Q1 2020 Baozun Inc Earnings Call

[music].

Good morning, ladies and gentlemen, thank you for standing by for about since.

A lot of 20 to 20 earnings conference call.

At this time, all participants in listen only mode.

The management's prepared remarks, you'll get question and answers fashion as even lighter todays conference call. These being recorded.

I don't know tend to meeting or with the hosts for today's call. These when do you sense.

So they can stay rectal about.

Please proceed Wendy.

Thank you operator, Hello, everyone and thinking about joining us today. All this first quarter at 21, he really wants that you're doing it already today and is available on <unk> website at <unk> thousand Dot com as well as all global news licensing.

A couple days I'll, then they have newbuildings benches, chairman and Chief Executive Officer, Mr., <unk>, Oh, Chief growth Officer, Mr., rather little Chief Financial Officer, Ms., Jill will reveal business operations and company highlights followed by Mr., Luiz, who loved discuss financial and and the guidance. It will all be available to answer your question.

Doing a few an exception that follows.

People and again I like to menus that this conference call contains forward looking statement billing the meaning of section. So do you want me optimistic he will take 10, Jack up 19 people as a mandate and as defined in the U.S. Private Securities Litigation Reform Act of 1985.

These forward looking statement, a baseball hall managements current expectations and power market and operating nation I relate to events that a lot known or unknown risks uncertainties and other factors Oh, they are difficult to predict and then have page up beyond the companies can show, which make up the companys actual results.

Oh cheesman today from a Chile, some though in the forward looking statement.

Further information regarding these and other risks uncertainties all factors, including in the company's filings with the U.S. SBC. The company does not undertake any obligation to update any forward looking statement as a result of new England nation future events or otherwise, except as required under applicable law.

Finally, please note that a lot otherwise stated all figures mentioned during this call our in RMB and it's now my pleasure to introduce our chairman and Chief Executive Officer, Mr. reason to listen please go ahead.

Andrew Thank you all but you will notice.

The war continues to feel.

Recurring monthly.

I'm done.

<unk> beautiful from offerings more importantly, I'm sure you Hills I'm sure people you are real farmers will be all will and the state.

Like most companies in the world persistent challenges, our whose normally keep army that historical from 23.

<unk> Chairman, Jim he brought two responses.

Sure Great visiting and achieved a mother foods operating and financial results.

Well pull their monthly active local consumption and the girls healthy commerce during the quarter.

It really gave you the JV partner, but optimizing them and you know routine or operational in the marketing capabilities.

For the first quarter Bulls, usually in total net revenues grew by 18% year over year.

Exceeding our previous expectations, although some groups temporarily delayed their E commerce grants as a result my memory.

We continue.

So I didn't move grants for portfolios during the quarter.

We weren't able to a net total eight your brand partners equal do you Wanna meeting your open home furnishing retailer.

A few luxury brands as well as a few domestic learn FMCG category.

Which grew particularly subs you in a pandemic.

Meanwhile, as we deploy or high quality growth strategies. We also made a program optimizing or category lives and ramping up really badly the brands.

Continues to be multiple improvement in our blended increase for the core.

In contrast to the wider E commerce industry suffer from Hughes, let's just this is Scott.

We were able to maintain or L.S.G. operations, which was critical to use shorten business can community for grandfathers Mrs. Penny their ecommerce strategies through all the Korean 19 period.

Although do steppers lever to incremental costs.

Ability to offer a coffee multiple services in the for human capacity, even during the most challenging environment has been mostly appreciated by our brand partners.

That's a result, we're pleased to be more integrated into our brand promise supply chains.

I'm trying to say from a traditional E commerce logistics partner and Oetwo integrated partner that is supporting many of.

In digesting offline reentry and in minimizing human chooses.

That's a digital strategy enabler, although it's not only between short little spring honors are able to merchandise and the for few orders.

The more critical to support them in another good during these challenging environment, we're driving growth opportunities.

So all this process, we've strategically enhancing our ability to revamp E commerce and agendas in high quality leads.

At the moment for brand partners.

For example, we continue to strengthen the initiatives to expand the consumer touch points.

We increased our efforts in actively engaging with users through live streaming and the leading short radio social platforms, such as so you kind of questionable, which consumers spend increase the amount of time, all while staying at home.

Meanwhile, we adjusted and optimizing our operations and strategy for that would stay at home economy, which is characterized by increase the time span indoors and the growing consumer theme for the door entertainment remote working and health and wellness.

Let me share with you and example, we early March before any recovery in ecommerce traffic.

Recall, one leading international food and eager to change to organize its marketing campaign fields around the theme of the so called Cherry Blossom Festival.

We organized a digital Cherry solution show and hosted the campaign allow people to express their best wishes.

We're very proud to have partnered with its Brian.

Promoting their salto campaign and contribute to building their digital consumer relationships just to quantify the result, this specific marketing campaign helped the grass partner to generate over half a million viewers.

It's also pulp ranking by Alibaba most successful live streaming efforts over that time period.

And the job and Incruse lead conversion rates a significant shipment that resulted in strong all life sales during the pandemic.

When we bought off the grid massively.

And agility off organization is played during the pendency.

And in particular, our technological aptitude during the pandemic.

Looted our vision technology empowered future success.

Constantly consistently focused on developing technology, driven systematic business contingency plans.

And the innovative and technical solutions to facility.

Our brand partners success.

Lastly.

We're very encouraged by the economic recovery, we have been seen in China since March.

Which has further strengthened made.

We believe that's a pandemic has accelerated reading the adoption of online retail.

And our brand partners, we're continuing to enhance and the prioritize their digital will go to market and the expansion strategies.

Well proven capabilities in driving innovation and the digitalization have positioned us well for a post the pandemic boom we demand.

We are confident your ability to capture this mid to long term growth opportunities and the reaffirms our commitment to driving our brand promise ecommerce businesses to the next level.

I mean, I'll pass the call over to Raring to go over our financials for the quarter. Thank you.

Thanks, Vincent good bye bye related impact on different categories outside the poly masking had that is.

Our balance the category will allow us and needs to be navigating through this challenging environment.

Well the pad that has impacted our margins in the fourth quarter. They ensure business continues he and the way for our depreciation and the median raising the market.

We've strengthened our reputation by demonstrating our outstanding black educated on the reliability to adapt to changing computing.

Yeah proud off late accomplishment this but that's the world market continues and as a scalability in our business is activities given during one of the top supply.

Our catalyst in Parliament the tower continuous wave firmly believe that really meant.

With our high quality growth strategy as available we establish though our non-GAAP operating profit in the second quarter help 2020.

With that in man I will now go over the fourth quarter 2020.

The latter results we've had we believe our year over year come rating is the best way to reveal our performance all presented to Ken and go to scale will be on that basis. Once again take note I'll take those that have maintained healthy meantime beam.

Although again they during the quarter increased by 17.6% he'll backbone to bid in that gets built and again. They go by 10% to 782.9 meeting and our large assortment visits and base increased by 18% Carole Park core bidding.

[noise] overlapping revenues increased by 18.4% killed 152 billion breaking this down product sales revenue increased by 13.5%. So thats how it is 1.1 million.

The service revenue increased by 52, plus 9% to 822.5 million during the quarter. They benefited from that relatively healthy growth in categories, such as both were locked sorry, I've had pacing I look forward at the half.

All the other half names and abatements closing, which are pocket clause activity. The most importantly, our totals that may face the challenges and the generators that could be lower growth.

All you model yesterday, our apparel category, which includes both writer laboratories as amazed an abatement clothing neoprobe by approximately 13% year over year during the quarter.

In contrast that demand for personal care products in our plastic category was very soft.

Due to the carving lighting 10 panic.

Total cost Bob and operating expenses were 1.5 billion compared with 1.2 billion in the same quarter last year in particular costs. Our products increased to 590 meeting from 590 days last year, primarily due to increased sales.

From that exists in model.

Due to incremental contributions from new brands and a deeper income over to promote sales third party 19, our gross margin for proactive declined to 15.8% compared with 17.6% a year ago.

Our plan B, the gross margin was 61.3%.

