The Chinese used car dealer is finally showing signs of a turnaround.
Shares of Uxin (UXIN 56.47%), the Chinese online used-car dealer, were soaring today after the company delivered better-than-expected results in its fiscal first-quarter earnings report.
As of 1:27 p.m., the stock was up 42.6% on the news.
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Uxin delivers strong growth
Uxin, which went public in 2018, has struggled for years, since before more recent challenges with the Chinese e-commerce sector and weak consumer spending in China.
The company has changed its business model multiples to gain traction in China’s massive used-car market, and its efforts seem to be finally paying off.
Transaction volume jumped 72% from the quarter a year ago to 5,605 units, driven by a surge in retail units, which were up 1,687 to 4,090, as the company focuses on the end buyer instead of selling to car dealers.
Revenue was up 38.8% to $55.2 million, but the company narrowed its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) from $6.7 million to $4.7 million.
CEO Kun Dai called it a strong performance and noted, “Our vehicle turnover efficiency remains healthy, with inventory turnover days around 30. Alongside our robust sales growth, customer satisfaction has also improved as our Net Promoter Score reached 65 during the quarter, the highest level in the industry.”
What’s next for Uxin
Uxin’s revenue growth is a promising sign, but investors should also keep an eye on gross margin, as that’s likely to be the biggest driver of profitability if the company can achieve it.
As the business shifts to the retail channel, the number should expand. The company also expects to achieve EBITDA profitability by the December quarter. If it can achieve that, expect shares to move higher from here.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
