Prospectus Summary
PROSPECTUS SUMMARY This summary highlights selected information contained in greater detail elsewhere in this prospectus. This summary may not contain all of the information that you should consider before investing in the ADSs. You should carefully read the entire prospectus, including “Risk Factors” and the financial statements, before making an investment decision. This prospectus contains information from an industry report commissioned by us and prepared by China Insights Consultancy, or CIC, an independent market research firm, to provide information regarding our industry and our market position in China. We refer to this report as the CIC Report.Our Mission
Our mission is to make logistics better. We are shaping the future of logistics with technology.
Logistics is the lifeblood of our economy, powering the movement of goods and connecting the engines of production and consumption. We aspire to revolutionize logistics, improve efficiency across the value chain and reduce carbon footprint for our planet.
Overview
Full Truck Alliance, or FTA, is the world’s largest digital freight platform by gross transaction value, or GTV, in 2020, according to the CIC Report. We have transformed China’s road transportation industry by pioneering a digital, standardized and smart logistics infrastructure across the value chain.
Our platform connects shippers with truckers to facilitate shipments across distance ranges, cargo weights and types. We have built a vibrant ecosystem of millions of shippers and truckers. In March 2021, approximately 1.4 million shippers posted shipping orders on our platform. In 2020, we facilitated 71.7 million fulfilled orders with GTV of RMB173.8 billion (US$26.6 billion), and over 2.8 million truckers fulfilled shipping orders on our platform. Approximately 20% of all China’s heavy-duty and medium-duty truckers fulfilled shipping orders on our platform in 2020, according to the CIC Report. In the first quarter of 2021, we facilitated 22.1 million fulfilled orders with GTV of RMB51.5 billion (US$7.9 billion), representing 170.2% and 108.0% year-over-year growth, respectively.
Industry Background and Challenges
China has the world’s largest road transportation market with a market size of RMB6.2 trillion (US$951.5 billion) in 2020, according to the CIC Report. The transportation of full-truckload, or FTL, and less-than-truckload, or LTL, shipments, makes up a majority of the road transportation market in China, amounting to RMB5.3 trillion (US$816.7 billion) in 2020 and expected to reach RMB6.5 trillion by 2025, according to the CIC Report.
The road transportation industry in China is highly fragmented, complex and inefficient. Road shipments are primarily arranged on-demand, and information is highly asymmetric. There is a high degree of fragmentation among both shippers and truckers, with a large long-tail of shippers who are small and medium-sized enterprises, and truckers who are individual owner-operators. This is structurally different from the U.S., where shippers are concentrated and served by scaled incumbents. In China, the matching of shippers and truckers traditionally took place offline in remote logistics parks, where shipping orders were written on blackboards in a disorganized manner, with most of the negotiation process conducted over the phone or in person.
As a result, industry participants faced significant challenges in China. Typically, shippers spent days to find a trucker and had to go through multiple layers of middlemen, resulting in higher costs. Pricing was opaque, and transactions were entered into in blind faith, without adequate protection of shipper or trucker interests. Truck utilization was limited due to highly asymmetric information, especially for individual truckers on back-hauls, who usually spent days in finding their next shipments. Truckers made frequent trips to logistics parks, which were typically over 50 kilometers away from their last shipment destinations, to find their next shipments, resulting in wasted mileage, fuel costs and time. They were not able to plan their routes and had limited visibility on their income. The lack of standardized protocols and trust between shippers and truckers led to frequent disputes, resulting in unfulfilled transactions and payment delays, further undermining trust and efficiency in the industry.
The FTA Platform
We believe the key to addressing these industry challenges is a digital, standardized and smart platform that connects shippers and truckers seamlessly. Leveraging the proliferation of smartphones and the mobile internet, we established nationwide infrastructure and industry standards that promote transparency, trust and efficiency across the logistics industry. In so doing, we are contributing to China’s economic growth, improving lives of millions of shippers and truckers, and reducing carbon footprint for our planet.
Yunmanman and Huochebang were founded in 2013 and 2011, respectively, and both companies rapidly grew to become leading digital freight platforms in China. The two companies merged to create FTA in 2017, establishing a nationwide road logistics network with significant economies of scale.
We are constantly improving our offerings to better meet the diverse, complex and often non-standard needs of industry participants. We have evolved from a directory of freight listings to an ecosystem that enables logistics transactions from end to end with data-driven technology and a comprehensive range of value-added services.
The diagram below illustrates the major components of our platform.
