Q3 2019 Earnings Call
Third quarter 2019 earnings conference call at this time, well, but do you suppose I listen only mode. After managements prepared remarks, there will be a question answer session. As a reminder, today's conference call is being recorded.
Let me go but your hosts for todays call is when he said investor relations staying about 2000.
Precedes Wendy.
Thank you operator, Hello, everyone I think you'll still joining us today. So I was just wonder ton Tonight <unk> earnings release with district live it already today and is available on <unk> <unk> <unk> I I don't follow them Dot com.
Good old news Watson with.
On the call today from the although they have missed the lease Anshu, Chairman and Chief Executive Officer, Mr., <unk>, Chief growth Officer, and missed Robbins, <unk>, Chief Financial Officer, Ms., Jill will do business operations on company highlights followed by Mr., Zhu we will discuss the initial guidance.
I'll be but I'll tell question you end up he lending section that saw the.
We thought would be guy I'd like to remind you that this conference call contains forward looking statement. They leave the meaning of section 21, eight Securities Exchange Act Nike study fall at the mandate and I see finding the U.S. probably Securities Litigation Reform Act 1995. These forward looking statement can be I'm satisfied by time.
Allergy such I believe expect anticipate future in time for that lead acid make target for what I look I'm seamless Damon.
Such statements are based upon managements current expectations on car market and operating condition I really see lives that involve known or unknown right I spend a deep and other factors off nature are difficult to predict and many of the job beyond the company's control, which may cause the companys actual results Oh nice out she from them today for MACI.
At least on those looking statements.
But April May show regarding these and other Reits uncertainties. All factors I include it in the Companys filing with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statement as a result of new inflammation suturing bashful, otherwise, except as required to end up.
Like about law.
Finally, please note that unless otherwise stated also you guys mentioned during this call I mean, I'm in B and it's not my pleasure introduce our chairman and Chief Executive Officer Mr. Vincent Yu means that please go ahead.
Oh, Thank you Wendy events, you everyone for joining the or pull today.
You columns in China continues to show tremendous resilience, despite the challenging macroeconomic working warm.
Let me today more active and you know with you. Thank you.
I would be.
And he's consumers purchase empowered and average spend people person cruises.
According to National deals was 36, you called it remains a major drug enforcing trends retail economy, you called unsealed accountable for this country its retail sales.
We have been capitalizing all aspects of this gross number we continue to leverage our leading position you may blur, we didn't <unk> you called the speech <unk>, chief healthy high quality and its sustainable growth.
During the quarter, Jim the gold.
3% year over year with net revenue of 1.5 cities.
Do you agree itself can be bought person.
You're seeing try the e-commerce sure you've worked towards marketing campaign sports event driven cells.
For low season like the third quarter fourth between June .
Its use in the singles day consumers tend to wait for the mix upcoming events for everything other than that because that's the street they do they goods.
This creates a period of slow seasonality between superior, who just especially true for the small home appliance categories.
Each former integral part of or distribution model.
As part of this impact revenue from Brookfield steel <unk> solid 31% during the quarter.
We can't give you can make a significant progress you blend that decision and then when do you brands operations.
During the quarter.
A matter of 11.
Continued focus on generating high quality sustainable girls.
She has to be girls, which brings the total number of Grand partners to 210 before.
Compared to what is 132 a year ago.
The newly added either.
Hi, premium I real FMCG categories.
In particular, we signed onboard harvest doesn't burn from Biloxi sector, several large and small fast fashion brands and a leading the national digital solution company during the quarter.
The lumpy.
Skilled you'll branches axles, maybe accelerating that's reflected in those strong GMB growth.
Our ability to bring more brands on board and drive incremental contribution to GMB has allowed us to offset the impact from seasonality and the one.
Electronics, where weve self serving during the quarter.
This is even more evident.
The single digit numbers, we reported last week, where we bring to the RMB 10 billion mark older value and an increase of 53.6% year over year.
This strong performance trends since all the competency in the solid girls fundamentals of E Commerce.
We exclude the single see plenty 18 contribution of the electronics rent that we stopped serving this quarter.
The go through this year would have fee.
76%, even stronger evidence of the Chinese consumers school pushes involved.
We remain committed to executing that strategy have generally been high quality on a sustainable goes by combining or part of your hedge fiber infrastructure integrated marketing capabilities extensive analysis, so because they both sophisticated warehouse. He spent a lot kids networks.
Deep insight into consumers all of which enable our brand partners to engage with consumers more effectively and the drop sales sustainably.
