Q4 2020 Vipshop Holdings Ltd Earnings Call
[music].
Ladies and gentlemen, and good day, everyone and welcome Covid shop Holdings, Limited's fourth quarter and full year 'twenty and 'twenty earnings Conference call at this point I would like to turn the call to Ms. Jessie fan.
Shops director of Investor Relations. Please proceed.
Thank you operator.
Hello, everyone and thank you for joining VIP shop fourth quarter, and full year, 'twenty and 'twenty earnings Conference call.
Before we begin I will read the safe Harbor statement.
During this conference call and won't be.
Forward looking statements.
The meaning of the private Securities Litigation Reform Act of 1995 that are based on our current expectations assumptions estimates and projections about the I T shop Holdings limited and its industry.
All statements other than statements of historical facts, we may make during this call are forward looking statements.
In some cases these forward looking statements can be identified by words and phrases such as anticipate believe continue estimate.
Net income.
Or are likely to may plan should well.
And that's unusual or other similar expressions.
These forward looking statements speak only as of the date hereof and are subject to change and anytime and we have no obligation to update these forward looking statements.
Joining us on today's call on Ericsson on co founder Chairman and CEO and David <unk> our CFO.
At this time I would like to turn the call over to Mr. Erickson.
Good morning, and good evening, everyone welcome and thank you for joining our fourth quarter and full year on the 10 day.
Earnings Conference call.
We finished the year old country store.
Strong financial and operational results in the fourth quarter.
During the quarter, our total <unk> increased by 75 per cent year over year to 59 from 3 billion from 47 6 billion and the same period last year.
Continuing the trend of accelerated growth specifically, Jim V for our co apparel related categories increase even after by 28% year over year driven by the low pass closed in our numbers coaxial customers, which increased.
And by 37% year over year in the fourth quarter.
Our new customers grew faster than total active customers during the quarter.
<unk>, that's our differentiated offering.
Accumulative by our professional and merchandising team.
Coming more attractive to customers, who do not shopped with us before.
We believe these strong customer acquisition trends.
Driven by the superior value and the convenience of shopping experience, we offer our customers and.
<unk> to the market place political.
The reason, we are able to see continued low basket growth momentum in our key operational and financial metrics.
Due to our folks on and expertise in the discount retail industry.
Over the decade experience in the inventory clearance industry in China and have deep expertise in dispute we offer superior value to consumers looking for abuse.
In apparel related categories, while at the same time, helping Glenn achieved faster inventory turns over and close their business and reach new customer segments.
Looking into 'twenty, 'twenty, one and beyond and we are deeply devoted to continue to execute on our merchandising strategy aiming to acquire more brands, while increasing our share and the business of our existing brand partners, which will enable.
And to offer more.
Diversified desirable product to our customers and attract new customers.
We will continue to enhance our big data capabilities and.
The tech knowledge Knowhow in order to serve.
A broader customer base, enabling customers from different age growth demographic and the income levels to shop with us and.
And enjoying our product offering.
And with pumps, let me hand over the call to our CFO very sweet so that he may discuss our strategy in more detail and go over our operational and financial results.
And that's there.
Hello, everyone.
We are glad to have delivered another quarter with strong financial results.
In the fourth quarter of 2020, we delivered accelerated top line growth driven by the strong 37% year over year growth.
And number of active customers and importantly, our non-GAAP net income such political VIP shop shareholders.
Also demonstrated robust growth in the quarter.
Increasing by 33% year over year.
Two six from.
One 9 billion in the prior year period.
Personally.
Trailing 12 months ended December 31, and 2020.
<unk> generated robust growth slash noble.
Robust free.
Net cash inflow of <unk>.
$8 3 billion.
<unk> increased significantly from $2 5 billion in the prior year period.
We are dedicated to offering our customers.
Variable and Paris.
And our 15th pump on a day.
Revenue basis.
While providing them with superior logistics services and.
Post sales customer service has.
As compared to marketplace platforms.
And as a result.
Our conversion rate in the fourth quarter of 2020 increased by 10% from the same period and.
On the prior year.
Moving forward, we will continue to income.
Our product assortment and balance our topline growth and profitability.
We are confident that the healthy customer acquisition and retention.
We will continue to drive our growth and the future.
By continuously awesome value.
For our customers and providing unparalleled inventory management solutions to our suppliers.
We will ultimately generate sustainable long term value for all of our shareholders.
Now moving on to our quarterly financial highlights.
Before I get started.
I would like to clarify that all the financial numbers presented today are in.
And then maybe amounts and.
And our the percentage changes refer to year over year.
And otherwise noted.
Total net revenue for the fourth quarter of 2020 increased by 22% year over year to $35 8 billion.
From 2009 exclusive in the prior year period, primarily driven by the growth and the number of total active customers.
Gross profit for the fourth quarter of tons and tons increased by 12, 1% year over year, two and seven 8 billion.
From seven zero period, and the prior year period.
Gross margin for the fourth quarter of 2020 was 21, 9%.
<unk> was 23, 9% in the prior year period.
Total operating expenses for the fourth quarter and 120.
Slide four period.
And that's compared with $5 four per unit in the prior year period.
As a percentage of the total net revenue.
Total operating expenses and for the fourth quarter of tons and tons and decreased.
15, 2% from 18, 3% in the prior year period.
Fulfillment expenses and for the fourth quarter of tons and tons were two.
$2 2 billion as compared with $2 1 billion in the prior year period.
As a percentage of total net revenue fulfillment expenses for the fourth quarter of cash.
And <unk> decreased to six 1% from seven zero percent in the prior year period.
Primarily attributable to the change in fulfillment logistic arrangement.
Marketing expenses and for the fourth quarter of 2000 and funded over $1 7 billion.
And that's compared with $944 1 million and the prior year period.
As a percentage of the total net revenue.
Marketing expenses for the fourth quarter of tons and tons of ore.
Four 8%.
With three 2% in the prior year period.
Primarily attributable to increased investment and customer acquisition.
Technology and content expenses for the fourth quarter of 2020.
Increased to $272 4 million from $362 2 million in the prior year period.
As a percentage of the total net revenue technology and content expenses and for the fourth quarter and plenty decreased to zero eight.
8% from one 2% in the prior year period.
General and administrative expenses.
For the fourth quarter of 2020.
And $1 3 billion.
As compared with $1 7 billion in the prior year period.
And as a percentage of total net revenue general and.
<unk> expenses for the fourth quarter of 2020 decreased to three 5% from.
And five 9% in the prior year period.
Our net on.
Our net income from operations for the fourth quarter of 2020 increased by 45, 9% year over year.
$2 6 billion from $1 8 billion.
And the prior year period operating margin for the fourth quarter of 2020 increased between seven 2% from $6 one per cent in the prior year period.
Non-GAAP income from operations.
Which excluded share based compensation expenses and amortization of intangible assets, resulting from business acquisitions increased by 32% year over year.
$2 8 billion from two 2 billion in the prior year period.
Non-GAAP operating income margin for the fourth quarter of 2000 and increased seven 9% from.
737, 4%.
Prior year period.
Our net income attributable to VIP shops to shareholders.
And fourth quarter of tons and tons of increased by 67, 7% year over year to $2 4 billion from $1 5 billion in.