The increase of 80 bps from last year, which was mainly due to included in the proportion of service revenue.

Fulfillment expenses decreased to 413 million from 288 meeting last year, mainly due to increased revenue contribution from the continent model, increasing use of a premium delivery services and the incremental expenses relate.

You probably 19.

Yes dietary is many new common into delivery partners suspending operations during the peak opt out rate, it's great to have more premium delivery partners to maintain and pro fulfillment capacity, which also like to a higher fulfillment expense vehicle as quite simply jobs.

They are fulfillment expense ratio increased to 4.5% for 2.7% a year ago.

Sales and marketing expenses increased to 366 million for 211 million last year and the other processes out yesterday, our sales at the marketing expenses to show remained glide at a 4%.

Technology on the comp and expenses increased to 96, meaning from 88 million a year ago.

We continue to invest in innovation and the presentation during the pen Danny you know very disciplined poker and it's good land manner.

During the fourth quarter up just on pricing our investment infiltrating the way seven and the cohabitation totaled 36 funding fascinating comparable because it's resonating last year.

In driving greater operating leverage against the expanded scale of our business technology and the company expenses as a percentage of plan they improved slightly to 1% from 1.1% last year.

Yeah, Hey expenses increased to 50 meeting from 45 million last year, which reflected our increased spending we are the mid thirties corporate back to a business plan is that as the business scaled offset by some cost Concord risky.

During the quarter income from operations decreased to 13 million for 46 me in the same quarter of last year and are noncash Stacy.

Income from operations was 37 meeting is non-GAAP operating margin public profile, 4%.

Upsizing interest income interest expense totaled 7.3 million heavily on one nearly a year ago. The increase in interest expense was mainly due to the issuance of common Pablo Hardwork robot in April 2019, it's meaningful data.

Great and treatment. This is a non cash items on the baby attendance in accounting standards.

In the fourth quarter net income attributable to ordinary shareholders help also in total the steel consuming basic and diluted net income attributable to ordinary shareholders accounted for 80 at what both work than other quarters.

Non-GAAP net income attributable to ordinary shareholder Softballs soon totaled 36 remaining.

Basic and diluted non-GAAP net income attributable to other shareholders about do so yeah. We're both 40 courses for the quarter.

As our March 34 fuel cell turnkey based has 1.7 billion cash and the tax equivalent and a short firmly maximum.

Compared with two bidding about December 34th 2019.

The decrease in cash and the catches Coleman and short term investment was mainly due to some delayed payments from our build brand partners during the pen Tammy.

We are seeing accelerated collapse and so far in the second quarter.

Turning to guidance provided the macroeconomic environment, that's not the terrorists further they added pace that get laid it does go through the second quarter 2020, I think with 55% compared with the state here last year.

We expect total net revenue during the second quarter of 2020, typically treated coupon, thereby creating a coupon sensitive which represents a grocery up 30% the 53% comparative sincere last year.

We expect service revenue to grow at a faster rooted in total that's revenues during the second quarter of two cents affinity.

This conclude our prepared remarks, thank you.

Operator, we're now ready to begin the two is actually thanks.

Thank you gentlemen, well now begin a question and answer session answer your question piece, that's tied to number one and the telephone keypad and pertaining to the.

It depends at the request.

And to give more people the opportunity to ask questions peacekeepers helps only one question at the time.

Again at this time I want to ask questions.

First question is something I know a btwob HSBC. Please.

Yes.

Thank you good evening management. Thank you for taking my question I think it's fair understandable for both other stuff and then make situation on the when can we help and congratulation on the to kill a stronger than expected although on your to kill topline.

My first question is is that if you look at the and then they actually keeping a lot more off the and then Theepan international fans.

Given that they are from a key part a majority part of our customer base, how would that impact their advertising or the online marketing but check.

How would that impact us as well and then second question is that the cars to the upcoming to 18 promotions.

How well you see that cells compared to last year do you see a change like a pent up demand is stronger than expected the comfortably in customer demand and also this year, how will opt span so final positioning Tiffany. Thank you so much.

Okay. So opinion says it's a jump off on thousands I think it's a question. So the first are you asking so let me clarify a question was about two one you said how did those international brand spending their marketing budget for all right.

I think they can actually I'm more looking I'm more curious on outlook I think one Q is very understandable.

Impact there, but I think I'm more concerned in the cost to come back okay, yes, kitson dependent than they might hurt some of the international brands that sells performance overseas.

And then we'll see the allocation to the online marketing budget in China, So I'm Mark Oh, Yes curious on the outlook. Thank you.

Okay I got it so we all know that we had a very tough factory and so a big basically every platform. They cancel all their own like campaign and the traffic dramatically engage a very active you know downtime and by starting from this March and especially after the campaign called a Queens day and a new.

Arrivals for spring Summer campaign. So we had a relatively very nice you know March and all those kind of traffic in terms of volume and aquatic he has back to normal so a right. After the first quarter. So all those international breast they'd been reallocating order marketing spending, especially from there.

Okay why resources, there trademarking to online so actually we had a relatively you know a bigger range off you know online marketing services project and not just circling the future, especially where a lot international breast realized that the current economic that kind of the trial like lightstream enriched costs and marketing as being.

Very efficient to driving a lot of traffic in consumer engagement for online and making transaction. So all in all and how we are looking forward to see no. Other company, it's getting better and there were very confident again allocating more online marketing budget, especially provided by public services and ask your question number one so.

You're at the New York Second question is related to the 618 performance overall compared to last year. So actually this is the second day off the 618 campaign. So I can only give us some color based on the two days you know our performance a yesterday was the shoe didn't they also first day off near the first away all the fixation camping.

One of the three ways about a whole campaign. So we had a very good performance you know our fight it out a pretty warm season at a pretty Phil you know purebred. So basically in terms of the volume and the volume of the traffic and the quality of the traffic. So we can definitely see higher conversion rate compared to last year. So the.

That kind of them off the six anything campaign, what very different from our last year last year. They had a very can kind of the a a big things are active you know.

Engagement with consumers, but this year. They you know us crescent all their mindset into different category by organizing them very well one after another adjusted our focus on the right accuray consumer goods to target a higher conversion rates. So if you look into the traffic volume so compared to last year, we might not be up huge increase but.

If you'll consider the conversion rates and considered a party autocratic, it's definitely better than last year. So we can see die based on.

Better investment considered a pricing strategy and the assortment strategy for from a lot of international brands and our aggressor.

For this campaign. So we are seeing a better it takes 18 for this year.

I think as Jim I, just feel comfortable and confident on they look like to thank you.

Thank you.

Thank you next question is from the nine of John Troy.

Please go ahead.

Hey, Thanks for taking my question on the questions on your since Q2 guidance on music on the I've heard remarks says that the service revenue is likely going to go faster on this coming quarter to mass me library, a more detail on this argument that I guess it's.

From advertising et cetera, and how would that impact our profitability I can also says I'm young galford pocket. It will likely continue to improve I just quickly on top of that honestly.

Since the recovery since March on was also mentioned now can you kind of show the latest trends I think you just mentioned earlier, but as June 18th but what are the some of the categories that you see more RBC improving versus wouldn't you. Thank you.

Sure.

Hi, Brian.

It's a robyn.

You know when we pull that outlook for for Q2, you know actually Oh formal guidance and our discouraging let me say they say you know the back into why they see the very softer demand from our.

Our kids business model leadership, many of them, putting those hereford off but appliances and that after today I think of it gives a very there's always highway about major category, which maybe main Taiwan or some impact our profitability in Q2 on the other having you know.

For the back inside an amendment is.

Closing the category I think they will see the attached to the Padre right now on the latter covered assets those were like Latchways. They say very strong because all demand in our biggest saudis. It's a nice 18 now unless we see that strong girls was Lisa.

Well, that's the whole feature of our category girls.

Hello Dom.

Oh, yes. Thank you I'm just on the service revenue or is that a buck of those.

Apart from down any color on the advertising or other services that are gonna be ramping up on twoq.

Yeah.

I do not for the other services in a in the lead you to truly see Ah Andre.

Some of the very strong from the you're one of them run about is that just marketing services on some additive and especially Linda you know right now in Florida live streaming.

