PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read in conjunction with, the more detailed information and financial statements appearing elsewhere in this prospectus. In addition to this summary, we urge you to read the entire prospectus carefully, especially the risks of investing in our ADSs discussed under “Risk Factors,” before deciding whether to buy our ADSs.

Our Business

We are the leading online destination for automobile consumers in China. Through our two websites, autohome.com.cn and che168.com , we deliver comprehensive, independent and interactive content to automobile buyers and owners. Autohome.com.cn ranked first among China’s automotive websites and automotive channels of internet portals in terms of average daily unique visitors, average daily time spent per user and average daily page views in the nine months ended September 2013, based on data published by iResearch, a third-party market research firm, or iResearch Public Data. In the same period, autohome.com.cn accounted for approximately 46% of the total time that China’s internet users spent viewing online automotive information, more than four times that of our closest competitor, according to the iResearch Public Data. We have developed a strong and well-recognized brand. Our “ ” (“ Autohome”) brand has been the most searched automotive-related keyword during substantially the entire period since July 2011 on Baidu.com , the leading Chinese language internet search engine.

Our ability to reach a large and engaged user base of automobile consumers has made us a preferred platform for automakers and dealers to conduct their advertising campaigns. We generate substantially all of our revenues from online advertising services and dealer subscription services with automakers contributing the substantial majority of our total net revenues. We have a high penetration rate in the automaker market, with approximately 80% of over 80 automakers operating in China having advertised on our websites in each of 2010, 2011, 2012 and the nine months ended September 30, 2013. In addition, a large and rapidly growing number of dealers are purchasing our advertising services and subscription services, through which they showcase and market their inventories on our websites.

We believe our focus on user experience, innovation and high-quality content distinguishes us from our competitors and is the foundation for our long-term success. Content we provide to our users includes:

 

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Professionally produced content . We have a dedicated editorial team focusing on serving consumers throughout the automobile ownership lifecycle. We conduct independent and professional evaluations of vehicle models from our users’ perspective, rather than relying only on information provided by automakers. Over the nine months ended September 30, 2013, we published a daily average of approximately 600 articles, 1,200 photos and 10 video clips.

 

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User generated content. We have the largest and most active online community of automotive consumers in China, with over 7.7 million registered users and over 1,400 user forums as of September 30, 2013 and an average of 2.7 million daily unique visitors to our user forums in the nine months ended September 30, 2013.

 

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Automobile library . We have one of the most comprehensive online automobile libraries in China with over 15,000 vehicle model configurations and over 2.0 million photos as of September 30, 2013. We believe our automobile library covers all passenger car models released in China since 2005.

 

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Automobile listing information . We feature extensive and up-to-date listings of both new and used automobiles on our websites. As of September 30, 2013, we had over 2.4 million new automobile listings. We added approximately 313,000 used automobile listings in the nine months ended September 30, 2013.

 

Our professionally produced and user generated content, comprehensive automobile library and extensive automobile listing information have attracted a large and engaged user base. This, in turn, represents a highly relevant audience that is receptive to automotive advertising. We believe that this user base, together with our nationwide advertising platform, targeted advertising solutions and value-added services, has led to our rapid growth and has laid the foundation for our continuing success.

We develop our business model and technology platforms around the consumer automobile ownership life cycle and our automaker and dealer customers’ sales cycle. The consumer automobile ownership life cycle has the following stages: research, purchase, maintenance and replacement. The sales cycle of our customers has the following corresponding stages: pre-sale marketing and advertising, sales leads generation, after-market sales and replacement sales. Our current business mainly serves the research and purchase stages of the consumer automobile ownership life cycle and the pre-sale marketing and advertising and sales leads generation stages of our customers’ sales cycle. We have been developing other services and technology platforms to capture additional revenue opportunities in the automobile maintenance and replacement stages of the consumer automobile ownership life cycle and the corresponding stages of our customers’ sales cycle.

