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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form
20-F
 
 
(Mark One)
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
or
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2021 or
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
or
 
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
                    
For the transition period from
                    
to
                    
Commission file number:
001-36222
 
 
Autohome Inc.
(Exact name of Registrant as specified in its charter)
 
 
N/A
(Translation of Registrant’s name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
18th Floor Tower B, CEC Plaza
3 Dan Ling Street
Haidian District, Beijing 100080
The People’s Republic of China
(Address of principal executive offices)
Quan Long
Chief Executive Officer 
Tel: +86 (10) 5985-7001
E-mail:
ir@autohome.com.cn
Fax: +86 (10) 5985-7400
18th Floor Tower B, CEC Plaza
3 Dan Ling Street
Haidian District, Beijing 100080
The People’s Republic of China
(Name, Telephone, Email and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the
Act:
 
Title of Each Class
 
Trading
Symbol
(
s
)
  
Name of Each Exchange on Which Registered
American depositary shares, each representing four ordinary shares
 
ATHM
  
The New York Stock Exchange
Ordinary shares, par value US$0.0025 per share
 
2518
  
The Stock Exchange of Hong Kong Limited
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
(Title of Class)
 
 
Indicate the number of outstanding shares of each of the Issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
505,183,788 
ordinary shares (excluding 4,203,812 treasury shares and ordinary shares that had been issued and reserved for the purpose of our share incentive plans as of December 31, 2021), par value US$0.0025 per share, were outstanding as of December 31, 2021.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ☐    No  ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer or an emerging growth company. See definition of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule
12b-2
of the Exchange Act. (Check one):
 
Large accelerated filer
 
  
Accelerated filer
 
       
Non-accelerated
filer
 
  
Emerging growth company
 
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐
 
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.    Yes  ☒    No  ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
 
U.S. GAAP  ☒
  
International Financial Reporting Standards as issued by the International Accounting Standards Board  ☐
  
Other  ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ☐    Item 18  ☐
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule
12b-2
of the Exchange Act)    Yes  ☐    No  ☒
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.    Yes  ☐    No  ☐
 
 
 

Table of Contents
 
     1  
     3  
     4  
ITEM 1
  IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS      4  
ITEM 2
  OFFER STATISTICS AND EXPECTED TIMETABLE      4  
ITEM 3
  KEY INFORMATION      4  
ITEM 4
  INFORMATION ON THE COMPANY      59  
ITEM 4A
  UNRESOLVED STAFF COMMENTS      92  
ITEM 5
  OPERATING AND FINANCIAL REVIEW AND PROSPECTS      92  
ITEM 6
  DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES      114  
ITEM 7
  MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS      125  
ITEM 8
  FINANCIAL INFORMATION      130  
ITEM 9
  THE OFFER AND LISTING      131  
ITEM 10
  ADDITIONAL INFORMATION      131  
ITEM 11
  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK      141  
ITEM 12
  DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES      141  
     145  
ITEM 13
  DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES      145  
ITEM 14
  MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS      146  
ITEM 15
  CONTROLS AND PROCEDURES      146  
ITEM 16A
  AUDIT COMMITTEE FINANCIAL EXPERT      147  
ITEM 16B
  CODE OF ETHICS      147  
ITEM 16C
  PRINCIPAL ACCOUNTANT FEES AND SERVICES      148  
ITEM 16D
  EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES      148  
ITEM 16E
  PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS      148  
ITEM 16F
  CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT      148  
ITEM 16G
  CORPORATE GOVERNANCE      149  
ITEM 16H
  MINE SAFETY DISCLOSURE      149  
ITEM 16I
  DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS      149  
     149  
ITEM 17
  FINANCIAL STATEMENTS      149  
ITEM 18
  FINANCIAL STATEMENTS      149  
ITEM 19
  EXHIBITS      149  
 
 
i

INTRODUCTION
Unless otherwise indicated and except where the context otherwise requires, references in this annual report on Form
20-F
to:
 
   
“ADSs” are to our American depositary shares, each of which represents one Class A ordinary share, par value US$0.01 per share, before our variation of share capital in 2021, and four ordinary shares, par value US$0.0025 per share, after our variation of share capital in 2021;
 
   
“CAGR” refers to compound annual growth rate;
 
   
“CCASS” are to the Central Clearing and Settlement System established and operated by Hong Kong Securities Clearing Company Limited, a wholly-owned subsidiary of Hong Kong Exchange and Clearing Limited;
 
   
“China” or the “PRC” are to the People’s Republic of China, excluding, for the purpose of this annual report only, Hong Kong, Macau and Taiwan;
 
   
“CSRC” are to the China Securities Regulatory Commission;
 
   
“HK$” or “Hong Kong dollars” or “HK dollars” are to Hong Kong dollars, the lawful currency of Hong Kong;
 
   
“Hong Kong” or “HK” or “Hong Kong S.A.R.” are to the Hong Kong Special Administrative Region of the PRC;
 
   
“Hong Kong Listing Rules” are to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited, as amended or supplemented from time to time;
 
   
“Hong Kong Share Registrar” are to Computershare Hong Kong Investor Services Limited;
 
   
“Hong Kong Stock Exchange” are to The Stock Exchange of Hong Kong Limited;
 
   
“Main Board” are to the stock market (excluding the option market) operated by the Hong Kong Stock Exchange which is independent from and operated in parallel with the Growth Enterprise Market of the Hong Kong Stock Exchange;
 
   
“Ping An Group” refers to Ping An Insurance (Group) Company of China, Ltd. (HKEX: 2318; SHA: 601318), a company organized under the laws of the PRC whose H shares and A shares are listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, respectively;
 
   
“RMB” and “Renminbi” are to the legal currency of China;
 
   
“SFC” are to the Securities and Futures Commission of Hong Kong;
 
   
“SFO” are to the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended or supplemented from time to time;
 
   
“shares” or “ordinary shares” are our Class A ordinary shares, par value US$0.01 per share, before our variation of share capital in 2021, and ordinary shares, par value US$0.0025 per share, after our variation of share capital in 2021;
 
   
“VIEs” and “VIE Entities” are the variable interest entities;
 
   
“we,” “us,” “our,” “our company” or “the Company” are to Autohome Inc., its predecessors, subsidiaries and, in the context of describing our operations and consolidated financial information, the VIEs in China;
 
1

   
“U.S. GAAP” refers to generally accepted accounting principles in the United States; and
 
   
“$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States.
In February 2021 we effected a
4-for-1
share split and an
ADS-to-ordinary
share ratio adjustment from one ADS representing one Class A ordinary share to one ADS representing four ordinary shares upon the approval of our shareholders, which applies to all share numbers in this annual report retrospectively.
Substantially all of our operations are conducted in China and substantially all of our revenues are denominated in RMB. This annual report contains translations of RMB and Hong Kong dollar amounts into U.S. dollars at specific rates solely for the convenience of the readers. Unless otherwise noted, all translations from RMB and Hong Kong dollars to U.S. dollars and from U.S. dollars to RMB in this annual report were made at a rate of RMB6.3726 to US$1.00 and HK$7.7996 to US$1.00, the respective exchange rates set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of December 30, 2021. We make no representation that any RMB, Hong Kong dollar or U.S. dollar amounts could have been, or could be, converted into U.S. dollars, RMB or Hong Kong dollars, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade.
 
2

FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements that reflect our current expectations and views of future events. The forward-looking statements are contained principally in the sections entitled “Item 3. Key
Information-D.
Risk Factors,” “Item 4. Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects.” These forward-looking statements are made under the “safe-harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. Known and unknown risks, uncertainties and other factors, including those listed under “Item 3. Key
Information-D.
Risk Factors,” may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.
You can identify some of these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “is/are likely to,” “potential,” “continue” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include statements relating to:
 
   
our ability to attract and retain users and customers;
 
   
our business strategies and initiatives as well as our new business plans;
 
   
our future business development, financial condition and results of operations;
 
   
our ability to further enhance our brand recognition;
 
   
our ability to attract, retain and motivate key personnel;
 
   
competition in our industry in China; and
 
   
relevant government policies and regulations relating to our industry.
These forward-looking statements involve various risks and uncertainties. Although we believe that our expectations expressed in these forward-looking statements are reasonable, our expectations may later be found to be incorrect. Our actual results could be materially different from our expectations. Other sections of this annual report include additional factors that could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. You should read thoroughly this annual report and the documents that we refer to with the understanding that our actual future results may be materially different from, or worse than, what we expect. We qualify all of our forward-looking statements by these cautionary statements.
This annual report contains certain data and information that we obtained from various government and private publications. Statistical data in these publications also include projections based on a number of assumptions. The online automotive advertising industry may not grow at the rate projected by market data, or at all. The failure of this market to grow at the projected rate may have a material adverse effect on our business and the market price of our ADSs and/or ordinary shares. In addition, the rapidly changing nature of the online automotive advertising industry and the online automobile transaction industry results in significant uncertainties for any projections or estimates relating to the growth prospects or future condition of our market. Furthermore, if any one or more of the assumptions underlying the market data are later found to be incorrect, actual results may differ from the projections based on these assumptions. You should not place undue reliance on these forward-looking statements.
The forward-looking statements made in this annual report relate only to events or information as of the date on which the statements are made in this annual report. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this annual report and the documents that we refer to in this annual report and exhibits to this annual report completely and with the understanding that our actual future results may be materially different from what we expect.
 
3

PART I.
 
ITEM 1
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not applicable.
 
ITEM 2
OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
 
ITEM 3
KEY INFORMATION
Our Holding Company Structure and VIE Contractual Arrangements
Autohome Inc. is not a Chinese operating company but a Cayman Islands holding company with no equity ownership in its VIEs. We conduct our operations primarily through our PRC subsidiaries and the VIEs. We conduct our business activities related to internet content services through the VIEs in order to comply with the PRC laws and regulations, which place certain restrictions on foreign ownership of companies that provide internet content services in China. Accordingly, we operate these businesses in China through the VIEs, and rely on contractual arrangements among our PRC subsidiaries, the VIEs and their shareholders to control the business operations of the VIEs. The VIEs are consolidated for accounting purposes, but are not entities in which our Cayman Islands holding company, or our investors, own equity. Revenues contributed by the VIEs accounted for 8.3%, 8.1% and 13.1% of our total net revenues for the fiscal years 2019, 2020 and 2021, respectively. As used in this annual report, “we,” “us,” “our,” “our company” or “the Company” refer to Autohome Inc., its predecessors, subsidiaries and, in the context of describing our operations and consolidated financial information, the VIEs in China, including, but not limited to, Beijing Autohome Information Technology Co., Ltd., or Autohome Information, Beijing Shengtuo Hongyuan Information Technology Co., Ltd., or Shengtuo Hongyuan, and Shanghai Jinwu Auto Technology Consultant Co., Ltd., or Shanghai Jinwu. Investors in our ordinary shares or ADSs are not purchasing equity interest in the VIEs in China but instead are purchasing equity interest in a holding company incorporated in the Cayman Islands.
A series of contractual agreements, including power of attorney, equity interest pledge agreements, exclusive technology consulting and service agreements, equity option agreements and loan agreements, have been entered into by and among our PRC subsidiaries, the VIEs and their respective shareholders. Terms contained in each set of contractual arrangements with the VIEs and their respective shareholders are substantially similar. As a result of the contractual arrangements, we have effective control over and are considered the primary beneficiary of these companies, and we have consolidated the financial results of these companies in our consolidated financial statements. For more details of these contractual arrangements, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Contractual Arrangements with the Variable Interest Entities.”
However, the contractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs, and we may incur substantial costs to enforce the terms of the arrangements. In addition, these arrangements have not been tested in PRC courts. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—Our contractual arrangements with the VIEs may not be as effective in providing operational control as direct ownership” and “—The interests of the individual nominee shareholders of the VIEs may be different from our interests, which may materially and adversely affect our business.”
There are also substantial uncertainties regarding the interpretation and application of current and future PRC laws, regulations and rules regarding the status of the rights of our Cayman Islands holding company with respect to its contractual arrangements with the VIEs and their shareholders. It is uncertain whether any new PRC laws or regulations relating to variable interest entity structures will be adopted or if adopted, what they would provide. If we or any of the VIEs is found to be in violation of any existing or future PRC laws or regulations, or fail to obtain or maintain any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for operating our services in China do not comply with PRC governmental restrictions on foreign investment in internet businesses, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, and we may face significant disruption to our business operations” and “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”
 
