Q4 2021 Pinduoduo Inc Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by.
<unk> fourth quarter and full year 2021 earnings conference call.
At this time all participants are in a listen.
Only mode.
A presentation, followed by a question and answer session at which time.
Wish to ask a question you will need to press star one on your telephone.
Must advise you that this conference is being recorded today.
I would now like to hand, the conference over to your host for today's conference. Mr. Chen. Please go ahead Sir.
Thank you operator, Hello, everyone and thank you for joining us today.
My name is Chen and Al will help host the earnings call Pingo <unk> earnings release was distributed earlier and is available on the IR website at Investor <unk> Dot com as well as through global Newswire services.
Before we begin I would like to refer you to our safe Harbor statement in the earnings press release, which applies to this call as we will make certain forward looking statements.
Also this call contains a discussion of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of the non-GAAP measures to GAAP measures.
Joining us today on the call are Chen Lei, our chairman and Chief Executive Officer Jean.
<unk>, our VP of finance, Larry I'll make some general remarks, our performance for the past quarter and fiscal year 2021, and our strategic focus.
<unk> will then take us through our key operating and financial results for the fourth quarter and fiscal year ended December 31st 2021.
During the Q&A session labor answered your questions in Chinese and I will help translate.
Please note that all translations provided for reference purposes only.
Case of any discrepancy between the original remarks and translate version statements in the original language should prevail.
Now it is my pleasure to introduce our chairman and Chief Executive Officer, Chen Lei Lei. Please go ahead.
Thank you Ted and I think everyone. Thank.
Thank you for joining us.
For the fourth quarter fiscal year 2021.
Let me first recap our results in Q4 and full year 2021.
Our total revenue in the fourth quarter, excluding revenue from our merchandise sales.
RMB 27 1 billion.
This is Ben.
The increase of 28%.
Our FTE by NIS $868 7 million.
And on December 31st.
Okay.
And <unk> $4 million I reach quarterly.
Our <unk> in 2021.
2000 and up.
441 billion.
Presenting for the 46 year on year growth, 46% year over year growth.
Total revenue for 2021, excluding revenue from merchandise sales.
RMB $86 7 billion.
Representing 61% growth year on year.
2021.
Vision for people at all.
Over the course of the year anyways I took over the role of Chad.
We shifted our priority for the sales and marketing towards research and development.
I'm glad to see that mix shift if you were on track.
It will lay a solid foundation.
Over the long haul.
Yes, Paul.
Continue with trust and support.
Right.
To keep up with.
Evolving and increasingly multi dimensional preferences.
We call ourselves, how we can serve them better.
As a team with engineering background.
<unk> has always been to use technology to benefit Paul.
We were fortunate to be only identify opportunity to contribute to <unk> value equity culture.
Agriculture is a sector that touch.
Everyone's daily life.
Yet at low levels.
What is the issue.
Since it was established inspection in 2015.
We have been facilitating agricultural modernization and digital conclusion.
And efficient.
Resilient.
The nickel and vibrant agricultural sector.
It hits all stakeholders in the value chain.
And we remain focused on our goal.
In 2020 was we deepen our agricultural digital inclusion efforts in various ways and late in Q1.
Farmers.
Then there are set to a market.
<unk> the.
One thing that you bought.
Agriculture.
And three.
Encouraging any April more young and tech savvy talent into agricultural sector.
And now let me elaborate.
In the downstream, we continue to bring partners into the digital economy by expanding our market access.
We are working hard to be the platform that can be matching consumer demand in agricultural production across the country.
This enabled farmers to flash and the partial equity if we put that in.
Lastly, you can consume them.
Bypassing layers of distribution delivered in a shorter timeframe.
The result is higher income for farmers.
Lower price for consumers.
The flash.
Produce consumers queasy.
Our profile has opened up the market.
817 million users farmers and producers in China directly.
We have also provided them with better tools to promote their unique agricultural producers.
One commitment that we have.
New commercial policy.
Household products.
Sales commissions.
Actually gave more exposure for agricultural products.
We plan to continue leasing Zero Commission policy of agricultural products.
We aim to create a virtuous cycle, what we have done.
In the past.
In which farmers more wow consumers get fresher and more affordable.
Amplify is the effectiveness, we launched numerous promotional events.
In 2020, while we work with various regions.
Serious equity focused shopping festival.
<unk> introduced to consumers across China to deeply I reach those specialties.
We also collaborated with key partners.
Such as CCTV.
I would like to launch live streaming events to promote China, agriculture and the heritage.
This event not only enhance user awareness.
<unk> of local specialties.
