Q3 2022 Boqii Holding Ltd Earnings Call

March 3, 2022

Operator 2: Good day, ladies and gentlemen. Thank you for standing by, and welcome to Boqii's Fiscal 2022 Q3 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 Lu, Boqii's IR manager. Mandy.

Operator: Good day, ladies and gentlemen. Thank you for standing by, and welcome to Boqii's Fiscal 2022 Q3 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 Lu, Boqii's IR manager. Mandy.

Good day, ladies and gentlemen, thank you for standing by and welcome to boat cheese fiscal 'twenty 22 third 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 objections you may disconnect at this time.

Now I will turn the call over to Mandy Lou.

Oh cheese IR manager Mandy.

Mandy Lu: Thank you, Andrew, and good morning, everyone. Welcome to Boqii's fiscal 2022 Q3 earnings conference call. Joining us today are Ms. Lisa Tang, Co-CEO and CFO, Mr. Kai Fang, Chief Strategy Officer, and Mr. Loyal Dai, Financial VP of Boqii. 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 US 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.

Mandy Luo: Thank you, Andrew, and good morning, everyone. Welcome to Boqii's fiscal 2022 Q3 earnings conference call. Joining us today are Ms. Lisa Tang, Co-CEO and CFO, Mr. Kai Fang, Chief Strategy Officer, and Mr. Loyal Dai, Financial VP of Boqii. 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 US 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.

Thank you Andrew and good morning, everyone. We're all comfortable with his fiscal 2022 in the first quarter earnings conference call joining.

Joining us today on the Nissan <unk> co CEO and CFO , Mr. Chi Fong, Chief strategy Officer, and Mr. Doyle Die financial V P of fortune.

We released the results earlier today. The press release is available on the company's IR website at IR Dot <unk> dot com as well as final newswire services, a replay of the call will be available on our site later today.

Before we continue please.

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 involve inherent risks and uncertainties.

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

Mandy Lu: 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 note that certain financial measures that we use on the call, such as adjusted net loss, adjusted 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. Also, please be reminded that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that, let me now turn the call over to our Co-CEO and CFO, Ms. Lisa Han. Over to you, Lisa.

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 note that certain financial measures that we use on the call, such as adjusted net loss, adjusted 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. Also, please be reminded that unless otherwise stated, all figures mentioned during the conference call are in Chinese renminbi. With that, let me now turn the call over to our Co-CEO and CFO, Ms. Lisa Han. Over to you, Lisa.

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 note that certain financial measures that we use on the call such as adjusted net loss adjusted net loss margin EBITDA and EBITDA margin are expressed on a non-GAAP basis, our GAAP results and reconciliations.

GAAP to non-GAAP measures can be found you know earnings press release.

Also please be reminded that unless otherwise stated all figures mentioned during the conference call are in Chinese renminbi with that let me now turn the call that you all have a score C. O M. CFO , let me at least that Tom over to you Lisa.

Uh huh.

Lisa Han: Thank you, Mandy, and many thanks to everyone for joining call today. During Q3 for fiscal 2022, we continued to enhance our value chain position as an end-to-end connector, creating values for both pet parents and industry partners. As we enriched our SKUs, further expanded our distribution network, and introduced creative initiative to satisfy the growing needs of pet parents, we were able to engage more users. On top of that, we observed the struggle for precise vertical traffic of our industry partners, while our proven private domain user traffic has enabled us to grow top line while controlling the sales and marketing spend. Therefore, we shared our user pool with industry partners and provided effective marketing solution for brand owners to penetrate the market and educate the pet parents in China. We continue to report pleasing performance across our operation figures against the fierce market competition.

Lisa Tang: Thank you, Mandy, and many thanks to everyone for joining call today. During Q3 for fiscal 2022, we continued to enhance our value chain position as an end-to-end connector, creating values for both pet parents and industry partners. As we enriched our SKUs, further expanded our distribution network, and introduced creative initiative to satisfy the growing needs of pet parents, we were able to engage more users. On top of that, we observed the struggle for precise vertical traffic of our industry partners, while our proven private domain user traffic has enabled us to grow top line while controlling the sales and marketing spend. Therefore, we shared our user pool with industry partners and provided effective marketing solution for brand owners to penetrate the market and educate the pet parents in China. We continue to report pleasing performance across our operation figures against the fierce market competition.

