Ladies and gentlemen, thank you for standing by for Autohome’s Fourth Quarter and Full Year 2014 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 Cara O’Brien, of FTI Consulting. Ms. O’Brien, you may begin. Cara O’Brien: Thank you operator. Hello everyone and welcome to Autohome’s fourth quarter and full year 2014 earnings conference call. Earlier today Autohome distributed its earnings press release and you can find a copy on the company’s website at www.autohome.com.cn. On today’s call we have Mr. James Qin, Autohome’s Chief Executive - After their prepared remarks, James and Nicholas 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 U.S. 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 the public filings with the SEC. Autohome does not undertake any obligation to update any forward-looking statements except as required under applicable law. The earnings press release in 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 will now turn the call over to Autohome’s Chief Executive Officer, Mr. James Qin. James?

Thank you Cara and hello everyone. Before we begin, let me wish you a very happy and prosperous New Year of the [Foreign Language] So we’re very excited to be here today as we delivered another fantastic fourth quarter and full year of 2014 performance, once again exceeding our guidance. We’re also excited about, as we enter 2015 we said we’re past the first quarter. Overall 2014 was an important year for all of us at Autohome, if 2013 was the year where we successfully diversified into the dealer Yellow Page business. Then 2014 was the year we became transaction platform centric, as this was our first year where more than 50% of our revenue came from the dealer network, and we also established Autohome Mall. And as I looked through 2015, I expect 2015 will be the year when we continue to expand our transaction platform, and engage our users with new types of mobile products and online experiences. Fourth quarter and the full year 2014 marked a new records for Autohome, with revenue net profits and the cash balance outreached historical high levels. Net revenues in the fourth quarter accelerated significantly to RMB739.1 million, with 91.5% year-over-year increase. For full year 2014, we achieved a new height exceeding 2.1 billion with year-over-year increase of more than 75%. Net income in the fourth quarter 2014 more than doubled, increasing 103% year-over-year to almost a RMB215 million, on a full year basis it increased 64.1% year-over-year to RMB almost a RMB750 million. And net cash provided by operating activities in the fourth quarter 2014 increased 51% year-over-year to RMB487.2 million. We had this in 2014 with cash and cash equivalents and term deposit of RMB2.77 billion on hand. These outstanding results were made possible by our great execution and proved…

Okay, thank you James, and hello everyone. I’m really excited to report earnings this quarter and proud of the teams at Autohome who delivered these results. Let me now go through the fourth quarter and full year 2014 results in more detail. Note that I have referenced RMB only in these discussions, so that can find a equivalent US dollar numbers in our press release, issued earlier today. For 2014, we witnessed strong growth across the board, and we are especially pleased with the growth of our dealer Yellow Page business, as this was the first year we crossed the 50% contribution in the dealer business. Also, we ended 2014 with a spectacular quarter, while, continuing the strong momentum into the first quarter 2015. There are two key drivers propelling our business. First and foremost is strong dealer business, as dealers are starting to shift their budget to online and therefore to Autohome and we are getting a bigger share of wallet from them. In this area, we delivered on our promises during the IPO and ended the year not just on track, but well ahead of our guidance. The second driver for both the quarter and the full year, has been an effort to turn into a transaction platform. We are especially pleased with the trials over 2014 that have and beat the generated greater returns for automakers, dealers, and users, and eventually driving our own broad based revenue growth. Turning to the specific of the fourth quarter, during the quarter we performed well against all key financial parties, with net revenue increasing 91.5% to RMB739.1 million, from RMB386 million in the corresponding period in 2013. Putting this down, automaker advertising services revenue increased 65.6% to RMB336.5 million, from RMB203.2 million in the corresponding period in 2013. Dealer Yellow…

We will now begin the question-and-answer session. [Operator Instructions] Your first question comes from Amanda Chen from Morgan Stanley. Your line is open, please go ahead.

Congratulations on the strong quarter. I have three questions if I may. My first one is regarding your strong revenue growth this quarter, we saw every business line, enjoyed a very faster growth. And do we understand that you’re being - here this year in existing markets and also the new markets. Could you please give us more colors on why we can interest such high growth rate this quarter? Is that because of PC, other things commercial contributions finally kicked in? Or is that because we - over high quality sales leads or any other reason? Thank you.

Hi Amanda this is James. Let me try to crack this question first up maybe, Nicholas can add more color on that. I think my understanding is, in Q3 we introduced a CPL product, but it’s more in the tight space. And in Q4 we put it in full gear. So I think that probably, I would think that is the number I asked you about our 2014 first quarter growth, so that’s number one. And secondly, probably is the mobile traffic, because we have a significant sort of accelerated growth rate in our mobile traffic in Q4. I believe that did play a relevant role, but probably not as much as you expected.

