Q2 2022 Boqii Holding Ltd Earnings Call

November 30, 2021

Good day, ladies and gentlemen, thank you for standing by and welcome to boat shoes fiscal 2022 second quarter earnings Conference call. Currently all participants are in listen only mode. Later, we will conduct a question and answer session and instructions will follow at that time as a reminder, we are recording today's call. If you have any object.

Operator 2: Good day, ladies and gentlemen. Thank you for standing by, and welcome to Boqii's Fiscal 2022 Q2 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Mandy Luo, Boqii's IR Manager. Mandy.

Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to Boqii's Fiscal 2022 Q2 Earnings Conference Call. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now I will turn the call over to Mandy Luo, Boqii's IR Manager. Mandy.

You may disconnect at this time.

Now I will turn the call over to Mandy low, but she's IR manager Mandy.

Thank you operator, and good morning, everyone. Welcome to Fortunately fiscal 2000 and finished September quarter earnings conference call. Joining us today are Mr. Louis now CEO and chairman for Chi nicely Satcom co CEO and CFO of Splotchy, Mr Chi Fong Chief strategy Officer.

Mandy Luo: Thank you, operator, and good morning, everyone. Welcome to Boqii's fiscal 2022 September quarter earnings conference call. Joining us today are Mr. Louis Liang, CEO and Chairman of Boqii, Ms. Lisa Tang, Co-CEO and CFO of Boqii, Mr. Kai Fang, Chief Strategy Officer, and Mr. Royal Dai, Financial Director of the company. We released results earlier today. The press release is available on the company's IR website at ir.boqii.com, as well as from Newswire Services. A replay of the call will be available on the site later today. Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements will involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today.

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Well at least without Oh, yeah today. The press release is available on the company's IR website at IR <unk> com as well as from near Flash services.

Play out of the call will be available on the site later today.

Before we continue please note that today's discussion will contain forward looking statements made under the safe Harbor provisions I'll say U S. Private Securities Litigation Reform Act of 1995.

Forward looking statements involve inherent risks and uncertainties.

As such the company's actual results may be materially different from the expectations expressed today further.

For information regarding this and other risks and uncertainties.

Mandy Luo: Further information regarding this and other risks and uncertainties are included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement, except as required under applicable law. Please also note that certain financial measures that we use on a call, such as adjusted net loss, net loss margin, EBITDA and EBITDA margin are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Please also be reminded that, unless otherwise stated, all figures mentioned during the call are in Chinese RMB. With that, let me now turn the call over to our Co-CEO and CFO, Miss Lisa Tang. Over to you, Lisa.

Put it in the company's public filings with the SEC. The company does not assume any obligation to update any forward looking statement, except as required under applicable law. Please also note that certain financial measures that we use on the call such as adjusted net loss.

Adjusted net loss net loss margin EBITDA and EBITDA margin.

On a non-GAAP basis.

Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release.

Please also be reminded that unless otherwise stated all figures mentioned during the call I and Chinese RMB.

With that let me now turn the call that our co CEO and CFO, Mr. Li side, Tom over to you Lisa.

Uh huh, Thank you Mindy.

Yingzhi Tang: 好，谢谢Mandy。非常感谢大家今天参加波奇二零二二年第二季度的业绩会议。上一财年第二季度结束的时候，我们在纽交所成功挂牌，庆祝了新的里程碑，同时也进入了新的发展阶段，肩负着投资者对整个赛道的青睐和期待，继续深挖波奇在宠物垂类链条上的壁垒，不断提升对行业各个节点的连接服务和价值，与行业合作伙伴共同成长。Thank you, Mandy. Once again, we welcome everyone attending the call today.

Lisa Tang: 好，谢谢Mandy。非常感谢大家今天参加波奇二零二二年第二季度的业绩会议。上一财年第二季度结束的时候，我们在纽交所成功挂牌，庆祝了新的里程碑，同时也进入了新的发展阶段，肩负着投资者对整个赛道的青睐和期待，继续深挖波奇在宠物垂类链条上的壁垒，不断提升对行业各个节点的连接服务和价值，与行业合作伙伴共同成长。Thank you, Mandy. Once again, we welcome everyone attending the call today.

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Yes.

Thank you Mindy and once again, we will come for everyone attending the call today Wednesday branches when Youll milestone at the end of catch you off their lots of physical year.

Yingzhi Tang: We celebrated our new milestone at the end of Q2 of the last fiscal year. As we have successfully listed on the NYSE, it opened a new chapter for us.

Lisa Tang: We celebrated our new milestone at the end of Q2 of the last fiscal year. As we have successfully listed on the NYSE, it opened a new chapter for us.

We have successfully listed on the NYSE.

Yeah.

Your job count for us.

Sure.

Yingzhi Tang: Shouldering the expectations of investors on the pet industry at large, we continue to strengthen our positioning in pet vertical by enhancing our grip along the value chain and improving our product and service offering with the goal of creating more value for end users and shareholders。从这个季度来看，我们在top line上继续交出了满意的答卷，实现了百分之二十三的同比增速，而这一增长也是高质量的。我们毛利率从去年同期的百分之十八点六提升到了百分之十九点七，履单后的毛利率更是大幅度从去年的百分之五点九提升到了百分之九点二。亮眼的数据背后，反映着供应链两端对波奇生态链的认可。In this quarter, we delivered solid financial results with top line reporting of year-over-year growth of 23.1% and our gross profit margin have improved from 18.6% to 19.7% this year.

Lisa Tang: Shouldering the expectations of investors on the pet industry at large, we continue to strengthen our positioning in pet vertical by enhancing our grip along the value chain and improving our product and service offering with the goal of creating more value for end users and shareholders。从这个季度来看，我们在top line上继续交出了满意的答卷，实现了百分之二十三的同比增速，而这一增长也是高质量的。我们毛利率从去年同期的百分之十八点六提升到了百分之十九点七，履单后的毛利率更是大幅度从去年的百分之五点九提升到了百分之九点二。亮眼的数据背后，反映着供应链两端对波奇生态链的认可。In this quarter, we delivered solid financial results with top line reporting of year-over-year growth of 23.1% and our gross profit margin have improved from 18.6% to 19.7% this year.

In that in that case on.

On the pet industry ACH, we continued to show strength in 45 days.

Any impact, but you know I am hanging with along the value chain and improving our product and service offering.

Offering with digital of creating more that it was for end users and their shareholders.

Yeah.

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Is it in these calls how we delivered solid financial results with.

With top line reporting.

Growth of Chinese with one 1% and our gross profit margin.

Improved from 18 point, if presented to a 19, 7% this year.

I was just fulfillment margin also increased significantly from five 9% June 9th once you finish.

Yingzhi Tang: Post-fulfillment margin also increased significantly from 5.9% to 9.2%.

Lisa Tang: Post-fulfillment margin also increased significantly from 5.9% to 9.2%.

Behind all of these dairy numbers. They also point your fans ACH plus he is enjoying growing recognition from both ends of the supply chain effectively connecting pet parents with vendors.

