Q3 2021 Ecmoho Ltd Earnings Call
Good day and thank you for attending by welcome to the <unk> 2021 third quarter earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone please be.
Today's conference is being recorded if you require any pride to assistance. Please press star Zero I would now like to hand, the conference over there your speaker today, Mr. Bonn to please go ahead.
Thank you operator, Hello, everyone and thank you for joining us today for our third quarter earnings Conference call.
And as a result were released earlier today and are available our.
Our website on the call today for easy Mohawk.
Yes.
<unk> founder and Chief Executive Officer, Mr. Daniel Wang co founder and head of capital market and Mr. Shan Li Chief Financial Officer Mats, just one well review that business operation and the company highlights followed by Mr. Li who will discuss financials and guidance.
They will be available to answer your questions during the Q&A session that follows.
Before we begin I would like to remind you. This conference call contains forward looking statements within the meaning of the Securities exchange.
At Nike 34, and our U S Private Security Litigation Reform Act of 1995.
Those forward looking statements are based upon management's current expectations and current market and operating conditions and they relate to events that involve known or unknown risks.
These and other factors all of which are difficult to predict and many of them.
Which are beyond the Companys culture, which may cause the company.
Actual results could differ materially from those in the forward looking statements.
Further information regarding these and other risks uncertainties or factors is included in our comments filing with the U S. SEC.
Company does not undertake any.
<unk> to update any forward looking statements.
As it required Andrea Apolo law. Finally, please note that unless otherwise stated all figures mentioned during this call are in RMB.
It's now my pleasure to insurers.
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Hello, everyone and thank you for joining us today for our third costs turning to anyone on this call as an integrated solution provider in health care and wellness market. He seemed more hot mission is to improve health and well being of costumers in China with this and the company continues to strengthen business.
In the health care market.
Our future vision is to build a health care and wellness management platform driven by digital and it.
Stan Trust on the supply chain, all of health care and wellness products and competitive I'll use it both lifespan for our house candidates, who have been putting great effort to ensure you are yes.
Firstly, we continue to attack our core business of our house kept pride ourself forecast, our house cab category and expand more addressable category to satisfy consumer demand.
We strive for innovation and digital marketing Janssen comes capability of Omnichannel courage, and new growth opportunities with our consumer insights and a comprehensive phishing solution.
With Janssen dedicated and the refining operation that includes supply chain and see I am and organization during the third quarter, we thought the negative impact due to the weak cross border supply chain were mainly offset by our optimization strategy.
We're able to optimize our brand portfolio with higher margin brands expand in the new category by focusing on health care and wellbeing and strengthened service capability by innovating in digital marketing.
For the third quarter, we have generated revenue of RMB $183 million and achieve our accumulated revenue I am b.
635 million as of September 30, total module right and Christa back five percentage year on year to 2021 'twenty 217 percentage.
We're showcasing the consistent progress we are making towards healthy profitability and remember ultimately paying comes from us was <unk>.
One 3 million as of September 30, representing a net addition of one planet.
A $6 million compared with the numbers in last year representing.
18 year over year growth.
Our repeat purchase rate has reached 38.
One five percentage the increasing number of paying users genius of users and category expansion related to a portion on products and medical device.
Have they come down.
Sustainable growth drivers of our business growth I'm coughing the efforts we make.
Mentioned.
Well continue to be the engine for our sustainable and healthy growth.
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Now I'll start with Pfizer sure mining sites, given the opportunities we saw firstly as healthy category expansion by a consumer demand with the rising privileged of China. Because this is what is it that should be preventable and and early stage, we see tremendous growth opportunity.
It is a handful of company that can supply has kept products and integrate family house solution to consumer anesthesia.
Expanded several new categories and offering to support costumer digestive health and I have worked closely and strategy colleague cooperated with leading global pharmaceutical company to introduce premium and a reliable product for consumers. According to these categories, which we.
We will believe will not meet high expectation of costumes, but will also serve as an important growth driver going forward.