Well, let me quickly go through the progress we made you own thing or infrastructure during this sort of quarter.
Technology continues to play a critical roles Neighborly E. Commerce is Ali Baba Timo flagship store 2.0, NOL deployed and continuous upwards in progress.
Both third or what's the mover advantage and rapidly upgraded nearly one is of our brents comments back sort of stores before simplistic.
This large scale deployment over a high multiples for took place across a variety of categories, including apparel electronics, cosmetics mom and baby and FMCG.
We believe we've used the of Smith wondering how it's already ability to help rent partners actively engage with customers personalized content [noise].
We manage because you're crazy marketing strategies.
In addition, we've significantly strengthens our hybrid cloud infrastructure, Belgium, cloud and a fully integrated our core E. Commerce systems by you consume them was actually the flexibility the ability to rapidly adjusts for sure was within minutes pool fishing C and reliability.
Oh, absolutely Rocky believes scale, we stay the processing capability from streaming into Formula orders for our you do sponsor a sudden insurgent others that's tends to happen.
Singles Day, and the brand the quick Swags Oh for example.
Your response to the needs over brand partners and changing dynamics in the industry. We have people, it's a wider array of comprehensive digital marketing services.
Why do you important aspect is cooperation with multi channel networks, including illustrate mean coil position the Ali Baba sequel systems, and other short video social networks, such as the OE and the question.
The co blended ultimately events term marketing powering the status quo.
To prepare for this year single say the industry kick off preparation very early in September and digital marketing playing.
If you will attract customers early on you.
He just walk me not only help <unk> acquire customers, but also crudes demands for positive purchases.
We also expanded our cooperation with a number of leading domestic brands during the quarter to include the analytics and overall marketing services.
We believe leaves you disputes served as a great entry points and opportunity to engage with domestic brands and demonstrate the value we can deliver to them.
We expanded our warehouse networks more than 500000 square meters and capacity during the quarter and the made a significant system up and upwards poor warehouses management systems, WMS and their logistics management information system.
Helmets.
Optimized resource allocation and or logistics network.
Yeah, there's some weeks when do the our warehouse club capacity to address the increasing demand from high premiums sector and are continuously upgrading I couldn't this specific operation features such as temperature and humidity controls Thirtys 360 degree money, there's other security enhancements.
We believe the continued innovation the announcement infrastructure could at a pretty cool it disappears fabric of Super simple films.
And our outlook for the rest of this year remains positive with Charlottes E. Com sector. So you can deals recently.
I would ballpark I call over to lobby will go over our financials for the quarter. Thank you.
That's the Vincent well I'm glad to see incremental contribution to deactivate from newly acquired brands as they ramp up as avoiding aren't giving well capitalized in a number off and emerging opportunities they should be very optimistic about future growth gross Pat.
They believe they thought even without money then how it's good you see is optimized the whole brand portfolio. So was higher quality girls and the reason that profit to capture lacked the emerging opportunities.
This new emerging opportunities not only I didn't write partners, but more strategically is new category.
Channels or the new approach to digital marketing.
In the third quarter, we expanded our warehouse capacity.
Hi premium vendors that up my Canada sales force is dedicated to this category.
The integrated Ickes system.
I'd bye-bye Dr. IP of it.
The investment I couldn't be paying all other reflecting the addition of alcoholic thousand Brian in the premium on the affordable luxury sector.
Furthermore, we are expanding those services they owe portfolios had many programs you costs into.
As we have discussed before in the last two quarters, we have have to many Brad you about off immediate have that ideal for branding marketing and the puts it taking deeper engagement with consumers.
Maybe programs are widely viewed lets up right tend to be an old Fisher stores, well walk into you enhance our ability to drive traffic acquisition, social networking scenario based initiatives on the marketing, which is central to old or smocks retail used to get the top brands with omni channel.
Hi tech into retail.
That's why in the fourth quarter, they would keep rise to give out up more active immediate app disease.
We will share more than our next earnings call.
Psyche, though about this emerging opportunities, which we believe the current superior technological capability more interactive marketing tools I know you know Vicki tuck in acquisition. All this fall doing is well positioned to provide.
We will be com our growth driver for the next few years.
I was kind of e-commerce industry continues to evolve.
The become more interactive engaging we now expect they in this fourth quarter two grew by approximately 45%.
50% year over year.
Based on our best estimate a golf today outlook for 2019 revenue growth is Lockaby Chen.
We'll take a few quarters for the incremental can be girls totally flat our revenue on the bottom line growth an hour. So it takes hold on the skill.
