Q3 2019 Earnings Call
Ladies and gentlemen, good day, everyone and welcome to the Q3 threat Tivantinib VIP Shop Holdings Limited earnings Conference call.
All participants are Oh this is on at.
This boy I would like to turns up all over the mystery shops on the I'd be shops director of Investor Relations. Please proceed.
Thank you operator.
Speaker 1: Hello, everyone and thanks for joining me.
Well, let me.
Earnings.
Before we begin.
The Safe Harbor statement.
During this conference call, we will make forward looking statement.
[laughter] Securities Litigation reform.
Thanks.
<unk>.
[laughter] patients assumption.
And projection.
Oh.
Oh.
Sorry.
Thanks.
Okay.
Okay.
Forward looking statements can be identified by words or phrases.
Anticipate.
Okay.
The name.
Yes.
Right.
[noise] well.
Potential other similar expressions.
These forward looking statement.
Yeah.
That's a changing anytime.
We have no obligations.
Our co founder Chairman and CEO .
Yeah.
At this time I would like to turn the call.
Good morning, and good evening, everyone, welcome and listen to pull joining or sort of caught your two soda Nike Inc. earnings conference call.
During the quarter with delivered a strong operational and financial results, which was made possible by our team sorely exclusion Oh, the merchandising strategy.
Our total active customers increased five times, they want to spend year over year.
Further improved from the 11% year over year loose with liquidity was sitting in the quarter go this year.
The Helsley glow smell wouldn't Oh, Oh, Oh, it peaked at the new customers is driving our topline close represented by a 10% year over year increase so the quarter to sort of 90.
Despite.
Weekly these despite weak.
Seasonality.
By shifting back to the east coast header bidding.
Well I'll call capabilities to lie.
We are seeing that says you use are met my treats across the board.
As we continue to heat cool old product offering to need more customs me.
The policy was almost <unk> book.
Steve will enable us to penetrate into new customer sentiment.
And that attract more new customers Uh huh.
This is very important as custom goes is there anything that's well drawn out Copeland gloves and the possibility improvements in the future.
Looking ahead, we will continue to folks Oh.
Oh the dock.
Okay, and the driving more volume.
To our customers as adults as a domain names.
Yeah, Im trying to use come the retail say them as.
We are well positioned to further expand our market share and generating sustainable body for many quarters.
At this point, let me hand, the old was a cotwo CFO Oh, yes, so that can be discussing our strategies in more detail and the goal, though operational and financial results.
Thanks, Eric and Hello, everyone.
We finished the third quarter of 2009.
The solid topline growth and sustainable year over year improvement.
Profitability.
During the quarter, our non-GAAP net income.
Well, two VIP shops shareholders increased five longer.
40% year over year to 1.2 billion RMB 501 million R&D in the prior year period, our non-GAAP net margins attributable to be up you shop shareholders reached 6.1%, which is a new we knew historically high levels. These successes with it.
Oh I'm more focused on highly profitable apparel related categories geographies for Oh related categories, including GMB from the newly acquired SASSA outlets increased by 29% year over year.
Third quarter of 2019.
Our too deep.
Channel.
Hi, Tom continued to drive hard GMB growth during the quarter, specifically do you have any contribution from these two times reached 42% of our online GMB.
Third quarter of 2019, which further increased from 29% in the previous quarter.
These results further demonstrate that our customers looking for Bobby.
Well we offer.
Desirable products at a deep discounts to them they shop with us more.
We're keenly focused on the trading up our merchandise as.
We continue to improve their procurement negotiation capability. We believe we will see further improvement in our key operating metrics and financial results, allowing us to reinvest into I'm Lucky the long term potential.
Our company.
For the more we will continue to balance our topline growth with sustainable profitability improvement aiming to deliver in time shareholder returns overtime.
Now moving on to our quarterly financial results pilot.
I guess started.
Just to clarify that all financial numbers presented today or maybe a month and all percentage changes referred to year over year changes unless otherwise noted.
Total revenue for the third quarter of 2019 increased by 10%.
To 19.6 billion from 17.8 billion in the prior period.
Primarily driven by the growth in a number of total active customers.
Profit for the third quarter of 2019 increased by 16.6%.
The 4.2 billion from 6.3 point 6 billion in the prior period.
Smart some increased to 21.6% from 20.4% in the prior year period.
