Q1 2022 Pinduoduo Inc Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to <unk> first.

First quarter 2022 earnings conference call.

At this time all participants are in a listen only mode.

Will be a presentation, followed by a question and answer session.

Each time, if you 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 today, Mr. Chin pinned Sir Please go ahead.

Thank you operator, Hello, everyone and thank you for joining us today.

My name is Chen and I'll help host the earnings call.

The earnings release was distributed earlier and is available on our website.

The adoption Goto dot com as well as through global Newswire services.

Before we begin I would like to refer you to all the safe Harbor statement in the earnings press release.

Which applies to this call as we will make certain forward looking statements.

Also this call includes discussions 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 Jay.

<unk>, our VP of finance.

Les will make some general remarks on our performance for the past quarter and our strategic focus going forward.

Jim will then take us through our financial results for the first quarter ended March 31 2022.

During the Q&A session, Laura answer questions in Chinese and Al will help translate.

Please note that all translation provided for reference purposes only.

In case of any discrepancy between the original remarks and translated version statements in the original language should prevail.

Now, it's my pleasure to introduce our chairman and Chief Executive Officer, Chen Lei Lei. Please go ahead.

Thank you Tim.

Hello, everyone.

Thank you all for joining.

On this call and the first quarter of 2020.

Let me start by giving a brief overview.

First quarter results.

Our total revenue for this quarter.

Could the revenue for merchandise sales.

The $23 7 billion.

This would represent a year over year increase of 39%.

Our SEC filings.

881, 9 million or 12.

12 months ending March 31.

$751 3 billion average quarterly.

Can you kind of scale.

User growth will inevitably slow down.

That's why we have shifted our priority.

New users.

Two how to better serve our existing user base.

We also supply adapt to a constantly evolving patterns of consumer behavior.

Yes, still plenty of room for us to improve.

And we will continue to work hard to refine and strengthen our core capabilities.

All of this.

It continues to be the front and center of our strategy.

We remain focused on making long term investments in agriculture.

Boating digital inclusion.

A key plank of our strategy has been to be bought by taxi with agricultural infrastructure.

Responses.

Payable.

That can be done.

Different stakeholders.

We constantly think about how we can use our platform to create more value.

Our consumer and enterprise side.

And here I would like to take this opportunity to it.

Express my thanks to our consumers.

<unk> Merck.

All of the partners for their continued support.

Nick wasteful to win for standing with us.

<unk> matures at the company and take full walk photo with synergies.

We are committed to still be all the better.

We are also grateful that people do you see your position with the millions of farmers.

<unk> been through a digital economy.

We help farmers more by promoting agricultural produce to more consumers across the country.

This is a huge value for our consumers.

Can now enjoy a high quality fresh produce a low cost to our agriculture network.

Dealing with Chinese new year period in the first quarter.

We partnered with our merchant and logistics service providers two of.

Interrupted deliveries.

Services.

Demand for high quality agricultural produce third during the period.

We attract periods orders from consumers.

Fulfill their needs create loyalty do.

Due to lengthy delivery time.

Hi, Cog and wastage.

All the volumes or different types of agriculture produce increased.

And indeed during the Chinese new year period.

They include charges RMB seafood and so on.

Yes, relatively short shelf life in that supply chain.

There has been confined to our local leaders.

Aided by our agricultural infrastructure.

Now it takes a few hours.

<unk> produce a wide warehouses.

This has greatly shorten the current consumer has to wait to receive the fresh produce.

Work continues on agricultural infrastructure.

We're also pushing on that.

<unk> technology front.

And now I'm happy.

I can share with you some of the tangible results from our second smart agriculture competition.

Along with the tomato growing challenge that concluded in April .

Over the last six months.

We worked closely with China equity coachman will be less.

So is that in the west.

Oh, well I didn't think it would be with the ink.

We encourage young.

And technologies.

To develop private coke and coal.

Cost effective equity Tech solutions.

<unk> can use it.

Their livelihood.

Participating with that very well applying technology to solve real world problems.

First let's develop position greenhouse management solutions.

Let's turn to the improved crop production.

The team able to deliver double the yield our transitional growers.

Addressing broader growth.

And the license.

The nutritional value of nickel might hold also graduate towards the top range of the industry.

This solution is a commercially viable and can be applied by cohort.

All special training.

Second.

The processes of participating teams a burden on the practical technology.

For instance, one.

Our researchers develop disease prediction model.

This week.

Weak window to intervene and prevent.

Another group.

Okay.

That can be friendly equipment.

Gross profit growth.

<unk> also reduced.

Visual recognition technology to help growers like a breath of initiatives.

Irrigation and harvesting.

Achievements that Australia benefits of technology when brought into agriculture.

We actually like that.

Competition is certainly.

Zambia and industry.

And the channel.

Implementation of effective technology.

We will be supporting that team.

This solution across China.

We are also very encouraged that patient has helped.

People from different disappearing and backhaul.

Their work agriculture.

The majority of the participants.

Agriculture competition, we're wrong.

Right.

Manny handset safety.

Thank you to greatly.

Acting with World class talent.

They gained new perspectives and new knowledge.

Was that all work.

Indeed, some participants competition comparable rural back loud.

We spent our first lien debt equity tax will help secure.

Hi.

We believe the workload of farmer.

We will share that deeply health and submission to make agriculture pattern, if you will technology.

The future of agriculture.

<unk> attracting more of this type.

And trends that passion ideas into this sector.

And our.

Can you go to SaaS is ready to help facilitate the gene.

We believe that.

Could you provide a vision of agriculture.

Opportunities and efficiencies that will benefit society at large and the environment.

We are committed to investing and working with my combined these pockets of areas all of these important mission.

We will play a long game and for long term success.

This will be patient.

We show it to you.

According to the impact of ethylene food ecosystem and future generations.

I will conclude.

We started last year to transition.

<unk> of hyper go to one of the more measured deployment.

Our transition from sales and marketing towards research and development continues.

Into 2022.

We now have a technology team members over 5600.

What should be pretty been about 60% of our total workforce.

Maybe not opening.

Okay.

Our technological capabilities.

Also helped attract new talent.

We will.

Our efforts to further build up our E comm.

Research and development capabilities.

We continue to believe that this is why approach at this stage of our development.

We will do more and do cracker achieve our long term corporate mission.

Put people first.

Open Center.

Benefit.

Thank you.

Now would be positive.

Thank you Li Hello, everyone. Let me first walk you through our.

Operating results for the first quarter.

And at March 31st 2022.

Our annual active buyers for the 12 months ending March 31st 2022 was $881 9 million.

This is an increase of 15 $8 1 million.

7% from the same quarter of 2021.

Average <unk>.

Q1 was 751 3 million.

This is a $26 7 million increase.

4% from the same quarter of 2021.

This carbon scale.

Average, though for that is just a slower user growth.

We will continue to focus on how to.

So if I use the factor.

To keep him to try to use just placed in us.

And then to improve user mindshare.

Next I will go through our financial performance and quarter end at March 31st 2022.

In terms of P&L, our total revenue in the quarter was RMB $23 8 billion.

Up 7% from RMB, 22, 2 billion and the same quarter of 2021.

This was mainly driven by an increase in revenues from online marketing services and the revenue from transaction services.

That decrease in revenue from <unk> trials.

Excluding revenue from our web two trials. Our total revenue was RMB 23 7 billion in Q1 2022.

At the two 9% from RMB 17 billion in the same quarter of 2021.

Revenues from online marketing services and others were RMB 18, 2 billion this quarter.

Up 29% compared with the same periods of 2021.

This was primarily due to an increase in merchant activities.

A reflection of the value that our platform trace with them.

Our transaction services revenue this quarter were RMB five 6 billion.

Up 19, 1% just the same periods of 2021.

The increase in our transaction services revenue was due to.

First.

The increase in total transaction processing fee as a result, which drove higher transaction bolden.

And second more diversified services that we provide to merchants.

Such as fulfillment services.

Moving on seacoast and expenses.

Our total cost of revenue decreased from RMB 10, 7 billion in Q1, 2021 and RMB two RMB seven 2 billion this quarter.

The decrease came mainly from the reduction of nitrogen to ourselves.

Partially offset.

If I can phrase fulfillment expenses.

Total operating expenses this quarter were RMB 14 5 billion.

But just RMB 15, 6 billion in the same quarter of 2021.

Our non-GAAP basis, our total operating expenses as a percentage of revenue. Excluding one P has been declined from 68, 6% to 55% for Q1 of 2021 and 2012 to respect.

Agree.

Looking to specific expense items.

Our non-GAAP sales and marketing expenses.

RMB 10 7 billion.

John 16%, just a second quarter of 2021.