Now, let's go over the third quarter 2019 financial results in detail.
<unk> year over year comparison is the pathway to reveal outperforming all percentage change I'm going to escape they'll be on that basis.
Once again. Please note all figures mentioned he is it's been Acker revealed Texan on.
Total again during the quarter increased by 43%.
To 9.0 I did it.
The non gets built and business once again outperformed with again may increase of 44% this quarter to 834 bit it.
Total net revenue increased by 35% to 1.5 bidding.
Was partially impacted by the low say they in fact as Vince into aggressive earlier.
So breaking style products sales revenue increased by 31% to 662 meeting.
Well the mobile home appliances sector is what categories that has been more impacted by this is not the case if any.
Services revenue increased by 39%.
841 million during the quarter. The increase was primarily attributed to go through the executive girl of our service model incremental contribution from yield right I think in particular right more engaging digital marketing services.
Total costs operating expenses were 145 bidding compared with 1.07 bidding in the same quarter last year.
In particular hopped off part I increased to 559 million for 401 meeting last year, primarily due to higher costs associated with an increase in product sales revenue.
Gross margin for product sales remained roughly unchanged at 20%.
Well I'm, David gross margin expanded to 64.8% increase Nike pad, which is mainly attributable to a increase in the proportion of services revenue contribution.
Fulfillment expenses increased to assume kind of sort of streaming from 262 meeting last year, mainly due to increasing T.N.V. from our distribution on the continent model and the warehouse rental expenses, which were partially outside by improvements in efficiency.
Well the increase R&D investment, Yeah, Hi, premium warehouse, we maintained disciplined cost control initiatives I mean has an average through your efficiency improvement and the optimization up the delivery resources.
As a percentage up yeah convey our fulfillment expenses ratio improved to 3.7% from one pop up from 4.1% a year ago.
Which marks the sort of passive two quarters, that's we will achieve leverage improvements in fulfillment costs.
Sales and marketing expenses increased to 443 meeting for almost 301 me there last year I know its percentage up yeah convey our sales on the marketing expense ratio go to 4.9% from 4.7% a year ago.
The increase up sales on the marketing expenses as a percentage off again way was mainly due to more marketing activities and the already launched a marketing campaigns for singles day.
Expand you stop in for a new brands.
Well high premium brands as well going home I can be.
Technology on the continent expenses increased to 94 meeting for some keeping it in a year ago under decreased 8 million sequentially from 102 meeting by quarter.
The sequential decrease in technology and the company expenses was mainly attributable to inquisitive and second I key infrastructure for new brands, I think efficiency and optimization in pool.
Our utilization of labor optimization.
Between our total under Shanghai R&D centers.
We continue to use of asking innovation at the Productization, how far it get playing poker and to streamline the matter.
During the third quarter of 2019, our investment the innovation and the Productization totaled 21 meeting largely unchanged from 20 meeting last year.
Yeah expenses increased to 52 million from 41 million last year, primarily due to increases are the main street you corporate strategy as a bit surprised you stop as a busy skills.
Oh Wow income from operations increased to 56 meeting with operating margin of 3.7% I expansion of twin TPP at <unk>, 5% is the same quarter last year.
For the fourth to nine miles of chose Omnicell.
Operating margin.
Expanded sircy at Q4, 0.2% from 3.9% off last year.
Outside the interest income Nike interest expense totaled 2.4 million compared with our net interest income.
470000 last year I know not interest expense of 3.4 meeting last quarter.
Income tax expenses totaled 14 million on back to tax rate of 18.9% compared with 13.6% of last year non-GAAP basis.
The increase the income tax was mainly due to higher net income base for this quarter and the lowering effectively.
Well some tax incentive policy it.
Applied to the same pure of last year.
In the third quarter net income attributable to ordinary shareholder so paulson increased by 32% to 39 minutes.
Basic and diluted net income attributable to ordinary shareholder how paulson for eight yeah for 68, and the 66 cents, respectively, compared with 50 to 50 cents respectively. During the same cleared up last year.
Oh, no cafes income from operations was 76 meeting I increase up 24% from 61 million last year.
non-GAAP operating margin for the 501 per cent compared with 5.5% in the same quarter up last year.
non-GAAP net income attributable to ordinary shareholder call Paulson increased by 15% to 59 million basic and diluted non-GAAP net income attributable to ordinary shareholder Paulson, yeah, well 101.
As a nice nice thing, respectively, compared with Nike, an 86 cents respectively for the same shared a lot here.
