Q1 2021 Baozun Inc Earnings Call
Yeah.
Good morning, ladies and gentlemen, and thank you for standing by for <unk>.
Awesome.
The 2021 earnings conference call at this time all participants are in the list.
From the only mode.
After management's prepared remarks, there will be a question and answer session.
As a reminder, today's conference call is being recorded.
Now some of the meeting over to you a host for todays call.
All of the shelf Investor Relations manager.
Please proceed Nichols.
Thank you operator, Hello, everyone and thank you for joining us today, our first quarter of 'twenty 'twenty. One earnings release was distributed earlier today and is available on our IR website.
I felt the Baldwin dotcom as all of it on a global news star So it just.
On the call today from about the we have Mr. Min, Xu Chairman and Chief Executive Officer, Mr out the E Chief Financial Officer, and MS. Tracy Li our Vice President of strategic business development Mr.
Mr. Xu will review the business operations and company highlights.
All of that I missed a E who will discuss financials and guidance. They will all be available to answer your questions. During the Q&A session that follows the for.
All of the begins I want to remind you that this conference call contains forward looking statements within the meaning of the security of Exchange Act of 19th or a full and the U S. Pallet to Securities Litigation Reform Act of 1995 of 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 unknown risks uncertainties and other factors all of which are difficult to predict many of the age of yeah on the company's control, which may cause the company's net.
The results to differ materially from those in the forward looking statements.
For information regarding these and other risks uncertainties or factors is included in the company's always which you asked the SEC and in the Companys announcing the notice all of other documents published on the left that helps us off the exchange of Hong Kong Limited.
The company does not take any obligation to update any forward looking statement, except as required under the applicable law signed.
Finally, please note that unless otherwise stated all figures mentioned during this conference call are a RMB eight is now a map hedges, our chairman and Chief Executive Officer, Mr. Listening to visit the please go ahead.
Well, thank you Nicole and thank you all for joining us.
We are piece of the announced another solid quarter of high quality growth.
For a total net revenue increased 3% a year over year to 2 billion and all of the non-GAAP income from operations more than doubled to 76 minutes.
We added a net total of 15 brands, including luxury apparel cosmetics food in the house brands as well as Brent from the food you had the acquisition.
We believe these numbers reflect the quality of the trust of the relationships, we have developed with brand partners.
And now please turn to slide three.
Overall, we are on track to deliver over a medium term strategic plan.
Let me provide some highlights about the whole we are progressing as sort of three key initiatives.
Please turn to slide four.
For a customer first the drive growth for luxury sector is things that simple you, which we've made a continuous progress this quarter.
In addition to a stunning new brands. We also provided more value added the services.
This includes interactive digital marketing.
By the customization and the premium warehousing of the logistic services.
They all have greatly improved the user experience and the generated a higher profit of contribution.
Luxury has become a significant profit a contributor accounting for 15% offer of G. M b in the apparel and accessories category.
And the growing or 50 per cent of the year over year.
In addition, we enhanced our leading position in luxury and the strengths in our consulting and the blending of the science capabilities. So the acquisition of for Jess and the strategic alliance with a fishing fashion group.
In late April and early May.
But the zone the core for jet team made a visit.
For Europe, and the generated a number of promising business leads.
Overall.
We remain optimistic that luxury sector will be one of our a key growth drivers in the year ahead.
All of our omni channel strategies, we are helping bring in partners to obtain incremental sales and the customers from a wide variety of emerging channels.
This quarter, we integrated additional sales functions in our Tencent mini program packages and a help several of sportswear brands from there the OEM platform.
We also test for a new <unk> stores for a certain brand and the apparel and accessories and FMC G categories.
Additionally, we made a great progress working more closely with J D.
Our efforts translated into a tremendous progress on the we accumulated extensive snowfall in setting the right the global market strategies for each platform.
During the quarter loan team all channels accounted for 35 per cent of total G. M B a.
For the increase from 25 per cent for.
For the full year of 2020.
More importantly, based on our initial assessment.
Consumer of overlap for all of a multiplatform sports is less than 10%.
Yes.
This indicates the other we are successfully helping our brand partners and cream mentally.
Strength in our businesses.
It also shows that we have great potential for further expand our addressable market.
On the cost structure optimization front.
Texture of a business process reengineering and the business model innovation continuing to show the results.
Operating efficiency metrics given the.
The fulfillment costs and a sales and marketing cost per G. M B a.