<unk> expenses for the third quarter of 2090 decreased 1.6 billion from 1.8 billing in the prior period.
As a percentage of total company fulfillment expenses decreased 2.1% from my point I per se the prior period.
Marketing expenses.
Third quarter of 2019 was somewhat longer 21 million.
Hurt with 578 million in the prior year period.
The percentage of total net revenue marketing expenses.
Good 0.7% as compared with 3.2% in the prior year period.
Technology Conference expenses for the third quarter of 2019 decreased to 401 million.
191 million in the prior year period.
As a percentage of total net revenue technology I'm confident census.
The two person.
2.8% in the prior year period.
General and administrative expenses for the third quarter of 2009.
Were 600.
2 billion, that's compared with 625 million in the prior year period.
As a percentage of total revenue general and administrative expenses remain stable at 3.5% year over year.
Our income from operations.
Quarter of 2019 increased by 229.7%.
1.2 billion from 255 million in the prior year period.
Operating margin increased to 6%.
2% in the prior year period.
non-GAAP income from operations, which excludes share based compensation expenses amortization of intangible assets, resulting from business acquisitions increased by 100.
51.5% to 1.4 billion from 547 million, it's in the prior period.
non-GAAP operating income margin increased to 7%.
3.1% in the prior year period.
Our net income attributable to VIP shops shareholders for the third quarter of 2019 increased by 282.7%.
875 million from 229 million in the prior year period.
Margin attributable to yeah, he shops shareholders increased.
4.5% from 1.3%.
The prior year period.
Net income attributable to VIP shops shareholders per diluted <unk>.
Increased to 1.31 be from zero point.
<unk> RMB in the prior year period.
non-GAAP net income attributable to be have yourself shareholders, which exclude share based compensation expenses in park lots of investments amortization of intangible assets, resulting from business acquisitions tax effect of amortization of intangible assets, resulting from this.
<unk>.
Investment gains and revaluation of investments excluding dividend.
We're locking investment.
Oh, sorry.
Tax effective investment gain a revaluation of events, including dividends and share gains or losses in investment of limited partnership that is accounted for an equity method investee increased by 140.2% to 1.2 billion from 501 million in the prior year period.
non-GAAP net margin attributable to be happy shareholders increased to 6.1% some 2.8% in the prior year period.
non-GAAP net income attributable to be I'd be shocked shareholders per diluted he has increased to 1.78 RMB from 0.75 RMB in the prior period.
At September Thirtyth 2019, our company had cash cash equivalents unrestricted cash of 6.6 billion and short term investments up 58 million.
For the third quarter of 2019.
From operating activities was 2.1 billion.
Looking at our business outlook for the fourth quarter of 2019.
Our total net revenue to be between 26.1 billion RMB and 27.4 billion RMB.
Representing year over year book rate of approximately zero percent to 5%.
Forecast reflects our current and preliminary view on the market, an operation what conditions, which its uptick subject to change.
That I'd now like to open the call QNX.
Ladies and gentlemen, we will not forget the question answer session.
My question. Please press star one on your telephone though at least.
We were named to the unknowns that's gone so your eclipse these breast about Uh huh.
And the I remind all participants so all the ask one question per person.
Thank you for your patience.
[laughter].
Your first question comes from the line of flow Gill from Goldman Sachs. Please go ahead.
Right.
Hi, Thank you said they'll go and Jesse.
Regulations on the very strong third quarter results. My question would be on your fourth quarter revenue guidance, just like here, how you've seen the singles day and how this that's first month and half of the fourth quarter has crept up threats and bought me because last year fourth quarter revenue net of slows or the pretty low base a quarter.
Last year as you've shifted the Oh.
The non apparel lumpy business to three d., so with this relatively low base and based on how you've done it say once they just want to hear how how are we looking into the growth in the fourth quarter and said, we expect a similar ROE pets and help the second and third quarter that you called somebody up than you ever.
Go ahead of what you were targeting as you guided but let's just want to hear how have you ever brought into the zero to 5% well Oh boy revenue guidance for the fourth quarter. Thank you.
So.
Sure.
Okay.
[laughter].
[noise] Josh.
Uh huh.
Sure.
Yep.
She was a 1 million units to the sun setting and sometimes the so called.
GGR, we smell woman so that was up also.
So just stop shop in shops, you saw in them. So I know what really happened tool that matures. It wasn't so you saw the selling a ball the budget to go saga of biological samples.
