Autohome Inc
NYSE:ATHM

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Autohome Inc
NYSE:ATHM
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Price: 26.36 USD 1.19% Market Closed
Market Cap: 3.2B USD

Earnings Call Transcript

Earnings Call Transcript
2018-Q1

from 0
Operator

Ladies and gentlemen, thank you for standing by for Autohome's first quarter 2018 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

As a reminder, this conference call is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to introduce your host, Fang Liu, Autohome's IR. Ms. Liu, you may begin.

F
Fang Liu
Investor Relations Manager

Thank you, operator. Hello, everyone. And welcome to Autohome's first quarter 2018 earnings conference call. Earlier today, Autohome distributed its earnings press release and you may find a copy on the company's website at www.autohome.com.cn.

On today's call, we have Mr. Min Lu, Autohome's Chairman and Chief Executive Officer; Mr. Haifeng Shao, Autohome's President; Mr. Jun Zou, Autohome's Chief Financial Officer. After the prepared remarks, Mr. Lu, Mr. Shao and Mr. Zou will be available to answer your questions.

Before we begin, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our public filings with the Securities and Exchange Commission. Autohome does not undertake any obligation to update any forward-looking statements except as required under applicable law.

The earnings press release and this call also includes discussions of certain unaudited non-GAAP financial measures. The press release contains a reconciliation of the non-GAAP measures to the most directly comparable GAAP measures and is available on Autohome's IR website.

As a reminder, this conference is being recorded. In addition, a webcast of this conference call will also be available on Autohome's IR website.

I'll now turn the call over to Autohome's Chairman and CEO, Mr. Lu.

M
Min Lu
Chairman and Chief Executive Officer

Thank you, Fang. Hello, everyone. Thank you for joining us today to discuss our first quarter 2018 results. I'm pleased to report a strong start to the year in which revenue, excluding direct sales, increased 33% year-over-year to RMB 1.3 billion.

For a detailed breakdown, our media and leads generation services revenue grew 28% and 31% year-over-year, respectively, which continued to outpace the growth in the overall market.

Our online marketplace and other revenue, primarily including new business over auto financing, data products and e-commerce, increased substantially by roughly 404% year-over-year excluding direct sales in the first quarter of 2017.

We are glad to see the progress and the signals that our new business are on track and the growth momentum is expected to continue throughout 2018. Also, adjusted net income during the quarter grew 42% year-over-year to RMB 520 million, representing an adjusted net margin of 40%.

Now, let me go over the three key factors that support our media and leads generation business strategy. Firstly, we are able to continue expanding high-quality traffic.

During the first quarter of 2018, the number of average daily unique visitors who accessed our primary application Autohome increased by 34.5% year-over-year to reach 10.1 million according to Quest Mobile.

Currently, the newly activated users of Autohome app has reached 250,000 on a daily basis. We are glad to see continued healthy traffic growth in mobile and a record traffic ramp up in newly launched channels and products such as user foreign [ph] and short video [ph].

As a result of these efforts, our mobile advertising revenue grew 58% compared to the same period of last year accounting for almost [indiscernible] media service revenue.

This is very essential for effective advertising and it's driving automakers and dealers to select Autohome as the primary digital marketing platform. For example, in the first quarter, penetration of the premium package subscription for dealers have expanded to 74%.

Secondly, our relentless focus in broadening content with better [indiscernible] intelligent recommendation and targeted user group launches such as EV channels, used foreign, online and offline social activities in the [indiscernible].

For example, as of March 2018, our enriched PGC content has over 6,000 active professional contributors. As another example, as of March, we had over 54,000 groups of [indiscernible] categorized by other owners, interests and localities, spanning across over 320 cities.

This further enhanced our S&S [ph] content and the user interaction with the various offline activities. I believe we are delivering the best user experience in the market by devoting significant resources towards expanding content breadth and depth, which will enhance users stickiness, support the user royalty, increase the retention and reduce the user acquisition cost.

The final key factor is our advanced technology development, especially in expanding AR/VR enabled ecosystem.

Now, for the recent Beijing International Auto Show, we are able to seamlessly link OEMs of VR car models displayed within OEM VR exhibition calls to relevant dealers VR showrooms in delivering the most comprehensive experiences for the online visitors.