As of September searches Tucson, Nike and we've had to punch 15 bidding in cat and the cash equivalent as short term investment compared with 514 meeting as of December 34th 2018, the significant improvement in cash position what the men.
Any attributable to strong operating cash inflow in the fourth nine mile of Tucson Night King.
More than tripled from the same appeared last year from working capital optimization.
Our safety financing back in April .
Turning to guidance based on current macroeconomic and operating contribution for the fourth quarter off 2019, we expect total net revenues to be between coupon 70 bidding on a 275 big Beechcraft a year over year girls freed up approximately 20.
3% to 25% invasive service revenue.
The increase in line with the girl straight up total net revenue a year over year basis.
This concludes our prepared remarks, thank you.
Operator, well now ready to begin to Kuwait second secular.
Thank you ladies and gentleman will now begin to question and answer session. So your question. Please press, Taiwan, and your telephones and Wheatley needs to be announced the council. The request it has to pass the heskey.
Once again.
The question these best Taiwan, and your telephone keypad.
My first question comes from the nine or 10 Hallow Th capital. Please go ahead.
[laughter] and then can management for pickup of my question [laughter]. The question is related to the Oh micro so Ah and I look on the guy that incentive little bit shell, we could attend the consensus expectation. So what you know a UK sat in the front.
Line of business operation or do you see any weakening economies impact.
China selection brand said consumption Oh, so that is the first question second line is.
Going forward. So once you are Ah Ah you know Brett pipeline.
How many do expect <unk> ads in Q4 and into next year. That's my two questions. Thank you so much.
Sure I'll tell you it's Robin I, Let me answer your question you know.
You know into public data you may see a yeah. There is some vicki as in China economy, especially in the second hop off this year I'd tell you know we do seem to E. Commerce is kinda <unk> Vice president of the Vincent to adapt in his prepared remarks.
However, you know Ah I think in some lets say southern category in ecommerce, we examine the fast fashion week, you'll see the south of they can eat in Q4, even though you know.
You know, we're always thinking you know a cross category.
They are pretty balanced you know well balanced the use of the girls in Osama certain categories like the fed and you'll see some Vicki is oh, what we can see right now, but you know regarding the revenue in a in Q4 I think the force wise I think he is a sound like Las Vegas back.
In the back in the early off this year by me you show the Cat and you know you remember is a seven point you bidding a is that he's a very your line is this a a viral already guidance because you know oh wait how a lot your pie up the agenda they come in from the new brands and the you know.
Based on our nature of the is going away you know a wami gravel one a one branding in a way nobody will only provide operations in the very beginning and then we will add up some other services like a digital marketing or like a logistics like a big data analysis services like.
Customer service or if it's too little so we continue to be the more of the services you know, even though you end up in the longer terms. So it's aligned where do you have something impact that we get a short term about our revenue generation tool for.
So I think that's my Oh, so for your first question regarding the second question I think you know a as you remember you know way way I speculate how 40 you are not right you know adding hopkins.
Here and there right now.
Until sometime or certainly as we are they add up 38, and though we are expecting more than 45.
Year on the floor to suddenly here, we don't have a number yet but based on our forest balm pipeline they seem to wait 10 or worry.
So we're optimistic about the next years or a new friends 'cause it. Thank you.
Thank you wrap them.
Thank you.
My question is from that I know <unk> of Citigroup. Please go ahead, sorry, you cannot like one of them I think Troy operator.
Hello can you help me yeah.
Hi, good evening.
Yeah. Good evening, Thanks for taking my questions to follow up OLED debate on the previous questions. So understand a bit on the G.N.V. Crawford versus the revenue you noted that the friends and then I'm sure that actually continue into the next quarter, meaning like Foster GMB.
Her sister revenue growth will that continue into the next few quarters and then for another quick question based on the sales and marketing understanding management gave us a feel Kyle quick reasons, but if you can elaborate a little bit more detail the reasons behind the higher that aspect that sales and marketing spend these costs.
And then how should we think about the sales and marketing for the fourth quarter and into the 2020 . Thank you.
Sure a it's a secular used robyn again.
Yeah, I think I.
Let me take the second question first I'm about to sales on the margin I think it you know when you bring a lot of the breakdown as to why you know to the to the increase up to its Mark I think that's really the supports why is the you know a you know basically a you know weight, how a slow season in.
On the so called especially in the second part of the sort of corridor and the somehow Brent just to start to already warm up for the because you're not allowed to the sales event, which is a single day under they you know you last more in the I'm knocking spending or so that's one reason the second reason is you know when.
