Ladies and gentlemen, good day and welcome to Full Truck Alliance's second quarter 2026 earnings conference call. Today's conference is being recorded. At this time, I'd 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 vulnerability as established by the U.S. Private Securities Litigation Reform Act. Such statements are not guaranteed of future performance and are subject to certain risks and uncertainty, 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. The general discussion of the risk factors that could affect FTA 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 working information except as required by law. During today's call, management will also discuss certain non-GAAP financial measures for comparison purposes only. For a definition of non-GAAP financial measures and a reconsideration 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 side are Mr. Hui Zhang, our Founder, Chairman, and CEO, and Mr. Sander Tai, our Chief Financing and Investment Officer. We will open the call to questions following brief opening remarks from Mr. Zhang. As a reminder, the conference is being recorded. In addition, a webcast replay of this call will be available on FTA's investor-related website at ir.fulltrackalliance.com. I will now turn the call over to our founder, chairman, CEO, Mr. Zhang. Please go ahead, sir.

Hello, everyone. Welcome to the second quarter of ManBang in 2026. Today, the second quarter is facing a challenging market environment. The company's business has shown solid growth and resilience. The reserve order has reached 68.5 million orders, which is 12.7% of the total growth. In terms of business, we continue to deepen the user experience and transaction efficiency by strengthening the breadth and depth of private goods insurance. The user satisfaction has increased significantly. The average number of goods delivered this quarter has increased by 12.8%, reaching 3.57 million people. In the past 12 months, the number of courier drivers has also continued to increase. The overall network effect has been further enhanced. The order density and driver attack have increased in both directions, and the push-and-pull rate has increased by 6.3% to 47%. Hello, everyone. Thank you for joining us today for our second quarter of 2026 Bernie's Conference Call.

In the second quarter, despite a challenging market environment, our business delivered resilient growth, with fulfilled orders reaching 68.5 million, up 12.7% year-over-year. Operationally, we remain focused on enhancing user experience and transaction efficiency. By broadening and strengthening transaction protection for both shippers and truckers, we significantly improved satisfaction across both sides of the platform. Average shipper MAUs reached 3.57 million this quarter, up 12.8% year-over-year, while the number of active truckers fulfilling orders over the past month continued to grow, further amplifying our nationwide network effects. Rising order density and trucker capacity lifted the fulfillment rate by 6.3% year-over-year to 47%, with median freight matching time further strengthened. In terms of our new business initiative, QMove continued to gain strong momentum overseas with rapid growth in both fulfillment orders and fulfillment rates. We also achieved nationwide coverage for our less than truckload offerings through our network of dedicated line carriers and expanded autonomous delivery vehicle pilots to multiple cities. On AI front, we continued rolling out our cheaper AI assistance to a broader user base and fully deployed AI-powered customer service across applicable user cases, further deepening AI applications throughout the fulfillment process.

In terms of revenue, the total revenue of this year's company is 33.8 billion yuan, which is 4.4% of the total revenue. Of which, the total revenue of the transaction service is 17.7 billion yuan, which is 33.1% of the total revenue. The total revenue of the transaction service is 52%. The net profit reached 13.5 billion yuan, which increased by 6.3% in total. The non-US common stock price was adjusted and the net profit reached 14.3 billion yuan, which increased by 6% in total. The economic activity cash flow reached 21.5 billion yuan, which increased significantly in total. The company's cash and cash assets totaled 33.4 billion yuan. The cash reserves have been established for the company's innovative business and have been strategically promoted. Financially, in the quarter, total net revenues reached RMB 3.38 billion, up 4.4% year-over-year.

