Q2 2023 ContextLogic Inc Earnings Call
Yeah.
Good day and thank you for standing by welcome to wishes second quarter 2023 earnings Conference call. At this time all participants are in listen only mode. After the Speakers' prepared remarks, there will be a question and answer session to ask a question at that time, you'll need to press star one on your telephone.
<unk> has been answered and you'd like to remove yourself from the queue simply press star one again.
Today's program is being recorded I would now.
Now I'd like to turn the conference over to Mr. Ralph Fong, which wishes director of Investor Relations. Please go ahead Sir.
Good afternoon, everyone and welcome to wishes second quarter 2023 earnings conference call on Rob song Director of Investor Relations and joining me today are our CEO, Julian and I was CFO and COO.
Today's prepared remarks have been prerecorded.
A slide deck that has been posted to our Investor Relations website, which is available for your reference.
Once we are finished with Joe and Bevens remarks, we'll hold a live Q&A session.
The remarks made today include forward looking statements related to among other things.
Our financial expectations business, and restructuring plans, including the impact of a reduction enforce logistics and operational efficiencies, including flat reshaping and related initiatives initially.
Initiatives to improve customer experience and engagement.
Expectations regarding merchant relationships and strategic partnerships impact of our strategic marketing and product initiatives, including spending and promotional events. They renewed supply strategy and anticipate a return on our investments and their ability to drive future growth.
Our actual results may differ materially.
From the results implied by these forward looking statements and certain risks materialize or assumptions prove incorrect.
Forward looking statements involve risks and uncertainties, which are described in today's earnings release, and our periodic reports filed with the SEC.
Any forward looking statements that we make on this call are based on our beliefs and assumptions today, and we disclaim any obligation to update them.
Also during the call, we'll present, both GAAP and non-GAAP financial numbers and metrics a reconciliation of non-GAAP to GAAP results is included in today's earnings release, which you can find on our Investor Relations website.
Those are filed with the SEC.
A replay of this call will be posted to our Investor Relations website.
With that I will now turn the call over to wishes CEO Julia.
Thank you Rob I would like to thank everyone for joining our second quarter could be 23 earnings call on this call I will share with you our Q2 financial update discuss the business highlights and the key strategic focus for 2023. We began will then provide a deeper dive into financial results show the third quarter.
Our guidance and a comment on our operations.
Finally, I will provide additional closing remarks before opening up the call to your questions.
In the second quarter of 2023 total revenue of $78 million were down 42% year over year and below our guidance range of $91 million to $102 million.
On the bottom line, we reported adjusted EBITDA loss of $66 million in Q2.
Which was within the guidance range of a loss of 60 million to $75 million.
We ended the second quarter with cash cash equivalents and marketable securities of $531 million.
During the quarter, our topline performance, including revenue in EMEA was impacted by the challenging operating environment as we continue to navigate macro headwinds as well as competitive pressures in the E Commerce space.
At the macro level, we continue to experience a high level of economic uncertainty, which impacted consumer spending habits.
Cold conditions, which include impression elevated interest rates and the cost of living continue to pressure our value oriented consumers.
Had a direct impact on discretionary spending across the markets we serve.
The e-commerce market is large and growing and the highly competitive and rapidly evolving.
Which is characterized by rapid changes in technology and consumer sentiment.
We acknowledge that the competition in our industry has intensified and we expect the trend to continue.
That being said we are focused on the things we believe we can control going forward.
Despite a dynamic and challenging environment the team executes on our strategies and have made progress in our various strategic initiatives.
I'll begin by reviewing some of the progress we have made on our three foundational pillars that we continue to believe are the most important to the long term financial health and the growth of wish.
Our first pillar is improving the customer experience.
As part of our efforts to drive basket building and further improve the customer experience.
We rollout flat rate shipping all eligible orders in each of our major geographies in the first half of 2023.
In Q2, we took it up a notch and expanded the flat rate shipping initiative by offering free shipping on all eligible others.
Over $10 during the week anniversary merchandising event that ran from June 24, two July seven.
Clearly shipping as part of a broader effort to improve the shipping experience on wish and it remains a key component in addressing one of the major pinpoints amongst our users.
We expect to further expand it in the second half of 2023, some ideas we plan on experimenting with in crude offering free shipping for order about established thresholds.
And making all items on which eligible for Ci ratio being instead of a limited number <unk>.
Ultimately our vision is to remove shipping as a major point of friction for our customer from here on in.