Yingzhi Tang: Behind all these daring numbers, they also point to the fact that Boqii is enjoying growing recognition from both ends of the supply chain, effectively connecting pet parents with vendors。对用户而言，我们能够提供一站式的满足购买需求、严选品牌以及极富竞争力的价格销售，而且通过各种宠物友好的生态延伸，加深养宠以及非养宠用户对波奇的认可。反映在数字上，从上市之后，我们报告的第一个季度开始，连续的五个季度，我们都实现了每个季度超过20%的活跃购买用户数的增长。今年的九三零季度也获得了23.5%的同比增速。For a user perspective, we are a one stop shop with extension products and service assortment, a premier quality yet being competitive in prices.

Lisa Tang: Behind all these daring numbers, they also point to the fact that Boqii is enjoying growing recognition from both ends of the supply chain, effectively connecting pet parents with vendors。对用户而言，我们能够提供一站式的满足购买需求、严选品牌以及极富竞争力的价格销售，而且通过各种宠物友好的生态延伸，加深养宠以及非养宠用户对波奇的认可。反映在数字上，从上市之后，我们报告的第一个季度开始，连续的五个季度，我们都实现了每个季度超过20%的活跃购买用户数的增长。今年的九三零季度也获得了23.5%的同比增速。For a user perspective, we are a one stop shop with extension products and service assortment, a premier quality yet being competitive in prices.

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Where are you with a perspective, we are a one stop shop is pension product and the service is so much a premium.

The income impact in prices.

Through our established ecosystem. We are also able to strengthen our brand name as well as insurance to patch on non pet owners.

Yingzhi Tang: Through our established ecosystem, we are also able to strengthen our brand name as well as influence to pet or non-pet owners. Ever since our listing, we have achieved a growth of more than 20% in the number of active buyers for five consecutive quarters.

Lisa Tang: Through our established ecosystem, we are also able to strengthen our brand name as well as influence to pet or non-pet owners. Ever since our listing, we have achieved a growth of more than 20% in the number of active buyers for five consecutive quarters.

Thanks.

Nowadays, we have achieved a growth of more than Chinese prevention in the number of active buyers for five can get can see cheap causes.

This was no its uptake is that she in Q2 as we saw a growth of Chinese with one 5%.

Yingzhi Tang: This was no exception in Q2 as we saw a year over year growth of 23.5%. 随着不断丰富的品牌和货品的选择，截至九三零，我们提供了六百九十个品牌的商品，总SKU数量达到了两万四千个，相较于去年六三零时候的品牌数量七百五十个，SKU一万七千个有了大幅的增长。除了为用户挖掘新的新品、新的品牌外，我们还加大了对中小品牌的扶持，通过对宠物精准流量的运营经验，帮助这些品牌更高效健康地增长，也让我们的用户享受到了更多优质品牌的福利。正因为如此，我们的服务收入在过去几个季度都保持了翻倍的高速增长，最近一个季度也完成了十一倍的同比增长，反映了波奇在品牌推广上为品牌方输出的价值，包括了在抖音等新媒体渠道上的高效投放、仓储配货、分包运输的管理能力。目前这部分收入占到了整体收入的5.7%，贡献了毛利和综合平台之间的差异化空间。Meanwhile, we continue to expand our brand and product selections.

Lisa Tang: This was no exception in Q2 as we saw a year over year growth of 23.5%. 随着不断丰富的品牌和货品的选择，截至九三零，我们提供了六百九十个品牌的商品，总SKU数量达到了两万四千个，相较于去年六三零时候的品牌数量七百五十个，SKU一万七千个有了大幅的增长。除了为用户挖掘新的新品、新的品牌外，我们还加大了对中小品牌的扶持，通过对宠物精准流量的运营经验，帮助这些品牌更高效健康地增长，也让我们的用户享受到了更多优质品牌的福利。正因为如此，我们的服务收入在过去几个季度都保持了翻倍的高速增长，最近一个季度也完成了十一倍的同比增长，反映了波奇在品牌推广上为品牌方输出的价值，包括了在抖音等新媒体渠道上的高效投放、仓储配货、分包运输的管理能力。目前这部分收入占到了整体收入的5.7%，贡献了毛利和综合平台之间的差异化空间。Meanwhile, we continue to expand our brand and product selections.

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Meanwhile, we continued to expand our brand and the product selection.

At the end of September we were providing Chinese office 24000, Skus from 619 brands compared with more than 17000 desk. He goes from 516 branch at at the end of June last year.

Yingzhi Tang: At the end of September, we were providing 24,000 SKUs from 690 brands, compared with more than 17,000 SKUs from 560 brands at the end of June last year. Revenue from online marketing and information services has more than doubled over the past few quarters. Specifically, in Q2, we also saw an 11 times year-over-year increase in this segment of revenue, increasing the recognition of Boqii's capability in brand incubation, as well as in effective marketing on new media channels such as TikTok. Currently, revenue from online marketing and information services has already reached 5.7% of total revenue, and we believe this will continue to contribute to our gross margin and constitute one of the key differences in terms of our ecosystem when compared to the generic platforms.

Lisa Tang: At the end of September, we were providing 24,000 SKUs from 690 brands, compared with more than 17,000 SKUs from 560 brands at the end of June last year. Revenue from online marketing and information services has more than doubled over the past few quarters. Specifically, in Q2, we also saw an 11 times year-over-year increase in this segment of revenue, increasing the recognition of Boqii's capability in brand incubation, as well as in effective marketing on new media channels such as TikTok. Currently, revenue from online marketing and information services has already reached 5.7% of total revenue, and we believe this will continue to contribute to our gross margin and constitute one of the key differences in terms of our ecosystem when compared to the generic platforms.

Revenue from online marketing and information services has more than doubled over the past few quarters.

So that's just fishing in Q2, we also saw a 11 times worldwide increase in these segments of revenue.

Showcasing the recognition of Buchi's Covid 80 in brand incubation as well as in it.

In fact, you're marketing.

New media channels, such as you talk.

Currently revenue from a marketing and information services has already reached a five 7% of total revenue.

We believe this will continue to contribute to our gross margin and constitutes one of the key differences in terms of our ecosystem when compared to the generic platform.

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As China's pet industry is still in its earliest stage, especially when compared to treat it as a mature categories like women's apparel.

Yingzhi Tang: As China's pet industry is still in its early stage, especially when compared to the other mature categories like women's apparel. These are numerous small and mid-sized brands that are living on terms of million RMB in GMV. Combining the fact that pet owners are just above 25% of the total population, it is difficult for most of the pet brands to secure sizable yet effective traffic. Let it be integrated e-commerce platforms, offline stores or hospitals. For online channels, the much diluted pet traffic on generic platforms and the high setup cost of flagship stores are squeezing the profit margin of brands. Even if they have made huge investment in the store, once they reach certain GMV scale, the growth rate is very likely to stay flat.

Lisa Tang: As China's pet industry is still in its early stage, especially when compared to the other mature categories like women's apparel. These are numerous small and mid-sized brands that are living on terms of million RMB in GMV. Combining the fact that pet owners are just above 25% of the total population, it is difficult for most of the pet brands to secure sizable yet effective traffic. Let it be integrated e-commerce platforms, offline stores or hospitals. For online channels, the much diluted pet traffic on generic platforms and the high setup cost of flagship stores are squeezing the profit margin of brands. Even if they have made huge investment in the store, once they reach certain GMV scale, the growth rate is very likely to stay flat.

