Ladies and gentlemen, good day, and welcome to Full Truck Alliance’s Fourth Quarter and Fiscal Year 2024 Earnings Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Mao Mao, Head of Investor Relations. Please go ahead.

Thank you, operator. Please note that today’s discussion will contain forward-looking statements relating to the company’s future performance, which are intended to qualify for the safe harbor from liability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guarantees of future performance and are subject to certain risks and uncertainties, assumptions and other factors. Some of these risks are beyond the company’s control and could cause actual results to differ materially from those mentioned in today’s press release and discussion. A general discussion of the risk factors that could affect FTA’s business and financial results is included in certain filings of the company with the SEC. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today’s call, management will also discuss certain non-GAAP financial measures for comparison purpose only. For a definition of non-GAAP financial measures and a reconciliation of GAAP to non-GAAP financial results, please see the earnings release issued earlier today. Joining us today on the call from FTA’s senior management are Mr. Hui Zhang, our Founder, Chairman and CEO; and Mr. Simon Cai, our CFO. Management will begin with prepared remarks, and the call will conclude with a Q&A session. As a reminder, this conference is being recorded. In addition, a webcast replay of this call will be available on FTA’s Investor Relations website at ir.fulltruckalliance.com. I will now turn the call over to Alexander, Chairman and CEO, Mr. Zhang. Please go ahead, sir.

[Foreign Language]

Hello, everyone, and thank you for joining us today on today’s fourth quarter and fiscal year 2024 Earnings Conference Call. In the fourth quarter, we made significant strides in advancing the digital and intelligent transformation of the logistics industry, substantially contributing to the reduction of social logistics costs. Amidst a dynamic macroeconomic landscape, we capitalized on our robust network effects and unparalleled transaction efficiency to further supply traditional off-line logistics transaction model accelerating our growth flywheel. As a result, our total fulfilled orders in the fourth quarter increased by 24% year-over-year, once again outpacing the overall industry’s growth and concluding 2024 on a strong note.

[Foreign Language]

Throughout the quarter, we remained dedicated to delivering user value, propelling key operational metrics to new highs. In terms of user growth, we made long-term investments in brand enhancement to attract new users, aiming to capitalize on the potential of the 30 million small and medium-sized direct shipper market. Our average monthly active shippers surpassed 2.93 million in the fourth quarter, reflecting a remarkable year-over-year increase of more than 30%. Our user structure also reached significant milestones, demonstrating our ability to drive rapid user growth while strengthening user engagement. For the first time in our history, our direct shippers accounted for 50% of total fulfilled orders and the number of shipper members exceeded 1 million by the end of fourth quarter. In terms of trucker supply and fulfillment efficiency, the number of active truckers fulfilling orders through our platform over the past 12 months surged to 4.4 million with the next month retention rate of truckers who responded to others exceeding 85%. Meanwhile, truckers board share of online transactions has continued to grow. Our value proposition of more orders, enhanced the pickup efficiency and higher earnings has gained widespread recognition within the trucker community. We have also notably improved the truckers ecosystem and matching efficiency by implementing trucker credit ratings, priority access and our premium cargo bidding mechanism enhancements that drove our fourth quarter fulfillment rate to 37.5%, up 5.4 percentage points year-over-year. Regarding monetization, we continue to smoothly tap into our platform significant monetization potential this quarter, fueling robust revenue growth. These achievements reaffirmed the unique value we created for both shippers and truckers.

[Foreign Language]

Supported by these operational accomplishments, we delivered a record-breaking financial performance for the quarter. Our total net revenues grew by 32% year-over-year, reaching RMB3.17 billion. Notably, transaction service revenues remained the primary growth driver, surging over 70% year-over-year to RMB1.16 billion and contributing 36% of our total net revenue. Non-GAAP adjusted operating income surged 142% year-over-year to RMB963.3 million, and the non-GAAP adjusted net income grew by 44% year-over-year to RMB1.05 billion.

