Autohome Earnings: Top Line as Expected; Margin Pressure Remains Given Rising Cost Base

Autohome reported in-line December quarter revenue, but profit was missed. Revenue increased 1% year on year with faster growth in data products offsetting revenue decline in the media service segment. Gross margin was stable year over year but remained under pressure due to rising content costs as Autohome built out its content ecosystem. User traffic, as measured by mobile daily active users, grew 25% from last year to 68 million. Increased traffic acquisition efforts during the period led to an 8.5% growth in marketing expenses from last year. As a result, net profit came in under our expectations.