During this AR auto show, 21 branded automakers displayed over 100 automobile styles, attracting over 41 million unique visitors and over 200 million views, linking close to 6,500 dealers VR showrooms nationwide.

Our AR auto show has proven to be capable of connecting potential consumers with strong demand in low-tier Chinese cities, which is precisely the total solution automakers and dealers are seeking in branding and acquiring high targeted traffic and effective leads.

Next, let me provide some updates on our new business initiatives, which are on track in driving our growth target for 2018.

First, for auto finance and business, during the first quarter, we facilitated RMB 2.1 billion consumer and merchant loans and had accumulated 2.5 million consumer accounts as of March.

In addition, we issued over 80,000 credit cards co-branded with Ping An Bank in this quarter and became Ping An Bank's largest online credit card issuers channel.

Beside auto financing, we plan to further expand our insurance business in 2018 now that we have applied the relevant insurance brokerage license in the latter part of 2017.

Secondly, for data products serving OEMs and dealers, we are pleased of the steady acceptance in the marketplace. Currently, over 10 OEMs and over 5,300 dealers have signed contracts for some combination of our data products.

We received a very solid feedback from our clients. As an example, our intelligent marketing data tools has gained quite a bit popularity as it leverages more comprehensive user profile and behavior data in order to significantly enhance leads to stop visit conversion, thus increasing dealers' call center efficiency, CRM management and setting a new industry standard.

Finally, as for the new car transaction platform, we have expanded to six Chinese provinces by end of March. In terms of the used car business, our SaaS infrastructure deployed in 2017 has already covered over 35,000 used car dealers, enabling these dealers to outperform various services.

For example, in the first quarter, by collaborating with Ping An Bank, we are able to offer very competitive merchant loans products to the used car dealers who worked with us, resulting in total credit line of RMB 2.7 billion granted to about 750 used car dealers for the first quarter.

We plan to continue to further enable used car dealers with enhanced car sourcing, effective sales leads generation and a wide array of financing support.

To conclude, our better-than-expected results during the quarter demonstrate the positive impact of our strategic focus on best-in-class user experience, expanded portfolio of mobile services and the best technology development.

This creates and accelerates a sustainable network effect, which is fueling the growth of both core and the new business spirits.

With that, I would now turn the call over to our CFO, Jun Zou, for a closer look at our first quarter financial results and business outlook.

J
Jun Zou
Chief Financial Officer

Thank you, Min. As Min has already highlighted, we are very pleased to report another strong quarter. But before I start, let me mention that, starting first quarter 2018, given the continued growth of our new businesses such as data, we have elected to revise the presentation of our revenue segments for better transparency.

Primarily online marketplace and other revenue will now include revenues from new and used car marketplace, auto financing business, data products and aftermarket services. The impact on the other two revenue segments of media services and lead generation are minimal.

In addition, as a reminder, in the first quarter of 2018, we have also adopted the revenue recognition accounting standard ASC 606, which changed the presentation of value-added tax from growth basis to net basis.

Compared to presentation on growth basis, the revenue under net basis for the first quarter of 2018 was around 9.5% low.

Now, I'll continue the quarterly reporting using these revised revenue presentations, including the first quarter of 2017. And please note that I will reference RMB only in my discussion today.

Net revenue for the first quarter was RMB 1.288 billion, representing 33% year-over-year increase, excluding direct sales. This was about the high end of our original guidance.

For detailed breakdown, media and lead generation revenue for the first quarter was RMB 584 million and RMB 611 million, up 20% and 31% on a year-over-year basis respectively.

Online marketplace and other revenues were RMB 93 million excluding direct sales. [indiscernible] the first quarter of last year, it increased substantially by 404% on a year-over-year basis.

A significant part of these revenues were generated from auto financing and data products. So, we're very pleased of the progress of these new initiatives so far into the year.

Moving on to costs, cost of revenue decreased 58% year-over-year to RMB 146 million, which resulted in gross margin increase to 89% in the first quarter of this year. Excluding the cost of direct sales in Q1 last year, the cost of revenue increased by 24% year-over-year, which is slower than our topline growth, thanks to our optimized cost [indiscernible] efforts.