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Michel for each of the foregoing eating occasions, all of that sometimes you buy them.
Second and personalize their house 10 months in part about all of our data driven and self developed Bhakti I am we have accumulated more than type one 3 million paying users and 80% page of the total paying users or women, who spend more time, revealing and petroleum product.
Men according to our customer analytics, a growing number of young Chinese people are anxious about their health.
Offering diversified demand for health care market yesterday.
So there are post the 19th generation power solution posturing or hospitals finished phineas and out amount our house food traditional.
No roofing health food and nutrition north of payment a key option.
According to us.
Nobody else referred to Paas consumption E C mall brands personalized health treadmill for a consumer.
For example, we supply dry house smell replenishment powder for scenario of improving physically physical business and enhancing the effect of exercise.
Martin your transfer airplanes replenish products.
And Zen product for skiing, anti fatigue D protected melatonin related product Boston Boston area of study and a walk dietary fiber and then products more T V timing for an upset stomach.
Jason our own.
Kerstin supplement to accomplish than what Theyre only differentiate a deficiency.
Our diversified customer base with diverse needs is expanding our marketing opportunities. Most importantly, under our house three months, our costume must repeat purchase rate has increased to 30 815 percentage.
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Saturday, Yes, new growth for like Dreaming. According to the data by KPMG and Ali Research Institutes.
My cell phone last journey has being over one trillion in 2020 I know rich two trillion ranking.
Certainly what we saw a substantial growth market and development opportunities for live streaming.
During the quarter.
Collaborator with thousands of Carryout, and Kelsey to generate paas content and launching more of them.
300, and a fire.
<unk> 3005 hundred of live streaming events to drive health and wellness product consumption.
We will continue with the solid our e-commerce live streaming commentary by improving supply chain and marketing influencer for fulfillment and lifestream operating.
We are confident that we could do liver more business and Merck growth for live streaming platform.
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Although all our operation tends to be sustainable and a house they perfect perfect ability with our increase the gross margin rate and a costume must repeated richer it.
<unk> purchased a rate by focusing on customer demand, which also bring us more compelling business.
Leveraging our extensive customer reach strong supply chain capabilities and technologies, we connect pharmaceutical companies and health care by that supplier distributor and a costumer three in Peru.
The ability of.
Foldable high quality health care and wellness product in China, especially for those who live in low tier cities with limited healthcare resources.
And omni channel strategy and digital marketing, we enable our brand my grandparents to capture the consumers in a more prestige and effective manner looking forward well continue to refine supply chain and introduce premium products and service to satisfy customer demand.
We.
We believe that you see more whole ecosystem.
Build will help to better provide health care for everyone and create sustainable value for shareholders.
I will now turn the call over to Mr. Li.
Thank you.
Hello, everyone.
Or to join the call.
During the third quarter against the backdrop of our brand portfolio optimization and Paas E. Commerce peak season, we took deliberate measures to manage our budget, which although led to revenue struggle resulted in better gross margin of product sales.
These optimization dynamics.
Normalized.
So well positioned.
Optimization.
I think next year is sustainable growth.
Most importantly, we continue to grow our business.
Nimble as well.
Doug.
We optimized our portfolio, which we believe will better position us.
To drive growth over the longer term.
Allow us to generate value for our brand partners.
Now I would like to go over the third quarter 2021.
Thoughts in more detail, we believe year on year comparisons are the best way to review our performance all percentage change I'm going to present will be on that basis, unless otherwise stated.
Once again, please note that all figures mentioned will be in RMB.
Total net revenue.
R M B, a hungry aided Q1 eight minutes nuclear project sales revenue, mainly due to weakened demand for mother children care category and the impact of the company's growth strategies to optimize portfolio.
It may cooperate with brands that have a higher profit margin.
Total gross margin was flat at two.
Two seven as compared to 17.
EBITDA.
In the same quarter last year gross margin of product sales was 30, 149% as compared to 17, 5% in the same quarter last year, primarily due to lower market spreads.