It's like visa and numerous small and mid sized brands that are living on terms of met N. I M D and G M D.

Combined effect that pet owners are just above 25% off the total population. It is difficult for most of the pet rents Juicy QR sizable yeah in fact him traffic.

They would be integrated e-commerce platforms.

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Even if they have made huge investments in the store once they reach certain GMP scale the growth rate is very interesting right.

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Talking about offline also the in store traffic is exactly what the branch lunch stuffs are scattered around the country and lack of change management.

Yingzhi Tang: Talking about offline, although the in-store traffic is exactly what the brands want, stores are scattered around the country and lack of trained management, requiring brands to invest heavily in sales team to build up the offline channel, no matter through direct sales or distributions. The sales points are hard enough to engage, let alone brand awareness or education. Hence, we believe one-stop supply chain and marketing solutions is the way to go for such small to medium brands. After a short period of adjustment, Boqii is now on a 14 to 16 split between self-operating and third-party channels. We believe such mix will enable our brand owners to attract new pet parents through the use of integrated platforms, while bringing customer loyalty through consistent and educational content through Boqii's self-operating channel.

Lisa Tang: Talking about offline, although the in-store traffic is exactly what the brands want, stores are scattered around the country and lack of trained management, requiring brands to invest heavily in sales team to build up the offline channel, no matter through direct sales or distributions. The sales points are hard enough to engage, let alone brand awareness or education. Hence, we believe one-stop supply chain and marketing solutions is the way to go for such small to medium brands. After a short period of adjustment, Boqii is now on a 14 to 16 split between self-operating and third-party channels. We believe such mix will enable our brand owners to attract new pet parents through the use of integrated platforms, while bringing customer loyalty through consistent and educational content through Boqii's self-operating channel.

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The sales points are hard enough to engage let alone brand out why awareness education.

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Well branding customer to lighting through concessions concessions and educational content you bought yourself operating channel.

Writing all our extensive brand mix and S. K U S elections, we have demonstrated our ability to effectively lower user acquisition cost.

Yingzhi Tang: Riding our extensive brand mix and SKU selections, we have demonstrated our ability to effectively lower user acquisition costs. As of 30 September, our user acquisition cost has gone further down to a historical low of CNY 9.9 per user. We shall also have broken the record as the lowest customer acquisition cost among all vertical platforms in China. Under such flexible arrangement, brand owners can devote more resources to brand DNA as well as formulation and product development. Boqii will handle customer origin supported by its 100+ 2C channels and extensive distribution network.

Lisa Tang: Riding our extensive brand mix and SKU selections, we have demonstrated our ability to effectively lower user acquisition costs. As of 30 September, our user acquisition cost has gone further down to a historical low of CNY 9.9 per user. We shall also have broken the record as the lowest customer acquisition cost among all vertical platforms in China. Under such flexible arrangement, brand owners can devote more resources to brand DNA as well as formulation and product development. Boqii will handle customer origin supported by its 100+ 2C channels and extensive distribution network.

So he's September our user acquisition cost has gone further John to a historical low of RMB nine nine plus user.

But you'll also have broken the record U S. The lowest customer acquisition costs, among our vertical platforms in China.

And as such flexible arrangement brand owners can devote more resources to branded DNA as well as elimination under project development.

And the votes, you will handle customer origin supported by its 100 paas to see China's and extensive distribution network.

That's a patch vertical player we see more all fall in values in healthy industry to grow and are providing a localized in a professional solution that is don't you us and it caused the fact him.

Yingzhi Tang: As a pet vertical player, we see more of our values in helping industry to grow, and providing a localized and professional solution that is down-to-earth and cost-effective.接下来我想把时间交给公司的CFO方凯，让大家进一步去解析业务和财务亮点。Now I will pass to our CFO, Kai Fang, and he will tell you more about our business and financial highlights.

Lisa Tang: As a pet vertical player, we see more of our values in helping industry to grow, and providing a localized and professional solution that is down-to-earth and cost-effective.接下来我想把时间交给公司的CFO方凯，让大家进一步去解析业务和财务亮点。Now I will pass to our CFO, Kai Fang, and he will tell you more about our business and financial highlights.

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That went down and now as you'll pass choice, yes, Okay, and as you all well know more you log on to our business and the financial highlights.

Thank you Lisa.

Kai Fang: Thank you, Lisa. Thanks everyone for joining our call. We would also like to share with you the three major business developments in our pet ecosystem as well as our financial data during this quarter. First, we have reached a strategic partnership with Evetsoft, an established leader in the pet hospital SaaS market.

And thanks, everyone for joining our call.

I would also like to share with you in the three major business developments in our pet ecosystem as well as our financial data during this quarter.

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First we have reached a strategic partnership with ever soft.

Establish a leader in the pet hospitals soft market.

Together, we will launch an online procurement platform called Doctor's choice you shouldn't you shouldn't.

Kai Fang: Together, we will launch an online procurement platform called Doctor's Choice 一心一选, catering to the procurement needs of over 3,500 independent pet hospitals and small hospital chains across the country. Over the last 11 years, Evetsoft has been committed to create specialized data management solutions to drive the operating efficiency of independent pet hospitals. Evetsoft now has a market share of 27%, covering over 350 pet hospitals and clinics, providing them with tailored SaaS solutions. In this partnership, Boqii brought our supply chain expertise to the table. We supply those independent pet hospitals with over 600 SKUs from 65 different brands. The new procurement platform covers not only medical and healthcare products, but also snacks and food as pet hospitals aim to diversify its revenue resources.

Catering to procurement fees of over 3500 independent pet hospitals in the small hospital chains across the country.

Over the last 11 years.

Ever soft has been committed to create specialized data management solution to drive the operating efficiency of independent pet hospitals.

To solve to now it has a market share with 27% covering over 305, 500, pet hospitals and the clinics, providing them with Taylor to solve solutions.

English partnership, but what she brought our supply chain expertise to the table.

We supply those independent pet hospitals with over 600, Skus from 65 different brands, the new procurement platform.

Congress, not only medical and health care products, but also snacks and food as pet hospitals aim to diversify its revenue resources.

Together with providers hospitals with a convenient online procurement system, which offers better choice border selections and also free fulfillment.

Kai Fang: Together, we provide those hospitals with a convenient online procurement system which offers better choice, broader selections, and hassle-free fulfillment.

We believe the collaboration would establish a disruptive approach to address the book human problem of over 10 solved in the independent pet hospitals nationwide.

Kai Fang: We believe the collaboration would establish a disruptive approach to address the procurement problem of over ten thousand independent pet hospitals nationwide。首先，我们在过去的一个季度当中，与中国领先的独立医疗管理软件服务商迅德签署了战略合作协议，双方将利用各自的行业优势，上线一心一选线上商城，为超过三千五百家独立的宠物医院和小医院体系提供优质稳定的订货服务。在过去的十一年中，迅德软件一直致力于打造专门化的数据服务管理，改善独立宠物医院的采购模式。随着全国各地宠物医院的认可，迅德软件已经实现了覆盖超过三千五百家独立的宠物医院，市场占有率高达27%。此次合作，波奇将充分发挥我们在行业内领先的供应链、仓储运输、运营、售后服务等方面的规模和技术优势，共同打造能够为独立宠物医院赋能的B2B供货商城，搭建稳定便捷的上游供应体系。合作初期，我们将提供来自六十五个不同品牌的超过六百个SKU，产品范围从药品、医疗耗材直到食品等类目。我们希望通过这个颠覆性的供应链解决方案，可以系统地、有效地解决全国超过一万家的独立宠物医疗机构在采购方面的痛点，以更高效、更便捷、更全面且节约成本的线上方式实现采购、采购模式的迭代。We also launched our brand new membership program in July.