And the prior year period.
Net margin attributable to VIP and staff.
Shareholders before the fourth quarter of 2020 increased six 8% from five zero percent and.
The prior year period.
Net income attributable to <unk> stock shareholders per diluted EPS for the fourth quarter from you.
The increase of two three.
One RMB from two non core RMB and.
And the prior year period.
Non-GAAP net income attributable to VIP and starts to shareholders for the fourth quarter of 120.
Which excluded share based compensation expenses tax and fact subsurface coming and those expenses.
Chairman class and investment and.
Amortization of intangible assets, resulting from business acquisitions and tax effect of amortization of intangible assets, resulting from business activity.
Thank you Susan.
The investment team and the value.
Eastern of your investment.
Food and dividend tax.
And in fact of investment and value.
And the investments.
Food and dividend and.
Sure of loss and investment.
Sure.
And that are accounted for as equity method you have key income.
Pleased by and 33, 4% year over year to two.
Two 6 billion from $1 9 billion.
In the prior year period.
Non-GAAP net margin attributable with Ya.
Stock shareholders for the fourth quarter of tons and tons.
Increased between seven 2% from six 6% in the prior year period.
Non-GAAP net income attributable to VIP shops to shareholders per diluted EPS.
Fourth quarter tons and tons, an increase of two 370 RMB from 284 RMB in the prior year period.
As of December 31, 2020.
And our company had cash and cash equivalents and risk.
<unk> cash.
12, 8 billion and short term and the investment of $7 3 billion.
For the fourth quarter of 2020 net.
Net cash from operating activities.
Seven.
Great.
Looking at our business outlook for the first quarter of punting.
On the one.
We expect our total net revenue to be between $27 2 billion RMB and so on.
On the $8 2 billion RMB, representing a year over year growth rate.
Approximately 45 per cent.
<unk> 50 per cent.
These forecasts reflect our current and <unk>.
Illinois review on.
And the market and operational condition.
And is subject to change.
With that.
I'd now like to open the call to Q&A.
Operator.
Ladies and gentlemen, and we will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone and wait.
Free them to be announced if you wish to cancel your request. Please press the pound or hach team.
To give more people the opportunity to ask question. Please keep yourselves and no more than one question at a time and you May touch Star. One again, if you have a follow up question.
Q.
Once again to ask a question it is star and the number one on your telephone keypad.
Okay.
Your first question comes from the line of Eddy Wang of Morgan Stanley. Please ask your question.
Hi, Central and.
David It's all on Jesse.
Good evening, and congrats and congratulations on the great results.
My question on just on the user growth, we have seen very strong user growth.
Just a first and fourth quarter actually our salary.
And sort of quarter so.
My question is that except for the assets you have made in terms of the cuts amongst physicians and the third quarter and a new initiative you have made in the fourth quarter can you give us and.
Examples, especially I think he is on the upper on partner sites.
As you mentioned that on the technology side. So that's my question on the user growth user growth. Thank you.
Thank you Eddie.
And so how do you think on tissue and 119 associates and material.
And then <unk> got pipe and tube.
And our Michigan and she will cut.
And that's the leadership here through innovation machine and so.
And what could that function.
And then there should that work and doing.
Yeah.
T shirt on that one.
And thank you so that's on.
Gotcha.
Sure.
Countries and Chipotle.
Nuclear women teachers, and school shooting and queues and case Capex pharma and matches the Q3, Capex and pulled from among women and steal from growth on a book, which hit on <unk>.
Ill put into each hour alcohol and you've got some TV drama and high yield.
And it will become the zoom zoom can book into Geos to meet them.
<unk> hundred and <unk>.
And each of those are Ya.
This is supposed to smooth some of it could be it concludes and be younger and more weak.
And the sensitivity of branches and all of the knee.
The total knee cheat channel.
And you guys.
And the attention of our Mohawk, which is a high dose of <unk> and <unk>.
The TV cycle.
On to Johnson, but.
Chip.
And then hopefully either juices and <unk>.
The multi way and the bulk forewoman shortages.
Good day, and boosting the Koko pub.
Boiler, but switching on <unk> and should not cause switch and now this year.
As I talked on the total number.
With me at that time.
On me and I'm going to go to book, the <unk> 14, and some in two assortment Johnson and Johnson.
How high you fall behind on <unk>.
The gentleman from feed.
And the key statistics yet.
Sue woman.
And last on volume.
We are still quite high even though on the TC from yet number one and store that couldn't do on the teco piece and all of this on 100 now.
And welcome to the zone.
And what we've done with our cash.
On the currency and she says.
Chief on me and till one Jonathan.
And.
And the bulk of <unk> companies.
70 <unk>.
And then bonds and loans.
And the bundle equivalents.
And just to jump in on.
And you just tissue.
And here on your question.
And the acquisition since last year's third quarter.
And to increase our marketing and sales.
New customers and retain existing customers. So we use various and.
And acquisition channels, including digital advertising on TV show and and.
And we added and sharing endorsement mobile and pre installation into loans.
And those funds in terms of marketing expenses and the pace at which we went on in 14 and very similar to what we have done and the third.
And in previous reported and we believe that there is lots of opportunity.
And our clients and customers in this market, particularly as we've readjusted to focus on.
Current retail so we will continue to invest in customer acquisition, but we used the last time that and model and evaluate and efficiency and effectiveness.
And where we're spending our marketing on it so we will continue to and.
That disciplined spending on.
On top of marketing we also.
And more focused on merchandising offering our customers really get products and deep discounts on a daily basis and.
And on the operational side and the technology side.
Also investing can and.
The conversion rate and improve the efficiency at which customers can find products that they like and suitable to their tastes and on our platform. So on.
And we believe there is a flywheel effect and everything that we're doing and as long as are the price of the business impact and will continue to improve on each element and we will continue to acquire customers that will contribute to our non turnkey book.
Okay.
Your next question comes from the line of Alicia Yap Citigroup free cash to your question.
Hi, good evening.
Shandong David Jesse Thanks for taking my questions and congratulations on the strong quarter.
My question is actually related to a later day.
The month over month, the <unk> trend and also on first quarter guidance on.
And so did you actually see from slowdown in December after the very strong things on promotion and as we go into first quarter.
Would you describe the situation does share given the state and the city in China for apps, and so did that actually stimulate more spending budget on the clothing or did that actually have.
Marketing spend.
Spending.
Selling and keeping people on that.
And traveling that much and not more.
And you've allocated as before.
Just wondering how is this.
Chinese.
Moving things and all.
Encouragement to stay on the city changers, and pent up that day.
No.
And these differences that you've seen the share of Russia, and the previous year and.
And colors in terms of direction that you think this strong first quarter guidance carried through to the rest of it yes. Thank you.
Thank you Alicia syndrome, and Lisa and suggest showroom and excellent people.
You can talk all day, and I think youre seeing with them and she can do.
And you guys are sharing.
Absolutely not and his journey with our EBITDA. She also essentially on plan and really matters and easy.
And the artists and the treaty that that gap is that non before noon that day.
And the other heaters and younger tissue and that that.
Before Nishu from South Asia project from <unk>.
Okay and then.
And now Glenn touched on data tissue from quickie on so quickly.