Transaction service revenues grew 33.1% year-over-year to RMB 1.77 billion, accounting for 52% of total net revenues. Net income reached RMB 1.35 billion, up 6.3% year-over-year, while non-GAAP adjusted net income increased 6% to RMB 1.43 billion. Net cash provided by operating activities grew significantly year-over-year to RMB 2.15 billion. contributing to a total cash transition of RMB 33.4 billion by end of the quarter. This provides ample liquidity to support the roll-out of new business initiatives and execution of our long-term strategy, and we are committed to continuously returning value to shareholders through quarterly cash dividends. Looking ahead, our comprehensive product portfolio, robust platform ecosystem, and expanding two-sided network gave our AI initiatives the fuel they needed. Transaction data at scale across a wide range of practical user cases. We will continue to advance AI innovation and application across the platform to strengthen our ecosystem, improve the experience for shippers and truckers, and create sustainable long-term value for our shareholders. Thank you all once again. That concludes our opening remarks. I would now like to open the call to Q&A. Operator, please.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. For the benefit of all participants on today's call, if you wish to ask your question to management in Chinese, please immediately repeat your question in English. Your first question comes from Ronald Kung with Goldman Sachs. Please go ahead.

Ronald Kang, your line is live. Please proceed with your question.

We'll move on to the next question. Your next question is from Eddie Wang with Morgan Stanley. Please go ahead.

Mr. Zhang, Mr. Simon, Mao Mao, Emma, thank you for accepting my question. My question is about oil prices and new energy card vehicles. In fact, in the past half year, I felt that the market oil price fluctuated a lot, and the penetration rate of new energy card vehicles is also constantly increasing. I want to ask, under these two conditions, will it impact the supply and supply structure of our entire freight industry and the competitive environment? I will translate it myself. Thank you for taking my question. My question is that given the ongoing fuel price volatility and the rising penetration of electric trucks, do you expect this trend to significantly affect the freight industry's capacity mix and the competitive landscape? Thank you.

Thank you, Eddie. This is Simon here. Let me address your question. Our platform data over the past few quarters does show a practically rising penetration of electric trucks, which now accounted for roughly over 20% of our total fulfilled orders. However, we do not expect this shift in the capacity mix to have a material impact on the long-haul food truck load market. Instead, we believe a more diverse energy mix across the truck fleet will benefit our platform ecosystem overall. First, electric trucks are currently most competitive in short to medium haul and local freight operations. Lower energy costs give them a strong position at ports, mining areas, and fixed route short to medium haul transportation. While some fast-charging and high-capacity battery models can now travel between 400 to 500 kilometers per charge, that's up from roughly 200 to 300 kilometers per charge. Their economics do depend heavily on fixed routes, high vehicle utilization, and convenient access to charging or battery swapping facilities. Second, the electrification of ad hoc long-haul trucking still face clear physical and infrastructure hurdles. The average shipping distance for full truckload long-haul transactions on our platform exceeds 500 kilometers, and many of these transactions involve cross-regional transportation, variable routes, and uncertain backhaul demand. In these settings, electric trucks are constrained by limited driving range, Sparse charging and battery swapping coverage, payload loss from battery weight, and reduced route planning flexibility. As a result, they're not positioned to replace diesel and natural gas-powered heavy-duty trucks across this market anytime soon. Overall, we believe the evolving mix of truck capacity will create long-term value for our platform. The changes in transportation equipment do not reduce shippers' underlying freight demand. Instead, they allow it to be fulfilled at more competitive freight rates. Our long-term vision is to become a one-stop logistics platform serving millions of small and medium-sized direct shippers whose logistics needs are often on-demand, dynamic, and fragmented. As truck capacity becomes more diversified, We can further leverage our vast pool of authentic freight demand, extensive route data, and advanced algorithms to match different powertrain types with the shipping distance and use cases they are best suited for. At the same time, by providing complementary services such as truck leasing and purchasing, charging and battery swapping, we can help truckers meaningfully improve vehicle utilization. As battery technologies advance and roadside charging and battery swapping infrastructure expands, electric trucks should gradually extend into selected long-haul use cases. We expect our platform to benefit from this ongoing capacity upgrade and create greater value for millions of shippers. Thank you.