As we continue to shift away from our previous forecast on snow Cinemark team.

We remained disciplined.

Marketing spending this quarter.

As a result on a non-GAAP basis.

Our sales and marketing expenses as a percentage of our revenue this quarter was 45%.

Compared with 57% for the same quarter in 2021.

Yes.

Sure.

Our non-GAAP general and administrative expenses were RMB $208 8 million.

Does this RMB $160 7 million in the same quarter of 2021.

Our non-GAAP research and development expenses.

<unk> 2 billion.

An increase of 70% from RMB, one 7 billion in the same quarter of 2021.

The increase was primarily due to an increase in <unk> com and the recruitment of more experienced R&D personnel.

To better meet evolving consumer demands and to <unk> sustainable growth of our platform.

We are committed to further growing our R&D capabilities and are stepping up our R&D spending.

Okay.

Operating profit for the quarter was RMB, two 2 billion on a GAAP basis.

Compared with operating loss of RMB, four 1 billion in same quarter of 2021.

non-GAAP operating profit was RMB three 7 billion.

That is just the operating loss of RMB three <unk> in the second quarter of 2021.

Net income attributable to ordinary shareholders was RMB two 6 billion.

Compared with a net loss of RMB, two 9 billion in the same quarter of 2021.

Basic earnings per ads was RMB <unk> six.

Thanks.

Diluted earnings per ads was RMB 184.

Basic and diluted net loss per ads.

RMB 233, and the same quarter of 2021.

non-GAAP net income attributable to ordinary shareholders was RMB.

<unk> 2 billion.

Compared with a net loss of RMB, one 9 billion in the same quarter last year.

non-GAAP diluted earnings per ads was RMB 295.

non-GAAP diluted net loss per ads of.

RMB one point.

Victor Chu and the same quarter of 2021.

More disciplined spending and slowing growth at my reasons behind a process in the past few quarters.

The process gave us more confidence and resources to devote to keep key areas.

Such as R&D and Agriculture initiative.

That said.

We expect profits to fill our trade.

We spend to meet changing consumer needs.

Notably our profit this quarter narrowed significantly, but just last quarter.

Our net cash flow used in operating activities was RMB nine 1 billion.

Compared with outflow of RMB, three 7 billion the same quarter of 2021.

Primarily due to changes in working capital as a result of seasonality.

Offset by an increase in online marketing services revenues.

As of March 31st 2022, the company had RMB 95 2 billion in cash.

<unk> equivalents and short term investments.

This concludes my prepared remarks.

Thank you Jay.

We'll move on to the Q&A session.

For today's Q&A session late entry will take questions from analysts on the line.

When they take a maximum of two questions per analyst.

Later, we will answer questions in Chinese and Al will help translate later remarks for ease of reference.

Operator, we may now take questions on the line.

Ladies and gentlemen, we will now begin the question and answer session.

If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press the pound or hash key.

Participants are requested to restrict two questions at each time.

Your first question comes from Thomas Chong with Jefferies. Please ask your question.

Somehow she said why did you win.

Well, they're going to issue one woman Yogi Berra.

Hi, Sam could you put us on you saw Robert Nipper Liam.

I wouldn't want to opine that come about.

Each in the ballpark.

You saw where many times how do you think.

Well.

Good good.

We signed a deal with Tricia.

So part of that.

Thank you, but I'll do it quickly.

Could you put us on mute.

Women.

The EBIT walk.

Thanks management for taking my questions. My question is about our growth driver in Q1 and given the outbreak of pandemic in recent months can management share about some of the thoughts about what we are seeing in terms of the.

Recent monthly trends.

Management also comment about the trend in terms of the tick rate. Thanks.

Yes.

Oh.

Okay.

Thomas I've had to deal with.

Sure.

Sure.

Uh huh.

Hi, Thomas.

Let me address your first question around growth rate.

Just a question you guys since you're not sure.

Hello James.

Further the Trulia.

Sure.

Jonathan schedule.

So far.

With each week.

Listen to you in the Gulf.

And when the physical.

Thompson.

So that's for sure.

Jim.

She was the question I just want to squeeze so without changing jobs.

Over the past period of time, we have been going through adjustments and development strategies.

To focus more.

Technology in agriculture.

Order to pursue long term high quality growth.

Well it takes time for the final results to bear fruit.

And in the process of real growth rate might be affected.

Hello, everyone.

Yeah.

Sure Jonathan.

Yes.

Sure.

We got to see that with Macquarie thoughts.

Ultimately.

In addition.

As we reach our current scale investors.

Not expect us to continuously deliver high growth.

Well listen that's all been she's a switching question.

Good.

Well machine.

Bye.

Number one.

Michelle Fayetteville with ourselves.

Cool.

Yes.

Useful.

Ashish.

Well I'm sure the cool pool.

Yes.

Thank.

<unk>.

We saw things it's about jobs.

Sure.

Well our development.

Separable.

The support of our consumers.

So as the user base our reach its current scale. Our focus now is on how to serve.

Over 880 million users and <unk>.

Improve their trust and.

Sure.

<unk> remained to be a user centric.

So we will continue to pay more attention to technology and Agri investments.

<unk>.

Promote our differentiation.

Agriculture to help create more value for our consumers.

That's of course subscriptions.

In fusion for women about Scorpion, we try and tools.

<unk>.

Tom do you think some jobs, especially in this way, it's an icon conclude you bet.

So hopefully that will continue.

<unk>.

Sure.

Hi, Jeff we hope will be the two quarters.

During the quarter.

So this is going to you're going to assume that's where the seating.

Texas jobs.

Wait.

Right.

Okay.

No.

Xi'an phase here in the Gulf.

So you're talking about.

Mhm.

As we have been communicating.

We have always remained committed to investing.

To create long term value.

If you look from the outside.

At a time, where my appear to be overly aggressive or overly conservative sometimes.

So we recommend to you not to pay too much attention to the fluctuations between quarters.

Ted I was hoping left us with focus.

Whether what we are doing is generating value and whether it can bring about a high quality development.

What I have shared mail addressed your question.

Well.

Hello, Thomas This is Jamie Thank you for your caption.

I want to talk about the take rate, we just mentioned.

Well, our focus has always been to better serve our users.

As just mentioned by <unk>.

With this being sat take.

Take rate or monetization rate.

It's not a metric to forecast.

Is that.

Thank you just a natural result.

So we will command queue.

Now look at quarter to quarter changes.

And in the long run our monetization rate depends on how much value we create.

And for our future outlook for monetization as I sat.

It really depends on our value creation.

One thing we would like to point out as we started can do it always a strong agriculture forecasts from the beginning.

And we.

We stick to our Zero Commission policy for agriculture products.

And we definitely will continue to support agriculture margins.

For example, offering more traffic project.

Also.

We have communicated before.

We will step up investment in agriculture for battery consumer experience.

Well as the proportion of agriculture product increases our monetization rates might be affected.

Thank you.

Operator, we will now take questions from analysts in the queue.

Your next question comes from Eddy Wang with Morgan Stanley . Please ask your question.

Got you and just wanted to see what our Tobey. It's early I'll go on to Bob do you want to you could ask question gender.

So Jonathan just to ensure that what I'm going to <unk> youll sort of project what she does some fashion for the June quarter shown here shortly but it's important to us.

We got out of your total bundle.

Yes.

Okay.

All right.

You don't want to tune conscious of Shaw senior industry show kind of dose I'm glad I shop without rule bedrock, Bob Jacob <unk> thought I should say J D.

Kieran Lee from your operators that solar farm MPR question for sure.

Just a trend that you should just dumping tires. That's all just as you consider kind of agile should you should support yes.

Sounds good I suppose should be judging that.

John Walker.

But as John challenges John could you so.

<unk> talked about <unk>.

So to summarize the whole woman.

So thats what were you should just to show a total fund me that culture.

Thiago in TTS this is going to go.

Jonathan.

So just a woman she says.

Also on the Potomac.

One can accomplish that Nokia from here just a short lag.

Bye.

Good.

Good.

Firstly on the <unk> Santo.

I understand that you don't rule out doing Ken.

Uhm.

So on a true Jim Lico somebody on the Trump Dot Guy I mean, why it was a solid quarter alongside what kind of supply Joseph Schwartz I shop on their way.

Yes.

Finally on Asia.

I assume that won't be a woman.

Right now what kind of a DCF I E.

Thank you for taking my question I have two questions first is about competition could you. Please share with share with US your view on China's e-commerce industry competitive landscape.

Going to start on one hand, we do see.

E Commerce platform adopting a structure of cost control and less aggressive expansion, but on the other hand, we do see some luxury e-commerce platform seems to.