You should handle on them.
And just.
And with them and in China and.
Our union and fearful of and Utah.
And without getting into the factory.
Hmm.
And women.
Just the truth.
And some of lung chemo and Mckinsey and steel from the tailwind in the past the Muskogee power the tongue and cheek seasonal.
And mobile EMEA, Canada, and QC side tremendous agenda.
And so the Tiger.
And <unk>.
Thanks, and then just the U S.
And that tends to lead to essentially bringing the total ankle system alone and so she somebody youre, suggesting.
Does that tend to leave and you're going to E for the ones that some of you have somebody else should do so.
And in Belgium.
Starting with our U S <unk>.
<unk> and the twins here, she is who can walk into non <unk>.
You want me and one of those.
Each store, okay, so deeply telcos or <unk> on board Institute and equally seasonal and conduct the <unk>.
And the public.
17th soil begins on you've got Ya.
So it's hard to do a talented channel C. One.
And that you should say.
Our Union Houston.
We can substitute in Daytona Beach as targets is that each and she yet.
Total share Aquila and ensure the Taiwan and Korea.
And then we took along cultural confounding so ya.
And really excuses.
And yet I see depends on the on which you will be accounting for the <unk> and <unk>.
We can create and buy even for them and that recent value for them, what we're doing which is on our union CHL.
He was fee income.
And if we touch.
Okay.
Alicia on your question regarding the trend that we've seen fourth quarter is always a peak season for e-commerce, particularly for us and we are.
On a predominantly apparel retailer and we have and things like that.
And the promotional event and our anniversary sales event on December eight both of which we saw solid results and trend.
Both assets into January.
<unk> to December January did decelerate a little bit.
And due to the weather change as we step out of winter.
When you look at January into February and he mentioned a lot of people, putting their respective cities and not going back to their hometown. During this Chinese new year and we are.
We're seeing better business results, and we were original and anticipating particularly as compared to previous full year and people were very much and.
Spending their time.
Hamlin Saturday shopping and thank you.
And <unk>.
Based on results, we believe that should be the industry and by trend.
<unk> ahead.
And with that the structural changes and people shopping more online and more people learning to shop online and average resulted from the COVID-19 pandemic will continue into 2021 and beyond and therefore continue to believe that there is a lot of opportunities.
<unk> growth and gained customers and.
And the rest of day.
From a tier.
And into 'twenty, and 'twenty, one and beyond.
Your next question comes from from the line of Ronald Cheng of Goldman Sachs. Please ask your question.
Thank you think crescendo, and David and and Jesse I think my question and kind of falling on the growth and the apparel market basically we see very strong growth and you've said, you'll GMB growth for apparel and particular was 28%. It seems like this is a lot faster than the overall apparel market and and.
And therefore.
Are we kind of benefiting from the increased supply of discounts and apparel over the past say.
And 111 year or two years to get to kind of day that buildup of inventory.
Kris the mantra of grant and clearing that inventory and so how are we seeing that and I'm.
Market share today and discount apparel.
And as this kind of inventory cycle, maybe lapsed Nathan this year, how do we see or how do we tap into the ongoing growth of the fish, let's say maybe private label.
And the drivers thank you.
Thank you onward, and I think.
Thank you Josh and remotely.
Yes.
And I don't know what kind of physical flow, Jonathan and we can pay per DAU that happens after that and.
And fifth third.
And we've done that.
And I think efficiently and each anyway, and especially here and sounds like football on that and as soon as and I think.
And if you'll call that you'll see going on there.
It seems on women can you hear Ya.
And then <unk>.
And let's see.
And I can do it on <unk>.
Sure.
So from that.
And Michigan, and so kind of a $40 million.
Sure sure.
And how much does that go on timing and likelihood of force cocoa Manhattan and I think.
But the momentum has come down since the women and children can you jumped from opinions and women's handbag zone.
It includes some dysfunction and the momentum with high school and sugar.
And again, we're trying to find and retention.
Two questions each income intention looking book and <unk>, which one could be that since have more suite <unk>, Inc. And thank you.
Two for you on book.
Special woman should be weighted either for you and when the benching and Ohio consuming other <unk> yoga pants and pieces and payer.
It will be chunky and it won't be.
Total.
Yes.
And some key and compete.
So that's on the final pieces and we'll be it on holiday.
And total system and future can cover them and price.
And merchant.
Peter just on <unk>. It was something that she has just.
And the blender and clean.
She is a woman Taiwan and whaler.
Okay.
<unk> intervention on the she wanted to sue on the assumed for the cash and what we see coming and the me too type on our book.
And with subject to the future.
And I found out and we've been in the discount retail business for over a decade, and there has not been and shortage.
And I've seen and the market of course and then.
And if it results.
And have a tailwind on the supply side.
And I think apparel is a very non internet category and there are thousands and apparel brands and they're constantly making loans.
So from a product and launching new products. So there will always be inventory and asset inventory and the apparel market as income.
Consequent to predict exactly comments to make for each at key.
And so that's on.
Existing and maintain market.
On top of that we're also at more actively and that.
And looking to maintain and be absolutely shocked product and product lifetime suppliers, and especially the top of the client.
And I'm, making.
Designing and especially especially for that and the IC shop platform and.
So far by the contribution from R&D and double digit and then.
Thank you and we will continue to collaborate with more hostile climate and increase the contribution from nuclear and we actually shop product.
Products will ensure that we will always have declined and you can find that attractive to us.
On that date and.
Going forward, we will continue to look into enhancing our merchandise and chemotherapy on both and mainframe VIP shop from.
Well as Dee.
Existing.
Market, we wanted to bring the best products to our customers as well as share nor suppliers and hospitality assets.
Your next question comes from the line of Thomas Chong of Jefferies. Please ask your question.
Okay.
Yeah.
Thanks management and novel, taking my questions can you comment about the trend and marketing expenses.
As well as the margin outlook for this year.
Thank you.
Thank you Thomas.
And on tonnage.
Good day and night.
And so I shouldn't say ya.
Got Ya.
The women and children.
And it could come sooner.
And I believe on the system coffee and thoughtful.
She is a woman.
And the whole on the Chesapeake turnkey yoga yoga apparel and shoes for women and we will Miss.
The digital and Woodman COO and manageable.
And either.
And my view on like on certain types of systems.
And that I think that you can pursue a union.
And they got unions, IPR settlement, social and regionally systems and other proxy and building one on one side.
And.
The <unk> ICL lunch and the board.
The <unk> is to be able to begin and whatnot.
So you're on the on the solid IV potentially one day.
<unk> and distribution with Mizuho bank and beyond that Suzanne comes on from here and to make the seemingly from Ya when we're going to be slow.
<unk> tightened up on there and the tissue machine that force the timber and the.
And quite.
Alright, and Thomas on your question on user growth and.
And the marketing expenses as well as Covid.
<unk> margin outlook in 2021 and beyond.
And as we continue to grow and more customers and customers and accelerating customer growth.
And even a little more on marketing into the second half of 2020, and we believe that trend and should be similar in 'twenty and 'twenty, one and beyond however that is given that they're in and.
Approximately 300 million potential customers that would be interested and discount retail and could become the ERP shop customers and from that perspective, we believe that there's still a lot of opportunity and the market and where.
