Key Takeaways:
- Full Truck Alliance’s revenue rose 25.3% in last year’s fourth quarter, while its net income tripled on strong investment income and new user growth
- The company said it will continue spending heavily on sales and marketing this year after its growth in that area accelerated to 49.8% in the fourth quarter
By Hugh Chen
Many members of China Inc. are putting the brakes on new investment these days, choosing to focus more on improving efficiency as the nation’s economy slows and regulatory oversight increases. But don’t tell that to trucking platform operator Full Truck Alliance (NYSE: YMM), whose latest earnings report shows it intends to stay in the expansion fast lane, at least for now, despite the challenging environment.
The operator of a digital platform that connects truckers to shippers sharply stepped up its sales and marketing spending last year, after Beijing allowed it to resume signing up new users in mid-2022 following a one-year pause for a data security review. The company’s sales and marketing expenses rose by 37.3% for all last year, including a big 49.8% year-over-year increase to 421 million yuan ($59 million) in the fourth quarter alone, according to its latest quarterly earnings report released last Thursday.
This heavy spending helped to boost revenues substantially as well, though at a slower rate than the marketing campaign. Sales for both the full-year and fourth quarter of 2023 grew by 25.3% to 8.4 billion yuan and 2.4 billion yuan, respectively.
Investors seemed to hold mixed views on Full Truck Alliance’s strategy and results. They punished the company with 5.3% decline in its share price last Thursday after the announcement, only to give back all of that and a little bit more the next day.
Following those fluctuations, the company’s shares now trade at a price-to-sales (P/S) ratio of 6.26, nearly double the 3.23 for more traditional logistics company ZTO (NYSE: ZTO) and light years ahead of the depressed 0.24 ratio for rival Gogox (2246.HK), which ...