Thank you Mindy and many thanks to everyone for joining the call today.

During two or three calls to do country songs attention.

We continue to enhance our balance sheet position at an entry in the connected creating values.

And the industry partners.

Actually enraged L S cans.

Expanding our distribution network and introduce Macquarie team can use Atms.

To satisfy the growing needs of pet parents.

We were able to engage more users.

Chunk of search.

Oh goodness juggle for precise 90 home traffic of our industry partners.

Well, our proven private on the user traffic.

<unk> enable us to grow the top line, while contributing to sales and marketing spend.

Therefore, we should just hold with industry partners and to provide an effective marketing machine footprint.

<unk> penetrated market.

K T to pet parents in China.

We continue on the path P. D performance across time allocation feed us again cause fierce market competition.

Lisa Han: Active buyers increased by 17.8% quarter over quarter, or 26.3% year-over-year. The number of orders increased by 19.2% quarter over quarter, pointing towards our expanding brand value and improving customer engagement. Such stickiness was able to translate to growth in total revenue, up by 6.3% year-over-year. Remarkably, our gross profit margin increased from 17.9% in Q3 of fiscal year 2021 to 23.1% in Q3 2022. We intend to continue working in user stickiness and cross-selling with our rich portfolio of products to effectively turn our traffic into meaningful sales revenue. We remain dedicated to supporting the development of small to midsize brands.

Lisa Tang: Active buyers increased by 17.8% quarter over quarter, or 26.3% year-over-year. The number of orders increased by 19.2% quarter over quarter, pointing towards our expanding brand value and improving customer engagement. Such stickiness was able to translate to growth in total revenue, up by 6.3% year-over-year. Remarkably, our gross profit margin increased from 17.9% in Q3 of fiscal year 2021 to 23.1% in Q3 2022. We intend to continue working in user stickiness and cross-selling with our rich portfolio of products to effectively turn our traffic into meaningful sales revenue. We remain dedicated to supporting the development of small to midsize brands.

Active buyers increased by 17 points H, but didn't you call on our culture, our Chinese 6.3% yeah.

Yeah.

And the number of orders increased by 19.2% quarter over quarter points.

Pointing to us, our extending brand value and improving customer engagement.

Such sticky was able to translate to growth in total revenue.

Six 3% year over year.

Remarks made on the gross profit profit margin increased from 17, 9% in Q3.

<unk> got a genuine choose turning so a 21%.

In Q3 2022.

We intend to continue Wilkie users P. T cost setting, we sell a rich portfolio of products to effectively train our traffic into meaningful revenue.

We remain dedicated to supporting the development washroom in this timeframe.

Lisa Han: With our established capabilities in supply chain, warehousing, SaaS, membership system, and offline extensive distribution network, we offer brands a cost-effective solution to target the right customer group. This has translated into a significant growth in online marketing, information services, and other revenue from 0.2% of total revenue in Q3 of fiscal 2021 to 4.6% of total revenue in this quarter. As the infrastructure for such service revenue is already in place, its marginal cost remains low. Together with our rising positive fulfillment margin, we are confident to reach breakeven in near future. Boqii is looking not just a sustainable growth in user base, but also a comprehensive network and infrastructure that allows us to connect the sellers and the buyers.

Lisa Tang: With our established capabilities in supply chain, warehousing, SaaS, membership system, and offline extensive distribution network, we offer brands a cost-effective solution to target the right customer group. This has translated into a significant growth in online marketing, information services, and other revenue from 0.2% of total revenue in Q3 of fiscal 2021 to 4.6% of total revenue in this quarter. As the infrastructure for such service revenue is already in place, its marginal cost remains low. Together with our rising positive fulfillment margin, we are confident to reach breakeven in near future. Boqii is looking not just a sustainable growth in user base, but also a comprehensive network and infrastructure that allows us to connect the sellers and the buyers.

It was the only established in Beijing in supply chain warehousing gosh membership system and.

You can see distribution network.