Thank you Michael channels and reduces.

The strong rebound from from Q1, two three too.

Okay, great. Thank you very much.

Okay.

Thank you.

Thank you next question is front and I mean, she apples citigroup.

[music].

Hi, I'm good evening management, Thanks for taking my questions I'm. Congrats on the solid result, however, Connie qatif questions on your friend relationship. So doing your communications, we feel global brands to last three to four months are there any noticeable changes.

After a commitment on the strategy income so how did the home after production changes technique or the marketing initiating some toward the China market with issues in home market more foreign brands treating China as the must win battle the sheer.

So if so what kind of operation changes that you anticipate a unique to support them and then on the other half are they any brands to actually become more cautious in light of leaving us trying attention. Thank you.

Okay. So this is you're about to let me ask the first question related to the Oh. The brand strategy you know my change during the a post coping I cant southern Robin can give you some hotter in terms of the relationship between us market in the China money. So yes, you know you know for the first quarter alone.

For the National brands, especially you know all but there have a lot of offline DTC, if it's a direct to consumer business. They realize that all my became very efficient for you know are there overall business proportion and they had been a locating apply resources to online in terms of their marking a budget in terms of off like inventory.

And then comes up a lot in character internal talent. So right. After the you know the first quarter, what we realized that I try to my already pass through or hopping back and stuff and the globally. We had another outbreak you know a from a with a lot of affecting a lot of our erratic rep hotter. So their global headquarters you know and it does.

The headquarters in there and their country has been shutting down a lot of their of my thought which increased your attention to the Chinese market. So then you know our pay more attention about how can we do more basis can you know rely on a strong partnership with us to do more online business, especially when there are global has been in facing the same.

Issues or the second half off before so I think you know a in a long run, especially in the fashion sports and luxury category. So I'll be seal for thing a lot of you know attention you know shifting from our there are headquarters to China, and where are you know feel very comfortable and confident about.

Okay engage a better business results in a future.

Okay. So let me answer the second part off your question.

You know a internally didn't see any chance you.

You know all intact.

From a U.S. and related conditions I think there's really no you know the most of the brands in China has been a famous brand that has been no classes in China for many years.

Whether it's their supply can all their brand name has been in China people for many years I believe is there any disruption above is.

Right now I realize that supply has been to solve the cost bothered a product in our has been that you know interacting dive into the hopped off the shelf, we got about CAD models, given the current now but that fortunately that cost probably only motivated in material.

I'll give me I mean, our whole picture, so we think that everything normal and.

More importantly in China, which is recovering verified there now and I'm talking about back door open.

The Brad and they will pay more thinking through the on them. So that is having a great offline.

Rather I think it would kind of benefit that we are in the long Rob. Thanks.

Thank you so much.

Thank you.

Well she did.

Oh Jefferies. Please go ahead.

Hi, Good evening friends management for taking my question and congratulations on a solid sets off we felt.

I have asked the questions. My first question, it's more about the second half Oh look I've certainly seen how should we think about our performance in Q3, and so forth on in terms of the T M beside a and secondly.

And management also comments about our T. M. B me by different categories like Cairo somebody that on it and FMCG in Q1 and two to be specific thank you.

Okay, Hi, how much is a it's robin again, you know a you may notice, we don't provide the whole Yahoo in order to lease because they see you know there to do and certainly in the macro issues. So we don't provide for the for the time of year. However, based on our.

Our documents right now I think so they are pretty possibly two for equipment and the without spend level.

You know a high quality girls you know we can take that.

We will try to four I'd tell you know.

As they sometimes there is uncertainty within the macro they cannot hold back because numbers out that.

What I want to see is it just as I I started back in the prepared remarks, our oh about that release property there'll be the powder, we choose who had the also improve our non-GAAP operating margin will be who was his last day.

Thank you so for the second question I think I can.

It going charger.

Second question in Q2, we see that lives that we see that the borrowers who continued to build in luxury is most blair and the men and women are voting getting a wind towers, you know a factor, but personal care products.

Our process has been driven model whereby recalled.

Thank you.

Thank you.

Thank you.

Well she was something might have seen along with credit Suisse.

[laughter].

Hi, Thank you management, taking my questions I have a quick question on the portfolio refinement project because management has mentioned in the past that now we want to ask seats out some under earned Brent I. So how does any of that nobody asked on that front in the first quarter and also what well be the roughly number.

We have in Atlanta.

For the full year one for the first.

Hum So what this is model, we will actually Oh for those new brands.

Thank you.

Sure it's Robby.

I think the hyperhidrosis about Wow coal strategies.

Other that's actually because we haven't helped oh portfolio, it's about the cost to achieve the high quality girls and then you know locally by lately. They had done in an awesome team to evaluate the ER our pipeline and the guy that is.

The price they are serving this probability and some other Oh you know factors on the with you know we think that's kinda like our wired routine wants to do and the fact way how badly.

Strong pipeline to how hot and cold. They that's why they tend to do that but we don't provide the number for the whole year you know deposits in the reason I suppose the for that I can tell me, but now they are discussing is oh by the strong headline partners or two in Japan, we just like the.

With level in Q1 within these are you know lists of outweigh public holidays, I'd say that you'll have a nice adding indeed, we our new stores I know Brad. Thank you.

Okay. Thank you Robyn.

Thank you.

Our next question it sounds like Deutsche Bank of America Verizon.

Hi, good evening, and Dubai and robbing thanks for taking my question I have a question actually recording the the state of the I phone development Ah We know like this year, we actually see in the brand actually performing very well on the t. more like afraid.

But I think last year. We also mentioned a lot we try to on kind of exploring new platform on the cash which had such as like Iraq.

And yeah. We also know another other platforms also introducing new function off like like seeming shop, and just wondering from the up I was impressed back that have we actually.

See a lot of like in the activities in terms of launching new platform for brands like saying like.

Todd or like you know quite show or like other live streaming platform or if we see any new channels involving hearing does like you know post the dynamic situation.

Pipeline, it's Rodney again.

After his yet you know there are more platform.

And ER our stance on the you know a deal no way or a that's half hour business. They are new programs in the mid cap and are they made a great progress for example, I you know really a you know I think brown rice the trend also for me.

This is model for example, where he's a good luck, we mean walk retained online offline and the group management together on the way our you know.

Within the family probably south of the brand by rate locks and Ah you know a unique new programming innovation and also they are asking so even on the price. So I would mention de Minimis and Ah I remind us Uh huh.

I think the.

Oh, no not really a virus early stage and the you know from a number two is the is not mature bought but as we noted that in the differences that you know things done programs underway.

Make him.

A greater programs, although gathers, especially the way our activity he will lead to embrace all the platform I will pass the other platforms I'm wrong.

A thousand specified these models to work with that is Ah lisanti.

Oh, yes, central Robbie I, just want to have a most to sum up on this question like.

We are doing different like neupogen with integrating with no new platforms are we actually well see a extension for the extension I like your headcount in order to launching the D kind off you know technology, new technology or new platform integration.

I'm not operators now I don't think way how much the same thing to have it has had a as they led by the last quarter.

Our girls me, so I think having bought like though on the 50% anyhow that went into why would I see no way. We are also offer at 10%. So I really don't see this panel that Oh grocery varli nivo and almost flat for the whole yes.

Got it thanks.

Thank you once again for those who wish to ask the question.

On the south.

So.

Okay.

Yeah.

Okay.

Once again just have one.

[music].

Our next question is something I guess, yeah, Oh I see capital.

Well.

Thank you. Thank you management congratulations on the first jump quarter in this kind of really hard time.

So my question is regarding the at the brands. So we are already has a lot because international brands I believe that they're not the domestic brands are always so what happens so HM get what demand just for you know a online E commerce operation and it's never said [laughter]. So TV.

You guys, just Ah I never to play will get into domestic market. So regarding domestic Brent.

It's very economically speaking married and get more value different than back into national brand and Oh. So Oh, we're talking about domestic brand development in 2020 speech is that going to be one of your primary targets. So that's the first question I'm very quickly.

One question is set kind you want to keep that some update regarding that Minneapolis developments for for the brand you know what you are developed there you're helping so that's got to question. Thank you.