All improved compare with a year ago.
This is also true for technology and the content of spending.
Or a centralized integrated operating platform B or C. S.
That's helped over a dozen brands.
Drive some significant cost of savings over the past six months and the.
The same time.
The infrastructure supports our abuses through process reengineering.
I think as ample growth includes integrated of functions for a one stop content design, which help us standardize workflow improve teamwork you have state of the accuracy and the improved communication efficiency.
Oh average brands have been able to reduce their operating costs by over.
10%.
We hope of expanding the service package to a broader apparel and accessories category.
And the we anticipate that this will be a important driver for operating efficiency and the cost of saving going for.
The addition, our remote service centers in the under one of the Ofa a post on truck and the.
Started the trial operations in March.
We believe that the after the post ramp up there will be meaningful cost the savings from the second half of 'twenty one.
Now, let's turn to slide number five.
Technology has constantly helping us to widen our competitive advantage with.
We launched significant upgrades to our it infrastructure to support that but evolving omni channel strategies.
For example.
Well the integrated into over quantity platforms, including Tmall Tencent mini programs, the William J D underpins a lot of.
Pre integration and help us help of our brand partners launch all of these platform quickly.
Really all of the plug and play base.
We keep enhancing our raw services will help brands deploys differentiated strategies across multiple platforms.
This sustainably improving yeah.
Patiency now the reduces or a brand partners of working capital.
Our efforts in technology innovation, we will never sell stock.
The addition of.
The promoting greater cost efficiencies.
We are also developing innovative topline growth in June for all of brand partners.
Recently, we launched a series of data driven toolkits to optimize around the sales.
Internally we call this summer.
For selling machine.
The mining extensive datasets and leveraging machine learning capabilities summer maximizes conversion rates.
And the overall shopping experiences it does this by recommending products and the assortment planning and the display strategy.
On the front end.
Some of it's currently in beta testing and the effectively importing traffic utilization.
We have identified a few key brands for which we plan to deploy all of our some of pockets across the chemo and Tencent mini programs.
We expect a broader deployment in the coming quarters.
In relation to a digital marketing we are also making progress on our content marketing live streaming from the data services.
During the quarter, we expanded our live streaming studio.
The 2000 square meters and established a dedicated a studio for.
The live streaming workforce.
Happy to see that a few brand the partners have achieved top ranking of events with a high ROI on the platform.
Meanwhile, we completed several equity investments in the digital marketing of arena.
This included a top 10 P M O M C N a.
Also growing the MCM, we stay there in the news feed analytics and the conklin marketing from them.
We believe these equity investments will enhance our digital marketing flexibility across different ecosystems.
This will the reinforce our value proposition by facilitating the digital marketing success of our brand partners.
All of the warehouse and the logistics side.
We expanded the capacity in the apparel and accessories beauty and the cosmetics categories.
For the end of plenty of funding or the infrastructure capacity.
For the growing to 640, a southern square meters Inc.
Moving specialty design the warehouse for the luxury sector, where demand is from beef up sharply.
We're also focused on providing more customized for the services. For example, we plan we launched a comprehensive piece will be business as well as a more a budget friendly service offerings.
We all of US approach everything with a customer first mindset and we will continue with the launch differentiated services based on the needs of our brand partners.
Meanwhile.
We will actively look for opportunities to enhance our logistics capabilities. So a strategic alliance with third parties.
Now on slide six.
All of this may we published our first environmental social and governance or ESG report.
It reflects our commitment for long term sustainable development.
We view <unk> as a commitment for our shareholder stakeholder commitments coming to the communities.
Hence was rated triple B.
M. A C I <unk> in 2020.
This is a top ranking in the e-commerce industry.
We believe good governance is important for a sustained commercial success in the learn of them.
We appreciate the participation of many of our shareholders in our survey while we were preparing this report.
We will strive to set new benchmarks in the brand the ecommerce service industry as well.
Meanwhile, we deepened our investments in human resources and look forward.
Billing or people to exceed the potential and the development there.
Careers together it was possible.
Overall, we are optimistic about the ecommerce sector community.
And to create new opportunities.
We will keep innovating to capture the kind of drive growth drive growth, both organically and through selective M&A.
We believe we are well on track for achieving sustainable and the profitable long term growth.
I will now pass the call over to other took all of our financials. Thank you.
Okay, Pennsylvania.
Hello, everyone.