We're still very small compared to the potential opportunity and this market share growth that will be on a top priority. However, as we have always been very focused on the balance between on top line growth as well as on our margin profile and our bottom line will continue to be very solid and I did mentioned previously we are maintaining our non-GAAP.
Net margin at a mid single digit range, and we will try to growth top line and as fast as possible on top of that and I think.
Going forward, we will continue to balance the two.
SaaS and grow user growth healthy users.
Contributes on long term growth sustainable.
Okay.
Your next question comes from the line of choice and <unk> of Bank of America. Please ask your question.
Shen Zhong, Okay, though Jackie and Johan.
Sure.
Congrats on that day.
Yes.
And what they need Goldman Kingfisher share you finally got the Alf X trade.
And then.
And that won't quite kind of flattish and Egypt, and Libya and play a combat application and totally youll glasses and the headwinds.
Oh allocation, Saudi and hold on accident and King.
Sure.
Oil and she does.
Your pilot hiring and.
On the woman Zhang and holiday.
<unk> balance.
And on Whatsapp I get nervous about what he played out from.
And that going forward.
Just on the day and fashion, So I'd say, it's on sale.
On the I E.
Our net junkie, you'll note that the phone is that hopefully I shouldn't you go from.
Shouldn't allow potential client or a bad thing.
And what is your cash.
Total debt.
And that I think.
And while maintenance hangar shake growth.
Gross driver.
Yeah, I wish her fight and my question.
Basically I'm asking for the strategic focus for <unk> for the management.
Management him on for this year back to 2019. The company has been focused on our merchandising strategy and also on efficiency improvement and for the last year a fair price.
It's worth on that.
And recover from the Covid.
Just wanted to know for this year, what's going on.
And your driver or any new initiatives, we should expect thank you.
Number one and then Houston that argument on that so sunlight and <unk>.
Suzanne comes on <unk> is still three children on the Tim from the Council.
And there will be some things towards Q2.
Just a little and then turned up.
It is.
And <unk>.
And it seems to slow down on the tonne, Chile, and Josh sulfate Doom and gloom.
Hardly a percentage to digital go to downtown Puds as Phil Creek had net.
And then go through and really slow and then chooses conjecture and.
<unk> and tissue from in store makes it a thumbs up from there.
Sure Luke.
<unk>.
It sounds from either wouldn't you saw that used to and <unk>.
Each legal and given the kingdom the assortment and then we see Ya.
So once again, we saw them.
Turns out and somebody on the streets of free more sell in the July 17.
And we do see some from.
And Jim.
And I'm curious looking into 2021 and beyond and we and.
And we'll continue to pursue and healthy and fast growth by health and growth, meaning that we weren't client high quality customers.
And who will contribute to our long term growth and profitability and labor.
And <unk>.
And our current size.
A lot of opportunity and potential to continue to growth and at the same timely and we're continuing to maintain and sustainable housing that margin profile as we continue to growth that on the operating leverage will come out and even more and.
Improved our profitability and growth.
That will continue to be on top.
And I already into 'twenty and 'twenty one.
Yeah.
Yeah.
Oh.
Your next question comes from the line of Natalie <unk> of Haiphong International things off with your question.
Hi, suggestions on sales on that Jackie just only the chiller and can check on from there.
And.
Which are the ones you just on 1000 switches and <unk> has available cash is more than one day.
One of the judge.
And how you guys are on today that you did.
And they are going to happen to actually from one of the key claw.
I will translate myself thanks.
For taking my question and congratulations on a very solid.
Michelle.
My question is regarding the offline contribution just wondering how much of that you won't be on the GAAP net competition comes from offline and the fourth quarter and what's management's expectation for 2000 and touching one on Oh.
And maybe get it all.
Hum mid to longer term.
And you've got that.
Okay.
We'll then need to change and <unk> Neo <unk>.
On a like number of women think good channel and we didn't make it sounds like there's some neat.
And much to kind of zero and trench and the multi window Amelia and some change.
And some day Ot by job growth.
And by each other down from here.
And the height weekly and <unk>.
And.
And the tension that certain key till Keybanc, Josh Hitachi and so.
Women, the GM, even attempt and Peggy bench, and so he and Shanghai and mobile <unk> change on cash on the Icos <unk> Memorial day. When it was just the woman seeking Zoe commandment and Molina and associated with the command more synergies.
The mobile and they're going to leak detection and keep with the mobile media, which should put on the 10th.
Young people.
And you can go to cash.
And from a bulk whole and hidden value that sensor and and Mercedes zone.
Those changes have been and about what we've done the adjusted Cleveland and.
And book, where machines are Ya condo chassis share with intuitive.
And eco minded like assembly and total <unk> seasonal women cheeses, and we make good.
Sure.
Two quick pension and what we said that what types of questions.
And I think you said something on that.
On your question regarding offline strategy on the operating side, we have three different businesses, one attention on outlets and <unk>.
<unk> is around 5% contribution and this business is very profitable and we will continue to grow that on a healthy pace.
And our own once the offerings, we have to model and the IP shocks and the other income.
And there are quite different in terms of pricing and target one of these businesses and we're still slightly loss, making while the other is almost breakeven.
And the total at the on the contribution of these two <unk> offline stores is still quite small per day slightly over 1% contribution and we will continue to explore how to grow these offline stores.
And I explored and online offer on strategy and Hudson movement and Macy's.
And fourth more digitized.
But all of these stores also.
And the current retail.
Sure, we are serving our core customers and core suppliers.
Our offline channel and as well and.
And we're exploring for new ways, and creating value for our members and customers.
Currently our offerings and towards the upper and more actively exploring wechat group and how to utilize the traffic and and the customers potentially.
And by more willing and wechat ecosystem currently around a third of the GM and contribution of VIP shop, with Yadkin Mac and coming from the more digitized revenue such as Wechat group and we will continue to explore how to bring up the profitability and grow these businesses and warehouse lending going forward.
Your next question comes from the line of Jerry Liu of UBS. Please ask your question.
And <unk>.
And Oh.
Without going okay.
You don't think.
Shifting.
And at Wassa chilling and charges.
And I'll mention side, let's say for me and that's for sure.
So your life book.
Brenda.
Hi, Neil.
Youll kind all from.
On your kind of per Slovenia and shopping are you waiting until we are sure wishing you. Good luck on the new change.
And sorry wishing to EBITDA.
And when that should put you at all and taking some share your pronunciation of chicken.
The whole hour by Asia.
Thanks. My question is related to the earlier comments about live streaming and short videos.
Video I was just wondering.
And purpose here is to use these channels as a way to acquire customers.
Or are we seeing some opportunities to maybe operate through some of these streaming and video platforms, especially when we look at wechat.
And operating on with you for a while but.
And maybe there are some new opportunities.
And in recent times thanks.
Does it need to assess a woman can balance.
He has assumed that support local clients and peanuts.
And that relationship to finance and bulk volume.
The GAAP project summit.
So on a woman from in that channel since a lot and sources of volume and so that could be up to us which is the pump and the vehicle and really how you balance the millimeter wave forms that they ship on behalf of what counsel and my thought total sysco.
So volume coupon and the needle and but somebody.
And how that similar type of question.