Okay.

It's Robin ER.

Now back to last year, we've talked about so that's the right.

That's right with what Wow, how exactly to achieve our corpus.

The you too wide on you know because they do Brad you can almost up you know coming from Damascus right.

I think with that testing for the last winter. We knew there was a difference I agree or in the domestic right. For example, I didn't even more integration between the I'm I'll fly.

And they need more often than some hot then the international brands and also to meet more I thought that I mean, you know people marketing services from us.

I think we accommodates it's kind of for the dedicated to the.

That's right.

He said, we talking to our.

Our take rate the dosing vary that much difference as a group, but it would probably cannot know Brad is Ah Ah you know it's different by the right a different type run by friends out there. There is no different utilities and I know I'd go back occasionally the watch the technology like a survey.

You know all customized December while she was a dependable. So we are very complicated the on the domestic right in a more confident than last year above these are setting up a treatment.

So what's your second question.

Hi, but he got into Minneapolis, Yeah, Yeah, Yeah, Yeah, yeah yeah.

Yeah definitely I think maybe the last question on they care about that you know, we are and where do we call the affordable bond, which means no way, even greater like baby store operations, Oh, yeah, because all that or was it offline or the wide inventory and also.

Our school operation of data and that's what they'll be called <unk>, a 41 for it I. We are off with regards to know how we have worked with Ah Ah Ah crap hardware for that I mean really that's good to talk with our our American ideally they.

Minneapolis, you know a group I know we are very comfortable on their program and also with US hobbies and I've seen more of them more offline for a more intense so that means that under the walk through they know exactly that hurt I believe that they want great opportunities in the future.

Thank you.

Thank you. Thank you for the asset that's all my question.

Thank you.

Next question, it's Ah lisanti.

That's a.

Okay.

Hi.

We managed to find my question I should have who my first one is on the.

So I would say reserves.

I didn't help from five cents I know you there and.

Yes, Hi, South guidance is quite conservative.

It depends how come on and then if we try to reconcile that with that I'd rather.

Well for the sake I'm, just wondering Massachusetts, just some color on the sizes that we still considering yeah.

We just see more conservative given what had a great. Since your last night from about two categories like well find since it really well Oh it was that because it sounds more like a category makes likes it makes me depression, it seemed not fully back to normal.

And that you have on.

Even so well Oh, it's essentially for that I know the second question actually on the margins either because it gave that guidance on seven eight I just think of them at that point of that at the conference call last winter like this that I think just wondering I used to have some upside on the guidance doesn't I want to module for accident more.

He said and stuff like.

That said I think.

Yeah, I used driving back to the that's the after our second question first Oh, we don't have.

We don't have cancer, our last quarters or you know a foundation about to be positive seven.

80% of our not FHLB borrowings.

Our company to achieve that Oh bar and the that's how I sat in two to a they will get the 40 the power of our non-GAAP based Oh, it's probably has already marketed so for the fourth scrapping is not ours, but here in your it.

Our problem I outside right I would say no wait wait how a reality differences you know categories or no.

Okay, our or some bad or has done a pretty soft as I've.

Now on the also the you know.

Catherine need to normally they can achieve what Vietnam, no oh, you've gotten the hogs, though I mean, especially for example, the luxfer. They back on line two Max factor going in the average and also a for the new brands that have been.

No not where we see even though it's had a much expanding market share or the percentage wise over the over again, mainly on the also contributed to that possible that hard to do because in the take rate. So let's talk about a coffee pot.

Our Delaware hard I'm confident our program right now.

Oh, I'm, sorry, I know you may have a.

We'll go back to for the corporate.

Yes, yes, maybe some they have like some comments on that.

Apparel inventory levels I think.

From some platform so some of our independent <unk> hi, excess inventories in the truth is just wondering how I would position for that I can help my friends as well.

Yeah, Oh definitely are you aware waste overhaul or was integrated.

You know where I'm going to consignment model. However, you know what do you are right now right.

Offline to online.

Great I believe.

But we have 2000 integrated or does that create more often from our systems the pot and how we can support for the but that the industry leading to all the outside of the industry I'm curious about what I see no agreed that a factory.

We believe that.

Got it. Thank you. Thank you for much of it.

In Q.

Thank you next question is from either the hi, something international.

Yes.

Hi management congrats on the results and thanks for taking my question and now I'm just a question on our Q2 guidance again now the Jim the expectation is slightly faster.

And our revenue guidance does that imply is probably a sequential decline in take rates I know. It then you a little bit Publicis and then it was just run through our assumptions behind these two numbers the gym be cognizant of maybe gotten more quota today.

And there's just a follow up on that we mentioned about live streaming services.

Can lead to some try to understand in addition to be flashing services is that going to be a take greatly enhancing or take quite diluted.

Thank you.

Okay. So what are they tend to repatriate or you know we use a you know our service.

Wrapping youre not going to service them. They I think the you know does the touching it would be about the revenue guide and I mean, maybe because of our personal care products. The how consistent model, it's usually it's by far the deal or.

Lower than the back.

So I don't think there the impact on our 60 overall and the intensity of though with our Oh.

I mean numbers include why do they how do we determined that the take rate.

Due to walk you know that's how America pays.

The.

About to.

Okay.

But what are the second question.

At the second question is on live streaming services or whether or not that's going to be positive.

A negative on our take rates in the longer run. Thank you.

Thank you regarding crushers businesses engines.

Yeah I was for me the emerging I'm sure it's way for the Brentwood. According to your consumers of course, we all can see this trend.

It is happening or fast.

As a company Bobby service actively participating.

In this kind of marketing activities would grant so we hope we're going to open up the whole thing.

Run audiences like the general Smartly service revenue.

So we just delivered a terrific epidemic.

So, but yes, I think the market likes couldn't be market has changed your merchandise.

We are we've seen some you know trend from a killer whale stones wooden coaster uses for example, so we are closely.

You know follow this trend I'm trying to develop the or better.

This is model when we engage we see.

On the clients, we see no murder to oil kills the kind of activities.

Of course targeting you know carry more.

Service revenues they were more about others, who will be Brent in they are short to midterm.

I'm sure.

Okay. Thank you that was helpful. Thank you.

Thank you.

Last question, it's something that is easily see I see.

I think comes on behalf of not anyway. Thanks for taking my question and congrats on the front end result.

My question is regarding to the margin trend.

Then the drop in the gross profit margin due to unusually required Brent pardon or how should we expect the gross profit margin going forward in the second quarter and for the full year.

And all from my second question is regarding to your cash flow or even the pandemic whole, what's your outlook for free cash flow in the first quarter.

How should we expect all cash flow and.

And cash position going forward, how close is that pandemic on there or I quite a bit strategy to question. Thanks.

Okay. So it's robin about the.

Gross profit margin.

I would say into two ways, you'll see the soft demand because from the personal care products that are which ill.

Alleviate the our gross margin comparably the two while I won't be there is thought to be having about cross property, but is not back to the normal a light oil which is normally they always soybean I sat in person through June 30%.

He sometimes to get back to recent normal level.

The other cash flow I think the TV in July four years on the layout that payment from the paid or partners.

Because I reserve access all of the overpaid or some other reasons.

Moving to two solar projects they are very high salaries.

Minimum payment from the Brad and back to the normal side that you then faster than last things back.

So I think a you know we are pretty up to the other that's all I can let me back later quarter, we either because they didn't know for the situation on the macro conditions bankers.

Thanks very helpful.

Thank you ladies and gentlemen.

Good day session and it's nice to have assessed.

Thank you operator.

Calling on behalf of what about the management teams would like to thank you all for participation in today's call. If you have any sort of question Phil. So it creates reach a story. Thank you for the has today anyway. This airlines they have been let's conclude the call.

Thank you this together.

Yes.

Before.

No.

[music].

[music].

[music].

[music].

Good morning, ladies and gentlemen, thank you for standing by for about.

<unk>.

Earnings Conference call.

This time.

I would imagine first appeared in <unk>.

Yes.

Today's conference call. These.

Oh.

Today's call these Wendy.

That's it.

<unk>.