I will start on slide number eight.
We saw strong growth in total a G M b.
<unk> increased by 44 per ton to a certain point 2 billion.
All of the distributions the M D rose by 77 per cent for $1 1 billion and all of the non distribution TMT increase for.
The $4 four per cent for a 12.
<unk> 2 billion.
A brief kantar a category we can.
Continue to see a strong growth momentum in the apparel and accessory.
The electronics and I find the C G country of course.
The strong performance of the luxury sector, how apparel curl, a nearly seven per ton year on year waste new luxury brand onboard on chemo.
However, we faced some temporary headwinds in March huge with a content right by the types of content initiatives.
This negatively impacted the girl of the apparel and accessories category in fact, the sportswear brand.
Electronics girl of the nearly full tape of times year over year.
I'm, a TG contribute H triple digits.
From a lot of things Lafayette.
<unk> now accounts for about 15 per ton of overall a T M D.
All of the other hand, we still see a slow.
From the appliance category.
But the trend of improving significantly comparable a Q4 2020.
We believe the hall of Fame unbalanced the girl of our T M. The demonstrate the resilience of our business model.
By all of a diversified portfolio across a wide greenfield category.
Now please turn to slide nine.
Total net revenue increased by 3% to 2 billion.
Part of sales revenue increased five nine per ton for 972 million.
Service revenue increased by 28 per tonne for 1 billion.
While the growth in service revenue was not as fast as a product sales revenue.
Remember that all of a survey of revenue in Q1, 'twenty 'twenty, well now, but may impact of COVID-19.
While we look at the overall revenue growth across a longer period from funds a 1928 once a month.
The talk a full of product sales revenue I'm, sorry revenue for both around the 25 per ton.
With a demonstrated a highly april trends.
A part of sales gross margin was $18 four per.
A slight decline from $18 eight per ton a year ago.
For a change in kind of worry me.
But it improved from $12 seven per ton class quota.
Although overall growth profit margin was $69 three per ton slightly down from the one 3% of a year ago, you went through Ohio revenue from product sales.
The take rate for the non of these take built the model was $8 six per ton volume from nine eight per ton a year ago.
This reduction in take rate, what's the expected.
We made progress in our omni channel strategy.
As a means as mentioned earlier.
For the first part of 2021 non chemo platform account for approximately a $5 per ton of.
Our total GMB.
The take rate of some of the new emerging channel, it's not comparable to a chemo.
At least the in the other.
So it will somehow downloads our planned a take rate.
So as we continue to scale all of the business and service model in new channel guidance in more mature we believe the ultimately the take rate and the profitability will improve in the long run.
However, as the contribution from new emerging channels of growth.
We anticipate the dilution of the take rate will continue over the next few quarters.
Now, let's turn to operating expenses on slide number 10.
In light weight of our growing business, a fulfillment expenses increased from $500 8 million.
And as a percentage of TMT improved true three eight per tonne from $4 five per ton a year ago.
This was mainly attributable to improvements in efficiency.
The increase use of lower cost of last mile delivery carrier.
Sales and marketing expenses were 471 million.
And I have a percentage of G. M b improved to a three six per tonne from full per ton a year ago.
Mainly due to the improved effectiveness of our digital marketing services and efficiency guidance for.
The deploying the latest technology in our operations.
Technology and content the expenses was $19 3 million.
And as a percentage of G M. The improved zero point of 7% from one point there of some class yet.
Most of the things was attributable to a more effective cost control and efficiency improvement.
Despite the prioritization of always take some development hypothesis.
G&A expenses increased to 18 million.
The increase was expected.
And mainly reflect a variety of investments we made to support our long term growth.
The flip side.
We've recruited new talent.
Especially for our growing omni channel services.
We also upgraded our compensation package for them.
All of the critical roles all of this will attract and retain the best of talent in the industry.
Secondly, we saw an increase in professional fees related to all of the increase I'm on the activities.
And thirdly, we have start page two income additional expenses related to all of the new headquarters.
As a percentage of G. M D. G&A expenses increased slightly to several of <unk> six per tonne from several of <unk>, 5%.
I'm really due to about 5%.
These were partially offset by efficiencies from the first part a procurement and monkey cost controls.
Now please turn to slide number 11.
Income from operations increased by 313% year over year will stay for a 3 million on a.
Non-GAAP basis income from operations increased by 106 per ton for $76 million.