Freight matching services
of China’s road transportation industry. At the end of 2013 and early 2014, Yunmanman and Huochebang each launched their mobile apps, where shippers could post shipping orders and truckers could contact them to find their next shipments in a standardized manner. After the two companies merged at the end of 2017, we began monetization of freight listing service in 2018 by launching membership service for frequent shippers, allowing paying shippers to post more shipping orders than non-paying shippers.
Value-added services
We provide a range of value-added services, which cater to various essential needs of shippers and truckers and increase their stickiness and engagement on our platform. Shippers can access transportation management system, credit solutions and insurance on our platform. Truckers can access software for routing and managing traffic ticket records, credit solutions, insurance, electronic toll collection, or ETC, services and energy services on our platform.
Benefits to Shippers and Truckers
Key benefits we provide to shippers and truckers include:
Our Scale and Financial Performance
We have grown rapidly and reached significant scale in recent years. We had over 1.3 million shipper MAUs in December 2020, representing a year-over-year growth of 42.2% from December 2019. As our platform’s matching efficiency continued to improve, our GTV increased significantly and reached RMB173.8 billion (US$26.6 billion) in 2020. China’s economy and our business was impacted by COVID-19, particularly in January and February 2020. Our average monthly GTV was RMB6.4 billion in January and February 2020, declining by 42.2% compared to average monthly GTV in the fourth quarter of 2019. We saw a strong recovery in transaction volumes for March 2020, achieving GTV of RMB 11.9 billion in March 2020, representing 145.4% growth compared to the previous month. Our GTV was RMB51.5 billion (US$7.9 billion) in the first quarter of 2021, representing 108.0% year-over-year growth compared to the same period in 2020.
We are at an early stage of monetization. We generate revenue primarily from membership fees from shippers, freight brokerage fees from shippers, as well as interests and fees from value-added services to shippers, truckers and other ecosystem participants. We started monetization of online transaction service since August 2020, and we currently collect commissions from truckers for shipping orders originating from certain cities in China. Our total net revenues were RMB2,473.1 million and RMB2,580.8 million (US$395.5 million) in 2019 and 2020, respectively. We recorded net loss of RMB1,523.7 million and RMB3,470.5 million (US$531.9 million) in 2019 and 2020, respectively. We recorded non-GAAP adjusted net loss of RMB92.8 million in 2019 and non-GAAP adjusted net income of RMB281.1 million (US$43.1 million) in 2020.
Our Strengths
We believe the following strengths position us well to capitalize on the opportunities of a massive and rapidly changing road transportation market in China.
Our Strategies
We pursue the following strategies to fulfill our mission to make logistics better:
Summary of Risk Factors
Investing in the ADSs involves significant risks. You should carefully consider all of the information in this prospectus before making an investment in the ADSs. Below please find a summary of the principal risks we face, organized under relevant headings. These risks are discussed more fully in the section titled “Risk Factors.”
Risks Relating to Our Business and Industry
Risks and uncertainties relating to our business and industry include, but are not limited to, the following:
Risks Relating to Our Corporate Structure
Risks and uncertainties relating to our corporate structure include, but are not limited to, the following:
Risks Relating to Doing Business in China
We are also subject to risks and uncertainties relating to doing business in China in general, including, but are not limited to, the following:
Risks Relating to This Offering
In addition to the risks described above, we are subject to risks relating to the ADS and this offering, including, but not limited to, the following:
Recent Developments
The following sets forth certain selected unaudited financial data for the three months ended March 31, 2020 and 2021. We cannot assure you that our financial results for the three months ended March 31, 2021 will be indicative of our financial results for future interim periods or for the full year ending December 31, 2021. These selected unaudited financial data are not a comprehensive statement of our financial results for the three months ended March 31, 2020 or 2021, and should not be viewed as a substitute for our full interim or annual financial statements prepared in accordance with U.S. GAAP. Please refer to “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” included elsewhere in this prospectus for information regarding trends and other factors that may affect our results of operations.
Revenues
We recorded net revenues of RMB438.6 million and RMB867.2 million (US$132.9 million) for the three months ended March 31, 2020 and 2021, respectively. RMB203.3 million and RMB470.2 million (US$72.1 million) of our revenues were attributable to VAT in the three months ended March 31, 2020 and 2021, respectively, which were primarily related to VAT charged for freight brokerage services.
