Cheche Group Reports Second Quarter 2024 Unaudited Financial Results
BEIJING, Aug. 29, 2024 /PRNewswire/ -- Cheche Group Inc. (NASDAQ: CCG) ("Cheche", the "Company" or "we"), China's leading auto insurance technology platform, today announced its unaudited financial results for the second quarter ended June 30, 2024.
Financial and Operational Highlights
-- Net revenues for the quarter increased 2.5% year-over-year to RMB851.8
million (US$117.2 million), while net revenues for the first half of
2024 increased 1.8% over the comparable prior year period to RMB1.6
billion (US$225.5million).
-- Net loss for the quarter decreased 16.4% year-over-year to RMB23.6
million (US$3.2 million), while net loss for the first half of 2024
decreased 24.0% to RMB54.9 million (US$7.6 million) over the prior-year
period.
-- Adjusted net loss ((1)) for the quarter decreased 38.8%, from RMB20.0
million in the prior-year period to RMB12.2 million (US$1.7 million),
while adjusted net loss for the first half of 2024 decreased 12.0% to
RMB24.4 million (US$3.4 million), compared to the prior-year period.
-- Total written premiums placed for the quarter was RMB5.6 billion
(US$0.78 billion) and remained stable as compared to the prior-year
period, while total written premiums placed for the first half of 2024
increased 4.2% over the comparable prior-year period to RMB11.1 billion
(US$ 1.5 billion).
-- Total number of policies issued for the quarter increased 11.1% to 4.0
million from 3.6 million for the prior-year quarter, while the total
number of policies issued over the first half of 2024 increased 15.9%
over the comparable prior-year period to 8.0 million.
-- Partnerships with New Energy Vehicle (NEV) companies ((2)) numbered 12
in the quarter and led to 225,000 policies embedded in new NEV
deliveries with corresponding written premium of RMB662.6 million
(US$91.2 million), representing an increase of 147.3% and 99.6% compared
to the prior-year quarter, respectively. Policies embedded in the new
NEV deliveries and corresponding written premium for the first half of
2024 reached 344,000 and RMB1.0 billion (US$142.1 million),
respectively, representing growth of 140.6% for policies embedded and
91.3% for written premium compared to the prior-year period.
(1) Adjusted Net Loss is a non-GAAP measure. For further information on the non-GAAP financial measures presented above, see the "Non-GAAP Financial Measures" section below.
(2) The rapid growth of the NEV market has created new opportunities for auto insurance offerings and propelled revenue growth of auto insurance providers. Cheche started to collaborate with NEV manufacturers in 2022, and such collaborations yielded considerable results in 2023. Cheche believes that the further growth of the NEV market and the introduction of innovative NEV auto insurance solutions will further fuel the revenue contribution of its partnership with NEV manufacturers. The management of Cheche utilizes the number of partnerships with NEV manufacturers, the number of insurance policies embedded in the new NEV deliveries, and the amount of corresponding premium generated from such embedded policies as the main operating metrics to evaluate its business and presents such operating metrics for investors to better understand and evaluate Cheche's business.
Management Comments
"Cheche reported positively-trending bottom-line results and continues to see revenue growth driven in part by increased engagement with our ever-evolving technology platform," said Lei Zhang, Founder, CEO, and Chairman of Cheche. "As we continue to gain scale as the technology partner for NEVs and our visibility increases with traditional vehicle manufacturers, our market influence and ability to generate efficiencies continues to improve.
"The first two months of this quarter have seen retail sales of NEVs rebound to the second highest sales on record in China and the NEV penetration rate reach a new high in June as more Chinese consumers adopt electric vehicles. Through our new and ongoing partnerships with Volkswagen (Anhui), Xiaomi Group, and other NEV manufacturers we're able to effectively meet the ever-changing, intelligent insurance needs of car owners."
Unaudited Second Quarter 2024 Financial Results
Net Revenues were RMB851.8 million (US$117.2 million), representing a 2.5% year-over-year increase from the prior-year quarter. The growth was driven by the increase in insurance transactions conducted through Cheche's platform by referral partners and third-party platform partners.