To be very aggressive in the user acquisition and.

Expansion. So just wanted to hear your view on.

The competitive landscape in e-commerce sector and the impact on PDD and follow up question is about the <unk>.

Kimberly.

Agriculture, new initiatives, so what's the proportion of the <unk>.

10 billion have been used so far and what's the next kind of area. So we want to do.

<unk> in the next maybe one or two years. Thank you.

Yeah.

So Sheila as you seem quite intuitive.

At this time.

Oh excuse me.

We're doing a hard tissue.

Thank you for the time.

You shouldn't that frankly.

Bob Appeal.

How much you've seen the wuxi sure.

Got it.

Sure Bob.

<unk>.

Hello, supersede hanmi that Keith.

Okay.

Yes sure.

Okay.

Yes.

Yes.

Titanfall two.

Fee income.

Okay.

Eddie So for your question around <unk>.

Competition landscape.

I think the current landscape versus two three months ago. It has now changed much.

So essentially China's e-commerce industry I see a huge market.

And it is full of potential.

As an industry infrastructure continues to develop.

And as a consumer needs continue to evolve more and more companies well July E Commerce.

Normally when you see the pins senior most of the units yet.

Sometimes you'll icon.

It sounds like a nice dwarf what does it do something.

Total Q2 this.

Michelle.

Sure.

We believe that.

In the long run the emergence of new platforms as well as new formats will have a positive impact on consumers and on the industry itself.

Q1.

Yourself.

Sure.

And it seems like E G.

Yeah.

Thank you.

Sure.

Yes.

That sounds like the Permian.

No.

Importantly shelf issues.

With 100, each ratio because then it will be possible to flourish.

Okay.

We spoke with some of our jobs.

Particularly homelessness.

For us.

You look at the under the perspective of the recent pandemic and if you look at areas.

Where other peers have done well, we think that for ourself. There is still a lot of room to further improve from our current level of service offerings.

What our team needs to learn from and our team needs to work harder and also remain down to earth to serve customers well and to create value for society as a whole.

Is the duty and responsibility for us as a company.

Yes.

We deal with reality.

If you want your charters homeowners hunting.

Alright.

I thought it was on the.

<unk> Cushing.

First on TNT.

And we're typically UK toward that.

Quite a challenging.

It's all for the hard tissue.

Now that you're in fact.

It could be from it.

Shawn Seanor.

Currencies don't go away.

Welcome to the jobs.

As for our differentiation.

We started out pingo Tau with agriculture products.

We develop.

Agriculture has always been our court.

We also firmly believe in the future potential of the agriculture sector.

Just as I introduced we are now stepping up investment in core technology.

Especially in agricultural technology.

We believe in the long run these investments can create more value for consumers.

Hopefully that's enough for you guys have been at Yahoo.

Yeah.

For Mr. Zhu year concluded.

Thank you.

The cohort or the seller.

Sure.

And of course <unk>.

We accrued to the team.

<unk>.

Also in <unk>.

I'll conclude with that.

Duke.

So here I'll, let me also address your second question.

We announced the 10 billion Agriculture initiative last year.

When we announced it we also mentioned that we hope this initiative.

Ken.

It takes the advancement of <unk>.

Promote digital inclusion and also to make.

Makes sense of fulfillment for Agri workers and average scientists.

Okay.

Uh huh.

So you continue.

We sell them.

<unk> global packaging.

Sure the default.

Over the past year.

Our team and myself.

<unk> been devoting a lot of time and effort to diligently.

And study <unk>.

Proposals and projects.

In order to deploy resources to where they are needed the most.

Thanks, Jim.

So we're just in Q2.

Sure.

Two two.

Could you touch on that.

<unk> Suisse.

Yes.

Thanks, Jim.

So clean Chico.

According to <unk> and dual channel.

In my previous remarks, I also have given you. Some examples of how technology empowers agriculture, including our smart agriculture competition.

In addition, we are also.

Cooperating with top agronomic universities and research institutions to jointly work on some research projects.

Got it.

Just two quick.

<unk> cool.

No.

Susan I think Xiang.

Sure.

You can do.

Nice usage Michelle Qi.

Sandra.

Uh huh.

Tier two or not.

Right.

Good luck.

Yes.

Hum.

So with you completely.

Admittedly to empower agriculture through technology requires a lot of thinking deep understanding and extra patient.

So we need to compare our various options side by sides and evaluate each options carefully.

We have to leverage our past experiences in agriculture, as well as our team's technical backdrop to make the best options and choices.

So I took a leaner.

I wanted to tell you that.

I got it.

<unk>.

<unk> adults in Utah.

I don't know that there is some value in the year.

So here.

I believe we are not.

Typically it goes out to lunch giant prudently issue.

So have you seen in coupon.

Yes, I mean this is Sean.

And in this area our strategy is long term.

And our investments in agriculture.

Early stage.

For such a sector of <unk>.

Such big scale and impact.

However.

<unk> horizon as well as investments scale would not change when there are short to medium term fluctuations pulpwood share can give you more color around how we think about and what we are doing in terms of agriculture.

Sure.

Operator, we may now move on to the next analyst.

Your next question comes from Kenneth Fong with Credit Suisse. Please ask your question.

Hi, My question TJ replenishment, Jason over to you when we were younger when tier <unk>. So we don't call. It comes up on there.

Okay.

G suite are due to higher cash returns on them.

And women.

Hold cheetos sooner do you mean by seeing that women's it easily.

Okay.

Okay, well, maybe I can.

Mr Chairman I represent <unk> <unk>.

Okay.

<unk> done it.

Women's sold.

Thanks, Susan.

Question is on the in China, while many of the social the tone, but is it going to the future.

On the NCS with kind of Joe Coppola, Thanks, very much happy holidays.

Sure sure.

A couple of our demand kind of in my mind to Carla.

It will mean that the merchant sales.

Sales and marketing.

Sure.

<unk>. This is what I can see your NGL pricing momentum for future years.

So I went through a portal to the Tianjin Shandong civil reaching.

<unk>.

Now what do you think Asia. Thank.

Thank you management for taking my question I have two.

Two question please.

So we noticed that despite a high base.

In EMEA, you see accelerating sequential growth can you share with us the drivers behind I understand that we shouldnt expect fast growth given our larger user base, how should we think about you.

Is there upside in the ceiling.

My second question is on the sales and marketing expense, despite the SaaS revenue growth.

Control over sales and marketing has been very effective with our mills continue to come down on a year on year basis.

Can you share with us the reason behind for example that you say change.

Our special.

This acquisition.

Any room for further improvement.

Last year <unk> shifting from a sales and marketing to R&D focus could you also update us on the progress and then should we expect this to be largely finished thank you.

Ken This is Neal <unk> with ICR tissue with clients.

Yeah.

Sure.

Uh huh.

Key endpoints, you give us a whole now.

Cool.

That's helpful.

Yes.

Yes.

Yes.

T D.

Okay.

So you got a product issue.

Things are way about your inbox with shipyard.

She didn't go up.

As always it is hard to achieve some of these <unk>.

So typically you can quibble Sean.

Oh, yes.

What do you do you take a look at affordable.

Right.

That's what that means.

Of course, you could CTV is equally so.

At that point.

Yes.

Oh, well Kenneth So let me address your question.

User number.

So let's look at the numbers first.

By the first quarter last year.

Our annual active buyers and <unk>.

Approximately $820 million and $720 million respectively.

This with already a relatively high base.

And by the first quarter this year.

Sure.

<unk> and Mou for the increased to about.

$880 million and $750 million.

We achieved some growth, but I think the long term trend should be very clear.

Though there might be a quality fluctuations I think it is inevitable that our user growth.

The slower.

Over the course from the past few quarters. We also have shared this view with you.

The Ministry for that is going to China to Shlomo.

Sure.

Duane.

So Sheila you guys included itself.

Yes.

They can do the window, if we could help assure you that the ocean tomo.

<unk> sales in the Kingdom.

Soft tissue.

C G.

So now.

<unk> that we see and.

The duty we have to perform right now is too.

Further improve the existing eight.

<unk> and 80 million consumers user experience.

And as well as to improve their trust and so it was a five year mine checking us.

Oh, yes.

To support this issue.

Finance and accounting.

Thanks for the question just before.

Okay.

She thought you're introducing cytosorb.

Sure sure.

So quick.

The teacher charcoal.

<unk> ability to grow.

And following that you bought.

Thank you.

Thank you Quinn.

As for the strategic shift we are going to basically.

Amid the changes in <unk>.

Infrastructure upgrade and the evolving user needs are what we are doing in terms of investing in technology is to find opportunities and improve ourselves to serve our users better.

Okay.