Sure.

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We also launched our brand new membership program in July and a new.

Your membership program would provide comprehensive benefits for the pet owners such as points redemption free of charge products trial 24 hour Butler service, neither medical emergency birthday gift and offline social events.

Kai Fang: In the new membership program, we provide comprehensive benefits for the pet owners, such as points redemption, free of charge products trial, 24-hour butler service, night medical emergency, birthday gift, and offline social events. By reading the data, we are proud to say that this is a membership loved by our customers. For example, the points redemption ratio was as high as 30%. Members' loyalty directly leads consumption. 17% of the activated members have been shopped with us in the past quarter. In terms of purchase frequency and ARPU value, members of the new programs are 3.1 times and 2.5 times more than non-member users. We are thrilled by the initial success.

Reading the data, we're proud to say that at least ease him and Michelle loved by our customers. For example, the points redemption ratio was as high as 30% members' loyalty directly at least consumption.

17% also activated members has been shopped with us in the past quarter.

In terms of purchase frequency in our P value.

Remember some of the new program, So 341 times and two five times more than non member users we.

We are thrilled by the initial success will further promote new membership program among our spending customers.

Kai Fang: We'll further promote new membership program among our spending customers。本季度内，我们也正式推出了全新的波奇家会员系统。在这一全新的会员体系内，我们利用自身的生态平衡维度优势，向我们的会员提供了从最简单直接的积分兑换、新品尝鲜、在线宠物健康管家、生日礼物、通宵急诊，到线下携宠聚会等多维度全方位的福利体系。从目前激活的会员行为数据来看，我们可以自豪地说，我们提供了宠物主所希望的。会员平均的积分兑换率高达30%。会员的忠诚度直接体现在会员的消费数据上。70%的会员在本季度内有在波奇的平台上消费。会员的季度购买频次是非会员的3.1倍。会员的本季度消费金额，也就是ARPU值，是非会员的2.5倍。初步的结果毫无疑问是鼓舞人心的。我们会再接再厉，让更多的消费顾客激活成为波奇会员。Last but not least, this October, we established a strategic partnership with China's largest hotel chain, Huazhu Group.

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This October.

Tablet should a strategic partnership with China's largest hotel chain Wacho group together, we aim to provide a pet friendly staycation experiencing over hundred blossom, how spread hotels in the coming three years.

Kai Fang: Together, we aim to provide pet-friendly staycation experiences in over a hundred Blossom House brand hotels in the coming three years. In this partnership, we will provide pet care-related training to hotel staff, upgrade hotel room facilities to accommodate pets, operate an in-hotel daycare center for the pets, and offer specialized design activities for pets and pet parents. Going forward, Boqii will co-develop more pet tourism products with Huazhu to benefit our customers. Previously, Lisa had already briefly shared our view on our revenue and gross profit, performance. In the following, we will discuss further regarding expense and net loss for this quarter. Quarterly gross profit was CNY 55.7 million, up by 30.7% year-over-year, which lead to a gross margin of 19.7%.

In this partnership we will provide Medicare related training to hotel stuff upgrade their own hotel room facilities to accommodate the Paas operated hotel daycare center for the pets and offer a specialized the design activity for pets and pet parents going forward, but what you will co develop.

More pass through rates on products, where the watchword to benefit all customers.

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Previously I had already briefly shared our view of our revenue and gross profit performance in a falling well, we'll discuss further regarding expenses our net loss for this quarter.

Quarterly gross profit was RMB $55 7 million up by 37% year over year, which leads to a gross margin of 19.7%.

<unk> expense.

Kai Fang: Fulfillment expenses slightly increased to CNY 29.6 million as compared to CNY 29 million in the same period of last year. Fulfillment cost as a percentage of revenue was 10.5% versus 12.7% in the same period last year. Post-fulfillment gross margin increased to 9.2% compared with 5.9% in the same period last year. Our early investment in a nationwide fulfillment infrastructure continue to contribute to the reduction in fulfillment expenses as a percentage of revenue and improve our operational efficiency. Our total sales and marketing expenses were RMB 44 million, up 40.3% from the CNY 31.3 million in the same period of last year.

Expenses slightly increased to $29 6 million as compared to 29 million in the same period of last year.

Fulfillment cost as a percentage of revenue was 10, 5% versus 12, 7% in the same period last year.

Post a fulfillment gross margin increased to nine 2% compared with 5.9% are in.

In the same period last year.

Our R&D investment in a nationwide fulfillment infrastructure continued to contribute to the reduction in fulfillment expenses as a percentage of revenue and improve our operational efficiency.

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Our total sales and marketing expenses were RMB 44 million up 40% of 44.

3% from the sort of $1 3 million in the same period of last year.

Sales and marketing expenses as percentage of total revenue were 15, 6% up from 13, 7% in the same period of last year.

Kai Fang: Sales and marketing expenses as a percentage of total revenue were 15.6%, up from 13.7% in the same period of last year. The increase were primarily due to the increase in personal expenses related to discontinued COVID-19 government subsidies for medical insurance, housing fund, and social insurance for the employees, as well as increased expenses for business expansion and investment in the emerging channels. G&A expenses were RMB 23.2 million, up by 39% from RMB 16.7 million in the same period of last year. G&A expenses as a percentage of total revenue were 8.2%, compared with 7.3% in the same period of last year. The increase were primarily due to the increase in share-based compensation expenses, as well as increased professional fees after we became a publicly traded company.

Increase were primarily due to the increase in personnel expenses related to the discontinued COVID-19 government subsidies for medical insurers Housebuilding and social insurance for their employees.

As well as increase the expenses within this expansion and the investment in the emerging channels.

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G&A expenses were RMB $23 2 million up by 39% from RMB $16 7 million in the same period of last year.

G&A expenses as a percentage of total revenue or eight 2% compared with 7.3% in the same period of last year. The increases were primarily due to the increase of share based compensation expenses as well as the increase in professional face. After we became a public traded company.

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Kai Fang: We ended this quarter with cash equivalent, and short-term investment of CNY 339.7 million, compared with CNY 450 million as of 13 June 2021. We usually experience a relatively low point of cash in Q2 of each fiscal year as we settle the accounts payables resulted from the 618 promotions, and stock up the preparation for the Double Eleven promotions, which result in a sudden increase in the prepayment. To conclude, Boqii delivered another solid quarter with a meaningful progress in execution of a quality growth strategy.

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We ended this quarter with cash cash equivalents and short term investments of RMB $339 7 million compare ways RMB 450 million as of June 13, 2021.

Where you experienced a relative low point of cash in Q2 of each fiscal year as with set of accounts payables resulted from six to 18 promotions and suck up the preparation for the double 11 promotion as well.