4

Our corporate structure is subject to risks associated with our contractual arrangements with the VIEs. If the PRC government deems that our contractual arrangements with the VIEs do not comply with PRC regulatory restrictions on foreign investment in the relevant industries, or if these regulations or the interpretation of existing regulations change or are interpreted differently in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations. Our holding company, our PRC subsidiaries and VIEs, and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of the VIEs and our company as a whole. For a detailed description of the risks associated with our corporate structure, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure.”
We face various risks and uncertainties related to doing business in China. Our business operations are primarily conducted in China, and we are subject to complex and evolving PRC laws and regulations. For example, we face risks associated with regulatory approvals on offshore offerings, anti-monopoly regulatory actions, and oversight on cybersecurity and data privacy, as well as the lack of inspection by the Public Company Accounting Oversight Board, or the PCAOB, on our auditors, which may impact our ability to conduct certain businesses, accept foreign investments, or list on a United States or other foreign exchanges. On December 16, 2021, the PCAOB issued a report to notify the United States Securities and Exchange Commission (the “
SEC
”) its determinations that it is unable to inspect or investigate completely registered public accounting firms headquartered in Mainland China, and identifies the registered public accounting firms in Mainland China that are subject to such determinations. Our auditor is identified by the PCAOB and is subject to the determination. Under the Holding Foreign Companies Accountable Act, or the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares or ADSs from being traded on a national securities exchange or in the over the counter trading market in the U.S. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment. These risks could result in a material adverse change in our operations and the value of our securities, significantly limit or completely hinder our ability to continue to offer securities to investors, or cause the value of such securities to significantly decline or become worthless. For a detailed description of risks related to doing business in China, please refer to risks disclosed under “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China.”
The PRC government’s significant authority in regulating our operations and its oversight and control over offerings conducted overseas by, and foreign investment in, China-based issuers could significantly limit or completely hinder our ability to offer or continue to offer securities to investors. Implementation of industry-wide regulations, including data security or anti-monopoly related regulations, in this nature may cause the value of such securities to significantly decline or become worthless. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—The PRC government’s significant oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs and/or ordinary shares.”
Risks and uncertainties arising from the legal system in China, including risks and uncertainties regarding the enforcement of laws and quickly evolving rules and regulations in China, could result in a material adverse change in our operations and the value of our ADSs. For more details, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—Uncertainties with respect to the PRC legal system could adversely affect us” and “—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet business and companies.”
Permissions Required from the PRC Authorities for Our Operations
We conduct our business primarily through our subsidiaries and the VIEs in China. Our operations in China are governed by PRC laws and regulations. As of the date of this annual report, our PRC subsidiaries and the VIEs have obtained the requisite licenses and permits from the PRC government authorities that are material for the business operations of our holding company, the VIEs in China, including, among others, the ICP licenses, the Value-added Telecommunications License for Online Data Processing and Transaction Processing Business (for operational
e-commerce
only), the Surveying and Mapping Qualification Certificate for Internet Mapping (such certificate held by the Autohome Information is in the process of the renewal), an Operating License for the Production and Dissemination of Radio and Television Programs, an internet Audio/Video Program Transmission License, an Internet Culture Business Permit, which is in the process of the renewal. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in China—We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet business and companies.”
 
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Furthermore, if we are deemed as a critical information infrastructure operator under the PRC cybersecurity laws and regulations, we must fulfill certain obligations as required under the PRC cybersecurity laws and regulations, including, among others, storing personal information and important data collected and produced within the PRC territory during our operations in China, and we may be subject to review when purchasing internet products and services. If we are not able to comply with the cybersecurity and data privacy requirements in a timely manner, or at all, we may be subject to government enforcement actions and investigations, fines, penalties, suspension of our
non-compliant
operations, or removal of our app from the relevant application stores, among other sanctions, which could materially and adversely affect our business and results of operations. In addition, we and the VIEs may be required to obtain permissions from CSRC, and may be required to go through cybersecurity review by the Cyberspace Administration of China, or the CAC, in case of any future issuance of securities to foreign investors. Any failure to obtain or delay in obtaining such approval or completing such procedures would subject us to sanctions by the CSRC, CAC or other PRC regulatory authorities. These regulatory authorities may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China, limit our operating privileges in China, delay or restrict the repatriation of the proceeds from our offshore offerings into China or take other actions that could materially and adversely affect our business, financial condition, results of operations, and prospects, as well as the trading price of our ADSs. For more detailed information, see “Item 3. Key Information—D. Risk Factors—Risks Related to our Business and Industry—Our business is subject to complex and evolving Chinese laws and regulations regarding data privacy and cybersecurity, many of which are subject to changes and uncertain interpretations. Any changes in these laws could cause changes to our business practices and increased cost of operations, and any security breaches or our actual or perceived failure to comply with such laws could result in claims, penalties, damages to our reputation and brand, declines in user growth or engagement, or otherwise harm our business, results of operations and financial condition,” and “—Risks Related to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required if we were to conduct offshore offerings in the future, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”
Cash Flows through Our Organization
Autohome Inc. is a holding company with no operations of its own. We conduct our operations in China primarily through our subsidiaries and the VIEs in China. As a result, although other means are available for us to obtain financing at the holding company level, Autohome Inc.’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries and service fees paid by the VIEs.
If any of our subsidiaries incurs debt on its own behalf in the future, the instruments governing such debt may restrict its ability to pay dividends to Autohome Inc. In addition, our PRC subsidiaries are permitted to pay dividends to Autohome Inc. only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries and the VIEs are required to make appropriations to certain statutory reserve funds or may make appropriations to certain discretionary funds, which are not distributable as cash dividends and can only be used for specific purposes. Under PRC laws and regulations, our PRC subsidiaries and the VIEs are subject to certain restrictions with respect to paying dividends or otherwise transferring any of their net assets to us. Remittance of dividends by a wholly foreign-owned enterprise out of China is also subject to examination by the banks designated by the State Administration of Foreign Exchange, or SAFE. The amounts restricted include the
paid-up
capital and the statutory reserve funds of our PRC subsidiaries and the net assets of the VIEs in which we have no legal ownership. For more details, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Holding Company Structure.” For risks relating to the fund flows of our operations in China, see “Item 3. Key Information—D. Risk Factors—Risks Related to Our Corporate Structure—We may rely to a significant extent on dividends and other distributions on equity paid by our PRC subsidiaries to fund any cash and financing requirements we may have. Any limitation on the ability of our PRC subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business.” In the years ended December 31, 2019, 2020 and 2021, our PRC subsidiaries paid to Autohome Inc. and its offshore subsidiaries a total of nil, RMB649.6 million and RMB681.4 million (US$106.9 million), respectively, in the form of dividends.
 
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Under PRC law, Autohome Inc. and its offshore subsidiaries may provide funding to our PRC subsidiaries only through capital contributions or loans, and to the VIEs only through loans, subject to satisfaction of applicable government registration and approval requirements.
The VIEs may transfer cash to our PRC subsidiaries by paying service fees according to the exclusive technology consulting and service agreements. Pursuant to these agreements, the VIEs agree to pay the applicable subsidiaries technology consulting and service fees, subject to conditions therein.
Autohome Inc. has in place a regular dividend policy. For the fiscal years of 2019, 2020 and 2021, we paid cash dividends in the total amounts of nil, US$99.8 million and US$105.7 million, respectively, to our shareholders, pursuant to our dividend policy. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.” For the United States federal income tax consequences of the dividends we make, see “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Dividends.” For PRC, Hong Kong and United States federal income tax considerations of an investment in our ADSs and/or ordinary shares, see “Item 10. Additional Information—E. Taxation.”
The cash transfer within the Company was summarized as below:
 
    
For the Year Ended December 31,
 
    
2019
    
2020
    
2021
 
                      
    
RMB
    
RMB
    
RMB
    
US$
 
                             
    
(in thousands)
 
Intercompany due from/(to) amounts
           
Amounts from parent to offshore subsidiaries
(1)
     55,208        101,785        3,523,478        552,911  
Capital contributions from offshore subsidiaries to onshore subsidiaries
     —          —          163,755        25,697  
Amounts transferred among onshore subsidiaries
(2)
     —          —          1,060,098        166,352  
Amounts transferred among VIEs and onshore subsidiaries
(3)
     —          —          538,794        84,549  
Dividend (paid) by onshore subsidiaries to offshore subsidiaries/parent company
           
Dividend paid by onshore subsidiaries to offshore subsidiaries
     —          (649,551      (681,427      (106,931
Dividend paid by offshore subsidiaries to parent company
     —          (634,078      (682,188      (107,050
Amounts paid / (received) by subsidiaries to / (from) VIEs
           
Cash paid by onshore subsidiaries to the VIEs
(4)
     245,693        121,156        251,369        39,445  
Cash paid by VIEs to onshore subsidiaries
(5)
     601,458        231,420        587,771        92,234  
 
Notes:
(1)
It represented temporary operating cash support and the proceeds in connection with our Hong Kong Offering in March, 2021, which was transferred from parent company to offshore subsidiaries.
(2)
It represented temporary operating cash support, which was transferred among onshore subsidiaries.
(3)
It represented temporary operating cash support, which was transferred among VIEs and onshore subsidiaries.
(4)
It mainly represented service fees paid by the WFOEs and other subsidiaries to the VIEs for information services.
(5)
It mainly represented service fees paid by VIEs to the WFOEs and other subsidiaries for technological development and promotion service.
In the years ended December 31, 2019, 2020 and 2021, no assets other than cash were transferred through our organization.
 
A.
Selected Financial Data
The following tables present the selected consolidated financial information for our company. Our selected consolidated statements of operations data presented below for the years ended December 31, 2019, 2020 and 2021 and our selected consolidated balance sheet data as of December 31, 2020 and 2021 have been derived from our consolidated financial statements, which are included in this annual report beginning on page
F-1.
Our selected consolidated balance sheet data as of December 31, 2017, 2018 and 2019 and the selected consolidated statements of operations data for 2017 and 2018 presented below have been derived from our consolidated financial statements not included in this annual report. Our historical results for any period are not necessarily indicative of results to be expected for any future period. You should read the following selected financial data in conjunction with the consolidated financial statements and related notes and the information under “Item 5. Operating and Financial Review and Prospects” in this annual report. Our audited consolidated financial statements are prepared and presented in accordance with U.S. GAAP.
 
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For the Year Ended December 31,
 
    
2017
   
2018
   
2019
   
2020
   
2021
 
                                      
    
RMB
   
RMB
   
RMB
   
RMB
   
RMB
   
US$
 
                                      
    
(in thousands, except for number of shares and per share data)
 
Selected Consolidated Statements of Operations Data:
            
Net revenues
(1)
  
 
6,210,181
 
 
 
7,233,151
 
 
 
8,420,751
 
 
 
8,658,559
 
 
 
7,237,004
 
 
 
1,135,644
 
Cost of revenues
(2)
     (1,358,685     (820,288     (960,292     (961,170     (1,047,892     (164,437
Gross profit
  
 
4,851,496
 
 
 
6,412,863
 
 
 
7,460,459
 
 
 
7,697,389
 
 
 
6,189,112
 
 
 
971,207
 
Operating expenses
            
Sales and marketing expenses
(2)
     (1,647,519     (2,435,236     (3,093,345     (3,246,507     (2,759,905     (433,089
General and administrative expenses
(2)
     (281,951     (314,846     (317,967     (381,843     (543,799     (85,334
Product development expenses
(2)
     (878,773     (1,135,247     (1,291,054     (1,364,227     (1,398,037     (219,383
Total operating expenses
  
 
(2,808,243
 
 
(3,885,329
 
 
(4,702,366
 
 
(4,992,577
 
 
(4,701,741
 
 
(737,806
Other operating income, net
     8,577       341,391       477,699       443,215       294,241       46,173  
Operating profit
  
 
2,051,830
 
 
 
2,868,925
 
 
 
3,235,792
 
 
 
3,148,027
 
 
 
1,781,612
 
 
 
279,574
 
Interest and investment income, net
     220,282       347,794       464,529       521,731       395,245       62,022  
Earnings/(loss) from equity method investments
     (10,571     24,702       685       (1,246     301       47  
Income before income taxes
  
 
2,261,541
 
 
 
3,241,421
 
 
 
3,701,006
 
 
 
3,668,512
 
 
 
2,177,158
 
 
 
341,643
 
Income tax expense
     (267,082     (377,890     (500,361     (260,945     (34,006     (5,336
Net income
  
 
1,994,459
 
 
 
2,863,531
 
 
 
3,200,645
 
 
 
3,407,567
 
 
 
2,143,152
 
 
 
336,307
 
Net (income)/loss attributable to noncontrolling interests
     7,160       7,484       (679     (2,338     105,633       16,576  
Net income attributable to Autohome Inc.
  
