Q2 2023 Sea Ltd Earnings Call

Speaker 1: Good morning and good evening. Welcome to the C-limited second quarter 2023 results conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Speaker 1: After today's presentation, there will be an opportunity to ask questions.

Speaker 1: Please note this event is being recorded.

Speaker 1: I would now like to turn the conference over to Ms. Minju Song. Please go ahead.

Speaker 2: Hello everyone and welcome to SEAS 2023 Second Quarter Earnings Conference Call. I'm Min-Joo Song from SEAS Group Chief Corporate Officer's Office. Before we continue, I would like to remind you that we may make forward-looking statements which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures, such as suggested EBITDA.

Speaker 2: We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures. For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release. I have with me C's Chairman and Group Chief Executive Officer, Forest Lee, Group Chief Financial Officer, Tony Ho, and Group Chief Corporate Officer, Andrew Ng. Our management will share strategy and business updates, operating highlights, and financial performance for the second quarter of 2023. This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Forest.

Speaker 3: Hello everyone and thank you for joining today's call.

Speaker 3: In the second quarter of 2023, we delivered strong results, building upon many of the key initiatives we shared previously. We are pleased to see positive developments across all three segments of our business during the quarter. Shopee continued to enjoy significant improvement in margins and strong growth in revenue year-on-year. As we started to ramp up growth for Shopee, it saw double-digit increase in growth orders quarter-on-quarter. Karina showed sequential active user and paying user growth, with bookings demonstrating more signs of stabilization. Moreover, Freefire also started to see quarter-on-quarter growth in bookings. Free Money continued to achieve both strong growth and profitability while maintaining a relatively stable risk profile. As a result, at the group level, we saw not only top-line growth, but also significant bottom-line improvement from the previous year, with our cash balance, which includes certain short-term and treasury investments, further strengthening to $7.7 billion.

Speaker 3: In the past couple of quarters, we have not only achieved self-sufficiency, but also demonstrated the profitability of our model and our ability to manage fast and significant shifts in operational focus as we see fit. Given this, we have strengthened our execution capabilities and increased the thickness of our ecosystem. We believe we are now on formal footing to better serve our communities. Meanwhile, the economics of our region have remained resilient, with inflation largely under control. This further boosts confidence in the long-term growth prospects of our markets. We are also excited to see recent ecosystem developments in diversified user engagement through live streaming and short-form videos as well as affiliate programs, which already brought new growth to Xiaomi. Such developments in our ecosystem offer us further opportunities to expand our long-term profitable time.

Speaker 3: Given these positive developments and trends, we have started and will continue to ramp up our investments in growing the e-commerce business across our markets. Such investments will have impact on our bottom line and may result in losses for Shafi and our group as a whole in certain periods. However, this does not change our unwavering emphasis on self-sufficiency and improving cost efficiency as a key competitive mode.

Speaker 3: Moreover, we believe that the efficiency gains and the stronger footing we have achieved through our past efforts have further strengthened our ability to invest efficiently in growth. Most importantly, we will remain highly agile and prudent by closely monitoring the conditions of each market and adapting our focus and pace accordingly from peer rate to peer rate. As I discuss Shafi's performance later, I will further elaborate on some of our focus areas in the near term.

Speaker 3: Moreover, we believe that the efficiency gains and the stronger footing we have achieved through our past efforts have further strengthened our ability to invest efficiently in growth. Most importantly, we will remain highly agile and prudent by closely monitoring the conditions of each market and adapting our focus and pace accordingly from peer rate to peer rate. As I discuss Sharpie's performance later, I will further elaborate on some of our focus areas in the near term. With that …

Speaker 3: Let us now discuss each business segment in more detail. Starting with e-commerce, as we mentioned in past quarters, we have been highly focused on reducing our ecosystem's cost to serve and improving the user experience for both our buyers and sellers. During the second quarter, we made important progress on both fronts. In the quarter, we further improved the efficiency of our logistics operations and expanded our network and capabilities across our markets. New initiatives such as improved digitalization of scheduling and tracking of orders also enhanced the user experience.