Yeah, adding to view on that is also, I think we have done a lot of transaction throughout 2014 and this definitely has added value to the users, the OEM’s and the dealers. So I think that in turn we get rewarded on the fact that you can see that we have strong growth in those OEM advertising business, the dealer advertising business as well, and also as far as dealer subscription and the more dealers signing up with us. So I think this is yeah, it’s interrelated.

So do you expect this growth trend can continue in 2015?

I think as you can see that we can be - it’s like having a very strong Q4 2014, we can see that we also have strong momentum getting into Q1. I think just on the guidance that we have given for Q1, the year-on-year growth is between 67.5% and 76%, for reference Q1 2014 we grew at 64%.

So we definitely see the strong trend have been carried into the beginning of the year. And we definitely are very excited about the Q1 outlook. I think with respect to the full year, I will say we remain cautiously optimistic about our overall performance because of a couple of things. First is, our transaction focus in 2014 actually build a very strong foundation and that attract more car buying traffic, the real car buying traffic. So that will definitely result in more budget allocation from both OEM side and dealer side. And so that trend will continue. Secondly, as the mobilization of our mobile advertising will definitely speed up in 2015 and, because in the future, we continue to monetize the dealer subscribers and we introduced new product and services to cover their more needs, for example the I-Autohub platform. And in 2015 we start to monetize, at least to really monetize our used car business. I think all those things add together will give us a more confidence about having a good result in 2015.

And my third question is regarding your [indiscernible] application. Do you have any operating metrics that you can share with us at the coming stage? For example, the active users and also orders number and so forth. And also in the long term, do you think that after sale market would be more from, I think, or has more potential of them as –?

I think this is firstly, it’s a very early stage development, and we’ll definitely report more of this as we see progress, and this is the first time trial that only started in Beijing. And the reasonably start to enter into this business is with the [indiscernible] there has a promising future for the aftermarket services and industry, so that’s why we start. So with that, I think in the future down the road revenue, get back to you with more detailed information, at this time probably it’s too early for us to share any confident and mature information to you guys.

Your next question comes from Vivian Hao from Deutsche Bank. Your line is open please go ahead.

I have three questions. My first one is, could you please elaborate a bit more on what are the key drivers for such a strong dealer subscribers growth, and also ARPU in fourth quarter, is both of them have a remarkable 17% quarter-over-quarter improvement. Also based on this, how should we expect the ARPU trend going into next year, given our deepening paying subscriber base? My second question is related to the first one, maybe I’ll wait for you to finish the first question, then I’ll ask the second one.

Vivian, so I think your question is on the growth of the dealer subscription business. I think as you heard from us just now, the dealer subscription in Q4 went up by 99.4% of which 69.4% is due to the volume growth. I mean the number of subscriber has increased. And then the ARPU was 17.7% that ARPU increase comes from two areas. One is that EBITDA price increase in the start of the year, but the pricing only kicked in when dealers renewed the contract. So that’s one, so there’s the second one is that also some of the dealers upgrade to the premium package, which offer them additional services.

Maybe I can add another two small things, there’s a couple of things we can increase our ARPU for three things. Mainly because of Nicholas has said, is to up sell from, upgrade from one level up. The second one is the regular price increase, because when dealer renew the contract, most of them renew their contract yearly. When they renew a yearly contract, then for the same package the price will have increased year-over-year, so that’s the second factor. The third factor actually is the operation efficiency, because in the past, when we do the annual renewal of the contracts, sometimes there will be a week, or maybe even two weeks, lap between the contract and the contract kick in. So that’s what we’ll be one or two week’s revenue loss, and ever since 2014 we started to pay attention to those kind of revenue true-ups. And we improve - we have a specific program to improve that, so right now we have seen some of the results showing in 2014. I think in the beginning of 2015, you actually can see a little bit better result because a lot more of our annual contract as in December 31st.

This is very thorough. Very quick follow-up on the contract renewal, I mean the price increase, what’s the magnitude of this increase? Is that contributing like 10%, or how much percentage of the total increase year-over-year, yeah?

I think 10% is a rapid number we can use, yeah.

Okay. My second question is related to the first one, just wondering if there’s any contribution from the new revenue stream based on the cost per lease model, if there is any, what is the percentage contribution? And also, what is the current adoption rate or adoption intention from our current existing dealer base? And also, how’s the conversion rate has been trending in fourth quarter?

