Token Cat Limited Q3 FY2021 earnings call

Management Statement and Operational Highlights:

• CEO Wei Wen mentioned that despite revenue contracting by 38.9% Y/Y to RMB61.1 million due to pandemic-related offline auto show cancellations, the company narrowed net loss attributable to shareholders by 10.7% Y/Y to RMB36.8 million.
• The company is forging ahead with online initiatives, streamlining cost base, and is expanding into EV manufacturing to capitalize on rising consumer demand for electric vehicles.
• Deputy CFO Chenxi Yu discussed financial results, noting net revenues of RMB61.1 million in Q3, cost management leading to narrowed net loss, and gross margin improvement to 76.6% in Q3 2021 from 72.1% in the same period last year.

Segment Performance:

• Offline marketing services: Generated net revenues of RMB33.1 million in the third quarter, representing a 59.9% year-over-year decrease. The number of auto shows organized were reduced to 65 across 55 cities compared to 152 auto shows in 107 cities in the third quarter of 2020.
• Virtual dealership and online marketing services: Saw net revenues increase by 72.6% year-over-year to RMB26.6 million during the quarter, primarily due to continuous expansion of collaboration with Webank.

Guidance:

• The company expects net revenues in the fourth quarter of 2021 to be between approximately RMB70 million and RMB80 million, representing a year-over-year decrease of approximately 57.8% to 51.7%.
• This forecast is primarily attributable to the estimated decline in the expected number of offline events in Q4 2021 due to COVID-19 pandemic and global microchips supply shortage impact on the auto industry.

Risks:

• Challenging macro environment with COVID-19 flare-ups and global chip supply shortage constraining auto production.
• Uncertainty around future number of offline events due to ongoing pandemic conditions.

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