Q2 2021 AiHuiShou International Co Ltd Earnings Call
Good morning, and good evening, ladies and gentlemen, thank you for standing by and welcome to the Highway shows International Company Limited second quarter 'twenty to 'twenty, One earnings conference call.
At this time all participants are in a listen only mode.
We will be hosting a question and answer session. After management's prepared remarks as a reminder, this call is being recorded.
Now I'll turn the call over to first speaker today, Mr. Jeremy J director of corporate development and Investor Relations of the company. Please go ahead Sir.
Thank you Hello, everyone and welcome to cap, we show <unk> second quarter 2021 earnings conference call with US today are Mr. Terry Chen founder, Chairman and CEO and Mr. <unk> Chen our CFO.
Our second quarter 2021 financial results were released earlier today and all available our company's IR website at IR, We show Dot com.
Well today's agenda Cary will share his thoughts on the Q2 performance followed by Rex who would discuss the financial highlights for the second quarter of 'twenty to 'twenty, one both carry Iraq, where do I end the Q&A session.
Before we continue I refer you to our Safe Harbor statement in the earnings press release, which have a price for this conference call any forward looking statements that the company makes on this call are based on the assumptions I spoke to date and the company does not undertake any obligations to update these statements.
Also this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. Finally, please note unless otherwise stated all figures mentioned during this conference call.
And all comparisons are on a year over year basis.
That I will turn the call to carry all business and strategy updates. Please go ahead.
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Hello, everyone and thank you for joining us on our first earnings call as a public company. We are very pleased to have the opportunity to share our business updates and strategies with these as we implement our mission to give them a second life too.
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Alright, you under New York Stock Exchange in Europe marks a major milestone in our 10 year development history as a technology driven consumer electronic transactions I'm, sorry, say that for all four business lines, namely a transfer recycled P. J T marketplace marketplace and HFC life span across the.
Entire industry value chain.
This offering connecting all industry participants to realize a closer look value chain cover both the supply and the demand side of the industry. Our platform combines seafood b b to b and b to seek an ability to provide standardized recycling inspection waiting pricing and after sales are weaker in the past.
This decade, we have dedicated our efforts are improving the scalability standardization and efficiency offering consumer product transaction.
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Our second quarter results exceeded expectations. They have called our G. M. D reached seven 8 billion up 69, 6% from the same theory lap here total net revenue required at 1.87 billion RMB.
Which we presented in your ear inquiries up 56% at 1.2% the number of consumer products transacted on our platform with seven 8 million up 27, 9%. These results are a testament to the enormous growth potential off the point on consumer electronics firms actually industry and our demonstration.
All our supply chain capabilities and our efforts. He says I'm just industry standards as well are well acknowledged.
Generally for the last 12 months increased by 64, 9% to 26 billion LTM revenue increased by 46.2% to six point for getting and L. P. N number of consumer products transacted increased 533, 7% to over $28 million.
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Turning to strategic areas first Oh, one P business, we expanded our geographic coverage and trading channels rapidly. During this quarter, we continued to optimize user experience when device trading with our strategic partner JT group, two copyrights consumer willingness to participate in the trading process.
We aim to make our one stop pretty experienced at the go to solution for new partnerships in China also to better address the issue of rising retail prices for annuity like this we've cooperated with JD group during the June 18th shopping festival at the launch of March's. He liked reading campaign that a wider discount for their trading.
Most of that would you like it.
These efforts allow us to offer consumers trading at more attractive prices and enhance our ability to source more supply as a result.
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Second we're continuing to expand our service coverage well have new offline doors and expand third party merchant services in lower tier cities as of June 30th 20th ones. One the number of offline to work further increased to 862 currently 184 cities in China, among the 485 square South.
Any chance to work 365, we're jointly operated air transport and 12 for pipeline connections to work our business philosophy is to open all of your stores and managing them well.