Okay.
From a product discovery and exploration standpoint in Q2, we also increase the scale of product collections in support of which anniversary merchandising event.
Graduating up the wall and our product groupings based on a specific category, such as home and garden beauty and awareness jewelry and accessories et cetera.
And is showing those products in feature of the modules that lithia unique collection pages.
Going forward, we intend to leverage generative AI to create product collections, our scale to drive engagement and a meaningful basket building opportunities for our customers.
Which I am excited about.
And that aspect of improving the customer experience is our quest to provide seamless guest experience.
Regardless of the entry point.
In Q2, our product team significantly reduce the friction on the mobile web by launching a gap checkout experience across a number of our major geographies.
The new experience enables new users to discover product at items to the car and the transat without needing to setup a entercom.
The result of which.
Has driven improvement in customer engagement and the conversion.
As most of our new and a churn user traffic comes in we have other mobile based apps. It's critical we get the M web guest experience, writing order to harness that traffic.
Mobile web is becoming an important channel for our platform distribution. In addition to our iOS and <unk>.
Android apps.
Speaking of user traffic.
The first experienced new and returning buyers have with wish.
And we intend to focus on making that experience engaging retentive and frictionless in the second half of 2023 as.
As part of our growth strategy.
We plan to optimize landing pages to focused on.
In enticing customers from <unk> to download the App.
Highlighting new buyer incentives and attracting a virality of new recommendations to drive exploration.
I wish our transition to allow guest experience is nearly complete looking ahead. The next phase in this program for the remainder of year in crude password less accounts and removing friction associated with account creation and the recovery.
The goal is to leverage one time possible otp and links to increase number of successful logging and prevent account takeovers with more secure authentication at the secondary wall.
In an effort to further improve the customer experience and to drive basket building our team intends to make the shopping car at a living part of the users which experienced by launching the life car in the second half of the year.
The lifestyle allows users to prominently see the status of their throughout the entire shopping journey.
In other words, the light car will help users to understand what's in their car at any given time without having to go to a different place within the app.
Moreover, the light car, where surface timely coupons encouraging customers to add more lot of an item to the cart or baskets before checking out providing a more personalized shopping experience to customers.
This brings me to our second pillar, which is deepening our merchant relationships.
Within the U S. We have successfully on boarded a number of new merchants in recent months.
Of particular note is a reseller of our refurbished consumer electronics product and the brand owners within the beauty fashion and our licensed sports collectibles space.
Importantly, this authorized resellers have domestic warehousing, the us enabling faster shipping times for North America, which customers.
Additionally, we announced a strategic partnership with one of South Korea, leading largest providers wrinkles.
The partnership is designed to streamline the process for Korean merchants seeking to ship goods overseas through the <unk> platform with.
We look forward to joining forces with <unk> to deliver a better shopping experience for our merchants and our customers and to grow our merchant base in the region.
As our marketplace platform, we recognize that our merchants play an integral part of providing a great customer experience.
We are committed to further strengthening our relationships with Lowe's merchant, who provide outstanding experience to our consumers.
Europe should continue to be strategically important region for which is our European customer base accounted for nearly half of our core marketplace revenue in Q2.
Consequently, we plan to host our first European merchants summit in September last year.
The two week long anniversary merchandising event was another successful event for which it was well received by our merchants and buyers.
Our merchants to position the product statistically within coffee categories and create ball-buster deal to help attract customers.
To put things in perspective.
Approximately 6000 merchants participating.
University, then enrolling over 360000 product listings and fitting ball-buster deals.
Importantly, we saw a double digit increase in <unk> during the event.
On our last earnings call, we introduced our renewed supply strategy, which aims to further deepen our merchant network to provide customers with fresh fun quality product at a competitive process.
That's a <unk> marketplace, the breadth and depth of our product range is a key differentiator.
As is our ability to enable both domestic and cross border trade for.
For the second half of the year, we plan to implement a renewed supply strategy by right sizing our supply pool to focus on a certain number of core listings and a high touch categories.
This will involve creating distinct experience for each of our high is to touch categories, such as health and beauty women's fashion refurbished electronics and home essentials.
We'll have separate landing pages think base the collections marketing messages is central all designed to be better aligned with our user home and life needs.
I will now discuss our third pillar of achieving operational excellence.
In Q2, the average trying to door in six of our major market improved by six days when compared to the same time period of 2022.
Our on time delivery rate was 91% largely flat when compared to the last quarter we.