Enable farmers to directly talk to consumers.
And the thing consumers' preference further.
Which I would think.
<unk> and <unk>.
Upgrades for quality agricultural produce.
For instance.
<unk> and R&D festival promote high quality Orange and specialty.
Seven major orange produced areas across the country.
Regional Orange over IP for consumers nationwide.
Benefiting from rising order volume.
Platform.
Local artist.
As we mentioned.
Praveen.
It is a large increase in sales.
This increase in sales not only improve the farmers living standards.
Also gave them confidence to invest into the future.
Many of the investors that process into developing better products.
<unk> shutting machines and the packaging design.
Moving upstream.
Advancing adoption.
Cultural technology to help improve their productivity.
Our full practical and affordable technology can also often all growth about agriculture competition last year.
Including automated crop monitoring.
Program dynamics adjustment for changing climate condition.
Irrigation.
We have several teams commercialized.
Apologies solution.
Today. These solutions have been applied in major strawberry growing regions across China, such as the army.
And youre not provinces.
They have how traditional.
More than doubled the management capacity.
Yes.
Such progress.
Inspiring variable tightened.
We regularly organize knowledge sharing session to encourage adoption of technology in this sector.
Earlier this month.
Currently postpaid sure sure infection with China.
China.
Harnessing smart agriculture to boost the foot protection and security.
Representatives from S O.
We are on it.
Closely what's the word class partners.
For the sector.
Such as Chinese agricultural.
Agricultural University.
Anyway.
You in Singapore.
Singapore, a star and then what American University.
And we look forward to collaborating with more like minded organizations and individuals in the future.
Another important program all single dose agricultural strategy.
Focus is encouraging.
More young and tech savvy talent.
The agricultural sector.
Right correct to see more and more young agricultural partners choosing to start their businesses with Pandora.
In October 2021.
100, and a 26000 young family of professionals phone after 1995.
As joined and appeal to a profitable.
I'll throw 85700 in 2020.
And a 29700 in 2019.
Most of these young entrepreneurs.
Indicated.
The digital natives, who grew up wasteful biotechnology.
Therefore, they are used to buying things online and use of innovation like live streaming.
At the same time.
Many of them are motivated by a desire to contribute to their rural communities.
To upskill them.
<unk> offered a dedicated training programs.
Necessary knowhow.
Operate their e-commerce businesses.
We will devote more resources to support them as we believe they will play a key role in facilitating agricultural modernisation.
And the rules by colonization.
Looking back at <unk>.
Agriculture, we.
We are happy with the positive impact that we have generated.
But we have only scratched the surface.
Field of technology advancement and digital inclusion in agriculture.
Therefore, we are stepping up our investment in this sector as a long term commitment.
The focus of our long term vision may not always translated into near term results.
But we will be patient.
We do our part to contribute to equity coach no modernization.
As mentioned last year.
Personally overseeing our 10 billion agriculture initiative.
Which end to facilitate advancement of Agri Tech.
Both digital inclusion and provide accurate tech talent with greater motivation and sense of achievement.
Profits from this quarter will continue to be allocated to this initiative.
Lastly, as a platform that serves over.
868 million consumers.
We're also sugary more social responsibility.
In July we rapidly response to help with flood relief efforts in Lennox.
Making donations and launching a portal to support emerging CBD distribution.
October will be the Sen to carry our emergency disaster relief at post is also construction work insights.
In December we.
Contributed towards relief efforts in Xi'an and work with the local government to maintain necessary provision.
Probably 19 outbreak.
To support the rural communities.
We launched total redo models.
Today, we have donated carefully select historic books to rural communities around the country organized reading program.
We hope that these efforts will broaden the horizon of the youth.
And to contribute to a better future who they completed.
As we step into another year.
We remain laser focused all goes and it will continue to do our best to serve all our stakeholders.
And I would like to thank you all and otherwise for your continued support.
And now let me pass the time to June .
James has been with <unk> since 2017.
It has been recently promoted to VP of finance.
Part of our plan to move more young generation of leaders.
Andrew Please.
Thank you Lee.
One last one as you have.
Let me first walk you through our operating results for the fourth quarter and fiscal year ended December 31st 2021.
Our annual active buyers for the telephones and at December 31st 2021 was 800 and <unk>.
$68 7 million.
This is an increase of $8 3 million from 2020.
Or one 4 million from the 12 months ending September <unk>.
2020 flattened.
In Q4, we observe two core hotel for Cortez decline okay.
Average and they use in Q4 was $733 4 million.
This is $13 5 million increase from the same in 2020.