 
2,001,619
 
 
 
2,871,015
 
 
 
3,199,966
 
 
 
3,405,229
 
 
 
2,248,785
 
 
 
352,883
 
Accretion of mezzanine equity.
     —         —         —         —         (411,792     (64,619
Accretion attributable to noncontrolling interests.
     —         —         —         —         311,573       48,893  
Net income attributable to ordinary shareholders
  
 
2,001,619
 
 
 
2,871,015
 
 
 
3,199,966
 
 
 
3,405,229
 
 
 
2,148,566
 
 
 
337,157
 
Earnings per share for ordinary shares
(3)
            
Basic
     4.30       6.10       6.75       7.13       4.30       0.67  
Diluted
     4.24       6.02       6.69       7.10       4.29       0.67  
Earnings per ADS attributable to ordinary shareholders (one ADS equals four ordinary shares)
            
Basic
     17.20       24.40       26.99       28.53       17.19       2.70  
Diluted
     16.95       24.08       26.77       28.40       17.17       2.69  
Weighted average number of shares used to compute earnings per share
(4)
            
Ordinary shares:
            
Basic
     465,519,384       470,687,884       474,328,384       477,467,268       499,861,764       499,861,764  
Diluted
     472,235,424       476,941,516       478,060,988       479,686,380       500,481,540       500,481,540  
Dividend per share
(5)
     —         —         —         —         —         —    
 
Notes:
(1)
In May 2014, the Financial Accounting Standards Board issued ASC 606, Revenue from Contracts with Customers, a new standard related to revenue recognition. The most significant impact on our company is the change of the presentation of value-added tax from gross basis to net basis. We adopted this guidance effective from January 1, 2018 using the modified retrospective method. The comparative information has not been restated and continues to be reported under the accounting standards in effect for the relevant periods. As a result, the operating results for the years ended December 31, 2017 have not been restated and are presented on a gross basis with value-added tax being included in the net revenues and cost of revenues in such years, while the operating results for the years ended December 31, 2018, 2019, 2020 and 2021 are presented on net basis, with the value-added tax being excluded from the net revenues and cost of revenues in such year, and value-added tax refunds being presented as a component of other operating income, net.
 
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(2)
Including share-based compensation expenses as follows:
 
    
For the Year Ended December 31,
 
    
2017
    
2018
    
2019
    
2020
    
2021
 
                                           
    
RMB
    
RMB
    
RMB
    
RMB
    
RMB
    
US$
 
                                           
    
(in thousands)
 
Allocation of share-based compensation expenses
                 
Cost of revenues
     15,166        16,112        15,508        21,372        23,142        3,631  
Sales and marketing expenses
     53,064        61,599        46,081        40,103        46,823        7,348  
General and administrative expenses
     59,954        55,992        62,884        55,868        48,803        7,658  
Product development expenses
     49,602        68,622        79,535        93,863        87,292        13,698  
Total share-based compensation expenses
  
 
177,786
 
  
 
202,325
 
  
 
204,008
 
  
 
211,206
 
  
 
206,060
 
  
 
32,335
 
 
(3)
Par value per share and the number of shares have been retrospectively adjusted for the share split and the ADS ratio change that were effective on February 5, 2021 as detailed in Note 2(a) of “Item 18. Financial Statements.”
 
(4)
Earnings per share for ordinary shares (diluted) for each year from 2017 to 2021 were computed after taking into account the dilutive effect of the shares underlying our employees’ share-based awards.
 
(5)
The special cash dividends declared in November 2017 to the holders of our ordinary shares of record as of the close of business on January 4, 2018 were paid in the amount of US$0.76 per share (inclusive of applicable fees payable to our depositary bank) on or about January 15, 2018. The cash dividends declared in February 2020 to the holders of our ordinary shares of record as of the close of business on April 15, 2020 were paid in the amount of US$0.77 per share (inclusive of applicable fees payable to our depositary bank) on or about April 22, 2020. The cash dividends declared in February 2021 to the holders of our ordinary shares of record as of the close of business on February 25, 2021 were paid in the amount of US$0.87 per ADS (inclusive of applicable fees payable to our depositary bank) on or about March 5, 2021. The cash dividends declared in February 2022 to holders of our ordinary shares of record as of the close of business on March 21, 2022 were paid in an amount of US$0.1325 per share (or US$0.53 per ADS) on March 31, 2022. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy.”
 
    
For the Year Ended December 31,
 
    
2017
    
2018
    
2019
    
2020
    
2021
 
                                           
    
RMB
    
RMB
    
RMB
    
RMB
    
RMB
    
US$
 
                                           
    
(in thousands)
 
Selected Consolidated Balance Sheet Data:
                 
Cash and cash equivalents, restricted cash, current and short-term investments
     8,154,224        10,061,458        12,795,110        14,629,398        20,822,623        3,267,523  
Accounts receivable, net
     1,893,737        2,795,835        3,231,486        3,124,197        2,139,471        335,730  
Total current assets
     10,258,586        13,141,317        16,358,382        18,364,080        23,325,718        3,660,314  
Total assets
(1)
  
 
12,294,975
 
  
 
15,756,201
 
  
 
19,155,865
 
  
 
23,730,845
 
  
 
28,529,006
 
  
 
4,476,824
 
Deferred revenue
     1,409,485        1,510,726        1,370,953        1,315,667        1,553,013        243,702  
Total current liabilities
     3,889,316        4,164,769        3,965,903        4,185,683        3,986,219        625,524  
Total
non-current
liabilities
     470,373        479,989        584,021        736,370        605,417        95,004  
Total liabilities
(1)
  
 
4,359,689
 
  
 
4,644,758
 
  
 
4,549,924
 
  
 
4,922,053
 
  
 
4,591,636
 
  
 
720,528
 
Mezzanine equity
  
 
—  
 
  
 
—  
 
  
 
—  
 
  
 
1,056,237
 
  
 
1,468,029
 
  
 
230,366
 
Total Autohome Inc. shareholders’ equity
  
 
7,951,637
 
  
 
11,135,278
 
  
 
14,629,097
 
  
 
17,625,734
 
  
 
22,754,419
 
  
 
3,570,665
 
Total equity
  
 
7,935,286
 
  
 
11,111,443
 
  
 
14,605,941
 
  
 
17,752,555
 
  
 
22,469,341
 
  
 
3,525,930
 
Total liabilities, mezzanine equity and equity
  
 
12,294,975
 
  
 
15,756,201
 
  
 
19,155,865
 
  
 
23,730,845
 
  
 
28,529,006
 
  
 
4,476,824
 
 
Note:
(1)
In February 2016, the Financial Accounting Standards Board issued ASU
No. 2016-02,
Leases, or ASU
2016-02.
Under the new provisions, all lessees will report a
right-of-use
asset and a liability for the obligation to make payments for all leases with the exception of those leases with a term of 12 months or less. We adopted this guidance effective January 1, 2019 using the modified retrospective method, with the comparative information not being restated and continues to be reported under the accounting standards in effect for those periods. The most significant impact upon adoption was the recognition of
right-of-use
assets and lease liabilities for operating leases related to our office buildings and internet data center facilities. As of December 31, 2021, operating lease
right-of-use
assets (included in other
non-current
assets) of RMB133.4 million (US$20.9 million), operating lease liabilities, current (included in accrued expenses and other payables) of RMB96.2 million (US$15.1 million) and operating lease liabilities,
non-current
(included in other liabilities) of RMB28.6 million (US$4.5 million) were recognized on our consolidated balance sheet.
 
9

Financial Information Related to the VIEs
The following table presents the condensed consolidating schedule of financial position for the VIEs and other entities as of the dates presented.
Selected Condensed Consolidated Statements of Income Information
 
    
For the Year Ended December 31, 2021
 
    
Autohome
Inc.
   
Other

Subsidiaries
   
Primary
Beneficiary
of VIEs
   
VIEs and
VIEs’
subsidiaries
   
Eliminations
   
Consolidated
Total
 
                                      
    
(RMB in thousands)
 
Net revenues:
            
-Third-party revenues
     —         6,081,662       206,822       948,520       —         7,237,004  
-Inter-company revenues
(1)
     —         18,446       1,085,139       131,524       (1,235,109     —    
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total Revenue
        
 
6,100,108
 
 
 
1,291,961
 
 
 
1,080,044
 
 
 
(1,235,109
 
 
7,237,004
 
Total Cost and expense
  
 
(36,007
 
 
(4,671,667
 
 
(1,100,250
 
 
(1,176,818
 
 
1,235,109
 
 
 
(5,749,633
Share of income of subsidiaries and VIEs
(2)
:
            
-Share of income of subsidiaries
     2,326,018       130,868       26,825       —         (2,483,711     —    
-Share of income of VIEs
     —         —         (89,397     —         89,397       —    
Others, Income/(loss)
     (41,226     725,283       3,869       1,861       —         689,787  
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Income before income taxes
  
 
2,248,785
 
 
 
2,284,592
 
 
 
133,008
 
 
 
(94,913
 
 
(2,394,314
 
 
2,177,158
 
Income tax expense
     —         (64,207     24,685       5,516             (34,006
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net income/(loss)
  
 
2,248,785
 
 
 
2,220,385
 
 
 
157,693
 
 
 
(89,397
 
 
(2,394,314
 
 
2,143,152
 
Net loss/(income) attributable to noncontrolling interests
     —         105,633       —         —         —         105,633  
Net income attributable to Autohome Inc.
  
 
2,248,785
 
 
 
2,326,018
 
 
 
157,693
 
 
 
(89,397
 
 
(2,394,314
 
 
2,248,785
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
Note:
(1)
It represents the elimination of the intercompany service charge at the consolidation level.
(2)
It represents the elimination of incurrence of losses by parent company and its subsidiaries for, or the receipt of economic benefits by parent company and its subsidiaries from, their respective subsidiaries and the VIEs.
 
    
For the Year Ended December 31, 2020
 
    
      Autohome
Inc.
   
Other

Subsidiaries
   
Primary
Beneficiary
of VIEs
   
VIEs and
VIEs’
subsidiaries
   
Eliminations
   
Consolidated
Total
 
                                      
    
(RMB in thousands)
 
Net revenues:
            
-Third-party revenues
     —         7,642,110       315,841       700,608       —         8,658,559  
-Inter-company revenues
(1)
     —         10,623       900,900       173,299       (1,084,822     —    
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total Revenue
     —      
 
7,652,733
 
 
 
1,216,741
 
 
 
873,907
 
 
 
(1,084,822
 
 
8,658,559
 
Total Cost and expense
  
 
(21,109
 
 
(5,252,144
 
 
(887,750
 
 
(877,566
 
 
1,084,822
 
 
 
(5,953,747
Share of income of subsidiaries and VIEs
(2)
:
            
-Share of income of subsidiaries
     3,361,422       482,106       9,172       —         (3,852,700     —    
-Share of income of VIEs
     —         —         23,342       —         (23,342     —    
Others, Income/(loss)
     64,916       752,063       131,438       15,283       —         963,700  
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Income before income taxes
  
 
3,405,229
 
 
 
3,634,758
 
 
 
492,943
 
 
 
11,624
 
 
 
(3,876,042
 
 
3,668,512
 
Income tax expense
     —         (270,998     (1,665     11,718             (260,945
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net income/(loss)
  
 
3,405,229
 
 
 
3,363,760
 
 
 
491,278
 
 
 
23,342
 
 
 
(3,876,042
 
 
3,407,567
 
Net loss/(income) attributable to noncontrolling interests
     —         (2,338     —         —         —         (2,338
Net income attributable to Autohome Inc.
  