We still see the Wendy.

Thank you operator, Hello, I'm thinking about joining us today.

Well, that's when you want to anybody wants that you're doing it already today and is available on <unk> website at <unk> <unk> thousand dot com as well as all global life. So it's oh.

Oh, the golf Oh, there's been hobbies buildings benches, chairman and Chief Executive Officer. He said, you well Oh cheap girls, all but I missed the lobby little Chief Financial Officer.

Hi, Joe will reveal business operations that accompany highlight although Bobby.

I'll discuss financial and the guidance it will all be available to Odell question do we look you an exception that follow.

Again, I like to my view that it's called let's call. It contains forward looking statements billing the meaning of section. So do you want any of the figure what exchange Act of Nike that people as a mandate and that the bond in the U.S. thought with dignity Litigation Reform Act of Nike that he buys.

These forward looking statement, a baseball Hall management College TJ, that's how we're lucky and operating day shape I relate to me that a lot from low or no.

So deep and other factors Oh, they each other they called <unk> and that have made a beyond the company's control, which make helped the company actual results Kopelman, Oh jubilant did not materially.

Forward looking statement.

I will mention regarding the other risks uncertainties. All factors included in the company's filing with the U.S. I think you see the company does not undertake any obligation to update any forward looking statement as a result of new England nation.

Then or otherwise, except I do part and the applicable finally, we know that a lot otherwise stated all say go lunch I'm doing the Paul Arling arm study. It is not my pleasure to introduce our chairman and Chief Executive Officer, Stelmi. So we've been too.

Please go ahead.

Andrew.

Thank you all for joining out.

Mm Hmm feeling here.

Good morning.

Well from dynamic.

Usable product offerings more important shortened Oh sure people.

Well, we all know they felt like most companies.

It's a challenge you talk with you all the people that.

That is far from.

So your children acreage block.

Okay great.

We have achieved a mother foods.

So much results.

Well Golden Monkey.

Well, we're all essentially chemicals will be called merged during the quarter.

Maybe if you did you talk.

Marty you know we.

We should more than the marketing.

Well first quarter shoot me and told them that scoop up 18% year over year.

Feeding all previous occasions.

Somewhere up early.

Your E commerce growth as a result.

It continues.

Second World War.

Good.

Well.

Overall.

On this.

We'll be in New York.

Some issues.

A few luxury brands as well.

The massive smart.

I'm speaking category.

Which grew equally.

Got it.

Well, that's we're deploying our quality goldstrike would you ultimately.

Optimize theyll probably be lumpy.

Got it would work.

Which can either way.

Okay.

Landed a group.

In comparable to the wider E commerce, they've suffered from Hughes with just it's both.

We weren't able to marine hey, or Ella Ji operations, which was critical to shorten <unk> well run fathers, let's just any either you almost double digits, so often colby monkeys.

Although we suffered no between your incremental costs.

You also bought me mineral services in the fulfillment capacity, even during the most challenging environment.

The men's we appreciate you or run offs.

That's a result.

Well you more integrated before one comments like shoes.

Turning to form a traditional ecommerce logistics polymer and all too old immigration policy that is supporting Monday August.

I dropped off line and trade and a mini might be even changes.

That's a digital strategy medlar, although not only to be sure what went wrong and are able to merchandise missile few orders.

More critical so called navigating these challenging environment I'm, drawing new growth opportunities.

So all this focus we strategically.

Bielicki revamp E commerce and agenda that high quality me.

Well for brand partners.

For example, we continued to strengthen the Michigan, we just don't consumer touch points.

Did you Chris afterwards.

Our people do you did you users who live streaming and at the meeting short to medium social platforms.

Sure So you kind of questionable.

Which consumers.

Oh, Hi mall, well stay at home.

Meanwhile, we jumped <unk> and optimizing our operations strategy.

What's the Oh, you called them.

Which is characterized by increasing the time span indoors.

And the growing consumer theme for maybe the war and working and health and wellness.

Let me share with you as an example.

During March before I mean recovery in ecommerce traffic.

Oh, one maybe the national food.

Switching so all the Myers its marketing campaign around what seem all the so called Cherry Blossom Festival.

All right digital children and wish him show and hosted UC I'm paying a lot people express their best wishes.

We have ever Tropichop Condor with its grant.

Promote their so called campaign and the contribution we wouldn't be digital consumer relationships just for qualifies as a result.

Specific marketing campaign, how the grandfather generally over <unk> million viewers.

Also <unk> record Ali Baba most successful life's getting efforts over the popular.

And the Joel I you crews in Culberson roots, what's significant shipment that result in his ball all life sales during the pandemic.

Some victory bought all agreed not to the.

Yeah, the agility off organization, it's played doing that and Doug.

And in particular or technological aptitude during the pandemic.

It would be or vision technology empowered future success.

Constantly consistently focused on developing technology, driven systematic business intrinsic value.

You know Weeklys technical solutions to facility.

Our brand partners success.

Lastly, we.

We're very encouraged by that economic recovery, we have been in China. This March.

Which up for this person may.

We believe that depends on what's actually maybe the adoption, but all I would tell you know grandfather, we've come through when he heads.

Hi, there digital will go to market.

Expansion strategies.

Well pull them 'cause it but it is driving innovation and the good utilization had position bodes well for he owes the pandemic boom leading Bob.

We are confident.

Anything captured this.

Long term growth opportunities.

And the reaffirm our commitment.

Driving or one on the ecommerce businesses.

The next level.

I mean, all parts of corporate Robyn I'll go over our financials for the quarter. Thank you.

Thank you.

<unk> bye-bye you they haven't talked before the tactfully outside the problem that can pad that.

Our private capital wouldn't be a lot often used to navigate it's really Kevin BARDA.

Has that impacted our marking the fourth quarter. They sure isn't it continues he I believe for all that we put the Asian other mediums leasing the market.

We've strengthened our reputation that including all the outside with Black indicated on the good about dedicated baskin changing Toby.

Yeah problem I'll leave a kaufman if that backlog of work Rockies column, you can have the data Vicki hollub busy exactly with it.

You're not off the top apply.

Well the trying to possibly.

Our continued.

For me if indeed, that's in the man.

Back with our high quality girls category I believe that they still wall and I've got a weve topic in the second quarter Hobbled just on Friday.

They definitely man I wouldn't alcohol in the fourth quarter 2020.

And that could result in UK it'd be need while you're on your commentary can you got that way to review our performance.

All put them into Canada, and it goes live games will be on that basis.

Right. Okay. Ignoring all please note that had nice and they'll be lumpy.

Oh, yes, they do it in the quarter increased by 17.6% you'll backbone to get it.

In that Didnt really yesterday or like 10% to 782 problems I needed an hour locker room and visit yes, they increased by 18% you'll baseball incorporated.

Overlapping revenue increased by 18 month corporate that one cost 52 billion.

Great. Thank the Dol Rockville revenue increased by 35% to 500 101 minute.

The services revenue increased by 52, plus as I said, Joe I really couldn't be coupon climbing given the quality.

They benefited from that wants to be a talented go in Kathleen.

Well, there lots or.

The other food or the house.

[noise] all got Uh huh.

It is an abatement cloaking reach our coffee claw back to the bulk orphan all those conveyed based attending to other generate that could be lower oil.

Oh, you all yes. They are all apparel category, which includes both Blair locks or other names on the David closing deals grew by approximately 13% year over year during the quarter.

<unk>.

He loved the corporate no Paris caught up in appliance category wasn't lottery fall.

Due to the carving that I've seen 10 diving.

Total cost Bob I know operating expenses were 1.5 billion compared with 1002 really in the same quarter last year in particular cough up Clorox increased to 500 nicely meeting <unk> 590 than last year.

Properties due to increased sales from that we've built in model.

Due to incremental contribution from New York run at a steeper gets call over to promote deal you are talking like team. Our gross margin book rock to decide to 15.8% compared with 17 months, except that a year ago.

Our philosophy, the golf marketing was 61.3%.

Then you get a unique ways of you'd be at four blocks here. He wasn't meant you usually nuclear.

He is a proportion of service that.

Fulfillment expenses decreased to 430 million homes.