Starts with our brand and brand awareness and fulfill the online to offline 20 orders and they'd be able to swap out of efficient sourcing by into working our online with offline to working through it is we're able to provide an optimal trustworthy user experience. Furthermore, the well established stores generated solid cash flow and.
Profit these are great assets.
Second quarter, we accelerated the penetration of all city level operation station.
As of June 30th 21 to one we had 30 city level operation centers.
By our prey on consumer electronics supply chain capabilities, we integrated offerings at our offline, okay selections doors and online sales channels to establish a new city level distribution model for primetime marketplace.
We expect this to become a new driving force for our business growth in the second half of 2021.
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In terms of our online marketplaces, we continue to go would be extending our reach to buyers and sellers in lower tier cities.
During the quarter, we acquired over 10000 registered sellers on P. J P marketplace at all.
I'll pause high marketplace weeks' worth of additional devices from different suppliers and performed interpret his quality inspections and operations before selling directly to individual consumers. Thus further consolidate in the industrial chain.
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Third in terms of new distribution channels, all five high other than M. J D dot com, including tow in I'm quite sure our strategic investments into this food exceeded 20 million, we have built out our partnerships with quite a shelf, but they didn't last revenue platform ethylene power small merchants I'm quite sure with all of our 35 point on income.
Or electronics or by offering inspection and operation capabilities, we're able to effectively establish not like premium drilling self channel.
Mid July we launched the recycle portal I'm quite sure through Prime shop going forward, we will enhance our collaboration with live streaming channels to provide users.
With premium recycling services, and where you see.
The level of accretion centers to establish our New York City long long distribution model for you all.
Marketplace.
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Luckily we have also strengthened our corporate governance by establishing I'm, Yes, She committee and the board of directors and releasing our 'twenty 'twenty. Yes, you report, which is currently available on our IR website. The report establishes an index off G. R. I standards based on characteristics of the premium consumer electronics.
And all signs and industry, leading calculation methodology for carbon emissions in the sector, you know cordis with China. Unfortunately, SEC five year plan for the development of the circular economy released by the National Development and Reform Commission in July we aim to further develop our supply chain capabilities for pre owned electronic devices.
Remote sustainability and standardization of the industry. Looking ahead, we will continue to improve our yesterday initiatives optimize corporate governance and operate our business with strict risk management measures to anticipate and adapt to regulatory changes.
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As we move forward into the third quarter and beyond we will continue Tony has our supply chain capabilities in credit penetration rates for China's retail services and improved and recycling and trading experiences for consumers. We believe that supply chain constraints on quality devices continue to be the bottleneck for the industry's development.
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We also continued to diversify our supply chain and lower tier cities empower merchants with our service offerings and maintain strong growth momentum for our platform businesses.
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Third we will continue to improve operational capabilities and reduce fulfillment expenses through investment in automated testing integrating we are pleased to report that matrix 2.0, with the second generation of our automated inspection system was put into trial operation at our Changzhou Operation Center It brings automation rates.
To the next level matrix 2.0, 45 is the foundation for upgrading our automated operations down here in South China. Later this year for future expenses saved from improved operating efficiency, we intend to invest in long term business development.
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Furthermore, we will accelerate the exploration off new initiatives, we remain optimistic about the growth potential of our live streaming e-commerce channels Type-high selections doors in overseas markets.
Our competitive strength and integrated online and offline platform, we are confident in achieving our potential operational grew up coal and.
And reinforcing our industry, leading platform, we will continue to execute on our principles as we enhance our supply chain and technology to empower the entire industry.
We believe that the greater the social value of our business and create the right or the economic value of the business will have we aim to build as you renew into our business at that social good in addition to generating long term shareholder returns.
17 goes to those here so Rex.
How would you in conversation with that I will hand, the call over to our CFO rack to go over the financials.
Thanks, Kurt and Hello, everyone before sort of details on our second quarter financial results. Please note that all amounts are in RMB and all comparisons.
Over year basis, unless otherwise stated.
During the second quarter, our increasing scale and there are two strong revenue gross narrowed our GAAP operating loss margin kind of further improvements.