 
3,405,229
 
 
 
3,361,422
 
 
 
491,278
 
 
 
23,342
 
 
 
(3,876,042
 
 
3,405,229
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
Notes:
(1)
It represents the elimination of the intercompany service charge at the consolidation level.
(2)
It represents the elimination of incurrence of losses by parent company and its subsidiaries for, or the receipt of economic benefits by parent company and its subsidiaries from, their respective subsidiaries and the VIEs.
 
10

    
For the Year Ended December 31, 2019
 
    
Autohome
Inc.
   
Other

Subsidiaries
   
Primary
Beneficiary
of VIEs
   
VIEs and
VIEs’
subsidiaries
   
Eliminations
   
Consolidated
Total
 
                                      
    
(RMB in thousands)
 
Net revenues:
            
-Third-party revenues
     —         7,385,579       333,132       702,040       —         8,420,751  
-Inter-company revenues
(1)
     —         22,113       1,055,078       113,430       (1,190,621     —    
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Total Revenue
     —      
 
7,407,692
 
 
 
1,388,210
 
 
 
815,470
 
 
 
(1,190,621
 
 
8,420,751
 
Total Cost and expense
  
 
(14,757
 
 
(4,996,916
 
 
(1,016,710
 
 
(824,896
 
 
1,190,621
 
 
 
(5,662,658
Share of income of subsidiaries and VIEs
(2)
:
            
-Share of income of subsidiaries
     3,140,537       462,075       15,057       —         (3,617,669     —    
-Share of income of VIEs
     —         —         (848     —         848       —    
Others, Income/(loss)
     74,186       752,344       102,141       14,242       —         942,913  
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Income before income taxes
  
 
3,199,966
 
 
 
3,625,195
 
 
 
487,850
 
 
 
4,816
 
 
 
(3,616,821
 
 
3,701,006
 
Income tax expense
     —         (483,979     (10,718     (5,664     —         (500,361
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
Net income/(loss)
  
 
3,199,966
 
 
 
3,141,216
 
 
 
477,132
 
 
 
(848
 
 
(3,616,821
 
 
3,200,645
 
Net loss/(income) attributable to noncontrolling interests
     —         (679     —         —         —         (679
Net income attributable to Autohome Inc.
  
 
3,199,966
 
 
 
3,140,537
 
 
 
477,132
 
 
 
(848
 
 
(3,616,821
 
 
3,199,966
 
  
 
 
   
 
 
   
 
 
   
 
 
   
 
 
   
 
 
 
 
Notes:
(1)
It represents the elimination of the intercompany service charge at the consolidation level.
(2)
It represents the elimination of incurrence of losses by parent company and its subsidiaries for, or the receipt of economic benefits by parent company and its subsidiaries from, their respective subsidiaries and the VIEs.
Selected Condensed Consolidated Balance Sheets Information
 
    
As of December 31, 2021
 
    
Autohome
Inc.
    
Other

Subsidiaries
   
Primary
Beneficiary
of VIEs
    
VIEs and
VIEs’
subsidiaries
    
Eliminations
   
Consolidated
Total
 
                                         
    
(RMB in thousands)
 
Cash and cash equivalents, restricted cash and short-term investments
     320,639        16,968,899       3,074,976        458,109        —         20,822,623  
Amounts due from Group companies
     3,862,063        2,295,176       1,156,827        183,335        (7,497,401     —    
Other current assets
     7,117        2,342,777       58,677        94,524        —         2,503,095  
Total current assets
  
 
4,189,819
 
  
 
21,606,852
 
 
 
4,290,480
 
  
 
735,968
 
  
 
(7,497,401
 
 
23,325,718
 
Investment in subsidiaries and VIEs
               
-Investment in subsidiaries
(1)
     18,606,902        3,009,373       395,800        —          (22,012,075     —    
-Investment in VIE
(1)
     —          —         1,697,324        —          (1,687,324     —    
             
 
 
   
Other
non-current
assets
     —          3,135,986       144,454        1,922,848        —         5,203,288  
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Total
non-current
assets
  
 
18,606,902
 
  
 
6,145,359
 
 
 
2,237,578
 
  
 
1,922,848
 
  
 
(23,709,399
 
 
5,203,288
 
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Total assets
  
 
22,796,721
 
  
 
27,752,211
 
 
 
6,528,058
 
  
 
2,658,816
 
  
 
(31,206,800
 
 
28,529,006
 
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Amounts due to Group companies
     22,740        4,713,764       2,235,914        524,983        (7,497,401     —    
Accrued expenses and other payables
     19,562        1,529,808       271,463        255,661        —         2,076,494  
Advance from customers
     —          34,610       61        88,699        —         123,370  
Deferred revenue
     —          1,495,984       25,544        31,485        —         1,553,013  
Income tax payable
     —          115,154       118,188        —          —         233,342  
Total current liabilities
  
 
42,302
 
  
 
7,889,320
 
 
 
2,651,170
 
  
 
900,828
 
  
 
(7,497,401
 
 
3,986,219
 
             
 
 
   
Total
non-current
liabilities
     —       
 
73,038
 
 
 
471,715
 
  
 
60,664
 
  
 
—  
 
 
 
605,417
 
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Total liabilities
  
 
42,302
 
  
 
7,962,358
 
 
 
3,122,885
 
  
 
961,492
 
  
 
(7,497,401
 
 
4,591,636
 
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Mezzanine equity
     —          1,468,029       —          —          —         1,468,029  
             
 
 
   
Total Autohome Inc. shareholders’ equity
  
 
22,754,419
 
  
 
18,606,902
 
 
 
3,405,173
 
  
 
1,697,324
 
  
 
(23,709,399
 
 
22,754,419
 
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Noncontrolling interests
     —          (285,078     —          —          —         (285,078
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Total shareholders’ equity
  
 
22,754,419
 
  
 
18,321,824
 
 
 
3,405,173
 
  
 
1,697,324
 
  
 
(23,709,399
 
 
22,469,341
 
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
Total liabilities, mezzanine equity and equity
  
 
22,796,721
 
  
 
27,752,211
 
 
 
6,528,058
 
  
 
2,658,816
 
  
 
(31,206,800
 
 
28,529,006
 
  
 
 
    
 
 
   
 
 
    
 
 
    
 
 
   
 
 
 
 
 
Notes:
(1)
It represents the elimination of the equity investment in subsidiaries and VIEs by parent company, other subsidiaries, and primary beneficiary of VIEs.
 
11

    
As of December 31, 2020
 
    
Autohome
Inc.
    
Other

Subsidiaries
    
Primary
Beneficiary
of VIEs
    
VIEs and
VIEs’
subsidiaries
    
Eliminations
   
Consolidated
Total
 
                                          
    
(RMB in thousands)
 
Cash and cash equivalents, restricted cash and short-term investments
     281,379        10,313,540        3,776,289        258,190        —         14,629,398  
Amounts due from Group companies
     —          2,482,058        1,440,420        129,223        (4,051,701     —    
Other current assets
     815,934        3,316,548        228,311        171,028        (797,139     3,734,682  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total current assets
  
 
1,097,313
 
  
 
16,112,146
 
  
 
5,445,020
 
  
 
558,441
 
  
 
(4,848,840
 
 
18,364,080
 
Investment in subsidiaries and VIEs
                
-Investment in subsidiaries
(1)
     16,540,687        4,097,465        368,975        —          (21,007,127     —    
-Investment in VIE
(1)
     —          —          1,854,526        —          (1,854,526     —    
Other
non-current
assets
     —          3,153,357        135,639        2,077,769        —         5,366,765  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total
non-current
assets
  
 
16,540,687
 
  
 
7,250,822
 
  
 
2,359,140
 
  
 
2,077,769
 
  
 
(22,861,653
 
 
5,366,765
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total assets
  
 
17,638,000
 
  
 
23,362,968
 
  
 
7,804,160
 
  
 
2,636,210
 
  
 
(27,710,493
 
 
23,730,845
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Accrued expenses and other payables
     12,266        2,596,144        348,591        497,742        (797,139     2,657,604  
Advance from customers
     —          39,464        167        87,604        —         127,235  
Deferred revenue
     —          1,287,351        10,672        17,644        —         1,315,667  
Income tax payable
     —          85,177        —          —          —         85,177  
Amounts due to Group companies
     —          1,464,087        2,484,221        103,393        (4,051,701     —    
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total current liabilities
  
 
12,266
 
  
 
5,472,223
 
  
 
2,843,651
 
  
 
706,383
 
  
 
(4,848,840
 
 
4,185,683
 
Total
non-current
liabilities
     —       
 
167,000
 
  
 
494,069
 
  
 
75,301
 
     —      
 
736,370
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total liabilities
  
 
12,266
 
  
 
5,639,223
 
  
 
3,337,720
 
  
 
781,684
 
  
 
(4,848,840
 
 
4,922,053
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Mezzanine equity:
     —          1,056,237        —          —          —         1,056,237  
Total Autohome Inc. shareholders’ equity
  
 
17,625,734
 
  
 
16,540,687
 
  
 
4,466,440
 
  
 
1,854,526
 
  
 
(22,861,653
 
 
17,625,734
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Noncontrolling interests
     —          126,821        —          —          —         126,821  
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total shareholders’ equity
  
 
17,625,734
 
  
 
16,667,508
 
  
 
4,466,440
 
  
 
1,854,526
 
  
 
(22,861,653
 
 
17,752,555
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
Total liabilities, mezzanine equity and equity
  
 
17,638,000
 
  
 
23,362,968
 
  
 
7,804,160
 
  
 
2,636,210
 
  
 
(27,710,493
 
 
23,730,845
 
  
 
 
    
 
 
    
 
 
    
 
 
    
 
 
   
 
 
 
 
Notes:
(1)
It represents the elimination of the equity investment in subsidiaries and VIEs by parent company, other subsidiaries, and primary beneficiary of VIEs.
 
12

Selected Condensed Consolidated Cash Flows Information
 
    
For the Year Ended December 31, 2021
 
    
Parent

Only
   
Other Equity

Subsidiaries
   
Primary
Beneficiary
of VIEs
   
VIEs and
VIEs’
subsidiaries
   
Eliminations
   
Consolidated Total
 
                                      
    
(RMB in thousands)
 
Net cash (used in)/provided by operating activities
     (10,770     2,852,900       269,838       411,966       —         3,523,934  
Net cash (used in)/provided by investing activities
     (2,841,291     (4,681,424     173,535       (386,343     3,922,510       (3,813,013
Net cash (used in)/provided by financing activities
     2,898,296       3,886,326       (127,240     163,424       (3,922,510     2,898,296  
 
    
For the Year Ended December 31, 2020
 
    
Parent

Only
   
Other Equity

Subsidiaries
   
Primary
Beneficiary
of VIEs
   
VIEs and
VIEs’
subsidiaries
    
Eliminations
   
Consolidated Total
 
                                       
    
(RMB in thousands)
 
Net cash (used in)/provided by operating activities
     (1,188     1,481,771       1,821,901       23,147        —         3,325,631  
Net cash (used in)/provided by investing activities
     532,293       (727,798     (1,801,299     193,190        (1,181,844     (2,985,458
Net cash (used in)/provided by financing activities
     (546,967     (532,293     (649,551     —          1,181,844       (546,967
 
    
For the Year Ended December 31, 2019
 
    
Parent

Only
   
Other Equity

Subsidiaries
   
Primary
Beneficiary
of VIEs
    
VIEs and
VIEs’
subsidiaries
   
Eliminations
   
Consolidated Total
 
                                       
    
(RMB in thousands)
 
Net cash (used in)/provided by operating activities
     (498     2,691,648       644,577        (446,358     —         2,889,369  
Net cash (used in)/provided by investing activities
     218,406       (1,951,026     30,632        478,513       55,208       (1,168,267
Net cash (used in)/provided by financing activities
     68,676       55,208       —          —         (55,208     68,676  
 
B.
Capitalization and Indebtedness
Not applicable.
 
C.
Reasons for the Offer and Use of Proceeds
Not applicable.
 
D.
Risk Factors
Summary of Risks Factors
An investment in our ADSs or ordinary shares involves significant risks. Below is a summary of material risks we face, organized under relevant headings. These risks are discussed more fully in Item 3. Key Information—D. Risk Factors.
 
