Quhuo Limited (QH) Earnings Call Transcript & Summary

Hello, and welcome to the Deutsche Bank virtual investor conference, dbVic. I am pleased to announce that our next presentation will be from Quhuo Limited from China. [Operator Instructions] On a final note, all today's presentations are recorded. It can be accessed by the Deutsche bank website, adr.db.com. At this point, I'm very pleased to welcome Leslie Yu, Chief Executive Officer, of Quhuo Limited. This trades on NASDAQ under symbol QH. Over to you Leslie.

Hello, everyone. This is [ Gary ], the co-founder of Quhuo Limited. I will set -- I will go through the presentation to you, and our CEO, Leslie Yu will be there for you at the Q&A session. Let's turn to Page 3, please. Quhuo is the leading gig economic platform in China. And because in China, we have multiple hybrid markets. And Quhuo is the leading player in the gig economy. We have tech-enabled system and standard service to empower the workforce to grow their business and provide service product that meets the need of local communities. By the end of 2020, we have -- our service covered 111 cities across 30 provinces, and our average monthly active workers are over 54,000 every single day. And then orders we fulfilled every month is over 36.5 million every single month. Currently, we have service area have been covered in delivery, on demand for delivery, grocery delivery and housekeeping, mobility and share back maintenance. Next slide, please. This is how our business rebounds. Our target is to meet the demand of local community service with -- when there is required, we will supply our service to them. We use our technology and our system to empower and organize our workforce. We have 2 Quhuo+ system, which is our internal designed management system. We will have a big data analysis, operation monitoring, AI refining and give their optimization advice. So the workers will have continuous improvement based on the advice of the system. And when this system will have some -- to gain higher productivity and the efficiency and to get more personal income. And when they output the standard service in every single scenario, we will try to modify their service in different business barriers by working -- by monetary, they are working by hours and create more and more work opportunities and then meet the diversified demands. Next slide, please. Our mission is to optimize the workforce efficiency and provide more career solutions on the Quhuo platform. And then become the largest gig economic workforce platform dedicated to serve the local communities. Our goal is to improve service standard with optimized cost structure to meet the growing needs of the community and empower the workforce on our platform to grow their own business and to provide more earning opportunities. And also, finally, we try to establish an ecosystem to improve their work and live ceders provide a fine working environment. This is our path of growth in the past few years. Our company was formed in 2012, and we started our business with Ele from 2013 and with Meituan from 2014. And this is all focused on the on-demand food delivery area. And from 2017, we started business with Yum! Group, start with Pizza Hut. And in 2018, we started working with KFC and entered the mobility ride-hailing business scenario and also share back maintenance business areas with Mobike. In 2019, we start working with Anxin Group, Carlyle Apartment into the housekeeping area. In 2020, we start working with Dingdong Maicai and [indiscernible] and [indiscernible]. This is all from the grocery delivery and share back maintenance area. And recently, in 2021, we start build a business relationship with NIO, N-I-O, to sell their owners club. and also work with the LF Logistics in pick and pack service in the warehouse, and also we invested in oTMS to start our business in the new retail service area. This is our business coverage. Our general idea is that in China, we are facing a very serious problem that our labor -- the total quantity of labor is decreasing every single year. Single figure is that from 2020 compared to the birthrate as the total number of newborn baby has been decreased by over 400 million just 1 year. So we are facing very big pressure in the near future of shortage of labor force. So our idea is that to multiply their usage, the use of labor force in different business scenarios. We will monitor their work by hours and also provide a different business opportunity and work opportunities for them. So they can -- every single day, they can use their own time to work for different business scenarios to earn extra money to improve the efficiency of their work. And currently, we have covered 3 major areas. One is the food and grocery delivery and second is the mobility service, which covers share back maintenance and [indiscernible] and also the housekeeping areas, which including commercial cleaning for the hotels and also the cleaning service for the restaurants. And on the right-hand side is our current figures. And most recent data is that our -- every single day, our food deliver orders is 1.23 million and our service order is 290,000 every single day. And in the food delivery, we have 80,000 grocery deliveries every single day. And also, we installed intelligent food box. The food box will serve 78,000 orders every single day. In the mobility service area, for the shareback maintenance, we have 76,000 orders every single day. For the rider-hailing, we fulfill 32,000 orders every single day. And for the -- we just entered the new retail service area, which is 35,000 (sic) [ 3,500 ] every single day. And for housekeeping, we have 21,000 orders every single day and covered 1,300 