Cost of Revenues increased 1.9% year-over-year to RMB820.9 million (US$113.0 million) from the prior-year quarter, which was consistent with the growth of business volume and net revenues.
Selling and Marketing Expenses increased 14.2% to RMB19.3 million (US$2.7 million) from RMB16.9 million in the prior-year quarter, mainly due to the increase in staff cost, marketing, and share-based compensation expenses. Excluding share-based compensation expenses, selling and marketing expenses were RMB18.3 (US$2.5 million) million, an increase of 12.2% compared to the prior-year quarter.
General and Administrative Expenses increased 41.8% to RMB27.7 million (US$3.8 million) from RMB19.6 million for the prior-year quarter, mainly due to the increase of share-based compensation and dispute resolution expenses. Excluding share-based compensation and dispute resolution expenses and listing-related professional service fees, general and administrative expenses increased by RMB2.4 million from RMB14.7 million to RMB17.1 million (US$2.3 million), primarily as a result of post-listing professional service fees of RMB4.1 million.
Research and Development Expenses decreased 21.1% to RMB9.1 million (US$1.3 million) from RMB11.6 million in the prior-year quarter. The change was mainly driven by decreased staff costs. Excluding share-based compensation expenses, research and development expenses decreased 24.7% to RMB8.6 million (US$1.2 million) from RMB11.5 million in the prior-year quarter.
Total Cost and Operating Expenses increased 2.7% to RMB877.1 million (US$120.7 million) from RMB854.1 million in the prior-year quarter, mainly due to the increase in cost of revenues and share-based compensation expenses. Excluding share-based compensation expenses, amortization of intangible assets related to acquisition, listing-related professional service fees and dispute resolution expenses, total cost and operating expenses increased 1.9% from the prior-year quarter.
Net Loss decreased 16.4% to RMB23.6 million (US$3.2 million) over the prior-year quarter. Excluding non-GAAP expenses, the Adjusted Net Loss decreased 38.8% to RMB12.2 million (US$1.7 million) from RMB20.0 million for the prior-year quarter.
Net Loss attributable to Cheche's shareholders decreased 80.0% to RMB23.6 million (US$3.2 million) from RMB117.7 million for the prior-year quarter.
Adjusted Net Loss attributable to Cheche's shareholders decreased 88.8% to RMB12.2 million (US$1.7 million) from RMB109.4 million for the prior-year quarter.
Net Loss Per Share, basic and diluted, was RMB0.31 (US$0.04), representing a decrease of 91.3% compared to a loss of RMB3.56 for the prior-year quarter.
Adjusted Net Loss Per Share, basic and diluted, was RMB0.16 (US$0.02), representing a decrease of 95.2% compared to a loss of RMB3.31 for the prior-year quarter.
2Q24 and Subsequent Business Highlights
-- On May 13, 2024, Cheche announced its partnership with Volkswagen
(Anhui) Digital Sales and Services Co., Ltd., the exclusive service
provider of NEV insurance business for Volkswagen (Anhui) Automotive
Company Limited ("Volkswagen Anhui"). Cheche aims to support Volkswagen
Anhui's branded insurance needs and enhance the attractiveness of
Volkswagen Anhui's branded insurance products, boosting its penetration
rate.
-- On June 20, 2024, Cheche announced its partnership with NIO Insurance
Broker Co., Ltd. ("NIO Insurance Broker") to provide its accessible
digital platform powered by industry-leading technology, simplifying the
process of securing auto insurance for NIO's customers, while reducing
front-end insurance delivery costs and enabling NIO to digitally manage
its insurance business. Cheche is committed to creating value for its
partners throughout the product lifecycle.
-- On June 27, 2024, Cheche announced a strategic partnership with Beijing
Anpeng Insurance Broker Co., Ltd. ("Beijing Anpeng"), a subsidiary of
Beijing Automotive Group Co., Ltd. ("BAIC Group"). BAIC Group is one of
the largest auto manufacturers in China, producing and selling vehicles
through its own brands as well as foreign-branded joint-ventures, with
Beijing Anpeng handling the insurance business for the brands, which
encompass ARCFOX, Beijing Automotive, Beijing Hyundai, Beijing Benz, and
Beijing Off-road, among others. The partnership names Cheche as the core
partner of BAIC Group, providing digital insurance solutions for brands.
