Good day and welcome to the Cheche Group F irst Half 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Crocker Coulson with Investor Relations for Cheche Group. Please go ahead. Thanks so much, operator. Good morning, everybody. Good evening to those of you joining us from Asia, and thanks to everyone for joining us on Cheche's First Half of 2025 Earnings Call. This morning, Cheche posted both the earnings release and related investor presentation to our website, which is at ir.chechegroup.com, and you can find all the materials there. With me on the call today are Lei Zhang, Cheche's Founder and CEO, as well as Sandra Ji, Cheche's Chief Financial Officer. After the prepared remarks are concluded, we'll be pleased to open up the call for your questions. Before we begin, I'd like to let you know that some statements in this teleconference will be forward-looking within the meanings of the Federal Securities Law. Although we believe these statements are reasonable, we can provide no assurance that they will prove to be accurate because they are prospective in nature. Actual results could differ materially from those we discuss today. We therefore encourage you to review the most recent filings with the SEC for risk factors that could materially impact our results. As I mentioned, you can find our earnings release at ir.chechegroup.com, and we encourage you to review the reconciliations of certain non-GAAP measures that are contained in that release. With those formalities now out of the way, it's my great pleasure to turn the call over to Lei Zhang, Cheche's CEO. Lei, over to you. Lei? I believe your line may be muted. Lei, Sandra, are you on mute? Pardon me for this. It looks like we're having some issues here. I am going to place the music back on, and we will get the situation resolved. Please stand by for just a moment. Thank you. Thank you for holding, everybody. This is the conference operator. I joined the speaker location back to the call. Please proceed. Hello, how are you? Please proceed. Okay, thank you. Thank you, everyone. Thank you for joining us today to review Cheche 's First Half 2025 Results. The first half of 2025 was a period of resilience, adaptation, and forward-looking investment for Cheche Group. In the first half of 2025, the number of AUV insurance policies transacted on our platform exceeded 810,000, representing an increase of 135% from the prior year, while total written premiums reached RMB 2.6 billion, up 150% over the same period. Over the past three years, our AUV business maintained a compound annual growth rate of 140%. As this is one of Cheche's fastest- growing and most promising core businesses, we continue to diligently strengthen partnerships with AUV makers and expand our insurance operations, expecting to serve 30%- 40% of China's AUV market over the next three to five years. AUV premiums, as a percentage of the total written premiums, increased to 22.5% from 9.3% in the previous year, and the gross margins increased, a clear reflection of the effectiveness of our business structure and operational efficiencies implemented over the past year. Our adjusted net loss for the first half of 2025 improved 47% to RMB 10 million, or $1.5 million, from RMB 24 million in the previous year, and we remain on track to achieve full-year adjusted operating profitability in 2025. Throughout the period, we continued to advance our strategic priorities. China's AUV market is standing at an unprecedented pace, fueling demand for innovative insurance solutions. Against this backdrop, we are taking decisive steps to invest and commercialize our innovative AI-driven intelligent insurance tools. This initiative will not only align us with the growth trajectory of AUV but also establish the framework for our global expansion roadmap. In short, while the numbers reflect a period of transition, the strategic process positions us crucially for sustainable long-term growth and leadership in both China and international markets. Looking more broadly at China's automotive industry, the first half of 2025 demonstrated continued momentum for AUV. Global AUV sales reached 9.1 million units, with China contributing 6.9 million units, representing an impressive 75% global share. AUV accounted for 44% of new car sales in China in the first half of 2025, and insurance demand is scaling rapidly. Auto insurance premiums reached RMB 440 billion over the same period, up 4.5% year- over- year, while AUV insurance premiums grew 41% to RMB 66 billion, nearly 10 times the pace of overall industry growth. This ongoing expansion of the AUV ecosystem validates our strategic focus and provides a strong tailwind for Cheche' s next phase of growth. Cheche 's position as the largest auto insurance technology platform by digital auto insurance transaction premiums remains strong, and our growth continues to set the pace for the industry. We are building on this leadership position by deepening partnerships with both traditional and AUV automakers