Neither box here, maybe due to increases Evansville, CONEXIS as well do the continent model increasing use of premiums deliberate though.

I'm going to include medical expenses related problems Nike.

Yes, I agree with many calling in.

You never at Pilar suspending operations during the peak awkward vis vis two or more appealing delivery partners you may see an ankle building capacity, which also liked a lot higher for building that's we feel.

Quite simply don't yet they also feel confident that they feel leap into 4.5% or <unk>, 0.7% a year ago.

Sales and marketing expenses increased to 66 million for 211 million last year and the other prospects, yes conveyed our built and the marketing budgets Newfield remained flat at the corporate that.

Technology on the comp and benefits increased to 96, meaning from a nearly a year ago.

We continue to use that no lease and other privatization, they're independent I mean, no very differently Volcker and that's good land manner.

During the fourth quarter officers on the pending always investment infiltrating the lease and other client base and hopeful it gets its funny fascinating apparently because it is resonating last year.

In driving greater.

Operating leverage against the blended skill of our business technology, and the pop and basket as a percent Oh, yes, they import likely kilowatts per cent for 1.1% last year.

Yeah, Hey benefit we feel good evening from 45 million last year, which reflected our increased spending yeah, the need to cope with Jackson.

Style of the given the scale offset by some cost come close to.

During the quarter you can talk from operation equal to start getting in Fourq important me in the third quarter awful lot here I know enough activity.

Income from operations.

So he started moving it no capital breaking marking a coupon corpus that.

Upsizing in should mean call interest expense totaled 1.3 knitting heavily on why it in a year ago. The increase in interest expense was mainly due to the you sure how awful hard work will fall in April 2019, which include that.

You can treatment they see it does not have item on the baby dependent upon is that is.

In the fourth quarter net income attributable to ordinary shareholder call quality.

Although the coupon through knitting basic and diluted net income attributable to ordinary shareholder call quality, partly yeah, well work than other quarters.

Non-GAAP net income attributable to ordinary shareholder for halted and although there could be made basically I get that won't be that last GAAP net income attributable to other shareholder up all the yeah, well for 40 Portland for the quarter.

I was on March 30 portal Joseph Plenti, We've had 1.7 feeling had an attachment Finland and therefore firmly back then.

I'm happy to bidding adopt December 34 kids on magazine.

The decrease in cash and the Texas Goodman I spoke circling back then was mainly due to some delayed payments from our field grandfather, they looked at that.

We are seeing accelerated the collapse and gold bar in the second quarter.

Turning to guidance for why didn't the macroeconomic environment. That's another three to four there they anticipate that debt. They go through the second quarter is uncertainty I had to be 55% compared with the thing here a lot here.

We expect total net revenue.

The second quarter 2000 funding to be between 2.5 getting on the coupon centseighty.

Which represents a grocery uptake percent if they get 3% apparently that since your last year.

We expect service revenue grew I go faster.

It is hopeful that revenues during the second quarter opposite.

This concludes our prepared remarks, thank you.

Operator, well now already could begin to realize that take that.

Thank you gentlemen, well now begin to question and answer session.

Quick question, he says towards number one and a telephone keypad and listening to the I now like it has to do because it is a powder Ashton.

To give more people the opportunity to ask questions. Please keep it jumps only one question at the time.

Once again at this time I want to ask your question.

First question is from them I know a btwob HSBC.

Yes.

Thank you did you have any management I think you for taking my question I think it's fair understandable for both other stuff pandemic situation on does on QVC and congratulation on up to kill a stronger expect although on a to kill topline.

My first question is is that if you look at depend then they actually keep paying a lot more off the immense C band International fans.

Given that they oh from a key part a majority part of our customer base, how would that impact their advertising or their online marketing budget, how would that impact us as well.

And then second question is that the cars to the upcoming Ah June 18 promotions.

How will you see the cells compared to last year do you see a entries like a pent up demand is strong, but then expect to be corporately in customer demand and also this year, how will opt band so probably know positioning differently Ah. Thank you so much.

Okay, well opinions thought that that you're welcome calls it sounds like it's a question so first off.

Okay. So let me clarify a question was about to why you said policy don't get a national brand spending their unlocking budget or Oh.

Oh, Thank you want actually I'm more looking at more Algeria is on the outlook I think one Q, it's very understandable that the impact there, but I think I'm more concerned in the cost to the rest of the gets independent than they might hurt some of the international brands that sells proponent overseas.

And then more date that allocation to the online marketing budget in China. So I'm more Oh, yes curious on the outlook. Thank you.

Okay I got it so we all know that we had a very tough factory and so a big basically every platform. They cancelled all they're all like hadnt paying and the traffic dramatically engage a very active downtime and but starting from a this march at especially after the campaign called Acquaints day and a new.

Our vital for spring Summer campaign. So we had a relatively very light that you know March and all those kinda topic and comes off the quality and quantity has stuck to model. So all right. After the fourth quarter. So all those international right they've been v. locating alder locking setting it's actually thought from there.

Alkali resources, there treat walking into a lot. So actually we had a relatively you know a bigger range off you know online marketing services budget. It up to circle back to chart, especially when a lot of international grass realized that the current phenomena kind of the kinda like in Lightstream enriched costs and marketing it's being.

Very efficient driving a lot of crop in countries like engage metaphor online and making transaction. So all in all on it you know we are looking forward to see no other probably it's getting better and that were very confident in allocating more online marketing budget. It's definitely provided by public services and ask your question number one so.

Your other New York second question is related to the fixed 18 hole, but overall compared to last year. So actually this is the second day optimistic 18 campaign. So I can only give you some color base on the today you know our performance.

I'll yesterday was the true didn't they all the first they often get the first wave compensation can bring one of the three ways about a whole campaign. So we had a very good a whole, but as you know off by it out a pre wants me that at a pretty fill up here right. So basically in terms of the volume and the volume off the topic and the quality off the top.

So we can definitely see me higher conversion rate compared to last year. So the mechanism off the U.S. expensing campaign, what very different from last years last year. They had a very kind of the a a big thing here is you know.

Engagement with consumers, but this year. They you know Oscar its an old there might fit into different category by organizing them very well one after another adjusted I'll focus on the right out to a consumer so talking about higher conversion rates. So if you look into the topic volume so compared to last year, we might not be up huge increase.

If you'll consider the conversion rates and consider policy on the topic, it's definitely better young last year. So we kind of C. GAAP based model.

Better investment considered a pricing strategy and the assortment strategy from a lot of international brands and our aggressor.

For this kind of tanks. So we are posting a better it takes 18 plus years.

I think is your largest fair household and congrats again on the Sean I'll look like to thank you.

Thank you.

Thank you. My next question is from the line of John Troy Valuable capital. Please go ahead.

Hey, Thanks for taking my question all my questions on your sense you to guidance on the speak on D.R. Horton remarks says that the service revenues likely going to go faster I'm, just I mean order ox imagine elaborate on more detail on this all given that I guess, it's likely to come from advertising et cetera, and how.

With that in tops. Our profitability is also says I'm young galaxy pocket. It will likely continue to improve I just quickly on top of that honestly.

The recovery since March or was also mentioned now can you kind of show the latest trends that you just mentioned earlier, but as June 18th, but what are some of the categories that you see more obvious eats movie versus wouldn't you. Thank you.

Sure.

Well.

It's a driving.

Well.

You know if we pull that all flow for Q2 actually Oh formal guidance on the all of these great seem to me to say, Oh, Hey, you know the back into what we see the lottery softer demand from our.

Our kids business model will usually as many of them, putting Ocala, Florida, but up lastly on that I think today I think when you say about it was always highway apologies the category, which they may Taiwan or something that's all or a process you shouldn't too on the out of time, even though.

For the bank side an amendment.

Both in the category I think they will see the back to the Padre right now on the other kind of where that the those were like Luckily we stay very strong with all the mom nobody gets out is it like 18 now on the we see that strong girls or at least.

Well, that's a whole can tell how have they will.

I want all.

Oh, Yes, I'm just on the service revenue was that a buck of those.

Apart from that any color on the advertising or other services that are gonna be wrapping up on to Q.