We have experienced significant revenue growth while maintaining profitability. Our net revenues increased from RMB252.9 million in 2010 to RMB433.2 million in 2011 and RMB732.5 million (US$119.7 million) in 2012, representing a compound annual growth rate, or CAGR, of 70.2%. Our total net revenues grew to RMB830.6 million (US$135.7 million) for the nine months ended September 30, 2013, representing a 62.6% increase from RMB510.8 million in the same period in 2012. Our income from continuing operations increased from RMB80.4 million in 2010 to RMB135.4 million in 2011 and RMB212.9 million (US$34.8 million) in 2012, representing a CAGR of 62.7%. Our net income amounted to RMB333.5 million (US$54.5 million) for the nine months ended September 30, 2013, representing a 96.7% increase from RMB169.6 million in the same period in 2012.

Our Industry

The online automotive advertising market in China has achieved rapid growth as a result of the concurrent development of China’s automotive and internet industries. China is the world’s largest passenger car market as measured by sales volume of new cars in 2012, according to LMC Automotive, a third-party industry research firm. The number of new passenger cars sold in China is expected to grow from 14.2 million units in 2012 to 20.7 million units by 2015, representing a CAGR of 13.3%, according to LMC Automotive. At the same time, China has the largest internet population in the world, which increased from 298.0 million in 2008 to 590.6 million at the end of June 2013, according to the China Internet Network Information Center, or the CNNIC. China’s growing population of automobile consumers increasingly relies on the internet as a source of automotive information. As a result, China’s automotive websites and automotive channels of internet portals have experienced rapid user growth. According to the iResearch Public Data, average daily unique visitors to automotive websites and automotive channels of internet portals increased from 5.8 million in December 2008 to 26.1 million in September 2013. The aggregate time spent by internet users in China visiting automotive websites and automotive channels of internet portals increased from 20.9 million hours in December 2008 to 100.6 million hours in September 2013, according to the iResearch Public Data. The number of monthly page views of automotive websites and automobile channels of internet portals in China increased from 1.5 billion in December 2008 to 8.8 billion in September 2013, according to the iResearch Public Data.

Automakers and dealers have therefore increasingly used the internet for brand advertising and product promotions. According to our commissioned report prepared by iResearch, or the iResearch Commissioned Report, automakers and their franchise dealers spent RMB2,370 million in 2009 on online advertising in China, which increased to RMB5,600 million in 2012, representing a CAGR of 33.2%. This growth outpaced their spending on traditional media, including television, print and radio, which increased at a CAGR of 8.9% during the same period, according to the iResearch Commissioned Report. It is expected that spending on online advertising will continue to grow at a more rapid pace than traditional media in the future.

 

Automotive websites have increased their share of total online automotive advertising spending. Online advertising spending on automotive websites accounted for 37.1% of total online advertising expenditures by automaker and dealer advertisers in 2012, increasing from 30.0% in 2009, according to the iResearch Commissioned Report. It is expected that revenue growth of automotive websites will continue to be driven by growth in new and used car sales as well as growth in sales of related products and services.

Our Strengths

We believe that the following competitive strengths contribute to our success and differentiate us from our competitors:

 

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the leading online destination for automobile consumers in China with strong brand recognition;

 

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user-centric and innovative culture driving a superior user experience;

 

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comprehensive and high-quality content creating strong network effects;

 

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highly effective online automotive advertising platform; and

 

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professional and proven management team backed by a strong strategic shareholder.

Our Strategies

Our goal is to become the dominant player in China’s online automotive advertising market. We intend to achieve this goal by implementing the following strategies:

 

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continue to attract and retain automobile consumers;

 

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enhance user engagement;

 

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increase our “share of wallet” from automakers;

 

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expand and further monetize our dealer network; and

 

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capitalize on our leading position to explore new opportunities.

Our Challenges

The successful execution of our strategies is subject to risks and uncertainties related to our business and industry, including those relating to our ability to:

 

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adapt to changes in the rapidly evolving automotive and online advertising industries in China;

 

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respond effectively to competitive pressures;

 

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anticipate user preferences and develop new products and services to attract and retain users;

 

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extend revenue growth from automakers;

 

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expand our dealer network into new geographical markets in China; and

 

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maintain and enhance our strong “Autohome” and “Che168” brands.

