Bitauto reports Q3 EPS 10c, consensus 39c

Reports Q3 revenue $355.5M, consensus $378.08M. Andy Zhang, CEO of Bitauto, said, "As new passenger vehicle sales in China have decreased over the past fifteen months, automakers and dealers have become more cautious in their marketing spending. Amid this unfavorable environment, Bitauto's total revenue was RMB2.54 billion for the third quarter of 2019. Our transaction services business, however, continued to gain market share with revenue increasing by 3.9% year-over-year to RMB1.42 billion. Since rolling out our upgraded Bitauto media app in the fourth quarter of last year, we have been pleased to see continuous improvements in our mobile traffic and the quality and quantity of our sales leads. According to QuestMobile, in October 2019 daily active users, or DAU, of the Bitauto media app increased by 255% over the same period in 2018. Also, the combined DAU of both the Bitauto media app and our Auto Pricing app increased by 55% over the same period in 2018. Our number of sales leads grew by 6% year-over-year in the third quarter despite declining new car sales, with a significant increase in the proportion of organic sales leads to over 60% of our total sales leads. Meanwhile, conversion rates as measured by store visits and number of transactions continue to rise, indicating the improved quality of our sales leads. We also made steady progress in expanding our new business areas. We have received positive feedback from automakers on our AI-based marketing solution which we launched earlier this year and we continued to grow our network of independent dealers to over 33,000 during the third quarter with more than 4,400 paying customers as of the end of October. We have recently stepped up our strategic marketing spending to strengthen the Bitauto brand and improve our brand recognition among automobile consumers. We view this as an investment to broaden our user base and better help our automaker and dealer customers. As more car buyers and owners view us as the app of choice for car-related information and services, our customer acquisition costs will also decline in the long run. In our transaction services business, Yixin further expanded its loan facilitation services business, which grew 213% year-over-year and contributed approximately 73% of total financed transactions. During the quarter, Yixin also further tightened its risk control standards to better adjust to China's slower economic growth and changing regulatory environment. Looking forward, we will remain focused on our core business strategies. First, we will help drive higher ROI for our automaker and dealer customers by bringing them more high-quality sales leads. Second, we will work towards rolling out our AI-based marketing solution, which provides automakers with tailor-made and result-driven marketing tools, to all mainstream automakers by the end of this year. Third, we will further improve the revenue mix of our subscription business by migrating more dealer customers to premium and deluxe premium packages and expanding our network of 4S and independent dealers. Fourth, Yixin will continue to grow its loan facilitation services, enhance risk management, and improve its product offerings."