Autohome Inc. (NYSE: ATHM) announced the result for the first quarter of 2020 on 1st June 2020. Period of this quarter ended on 31st March 2020. This company has businesses in China, which were closed in January and in most days of February. Hence, the revenue of the company has declined by 4% in this quarter over a year.
Financial Highlights of Q1 2020 Result are
- Revenue: Revenue generated by the company in Q1 2020 was RMB 1,546.6 million ($218.4 million), declined by 4% from RMB 1,611.9 million earned in Q1 2019.
- Gross Profit: Company’s gross profit in the first quarter of 2020 was RMB 1,386.7 million ($193.3 million), down by 4.1% from RMB 1,427.4 million earned in the same period of 2019.
- Gross Margin: Gross Margin reported by the Autohome in the first quarter of 2020 and 2019 was 88.4% and 88.5% respectively.
- Operating Expense: Autohome’s operating expense in Q1 2020 was RMB 905.3 million ($127.8 million), increased by 7% from RMB 846 million spent in Q1 2019.
- EBITDA: EBITDA in the first quarter of 2020 was RMB 448.29 million ($113.8 million), down by 5.7% from RMB 794 million generated in the same period year ago.
- Cash and cash Equivalent: Cash and cash equivalent by the end of the first quarter of 2020 was RMB 2,024.8 million ($285.9 million).
- Net Profit: Autohome’s net profit in the first quarter of 2020 was RMB 587.2 million ($82.9 million), declined by 10.8% from RMB 646.5 million earned in the first quarter of 2020.
- Diluted EPS: Diluted EPS for Q1 2020 was RMB 4.91 ($0.69) compare to RMB 5.41 in Q1 2019.
- Dividend: Total Dividend distributed by the company in RMB 651.1 million ($91.9 million).
- Employees: Total employees working in Autohome by the end of the first quarter of 2020 was 4,057.
- A conversion rate of US$1 equal to RMB 7.08 is used.
Autohome’s business is in the automobile segment and was hit in January and February due to quarantine instruction issued by the government of China. Due to COVID-19 outbreak and extension of the Chinese New Year holiday, passenger vehicle sales declined by 45% over a year. Due to continuity in the spread of the pandemic, customers delayed their plan to purchase a new vehicle. Company is supporting dealer in this crisis; it has provided free trials of the instant messaging app to 2000 dealers.
Autohome operates its business in three different segments. Only online ‘marketplace and others’ segment reported positive revenue growth while the other two segments reported negative revenue growth over a year.
- Media Services: This segment contributed 36.6% of the total revenue generated by the company. In Q1 2020 revenue generated by this segment was RMB 566.3 million ($218.4 million), declined by 11.9% from $643.2 million earned in Q1 2019. Revenue declined because of disruption in the microeconomic environment in China related to COVID-19 and a decrease in average revenue per automaker advertiser. Although revenue in this segment declined, the company took several incentives to increase its revenue such as 50 automakers have delivered a total of 124 programs on Autohome’s live streaming channel. Autohome collaborated with China Council for the Promotion of International Trade to launch three weeks virtual auto show, where 60 auto brands and more than 1300 dealers signed up for this event.
- Leads Generation Services: Contribution made by this segment in the first quarter of 2020 was 43.3% of the total revenue. This segment reported revenue of RMB 670.4 million ($94.6 million) in Q1 2020, down by 8.6% from RMB 734 million in Q1 2019. Revenue in this segment as a smaller number of dealers was able to do business in COVID-19 crisis.
- Online Marketplace and others: In the first quarter of 2020, the contribution made by this segment was 20% of the total revenue. This segment was able to generate revenue of RMB 309.8 million ($43.7 million) in Q1 2020, increased by 32% from RMB 234.6 million generated in the same period of previous year. This segment witnessed an increase in revenue due to an increase in contribution from data products. Data product was able to achieve revenue growth of 80% in the online marketplace and other business. More than 17,000 automakers have purchased data products in this quarter. Data Products purchased by automakers in the first quarter of 2020 was 17, compared to 8 reported in the same period year ago. Company is working automakers for launching 15 programs for intelligent car launch and 29 projects for intelligent marketing solution.
Autohome in its guidance claims that in the second quarter of 2020, will be able to earn the revenue between RMB 2,220 million ($313.5 million) to RMB2,320 million ($327.6 million). Opening of the Market in China and stimulus policy of the government is a positive sign for a company to earn revenue. Microeconomic uncertainty caused by COVID-19 has resulted in a decline in demand for a passenger vehicle, so it will be challenging for Autohome to achieve the estimated revenue target.