Yeah, Michael Sousa, what she's either through the position.
Uh huh.
Fourth quarter and be quarter for us so the GMI and the revenue contribution for the 40 point I'd make.
[laughter] I, we just finished England.
Uh-huh versus December eight anniversary sale.
I'm fighting fraud, and it's actually the biggest.
Fourth quarter.
Thanks for that I know there for a way I mean model.
Thank you. Your next question comes from the line of Joyce Zhou from Bank of America, the lightest Nelson.
Hi, good evening actions on young blend Kathy congrats on the phone whether I actually have a question regarding the on consolidation of the offline outlet business. We have seen a young America. We have seen very strong growth in terms of GE and lead apparel growth, it's funny, 9% yoga here I wonder like.
How much felt there was like growth actually conference, you'll get Vida offline outlets and also a holiday or how do we actually feel so rather than you for debt betting that it's it does it all like you know calculated in the other rats and also wants to us for our active customer growth and also down although growth.
Our the offline or their team also accounted in yeah.
Okay, Let me.
First question about how we consolidated the numbers from a sense and Oh. The small you know we book size.
Revenue on that basis, meaning we only book the the commission.
Although the outlets or make on the a sales Ah.
So good Tom <unk> basis in Q3.
The net revenue contribution from center outlets was around 70 million RMB, it's not like number and on the on the topline.
Process no problem that we booked.
Consolidated from all that was around.
8 million RMB, so that sort of competition.
From sense on in terms of net.
Revenue and bottom line or not there is significant.
The second question.
So I'm joined social them woman.
<unk>.
Okay.
John .
Yes.
I mean.
So I'm not.
Josh.
My hunch.
Yes.
Sure.
Oh, Okay digital mission has shortened the tone here, so generally that are stupid.
Since then the problem is not going instances chunking wash.
I want to she said she told us.
Oh gosh.
Sure, Okay cool negotiation <unk>.
Joey.
[laughter] apparel growth in that there were up 2019, when they're about 20% a younger and.
In terms of after.
Total order.
We don't Inc.
[noise] offline on that.
Your next question comes from the line off Thomas Chong from Jefferies. Your line is not weapon.
When we moved from a mixture of what's more important matson well this quarter the margin isn't that different exports I think oh, well hold it to me I go up and it's quite as much in the most of them, but my question guys and I'm trying to hold into watching the and then well tell you need to human experience as a percentage right for me.
That's great. Thank you.
Thank you for your question.
So in terms of.
Mark we're confident that the current margin level, a will be sustainable into the seeable future.
Look at the reasons behind the margin improvement.
You know we've refocused our effort.
Hi, a gross margin apart related categories.
And then you know we have taken great offers.
The good does come down costs in our operations.
So you look at those things that drive the improvement in our margin.
You can see the word the covenants has come from.
Why we believed that the margin Kurt margins should be sustainable into the civil future [noise].
And in terms of the fulfillment costs you know, we're still trying to further drive down to put them in Clos and so far we've outsourced.
About 30% to 40% of our delivery operations to third party careers and going forward. You know we will continue to take a make efforts you know to further cut down.
Are you know costs.
[noise].
I think you. Your next question comes from the line up will be on shoe from P.H. capital. Your line is now open.
Yeah. This isn't something like anything from a good to see two malls.
The questions related to the <unk>.
HM Global Oh.
That's okay.
Okay.
No I wouldn't go home and some are yes, so well that is one of them come from beat that would take <unk> and Golden Boy that you know this month nascent user.
HM Okay, that's it for less than seven since you they person so so what we're doing.
Oh, Gee I know woman she out even though we don't but yes.
Or not they find themselves in the late night, Yes. This is a woman's Navy well that's yeah.
Monday night.
Dan did.
Mm Hmm cyber she's been a person is that's yeah, Oh, we have already with Needham foreclose on Oh.
Right.
So going forward.
Mm Hmm.
Uh huh.
Thank you so much.
Equally DS services.
Yeah sure assumption.
[laughter].
[laughter].
Well I saw that [noise].
They do a woman I understand that keep himself.
She couldn't finalize the collection continues on the ball.
Like I said vanguard.
[laughter], 24% are already and you can.
HM.
However, we do want to know.
Okay.
Total after.
Different metrics.
The arms.
Huh.
Right.
No.
This is.