Your next question would be from Ronald Kung with Goldman Sachs. Please go ahead.

Thank you, Mr. Zhang Wei and Mr. Simon. There was a bit of a problem with the recording just now. Excuse me. I would like to ask, we have seen that the orders for the second quarter have increased by about 12.7%. What are the driving factors for the second quarter? Considering that the domestic oil price has been very high since March, it has clearly fallen back. Thank you management and apologies for the technical glitch just then. I want to ask about the fulfilled order growth was around 12.7% in the second quarter. So what were the key growth drivers this quarter? And given that the domestic fuel prices have declined significantly from the late March highs, has the impact on high fuel prices on road freight demand fully subsided? And how do you view order growth over the next few quarters? Thank you.

Thank you, Ronald. The second quarter order volume growth was broadly in line with our expectations. driven primarily by continued improvements in freight order quality and fulfillment efficiency. First, our ecosystem governance work and optimized user mix continues to pay off. Since the fourth quarter of last year, we have implemented targeted governance initiatives addressing misclassified carpooling orders, Co., Freight Reselling, and Low-Priced Freight Listing, which have significantly improved the authenticity of freight demand and fulfillment reliability. Meanwhile, direct shippers have continued to grow as a share of our shipper base, further shifting our order mix towards generating shipping demand. These improvements have strengthened truckers' willingness to accept orders, leading to greater fulfillment reliability and efficiency. More refined operations further improved our supply-demand dynamics. During the past quarter, we continued to enhance our trucker credit rating program and freight payment protection mechanism. We directed more high-quality freight demand and core platform benefits towards truckers with strong fulfillment track records, increasing order acceptance among high-quality capacity. Meanwhile, freight payment protection helped alleviate truckers' concerns about payment defaults and other transaction risks, improving fulfillment reliability post-match. As a result, the median matching time of orders on our platform was shortened to five minutes for the first time, reflecting further gains in matching efficiency. Third, solid growth in our full truckload long-haul business remained a key driver Field orders in this segment grew faster than overall platform orders during the quarter on the strength of the supply-demand network, price discovery capabilities, and capacity matching efficiency we have built in the ad hoc trucking market. These capacities widened our online platform's advantages of offline channels and supported high-quality growth at scale. Fuel price volatility since the beginning of the second quarter temporarily impacted both overall road freight demand and growth of fuel orders on the platform. Domestic diesel prices remained elevated from late March to May in particular, dampening shipping demand for certain low-value, price-sensitive freight. Since June, consecutive diesel price cuts have gradually eased and others. Looking ahead, we remain cautiously optimistic about long-term order growth. Externally, the recent moderation in fuel prices should support gradual recovery in freight demand, although the road freight market continues to face a challenging and evolving macro environment. In addition, the recent typhoon, flooding, earthquakes, and other extreme weather events and natural disasters across various parts of China may cause some near-term disruption to freight shipping and transportation activities. Over the long term, we believe online penetration in the long-haul freight market still has substantial room to grow. We will continue to drive growth into a few others by expanding our direct shipper base, increasing penetration in the full truckload long-haul segment and further improving order quality through ongoing ecosystem governance initiatives. Thank you.

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

Hey, Chairman Zhang, Chairman Simon, Mao Mao, Emma. Congratulations on your very good performance. I would like to ask about the interest rate. I saw that the interest rate of the second quarter reached 47%, which is a new record. I would like to ask what the main driving factor is and how the management is looking forward to the future change of this indicator. Thank you. I will translate myself. My question is regarding fulfillment rate. Our fulfillment rate hit a record high of 47% in the second quarter. Management share what was the key drivers in the second quarter and how do you expect this metric to change going forward? Thank you.