Speaker 3: More delivery options have been launched to address user preferences as well. For example, in Singapore, we have recently added an additional 600 collection points across a variety of retail locations to the existing 1000 self-collection blockers to offer more delivery options to users.

Speaker 3: In Taiwan, we installed lockers with 24-hour access at around 150 convenience stores with plans to scale this pickup option across the market. These efforts have resulted in lower logistics costs, including manpower costs and better delivery experience across our markets. We believe that the highly cost-effective and seamless logistics operation can be used

Speaker 3: can serve as a key competitive advantage for us. Our efforts certainly go beyond logistics and include all parts of our users' e-commerce journey, which has become our competitive mode as the leading integrated marketplace in our region.

Speaker 3: We will remain highly focused on lowering the cost to serve for the entire ecosystem while continuing to improve user experience over the long run.

Speaker 3: We also improved our user engagement metrics this quarter, further cementing Shopee's position as the e-commerce platform of choice. For example, we have focused on growing our live streaming feature.

Speaker 3: driving significantly higher participation from buyers, sellers, and creators in the second quarter. The feedback from our efforts was highly positive, reflecting the strong demand and high satisfaction for this feature from our users. Indeed, during July 2007 live streaming focused campaign Indonesia, the

Speaker 3: We recorded a 12 times growth in transaction volume and a 10 times increase in the number of buyers during the campaign, as compared to a normal day. For the double-edged shopping campaign, around one-quarter of our Indonesian buyers watched live streams on Shopee Live and made close to 5 million orders in a single day. In fact, Shopee has already become the leading live streaming e-commerce platform in Indonesia based on a report by Populix. We also significantly grew the pool of influencers and content creators in the last 10 years.

Speaker 3: through our Shopee affiliate program. This in turn enables us to efficiently attract more buyers to our platform. These affiliate partners are carefully recruited by our team and can choose to work with us directly or with the sellers on Shopee to promote products to their communities.

Speaker 3: Feedback from our efforts has been very positive and we are starting to see a tangible boost to our GMV and revenue from these initiatives. Indeed, over the course of the second quarter, over 1 million influencers registered with the program. Meanwhile, we have been attracting more new users to our platform.

Speaker 3: especially including those from the less accessible areas of our market. We believe we are unique in having the full capabilities to service the mass market with the broadest coverage with our low cost to serve and strong-owned infrastructure. We have also broadened our assortment of products for our core categories.

Speaker 3: such as fashion, health, and beauty, to further enhance our competitive mode in the long-tail categories. As a result of our user-focused efforts, we have been able to improve our performance and improve our performance.

Speaker 3: FireNet promoter score on Shopee improved by 10% over the course of the second quarter.

Speaker 3: For sellers, we continue to improve support by upgrading our services and tools to provide a more seamless onboarding process.

Speaker 3: more attentive seller management, and better seller tools and services. We also provide our sellers with more upskilling and training opportunities to improve their competitiveness. For example, we have conducted hundreds of daily classes and camps.

Speaker 3: to train our sellers and organize the knowledge sharing events this year in Malaysia. Our Shopee Under Load initiative brings free in-person training to sellers across Brazil.

Speaker 3: We partnered with Thailand's Creative Economic Agency and other industry participants to help introduce a design product produced by local Thai communities to our global buyers and provided business training and marketing support to these Thai sellers.

Speaker 3: In summary, as we look back on the past few quarters,

Speaker 3: I am very pleased and highly encouraged by the progress made. Having significantly improved our efficiency and unique economics over the past few quarters, we have become the first and only e-commerce marketplace in Southeast Asia with a proven profitability record at scale. This track record shows our ability to manage profitability and growth in each market as we see appropriate, based on market conditions. More importantly, this ability puts us on a much stronger footing and positions us well for maximizing our long-term potential in each market. We now have a more adaptive and efficient organization, supported by our strong market leadership and financial position, and underpinned by a resilient macro outlook.