Hello.

Continuing to come down to Q4.

Within the week.

To be humming along at home tissue.

Sure.

Just one touch with fewer jobs.

And I'm glad to see that.

Through our effort.

Indeed.

Is it value for consumers, especially in the area of agriculture produce.

Meanwhile, Hollywood icon.

Okay.

You see you.

<unk> introduced their wounds.

Sure.

John will then do a fiscal year.

I Couldnt.

Being passed on them.

D C.

How the depot.

Number one particular niche.

And that should be easier.

You've seen the Street's European call.

Please proceed.

No idea now just for the type of questions.

Yeah.

Sure.

Jim.

Yes.

Okay.

I'm pleased.

Hey, guys.

No.

Thank you.

The figure on the assumption that I see.

So another point is that.

The recent pandemic does show some of the areas that we need to improve and in terms of understanding understanding users' needs and keeping up with the changing their behaviors and their demand.

We need to do better so we will continue to explore the evolving needs and preferences.

Our users and to continue enhance our capability.

Additionally, as we explore.

When we see good opportunities, we will continue to invest.

So.

If we look at the financials. It is possible that our efforts would show up in and be reflected in the future financial results as well, especially around technology.

Okay and she wants to know what did you think things are going.

<unk>.

It could be one of your pressure pumping.

Sure.

Yeah.

And what I've just have just share may provide you with more color and give you some insight.

Our user number and its growth going forward.

Okay.

You can't Miss it.

Take your second question about <unk>.

And I mean.

Expenses.

Well.

So just that we are going through those ships.

Small forecast tables RMT from marketing.

Such shaved has been in our financial results since you may see.

For example, sales and marketing expenses fell 14% year over year in Q1.

Each represents.

<unk>, 7% of total revenue.

<unk> down from six 9% of Q1 last year.

And.

At the same time R&D expenses increased by 20% Y O y.

Well for every investment we carefully evaluating our eye and we allocate resources to generate long term and.

High quality development.

As always we will continue our investment discipline.

And.

In terms of serving user needs, we're not doing well enough and there are still plenty of room for us to southern pits.

So.

We need to further explore how to better serve how they use us.

In fact.

Reasons.

It also shows a certain areas for us to improve.

So as we see opportunities, where we continue our investments.

To create more value for our consumer to consumers as a result, the future expenses trend is likely to change.

And to us.

We firmly believe that R&D investment can generate high quality development.

So we will continue to step up the investments, which will be showing our financial results.

And we.

We are still in the investment phase.

Out of the state of the states.

For our financial numbers would suggest you could look.

Cathy long term trends and.

The value we create from these investments.

How do you that can clarify clarify your questions. Thank you.

Operator.

I think we still have time to take questions from the next.

And that will be the last one.

Your last question comes from Natalie <unk> with <unk>.

International Please ask your question.

English you can go.

Go ahead Tim.

La which I am glad to be there.

Sure Glenn.

Yes.

Just in.

In terms of our lease on one side.

Towards that <unk> consider using in Charlotte.

Yeah.

We instituted a number yet.

So it's just the toy box.

Okay.

I'd like to do things.

Just from a business model shift that I.

Thank you Gisela.

The partial quite need at chemical.

Chemical thing Jamie I was just sort of total <unk>.

Yes.

Normally does indeed not chump.

So I feel like also you guys John Baugh Stifel.

Okay. Thanks, a lot.

Congestion in type.

Chip I think institutional relations.

Hi.

Let me quickly translate myself.

So.

Two questions from my side.

Our first question is related towards that caused that.

Regarding the I was going to.

Call it break out Ken.

Can management share more details about how the pandemic has impacted industry.

Operations at Keno Hill.

How much impact it.

Uh huh.

First quarter results.

So what is your outlook towards the second quarter was about <unk> comments.

The next day pass.

And then my second question is regarding the probability.

You'll have to lever to move forward.

Pop us both GAAP and non-GAAP .

The basis for four consecutive quarters I was just wondering are you now.

Prioritizing.

The Delta of the Gulf should investors expect quarterly earnings to be the norm. Thank you.

Okay.

Any heart tissue will help with us not just from Macquarie research.

You can do to the east.

Oh Jordan.

Pete on the initial institution.

Sure.

Regional country is also true.

Got it.

Hum.

CSI.

Thank you.

Since the summer.

Find me a message.

A T cell <unk>.

Well not slate so let me take your question on how the pandemic has affected us and our operations.

Well I think one area that the pandemic has shown us.

<unk>.

For our business will need to build it to be more resilient and there are certain.

Areas that we need to further improve especially in terms of.

How we can effectively.

Users' needs.

She was in China.

Clinical go hard enough with.

With the sulfides.

It took a formula.

Sure.

Sure.

And under the current situation and.

The.

On the current situation I think our peers have shown some aspects.

We may also learn from.

Peter will touch GCC.

Did you hear you Joel.

Some quick comments.

Manuel <unk> and whatnot.

The Lille score keeping the Caribbean.

Sure.

Okay.

<unk>.

City Creek.

Yeah.

Thank you Shelly.

So I just want the functionality.

Since the passage of the football impulse.

Our Q2 call.

She types you can pay the function.

But you would think of it.

<unk>.

Judith.

Okay.

Yes.

And Ah Pingo Tau is E Commerce company.

It focuses on the essential needs of users.

During the pandemic we are also.

Actively leveraging our differentiation to create value for consumers and to fulfill our social responsibilities.

Sure.

They give you some examples.

In Shanghai.

Launched a 48 hour supplied packages for Shanghai residents.

Through aggregating their ordering and fulfillment staff.

We strive to meet the basic needs from as many households as possible.

Now EMEA.

Somewhere between the two.

Sure.

Anyways.

Yes.

Sure Chris.

Sure.

Due to the volatile tissue, that's especially with CGM.

Keith <unk>.

In addition on the guidance of our relevant governmental departments.

Have made efforts to provide supplies for medical personnel and people need.

These are some areas, which we have been working on.

By leveraging our differentiation and.

Our value proposition.

I was just wondering why you were for me and I'll just go with it.

Sure sure.

Second question Joanna.

According to the Nielsen dwarf inching down 10 basis points.

<unk> digital.

If you wouldn't keep doing that.

Alright.

So it helps us think about the DCF bulk.

<unk> <unk>.

It's important.

So some of that.

During the week.

Download it could do.

Okay.

Sure.

Good job.

Thanks, guys listen the AT&T deal kind of cool.

Essentially equal one with your dog.

To conclude the process quicker than CNC metallic.

Good morning.

Another important point that I want to make during this pandemic time is that.

We also see many young talents are rising up to challenges and they are growing up rapidly in the face of this real world challenges.

They are proactively securing good supply.

They provide technical support.

To assist the fulfillment and they are.

Also solving some of the operational difficulties.

They they are taking on more and more responsibilities and challenges so from this.

Im confident in the potential for our team so.

Just on what I, just said what I see really has given me more.

<unk>, Inc.

Our team performed in the young talent from our team.

Hopefully it will help with the hard tissue.

This is yeah, you should come down.

Cool.

I think we are.

Joey.

<unk>.

So javier.

Sure.

Okay.

It really cements itself.

Oh God eastbound managers for sure.

EMEA pharma tie into the system.

<unk>.

Subsequent to the outlet channel sharing from my seat account usage.

Your fishing at home.

He won't be sooner if you tell me.

I was going to do it.

Greig.

You see on that.

Okay.

And to add on one more point.

During a special time.

You'll see that.

Agriculture, and agriculture, our supply chain.

So essential.

And the importance of having a very a resilient agriculture supply chain.

Our long term investment in agriculture.

Particularly important.

<unk>, what I've just shared around this point can give you some more.

Color around our take on agriculture.

Oh well.

Thanks for your second question about profitability.

First I would like to point out I just know it's our current priority.

Well, we're just past few quarters, our profit was mainly due to our operating leverage.

Especially from sales and marketing.

And as mentioned last quarter.

We have also control our spending in the face of slower growth.

And.

Caring intensified competition. We also see we still have meaningful room to improve in terms of satisfying gives us.

The reasons pandemic shows that.

So we need to step up our investments.

And it may call. This our quarterly profit it fluctuate in.

In the future.

As you May see this quarters profit has decreased sequentially.

Sequentially versus last quarter.

Meanwhile.

The profitability.

Past few quarters also gives us greater confidence to continue our long term investments.

We hope that everyone will focus more on the value we generate thank you.

Okay. Thank you everyone for joining us on the conference call today.

If you have further questions. Please feel free to reach out to our IR team. Thank you have a great day.

Ladies and gentlemen that does conclude our conference for today. Thank you for participating you may all disconnect.