Pharmacy type of media last year.
Operating margin for this quarter was two 6% while non-GAAP operating margin was three 7%.
And then on slide number 12.
Non-GAAP net income attributable to ordinary shareholders totaled $6 1 million.
An increase of 136% over here please.
Basic and diluted non-GAAP EPS, a yet what several points a phase three.
Several of <unk> 82, respectively for the quarter.
As of March 30 for 2020 for what we've had for <unk> 5 billion in cash cash equivalents and short term investment.
Lastly earlier today, we announced all of the 125 million annualized dollar share repurchase of the program over the 19th of 12 months.
King from 18 until late 2008, one for one.
This program a consistent with all of the disciplined approach for capital allocation and for per ton sides of the use of cash to increase shareholder value.
The overall, we are pleased the ways our financial results.
Despite some short term headwinds from the content right the by types of for the initiative.
All of the business has shown great resilience.
Looking ahead, we will continue for executing our strategies throughout the year and deliver sustainable profitable growth for our shareholders.
This concludes our prepared remarks, some kind of everyone. Operator, you are now ready to begin the Q&A session.
Ladies and gentlemen, even though the end of the question and answer session.
Ask a question. Please press star one on your telephone keypad and please wait for your name to be announced once again at a star followed by one to ask the question.
Yeah.
We have the first question is coming from the line of a niche.
<unk> from Citigroup. Please go ahead.
Hi, Good evening management, Thanks for taking my questions I.
I have a question regarding the upcoming June 18 promotion, a so with one month of approaching debt event can management, a shabby bears a compared to loss share.
What are the different.
The difference in terms of the consumer sentiment and all sorts of much of its rating of a income since the preparations for the eastern 18 campaigns.
The mushroom sorry, the saga to protect and a day.
Mobile Inc to spend the marketing budget for a promotion or actually a have you seen any scale back a on the promotion a that there would be more prudent to share. Thank you.
So maybe Turkey for example.
Yeah.
Yes, I think Oh, how many rhino, we have going to the five of our model to a prepare for that if the 18th only a one month left I think we can take the question from to a point of view first of all from the brand apart the actually I think we prevail does.
Much more of a longer time compared with lots of your in the from the merchant wise and also the promotion paydowns in parts of <unk>.
A more mature than before and you can see a Jim will actually and also other pass on the has released the or a catalyst this year and a all of our preparation of the current on the up all of this and then other plants how long do highlight is from the actually from the platform itself. After the regulation you can see.
Actually the Alibaba will have been more children a friendly two hour of brands out of the merchant and this has been demonstrated by providing new tools to merchants with a lower cost exactly by waiting to sell off of the deposit fees. The lower the interbody with a small new brands, which means I think for a busy year six the 18th for the smaller end.
The middle size strength they're.
The European there can be a little more improved and of all of our larger brands within collaborate to right. Now we are finding multiple days. Besides the tmall platform and the other has a like a emerging channels.
To realize the.
The well yes.
I see thank you for much of QE.
Okay.
The next question comes from the line of.
Ask the shoe from credit Suisse. Please go ahead.
Thank you management for taking my questions I guess two questions first.
First day is that you have mentioned of about the selling machine a quicker.
Please elaborate more on this and what's the latest progress and what we should expect the next stage.
And my second question is about the a impact.
The impact from the a fight caught in the issue of how how should we see the impact for both two two and full year in terms of how large the impact to be and how long battled a continue thank you.
Okay.
The IRA.
Take the first one of all the sudden even sure thing and then I'll ask the author to answer your second question.
About the PCI.
Uh huh.
We mentioned selling machine a you know.
I think the a results generating the now is quite encouraging but it's still in a quite early stage. So I think two of them.
A major task today for the team as debt.
We just wanted to deliver a deeper in the more solid resolved before we can roll off this a tool kits to other brands.
But.
Anyway, we are a quite optimistic for the potential of this tool and we think this will be instrumental for a lot of brands to generate incremental sales in the future. Yeah. We can I think we can see this for.
All of it or not.
And the second one of our D C a R.
Yes, let me a share some thoughts of the PCI.
A for the PC I think it's mainly impacting the apparel category and for US is a mandate of sportswear.
And fashion.
I'm a placement breath.
It's a sensitive issue and the very difficult, it's very hard to predict what's going to have a nice therefore of the brands are keeping a low profile.