Or $8 1 million decline from Q3 820 <unk>.
At our current scale, we are approaching the limits and cat not to use the number and you can ask that as a meaningful driver of future events.
And just more important to focus on meeting our existing users in both knees and to serve them in a faster way that we can.
Our agenda for the last 12 months ended December 31st 2021 was RMB 2000 441 billion.
An increase of 46% compared to 2020.
Average annual spending per active buyer for the last 12 months ending December 31st 2021.
Which is the result of DMV divided by the number of active buyers over the same period increased 33% year over year to RMB 2810.
We're encouraged by their growing fast and are committed to serve them better.
Last year, our platform generated at <unk> totaled 61 billion coaches, an increase of 15, 9% from a year ago.
The ASP in a significant increase in agriculture <unk> on our platform.
In line with that step up forecast and our resources on our sector.
As average order value for agricultural products is lower.
This resulted and decrease in <unk> over the same periods.
Our AMB Kim Jong, 8% before 2021 as compared to RMB 44 in 2020.
Well average number of Odessa proactive fire was 70 in 2021.
And in print is a 45% from 2020.
We're glad to see that our investment in the agriculture sector.
Dressing R&D is just real needs.
We plan to deepen our efforts in agriculture.
Next I will go through our financial performance in the quarter ended December 31st 2021.
In terms of P&L, our total revenue in the quarter was RMB 27 2 billion.
Up 3% from RMB 26, 5 billion in the same quarter of 2020.
This was mainly driven by an increase in revenues from online marketing services and just revenue for transaction services.
Offset by a decrease in revenue from <unk> trials.
Excluding revenue from our <unk>. Our total revenue was RMB 27, 1% in Q4 2021.
28% from RMB 21, 2 billion in the same quarter of 2020.
Revenue from online marketing services and others were RMB 22, 4 billion this quarter.
Up 90% compared to the same period of 2020.
This was primary due to increase in merchant activities.
Our Tasman shelf, our platform's capability to help them reach their target customers effectively and efficiently.
Yeah.
Our transaction services revenue this quarter were RMB four 7 billion.
At 108% compared with the same period of 2020.
The increase in non transaction services revenues was due to.
First the increase in total transaction processing fees as a result, which have higher Gen V.
Second.
More diversified services that we provide to merchants.
Such as fulfillment services.
When we all have to caution that expensive.
Our total cost of revenue.
Crazed from RMB 11, 5 billion in Q4, 2022, RMB six feeble in this quarter.
The decrease came mainly from the reduction of lumpy trials and decreased cervical was due to a one of rebate.
Offset by increased fulfillment fees.
Total operating expenses this quarter were RMB 13 points April .
Compared with RMB 17, 1 billion in the same quarter of 2020.
Our non-GAAP basis.
Our total operating expenses as a percentage of revenue.
Excluding one P has been declined from 94% to 76% to 45% for Q4 of 2019 2020 and in 2021, respectively.
Yes.
As we observe slower user and top line growth, we proactively control of expenses.
This resulted in lower operating expenses in the quarter.
As we face more competition from existing and new players.
We expect a relevant expense items to increase in the future.
Looking just specific expense items.
Our non-GAAP sales and marketing expenses this quarter RMB 10 8 billion.
John I'm trying to find those just the same quarter of 2020.
As we continue to shift away from the previous forecast also with no marketing.
On top of this as I mentioned.
With further control, which our expenses in the face of slower user and revenue growth.
As a result.
On a non-GAAP basis.
Our sales and marketing expenses as a percentage of our revenues and this quarter was 40%.
<unk> with.
84% and 54%.
For the cynical, which had in 2019 and in 2020.
Our non-GAAP general and administrative expenses were.
RMB $195 8 million.
Compared with RMB 100, and.
And $53 1 million in the same quarter of 2020.
Our non-GAAP research and development expenses were RMB, one 3 billion.
A decline of 16% from RMB, one 6 billion.
Same quarter of 2020.
The decrease in non-GAAP R&D expenses was due to when neff rebate from one of our service providers.
If we take out impact Tophus rebate.
R&D expenses will have Ryan.
We did not expect a rebate to recur.
As a result.
Operating profit for quarter was RMB, six 9 billion on a GAAP basis.
Compared with operating loss of RMB <unk> in the same quarter of 2020.
non-GAAP operating profit was RMB eight 4 billion.
Compared with operating loss of RMB, one 1 billion in the same quarter of 2020.
Net income attributable to ordinary shareholders was RMB six 6 billion.
Compared with a net loss of RMB, one 4 billion in the same quarter of 2020.
