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Autohome (ATHM) Q2 Earnings In Line, Revenues Miss Estimates

Shares of Autohome Inc. ATHM are down 5.2% since the company reported not-so-encouraging second-quarter 2020 results on Aug 25. Autohome reported second-quarter non-GAAP earnings of $1.04 per share, in line with the Zacks Consensus Estimate and flat year over year.

However, revenues of $327.4 million fell short of the Zacks Consensus Estimate of $329 million. On a year-over-year basis, revenues declined 2.7%. Weakness in Media services and Leads generation services’ businesses offset the growth witnessed in Online marketplace and other revenues.

Notably, on a year-to-date basis, Autohome stock has returned 5.5% compared with industry’s rally of 28.1%.

Autohome Inc. Price, Consensus and EPS Surprise

Autohome Inc. price-consensus-eps-surprise-chart | Autohome Inc. Quote

Top-Line Details

Media services revenues (40.3% of total revenues) were $131.9 million, down 12% year over year due to lower average revenue per automaker advertiser. Leads generation services revenues (36.3% of total revenues) of $119 million fell 8.1% year over year, owing to reduced number of paying dealers.

Meanwhile, Autohome’s Online marketplace and other revenues (23.4% of total revenues) of $76.5 million witnessed year-over-year growth of 34%. The upside was driven by data products and auto-financing businesses. Data products business recorded year-over-year growth of nearly 70% in the quarter. The company’s data products were used by 17,000 dealers.

Autohome’s daily average users were up slightly from prior-year quarter’s levels and increased 20% from March figures, showing strength in demand.

Live stream is an important driver of the company’s performance. In the second quarter, there were 93 live-streamed events from 40 brands with an average viewership of 420,000. Events like 818 Global Super Auto Show were also integrated into Live Streams. Markedly, 818 Global Super Auto Show witnessed an impressive attendance from 70 brands and 2400 dealers.

The road trip business continues to witness robust growth. The gross merchandise volume (GMV) for the first seven months of 2020 doubled compared with full-year 2019 GMV. Trip reviews and the short media posts reached a million-mark.

Margins

Autohome’s gross margin in the quarter was unchanged at 89% in the second quarter compared with the prior-year quarter’s levels.

Meanwhile, total operating expenses of $181.4 million, declined 6.8% year over year. The decline was caused by lower product development expenses in the quarter.

The company reported operating profit of $123.2 million compared with $121.7 million reported in the corresponding period of 2019. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) came in $155.1 million compared with $150.1 million reported in the second quarter of 2019.

Balance Sheet

As of Jun 30, 2020, Autohome’s cash and cash equivalents (and short-term investments) came in at $1.84 billion compared with $1.88 billion as of Mar 31, 2020. In the second quarter, Net cash provided by operating activities came in at $65.9 million.

Q3 Guidance

Autohome’s revenues are anticipated in the range of $317.1-$322.7 million. The company reported revenues of $303.6 million in the third quarter of 2019.

Solid uptake of online marketing services on the heels of shift to online channels, triggered by coronavirus crisis, is likely to cushion the top line growth. Also, launch of new products is likely to boost data products revenue in the third quarter.

Momentum in new data products, including data analysis and marketing services, aimed at enabling automakers and dealers boost efficiency and facilitate transactions is also expected to boost the top line.

Zacks Rank & Stocks to Consider

Autohome currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector include Apple AAPL, Lam Research Corp. LRCX and Synaptics SYNA, all sporting a Zacks Rank #1 (Strong Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The long-term earnings growth rate for Apple, Lam Research and Synaptics is currently pegged at 10.7%, 15.4%, and 10%, respectively.

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