Q4 2021 Mogu Inc Earnings Call
Ladies and gentlemen, thank you for standing by and welcome to the mobile fourth quarter and fiscal year 2021 earnings Conference call. At this time, all participants are in a listen only mode.
After the Speakers' presentation, there will be a question and answer session.
Ask that question during the session you will need to breast are wondering your telephone.
I would now like to hand, the conference over to your Speaker today, Mr. Roger Hu. Thank you Pease go ahead Sir.
Thank you Hello, everyone and thank you for joining US today moves earnings release was distributed earlier today and is available on the IR website at IR <unk>, Inc. Dot com as well as on the business wire services before we begin I'd like to remind you that this conference call contains forward looking statements within the meaning.
Our section 21 E. Other 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 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 on 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 and other risks uncertainties or factors is included in the company's filings with the U S Securities and Exchange Commission. The company does not undertake any obligation to update any forward looking statement as a result of new information future events or otherwise, except as otherwise except as required under applicable law.
On the call today from <unk> are Mr Shark, Chen Qi, Chairman and CEO, Mr. Raymond for.
Chief strategy Officer, and Miss from Chief Financial Controller, Mr. Chen will review the business operations and company highlights followed by Mr. Wang who will discuss financials there'll be available to take your questions 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. Thank you for joining us today on our fourth quarter and fiscal year 'twenty 'twenty, 1 earnings conference call today.
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During the past quarter, we continue to see a consistent and steady growth in the Lotte E Commerce business, the Jimmy from Lotte E Commerce increased by 42% year over year to RMB.
2.2 for 5 billion in the fourth quarter contributing to 87, 2% on for a total JV during this period.
This demonstrates that mobile has successfully execute on the transformation of its business and has essentially become a pure play e-commerce powerhouse.
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Early mover in life E Commerce, we have witness the advancements in the life E Commerce business in China. During the last 5 years and have established a very differentiated shopping experience for users.
Allow us to continue capturing new growth opportunities in e-commerce for space in China.
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So continuous innovation is an essential quality mobile's culture after establishing our Lotte E Commerce business. In 2016, we have also developed for a product feature called short line, which has really begun to make a breakthrough over the past few months.
So life is basically a short video clip produced by Kols in local lie for them and can be distributed as a structure and tax information to wider audience in public.
This information can be searched structures categorized and recommenced in the feed.
Different from the 1 on performance in the offshore short life can have very long shelf life for.
For consumers to browse and purchase.
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As for all users short life has significantly enrich their lives mobile shopping experience.
So lower the entry barriers for new users in our life E Commerce business, although the user stickiness of life E. Commerce is for a strong. It's also a very time consuming and it presents a higher entry barrier for new users. That's what makes it difficult to fully improve the penetration rate of.
<unk> E Commerce E Commerce space.
Sure video is not just a simple recording on product presentation. He also captures the best moment of the host of the light post and also the personal touch on the product feature.
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As for our as for our Punters, our short line product. It's also disruptive innovation show life can be easily recorded during the mobile live shows and their production costs are very low.
Apart from real time sales are going to lap in the life showroom So life allow.
Allows for Kols to fully extend their sales channels in the long term.
Furthermore for life also provides an excellent growth path for small and medium kols.
By leveraging the lower entry barrier for gaining new fence, they can generate a stable and considerable considerable considerable.
Revenues from the solar business.
A few months after launching this product we have already seen hundreds of kols growing their presence on.
As for brand partners short life now enables them to generate continuous sales volume over extended period of time in addition to generating expose yourselves a life.
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We have achieved our early success with our short line product and I believe that it will be a breakthrough in Lotte e-commerce industry going forward, we will continue to expand the ecosystem on salt life and to help accelerate our life E. Commerce growth. We believe that there will be unlimited possibilities for Lotte e-commerce in the future.
And the mobile will be a continuous innovator and a beneficiary of the industry. Thank you.
Thank you for shock.
Thanks, again for everyone to joining our conference call today I will now walk you through our fourth quarter and fiscal year 'twenty 'twenty, 1 financials, we believe year over year comparisons on the best ways to review our performance.
Therefore, unless otherwise stated all percentage changes I'm going to mention we'll be on that basis.
So that's a review on the financials first on <unk> for the first fourth quarter of fiscal year 'twenty 'twenty, 1 was RMB $2.476 billion.
An increase of 6.5% year over year.
<unk> for the 12 months period ended March 31, 'twenty 'twenty, 1 horse RMB.
13.855 billion, a decrease of 18, 8% year over year on.
Our focus has been growing the <unk> from live video broadcasting business, which has increased by 42% year over year to RMB 2.2 for 5 billion.
Love video broadcasting associated <unk> for the fourth quarter of the fiscal year 2021 accounted for 87, 2% of the total <unk>.
Let's now turn to revenues.
During the quarter total revenues decreased by 23.6 per cent to RMB 90.
9 million from RMB 119 million during the same quarter of fiscal year 2020.
Commission revenue decreased by 1.7% to RMB $65.2 million for RMB $66.3 million in the same period of fiscal year 2020, primarily due to the restructuring on company's business towards <unk> focused model.
