Q3 2021 Mogu Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to Mogens third quarter fiscal year, 'twenty 'twenty, one financial results.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session and to ask a question. During this session you will need to press star one on your telephone.
You require any further assistance. Please press star Yeah, I would now like to hand, the conference of interest Speaker today, Mr. Roger Hugh. Thank you. Please go ahead Sir.
Thank you Hello, everyone and thank you for joining US today Motors earnings release was distributed earlier today and is available on the IR website at IR Dot logo SaaS, Inc. Dot com as well as on the business wire services before we begin I would like to remind you that this conference call contains forward looking statements within the meaning of section 21 E.
On the Securities Exchange Act of 1934 as amended and as defined in the U S. Private Securities Litigation Reform Act of 1995. These forward looking statements are based upon management's current expectations and the current market and operating conditions and relate to events that involve known or unknown risks uncertainties or other factors.
All of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results performance or achievements to differ materially from those in the forward looking statements further information regarding these risks and other risks and.
Uncertainties or factors is included and the Companys filings with the U S Securities and Exchange Commission.
Company does not undertake any obligation to update any forward looking statement as a result of new information future events or otherwise, except as required under applicable law.
On the call today from <unk> are Mr Sharp, Tennessee, Chairman and CEO, Mr. Raymond Huang and Chief Strategy Officer, Mr. <unk>, Li Investor Relations Director and MS. <unk>, Li Wang Financial Controller, Mr. Chen will review the business operations company highlights followed by Mr. Paul who will discuss financials and they will all be available to take your.
And as during the Q&A session.
Now it is my pleasure to introduce our chairman and CEO. Mr. Chen. Please go ahead.
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Hello, everyone and thank you for joining us on the third quarter resolve announcement and pull the fiscal year tonnage and do one today.
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But from a good 10 years ago on 2011 for last 10 years, while being very persistent on the mission of big fashion accessible to everyone. What I've been continuously innovating and towards the new format on site and shopping.
And from creation to E Commerce from life ecommerce to short video E Commerce.
And our 10th anniversary Weibo's will achieve positive EBITDA for this quarter on non-GAAP basis rich.
Reflecting our operating efficiency improvements and disciplined capital allocation and this severely and competitive environment.
This turning point and made US made our development more sustainable and it provides a stronger foundation for our new business incubation.
And that's simple year with tissue boxes and the.
And once you're on the only thing on balance also to ensure that all especially the LTE and <unk>.
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Head up average Abbas against that so full year will be decided she doesn't like also the EPS it ends up.
We continue to see a high growth rate and mobilize mobilize <unk> increased by 29% year over year to RMB $44 1 billion and your third quarter.
Mobile ly continuously maintain leading position in user experience innovation kilo incubation and supply chain development seems where innovates like e-commerce in 2016 as.
And its contribution to our overall on G. M. B also jumped to 80, 383% this quarter mobile ly continuously drives our future growth opportunities.
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Mobile ease of shopping inspiration platform as well as a vibrant community Inc.
Inside and outside of home and life showrooms people, who connect interact and influence and to support each other because of this vibrant community and we users have been attracting more users to join mobile Ala and see if buyers of the live video broadcasting business has achieved a year over year growth of 19, seven nine from 4%.
During the double 11 and doubled from promotion to Kols on our platform have each achieved over RMB 100 million sales in this too and festivals respectively.
And then top tier kols of the life E Commerce industry.
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For high teens on Shanghai, It had and then you all mentioned.
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And then what should have seen a tupac gala, Michael and on SEDAR Shied us and you see here.
In the future, we will explore new business opportunities, including cross border ecommerce and also on business, we will make sure that and we can leverage all of the strategic assets. We have built over the last 10 years and take advantage of the opportunities emerged from the industry landscape change.
And that stay tune for next 10 years. Thank you.
Yeah.
Thank you shark. Thanks again, everyone. This is Raymond speaking thank you for joining our conference call. Today. So now I'll walk you through our third quarter for net physical year 2021 financials. We believe year over year comparison is the best way to review our performance unless otherwise stated all percentage changes I'm going to give you.
And would be on that basis. That's a review of the financials first on <unk> for the first before the third quarter of fiscal year, 'twenty and 'twenty one was RMB.
And 5.046 billion a decrease of 19, 9% year over year Jimmy for the 12 months period ended December 31, 'twenty and 'twenty was on beef.
13 billion and $698 million a decrease of 21 point.
25, and 25, 1% year over year on our focus has been growing the <unk> from live video broadcasting, which has increased by 29% year over year to RMB 4.051 billion and OBO associated and <unk> for the third quarter of fiscal year 'twenty 'twenty, one accounted for 83%, although total Jamie.