The <unk> brand for many of the customer and many of the communication properly and helping brands to decide when to make the investment into the advertising for generates the backfill for <unk>.
Are we starting to see the impact since the end of March and throughout April we have seen some impact to all of the topline a.
Oh, that's a girl.
Starting from me, we have seen a sign of recovery.
We are waiting to see what's the 618 out of the time.
The outcome looks like to decide what the true impact for the full year.
Our base scenario of a plenty of the business for what he is with Inc. The impact will be in Q2 at the one of each of my.
But hell of a second half a.
All of a outflow will kind of unchanged.
Oh, that's that's all of the overview of a forward the PCI.
Yes.
Thank you.
Thank you.
Do you have the next question coming from the line of Joyce Ju.
From Bank of America up in the store.
It is a management congrats for the I felt like without the support areas.
Hum.
As a person.
Yes.
Yes.
Cash flow.
This is a.
Yes graveyard.
For sure.
True.
Go for it.
All of it.
Got it.
So the timing.
You are breaking up a little of it not very clear.
Okay.
It's a better now.
Yes.
Yes.
Oh, Yeah, that's right I mean, given we actually see in Crazy exposure announced the launch out of a could you share with a let up at more in terms of all of its yard which had.
First of all like working for a man hour a survey.
Services provided through the pets in the prepared for the true 18, given you know we all have like you know well as a platform promotions and it should be a per pet I need to attack and the second question is actually looking at what are the kind.
From freight off of our.
Dunkin' more of a sense of G. N V. Just types of understand a which platform concept the <unk>.
That was for two days like in the in for nano well a.
And how we should expect with the ratios the change all of our debt.
Okay.
Thank you.
So many of these simply talk about the non small, but and then I was talking about the chemo.
What's the message.
Sure.
I think of it.
Regarding the regarding the the how to see the the Omi channel landscape of I know I also would like to take this from the two upon the deal.
For the longer term actually you see from the brand upon the view to have a healthy on the sustainable growth of brands need to continue building their relentless a release dates in the future proofing the ARPA.
The other news site from a constantly adoptions of trying to assess of the cause.
It's a katie's online kind of lessen the island. So a phone based upon the real you can see even in the coming I mean, six to 18, they've been training to a fleet and also to a fleet. The boundaries on the also to trying different angles all of the promotion part use different tools and a different platform you can see some of our category, especially in the fashion.
And also a luxury maybe a they've been using the mean utilize some of the lifestream waste a as a PA even outside of a may 20 campaign, a right before the 618 to pass the word or I mean, the business model and also the the consumer landscape in a in a in.
In that platform and also I think the second part from the platform itself, a they're a strong D. A U a E. Those especially comes in a range of <unk> platform has shows we have a great I think potential to realize a close loop income of fitness there so which means we look good on this that's why from thousands of a.
Our own efforts we've been trying.
Trying to a asking quake and the make progress in the emerging channels to build over a work force and also of the last months here to make sure when the.
It's come up we can do even better there yeah.
Okay.
Now I will make some comments about the of the MISO the AUM of no channel in place.
So basically for the increase of the non chemo of the channel of the per tonnage. We saw the increase from one channel a outside of chemo and a most significantly from the mini program. The notes Pony a far behind the pace our friend installed adult.
L a.
So this is a further proof that in the market, you're probably looking for a channel solution, where culture and a half of what Johan.
A sizable your highest of.
All of the technology capability, we call for the story.
The response paid two hour kind of come out.
And also a I want to a a.
To repeat that even though we made progress in the non chemo.
And a kind of PMO itself is actually growing a pile of like Oh.
We delivered over a 20% year over year growth from the Tmall channel weighted a high the Alibaba Tmall a channel.
Yeah on your growth.
Actually a demonstration of powertrain type.
Let's say for how the brands to be successful in the chemo, China as well going forward, we will keep making the investment into our strategy to go for the omni channel and helping a.
For helping our partners deliver more incremental growth for that.
Yeah.
Just a quick follow up could you remind us like you know what's the.
All of next or other channel are they similar to the Tmall are they actually there is a friend and also with higher pretax income.
Yeah.
Oh, that's a hotel.
I want a pet blended take rate margins, having I'm, giving a different.
Okay. So.
So we're in the early day in terms of Omni channel. So we're still in the stage of making the investment therefore, the take rate a whole other channel is not high schools a PMO.
And also is a we talk about in the past.
