Q4 2023 111 Inc Earnings Call
Operator: Hello everyone, and thank you for joining 111's conference call today. On the call today from the company are Dr. Gang Yu, Co-Founder and Executive Chairman, Mr. Junling Liu, Co-Founder, Chairman, and CEO, and Mr. Luke Chen, CFO of 111's major subsidiary, and Mr. Haihui Wang, COO.
Hello, everyone and thank you for joining 111 conference call today.
Speaker Change: On the call today from the company adopt a gang Yu co founder and executive Chairman, Mr. Jin Ling, Li co founder Chairman and CEO and Mr. Luke Chen CFO of one on ones major subsidiary and Mr. Hobby, One cri.
Operator: As a reminder, today's conference call is being broadcast live via webcast. The company's earnings press release was distributed earlier today, and together with the earnings presentation, it is available on the company's IR website. Before the conference call gets started, let me remind you that this call may contain forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known and unknown risks, uncertainties, and other factors, all of which could cause actual results to differ materially. For more information about these risks, please refer to the company's filings with the SEC. 111 does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or otherwise, except as required under applicable law.
Speaker Change: As a reminder, today's conference call is being broadcast live via webcast.
Speaker Change: The company's earnings press release was distributed earlier today and together with the earnings presentation are available on the company's IR website.
Speaker Change: Before the conference call will get started let me remind you that this call may contain forward looking statements made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Speaker Change: Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known and unknown risks uncertainties and other factors all of which would cause actual results to differ materially.
For more information about these risks please refer to the company's filings with the S E C.
Speaker Change: 111 does not undertake any obligation to update any forward looking statements as a result of information future events or otherwise, except as required under applicable law.
Operator: Please note that all numbers are in RMB and all comparisons refer to year-over-year comparisons unless otherwise stated. Please also refer to the earnings press release for detailed information on the comparative financial performance on a year-over-year basis. With that, I'll turn the call over to 111's CEO, Mr. Junling Liu. Good morning. Good evening, everyone.
Speaker Change: Please note that all numbers are in RMB, and all comparisons refer to year over year comparisons unless otherwise stated.
Please also refer to the earnings press release for detailed information of the comparative financial performance on a year over year basis.
Speaker Change: With that I'll turn the call over to 111 CEO, Mr. John Laing Lu. Please go ahead.
Speaker Change: Good morning, good evening everyone.
Junling Liu: Thank you for joining our fourth quarter 2023 earnings call. The information we'll be discussing is also available in the slides that were posted earlier today on the company's website. I encourage you to download the presentation as well as the earnings report from our Investor Relations website at ir.111.com.cn. As we gather here today, I'm reminded of the journey we've been on over the past year.
Speaker Change: Thank you for joining our call it 10 to 23 earnings call.
Speaker Change: Information.
Speaker Change: <unk> is also available in the slides that were posted earlier today on the company's website.
Speaker Change: I encourage you to download the presentation.
Speaker Change: Well as the earnings reports from all investors, our Investor Relations website.
Speaker Change: I asked one of my one dot com CN.
Speaker Change: As we get that he had to say I'm reminded of the journey we've been box.
Speaker Change: Over the past year.
Junling Liu: A journey characterized by unprecedented calendars yet remarkable resilience and innovation. In the ever-evolving landscape of health care, our team at 111 has not only navigated through those turbulent waters but has also set new benchmarks, proving that strategic agility and unwavering commitment are the bedrocks of our success. Today, I'm here to share with you the milestones we've achieved, the challenges we've overcome, and the exciting path that lies ahead for us. Our discussion today will include a comprehensive overview of our operational and strategic framework. Paint a picture of our company's enduring strength and our vision for a future where healthcare is transformed by technology and innovation. Then, our Chief Financial Officer, Mr. Luke Chen, will present a thorough analysis of our financial performance.
Speaker Change: Hi, Jenny characterized by unprecedented challenges yet remarkable resilience and innovation.
Speaker Change: In the ever evolving landscape of health care.
Speaker Change: Our team has.
Speaker Change: It's not only navigating through those turbulent waters.
Speaker Change: As also set new benchmarks.
Speaker Change: Strategic agility and unwavering commitment.
Well a lot of success.
Speaker Change: Today I'm here to share with you the milestones we've achieved.
Speaker Change: The challenges we've overcome them.
Speaker Change: And the exciting part that lies ahead for us.
Speaker Change: Our discussion today will encompass a comprehensive overview.
Speaker Change: Our operational and strategic frameworks.
Speaker Change: A picture of all of that is enduring strength.
Speaker Change: For a future where health care is transformed by technology and innovation.
Speaker Change: Then I'll Chief Financial Officer, Mr. Luke Chen we present, a thorough analysis of our financial performance.
Junling Liu: Now, let me start with the medical situation in our industry. The year 2003 marks a significant turning point for China's economy and the healthcare industry, as we emerged from the shadows of the pandemic.
Speaker Change: Now, let me start macro situation in our industry.
