Autohome Earnings: Revenue and Profit In Line; Rising Cost Base Offset by Nonoperating Income

Autohome reported in-line third-quarter results. Revenue increased 3% versus a year ago, driven by faster growth in data products and the company’s new retail initiatives. Gross margin narrowed 2 percentage points year over year due to rising content costs as Autohome built out its content ecosystem. User traffic, as measured by mobile daily active users, grew nicely by 10% from last quarter to 69 million, but the increased traffic acquisition during the period also led to 8% growth in marketing expenses from last year. While the operating profit run-rate came in below our full-year forecast, interest income and contribution from equity investments brought net profit back in line with our expectation.