Thank you, Brian. Our fulfillment rate reached 47% in the second quarter. That's up 6.3 percentage points year over year and 2.9 percentage points quarter over quarter, setting another record high. Fulfillment rates improved across all major business lines and shipper segments, primarily driven by systemic improvements in capacity allocation, Great demand, quality, and matching efficiency. On the capacity side, effective truck supply remains abundant. Monthly active truckers responding to orders increased by nearly 5% year-over-year in the second quarter, supporting timely order responses and reliable fulfillment. Notably, the fulfillment rate for our full truckload long-haul business increased by nearly 7 percentage points making it an important driver of the overall improvement during the quarter. Second, our ongoing ecosystem governance initiatives continue to improve freight demand quality across the platform, laying a solid foundation for the increase in the overall fulfillment rate. In terms of product, further segmentation of our product portfolio in terms of matching We resegmented our freight product offering into four clear categories, Express, Entrusted Shipping, General Freight, and Lesson Truckload, or LTL. Each of them is designed for a distinct use case, rapid and satisfying short-haul matching, higher quality pricing services, standard matching, and LTL shipments through partnerships with dedicated line carriers. respectively. Clearer product positioning enables shippers to communicate their transportation requirements more effectively and allows the platform to match them with the most suitable capacity, reducing mismatches throughout the transaction and fulfillment process. From a user mix perspective, fulfillment performance improved across all shipper segments The average fulfillment rate among direct shippers exceeded 65%, while fulfillment among broker shippers also continued to improve. This demonstrates that the increase in the platform-wide fulfillment rate was driven not only by the growing share of high-quality direct shippers, but also by organic improvement in order quality and conversion efficiency across a broader shipper base. We expect the platforms for human rate to maintain a steady upward trajectory going forward as we continue to refine our operating strategies and product mechanisms while progressively integrating AI across the full machine and human process. We expect to unlock further gains in transaction efficiency.

Thank you. Thank you.

Your next question comes from Sun Chen with UBS. Please go ahead.

Thank you all for giving me this opportunity. I am UBS's Chen Jing. My question is about the total revenue. We saw that the revenue of the second quarter reached 33% of the total revenue growth and continued to increase rapidly. I would like to ask what is the driving force behind this? How does the company look forward to the future growth of the total revenue? Let me ask you a question. This is Chen Jing from UBS. My question is about the transaction service revenue. This revenue continued to grow relatively in the second quarter, increasing by 33% Yang Ye. What are the key growth drivers and how do you view the outlook for this revenue?

If the transaction service revenue reached approximately RMB 1.77 billion in the second quarter, that's up 33% year-over-year. And this strong growth was primarily driven by the full rollout of our commission network, steady improvement in monetization for order, and incremental contributions from emerging business use cases. Firstly, nearly full coverage of our commission network provided a solid foundation for our transaction service business. During the second quarter, we completed the rollout of the commission model across all eligible cities, lifting the permission penetration rate to 94.7%. At the same time, our ongoing ecosystem governance initiatives continue to improve freight demand quality and drive the overall fulfillment rate higher, providing a larger and more reliable base of high-quality transactions for our commission model. Second, refined operations continue to improve monetization efficiency. We dynamically optimize our commission strategy based on city, route, vehicle type, and user segment. As we advance monetization, healthier trucker economics and the long-term health of our platform ecosystem remain essential prerequisite. Our commission strategy considers truckers' take-home earnings, willingness to accept orders, and others. We also improved truckers' operating efficiency through preferential access to high-quality freight demand, membership benefits, freight payment protection and operational subsidies. We firmly believe that protecting reasonable trucker earnings is fundamental to creating a sustainable virtuous cycle between the transaction scale and monetization. As we move forward, we expect transaction service revenue to deliver High-quality, sustainable long-term growth driven primarily by continued growth in fulfilled orders, higher monetization per order through refined and tiered operations, and the scaling of new business cases.

Your next question comes from Wenjie Zhang with CICC. Please go ahead.