In addition, we are subject to risks and uncertainties related to our corporate structure and doing business in China, including risks associated with:

 

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our control of our variable interest entities, which is based upon contractual arrangements rather than equity ownership and may be subject to regulatory uncertainties; and

 

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our ability to maintain various operating licenses and permits and to make registrations and filings necessary for us to operate our business, including those associated with providing internet content.

 

See “Risk Factors” and other information included in this prospectus for a discussion of these and other risks and uncertainties associated with our business and investing in our ADSs.

Corporate History and Structure

Autohome Inc., or Autohome, was incorporated under the laws of the Cayman Islands under its former name, Sequel Limited, in June 2008 and adopted its current name in October 2011. Shortly after its inception, in June 2008, Autohome acquired all of the equity interests of the following entities:

 

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Cheerbright International Holdings Limited, or Cheerbright, a British Virgin Islands company that operates autohome.com.cn , which was launched in 2005;

 

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Norstar Advertising Media Holdings Limited, or Norstar, a Cayman Islands Company that, among other businesses, operated che168.com , which was launched in 2004; and

 

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China Topside Limited, or China Topside, a British Virgin Islands company.

Our largest shareholder is Telstra Holdings Pty Ltd., or Telstra Holdings, a wholly-owned subsidiary of Telstra Corporation Limited, the leading diversified telecommunications company in Australia and a Fortune Global 500 company.

To sharpen our business focus on the automotive industry, we completed a corporate reorganization in 2011 by spinning off our then subsidiaries that were not involved in our core business. In March 2011, we completed the transfer of the che168.com business from Norstar to Cheerbright. In June 2011, we contributed our entire equity interests in Norstar and China Topside to Sequel Media Inc., or Sequel Media, our Cayman Islands subsidiary. We then immediately distributed shares of Sequel Media to our shareholders.

PRC laws and regulations currently limit foreign ownership of companies that engage in internet and advertising services. We therefore conduct our operations in China primarily through contractual agreements between our wholly-owned PRC subsidiary, Beijing Cheerbright Technologies Co., Ltd., or Autohome WFOE, and each of the three groups of entities and individuals—(i) Beijing Autohome Information Technology Co., Ltd., or Autohome Information, shareholders of Autohome Information and three subsidiaries of Autohome Information: Beijing Shengtuo Hongyuan Information Technology Co., Ltd., or Hongyuan Information, Beijing Shengtuo Chengshi Advertising Co., Ltd., or Chengshi Advertising, and Beijing Shengtuo Autohome Advertising Co., Ltd., or Autohome Advertising, (ii) Shanghai You Che You Jia Advertising Co., Ltd., or Shanghai Advertising, and shareholders of Shanghai Advertising, and (iii) Guangzhou You Che You Jia Advertising Co., Ltd, or Guangzhou Advertising, and shareholders of Guangzhou Advertising.

These contractual arrangements enable us, through Autohome WFOE, to:

 

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exercise effective control over these entities;

 

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receive substantially all of the economic benefits of these entities; and

 

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have exclusive options to purchase all of the equity interests in these entities when and to the extent permitted under PRC law.

As a result of these contractual arrangements, we, through Autohome WFOE, are the primary beneficiary of these three groups of entities and treat them as our “variable interest entities”, or VIEs, under the generally accepted accounting principles in the United States, or U.S. GAAP. We have consolidated the financial results of the VIEs in our consolidated financial statements in accordance with U.S. GAAP.

 

There are certain risks associated with conducting our operations through contractual arrangements. For example, if the PRC government determines 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 and advertising 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. Our contractual arrangements with our VIEs may not be as effective in providing operational control as direct ownership. Any failure by our 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. For a detailed description of the risks associated with our corporate structure and the contractual arrangements underlying our corporate structure, see “Risk Factors—Risks Related to Our Corporate Structure.”