We also saw our average time to door improved in the major markets we serve.
Favorably impacting customer other cancellation rate refund rates and our customer experience.
Our customer order cancellation rate declined 47% year over year in Q2, and a customer refund rate dropped by 30% within the same tanker road Adil.
Additionally, we saw a 28% year over year improvement in customer NPS, alongside encouraging buyer conversion and customer retention trends in Q2 in particular buyer conversion and customer retention improved by 13% and 3% respectively in the second quarter of 2023.
When compared to the same period last year.
Having said that we have a lot of work ahead of a further improve our business operationally and our first steps are to rationalized corporate overhead and operating expenses.
As part of these efforts, we will be implementing our restructuring plan earlier. This week with notified wishing price that we will undertake a new route of reduction in our global workforce as part of a broader alignment of our resources.
Anticipate that this reduction will decrease our global workforce by approximately 255 positions representing about 34% of our head count.
This is an incredibly difficult decision to make and the process to go through.
It's critical that we rightsize our spend to match the current size and the scope of our business.
We estimate that we will incur one time charges off optimally $8 7 million for severance and personnel reduction clock. We expect the majority of lease charges will be incurred in Q3 and that the implementation of workforce reduction will be largely complete by the end of our fiscal year.
<unk> 2023.
We expect to realize run rate saving of ultimately $43 million to $46 million on an annualized basis, starting in the fourth quarter of 2023.
We intend on making wish a much leaner and more efficient business with a goal of becoming a profitable company longer term.
With that let me now turn the call over to our CFO and the CFO Vivian Liu to discuss our financial results in more detail and give you an update on our operations.
Thank you Joe.
Now I will add more color Q2 financial performance and provide Q3 financial guidance.
On the user metrics.
We had 12 million monthly active users and $10 million last 12 month active buyers.
In the second quarter 2023.
Which represented a decline of 48% and 50% respectively year over year.
The decline was partially driven by the cumulative reduction in AD spend over the past several quarters.
As we continued to focus on achieving targeted returns our ad spend.
The total last 12 months.
AD spend.
Greek by 30% versus the same period of the prior year.
In addition.
As Joe shared earlier we.
We started to see increased competition.
The e-commerce industry.
As some of the market participants.
Focused on July .
The new user acquisition and retention.
Offering deep discounts and incentives.
We believe that such compensation further contributed to the decline in our monthly active users and the buyer count in Q2 2023.
Total revenues in Q2 were $78 million.
A decline of 42% year over year.
This decline was across core marketplace.
Product can boost and logistics.
Primarily driven by reduced AD spend and at the pricing changes that are were fully implemented by the end of Q2 2022.
Similar to what we experienced last quarter.
The pricing changes impacted our Q2 revenue and EBITDA.
Resulting in an unfavorable comparison to the prior year.
Please note the impact from the pricing changes will be lapped fully.
Starting Q3 2023.
Q2, gross profit was $16 million.
A decline of 52% year over year.
Gross margin was 21% versus the 31% in Q2 2022.
Gross margin performance was mainly driven by the decline in marketplace gross profit.
Due to the pricing changes as discussed earlier.
As well as the lower margin logistics business.
Are you building a higher percentage of the total revenues.
Total operating expenses were $99 million.
A reduction up 26% year over year.
Lower ad spend.
Lower customer support and services costs.
We reduced employee head count accounted for a majority of the reduction in operating expenses.
Excluding stock based compensation expenses.
Total operating expenses were down by 19% year over year.
Our net loss was $80 million.
Compared to a net loss of $19 million in the second quarter of 2022.
On a year over year basis.
The decrease in gross profit was offset by the decline in operating expenses.
Resulting in a decrease in net loss in Q2 2023.
Our adjusted EBITDA was a loss of $66 million.
Compare to Q EBIT loss of $58 million in Q2 2022.
The year over year decline.
Adjusted EBITDA was primarily driven by lower revenues.
And as the impact of our pricing changes, which made Q2 2023 unfavorable from a year over year comparison standpoint.
Q2, 2023 EBIT result.
Within the guided range of a loss of $16 million to $75 million.
Operating cash flow was negative $88 million.
And our free cash flow was negative $91 million for Q2 2023.
Compared to operating cash flow and our free cash flow of negative $67 million in Q2 2022.
The year over year increase in net cash used in operating activities was primarily driven by unfavorable changes in working capital.
As the balance of total payable declined corresponding to lower transaction volume and amount.