Which should result in further increasing the prepayments.

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To conclude but what she delivered another solid quarter with a meaningful progress in infusion of a quality growth strategy.

Continued competing committed to invest and build up our pet ecosystem.

Kai Fang: We remain committed to invest and build up our pet ecosystem because that's the right thing, would offer unparalleled value for the pet parents and our brand partners. 总结一下，波奇继续交付了非常令亮眼的季度的运营和财务数据。在我们追求高质量增长的路上，我们仍然保持着对投资和打造自己独特的宠物生态系统的承诺，因为这是长期会回馈我们的宠物主和我们的合作伙伴的正确的事情。Now let's start with the Q&A session. Operator.

Because that's the right thing would offer unparalleled value for the pet parents and our brand partners.

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Now, let's start with the Q&A session operator.

Okay.

We will now begin the question and answer session. If you would like to join the question queue Press Star then one if you are using a speakerphone. Please pick up your handset before pressing the keys.

Operator 2: We will now begin the question and answer session. If you would like to join the question queue, press star then one. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to remove yourself from the question queue, press star then two. We will pause momentarily to assemble our roster. The first question comes from Darren Aftahi with Roth Capital Partners. Please go ahead.

Operator: We will now begin the question and answer session. If you would like to join the question queue, press star then one. If you are using a speakerphone, please pick up your handset before pressing the keys. If you would like to remove yourself from the question queue, press star then two. We will pause momentarily to assemble our roster. The first question comes from Darren Aftahi with Roth Capital Partners. Please go ahead.

If you would like to remove yourself from the question queue Press Star then two.

We will pause momentarily to assemble our roster.

Okay.

And the first question comes from Darren <unk> with Roth Capital Partners. Please go ahead.

Good evening and thanks for taking my questions. Just a couple if I may could you speak to on your membership business of the $1 6 million active buyers.

Darren Aftahi: Good evening and thanks for taking my questions. Just a couple if I may. Could you speak to on your membership business, of the 1.6 million active buyers, how many of those are currently members? Then how you plan to kind of improve that figure going forward?

Many of those are currently members and then how you plan to kind of improve that figure going forward.

Hi, John My email can go again and great question.

Kai Fang: Hi Darren, nice e-meeting you again, and great question. So far we are at a very early stage of formally launching the membership program, and we have 30,000 active members. The next stage of our membership programs will focus on A, further promoting our member activation of a membership among our spending customers, B, we would further enrich the benefit system, leveraging our platform advantage. Regarding the membership program, I want to say that because this membership will be exactly like the membership program of airline company and hotel chains, so it's free to activate. Therefore, definitely we are confident that with good enough benefit system, we should be able to get a very optimized number of members, the spending customers to be our members.

So far we are very new and early stage, you'll formally launched our membership program and we have a sturdy foundation.

And activate amendment members.

The next stage of our membership programs, we will focus on a further promoting our member activation of our membership among our spending customers B, we will further enrich the benefits system.

Leveraging our platform advantage regarding the membership program I want to say that because this membership will be exactly like the membership grew Bam of airline airline company in hotel chance. So eight free to activate therefore definitely we are confident that two ways.

Good enough manifest system, we should able to get a a very optimal numbers our members to be spending customers to be a member.

Okay.

Royal Dai: 你中文说一下。对，我来重复一下刚才分析师的问题和管理层的答案。刚才分析师的问题是，在这个季度一百六十万的购买用户里面，有多少用户是会员？那么在未来这个数字将如何继续提升？我们这边是方凯总回答了。那么在这个季度里面呢，我们因为是刚推出的会员项目，总共是三万名的会员。那么在未来呢，我们相信这个数字会随着我们不断地去推广用户权益，去加强对于整个生态里面用户的吸引力，这个数字会不断地提升。那其实我们简单再介绍一下，会员它是跟航空公司的体系是一样的，是只要消费一块钱就能够成为会员，它不是一种付费会员制度。Darren, you can continue your question.

Lisa Tang: 你中文说一下。对，我来重复一下刚才分析师的问题和管理层的答案。刚才分析师的问题是，在这个季度一百六十万的购买用户里面，有多少用户是会员？那么在未来这个数字将如何继续提升？我们这边是方凯总回答了。那么在这个季度里面呢，我们因为是刚推出的会员项目，总共是三万名的会员。那么在未来呢，我们相信这个数字会随着我们不断地去推广用户权益，去加强对于整个生态里面用户的吸引力，这个数字会不断地提升。那其实我们简单再介绍一下，会员它是跟航空公司的体系是一样的，是只要消费一块钱就能够成为会员，它不是一种付费会员制度。Darren, you can continue your question.

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Darren you can continue your question.

Great. Thanks.

Darren Aftahi: Oh, great, thanks. Two more if I may. Could you just speak to the strength in the online marketing segment? Kind of what's driving that? How sustainable that is, and just the impact it's having on gross margins.

Two more if I may could you just speak to the strength in the online marketing segment kind of what's driving that and then how sustainable.

That is and just the impact that's happening on gross margins.

Yeah.

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Kai Fang: 这个问题呢，分析师问的是说关于这一个季度的服务收入，也就是我们的 other revenue 的 online marketing 的这个部分，那在这个部分的收入，它的增速为什么这么快，在未来是否能持续？然后这个请方凯总解析一下。

Lisa Tang: 这个问题呢，分析师问的是说关于这一个季度的服务收入，也就是我们的 other revenue 的 online marketing 的这个部分，那在这个部分的收入，它的增速为什么这么快，在未来是否能持续？然后这个请方凯总解析一下。

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Royal Dai: 方凯总。

Lisa Tang: 方凯总。实际上来解读，服务收入在最近几个Q都一直保持了高速的增长。最近这个Q当然表现非常好，是去年同期增长了将近四倍。它的业务增长主要的原因是反映了品牌方认可我们为他们输出的价值。目前中国宠物的大部分品牌其实处于一个高速增长的状况，品牌方希望能够有一个有效的渠道能够触达到用户，将自己的品牌理念、品牌的优势能够精准地传递给它的受众人群。那我们目前是国内效果最好的，也应该是唯一的这样的一个综合服务的提供商。从数字上来看，这一部分的服务得到了品牌方的认可。第二，其实在这个整体的收入上，有一部分基于U.S. GAAP的原则，会有一部分会调不到产品的毛利。所以从另外一个维度，在整个品牌方给到我们基于非产品销售的收入的认可的总数，其实已经达到了我们整体收入的7%，但基于有一部分是调到了产品的毛利上，所以综合在报表上，这个数字反馈的是，会比这个更少一些。

Yingzhi Tang: 实际上来解读，服务收入在最近几个Q都一直保持了高速的增长。最近这个Q当然表现非常好，是去年同期增长了将近四倍。它的业务增长主要的原因是反映了品牌方认可我们为他们输出的价值。目前中国宠物的大部分品牌其实处于一个高速增长的状况，品牌方希望能够有一个有效的渠道能够触达到用户，将自己的品牌理念、品牌的优势能够精准地传递给它的受众人群。那我们目前是国内效果最好的，也应该是唯一的这样的一个综合服务的提供商。从数字上来看，这一部分的服务得到了品牌方的认可。第二，其实在这个整体的收入上，有一部分基于U.S. GAAP的原则，会有一部分会调不到产品的毛利。所以从另外一个维度，在整个品牌方给到我们基于非产品销售的收入的认可的总数，其实已经达到了我们整体收入的7%，但基于有一部分是调到了产品的毛利上，所以综合在报表上，这个数字反馈的是，会比这个更少一些。

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Okay.