Speaker 3: As shared earlier, we believe now is the right time to start re-accelerating our investments in growth. The early signs are encouraging. Growth orders in the second quarter grew by more than 10% quarter on quarter, driven by growth in both active buyers and the buyer purchase frequency. Long ahead, as we re-accelerate investments in growth, our strategic focus to build cost leadership and continually improve user experience remains key to our long-term success.

Speaker 3: We believe that the learnings from the past help us to be even more effective in executing our strategy. We plan to stay highly agile in adapting to user preferences as well as the ever-evolving industry and competitive trends to strengthen our leading position. Moving on to digital entertainment, the arena's performance in the second quarter was encouraging as the positive trends in the previous quarter continued to play out. During the second quarter, both quarterly active users and quarterly paying users grew quarter on quarter.

Speaker 3: as Free Fire shows sustained signs of improvement in user retention and engagement. Bootings for the game also grew quarter on quarter for the first time in the past seven quarters. These recent trends are encouraging signs of Free Fire stabilizing while remaining one of the largest mobile games worldwide.

Speaker 3: and we continue to closely monitor if this is the beginning of a longer-term stabilization of the game. In recent months, we have continued to improve core user experience and optimize features and content to ensure a more seamless gaming experience for all users. We also refreshed the gameplay of Free Fire, particularly around characters and maps. We recently celebrated Free Fire's sixth anniversary with many community events that our growing user base found highly engaging. There have been sustained healthy trends across our existing long-running franchises.

Speaker 3: and we will continue to build upon these successes. One of the arena's key competitive advantages is our ability to bring best-in-class game experiences to users across diverse markets. We have repeatedly demonstrated how we build deep, lasting engagement with our users, particularly through games involving complex genres and gameplay, even if they are using low-spec devices. And we are confident that we can further capitalize on these as we bring more new games to our key markets.

Speaker 3: Lastly, on our digital financial services business, C-Money's second-quarter performance was strong as we continued to expand our features and product offerings across the business. We are also increasingly seeing growing benefits from the synergies between the Shopee and the C-Money ecosystems.

Speaker 3: More importantly, our progress has enabled us to provide underserved segments of our market with better access to financial services and products.

Speaker 3: In the second quarter, gap revenue grew 53% year-on-year, driven by our credit business. Profitability in terms of adjusted EBITDA also continued to improve meaningfully on both a year-on-year and quarter-on-quarter basis to reach $137 million.

Speaker 3: Well, we maintained a stable and healthy risk profile with non-performing loans past due by more than 90 days remaining at around 2% of our total gross loans receivable.

Speaker 3: Over the past quarters, we continued to refine our risk policies with respect to customer credit and selection. Alternative funding from third parties for our credit business also grew as a portion of our loan book as we continued to diversify the sources of funding. We have seen progress made in further developing our digital bank offerings.

Speaker 3: and connected to BI fast, a real-time simplified bank transfer service.

Speaker 3: to enable easier and faster payments and transactions for our users. Users can now purchase digital products such as mobile data and pay utilities or credit card bills through our bank app.

Speaker 3: Meanwhile, we have further integrated the bank into our broader ecosystem through our direct debit feature where Shopee buyers can make payments on Shopee directly from their bank account with us. As a result of our user-friendly UI and UX design, the rating for our bank app reached over 4.8 stars on both Apple and Google App Stores.

Speaker 3: To conclude.

Speaker 3: We have made strong progress over the last four quarters in our efforts to enhance our efficiency, improve user experience, and solidify our market leadership as we run top growth with efficiency.

Speaker 3: prudence, and agility and continue to strengthen our fundamentals. We are better positioned than ever to capture the sustained opportunities across our businesses and markets. We believe our efforts will translate into even greater defensibility and profitability for our business as a whole over the long term. With that....