with customized systems and embedded insurance products, which formally establish Cheche a s a critical partner in the automotive ecosystem. These collaborations provide us with rich data, valuable insights, and direct customer access, resources that enable us to broaden our reach and continually enhance the solutions we deliver. This morning, alongside our earnings release, we announced the launch of two forward-looking global initiatives: the AI-driven intelligent insurance tool, a result that will leverage real-world driving data to enhance liability determination, automate claims processing, and improve efficiency for insurance, and the fintech solution for automakers abroad, a toolbox of digital solutions that will support automakers as they expand internationally, providing financial and insurance infrastructure to enable success internationally. These initiatives are not only designed to strengthen our leadership in China but also to position Cheche as a digital backbone, connecting automakers, insurers, and vehicle owners globally. We are also collaborating with insurance companies and OEMs to jointly develop an anti-fraud claims system tailored for intelligent driving scenarios. By analyzing vehicle driving data, the system will improve accuracy in the liability determination and streamline claims automation. Over the next three to five years, China's AUV fleet is expected to reach 8 million to 10 million units. Based on an industry-average estimated claim rate of 30%, our claim services will cover around 3 million AUV. This vast market opportunity is projected to contribute RMB 300 million-RMB 500 million in AI-driven solutions and services, significantly improving the company's financial and operational structure. Our vision is not limited to China. We are preparing to roll out these next-generation solutions in global markets beginning in the quarter of 2025, and we are expecting overseas business to serve as a key growth engine beginning in 2026. We have already formed partnerships with several automotive brands with a strong overseas focus, and together we have developed a comprehensive global roadmap spanning Asia-Pacific and Europe. This expansion is expected to validate China's major AUV digital pricing model in global markets, promote alignment in international insurance standards, and enable ecosystem-wide globalization of China's automotive industry. We believe these steps mark a key milestone in Cheche' s global expansion blueprint and reinforce our role as trusted technology partners in the worldwide transition to intelligent and connected mobility. To summarize, the first half of 2025 reflects a period of transition and strategic positioning for Cheche Group. We achieved a higher gross profit margin as a result of business structure improvements, launched plans for two transformative initiatives that are expected to extend our leadership beyond China, and are preparing for global expansion in partnership with automakers and insurers worldwide. We remain confident that our AI-driven intelligent insurance tools and fintech solution for automakers will not only strengthen Cheche 's financial outlook but also help shape the future of insurance in the intelligent mobility era. I will now turn the call over to our CFO, Sandra Ji. Thank you. Thank you, Lei. I'd like to begin by touching on our first half operational and financial highlights before taking questions. Firstly, operational updates. Our total written premiums placed for the first half of 2025 increased 4% to RMB 11.5 billion or $1.6 billion. The total number of policies issued increased from 8 million in the prior year period to 8.3 million in the first half year of 2025. 810,000 embedded policies and RMB 2.6 billion of corresponding premiums were embedded in AUV deliveries, growing 135.5% and 150.6% respectively year over year. Next is our financial update. In terms of net revenues, we generated RMB 1,348.7 million or $188.3 million in the first half of 2025, a decrease of 17.7% year- over- year. The shift was driven by the larger proportion of AUV premiums, which was a lower service fee rate. AUV policies represented 22.5% of total written premiums placed, compared to 9.3% in the year-ago period. Our cost of revenues in the first half of 2025 was RMB 1,282.9 million or $179.1 million, down 18.5% from the year-ago period, due to a decline of net revenues and a higher gross margin driven by the rapid growth of the AUV business. Gross profit increased 1.7% to RMB 65.8 million or $9.2 million, compared to the prior year period. Despite the lower net revenues, the improved business structure led to a higher gross margin. We also reported a decrease of 10.6% in selling and marketing expenses in the period to RMB 37.3 million or $5.2 million, primarily due to a decrease in stamp costs, amortization of right-of-use assets, and share-based compensation expenses. General and administrative expenses were also lower in this period, declining 39.7% to RMB 37.3 million or $5.2 million, from RMB 61.8 million in the year-ago period, largely due to decreased share-based compensation, staff costs, and professional service fees. Research and development expenses decreased slightly to RMB 18.3 million or $2.6 million. The total operating expenses decreased by 23.9% to RMB 92.8 million or $13 million, from RMB 121.9 million in the prior year period, mainly due to the decrease in staff costs and share-based compensation expenses. If we exclude share-based compensation expenses and dispute resolution expenses, the total operating expenses decreased 13.7% from the prior year period. Net loss for this period improved 53.4% to RMB 25.6 million or $3.6 million over the first half year of 2024. The adjusted net loss for the period improved to RMB 10.5 million or $1.5 million, down 56.9% from the adjusted net loss in the prior year period. While turning to our balance sheet, we reported RMB 167.2 million or $23.3 million in cash, cash equivalents, and short-term investments in the prior year period. Looking ahead to the fourth quarter of 2025, Cheche is revising net revenue guidance to an approximate range of RMB 3 billion- RMB 3.3 billion, from the previously announced range of RMB 3.6 billion- RMB 3.8 billion, to reflect recent changes in the business structure. We still affirm expectations for the following: one, total written premiums placed ranging from RMB 25.5 billion- RMB 27 billion, AUV written premiums placed ranging from RMB 7 billion- RMB 8 billion, and the adjusted operating results shifting from a loss to a profit. With that, we'll be happy to address your questions. Thank you. Thank you. If you would like to ask a question, please press star then one on your telephone keypad. If your question has already been addressed and you'd like to remove yourself from the queue, please press star then two. Today's first question comes from [Xintao Chen] with CICC. Please go ahead. Thank you. I appreciate the chance to pose a question to the management. My question is, could you add some color on the recent significant progress or strategic roadmap for the AUV business? Building on the company's years of technological expertise and industry accumulation, what future innovation opportunities do you foresee? Thank you. Thank you, CICC. I answer this question in Chinese. Thank you. from early 2020, this will bring new business growth points to the company. Please have my colleague do some translation, thank you. The company is centered on its intelligent AUV insurance platform, delivers end-to-end AI-driven digital insurance solutions for OEMs, which address diverse needs such as pricing, risk control, underwriting, claims, and others. Compared with the prior period, the AUV insurance market, just acting on our platform in the first half of 2025, exceeded 8 million, with policy volume and premiums growing by 135% and 150% respectively, maintaining a CAGR of around 140% for three consecutive years. These results underscore strong AUV market demand and validate the success of our strategy to empower AUV growth through digital insurance technology. In 2025, the company will focus on strategic opportunities in the intelligent and connected AUVs, leveraging our partnerships with 15 major AUV manufacturers. We plan to gradually fully serve the AUV risk control management. This AUV segment will create a flywheel effect for the company's revenue and margin over the next three to five years. The company plans to expand into the international market in the fourth quarter of this year, and we have formed partnerships with several major auto brands, and together we have developed a detailed roadmap covering the Asia-Pacific region, Europe, and Latin America. It is expected to validate and refine China's mature AUV digital pricing models in global markets, promote alignment in international insurance standards, and empower the ecosystem-wide globalization of China's auto industry through multiple models. The company also expects this all-season business to serve as a key growth engine beginning in the year of 2026. Thank you. Thank you. Our next question today comes from Derek Greenberg at Maxim Group. Please go ahead. Hi, thanks for taking my question. You guys have mentioned that your goal is to get to a 30%- 40% market share in the AUVs in three to five years. I was wondering where you're starting at now, what that market share is scaling from. Okay, thank you. [Foreign language] 我们目前的目标就是未来三到五年达到30%到40%。那我们现在的起点呢, 市场份额实际上我们现在已经占到整个中国新车销售的服务的10%以上。所以呢, 我们再加上存量车, 加上已经存在的车, 我们每年保持着100%以上的增长, 就可以在三到五年内实现我们的目标, 而我们对这个增长率是非常有信心的。 