How old lots of new brands, especially when you set up the dedicated team for the Oh, Hi, premium brands, which you know a adopt some you know related costs and still smoking.
The surgery, the is pretty normal oscillate a top before they how worried are seeking dependent grow seen the digital marketing services, which has a lower margin. For example, you know we start to do the surveys for some bar if they more seasoned outran, you know and Oh, Yeah, Hi show.
Which you know really trying to hop to the revenue, but to you know still have some but not that can impact the hour our marketing spending.
So Europe , so what's your for specialty.
Oh, Yeah. The first question. She is you know the downtime between the GMB growth rate this quarter versus the revenue growth rate.
That you didn't mention a lid up based on the reasons why GMB growth is pasta. So I'm just wondering into the next few quarters about these have to sell talk continue.
Yes, absolutely it will get bad or as you remember doesn't know we start to.
Jeff the hour a G.M. They you know to pursue the high growth profile and the you know a asking where are you done you know right. How proud to do that we are expecting we haven't got to you know it just seems a bad her and better in the later feel quarter, especially for the next year.
Oh, Okay, alright, thank you.
I feel.
Thank you. My next question is front and I never had any CAC. Please go ahead.
Hi, Alex if they they said they robbing thanks for taking my question I actually have two questions asked that's why it's a for the Minneapolis initiate it I noticed that you started the some kind of the child regarding that mean, apple with saying, the which had ecosystem for <unk>.
This thing up brands, all you need a pop in the US just one day for the money Apple related initiated a compelling Wes some P.S. specializing in this business for many years, what kind of the competitive advantage. It doesn't have a they can differentiate it.
So from a friend from then and that's my first question.
Second why is that I keep some that termination of the contact with the popular domestic cellphone brand. So I just want to they can we have some caught us on the T N D topline and the margin outlook moving into next year and should we.
We expect a high base effect into the early 2020 and identified by us and acceleration in the second half. Thank you.
Sure.
Yeah, Let me let me take the second question first Yeah, you know.
You know one of the.
Actually now we are just cost tracking our forecasts and now I'm in for the next year.
I'm sorry.
Optimistic about how would you I'd be girls, even though taped or the electronics graduates stops or it into the conservation or maybe that's harder I pad and you know way a in a in a in a number you know our grocery and will be negatively affected a little bit in done what's happening here on the wheel.
Got it normal for the second half a year up next year, but the base just nice out based on our you know the new brands. We acquired you'll know this year on the based on our strong pipeline. We think you know we are very optimistic about how would you have made girls for the next year, we will give you more color for the next earnings call.
On a about the immediate program. The first question I would like to spend a couple of minutes to reveal more color about that you know a way you'll know strategically we think a mini program is oh Wow, a future growth driver a the reason for that if they go today that the first of all.
On a you know a way things you know.
Many many program is kinda like Oh, sorry revolutionary.
E Commerce ecosystem comparable is a so called the traditional eecol in common to somebody into existing platforms. For example, you know we can do more larger scope a particular services in this ecosystem. You know we can do with a membership management, a very easy to come works with the OTA, albeit this.
And also we can do the high Kesa Boucher as you know the end to end you know so it's based on the stocks is suddenly a developed in the past two years and also we can do the CRM system and the traffic acquisition marketing and it's something like that so we are we do spend.
You know a some energy and resources in this newly initiatives.
The second to why is the way how worried compared to you know advantage I'm her with existing here because we are kinda like abroad service professionals on the way, how Oh work boots combination between the technology and the appreciates capabilities as if we because I'm poll you know I'm most.
Recently away all fared a leading retailer on the international retailer, we compete with the they exist in a strong a competitor or I'd stadium this ecosystem or for a long years, but we win so listen you know we are confident for this oh future.
Hi.
You just some more color on this on this one.
The first question about the maybe.
I think bodes well.
We are quite strong traditionally in the brand the official stores so.
No matter the paid her system and also a backend logistics are very strong so I'm really happy just the from and new front and of the official Webstore actually so a weekend very much leverage on the students or run the store.
Capability and then you know two computers the others. So Oh, we are quite confident on that and we are closely monitored the new.
New functionalities a from a.
They tend to side, we are worked very closely with them.
For example, the old we've used here or there are about to release.
He is very actively working with them. So you list kids 40, a big wins and also Empress users we are much stronger than the other players in the market. Thank you.
Got it thank you Vincent and I Gabi.
Thank you. Thank you my next question.
Our next question is from that I know John choice of Dilo. Please go ahead.