Active buyers of the ABB in the last 12 months.
And at December 31st 2020 grew by nine 4% year over year, two and three 5 million.
So, let's now turn to revenues.
During this quarter total revenue decreased by 45, 6% to RMB, one and $146 5 million from RMB on two.
269, five media during the same quarter of the fiscal year 2020.
Commission revenue decreased by 29, 8% to RMB $99 2 million from RMB, $141 2 million and the same period of fiscal year 2020.
Primarily due to the restructuring of the company's business towards L. B B focused model marketing services revenue, which is mainly generated from our marketplace business.
Our marketplace business unit decreased by 75, 9% to RMB 17, 4 million from RMB 72, 5 million in the same period of fiscal year 'twenty and 'twenty. The decrease was primarily due to restructuring of the company's business towards a L. B day focused model.
I will now walk you through our major cost and expense.
Cost of revenue decreased by 48, 3% and to RMB 51 million from RMB, $98 6 million and a sim periods on fiscal year, 'twenty, which was primarily due to a decrease and the cost associated with decrease on line that ourselves and the I T with interest expenses.
Sales and marketing expenses decreased by 63% to RMB 70.
And 76, and 5 million from RMB $209 3 million in the same period of fiscal year 2020.
Primarily due to optimize spending on branding and the user acquisition activities.
R&D expense decreased by 14, 5% to RMB 27, 2 million and find the.
31, 19 and in the same period of fiscal year 2020, primarily due to a decrease of share based compensation expense.
General and administrative expenses decreased by 32, 4% to RMB $29 1 million from RMB 43.0 media in the same period of fiscal year 2020.
Primarily due to a decrease of share based compensation expenses.
Amortization of intangible assets decreased by 10, 3% to RMB $113 5 million from day, $102 9 million and in the same period of fiscal two physical year 2020.
Loss from operations was RMB $123 2 million compared to loss from operations of RMB 1 billion and $594 nine.
And 9 million in the same period of fiscal year, 'twenty and 'twenty, primarily attributable to a goodwill impairment incurred in third quarter of fiscal year 'twenty and 'twenty.
Gambro and investments.
And was.
It was $91 2 million compared to loss from investments of <unk>.
And $33 9 million and a same period on fiscal year, 'twenty and 'twenty, primarily due to one of the companies invest T repurchase a majority portion of the company's investment in October 2020.
Net loss attributable to mobile was ordinary shareholders was <unk>.
And $36 7 million compared with a net loss attributable to the mobile ordinary shareholders of 1.6 and three four points.
1 billion and 634 million in the same period of fiscal year, two and attendance.
Adjusted EBITDA.
Was RMB, one 2 million compared to a negative.
RMB $86 7 million in the same period of fiscal year 'twenty and 'twenty.
Cash and cash equivalents restricted cash and short term investments was RMB 821 million as of December 31, 2020, compared with RMB $1095 4 million as of.
March 31 2020.
Stock market in 'twenty, and 'twenty has been very volatile and wealth view that mobile is the share price does not reflect the fundamental growth potential of the company and we have successfully repurchase Amelia and shares for cross mentally 717 million and U S. Dollar.
<unk>, 7% of the company's outstanding shares over the course of the last fiscal year.
Looking forward, we're very confident that all put on innovation and our dedication to kols centric system.
Well deliver a very well deliver a very differentiated fashion shopping experience to our customers.
So with that I would like to open the call for Q&A.
Operator.
Okay. At this time, we will be conducting a question and answer session.
Now for as many questions as possible. We ask that you. Please limit your questions to one question with one related follow up.
I'd like to ask a question. Please press star and the number one on your telephone keypad will pause for a brief moment to compile the Q&A roster.
And as a reminder, if you'd like to ask a question. Please press star and the number one on your telephone keypad. Your first question comes from the line of Charlie Chen with China Renaissance.
Your line is open.
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And Charlie.
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So on trials to course, and Charlie has two questions. The first question is about the EBITDA. So it seems that the EBITDA has been has turned positive for this quarter. So what's the company's strategy going forward on do we focus more on the revenue growth on revenue and Jamie growth, all we want to expand margin and and the improved EBITDA margin.
And the other question is about the growth on the.
He was the number three and five.
<unk> user number it seems to be more conservative so what's company's strategy going forward and to some user acquisition strategy.
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E Commerce is apparently we're thinking that the gross credential folded and I e-commerce sector as part of our high on board. However.