Gross margin services.
The five 1% as compared to 24, 5% in the same quarter last year due to the increased proportion of hi, Margaret GP service revenue.
Operating expenses.
Were RMB 64 nine.
9 million, representing a decrease of.
44.
Yeah.
<unk> hundred 61 million.
<unk> million in the same quarter of last year as we can.
So cost and optimize our operations.
The decrease was mainly.
<unk>.
To decrease our fulfillment expenses and sales and marketing expenses.
Fulfillment expenses were RMB.
One 4 million, representing a decrease of four.
Two 9% from RMB.
Great.
In the same quarter of last year. The decrease was primarily due to decreased warehouse.
Logistics expenses.
Is that lower product sales in the third quarter, a pretty exciting one.
Marketing expenses were RMB.
<unk> 33.
He is representing that do play itself.
Two 5% from RMB seven six.
6 million in the same quarter of last year. The decrease was mainly.
What's.
Marilyn due to a decrease business promotion expenses.
For them.
Fees due to lower product sales revenue in the third quarter of 201.
And reduced employee related expenses due to staff structure requirements.
General and administrative expenses.
<unk> 16, 41 minutes, representing a decrease of plenty.
So the three 4% from RMB 21 million in the same quarter of last year. The decrease was primarily due to decreased pressure now cost due to staff structure requirements.
Professional service fees, such as audit fees and consolidate.
Research and development expenses were RMB.
One 9 billion.
As compared with RMB, one 8 million.
Last year operating loss was RMB.
For the three or four minutes as compared to an operating loss of RMB 29 three minutes.
The same quarter of last year non-GAAP operating loss.
It was RMB 16, 2 million as compared to a non-GAAP operating loss of RMB 27, 5 million in the same quarter of last year.
Net loss.
With RMB 44 five minutes.
Fair enough.
RMB eight 6 million in the same quarter of last year.
Factors described above.
Non-GAAP net loss RMB, $17 2 million as compared to non-GAAP net loss.
RMB 26, 8 million in the same quarter of last year.
This concludes our prepared remarks, thank you.
Operator.
But it will be candy.
Thanks.
As a reminder to ask a question you will need to press star one on your telephone.
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I would like to hand, the conference back to our presenters. Please continue.
Thank you operator in closing on behavior of D E CMO home management team.
Like to thank you for your participation in today's call. If you require any further information or came to visit us.
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Thank you for joining us today. This concludes the call.
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Good day and thank you for attending by welcome to <unk> 2021 third quarter earnings Conference call. At this time, all participants are in a listen only mode.
The speaker's presentation, there will be a question and answer session to ask a question. During the session you will need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any pre-k assistance. Please press star zero.
I would now like to hand, the conference over theory Speaker today, Mr. Bonn to please go ahead.
Thank you operator.
Hello, everyone and thank you for joining us today for our third quarter 2021.
Conference call.
The Companys results were released earlier today and are available on our.
Our website on the call today for easy Mohan, we have Ms <unk>, Wang founder and Chief Executive Officer, Mr. Daniel Wang Co founder and head of capital market and Mr. Shan Li Chief Financial Officer, Ms. Just why well reviewed our business operation and incomes.
The company highlights followed by Mr. Li who will discuss financials and guidance there will be available to answer your questions. During the Q&A session that follows.
Before we begin I will.
I'd like to remind you. This conference call contains forward looking statements.
The meaning of the Securities Act of Nike's, 34, and our U S. Private Security Litigation Reform Act of 1995.
Forward looking statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known unknown risks.
These and other factors all of them.
Of which are difficult to predict and many of them.
Which are beyond the Companys control, which may cause the company.
Actual results could differ materially from those in the forward looking statements further information regarding these and other risks uncertainties of better is included in our comments flattening with the us SEC.
Company does not undertake any obligation to update any forward looking statements.
As it required Andrea Apolo.
Finally, please note that unless otherwise stated all figures mentioned during this call are in RMB.