Our free cash flow totaled Jimmy increased approximately 6% among which Jimmy for the Soc increased by 72, 7%. So increase was mainly driven by a record gross in our trading business collaboration with JD group, So opening up new stores, so fishing tau pushing off a few existing stores enter the fast sales growth.
So when she devices on Pi Pi.
Keep in mind that new stores will open at the midway through the second quarter and that's due at an early stage, we expect improvements.
You can go fishing seasons of foreign quarters, Jim before online marketplace, including parts of you talking in the pipeline increased by six to eight 6%.
Driven by strong customer demand and there is a continued expansion of our platform's network effects and the SEC.
In the quarter total revenues increased by 50.
Six 2% to with some of the 868 million.
Sales revenue increased by 53, 1% to what's on the 600 extremely to Wow, our social revenue increased by 77, 9% to 270.
64 million as our platform service capabilities improved.
Revenue.
Grow faster than product sales revenue and as our revenue mix continues to developing a more beneficial disruption. So contribution from service revenue increase of $2.14, 2% of total revenue during the second quarter compared to 12, 4% second quarter town and country.
Notably Jim before because I'm in the mall to a computer for 19, 7% of.
Jimmy in Q2, we believe that our gross margin will improve ease of medium to long term as we increase the proportion of her when she recycled products that can be sold to individual consumer survive part and more importantly, we can further increase the commission rate.
With greater adoption of profit because I'm the model and the more value added services provided to merchants.
Perhaps you tie in the pipeline.
Next turning to our operating expenses to provide greater clarity on the trends in our actual operating expenses, we'd like to share the trends of our non-GAAP expenses, which better fracs abuse of measurement.
Merchandise costs increased by 56, 9% to one soundness 319 million, we didn't have any non-GAAP adjustments to merchandise costs fulfillment expenses increased by two 4% to $276 million. In addition to the immediate recognition of shippers to compensate.
<unk> expenses, resulting from options granted to employees.
<unk> performance, which we look forward to SPC. So increase was mainly due to first as of close of personnel related expenses.
The increase the number of.
Franco.
Oh, Oh, Oh, putting centers, especially now.
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Gross of copying us.
And the second is the increase in logistic expenses and all pushing center related expenses, which was in line with increasing sales.
Consumer electronics, and then capital fulfillment expenses excluding SBC.
Brewster by 56% to 200 is extremely tight due to the revenue mix off of when people that sales revenue industry service revenue when metrics to evaluate the profitability of our platform isn't that GAAP fulfilled gross margin, which remained stable at <unk>, 8% compared with the first quarter and 31 SEC.
Marketing expenses increased by 63% to 316 million addition to SBC. The increase was mainly due to an increasing promotion expenses advertising expenses and sales commissions Patriot JT group in connection was terrific.
King and associates prelim devices.
In addition to upfront payments to merchants as a way to promote so because I'm the MAU DAU pepper in marketplace. We invested in sales promotions during the June 18th shopping festival as well as new distribution channels, including building in the parcel.
Selling and marketing expenses, excluding SBC and amortization of intangible assets, resulting from business acquisitions increased by seven to eight 8% to 214 million.
<unk> expenses increased by 593, 2% to 310 minutes. So the increase was mainly due to the immediate recognition of SPC.
<unk> expenses, excluding SBC decreased by 17, 7% to 28 million, but decreasing the GAAP G&A expense.
Brexit and improve the cost efficiency in middle and back offices technology and content expenses increased by 144, 5% to $82 million. In addition to the SPC to increase was mainly due to <unk>.
An increase in personnel related expenses in connection with the expansion of the R&D team to improve our technological capabilities, and then capture technology and content expenses, excluding SBC and amortization of intangible assets.
Creased by 65, 1% to 53 million.
As a result.
I wouldn't have GAAP operating loss increased by 39, 3% to 50 wouldn't be that second quarter 2021 than GAAP.