Now, for operating expenses, sales and marketing expenses in the first quarter increased by 30% year-over-year to RMB 398 million. But as a percentage of revenues, excluding buyout, it is still slightly lower both on a year-over-year and a sequential basis. This was primarily due to an increase in operating execution, branding expenses as well as salary and benefits.

P&D expenses were RMB 229 million, up 21% year-over-year. Again, this reflects our R&D headcount increase in the last few quarters and it's proof of our commitment to technology and hiring talents.

Now, finally, general and administrative expenses were RMB 63 million, slightly up by 4% on a year-over-year basis. As a result, we delivered operating profit of RMB 523 million, a significant increase of 46% year-over-year, primarily as a result of increased operational efficiency and effective cost controls.

Adjusted net income attributable to Autohome Inc. was up 42% year-over-year to RMB 520 million.

Non-GAAP basic and diluted earnings per share per ADS for the first quarter were RMB 4.43 and RMB 4.36 respectively compared to RMB 3.18 and RMB 3.13 respectively in the corresponding period of last year.

As of March 31, 2018, our balance sheet remained very strong with cash, cash equivalents and short-term investments of close to RMB 8.0 billion. We generated operating cash flow of RMB 421 million in the first quarter of this year.

Now, let me address our second quarter 2018 outlook, which reflect our current and preliminary view on market and operating conditions that may be subject to changes.

At this point, we expect to generate net revenue in the range of RMB 1.780 billion to RMB 1.8 billion. If we exclude the impact from our direct sales business, this represents a 29.6% to a 31.1% year-over-year growth.

In summary, we're very pleased with our first quarter 2018 results. Together as a team, we again achieved an excluding buyout revenue growth of 33% and delivered 48% net profit growth year-over-year.

More importantly, our new business initiatives are also gaining market acceptance with revenue contribution, which will help drive our sustainable growth into the future.

With that, we are ready to take your questions. Operator, please open the line for Q&A.

Operator

Thank you. [Operator Instructions]. Your first question comes from Eddy Wang from Morgan Stanley. Please go ahead.

E
Eddy Wang
Morgan Stanley

Hi, management. Thank you for taking my questions. First of all, congratulations on the very strong results. Now, I have three questions. First of all is regarding the online marketplace and other business, can you give us some color on the growth of each such as the auto finance, auto insurance, data product. Your revenue growth guidance of business in this year.

I know management have highlighted that [indiscernible] this business. So, my second question is related to this year. We noticed that the OpEx ratio actually increased in the first quarter compared with the first quarter last year. So, what's your guidance of this [indiscernible] of this year.

And the third question is about the headcount. I noticed that the headcount at the end of this first quarter actually [indiscernible] quarter-over-quarter to compare with end of last year. Would you please give us [indiscernible] of why the decline and what [indiscernible]? Thank you.

J
Jun Zou
Chief Financial Officer

Eddy, I think you're breaking off. We didn't quite hear your last question.

E
Eddy Wang
Morgan Stanley

Yeah. Last question, let me repeat. The last question is about the headcount. So, at the end of the first quarter, it seems to have declined compared with – at the end of last year. So, I just want to know the reason behind this and if there is any color around the trend of [indiscernible] in this year. Yeah.

H
Haifeng Shao
President

[Foreign Language].

Talking about the new business, we're referring two business. One is about auto financing and also financial-related business. The second are data related business.

[Foreign Language]

Now, talk about auto financing, as we mentioned, the total transaction is about RMB 2.1 billion. And I think in the future, we're going to further grow this number. And the key is we have to drive the volume of our platform for the used car business. If we drive the volume of the used car business transaction up, then I think this number will further grow.

[Foreign Language]

Now, talking about the auto insurance business, as you know, there are some regulatory updates and changes in the market. Before the new regulation, no offers are allowed. And we heard that the Chinese Banking and Insurance Regulatory Commission is going to free to premium policy in three provinces. If this policy gets introduced to the market, that would further expand our auto insurance business.

[Foreign Language]

Now, the second business I want to echo is the data product. We already signed the contract with 10 OEMs and 5,300 dealers.

[Foreign Language]

Well, this is only just getting started and the real number is actually bigger than this one because according to our financial and accounting principle, we have to amortize the newly signed contracts in 12 months. So, that's why in terms of financial current system, we have to do such amortization. That's why the real number is bigger than we quoted.