Thank you for taking my question Ive two questions. Your no look into the fourth quarter guidance. You know I think I'm you guys already touched based on the discrepancy between JV on to revenue growth here, but if I could literally go a little bit. The further here duveen should we be expecting for the existing brands to see a similar take rate I know Robin you mentioned.
The new brands, who will take some time and over the course of quarters I'm you know they take we should eventually recover no question about just want to double from bad. That's my first question. A second question has come could management share. Some on the road map for your cloud offering, particularly I know there you guys have been investing quite a lot on the cloud infrastructure and also on.
Software side. So you know what does the adoption rate and whats the brands response, so far and how do you think you will further to develop it from here. Thank you.
Sure.
Yeah, I count from yes, I mean, you know when you look back how Ross history, you know one way or higher up apprise, a you know the larger the broadening the slower or the graph hop off the revenue that's the cracked.
On the second question, how much of Spice felt good about your second question. Please.
Oh, I'm asking I'm on the cloud on development. So what are the progress here can you share me.
Among your brand so what's the adoption rate and or whats. The further development. Thank you.
Yes, I was talking about ultimately.
Okay isn't going to have it.
Okay.
So the question, yes, we are we're actually Oh contracts first track is that where do you ever developing.
Bunch of software tools for future use and the the me well.
Some of the mature tools already adopted in the daily operation all the stores.
I can say that's.
I think early next year most of the stores around 300 stores, we all thought.
The recently developed but.
I'd say, our Ross tools, who choose the you know.
So all personal information pools, which can help quickly uplift the efficiency of the source.
This example, the others I mean, the Meanwhile, the tools software so.
We will be a continuously.
Good from time to time, so that is the other truck.
So we continue if you must be in the suffers infrastructures and tools and he is in the Meanwhile, we are quite positive about the gulag deployment.
All these tools and most importantly, the measurement of the.
The value return or from this kind of investment its.
I already said adopting the technology Department and were seeing more and more you know pulse positive feedbacks from the front end.
Yeah, you know I'm, just not always talk about Amini program. The you know for the for the Brian but is there enough for you. This is Bryan said the annuity Arda, Brett Lee utilized our Sop basis, if somebody developed in the interest on 18 and that it probably is that you though.
The end to end you know E Commerce Soviet solutions for this branch in the media programs. So it's pretty successful now.
Got it thank you.
Thank you.
Next question is from the line of choice GE of Bank of America.
Please go ahead.
Good evening, Vincent <unk> and Wendy Thank for taking my question I actually thought of question related to our luxury probably only and and always have pedigree expansion himself luxury all premium brands.
Once you get an update I wish the progress off like my Dot Com and water and also like for the specific types of raised on you are only Nash and press release, Oh, sorry, <unk> in your opening remark that like you actually signed a half a dozen the off like you know premium brands, but it actually elaborate a bit.
More or like what business model, we are adopting and to what stepped potential like you know G.N.V. revenue potential and also I wish that take rate business model and a profit outlook for these friends.
<unk>.
Okay. George this is Jim <unk>, Okay. So let me address your questions. So before I getting deeper so let me explain to you about the freebies spot on luxury Gillian. So the first model in a single brand flagship store just like we're helping a lot of independent brand opened or a flagship store on luxury filling out the category. The second best model as a matter.
He ran collection store just like Im just mention about index using data from.
The surface model, a like a t. more self operated sophomore just like you mentioned the main dot com could be one example, so in this quarter with been developing a strong pipeline and we feel a lot off you know new clients amount, how 11, new friends over 50% off the our pipeline came from the luxury.
A premium brands and they contributed a significant G.N.V. in Q3, so in that Harvey can see very Connie and very promising trends in this category and of course in this luxfer preventing operation there a lot of benefits for helping our flexing single brand flex is thought to be more Harlan.
With a a luxury prevail in resources and it's also very important for us to really help T mall to run their self operated it sounds like made on something like that so this is a very unique business model and we can take a lot of dollars. Yes. We can you know I imagine too expensive more categories, helping.
Running their business on T mall and for now cheap rats collections. So and also provides a way to connect with our existing single brand flagship store to help to just make sure. We can put on a part on lifecycle status. For example, like new arrival in light of season and clearance across different topics.
Not even not only just provide cells in a single brand flagship store and also can collect the traffic and engage different how cheers consumers and there are multiple infection still so we have seen in the next quarter in the next year. This pipeline in this category well be continued very strong and overall take right in this category naturally.
Hi, or any other category like fast fashion or when those aren't bad something like that.