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Ladies and gentlemen, thank you for standing by and welcome to <unk> first quarter 2022 earnings Conference call.

At this time all participants are in a listen only mode.

There will be a presentation followed by a question and answer session at which time if you wish to ask a question you will need to press star one on your telephone.

I must advise you that this conference is being recorded today.

I would now like to hand, the conference over to your host today, Mr. Jim <unk>. Sir Please go ahead.

Thank you operator.

Hello, everyone and thank you for joining us today.

My name is Chen and I'll help host the earnings call.

<unk> earnings release was distributed earlier and is available on our 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 includes discussions 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, <unk> <unk>, our VP of finance.

Les will make some general remarks on our performance for the past quarter and our strategic focus going forward.

Jim will then take us through our financial results for the first quarter ended March 31 2022.

During the Q&A session, Laura answer questions in Chinese and Al will help translate.

Please kindly note that all translation provided for reference purposes only.

In case of any discrepancy between the original remarks and translated version statements in the original language should prevail.

Now, it's my pleasure to introduce our chairman and Chief Executive Officer, Chen Lei Lei. Please go ahead.

Thank you Tim.

Hello, everyone. Thank.

Thank you for joining our earnings call in the first quarter of 2022.

Let me start by giving a brief overview of first quarter results.

Our total revenue for this quarter.

Excluding revenue from our merchandise sales.

The $23 7 billion.

This business than a year on year increase of 39%.

Our annual active buyers.

$881 9 million.

But ending March 31.

With $751 3 billion average quarterly.

Can you try to scale our user growth.

<unk> slow down.

That's why we have shifted our priority.

New users.

How to better serve our existing user base.

We also strive adapt to a constantly evolving patterns of consumer behavior.

There's still plenty of room for us to improve.

And we will continue to work hard to refine and strengthen our core capabilities.

All of this agriculture and it continues to be the front and center of our strategy.

We remain focused on making long term investments in agriculture, and promoting digital inclusion.

A key plank of our strategy has been to develop a tech driven ethylene culture infrastructure.

Responses.

Stable.

It can meet the needs of different stakeholders.

We constantly think about how we can use our platform to create more value for <unk>.

All consumers and benefits to slide.

And here I would like to take this opportunity to.

My thanks to our consumers.

Users.

Mercury.

One of the partners for their continued support.

Nick wasteful to win for standing with Athene.

The dual matures at the company and take full work social with synergies.

We are committed to serving all of them.

We are also grateful that people do is speed up.

Position.

Our farmers and connected to a digital economy.

We self funded more by promoting agricultural produce to more consumers across the country.

This is a huge value for our consumers.

Who can now enjoy a high quality fresh produce a low cost to our equity culture network.

Fueling the Chinese new year period in the first quarter.

We partnered with our merchant and logistics service providers two of our interrupted deliveries.

Basis.

Demand for high quality agricultural produce food during the period.

We attracted orders from consumers.

Fulfill their needs.

Pete.

Due to lengthy delivery time.

High cost and wastage.

All the models for different types of agriculture produce.

Significantly during the Chinese new year period.

They include charges R&D seafood and so on.

They're relatively short shelf lives and that supply chain.

It has been confined to our local leaders.

<unk>.

Equity cultural infrastructure.

Now it takes a few hours.

<unk> produced a y.

Javier.

This has greatly shorten our current consumer has to wait to receive the fresh produce.

Work continues agricultural infrastructure.

So pushing on that.

Technology front.

And now I'm happy to share with you some of the tangible results from our second smart agriculture competition.

Loyalty tomato growing tonnage.

Included in April .

Over the last six months.

Closely with China, agriculture will be let's see.

In the west.

The U S and then why Couldnt you got University.

Encourage young scientists.

Technologies.

To develop practical and cost effective equity Tech solutions.

<unk> can use to improve their livelihood.

The participating teams have done very well in applying technology to solve real world problems.

First let's develop Prevision greenhouse management solutions.

Let's turn to the improved crop production.

The team able to deliver double the yield our transitional growers.

Addressing barcode.

And the like.

The nutritional value of metal Nato's also Greg.

At the top range of the industry.

This solution is a commercially viable and can be supported by core result.

Our special trains.

Second R&D.

R&D processes of participating teams.

On a practical technology.

For instance, one group of researchers develop the disease.

This particular model.

This one week window to intervene and prevent loss.

Another group.

Low cost and environmentally friendly equipment.

Our planned growth.

Also with us.

Visual recognition technology to help growers better position.

Irrigation.

Obviously.

Yeah achievements demonstrate the benefits of technology.

In agriculture.

We are delighted that the competition is serving.

It seems like EMEA and industry and the.

Channel.

<unk> season of effective technology.

We will be supporting that team.

Their solutions across China.

We are also very encouraged that patient has helped young people.

Disappearing in the backlog.

Their work agriculture.

The majority of the participants.

Culture competition with one.

All right.

All right.

Manny handset.

Thank you to greatly.

Acting with World class talent.

Yes.

They gained new perspectives and new knowledge.

They all work.

Indeed, some participants in the competition Council rural backgrounds.

We spent our first lien debt equity tax will execute.

Supplier.

We believe the workload all farmers.

We will share that deeply held since our mission to make agriculture technology.

Technology.

The future of agriculture.

Attracting more of this test.

And try them their passion ideas into this sector.

And our.

Peter that's ready to facilitate their team.

We believe that digitalization of agriculture.

Opportunities and efficiencies that will benefit society and the environment.

We are committed to investing and working with my commodities Carpenter is all of this important mission.

We will play a long game.

For long term success.

This will be being patient.

<unk> according to the impact of ethylene ecosystem and future generation.

To conclude.

We started last year to transition flow afraid of hyper goes to one of the more dynamic.

Our transition from sales and marketing towards research and development continues.

Into 2022.

We now have a technology team members over 5600.

What should look pretty thin about 60% of our.

Total workforce.

Not only they are.

Not only improve our technological capabilities.

Also helped attract new talent.

We will step our effort to further build up our in house research.

Research and development capabilities.

We continue to believe that this is why approach at this stage.

<unk>.

We will do more and do better achieve our long term corporate mission.

To put people first.

Open thank you.

The benefit of.

Thank you.

Now that would be positive.

Thank you Li Hello, everyone.

Let's first walk you through.

<unk> results for the first quarter ended March 31st 2022.

Our annual active buyers for the 12 months ending March 31st 2022 was $881 9 million.

This is an increase of $58 1 million or so.

7% from the same quarter of 2021.

Average <unk> in Q1 was 751 3 million.

This is a $26 7 million an increase.

Or 4% from the same quarter of 2021.

At this current scale it just inevitable for us just as to lever user growth.

We will continue to focus on how to serve our users better.

To keep him to try to use is placed in us.

Yeah.

<unk> used in my share.

Okay.

Yeah.

Next I will go through our financial performance and quarter end at March 31st 2022.

In terms of P&L, our total revenue in the quarter was RMB $23 8 billion.

Up 7% from RMB $22 2 billion in the same quarter of 2021.

This was mainly driven by an increase in revenues from online marketing services and revenue from transaction services.

Offset by the decrease in revenue from <unk> trials.

Excluding revenue from our went to travelers.

Our total revenue was RMB $23 7 billion in Q1 2022.

At the two 9% from RMB 17 billion in the same quarter of 2021.

Revenues from online marketing services and others were RMB 18, 2 billion this quarter.

29% compared with the same periods of 2021.

This was primarily due to an increase in merchant activities.

A reflection of the value that our platform trace with them.

Our transaction services revenue this quarter were RMB five 6 billion.

91%, but just the same periods of 2021.

The increase in our transaction services revenue was due to.

First the increase in total transaction processing fee as a result, which drove higher transaction bolden.

And second.

Our diversified services that we provide to merchants.

Such as fulfillment services.

Moving on to costs and expenses.

Our total cost of revenue decreased from RMB 10, 7 billion in Q1, 'twenty to 'twenty, one and RMB two RMB seven 2 billion this quarter.

The decrease came mainly from the reduction of merchandise sales.

Partially offset.

<unk> and crazed fulfillment expenses.

Total operating expenses this quarter were RMB 14 5 billion.

That's just RMB 15, 6 billion in the same quarter of 2021.

Our non-GAAP basis, our total operating expenses as a percentage of revenue. Excluding one P has been declined from 60, 86% to 55% for Q1 of 2021 and 2022, respectively.

<unk>.

Looking to specific expense items.

Our non-GAAP sales and marketing expenses.

RMB 10 7 billion.

John 16% that just a second quarter of 2021.

As we continue to shift away from our previous forecast on snow Cinemark team.