We also grants are caused to ease that team said machine to target the right customer group.

This has translated into significant growth in online marketing information services and other revenue.

From zero to plus 2% of total revenue in Q3 on physical journey, one two full points X percentage of total revenue in these countries.

Yeah.

As the Internet.

In infrastructure for such service revenue is already in place.

It's Marty no coffee remains low.

Together with our rising punk just fulfilling the margin we are confident you'll reach breakeven.

Sure.

But she is smoking notch notch.

<unk>, just a sustainable growth.

But also a comprehensive network and infrastructure that allows us to connect the status and the buyers.

Lisa Han: As we achieved a new low in CAC of RMB 8.5 per user, we believe our closed loop system has taken shape, and we will further improve our service, servicing capabilities. Looking ahead, China's pet industry is expected to continue its growth, reaching more than RMB 400 billion by 2023, according to market research. Huge opportunities lies behind the increasing penetration and expanding needs of pet parents and the underserved brand owners. Now I will turn the call over to our CSO, Kai Fang, who will share more details about our strategy and financial highlights. Kai?

Lisa Tang: As we achieved a new low in CAC of RMB 8.5 per user, we believe our closed loop system has taken shape, and we will further improve our service, servicing capabilities. Looking ahead, China's pet industry is expected to continue its growth, reaching more than RMB 400 billion by 2023, according to market research. Huge opportunities lies behind the increasing penetration and expanding needs of pet parents and the underserved brand owners. Now I will turn the call over to our CSO, Kai Fang, who will share more details about our strategy and financial highlights. Kai?

Actually achieved a new loan E E C O M. P. Eight five per user we believe our closed loop system has taken shape and then we will further improve our 30, so everything kind of entities.

Okay I had China's Pat in this trade is expected to continue its growth reaching more than 400 engine by truth on the Chinese rate According to market research.

Huge opportunities lie behind increasing country penetration and extending these pet parents.

And Brendan on us.

Now I will turn the call.

Well that should Oh, yes, okay phone well shut in more detail about our strategy and the financial highlights.

Yes.

Yeah.

Kai Fang: Thank you, Lisa, and thanks everyone for joining us tonight or today. On top of our general business overview, I'd like to share more detailed financial information that will be moving steadily toward profitability this quarter and onwards. First, we are pleased to see a healthy revenue breakdown. Product sales continued to pick up, mostly powered by our self-operated segment. We were able to roughly maintain a 40-60 split between self-owned channels versus third-party channels contribution. We believe such blend is well balanced between efficiency, acquiring new traffic, and retaining user loyalty within our own community. The strong growth in user base and the traffic should also lay the solid foundation for future business expansion. This quarter, our gross profit was RMB 76.9 million, up by 37% year-over-year, and our gross margin increased to 23.1%.

Thank you Lisa and thanks, everyone for joining us Tonight.

Hey.

On top of a general business overview I'd like to share more detailed financial information that we are moving steadily towards profitability this quarter and awards.

First we are pleased to see a healthy revenue breakdown.

Product sales continued to pick up.

Most of them they powered by our self operated segment.

We're able to roughly maintain a 40 60 split between self owned channels versus third party channels contribution.

We believe the brand is well balanced between efficiency acquiring new topic and retaining user loyalty within our own community.

The strong growth in user base and the traffic should also laid a solid foundation for future business expansion.

This quarter, our gross profit was RMB $76 9 million.

By circa 7% year over year.

And our gross margin increased to 23, 1%.

Kai Fang: This is mainly driven by improved margin of optimized SKU matrix and higher margin contribution from our value-add services. Fulfillment expenses slightly increased to RMB 37.7 million as compared to RMB 33.6 million in the same period of last year. Fulfillment as percentage of revenue was 11.3% versus 10.7% in the same period of last year. This increase was primarily due to the increase in stock handling cost and the packaging cost as a result of the increase in the proportion of the pet supply products, which requires higher packaging. Post-fulfillment gross margin increased to 11.8% compared to 7.2% in the same period of last year.

His many driven by improved margin optimize SKU matrix and higher margin contribution.

Value added services.

Fulfillment expenses.