Yeah.

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So to answer your first question regarding the high growth rate of the service revenue. The first the logic why our friends are working with us or they are willing to pay money to us is because the market Pat has grown really at a at a fascinating space speed, but in the meantime.

Kai Fang: Darren, answering your first question regarding the high growth rate of the service revenue. First, the logic why brands are working with us or they are willing to pay money to us is because the market of pet is growing really at a fascinating pace. In the meantime, we are seeing that middle to small scale brand they lack effective traffic to market on, and they can't really find such traffic through different channels, be it online or offline. For us, we have omni-channel, and we on top of sales for that products, we also offer different values, including marketing, helping them making advertisement on emerging channels and doing many other brand awareness programs. They are willing to spend it with us.

[Translator]: Darren, answering your first question regarding the high growth rate of the service revenue. First, the logic why brands are working with us or they are willing to pay money to us is because the market of pet is growing really at a fascinating pace. In the meantime, we are seeing that middle to small scale brand they lack effective traffic to market on, and they can't really find such traffic through different channels, be it online or offline. For us, we have omni-channel, and we on top of sales for that products, we also offer different values, including marketing, helping them making advertisement on emerging channels and doing many other brand awareness programs. They are willing to spend it with us.

We are seeing that middle to small scale brand they lag effects have traffic to market and they can't really find such traffic through different channels be it online or offline, but for us we have omni channel and we on top of sales for that product. We also offer a different values, including our marketing helping that.

I'm, making an advertisement on our emerging channels and doing many other brand awareness programs. So they are willing to spend it with us and variant turning to the numbers. We are very glad to see that in this quarter. There's a service revenue has picking up by 11 times and this is a remarkable are achieved.

Mandy Luo: Now turning to the numbers. We are very glad to see that in this quarter, this service revenue has picked up by 11 times, and this is a remarkable achievement sustaining the growth in the last few quarters. Lisa further added that because of some of the rules of the U.S. GAAP, some of our revenue were calculated into the gross profit were canceled out as the cost of goods sold. That's why if combining the overall part, the total service revenue actually contributes to around 7% of total revenue instead of the 5.7% number shown on our financial statements. I will ask Lisa the second question about the GP.

[Translator]: Now turning to the numbers. We are very glad to see that in this quarter, this service revenue has picked up by 11 times, and this is a remarkable achievement sustaining the growth in the last few quarters. Lisa further added that because of some of the rules of the U.S. GAAP, some of our revenue were calculated into the gross profit were canceled out as the cost of goods sold. That's why if combining the overall part, the total service revenue actually contributes to around 7% of total revenue instead of the 5.7% number shown on our financial statements. I will ask Lisa the second question about the GP.

Rents are sustaining that growth in the last few quarters at least offer the added that because because of some of the rules of the U S. GAAP are some of our revenue were calculated into into the gross profit what were canceled down as the cost of.

All right. Good stone, that's why Ah if combine their overall part the total service revenue actually contribute to around 7% of total revenue instead of the five 7% numbers shown on the on the <unk> on the on our financial statements and at least I had a second question about the G. P.

Uh huh.

Royal Dai: 他还问了一个就是说，那其实服务收入增长这么快，它对我们整体毛利率的涨向有什么影响？然后这个影响是否可以持续。

Lisa Tang: 他还问了一个就是说，那其实服务收入增长这么快，它对我们整体毛利率的涨向有什么影响？然后这个影响是否可以持续。了解。服务收入的增长对毛利率目前来看影响不是非常大，毛利率在产品零售这一块还是保持着既有的比较稳健的一个增长的速度。但是从长期来看，基于跟品牌方多维度的合作，会使得我们无论在新品的首发，产品的差异化地为用户去不同渠道提供差异化的产品，会得到品牌整个供应链上品牌方更多的支持，所以在不同渠道的毛利率上未来会有进一步的提升的空间。

Sure.

I'm not suggesting for Charlotte's uncharged them, a quiet how to junk team on either selling or something so that whole journey as household penetration.

Oh, yes.

Yingzhi Tang: 了解。服务收入的增长对毛利率目前来看影响不是非常大，毛利率在产品零售这一块还是保持着既有的比较稳健的一个增长的速度。但是从长期来看，基于跟品牌方多维度的合作，会使得我们无论在新品的首发，产品的差异化地为用户去不同渠道提供差异化的产品，会得到品牌整个供应链上品牌方更多的支持，所以在不同渠道的毛利率上未来会有进一步的提升的空间。

Sure. This is John.

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Yeah, there and then regarding the gross profit margin, yes. It does have some now some positive effect on the G. P M, but we see more values on the other parts of our ecosystem because as brands are working with us more closely that trusting us to help them market.

Mandy Luo: Yeah. Darren regarding the gross profit margin. Yes, it does have some positive effect on the GPM, but we see more values on the other parts of our ecosystem, because as brands are working with us more closely by trusting us to help them market their products and invest in their users. They also give us other privileges, such as giving us the first chance to release their new products, like to give us differentiated products, and also give us other supply, other support on the supply chain. We think this will continue. Of course, we also have GPM up drivers from other parts of the business as well.

[Translator]: Yeah. Darren regarding the gross profit margin. Yes, it does have some positive effect on the GPM, but we see more values on the other parts of our ecosystem, because as brands are working with us more closely by trusting us to help them market their products and invest in their users. They also give us other privileges, such as giving us the first chance to release their new products, like to give us differentiated products, and also give us other supply, other support on the supply chain. We think this will continue. Of course, we also have GPM up drivers from other parts of the business as well.

Their products and invest in their users. They also gave us other privileges such as giving us a the first chance to release their new products are like two gave us differentiated products and also gave us other some other support on the supply chain and we think this will continue and of course, we also have.

G P M off drivers from other parts of the business as well.

Yes.

Right.

Great. Thank you and then just last one for me and I'll pass it on we've heard from other Chinese E Commerce.

Darren Aftahi: Great, thank you. Then this last one for me and I'll pass it on. You know we've heard from other Chinese e-commerce providers and service providers that you know obviously COVID still an impact, but there's been a slowdown in consumer demand. I'm just curious kind of your thoughts on both and whether there's any impact on your business going forward. Thanks.

Providers and service providers that you know, obviously COVID-19 is still an impact but there is there's been a slowdown in consumer demand I'm, just curious kind of your thoughts on both and whether there's any impact on your on your business going forward. Thanks.