In October 2013, our wholly-owned subsidiary in Hong Kong, Autohome (Hong Kong) Limited, or Autohome HK, acquired Prbrownies Marketing Limited, or Prbrownies Marketing, a Hong Kong advertising and marketing company. Prbrownies Marketing has established a wholly-owned subsidiary, Autohome Shanghai Advertising Co. Ltd., in Shanghai. We plan to gradually shift our advertising business from our VIEs to our wholly-owned subsidiaries.

 

The following diagram illustrates our corporate structure as of the date of this prospectus:

 

 

(1)

The three individuals are James Zhi Qin, our director and chief executive officer, Xiang Li, our director and president, and Zheng Fan, our vice president. Each of these three individuals is also a beneficial owner of our company and a PRC citizen. James Zhi Qin, Xiang Li and Zheng Fan hold 8%, 68% and 24% of the equity in each of Autohome Information, Shanghai Advertising and Guangzhou Advertising, respectively .

 

Share Purchase from West Crest Limited

On October 30, 2013, West Crest Limited and its sole shareholder Mr. Jiang Lan informed our shareholders that they had received a binding written offer from one of our major competitors to purchase 6,684,711 ordinary shares of our company held by West Crest Limited for a total purchase price of US$130 million. Mr. Lan was a director of our company and 6,684,711 ordinary shares beneficially owned by Mr. Lan constituted approximately 6.7% of our then total issued and outstanding shares. Should we allow our competitor to acquire a significant stake in our company while we are a private unlisted company, we believe the competitor may obtain our confidential business information and gain influence over our corporate strategy and the right to vote on our significant matters requiring shareholder approval. In the interest of our company, our board of directors and all of our existing shareholders unanimously approved our and Telstra’s proposed purchase of all of our shares held by West Crest Limited for US$130 million in cash, or the West Crest Share Purchase. On November 4, 2013, we and Telstra Holdings entered into a share purchase agreement with West Crest Limited, Mr. Jiang Lan and other shareholders of our company. Pursuant to the agreement, we and Telstra Holdings purchased 3,856,564 and 2,828,147 ordinary shares of our company held by West Crest Limited for US$75 million and US$55 million, respectively, in cash to be paid in two installments, with 50% to be paid no later than November 25, 2013 and the remainder to be paid no later than February 4, 2014. Mr. Lan has resigned from our board of directors upon signing of the agreement, and all other shareholders have agreed not to transfer shares of our company held by them from the date of the agreement until 180 days after the date of the final prospectus for this offering. We plan to pay our first installment of US$37.5 million by obtaining U.S. dollar financing from a third-party lender and pledging the approximate corresponding amount of our existing RMB cash balance to the lender as collateral. We intend to use part of the proceeds from this offering to pay the remaining purchase price of US$37.5 million, although we believe our existing cash balance and expected cash from operating activities would be sufficient to fund the entire purchase price and our business operations and liquidity would not be materially adversely affected by the West Crest Share Purchase.

Corporate Information

Our principal executive offices are located at 10th Floor Tower B, CEC Plaza, 3 Dan Ling Street, Haidian District, Beijing, 100080, China. Our telephone number at this address is (+86) 10-5985-7001. Our registered office in the Cayman Islands is located at the office of Codan Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, P.O. Box 2681, Grand Cayman KY1-111, Cayman Islands.

Investors should submit any inquiries to the address and telephone number of our principal executive offices. Our corporate website is                         . The information contained on this website is not a part of this prospectus. Our agent for service of process in the United States is Law Debenture Corporate Services Inc.

Our Dual-class Shareholding Structure

As of the date of this prospectus, our outstanding share capital consists of ordinary shares. Immediately prior to the completion of this offering, our ordinary shares will be converted into Class A ordinary shares and Class B ordinary shares. Holders of Class A and Class B ordinary shares will have the same rights, including dividend rights, except for conversion and voting rights. Each Class B ordinary share may be converted into one Class A ordinary share at any time by its holder, while Class A ordinary shares cannot be converted into Class B ordinary shares under any circumstances. Each Class A ordinary share is entitled to one vote. When the total number of ordinary shares held by Telstra constitutes no less than 51% of all of our issued and outstanding ordinary shares, each Class B ordinary share is entitled to one vote; when the total number of ordinary shares held by Telstra drops below 51% but is no less than 39.3% of all of our issued and outstanding ordinary shares, each Class B ordinary share will carry such number of votes that would result in the total number of ordinary shares held by Telstra carrying, in the aggregate, 51% of the voting rights represented by all of our issued and