13

Risks Related to Our Business and Industry
 
   
We are dependent on China’s automotive industry for substantially all of our revenues and future growth, the prospects of which are subject to many uncertainties, including government regulations and policies and health epidemics.
 
   
We face significant competition, and if we fail to compete effectively, we may lose market share and our business, prospects and results of operations may be materially and adversely affected.
 
   
We may not be able to maintain our current level of growth or ensure the success of our expansion and new business initiatives.
 
   
If we fail to attract and retain users and customers or if our services do not gain market acceptance or result in the loss of our current customer base, our business and results of operations may be materially and adversely affected.
 
   
Our business depends on strong brand recognition, and failure to maintain or enhance our brands could adversely affect our business and prospects.
 
   
Our business is subject to complex and evolving Chinese laws and regulations regarding data privacy and cybersecurity, many of which are subject to changes and uncertain interpretations. Any changes in these laws could cause changes to our business practices and increased cost of operations, and any security breaches or our actual or perceived failure to comply with such laws could result in claims, penalties, damages to our reputation and brand, declines in user growth or engagement, or otherwise harm our business, results of operations and financial condition.
 
   
A limited number of automaker customers have accounted for, and are expected to continue to account for, a large portion of our revenues. Failure to maintain or to increase revenues from these customers could harm our prospects.
Risks Related to Our Corporate Structure
 
   
We are a Cayman Islands holding company with no equity ownership in the VIEs and we conduct our operations in China primarily through our subsidiaries and VIEs, with which we have maintained contractual arrangements. Investors in our ordinary shares and ADSs thus are not purchasing equity interest in the VIEs in China but instead are purchasing equity interest in a Cayman Islands holding company. If the PRC government finds that the agreements that establish the structure for operating our services in China do not comply with PRC governmental restrictions on foreign investment in internet businesses, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations, and we may face significant disruption to our business operations. Our holding company, VIEs and investors of our company face uncertainty about potential future actions by the PRC government that could affect the enforceability of the contractual arrangements with the VIEs and, consequently, significantly affect the financial performance of the VIEs and our company as a whole. The PRC regulatory authorities could disallow the variable interest entities structure, which would likely result in a material adverse change in our operations, and our ordinary shares or our ADSs may decline significantly in value.
 
   
Our contractual arrangements with the VIEs may not be as effective in providing operational control as direct ownership.
 
   
The shareholders of the VIEs may breach, or cause the VIEs to breach, or refuse to renew, the existing contractual arrangements we have with them and the VIEs. Any failure by the VIEs or their shareholders to perform their obligations under our contractual arrangements with them would have a material adverse effect on our business and financial condition.
 
14

   
The contractual arrangements among our subsidiaries and the VIEs may be subject to scrutiny by the PRC tax authorities and a finding that we or the VIEs owe additional taxes could substantially reduce our consolidated net income and the value of your investment.
 
   
The interests of the individual nominee shareholders of the VIEs may be different from our interests, which may materially and adversely affect our business.
Risks Related to Doing Business in China
 
   
The PCAOB is currently unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections over our auditor deprives our investors with the benefits of such inspections.
 
   
Our ADSs will be delisted and prohibited from trading in the United States under the HFCAA, in 2024 if the PCAOB is unable to inspect or fully investigate auditors located in China, or in 2023 if proposed changes to the law are enacted. The delisting of our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
 
   
The PRC government’s significant oversight and discretion over our business operations could result in a material adverse change in our operations and the value of our ADSs and/or ordinary shares.
 
   
Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.
 
   
Uncertainties with respect to the PRC legal system could adversely affect us.
 
   
Substantial uncertainties exist with respect to the interpretation and implementation of the PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.
 
   
We may be adversely affected by the complexity, uncertainties and changes in PRC regulation of internet business and companies.
 
   
The approval of and filing with the CSRC or other PRC government authorities may be required if we were to conduct offshore offerings in the future, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.
Risks Related to Our ADSs and Ordinary Shares
 
   
The trading price of our ADSs and/or ordinary shares has been and is likely to continue to be, volatile, which could result in substantial losses to holders of our ADSs and/or ordinary shares.
 
   
We adopt different practices as to certain matters as compared with many other companies listed on the Hong Kong Stock Exchange.
 
   
We cannot guarantee that any share repurchase program will be fully consummated or that any share repurchase program will enhance long-term shareholder value, and share repurchases could increase the volatility of the price of our ADSs and/or ordinary shares and could diminish our cash reserves.
 
   
If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research or reports about our business or if they adversely change their recommendations regarding our ADSs and/or ordinary shares, the market price for our ADSs and/or ordinary shares and trading volume could decline.
 
15

Risks Related to Our Business and Industry
We are dependent on China’s automotive industry for substantially all of our revenues and future growth, the prospects of which are subject to many uncertainties, including government regulations and policies and health epidemics.
We rely on China’s automotive industry for substantially all of our revenues and future growth. We have greatly benefited from the growth of China’s automotive industry historically. However, this industry has experienced headwinds in its development. In July 2018, China’s automotive industry experienced negative growth for the first time in the past 28 years and new automobile purchases in China declined for the whole year of 2018, 2019 and 2020. We cannot predict how this industry will develop in the future, as it could be affected by complex factors, including general economic conditions in China, the urbanization rate of China’s population, the growth of disposable household income, the costs of new automobiles, the trade barriers and tensions and other governmental protectionist measures, as well as taxes and incentives related to automobile purchases, among other things. Specifically, tariffs or a global trade war could increase the cost of imported automobiles, which could negatively impact the demand for automobiles and adversely impact our business. In addition, governmental policies-including restrictions by major cities on new passenger vehicle plate issuance, increasingly stringent emission standards, and adjustment of purchase
tax-may
have a considerable impact on the growth of the automotive industry in China.
The automotive industry in China was negatively impacted as well by the outbreak of
COVID-19,
during which automobile production and the number of purchasers declined due to precautionary government-imposed closures of certain travel and business, the government’s order to delay resumption of service and mass production and the related quarantine measures. The containment efforts led by the government also caused delay in the near-term marketing demand of our automaker and dealer customers. While most of the restrictions on movement within China had been relaxed as of December 31, 2021, there is great uncertainty as to the future development of the
COVID-19
outbreak and its impact on the automotive industry. Restrictions have been
re-imposed
from time to time by certain local authorities in China to combat sporadic outbreaks. Relaxation of restrictions on economic and social life may lead to new cases which may lead to the
re-imposition
of restrictions.
Such regulatory developments, health epidemics as well as other uncertainties, may adversely affect the growth prospects of China’s automotive industry, and in turn reduce demand for automobiles. If automakers and automobile dealers were to reduce their marketing expenditures as a result, our business, financial condition and results of operations could be materially and adversely affected.
We face significant competition, and if we fail to compete effectively, we may lose market share and our business, prospects and results of operations may be materially and adversely affected.
The markets for our services are highly competitive. With respect to our auto media business, we face competition from China’s automotive vertical websites and mobile applications, such as BitAuto, Dongchedi, Xcar and PCauto, from the automotive channels of major internet portals, such as Sina and Sohu, and from companies engaged in mobile social media, news, video and live-streaming applications. We may also face competition from online automobile transaction platforms, such as Uxin, Guazi and Renrenche as we develop our used car transaction business. Our auto finance business faces competition from other auto finance companies, such as Yixin and Souche. In addition, we also face competition from companies engaged in social media business, such as ByteDance and Tencent, and companies engaged in data product offering, such as Bitauto. We may also face competition from mobile applications of automakers as some automakers explore to connect with users directly. Competition with these and other websites and mobile applications is primarily centered on increasing user reach, user engagement and brand recognition, relationships with the suppliers, and attracting and retaining customers, among other factors.
Some of our competitors or potential competitors have longer operating histories and may have greater financial, management, technological, sales, marketing and other resources than we do. They may use their experience and resources to compete with us in a variety of ways, including by competing more heavily for users and customers, investing more heavily in marketing, traffic acquisition and research and development, and making more acquisitions. Some of our competitors have entered or may enter into business cooperation agreements with search engines, which may impact our ability to obtain additional user traffic from the same sources. Our competitors may be acquired and consolidated by, or cooperate with, industry conglomerates who are able to further invest with significant resources into our operating space. We cannot assure you that any such large internet business will not in the future focus on the automotive sector. If we are unable to compete effectively and at a reasonable cost against our existing and future competitors, our business, prospects and results of operations could be materially and adversely affected.
 
 
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For our media business, we also face competition from traditional advertising media, such as newspapers, magazines, yellow pages, television, radio and outdoor media. Advertisers in China generally allocate a significant portion of their marketing budgets to traditional advertising media. If we cannot effectively compete with traditional media for the marketing budgets of our existing and potential customers, our results of operations and growth prospects could be adversely affected. For our online marketplace business, as online automobile transaction is a relatively new business model and consumers in China might be accustomed to make automobile purchases offline, we cannot guarantee that the automobile consumers in China will accept such business model.
Beginning in 2019, we extended our business to the European market and established two subsidiaries in the UK and Germany. These subsidiaries have not generated significant revenues as of December 31, 2021 and are scaling back their operations due to the macroenvironmental changes, especially the
COVID-19
impact and the evolution of our strategies. However, if we maintain our business overseas or decide to expand our global footprint in the future, we will face competition from local automotive vertical websites and mobile applications and online automobile transaction platforms, whose platforms may have more experience in the local markets and have relatively more established user bases. We cannot guarantee that we will be able to compete effectively for talents, users or customers. We may also incur additional expenses in our overseas acquisitions and subsequent marketing and other spending to acquire new customers. If we cannot maintain customer recognition and trust in us and successfully attract and retain sufficient users on our overseas platform, our results of operations and growth prospects could be adversely affected.
We may not be able to maintain our current level of growth or ensure the success of our expansion and new business initiatives.
Our historical growth rates may not be indicative of our future growth, and we may not be able to generate similar growth rates in the future. Our revenue or profit growth may slow down, or our revenues or profits may decline for any occurrence of possible reasons, including increasing operating expenses, increasing competition, slow growth of our business development, emergence of alternative business models, adjustment of our certain business operations, and changes in government policies or general economic conditions. We cannot assure you that we will grow at the same rate as we had in the past.
We expect to continue to grow our user base and our business operations. We have been implementing our future strategy to integrate and create a consumer centric automotive ecosystem, but we may not have sufficient experience in executing our new business initiatives during this process. These new business initiatives may not be well received by the market and we may determine to cease some new initiatives from time to time. We cannot assure you that they will achieve the success we expect, in which case we may not be able to recoup the resources we invest to develop, optimize and expand our new business initiatives.
To manage the further expansion of our business, we need to continuously expand and enhance our infrastructure and technology, and improve our operational and financial systems, procedures and internal controls. We need to adapt our business management to the local corporate cultures and customs, and train, manage and motivate our growing employee base. In addition, we need to maintain and expand our relationships with automakers, automobile dealers, advertising agencies, financial institutions, insurance companies and other third parties. We cannot assure you that our current and planned personnel, infrastructure, systems, procedures and controls will be adequate to support our expanding operations, neither can we guarantee that we will be able to effectively adapt our business management to the local corporate cultures and customs and attract and motivate sufficient talents to support our new business initiatives if and when any of them are launched.
We may be required to further increase our research and development expenses in order to enhance our technology capabilities, such as artificial intelligence technologies, big data technologies and cloud technologies, to support any such expansion and our efforts may not be effective. Our new business initiatives may also expose us to new regulatory risks, which could be different from what we have experienced before and may increase our compliance costs. Lack of experience in handling these new risks and manage the related costs may result in failure to generate the expected results of operations and prospects.
 