Marketing services revenue, which is mainly generated through our marketplace business unit decreased by 34, 5% to RMB $11.9 million from RMB $18.2 million in the same period of fiscal year 2020.
The decrease was primarily due to restructuring of company's business towards <unk> focus business.
I will now walk you through our major cost and expense.
Cost of revenue decreased by 35, 4% to RMB $37.9 million from RMB on.
<unk> 15, a $58.6 million in the same period of fiscal year 2020.
Which was primarily due to a decrease in the costs associated with the lower on my direct sales.
Sales and marketing expense decreased by 44, 5% to RMB $43.4 million from.
From RMB $78.2 million in the same period of fiscal year 2020, primarily due to optimize our spending on branding and user acquisition activities.
Research and development expense decreased by 43 per cent to RMB $19.6 million from RMB $32.8 million in the same period of fiscal year 2020.
Primarily due to the optimization of head count.
G&A expense increased by 124, 4% to RMB $25.7 million on for.
RMB 11, 5 million units in periods of fiscal year 2020, primarily due to the reversal of share based compensation expense in the fourth quarter of fiscal year 2020.
Amortization of intangible assets decreased by 5.7% to RMB $82.1 million from RMB $87.1 million in same period of fiscal year 2020.
Loss from operations was 100, $110.3 million compared to loss from B on.
From a loss from operations of RMB $149.1 million in the same period of fiscal year 2020.
Net loss attributable to <unk> ordinary shareholders was RMB $108.6 million compared with a net loss attributable to Moog was ordinary shareholders of RMB $141.90, net in the same period in fiscal year 'twenty 'twenty.
Adjusted EBITDA was RMB $20.1 million compared with negative RMB $83.6 million same period between 2020 cash.
Cash on cash equivalent restricted cash and short term investments why on the 800 and the $3.1 million as of March 31, 2021, compared with $1095.4 million as of March 31.2020.
So, let's now move to the financials to the entire physical year on 'twenty 'twenty 1.
Total revenue came in at 482.4 million a decrease of.
43.42, 3%.
So the commission revenue came in at <unk>.
$318.6 million a decrease opportunity to 7.3%.
Marketing services revenue coming from.
At $71.3 million, a decrease of $17.76 per cent.
For the overall decrease was primarily due to company's restructuring on a transformation of its business towards the <unk> focused model.
Cost of revenue decreased by 37, 7% to $183.1 million sales and marketing expense decreased by 60 on.
62, 5% to 229.8 million, primarily due to optimize our spending on branding and the user acquisition.
R&D expense decreased by 39, 5% to 103.5 RMB.
And the G&A expense decreased by 19, 6% to 103 point.
Zero million.
Loss from operations was $428.9 million compared with the loss of operations of $2072.9 million in fiscal year 2020.
Net loss attributable to mobile was ordinary shareholders was 328.0 million compared with $2423.6 million in fiscal year 2020.
So adjusted EBITDA was negative at all day.
$1.5 million compared with a negative.
Compared with negative $320.1 million in fiscal year 2020.
Our net loss and adjusted EBITDA improved modestly by 85, 3% and 83, 9% respectively.
We showcase the positive effects from our effort to optimize for customer acquisition and operating efficiencies.
By the end of fiscal year 'twenty 'twenty, 1 we'll have reached a major milestone in the execution of our strategic transition to on live video Broadcasting E Commerce company.
Our breakthrough is a short video.
Our breakthrough in short video further expand our live video broadcasting.
Ecosystem.
He is a new revenue growth generator.
Going forward, we will continue to execute on our disciplined approach in terms of customer acquisition and it will parnell with more capable and innovative for <unk>. So that they can deliver the best products and the best shopping experience for our consumers.
So with that I would like to open the call for Q&A.
At this time.
And we'd like to remind everyone in order to ask a question you May Press Star then the number 1 on your telephone keypad.
That need star 1 on your telephone keypad, we'll pause for just a more medically biologically we named roster.
Your first question comes from the line of Sabrina who from Jefferies. Your line is open. Please ask your question.
Thanks management for taking my questions I have 2 questions. The first 1 is how should we see the competitive landscape going forward finished shadowy do snaps from step on.
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Sure. So I'll answer the question to our to the English that so.
So number 1 speaking of competition of course, we are seeing that the e-commerce space in China is extremely competitive, but we do believe that okay.
Chinese consumers have verified demanding they're always asking for more innovative and more interesting more immersive more interactive way to shop.
China is becoming a very strong concho was a ferret out for in society. So the our shoppers who have many different options, they're not just going for the cheapest products all day on going for the massive for that product, they're actually asking for different shopping experience. So that's why at mobile will stay very very focused on product innovation and to give up.
Our consumers the best experience and we believe that our Kols partners. They know our consumers the best they can find the best part of that is suitable for our consumers and they can actually deliver the best experience.
So speaking of all maybe all of the competitors we are seeing that the other on maybe your short video platforms. They are fair for a strong maintenance per traffic on intensive for entertainment and content, but we are a large e-commerce platform. So that's the fundamental difference between us.