As we just mentioned, our target in the AUV market, basically, currently we are taking around 10% of the AUV market. That number is for the new car delivery. Plussing the current inventory cost in the AUV market, we are confident, and also with our more than 100% growth each year, to reach this target in three to five years, we are quite confident to achieve that. This is Sandra. Let me add something. For the past few years, the CAGR for our AUV business is over 140%, and we are quite confident that we will keep that high growth momentum for the next three to five years. For the whole industry, the AUV insurance growth rate for last year is 40%. We enjoy over one, as I just mentioned, we enjoy CAGR of 140%, far faster, way faster than the industry growth rate, which means we are gaining more and more market share during the growing process. That's why we are quite confident after three to five years, we can, you know, achieve 30%- 40% of the total AUV insurance market. Thank you. Okay, thank you. That's helpful. I think earlier in the call, you may have mentioned, I wanted to reaffirm that I think NEVs are 22.5% of the mix, which is up from 9.3% prior. I just wanted to verify that. Given that scale and market share and the growth you're seeing, what do you see the mix shifting to as you achieve your market share goal? Yeah, we already saw the trend that AUV business accounted for more and more percentage proportion of the overall business picture. Actually, the growing rate is becoming faster and faster. For the three to five years, we estimated that the AUV business will account for over 50% or even higher, 50%- 70% of our total business. Okay, great. Just real quickly, I was wondering if you could help us understand. There's strong performance on the bottom line, and it looks like you know you're reaffirming written premiums. I wanted to kind of parse down the net revenues and how that's impacted by this business. Is it just a lower policy rate or take rate on the NEVs, or what explains the variance there in terms of growth in all other segments, but a little bit lighter on revenue? If you could just help us understand. Yeah, yes. For the take rate, yeah, that's the fact in China's industry. The take rate for AUV insurance is much lower than the traditional car insurance. Yeah, because, you know, since AUV insurance is still in the preliminary stage, most, actually, nearly all of the insurers are still suffering from the loss in the AUV insurance market. That's why they can't give, you know, a higher take rate for us. Along with the development of the total market with the AUV insurance, we believe that all the insurers will shift from loss to profit in AUV insurance. As a result, they are willing to give more and more take rate to us. That's a trend we believe will realize in the future. To explain the revenue variance in this period, although the take rate for the AUV insurance is lower, we enjoy much higher gross margin in the business than traditional car. That's why, despite the lower net revenues, we still have stronger, higher gross margin. You can see from the number, which means the profitability is improving. The business structure actually has improved compared to previous years. I think the quality of the revenue is higher than all those, you know, traditional cars because the margin is higher. Yeah, that's the reason. Thank you. Okay, that makes sense. I'm going to ask one more, and then I'm going to hop back in the queue so others have an opportunity to ask questions. I wanted to touch on the announcement this morning of the two new AI products and their international expansion. I was wondering if you could just talk a little bit about what the rollout will look like in terms of those products and the go-to-market strategy, maybe what geographies you're targeting first, and if there's going to be additional resources and investment in that area. [Foreign language] 我们第一个问题就是关于两个新产品的这个AI方面的产品，我们会在中国区域呢，针对其中一家车企对它的理赔流程使用AI agent去进行改造，将会提高理赔效率50%以上。这是我们在AI方面的一个进展。 Okay, for the two products we pronounced this morning, currently in China, we are cooperating with a major automaker by using the AI-driven intelligent insurance tools to help them reform their claims processing, which can increase around 50% in accuracy. [Foreign language] 那么我们在出海战略方面呢，我们现在已经在亚太地区，还有包括泰国和澳洲呢，进行了相应的战略合作伙伴的MOU合作备忘录，现在正在落地相关的金融服务。 As for our global strategy, currently, as I mentioned, in the Asia-Pacific region, and also other countries like Thailand and Australia, we are cooperating with local partners, and we have signed several agreements. Right now, we are trying to deliver financial insurance tech services to these partners. Thank you. Okay, great. Thanks. Thank you. Once again, if you'd like to ask a question, please press star then one on your telephone keypad. Our next question comes from Mark Long at Prime Impact Capital. Please go ahead. Morning, Lei and Sandra. Congratulations on a strong first half of leadership in the NEV insurance sector and positioning the company to become profitable in the second half of 2025. That's very impressive performance. Could you briefly explain, Lei, how you're leveraging AI and data analytics to deliver your new claims and fintech solutions? Okay, thanks, Mark. [Foreign language] 我们利用智能网联汽车的车机数据, 因为目前的NEV汽车呢, 都是智能网联的汽车, 所以呢, 它具备大量的行驶数据和驾驶行为数据。我们利用这些数据可以在事故发生的时候第一时间用于上传到我们的云端, 利用AI agent去判断事故的情况和基本信息。 