Okay. I think you’re asking the CPL for dealers right? The CPL for dealers, right now we have a trial in five cities and in Q4 there was an - run that about half, like about 50 dealers and in those are five cities. And we have seen very satisfactory results so far. We believe we should be able to skew up that business in the near term.

So currently, it’s still not material contributions to our P&L, I suppose?

Yes, I think the currently the CPO has put up, we have not sorted yet, they’re still currently on track.

In some, your last assessment was right, it has not materialized yet.

Okay. Very quick final question. So for our ecommerce business model, this time in this quarter we had 200 million TMB, do we - have we monetized on this at all, or what do you think is exactly the monetization model for the ecommerce side?

Let me answer that. I think basically some of the business, some of the revenue generated from Autohome model would be like this, a OEM pays us advertising dollars. And sometimes with the subsidy with the transaction subsidy, we pass through that transaction subsidy to consumers. However we cap the advertising dollars for ourselves in order to promote the sales event on the Autohome Mall. So we definitely generate some revenue on the Autohome Mall property.

And that has captured in the dealer advertising business.

Understood, the same as last quarter.

Yes the treatment is the same, yes. But just as you can see that we overall, the dealer advertising has very strong growth. Especially strong in, Q3 was strong, but Q4 is even stronger.

So quickly basically put everything in hand. So the CPL product for dealers has not been ticked in yet. The CPL for OEM has some effect in 2014 Q4.

[Operator Instructions] Your next question comes from the line of Fei Fang from Goldman Sachs. Your line is open. Please go ahead.

Hi James and Nicholas, this is Fei on behalf of Piyush. I wanted to add our congratulations to your impressive results. For the used car business, can you elaborate on the perspective monetization model? Then I have a follow-up question, thank you.

For our used car business, currently what we are thinking, we currently have approximately 5,000 active sellers those are the commercial sellers on our site. And we plan to start to monetize by the ways of loosing and advertising in 2015. So that’s probably the number I can actually give you at this point.

That’s great. And if we can just switch gear here, just overall the top line has been obviously very strong in the quarter and you have achieved operating leverage across most of the major cost lines. The only exception seemed to be that E&A line, which seemed to accelerate to 49% year-on-year, so just wanted more perspective, is that a one off? And also more broadly, as you kind of accelerate your revenue growth into next year, how should we think about the cost structure? Thank you.

I think you’re asking for the, Fei you are asking for the cost of the margin right?

Yes Nicholas.

Yeah, I think if you look at 2014, we have a very strong performance overall in terms of both revenue growth and margin. I think top line growth was 79.3% year-on-year, and non-GAAP net margin, we came in for the whole year 38%. But we do not provide full year bottom-line guidance, but let me give you some, but I can give you some colors. I think if you look at it, our profit end margin levers has remained leading in the industry, way ahead of the peers. And this has been achieved, despite the fact that we have been making many investment, in particularly during 2014 in areas like sales and marketing expenses, the Aladdin transaction platform, mobile products and our used car business. But what we have done was making the right move at the right time, and investing for the future. But also delivering appropriate returns to our shareholders, some of the investment if we have not invested last year, I think it will be even more expensive this year. Like for example mobile, so I think we believe that our investment will be able to continue to bare fruits at the right - with the right strategies and the team to execute the right thing. You can see that on the gross margin-wise, we have operating leverage I think, in fact our gross margin has gone up from 79.3% in 2013 to 82.2% in 2014. So if we look at our existing business, I think we should be able to run at 30 plus non-GAAP net margin. And I think you also mentioned just now on the G&A, G&A percentage as revenue comes down, because from a revenue cost and point, it increased much lower than the revenue increase.

Okay that’s helpful, thank you.

Just to add one more for Fei. I think Fei you asked the first quarter G&A percentage right?

That’s right.

Yes we did have a fall in first quarter. I didn’t know that exact number, I think our finance team can give thorough analysis on that. But I think that definitely play a small part on that because it was pretty expensive.

Our next question comes from Ella Ji from Oppenheimer, your line is open, please go ahead.

Hi, good evening management and congratulations on a strong quarter. My first question is relating to the OEM budget for 2015, as we continue to see, and you also talked about there’s continuing shift to online as a attachment that certainly benefits your business. So as we look into 2015, as you talk to the OEM, were the type of online budget growth are you seeing overall on the market? And then relating to that, in the past you have been successfully increase your price of online advertisement. Do you think you can maintain the same rate of price increase in 2015, that’s my first question? Thank you.