My pleasure to introduce I'll watch a woman and she is active officer Ms. <unk> Li. Please go ahead.
Thank you.
Uh huh.
I am going to tender is M O R E and <unk>.
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Condo shouldn't eat the whole woman shirts shoes that Jim <unk> fusion guns.
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Well, then we're down to that cycle time Champions League.
<unk> T. A woman tissue had that shouldn't guns that can contact you to hooking you to gel couture Johns Senator Shelby just huge or the same.
<unk> completely now they're gonna woman Wonder how sure sure.
Keagle, Chile, although the economy. So operator, let me tell you the floor.
<unk> seen that you would've seen that tug of war.
This underlines that she got city, they're going in C. I am to do that since you have the hain meet.
Ali our union that <unk> do well not sure sure, though youll call woman Natalia <unk> nugget.
Hello.
Chip I hope that I don't want that to go do.
How do you deal with it.
Given shell taller.
A woman at that time, she shops, there without a doubt the yoga.
Are you kind of a true woman the Mali Youre looking at other patient cohorts you reach out and talk with you in <unk> or should we can sell them. So if you try and keep that.
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And then late in.
And $5 <unk> for a while to show up in the fourth quarter.
<unk> agenda of passengers should that not be job-hop, Vishal Shaw, who forgot eating occasions, all the bathroom dystocia body I'll walk you on quarter, Jim Jong in Yang that she doesn't gap now called lunch in the gym company right. You know what she said the torch on it yet so I don't want me Youll just on its own that woman is asking the total you shop you saw wash.
Well I'm sure the Santana Jinsha now, what's asking you say Michael <unk>.
The ups and downs.
Hello, everyone and thank you for joining us today for our third call Tony on his call as an integrated solutions provider <unk>.
The wellness market you seem more hot mission is to improve health and wellbeing of cardio market in China with this and the company continues to strengthen business in the healthcare market. Our future vision is to build our health care and wellness management platform driven by digital and it.
Its standards on the supply chain of health care and awareness product encompassing all users both lifespan for all health care needs.
It had been putting great effort to answer you are yes.
Firstly, we continue to attack our core business of our health care product <unk>.
<unk> has cab category.
And more addressable category to satisfy customer demand.
We strive for innovation in digital marketing Janssen comes capability of Omnichannel courage to gain new growth opportunities with our customer insights and a comprehensive operation solutions.
With Janssen dedicated and refine operation that includes supply chain and organization during the third quarter, we thought the negative impact due to the weak cross border supply chain were mainly offset by our optimization strategy, we were able to optimize our brand portfolio with <unk>.
Higher margin brands expand in the new category by focusing on health care, and wellbeing and strengthened service capability by innovating in digital marketing.
For the third quarter, we have generated revenue of RMB $183 million and achieve our accumulated revenue I am b.
$635 million as of September 30, total module Rea and Christopher by 5% year on year to 20 2022, 7%.
We're showcasing the consistent progress we are making toward TLC profitability number all accumulated paying comes from Mark was.
One 3 million as of September 30, representing a net addition of about one <unk>.
$6 million compared with the numbers in last year representing.
18 year over year growth.
Our repeat purchase rate has reached 38.
Five percentage.
Crazy nimble all paying users genius.
Users and category expansion related to a functional products and medical device.
Have they conduct a sustainable growth drivers of our business growth.
The efforts we make.
Mentioned.
Well continue to be the engine for our sustainable and healthy growth.
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Gladstone Zhao woman Duck Donuts.
Now as that to a Pfizer show mining sites given the opportunities we saw certainly a healthy category expansion via costumer demand with these rising prevail out of China. Because this is what is this issue will be preventable and and early stage, we see tremendous growth opportunity.
<unk> noticed a half one company that can supply has kept product and integrate family house solution too.
<unk> carcinoma anesthesia.
Expanded several new categories and offering to support costumer digestive health and our house.
Closely our strategy totally cooperated with leading global pharmaceutical company to introduce premium and a reliable product will costumer. According to these categories, which we will believe will not meet high expectation of costumes, but will also serve as an.