Just a woman she was it shouldn't that should we don't.
So certainly that.
I'm a woman she decides to go pick I come out of home again, we'll begin with elements where the sun.
With a child similar she's a high volume.
Got it and say what she's a ties to show.
The.
Just a function.
So not much.
So Tim.
One question on the growth driver going forward.
They've shifted back to the corn business to non apparel anything.
How much it resolved so we do believe that as I guess.
Continued to deepen our expertise.
And in continuing to execute on the merchandising strategy there.
Potential.
Our core business and our merchandising.
To drive our long term.
The one thing to 20 shot to woman anyway.
Oh, no similar lunch pardon.
For the two machine could do I will now talk it along with Michael woman the machine couldn't I, let's hold your Selecttech Archrock partners outside of the loan.
So do you just don't chooses usage local school children.
Shambles when and assumed.
And what specifically where it's okay.
Good.
So we're focused on good merchandising and product offering.
How did [laughter] catching fire.
Our platform and also at the same timeline.
Well be buying more I want to me.
[laughter].
To offer good merchandising and product.
Huh.
Become high quality.
Over time.
I do believe that everything.
Right.
Thank you. Your next question comes from the line of Andre Chung from JP Morgan Your line is not weapon.
Oh fundamental hall, how would you see any mahalo continue vendor so you'll be talking something or what do we want to keep one needs to go for humans.
They can shop whoa concept of shipping and handling space, so sometimes with until they get <unk> look I tend to shoot jugend.
So kind of overall before feeling said still fall it held up that you're saying that they're still hold your cheap or something if you do go tight altered the real feel fulfillment says, we don't talk I sent home Wi pitching Oh sure Sadrist looks like a fulfillment.
If you do the gosh I thought I'd be help out different for instance, I should eat on Oh, Let me try to say my question, Oh, I notice that the Endo fulltime extends the shipping and handling things. This improvement has been pretty consistent but the other part has been pretty volatile your third quarter. The other particle feel fuming expenses has improved quite.
Absolutely I wish I want to understand the only reason behind that thank you.
Well. Thank you very much for your question I think the biggest to consider.
Creditor.
Oh, the savings in our fulfillment cost as they see a key.
[laughter] model.
Yeah.
You know where now shipping the product under the Jack's modern directly from our suppliers warehouse to our customers addresses.
So but in the past you know everything has had to go through our own warehouses. So by shipping directly from their suppliers to the customers. You know we could say you know warehousing costs and also a shipping costs.
And also.
Past quarter, you know we caught.
Yeah.
Also in our on our headcount headcount in our fulfillment operation.
Which is another.
Contributor to our cost savings.
Your next question belts from the line of Tiet, along from credit Suisse, you're allowed to some of them.
Oh, Hi management congratulations on the very strongly dogs I have my question actually advise on because that we actually.
Noted since <unk> fourth quarter last year, most of our revenue growth actually I have seen driven by the number of active customers instead of the revenue per customer and in fact, the revenue per customer actually has been entry into negative territory since fourth quarter last year. So we wanted to know going forward I should we expect the ARPU.
To be stabilized or continue to enter any continue to stay in the negative. So young your territory and the growth were mainly driven by the out a customer number gross or we should see realisation they ARPU and a in the meantime, well have a more oh sorry.
A healthy customer number grounds. Thank you.
Sure.
And then John .
[laughter].
Yeah.
Uh huh.
Yeah.
[laughter].
<unk>.
Gosh I like.
Yes.
Yeah.
Okay, well I'm interested to see to offer you Dan do you told me about your home infusion, we want machine clear bought about coming to pull that we'd be long hopefully the thing when the empeno one she's it just depends on how you that says she said she.
She is a sudden job.
Hi, even though you know.
So if you just might have been she got it.
So you're going to use some tissue them off what was what social <unk> kinda, though could then it'll keep oh, we be like E. She actually what really matters that we like the cheap.
We choose to just wasn't done the too cheap, but some of what was your tax issue the ones out there.
Sure what minimum wage watches.
Thanks, good to see.
Construction loan couldn't find them become a cool agenda, how the couldn't joc and comments as we saw some no wouldn't use in my mind, we plan to what.
[laughter] Oh.
When I was down year over year due to a few factor on the first its.
Contribution went up and [laughter].
I think.
And therefore, there one.
Sure.
And the second factor.
On the contribution from our marketplace went up and ticket that marketplace.