Operating margin narrowed to two negative two 7% compared with negative <unk>, 1% and you assume share it lost a year.
As of June cities cash covenants restricted cash and short term investments added up to a total of $2.8 billion.
So that's a sufficient liquidity on hand to be able to fill our business development and strategic partnerships with chip, which generate lasting shareholder value now.
Now turning to Altra first we expect the gross momentum for the fiscal year 'twenty one to remain unchanged second fourth quarter, often even knew what the company currently expects total revenues to be between RMB 187 billion and RMB 193 billion. This forecast.
Followed a threat to the covenants current and preliminary views on the marketing and operational conditions harvest that might be mounting uncertainties. For example is our current sources of COVID-19 Delta Merit in multiple regions in China, which might adversity, our authorized stocks in their business.
This concludes our prepared remarks for today operator, we are now ready to take questions.
Yes.
At this time when we begin the question and answer session to.
To ask a question you May Press Star then one on your Touchtone phone.
If you are using a speakerphone. Please pick up your handset before pressing the keys to withdraw your question. Please press Star then two when asking a question. Please state. Your question in Chinese first then repeat your question in English for the convenience of everyone on the call.
At this time, we will pause momentarily to assemble our roster.
And the first question comes from Lucy Li with Goldman Sachs.
I think you're going to need to hang a home. Yes go ahead hygiene in NPS.
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No I can't.
I have two questions. The first one is regarding COVID-19 related travel restrictions.
We see that.
That does not clear guidance is still quite strong but considering.
The COVID-19 related travel restrictions.
Wonder if management could on Friday Uh huh.
I struggle to understand.
What kind of.
Impact that would have impacted that.
That will create on our business.
And the second question is with regard to our collaboration with J D and a partial.
Management has already shared with us key strategies on a one stop trading with JD and that we have already opened up.
But recycling channel on the I'm quite.
I shall ask Doyle I Wonder if you can help us to understand for example.
Helping to improve the build and improve the three key recycling.
Infrastructure and supply chain capabilities.
I'm quite sure Josh Thank you.
Okay.
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How are you doing well my hiring Michelle was also let me know.
IPhone opinion that the iPhone, so sudden that they'll go Fabulous Jenkins with high trading the.
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When do they give it to you soon.
Okay. Thank you, though to answer your first question.
And try to Covid and I think they'll come very entrepreneur in multiple regions in China.
You got me arrange that swept past four employees talking to a highway square area and it worked from home to ensure the safety of course their working environment.
At the same time and see academic materials were delivered to the C. D. We do not rule out the further impact of urban locked off or travel restrictions and its short time or continuous impact of our one piece of it.
Referring to the second quarter pro forma Bossier, that's all I have to hard Lockdown is is our trading business. We view them very quickly and vision, we need to say that the launch date of the iPhone Thirteenths here. It is uncertain either it will fall on a fall in the third quarter or the fourth quarter. So there might be seasonality of revenue.
Both year over year, although we would recommend you to compare the results of this brand can pop up in Europe with the same period last year.
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Trading close in Pompe.
So we would like also we would also like to mention about the successful ones off trading services as we've got it in a continuous growth more times momentum in both G. M E G M B and revenue.
So we will continue to you know right and to strengthen the partnership with JD com.
One thing to highlight is on the 10th of August we box, that's really service projects as a pilot project. We didn't go in retail and also we started from the policy of Shanghai and undertake the last mile delivery Ophthalmology franchise, iPhone, which is provided by our offline store employees.
And also do your employees will provide users with stricter with screen protectors extended warranty services and we also wanted to cover.
Then Europe nearby three two or three competitors to buy the offline source out to Colorado fulfillment after anything new from the South and we would like to expect that's backhaul collaboration from this.
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Jim or May April sounds good sounds good.
So he can keisler saga Pepe you shouldn't forget opinions from Bush Bush also what type of inflation some teaching nothing bolthouse over again to focus on social cause I shouldn't gaslog, Shanghai, social Oh, Gee too cheap.