We ended Q2 with $531 million in cash.
<unk> equivalents and marketable securities.
And no long term debt.
I would now like to provide a guidance for the third quarter of 2023.
For Q3, we expect total revenue to be in the range of.
$55 million to $65 million.
Adjusted EBITDA loss to be in the range of $55 million to $65 million.
Revenues are expected to remain under pressure.
Primarily driven by reduced monthly active users and a pilot accounts.
Quarter over quarter and year over year basis.
EBITDA is expected to improve quarter over quarter, largely due to better cost efficiency associated with a lower employee expenses.
From a year over year standpoint.
EBITDA is expected to improve significantly.
The projected decline in revenue is more than offset by cost savings across Cogs and operating expenses.
To sum up the.
Competitive landscape is changing rapidly in the cross border E Commerce space.
And we are experiencing unprecedented headwinds.
From intensified competition in the industry.
As a result, we expect user acquisition and retention to remain pressured for the near term negatively impacting our monthly active users active by account and our revenues.
As Joe shared earlier.
We have made the difficult decision to further right size our cost structure.
In addition to the annualized savings of approximately $43 million $246 million.
As a result of this round of workforce reduction.
We're working to achieve additional annualized savings of approximately $20 million in non employee related cost items.
They enhance cost efficiency should enable us to improve cash flow.
And invest in our critical initiatives for the future.
We will continue to double down on the three pillars.
Customer experiences.
Merchant engagement and operational excellence.
To deliver differentiated shopping experiences and great value at competitive prices for our buyers and our merchants alike.
Well now.
Salary to the path to reinvent, which with an ever greater sense of urgency.
Financially, we will sharply focus on return on investment.
EBITDA and the cash optimization to improve shareholder bodies.
With that I will now turn over the call to Joe for his closing remarks.
Thank you we have yet to close I'll leave you with a few final thoughts.
We are cautiously optimistic with English about all the initiatives we have in place from a user and merchant experience standpoint, but we still have a lot of more work ahead as I've discussed in the beginning of the call we faced intense competition.
Challenging macroeconomic climate.
As a result for the remainder of 2023, the entire king at which will collectively sharpen our focus on our key initiatives that we expect will drive improvements in customer experience and sustainable growth.
Our plan is to improve the shopping experience for our users through the app's features improve the product quality and delivery times more responsive customer support and the competitive pricing.
Going forward, we intend to leverage generative AI as well as other technologists to provide differentiated shopping experience to engage delight and to drive basket building opportunities for our users.
Meanwhile, we are dedicated to the three foundational pillars and we are focused on the goal of returning shareholder value over the long term.
At this time.
Operator could you please open the call for Q&A.
As a reminder, if you have a question at this time. Please press star one on your telephone one moment for our first question.
And our first question comes from the line of can all do care from UBS. Your question. Please.
Alright, Thank you for taking the questions and thanks for the for the opening remarks.
Quick one on you talked about macro and competitive.
Challenges.
Out there macro is whatever macro is but as far as the competitive challenges are concerned.
And what are you doing there to kind of improve and maybe change stuff and.
Are you seeing any change.
We'll figure it out is is that is there a chance that revenue can actually grow from current levels.
Sure.
Okay perfect.
Okay, yes. Thanks for the question this is Julian.
So I think the competition is always there so.
We did see.
Quite a few players in the space so increased the investment level, especially in the past two quarters. So it also signal very strong demand in the cross border E Commerce sector. So wish we as a company right. So we kind of keep focusing on.
Dependable growth right because we believe the sustainability is the key to E Commerce company as the E Commerce.
That would be a long run rate for everyone. In this space right. So what we have done here. So we keep focusing on what we can do right. So I think that first of all I think thats about the supply quality as we set right. So this is something has been <unk>.
Pinpoint for our customer.
From a customer experience perspective, we have been doing a lot of things on improving unless there is something really can help us to grow.
And also the retention in a longer run right.
<unk> to that right. So I think.
The competition will also get a forthright to every player in the market, including ourselves rather for us to really think about how we can accelerate SRA.
Reinvention of the shopping experience right. So that's the thing why our product teams have been focusing a lot. So are improving and a lot of product features like <unk> share in the earnings earlier right. So there's nothing there's nothing I can really help us to differentiate ourselves in the market in this competitive market.
Alright, so still a lot of work to do and we think that you listened in on the shopping experience right.
Innovation can help us ready to be achieved.