We remained disciplined.

Listen that marketing spending this quarter.

As a result on a non-GAAP basis.

Our sales and marketing expenses as a percentage of our revenue this quarter was 45%.

Compared with 57% for the same quarter in 2021.

Our non-GAAP general and administrative expenses were RMB $208 8 million.

Does this RMB $160 7 million in the same quarter of 2021.

Our non-GAAP research and development expenses.

RMB 2 billion.

An increase of 70% from RMB, one 7 billion in the same quarter of 2021.

The increase was primarily due to an increase in head com and the recruitment of more experienced R&D personnel.

Ciabatta made involving consumer demands and <unk> of our platform.

We are committed to further growing our R&D capabilities and.

Stepping up our R&D spending.

Okay.

Operating profit for the quarter was RMB, two 2 billion on a GAAP basis.

Compared with operating loss of RMB, four 1 billion and second quarter of 2021.

non-GAAP operating profit was RMB three 7 billion.

That is just the operating loss of RMB, three <unk> cheaper than in the second quarter of 2021.

Net income attributable to ordinary shareholders was RMB two 6 billion.

Compared with a net loss of RMB, two 9 billion in the same quarter of 2021.

Basic earnings per ads was RMB two six.

Thanks.

Diluted earnings per ads was RMB 184 basis basic and diluted net loss per ads.

RMB 233, and the same crew, which have 2021.

non-GAAP net income attributable to ordinary shareholders was RMB.

<unk> 2 billion.

Compared with a net loss of RMB, one 9 billion in the same quarter last year.

non-GAAP diluted earnings per ads was RMB 295.

That's a non-GAAP diluted net loss per ads of.

RMB one point.

Victor Chu and the same quarter of 2021.

More disciplined spending and slowing growth at my reasons behind a process in the past few quarters.

The process gave us more confidence and resources to devote to keep key areas.

Such as R&D and agriculture initiate it.

That said we.

We expect profits to fill our trade.

We spend to meet changing consumer needs.

Notably our profit this quarter narrowed significantly, but just last quarter.

Our net cash flow used in operating activities was RMB nine 1 billion.

Compared with outflow of RMB, three 7 billion the same quarter of 2021.

Primarily due to changes in working capital as a result, which obviously isn't analogy.

Of that bad and increased online marketing services revenues.

As of March 31st 2022, the company had RMB 95, 2 billion in cash and cash.

<unk> equivalents and short term investments.

This concludes my prepared remarks.

Thank you Jean <unk>, who will move on to the Q&A session.

For today's Q&A session late in June we will take questions from analysts on the line.

When they take a maximum of two questions per analyst.

They will answer questions in Chinese and Al will help translate later remarks for ease of reference.

Operator, we will now take questions on the line.

Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced and you wish to cancel your request. Please press the pound or hash key.

Participants are requested to restrict two questions at each time.

Your first question comes from Thomas Chong with Jefferies. Please ask your question.

Somehow she said why did you.

Well, the when issued one woman Yogi <unk>.

It would have been it was saying please let us know.

The turnaround at the Lima.

So part of that.

In each and so I'm wondering you saw well many times how do you think.

Well.

Amit good.

We signed a deal or two sure.

Maybe part of that.

Sure could you put us on it.

The EBIT walk.

Thanks management for taking my questions. My question is about our growth driver in Q1 and given the outbreak of pandemic in recent months can management share about some of the most about.

We are seeing in terms of the.

Recent amongst <unk> trend.

Can management also comment about the trend in terms of the tick rate. Thanks.

Yes.

Okay.

Thomas.

<unk> you want to.

Consistent with <unk>.

Hi, Thomas So let me address your first question around growth rate.

Just a question you guys since you're not sure.

Okay.

Further the Trulia.

Sure.

Jonathan schedule.

But for me is on that.

Let me now.

Each legal Thompson T in the Gulf.

Got that.

I'm on the physical side.

First of all I can tell us on that.

Got myself when I can assure you on demand will be adjusted again.

Okay.

I just Wanna branches since what we saw with our CEO .

Over the past period of time, we have been going through adjustments and development strategies.

To focus more.

Technology in agriculture.

Harder to pursue long term high quality growth.

Well it takes time for the final results to bear fruit.

And in the process of real growth rate might be affected.

Hello, everyone.

Yes.

Sure Jonathan.

Okay.

Yes.

We got to see that with Macquarie, It's about call it from the top.

In addition, as we reach our current scale investors should not expect us to continuously deliver high growth.

Well listen its audience is a housing crisis.

Okay.

What machine.

Baidu.

Number one.

Michelle Fayetteville, we bought shell.

Cool.

Thank you Sir.

Ashish.

No I'm sure not equal.

Yes.

We have others.

Thank God.

Hopefully just how about yards.

Well Albert.

Development is inseparable from the support of our consumers.

So as the user base reaches its current scale our focus now is on how to serve.

Over 880 million users and.

Improve their trust and.

Mindshare.

To remain to be a user centric.

So we will continue to pay more attention to technology and Agri investment.

And.

To promote our differentiation.

Agriculture to help create more value for our consumers.

Second quarter distributions without scooping that we're trying to do.

Thanks, Josh.

And that's why I said I can't conclude you bet.

The fact that now.

So hopefully that will continue.

Okay.

So that was job.

We'll do that too quiet.

Keith.

During the quarter.

Can you quantify what the seating.

Therefore certain jobs.

We'll wait to see that lag.

Okay.

No.

Xi'an phase here in the Gulf.

Sure so you're talking about.

Well as we have been communicating.

We always remain committed to investing.

To create long term value.

If you look from the outside.

At time, where my appear to be overly aggressive or overly conservative sometimes.

So we recommend to you not to pay too much attention to the fluctuations between quarters.

Ted I was hoping left us with focus.

Whether what we are doing is generating value.

And whether it can bring about a high quality development.

What I have shared mail addressed your question.

Okay.

Well Hello.

Hello, Thomas This is Jay Thank you for your caption.

I want to talk about the take rates I just mentioned.

Well, our focus has always been to that.

As of our users.

As just mentioned by <unk>.

Is this being sat.

Take rate or monetization rate.

It's not a metric to forecast.

Is that.

Thank you just a natural result.

So we will command too.

Not look cat quarter to quarter changes.

And in the long run our monetization rate depends on how much value we create.

And for our future outlook for monetization as I sat.

It really depends on our value creation.

One thing we would like to point out as we started can do it always a strong agriculture forecast from the beginning.

And we.

We stick to our Zero Commission policy for every corporate tax.

And we definitely we have continued to support agriculture merchants.

For example, offering more traffic project.

Also.

We have communicated before.

We will step up investment in agriculture for Bachelor consumer experience.

Well as the propulsion of agriculture product increases our monetization rates might be affected.

Thank you.

Operator, we will now take questions from the net.

And that's in the queue.

Your next question comes from Eddy Wang with Morgan Stanley . Please ask your question.

Got you and just wanted to see what our Caribbean certainly aren't going to Buck that you wanted to you could ask question gender.

So Jonathan just asked what our market <unk> Yoshida project.

So Sean for the June quarter shown yet you thought youre short why but it's important to change the way we got out of your total Guangzhou.

Yes.

Yes.

So enjoy that.

You don't want to train conscious of Shaw senior industry show kind of dose I'm glad I shop without raw bedrock, Bob Jacob <unk> thought I should say J D.

Kieran Lee from you all pushes that solar farm MPR question, what you just said.

And on that you should just dumping tires, that's sort of what kind of agile should you should support yes.

Shorter lateral should be judging that.

Well first of all John John <unk>, John <unk>.

So to them and then talk about <unk>.

It helps us on the whole woman.

Selling them and Thats what were you should just to show our total fund me that intelligence.

Thiago in TTS. This is going to go somewhere.

Yes.

So a woman she says they also put on the phone can accomplish that Nokia Colombia.

Dr. Joseph So RJ just end by non yen.

Q2, it's in good shape.

I'll tell you on the <unk> that youre selling to somebody else.

I understand that you don't rule kind of thought.

<unk> connect.

So you probably don't want to you can totally because somebody on the trunk stock I mean, why it was a solid quarter, Taiwan site, where kind of supply Joseph Schwartz I shop on what's out there.

Yeah.

Sure.

They should kind of assume that won't be a woman to total water right now what kind of self funding itself.

Thank you for taking my question I have two questions first is about competition could you. Please show us share with US your view on China's e-commerce industry competitive landscape.

We want to start on one hand, we do see other e-commerce platform adopting a structure of cost control and less aggressive expansion, but on the other hand, we do see certain luxury e-commerce platform.

To be very aggressive in the user acquisition.