So with all those who've been with Jim.
You can cheese, I mean be funded and that's helpful.
So that's what it's going to Europe.
So one more quickie shoot Jean said look one pencil opinion homeserve took them off she wont die shops peoples have all this what you'll come to those things.
So she.
Do you want me to me it sounds like for the most of it is when we get to them to hopefully from waste your time dealing with some.
He comes to me personally.
Okay to answer your question, we weren't quite sure quite frankly most of them all.
Pre IPO around inmate Twenty-twenty. We are we are whilst the newly my feelings you must have been quite so maybe this year. The cooperation with partial mainly includes three FX opening in the recycling bin trends I'm quite sure my wife, and providing quality inspection, Florida third party merchants, leveraging our operation centers and the supply to them.
More hours and quite show provides traffic sources to us.
The cooperation with quite shocking brought our b to C sales channels outside J D Dot com.
We only wish to cooperation with quite a show into the property still in the stage of being up to speed.
Speeding up exploration and improving business process in mid June we launched at the recycled channel I'm quite show through quite sharp.
And from a city level model perspective, where.
We're still accelerating defense exploration, we have made additional investments this quarter with more than 30.
With more than 20 million you felt child is corner.
And.
In addition to the stadia model, we would like to clarify that we stick to the strategy of building the integrated platform over the past few months, we have continued to deepen the capabilities of our integrated platform by integrating the capabilities.
Operation Center, J D channel, new channels, such as Boeing and quite shelf and peptides vaccines doors on a city level basis, and it continues to explore and validate new retail and see where do you see the model.
I'm too for pipe highest integrated city model, we set out with senior level operation stations to provide quality inspection and certification services locally for small merchants with local sourcing of supply we developed them as franchisees and authorize them to use the brand all time highs collection so that.
That's worth and operate in a standard manner franchisees, obtaining secondhand mobile phone life in the city and send them to the local operation station for quality inspection. So good at are not qualified to retail rapid distribution will be carried out through P. J T marketplace.
And this is in line with the group with aid you in your integrated platform throughout the strategy you know more in detail to figure out what the dimension various capabilities such as JD, China, though in quite a short China and P. J T marketplace Operation Center quality inspection and purposeful actions to where it should be integrated into a more efficient.
Way to form an integrated owe them all capability locally.
And we've already in the city level model projects in their pipeline, new retail the upfront investment by us.
Single quarter exceeded 20 million RMB rely on field level operations stations in 30 cities. We have opened 12 carbide selection store, that's provided online and offline sales in the second quarter, Jeremy from new channels reached 117 meeting.
With the sequential quarter over quarter growth of more than 100%.
While a good ways out and validation, we will continue to explore and fortify this model with cautious optimism and hope to have more data to share with you in the next quarterly earnings results briefing.
Okay.
Yeah.
Hmm.
Thank you and the next question comes from Gabrielle Zhou with Bank of America.
Oh sure.
Joyce.
Got it got it and I'm going to tell relaxing Jeremy to take you through that yet.
Oh, what did they end up on that if I'm wrong.
Some of them have done anything wrong.
The south bound up with just.
Oh, My God, she pallet tiny, but certainly not all of them all just a comment I thought the.
Cell phone to Oklahoma.
Now that cant go away like the deadline kicked in yet.
He said I want to close and I think I mentioned that Jacob.
It can't go down.
My colleague Hockey games development, James that don't do that.
Oh, no I should say.
People don't do that.
Hi, Patrick.
James I, just wanted to find out what the bad guys, you're baking in really good shape.
So you got a dashboard and Michigan, Indiana.
Example, I hope I'll call I'll kind of Covid.
Do Alabama show.
I think one of the tool.
Well I think the Taiwan and they'll probably your mail you shouldn't I mean should that cause it to happen again.
Hi, Felicia I wanted to cry shelf, but actually point, though.
No I don't.
I Hope you have a bad thing.
If it turns out a lot younger than she got a partnership with Dell Inc.