Speaker Change: But yeah 2003, Mount Milligan, turning point, the Chinese economy, and the health care industry.
Speaker Change: As we emerged from the Shadows.
Junling Liu: The industry faced a new challenge: adapting to post-pandemic normalization and responding to the accelerating shift toward digital health solutions. These dynamics presented both opportunities and obstacles, reshaping the competitive landscape and accustomed expectations. The anti-corruption crusade that swept through the hospital system in 2023 is poised to significantly reshape the landscape of the healthcare industry. This stringent campaign saw some hospital presidents being apprehended for engaging in bribery, casting a long shadow over the traditional methods of business conduct within the sector.
Speaker Change: The industry faces a dual challenge.
Speaker Change: Adapting to the post pandemic normalization and responding to the accelerating shift towards digital health solutions.
Speaker Change: These dynamics presented both opportunities and obstacles.
Speaker Change: So the competitive landscape and customer expectations.
Speaker Change: The anticorruption Crusade.
Speaker Change: The hospital system in 'twenty, two 'twenty three is poised to significantly reshape the landscape of the health care industry.
Speaker Change: This will strengthen the campaign saw some hospital presidents being apprehended for engaging in broad rate husky, the long shadow over the traditional methods of business come back.
Speaker Change: Uh huh.
Junling Liu: As a consequence, pharmaceutical companies are now grappling with new challenges in getting their medications adopted by hospitals, marking a pivotal shift away from the norm of sales strategies. This heightened scrutiny on ethical practices is not just a temporary hurdle but a transformative force, heralding a new era of transparency and integrity in healthcare conduct. This evolution in the healthcare ecosystem is set to redirect the flow of drugs, moving some of them out of hospitals and into the more accessible and diverse realm of retail pharmacy. Such a condition underscores the paradigm shift.
Speaker Change: As a consequence.
Speaker Change: Pharmaceutical companies are now grappling with new challenges in getting their medications adopted by hospitals and mobs pivotal shift.
Speaker Change: <unk> from the loss of sales strategies.
Speaker Change: This heightened scrutiny on ethical practices is not just a temporary slowdown.
Speaker Change: But I kind of almost a false.
Speaker Change: Hello.
Speaker Change: Era of transparency and integrity and health care transactions.
Speaker Change: This evolution in the health care ecosystem is set to rebound slow abroad.
Speaker Change: Moving out.
Speaker Change: Out of the hospital and into the more accessible and diverse array of retail pharmacies.
Speaker Change: Patrick <unk> underscores the paradigm is shifting.
Junling Liu: Towards a more open and competitive market, where efficiency and value dictate the dynamics of product distribution and sales, rather than traditional practices. Our company, strategically positioned at the nexus of this transformation, embraces the changing tides with a business model that empowers farmers. We're at the forefront of championing a competitive landscape where success is predicated on operational excellence, customer satisfaction, and the delivery of genuine value. By leveraging cutting-edge technology and innovative service models, we aim to enhance the capabilities of pharmacies, enabling them to thrive in this new environment of increased accountability and competition. In this transformative period, our company stands ready to support pharmacies in navigating the complexities of this new landscape, providing them with the technology, insights, and networks needed to excel.
Speaker Change: The walls and the competitive market right. So you can see the value of the big tasty dynamics of distribution and sales rather than the traditional practices.
Speaker Change: Our company strategically positioned at the Nexus of these transformation embraces tied with a business model that empowers pharmacists.
Speaker Change: We're at the forefront championing a competitive landscape where success is predicted.
Speaker Change: Is that predicated on operational excellence customer satisfaction and the delivery of generally.
Speaker Change: By leveraging our cutting edge technology and innovative service models, we aim to enhance the capabilities of the pharmacy.
Speaker Change: Enabling them to thrive in this new environment of increased accountability and the competition.
Speaker Change: It is a transformative period, our company stands ready to support pharmacies in navigating the complexities of this new landscape.
Speaker Change: Adding them technology.
Speaker Change: Right.
Speaker Change: So X L.
Junling Liu: We welcome the dawn of a new era in healthcare, one characterized by fairness, efficiency, and innovation, and we remain dedicated to playing a pivotal role in shaping its emergence. Through collaboration, innovation, and a steadfast commitment to ethical business practices, we look forward to contributing to a healthier, more transparent healthcare system for all. Another significant phenomenon to note is that the healthcare industry, traditionally seen as conservative and slow-moving, is now at the forefront of technological innovation. This shift is driven by several factors.
Speaker Change: We welcome the dawn of a new era in health care, one characterized by Spanish efficiency and innovation.
Speaker Change: And the women and we remain dedicated to playing a pivotal role in shaping its emergence.
Through collaboration innovation, and a steadfast commitment to ethical business practices, we look forward to contributing to our healthy.
Speaker Change: All transparent to the health care system for all.
Speaker Change: Yes.
Speaker Change: But another phenomenon.
Speaker Change: The health care industry traditionally seen as conservative and slow moving is now at the forefront of technological innovation.
Speaker Change: This shift is driven by several factors.