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Royal Dai: 好，OK。最后一个问题呢，是关于新冠疫情以及整体的在中国这边的电商的趋势表现。因为看到很多增速都在变慢，那么我们有什么想法要分享的？我们是否受到了疫情影响？

Lisa Tang: 好，OK。最后一个问题呢，是关于新冠疫情以及整体的在中国这边的电商的趋势表现。因为看到很多增速都在变慢，那么我们有什么想法要分享的？我们是否受到了疫情影响？尤其是最近其他一些电商的增速放缓。就你，就你。好的，当然，那我来回答一下这个问题。对，我们会有一些影响，就比如以这个季度的数字来讲，我们行业其实整个跨境的业务受到了海关新政策的一些影响，所以我们整个海淘业务的收入其实是比去年同期稍微有一些影响的，就很多商品可能进不来，对。但这个，如果不是这个影响，我相信我们可能会交出更好的数字。但总的来说，因为整个宠物行业的宠物数量的增速非常的坚挺，整个行业的跨金融周期的属性非常的明显，并且行业在处于多维度都有发力增长的潜力，不仅是国内的新的国货的产品，还是跨境的产品，都有积极的增长，所以会处于一个即使A部分受到了一些影响，但是B部分的增长仍然能够比较坚挺地维持一个增长的增速的一个阶段。

Well Miss you fall short on the 18th.

Sure. So as you know in Chicago.

David Brown: 尤其是最近其他一些电商的增速放缓。

Hmm.

Okay.

Royal Dai: Oh.

Yingzhi Tang: 就你，就你。好的，当然，那我来回答一下这个问题。对，我们会有一些影响，就比如以这个季度的数字来讲，我们行业其实整个跨境的业务受到了海关新政策的一些影响，所以我们整个海淘业务的收入其实是比去年同期稍微有一些影响的，就很多商品可能进不来，对。但这个，如果不是这个影响，我相信我们可能会交出更好的数字。但总的来说，因为整个宠物行业的宠物数量的增速非常的坚挺，整个行业的跨金融周期的属性非常的明显，并且行业在处于多维度都有发力增长的潜力，不仅是国内的新的国货的产品，还是跨境的产品，都有积极的增长，所以会处于一个即使A部分受到了一些影响，但是B部分的增长仍然能够比较坚挺地维持一个增长的增速的一个阶段。

Uh huh.

Absolutely.

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Ah yes their answer all questions. The management, that's where does observe a the slowing down of the knees and some other ecommerce players, but we are not really affected by this trend and if you look at our revenue. This quarter is still growing at a very strong rate. Although we went public we were partly.

Mandy Luo: Yes, Darren, answering your questions. The management does observe the slowing down of the needs in some other e-commerce players, but we are not really affected by this trend. If we look at the revenue, this quarter is still growing at a very strong rate. Although we were partly affected by the COVID, because some of the cross-border e-commerce products, they can't really enter China because of some limitations or the transportation. So we were slightly affected. But looking at the macro trend, the industry is still growing at a fast CAGR. From the past experience, we are not affected by the economic cycle, so we will continue to grow driven by the different demands of the industry, including from domestic brands or international brands. We don't see that trend slowing down.

[Translator]: Yes, Darren, answering your questions. The management does observe the slowing down of the needs in some other e-commerce players, but we are not really affected by this trend. If we look at the revenue, this quarter is still growing at a very strong rate. Although we were partly affected by the COVID, because some of the cross-border e-commerce products, they can't really enter China because of some limitations or the transportation. So we were slightly affected. But looking at the macro trend, the industry is still growing at a fast CAGR. From the past experience, we are not affected by the economic cycle, so we will continue to grow driven by the different demands of the industry, including from domestic brands or international brands. We don't see that trend slowing down.

Affected by the by the by the Covid because some of the cross border E Commerce products. They cant really enter China because of some limitations to what I tried to transportation. So we were smalley affected but are looking at a macro trend that the industry is still growing at a fast CAGR.

And from the past experience, we are not affected by the economic cycle. So we will continue to grow driven by the different demands of the industry, including from domestic brands or international brands, and we don't see that trend slowing down.

Oh is that right.

Yingzhi Tang: 然后我再补充一点关于新冠疫情的影响，就国内的新冠疫情也是在零星的在一些地方会有复发，那这个的影响更多的是对于我们看到的是对线下的宠物门店，整个线下的业态是会在部分地区受到一些影响的。也正因为基于这样一个现状，所以在这个季度我们达成了跟宠物医疗的一个合作，也是希望在这样一个可能年景不是很好的大的商业环境下，但更多的宠物主还是希望让自己的宠物能够获得更好的服务，所以我们会愿意拿出自己更多的经验资源去赋能那些独立的宠物医院，包括未来的宠物门店，所以使得这个行业能够有一个更蓬勃的发展，将新冠疫情对线下的影响能够降到最低。

Lisa Tang: 然后我再补充一点关于新冠疫情的影响，就国内的新冠疫情也是在零星的在一些地方会有复发，那这个的影响更多的是对于我们看到的是对线下的宠物门店，整个线下的业态是会在部分地区受到一些影响的。也正因为基于这样一个现状，所以在这个季度我们达成了跟宠物医疗的一个合作，也是希望在这样一个可能年景不是很好的大的商业环境下，但更多的宠物主还是希望让自己的宠物能够获得更好的服务，所以我们会愿意拿出自己更多的经验资源去赋能那些独立的宠物医院，包括未来的宠物门店，所以使得这个行业能够有一个更蓬勃的发展，将新冠疫情对线下的影响能够降到最低。

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And also one thing to add as a that we still see the emergence of Covid our situation in some part of China from time to time, that's why the offline business, especially the offline Pat stall a pet store and hospitals are affected by the COVID-19, but in the main.

Mandy Luo: Yes. Also, one thing to add is that we still see the emergence of COVID situation in some parts of China from time to time. That's why the offline business, especially the offline pet store and hospitals were affected by the COVID. In the meantime, we think it is also a good time to consolidate resources. That's why we announced news today that we are working with EvetSoft, the offline hospital SaaS solution provider, to try to empower the offline independent hospitals because there are a lot of them while they lack professional supply chain, and we want to offer that to them to use this kind of period to really empower them and help providing better medical service to the end users, i.e., our customers.

[Translator]: Yes. Also, one thing to add is that we still see the emergence of COVID situation in some parts of China from time to time. That's why the offline business, especially the offline pet store and hospitals were affected by the COVID. In the meantime, we think it is also a good time to consolidate resources. That's why we announced news today that we are working with EvetSoft, the offline hospital SaaS solution provider, to try to empower the offline independent hospitals because there are a lot of them while they lack professional supply chain, and we want to offer that to them to use this kind of period to really empower them and help providing better medical service to the end users, i.e., our customers.

Time, we think it is also a good time to consolidate resources, that's why we announced our newest today that we are working with upstream EBIT soft their offline are hospitals fast solution provider to try to empowered off my independent hospitals, because there are a lot of them while they.

Lack a professional supply chain and we want to offer that to them to use this kind of period to really empower them and help providing that her medical service to the end users I E. Our customers.

Uh huh.

Great. Thank you.

David Brown: Great. Thank you.

Darren Aftahi: Great. Thank you.

Thank you Darren.

Mandy Luo: Thank you, Darren.

Okay.

Our next questions come from Min Chen with Goldman Sachs. Please go ahead.

Operator 3: Our next questions come from Ming Chen with Goldman Sachs. Please go ahead.

Operator: Our next questions come from Ming Chen with Goldman Sachs. Please go ahead.

Okay.

Sure well thank you.

Ming Chen: Sure. Thank you. I was just wondering, could you elaborate more what's driving your online marketplace revenue?