Revenues from freight matching services increased by 129.7% from RMB302.7 million for the three months ended March 31, 2020 to RMB695.2 million (US$106.5 million) for the same period in 2021 due to increase in revenues from freight brokerage service and freight listing service as well as growth in transaction commissions since late 2020.
Revenues from value-added services increased by 26.5% from RMB135.9 million for the three months ended March 31, 2020 to RMB172.0 million (US$26.4 million) for the same period in 2021, due to the increase in revenues from credit solutions and other value-added services.
Cost of revenues
Our cost of revenues increased by 117.6% from RMB189.7 million for the three months ended March 31, 2020 to RMB412.8 million (US$63.3 million) for same period in 2021, primarily due to an increase in VAT, related tax surcharges and other tax costs, net of tax refunds from government authorities. Our cost of revenues as a percentage of our net revenues increased from 43.3% to 47.6% during the same period.
For the three months ended March 31, 2020 and 2021, the gross amount of VAT was RMB258.2 million and RMB622.2 million (US$95.4 million), respectively, of which RMB244.0 million and RMB598.4 million (US$91.7 million) was related to freight brokerage service, and the amount of related tax surcharges and other tax costs was RMB46.2 million and RMB97.3 million (US$14.9 million), respectively, substantially all of which was related to freight brokerage service. For the same periods, the amount of tax refunds (including refunds on VAT and related tax surcharges) from government authorities was RMB160.3 million and RMB358.5 million (US$54.9 million), respectively, of which RMB152.2 million and RMB299.5 million (US$45.9 million) was refunds on VAT. Substantially all of the tax refunds were related to freight brokerage service.
Sales and marketing expenses
Our sales and marketing expenses increased by 107.0% from RMB82.3 million for the three months ended March 31, 2020 to RMB170.4 million (US$26.1 million) for the same period in 2021, and our sales and marketing expenses as a percentage of our net revenues increased from 18.8% to 19.6% during the same period. The increase was primarily due to (i) an increase in salary and benefits expenses by RMB31.9 million (US$4.9 million) driven by an increase in sales and marketing headcount and an increase in welfare contribution rate, (ii) an increase in advertising and marketing expenses by RMB17.3 million (US$2.6 million) as a result of new marketing initiatives, and (iii) recognition of share-based compensation expenses of RMB26.2 million (US$4.0 million).
General and administrative expenses
Our general and administrative expenses increased by 88.1% from RMB171.2 million for the three months ended March 31, 2020 to RMB322.0 million (US$49.3 million) for the same period in 2021, primarily due to an increase in share-based compensation expenses by RMB177.6 million (US$27.2 million). Our general and administrative expenses as a percentage of our net revenues decreased from 39.0% to 37.1% during the same period, primarily due to operating leverage on higher net revenues.
Research and development expenses
Our research and development expenses increased by 52.0% from RMB90.8 million for the three months ended March 31, 2020 to RMB138.0 million (US$21.1 million) for the same period in 2021, primarily due to (i) an increase in salary and benefits expenses by RMB27.5 million (US$4.2 million) driven by an increase in research and development headcount and an increase in welfare contribution rate, and (ii) recognition of share-based compensation expenses of RMB15.0 million (US$2.3 million). Our research and development expenses as a percentage of our net revenues decreased from 20.7% to 15.9% during the same period, primarily due to operating leverage on higher net revenues.
Net loss
We incurred a net loss of RMB197.0 million (US$30.2 million) for the three months ended March 31, 2021, as compared to a net loss of RMB63.3 million for the same period in 2020.
Our net revenues for the three months ended March 31, 2021 increased on a sequential basis from those for the three months ended December 31, 2020, primarily attributable to an increase in revenue from transaction commission due to the expansion of such business since late 2020, partially offset by a decrease in revenues from freight brokerage service and credit solutions, as we experienced a decrease in transaction volume caused by the seasonal impact from the Chinese New Year holiday season. Our net loss decreased over the same period primarily due to a significant decrease in our share-based compensation expenses.
Non-GAAP Financial Measures
We recorded non-GAAP adjusted operating income of RMB110.7 million (US$17.0 million) for the three months ended March 31, 2021, as compared to non-GAAP adjusted operating loss of RMB30.0 million for same period in 2020. Our non-GAAP adjusted net income increased by 324.4% from RMB26.6 million for the three months ended March 31, 2020 to RMB112.9 million (US$17.3 million) for same period in 2021, driven by growth in net revenues.
The following table reconciles our non-GAAP adjusted operating (loss)/income in the periods presented to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, which is loss from operations.