17

If we fail to attract and retain users and customers or if our services do not gain market acceptance or result in the loss of our current customer base, our business and results of operations may be materially and adversely affected.
In order to maintain and strengthen our position as the leading online destination for automobile consumers in China, we must continue to attract and retain users to our websites and mobile applications, which requires us to continue to provide quality content throughout the automobile ownership life cycles. We must also innovate and introduce services and applications that enhance user experience. In addition, we must maintain and enhance our brand recognition among consumers. If we fail to provide high-quality, enriched and customized content, offer a superior user experience or maintain and enhance our brand recognition, we may not be able to attract and retain users. If our user base decreases, our websites and mobile applications may be rendered less attractive to customers, including automakers and dealers, and our services may become less attractive, which may have a material and adverse impact on our business, financial condition and results of operations.
In addition, one element of our growth strategy is to expand our services to customers. As a result, we have added additional services in the past few years. To serve our dealer customers, we had local sales and service representatives covering 63 cities across China as of December 31, 2021. We intend to increase our penetration in existing dealer advertising and subscription services markets. We have implemented business strategies to further monetize our large dealer network by enlarging the offering of products and services with new technologies on our dealer digital platform, increasing the average spending of our existing dealer subscribers and upselling our dealership packages for our leads generation services. In order to increase the average spending of our existing dealer subscribers, we keep close communications and negotiations with relevant parties such as dealers, dealer groups and automakers. However, we may not succeed in making our customers sufficiently aware of existing and future services or in creating customer acceptance of these services at the prices we would want to charge, and we cannot guarantee that our pricing strategy and measures will always be agreed and accepted by any and all of our customers. We may not be able to achieve the market acceptance of our products and services as we expect and thus may fail to achieve an increase from our “share of wallet” approach. Our existing customers may even terminate their cooperation with us if they are not satisfied with our pricing strategy or measures, which may subject us to negative publicity and adversely impact our business. The decline in the auto market may result in our dealer customers’ cancelation of subscription services from us or even discontinuance of operations, which would directly impact our number of dealer customers. Also, we may not identify trends correctly, or may not be able to bring new services to market as quickly, effectively or price-competitively as our competitors. New services may alienate existing customers or cause us to lose business to our competitors. If the number of our dealer customers decreases, we might not be able to generate sufficient revenues to cover our increased costs and expenses. As a result, our business and results of operations may be materially and adversely affected.
Our ability to attract and retain users and customers may also be impacted by the sales and marketing approach taken by automakers. For example, automakers of new energy vehicles are conducting advertising and marketing through direct engagement with consumers in addition to advertising placements on internet platforms like us. If new energy vehicles become increasingly popular among automobile consumers, a portion, if not all, of our users or potential users who are interested in new energy vehicles may be diverted to these automakers for information and services directly. In addition, advertising budgets allocated to internet platforms like us may be negatively impacted if automakers of new energy vehicles continue to adopt the direct sales and marketing approach while new energy vehicles taking more shares of the automobile market or the direct sales and marketing approach gains more adoption among all automakers. Although we offer diversified products and services and look for new avenues to capture the opportunities brought by this trend, we cannot assure you that our products and services will gain wide acceptance from automakers. Any of these occurrences could adversely affect our results of operations, financial condition and business prospectus.
Our business depends on strong brand recognition, and failure to maintain or enhance our brands could adversely affect our business and prospects.
Maintaining and enhancing our “Autohome” and “Che168” brands is critical to our business and prospects. We believe that brand recognition will become increasingly important as the number of internet users in China grows and competition in our industry intensifies. A number of factors could prevent us from successfully promoting our brands, including user dissatisfaction with the content offered on our websites or mobile applications, negative publicity involving our business, our management, our brand spokespersons, our relationship with our partners and customers, the failure of our sales and marketing activities, employee relationship and welfare, regulatory compliance and financial conditions. If we fail to maintain and enhance our brands, or if we incur excessive expenses in this effort, our business, results of operations and financial condition might be materially and adversely affected.
 
18

Our business is subject to complex and evolving Chinese laws and regulations regarding data privacy and cybersecurity, many of which are subject to changes and uncertain interpretations. Any changes in these laws could cause changes to our business practices and increased cost of operations, and any security breaches or our actual or perceived failure to comply with such laws could result in claims, penalties, damages to our reputation and brand, declines in user growth or engagement, or otherwise harm our business, results of operations and financial condition.
Our platform collects, stores and processes certain personal and other sensitive data from our users for purpose of providing our services. We have taken technical measures to ensure the security of such personal information and prevent the personal information from being divulged, damaged or lost, and we believe the measures we take regarding collection, storage, and use of personal data are generally compliant with industry standards. However, we face risks inherent in handling and protecting personal data. In particular, we face a number of challenges relating to data from transactions and other activities on our platform, including:
 
   
protecting the data in and hosted on our system, including against attacks on our system by outside parties or fraudulent behavior or improper use by our employees;
 
   
addressing concerns related to privacy and sharing, safety, security and other factors; and
 
   
complying with applicable laws, rules and regulations relating to the collection, use, storage, transfer, disclosure and security of personal information which are subject to change and new interpretations, including any requests from regulatory and government authorities relating to such data.
In general, we expect that data security and data protection compliance will receive greater attention and focus from regulators, both domestically and globally, as well as continued or greater public scrutiny and attention going forward, which could increase our compliance costs and subject us to heightened risks and challenges associated with data security and protection. If we are unable to manage these risks, or if we are accused of failing to comply with such laws and regulations, we could become subject to penalties, including fines, suspension of business, websites or applications, and revocation of required licenses, and our reputation and results of operations could be materially and adversely affected.
Recently, regulatory authorities in China have enhanced data protection and cybersecurity regulatory requirements, many of which are subject to change and uncertain interpretation. These laws continue to develop, and the PRC government may adopt further rules, restrictions and clarifications in the future. Moreover, different PRC regulatory bodies, including the Standing Committee of the National People’s Congress, the Ministry of Industry and Information Technology, or the MIIT, the CAC, The Ministry of Public Security and the State Administration for Market Regulation, or the SAMR, have enforced data privacy and protections laws and regulations with varying standards and applications. See “Item 4. Information on the Company—B. Business Overview—Regulation—Regulations on Internet Privacy and Data Security.” The following are
non-exhaustive
examples of certain recent PRC regulatory activities in this area:
Cybersecurity
 
   
The Cyber Security Law of the PRC, or the PRC Cyber Security Law, which became effective in June 2017, created China’s first national-level data protection framework for “network operators.” However, it is subject to interpretations and clarifications by the regulator. It requires, among other things, that network operators take security measures to protect the network from interference, damage and unauthorized access and to prevent data from being divulged, stolen or tampered with. Network operators are also required to collect and use personal information in compliance with the principles of legitimacy, properness and necessity, expressly notify the purpose, methods and scope of such collection and use, and obtain the consent of the person whose personal information is to be collected. Substantial financial, managerial and human resources are required to comply with such legal requirements, enhance information security and address any issues caused by security failures. Even if our security measures are sufficient and in compliance, we nonetheless face the risk of security breaches or similar disruptions.
 
19

 
Due to the data assets we have, our platform is an attractive target and potentially vulnerable to cyberattacks, computer viruses, physical or electronic
break-ins
or similar disruptions. Because techniques used to sabotage or obtain unauthorized access to systems evolve continuously and frequently and generally are not recognized until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative counter-measures. In addition to advances in technology, an increased level of sophistication and diversity of our products and services, an increased level of expertise of hackers, new discoveries in the field of cryptography or other risks can result in the compromise or breach of our websites or our apps. If security measures are breached because of third-party action, employee error, malfeasance or otherwise, or if design flaws in our technology infrastructure are exposed and exploited, user data or personal information could be stolen or misused, which could expose us to penalties or other administrative actions, time-consuming and expensive litigation and negative publicity, materially and adversely affect our business and reputation and deter potential users from using our products, each of which would have a material adverse impact on our results of operations, financial condition and business prospect.
Data Security
 
   
In June 2021, the Standing Committee of the NPC promulgated the PRC Data Security Law, which took effect in September 2021. The PRC Data Security Law, among other things, provides for security review procedure for data-related activities that may affect national security. A series of regulations, guidelines and other measures have been and are expected to be adopted to implement the requirements created by the PRC Data Security Law. For example, in July 2021, the State Council promulgated the Regulations on Protection of Critical Information Infrastructure, which became effective on September 1, 2021. Pursuant to this regulation, a “critical information infrastructure” is defined as key network facilities or information systems of critical industries or sectors, such as public communication and information service, energy, transportation, water conservation, finance, public services,
e-government
affairs and national defense science, the damage, malfunction or data leakage of which may endanger national security, people’s livelihoods and the public interest. In December 2021, the CAC, together with other authorities, jointly promulgated the Cybersecurity Review Measures, which became effective on February 15, 2022 and replaces its predecessor regulation. Pursuant to the Cybersecurity Review Measures, critical information infrastructure operators purchasing network products and services and internet platform operators carrying out data processing activities, in a manner which affects or may affect national security, are subject to cybersecurity review. The Cybersecurity Review Measures further provides that network platform operators that hold personal information of over one million users shall apply with the Cybersecurity Review Office for a cybersecurity review before any public offering at a foreign stock exchange. As of the date of this annual report, we have not been informed that we are a “critical information infrastructure operator” by any government authority. However, the exact scope of “critical information infrastructure operators” under the current regulatory regime remains unclear, and the PRC government authorities may have wide discretion in the interpretation and enforcement of the applicable laws. Therefore, it is uncertain whether we would be deemed to be a critical information infrastructure operator under PRC law. If we are deemed a “critical information infrastructure operator” under the PRC cybersecurity laws and regulations, we may be subject to obligations in addition to those with which we are currently obligated to comply.
 
   
In November 2021, the CAC released the Regulations on the Network Data Security (Draft for Comments), or the Draft Regulations on Network Data Security. The Draft Regulations on Network Data Security define “data processors” as individuals or organizations that can autonomously determine the purpose and the manner of data processing. In accordance with the Draft Regulations on Network Data Security, data processors shall apply for a cybersecurity review for certain activities, including, among other things, (i) seeking for listing abroad of data processors that process the personal information of more than one million users and (ii) any data processing activity that affects or may affect national security. However, there have been no clarifications from the relevant authorities as of the date of this annual report as to the standards for determining whether an activity is one that “affects or may affect national security” under the Draft Regulations on Network Data Security. In addition, the Draft Regulations on Network Data Security requires that data processors that process “important data” or which seeks for listing overseas must conduct an annual data security assessment by itself or authorize a data security service provider to do so, and submit the assessment report of the preceding year to the municipal cybersecurity department by the end of January each year. As of the date of this annual report, the Draft Regulations on Network Data Security were released for public comment only, and their respective provisions and anticipated adoption or effective date may be subject to change with substantial uncertainty.
 
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Personal Information and Privacy
 
   
The Guideline on Anti-monopoly of Platform Economy Sector published by the Anti-monopoly Committee of the State Council, effective on February 7, 2021, prohibits collection of unnecessary user information through coercive means by online platform operators.
 