None found. Currently, most of the NEVs are smart and connected NEVs, so they possess a huge amount of data. Actually, we are using the AI tool to determine that when an accident happens, we're using the AI tool to help determine in real time the accident situations to decide, to determine who is the main responsibility when the accident happens. [Foreign language] 然后我们利用这些数据，一方面可以反欺诈，防止事故的造假，另外一方面呢，可以在事故发生后快速地提高理赔的效率，把现场查看、定损和赔所有的流程能够在几分钟之内就可以实现，那么节约了保险公司的成本。 On the other hand, utilizing this type of data, we could help to achieve anti-fraud. When the accident happens, we could help to increase, after the accident happened, we could help to increase the accuracy, the efficiency of the claims processing. We will help them to integrate the loss determination and claims and other types of steps into one suite processing and to realize, to finish this type of claim services in a few minutes. In this way, we could help insurance companies to achieve their operational efficiency. Thank you, Mark. Lei, that sounds very innovative. Can you explain the expected revenue contribution from these new initiatives over the next three to five years? Yeah. According to the industry statistics, according to the accident rate, it is averaged at 30% of the total NEV cars. Yeah, according to the number, we can cover over 30 million NEV unit cars, which means, according to our estimation, that will bring us RMB 300 million- RMB 500 million revenues to our business. Since the product is an AI-driven product which has a very high gross margin, the RMB 300 million- RMB 500 million revenue also means, you know, profit to our business. Thank you. That's excellent. Do you expect to make significant investments in operational expenses, or will you be driving your kind of operating leverage from your existing platform? Yeah, actually, we are in a very good position, and we are quite confident we can keep the operating expenses under control. The total operating expenses and investments won't go up drastically. We will keep it under very good control. The profitability and the net margin will go up significantly in the foreseeable future. That's excellent. Thank you. Thank you. Our next question today comes from Derek Greenberg at Maxim Group. Please go ahead. Hi, I was wondering, with operating expenses and the decline we saw year over year, if you could just remind us the reductions across the three segments, how you're achieving that. Yeah. Since we, for the past two or three years, had very good control on our headcount, and we already developed a very good technology network, that won't need us to need a significant investment in R&D and in other expenses. That's why. We also have much lower share-based compensation. That's why the total operating expenses are decreasing significantly compared to last year. I think for the three to five years, the operating expenses may keep relatively stable and will not grow very fast. Thank you. Okay, great. Could you just talk a little bit about some of the initiatives you have towards autonomous driving? [Foreign language] 针对自动驾驶的话呢，我们现在和小鹏和华为，我们都在研究关于基于自动驾驶下的保险保障。我们会在四季度与中保研，就是CIRI，中保研汽车研究院启动战略合作，对自动驾驶的风险管理和鉴定落地相关的解决方案。 As for autonomous driving, currently, we are cooperating with Huawei and Xpeng to develop protections based on the intelligent autonomous driving scenarios. In the fourth quarter of this year, actually, we are cooperating with the China Insurance Automotive Research Institute to develop a strategy to solve the standards problem for the NEV insurance. Thank you. Okay, great. My last question is just, I guess, looking at the macro, is there anything you can point to in terms of how the consumer is holding up or if there's any changes in government regulations and stimulus, either recently or in the horizon? [Foreign language] 如果从宏观政策上来看呢，目前对于新能源汽车的保险解决方案全球都是非常急需的。那么中国因为NEV的保有量巨大，所以呢，在NEV保险上面有三年以上的先发优势。这些优势呢，积累的定价理赔的模型，我们将会把它进行全球化的落地。 In terms of our policies, the NEV insurance, we think not just China, but the other countries also in need of a right, a good, and accurate NEV insurance policies. Right now in China, the NEV inventory is quite huge. We have advantages when it comes to the hands-on experiences and pricing models of NEV insurance. Currently, we have talked about overseas expansion. We are trying to take these experiences and models globally and help other countries and partners globally. Thank you. [Foreign language] 新能源汽车将会成为全球汽车市场的主要增长引擎。我们预计新能源汽车的保有量会在未来三年在全球超过15%。 We think NEV is going to be the key growth engine in the future, and we focus that probably the total number of NEVs will exceed 15% in the future globally. Thank you. Okay, great. Thank you. Thank you. This concludes the question and answer session. I'd like to turn the conference back over to the company for any closing remarks. Okay. Thank you. We appreciate you taking the time to join us on the call today. Please reach out to Investor Relations with any questions. Thank you very much. Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.