I actually increased to 37 7 million RMB as compared to 3.6 million RMB in the same period of last year.

Fulfillment <unk> percentage of revenue was 11.3% versus 10, 7% in the same period of last year.

This increase was primarily due to the increase in staff handling costs and packaging costs as a result of increasing the proportion was a pet supply products, which was higher packaging required.

Post a fulfillment gross margin increased to 11, 8% compared to seven 2% in the same period of last year.

Kai Fang: Our total sales and marketing expense were RMB 48.3 million, down by 12.4% from RMB 55.1 million in the same period of last year. Sales and marketing expenses as percentage of total revenue was 14.5%, down from 17.6% in the same period of last year. The decrease was mainly due to the decrease in the share-based compensation expense of RMB 11.4 million when compared to the same quarter of fiscal year 2021. G&A expense were RMB 22.3 million, down by 64% from RMB 61.8 million in the same quarter of fiscal year 2021. G&A expense as a percentage of total revenue was 6.7%, down from 19.8% in the same quarter of last fiscal year.

Our total sales and marketing expenses were RMB 48, 3 million down by 12, 44% from 50, $155 1 million RMB in the same period of last year.

Sales and marketing expenses as a percentage of total revenue was 14, 5% down from 17, 6% in the same period of last year.

The decrease was mainly due to the decrease in share based compensation expense of RMB 11, four minute when compared to the same quarter of fiscal year 2021.

G&A expenses were RMB 22, 3 million down five.

By 64% from the RMB 61, 8 million in the same quarter of fiscal <unk>.

Year 2021, G&A expenses and you take your total revenue was $6 seven.

I'm from 19, 8% in the same quarter of last fiscal year.

Kai Fang: We ended this quarter with cash equivalents, and short-term investment of RMB 315.7 million compared to RMB 339.4 million as of 30 September 2021. With no major CapEx foreseen, strong credit line backup, and we are very close to the breakeven point, we believe we are cash sufficient in our operations and the new initiatives. To conclude, Boqii delivered a set of solid results in this quarter with meaningful progress in the execution of our growth strategies. We remain committed to investing more resources to build our pet ecosystem. We believe that by leveraging our leading market position in the pet industry, strong execution, and the business development strategies, we can capture the promising business opportunity and deliver value add for both pet parents and our brand partners.

We ended this quarter with cash cash equivalents and short term investments at RMB 315.7 minutes.

Compared to RMB 339 4 million.

Timber searches in 2021.

With no major Capex or thing strong question line back up and that we are very close to the breakeven point. We believe we are cash sufficient in our operational and the new initiatives.

To conclude.

<unk> delivered a solid result in this quarter with a meaningful progress in the execution of our growth strategies.

We remain committed to investing more resources to build out the ecosystem.

We believe that by leveraging our leading market position in the pet industry strong execution and the business development strategies, we can capture the promising business.

Acuity and deliver value add for both pet parents, and our brand partners and we are moving steady to the breakeven point and profitability.

Kai Fang: We are moving steady to the breakeven point and profitability. Now, let's move on to the Q&A questions. Operator, you might open the line up for the questions. Thank you.

Now, let's move on to the Q&A questions. Operator, you may open the lineup for the questions. Thank you.

Operator 2: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Darren Aftahi with Roth Capital. Please go ahead.

Operator: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Darren Aftahi with Roth Capital. Please go ahead.

Thank you we will now begin the question and answer session.

To ask a question you May press Star then one on your telephone keypad, if you're using a speaker phone. Please pick up your handset before pressing the keys.

If at any time. Your question has been addressed and you would like to withdraw. Your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.

Our first question comes from.

Darren <unk> with.

Roth capital. Please go ahead.

Darren Aftahi: Yes, yes. Good morning. Good evening. Thanks for taking my questions. Just a few if I may. In the press release, you called out challenging market conditions in light of your growth. I'm just kind of curious what you're referring to. Is that COVID, supply chain, kind of something else? I guess, you know, when do you see those challenging market conditions improving?

Yes. Good morning, good evening, Thanks for taking my questions. Just a few if I may and in the press release.

You called out challenging market conditions.

In light of your growth.