 

outstanding ordinary shares; when the total number of ordinary shares held by Telstra drops below 39.3% of all of our issued and outstanding ordinary shares, all Class B ordinary shares will be automatically converted into the same number of Class A ordinary shares. The ADSs being sold in this offering represent Class A ordinary shares. See ‘‘Description of Share Capital—Ordinary Shares’’ for more detailed description of our Class A ordinary shares and Class B ordinary shares.

After the completion of this offering, Telstra will continue to retain a majority of our aggregate voting rights due to its equity interests in our company and our dual-class share structure. Telstra will hold 68,788,940 Class B ordinary shares, representing             % of our aggregate voting rights, immediately after the completion of this offering, assuming the underwriters do not exercise the over-allotment option. Upon the transfer of any Class B ordinary share to any person that is not an affiliate of Telstra, such Class B ordinary share will be automatically and immediately converted into one Class A ordinary share. If immediately following the transfer of any ordinary shares held by Telstra to any party that is not an affiliate of Telstra, Telstra holds less than 51% of our total number of outstanding shares, each issued Class B ordinary share will be automatically converted into one Class A ordinary share.

So long as Telstra holds at least 51% of our voting rights, Telstra will be entitled to appoint at least a majority of our directors. After the completion of this offering, we will be a controlled company as defined under the New York Stock Exchange Listed Company Manual, or the NYSE Listed Company Manual.

Conventions that Apply to this Prospectus

Unless otherwise indicated or the context otherwise requires, references in this prospectus to:

 

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“ADSs” are to our American depositary shares, each of which represents              Class A ordinary shares;

 

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“China” or the “PRC” are to the People’s Republic of China, excluding, for the purpose of this prospectus only, Hong Kong, Macau and Taiwan;

 

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“ordinary shares” are, prior to the completion of this offering, to our ordinary shares, par value US$0.01 per share and, upon the completion of this offering, to our Class A and Class B ordinary shares, par value US$0.01 per share;

 

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“RMB” and “Renminbi” are to the legal currency of China;

 

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“we,” “us,” “our company” and “our” are to Autohome Inc., its predecessors, subsidiaries and VIEs;

 

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“average daily unique visitors” refers to the number of different IP addresses from which a website is visited during a given day in a month, averaged over that month;

 

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“average daily time spent per user” refers to the aggregate time spent on a website by a user in a month divided by the number of days the user visited that website, and such calculation result is further averaged for all the users visited that website in that month. A web page opened for less than three seconds is excluded; time spent on a web page after two hours is treated as inactive time and is excluded from the calculation; and

 

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“average daily page views” refers to the aggregate number of web pages on a website viewed by all users during a month, divided by the number of days in that month. A web page opened for less than three seconds is excluded from the number of page views.

Unless the context indicates otherwise, all information in this prospectus assumes no exercise by the underwriters of their option to purchase additional ADSs.

 

Implications of Being an Emerging Growth Company

As a company with less than US$1.0 billion in revenue for our last fiscal year, we qualify as an “emerging growth company” pursuant to the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, in the assessment of the emerging growth company’s internal control over financial reporting. The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we have elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. This decision to opt out of the extended transition period under the JOBS Act is irrevocable.

We will remain an emerging growth company until the earliest of (a) the last day of our fiscal year during which we have total annual gross revenues of at least US$1.0 billion; (b) the last day of our fiscal year following the fifth anniversary of the completion of this offering; (c) the date on which we have, during the previous three-year period, issued more than US$1.0 billion in non-convertible debt; or (d) the date on which we are deemed to be a “large accelerated filer” under the Securities Exchange Act of 1934, as amended, or the Exchange Act, which would occur if the market value of our ADSs that are held by non-affiliates exceeds US$700 million as of the last business day of our most recently completed second fiscal quarter. Once we cease to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above.