Expansion, so just want to hear your view on.

The competitive landscape in the e-commerce sector and the impact on PDD.

Follow up question is about the.

Kimberly.

Culture, new initiatives, so what's the proportion of the <unk>.

10 billion have been used so far and what's the next kind of area. So we want to investment in the next maybe one or two years. Thank you.

Uh huh.

So timna as you seem quite shortly.

At this time.

Sure.

Oh excuse me.

We're doing a hard tissue.

And the teams and the types.

You shouldn't that frankly, you can chip in.

How much you've seen the <unk> sure.

Yes.

Sure Bob.

Hello.

ESG the army the T for C C.

Okay.

The sulfur.

Got that.

Yeah.

Yes.

Titanfall two.

Sure.

I'll pass it on.

Yes.

Eddie So for your question around competition landscape.

I think the current landscape versus two three months ago. It has now changed much.

So essentially China's e-commerce industry, you see a huge market.

And it is full of potential.

As an industry infrastructure continues to develop.

And as a consumer need.

<unk> to evolve more and more companies are way out July E Commerce.

None of them are doing.

<unk> seen the most of the units yet.

Sometimes you'll icon.

It sounds like a nice Shaw.

Total Q10 years Gotcha.

We believe that in the long run the emergence of new platforms as well as new formats will have a positive impact on consumers and on the industry itself.

Q1 can you say.

Yourself.

Sure.

Chimpanzees seems like E G.

Gina.

Sure.

Definitely shelf pardon me about.

Neil.

No.

Doing a shelf issues.

With 100, Dietrich because government will be possibly Q4, which I'll briefly.

Okay.

Hum.

So if we start on jobs.

Two quick on what you listen to and see what we think next year.

For us.

If you look at the under the perspective of the.

The recent pandemic and if you look at areas.

Where other peers have done well, we think that for ourself. There is still a lot of room to further improve from our current level of service offerings.

This is what our team needs to learn from and our team needs to work harder and also remain down to Earth.

To serve customers well and to create value for society as a whole.

This is the duty and responsibility for us as a company.

Yes.

Do you want to define that.

Sure Jonathan when counting case.

Alright.

And I thought it was.

No we announced its only a sort of Cushing.

Well I mean first on TNT.

And we're typically UK toward that.

Quite a challenging.

Softwood Hot you shouldn't.

Joe that you in fact.

Dan could you help me.

Shawn Seanor.

<unk> current seat.

Sure.

The jobs.

As for our differentiation.

Well, we started out pingo Tau with agriculture products.

As we develop agriculture has always been a court.

We also firmly believe in the <unk>.

Future potential of the agriculture sector.

Just as I introduced.

Now stepping up investment in core technology.

Especially in agriculture technology.

We believe in the long run these investments can create more value for consumers.

So it kind of played out.

Sure.

For Mr. Zhu year concluded.

Bye.

Yeah.

The corporate Assembly.

Sure.

And of course, you don't have to go to <unk>.

We are clear to the team.

<unk>.

Awesome.

<unk>.

Thank you John .

Goodbye.

So here.

So I'll address your second question.

We announced a 10 billion agriculture initiative last year.

We announced it we also mentioned that we hope this initiative can facilitate the advancement of Agri Tech pro.

<unk> digital inclusion.

And also to.

Makes sense of fulfillment for Agri workers and Agri scientists.

No.

EMEA too.

Andrea.

J D.

We sell them.

Global box office.

Sure the default.

Over the past year.

Our team and myself have been devoting a lot of time and effort to diligently evaluate and study our various proposals and projects.

In order to deploy resources to where they are needed the most.

Tim you know what.

Do you see interest in Q2, when we have.

Sure.

Two two.

Could you talk sorry.

Now it used to post <unk>.

<unk>.

Chengdu reinvent yourself.

If you go back.

<unk> and dual channel.

In my previous remarks, I also have given you. Some examples of how technology empowers agriculture.

<unk>, our smart agriculture competition.

Additionally, we are also cooperating with top agronomic universities and research institutions.

To translate what comes down research projects.

Hi, just two quick.

<unk> cool.

No.

She should be hiking again.

She all three types of seats you can draw.

19 usage.

Sure.

Sandra.

Uh huh.

Tier two and Oh I'm sorry.

Yes.

Clearly this year.

So maybe just repeat that.

Admittedly to empower agriculture through technology requires a lot of thinking deep understanding and extra patient.

So we need to compare our various options side by side and evaluate each options carefully.

And we have to leverage our past experiences agriculture, as well as our team's technical background to make the <unk>.

Options and choices.

Okay.

I took a leaner.

I wanted to talk to you with that.

<unk> adoption.

I don't know if you thought there was some time ago.

Well Colette.

Yes.

I believe we are.

The completion of the two months trying to prudently Michelle.

So what you see in the bundle.

Yes.

And in this area our strategy is long term.

And our investments in agriculture.

Early stage.

For such a sector of <unk>.

Such big scale and <unk>.

Impact of.

However, investment horizon as well as investments scale would not change when there are short to medium term fluctuation pulpwood share can give you more color around how we think about and what we are doing in terms of agriculture.

Fisher.

Operator, we may now move on to the next analyst.

Your next question comes from Kenneth Fong with Credit Suisse. Please ask your question.

Hi, My question is you're pointing to.

Just on one or two when we were younger and tier two cities when we go on there.

<unk> counties.

<unk> LNG to Hiseq, Joshua young Dunzo Coppola with enrollment.

Hold Trudeau sooner do you mean by seems that women's it sounds.

I think the same thing.

Great.

Okay, well I appreciate you say well, maybe I can michele certainly represent that we choose to do.

With him.

But as <unk> done in.

Women's sold some.

<unk> has a question concerning China, while many of the social the tone, but is it going to the patient.

On the answers.

That's helpful. Thanks, very much happy holding gain.

Sure sure.

Our demand no Monte Carlo.

It will mean that the merchant sales.

Sales and marketing.

<unk>.

<unk>, so I can see your NGL pricing mono drug once you Julien.

Too much of a portal to the Tianjin.

Civil reaching.

Once you win them.

Now what do you think Asia.

You management for taking my question too.

Two question please.

So we noticed that despite a high base.

In EMEA, you folks see accelerating sequential growth can you share with us the drivers behind I understand that we shouldn't expect fast growth given our larger user base, how should we think about you.

The upsides and the ceiling.

My second question is on the sales and marketing expense. Despite the SaaS revenue growth and our control overdosing and obviously it has to be very effective with our mail continue to come down on a year on year basis can you share with US. The reason behind for example, what you say change.

Our special.

For this acquisition.

Any room for further improvement.

Last year, <unk> said that we are shifting from a sales and marketing to R&D focus.

Also update us on the progress and then should we expect this to be largely finished thank you.

Ken It's Neal Shah with ICR tissue with clients.

Sure.

Yeah.

Key endpoints, you give us a hole.

Sure.

That's helpful.

Yes.

Yes.

Okay.

All right.

So you got a quality issue.

Things always about your inbox.

A few weeks within the beltway.

That's what we can.

To achieve some of these <unk>.

Sure.

Sure.

Oh, yes.

What do you do you take a look the affordable.

Right.

That's what that means.

Of course, you could TWC quake zones.

I think at that point.

Oh, well Kenneth So let me address your question.

User number.

So let's look at the numbers first.

By the first quarter last year.

Our annual active buyers and many of you.

Approximately $820 million and $720 million respectively.

This with already a relatively high base.

And by the first quarter this year hover AC and Mou for the increased to about.

$880 million and $750 million.

Chip some growth, but I think the long term trend should be very clear.

Though there might be quarterly fluctuations I think it is inevitable that our user growth.

The slower well over the course from the past few quarters. We also have shared this view with you.

The Ministry for the joint team.

Sean.

What kind of a potential downturn.

Hello.

So Sheila.

Included itself.

Yes.

They can do to wonder if we could jump in here yet.

Sure.

Tomo squeal seats in Cuba typing due to soft tissue.

C G.

So now.

<unk> that we see and.

The duty we have to perform right now is too.

Further improve the existing eight.

<unk> and 80 million consumers user experience.

And as well as to improve their trust and solidify their online checking us.

Number.

To support this year.

So any color there.

So the question just before.

Yeah.

She thought you're introducing cytosorb.

Sure.

So quick.

So the piece, which I'll go with it but since you did not equal the question Joe.

Following that you bought.

Sure.

Okay.

As for the strategic shift we are going to basically.

Amid the changes in <unk>.

Infrastructure upgrade and the evolving user needs are what we are doing in terms of investing in technology is to find opportunities and improve ourselves to serve our users better.

Yeah.

Hello.