Junling Liu: An amazing population, rising health care costs, and increasing consumer demand for personalized and accessible care. In response to these trends, 111 has strategically positioned itself as a leader in the digital healthcare revolution. Our approach has been focused on enhancing our core offerings through digitization and operational efficiency. The year 2023 emerged as a beacon of hope, marked by numerous promising developments that signal positive developments I just talked about.
Speaker Change: Amazing population.
Speaker Change: Rising health care costs.
Speaker Change: And increasing consumer demand for personalized and accessible pet.
Speaker Change: In response to these trends by my mind has strategically positioned itself as a leader in digital health care evolution.
Speaker Change: Our approach has been focused on enhancing our offerings through digitization and operational efficiency.
Speaker Change: But yet you're 53 months.
Speaker Change: Beacon of hope marked by numerous promising developments that signal positive development I just talked about.
Speaker Change: Nonetheless.
Junling Liu: It unfolded to reveal itself as one of the most challenging periods in recent history. The initial optimism surrounding a post-pandemic rebound proved to be short-lived. That was the reality of the economic landscape setting, characterized by various formidable challenges that tested the resilience and adaptability of business across the board. This period saw a notable downturn in pharmacy-famed store sales.
Speaker Change: It also leads to reveal itself as one of the most challenging periods in our recent history.
Speaker Change: The initial optimism surrounding the post pandemic rebounds to sea Salt Lewis.
The reality of the economic landscape, but landscape.
Speaker Change: Characterized by very formidable challenges that tested the resilience and adaptability of business across the board.
Speaker Change: Okay.
Speaker Change: This period, so it's multiple downtown pharmacy same store sales critical indicator of consumer engagement and the market health, which declined as customers pipes valves and response to the uncertain economic climate.
Junling Liu: Critical indicator of consumer engagement and market health, which declines as customers tighten their belts in response to the uncertain economic climate. Furthermore, the sector has been engulfed in fierce pricing competition, with businesses aggressively lowering prices in a bid to capture market share, thereby escalating the challenges associated with maintaining profitability and growth. This period underscored the importance of agility, resilience, and strategic foresight in navigating the complexities of the contemporary business environment. 111's response to these challenges illuminates a path forward, highlighting the potential for reinvention and growth, even in the face of daunting obstacles. As the company continues to adapt and evolve, it remains steadfast in its commitment to delivering value to its customers, stakeholders, and the broader community, reinforcing its role as a pivotal player in the healthcare industry. In the fourth quarter of 2022, we experienced a peak in the pandemic.
Speaker Change: Well the mall.
Speaker Change: Oh, it was engulfed in fierce pricing competition with businesses aggressively lowering prices to capture market share, thereby escalating challenges associated with maintaining the profitability and growth.
Speaker Change: This period on the smaller pops of agility resilience and strategic full size in navigating the complexities of the temporary business of the contemporary business environment.
Speaker Change: Well no one's response to these challenges illuminates our path forward highlighting the potential of reinvention and growth even in the face of dumping obstacles.
Speaker Change: As the company continues to adapt and evolve it remains steadfast in its commitment to delivering value to its customers stakeholders and the broader community reinforcing its role as a pivotal player in health care industry.
Speaker Change: In the fourth quarter of.
Speaker Change: 2022 we experienced peak overdependent all found him a pharmaceutical sales.
Junling Liu: Our pharmaceutical sales significantly surged, reaching unprecedented highs due to increased demand for health-related products and medication. This surge set a challenging high baseline for the subsequent year. In Q4 2023, while our revenue witnessed a slight year-over-year reduction of 1%, closing at 4.1 billion RMB, gross second profits had a 15.5% decrease compared to the same period in the previous year.
Speaker Change: Lisa.
Speaker Change: Reaching unprecedented highs due to increased demand for health related products and medications.
Speaker Change: Mr Sun.
Speaker Change: The challenging high baseline for the subsequent yeah.
Speaker Change: In Q4, 2023, while our revenue witness a slight it will be a reduction of 1% closing full.
Speaker Change: <unk> 1 billion RMB.
Speaker Change: Gross profit had a 16, 5% decrease compared to the same periods in the previous yet.
Junling Liu: Our total operating expenses witnessed an increase to 420.8 million RMB from 361.9 million RMB in the corresponding quarter of the previous year. This escalation of expenses was primarily due to decisive measures undertaken to terminate the ESOP granted for future years and to implement further reductions in our workforce. These steps were pivotal in realigning our operational strategy and ensuring long-term sustainability. Nevertheless, despite these significant actions, our dedication to improving operational efficiency remains steadfast by meticulously managing our operational costs and continuously seeking efficiency improvement. We were able to offset some of the financial impacts of these strategic decisions. A critical aspect of our financial management strategy involves excluding shared basic compensation expenses, which amounted to 151.4 million RMB for the quarter, compared to 68.7 million RMB for the same quarter of the previous year.
Speaker Change: Our total operating expenses witnessed an increase to 428 million RMB from 361 9 million RMB in the corresponding quarter of the previous year.
