Full Truck Alliance Co. Ltd. ("FTA" or the "Company") (NYSE: YMM), China's "Uber Freight", a leading digital freight platform, announced on March 5th its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2024. In the fourth quarter of 2024, FTA achieved a record operating income of RMB 3.17 billion. The net income under non-US accounting standards reached RMB 1.05 billion, an increase of 43.5%. The annual operating income in 2024 was 11.24 billion yuan, up 33.2% year on year; Net profit under non-US accounting standards was approximately RMB 4.02 billion, an increase of 43.7%.

Truck drivers in China form a large but fragmented group, with 90% of the market made up of long-tail individual truck drivers. These drivers purchase trucks through leasing or loans, then independently take orders of hauling goods, running the business at their own risk. As a result, demand is highly volatile, while the market size for contract-based trucking remains largely untapped.

This blue ocean has provided FTA with ample room for growth. Backed by SoftBank Group Corp. and Tencent Holdings Ltd, the company operates a mobile app that connects truck drivers with individuals and corporations needing to transport goods within China. Currently, FTA's business primarily focuses on freight matching, freight brokerage, freight listing services, and value-added services. By leveraging artificial intelligence and big data technologies, FTA is able to optimize freight matching efficiency, enhancing the overall efficiency of the industry.

Taking the fourth quarter of 2024 as an example, a significant portion of FTA's revenue growth stemmed from the increase in order volume, driven by the platform's ability to precisely match the needs of both shippers and drivers.

Additionally, the company is consistently streamlining its cost structure and launched its original share repurchase program, further boosting investor confidence.

Q4 2024 Results Highlight Strong Core Profitability

and Improved Platform Efficiency

Q4 2024 Results Highlight Strong Core Profitability and Improved Platform Efficiency

In the fourth quarter of 2024, FTA achieved a total revenue of RMB 3.174 billion (USD 435 million), representing a year-over-year growth of 31.8%. This increase was primarily driven by a significant rise in revenue from freight matching services, reflecting the continued growth in platform user demand and further optimization of matching efficiency.

Credit：YMM-NYSE

As of March 30th, FTA’s ADR rose to $12.85, returning to levels last seen in November 2021.

Net profit for the quarter was RMB 575 million ($78.7 million), down slightly from RMB 588 in the same period in 2023. However, after non-GAAP adjustments, net income reached RMB1.052 billion (US $144 million), an increase of 43.5% year over year.

This adjusted increase in net income shows that the company's core profitability remains solid despite some near-term financial headwinds.

Credit：MarketWatch /USD

In terms of operational data, FTA's fulfilled order volume reached 56.9 million in the quarter, an increase of 24.3%. Average monthly active shippers (MAUs) reached 2.93 million, up 31.3% year-over-year. The increase in user activity indicates that FTA’s market penetration is increasing.

2024 Full Year Financial Results

Demonstrate Superior Business Optimization

and Cost Control

Credit: Gushitong/Baidu

FTA achieved a total revenue of RMB 11.239 billion (USD 1.54 billion) for the full year of 2024, representing a year-over-year growth of 33.2%. Among this, revenue from freight matching services reached RMB 9.455 billion, accounting for 84.2% of total revenue, confirming it as the company’s primary revenue stream.

The company reported a net profit of RMB 3.123 billion (USD 428 million) for the year, reflecting a 40.2% year-over-year increase. The non-GAAP adjusted net profit stood at RMB 4.020 billion (USD 551 million), marking a 43.7% growth. This improvement in profitability highlights the company’s strong performance in business optimization and cost management.

Operating Costs Rise

While R&D Spending Falls

The operating cost in the fourth quarter of 2024 was RMB 1.392 billion, an increase of 20.8% year-on-year. This growth was mainly influenced by higher taxes and fees as well as reduced government subsidies.

Sales and marketing expenses for the quarter were RMB $472 million, an increase of 12.1%, as advertising and marketing expenses increased.

Administrative expenses were RMB 202 million, down 23.9% year on year, due to a decrease in employee compensation and benefit expenses.

Research and development expenses were RMB 205 million, down 19.7 percent year-on-year. Salary reduction of the research and development staff is the main reason, but FTA said that the company is still investing in AI technology to optimize the matching efficiency.

Solid Balance Sheet,

Though NPL Ratio Edges Up

As of December 31, 2024, FTA had total assets of RMB 41.287 billion (US $5.656 billion) and cash and equivalents of RMB 29.2 billion (US $4 billion), an increase of 5.8% over the same period last year.

Total liabilities were RMB 3.152 billion (US $432 million), down 8.7% year on year. It is worth noting that the non-performing loan ratio of 2.2%, slightly higher than last year's 2.0%, indicating growing risks in its credit-related business.

Net cash flow from operating activities in the fourth quarter was RMB 1.150 billion (US $158 million), maintaining a healthy cash flow position.