Basic earnings per ads was RMB five <unk> effects.
And the diluted earnings per ads was RMB 466.
Compared with basic and diluted net loss per ads of.
RMB, one <unk> that team and some quarters of 2020.
non-GAAP net income attributable to ordinary shareholders was RMB eight 4 billion.
Compared with a net loss of RMB $184 5 million in the same quarter last year.
non-GAAP diluted earnings per ads was RMB 588.
Pouch with non-GAAP diluted net loss of.
RMB <unk> sitting in the same quarter of 2020.
To conclude.
The ability to pass hotel was mainly attributed to.
Says control spending in the face of a slow growth.
And second reduction of costs and expenses to a one of rebate.
We expect profits to fluctuate as we continue to invest in agriculture space.
Including agricultural technology.
As I mentioned in previous Cortez.
We are also facing more competition.
Therefore, we do not expect the profitability in Q4.
That's a benchmark for the falling Cortez.
Similar to previous Cortez profits from this quarter would be allocated to the 10 billion agriculture initiate tests.
That completes the profit and the loss statements for fourth quarter 2021.
Our net cash flow provided by operating activities was RMB 16 4 billion.
Compared with RMB 14, 9 billion in the same quarter of 2020.
As of December 31st 2021 to.
The company had RMB 92, 9 billion in cash cash equivalents and short term investments.
With that I conclude my prepared remarks.
Thank you Jim next we will move on to the Q&A session for today's Q&A session layer and doing well may questions I'll take questions from analysts on the line.
Could take a maximum two questions per analyst.
We will answer questions in Chinese and I will help translate lace remark for easier reference.
Operator, well now take questions on the loss.
As a reminder.
Vendor to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
These standby, while we compile the Q&A roster.
Our first question is from Thomas Chong with Jefferies. Your line is open.
So take one HR days are awarded what do you <unk>, whether you saw one digital trading thing <unk> <unk> Goldman <unk>.
Hi Ali.
It depends on each one of them or the kind of the box.
<unk> issued one enrollment.
He.
<unk> I believe.
<unk> NAND TPI <unk>.
<unk>.
Thanks management for taking on my questions. My first question is more about.
The macro uncertainties that we are facing how should we think about the impact to the consumers as well as.
Two <unk>.
And my second question is about our 10 billion RMB.
Agriculture initiatives can management comment about the pay grades so the.
The P&L impact.
API as well as our thoughts.
It will be a step up in investment going forward. Thank you.
Okay.
Okay.
Yes.
It's usually a pullback.
No that's helpful.
Sure sure you wouldn't see.
C J.
<unk> a tissue.
No.
Newborn actually kind of going towards.
She says she swore an activity.
Let me as always.
Hi, guys.
Got it.
Hello.
To make.
Should that come down.
Thanks.
Thank you Tomas fell question, let me take your questions.
Ask about macro economy well for us.
Always look internally and see what areas, we can improve through technology and for us a big area.
Agriculture.
Okay.
Well listen we really mean that Houston is doing right now.
Oh man.
Okay.
Chip.
Oh My God.
Could you know seasons have been answered.
Thank you Duane.
Yeah Ali.
One is around the corner.
Carl.
Total.
That's helpful.
Okay cool.
Cool.
Yes.
I'm not sure how much at all because she is here.
Sure.
Yeah.
Pushing things are lumpy.
Okay.
So they.
There are many aspects and areas in agriculture, Darwin can improve and production, we can increase yield and reduce the momentum.
And also how farmers Scott higher and stable income.
In terms of consumption. So all the efforts, we can provide consumers with fresher and more affordable agricultural produce and a reduced waste at the same time.
Oh my goodness.
Got it.
Wonderful.
<unk> core.
Tissue that you said, north Huntingdon and Charlie.
Sean It's Rob.
Sure.
In addition, another area of interest for US is seeing distribution, we can use technology to improve the distribution efficiency of agriculture produce and also strengthen the rural logistics system.
Right.
Alright good.
Got it.
Hi, Thank you could you kind of Dalton.
<unk>.
CSI bleed through of course as well.
The father.
Yes, it was too much into that.
Okay.
In the agriculture sector, along which is so fundamental and crucial we see so many opportunities.
This reflects that we remain confident about the potential of the industry and our future development.
Okay.
<unk> Court.
Our mix of fees on the Shanghai seawater.
But investments in agriculture.
Time and the process is gradual so we have to be very patient in the process.
Yeah.
Now, let's look at what we do.
<unk>.
Whether the AGA woods.
Good bye.
Yeah.
Uh huh.