Speaker Change: This escalation in expenses was primarily due to a decisive measures undertaken to terminate the aesop renting for future yes.
Speaker Change: I meant to further reductions in our workforce.
Speaker Change: These steps, what pivotal and realigning our operational strategy and ensuring long term sustainability.
Speaker Change: Despite this leveraging.
Speaker Change: Our dedication to improving operational efficiency remains steadfast.
Speaker Change: By meticulously managing our operational cost and are continuously seeking efficiency improvements.
Speaker Change: We're able to offset some of the financial impact of these strategic disease.
A critical aspect of our financial management strategy.
Speaker Change: Excluding share based compensation expenses, which amounted to <unk> 50.
Speaker Change: $51 4 million RMB for the quarter compared to $68 7 million RMB for the same quarter of the previous year.
Junling Liu: After adjusting for these expenses, our total operating expenses as a percentage of net revenues demonstrated a notable improvement, decreasing to 6.6 percent from 7.1 percent in the same quarter of the previous year. It is also great to note that our operational efficiency has shown continuous improvement. Specifically, we've managed to lower fulfillment expenses to 2.5% of net revenues this quarter, down from 2.9% in the same quarter last year. Reflecting a decrease in fulfillment costs by 14.7%, sales and marketing expenses, after just for share-based compensation, have decreased as a percentage of net revenues to 2.6% this quarter from 2.7% in the previous year. Our general administrative expenses remained stable at 0.9% of net revenues, identical to the previous year.
Speaker Change: After adjusting for these expenses our total operating expenses as a percentage of net revenue was demonstrated in multiple improvement decreasing to six 6% from seven 1% in the same quarter of the previous year.
Speaker Change: It is also great to note that our operational efficiency has shown continuous improvement.
Speaker Change: Specifically, we've managed to lower the fulfillment expenses, so two 5% of net revenues this quarter.
Speaker Change: From two 9% in the same quarter last year.
Reflecting a decrease in fulfillment costs by 14, 7%.
Speaker Change: Sales and marketing expenses after adjusting.
Speaker Change: Share based compensation.
Speaker Change: A decrease as a percentage of net revenues. So two 6% in this quarter from two 7% in the previous in the previous year.
Our general and admin.
Speaker Change: Administrative expenses have remained stable at 0.9% of net revenues identical to the previous year.
Junling Liu: Technology expenses, after excluding share-based compensation, have also maintained their proportion of net revenues at 0.6%, the same as last year. Looking back at the entire 2023 annual performance, as an impressive demonstration of resilience and strategic acumen, 111 has posted a robust increase in net revenues, reaching 14.9 billion RMB and marking a commendable year-over-year growth of 10.6%. This growth underscores the company's successful navigation through market dynamics and its ability to capture a larger share of the digital health market. Equally noteworthy is the modest yet positive uptick in gross economic profit, which climbed by 1.1% year over year to 849 million RMB. On the financial stewardship front, 111 has shown remarkable prudence and efficiency in managing its operating expenses, which totaled 1.2 billion RMB, a continuous decrease from 1.21 billion RMB in the previous year.
Speaker Change: Knowledge expenses after excluding share based compensation I've also maintained their propulsion up net revenues at six zero plus 6% the same as last year.
Speaker Change: Looking back at the entire PC companies.
Speaker Change: And performance.
Speaker Change: It's an impressive demonstration of the resilience and the strategic acumen. One woman has posted a robust increase in net revenues, reaching 14 9 billion RMB and marking a commendable year over year growth of 10, 6%.
Speaker Change: This growth underscores the company's successful navigation sort of market dynamics and its ability to capture a larger share of the digital health side.
Speaker Change: Equally noteworthy is the modest yet positive uptick in the gross profit, which climbed by one 1% a year over year to 849 million RMB.
Speaker Change: On the financial stewardship.
Speaker Change: While my mind has shown remarkable prudence and efficiency and managing operating expenses, which totaled.
Speaker Change: One 2 billion RMB, a continuous decrease from 121 billion RMB in the previous year when adjusting for share based compensation expenses. The total operating expenses as a percentage of net revenues, notably decreased to six 5% from seven 8% last year.
Junling Liu: When adjusting for share-based compensation expenses, the total operating expenses as a percentage of net revenues notably decreased to 6.5% this year from 7.8% last year, signaling a leaner and more streamlined operational structure. Furthermore, the company has successfully reduced its losses from operations, both on the gap and non-gap basis, demonstrating enhanced operational efficiency and types of financial control. The gap loss from operations decreased to 2.3 percent of net revenues, down from 2.7 percent last year, while the non-gap loss from operations notably decreased to 0.8 percent from 1.6 percent last year.
Speaker Change: Signaling a leaner and more streamlined operational structure.
Furthermore, the company has successfully reduced its loss from operations, both on the GAAP and non-GAAP basis, demonstrating enhanced operational efficiency and types of financial control that.
GAAP loss from operations decreased to two 3% of net revenues down from two 7% last year, while the non-GAAP loss from operations multiple a decrease to 0.8% from one 6% last year.