The opportunity is already off to a strong start with ARCFOX's service
system being launched as a direct-sales channel, the system for Beijing
Automotive, expected to cover 200 dealerships by the end of the year, in
the process of being rolled out, and Beijing Hyundai's planned service
system expected to cover 100 dealerships at year end.
-- On August 15, 2024, Cheche announced a strategic partnership with
Dongfeng Motor Group Company Limited's ("Dongfeng Motor Group")
insurance provider, Wuhan Dongfeng Insurance Broker Co., Ltd. ("Dongfeng
Insurance"). Dongfeng Insurance designated Cheche as an approved
provider for Dongfeng Motor Group's NEV brands, such as VOYAH, a luxury
EV brand that recently engaged the services of Cheche's digital
insurance solutions platform.
-- On August 19, 2024, Cheche Group announced its latest progress with BAIC
Group's NEV brand ARCFOX. Cheche has successfully launched a
full-service insurance platform for ARCFOX that provides its car owners
with a comprehensive insurance application system. The collaboration
with ARCFOX allows Cheche to gradually introduce high-margin insurance
products, while continuing to grow its NEV insurance presence, thereby
diversifying Cheche's revenue mix and boosting the Company's reputation
among automotive enterprises.
Balance Sheet
As of June 30, 2024, the Company had RMB204.6 million (US$28.2 million) in total cash and cash equivalents and short-term investments.
Business Outlook
Cheche affirms its full year 2024 outlook, anticipating:
-- Net revenues to range from RMB3.5 billion to RMB3.7 billion,
representing an increase of 6.1% to 12.1%, compared to the full year of
2023.
-- Total written premiums placed to range from RMB24.5 billion to RMB26.5
billion, representing an increase of 8.4% to 17.3%, compared to the full
year of 2023.
Conference Call
Cheche will host a webcast and conference call to discuss its second quarter 2024 results today at 8:00 a.m. EDT. This earnings release and a related investor deck will be available prior to the event in the "Quarterly Results" section under "Financials", while. the live webcast will be available in the "Events" section under the "News & Events" header on the investor relations website at ir.chechegroup.com.
The dial-in numbers for the conference call are as follows:
-- Participant (toll-free): 1-888-346-8982
-- Participant (international): 1-412-902-4272
-- Hong Kong LT: 852-301-84992
-- Hong Kong Toll Free: 800-905945
-- China Toll-Free: 4001-201203
Please dial in 10 to 15 minutes before the scheduled start time and request Cheche's second quarter earnings call.
A webcast replay will be available for one year following the call.
Exchange Rate Information
This announcement contains translations of certain RMB amounts into U.S. dollars at a specified rate solely for the reader's convenience. Unless otherwise noted, all translations from RMB to U.S. dollars and from U.S. dollars to RMB are made at a rate of RMB7.2672 to US$1.00, the exchange rate on June 28, 2024, set forth in the H.10 statistical release of the Federal Reserve Board. The Company makes no representation that the RMB or U.S. dollar amounts referenced could be converted into U.S. dollars or RMB, as the case may be, at any particular rate or at all.
About Cheche Group Inc.
Established in 2014 and headquartered in Beijing, China, Cheche is a leading auto insurance technology platform with a nationwide network of around 108 branches licensed to distribute insurance policies across 25 provinces, autonomous regions, and municipalities in China. Capitalizing on its leading position in auto insurance transaction services, Cheche has evolved into a comprehensive, data-driven technology platform that offers a full suite of services and products for digital insurance transactions and insurance SaaS solutions in China. Learn more at https://www.chechegroup.com/en.
Non-GAAP Financial Measures
Cheche has provided non-GAAP financial measures in this press release that have not been prepared in accordance with generally accepted accounting principles (GAAP) in the United States.
Cheche uses adjusted cost of revenues, adjusted selling and marketing expenses, adjusted general and administrative expenses, adjusted research and development expenses, adjusted total cost and operating expenses, adjusted net loss, and adjusted net loss per share, which are non-GAAP financial measures, in evaluating our operating results and for financial and operational decision-making purposes.