Partner growth driver going forward.
Do you have enough women to young children from tier one mortgage without getting daughter, Jim candidate you saw not a tallboy you seem well hold so Julia and father C. I am sheet hole, well meeting T. Layla troubled E chance that E mail them by SASSA wanted to see them kind of fulfillment cost.
Corner passenger passionate way June quarter.
Im include China, Sichuan Shandong call you don't go to 19.
<unk> posted an all women's fashion.
So I told the team Paas usual can chewing and quinoa not Julien how eating cash requirement with Genpact now close your woman, that's what you can't see a.
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<unk>, Yeah, Eastern Jin Jiang provisions related hunting you guys are talking about what does she contacts.
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No my talk a woman so Julian Segal, a woman uncle contingent the module you don't call the pool close usual Dwayne a woman the shelf each of the foregoing anything patients all of that and just ask you about the outlook.
Second personalize their house 10 months in part about all of our data driven and self develop C. I am we have accumulated more than type one 3 million paying users and 80% page of the total paying users.
Women, who spend more time resilient and petroleum product them. According to our customer analytics. According nimble beyond Chinese people are anxious about their house. They also offering diversify men's wearhouse com market yesterday.
So there are post the 19th generation power solution posturing hospitals finished phineas ends out amount our house foods traditional.
No roofing house food and nutritional supplement a key option.
According to us scenarios referred to payoffs consumption E C mall brands personalized health trademark for consumer Board.
The example, we supply dry house smell replenishment order for scenario of improving physician physical goodness and enhancing the effect of Ssi.
<unk>, new transfer airplanes replenish product.
And Zen products for skin anti fatigue, Dave protected melatonin related product Boston, Boston area of study and a walk dietary fiber and then products more TV <unk> four and <unk>.
Jason.
Kirsten supplements to accomplish than what Theyre only differentiate the deficiency.
Diversifying customer base with diverse needs is expanding our market opportunities. Most importantly, under our house 10 months, our costume must repeat purchase rate has increased to 38 five percentage.
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China.
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Hi, Mark.
But do you see Mohawk.
Kim good Oh, okay, well, thanks, a lot Jim.
<unk> tons, all hoods or the cues that woman teaching toggle essential patents. So you've shown that you bought.
Sugar Teetotal Combi engines out the Super pit and quiet people Arlington Jacques showed that 500, <unk> Civil War Mcafee.
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Saturday, Yes, new growth for Black dreaming. According to the data by KPMG and Ali Research Institute.
<unk> has been over one trillion in 2020.
Well rich two trillion, yet zagging turn it on and what we saw a substantial growth market and development opportunities for last Jamie.
During the quarter.
Collaborator with thousands of Carryout, and Kelsey to generate paas content and announce the more of them.
300 and Oh.
<unk> 3005 hundred of live streaming events to drive health and wellness product consumption.
We will continue with the solid our e-commerce live streaming commentary by improving supply chain and marketing Influencer for fulfillment and last June operating.
We are confident that we could do liver more business and more.
<unk> growth for live streaming platform.
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Josh and closer to you know, we have been choosy and cartilage tissue no woman.
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Lynn.
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Woman I'm going to change in the total can both of whom who they're doing cook that isn't contingent up she paid.
No matter when the hazard Jin for Q1, and they'll go ways all of them, they're going to court.
Women they are going in Tijuana will get Chelsea address that thank you to the Chongqing Gulf War pushed a woman chassis you assume will hold us in tax that will that number okay.
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Judging that ATM count well Miss you I don't know tons all countries using the downtick.
Although all our operation tends to be sustainable and a housing perfect perfect ability with our increased gross margin rate and a costume must repeat Richard.
Purchased right by focusing on customer demand, which also granting us more compelling business.
We will leverage our extensive costume, a rich strong supply chain capabilities and knowledge it will connect pharmaceutical companies and healthcare potash supplier.