Yeah, and also Ah, we believe study in the coming two three years.
Three a industry luxury category will be the Hawk is category.
The PMO a platform.
So we are we put them all the resources on this category and also.
Today, where you are clear leading position in this category. So I think we would be.
You know benefit and walk from the development fees just industry in coming years.
Yes exactly.
Matt has a quick follow up in terms of like.
You mentioned actually and that's a lot resources and just Kato Grace could you elaborate at that.
Uh Huh <unk>, what percentage off like you know expenses or like what kind of preparation you have made in that for this.
And when you sure when we should expect we starting to see positive returns inasmuch. Thanks.
Sure Oh, you wrong.
Category. Okay go ahead Robbie universe.
And then I'll sort of I think that's up and I go classroom anyway.
Okay, I think it's worthwhile.
Yeah I mean.
Yeah, when we talk about luxury I think that you know a you know a thought I think that's not very accurate accounts have a you know I think the well talk about high premium for example, the house I'm a light luxury a you know apprised also included in this cadre internally.
Second the while about Oh about the investment do you know there's different high where the first wise you know your favorite upgrade our our warehousing equipment as a base mentioning our remarks and also we have plans you know as to how what are some pack season. Those fan gave you know.
Hi, My time, so that we can stretch in you know our competition in this a certain categories, which if you know makes a certain amount of money to do you know of course, you know property in the fulfillment you'll see mochi traction in Q3, the reason for that easily dr. do something.
He massman you know a summer sum up the investment has been capitalize on the some of it has things that you end up fulfillment and the on the other way you know we have over it's crazy you know costs Comscore programming in the our fulfillment so into anything in the numbers, how you'll see that average for that maybe the tool for you'll see something in mass.
For our fulfillment that's it that's of course, probably the second party that there was a marketing a way how with some you know a there's a couple million dollars. A meeting you I saw a meeting on the gun afford a dedicated team to set up especially for these categories on either technology.
Do you know for you Chip program on the you know for the connection with the idea about system, where you've got some extra money so that even though it's how how well you know a a good capacity bought two or two got pop these categories.
Got it thanks.
Thank you.
Once again for those who wish to ask your question. Please press star one I get telephones and way to name to be enhanced.
But your question. Please press star one I could tell itself.
In late <unk> to be announced.
Our next question is something I know Thomas Chong of Jefferies. Please go ahead.
Hi, Good evening, no offense manage man for taking my questions.
But the fact that we have you will be set up how much do you sense and optimize our technology expenses.
And we're also seeing our investment in fulfillment marketing that's right.
Just wanted to get a sense about our trends in terms off the headcount.
Our op expenses line going into a trendy trendy.
I would be great. Thank you.
Oh, Okay. It's Robin secure you know a woman who had I'll kill street numbers at least seats on the labor reduction well 18 year resources reduction.
In both logistic side on a technology side.
And the we'd have some Adam Spice. It five you know about a new Brian inside the dedicated team for the high premium category in the marketing side. So it that's kinda like how hybrid a inbetween under way see moderate you know a high copying increase for 2020 as we expected.
Thank you.
Thank you.
Thank you once again for those who wish to ask collection. These past, Taiwan I know telephones.
Next question is from the line of Ah, Saudi can see an essay discovery.
Yes, hi, good but he didn't management.
My question Ive two questions I don't know singles day performance, Oh, we reported very strong 54% I can't recall, it's like this there are some buffet because your mind sharing more color.
Two categories have performed for example, Ali electronics for flat in apparel brands I sat truck and how should we expect this all that younger girls to translate into revenue growth for the quarter putting into consideration that these categories have quite different take me and my second question is on the many a new initiatives.
Two more this year and doing that singles day off or something like let's say me like he more 2.0 et cetera could you show that's how how brand.
<unk> <unk> <unk>, when you say pets and how has this I understand that's driven theirself during the event. Thank you.
Yeah, Let me a it struck me let me take the first question.
Even though that you know, we Oh, we want to give you more color.
Or about to Tommy labs in the next earnings call I can give you some highlights for that number wise I think for you know our category a well balanced in are you not I mean, I've been sales I, though because I'm, hoping that most where a electronics I just some either you know high could mean abroad.
This is pretty good at the for example in doesn't always talk about high premium brands. Our same store sales gross is all have you present.
That's it and the also I have to make sure you know in some sorted, especially category like a fast fashion as I've mentioned, just now we do see some a slow down in ER, probably 11 sales.