Cheche defines adjusted total cost and operating expenses as total cost and operating expenses adjusted for the impact of share-based compensation, listing-related professional service fees and dispute resolution expenses, which represents expenses incurred by Cheche in connection with settling a dispute with a certain security holder. Cheche defines adjusted net loss as net loss adjusted for the impact of share-based compensation expenses, amortization of intangible assets, and changes in fair value of amounts due to a related party related to the acquisition of Cheche Insurance Sales & Services Co., Ltd. (previously named Fanhua Times Sales and Service Co., Ltd), change in fair value of warrants, listing related professional service fees and dispute resolution expenses. Adjusted net loss per share, basic and diluted, is calculated as adjusted net loss divided by weighted-average ordinary shares outstanding.
Cheche believes that these non-GAAP financial measures help identify underlying trends in its business that could otherwise be distorted by the impact of share-based compensation expenses, amortization of intangible assets related to acquisition, and change in fair value of amounts due to a related party related to the acquisition of Cheche Insurance Sales & Services Co., Ltd. (previously named Fanhua Times Sales and Service Co., Ltd), change in fair value of warrants, and listing related professional service fees and dispute resolution expenses. Cheche believes that such non-GAAP financial measures also provide useful information about its operating results, enhance the overall understanding of its past performance and future prospects, and allow for greater visibility with respect to key metrics used by its management in its financial and operational decision-making.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. They should not be considered in isolation or construed as alternatives to net loss or any other measure of performance or as an indicator of Cheche's operating performance. Further, these non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to the Company's data. Cheche encourages investors and others to review the Company's financial information in its entirety and not rely on a single financial measure. Investors are encouraged to compare the historical non-GAAP financial measures with the most directly comparable GAAP measures. Cheche mitigates these limitations by reconciling the non-GAAP financial measures to the most comparable U.S. GAAP performance measures, all of which should be considered when evaluating its performance.
Safe Harbor Statements
This press release includes "forward-looking statements" within the meaning of the "safe harbor" provisions of the United States Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as "estimate," "plan," "project," "forecast," "intend," "will," "expect," "anticipate," "believe," "seek," "target" or other similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements also include, but are not limited to, statements regarding projections, estimations, and forecasts of revenue and other financial and performance metrics, projections of market opportunity and expectations, the Company's ability to scale and grow its business, the Company's advantages and expected growth, and its ability to source and retain talent, as applicable. These statements are based on various assumptions, whether or not identified in this press release, and on the current expectations of the Company's management and are not predictions of actual performance. These statements involve risks, uncertainties, and other factors that may cause the Company's actual results, levels of activity, performance, or achievements to materially differ from those expressed or implied by these forward-looking statements. Further information regarding these and other risks, uncertainties, or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. Although the Company believes that it has a reasonable basis for each forward-looking statement contained in this press release, the Company cautions you that these statements are based on a combination of facts and factors currently known and projections of the future, which are inherently uncertain. The forward-looking statements in this press release represent the views of the Company as of the date of this press release. Subsequent events and developments may cause those views to change. Except as may be required by law, the Company does not undertake any duty to update these forward-looking statements.