[Foreign Language]

As we had different relationship with OEMs and dealers, we would understand better how to serve them with our data products.

[Foreign Language]

So, on one hand, we are making ourselves. On the other hand, we are getting to know our customers better and we are developing our next generation data products to better serve the dealer and OEMs.

[Foreign Language]

As you know, Q1 is just what we have quoted, the numbers, and we do have a great hope for this kind of two pieces of new business would become our traditional business. They will grow as big as our traditional business.

[Foreign Language]

Now, I want to echo with your third question which is the headcount. Actually, comparing with end of last year, in terms of the headcount, we are 100 people less. I think this is quite normal turnover rate for the Internet business. Usually, our Internet b, after the staff members get their annual bonus, they would leave. And we are also recruiting new members into our team.

On the other hand, we are trying to control our headcount in a strict way. As I said last year, if we expand our headcount, I think some of the revenue and profit would be eaten by the growing headcount, so that's why we want to control a small size to headcount.

[Foreign Language]

If you look at our financial statement, you will see that last year, end of last year, we have offered very good bonus to our staff members. So, that's why the employees are really very happy to see with good bonus.

[Foreign Language]

We don't worry about recruiting our staff members. So, in terms of HR, there's no worry.

J
Jun Zou
Chief Financial Officer

Eddy, as for operating expense, we have mentioned in the past that we believe we will try to maintain our operating margin very similar to last year's level excluding direct sales business. And in the meantime, I believe we would try our best to achieve operating leverage, even though we will also continue to spend to grow our new business. But let's say the bottom line is that we will at least try to maintain our margin profile similar to that of last year.

And just to add on to Min's answer to question three, I think for this year we will try to limit our headcount sort of growth by single digit compared to the end of last year. And most of the addition should be non-P&D side.

E
Eddy Wang
Morgan Stanley

Thank you very much. Thank you.

Operator

[Operator Instructions]. Your next question comes from Liping Zhao from CICC. Please go ahead.

L
Liping Zhao
CICC

[Foreign Language]

I have two questions. So, first question is related to the insurance business. The management elaborated the business model for insurance segment. And what's the take rate for the business?

And my second question is related is financials. The first one is regarding the growth in the other income. Is it related to the standards adjustment? And then, second question is about the OEM revenues. How many OEM clients were there in the first quarter? Thank you.

M
Min Lu
Chairman and Chief Executive Officer

[Foreign Language]

Now, let me answer the question about our business model for the auto insurance business. Our auto insurance business in Q1 is still a traditional insurance business model. The subscribers would purchase insurance under subscriber premiums from the Autohome app.

[Foreign Language]

Actually, we do not advantages as offline sales because online sales, we're not allowed to generate offers.

[Foreign Language]

As our president just mentioned, there are new regulatory changes released by the regulators which they are going to select three provinces as pilot province to start reforming of the online premium subscription. They would allow offer for the online insurance subscription in three provinces.

[Foreign Language]

The purpose of such regulatory change is try to reform the online insurance market which offer the clients with a better premium if they subscribe online. Actually, it's like a unified standards for online and offline offering. And if the insurance – and the insurer doesn't have any accident, they can enjoy a better premium.

[Foreign Language]

Actually, in terms of this regulatory change, how would that affect our insurance brokerage business? I think there are both benefits and also disadvantages. Now, talking about the benefits, I think the business transaction volume and the user number would both grow.

[Foreign Language]

However, such policies, the government just announced the framework. They haven't started the releasing of such policy yet. So, implementation will still have to wait. And also, due to the government time table, they're going to select three provinces to start this new policy. And for the three provinces, the insurance business only accounts for 5% of the national total.

J
Jun Zou
Chief Financial Officer

So, now, Liping, I will answer your second question. The first part of your second question, yes, auto income increase is related to actually the accounting policy change. Now, in ASC 605, we actually have booked the 13% rebate from our lead generation business as a cost reversal to offset our cost.

And now, under the new policy, under ASC 606, we book that as – we firstly book actually the revenue from lead generation from a net basis after the 17% VAT and then we book the tax rebate under other income. So, yes, that's related to the account policy change.