And is there any water that junior cure.
That's helpful.
And with that this naturally brings us to our next question.
Our 10 billion Agri initiative, we announced the attendant Abra initiative in Q2 last year.
Yeah.
Cool.
So therefore.
Therefore mix without hogs.
Super Thank you Joe.
How much is in Washington.
Sure.
Yes.
<unk> done some of that showing up.
So since I told you call me in Q1 for sure.
Sorry, Sheila.
Okay.
<unk> Nikko.
The team.
Great.
Got it.
Eastern time.
Could you go into an ongoing portfolio.
Well, Doug this is Phil.
And for this initiative our profitability our commercial value is not the aim.
We hope that this initiative contrast, the critical needs in the agriculture sector and rural areas.
For well, we would put our investment and I Hope. This initiative can facilitate the vast amount of Agri tech promote digital inclusion and also give more motivation in the sense of achievement to accurate talents and workers.
Yeah.
She won't buy something and then go to the pod.
So you could see.
To move quicker.
Great.
Okay.
<unk> said that things are working.
Some of the <unk> gene.
Yes.
Yes.
Do you think the team in Europe .
So Keith please.
Okay.
We really hope to 10 billion agro initiative can maximize its potential and impact in the advancement of Agri Tech and digital inclusion.
Therefore, we are diligently evaluating different proposals and projects and also take into account of our and make those evaluations based upon our past experiences in agriculture as well as our technical background.
Oh.
Hey, Jessica.
Hello, Jim.
Thank you Denise.
Tier I can also share some examples of our focus areas.
Okay.
You can notice of food.
So with all that will.
We will go to <unk>.
Sure.
Shelby.
Hum.
<unk>.
Could you comment.
Thank you.
John do you increase from here.
And it's also quite easy sale.
Hey, Luke.
The Coke segment.
We have seen kind of a funnel.
<unk> Angola, Sean Quinn.
Eastern time.
Some examples some of which I have mentioned includes at how to improve distribution efficiencies through technology, how to reduce the transportation time as well as reduce the environmental impact to visa.
<unk> technology and also how to use technology.
And production to improve the efficiency as well as quality.
Okay.
And then we'll go to.
Sure.
Yes.
Near to the Hialeah and telecom.
Do you still see going out.
<unk> actually got a nice evening.
To the contrary.
Chairman there that's when we reported adoption.
Hey, Jonathan where do we sit nicely.
So are you doing with whole now.
Yes.
Thank you Sheila.
To do that.
Yeah.
She obligations in Angola.
Okay.
To use technology to enable different lengths along the agriculture our value chain.
It's really a long term project that requires long term dedication and patience. We are still in the early days of this I hope everybody can have more patients have more patients as we invest we also look forward to share with you our progress on the timber.
Every initiative.
Hope a lot as have set addressed have addressed your question.
Sure Jay.
Operator, we may take a question from the next Alice unlocked.
Our next question comes from Yang Bay with CIC. Your line is open.
So our <unk> entity.
Thanks.
If you don't ship it out.
Gotcha.
<unk> number I was wondering if I talk to John Cai.
Yeah.
Industrial.
Just on <unk> could you if I'm going to hold the yocum.
No it <unk>.
The English courts should icon.
I think we're not sure how that youll ship than toddler, you deem that Jacob.
How is that I think that would be it has the hotel Milo Tego <unk> tomo.
So when you talk many times about your candidate.
Hi, there thank you.
Thank you management for taking my question.
My first question is regarding to the future competitive landscape I'd noticed that the OLED folks more on the value to consumer instead of Pasha competitor.
No.
What is needed.
Improvement should it be emphasize for the company to make the cock and.
And my second question is regarding to your branding strategy for the past six years and although it's very distinguished from other competitor, especially for your value per mine and merchandise, however, willing to come to branding and assume that the past Atlantic is kind of becoming the bottleneck so I like to.
Your future strategy, how to efficiently help a brand business and peanuts.
Pat as well.
Yeah.
Okay.
<unk> she said.
Uh huh.
Good evening.
Goodbye.
<unk> done the hard work through this issue.
<unk>.
Yeah.
Keith.
Yeah.
I'm on the June quarter, it is telling us about.
Archie I know you do see.
Due to seasonality.
Thank you Goodbye and for your questions our shell my views.
Those fronts.
As for competition since the day Tinder daus establish.
We are in this highly competitive specs and China E. Commerce space is a huge industry and it has always been highly competitive.
Sure Ken.
Couldn't do with adoption.
Teamwork and accountability.
We saw very good people in Oklahoma.
Oh sure.