The following table reconciles our non-GAAP adjusted net income in the periods presented to the most directly comparable financial measure calculated and presented in accordance with U.S. GAAP, which is net loss.
Key Operating Metrics
Set forth in the table below are our key operating metrics for the three months ended March 31, 2021, as compared with those for the three months ended March 31, 2020. Our average shipper MAUs, fulfilled orders and GTV increased significantly on a year-over-year basis due to increased demand for our services, as China’s road transportation industry substantially recovered from the COVID-19 pandemic, as well as continued expansion of our business. In March 2021, approximately 1.4 million shippers posted shipping orders on our platform, representing a year-over-year growth of 63.0% from March 2020.
In August 2020, we began monetization of our online transaction service by collecting commissions from truckers on selected types of shipping orders originating from an initial batch of three cities, namely Hangzhou, Huzhou and Shaoxing. In March 2021, we collected commissions on shipping orders with GTV of RMB793.8 million, representing 96.8% of the total GTV originating from these three cities on our platform. Commission charges were RMB5.4 million in March 2021. We started collecting commissions on shipping orders originating from certain other cities on a smaller scale in the fourth quarter of 2020 and the first quarter of 2021. In March 2021, we collected commissions in a total of 60 cities on shipping orders with GTV of RMB8.6 billion, representing 89.6% of the total GTV originating from these 60 cities and 36.3% of the total nationwide GTV facilitated through our platform in the same month. Our total commission charges from these 60 cities were RMB46.6 million in March 2021.
Our History and Corporate Structure
The operations of Yunmanman commenced in 2013. Prior to December 2017, the Yunmanman platform was operated by the subsidiaries and variable interest entities of Full Truck Logistics Information Co. Ltd, an exempted company incorporated under the laws of the Cayman Islands. The operations of Huochebang commenced in 2011. Prior to December 2017, the Huochebang platform was operated by the subsidiaries and variable interest entities of Truck Alliance Inc., an exempted company incorporated under the laws of the Cayman Islands.
In December 2017, Full Truck Logistics Information Co. Ltd and Truck Alliance Inc. merged into Full Truck Alliance Co. Ltd., an exempted company incorporated under the laws of the Cayman Islands.
Due to PRC laws and regulations that impose certain restrictions or prohibitions on foreign equity ownership of entities providing value-added telecommunications services and certain financial services, we conduct a substantial part of our operations in China through contractual arrangements with Shanghai Xiwei Information Consulting Co., Ltd., or Shanghai Xiwei, Beijing Yunmanman Techonlogy Co., Ltd., or Beijing Yunmanman, and Guizhou FTA Logistics Technology Co., Ltd., or Guizhou FTA, which are our consolidated VIEs. Our consolidated VIEs and their subsidiaries hold certain licenses required to operate our business in China. We gained control over Shanghai Xiwei and Beijing Yunmanman through Jiangsu Manyun by entering into a series of contractual arrangements with Shanghai Xiwei, Beijing Yunmanman and their respective shareholders. In addition, we gained control over Guizhou FTA through Full Truck Alliance Information Consulting Co., Ltd., or FTA Information, by entering into a series of contractual arrangements with Guizhou FTA and its shareholders. For more details and risks related to our variable interest entity structure, please see “—Contractual Arrangements with the VIEs and their Shareholders” and “Risk Factors—Risks Relating to Our Corporate Structure.”
The following diagram illustrates our corporate structure with our principal subsidiaries as of the date of this prospectus. Certain entities that are immaterial to our results of operations, business and financial condition are omitted. Except as otherwise specified, equity interests depicted in this diagram are held as to 100%.
Our Corporate Information
Our principal executive offices are located at No. 123 Kaifa Avenue, Economic and Technical Development Zone, Guiyang, Guizhou 550009, People’s Republic of China and Wanbo Science and Technology Park, 20 Fengxin Road, Yuhuatai District, Nanjing, Jiangsu 210012, People’s Republic of China. Our telephone numbers at these addresses are +86-851-8384-2056 and +86-25-6692-0156, respectively. Our registered office in the Cayman Islands is located at the offices of Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman, KY1-1111, Cayman Islands. Investors should submit any inquiries to the address and telephone number of our principal executive offices set forth above.
Our main websites are www.ymm56.com and www.huochebang.cn, and the information contained on these websites are not a part of this prospectus. Our agent for service of process in the United States is Cogency Global Inc., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.