   
In August 2021, the Standing Committee of the NPC promulgated the Personal Information Protection Law, which took effect on November 1, 2021. The Personal Information Protection Law further strengthened requirements on personal information protection, enhanced the punishment for illegal processing of personal information and consolidated various previously promulgated rules with respect to personal information rights and privacy protection. We update our privacy policies from time to time to meet the latest regulatory requirements of PRC government authorities and adopt technical measures to protect data and ensure cybersecurity in a systematic way. Nonetheless, the Personal Information Protection Law elevates the protection requirements for personal information processing, and many specific requirements of this law remain to be clarified by the CAC, other regulatory authorities, and courts in practice. We may be required to make adjustments to our business practices to comply with the personal information protection laws and regulations.
Furthermore, the PRC government authorities have taken steps to limit the method and manner that internet companies may apply when using algorithms. For instance, on December 31, 2021, the CAC, the MIIT, the Ministry of Public Security, and the SAMR jointly promulgated the Administrative Provisions on Algorithm Recommendation in Internet Information Services, which came into effect on March 1, 2022. The Administrative Provisions on Algorithm Recommendation in Internet Information Services implements classification and hierarchical management for algorithm recommendation service providers based on various criteria. Under the Administrative Provisions on Algorithm Recommendation in Internet Information Services, algorithm recommendation service providers shall inform users in a conspicuous manner that algorithm is used in service recommendations, inform users of the basic principles, purpose and intentions, and inform users in an appropriate manner of the main operating mechanisms for the algorithm recommendation services. Under the Administrative Provisions on Algorithm Recommendation in Internet Information Services, algorithm recommendation service providers selling goods or providing services to consumers shall (i) protect consumers’ rights of fair trade, and (ii) be prohibited from applying differential treatments to consumers with respect to transaction terms and conditions in an unreasonable manner based on consumers’ preferences, purchasing habits and such other characteristics. In addition, on October 23, 2021, the Standing Committee of the National People’s Congress published the Anti-monopoly Law (Revised Draft), or the Draft Revised Anti-monopoly Law for public comment. The Draft Revised Anti-monopoly Law provides, among others, that business operators shall not abuse, among others, algorithms, to exclude or limit competition. As of the date of this annual report, the Draft Revised Anti-monopoly Law has not been formally adopted. We will closely monitor the regulatory development and adjust our business operations from time to time to comply with the regulations over algorithm-based recommendation. However, we cannot assure you that our algorithm recommendation functions are or will continue to be in compliance in all respects with the evolving rules in the area of the algorithm-based recommendations. If our algorithm recommendation functions were to be required to adjust in a manner that is adverse to our business in accordance with applicable rules, our ability to enhance the quality of content offering on our platform and deepen user engagement may be adversely affected.
Many of the data and data privacy-related laws and regulations are relatively new and certain concepts thereunder remain subject to interpretation by the regulators. If any data that we possess belongs to data categories that are or may become subject to heightened scrutiny, we may be required to adopt stricter measures for protection and management of such data. The Cybersecurity Review Measures and the Draft Regulations on Network Data Security remain unclear on whether the relevant requirements will be applicable to companies that, like us, are already listed in the United States. We cannot predict the impact of the Cybersecurity Review Measures and the Draft Regulations on Network Data Security, if any, at this stage, and we will closely monitor and assess any developments in the rule-making process. If the Cybersecurity Review Measures and the enacted version of the Draft Regulations on Network Data Security mandate clearance of cybersecurity review and other specific actions to be taken by issuers like us, we face uncertainties as to whether these additional procedures can be completed by us timely, or at all, which may subject us to government enforcement actions and investigations, fines, penalties, suspension of our
non-compliant
operations, or removal of our app from the relevant application stores, and materially and adversely affect our business and results of operations. As of the date of this annual report, we have not been involved in any formal investigations on cybersecurity review made by the CAC on such basis.
 
 
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In general, compliance with the existing PRC laws and regulations, as well as additional laws and regulations that PRC legislative and regulatory bodies may enact in the future, related to cybersecurity, data security and personal information protection, may be costly and result in additional expenses to us, and subject us to negative publicity, which could harm our reputation and business operations. There are also uncertainties with respect to how such laws and regulations will be implemented and interpreted in practice. In light of the fact that laws and regulations on cybersecurity, data privacy and personal information protection are evolving and uncertainty remains with respect to their interpretation and implementation, we cannot guarantee that we will be able to maintain full compliance at all times, or that our existing user information protection system and technical measures will be considered sufficient. Any
non-compliance
or perceived
non-compliance
with these laws, regulations or policies may lead to warnings, fines, investigations, lawsuits, confiscation of illegal gains, revocation of licenses, closedown of websites, removal of apps and suspension of downloads, price drops in our securities or even criminal liabilities against us by government agencies or other individuals. In addition, our launch of new products or services or other actions that we take in the future may subject us to additional laws, regulations, or other government scrutiny.
A limited number of automaker customers have accounted for, and are expected to continue to account for, a large portion of our revenues. Failure to maintain or to increase revenues from these customers could harm our prospects.
A limited number of automaker customers have accounted for, and are expected to continue to account for, a large portion of our revenues. In 2019, 2020 and 2021, 92, 92 and 91 automakers operating in China used our media services, respectively. These automakers include independent Chinese automakers, joint ventures between Chinese and international automakers and international automakers that sell cars made outside of China. In 2021, our top five automaker customers contributed 27.8% of our media services revenues. We believe that our major future revenue growth will be focused on deepening our existing commercial relationships with automakers to increase our share of each automaker’s budget. We cannot assure you that our automaker customers will continue to be satisfied with our cooperation model and strategy as well as our services, or our relationships with any of these automaker customers will continue in the future. Failure to provide deliverables satisfactory to our automaker customers or failure to reach a mutually amicable agreement with our automaker customers on the collection of payable fees may adversely impact our relationships with our automaker customers, which would have a negative impact on our reputation and results of operations. If we lose one or more of our important automaker customers, or if they materially reduce their purchase of our services, our results of operations would be materially and adversely affected.
We typically extend credit terms to automaker customers, which is relatively longer than other customers. We face risk of being unable to collect all the accounts receivable from automaker customers in light of the slowdown in China’s domestic automotive market. If we fail to collect accounts receivable from automakers in a timely manner, or at all, our business, results of operations and financial conditions may be materially and adversely affected. See “Item 3. Key Information—D. Risk Factors—Risks Related to Our Business and Industry—We are subject to credit risk in collecting the accounts receivable due from our customers.”
Due to the limited number of automakers operating in China, which is exacerbated by the increasing competition and concentration of automakers in China, and our revenue concentration attributable to a small number of these companies, any of the following events, among others, may cause a material decline in our revenue and materially and adversely affect our results of operations and prospects:
 
   
contract reduction, delay or cancelation by one or more significant customers and our failure to identify and acquire additional or replacement customers;
 
   
dissatisfaction with our services by one or more of our significant customers;
 
22

   
a substantial reduction by one or more of our significant customers in the price they are willing to pay for our services; and
 
   
financial difficulty of one or more of our significant customers who become unable to make timely payment for our services.
If we are unable to grow our used automobile-related business, we may not be able to achieve our expected business growth and our results of operations may be adversely affected.
Our
che168.com
website has been focusing on used automobile information and content since October 2011. We also launched
che168.com
mobile application in 2012. Through these platforms, we offer used automobile listing services to used automobile dealers and individual car owners through a user interface that allows potential used car buyers to identify listings that meet their specific requirements and contact the seller. To further enhance user experience and optimize our used automobile-related business, in June 2018, we invested in TTP Car Inc., or TTP, a company operating an online bidding platform for used automobiles, and in the fourth quarter of 2020, we acquired control in TTP.
We may not be able to successfully grow our used automobile-related business. Although the used automobile market in China is growing due to the increased number of consumer-owned automobiles, there is still significant uncertainty regarding the extent to which our used automobile-related business may benefit from such growth. We may not be able to source sufficient used automobiles or attract a broad user base to our
che168.com
website and mobile application or be successful compared to our competitors. Even if we are able to do so, we may not be able to establish a business model that allows us to effectively monetize the user traffic. We may not be able to successfully facilitate used car transactions and our services might not be satisfactory to the used car buyers or sellers. Additionally, customers may not respond well to our new business initiatives as we expect. In such cases, we may suffer negative publicity and may not be able to achieve our expected business growth and our results of operations may be adversely affected.
If we are unable to conduct our marketing activities cost-effectively, our results of operations and financial condition may be materially and adversely affected.
We have incurred expenses on a variety of marketing and brand promotion efforts designed to enhance our brand recognition and increase sales of our products and services. Our marketing and promotional activities may not be well received by customers and may not result in the level of sales of products and services that we anticipate. We incurred RMB3,093.3 million, RMB3,246.5 million and RMB2,759.9 million (US$433.1 million) in sales and marketing expenses in 2019, 2020 and 2021, respectively, representing 36.7%, 37.5% and 38.1%, respectively, of total net revenues in the corresponding years. Marketing approaches and tools in the consumer products market in China are evolving. This further requires us to enhance our marketing approaches and experiment with new marketing methods to keep pace with industry developments and consumer preferences, which may not be as cost-effective as our marketing activities in the past and may lead to significantly higher marketing expenses in the future. We conducted various sales and marketing initiatives to promote our brands through websites, search engines, mobile platforms, navigation sites and traditional media channels, for example, the annual “Singles’ Day” event, the “AR Auto Show” event and TV ad broadcast on China Central Television. We also conducted various offline promotional activities and cooperated with brands and dealers for promotions in target regions. In August, 2019, we launched the 818 Global Super Auto Show, the first auto-themed gala in China that created an innovative integration of online and offline promotion elements, which attracted a large number of automakers, dealers and potential auto consumers to participate and further promoted Autohome’s brand awareness to a much wider user base. In addition, we engaged celebrities, primarily athletes, as our brand spokespersons to further promote our brand and stimulate user interest in our platform. We may not be able to continue or conduct these activities efficiently, and our marketing activities may not yield satisfactory results. Failure to refine our existing marketing approaches or to introduce new effective marketing approaches in a cost-effective manner could impact our net revenues and profitability.
Our auto insurance brokerage businesses are highly regulated.
Non-compliance
with applicable laws, regulations and regulatory requirements or failure to respond to legal and regulatory changes may adversely affect our business and prospects.
 
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We have obtained the relevant license to conduct auto insurance brokerage businesses from the China Banking and Insurance Regulatory Commission, or the CBIRC, and such businesses generated an insignificant amount of revenue for us in the three years ended December 31, 2019, 2020 and 2021. The insurance industry in China is highly regulated, and the regulatory regime continues to evolve. The CBIRC has extensive authority to supervise and regulate the insurance industry in China. The CBIRC conducts various reviews and inspections on insurance brokerage business operations from time to time, which could cover a broad range of aspects, including financial reporting, tax reporting, internal control and compliance with applicable laws, rules and regulations. If any
non-compliance
incidents in our insurance brokerage business operation are identified, we may be required to take certain rectification measures in accordance with applicable laws and regulations, and would be subject to regulatory actions including penalties, warnings, suspension of operations, revocation of licenses, tax, civil, administrative and criminal liabilities, any one or a combination of which would have negative impacts on our reputation, businesses, results of operations and financial conditions.
Furthermore, China’s insurance regulatory regime is undergoing significant changes. Development of regulations applicable to online insurance business or our auto insurance brokerage business may result in additional restrictions on its business operations or more intensive competition in this industry. We might be required to spend time and resources in order to comply with any material changes in the regulatory environment, which could trigger changes to the competitive landscape and we may lose some or all of our competitive advantages on our auto insurance business during this process. The attention of our management team could be diverted to these efforts to cope with an evolving regulatory or competitive environment. Meanwhile, staying compliant with the restriction may result in limitation to our insurance brokerage business and limitation to its product and service offerings, which may reduce the attraction to clients. As a result, our business and results of operations might be negatively affected though insurance brokerage business currently does not contribute a material amount of revenue for us.
Goodwill and intangible assets impairment could adversely affect our results of operations and financial condition.
We recorded goodwill of RMB1,504.3 million, RMB4,071.4 million and RMB4,071.4 million as of December 31, 2019, 2020 and 2021, respectively, in connection with the acquisition of Cheerbright International Holdings Limited, or Cheerbright, China Topside Co., Ltd. and Norstar Advertising Media Holdings Co., Ltd. in June 2008 and the acquisition of TTP, in December 2020. In addition, we recorded intangible assets of RMB349.7 million as of December 31, 2021, primarily consisting of technologies, trademarks, customer relationship and database from the acquisition of TTP. We do not amortize goodwill. We have and will continue to incur amortization expenses as we amortize intangible assets over their estimated useful life on a straight-line basis. We undertake goodwill and intangible assets impairment reviews periodically or more frequently if there are indicators of impairment present. As of December 31, 2019, 2020 and 2021, we performed an impairment assessment and no provisions of goodwill and intangible assets were required. However, if in the future our goodwill or intangible assets is determined to be impaired, we would be required to write down the carrying value or record a provision of impairment loss for goodwill or intangible assets in our financial statements during the period in which our goodwill or intangible assets is determined to be impaired, and this impairment would adversely affect our results of operations and our financial condition.
We may be adversely affected by the mergers, acquisitions and other consolidation activities in the automobile industry which may exacerbate our customer concentration.
The potential mergers, acquisitions and other consolidation activities in China’s automobile industry will result in a lower number of automakers and dealers, which make up a major part of our customer base. We are already subject to risks related to customer concentration. See “—A limited number of automaker customers have accounted for, and are expected to continue to account for, a large portion of our revenues. Failure to maintain or to increase revenues from these customers could harm our prospects.” Further consolidation within the automobile industry could exacerbate our customer concentration. If we fail to maintain a good relationship with a large customer, our business, results of operations and financial condition could be harmed.
Increasing focus with respect to environmental, social and governance matters may impose additional costs on us or expose us to additional risks. Failure to adapt to or comply with the evolving expectations and standards on environmental, social and governance matters from investors and the PRC government may adversely affect our business, financial condition and results of operation.
 