Speaker 3: I will invite Tony to discuss our financials. Thank you Forrest and thanks to everyone for joining the call. We have included detailed financial schedules together with the corresponding management analysis in today's press release. So I will focus my comments on the key metrics. You will see overall, total gap revenue increased 5% year on year to $3.1 billion.

Speaker 3: This was primarily driven by the improved monetization in our e-commerce and digital financial services businesses. Our group total adjusted EBITDA was $510 million compared to an adjusted EBITDA loss of $506 million in the second quarter of 2022.

Speaker 3: Within Gap Marketplace revenue, core Marketplace revenue mainly consisting of transaction-based fees and advertising revenues was $1.2 billion, up 38% year-on-year and 7% quarter-on-quarter. As a result of both increase in advertisement uptake by sellers on our platform, we have

Speaker 3: and commission rates. Value-added services revenue mainly consisting of revenues related to logistic services was $0.6 billion, up 11% year-on-year. On a quarter-on-quarter basis, value-added services revenue declined 7% as we began to reaccelerate growth during the quarter and increased.

Speaker 3: investment in shipping subsidies programs. E-commerce adjusted EBITDA was $150 million in the second quarter of 2023, compared to an adjusted EBITDA loss of $648 million in the second quarter of 2022. The improvement was driven by increased monetization and greater operating cost efficiencies.

Speaker 3: For our Asian markets, we achieved an adjusted beta of $204 million during the quarter, improving substantially from a loss of $316 million in the same period last year.

Speaker 3: In our other markets, the adjusted EBITDA loss was $54 million, narrowing meaningfully from last year. We lost this for $332 million.

Speaker 3: Contribution margin loss per order in Brazil improved by 83% year on year to reach 24 cents, reflecting better monetization and higher efficiency in our operations. Digital entertainment bookings were $423 million and gap revenue was $529 million. Adjusted EBITDA was $239 million.

Speaker 3: with quarter-on-quarter growth partly driven by the sequential increase in free-fire bookings, which has higher margins. Digital financial services kept revenue was up by 53% year-on-year to $428 million. Adjusted EBITDA was $137 million in the second quarter of 2023, compared to an adjusted EBITDA loss of $112 million in the second quarter of 2022. On credit, that's the end of the second quarter of 2023.

Speaker 3: The total loans receivable on our balance sheet was $2 billion, net of allowance for credit losses of $279 million. Non-performing loans, past due by more than 90 days as a percentage of our total gross loans receivable, remained stable at around 2%. We recognized a net non-operating income of $108 million in the second quarter of 2023, compared to a net non-operating loss of $33 million in the second quarter of 2022. The year-on-year increase was mainly due to higher interest income in the second quarter of 2023 and investment losses recognized in the second quarter of 2022. We had a net income tax expense of $62 million in the second quarter of 2023.

Speaker 1: let me turn the call to Ming Gu. Thank you, Forest and Tony. We are now ready to open the call to questions. As usual, our Group Chief Corporate Officer, Andrew Wang, will lead this part. Operator. Thank you. We will now begin the question and answer session. To ask a question, you may press star, then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then two.

Speaker 1: In the interest of time, we'll take the maximum of two questions at a time from each caller. If you wish to ask more questions, please request to join the question queue again after your first questions have been answered. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Pang Tze from Goldman Sachs. Please go ahead. Hi, good afternoon, and thank you very much for the opportunity. Two questions from me. Based on e-commerce, any comment on GMV and take rate in second quarter you can provide? Can we also have a better understanding of your e-commerce strategy right now? What exactly did you see that prompted you to be more aggressive on spending now? Any change in competitive landscape? Where do you spend right now as well? Is it on price subsidies, shipping subsidies, or brand campaign overall? Is there a lagging as well for this to show up in top line?