I'm, just kind of curious what you're referring to that COVID-19 supply chain kind of something else and then I guess you know when do you see those challenging market conditions improving.

Mandy Leung: Thank you, Darren. All right. Kai, go ahead.

Lisa Tang: Thank you, Darren. All right. Kai, go ahead.

Thank you Dan.

Uh huh.

Alright.

Yeah.

Kai Fang: Hi, Darren. Thanks for question. Actually, that's a very great one. We're talking about the challenging market condition mainly have impact on our top line as well as bottom line. So far, we can see a very steady demand in terms of domestic market. Unfortunately, for our offline business as well as our offline traffic is heavily impacted by the COVID situation, and that impacts our supply chain as well. Due to the COVID situation, we are seeing some tough, especially for the cross-border business, we are seeing some headwind in terms of the logistics. Therefore, as you can see, some of the imported products in our SKU lineup get impacted in the last quarter and the quarter before last.

Hi, Dara Thanks for the question actually.

Actually that's a very good grade ones. So we're talking about the challenging market condition when many affecting have impact on our top line as well as bottom line. So far we can see a very steady demanding in terms of domestic market.

Unfortunately for our offline business as well as offline traffic that are heavily impacted by the by the Covid situation and that's impacted our supply chain as well.

And do choose.

Due to the Covid situation, we are seeing some tough.

Especially for the cross border business, we are seeing some headwinds in terms of the logistics simple.

Therefore, as you can see some of the imported products in our <unk>.

Our SKU lineup yet the impact at the end of last quarter end of the quarter before last.

Kai Fang: We hopefully with medication and vaccination situation improved and we can contain and people will find a way to coexist with the COVID-19 in better and has less impact on people's.

Kai Fang: We hopefully with medication and vaccination situation improved and we can contain and people will find a way to coexist with the COVID-19 in better and has less impact on people's normalize and have less, especially in the cross-border supply chain.

We hopefully ways.

Medication and adolescent nation situation improved and.

Well, we can contain and people people will find a way to coexist with the COVID-19 in Badger and has less impact on People's a normal.

Lisa Han: Normalize and have less, especially in the cross-border supply chain.

Normal life and have less especially in the cross border supply chain.

Darren Aftahi: Can I follow up on that? Are you seeing demand from customers and actually not being able to fill demand because you don't have the products because of supply chain issues?

So can I follow up on that are you.

Darren Aftahi: Can I follow up on that? Are you seeing demand from customers and actually not being able to fill demand because you don't have the products because of supply chain issues?

The demand from customers and actually not be able to fill demand because you don't have the products because of supply chain issues.

Okay.

Lisa Han: Yes. I'll put it this way. It's like, we did see a lot of traditional overseas imported products that were undersupplied. The domestic supplies, the domestic brands are trying their best to fill this gap, but we do see a lot of gaps that are out in the field.

Kai Fang: Yes. I'll put it this way. It's like, we did see a lot of traditional overseas imported products that were undersupplied. The domestic supplies, the domestic brands are trying their best to fill this gap, but we do see a lot of gaps that are out in the field.

Yes.

I'll put it this way.

Okay.

We did we did see a lot of Oh.

Traditional overseas.

Imported product.

That the war under supplied and its domestic.

The domestic supply it does it does.

Domestic Brenda trying our best to fulfilling this gap.

Two we do see a lot of gas.

The field.

Darren Aftahi: Great. That's helpful. Another one, if I may. Your gross margin was exceptionally strong in the quarter, and I know typically it's seasonally pretty strong. I just wanna understand. I appreciate the online marketing piece is showing a lot of strength, and that's a higher margin business. Like, can you speak to a couple things with gross margin? One, like, what's the gross margin you're seeing on your product business? And then number two, like, how sustainable is that level going forward? Have you changed something structurally that you feel like you're confident those gross margins can be elevated in the future?

Great. That's helpful. Another one if I may your gross margin was exceptionally strong.

In the quarter and I know.

Typically its a seasonally.

Pretty strong, but I just want to understand I appreciate the online marketing pieces, it's showing a lot of strength, that's a higher margin business, but.