I was just wondering could you elaborate more what's driving your online marketplace revenue.

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Mandy Luo: Sure. Online marketplace. The first question is very macro. The COVID situation doesn't really affect the pet industry. Actually, it helps us with some tailwinds. That's why we are seeing more consumption in the field.

Lisa Tang: [Foreign language]

[Translator]: Sure. Online marketplace. The first question is very macro. The COVID situation doesn't really affect the pet industry. Actually, it helps us with some tailwinds. That's why we are seeing more consumption in the field.

Marketplace.

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A the first question as far as very macro Ah the COVID-19 situation doesn't really affect the pet industry actually it helps us with some tailwind. That's why we are seeing more consumptions in the field.

Kai Fang: [Foreign language]

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Ming Chen: Uh,

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The second question is because we are in the industry for over 13 years, and we have a lot of that already have a lot of users are still we see the active buyer number growing at a CAGR of about 20% every quarter and that's why they are driving our our revenue growth are on the marketplace part.

Mandy Luo: The second question is because we are in the industry for over 13 years, and we already have a lot of users. Still, we see the active buyer number growing at a CAGR of about 20% every quarter. That's why they are driving our revenue growth on the marketplace part. Yeah. The third question is because in addition to customer engagement, we also have been working on a supply chain for many years. As you can see from the latest numbers, we are working with over 600 brands. Because of our years of experience in this industry, we understand what the users need to understand about the brands and their products, so the brands can trust us to promote their products to the users.

[Translator]: The second question is because we are in the industry for over 13 years, and we already have a lot of users. Still, we see the active buyer number growing at a CAGR of about 20% every quarter. That's why they are driving our revenue growth on the marketplace part. Yeah. The third question is because in addition to customer engagement, we also have been working on a supply chain for many years. As you can see from the latest numbers, we are working with over 600 brands. Because of our years of experience in this industry, we understand what the users need to understand about the brands and their products, so the brands can trust us to promote their products to the users.

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Yeah, and then the second the third question is because in addition to a customer engagement. We also have been working on our supply chain for many years as you can see from the latest numbers. We are working with over 600 brands because of our years of experience in this industry, we understand what the what the users.

To understand about our friends and that products. So the brands can trust us to promote that product here. Their users. That's why you can see the continued growth and momentum in our revenue segment, our online marketing and other revenue part and you will see this trend continue.

Mandy Luo: That's why you can see the continued growth momentum in our revenue segment, online marketing, and other revenue part, and you will see this trend continue. Yeah. Ming, do you have further questions?

[Translator]: That's why you can see the continued growth momentum in our revenue segment, online marketing, and other revenue part, and you will see this trend continue. Yeah. Ming, do you have further questions?

Yeah, I mean do you have further questions.

Yeah.

A couple of questions from me.

Ming Chen: No further questions from me. Thanks.

Thank you Amy.

Mandy Luo: Thank you, Ming.

As a reminder, if you would like to ask a question Press Star then one to join the queue.

Operator 3: As a reminder, if you would like to ask a question, press star then one to join the queue. The next question comes from Majid Mohammed with Shuri. Please go ahead. Hello, Majid Mohammed, your line is live. You might be muted on your end.

Operator: As a reminder, if you would like to ask a question, press star then one to join the queue. The next question comes from Majid Mohammed with Shuri. Please go ahead. Hello, Majid Mohammed, your line is live. You might be muted on your end.

The next question comes from Majid Mohammed with Sheree. Please go ahead.

Yeah.

Hello Madrid Mohammed your line is live you might be muted on your end.

Oh, sorry, Yeah Yep Hello, the first of all congratulations on your results awesome excellent work there.

Majid Mohammed: Sorry. Hello there. First of all, congratulations on your results. Some excellent work there. I have two quick questions. The first is, you plan to reach profitability by the end of the year. Are we to assume that you'll be reaching profitability next quarter? Finally, the cash position. You have around $50 million in cash. Is that enough for future investments or do you plan to raise capital? Thank you very much.

[Analyst]: Sorry. Hello there. First of all, congratulations on your results. Some excellent work there. I have two quick questions. The first is, you plan to reach profitability by the end of the year. Are we to assume that you'll be reaching profitability next quarter? Finally, the cash position. You have around $50 million in cash. Is that enough for future investments or do you plan to raise capital? Thank you very much.

I have two quick questions. The first is you plan to reach profitability by the end of the year are we to assume that you'll be reaching profitability next quarter.

And finally, the cash position you have around $50 million in cash is that enough for a future investments or do you plan to raise capital. Thank you very much.

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Yeah I'm sure a question Mohammed Oh, there you can see our G. P. M. Gross profit margin is improving so we really see and also the expenses are shrinking. So we do see our breakeven point by the end of the first half of next fiscal year, that's before September and out next year.

Mandy Luo: Yeah. Answering your question, Majid Mohammed. You can see our GPM, gross profit margin, is improving, and also the expenses are shrinking, so we do see a breakeven point by the end of the H1 of next fiscal year. That's before September next year.

[Company Representative] (Boqii): Yeah. Answering your question, Majid Mohammed. You can see our GPM, gross profit margin, is improving, and also the expenses are shrinking, so we do see a breakeven point by the end of the H1 of next fiscal year. That's before September next year. Your second question about the cash. I will address the cash position question. As mentioned that we're in strong cash position with over CNY 339 million on cash and cash equivalents on the balance sheet. Definitely it's more than enough to burn through till next year and even the year after next. We're very strong in terms of cash position. In addition, we have sufficient bank facility of CNY 300 million from our banks, and we have no sizeable CapEx. Thank you.

Sure.

Yeah.

And your second question about the cash.

Mandy Luo: Your second question about the cash.

Our dress up your cash position. Your question as mentioned that we were in a strong cash position with over three 339 million RMB or cash cashew prudent balance sheet.

Royal Dai: I will address the cash position question. As mentioned that we're in strong cash position with over CNY 339 million on cash and cash equivalents on the balance sheet. Definitely it's more than enough to burn through till next year and even the year after next. We're very strong in terms of cash position.

Differently. This morning enough to burn two two till next year and even though you're not off index. So we're very strong in terms of cash position without him.

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Kai Fang: In addition, we have sufficient bank facility of CNY 300 million from our banks, and we have no sizeable CapEx. Thank you.

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Thank you.

Okay.

Yeah.

Hum.

This concludes our question and answer session I'll turn it back over to management for any closing remarks.

Operator 3: This concludes our question and answer session. I'll turn it back over to management for any closing remarks.

Operator: This concludes our question and answer session. I'll turn it back over to management for any closing remarks.

Okay.

Okay. Thank you operator, and thank you for participating in today's call and as far as deposits. We appreciate your interest and.

Mandy Luo: Okay, thank you, operator. Thank you all for participating in today's call and for your support. We appreciate your interest and look forward to reporting to you again on our progress in the next quarter. Thank you.

So I'll, let you were talking to you again on our progress internationally. Thank you.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Operator 3: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.

Okay.

[music].

Yeah.

Okay.

Yeah.

Yes.

Okay.

[music].

Yeah.

[music].

Hum.

[music].

Q2 2022 Boqii Holding Ltd Earnings Call

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