So it is a good piece of defense number. So I don't think that this feature will be likely continued good with you that.
Manuel maybe dealer.
<unk>.
Yeah, John without it.
We now see more large platforms entering e-commerce , and they provide different options to consumers.
As technology continues to operate.
<unk> needs, while also continuing to evolve and we expect expect more engaged more formats will emerge and more platform companies, we're drawing commerce.
Okay.
I'll now turn the woman sorry, Colin to unit, Utah.
Israel will need.
Maybe driven in our marketing Guangzhou.
Sure Matt going forward.
<unk>.
No no no.
Okay.
Tyler.
Sure.
It's true that as a good year.
It took them to us.
No.
That won't be a clean quarter without <unk>.
The new diesel.
As you have mentioned in your question internally.
Our focus on users.
Whether we are serving their needs well so were targeted to offer users a unique more savings smartphone shopping experience. This is our company sponsored indeed, we do not focus too much on competition.
Thanks for that of course, it starts again and there's no real way.
Women's <unk>.
No.
She always issue.
Bobby.
Your dad could you guys in the <unk>.
That's fair enough.
100, and some diesel.
You'll find me enough.
Hello, Michelle Cytometry issued.
Yeah.
But with that said.
Over the past period of time in terms of understanding and catching up with the rapidly changing user needs and addressing their needs.
Active and efficiently there is still plenty of room for us to improve.
<unk>.
<unk> many of our competitors have done a better job in some of these aspects and we need to learn from them.
Yeah.
When you launch you said this on to the entitled Land in China.
Sure.
Thank you.
Keith.
Much Kigali, Oklahoma.
Super.
Sure she launched two of them.
Good luck to you, but you can change it is towards the cool people.
<unk>.
No.
Maintenance.
Yeah.
Okay.
Scientists often time doing it Felicia.
Of course in Indiana.
EMEA.
Obama.
Those of you who goes to court.
Especially under intensified competition, we still need to look into ourselves.
How to better improve our services.
And raise our user satisfaction.
Joe mentioned, a quarter or a few quarters ago that pingo <unk> cannot always be perfect or be the best.
And we will inevitably slow down as we go through transition.
Leadership, and when we make adjustments.
These are all part of our company's development.
W are if I'm in the same time.
Sure.
Due to the <unk> team can do it at home.
So she is it between the goods.
Two questions on the oil markets.
That's why it's happening in April and June .
Sure Matt.
Contamination.
In addition, we have chosen to investing agriculture, and this is different from a pure internet technology.
In this sector, we need to be more patient with salaries investments due to its nature.
I'm gonna were more weighted to <unk>.
10040, <unk>. If you can talk to you know kind of how we've been cautious on widely between.
Sure.
<unk>.
Yeah.
Sure.
To assure youll be open.
With feature.
They didnt go down.
Single B.
Yeah.
And I'll tell you some weeks ago that didn't include the total year.
Bye Bye now.
Houston.
One <unk> to be accretive.
Okay.
We will continue to investing in agriculture, we see that are comparable with categories that have been digitized earlier, our categories now have higher penetration rate.
The online penetration rate for agriculture is still very low.
And on the existing fulfillment experience many consumer needs have not been met this is why we are investing agriculture and without hesitation as well as a core agricultural technology.
With a goal to promote our tech and digital inclusion.
It's a coincidence.
Diana.
All the time doing that particularly from Argentina.
C C.
Excellent crews with off highway.
Sure.
Mr Rohner.
To continue to push it.
For our Companys mid to long term.
Element outlook.
Tim and I are confident at the same time in order for our confidence to translate into actual results, we need dedication and hard work from everybody and our team.
Macquarie needed took a Java wouldn't T hydrous in quarantine.
No no no.
Sure.
This is Brian .
But in Chile.
No one has a ton of the future.
No.
If you want to sure nickel mines.
Yeah.
So the team itself.
We'll do it.
Yes, John sure.
<unk>.
As for you on that question on brand our platform now has nearly 870 million users and their need is continuing to diversify we hope to satisfy our users' needs and also give them a better shopping experience.
<unk> on our platform and.
In this process brand is definitely one of one part of it we need to account.
But the team panel IP product.
Sure.
Sure Jordan this is Josh.
Just on that point, just always with our platform.
Beyond seasonal seafood and producing for herself.
So just wonder woman.
Nice try.
The 401.
You guys will go to the others.
However, our store opening does not happen overnight.
That it takes time.
Essentially I believe that the ultimate goal for brands and for US at the same that is to serve consumer as well.