And <unk> Fujitsu standard support the Mississippi, and the <unk> and simply wanted day Michael on that.
<unk> on the subordinate and <unk>, which is as we do that the insurance pension and what memorial day.
And we.
And as of January Baidu and competitive.
And on mobile.
And we hope it out on the APB.
And so we're pleased to try and move.
And so if you put <unk> on that.
And what we do.
Well I just don't.
As reported at <unk>.
And that she statistically the Simpson and mobile and <unk>.
And this view.
Thank you Jerry on your question regarding <unk> and short videos.
And we do believe that I'd like gene and half and short video apps, and where a lot of our customers and spending a lot of time and we are at.
Alright, and half from actively investing and explained customer acquisition method and the dealer channel.
However, we do think that day.
Our results and not up to expectations, and therefore, and we still have more room to improve how we're targeting the content as well and how we are acquiring customers.
And your formats on.
And our own VIP shop, App, and the 19 customers would be 100 and Oh however.
However for example, like and are there any meaningful it about half of free customers would come from our App and afterwards.
And the other half with mid teen and shopping with us and maybe.
And going forward.
And any thoughts.
And we will continue to work with these areas.
Channel in order to improve the efficiency and we will.
We'll continue to look at ways to best investing into customer acquisition and <unk>.
I assume and short video apps.
Your next question comes from the line of sight on Zhang of TICC. Please ask your question.
Yeah Ah patients on data and Jefferies and for taking my question congratulation on very robust readout.
Follow up question actions, I mentioned and that she shop products all on.
And the VIP shop product on a special edition will impact our business I'll tell ya.
Have better price or better profitability or.
The special edition and helped us to gain more consumers and elaboration on that would be very helpful. And do you have any target as far as the Florida VIP shop product. Thanks.
Thank you Victor and I don't think.
And so she won't flip and even critical missions and remember.
And it sounds like going on in Houston.
And now that needs to come from that.
And one for cash at all and even gone how partnership element and showplace separate from nickel.
And then from a data system.
And they can see this and counseling.
Telescopes and Chipotle and.
Remember women's systems and in total on the <unk> and <unk> and I don't know at least.
Mills, where you also saw it took on this on people.
And so going into the mall and the pension assumptions on programs with <unk>, one and <unk>.
Hi, Archie and that just.
The chart for free.
Machine capital call and low when it comes to we look with decision and one year free value from.
EMEA Saddam Felicia.
On the funnel what she wants to jump if you could give us on them.
And so thats the other thing.
As a male demo women and children.
On the call that somewhat.
Couldn't go to see helping to tons sheet Golar igloo I appreciate could get assumption.
Okay sessions on Paypal regarding your question on made for VIP product and how it's different.
And how it will impact VIP shop, as a platform that take rate or the gross margin for the make buy VIP shop product, but actually the theme on other product for a given brands and however, when we go work with them and make for the IP shop products, we asked for and more value, meaning the price of that they offer.
And similar to other products that they are giving us on a concern and basis and on the.
And then there are natural price product.
And we also give additional traffic support for the nuclear and the additional products and these products and more differentiated and share with us and better conversion rates from our customers as well as help us acquire new customers because these products could only be found.
And platform and going forward, and we will continuously and looking to ways to back into the midpoint of the etsy shop from us.
Yeah.
Your next question comes from the line of Veronica Zhang of China Renaissance. Please ask your question.
I guess a shameful low.
And jetblue and how well the ones and this requires you to take on archway and like to that your cash and plenty of comments about it you can say on what edge and the Arps and foundry on excellent and we don't Volker and I was just Sunday day.
Because I'm on my you know on my phone and your ideal cash and also it's also presents Michelle Ma and.
Hello, and somebody else and they all kind of belts and yet to cancer triage approach on how they go on tour and see the odd for share side presents and Sean and I forget the truth on the on Alcon.
And James will catch ups and had to apply kind of that's obviously from Kai I hope you're safe and take a careful how far that took on Italian on they can't wait.
And thank God.
Well. Thanks for taking my question. My question was regarding the optimal well I remember demand commence and mentioned that the artful from home and Richard and.
Is relatively low and so could you. Please provide us some color about the trained up I feel from long answers withdrawing react and shop for Ya.
The second quarter and watching it and check average from their spending on our pinpoint and say that's it.
They have going as far more than half yet.
And how should we look at the OXXO going forward catch it brings and you certainly thank you.
Women.
70, <unk> hundred <unk> with how the opposite that Damian EBIT and the number that.
John you're absolutely keeping I.
And I believe so used to a bulk of and they could keep the competencies of the account value maintenance fee to the hapi zone.
So just on the woman and she is alcohol.
<unk> momentum Q2 causes.
On the army and premium mass cheapest on the obstacle that FEMA and reward me Cotwo mandates and.
Bob I mean, the throughput, Belgium, Ireland and it gives a woman alright.
You didn't give a thought on the thinkers and outlook.
And the key fashion.
And so that's it from simple I'll Cook on Sheila.
<unk> slightly up, especially on the tongue in cheek.
Again feel free.
And how do you think upbeat with season, she system and see what and hydro for Ya <unk>.
The more we like quite Michael.
And as a simple.
And also for new customers easily double from year, two from our historical numbers and.
And the customers that we've acquired in the past few quarters and continue to see solid vacation and.
And for growth on a quarterly basis.
And are quite confident about that and long term sustainability and healthy contributions from these newer customers and the reason that <unk> has seen decline year over years, and 2000 and 'twenty versus 2019 is because we're acquiring a lot more new customers and onboard customers.
Have not shopped with us for a while and therefore on.
Adding them to their mix the IPO for these customers and usually millwork dragging down the average ARPA and for the total customer pool.
Additionally, we've also made changes to the free shipping method and nowhere else.
And the free shipping on time.
On to 88 to 88, RMB and which has impacted the short term ARPA on some of our Super VIP as well as customers.
Customers.
And so we're still getting used to.
Neil or adjustments, there and shopping.
Shopping more frequently and <unk>.
Not enough to cover the slight decrease in net ticket side.
From historical trends, we're confident that all.
Issues will continue to go away as the constant constant and becomes more apples to apples and these high quality, new customers and if I'm right in the future as well as existing super of the actions and all customers are already buying more frequently and so.
We were on.
Continue to see better trends into 2000 and women beyond on the occupancy.
Okay.
Your last question comes from the line of management.
Gary Please ask your question.
Great. Thank you for your times a day.
And what is that your other revenues have been growing a bit faster than the product revenues and presented us with advertising revenue. So.
Sure.
Assume that that type of relationship that we have with brands is helping them put more advertising on that platform and <unk>.
And kind of user growth momentum continues should we continue to see and kind of other revenues grow at a faster clip than potash.
The word and threat.
Thank you.
Other revenue represents represents our offline revenue from from.
Top line revenue and.
Tightening on revenues and.
Our offline.
Yeah.
You can only represents a very small portion of total revenue run rate.
So it doesn't it doesn't change that much and.
Right.
Yes, so on the other revenues line and grew slightly faster.
And I will give the breakdown in the fourth quarter and third party marketplace contribution is around 14% compared to last year that came down a little bit but on the advertising is growing slightly faster and this is due to us and being more focused on the primary business and.