Thank you, Guan Yishan. Thank you management for taking my question. My question is about free brokerage business. Can you give us an update on the progress of transforming this business during the second quarter? Thank you.

Thank you. In the second quarter, we made steady progress in transitioning our freight brokerage business from a traditional self-operated model to a dual-track structure combining self-operated and aggregator operations. We're taking a phased approach to transition and optimizing the business mix in line with customer needs and compliance requirements. This enables us to reduce our exposure to VAT refund risks while continuing to meet shippers' needs for compliant VAT invoicing and freight matching. First, we proactively managed the skill of the self-operated business while further improving its customer mix. Under this model, the platform continues to handle invoicing and settlement workflows, primarily serving shippers with genuine freight matching needs. During the second quarter, invoicing-only customers declined further to a single-digit percentage of the total transaction volume. Customers that continue to use this model primarily seek an integrated solution combining freight matching with VAT invoicing, reflecting continued improvement in the quality of this business. The take rate for the self-operated invoicing business remains stable at approximately 10% during the quarter. Second, the aggregator model continues to grow steadily, diversifying the underlying risk across a larger base. Under this model, invoicing and fund settlement workflows are handled by qualified third-party partners, while our own platform focuses primarily on matching freight demand with truck capacity and charges a low single-digit channel service fee. Beginning in the second quarter, the associated revenue was recognized under freight brokerage business. This asset-light model significantly reduces the company's direct exposure to VAT refunds, Settlement and Operational Risk while keeping shippers and their freight demands within our platform ecosystem. Going forward, we will continue to manage a smooth transition between the self-operated and aggregator models, and this will enable us to meet shippers' compliance demand, deepen user engagement, and better support and reinforce our core freight matching business. As the SLI revenue contribution from the aggregator model gradually scales, We expect the revenue mix and overall earning quality of the freight brokerage business to improve further. Thank you.

The next question comes from Rich Chisan with HSBC. Please go ahead.

Zhang Huizhong, Simon Zong, Mao Mao Zong, Emma, good evening. Thank you for giving me the opportunity to ask a question. I would like to ask about the company's operating cash flow of 2.5 billion yuan in the second quarter. What is the main reason for this performance or growth? Thank you, management, for taking my questions. I want to ask about the operating cash flow, which was $2.15 billion in the second quarter. It's been very strong growth. What are the key drivers behind it? Thank you.

Thank you. In the second quarter, our net cash provided by operating activities reached $2.15 billion in RMB, while free cash flow totaled RMB 2.04 billion, reflecting strong cash generation across the business. This performance was driven primarily by significantly improved profitability in our core platform business, the release of capital previously tied up in our credit business as it transitioned to a new model, and efficient working capital management. First, the high-quality growth of our core business further strengthened our organic cash generation. Four platform businesses such as transaction services are not only growing quickly but also benefit from an asset-light model with short cash collection cycles. As these businesses contribute a growing share of our revenue, our revenue and profit mix is becoming increasingly weighted towards businesses with higher cash conversion and significantly reinforcing the core business ability to generate cash organically. Second, we continue transitioning our credit business towards SLI distribution model, reducing the deployment of our own capital for new loans while gradually recovering capital from the existing loan portfolio. The resulting reduction in capital tied up in this business contributed positively to the operating cash flow during the quarter. In addition, we maintained a stable collection and settlement cycles and managed our working capital efficiently. and others. Given the inherent asset-light nature of our platform model, rapid business expansion does not require a corresponding increase in capital deployment, providing further support for our operating cash flow. Looking ahead, our cash flow may fluctuate from quarter to quarter due to the timing of business settlement, tax payments and changes in working capital. Nevertheless, as our revenue mix continues to shift towards higher margin, asset-light and other platform businesses. We expect our long-term cash generation capabilities to strengthen steadily.

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 Full Truck Alliance directly all reach out to PS&T Financial Communications. Our contact information for IR in both China and the US can be found in today's press release. Have a good day.