Revenue Composition:

Growth Across Core and Value-added Services Indicates Rising User Trust

Credit: FTA Prospectus

Among all freight matchmaking services, the revenue of transaction service, which mainly derived from commission income, was RMB 1.158 billion, an increase of 71.1% year-on-year. Freight brokerage service means that FTA signed a contract with the freight owners on the platform to provide them with freight services and platform services, and then purchased freight services from the truck drivers on the platform to earn the difference. Its revenue was RMB 1.316 billion, up 17.0 percent year-on-year. The freight listing service is essentially a membership fee that the shippers pay a certain fee to release a certain number of shipping orders for free on the FTA’s platform, with a revenue of RMB 230 million, an increase of 7.5%.

Some freight drivers have expressed dissatisfaction with the high commission rate of the platform. Although FTA offers a great platform that connects freight drivers with businesses, driver earnings have not seen significant improvement.

Loan and credit are becoming a new engine of revenue growth. In the fourth quarter of 2024, value-added services revenue was RMB 469 million, an increase of 19.8%. Among them, the growth in demand for credit solutions is the main driver, indicating that users have increased trust in the financial services provided by the platform.

30% High Interest Loan Controversy

On a Chinese complaint reporting app "Black Cat Complaint", the actual annual interest rate of FTA's "driver loan" and "cargo owner loan" has become a highly reported issue. Some truck drivers uploaded details that the loan interest rate was as high as 30%. And there are several other issues like excessive late fees, irresponsive customer service, etc.

In response, FTA said that the 30% high interest rate is an outlier, which depends on whether there are overdue penalties and other factors in the using process. FTA has clearly informed the cost in the contract, and can also be viewed on the FTA app at any time. Since it only acts as a matching platform, it lacks enforcement authority and cannot oversee every transaction.

Reward Shareholders Through Dividends

and Share Repurchase Programs

FTA plans to implement a semi-annual cash dividend of $0.0048 per ordinary share from 2025 and plans to distribute $200 million for the whole year. The first dividend of $0.0960 per ADS will be paid on or about April 18, 2025. The company will extend the shareholder repurchase program until March 12, 2026, up to a maximum amount of $200 million to repurchase ADSs or common shares.

Share buybacks typically signal management's belief that the stock is undervalued, potentially boosting share prices. Meanwhile it will also reduce free cash flow, potentially deterring hostile takeovers, and help avoid earnings dilution.

Major investors including Norway's Sovereign Wealth Fund and BlackRock have increased their stakes, though the overall market sentiment remains cautious.

Domestic Market Grows Aggressively,

While International Market Moves Cautiously

credit: 360che.com

In 2017, FTA was formed from the merger of "Yun Man Man" and "Truck Alliance," naturally gained a dominant market position. However, in 2020, after Didi announced its entry into the freight market, Lalamove also announced the completion of a $515 million Series E funding round. A month later, Didi Freight raised seven times more than expected. Then, Hello Bike launched "Hello Express," and S.F. Express received the official freight business license. So far, the freight industry has attracted Alibaba, Didi, 58.com, Lalamove, FTA, S.F. Express and other big corporations. Although these freight platforms backed by major companies face similar issues—such as high commission fees and improper matching, etc., they are taking a significant market share, thus placing considerable pressure on FTA in this increasingly competitive market.

In the international market, FTA has been actively looking for opportunities for expansion.

FTA was initially listed in a $1.6 billion US public offering in 2021, before a Chinese regulatory investigation led to its app being removed from app stores. It returned about a year later with a renewed focus on the domestic market.

"Regarding a (second) listing in Hong Kong, whether it was then or now, the most important consideration for us has always been to hedge against U.S. risks," said Chief Financial Officer Simon Cai to Reuters.

Future Outlook:

Sustained Revenue Growth Expected

According to the financial report, FTA expects revenue in the first quarter of 2025 to be between RMB 2.63 billion and 2.68 billion, an increase of 15.9% to 18.1% year-on-year. Looking ahead, FTA plans to increase order conversion rates by enhancing AI-powered freight matching. It also intends to refine its driver credit rating system to ensure high-performing drivers receive better-quality orders.

On March 5th, Morgan Stanley demonstrated confidence in FTA by increasing the firm’s price target for the company’s stock to $15.00, up from the previous target of $14.00.

It also maintained an “overweight” rating for the company, signaling a positive outlook. While FTA saw lower net income in the fourth quarter of the year, full-year net profit still increased.

Morgan Stanley said the updated rating was based on its optimism about FTA’s future, particularly due to its strategic shift away from lower-margin freight brokerage, a move expected to improve future profit margins.

Conclusion: Despite Strong Growth,

FTA Must Diversify Its Revenue Model

and Address High Interest Rates

The success of FTA lies in seizing the opportunity for digital transformation of freight. In 2024, FTA achieved strong revenue and profit growth, demonstrating its industry-leading position. With AI, big data, optimized matching, and international expansion plans, the company is expected to continue increasing its business scale and profitability. In addition, the new shareholder return plan has boosted investor confidence.

However, from the perspective of the long-term development of the platform, finding a balance between profits and drivers' interests and achieving sustainable growth remains a key challenge. If driver dissatisfaction continues to grow, it will eventually have a negative impact on the platform’s long-term stability. As a digital freight company, the revenue model is single-track, which is increasingly reliant on credit-driven services, making them essentially a "financial technology company." Is the credit model sustainable? Will regulatory pressure intensify? How can FTA ensure its indispensability to truck drivers? These questions need to be answered as soon as possible.