So we will continue to be very patient and down to us to do our part within our capability on what we should do.
Thanks, Tim.
It wasn't in EMEA.
But she should interest you.
Sure.
The change in the assumption that phenotype.
Doug honestly Bob.
Only one.
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Hi, Josh.
In this process of cooperation we see a trend that brands, who sees opportunities first would generate higher returns.
And this would in turn attract more brands to allow more about us and seek collaborations.
Not to use open door to Ping pie.
We didn't go up it will be.
Yes.
I think that yeah.
Kendall.
I see okay.
What might you do.
Well Jason.
It is being turned down.
And we see it.
Yes.
Hi.
Your pin.
Okay.
Yes.
To me that you can share.
As asphalt whether more brands goods helped increase the pool.
<unk> that is not our core focus instead, we focus on user satisfaction.
We will stick to our principles of a benefit are people firsthand and more open and I believe this would have a positive impact on brands of users as well as our platform.
Okay.
Operator, we will now take question from that side of it.
Our next question comes from Joyce Ju with Bank of America. Your line is open.
Good evening, Lei, Zhang and John Congrats on the solid quarter and thanks for taking my questions.
My first question first.
First that we have seen continued leverage and declining sales and marketing expenses this quarter.
Is there any specific reason this quarter, which lead to the company to a further kind of how the south marketing spending or it.
Simply and improvement on your sales marketing ally.
And my second question.
PBT has delivered another quarter of strong profit could you share with us how management team are looking at the balance between profitability and growth.
Are we seeing a pause that in T. J I already also should investors expect huge how shall we expect our future profitability trend and how much was the one time rebate that contribute to this quarter's higher profitability.
Well I think if I were to win whether it be Eagle Lynn can you share your Wang Yu women that relative to kind of our mandate.
Keith I think Alere and Lee.
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Thank you Stanley.
And with Macquarie.
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Thank you Christine.
Thank you I Wonder if you could speak to the lira.
So you Shouldnt read that back I should go with that.
Yes.
Thank you for your question guys.
Well for sales and marketing expenses.
You may see that we are actually changing our investment direction based on our past Covid test results.
And during Q1 and to Q3 of last year.
Our S Ens and expenses showed a kentucky consecutive quarter on quarter decreases in terms of <unk>.
Absolute dollar amount.
And in Q4.
Our selling and marketing expenses decreased by 23% Y O y.
Presented a 42% of revenues worldwide.
Our lowest level in our history.
We thank you just a dredge tissue shift.
As Les just mentioned, we need to focus and invest more in technology development.
Such as our attack.
And.
Meanwhile.
With slowing growth rate, we are more cautious so we have proactively control expenses.
This is also we're seeing higher profitability margin in the past quarter.
And ratio fluctuation and user activities and.
Slowing revenue growth is a reflection that we are not doing well enough in terms of satisfying users' needs.
So our team is working hard to express.
How to meet users' needs better and quicker.
And we think this will require continued investment and.
Definitely.
Spence will very likely Chris in the future.
For a second questions, which is about profitability.
Well I.
I would like to point out that we're not changing our strategy to focus on profit profitability.
This quarter's higher profile was due to one off rebates as mentioned before.
And control spending in the face of slower growth.
To further elaborate on says we are.
As we in Congress low growth and concurrently making adjustments we.
We have taken a cautious approach and proactively controlling our expenses.
On top of this portion of this quarter's profit.
Due to our cost and expense reduction related to whenever abate.
From our service provider.
And this whenever beige has resulted in a lower cost and expenses.
And higher profitability in the quarter.
But if we strip out the one of rebate costs and expenses.
Then the reported number.
And profitability and our courtyard will also be lower.
In seconds.
Yes.
Petition to intensifies and user demand becomes more diversified.
We do expect.
New investment in Africa, China core technology.
Where results in higher expense line items, hence.
Hence.
Impacting profitability.
And in your question you also Andrew size the rebates.
Well I think the.
The one after rebates yesterday, one of nature. It is based on a case by case negotiation, which now with service providers.
We do not expect it will recur in the future.
<unk> for the amounts due to confidentiality obligations. Please just so it was for a rider we cannot come out a specific amount, but what we can say is that it contributed meaningful portion of this quarter's profit.
Okay.
Thanks.
We have time to take questions from one more analyst.
Our last question comes from Kenneth Fong with Credit Suisse. Your line is open.
Alright. Since your question was just awarded to you or Tom.
So going from day, one what kind of online marketing service revenue <unk> the Companys CEO .
It wasn't just all stakeholders.
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Woman back to Michele.
While Jose.