Good return and a cost per month three in Peru.
This ability of.
A photo book high quality healthcare and wellness product in China, especially for those who live in low tier cities with limited healthcare resources.
<unk> and omni channel strategy and digital marking we enable our brand partners to capture the consumers in a more prestige and effective manner looking forward well continue to refine supply chain and introduce premium products and service to satisfy customer demand.
We believe that you see mahalo ecosystem, we've built will help to better provide health care for everyone and create sustainable value for shareholders.
I will now turn the call over to Mr. Li.
Thank you.
Hello, everyone, it's a pleasure to join the call.
During the third quarter against the backdrop of our brand portfolio optimization and Paas E. Commerce peak season, we took deliberate measures to manage our budget.
Although led to revenue struggles resulted better gross margin.
Got it ourselves.
This optimization dynamics will gradually normalize.
Well for the transition of this year's optimization strategy to next year's sustainable growth.
Most importantly, we continue to grow our business, staying nimble and well balanced manner as we optimized our portfolio, which we believe will better position us to do.
<unk> growth over the longer term and allow us to generate value for outbound Congress.
Now I would like to go over the third quarter 2012.
<unk> financial results.
More details we believe year on year.
Your comparisons.
Best way to review our performance.
All percentage change I'm going to pay that will be on that basis, unless otherwise stated.
Again, please note that all figures mentioned will be in RMB.
Total net revenue.
That'd be a hungry aided Q1 eight minutes.
Product sales revenue, mainly due to weakened demand from other children category and you can pay down the company's growth strategies to optimize portfolio.
Blake cooperate with brands that have a higher profit margin.
Total gross margin was.
But at two seven.
<unk> to 17 seven.
And the same quarter last year gross margin of product sales was 31, 9% as compared to 17, 5% in the same quarter last year, primarily due to your lower margin.
Gross margin rate up services.
Five.
1% as compared to 24, 5% in the same quarter last year due to the increase reported by Margaret GP service revenue.
Operating expenses.
Were RMB 64 nine.
9 million representing a decrease.
44.
It's Dan from RMB 116.
Second quarter of last year, as we continue to control costs and optimize our operations.
The decrease was mainly.
<unk>.
<unk> decreased our fulfillment expenses and sales and marketing expenses.
Fulfillment expenses were RMB.
One 4 million representing a decrease.
42, 9% from RMB 20.
Lastly in the same quarter of last year. The decrease was primarily due to decreased warehouse and logistics expenses.
Lower product sales in the third quarter, a pretty exciting one.
Sales and marketing expenses were RMB 33 five.
Canadian representing that deeply itself.
245% from RMB seven.
6 million in the same quarter of last year. The decrease was mainly.
Primarily due to a decrease business promotion expenses.
Platform.
Fees due to lower product sales revenue in the third quarter of 201.
And reduced employee related expenses due to staff sector requirement.
General and administrative expenses.
<unk> 16, 41 minutes, representing a decrease of 20.
So the three 4% from RMB 21 million same quarter of last year. The decrease was primarily due to decreased pressure now cost due to staff structure requirements.
Professional service fees, such as audit fees.
And consolidate.
Research and development expenses were RMB, one 9 billion.
As compared with RMB, one 8 million same quarter of last year.
Operating loss was RMB.
One of three or four minutes as compared to an operating loss of <unk>.
29, 3 million in the same quarter of last year.
Non-GAAP operating loss.
RMB $16 2 million as compared to a non-GAAP operating loss of RMB seven 5 million in the same quarter of last year.
Net loss.
With RMB 44 o'clock minutes as compared to a net loss.
RMB eight 6 million in the same quarter of last year.
Reserve factors described above.
Non-GAAP net loss.
RMB $17 2 million as compared to non-GAAP net loss of <unk>.
RMB 26, 8 million in the same quarter of last year.
This concludes our prepared remarks, thank you.
Operator.
Sandy.
No.
Thanks.
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Thank you operator in closing on behavior of the CMO home management team.
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