Speaker 1: and the objective to try to achieve any guidance you can provide. And importantly, what is the lie here? Will we potentially see you go back to cash burn mode or negative EBITDA on e-commerce again on good level? That's question number one. Question number two on gaming. We start to see a better trend on QAU and also clear ratio. It is safe to say that the worst is over for free fire and we were likely to see some positive momentum hit forward towards road again. Any one off due to seasonality, due to summer holiday? And can you also walk us through the improvement for your EBITDA margin here as well? Is this the new run rate we can expect? Thank you, Penn. That seemed to be a lot of questions. Thank you. So on the e-commerce side, regarding GMB and takeaways, we see also sequential growth in GMB. And we did mention that we saw double digit growth in order, it's number, quarter on quarter.

Speaker 1: So that's an initial positive sign in relation to our ramp up investments in Q2 already. Why we – in terms of tick rates, as some of you probably already observed, we continue to see uptake in terms of advertisement and also so much spending on our platform and therefore the core marketplace revenue continue to grow as a result. Of course there is some impact on the VAS revenue because of our ramp up investment in logistics spending which affects due to gap accounting and netting off affects VAS gap revenue. And I think that might be an ongoing trend. So if we want to highlight that in terms of tick rate, we would like to get people to look more at core marketplace tick rate because VAS tick rate will be affected by accounting treatments.

Speaker 2: of shipping subsidies we may provide from time to time. In terms of what's going on, why we are re-accelerating our growth and investment in growth during this period of time, I think if we look at the past quarters, we have become the first and only e-commerce platform in our region that has achieved profitability at scale. That shows the strengths of our operations as well as our ecosystem. I think that also looking at the financial position we have achieved and the resources we have. Overall, we think we are in a...

Speaker 2: a much stronger position and on a much stronger footing now to refocus on growth. I'd like to remind all that during the entire lifespan, we've been talking about the growth potential of our markets. Our markets remain important growth markets for e-commerce and the significant opportunities that we think ahead of us. That should never be lost regardless of shifts in focus. But the past few quarters efforts in focusing on cost efficiency and improvements on overall cost management of the organization, as well as we mentioned the continuing efforts to focus on cost leadership for our ecosystem as a whole has significant benefit to grow further more efficiently in this period of time. So I think this is one benefit we can leverage as we shift back to reinvestment into growth. The second thing is when we look at the macro environments in our ecosystem, we've seen resilience in the local economy and consumption.

Speaker 2: the only platform, other platforms, and also the profitable position we have already achieved. We're in a better than ever position to actually capture a larger slice of growth in the pie that we already see in the market as Horst previously shared.

Speaker 2: Just now we actually already started to see some progress and benefits from our focus on this content based e-commerce activity in our region. And we have attracted a significant number of top influencers and sellers to stream our platform as a result. Our Sharpie platform in Indonesia has already, we believe, become the largest live streaming platform in the country. So this has been a focused area that we are ramping up in that area.

Speaker 2: market conditions and also given the new opportunities that we see in the market that we have a significant advantage in capturing. We do believe that now is a good time to start to invest in growth.

Speaker 2: And in terms of the where the investment will be made, I think it probably is covered by my answer just now. And how it affects the top line and bottom line, I think it remains to be seen, the effect on the top line. Of course, we drive what expect and what hope to see more growth from the investment. And at the same time, in terms of value, it's actually a point while we do see more dollars in order to stick up the investment of our platform.

Speaker 2: The impact on the VAS from the free shipping program might have a accounting impact on the total revenue. So we remain the net effect we made to be seen. In terms of the bottom line also as shared by Forest earlier, it will have an impact on the bottom line for shoppy.

Speaker 2: and a group as a whole. But we think given our capabilities and ability also that we have proven to shift focus and to manage growth as well as profitability from here to period and time to time. We believe that we will be able to manage it in a very responsible, efficient and prudent manner.

Speaker 1: I have two questions as well. First of all, follow up on the gaming. Can you share with us what have you done that has been working on re-engaging the user? And do you expect this user and booking growth, you know, could sustain?

Speaker 1: How should we reconcile the use of metrics in the gap revenue and the EB-DOT trend into the second half? And then for the e-commerce, we also to follow up. Can management share with us what kind of results or achievements that you hope to obtain with the re-accelerations of the investment?