And ER positive revenue conversion you know a I see I asked question about you know the up the new brands, where they should take some time to convert to the revenue. For example, you know our ER to share off the new brands on the contribution of the new brands to the G.M. They.
Has been tripled versus last year, I know, it's a big pie and the way need some time to get it more revenue from the new brands. So that cow reason why you will see you know there is a kind of like the you know deeper into groceries for the revenue into four.
All right. This is doing well let me address your second question. So we made a significant growth in the double 11 at the in every week.
And we see about over 10 billion RMB into one single day, that's definitely a historical moment and milestones and nobody has ever done that so I like to let you know that we achieved our goal because we just like Benson mentioned earlier, we prepare although several living campaign weight earlier ago actually dealt with in the July and beginning.
The August so all operation team merchandising team AD units, one and planning team and our marketing team has been spending a lot of resources in high mediation with Oprah partners pure all those assortment planning and traffic acquisition plan and how do we just segmenting oldest consumer profile and how do we try to.
A significant higher conversion rate than ever before and then doing the three stages, a pre order and a a work and big day, even got three stages, we've been definitely engage a lot of new initiatives. Just like you mentioned, a live streaming and team or 2.0, so life's streaming wheat.
Engage a lot of France, helping attitude.
With a lot of calwell to helping the brands last year, new arrivals and also to just give a very significant growth on the our new events I used truck, especially for a seasonal product and for a high quality and higher.
Discount price during that moment to live streaming becomes a very significant way to drive a sale and a membership manifest the store at about Hemo 2.0 is basically like a fundamental support they provide a lot of tools regarding the consumer management never ship management, CRM and inventory across different channels management. So.
We provide a lot off you know a implementation based on those foundation.
She more they selected over 100 top Brad to you know a pilot runs all those people to France ever Gonna casket model.
Second part is already a photo is on a top up here, Matt. So most of our Brad was selected to be part of a few more to friends Europe highly Ron that's why we took a lot about interest and that kind of implementation, which also drive more traffic and higher conversion rate even that day okay.
Okay that frankly.
Thank you.
Our next question is something I know Tina lump credit Suisse. Please go ahead.
Hi, thinking minutes from for taking my question I have two questions. The first one is on the need program I because as you mentioned that you weren't start you do with them try on setting up May program side. So I want to know the first stage and also probably future pipeline will it be in within our existing bad portfolio or.
Are you actually acquire new brands to do many programs and in the meantime, I'm curious to know the.
Take away level for me program compared to the chemo sites and my second question is on the Oh, a warehouse related to the high premium high fashion brands. So I understand previously there's a chance that we may consider giving I went out of our own warehouse. So I want to know that decision has been made and if so like.
How long will be the construction cycle and how much we earmarked the capex. Thank you.
Oh sure about a it's robin I cannot.
Bother Me program you know we are we both you know provides us with a way pride surveys to both our existing Brian on the way you know a independently of fired up rise only for the meaning program.
In the mini program is the emerging ecosystem I think almost all the brands will like to explore this opportunities on the is Oh for them you know I seem to the whole ecosystem is still not material is though I usually emerging so about a charge model about a survey to a pro why there's always.
The tax true out right now on the there's not a mature yet, but I think that's a very bright future for the for the media program ecosystem.
The also you know a at this moment you know we see the summer leading retailer or there's something between you know a comprehensive Brian has a very big you know G.M. each iteration already in the media program and they are wrapping up to the charge modelo like chemo, but it still takes some time.
But the way you know he leaves a you know look hasn't the you know the types of surveys to become pro I think is more expensive than what we can do you any other platforms. So he is a that's why we see no tikrit, even though now that securities now to you know a hard enough for the two competing with the odd.
There you know type from used do a very good shouldn't you bought it we've got pop.
Regarding the second the second question the warehouse or watch we the management. The can do is where we'll do it does very smart investments on the there is not a worry attacking it time slots to do that we do have apply a bothered by the way, we'll see you know a where why is the appropriate time.
Our two fewer days not to do this cost structure for the metric the temporary we can use.
Thank you.
Thank you thank you Alan.
Thank you don't have any more questions I know the I'd now like to had to Congress back to Miss Wendy.
Uh huh.
Thank you operator in closing on behalf of thousand management team, we would like to thank you for your participation in today's call. If you require any further information I came to leave us in China. Please let US now thank you for joining US today. This concludes the call.
Thank you Mr. Vincent and Miscanthus Nice these don't disconnect outpace your back to the speaker sub.
Thank you, ladies and gentlemen that doesn't today conference for today and thinking for participating even though this can.