I think the, I’ll probably address the question in terms of 2015 OEM advertising revenue growth. I think it’s in the 2014 and 2015 we had seen the China’s new car market grow at a very healthy rate, probably around 1.5 times the GDP growth. So this is probably is the only large OEM, our large manufacturing sector, which has a healthy growth and market, very healthy market. So we are very lucky to be part of this industry at this point. And so both in 2014 last quarter and 2015, we have seen relatively satisfactory new car growth. In the first two months of 2015, I think the new car growth rate published by, at least manufacturers fell 10%, which is 1.5 time of the GDP growth. So I think we feel pretty good about that. Around the OEM advertising side, what we have seen is, in 2015 the OEM are going to ship more and more percentage of the budget on mobile - on the mobile platform. And also with the effect of more and more China’s OEM are paying attention to some of the retail channel, as effective channel to do publishing campaign. So from our point of view with all those factors together in 2015, probably we are going to see a very high growth of the OEM advertising allocation of mobile media, which actually plays to our strength which, because we have more than 7 million viewers at our mobile platform. But at this point our mobile OEM advertising only accounts for probably less than 10% of our total OEM advertising spend on Autohome’s website. So that I think that is helpful for us. So in the whole year of 2015 we’re pretty, we feel pretty good about that. With that, I think the advertising, the banner ads driving and the banner ads price increase in 2015 probably would be at last important for us. We definitely will have a price increase because I hope, just even on the PC platform we have seen the DAU growth and also the advertising spend growth our platform. So that give us a rational reason to increase our price, however I think our OEM advertising revenue growth side, we’re going to pay more attention on the mobile platform. Hopefully I answered you.

And then second question is you have seen some of your competitors recently incorporating with some larger channels, internet channels. So can you also talk about your thoughts and then are you also opening to corporation or you continue to operate as an independent channel?

We have better practice, we do not comment on our peers, or we do not speculate on those still evolving event in our industry, probably I think we are, we know probably as much as you do on those. I think with regard to Autohome, we have been, and always will be open-minded for all kinds of collaboration. And in fact on the other, PC Aladdin, that is a evidence of us collaborating with one of the larger internet players in China. And going forward, we are going to do more collaboration with all those large companies. And I think it’s very important for Autohome to really build up our own value proposition, we create more value to the consumers, and also we create more value to the China’s auto OEM car makers and dealers. I think that is the sort of the entry barrier Autohome can build.

Lastly, quick question, could you update us with the total headcounts you have as of end of '14?

At the end of ‘14 we have about 1,770 headcounts.

[Operator Instructions] Your next question comes from [indiscernible] Capital. Your line is open. Please go ahead.

James and Nicholas I have couple of questions. One question is related to your expansion. So you’ve mentioned that you’re expanding into a new geographic market like Tier 3, Tier 4 cities. So would you please give us some colors regarding those expansions, such as how many cities you have already covered and what is the goal at the end of the 2015. That is the first question, I will have a follow-up after this.

So in terms of the number of cities we covered, I think we covered 360 cities and I think if you ask me, I think probably your question is like how many cities we cover by people on the graph. I think that’s roughly about a 140 –

150 where we have underground support, and like what James said we had 366 in total coverage, so the rest is recovered through the - sales.

And related to your ecommerce business at Autohome Mall, and do you mind to give some colors on how many OEM incorporation and what are the sequences involved? And how many mall growth etcetera, etcetera?

I think in the whole last year, we have incorporated, we have 66 brands. And also there’s about 864 - I think in the whole of 2014 we worked with 80 car brands and the car orders about 1,410 car orders. And yeah, so we do work with cooperative wide range of brands. I think this year what we would do is like, we’ll make the Autohome even more active. So we would have what we call the monthly event, and also there is multi-brands, and also the other one what we call flash sales. And then the other one is what we call feature sales, feature sales is more specific on, that’s on some particular brands or particular model. So we have, so what you could see is that in 2015 the Autohome Mall will be more active than in 2014, because 2014 was the year where we triumph, so we definitely do gain quite a bit of experience over the whole of 2014 and we’re making it more active in 2015.

Okay, so that’s very helpful, for your new way of doing the ecommerce like a feature sales and the flash sales, and what are the revenue model, is that still going to be advertising model?