And I was focused in the marketplace and therefore the commission rate has decreased as contribution on CMV from third parties.
Platform and deep.
<unk> slightly to around 5% and fourth quarter.
The increase is primarily due to contribution actually from Shan Shan outlets and.
And last year's fourth quarter, and owning contributed to around 7% on other revenue in the fourth quarter of this year and on outlets contributed to around 13% per quarter.
And then.
Yes.
And so there are no further questions I will now hand, the call back to the management for the closing remarks.
Okay.
So.
Thank you for taking the time to join Us and.
And we look forward to speaking with you next quarter.
Yes.
Thank you.
And thank you.
Yes.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and and now all disconnect.
Yes.
And.
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And.
[music].
And then.
[music].
[music].
[music].
Ladies and gentlemen, and good day, everyone and welcome to Vet Shop Holdings Ltd, 's fourth quarter and full year 'twenty and 'twenty earnings Conference call at this point I would like to turn the call to Ms. Jessie fan.
Shops director of Investor Relations. Please proceed.
Thank you operator, Hello, everyone and thank you for joining VIP shops fourth quarter and full year 2020 earnings conference call.
Before we begin I will read the safe Harbor statements.
During this conference call and we will make forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 that are based on our current expectations assumptions estimates and projections about VIP shop Holdings limited and its industry.
All statements other than statements of historical facts, we may make during this call on forward looking statements in some cases. These forward looking statements can be identified by words or phrases such as anticipate believe continue estimate expect intend is.
Or are likely to may plan should well aim potential or other similar expressions.
These forward looking statements speak only as of the date hereof and are subject to change at anytime and we have no obligation to update these forward looking statements.
Joining us on today's call on Ericsson on co founder Chairman and CEO and David <unk> our CFO.
At this time I would like to turn the call over to Mr. Erickson.
Good morning, and and good evening, everyone welcome and thank you for joining our fourth quarter and full year 210 day earnings Conference call.
We finished the year on the <unk> with strong financial and operational results in the fourth quarter.
During the quarter, our total <unk> increased by 25% year over year to 59 from 3 billion from 47 6 billion in the same period last year.
And in the trend.
Accelerated growth.
Typically <unk> for our co apparel related categories increase even after by 28% year over year, driven by the low pass closed in our numbers.
New customers, which increased by 37% year over year in the fourth quarter.
Our new customers grew faster than total active customer during the quarter.
<unk> net our depreciates offering.
Procured by our professional merchandising team, becoming more attractive to customers, who did not shopped with us before.
We believe these strong customer acquisition trends.
Driven by the superior value and the convenient shopping experiences, we offer our customers and compared to the marketplace pitfall.
The reason, we are able to see continued robust growth momentum in our key operational and financial metrics.
And due to our focus on and expertise in the discount retail industry.
We have over the decade experience in the inventory clearance industry, and China and have deep expertise in dispute we offer a superior value.
Value to consumers looking for views particular in apparel related categories.
At the same time, helping brands achieved prospect inventory and OLED grows their business and reach new customer segments.
Looking into 2021 and beyond and we are deeply devoted to continue to execute on our merchandising strategy aiming to acquire more top brand, while increasing our share and the business of our existing brand partners, which will enable us.
And to offer more dive.
Diversified desirable product to our customers and attract new customers.
In addition, we will continue to enhance our big data capabilities and the tech knowledge Knowhow in order to serve our book.
Total customer base, enabling customers from different age growth there.
Graphic and the income levels to shop, with us and enjoy our product offering.
And with pumps and me.
And OLED and core to our CFO, David free so that he may discuss our strategy in more detail and go over our operational and financial results.
And that's there and.
Hello, everyone.
And we're glad to have delivered another quarter with strong financial results.
In the fourth quarter of 2020, we delivered accelerated topline growth driven by the strong 37% year over year growth.
And number of active customers and <unk>.
Fortunately, our non-GAAP net income such beautiful VIP shop shareholders also demonstrated robust growth in the quarter.
Increasing by 33% year over year total $2 6 billion from $1 9 billion in the prior year period.
Additionally for the trailing 12 months ended December 31 2020.
<unk> generated robust growth.
Robust.
Free cash inflow.
$8 3 billion, which increased significantly from $2 5 billion and the prior year period.
We are dedicated to offering our customers with desirable monthly doses and a.
Fee income on a daily basis.
While providing them with superior logistics services and home.
Sales customer service.
Compared to our marketplace platforms.
As a result.
Originally released in the fourth quarter of 2020 increased by 10% from the same period in the prior year.
Moving forward, we will continue operating.
Our product assortment and balance our topline growth and profitability.
We are confident that the healthy customer acquisition and retention trends.
To drive our growth and the future.
But it continues and the offering.
Value to our customers and providing unparalleled inventory management solutions to our suppliers.
And will ultimately generate sustainable long term value for all of our shareholders.
Now moving on to our quarterly financial highlights.
Before I get started.
I would like to clarify that all the financial numbers presented today are in.
And there may be amongst and.
And all the percentage changes referred from year over year to them and us.
Otherwise noted.
Total net revenue for the fourth quarter of 2020 includes the 508 zero percent year over year to 35.
Yes.
From $29 three per day in the.
Prior year period, primarily driven by the growth and the number of total active customers.
Gross profit for the fourth quarter of tons and tons increased.
Increased by 12, 1% year over year to $7 8 billion.
From seven zero period, and the prior year period.
Gross margin for the fourth quarter of 2020 was 21, 9% as compared with 23, 9% and the prior year period.
Total operating expenses for the fourth quarter of 120.
Slide four periods.
And as compared with $5 four per unit in the prior year period.
As a percentage of the total net revenue.
Operating expenses for the fourth quarter of 2000 and decreased to 13, 2% from 18, 3% in the prior year period.
Fulfillment expenses and for the fourth quarter of tonnes and tonnes or $2 2 billion as compared with $2 1 billion in the prior year period.
As a percentage of total net revenue fulfillment expenses and for the fourth quarter of 2020 decreased to six 1% from seven zero percent and the prior year period.
Primarily attributable to the change in fulfillment logistic arrangement.
Marketing expenses for the fourth quarter of 2000, and funded or $1 7 billion.
And as compared with $944 1 million and the prior year period.
As a percentage of the total net revenue.
Marketing expenses for the fourth quarter of tons and tons of four $4, 8%.
And as compared with three 2% in the prior year period.
Primarily attributable to increased investment and customer acquisition.
Technology and content expenses for the fourth quarter of 2021 day.
Decreased to $272 4 million from $362 2 million in the prior year period.
As a percentage of total net revenue and technology and consulting expenses and for the fourth quarter of 120 day.
Non-GAAP net income from operations.
Which excluded share based compensation expenses and amortization of intangible assets, resulting from business acquisitions increased by 32% year over year to $8 eight period from two 2 billion in the prior year period.
Non-GAAP operating income margin for the fourth quarter of 2000 and increased seven 9% from seven to seven 4%.
Prior year period.
Our net income attributable to VIP shops to shareholders for the <unk>.
Fourth quarter of tons and tons increased by 67, 7% year over year to three 4 billion from one 5 billion.
And the prior year period net.
Net margin attributable to VIP shop.