The moat that differentiation compare to the other players. So yes. So I think there's still a lot of work to do but there is something we will focus on in the future and on the growth side right. So definitely right. So we believe raise though with those kind of shopping experience improvement right and also including the supply quality improvement right. So that can really give.
US a chance to stabilize the trop.
To kind of back to the growth track okay.
If I may add to Joe's point.
And we may not be able to I'll spend or our competitors in terms of marketing dollars, but what we can do to drive sustainable growth at scale.
Shared in the prepared remarks number one user acquisitions through the high touch category.
<unk> re February Refurb electronics home Essentials, and beauty and health and if those are the areas where we are.
Can build a lot of differentiation protocol experiences it for user acquisition as well as the user retention.
I'll also mention that generated <unk> AI technology will play a very important role in creating total vertical experiences.
And that's the second piece, so kind of a growth user conversion.
Removing friction in the either attorneys and the third piece is increasing the average transaction value through the flurry of shipping and other basket building initiatives.
So I think when we think about <unk>, it's more than just acquiring users it's about converting users into buyer and to retain the buyers to more effectively and helping the buyers of beauty bigger basket.
So all of that collectively will help us to build a path towards a systemic growth and.
Even if they've been pretty muted in the top line.
Great. Thanks, Joe and Thanks again, a quick follow up if I could what are the things you mentioned, we've been was <unk>.
You discussed it in the in the opening remarks also is the highest touch categories health and beauty fashion and home essentials.
What percentage of your GMB comes from these four categories.
Yes, So we don't report GMB.
Category level, but those are very major categories already on the platform. So they are.
In a general statement I'd say accounted for more than 50% of a total Jimmy on the platform, while we highlighted as a for high touch category. There are subset of the bigger home and garden category or fashion. So they are suffering under the bigger categories, where we see additional growth opportunities if we double down.
And then manage the subcategories of property, we can drive a lot more growth right. So to answer your question. Those four major categories accounted for a very large question for Tms well, we selected our the subcategories under the four bigger category to drive additional growth again women's question refurbished electronics home essentials, and beauty and health.
Got it thank you so much.
My pleasure. Thank you.
As a reminder, if you have a question at this time. Please press star 111 moment for our next question.
Our next question comes from the line of Laura Champine from Loop capital. Your question. Please.
Thanks for taking my question, it's really about the restructuring I know that the.
There was a significant number of staff.
Laid off of I think it's 34% of the total but are there certain areas where that was concentrated certain functions and are there certain things that you did not touch maybe just a little more visibility into what what you did there.
Yes, Thanks, a lot out of this Joe.
So looking ahead to the remainder of this year 2023, we recognize the macroeconomic uncertainties and the competitive pressure will likely persist. So in response to this dynamic environment and to position wish to thrive over the longer term right. So we are taking aggressive action as you mentioned to significantly lower our cost.
And to improve our operational efficiency right. So as part of this output. So we are restructuring our full force in the <unk>.
<unk> for pulp a strategic priority so can make us.
More laser focused on executing.
The top priority things within the company. So we're able to maintain the major investment that we have with what we have planned for this year and the lowest cottonwood taken into a car. So back to your question right. So this deduction.
Across our deep cut across different areas of the company and they are a number of factors that were included in the decision making process. However, our priority was really making sure that we have the full funding for what we consider are the key strategic priorities, both on the product and operation side.
Got it and then a second question.
How do you expect to trend your own advertising expense, which I know is dror dwarfed right now by some competitors, but how do you expect do you expect to increase or does it not make sense to grow AD spend at this time.
Yes. Thank you for the question.
Our AD spend it will fluctuate.
Based on the seasonality for instance, during the holiday season, we tend to spend a little more to capture that.
Purchase power from the customers.
Generally speaking we will be more focused we will take a very disciplined approach with our AD spend meaning we set a threshold for the rollout of the return on the EDA spent and we won't spend additional dollars until we see the threshold requirement be Matt.
So I think the between spending a lot of dollars trying to compete head to head with that.
Deeper pockets than just a part of this acquisition.
Spending wisely and in a disciplined manner to make sure we get the property investment on the <unk> I think at $1, which is the second part right.
And we are like I have mentioned in the prepared remarks and financial year, we're very focused on.
Optimizing for cash flow returns and EBITDA.
So I think it's probably fair to say compared to.
Last year, I think it before EDA spend and we'll continue to stay at a very disciplined level and.
As we continue to focus on they are realized.
Our return threshold.