Speaker 1: What are the cushions level of the loss that you would wonder to maintain along with your investment step up? And there is that specific country that will account for higher proportions of the investment spend. Thank you. Thank you, Alicia. Regarding the game, I think all the efforts we've shared before in our earnings With our community.

Speaker 2: and also better user accessibility and user experience. So all these I think have been helping us building up to be in for our content and user engagement. As we explained before, I'm a gaming perspective. We focus on active user based first and before monetization, usually when you see positive.

Speaker 2: as well. So I think this is the trend has been playing out. And again, we hope that this is again a beginning of a long-term stabilisation trend for three fires that are largest games and they want a largest game in the world. But also on the other side, we remain cautious and want to continue to observe.

Speaker 2: in direction. Of course, from time to time, there could be differences due to changes in recognition periods, etc. from a county perspective. So, but on the whole, I think we generally expect that the big picture direction should be similar.

Speaker 2: In terms of the e-commerce, the KPIs, we look at, of course.

Speaker 2: Overall, in terms of the user engagement, active user base, and in particular, using engagement in areas, we are focused on such as live streaming, and as well as a sort of quote, categories we're focused on such as fashion, health and beauty, home and living, and these are high margin categories that have been traditionally our core focus areas. And of course, that hopefully translates into higher order number and GMB needs.

Speaker 4: The next question comes from Pius Chaudhary from HS.

Speaker 2: So let me cut you to answer the previous question. In terms of level of profit or loss, you know, we are waiting to sustain during these periods, I think that overall we want to remain as a self-sufficient, that self-sufficiency as a quote-a- quote has not been changed and as shared, I will see you just now. That's continued to be our mantra and also in terms of our cost efficiency improvement for the time. We think that these facts...

Speaker 2: competitive, important competitive growth. And in fact, the fact that we can become profitable so quickly while maintaining the size of our ecosystem and our market, strong market leadership and able to now also invest in growth while many of our peers still trying to manage their losses or are incurring very very significant losses.

Speaker 2: That shows that the resilience and the strength of our ecosystem will continue to be a competitive, important competitor for us. As we shared previously, we truly and strongly believe that in the longer run the competition on e-commerce.

Speaker 2: It doesn't matter which angle you cut it and where you come from, it's a very much a business that focuses on fundamentals. You need to serve your users as well at the lowest cost possible. These are things that improve the principles that we follow.

Speaker 2: There are many ways to engage our users. There might be new ways to engage with them that we will be able to leverage. There are many, many different seven points we can touch and also continue to improve. And there are also many cost points go continue to improve on. And these are the key competencies, I think, that brought us here to the current position of strong market leadership with the lowest cost to serve a platform that allows us to be both a market leader but also profitable and one and only.

Speaker 2: in Southeast Asia so far. I think we will not give up that, that's not the moment, and we'll continue to strengthen that. From period to period, we may make decisions and execute based on what we see is appropriate opportunities in a market and make investments, and those investments can be significant.

Speaker 2: But we will continue to focus on our execution efficiency. And also in the longer run, everything we're doing is continuing to strengthen our long-term profitability and market leadership. So those are the principles that we will always stick to in the long run.

Speaker 4: The next question comes from Next question comes from Puse Childry from HSBC. Please go ahead.

Speaker 5: Hi, greetings and thanks a lot for the opportunity. And two questions. Firstly on e-commerce.

Speaker 5: Within Shoppy Asia, can you talk a little bit about where you see better growth opportunities and where you will invest kind of significantly more? And what is the outlook for Shoppy Brazil? Can we expect more investments even in Shoppy rest of the other markets?

Speaker 5: an increasing losses there or would you aim to reach a bit dub-break even in rest of markets first?

Speaker 5: And secondly on gaming, can you give us some insights on the performance of Undon, post-it launch? Is it trending above or below your expectation? And any update on free fire game in India?

Speaker 2: Thank you for your interest of the shopping agent, the goal software, and to where we're seeing are also shared earlier in terms of all market conditions, the conducive and consumption resilience.