It's a different channel has a different cost model for.
For example, if you look kind of a mini program is actually a has a much simpler operation, which rig class significantly last call comparable the chemo operations.
All of the take rates charged for the model will be different comparable with a chemo.
But having said not a what we at least vibrancy of what we don't want to do a used too colorful a it's a girl.
Got it.
On a profit.
We are looking for sustainable long term growth. So every new channel of.
Of which develops we will aim for maybe some of that channel profitable in the medium and the longer term.
Thank you very much.
If you have the next question coming from Thomas Chong from Jefferies. Please go ahead.
Oh, Hi, I have two questions.
All of the first question is.
When we talk more about all of our M&A strategy and my second question is can management elaborate more on the cost base per se.
A optimization and.
Operating expenses.
Okay. So I have two questions one the income I'm on the strategy and secondly is on the cost the same.
It kind of.
How how the optimize the cost base right.
I will go for the I'm.
My name is part of the DFAST.
So basically we laid out all of the medium term signed a long time, so we want to become a.
A 108 billion Dnb company in three to five Years' time.
So you're all day to do that well actually a looking at all the growth flavor of where things. If we only called holds the outstanding for all of them.
We'll not be able to deliver all of a.
All of a medium term objective. Therefore, we will we are actively using a monday I sort of wait for girls to our topline.
So that's the first direction, we are aiming for through all of the on Monday.
And secondly, a the.
The requirements of our customer expanding and a we need to enhance a improve our own capability.
So in that way, we will be able to salaries of our customer feature for them.
Therefore on a one time, we're looking at you saw the.
Internal capability to do it and at the same time, we look kind of external.
Class a capability to how fast you do a faster.
For example, you the things are all of the Oh, what sort of hatred aligned with I think it's actually helping us to a total.
On the science capability of very quickly in a the mini program, that's all of which help us to a actually took a to provide a box I'm sorry for the customer. So that's the type of a month.
And then the third one.
So we have seen some new channel.
We have seen some channel where the girl of the state has a huge potential. So for example, the OEM.
So in this quarter.
<unk> made some isolated units a month into some like a screening company, which pilot to enhance all of a life screening capability.
The weighted at all in mind, we're actually a.
Well actively looking at the different targets and using the M&A is a driver for for all of the business. So that's an M&A strategy.
On the cost optimization, but this is a one off all of a strategic pillar.
So there are two ways, we want to do it.
One way or a suite a technology company, what's the athlete needs to use the technology to drive efficiency I E. A in the R&R. We mentioned, we'll have a POC sits in the operating center.
As a base all of a role type one and also a lot of holds the see some tools, which by the way.
All of that will actually deliver a significant savings through automation and through a bank of a process management.
And at the same time, the second a debt.
The second a enabler of all of the cost optimization I used to go through all of the initiative of our I see what we call a remote service center.
We start to build from the OLED, yeah in Nantong and in Hefei.
The goal of achieving that is actually to enhance our customer surveys of.
By a moving on the operation of a restructured weight from a high cost location in Shanghai into a lower cost locations, where at a lower cost we're actually kind of acquire higher skilled labor to do the work for a lot.
So in that way without compromising the customer sorry, we will be able to see something between 15% to a 25 per ton cost the efficiency just from a labor rate per site.
And the if you will think about if we I think the technology process reengineering and a at.
For the location a location driven a labor cost efficiency, well actually see a bigger impact all of our cost base from some I'll, let by all of whom I've seen well actually see something between a third page will suddenly a five per tonne overall efficiency I think those two things together, so well now.
Funding those two initiatives with a wider a business unit waiting Baldwin and one thing we will see some might take place equal a cost base of both of them going forward.
Yeah.
Yeah.
Okay.
Thank you.
Thank you.
Yeah.
The has the next question is coming from fetal Zhang from C. A T. C. Please go ahead.
Uh huh.
Thanks for taking my question I have two questions for.
One is a regarding two new brands.
No I want to know our new brands you know this quarter, we have many new brands a I want to know the number of new brands coming from our investments or a corporation I always I click or a foot yet or you know foreseeing a those are the those corporation to have a better understanding to our brand portfolio and also what is our same store sale.
The growth for this quarter. A this is my first question and my second question is a is what is management view on Tmall platform post the regulation of will it be more friendly to motions or more to a local brands Inc. 's address a thank you.
Okay I will take the first 150 from.
The amendment and talk about the second.