And on an impact.
And lastly.
Moving.
Onto the core deep discount.
On the ticket.
Absolutely.
Contributing.
Decline however, we do think that means.
I should have stabilized going forward and.
As.
New customers shop.
I'm more confident that we can turn them into high quality existing customers want me anymore with that and the tension and more help me going forward.
[noise], that's why shouldn't don't throw a lot of had shown from Keybanc capital Mark Your line is not weapon.
Good evening or thinking about taking my question. So essentially on its own jaycee <unk> Oh, So don't I've a couple of quick questions. So first.
If we look at the gross margin so quarter is things like that he is he's actually.
Sequentially on them.
But historically, we have seen does he can show cause for so core in terms of course module in it so maybe just.
Any color regarding a train and then and then how should we think about the fourth quarter and beyond and then and then second one is I notice that our human tree or not the <unk> dollar and knows though the days of inventory, both spike a little bit infill quarter.
And then.
No wonder what's the dynamic here and is that because we we we started to increase more and more upcoming <unk> poachers Oh from here. So.
Any color would be how before thinking.
Okay, well thank you there.
The question, let me, let me take care.
Question first gross margin in Q3.
You know its Q3 is usually our.
Soft season in there I guess, it's hot summer time, and we saw a lot.
Apparel.
In Q3 than other quarters for example, Q4 Q1.
So gross margin sequentially.
Is usually a lower.
Because of the product mix.
But you know year over year gross margin improvement in Q3.
It's past Q3 was ER was quite strong.
And inventory.
Do you see increasing or inventory and.
The inventory turnover days is mainly because you know weve purchased some some products for our off my stores.
So far we've got about 300 offline stores.
But those older stores and so in in this experimental stage.
But we bought some inventory to support the growth of those operations of those offline stores.
Your next question comes from the line off of usually up from Citi. Your line is now open.
This is the key went on behalf of Alicia yet, but even management, saying well taking my question I have a follow up questions owns Samsung All night what management. Please share it does seem to do you see we sense then.
Well show and also in terms of apparel wash away. If that's not a pembro 10 vehicles into next year and any color on they choose you push shared with us on the single safe motion, especially on the apparel, so well right everything goes I think it.
Uh huh.
[laughter] fashion.
Yeah.
Yeah.
Yeah.
Yeah.
Josh.
Oh my.
Oh My gosh.
[laughter] She's just how should we woman she just jump getting Jones has all at once and that's changed.
She says just shot I mean, if it's a little more the do it.
People that shouldnt than the ones you still have its house, that's what really short fall pushing assumptions.
Nicole drilling she would you please.
Yes.
Dominion.
Which on the woman since you don't we said woman she's the leader.
And she's looking back to tell me what really what's on the terms was okay. Then the peaking in the short term courts him into the show Pizza Union Quants, Yeah, well just sometimes she show I saw that show thought emphasis is on this we want which is the what's on the to the people either sometimes maybe she she's.
Yes.
Oh, they just don't see what the something done yet.
She personified partially sighted actually so.
So oh I should mention because.
Okay.
Oh, I know that tranches.
Change I mean, you're seeing a lot of opportunity.
15 integrate island online and offline.
Ah growth next year.
Keenly focused on that.
Uh huh.
[noise] quite category continue.
Okay 2020.
Lastly, we got in English.
Oh, we saw quite solid.
Okay.
I think promotional events.
Your next question comes from the line up nothing lymphomas. She likes you see your line smell open.
Hi management its feet hinge on behalf of nobody.
Thanks for taking my question would you please share.
Breakdown breakdowns that elements in other revenues, what he's a person Paychex Commission and how should we expect the proof and other revenues and and ask personally job total revenue, especially after the consolidation for some sense. Thanks.
So.
Okay, I'll just be no guarantee other revenue breakdown.
The third quarter.
29 team.
Other revenues.
Contribution.
Marty and market place commission and around 23%.
From advertising around 22%.
Third party logistics and co location.
And.
Internet finance.
[laughter] around 7%.
Third party delivering com.
35 cents.
Yeah, Hey membership fee.
Yes, and [laughter] and the rest.
Your next question comes from the line of leading judge true.
From 86 research your line is now open.
Hi, my husband, congratulations on strong without.
My question is on the Fulfillments, especially on the G. I T X model.