Shareholders before the fourth quarter of 2020 increased six 8% from five zero percent in the prior year period.
Four per cent you're over here too.
6 billion from one ninth period in the prior year period.
Non non margin attributable.
And you stop shareholders for the fourth quarter of tons and tons of increase between 7.2% from six 6% in the prior year period.
Non-GAAP net income attributable to VIP and shop, the shareholders per diluted ABS.
The fourth quarter of Kentucky increase of too.
370, RSV from four.
484 Army and.
And the prior year period.
As of December 31st of 2000 and punchy.
Our company had cash and cash equivalents.
It was good cash.
12, 8 billion and and short term and investment of seven three and it.
For the fourth quarter of 2020, net cash and from operating activities was seven 2 billion.
Moving at our business outlook for the first quarter of country on Ya.
We expect or a total net revenue to be between 2007 2 billion Rmb's and.
28.2 building RMB, representing a year over year growth rate of.
Approximately 45%.
50%.
Is forecast reflect our occurred and.
<unk> and view.
On the market on operational condition.
Which is subject to change.
With that and.
And I would like to open the call to Q&A.
Operator.
Ladies and gentlemen, and we will now begin to question and answer session. If you wish to ask a question for you expect star one on your telephone and.
Wait for them to be and if you wish to cancel your request for Ya.
These past day found our husky.
And it gives more people the opportunity to ask question. Please keep yourself to no more than one question at a time and you may Texstar. One again, if you have a follow up question. Thank Ya.
Once again to ask a question is to start and and number one on your telephone keypad.
Your first question comes from the line of Eddie Lang of Morgan Stanley. Please ask you a question.
Hi, Central and favorite song and Jesse and good evening and Congress. Congratulations on day about great results. So my question and you're just on the use a growth we have seen very strong and he was a growth.
Just a day and fourth called actually and Ah Saturday reach you know from sort of culture. So my question is that except for the afterwards Ya have made in terms of the cut some exposition, India, So Dakota and and you initiate after you have a meeting fourthquarter can you give us and examples, especially I think he is.
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Eddie on your question and a customer acquisition since last year's Dark wood and.
I was starting to increase or nothing and.
Crying and a new customer and.
<unk>.
And we use areas and customer acquisition channel, including digital advertising on television share and and reality show endorsement mobile having pain installation until on so.
And those sounds in terms of marketing expenses and the case that.
Uh-huh Unfortunately, there soon and.
And what we have done for Ya and and pay the full day and wait.
Believes that there is lots of opportunity and and.
Okay, and and new customer and you have market and particularly.
And we adjusted Okay, and discount retailers and and we will continue to invest and cute customer acquisition, but we'll use the last on that and model and that and.
And the efficiency and effectiveness.
And where we're spending on marketing on it so we will continue to and.
But disciplined ending on.
On top of marketing way also.
Okay, and merchandising operating and our customers really get products and deep discount on a daily basis, and Tony operational science and technology.
And then also investing can improve E conversion rate and improve the efficiency average customer and time products that day like and that are suitable and see their teeth and on track one so are on.
And we believe is on flywheel effect and everything that we're doing and is.
<unk> as Rd type of the business eight and tack and we will continue to improve on each element and we will continue to acquire customers and that will contribute try and on 10 Bucks.
And your next question comes from the line is on it.
Fifth Street.
<unk>.
Hi, Good evening sent on David Jessie. Thanks, a lot. They came my questions and congratulations on the strong quite out my question and does that change related too early that day the month over him on the 14th trend and also don't first quite a dive and so did you actually.
See some slowed down and December after they're very strong things that day promotion and S. We go into first quarter and how would you describe the situation does shed and that's.
State and the city and Chinese <unk>, so did that at Ya stimulate and more spending budget the clothing or did that actually have a lack of it and put on spending.
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People I'm not traveling that much and not.
Many eradicate that's before so just wondering how is this Chinese.
<unk>, Yeah, it's giving things and Ah in college and like to stay on the city Ah changes and tense up at the mall and then the same stuff that you see this share Russia, the previous yeah, and and colors and comes up direction that you think there's a strong first quarter guidance quick having through to the rest up and.
Yes. Thank you.
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<unk> and <unk> and we can place and my eat for them and I'm not too recent Maggie from them, what we're doing which is on in our Union. So you said a nigger T. Two on his knee and we encourage retouched goodwill.
Mhm, it's income Alicia on on your question regarding the trend that we've seen a fourth quarter is always apc's important calmer, particularly for us.
I predominantly apparently to it and we have and and see what's.
Hey, promotional event as well as our anniversary and sales and then on December 8th.
And solid results and that trend I feel that.
And acid into January Ah compared to December January book, Decelerates, and a little bit and that must be due to the weather change and that's out of winter and so when you look at and January and February and you mentioned and a lot of people put in their respective cities and not going back to their hometowns during this.
Chinese new year and we are.
Seeing better business results, and we were original and anticipating particularly as compared to previous and there were people were very much and and.
Spending their time.
Families standard and shopping on this year.
And <unk>.
And he saw it was that we believe that should be the industry and by train and looking ahead I'll be moving at the structural changes of people shopping more on learning more people 90 and to shop online and I was resulted from the equivalent 19 pandemic will continue into 2001 and beyond and therefore and continue to believe that there's a lot of on.
The communities, where else to continue to grow and gain customers and and the rest of today and.
Income is cute.
And two 2021 and beyond.
Your next question comes from the line of Ronald Chang.
And and sax. Please ask you a question.
Thank you. Thank you and don't pay that and Uhm and Jessie I think my question and kind of falling on the the growth and the apparel market basically we'd be very strong growth and you've schedule G. M. B growth for apparel in particular was 28%. It seems like this is a lot faster than the overall apparel markets and and therefore.
Oh Ya Gotta benefiting from the increase supply of discounts and apparel over the past day.
111 year or two years to get that kind of day to pick up a inventory.
Increased amount of grand and clearing that inventory and so how about we seen that and a market share say and discount apparel.
And as this kind of inventory cycle, and maybe lap snake that this year and how do we see or how do we tap into the ongoing growth of the business day, maybe private maypole and so.
The drivers and thank you.
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Michael what day to bring the best products to our customers as well and.
North Recliners and you have to go there.
Your next question comes from the line of Samus shop of Geoffrey's. Please ask you a question.
[noise] French management and novelty kicking my crashes all can you comment about a trend and marketing expenses as well as the module outlook.
Thank you.
Thank you Tommy.
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Thomas on your question on user.
Growth and marketing expenses as well as how and he'll be margin outlook and 2021.
And as we continue to grow more customers and customers and accelerating customer growth, we us and a little more on marketing into the second half of 2020 and.
And we will need that trend and it should be similar and turning 21 and beyond however that is still in that day.
And approximately 300 million potential customers that was and interested in the current retail and could become Yankee shop customers and from that perspective, I believe that is bill amount of opportunity and the market and.
We're still very small compared to the potential opportunity is market growth and will be on top priority. However, and we have always been very focused on the balance between on top and growth as well as on a margin profile or bottom line will continue to be very solid and business include.
The asleep on the.
<unk> I am on Dot net margin on a mid single digit range and we'll try the growth suffering as fast as possible on top of that and I said, we're going.