And as for the second part of your question, the OEM customers, in the past quarter, we still have around 90 OEM customers, a similar number to that of last year.

L
Liping Zhao
CICC

All right. Very clear. Thank you.

Operator

Thank you. As a reminder, each participant will be allowed one question only to allow other participants in the queue to ask their question as well.

Your next question comes from Miranda Zhuang from Merrill Lynch. Please go ahead.

M
Miranda Zhuang
Bank of America Merrill Lynch

Good evening, management. Thank you for taking my questions. I have one question about our strategy to penetrate into lower-tier cities.

I want to know the company strategy in terms of acquiring dealers and the users in the lower-tier cities. Thank you.

[Foreign Language]

U
Unidentified Company Representative

[Foreign Language]

Thank you for the question. Well, if you look at Q1, the auto sales in the lower-tier cities, they're growing.

[Foreign Language]

Now, we're going to ready for two things. First one, we are trying to build up our branding in the lower tier cities.

[Foreign Language]

To build up the branding image, that's why we subscribed to the CCTV advertisement for other homes.

[Foreign Language]

We worked with CCTV Channel 1, Channel 5 and Channel 6 which enjoy good viewing in the lower-tier cities. So, we want to try this out to see which one would be more effective to penetrating into the lower-tier cities.

[Foreign Language]

And also, we hired an ambassador which is a celebrity ping pong ball player in China and he just won the ping pong champion, for the group champion yesterday in an international competition. His name is [indiscernible]. He has become our ambassador.

[Foreign Language]

He's very young. He's only 21 years old and how he's ranking in the world in number one.

[Foreign Language]

In last week, it's just [indiscernible] for the ping pong games and which enjoy a very high penetration rate for viewing for CCTV 5.

[Foreign Language]

Now, the next thing is we have established AR auto show during the Beijing auto show which is very successful.

[Foreign Language]

The Beijing auto show is a massive scale auto show, but is also trying to generate leads and also to convert the leads into sales.

[Foreign Language]

So, we want to bundle online plus offline. We want to connect both sides. So, in this way, for online, we can generate traffic and divert the traffic into lower tier cities. And we also provide the lower-tier cities sales opportunities. In this way, we can combine online/offline sales.

[Foreign Language]

Talking about the dealership, the dealers in the lower tier cities, they all had collaboration with us.

[Foreign Language]

In summary, by building our marketing strategies and branding as well as combining the offline channels with online channels, we are trying to get higher penetration into the lower-tier cities and try to help the lower-tier city users to get the car which they want to buy.

[Foreign Language]

Thank you.

M
Miranda Zhuang
Bank of America Merrill Lynch

Thank you very much. That's very helpful. Can I have just one very quick follow-up. So, can you remind us the mix of the users and dealers from lower-tier cities in Autohome?

J
Jun Zou
Chief Financial Officer

So, you're referring to, like, the percentage of customer from lower-tier cities.

M
Miranda Zhuang
Bank of America Merrill Lynch

[Foreign Language]

U
Unidentified Company Representative

[Foreign Language]

U
Unidentified Company Representative

[Foreign Language]

U
Unidentified Company Representative

[Foreign Language]

U
Unidentified Company Representative

[Foreign Language]

U
Unidentified Company Representative

[Foreign Language]

M
Miranda Zhuang
Bank of America Merrill Lynch

[Foreign Language]

U
Unidentified Company Representative

We work with basically all the dealers. Out of these 28,000 dealers, we work with 26,000 dealers. And we also work with tier two sales networking dealers. In terms of the users, I think the lower-tier city users account for basically half of our users.

M
Miranda Zhuang
Bank of America Merrill Lynch

Thank you very much.

Operator

Thank you. Your next question comes from Monica Chen from Credit Suisse. Please go ahead.

M
Monica Chen
Credit Suisse

Good evening. I have one question regarding our online marketplace business. So, I was trying to understand our target for our auto financing business loan balance or our auto transaction volume target by end of this year for each of the customer loan and merchant loan respectively. And also, any of our customer target for the OEM and dealer data product also for this end of this year?