Yeah.

I do not with the other service if you are in the UK, who truly see or possibly.

Some of the large drop from the one of them run about this isn't just knocking so there is some holistically. That's really moved up you know a REIT and all in Florida and lastly, we are losing my can count on leasing that the strongly ball from farm to us.

Okay, great. Thank you very much.

Okay.

Thank you.

Thank you next question.

And I mean, she apples Citigroup. Please go ahead.

Hi, I'm good evening management, Thanks for taking my questions I'm. Congrats on the solid result, I have a qualitative questions on your Brent relationship. So doing your communications, we feel global brands. The last three to four months are there any noticeable changers after committing.

On the strategy income so how they view us off the production changes technique or the marketing any shaking toward the China market with issues in home markets a more foreign brands are treating China asked the must win battle the sure I'm, So if a what kind.

<unk> operation changes that you anticipate a unique to support them.

And then on the out ahead are there any brands to actually become more cautious.

Like that the leads and U.S. trying attention. Thank you.

Okay. So a this is your lots of let me ask the first question related to the Oh that right strategy you know like change during the holds Carbonite came about and Robin can give you some hotter and trying to stop the relationship between U.S. market going to try to model. So yes.

Fourth quarter, a lot of National brand, especially you know our weather had a lot of acquired DTC had been there's got to customer visits they realize that all I cant very efficient for you know all their overall this proportion and they had been a locating why resources to lie in terms of top their unlocking a budget in terms of.

Like inventory and then comes up a lot of yard internal talent. So right. After the you know the first quarter, what we realized that I try to my already pass through or holding back and stuff and the globally. We had another outbreak you know all from what was a lot of affecting a lot of ours. That's about potter. So they are global headquarters.

And it does the headquarters in there and their country has been shutting down a lot of their high school, which increase your attention to the Chinese market. So then you know a pay more attention about how can we do more aggressive and rely on a strong partnership with us to do more all life is especially when their global has been.

Even facing the same kind of issues, while the second half off before so I think you know a in the long wrong and especially in the fashion sports and luxury category. So are we feel for thing a lot off you know a passion you know shipping from our there are a headquarters to China, and where are you know feel very comfortable and.

Confidence about you know kind of engage a better business results in the future.

Okay. So let me also second Colorado question, well below a internally do you see I mean a chance.

All these attack.

For the U.S., China related issues.

Good evening, you know I'm you know the most off the brands in China has been.

I'll say look wrap and local last one title for many years or whether they're supply to add all their brand we have in China people for many years I believe in the Indians Roxanne above is right now other relating to a black kids because that off the call bother.

There are no had been.

These are asking that maybe you talk off the shelf is up by CAD models in the power at all to Fortunately that talk qualitatively only probably didn't matter or hot halting.

Our whole picture. So are we think that everything normal and.

More importantly in China, the power and other costs are now and then of outdoor openings.

The Brad.

They will pay more thinking through the honor those so that they haven't get laid off that.

Well I think it was kind of benefit that you are in the long wall.

Thank you so much.

Thank you.

Switching to swap ourselves off of Jefferies. Please go ahead.

Hi, Good evening, Frank management for taking my question and congratulations on the thought that tough we felt I have asked some questions. My first question, it's more about the second half an hour.

I've certainly seen how should we think about outperformance in Q3, and so forth on income topic T M beside a and secondly.

Okay management also comment about our G.M.B. me my five different categories like pyro somebody that tronic and FMCG in Q1 and two movies. That's it. Thank you.

Okay, Hi, Tom Watson is a is Robyn again I'm going to all you may notice, we don't provide the whole Yahoo.

Our new lease because obviously you know there.

In the latter usually a waiting for a like for the for the.

We are all however, based on our government grant often go crazy, possibly into performance and with our family all.

No I wouldn't be girls leases you know we can take that.

Because you have to or by selling or are they thought that there is uncertainty the macro they cannot hold back because number about that.

Well, what I want to see to get the as I said, starting the first I remarked, our oh about that.

Okay they'll be harder.

Who had the also include the all or nothing bad or with the marketing there'll be who was in line.

Thank you so for the second part of that can happen or keep going to alter.

Second question into two we see that life that they see the.

Artists, who continue to build in luxury is local there and the main inside of him in a place is getting a wind power you know a factor, but wouldn't know careful about our process, it's different model whereby resolved.

Thank you.

Thank you.

Thank you.

Next question something might have seen along with credit Suisse.

Yes.

[laughter].

Hi, Thank you management, taking my questions I have a quick question on the portfolio refinement project because management has mentioned in the past that now we want to ask seats out some under earned Brent So how does any of the congrats.

On that front in the first quarter and also what well be the roughly I mean that number of friends we have in Atlanta.

For the full year or for the first I.

Also what business model, we will actually Oh for those new brands.

Thank you.

Sure a is robby.

I think to a higher gross.

Oh strategies.

Absolutely believe five and help the alcohol, although it's about the cost to achieve the high quality girls I live in all.

Well, we don't buy lately they have the offering team to evaluate the ER our pipeline.

The other brightly observing a with a topic that if you hadn't thought or are you know factors on the weight as you know we think that's kinda like all of our routine wants to do and the fact way how borrowing.

So I'd like to hop off a wholly that's why they tend to do that that's the way you don't pull out of that were for the whole year.

Indeed, and I heard before that I can happen, but now that he's got his oh by risk on that I had another since you're probably in just about the level in Q1 of them. When they are there's always a a operating profit colleagues ideally you'll have a nice adding Lisa.

Our new stores I don't know glass. Thank you.

Okay. Thank you Robert.

Thank you.

Our next question it sounds like Deutsche Bank of America Verizon.

Hi, Good evening, then then a July and robbing thanks for taking my question I have a question actually record in the the phase or the hop on development Ah. We know like this year, we actually see in the brand actually performing very well on the t. more like upgrade.

With that but I think last year. We also imagine a lot we try to on kind of exploring new platform on the cat, a which had such as like a rat and they will wrap up.

Yeah. We also know another other platforms also introducing new function off like my feeling shop, and just wondering from the about them put back they have have we actually.

Feed a lot of flight activity in terms of launching new platform for brands like saying like.

Todd or like you know quite show or like other like streaming platform or if we see and they are huge hanover involving hearing does like you know post the dynamic situation.

Pipeline, it's running again.

All three yes, or no there are more platform.

And Ah Ah Alesana, possibly getting all of you know we are that's alcohol is they are really provides a mid cap on the they made a big programs. For example, I you know really a you know I think where all the time awful for me.

This is model for example, where it needs it with a lot. We mean walk recent online offline on a go back then together until they are Ah you know.

Maybe the batteries the ways out there that I read a lot on the you know a user overlapping innovation and also we are asking oh, even apart. So I would mention munis and are we bought us.

I think the.

Oh, no not really a virus firstly on the you know for the number two the or does not mature but.

As we noted that the differences that we know exactly where we are making.

Great her pro rata, although gathers.

Today, our activity in Chile.

When you break all the platform and fast other platforms I'm going wrong.

Problem asset classes models to walk through that is Oh crap.

Oh, yes, central Robbie I, just want to have us well follow up on this question like.

We are doing different like new approach as with integrating with those new problems I, we actually well see a extension for the extension Oh, I keep calling in order to launching that he's kind off you know technology, new technology on new platform integration.

Oh My operating those all I don't think we had a lot of I've actually got it had cost and a away, but I did a lot corridor.

Our girls so the IP, having bought like though our 50% and he all that.

I see going away or we are all girls.

There are well I know, it's kinda like Oh grossly borrowing Meanwhile, on the almost flat for the whole yes.

Got it thanks.

Thank you once again for those who wish to ask for functions.

I wanted just how the south.

Yeah.

So you saw that they can.

He sees itself.

Okay.

Once again, it just sounds like.

Okay, especially something like Oh, I see capital.

Thank you. Thank you management congratulations on the [noise].

First jump quarter in this kind of really hard time.

So and that's actually just regarding the of the brands. So I, we already have a lot of international brands I believe that they're not the domestic brands are always so what happened. So HM at what demand just for you know a online E commerce, how permission and if you ever said [laughter]. So a I believe you go.