[Foreign Language]

Before I wrap up, I’d like to share some thoughts about the technology trends shaping our industry. As a pioneer in advanced logistics productivity, we remain committed to embracing technology-driven innovations. Currently, we are leveraging our unique user scenarios and high-quality data to explore AI applications that will potentially enhance the efficiency of freight matching and tracker capacity scheduling. We aim to empower truckers to improve fulfillment efficiency and earnings while reducing logistics costs for shippers ultimately creating enduring value for the entire industry. Thank you all once again. Now I’ll pass the call over to our CFO, Simon, who will provide an update on our fourth quarter’s business progress and financial results.

Thank you, Mr. Zhang, and thanks, everyone, for joining our earnings conference call today. I will now provide an overview of our operational highlights and financial performance for the fourth quarter of 2024. Let’s start with our operational performance this past quarter, which was highlighted by significant breakthroughs in expanding our user base, enhancing efficiency and improving monetization capabilities. We also achieved a remarkable 24.3% year-over-year increase in fulfilled orders to 56.9 million in the fourth quarter. This growth was primarily driven by our rapidly expanding shipper user base and the increased fulfillment efficiency stemming from shifts in our user structure along with the earlier Chinese New Year and other seasonal factors. Building on our third quarter momentum, our fulfillment rate set another new record this quarter, increasing significantly to 37.5%, up over 5 percentage points year-over-year. Notably, the average fulfillment rate of low and medium frequency shippers exceeded 55%, continuing its upward trend quarter over quarter. The other contribution from our low and medium frequency shippers reached 50%, also marking a new milestone. Our increasingly optimized order and user structure, ongoing improvements to our – improvements to our matching ordres, our refined operational strategies collectively drove this quarter’s all-time high fulfillment rate. Our average shipper MAUs increased by 31.3% year-over-year to RMB2.93 million in the quarter, with our average shipper MAU surpassing RMB3 million for the first time in December last year. This strong growth was driven largely by our low and medium frequency direct shippers. Our coordinated efforts across multichannel user acquisition streamlined app interfaces and initiatives supporting new users have significantly improved the new user onboarding experience. Shipper activity remained robust as a result with our shipper member 12-month rolling retention rate consistently exceeding 80% in the fourth quarter. Our trucker side operational performance was equally impressive…

[Operator Instructions] The first question today comes from Ronald Keung with Goldman Sachs. Please go ahead.

[Foreign Language] Thank you, management. We’ve seen the number of fulfilled orders for the fourth quarter was very strong at 24% plus, even outpacing the third quarter growth rate and exceeded overall freight rate market quite significantly. So I want to hear what are the drivers behind this acceleration in the fourth quarter? And based on the order trends so far the quarter-to-date, how do you view order volume growth for the full year of 2025? Thank you.

Thank you, Ronald. Our platform’s order volume continue to grow very steadily in the first quarter. That’s beyond seasonal tailwinds given the impact of earlier Chinese New Year in 2025. There are three key elements, which drove this momentum. And first, we continue to see robust growth in new user acquisitions against the backdrop of rising shipper demand for reduced logistic costs and improve efficiency. We have adopted a dual approach to optimize user – new user acquisition and combining precise online marketing with off-line engagement. Online, we focus on boosting app store promotions and targeted ads to improve our conversion rate. In off-line, we expanded brand visibility and reached more target users with truck stickers and TARP ads. We also ramped up our brand marketing efforts in the fourth quarter by placing billboards in high-traffic locations, such as high-speed rail stations, airports and business districts to connect with direct shippers across multiple touch points. And thanks to these effective news or acquisition initiatives, our shipper MAU surpassed 3 million for the first time in December last year. And for full year 2024, our average shipper MAUs grew more than 30% year-over-year, accelerate meaningfully from the prior year with direct shippers making up a big chunk of growing share. Given the relatively low online penetration rate in the long-haul market, we are confident we can continue to expand our shipper user base at a very healthy pace. Now second, we continue to implement and execute highly effective operational strategies, which help to accelerate auto volume growth. For new users, we focus on improving fulfillment rates for their first three trials. This is achieved by leveraging hands on support from our operations team, offering new users, incentives through various benefits and using WeCom or WeChat engagement to enhance both user retention and all the fulfillment. For active truckers, we upgraded our premium cargo bidding function and introduced a dedicated service section with expanded coverage of all other types. In addition, we fine-tuned our order distribution mechanism based on truckers’ credit ratings, further improving the fulfillment efficiency in matching mid to low-value freight resources. And finally, rapid growth in our new user – new business lines contributed to order expansion. For example, our less than truckload business, again exhibited very strong growth momentum has fueled by optimized pricing strategies and upgraded matching algos. And these improvements enhanced carpooling efficiency for truckers and leading to a notable increase in LTL orders. And looking ahead, we see even more potential for this business to scale up further. As we move into the current year, we remain optimistic in other volume growth of the platform regardless of macro challenges, where our full truckload business will continue to deepen online penetration and expand our market share, meanwhile, we also keep refining our product offerings and operational strategies to strengthen our less than truckload and short-haul services and laying a very solid foundation for long-term scalability. I hope that answers your question.

