TuanChe (TC) Reports Q1 Loss of $0.02, Revenues Beat

TuanChe (NASDAQ: TC) reported Q1 EPS of ($0.02). Revenue for the quarter came in at $1.4 million versus the consensus estimate of $1.29 million.

Key First Quarter 2020 Financial and Operating Metrics Compared with the Prior Year Period

The Company's financial and operational results for the first quarter of 2020 have been materially and adversely impacted by the COVID-19 pandemic:

• Net revenues decreased by 92.1% to RMB9.7 million (US$1.4 million) from RMB122.9 million.
• Gross profit decreased by 93.6% to RMB5.7 million (US$0.8 million) from RMB88.9 million. Gross margin decreased to 58.6% from 72.4%.
• Quarterly number of organized auto shows across China decreased by 96.6% from 178 in 137 cities to six in six cities. Quarterly number of special promotion events increased 8.3% from 12 to 13.
• Quarterly number of automobile sale transactions facilitated decreased by 96.4% to 2,305 from 64,641. Quarterly Gross Merchandise Volume of new automobiles sold decreased by 96.4% to RMB 0.3 billion (US$0.04 billion) from RMB8.4 billion.
• Sales operations covered 146 cities as of March 31, 2020, compared with 148 cities as of December 31, 2019 and 146 cities as of March 31, 2019.

Mr. Wei Wen, Chairman and Chief Executive Officer of TuanChe, commented, "In the first quarter of 2020, we experienced significant challenges stemming from the COVID-19 pandemic which resulted in material year-over-year net revenue declines and a widening net loss. In response to these challenges, we took immediate efforts to address three key priorities: ensuring the health and safety of our employees and customers, streamlining our cost structure, and accelerating our online strategy. As part of our online strategy, we formed a strategic partnership with Baidu Youjia, Baidu's information service app in the automobile vertical, and deepened our collaboration with TMall Auto. We also completed the acquisition of Longye International Limited on January 13, 2020, a leading social CRM cloud system provider for China's automotive industry, further enhancing our capability to empower OEMs and dealers to reach customers more effectively and efficiently. These efforts have led to encouraging results. In the first quarter, we experienced a 12.3% year-over-year increase in revenues from virtual dealership, online marketing services and others. As the COVID-19 pandemic accelerates the ongoing consumer transition towards online channels, we were, and will continue to be, well positioned to take full advantage of this shift by further developing our omni-channel initiatives. Going forward, we will continue to focus on effectively leveraging our offline operations and applying our expertise in facilitating auto transactions online. Through a hybrid brick-and-mortar and online business model, we strive to provide our customers with both the security and quality they are accustomed to when purchasing in-store and in-person, as well as the convenience of a customized experience they expect from online shopping."

Mr. Chenxi Yu, Deputy Chief Financial Officer of TuanChe, added, "As previously announced, the Company cancelled all auto shows and special promotion events scheduled in February and March of 2020, leading to a 92.1% year-over-year decline in net revenues to RMB9.7 million in the first quarter. We took these tactical measures in accordance with all national and local regulatory guidelines on COVID-19 prevention and control, prioritizing the health and safety of our customers and employees. In response to the material impact of the COVID-19 pandemic, we implemented measures to adjust the pace of our operation expansion and conserve resources, such as furlough arrangements and scaling back our recruitment budget and employee size, and may resort to other costs cutting measures if the outbreak of COVID-19 and its impact persist or escalate. We have gradually resumed our offline operations in certain cities since May 2020, albeit uncertainties associated with the development of the COVID-19 pandemic. We are closely monitoring the circumstances and will adjust our operations accordingly. While we adjusted our pace of offline expansion by focusing on generating higher ROIs, we have accelerated the development of our online marketing services. With this strategy, we are confident in our ability to better navigate this challenging period while at the same time continue laying the foundation for an omni-channel approach to achieve long-term growth."

For earnings history and earnings-related data on TuanChe (TC) click here.

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