Can you speak to a couple of things with gross margin one like what's the gross margin you're seeing on your your product business.

And then number two like how sustainable is that level going forward or did you change something structurally that you feel like you're confident those gross margins can can be elevated in the future.

Okay.

Oh, okay.

I mean, my age and Jonathan Bush.

What's been chomping want either shoot Xiaomi monitor what else within Samsung.

Lisa Han: In this quarter, we saw very solid growth of gross profit margin in our product sales part. It has increased from 17.9% to 21.4%, compared to the same period last year. If we break this down, the contribution was from all across the categories, including staple food, pet supplies, as well as pet care products. This was actually driven by two reasons. Firstly, because we increased the support for the small to mid-sized brands, and they have higher margin compared to other brands. Secondly, because we have kind of adjusted the product mix, which has also helped the increase in the product sales margin. If we look to the future, we will see two drivers for the GPM.

You should be glad to.

I want to wish all the money that you don't want that to happen because I think that she may shock she's actually all compete but you don't know, but just on the PJM on even the things beyond that.

Lisa Tang: In this quarter, we saw very solid growth of gross profit margin in our product sales part. It has increased from 17.9% to 21.4%, compared to the same period last year. If we break this down, the contribution was from all across the categories, including staple food, pet supplies, as well as pet care products. This was actually driven by two reasons. Firstly, because we increased the support for the small to mid-sized brands, and they have higher margin compared to other brands. Secondly, because we have kind of adjusted the product mix, which has also helped the increase in the product sales margin. If we look to the future, we will see two drivers for the GPM.

And this quarter, we saw a very solid performance.

Gross profit margin in our product and our product sales part that has increased from 17, 9% to 21, 4%.

Compared to the same period of last year and if we break this down the contribution was from all cross categories, including staple food.

Pet supplies as well as pet care products.

Okay. So have you made the monitoring I'm going off the injunction hotly negotiated to have some how does Jesus situation going into the target.

With that she made intelligent and shell.

She is an attorney with a dodgy much money.

The engine.

So this was actually brought a was actually driven by two reasons firstly, because we increased our support for the small to mid size friends and they have higher margin compared to other brands and secondly, because we have changed we have kind of adjusted the product mix, which has also helped.

The increase in product sales margin.

A J good morning, Josh Okay sure.

Two if I may you would so there shouldnt be how would you even petition sanhedrin money to shop, how should we will continue in the diesel costs, Yeah, Yeah, Chinese Joshua James Hi, Shang.

Q2 should enjoy that's one of the gene that you do it sometime on or you would only be jumpy and Oklahoma cheaper intelligent challenging 10 dollar tree. So I can I shouldn't be younger she she went after them wanting it and Johns Hopkins, which again tissue really Uh huh.

And look because if we look to the future we will see two drivers for the G. P. M of course, one part is from the information services and other revenue because it has high margin and it will we also foresee that this will this will constitute an increasing part of total revenue and secondly.

Lisa Han: Of course, one part is from the information services and other revenue because it has higher margin, and it will. We also foresee that this will constitute an increasing part of total revenue. Secondly, this will be contributed from the sales, product sales part, because in Q3 of the fiscal year is the December quarter, and we usually have the e-commerce promotions. In this quarter, product sales GPM will be quite low. We are very confident that in the future quarters, this number will continue to pick up. In the longer term, we will balance. We will have a more balance. We'll have more balance between the overall revenue growth as well as the GPM improvement.

Lisa Tang: Of course, one part is from the information services and other revenue because it has higher margin, and it will. We also foresee that this will constitute an increasing part of total revenue. Secondly, this will be contributed from the sales, product sales part, because in Q3 of the fiscal year is the December quarter, and we usually have the e-commerce promotions. In this quarter, product sales GPM will be quite low. We are very confident that in the future quarters, this number will continue to pick up. In the longer term, we will balance. We will have a more balance. We'll have more balance between the overall revenue growth as well as the GPM improvement.

This will be a contributor to it from the sales cut off.

Sales part because in Q3 of the fiscal year, just the December quarter, and we usually have the equal much promotion. So in this quarter Kodak G. P. M will be quite low. So we are very confident that in the future put us. This comeback. This number will continue to pick up and in a longer time, a little balance we will have a more balanced.