Yes. Thank you, Simon.

The next question comes from Brian Gong with Citi. Please go ahead.

I am now translating myself. Thanks Hui Zhang for taking my question. I have a quick question on fulfillment rate. In the fourth quarter, the fulfillment rate further improved to 37.5%, up 5.4% year-on-year and 3% sequentially. What were the key drivers behind this improvement? And what operational strategies were implemented to enhance the procurement rate? And what is your expectation for 2025? Thank you.

Thank you, Brian. Our fulfillment rates reached another record high in the past quarter. There are three main contributors to this. First, the continuous user mix improvement has laid the foundation for other quality improvement. In the fourth quarter, the other contribution from direct shippers was around – while it actually hit 50% for the first time in fourth quarter. By nature, these direct shippers are mainly SMEs, which tend to have more stable demand and prioritized service quality over price. So, as a result, they typically contributed to higher fulfillment rates than those professional shippers, such as 3PLs and Brokers. And for example, the average fulfillment rate of our entrusted shipment transactions exceeded 60% in fourth quarter. The subscribers of this program are mainly direct shippers, especially those who newly joined the platform due to the high certainty of the fulfillment. As a result of strong shipper growth, the other volume of entrusted shipment transaction in the fourth quarter grew by over 100% year-over-year, contributing greatly to the overall improvement in our fulfillment rate. In addition, our precision operation strategies are delivering strong results. For instance, the expanding coverage of premium cargo billing functions further boosted truckers’ willingness to respond to others. Our algo-driven precise recommendations more effectively align truckers’ preferences with freight source labels. As a result, the median fulfillment time for truckers dropped to under 10 minutes in fourth quarter. We also implemented additional measures to address duplicate freight listing, including proactively suppressing orders from inefficient professional shippers to prioritize exposure for high-quality orders from direct shippers. And lastly, the ongoing improvement in supply and demand dynamic also positively impacted our fulfillment rate. Apart from seasonal tailwinds, as mentioned before, our continuous improvement on freight quality led to a steady increase in both the number of truckers responding to and fulfilling orders in the first quarter. Meanwhile, truckers wallet share also rose steadily, enhancing the overall sufficiency of trucker capacity and ensuring greater fulfillment stability. Moving forward, we expect our fulfillment rate to continue its steady upward trajectory, driven by ongoing upgrades to our direct shipper strategy, our technological capabilities as well as growing trucker ecosystem synergies. And these factors will create a positive cycle between high-quality orders and sufficient trucker capacity and further boosting our fulfillment rate.

The next question comes from Charlie Chen with China Renaissance. Please go ahead.

Thanks management for taking my questions. I would like to ask some questions regarding the user membership. What was the growth trend for shipper membership in the fourth quarter? And what is the latest update on the 288-Tier mini membership? Thank you.