Going forward and we will continue to balance the two.
So I think we'll use it and grow healthy and contribute to I'm on 10 growth sustainable.
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And will continue to pick and healthy and fast growth by house and growth removed and that really weren't client high quality customers and.
Who will contribute to our long term growth and how.
From the ability and wait.
And compared to the current size and there is a lot of opportunity and continue shows to continue to growth and at the same time, we will continue to maintain a sustainable housing that margin profile and as we continue to grow fat on the operating leverage and it will come out and even more and improve our.
Profitability as well so that will continue to be on file.
Priority into 2021 and.
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Your next question comes from the line and if Natalie who of Haiphong International things off to your question.
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I will transfer my child, Thanks for taking my question and congratulations on your child and yourself my questions regarding the online consultation just wondering how much of the G. M. B and does apnea consultation comes from a fly and the fourth quarter and what's the management and the technician for 2021 and.
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Okay and Natalie on your question regarding offline that I think on the offer.
Also and that we have three different businesses, one attention and outlets. It's D and D is around five per cent contribution and this business is very profitable and will continue to grow that and a healthy paid paid.
And our own once he offerings stores and we have two models and.
T shops, and the other and <unk> and there are quite different in terms of pricing and target one of these businesses and it's still slightly lossmaking, while the other is almost breakeven and.
And the total at the on the contribution on who was 212 offerings stores is still quite small per day slightly over one and contribution and we will continue to explore how to grow these offerings stores and stuff.
Explore the airlines awesome strategy, and Hudson movement, and maybe like more digitized.
But oh well.
Okay and the current retail.
And we're we're serving a core customer and of course the player.
Offline channel and as well and.
Going for a new way, that's and creative value for a and number and customers currently offerings to look that up and more actively exploring wechat group and how to utilize the traffic and the and the customers potentially alright bye.
Find more a living and let me check ecosystem I currently have on the third of the G. M and contribution of me ask you shop, and we'll be asking Max and coming from the more digitized revenue such as we check book and we will continue to how.
How to bring up the profitability and we'll have grow these businesses My house on me going for it.
Your next question comes from the line of share you made a few B S. Please ask you a question.
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Just wondering.
And purpose here is to Ya is these channels as a way to acquire customers.
Or are we seeing some opportunity to maybe operate through and some of the streaming and video platforms and especially when we look at <unk>.
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Maybe there are some new opportunities and and.
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Alright. Thank you carry on your question regarding lashing and short video.
We do believe that and I'd like to name half and shortly after I wear a lot of our customers and spending a lot of time and we had.
Alright, and have been actively investing and exploring customer acquisition methods and the newer.
Channel. However, we do think that the results and not up to expectation and therefore, and we still have more room to improve power of targeting the constant as well and how were climbing customer newer format and.
On our own VIP shop, App, and and I've seen and customers would be 100 per cent. However for example, and 19 and very many stories about half a few customers would come from our App and afterwards and the.
The other half would routine and the name shopping with us and maybe and turning solid E.
Any store and so we will continue to work with these various channel in order to improve the efficiency and we will continue to look at the place too fast and that.
And it's a customer from physician and I've seen and short video at.
Your next question comes from the line of based on Zhang F. C. I T. T. Please ask you a question.
Yeah, Haitians on David and Jessie Thanks for taking my question and I'll Congratulation and I'll go ahead and do a bunch of results. It's a follow up question actions on mentioned and add to shop products on how are Ya, they actually shop product on the special edition and what impact our best news all can we have better price or a better profit Zachary or.
I shall and fish and help us to pay more consumers and elaborate ya on that would be very helpful. And do you have any target and for the for the day I too shop products and thanks.
Thank you for Ya.
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And so they told me dining no question on late for the product and how it's different and how it on impact VIP shop as a platform.
Great and what are the gross margin for it and make by the on to shop products that actually the theme and other products for a given them. However, when we go and work with them and make for the kitchen on products, we ask for and more value meaning.
And the price and set the offer should be similar to other products that they're giving us on a confirm and basis and on the on.
And you know, they're they're natural price.
Donna.
And we also give additional traffic and <unk> nuclear and the product and I'd be.
Products and more differentiated and shit results and better conversion rate for our customers as well as help us Ah client and new customer because these products could only on and platform and going forward and we will continue to listen to waste the best and masks and see the need for the F. You shop on us.
Yeah.
Your next question comes from the line of Veronica Shen China Renaissance. Please ask you a question.
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Cook them away like Queen Michael.
And some other.
And I prefer new customers, usually doubles and year two from a historical numbers and from there and customer like that we have on acquiring the cost and reporters and continue to see you call. It vacation and started up a growth on a quarterly basis and so we are quite confident about and long term sustainability and how can you contribute to and from the.
Newer customers and the reason that they seem decline year over year and 20th hunting vs 2019 is because.
And not my new customers and all good customer and who have not shocked with us and for awhile and therefore.
Adding them to the mix the Eiffel for these customers and usually nowhere driving down and the average Arkansas and the total customer cool. Additionally, we've Ottoman made changes to the free shipping method and annoying and the free shipping and I'm from 288 to 88 Army and which has impacted the short term.
Because they're vips as well as customers.
Alright, and they're getting used to.
New newer adjustment on their shopping something more frequently and not enough to cover the slight decrease team and ticket site.
From historical trends were confident that all these issues and I will continue to go away as the constant constant and becomes more hapless and apples and these high quality new customers with I'm right in the future as well as existing super reactions and all customers are on.
Ready buying more frequently so we were on you know and continue to see better trend into 2001 and beyond and exercise.
Your last question on the standard of mine.
Sorry, Please ask your question.
Great. Thank you for your time today I've noticed that your other revenue just and growing up it faster than the product revenues and I presume and was this advertising revenue. So shoe should we assume that the tighter relationship that we have with brands is helping them put them on advertising and I'll try and plop on them and.
And I kind of like user grew up on like a continuous and should we continue to see and kind of other revenue from other foster click on product for Ya is is that is that the word throughout the day all but thank you.
Oh, a revenue Aquila represents represents or offline revenue from from.
Hoffman revenue and.
Otherwise housing revenues and and.
Offline.
And.
You can only represents a very small portion of total revenue right right. So it doesn't it doesn't and changed that much and.
Okay.
And so on the other and revenues line and grew slightly faster for free.
I will get the breakdown in the fourth quarter, a third party marketplace contribution is around 14% on our compared to last year that came down and a little bit.
Alright, and the advertising is gross slightly faster and this is due to us and I've been blessed.
Focused on their primary first two business and not on as.
Okay, and the marketplace and therefore and the permission rate has decreased as contributions can move on.
And Ah platform.
Creek, slightly turn around 5% and fourthquarter.
The increase is primarily do too contribution actually from changed on outlets as and last year's fourth quarter and owning contributed to around seven per cent of other revenue but.
The fourth quarter of this year's changing on outlets contribute it turned on 13 president on other.
And then.
And.
And so there are no further question and I will now on hand to call back to the management for the closing remarks.
[laughter]. So thank you for taking the time to join Us and.
And we look forward to speaking with you and a quarter.
<unk>.
And you too. Thank you. Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating in and out all disconnect.