Full Truck Alliance Co., Ltd. Q1 FY2025 earnings call

• Focused on enhancing operational efficiency and reducing logistics costs using digitalization and smart technologies, with total field orders growing 23% year-over-year.
• Average shipper MAUs reached 2.76 million in the first quarter, up 28.8% year-over-year; total shipper members exceeded 1.1 million, and order contribution from direct shippers increased to 51%.
• Upgraded trucker credit rating system, optimized trucker membership benefits, and refined premium cargo bidding algorithm; trucker membership at all-time high, next month retention above 85%, fulfillment rate reached 39.2%, up nearly 6 percentage points year-over-year.
• Transaction service revenue up 51.5% year-over-year due to order growth and enhanced monetization, with monetized order penetration rates surging to 85.2% and average monetization amount per order improving.

Total net revenues for the first quarter of 2025 reached RMB2.7 billion, up 19% year-over-year. Transaction service revenue saw a significant acceleration, increasing 51.5% year-over-year to RMB1.05 billion, accounting for nearly 39% of total revenues. Freight brokerage service revenue in the first quarter was RMB965.7 million, remaining nearly flat. Freight listing service revenue was RMB234.9 million, up 10% year-over-year. Value added services revenue was RMB452.8 million, up 13.5% year-over-year. Cost of revenues decreased by 32.3% from the same period in 2024. Sales and marketing expenses increased, while general and administrative expenses and R&D expenses decreased. Non-GAAP adjusted operating income surged by 171.5% year-over-year to RMB1.32 billion, and non-GAAP adjusted net income increased by 84% year-over-year to RMB1.39 billion.

• Second quarter 2025 total net revenues expected between RMB3.06 billion and RMB3.12 billion, representing a year-over-year growth rate of approximately 10.6% to 12.9%.
• Board approved an additional $125 million investment in Plus PRC, expecting to maintain no less than 52.8% of equity interest and 56.2% of voting rights in Plus PRC, and to consolidate Plus PRC's financial results into consolidated statements upon completion of investment.

Q: About the fulfilled orders that were very healthy at 23% in the first quarter, outperforming the industry significantly. What are the key factors? And since the tariff impact came in April, have you seen any impact on your order volumes and how should we think of the full year volume expectations for 2025?

A: Despite traditional seasonal slowdown during Chinese New Year, fulfilled orders grew 22.6% y-o-y. Key factors include expansion of high-quality user base, effective execution of refined operational strategies, and breakthroughs in new business. No significant impact from tariff adjustments observed yet. Still optimistic about 2025 order volume outlook, focusing on strengthening long-haul freight operations.

Q: Regarding the fulfillment rates which continued to increase in the first quarter, reaching 39.2%, a year-over-year improvement of 5.7 percentage points and a quarter-on-quarter improvement of 1.7 percentage points. What are the main drivers behind the significant increase in the fulfillment rates over the several consecutive quarters?

A: Fulfillment rate improvement due to user structure optimization, upgraded operational strategies, and enhanced matching efficiency. Improved user mix, refined operational strategies unlocking greater efficiencies through user life cycle, and strengthened shipper loyalty contributing to higher fulfillment rates.

Q: Regarding shipper users. In the first quarter, the number of monthly active shippers increased about 29% to 2.76 million. What are the main reasons behind this high growth? And if we look at overall trends over the past three years, we have seen an accelerated growth of the shipper users, what are the primary reasons for that?

A: Growth driven by targeted outreach through comprehensive marketing system (digital and offline), refined operational strategies improving user engagement and retention. Long-term growth due to platform's accumulated value, enhancing user ecosystem, and robust credit rating and dispute resolution system minimizing transaction risks.

Q: How was the truckers activity level in the first quarter and has order acceptance frequency of active truckers on the platform further increased. Have you noticed the rapid growth in the number of trucker users given a relatively mix job market and therefore, the supply demand relationship between truckers and shippers becoming increasingly imbalanced?

A: Average number of monthly active truckers remained above 3 million, with truckers' engagement and transaction frequency improving. Structurally stable supply of medium and heavy-duty truckers due to high entry barriers. As order volume grows, trucker vehicle utilization and income expected to improve, with supply-demand dynamics becoming more balanced.

Q: In the first quarter, transaction service revenue increased by 51.5% year-on-year, continuing its rapid growth. What are the main drivers behind this, what were the focuses is for your commission strategies this quarter?

A: Driven by expanding business scale and improving order quality. Commission orders growing rapidly with increased coverage, and monetization per order improving. Focus on further expanding commissioned cities, transitioning to order-based exemption model for higher monetization efficiency, and refining commission strategies to enhance user experience and drive sustainable growth.

Q: About what are the key considerations behind the anticipated increase in investment in Plus PRC during this year, and what is the current progress of Plus PRC's business?

A: Autonomous driving technology at inflection point from technical validation to large-scale commercialization. Key consideration is seizing opportunity by scaling up investment in Plus PRC. Plus PRC's intelligent trucking fleet has begun delivering freight services to enterprise clients, with joint R&D initiatives with leading OEMs.

Q: About AI. So what are the main applications of AI on the platform's product functionalities currently and what are the plans for the AI development in the future?

A: Currently focused on intelligent dispatching, with AI-powered Truck Finder helping shippers locate right truckers more effectively. Plans to substantially increase AI-related investments and explore use in order posting, customer services, and route planning to further enhance operational efficiency and deliver high-quality services.