However, it has come to a relatively mature stage and most of the most of them moving parts in the industry has been settled and going forward, we'll be seeing and that they will be more brands more and more brands and more.
And your business partners and them coming to the E Commerce and space Inc.
Instead of just purely focused on carrying out our last streaming will be seeing more merchants on more brands to join and Lotte E Commerce and smell.
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So I'd love to hear how you're financing.
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And Joel it's on us.
I'm also on the ball.
So you'll see a full multilingual trivia.
So of course, we're definitely that will continue to investing and the lobby ecommerce technology business and on to maintain and to enhance our competitive advantage over the other competitors will continue to.
Innovate and to optimize our user interface. However, we will also closely.
Closely.
And although the demand has been and strategy.
And as we and this is essentially all we are well on track to to have a stronger monetization on being our E Commerce business and we also want to achieve a balance between different roes in there might be from different.
Different players and the Nike commerce space, including on Kols merchants and brands and also other supply chain partners, we want to strike a balance between all these different players.
While we have shipped them on a decision.
I hope you're all up on me and all four months.
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What's your latest thinking about the outcome.
On Baltimore that simple.
And so it seems we have been continuously innovate comped.
And a lot of ecommerce space, we have accumulated a massive amount of knowledge and and a know how in this space and we do believe that we have more room to apply on knowledge, we would like to apply our knowledge and in all those spaces, including cross border E Commerce, and so us offline commerce, we believe lunch hour and our experience and our Knowhow.
And definitely be an average debt to capture future business opportunities.
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For me and.
Other than that seamless autonomy on Florida.
And almost equally.
So as you can see the costal markets from cost on average for the entire industry and has been increasing.
Refugees and the overlaps and maybe on a year or two so very much a focus on the on.
Customer retention.
And as we mentioned on previous earning calls.
Existing users and retention is extremely important for us as you can see that the not be commerce part.
And the average users optical is way higher than the than the traditional E. Commerce users. So we are seeing much higher much higher up over there.
So that's why we can.
And as you can see from the quarterly results.
Our sales and marketing expense actually decreased by 63%. So we can use a much lower sales and marketing expense to them is to maintain the growth.
Going forward, given the magnitude and the.
The scale of the company.
We will not be using our cash burn and strategy to acquire customers. Instead, we will be leveraging our knowhow and knowledge and to use innovation to acquire customers and to to use the money more efficiency on our spaces.
Okay.
And Paul.
How does just yet.
Okay got it the fingers on.
And again, if you would like to ask a question. Please press Star then the number one on your telephone keypad. Your next question comes from the line of Lucky with a J asset management Lucky Your line is open.
The EBITDA.
And then.
Yeah.
Joe heel senior debt.
Okay and <unk>.
Walsh and keep them on.
Net.
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Away from Covid.
And pharma TCA.
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Okay sure on the question from from Lucky as that.
And congrats to companies and positive EBITDA. This quarter. So the he has two questions. There one is that what's company's charters going forward.
Category expansion on the other way and as bad can we elaborate and they'd be more on the on bone and Kols.
Other than the top two.
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Product sales.
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And.
So the question about category expansion on now.
Of course, we would always wanted to expense categories, while our tactics and this.
And with regard to this question is that I would take this is to we will expand into higher margin categories.
Because traditionally and I really I think on apparel has been a very good category to retain customers.
And as I always like to come back and check on the latest release of fashion brands. So that's why they always come back it's a retention and category, but apparently the margin for this kind of rate is not as big cash, we almost want it to be and.
And going forward would be expanding into expanding into high margin categories like cosmetics skincare and nutrition. So this categories and I'll, probably higher margin categories and we can attribute.
And monetize more.
Well, thank you on the Lucky.
And what do you see our opinion about it.
And so forth, yes, I'll sit diversify EBITDA.
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I do apologize for this brief interruption and there has been an issue with the speaker line.
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Yes.
Your line is now open and I will reopen lucky's line for the question just one moment.
Yeah.
Yeah.
And Lucky your line is now open for your question.
Okay. I think we got on the Luckiest question, maybe I would just go straight to the to the answers events. That's easier. Okay. So I think the lockers question was about the category expansion, which routes are all there and then the other question was about the Howard trade and the top how would you how how we what's our tactics for the came out and commission and I think as Chuck mentioned.
And last year, the Lotte E Commerce space was extremely competitive and so that's why we spend more time and effort onto.
And to our on top Kols and to make sure that they can be extremely competitive with other platforms and with the kill us from other platforms and as a result, we can see that the top two kols. They both achieve 100 million sales overnight on during the Ww and dump a trough promotion days rich.