And we do believe that we can provide a more holistic shopping experience in terms of reform return on.
And also quality control brand authentic.
Authentic brands.
All of these are very important elements with our consumers to make a purchase decision. So that's why we're different from short video platforms and on.
So compared with other.
On Big shopping platforms I think we're very much focused on the human adamant, we want our kols to become the from face of.
Our shopping experience so they can interact with.
With our consumers so instead of people go.
For certain platform that search for products they will be actually.
Connected with our Kols to buy whatever products, they actually our kols things inkjet, especially suitable for them for that.
This basically.
Sorry.
Differentiate us from the other shopping platforms and we believe that for our users as you can see from the retention data.
Sorry.
As shown on that it's showing their vote to support our platform.
And the second question is about the short life and the revenue growth.
So we.
We all have a view that share that is a very very important product feature that can help.
That can help all the kols to grow faster on the platform.
All their suppliers can benefit from the growth Kols and our consumers will be attracted to us because of this diversified and a massive supply of treehouse and substantially the products behind them.
So we believe that this is a very important growth engine for us in terms of interest of users and <unk> so over time.
Our supplier will be increasingly diversified.
And I'll share our experience will be increasingly diversified and therefore revenue for any financial numbers as a result will come after that.
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So when we when we examine the competition landscape. We also need should look at our internal reasons. So I think our dedication to lap e-commerce and our very extremely efficient.
Operation is a very important distribute differentiating factor. So we know that E. Commerce is very complicated system, everyone needs to do a lot of work around the system to make sure that system doesn't more part and a lot of income is essentially a more challenging and as we can see that might be commenting accounted for 87% share of our total channel.
We're now effectively a pure play off a lot of ecommerce.
Have been dedicated to e-commerce.
Segment for firepower of on time and to ours.
Investments in our dedications in this on this.
Segment will definitely pay out and our focus on the line E Commerce segment.
Is.
It's a big differentiating factor that differentiate us from competitors and the short lives. As a result was also the result was also the.
The fruit of our dedicated effort in this play in this segment.
So without this much this level of dedication.
We wouldn't be able to innovate a product like this and we believe that this is actually a very big breakthrough of the e-commerce industry in China.
Okay.
Yeah.
Your next question comes from the line of Charlie Chan your.
Your line is open please ask your question.
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Paul.
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Charlie will find out about that so basically the question on is the first phase for its employees basically about.
Oi off of short line versus alive.
In terms of the.
Operating on different factors, including user interaction in the showroom and also how many times, we can repeatedly Houston so on.
On that video.
2 the company's Andreas.
Yes, that's a very good question. So shoreline on shut up is meeting the user injection. So that's actually the.
The best part of the after show that.
Our users tend to find better.
User interaction.
In the life showroom, so that's where most of the interaction happens, that's where the immersive and interactive experience takes place.
However, the pros on the advantage of product is that it can be used forever. We are seeing that on the hour.
Our host it can be.
They are they are recorded on short life.
From last year.
From 12 months ago can be still seeing by our audience and people are still making purchase of line items that you introduce our she presented 12 months ago. So it has a third party law on shelf time. So people can always go back to the product and the pilot so that so apparently the return on investment on that or I guess the cells that can generate per.
At Ku on sales can generated per short life is very very high.
Speaking on the interaction or I guess.
The specific things about a show that is.
In short line you can see all the previous product reviews posted by previous.
On buyers so.
In line.
In life, you actually cannot see OLED user reviews at same time, because the price actually new and essentially new to the audience by insured lives because as for long shelf life. So you can actually.
See all the reviews from previous buyers and then make a more informed decision accordingly, so therefore, the conversion rate even though the.
Assistance from previous buyers make it.
The conversion rate even higher so that's that's kind of what we have observed over the over the course of last year.
Over the last few months.
Okay. Thank you very much. Thank you John Thank you.
Again to ask a question press Star then the number 1 on your telephone keypad.
Your next question comes from the line up Lucky low your line is open. Please ask your question.
Hi.
Uh huh.
Okay.
So on.
Well on <unk>.
So from.
Well Monika.
Sorry can seafood T M zone.
How do you think on people from Lincoln Fine tissue.
Okay. So look it's a question on his apologetic growth for the last quarter and for the quarter going forward. So I think as.
Sabrina mentioned out there China is actually extremely competitive situation on the last year and e-commerce growth.
Really fast.
And interest of the in house sector growth. So it's also extremely competitive so at this juncture, we wouldn't be able to keep on forward looking guidance on the on the GMB growth.
We do believe that the docs from ecommerce.
<unk> segment has very very high potential and we're only at the beginning so we are optimistic and positive on this side. So we'll continue to invest.
In the life E Commerce business to make sure that we can capture all the growth opportunities going forward.
Okay. So operator do we have next question.
There are no for a good question at this time.
You may continue.
Okay, great. So if we do have follow up questions on the floor.
We can end the call today. So thank you again, everyone for joining our conference call today.
We'll look forward to seeing you on the next quarter.
This concludes today's conference call. Thank you for participating you may now disconnect presenters. Please stay on the line.
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