Yes.
It's a little bit color here.
So in the past few quarters. So we have been spending a lot of effort on optimizing the return on AD spend, especially in the existing customer segments right. So we have seen a quite improvement from the existing customer segment that actually root can allowed us so as we kind of allocate a little bit more on budget.
<unk>.
New user acquisition in the upcoming quarters right, but it doesn't mean that you will increase.
Getting spec costly while there's nothing just like more.
Approach.
Campaign structure change right and really help us to optimize.
Ross at.
At a more holistic view right. So I think listen to the overall approach we are doing not right in Q2 definitely its transition.
Transitioning quarter right. So we have studied some of the campaign approach change and we do hope right. So that can really help us to build all the top funnel.
At the end of the day right just like what et cetera organic is steel is the biggest bet too for us. So the marketing still will remain a very key.
Driver our approach for us for the <unk> the gross.
I think the organic is still is the biggest the beds. So listen thing, we'll still we're relying on the customer experience improvement in our product feature improvement right. So.
What we shared earlier, including reducing.
The customer friction during the shopping journey right the more innovative way for exploration and discovery and also the continuing improvement on the improvement on the shipping experience right.
All of these things coming coming together right. So it can really offer our customer much better experience on which right and this is something I think it can really help us grow on the organic side. So yes, having a set right. So with the oldest combined athar I would do hold up right.
The marketing and the product efforts can really kind of what together to generate more kind of a user for wish.
Got it thank you.
Thank you one moment for our final question for today.
And our final question for today.
Yes.
Comes from the line.
<unk> <unk> from UBS your question please.
Alright.
All right. Another question popped in my mind and that was with regard to the marketing spend.
So moving you talked about.
Having a high Ottawa thresholds on the marketing spend and when I look at like.
Marketing spend as a percentage of core marketplace revenue.
That increased from about 130% in <unk>, 23% to 160% to $2 23.
Marketing the aggregate marketing spend actually increased SKU would keep them in the second quarter when revenue declined.
So can you can you talk about how much of your marketing spend is performance based versus versus Brandon.
The <unk> equation, maybe breaking down.
Thank you.
Thank you. Thank you for the question. So I think a couple of things if we compare year over year.
First of all our <unk> on the performance marketing spend has been improving pretty steadily.
But I understand that the dynamic you are describing our total marketplace revenue is declining from year over year standpoint, so choose.
Two things to keep in mind. The number one is the fact that we moved our attention our pricing practices.
Last year.
Sorry, we implemented a new pricing changes by end of Q2 last year, which means when you compare this Q2 to the last Q2.
This year is after a while because we <unk>.
Implemented at the changes that you remove premium uncertain item prices of which directly impact our marketplace revenue and margin. So thats, a very big portion of why the marketplace revenue decline from your standpoint now keep in mind going into Q3. This year the comparison will be apples to apples because.
That change it wasn't completed it by the end of Q2 last year at Q3 onward is clean so that.
Number one number two I think.
I would say despite the fact that we can improve realized.
Alright on the marketing and we're being.
Really.
Careful in terms of how we allocate in a bunch of one dollar as Joe mentioned, we focus on the existing buyers and when we see upside in the rollout as we move additional dollars into new user acquisition. So we have done all the right things in terms of optimizing the returns on our marketing however, the external competition and is at the mall.
<unk>.
General macro has been a much bigger factor in driving down the total revenue, particularly on the marketplace side. So I think that's not a reflection of the efficiency of our marketing spend is probably more a reflection of the pricing changes from year over year standpoint, as well as the intensified competition.
Therefore, overall marketing spend rate as performance now is still the majority of our spin.
But starting Q2 right and come into Q3 gradually rise. So now we start some of the new brand marketing campaign raised the idea here is we want to have some of the always on evergreen brand marketing campaign in some of the <unk>.
Diversify the channels right and see how achieved brand marketing can really play their role to help us to improve the tough on the conversion rate to help us to build the telephone right. So this is something we do expect to see the synergy between the performance of brand marketing can really help us to either.
Improved marketing efficiency.
Holistically.
Okay.
Thank you.
Does conclude the question and answer session of today's program I'd like to hand, the program back to Joe <unk> for any further remarks.
Thanks, everyone for joining our earnings conference call and we look forward to talking to you throughout the quarter.
Thank you, ladies and gentlemen for your participation in today's conference. This does conclude the program you may now disconnect good day.
Yes.
Okay.
[music].
Okay.