So I you know inevitably will get you to domestic markets. So regarding the massive Brent.

It's very economically speaking nerd and 2.4 mine the old different than that into national brands and Oh. So Oh, we're talking about the Mac brand development in 2020 is that going to be one that you are prime rate target. So that's the first question I'm very quick SEC.

My question is set kind you want to keep that some updates regarding that many app development people for the brand you know what you are developed there you're helping so that's got to question. Thank you.

Okay.

These robbing or.

You know back to a last year, we talked about so that's the right.

That's right with what why all of that needed to achieve our corporate.

On the into why are you know we can do a deal Brad you can almost hop in all coming from domestic Oh.

I've been with that are happening for the last where we knew there was a deeper dive right in the domestic right. For example, I didn't even more integration between the out I'll fly under the even more than a pop agenda in that whole breast and also TV boy, that's a bad I mean.

You know digital marketing services from us.

I think we accommodates it's kind of indicated to the domestic right.

Got you said without the our take rate. They don't think there is a much different.

That's cool must be for is broadly do not know Brad is though is different about Ah Ah Brad.

Hi, Brian about right that there is no different maturities for that logical that initially the wants to talk about the early you know all time highs and for what.

He's going to go so we are very complicated the article that Brad I'm more confident than last year above these had novel treatment.

Okay, how what your second question.

Hi, but he got in the Minneapolis, Yeah, Yeah, Yeah, Yeah yeah.

Yes, definitely I think he's a lot.

How about that you know we are reasonably called the affording Bothers me no way, even greater by busy salt recent Oh, yeah, because all our or was it offline otherwise limits way and also with all our school operation of data.

And that's what we called <unk> ER or you can watch for it I, we Oh my God not always have what we are probably five or for that I mean, that's good to talk with our our Ah Ah Americanizing day, Minneapolis, you know outgrew the we are very comforting.

Okay.

Also with a hobby and I see more of them more offline for what they would that mean, yeah under the walk through back to better I wish you the do a great opportunity the visitor.

Thank you.

Thank you. Thank you for the after that so my question.

Thank you.

Next question is Ah lisanti.

Yeah, that's a [noise].

Hi.

We bring mask sets. It apart. That's my question I still have who Ah I suppose one it's on the.

Yes that would give out was there.

And I didn't sell patents and 5% down over there and.

With that young yet.

South guidance is quite concerned with it I would consider the pent up demand and then if we try to reconcile that with that I'd, rather see my youngest wells for that to say I'm, just wondering Massachusetts, just some color on the sizes that was considering.

Is that we're just seeing more conservative because I would have a great since your last year and come up out key categories like small appliances fit really well or is that speaks for itself more like a category make like you know like maybe a question it seemed not pulling back to normal and that you have any comments on that how even.

Well Oh, it's unfortunate for that I noticed second question actually on the margins either because we gave that guidance all seven eight I guess it with them at that point of that at that conference call last quarter like this that I see with one thing I would have some upside on the guidance doesn't I want to my guess would actually the more we sell them.

What I said I think.

Yeah, I used to driving back to the that's out there all second half at work Oh, we don't have.

We don't have cancer or a lot harder or you know a valuation about possibly to 780% of our not that they sell green bar.

They are accustomed to achieve that Oh bar on the that's all I pad and into two or whether they'll get the 40. The power of our non-GAAP is Oh, we probably have opened in March so.

So for the core classes and all of our here Youre in order for all right outside of dry or I would say no wait wait how a hell of differences in all categories or no.

Okay power or like that or something.

All right.

Now on the also the you know a pathway to me, but normally we have achieved what we are now you know.

We've gotten into all goes I mean, especially because I'm always a lot. So they got a lot here.

Last factor goals.

On the also for the new brands that have been because I like where everybody today, even though it's had a much expanding box here or there are facing why all of them.

They are also contributing to that oh, but rather rapidly.

So last how about if I recall.

Although I've heard a confident or.

Our progress right now.

Oh, I'm, sorry, I know you may help Oh.

For the fourth but.

Yes, yes, maybe something like some comments on the sort off the apparel inventory levels I think from some tough on south all of our independently hi excess inventory.

Okay. So just wondering how I would positioning for that I can help my friends as well.

Yeah, all the industry Oh were waiting for home or was integrated.

You know, we always an assignment model.

Or you know what do you are now right.

Offline and online.

Okay, I will pass them, but yeah. It was out of integrated or does that create more often.

For them all.

Hi, how are we going to support for the type of inventory.

With all the outside of the industry.

We are what I see no or at least at Oh by the recoveries in the back.

I think feels like it for myself and.

Thank you.

Thank you next question is from either the on has something to national.

Hi management, congrats on the results and thanks for taking my question and not.

Just a question on our Q2 guidance the Guy now the Jim the expectation is slightly faster.

Then our revenue guidance does that imply is probably a sequential decline in take rates I know. It then you a little bit Korea. This and then it was just run through our assumptions behind these two numbers the gym be Guy does and then maybe gotten more quota today.

And then just a follow up on that we mentioned about live streaming services.

We just.

I understand in addition to be less Jimmy services is that going to be a take greatly enhancing or take quite diluted thank you.

Okay. So lovely temporarily to each of you know we use a you know our third 70 or rather the service yesterday I think the you know the touching it would be about the revenue guide and I mean, maybe I'll I'll put those aircraft.

Yeah. This is model, which is a lifestyle.

Deal or lower when they back so I don't think there's a impact our.

Overall the.

The know how at least our Oh.

I mean number could widen daily Halloween.

In the take rate.

While you know that's kinda like okay.

The.

Or about to.

Okay.

But what was the second question.

The second question, it sounds like streaming services or whether or not that's going to be positive or negative on out take rates in the longer run. Thank you.

Thank you regarding crushers businesses engine.

Yeah, let me make the emerging.

Sure its way for the grants were going to be your consumers of course, we all can see this trend.

It is happening.

Or the company, but we are actively participating.

In this kind of marketing activities, which there so we help them to open up the whole thing.

And run on the general Smart food service levels.

Well, we just deliver services care underground mining.

So what you are hitting the market life's couldn't be market is changing merger.

Are we are we seeing some you know trend from the care Wellstone's wooden coaster uses for example, so we are closely.

You know follow this trend I'm trying to develop the better.

This is model when we engage with the.

On the client.

No Mercury oil kills the kind of activities.

Of course targeting you know carry more service revenues a bigger more all the others will be brand in they are short to midterm.

Sure.

Okay. Thank you that was helpful. Thank you.

[noise]. Thank you.

Last question, it's something that is easily see I see.

Oh, Hi, Beacon, which on behalf of not anyway. Thanks for taking my question and congrats on the front end result.

My question is regarding to the margin trend you explained the drop in the gross profit margin due to unusually required Brent partner, how should we expect that gross profit margin going forward in the second quarter and affords a four year.

And also my second question is regarding to your cash flow or even dependent make whole what's your outlook for free cash flow in the first quarter.

How should we expect all cash flow and.

And cash position going forward, how close is economic under our high quality strategy to question. Thanks.

Okay is running about the or walk in March.

I was sitting today, you'll see the talked me mom or from the personal care products that are which no effect.

I'll leave it to our gross margin.

Currently the through I would be there is thought to be having about cross property, but is not back to the no long lateral which is normally a healthy.

Right.

In burn through June, 30%, which gives you some time to get absolutely no more lateral.

Other cash flow I kind of hazy in July four years on the layout the payment from the okay.

Partners.

Cosmo either oh, it or other reasons.

Two too so pottery barn accelerated.

Well I'm going right at the back to the normal side that you then a faster then lastly is bad.

So I could you know we are pretty awesome job at that role.

Later quarters.

There is no for the conversion of the macro.

Thanks very helpful.

Thank you, ladies and gentlemen that sensor Ginnie session and that's nice to kinda talk effect.

Thank you operator in calling on behalf of what about the management team would like to thank you all for your participation in today's call. They do have any for the other question Phil So it creates a richer stores and you probably been asked today and if they wish airlines they have they conclude the call.

Thank you Jason together.

Thank you for participating.

No.