We'll have more balance between our overall growth the overall revenue growth as well as the G. P M. The improvement.

Yeah.

Darren Aftahi: Great. Just two more, if I could. You mentioned reaching profitability, or breakeven, whatever the metric is, several times in your press release. I'm just kinda curious what level of quarterly sales you kinda have to be at to achieve that goal.

Great.

And then just.

Just two more if I could you mentioned profit reaching profitability breakeven whatever the metric is several times in your press release I'm just kind of curious.

What level of quarterly sales you kind of have to be at to achieve that goal.

Loyal Dai: Hi, Darren, this is Loyal. As Lisa mentioned, with our GPM continued improvement, we expect, when our total revenue achieve RMB 400 million, we expect we will achieve the breakeven.

Hi, Darren.

Absolutely as I mentioned with our G. P M.

Well continue improvement we expect.

Our total revenue our total revenue are achieved.

Oh, just a true 400 meter I M. B, a we expect we've got achieved the breakeven.

Okay.

Darren Aftahi: Thanks, Loyal. Just last one for me. I know you have some time to address this, but I'm sure there's a lot of investors on the call that wanna know. Just can you speak high level what some of the initiatives are that you're thinking about in terms of consideration for kind of the share price requirements for Nasdaq to get back to being in accord with their requirements? Thanks.

Thanks loyal and then just last one for me.

You have some time to address this but I'm sure. There's a lot of investors on the call that they want them now, but just can you speak high level, what some of the initiatives are that you're thinking about it.

In terms of.

Federation for kind of the share price requirements for NASDAQ to get back to being in.

In a chord with our with the requirements.

[Company Representative] (Boqii Holding): Oh, yeah, sure. Hi, I'm Andrew. We are fully aware of the kind of the Nasdaq stock price requirement. We will take two approach. One approach will be fundamental approach. We'll continue to do our division work in terms of investor relationships. We are trying to get more investors who recognize our intrinsic value to able to take advantage of this latest price. This is like one approach on one hand. On the other hand side, we are fully aware of like all the technical avenues that the company can take in terms to fulfill to meet the requirements, such as reverse split of the stock. I'm just quoting one.

Oh, Yeah sure Hi, John So we we are we're pretty aware of kind of the NASDAQ is sure.

Quick question requirement and.

We will take to approach one would probably be fundamental approach. We will continue to owe doesn't work in terms of our investor relationships and we are trying to get more.

More investor, who recognize our intrinsic value to able to take advantage of this.

They just price.

Ah yes, the one like why approach on one hand and all that.

[Company Representative] (Boqii Holding): On the other hand side, we are fully aware of like all the technical avenues that the company can take in terms to fulfill to meet the requirements, such as reverse split of the stock. I'm just quoting one. We will definitely keep investors and the public be aware, should we have more concentrated, concrete plan to meet that requirement.

On the other hand, we are fully aware of like all the technical.

Hubert that the company can take in terms that this will be.

To meet your requirements such as reverse split the stock.

I'm just quoting one so therefore, we will definitely keep investors and the public.

Kai Fang: We will definitely keep investors and the public be aware, should we have more concentrated, concrete plan to meet that requirement.

Be aware just should we have more concentrated.

It's Fran.

To meet that requirement.

Mandy Lu: Great. Thank you.

Darren Aftahi: Great. Thank you.

Great. Thank you.

Yeah.

Okay.

Operator 2: This concludes our question and answer session. I would like to turn the conference back over to Mandy Leung for any closing remarks.

Operator: This concludes our question and answer session. I would like to turn the conference back over to Mandy Leung for any closing remarks.

This concludes our question and answer session I'd like to turn the conference back over to Mandy Lowe for any closing remarks.

Mandy Leung: Yeah. Thank you, Andrew. And 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.

Thank you Andrew and 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.

Operator 2: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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

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

Okay.

Yeah.

[music].

Okay.

Yeah.

[music].

Q3 2022 Boqii Holding Ltd Earnings Call

Request a DemoDemo

Boqii Holding

Earnings