Thank you, Charlie. We reached a milestone at the end of fourth quarter with the number of active shipper members on our platform basically surpassing 1 million, it’s actually 1.05 million to be precise. The key growth drivers of shippers membership were the optimization of our membership tiering system and our targeted subsidy strategies. So, look at our membership system, our 288-Tier Mini membership, which was launched in early 2024 has unleashed incremental growth contributing most of our new shipper members this quarter. It is different from the existing 688 and 1688 Tier members. The 288 Tiers offer fewer shipping benefits, but at a much lower price, effectively lowering the barriers to entry for new shippers and boosting paying member conversions. This mini membership program is particularly attractive to small and medium-sized direct shippers as it aligns very well with their early-stage shipping needs as they transition to an online business model. Additionally, we introduced targeted subsidies for new user purchasing the mini membership as well as returning users who met certain criteria and further reducing the membership cost and allowing shippers to enjoy benefits such as shipment tracking and freight rate discounts, which in turn enhanced overall user engagement on the platform. And additionally, our operations team is developing a transition model to encourage mini members to upgrade to the 688 Tier, closely monitoring the renewal rates and upgrades to inform long-term member strategies that align with user behavior. On a related note, our gradual conversion strategy for non-paying users is also progressing steadily. For example, while maintaining the current benefit of five free orders per month for existing users, we introduced a 30-day unlimited shipping feature for certain newly registered shippers, and we will closely monitor the positive impact of these feature on membership conversion. And looking ahead, we are confident that by continually optimizing our membership products and fine-tuning our operational strategies, we can further expand our paying member base and enhance overall user engagement with us. Thank you.

Thank you, Simon.

The next question comes from Wendy Zhang with CIBC. Please go ahead.

I will do the translation for myself. The revenue of the freight brokerage service in the fourth quarter grew by 70% year-over-year beating market expectations. What are the main reasons behind that? And what’s going to be the outlook for the business this year?

Thank you, Wendy. The better than expected revenue growth for freight brokerage business in the fourth quarter was primarily driven by the increase in service fee rates and that’s partially offset by a decrease in transaction volume. We have always maintained a cautious approach to freight brokerage. It is one of our traditional business. The value proposition for this business has been to improve user retention and engagement by meeting the invoicing needs of high-frequency shippers as they find it convenient and compliant. And since the publication of the fair competition regulatory review last August, we further turned down the scale of this business to adjust to the potential changes on national VAT requirement. As a result, the total transaction value of freight brokerage business declined both year-on-year and quarter-over-quarter in fourth quarter 2024. Meanwhile, anticipating potential reduction in regional tax rebate, we raised our service fee rates in October last year. By Q4, the overall service fee has increased to about 7% from about 6% a year ago. This strategic adjustment helped to offset the decline in transaction value and then contributing to the year-over-year revenue increase. By the end of 2024, although we received notification from certain local governments on further tax rebate reductions, our proactive rate adjustments as mitigating measures help to fully offset these negative impacts on margins without major fluctuation compared to previous quarters. As we move to 2025, we remain committed to prudent risk management for this business. We continue serving high-value shippers while keeping a close eye on potential changes in tech rebate policies. This way, we can ensure stability and sustainable growth for our business while creating value for our users in the long-term. One important note is that while our total revenue growth is expected to moderate in 2025 due to a strategic adjustment in our freight brokerage business, we expect core transaction service business and its revenue to grow at a strong pace. And thanks to our expanding user base, steadily improvements in monetization efficiency and disciplined cost control, plus the operating leverage, we are very confident in achieving over 60% year-on-year growth in adjusted operating profit for 2025. Thank you.

The next question comes from Ritchie Sun with HSBC. Please go ahead.

My question is about less than truckload business. How did the LTL business progress in fourth quarter? And what are the key differences between LTL car pooling and dedicated line services? Thank you.