[Foreign Language]

U
Unidentified Company Representative

[Foreign Language]

Talking about the target, we do have internal KPI and targets. But I'm not in a convenient position to quote this target to the external analyst. Well, we want to achieve beyond – even beyond this target. This is the very first time for us to do such new business. So, even if we have a target, this may not 100% be accurate. But what we're trying to do is what we would try our best to exceed our internal targets.

[Foreign Language]

Talking about our financial business, I think the key is if we drive the transaction volume in the closed-loop transaction, I think the business volume would go up.

[Foreign Language]

For example, the used car transaction already occurred in our closed-loop transactions.

[Foreign Language]

Especially the C2B.

[Foreign Language]

Now, talking about B2C business, this is relatively speaking more complex than C2B. And also, we need to deploy more POS machines to a lot of our cities. About May or June, we're going to make new release about the B2C business.

[Foreign Language]

Talking about the data products, we already gained feedback – very positive feedback from customers. So, we would continue to come up with our further development of the next generation data product offering.

[Foreign Language]

During the May auto show, the Dongfeng automotive group already signed a lumpsum contract with us.

[Foreign Language]

All of that is strategic collaboration contract with us. Major piece of that was the data service.

[Foreign Language]

And in May, there's another OEM which is going to sign the strategic collaboration agreement with us. There are further OEMs who showed their interest.

So, hopefully, we can be more interactive with our customers and we can come up with better data products for the OEMs.

[Foreign Language]

Thanks. Thank you.

M
Monica Chen
Credit Suisse

[Foreign Language]

Thank you very much.

Operator

Thank you. Your next question comes from Hillman Chan from Citigroup. Please go ahead.

H
Hillman Chan
Citigroup

[Foreign Language]

So, my question is on the data product for the OEM. So, can management share more color on which data product and targeting which part of the value chain is more popular among the OEM customer and a rough price range for that. And the other question is about the competition from Dongfeng and how the management see the competition from them? And lastly is on the auto loan. Can management share more color on the difficulties we face during the process related to the customer engagement dealer partnership integration with Ping An and how you expect to improve going forward? Thank you very much.

U
Unidentified Company Representative

[Foreign Language]

Now, I want to echo in the first question which is about data product. We have data product signing at OEM as well as targeting at the dealers.

[Foreign Language]

We are now pushing forward both piece of business.

[Foreign Language]

Now, your question is focusing on the OEM data product. Actually, we have multi-offering in terms of the data products to OEMs. Generally speaking, they are different categories. For example, the data product related to RMB.

[Foreign Language]

The second category is about strategy collaboration and competition.

[Foreign Language]

A lot of OEMs, their big boss come to our showroom and they can witness what kind of strategic competitive edge of them comparing with competitors each day, each week or each month.

[Foreign Language]

And the third category is about marketing and sales. We do have a sales tour for them to see how clearly they have made the conversion from leads to absolute sales.

[Foreign Language]

In the sales funnel, they can see that how many showed interest and how many leads are there. So, that's why they can clearly understand for their car model, under some of the brands, what are the difficulties they're facing and what are the areas people showed great interest in.

[Foreign Language]

So, in this way, if they deepen their collaboration with us, we can help the OEMs to make a higher conversion rate along different layers of the sales funnel.

[Foreign Language]

They can also make comparison with competitors and also to compare the competitive car models, which are better, which are worse. So, in this way, they would have a clear competitive perspective over the market.

[Foreign Language]

And also, it's related to improving the quality of the product. For example, we have a lot of user-generated data and the user-generated comments about some of the car models. And we would come up with a template with all the user-generated comments as a good feedback for the OEMs to improve the quality of the product.

[Foreign Language]

For the latter half of the year, we're going to launch a service-oriented model for them. So, in this way, they would understand how good are the sales and the service quality online which is quite important for the OEMs.

[Foreign Language]

Thank you. Due to time limit, so that's all for question number one.

[Foreign Language]

So, actually, we have a lot of product offering to our OEMs, but due to time limit, I have to stop here.

Now, answering the second question, I will comment on our competitors like Dongfeng.

[Foreign Language]

As you know, we are in competitive business and we're getting used to such competition.

[Foreign Language]

And each of the player in the market does have their own unique way to do the business.

[Foreign Language]

For Autohome, no matter who our competitors, we are very much willing to learn from them.

[Foreign Language]

Meanwhile, we would keep focusing our core competency and try to strengthen our core competency.