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The PRC government and public advocacy groups have been increasingly focused on environment, social and governance, or ESG, issues in recent years, making our business more sensitive to ESG issues and changes in governmental policies and laws and regulations associated with environment protection and other
ESG-related
matters. Investor advocacy groups, certain institutional investors, investment funds, and other influential investors are also increasingly focused on ESG practices and in recent years have placed increasing importance on the implications and social cost of their investments. Regardless of the industry, increased focus from investors and the PRC government on ESG and similar matters may hinder access to capital, as investors may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. Any ESG concern or issue could increase our regulatory compliance costs. If we do not adapt to or comply with the evolving expectations and standards on ESG matters from investors and the PRC government or are perceived to have not responded appropriately to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational damage and the business, financial condition, and the price of our ADSs and/or ordinary shares could be materially and adversely effected.
Our business is subject to fluctuations, including seasonality, which makes our results of operations difficult to predict and may cause our quarterly results of operations to fall short of expectations.
Our quarterly revenues and other operating results have fluctuated in the past and may continue to fluctuate depending upon a number of factors, many of which are beyond our control. Our business experiences seasonal variations in association with the demand for automobiles in China. For example, the first quarter of each year generally contributes the lowest portion of our annual net revenues primarily due to a slowdown in business activity around and during the Chinese New Year holiday, which occurs during the period. Consequently, our results of operations may fluctuate from quarter to quarter. For these reasons, comparing our operating results on a
period-to-period
basis may not be meaningful, and you should not rely on our historical results as an indication of our future performance. As each of our business lines may have different seasonality factors and the mix of our revenue source may shift from year to year, our past performance may not be indicative of future trends.
In addition, because a portion of our revenues arising from our media services is attributable to new model promotion campaigns, the timing of new car releases of our major automaker advertisers can have a significant impact on our results of operations. The timing of such releases, however, is subject to uncertainty due to various factors, such as automakers’ design or manufacturing issues, marketing conditions and government incentives or restrictions. These factors may make our results of operations difficult to predict and cause our quarterly results of operations to fall short of expectations.
If we are unable to maintain our relationships with advertising agencies or if we are unable to collect accounts receivable from advertising agencies in a timely manner, our results of operations and prospects may be materially and adversely affected.
We are currently selling a substantial portion of our advertising services and solutions to third-party advertising agencies that represent the automakers and automobile dealers, who could maintain our business relationships with automakers and automobile dealers. We do not have long-term cooperation agreements or exclusive arrangements with these agencies and they may elect to direct business to other advertising service providers, including our competitors. If we fail to retain and enhance our business relationships with third-party advertising agencies, in particular the few ones we frequently transact with, we may suffer from a loss of advertisers and our business, financial condition, results of operations and prospects may be materially and adversely affected. In our agreements with certain major advertising agencies, we undertake to provide them with most favored pricing terms. Such most favored pricing terms may hinder our ability to acquire new customers using special pricing terms.
In addition, we have been relying on third-party advertising agencies for the collection of payment from advertisers and we have been relying on a few advertising agencies to collect a significant portion of our total account receivables. As a result, the financial soundness of advertising agencies may affect our collection of accounts receivable. We make a credit assessment of a potential advertising agency to evaluate the collectability of the advertising service fees before entering into an advertising contract. However, we cannot assure you that we will be able to accurately assess the creditworthiness of each advertising agency, and any failure of advertising agencies to pay us in a timely manner may adversely affect our liquidity and cash flows. Amid the sustained decline in new automobile purchases in China, certain automakers operating in China have suffered declining performance or financial difficulties. As a result, advertising agencies that represent the automakers and automobile dealers may encounter financial and operational difficulties, or even go out of businesses. This in turn causes us to suffer from longer accounts receivable turnover days, allowance for doubtful accounts or even bad debt. Initiating legal proceedings against such advertising agencies can be expensive and time-consuming, and could divert our management’s attention and other resources from our business operations, which could adversely affect our results of operations. Even if we receive a favorable judgment in such legal proceedings, it may still be challenging and uncertain for us to collect the outstanding payments promptly and in full from the advertising agencies if they are experiencing financial difficulties or even go bankrupt. Moreover, even if we are able to enforce our rights against any collaterals other than cash for the outstanding payments, it may still be challenging and uncertain for us to effectively liquidate such collaterals.
 
 
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If online advertising and promotion do not continue to grow in China, our ability to increase revenue and profitability could be materially and adversely affected.
With the continuous growth of internet usage in China, the internet has become an increasingly important marketing and advertising channel to China’s automotive industry. Although online advertising and promotion have constituted a significant portion of the overall marketing activities of our current and potential advertisers and dealer subscribers, if the promotional effect or outcome realized through online advertising and promotion cannot meet the expectations of advertisers and dealer subscribers or address their needs, our advertisers and dealer subscribers may decrease their spending and efforts on online advertising and promotion and devote more marketing budgets to traditional print and broadcast media. Our ability to increase revenue and profitability from online marketing may be adversely impacted by a number of factors, many of which are beyond our control, including:
 
   
difficulties associated with developing a larger user base with demographic characteristics attractive to advertisers;
 
   
increased competition and potential downward pressure on online advertising prices;
 
   
difficulties in acquiring and retaining advertisers or dealer subscribers;
 
   
uncertainties and changes in regards to PRC regulations on internet advertisements;
 
   
failure to develop an independent and reliable means of verifying online traffic; and
 
   
decreased use of the internet or online marketing in China.
If the internet does not become more widely accepted as an effective media platform for advertising and marketing by China’s automotive industry, our business, financial condition and results of operations could be materially and adversely affected.
We are subject to credit risk in collecting the accounts receivable due from our customers.
The credit terms we extend to our customers result in accounts receivable. As of December 31, 2019, 2020 and 2021, our accounts receivable (net of allowance for doubtful accounts) were RMB3,231.5 million, RMB3,124.2 million and RMB2,139.5 million, respectively, and we recognized additions to allowance for doubtful accounts of RMB36.7 million, RMB95.7 million and RMB53.3 million in 2019, 2020 and 2021, respectively. We usually make credit assessment of our customers before entering into agreements. However, we cannot assure you that we are or will be able to accurately assess the creditworthiness of each of our customers before entering into agreements, neither can we guarantee that each of these customers will be able to strictly follow and enforce the payment schedules provided in the agreements. Any inability of our customers to pay us in a timely manner may adversely affect our liquidity and cash flows, which in turn has a material adverse effect on our business operations and financial condition.
Our short-term investments may expose us to default risk and adversely affect our business, financial condition and results of operations.
During the years ended December 31, 2019, 2020 and 2021, we invested in bank deposits and adjustable-rate financial products with original maturities of less than 1 year. As of December 31, 2019, 2020 and 2021, our short-term investments amounted to RMB10,806.8 million, RMB12,878.2 million and RMB16,496.3 million, respectively. We are subject to default risk associated with these short-term investments, and we have experienced default on payment by asset managers of certain of our investments. For example, the investment of one of our subsidiaries in a financial product experienced default on payment by the financial institution when the relevant investment units reached maturity. As of the date of this annual report, we have not received the payment from such financial institution, for which we recognized the related loss in the consolidated statements of comprehensive income, and we cannot guarantee that we can ultimately successfully collect the related amount. Neither can we assure you that we will receive investment income or will not incur financial losses from our other investments. In addition, changes of inputs such as annual interest rate will change the fair value of certain of our short-term investments. In the event that we incur financial losses from these short-term investments, our business, financial condition and results of operations may be adversely affected.
 
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Inaccuracy in pricing and listing information provided by third parties on our platform may adversely affect our business and financial performance.
Our automobile listings and promotional information are provided and updated by third parties on our platform, including the automakers, dealers, financial partners and used car sellers. Users interested in particular vehicle models can conveniently search for
up-to-date
information on such models without having to visit the local showrooms of relevant dealers or solicit related information from other sources. Although we have optimized our system to detect pricing inaccuracy and have leveraged our advanced technology and third-party data to improve the accuracy of price listings and promotional information on our platform, we cannot assure you that these measures are always effective to ensure the accuracy and reliability of pricing and listing information provided to our users. If such listings and promotional information provided by the third parties on our platform are frequently inaccurate or not reliable, our users may lose faith in our websites and mobile applications, resulting in reduced user traffic to our websites and mobile applications and diminished value to customers. We may receive more customer complaints, and we may need to allocate more resources in responding and handling such complaints. We cannot guarantee that such complaints will be resolved in satisfactory outcome. Our reputation could be harmed, which could adversely affect our business and financial performance. For used car listings on our platforms in particular, we are subject to risks associated with inaccurate representation of used car conditions in the inspection reports we show on the listings. We may receive complaints or claims of damages arising out of such inaccuracies. While we are attempting to mitigate the issue through third-party inspection warranty, revising the report items and showing inspection methodologies, there is no guarantee that those measures will be effective.
If we are unable to effectively manage our auto finance business, we may not be able to achieve our expected business growth, our results of operations may be adversely affected and we may be subject to penalties as a result of noncompliance.
Since 2017, with the collaboration and integration of our business with Ping An Group, we have been developing our auto finance services for our cooperative banks and financial institutions and displaying and marketing their financial products, including financing and financial leasing products, on our platform. We enable our cooperative banks and financial institutions to present their financial products to users of our websites and mobile applications and to accept users’ auto financing applications. Although we have an existing large user base, we cannot assure you that the business model of our auto finance business will be attractive to users and financial partners. Failure to provide satisfactory services on our platform or facilitate financing transactions between our users and financial product providers would cause an adverse impact on our auto finance business. As a result, we may not be able to achieve our expected business growth and our results of operations may be adversely affected.
Since our auto finance business is subject to broad regulation and supervision in the PRC, we may need to handle regulatory inspections during our ordinary course of business from time to time. In addition, although we don’t have business operations in the U.S., we may nevertheless be subject to its laws and regulations related to our auto finance business such as anti-money laundering laws and regulations. We have developed an internal control system relating to compliance matters for auto finance business. However, we cannot assure you that the internal control system could always work effectively in tracking and administering the compliance matters relevant to our auto finance business and we may need to incur increased compliance costs to maintain and upgrade such internal control system effectively. If we cannot satisfy any of the requirements of competent authorities, we would be exposed to the relevant regulatory risks, which may result in penalties imposed against us.
Any financial or economic crisis, or perceived threat of such a crisis, including a significant decrease in consumer confidence, may materially and adversely affect our business, financial condition and results of operations.
 
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The global financial markets experienced significant disruptions in 2008 and the United States, European and other economies went into recession. The recovery from the lows of 2008 and 2009 was uneven and the global financial markets are facing new challenges, including the escalation of the European sovereign debt crisis since 2011, the hostilities in the Ukraine, the end of quantitative easing by the U.S. Federal Reserve and the economic slowdown in the Eurozone in 2014. In addition, the recent conflict in Ukraine and the imposition of broad economic sanctions on Russia could raise energy prices and disrupt global markets. It is unclear whether these challenges will continue to exist and what effects they each may have. There is considerable uncertainty over the long-term effects of the expansionary monetary and fiscal policies that have been adopted by the central banks and financial authorities of some of the world’s leading economies, including China’s. Economic conditions in China are sensitive to global economic conditions. Any prolonged slowdown in China’s economic development might lead to tighter credit markets, increased market volatility, sudden drops in business and consumer confidence and dramatic changes in business and consumer behaviors. In response to their perceived uncertainty in economic conditions, consumers might delay, reduce or cancel purchases of automobiles, and our customers may also defer, reduce or cancel purchasing our services. To the extent any fluctuations in the Chinese economy significantly affect automakers’ and dealers’ demand for our services or change their spending habits, our results of operations may be materially and adversely affected.
We and