Speaker 2: At the same time, we see new opportunities related to in particular life streamings and video content based e-commerce that we are trying to capture. And outlook for Brazil remains strong. As we shared this and previous quarter, we continue to see Brazil as an important close market for us, no long run.

Speaker 2: and we will continue to invest in growth there. At the same time, we can do the focus on efficiency also growth. We see the quarter-quarter basis. We saw improvement in the Ipadal last-per-order profile as a result of our continuing improvement cost efficiency in particular in logistics.

Speaker 2: Now in Brazil, we do believe this is the remains a long-term growth opportunity for us. For the other markets, there are relatively small for us outside of Asia and Brazil. And we believe there are, at that point, the mostly contribution market positives.

Speaker 2: It doesn't really require too much investment. We'll continue to observe how the market provides down the road. And those have been launched and usually with a new launch again, we first focused on engaging with our user base and try to make sure we have a strong user base and good engagement level from these people.

Speaker 2: clear on free fire in India at this point. Thank you.

Speaker 4: The next question comes from Gyeong-Shao from Barclays. Please go ahead.

Speaker 4: Thank you very much for taking my questions. First, I want to clarify when you said all the growth double digit. I want to clarify, that's quarter of a quarter year over year. And if you can comment on all the growth I use seeing higher growth in Brazil via Asia. My question is about the take rate.

Speaker 4: I think you talked about the perhaps the higher shipping subsidies has met an impact on a take rate for this quarter. But over the last few years, it seems you have maintained a growth rate pretty much every single quarter. I will back up with Amelope calculation showing.

Speaker 4: that take rate sort of was down quarter to quarter should we expect to take right now is kind of becoming more volatile going forward how should we think about the the drivers the reasons behind the? the fluctuation in the take rate if they it's going to be one going forward. Thank you

Speaker 2: Thank you. In terms of the order growth, the position order growth we're talking about for and for and for and Brazil order growth overall is aligned to with the group level. In terms of a take rate, as I mentioned, with our core marketplace take rate, continue to increase. However, if you look at the overall take rate, it's

Speaker 2: as revenue is that primary related to logistics. So at the end of the app accounting rules, we have to net off the shipping subsidies from logistics revenue under the ads at an order level. So that will affect the overall take rates as a result, as well as the revenue growth. So this might compound some of the

Speaker 2: trends you will be seeing down the road. But I think the general trend should still be that we believe at the core marketplace level, we believe our sellers will continue to engage with us more and commissions also we do see some increase in commissions from time to time, but it might not be increasing so rapidly.

Speaker 6: What was behind these numbers? Secondly, if the focus of the management is shifting towards growth again, are we going to start seeing quarterly gene we've been disclosed as well? Thank you. Okay, look at the core marketplace where the new core-on-core actually is going to go straight, that's accelerated, it needs to 2 to 7.4%, compared to about 2% in 2.1, 2.2.

Speaker 2: So I think it's still, it's like an increase in the growth of the two-three at the core margin, please level. And in terms of a GME Discoosure, I think we'll continue to make a decision about the quarter-round quarter we may provide for them spot distortion from time to time where we see relevant.

Speaker 4: comes from Thomas Chong from Jeffries. Please go ahead.

Speaker 6: Hi, good evening. Thanks, management, for taking my questions. I have a question relating to the theme text side. Can you comment about how we should think about the strategies going forward in terms of the business model as well as our digital bank initiative and how we should...

Speaker 2: In terms of the FING tech business, we're pleased to see that the continue to produce a strong cash flow and also a very strong young year growth with a stable risk fall fall. And as we explained before, overall we think of this.

Speaker 2: service to our users. But it's still a very early stage for us at a fintech level. But it's already a very good business, so we'll produce a stable good cash flow. So we're happy to see how this will focus more on the health of the growth and the synergies to make sure we maximize efficiency of the business at a stage. This concludes our question and answer session. I would like to turn the conference.

Speaker 4: Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.