Firstly, the 15 brands, it's actually a mix of both the organic growth and also of the acquisition from Okay. So basically kind of push out the comfort you have six brands within the 15 brands, we actually have a class and secondly for the same store growth.
Looks like the same store is actually 27 per tons year over year same store growth, but if we look at the same brand growth year on year. It's actually go up to 31 to a 32% which means our homing of kind of property.
And it's actually filed from the brands to grow the channel as well on top of the same store growth year over year.
Yeah.
Regarding the post the came up a host of regulation I think a somewhat of a lot of the publisher drafts of right now and also we have a lot of a close starting dance with channel you can see a actually Alibaba has been more closer in the most of them. The day to the merchants that has been demonstrated by providing Youtube a two merchants with the law.
Our costs and the eye, leaving some of the because he sees in the lower the entry by a true new rents a I think of they will have a director of improvement on brands P&L, especially for the smaller on the medium sized companies from the local brands and also I think the one thing we like to pull all of its about the Shanghai hub. So in the Ah in I think last.
The amounts of April in the PMO closed door event pop park and the Tmall either a has a compressed we are supposed to prior to this year well do to improve the consumer a expiring further on the create a bedroom a marketplace environment for merchant and the also the the.
So they could provide the limelight.
So the relocation a.
Two a wheel hub came out of a better serve international companies shutting goes on the site and also the relocation of where in fact, the most a lot of categories starting from the beauty and the other sports and also there of consumer arent a consumer operations unit, a will move to Shanghai, the first away from the other humans.
L. A somehow for the other units with a follow and the things thousands of how corridor is also located in Shanghai. So I think there's a movement will also for the strengthening our collaboration with brands and also out of about a group together.
Thank you.
Very helpful. Thank you.
Okay.
Do you have the next question is coming from.
Charlie Chen from China, or something sort of ahead.
Thank you a this is Charlie Thanks management for taking my question. So I for one question about the a take place. So you just mentioned that a the.
The take rate for emerging channels are not comparable to a chemo of channels. So a can you share with us more details about what are those low take rates from the new channels of our because of the product category of data you are selling in the new channel the sort of definitely a naturally.
Having lower take rate or a you are giving some sort of a subsidies are helping those brand to grow initially so that's a you all voluntarily taking a lower take rate and also the follow up question is how do you think the a take rate trend in the new channels going forward. Thank you.
Okay.
Oh, Hey, Tony Thanks for the Hudson.
From a take rate in the new channel perspective.
Actually a mix of both because you just mentioned about a one night on the different categories. So for example, a we have seen the icon.
MTGE has a great we paid a high for us from the potential in the platform license a D. A nightclub at a meaningful from wage has historically comparable lower take rate, but most importantly, it's like I mentioned earlier, it's actually the pulse of the swaps of different when we do a business.
We don't do a business because of the pulse rate with the lips and by looking into the revenue we generate and the also the calls waiting for that business. The all of the two types of let's see how much propane the comfort yields for the bottom line for by looking at a different model.
In the.
The new channel were actually not purely focused on the T. M. The lack of sleep for per song, but revenue for for example, a a.
Have a base a C M D wave a lower.
The kind of takeaway, but generate a significant revenue weighted you talked paper pulp and paper out of Ohio at the margin and we can take a business we should be doing going forward.
The focus on the take rate the way of food per tonne a potent.
So that's number one.
Number two is we did make some investments in the early phases. So for example, as Vincent mentioned on a technology investment to a into our system, we changed a plug and play pay for it we're actually pre fund a lot of channel one a brand as a new request with the eye.
The very quickly take it onboard so that you might for a month and that you might from an area, where we will keep you might see in the next few quarters, but after a lot.
So we have built a style and after all of the technology investments.
Has gave us the efficiencies we will be able to receive the benefit from the style of the business, which will increase the profit margin.
And also the take rate of the new channel. So that's the plan going forward.
Alright, Thank you very much very clear thanks.
Thank you.
Once again, ladies and gentlemen, it is thoughtful of by one of if you wish to ask a question.
Hum.
As we have no further questions of this moment I would like to hand, the conference back to a host of Nicole Please take over.
Thank you operator in closing on behalf of coupons and the management team I'd like to thank you for your participation in today's call. If you require any further information please feel free to reach out to us. Thank you for joining US today. This concludes the call.
Thanks, everyone.
Thank you. Thank you.
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