Continuing to come to our tissue for which you will.

Within the week.

Two Bcf turnkey Columbia home D C.

On a shelf and go.

<unk> talked with fewer jobs.

And I'm glad to see that.

Through our effort, we have indeed created value for our consumers.

Especially in the area of agriculture produce.

So let me make.

Sure.

You see you.

You have high interest.

Just as rule changes.

John will then do a fiscal.

Typically each year.

Thank you.

Pronto, which combines E C.

How the deal.

Number one particular niche.

<unk> seen the Street's European call.

Thank you.

No idea now just for the type of questions on <unk>.

Yeah.

Sure.

Jim.

Sure.

Okay.

Okay.

Hey, guys.

Yes.

Hey.

How do you think about funding.

See you on the assumption that I see.

So another point is that.

The recent pandemic does show some of the areas that we need to improve.

And in terms of understanding understanding users' needs and keeping up with the changes in their behaviors and their demand.

We need to do better.

We will continue to explore the evolving needs and preferences of our users and to continue enhance our capabilities.

In addition, as we explore.

When we see good opportunities we've got continued seeing left.

So.

If we look at the financials it is possible that our efforts.

Show up in and be reflected in the future financial results as well, especially around technology.

Okay and she wants to go because these are things you can go other than <unk>, including <unk>.

Sure.

Sure.

Yeah.

And what I've just have just share may provide you with more color and give you some insights.

Our user number and its growth going forward.

Okay. Thank you Candice Oh it take your second question about S enemy.

<unk>.

Well.

As you just that we are going through a shift with small forecast have always RMT from marketing.

And does that shape has been you know a lot of financial result, since you Mr. Li.

For example.

And the marketing expenses fell 14% year over year in Q1.

Represents 47% of total revenue.

And down from 59% that's Q1 last year.

And either.

At the same time R&D expenses increased by 20% Y O y.

Well for ARINC investments, we carefully evaluating our eye and we allocate resources to generate long term and.

High quality development.

As always we will continue our investment discipline.

And.

<unk> in <unk>.

<unk> seven user knees would not do well enough and there are still plenty of room for us to say peers.

So we.

We need to further explore how to better serve all they use us.

In fact.

Reasons.

It also shows a certain area with glass screen peers.

So as we see good opportunities, where we continue our investments.

To create more value for our consumer to consumers.

Results diffuse expenses trend is likely to change.

And to us.

We firmly believe that R&D investment can generate high quality development.

So we will continue to step up the investments, which will be showing our financial results.

And we.

We are still in the investment phase.

Out of the state of the states.

For our financial numbers, which suggests you Kathy.

Cathy long term trends and.

The value we create from this investment.

How do you that can clarify clarify your questions. Thank you.

Operator.

I think we still have time to take questions from the next and that's the end that would be the last one.

Your last question comes from Natalie <unk> with <unk> International Please ask your question.

English you can go ahead and transition.

I am Glenn <unk>.

Can you guys.

Just I just want to learn from April on one side.

Towards that <unk> consider even Charlotte.

Yeah.

<unk> instituted a number yet.

Sure.

The toy box.

Okay.

I'd like to do things.

From a business model should.

Thank you Diego.

Sure.

Linda Chen.

Chemical thing Jamie I was just sort of <unk> the cap on my watch I normally does not change.

So I feel like also you guys John Baugh Stifel.

Okay.

Not progressing.

In Q.

<unk> mission.

Okay.

Let me quickly translate myself so.

Two questions from my side.

Our first question is related with a call that.

Regarding the recent recall.

Covid breakout.

Can management share more details about how the pandemic has impacted industry.

Ah patients.

How much impact it.

Uh huh.

First quarter results.

So what is your outlook towards the second quarter, it's about doing comment upon.

Benelux later.

And then my second question is regarding the corporate balance sheet.

You'll have to lever to move.

I apologize.

GAAP and non-GAAP .

Spaces for consecutive quarters.

Wondering okay, but are you now.

Pricing power.

The delta of the Gulf should investors expect a call.

Earnings to Vietnam. Thank you.

Okay.

Tricia will help with us not just from Macquarie Research you.

Each in due course.

No.

Can you just get on the initial institution.

Sure.

Distributional.

Sure.

Right.

Sure.

Sure sure.

Thank you.

Since the summer.

Thank you.

This website.

Yeah.

But Houston acquisition.

Well not slate so let me take your question on how to pandemic has affected us and our operations.

Well I think one area that the pandemic has shown us is set.

For our business, we need to do that to be more resilient and there are certain areas that we need to further improve especially in terms of.

How we can effectively meet.

Users' needs.

She was the one in China.

Clinical go hard enough with.

With the sulfides.

It took a formula.

Do you want to start machine.

Sure.

And under the current situation and.

The.

On the current situation I think our peers have shown set aspects.

We may also learn from.

Peter will touch you can see if you can.

<unk>.

So which would be I think how much.

Manuel <unk> and whatnot.

I teach the Lille score keeping attributes.

We started with.

<unk>.

City Creek.

I appreciate it.

I just want the functionality.

Since the passage of the football impulse.

Our Q2 call.

Balance sheet pay the function.

So we think of it.

Yeah.

Sure.

Yes.

And Ah Pingo Tau is E Commerce company.

That focus is on the essential needs of.

Users.

During the pandemic we have also.

Actively leveraging our differentiation to create a value for consumers.

And to fulfill our social responsibilities here.

Here.

Let me give you some examples.

First in Shanghai, We launched a 48 hour supplied packages for Shanghai residents.

Through aggregating their ordering and fulfillment staff.

We strive to meet the basic needs from as many households as possible.

To slow.

Somewhat.

Sure.

Anyways.

Yes.

Sure Chris.

Sure.

Whats the ballpark.

Thats, especially with CGM.

We will continue to mature the two leases.

In addition on the guidance of our relevant governmental departments.

We have made.

To provide supplies for medical personnel and people need.

These are some areas, which we have been working on.

By leveraging our differentiation and offer our value proposition.

I was just wondering why Youre for me and I'll do so.

Kind of on Ultrashape.

Second question Joanna.

According to the new home door.

<unk> got plenty of time.

You bet.

<unk> digital tool.

If you wouldn't keep owner.

Alright.

So it helps us think about the ECM.

Our forecast for Q2 was <unk> <unk>.

Cool.

I think we'll continue the dividend.

Some of them.

No.

Download it could do to help them.

No.

What do you see that.

Thats a good color.

Thanks, guys listen the AT&T deal kind of cool.

So essentially equal one would your dog.

The project.

C&C metallic ores.

Okay.

Another important point that I want to make during this pandemic time is that.

We also see many young talents are writing up to challenges and they are growing rapidly in the face of this railroad challenges.

They are proactively securing good supply.

They provide technical support.

To assist the fulfillment and they are.

Also solving some of the operational difficulties.

They they are taking on more and more responsibilities and challenges.

From this.

Im confident in the potential for our team.

No.

Based on what I, just said what I see really has given me more conviction in how our team performed in the young talent from our team.

Hopefully it will help with 20 the hard tissue.

Suzanne you should come down.

Cool.

I think we are here.

Sure.

<unk>.

So javier.

Yes.

Sure.

As you can.

<unk> seen that you John Quealy.

Oh, well respond to for sure.

In EMEA pharma onto the system.

Tony.

We continue to shine.

From my seat.

The fishing at home.

He won't be seen.

Hi, guys.

Cool.

Thank.

You see on that.

And to add on one more point.

During a special time.

We also see that.

Agriculture, and agriculture, our supply chain.

So essential.

And the importance of having a very resilient.

I will touch on supply chain.

So.

Our long term investment.

Culture is particularly important.

Hope what Ive just shared around this point can give you some more.

A color around our textile agriculture.

Oh well thanks for your second question about your possibility.

First I would like to point out.

Our current priority.

And we're just past few quarters, our profit was mainly due to our operating leverage.

Especially from sales and marketing.

And as mentioned last quarter, we have also control our spending in the face of slower growth.

And and caring intensified competition.

You see we still have meaningful room to improve in terms of satisfying uses.

The reasons pandemic shows that.

So we need to step up our investments.

And it May college, our quarterly profit it fluctuate in the future as you may see this quarters profit has decreased.

Sequentially versus last quarter.

Meanwhile.

The profitability.

Over the past few quarters also gives us greater confidence to continue our long term investments.

We hope that everyone.

<unk> owned the value we generate.

Yeah.

Okay. Thank you everyone for joining us on the conference call today.

If you have further questions. Please feel free to reach out to our IR team. Thank you have a great day.

Ladies and gentlemen that does conclude our conference for today. Thank you for participating you may all disconnect.