Junling Liu: These improvements, coupled with a healthy liquidity position, positions 111 on a solid foundation for future growth and innovation. Please allow me a moment to underscore the progress we've achieved in our operations during the fourth quarter and entire 2023. This period has been characterized by our continued focus on advancing digitization and improving our management processes, laying the groundwork for even more substantial returns on this strategic investment in the times ahead. At the heart of our business expansion is our commitment to operational efficiency, achieved through the strategic integration of technology across our supply chain, demand fulfillment, and overall operations. Our progress is fundamentally attributed to the efficient application of technological innovations that refine our ability to anticipate and fulfill customer demands with unmatched speed and accuracy.
Speaker Change: These improvements coupled with a healthy liquidity position positions.
Speaker Change: $673 7 million RMB in cash restricted cash and short term investments as of December 31st in the country three position by my one on a solid foundation for future growth and innovation.
Speaker Change: Please allow me in Poland to underscore the progress we've achieved in our operations during the fourth quarter and in tie up 10 to 23.
Speaker Change: This period has been characterized by our continued focus on advancing digitization unimproved and power management processes laying the ground for you.
Speaker Change: Even more substantial lead times on this strategic investment in the times ahead.
Speaker Change: The hotspot business expansion is our commitment to operational efficiency.
Speaker Change: Cheating through the strategic integration of technology across our supply chain demand fulfillment and overall operations.
Speaker Change: Our progress is.
Speaker Change: He is fundamentally attributed to the efficient manifestation of technology innovations that refine our ability to anticipate and fulfill customer demand with unmatched speed and accuracy.
Junling Liu: This technological synergy enhances our operational capabilities, allowing us to execute with greater precision and adaptability. The result is a highly efficient operational model that drives continuous growth by optimizing every facet of our business, from supply to demand, through the intelligent use of technology. For example, our smart sales effort, driven by the Eagle Eye analytics tool, streamlines customer interactions and marketing strategies to boost efficiency dramatically. Currently, we optimize pharmacy operations by segmenting customers effectively.
Speaker Change: This technological synergy enhances our operational capabilities, allowing us to execute with greater precision and adaptability.
Speaker Change: The result is a highly efficient operational model that drives continuous growth by uptime by optimizing every facet of our business from supply to demand through the intelligent use of the technology.
Speaker Change: For example, our smart sales asset driven by the Eagle eye analytics tool streamlined customer interactions and our marketing strategies to boost efficiency dramatically.
Speaker Change: Currently we often is the optimized pharmacy operations by segmenting customers effectively provide.
Junling Liu: Providing targeted service strategies, implementing an efficient smart sourcing system, introducing cloud prescription services, utilizing the pharmacy operation analysis board, and employing a pharmacy CRM system, among other attendees. This comprehensive strategy not only identifies pharmacy needs with unparalleled precision but also furnishes them with the necessary tools to excel in a competitive market efficiently. This cohesive and efficiency-oriented approach ensures that every facet of our operation is streamlined for peak performance, embodying our commitment to enhancing operational efficiency across the board. A pivotal extension of this strategy is our commitment to offering a comprehensive selection, ensuring an expansive assortment of medication and medical equipment. This not only enhances our operational efficiency but also caters to a wider range of customer needs and preferences, thereby enriching the diversity of our product portfolio.
Speaker Change: Providing poverty and service strategies implementing an efficient smart sourcing system, introducing cloud prescription services utilizing the pharmacy operation analysis support.
Speaker Change: And employing a pharmacy CRM system among.
Speaker Change: Among other adventures this.
Speaker Change: This comprehensive strategy not only occupies pharmacy needs with unparalleled precision, but also furnishes them with the necessary tools to excel in a competitive market efficiency.
Speaker Change: This cohesive and efficiency oriented approach ensures that every facet of our operation a streamlined for peak performance embodying our commitment to enhancing operational efficiency across the board.
Speaker Change: I'll take it as an extension of this strategy is our commitment to offering a comprehensive selection.
Speaker Change: Following an expansive assortment of medications and medical equipment.
Speaker Change: This not only amplifies our operational efficiency, but also cases to a wider range of customer needs and preferences, thereby reaching a diversity of our product offerings.
Junling Liu: This holistic approach underlines our dedication to not just strength-learning operations but also to providing an extensive variety of products, further positioning us as a leader in operational excellence and market breadth. Our JVP merchant business is at the center of the effort to provide the best selection for our customers. To ensure these partners can have a great experience on our platform, our teams work tirelessly to offer a range of services to our GDP partners, including automating transactional workflows, cutting down the stock to shelf time frame from hours to mere minutes. And, similarly, optimizing the replenishment process for peak efficiency. We also offer critical tools, such as immediate sales visualization, allowing merchants to efficiently perform data queries through mobile devices thousands of times a day.
Speaker Change: This holistic approach underlines our dedication so not just the shrimp Lonnie operations, but also providing an extensive.