[Foreign Language]

So, I think our best wishes no matter which platform or which APP our user may go to, but when they finally try to purchase a car, they would come to Autohome.

[Foreign Language]

So, we do have a slogan which says, viewing, selecting, buying a car, welcome to Autohome.

[Foreign Language]

Well, purchasing a car is very different of buying a commodity or other kind of daily consumption products.

[Foreign Language]

Usually, before they make the purchase, they would spend three months surfing the Internet for information.

[Foreign Language]

Then they would take another month to shop from the 4S stores.

[Foreign Language]

So, Autohome do enjoy core advantages. We have very professional content as well as big data offered to our customers.

[Foreign Language]

We would help the users to get to know about the car, to view the car, to understand the car, then purchase the car. For the later half of the year, we will also help the users to use the car well.

[Foreign Language]

These three pieces are just meeting the core demand of our core customers.

[Foreign Language]

On November 10 [ph], we're going to issue a new additional of our new app, which we provide seven-step guidance to purchase a car, which is like writing a Chinese poem in seven steps.

[Foreign Language]

In summary, we want to keep and further expand our core competency in the market.

[Foreign Language]

Hopefully, the users when they're trying to select the car, view the car and purchase the car and use the car, they would always come to Autohome.

[Foreign Language]

Thank you.

[Foreign Language]

Now, talking about auto financing, I think the key is we want it to be Internet based. We also want to meet with the bank's risk management core requirement. So, that's why when talking about collaboration with Ping An Bank and other financial leasing companies, we have already established the standard and the process for risk management and for the whole auto financing business.

[Foreign Language]

Now, we have been expanding such business. And for Ping An Bank, they're trying to accumulate experiences, especially in risk management experiences. After we accumulated enough experience, I think we would quick the steps in further expanding this business.

[Foreign Language]

Thank you very much.

H
Hillman Chan
Citigroup

[Foreign Language]

Operator

Our next question comes from Wendy Huang from Macquarie. Please go ahead.

W
Wendy Huang
Macquarie

Thank you. I just have a few follow-up questions. First is, we have seen the tightening regulation in China's social networking and also online advertising space. Some of the players such as [indiscernible], they got hit. So, this question is not really about specific competition from Dongfeng. It is more about whether there has been any auto budget shift you observed actually shifted from the [indiscernible] overall to actually Autohome or overall online auto space.

And second, you mentioned earlier that the integration with Ping An Bank has been quite smooth recently. So, can you elaborate a little bit on that?

And also, how well – or how has Autohome already actually leveraged Ping An's 1.4 million insurance agents on the ground to develop your business? Thank you.

U
Unidentified Company Representative

Now, to answer your first question, if you look at Q1, actually, the auto sales growth in China is not very strong. It's within 3%.

[Foreign Language]

We do see the slowing down of the growth if we compare this number with a few years back, which was double digit.

[Foreign Language]

But we're happy to announce that in Q1, in terms of OEM, media service, we have more than 20% growth.

[Foreign Language]

So, this growth was quite good even if we compare the data with the good years, which the growth was double digit for auto market.

[Foreign Language]

We understand the competition are always there and it's hard to tell who took whose market share. But what we want to focus is to try to create better value for our customers.

[Foreign Language]

So, we are dedicated and are focused on our core competency including our data service business. I think we would have very good collaboration with one or more OEMs.

[Foreign Language]

Talking about the collaboration with Ping An Bank, we have a few business collaborating with them.

[Foreign Language]

The first one is credit card business.

[Foreign Language]

Secondly, auto financing.

[Foreign Language]

For the 1.4 million agents of the life insurance under Ping An Bank, they help to generate C1 and the C2 –

[Foreign Language]

They help to generate C1 and C2 leads for used car.

[Foreign Language]

Thank you.

Operator

Thank you. There are currently no more questions in queue. I'd like to hand over the call back to your speaker today. Please go ahead.

M
Min Lu
Chairman and Chief Executive Officer

Okay. Thank you very much for joining us today. We appreciate your support and we look forward to updating you on the next quarter's conference call in a few months' time. In the meanwhile, please feel free to get in touch with us if you have further questions and comments.

Operator

Thank you, sir. Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.