None of the share how much of your or there's a is currently using D. Dimer Gx model now and what he feature targets. Thank you.
So.
[laughter].
Yes.
[laughter].
Good woman she has a small chimbonda sense.
For conventional Majid T X.
But that's a woman anyway [laughter]. So you have a realized what you didn't get excellent we said sometimes with somebody else.
So Lisa currently up 30% then about orders shipped to that they actually act.
However, we do have a lot of owner.
[laughter] and therefore.
Well actually will continue to expand coverage.
And the contribution should continue to increase slightly I Buddy.
That's one thing I can increase.
Yeah.
It's like your next question comes from the line Dolphin. She Nishan from Bank of China, you mean off the question.
Hi, I'm imagining I has a very quick follow up on the customer growth I seem to name a better merchandising strategy as a key driver behind the customer girls in her prepared remarks, just wondering if you could you elaborate more on how you managed to improve target.
Syndication fees for new customers it back to me during the past quarter. In addition, as we're halfway through the fourth quarter or do you expect the robust customer growth trend to continue thank you.
Okay.
[laughter].
And Josh.
[laughter].
Josh.
That's right.
Okay.
[laughter] do woman she said she could cause it turns out.
<unk>.
Number one she says.
Suggest that.
Well I couldn't go into held for each of.
Okay shell BG and shell pizza.
And could that lie.
Could go.
So when he will hinge on the digital phone Fox uses <unk> number one the bulk acoustic you're kinda arches digital to see if it's a.
So you won't really chooses to the.
You guys want mission, which is shown preachy cool that some something you'll see that together.
We Oh, we try to retool, our new and existing customer growth.
Our merchandise strategy.
So.
Oh, we bring better and better product offerings to our platform Oh my.
[noise] lunch.
Shops on that.
So we do believe that Uh huh.
Sure.
And continuing to find better.
Products.
Okay.
In the fourth quarter I, it's the same strategy for.
We continue to focus on merchandising and were.
Pretty good trends currently.
Your next question comes from the line up Saudi Chan from also let us know open.
Yes, Hi, Hello, I think imagine for taking my question.
I should have a follow up question Oh, no one's Johnson a understood that we opened around 200 VIP offline stores in the past one yeah.
You know I loved and North I, just three new <unk>, just wondering I say for older sports are there any magic. So we can share in terms of himself for the March inside a and for example for these older stores, how long do we think it could take for them to break even.
Okay, Nick Yeah, what type of pension.
No one likes while flying so how much upside investments, we need for each store and actually we bought and you track to margins out for next year or even this year. Thank you.
And your Sally.
Hello.
Oh man.
Yes.
Yes.
Thank you.
Thanks.
Josh.
Josh.
Oh.
Uh huh.
Oh.
What is your software.
Yes.
HM.
So what mission that she is going to watch the changes yeah.
This is.
Number one when she comes out to go you summed up Cook, who does she held them all really sometimes you show as much as I just wasn't the she's shopping I should weeklys. So these are what you see if someones shops as it was short you saw that woman. Some young she kind of school number I think I'd get houses fly them Oh the scene.
With the shoes for anyone the human touch.
Oh and she's shopping we say she she did house.
We kind of cool.
Anyway.
Morning.
Fine opportunity in two different models to shop Yakking [laughter].
Currently we think there again.
Oh the isn't it.
[noise] basis currently where.
My early stage.
Good morning optimized.
Per store efficiency and also to me.
Right.
So we will continue.
To the offline opportunity.
Okay.
Segment.
Sure.
Thank you Ben Palmer.
Yes.
And until those opportunities both Jeremy countries contribution from the Oh My source is not very significant.
Uh huh.
Now.
[noise].
Your next question comes from the line of every Jong from Macquarie. Your line is now open.
Oh, Thank you and she's only I'm going to see congratulations on the strong quarter I just have a quick question on the average order ticket size.
So when I did it was I divide it GMB by between orders and I realize when the past two quarter. It seems that our average order ticket sizes from a bit below to our RMB 288 free shipping threshold I just want to see if management can give us any color on a the reason of so low.
Our order ticket Fred I think you.
I do Lynch.
HM.
No Tammy.
Sure.
Yeah.
[laughter] indefinitely.
Sure.
Hey, good to support I've traveled to switch gear in Yuma.
Some interest cost will there be sandboxing high number one it's done she someone border states with tissue that get Benjamin.