Speaker Change: Further positioning us as a leader in operational excellence and market breadth.
Speaker Change: Our JBT much of your business is at the center of the effort of providing the best selection for our customers.
Speaker Change: To ensure these partners kind of have a great experience on our platform. Our teams working pilots pilots to offer a range of services cloud GBP, Pos, including ultimate any transactional workflows cutting down the stock stocks have shelf on frame from hours to mere minutes.
Speaker Change: And similarly, optimizing the replenishment process for peak efficiency.
Speaker Change: We also offer a critical tools such as immediate sales visualization, allowing merchants so efficiently perform they took place through mobile devices thousands of times a day in this.
Junling Liu: This capability empowers them to execute data-driven decisions swiftly and accurately. Another key highlight of our achievements was the significant optimization of our supply chain and the innovative cost-saving measures implemented in our warehouse operations, through strategic redesigns and the integration of cutting-edge technology. We were able to streamline our storage and distribution processes, resulting in multiple reductions in operational costs.
Speaker Change: This capability in Palestine.
Speaker Change: Execute data driven decisions swiftly and accurately.
Speaker Change: Yeah.
Speaker Change: Another key highlight of our achievements was the significant optimization of our supply chain and the innovative cost saving measures implemented in our warehouse operations.
Through a strategic redesign and the integration of cutting edge technologies, we were able to streamline all storage and distribution processes, resulting in multiple reductions in operational costs.
Junling Liu: The optimization not only improved our logistical efficiency but also enhanced our overall supply chain resilience, ensuring faster and more reliable delivery of goods to our customers. These investments reflect our commitment to operational excellence and our ability to adapt and innovate in response to dynamic market demands. Strengthening our sales efficiency was a major focus in 2023, leading to significantly higher productivity per unit output.
Speaker Change: The optimization not only improved our logistical efficiency, but also enhance the overall supply chain resilience, ensuring faster and more reliable delivery of huge swaths of customers.
Speaker Change: These investments reflect our commitment to operational excellence and our ability to adapt and innovate in response to dynamic market demand.
Speaker Change: Strengthening our sales efficiency was a major focus in 2023.
Speaker Change: Leading to significantly higher productivity per unit output.
Junling Liu: By refining our sales strategies and leveraging advanced analytics, we managed to optimize our sales force performance and improve our market penetration. This achievement is indicative of our strategic approach to sales management and our ability to effectively harness data and technology to drive growth and maximize returns on investment. The pivotal element of our strategy this year was the upgrade of our supply offer, marked by a substantial increase in the absolute value of our product label brand.
Speaker Change: By refining our sales strategies and leveraging advanced analytics, the managed to optimize our sales force is performance and improve our market penetration.
Speaker Change: This achievement is indicative of our strategic approach.
Speaker Change: So sales management and our ability to effectively harness data.
Speaker Change: Technology to drive growth and maximize returns on investments.
Speaker Change: Our pivotal elements of our strategy. This year, what's the upgrade allows flight offerings marks to by a substantial increase in the absolute value of our private label brands.
Junling Liu: This development not only diversified our product portfolio but also enhanced our brand equity and customer trust. By focusing on quality and innovation, we have successfully positioned our own brands as leaders in their respective categories, contributing to our overall market strength and sustainability. Reflecting on the entirety of 2023, it's evident that the year was rich in acknowledgement and accolades for our efforts and achievements.
Speaker Change: This development not only diversified our product portfolio, but also enhanced our brand equity and customer trust.
By focusing on quality and innovation, we have successfully positioned.
Speaker Change: Our own brands as leaders in their respective categories contributing to overall market strength and the sustainability.
Speaker Change: Reflecting on the entirety of the 2023.
Speaker Change: As evidence that the yeah, the switch launch in acknowledgement and accolades for our efforts and achievements.
Junling Liu: One of the accomplishments this year was our intensified focus on technological innovation, which led to the addition of four new patents to our portfolio. This investment in technology underscores our dedication to staying at the forefront of industry advancements and maintaining a competitive edge by pioneering noble solutions and securing intellectual property rights. We're not only enhancing our product offerings but also contributing to the broader technological landscape, setting new standards for innovation and excellence. Following an array of concerted efforts by 111, the company has achieved significant milestones, marking its prominence and innovation within the e-commerce and internet service sectors. These endeavors have not only exemplified 111's commitment to excellence, but Bye also participated in the attainment of two prestigious recognitions in Q4 2023.
Speaker Change: One of the accomplishments this year wasn't our intensified focus on technological innovation, which led to the addition of four new patents to our portfolio.
Speaker Change: This investment in technology underscores our dedication to staying at the forefront of industry attachments and are maintaining our competitive edge.
Speaker Change: By pioneering mobile solutions and are securing intellectual property rights.
Speaker Change: We're not only enhancing our product offerings, but also contributing to the border technological landscape setting new standards for innovation and excellence.
Falling on the rate.
Speaker Change: Efforts by my model. The company has achieved significant milestones, marking its prominence and innovation within the E Commerce and Internet services sectors.