hotels and over 70 (sic) [ 7,000 ] B&Bs. Next slide, please. This is our most recent development. At the end of 2020, we have acquisition of Lailai, paving the way for the community-based family service. Lailai is the leading workforce platform specialized in the housekeeping solution for hotels and B&Bs. By the acquisition, we have added over 30,000 workforce specialized in the hospitality sector on our platform. And within access to many famous hotel groups such as JW Marriott, Hilton and Quanji. By the commercial cleaning service for the hotels and B&Bs is built on our foundation for our future development into the committee to the family service. And this is our new investments into oTMS in 2021, which is a leading smart logistics solution platform specialized in the TMS management in FMCG, fashion and in new retail service. We have added over 340,000 drivers information and job details on our platform. We gained access to many big brands in FMCG, retail and fashion. And we already started to reduce reuse our delivery force -- our demand for delivery force and the network into the new retail delivery force Bestseller and Anta. These investments will help us to expand our business to the retail service market and create brand-new job opportunities for our workforce on the platform. Below are all the big brands oTMS has been so served, which has opened a very big opportunity for us in the retail -- new retail service area. Next slide. This slide is our investment highlights. In this slide, I want to just have a brief introduction of the overall market. In the market we are in is called workforce operations solutions market. The market according -- the market record, according to data of Frost & Sullivan, in the past few years, the growth is -- CAGR is 23.1%. And from 2019 to 2024. And on the right-hand side, you can see from 2017 to 2019, the CAGR of the market is 22.7% where as the gross CAGR of Quhuo is 77.2%. We have beat the market CAGR by over 3x. So which means that the market is -- the sealing of the market is still very high in the future. And we have already proved our ability to beat the market growth in the past. So we have very big confidence to continue our high-speed growth in the future. In the next slide is our marketplace. As I mentioned earlier, we are the largest platform for the gig force operation solutions in China. And also, we are also the #1 in China for the hotel housekeeping and on-demand food delivery solutions. On the right-hand side, you can see a single figure is that the market share for Quhuo is about 4% of the total market. We are the #2 to #5 [Audio Gap] is not as big as what we have right now, which means we are in the absolute leading position in the market. Well, the market is still very big and very diversified. So give us opportunity for future merge and acquisition to speed up our company's growth in the future. In the next slide is introduction of our AI management system. This is our -- one of our core competency. This system is based on our management experience in the past 8 years. It is entirely our internal design and developed system. This system, the core of the foundation is the AI refining system. It is connected with our data operation. Our -- it is connected with and also with our HR management system. Our workforce has all been digitalized in the system. There every single day's work, job and activity has been captured and record in the system. And the system will compare their vertically with other people and with our other service station to give their -- give out optimization advice. And the station manager they don't need to do the data analysis. They just need to rely on the system. The system will have very detailed analysis and output ultimately advised. They just need to implement those solutions. We should really help them to improve their operated operation continuously. And also this -- our AI system is connected with our financial management system. So the station manager, they can -- from system, they cannot only see their management efficiency improvement and daily activity. They can also see their financial performance every single day. They have their expense management, procurement management and P&L output from the system. So they just need to concentrate on the daily implementing and the station management, and the system will greatly ease the burden on their shoulders. And we -- by this system, we have empowered our station manager, so they have more energy to focus how to reduce the workforce on different business scenarios to improve the efficiency of the entire station, and we improve the only opportunity for every single workers. And also, we have built up a little community for our workforce. We have a mobile portal for the workers. So on the mobile portal is a small platform and community. They can apply for different job opportunities. They can apply for different training sessions. They can apply the lease and rental for their working tours such as electric motors, and they can apply for the blue-collar apartment. And also, we have different financial tools to help them to solve their problems if they have any financial shortage, cash shortage on hand. And then the next slide, I'll hand over to our CFO, Sandra, she will give a brief introduction.

For the interest of time, I would like to skip this part since all the numbers are public, so we can leave more time to the Q&A session. Thank you.

Okay. Hello, all the investors. So one of the investor required 1 question, so I've got to read very loudly. So [indiscernible] ask, you made a strategic investment in Lailai and the [indiscernible] home in the house keeping solutions sector. Do you have any plans? [Audio Gap]