<unk> done what do you define Asia. Thank.
Thank you management for taking my question.
I have a question on the online marketing service revenue, which in Q4 record a slower growth rate of only 19% compared with the previous quarters Whats. The reason behind this is mainly due to a slower GMB growth or due to change in take rate policies and have we carry out more versions of <unk>.
In the recent quarter that also depressed I'll take rate and as an investor how should we think about the growth outlook for first quarter and then the next quarter. Thank you.
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Sure.
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I'm holding to increase in two short questions.
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Some channels.
And then you had two banks you sure.
Peter.
The global economy.
Tom Shea.
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Appreciate it.
Yeah.
Kenneth Let me take your question now offer some insight on our revenue growth and then train well supplement with some insights on take rate US first of all for us to reach our current scale and investors should not expect continuous and ultra.
Our high growth.
Okay.
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Tourism.
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Joe.
Okay.
Trulia.
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Yes.
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Got it.
No we didn't.
With this issue.
Okay.
As for our future growth I believe we need.
That's a.
Strategic upgrades and we also went through adjustment last year to focus more agriculture and.
Core technology in order to pursue a long term high quality development.
Okay.
So no one taught.
Switching to issue guidance.
Could you guys shortly.
Okay.
So I'll take that myself.
Yes.
Can you Susan <unk> definition.
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Oh sure.
This concludes our question.
Joe It was higher than that.
For example, we are looking to how to apply our core technology to improve the efficiency and the reduced waste in agriculture, so that a consumer can get.
Affordable and high quality produce and farmers at the same time can increase yield enjoy improvement in income and benefit from digital inclusion.
We believe our focusing agriculture and investment in our core technology creates long term value.
Nominal.
Are you seeing.
You won't see an impact into the shelf.
Sure Jonathan.
Inventory.
The issues of law or machine itself April .
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By email.
Commercial and consequent improvement.
Oh of course EMEA now.
Yes sure.
Hi.
No.
Okay.
Sure.
Sure.
For me, it's easier to women.
Thank you.
Hopefully, we can get to your goals on the share price we get.
Good luck.
You bet.
Okay.
We are fortunate to have nearly 870 million customers, who choose to up leaving us.
To serve our users well address there are costly and changing needs and improve their satisfaction level is our long term focus.
The past year, we have seen many different platforms entering e-commerce as well as.
Our new e-commerce formats.
We need to learn from them and also improve our services. It also serve serves as a good reminder, for us too.
To iterate and promote more young talent to our management team and to keep up with the market development.
So you would have thought that the hotels right now.
Yes.
And my second question.
So Paul I think the issue.
Not that good.
Thanks for that John .
Okay.
So you don't see them off the Thai baht towards being pursued.
D J.
J D.
The items you get to the Thai baht.
Sure Sean.
Sure.
For these adjustments to shell rates out it takes time and in process our growth rate may be affected as we develop.
I see that our business cycle and financial reporting cycle do not necessarily correspond closely to each other so we do not recommend investors to use one quarters of results to predict the next.
Now Q3 Beaumont.
Hey, guys, how do you see greater detail.
Our dream of health supplement with some insights on take rate.
Okay. Thank you.
As you mentioned about SME, so before I answer.
The answer to your question about the take rate.
I would like to talk more about SME as we start opinions or whichever.
We shall incorporate pressing pause of benefit I'll give a first and more open.
In addition, agriculture as our core trends.
Any agricultural margins, our SME merchants themselves. So we have always been looking for a way.
Is to support SME merchants and the products.
<unk> four and take rate well, it's not a metric that we focus on.
In the past three quarters as you already know that.
We're continuing to implement the zero Commission policy on agricultural products.
We actively extend support to agriculture merchants that an SME merchants.
And offer more exposure and traffic.
Agricultural products all of this would affect our take rates.
That were well we had that we have done and are doing and in the long run.
Our revenue and monetization.
Monetization depends on how much value we create.
As we.
As our user experience and use it.
Mr. Matt sure improve.
Our platform can provide more value to merchants and merger with Phi investment on our platform are attractive as that runs out.
But.
I think if the percentage of our average.
Cardio protective of increases there.
The monetization rates unlikely to row Edison pays us all at scale.
That trial, so we know so well is our number one priority.
As mentioned before agriculture is teetotal is core and strategic direction, and we will stick to that.
Thank you very clear.
Thank you I would now like to turn the call back over to Chin Penn for closing remarks.
Alright, Thank you everybody for joining us on the conference call today.
If you have any further questions. Please feel free to reach out to the IR team. Thank you have a great day.
Yeah.
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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