Thank you, Richie. Our LTL business maintained its rapid growth trajectory in Q4. That’s mainly due to our deeper penetration into offline markets and the ongoing optimization of our carpooling features. We have been very focused on solving the timeliness issues that often plate the traditional LTL express and dedicated line logistics like multiple loading and unloading, pickup and delivery – and the delivery process. By developing a carpooling model that caters to diversified LTL needs, whether it’s short to medium distance or large trade volumes, we have been able to streamline processes by offering a single loading and unloading and door-to-door delivery service. As a result, we are not only improving transportation efficiency, but also significantly reducing the risk of cargo damage and gaining market share of shippers. Looking at our user conversions, the order volume growth in the fourth quarter was mainly from small and medium-sized direct shippers, over 70% of which migrated from offline LTL dedicated lines and express models based on our survey. Our core advantage lies in our unique door-to-door delivery model and lowering pricing given the massive trucker supply, which is much more efficient than the traditional off-line options. And during the quarter, our product functionality improvements have further contributed to user growth. For shippers, we introduced a feature that allow them to compare prices between full truckload and less than truckload carpooling options making it easier for shippers to see the cost advantage of carpooling. On trucker side, we have successfully rolled out route – dedicated route operations along first 10 routes where the number of truckers opting for carpooling was up by almost 10% compared to the broader market. And going forward, we plan to expand our route operations coverage to further enhance the match and efficiency, which will help us establish stronger operational barriers. We are also exploring opportunities in the LTL dedicated line sector. Right now, we are working closely with LTL dedicated lines to meet their diversified transportation needs and improve the overall shipping experience for our shippers. And looking ahead, we are confident that our well-established operational know-how in FTL will help us strengthen our advantageous position in the large ticket LTL market. We are also committed to boosting industry’s online penetration rate, which will help solidify our competitive edge in the long-haul market. Thank you.

Thank you.

The next question comes from Juan Liao with CITIC. Please go ahead.

Thanks management for taking my questions. My question is, what are the main reasons behind the RMB350 million impairment loss in the first quarter, and any guidance for the impairment in the near few quarters? Thank you.

Thank you. The impairment loss in the first – in the fourth quarter was mainly stemmed from our investment in an e-commerce platform that focused on tire sales and aftermarket auto parts supply chain. And that company has been facing ongoing operating losses. The initial investment into that company was made by another team back in 2018 under a different leadership before [indiscernible] operations were fully integrated. Regarding our accounting treatment for the investment, we have always adhered to prudent and standardized principles and regularly assess the most up-to-date situation of invested companies. And based on all this judgment, we believe that the financial conditions of this investment is beyond recovery. So, as a result, we made a full impairment provision of RMB350 million in the fourth quarter. The impairment was one-off. We are not aware of any other situations that would potentially lead to an impairment of investment in the foreseeable future. Looking ahead, we will continue to maintain a prudent approach to investing while strengthening our post-investment management. Our key go through investment is to create synergies to our freight matching business and contribute to the achievement of our long-term vision. Thank you.

The next question comes from Thomas Chong with Jefferies. Please go ahead.

Thanks management for taking my question. My question is about our growth strategy. How do we ambition our overall development strategy for this year? Thank you.

Thank you, Thomas. We expect the company to maintain steady business growth in 2025 with the year-on-year other volume growth expectation of at least 15%. This growth will be driven by efficient user acquisition strategies and technology, which will deepen the platform’s online penetration and further improve operational efficiency across the entire value chain, accelerating the digitalization transformation of the freight industry. From a financial strategy perspective, our focus will be on optimizing the revenue structure. The proportion of freight brokerage business in the overall revenue mix will be further reduced to ensure that’s sustainable development while effectively managing risk. Meanwhile, leveraging the platform’s network effects and technological capabilities, the transaction service business will continue to grow rapidly through economies of scale and enhanced algo recommendations. It will be – it will become the core engine of our company’s revenue growth as a strategic pillar in the profit structure. This adjustment strategy reflects our proactive management of the business portfolio, ensuring a balance between optimizing the business mix and increasing the share of high margin businesses. By improving operational efficiency, we aim to significantly enhance the overall profit margin. We believe this flexible yet very robust strategic path will provide shareholders with higher certainty of long-term returns and strengthen our company’s leadership position within the industry. Thank you.

And that concludes the question-and-answer session. I would like to turn the conference back over to management for any additional or closing comments.

Thank you once again for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG Investor Relations. Our contact information for IR in both China and the U.S. can be found in today’s press release. Have a good day.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.