Unaudited
Condensed Consolidated Balance Sheets (
All
amounts in thousands, except
for
share
and
per share
data)
December 31, June 30, June 30,
2023 2024 2024
RMB RMB USD
ASSETS
Current assets:
Cash and cash equivalents 243,392 133,117 18,318
Short-term investments 21,474 71,494 9,838
Accounts receivable, net 466,066 639,233 87,961
Prepayments and other current assets 49,321 52,912 7,281
Total current assets 780,253 896,756 123,398
Non-current assets:
Restricted Cash 5,000 5,000 688
Property, equipment and leasehold improvement, net 1,667 2,479 341
Intangible assets, net 8,050 7,000 963
Right-of-use assets 10,249 10,021 1,379
Goodwill 84,609 84,609 11,643
Other non-current assets 4,149 3,908 538
Total non-current assets 113,724 113,017 15,552
Total assets 893,977 1,009,773 138,950
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable 316,868 467,552 64,337
Short-term borrowings 20,000 15,000 2,064
Contract liabilities 4,295 3,274 451
Salary and welfare benefits payable 73,609 73,313 10,088
Tax payable 950 875 120
Amounts due to related party 55,251 58,801 8,091
Accrued expenses and other current liabilities 25,759 23,452 3,228
Short-term lease liabilities 3,951 4,730 651
Warrant 850 1
Total current liabilities 501,533 646,998 89,030
Non-current liabilities:
Deferred tax liabilities 2,013 1,750 241
Long-term lease liabilities 5,398 4,485 617
Deferred revenue 1,432 1,432 197
Warrant 5,419 2,921 402
Total non-current liabilities 14,262 10,588 1,457
Total liabilities 515,795 657,586 90,487
Ordinary shares 5 5 1
Treasury stock (1,025) (1,025) (141)
Additional paid-in capital 2,491,873 2,518,989 346,624
Accumulated deficit (2,113,821) (2,168,693) (298,422)
Accumulated other comprehensive income 1,150 2,911 401
Total Cheche's
s
hareholders'
equity 378,182 352,187 48,463
Total liabilities and shareholders' equity 893,977 1,009,773 138,950
Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss (All amounts
in thousands, except
for
share and per share
data
)
For the Three Months Ended For the
Six
Months Ended
June June June June June June
3 3 3 3 3 3
0 0 0, 0 0 0,
, , , ,
2023 2024 2024 2023 2024 2024
RMB RMB USD RMB RMB USD
Net revenues 830,721 851,842 117,217 1,610,371 1,638,986 225,532
Cost and
Operating expenses:
Cost of revenues (806,036) (820,913) (112,961) (1,551,979) (1,574,285) (216,629)
Selling and marketing expenses (16,943) (19,342) (2,662) (47,755) (41,661) (5,733)
General and administrative expenses (19,567) (27,745) (3,818) (49,694) (61,753) (8,497)
Research and development expenses (11,569) (9,128) (1,256) (31,303) (18,525) (2,549)
Total
cost and
operating expense
s (854,115) (877,128) (120,697) (1,680,731) (1,696,224) (233,408)
O
ther expense
s:
Interest income 1,108 1,282 176 1,483 3,257 448
Interest expense (320) (206) (28) (541) (440) (61)
Foreign exchange losses (7,781) (803) (110) (6,334) (1,055) (145)
Government grants 4,193 7,240 234 32
Changes in fair value of warrant (104) 2,908 400 (127) 3,376 465
Changes in fair value of amounts due to (2,075) (1,555) (214) (3,836) (3,286) (452)
related party
Others, net 2 (33) (5) 29 180 25
Loss before income tax (28,371) (23,693) (3,261) (72,446) (54,972) (7,564)
Income tax credit 130 92 13 258 100 14
Net loss (28,241) (23,601) (3,248) (72,188) (54,872) (7,550)
Accretions to preferred shares redemption (89,452) (109,991)
value
Net loss attributable to the Cheche's (117,693) (23,601) (3,248) (182,179) (54,872) (7,550)
ordinary shareholders
Net loss
Other comprehensive
income/
(loss):
Foreign currency translation adjustments, 10,138 1,442 198 7,410 2,016 277
net of nil tax
Fair value changes of amounts due to 47 (245) (34) (300) (254) (35)
related party due to own credit risk
Total
other
comprehensive
income 10,185 1,197 164 7,110 1,762 242
Total c
omprehensive loss (18,056) (22,404) (3,084) (65,078) (53,110) (7,308)
Net loss per ordinary shares
outstanding