It doesn't take the people can really get.
Bala.
Uh huh.
We don't find those different go Wow.
Clean and government didn't do that well I think.
Yes.
Yeah.
Oh.
So I'll kind of tell what.
I think what kind of takeaway that intrusive Oh I won't translate by myself. My first question was regarding the.
The outlook for the third quarter, what assumptions are in terms of the I phone new model launch and also promotions together with the platform having been in this forecast and how shall we look at them going up it doesn't bloody awful a quote.
Quarter end of the fourth quarter.
The second question was related to the gross margin. It seems like you know declined sequentially.
To get more color on it and also what like to have more.
Insight in terms of them going for what trend. Thanks a lot.
Yeah.
Okay.
While we pingo <unk>.
To the minions Fob Port APA Cabos, Virginia, you didn't the trading team.
So hopefully it's attached to it.
Two machine builders of whole foods.
So you are too.
And then totally because sometimes you do what agenda both of them.
So Jack J E T.
He taught us a whole new cheap out with all of them.
John Mcfall copy Tucson called Crusader she does.
So hopefully someday go retail shelter.
Our whole account on women can choose who doesn't know Photogene Guangdong school clinical you'll see we didn't see it.
Okay awesome.
Physically we shouldn't lead us off with a surgeon almost all that useful motion generally supposed to pick up also.
Yeah, I'll go to class a woman a typical player coach and the really cheap mainly in the Qs The English India fossil assortment at Gulf wind, she will mostly cool pingo <unk> teaching, though each ito duckboard it sounds your pension cost, which helped little tissue.
So to answer your question regarding the launch of New iPhone model Oh, we do have.
Function that the state might fall in me late in mid September until early October. However, we would like to make a conservative assumption that the launch date will be in late September and this shall be minimizing the impact on our Q3 and Q4 earnings results and we might make.
Adjustments to our assumptions regarding the actual launch date of the new model iPhone regarding the collaboration with JD Com we.
We also continue the collaboration regarding trading services in the third quarter and going forward.
We are happy to provide more color on this later.
Okay great.
Molly you do need to do it wouldn't be a woman Tokyo woman a sample Brexit Jesse.
Okay. Thanks choice I would take the industry.
At this question.
So if you look at when she gross margin right.
We're fine.
Gross margin also when she finished decreased compared to prior quarters and also decreased compared to the same quarter of last year.
Yeah.
Do you if you look at the overall gross margin you can see those are complex overall gross profit margin in Q2 remained stable at 25%, which was consistent competitive with us.
Sure in the last two years.
So contribution from service revenue this quarter increased to 14, 2% this quarter.
This can bring higher margin and offset in part offset decreasing when she'd been a smattering of Q2. So we believe so overall gross margin.
It will keep decreasing gradually going forward.
We leverage multiple marketing.
Competing approach would prefer to refuse and then GAAP operating profit margin non-GAAP.
Operating loss was two 1 million in this quarter and as the operating margin was negative two 7% compared with negative strip out 1% Jean Coutu country, We anticipate a positive non-GAAP operating margin in Q4. This year. Once we can retail we intend to target all from them GAAP operating margin, reaching a certain quarter.
We will invest.
All of this.
Additional resources to expand our scale as a larger as possible. So in English Q2 also due to the June 18th Festival with copper, we collaborated with J D and it would go directly increases our recycling price too attractive.
More consumers are.
To do the trading finished instead of using agile sales campaigns.
<unk> been decreasing our gross profit margin.
2% totally additional amount of spending in this area was RMB 36 million.
If we did not increase the recycling process trucks.
Because you must put investing so its.
So semi Mount so two 6 million RMB.
Selling and marketing activities once your gross margin of two two and sometimes you win what would be 52% similar to setup.
Two to hunting, which were 15% of costs selling expenses will increase accordingly.
So basically we debuted.
GAAP.
Approaching <unk>.
Yeah.
Has already reached Halloween, probably that's what we spent the additional.
Money into them.