Yup Yup yup.
To that there's a woman chump change occurring in the woman's when cheers <unk> jump to who wants to jump the shouldn't said you.
Tool that allows them a gentleman father, the could've done each of them, but you really cool to get Mike annually.
I was just real quick what you.
That's it and that's it.
Yes, that's about just the could I don't really your systems, how though some of the told you get.
Some of what was the shops, a woman I mean.
Got it.
Shopping.
So what do you with the bashing.
To put that got doing what would you sometimes you want.
Two singly cool you could see what's the unions that weve.
Yes, the mobile releases my children or trend that you're supposed to how the school much <unk>.
[laughter].
So I was sort of the two which isn't they made without it.
Uh huh.
The fact that decline neutral if you factor.
The first one is I can think contribution increased from 5%.
There are plenty, 18% to 19%.
And because that party.
Right.
Samsung defended fire and ticket that.
Sat down.
Hi.
The second factor I know bundling policy that we rolled out in the fourth quarter last year [laughter] captured by more than one item.
Hi.
So after we wrote a note.
We were seeing.
And having some customer.
I am I went back inside but better for the customer.
And lastly, I think from yet.
Shipping and same internally.
[laughter] have to bike over [noise].
Fishing.
Overall, we're not too concerned about declining ticket side, we're more focused on.
Joining me are for point of income.
So at buying but more problems.
Basis.
Hi, this time.
I want them to then it more frequently.
They can.
We can oh.
Uh huh.
The shipping.
I was.
Right.
[laughter].
Your next question comes from the line of greatest <unk> from you'd be I feel like it's not weapon.
They shouldn't zone Young zone Jesse Mahal. Thanks for taking my question. My question is that other than fulfillment expenses, where else can we see leverage and operating expenses and how do we see our marketing expenses trend for next quarter and next year.
Given our revenue guidance for the next quarter is only zero to 5% a third question could we have somewhat of an update on these super VIP users she's yet.
Okay.
Sure.
That will shine.
Huh.
Okay.
Yes.
[laughter] shopping [laughter].
Okay.
No.
Oh gosh.
Oh gosh.
Yeah.
[laughter] won't show up and shouldn't that level do feel junkie them.
So.
Your next year.
And just some either sometime.
He wants or something so many of them today.
Okay.
To sum the there's a whole could somebody they chunky could could we just couldn't <unk> dollar has uncovered a book, which im a bit sounds.
So so the problem really want to so some of.
Number with me she wants you'll should the job.
Google.
Okay I can they technology trends I should continue to go down with a more and more leverage as we.
And our scale in fact, our customer acquisition costs.
[laughter].
That.
Hi, 19.
Continues.
Okay.
Fourth quarter.
Okay.
He told you it totally VIP rooms that are used to into senator shows you. Sometimes when you just told you with.
She has held you back in attrition don't.
She says make a huge equal shoot me, which she's job to go told you be happy that.
<unk>, who will go sit on the you'll come in to the would appeal.
And the Super VIP program in that there would have 2019 with around 2.5 million payment.
Very loyal customers can be happy shops in the future we plan to increase backman, each and every young people.
[laughter] thinking.
Your next question comes from the line Joyce Zhou from Bank of America, Let us know open.
Okay.
Trends on young so again I have a both Oh I can report and Oh very wrong on what do you see that in the general role on the ecommerce site cost me not no later than we do know.
Oh, no data showing a slowing down on.
You know anything it's the water, while you know or the company enjoying a relatively result in the non admitted thing, but have you ever in a actually happening and for that and I'm right now and then light in the fourth quarter versus the weather or like the actually seeing it in more than a single like.
[laughter].
Oh.
Excellent.
[laughter].
Yeah.
Yeah.
Okay.
Yes on the systems.
Good.
Uh huh.
Focus is as follows.
Could you just kind of.
Oh.
I should.
You know with yourself.
So.
Chuck don't choose should become done.
We are seeing quite strong growth momentum and go to potentially.
Industry.
Fourth quarter.
Uh huh.
In the industry, we have a lot of confidence in the continued growth.
Going forward.
[noise].
There are no further questions at this time I would know liked to have there been friends over back to management team.
Thank you for taking the time to join us.
We're just speaking with you next quarter. Thank you.
Okay.
Thank you so much the centers so ladies and gentlemen. This concludes todays conference call. Thank you for participating give me all disconnect.