Speaker Change: These endeavors have not only exemplified by months commitment to excellence.
Speaker Change: But.
Speaker Change: I'm also automate it in the attendance of two prestigious recognitions in Q4 2023.
Junling Liu: Firstly, 111 has been honored as the 2023 Shanghai E-commerce Demonstration Enterprise, a testament to its leading role in advancing the e-commerce landscape.
Speaker Change: Firstly.
Speaker Change: While no one has been on it as a 2023, Shanghai e-commerce demonstrations and surprised.
Speaker Change: A testament to its leading role in advancing the e-commerce landscape.
Speaker Change: Okay.
Speaker Change: Excuse me.
Speaker Change: Okay.
Junling Liu: Demonstrating exemplary practices. I'm driving beautiful e-commerce innovation. Thank you. Good job.
Speaker Change: Demonstrating the exemplary prep the exemplary practices.
Speaker Change: I'm driving E Commerce innovation.
Speaker Change: Okay.
Speaker Change: And Shanghai.
Speaker Change: This accolade reflect one more month successful integration of technology.
Junling Liu: This accolade reflects Taiwan's successful integration of technology and Commos, setting benchmarks for industry peers. Secondly, the company has been recognized as a Shanghai key productive internet service platform, highlighting its significant contributions to the internet services domain. This designation underscores for a moment the impact on enhancing the digital infrastructure and services in one of Shanghai's most dynamic and technologically advanced districts. Together, these recommendations underscore 111's influential position in shaping the future of digital commerce and Internet service, solidifying its status as a pioneer in the industry. A significant milestone of the year was the listing on the Shanghai Data Exchange. With over 720,000 product master data and 1.2 million enterprise master data entries covering 99.6% of the pharmaceutical market,
Speaker Change: I am almost setting benchmarks for industry peers.
Speaker Change: Secondly, the company has been recognized as a Shanghai key productive Internet service platform highlights include significant contributions to the Internet and services demand.
Speaker Change: This designation underscores promo months impact.
Speaker Change: The digital infrastructure and the services and one of Shanghai is the most dynamic and technologically advanced history.
Speaker Change: Together these recommendations on the skull Beaumont months influential position in shaping the future of digital Commerce and Internet services.
Speaker Change: Solidifying its status as a pioneer in our industry.
Speaker Change: A significant milestone for yeah, what's the listing in Shanghai data exchange with over 720000 products most of the data and the $1 2 million enterprise Master data increased covering 99, 6%.
Speaker Change: Pharmaceutical market.
Junling Liu: 111, Inc.'s Information Brain Series, listed on the Shanghai Data Exchange, epitomizes the company's significant contributions and the leading edge in digitizing the pharmaceutical industry. This remarkable achievement not only showcases 111's innovative capabilities and strategic foresight but also solidifies its pivotal role in advancing the digital transformation of healthcare, furthering its commitment to enhancing industry efficiency. Receiving national recognition from MOFCON as a demonstration e-commerce enterprise and being named a Shanghai e-commerce demonstration enterprise among our most prestigious accomplishments in 2023. These owners are testaments to our innovative business practices, our leadership in digital commerce, and our contribution to the development of the e-commerce industry. They underscore our commitment to excellence and our role as a pioneer in the digital transformation of commerce. As we look forward to our future growth initiatives, it is clear that our path is paved with strategic investments in key areas that will propel our company to new heights. Firstly, focusing on operational efficiency is fundamental to our program.
Speaker Change: One inks information brain theory is listed on the Shanghai data exchange.
Speaker Change: Epitomised as to the company's significant contributions and the leading edge and digitizing the pharmaceutical industry.
Speaker Change: This remarkable achievement not only showcases this by months innovative capabilities and our strategic foresight, but also solidifies. These pivotal role in advancing the digital transformation of health care furthering its commitment to enhancing industry efficiency.
Speaker Change: Receiving national explanation from MOFCOM as a demonstration e-commerce enterprise and being named a Shanghai E Commerce demonstration and surprise among our most prestigious accomplishments in 2023.
These honors are a testament to our innovative business practices, our leadership in digital commerce, and our contribution to the development of the E Commerce industry.
Speaker Change: They underscore our commitment to excellence in our role as a pioneer in the digital transformation of commerce.
Speaker Change: As we look forward to our future growth initiatives. It is clear that our path is paved with strategic investments in key areas that will propel our company to new Heights.
Speaker Change: Firstly <unk>.
Speaker Change: Casino and operational efficiency is fundamental cloud approach less.
Junling Liu: Recognizing efficiency as a core competitive advantage, we are dedicating resources towards enhancing our operational frameworks and processes. This involves the best in advanced technologies and methodologies to streamline our operations, reduce waste, and improve productivity.
Speaker Change: <unk> efficiency as a core competitive advantage, we are dedicating resources towards enhancing our operation operational frameworks and processes.
Speaker Change: This involves best.
Speaker Change: And advanced technologies, and methodologies to streamline our operations reduce waste and improve productivity.