Secondly, so they have proven they are proven to be the top kols in China over internet as of last year.
And this shoe care I was extremely important to us because they become the flag of mobile life E Commerce.
And because of their influence and because they have their first from power to our sales power and they can attract more emergence more supply chain partners and even more kols to join and local platform. So they are extremely important and when it comes to.
And expense our e-commerce platform.
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Starting on the whole facility.
So they share charter.
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Some data so the model and look and you swallow.
And that is a patent and they'll come back on the bed.
And Paul.
Total debt.
In India and adhere to losses on how many deep central zone.
And let him a gorilla has just under five day ability is on EBITDA.
On Mcdonald with synergy.
And you can go there.
That's also on line, you'll flip back and order to EV can do there and clear holdout some help on that.
From a bundle of balance sheet for broader this year for boards and routine.
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And this is Tom will conclude our Singapore team.
So there's a faster organic growth.
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Yes.
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And Taiwan.
And your shareholders and of course, the size of authority Ross.
So a few highlights.
And Gatwick Handoffs on in this year.
Hi.
And.
So as we can see that.
And in 2021, and I think we are seeing that the market has been more stabilized and and all the all the kols and their respective teams on a more mature so we don't need to spend as much effort as we used to be and.
And we can dedicate more resources to other kols and to help them growth.
And as we also mentioned on all of their category expansion and so it's very important as a priority for us. This year. So we intend to recruit more kols on this year, especially the <unk> that can help us to expand categories.
We have spent a lot of time.
Strategy diving.
And the plans to recruit and carriers and on before and after Chinese new year. So we will be able to what you guys can see our effort in the in and amongst accounts.
Okay.
So lucky do you have other questions.
Yeah.
Okay. So then I guess ill pass back to the operator.
Okay and as a reminder, if you would like to ask a question. Please press Star then the number one on your telephone keypad. We do have another question. This comes from Sabrina Cube Jefferies. Sabrina Your line is open.
And Sabrina.
On the call today on <unk>.
T J.
Sure.
Good day in Shanghai, and Jim Jones, and guys. Okay.
And Jimmy <unk> and <unk>.
Jaguar and tissue.
Ill go ahead and Telemundo from John.
Zack on for Glenn you too John.
Good day.
Okay.
So as the brain answer. Your question is why is the competitive landscape of lobby ecommerce in China and the other one is the.
The management and to elaborate a little bit more on the cross border E Commerce opportunity.
Okay.
And then maybe I'll just answer your question directly okay.
While the competitive landscape in China, we have seen that a lot of our companies has been extremely focused on large e-commerce across different segments of Hunter, we as the innovator of IP commerce back in 2016.
Prove that we we are very very much at pioneer in terms of our product innovation and continuous and we will do so.
We believe that our strength is related product innovation, we can make sure that our customers will have the latest and.
And was cutting edge user experience when it comes with Lotte E. Commerce. So that's number one that differentiated us from the other platforms and number two.
We are a life e-commerce dedicated platform I think unlike other platforms, who are they more I think.
And have other other other revenue streams and other things we are very much a KOL driven <unk> E Commerce platform and that's why we're also for our differentiated product on the outlets. We don't think the market is really driven by budgets are driven by our cash burn and capability is really driven by people.
Okay, and actually innovate and listing companies understand users' needs and innovate new features new products and.
New user experience to make sure that we can provide the most interesting and most immersive and the most interactive shopping experience for our customers. So we don't think it's.
Specifically our budget treatment.
Landscape, that's the first question.
And second question is about our cross border E Commerce, So cross border has been.
And I always being a very important opportunity we have been closely examine so.
As you can see that and have been doing e-commerce in China for the last 10 years and.
And we have accumulated a lot of knowledge experience and knowhow and the and human capital and so and also hours with Kols in China. They have extremely extremely capable they're very smart and they can provide a lot of supply chain capabilities.
All This award Ford class cash and corrosion.
Capabilities, which we can easily leverage to influence customers and audience overseas. So that's why we went on and beverage. We have we went to team up with our Kols, we want to go out and to other countries and to leverage our experience over there.
Alright, thank you.
Okay.
Operator.
And again, if you'd like to ask and audio question. Please press Star then the number Brian on your telephone keypad.
Okay.
There are no further questions I will turn the call back over to the right.
Roger Hughes for closing remarks.
Thank you and thank you everyone for joining the call today. If you have any further questions or comments. Please don't hesitate to reach out to any one of US here at <unk>. This concludes our call today.
Okay. Thank you.
Ladies and gentlemen, this concludes today's call. Thank you for participating you may now disconnect.
Okay.
Okay.
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