Coupons to directly.
The increase in recycling price, which is huge.
Decreased decreasing gross margin off of Lumpiness in Q2.
Okay.
Increasing gradually.
Okay. Thank you.
Thank you and once again. Please press Star then one if you would like to ask a question.
And the next question comes from L. A G with Renaissance.
Thank you Cynthia so anytime there's always yes, you're gonna say downtown.
What can they are now.
Thank you Sir.
Shipyards in Burlington deal maker, because while you come and say Gee, it's always Europe than Q4 with that high that I think I am.
I don't see that today I'm glad I can keep going with some online high school going toward.
So in central Europe.
Got it.
Thank you Michelle without consult or something like that what exactly caused that is embedded.
Yeah, Yeah yeah.
Yeah, but when tissue is Europe, you know I think one income until she's got government back to you with that.
Great, Okay, well, maybe I can do that.
Uh huh.
Oh gosh.
Gosh Amanda.
Yeah Danielle.
Got that got that extra day.
So I have two questions.
The first one is could the management to provide an update on the value added services.
Such as that.
Fixture eccentric.
E marketplace or just wanted to know.
The second question is the <unk>.
Can management give us the details.
Take rate.
Our market the pace, specifically for both pricing and then.
What is the take rate for this quarter and how is that year over year comparison.
Thank you very much.
Okay cigarette.
So first question since later mate.
Lobster, better adjuvant maintenance services, So service fees totaled one 4 million RMB and.
To increase the overall commission related types of talking about the place.
By about 1% per month, so in the future. We will continue to expand and diversify so that I didn't mention the services and an increase a corresponding pick rate. So we would expect.
So additional take out the problems of maintenance service.
It can be around the seven 2%.
By the end of this year.
And also starting from August.
Got to charge, a logistics service fee inspection, so to speak and because I'm so to speak.
To set us on parts of the marketplace based on say a size and if the goods will be shifting to our operation Center.
So we expect overall, particularly from a street.
Three for other services, including logistics service inspection service and because I'm serious.
It can be several.
Seven 6%.
In September time frame, so that means.
By the end of this year, we can charge auditioner instead of 8%.
Take rate from the Apache at home marketplace and in Q2s actually average, particularly with all types of ton marketplace is still four 5%.
Consistent with Q1 tend to anyway.
So.
So part of the marketplace can particularly there will be increased in the next two quarters and Christa into Q4, so by Q4 particular can't be around five 3%.
Pottstown marketplace, so well.
Uh huh.
The growth rate.
Marketplace increased to.
<unk> a four 7%.
In Q2 from from.
From a four 2% of Q1.
So, particularly off consider consignment model marketplace was five 8% in Q2, while we brought a charge of any commission being too cute on country. The strips because I'm model is expected to generate higher commission fees, and we expect to charge, a 210%, particularly in the future. So by the end of this.
At the end of this year, we spread that we can so because I'm gonna model take rate can be around 665%.
So because I'm always being quickly adopted by that much.
So reasons included complexity and fragmentation of the prelim the electronics transaction industry change several sort of a cypress face challenges when distributing.
Products to consumers.
Condemned model of apartheid easiest to put it off maturity from small merchants.
Assume times, particularly with the <unk>.
Pulp model for electronic devices also increased by seven 5% starting from this quarter.
So, particularly after a poem model will be stable.
Within this year.
No.
For the overall pipe pipe.
Marketplace take rate increase where we're from the so because I'm. The model. So we did we expect the overall pie pie articulate Kim can increase from current to four 7% of Q2 to around five 2% in Q4 this year.
Okay.
Thank you very much.
Thanks, Adam.
Thank you.
And this concludes our question and answer session I would like to turn the call to Jeremy Zhu for any closing comments.
Thank you.
Thank you again for joining us.
A replay of today's conference call will be available on our website shortly.
Have any additional questions. Please feel free to email us at IR at <unk>, We showed a call have a good day.
Okay. Thank you. Thank you. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Okay.