Basic (3.56) (0.31) (0.04) (5.57) (0.72) (0.10)
Diluted (3.56) (0.31) (0.04) (5.57) (0.72) (0.10)
Weighted average number of ordinary
shares
outstanding
Basic 33,098,269 77,045,425 77,045,425 32,705,091 76,264,603 76,264,603
Diluted 33,098,269 77,045,425 77,045,425 32,705,091 76,264,603 76,264,603
Reconciliation of GAAP Cost and
Operating Expenses
to Non-GAAP
Cost and Operating Expenses
(Unaudited)
(All amounts in thousands)
For the For the
Six
Three
Months Months Ended
Ended
June June June June
3 3
3 3 3 3
0 0 0 0,
0 0, , ,
, , June June
2023 2024 2024 2023 2024 2024
RMB RMB USD RMB RMB USD
Cost of revenues (806,036) (820,913) (112,961) (1,551,979) (1,574,285) (216,629)
Add: Share-based compensation expenses 2 3 72 6 1
Amortization of intangible assets related to 525 525 72 1,050 1,050 144
acquisition
Adjusted Cost of revenues (805,509) (820,385) (112,889) (1,550,857) (1,573,229) (216,484)
Selling and marketing expenses (16,943) (19,342) (2,662) (47,755) (41,661) (5,733)
Add: Share-based compensation expenses 614 1,025 141 9,673 3,632 500
Adjusted Selling and marketing expenses (16,329) (18,317) (2,521) (38,082) (38,029) (5,233)
General and administrative expenses (19,567) (27,745) (3,818) (49,694) (61,753) (8,497)
Add: Share-based compensation expenses 1,654 8,325 1,146 15,355 22,146 3,047
Listing related professional expenses 3,176 5,537
Dispute resolution expenses (3) - 2,355 324 2,355 324
Adjusted General and administrative (14,737) (17,065) (2,348) (28,802) (37,252) (5,126)
expenses
Research and development expenses (11,569) (9,128) (1,256) (31,303) (18,525) (2,549)
Add: Share-based compensation expenses 110 496 68 8,775 1,333 183
Adjusted Research and development (11,459) (8,632) (1,188) (22,528) (17,192) (2,366)
expenses
Total cost and operating expenses (854,115) (877,128) (120,697) (1,680,731) (1,696,224) (233,408)
Adjusted total cost and operating (848,034) (864,399) (118,946) (1,640,269) (1,665,702) (229,209)
expenses
(3
) represents expenses incurred by Cheche in connection with settling a dispute with a certain security holder
,
which
are
not directly related to the core operations of
Cheche's
business.
Reconciliation of GAAP to Non-GAAP Measures (Unaudited)
(All amounts in thousands, except for share data and per share data)
For the
Three For the
Six
Months Ended Months Ended
June June June June June June
3 3 3 3 3 3
0 0 0 0 0 0
, , , , , ,
2023 2024 2024 2023 2024 2024
RMB RMB USD RMB RMB USD
Net
loss (28,241) (23,601) (3,248) (72,188) (54,872) (7,550)
Add: Share-based compensation expenses 2,380 9,849 1,355 33,875 27,117 3,731
Amortization of intangible assets related to acquisition 525 525 72 1,050 1,050 144
Listing related professional expenses 3,176 5,537
Change in fair value of warrant 104 (2,908) (400) 127 (3,376) (465)
Changes in fair value of amounts due to related party 2,075 1,555 214 3,836 3,286 452
Dispute resolution expenses - 2,355 324 2,355 324
Adjusted net loss (19,981) (12,225) (1,683) (27,763) (24,440) (3,364)
Accretions to preferred shares redemption value (89,452) (109,991)
Adjusted net loss attributable to Cheche's (109,433) (12,225) (1,683) (137,754) (24,440) (3,364)
ordinary shareholders
Weighted average number of ordinary shares used
in computing non-GAAP adjusted net loss per
ordinary share
Basic 33,098,269 77,045,425 77,045,425 32,705,091 76,264,603 76,264,603
Diluted 33,098,269 77,045,425 77,045,425 32,705,091 76,264,603 76,264,603
Net
l
oss per ordinary share
Basic (3.56) (0.31) (0.04) (5.57) (0.72) (0.10)
Diluted (3.56) (0.31) (0.04) (5.57) (0.72) (0.10)
Non-GAAP adjustments to net loss per ordinary
share
Basic 0.25 0.15 0.02 1.36 0.40 0.06
Diluted 0.25 0.15 0.02 1.36 0.40 0.06
Adjusted net loss per ordinary share
Basic (3.31) (0.16) (0.02) (4.21) (0.32) (0.04)
Diluted (3.31) (0.16) (0.02) (4.21) (0.32) (0.04)
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SOURCE Cheche Group Inc.