I think from the financial reporting point of view I would assume in 2015, it will still show up in the dealer advertising revenue, advertising services. So that is the model and we had, so basically the model is that we got two different type of money. One is in terms of OEM buying advertisement from Autohome Mall to promote either the flash sales or feature sales. The only difference between the flash sales and feature sales is that feature sales probably lasts around a month, and it’s only designed for one OEM car maker. While the flash sale is sort of a flash sale for three, four days, but it is one of our, everyone can join, so that’s revenue for one. And secondly is - sometimes the car makers keep the transaction subsidies through Autohome. So those are the two major money we get from OEM.

Your next question comes from Ming Zhao from UBS. Your line is open. Please go ahead.

Good night James and Nicholas, congratulate on the strong quarter. So I have a few questions, first of all it’s regarding the CPL product for OEM advertisement, which James you just mentioned. Could you give us more color on that part of the business?

So in the past if they come in for say, I do not have a brand promotion these, I only want to generate sales feed for all my dealers. In the past, the only thing they advise is by banners, currently they can buy a new commercial product, which we price based on the number of qualified sales feed we generate for that, so that’s a new CPL product, it does not occupy the traditional banner space.

So could you share with us more from operation data on like adoption rate or like revenue contribution, something like that?

So currently, we do have those kind of numbers.

Okay. So my second question regarding the dealer advertising business, which is very strong. So could you share with us more data on like the number of advertisers or the volume of as compared to like last quarter, or compared to Q4 last year?

In Q4, versus Q3, in terms of dealer advertising, and in terms of brand, in Q3 there were about 82 brands or models, 82 brands the dealers worked with us. And in Q4 there were about 100, so that’s –

And this means brand or the car brand?

Yes, so basically more brands dealers start to join the advertising services with Autohome.

Okay. So how should I understand the growth? Is it more come from more dealer signing up, or dealers placing more ads, each dealer placing more ads on your platform? Which one’s more significant?

I think it’s the share of wallet has gone up, is more significant, because if you look at the number of brands increased. I think Q4 versus 2014 versus 2013, we went up by about 29%, but you can see that our dealer advertising grew 100% plus. So that means the rest of the increase is really coming from the same advertiser buying more, so the share of wallet has gone up.

So in my mind, I probably will recommend you guys to look at the dealer advertising and the dealer subscription as one business, rather than split into because, so for example, for the dealer advertising business, as I’ll give you one example. We have a CPL product for dealers, and as I mentioned to you, you should not, in fact it has now been kicked in 2014, we start to launch that in 2015. We also have an up sale in the subscription business, I think those business from Autohome point of view generate a similar affect, which is per sales lead we generate more revenue. And then from the dealer point of view, it achieved deeper purpose, the up sale of the, the premium package of the subscription will give them in pivotal time, more sales lead compared with the old non-premium service. However, on the CPL front, we can generate a lot more sales leads with very short period of time. It’s basically at the end of the day, they want to get in sales in the last week of a quarter end, they can use a CPL product. So I think we start to offer more products, and from Autohome point of view is to generate more revenue on the same number of sales lead perspective. So, and we at the same time, we also increase number of sales we generate from Autohome cycle. So I will really recommend you guys to look at the dealer advertising and the dealer subscription as one business. Just unfortunately different, we sign contracts in different ways, so it adds up in the financial report differently.

Okay, thank you, very helpful. So my final question is about the advertisement we had, as you’ve just mentioned. So we also noticed that the automakers such as BMW and Ford are among the early adopters of WeChat advertisement. So I just want to know your view or your comment on this. Is this a, what would be the impact on your business? Will this actually be a negative impact as a dilution of wallet, or is it actually a positive in fact that it increased the online migration of marketing budget by the OEMs?

It’s definitely leaning towards your second point, which is creating more awareness among OEM, the key decision makers among OEM about the mobile as a channel to promote their product and end brands. So I think mobile advertising public would be one of the few bright spots in the media landscape in 2015. And also, there was a couple of advantages for the mobile advertising platform, one of them would be to deliver the right message, to the right person at the right time. This was a very important and Autohome can generate a similar effect. So I think for more and more China’s Automaker adopt WeChat as one of the platform, that’s definitely a good news for us.

Thank you there are no further questions at this time. I will turn the conference back to management for closing comments.

Thank you very much for joining us today, we appreciate your support and we look forward to updating you on our first quarter 2015 conference call in a few months time, actually in two months time. In the mean time please feel free to get in touch with us if you have further questions concerns or comments. So before we end our call I would like to wish everyone a happy festival - because tomorrow would be - so we’re just happy probably Eastern Valentine’s Day tomorrow, wish everyone a happy and enjoy a good night with your family. With that I would end our call. Thank you.

This concludes today’s conference. Thank you everyone for your participation.