Junling Liu: By doing so, we aim to not only accelerate our response times to market changes but also to ensure that we can deliver services and products with greater speed and precision. This focus on operational excellence is expected to drive a significant improvement in our overall performance, making us a formidable competitor in the marketplace. Secondly, offering a comprehensive selection of products is simple for meeting customer needs and creating a sustainable competitive mode for our company. In the coming period, we will intensify our efforts to understand and anticipate the evolving preferences of our customers. This will involve leveraging data analytics and market research to ensure our product portfolio is both diverse and aligned with customer demands.
Speaker Change: By doing so we aim to not only accelerate our response time to market challenges, but also to ensure that we can deliver services and products with greater speed and precision.
Speaker Change: This focus on operational excellence is expected to drive significant improvements in our overall performance.
Speaker Change: Making us a formidable competitor in the marketplace.
Speaker Change: Secondly, offering the comprehensive selection of products is simple to meeting customer needs and creating a sustainable competitive moat for our company.
Speaker Change: In the coming periods, we will intensify our efforts to understand and anticipate the evolving preferences of our customers.
Speaker Change: This will involve leveraging data analytics and market research to ensure our product portfolio is both by bus and aligned with customer demand.
Junling Liu: By doing so, we aim to not only satisfy the immediate needs of our customers but also to foster long-term loyalty and trust, thereby solidifying our market position. The enhancement of our ecosystem with partners, including JVP and marketplace merchants, is another pillar of our future initiatives. We recognize the value of nurturing stronger, more collaborative relationships with our partners as a means to expand and prosper together.
Speaker Change: By doing so with aimed toward not only satisfy the immediate needs of our customers, but also to foster long term loyalty and trust, thereby solidifying our market position.
Speaker Change: The enhancement.
Speaker Change: Our ecosystem partners, including ABP and a marketplace much is another pillar of our future initiatives.
Speaker Change: We recognize the value of the nurturing stronger more collaborative relationships with our partners as a means to expand and in the process together.
Junling Liu: Through these partnerships, we aim to create a synergistic ecosystem where shared knowledge, resources, and capabilities can lead to mutual growth and success. By aligning our goals and strategies with our past, we anticipate unlocking new opportunities for innovation and market expansion. In addition to the most comprehensive selection within the industry, we're also making low pricing one of our strategic priorities.
Speaker Change: Through these partnerships the aim to create a synergistic ecosystem last share knowledge resources and the capabilities can lead to mutual growth and success.
Speaker Change: Aligning our goals and strategies with our partners, we anticipate unlocking new opportunities for innovation and market expansion.
Speaker Change: In addition to the most comprehensive selection within the industry, while also making low pricing one of our strategic priorities.
Junling Liu: We're convinced that our advanced digital capabilities will enable us to achieve unparalleled operational efficiency. It is our belief that the true measure of our success is in our ability to transfer these efficiency gains directly to our customers, offering them exceptional value without compromising on quality. By implementing this strategy, we are not just focusing on community benefits but are laying the groundwork for long-term recognition and loyalty from our customers. Our commitment to maintaining low prices coupled with our unmatched selection is expected to become a hallmark of our brand identity.
We're convinced that our advanced digital capabilities will enable us to obtain unparallel operational efficiency.
Speaker Change: It is our belief.
Speaker Change: The measure adopted SaaS is in our ability to transfer these efficiency gains directly to our customers offering them exceptional value without compromising quality.
Speaker Change: By implementing this strategy, we're not just focusing on immediate benefits, but are laying the groundwork along some recognition and loyalty from our customers.
Speaker Change: Our commitment to maintaining low prices coupled with our unmatched selection is expected to become a hallmark of our brand identity.
Junling Liu: Over time, this dedication will be acknowledged by our customers and will stand as one of our key competitive advantages. Optimizing our organizational structure is also on our agenda. We're committed to creating a more agile, flexible, and responsive organization that can quickly adapt to changes and seize new opportunities. This involves evaluating and realigning our teams, processes, and systems to ensure they are conducive to our strategic objectives. By fostering a culture of continuous improvement and adaptability, we aim to enhance our operational effectiveness and drive sustainable growth. Lastly, our commitment to digitization remains unwavering.
Speaker Change: Over time, its dedication of it'll be acknowledged by our customers.
Speaker Change: We will spend is one of our key competitive advantages.
Speaker Change: Optimizing our organization structure is also on our agenda with.
Speaker Change: We're committed to creating a more agile flexible and responsive organization that can quickly adapt to changes and seize new opportunities.
This involves evaluating realigning our teams processes and our systems to ensure they are conducive to our strategic objectives.
Speaker Change: My fault sacrifice upstream a culture of continuous improvement and adaptability, we aim to enhance our operational effectiveness and drive sustainable growth.
Speaker Change: Lastly, our commitment to Digitization remains unwavering.
Junling Liu: In an era where technology is continually reshaping industries, we aim to stay ahead by embracing digital transformation across all sectors of our business. This includes investing in digital tools and platforms to enhance our operational efficiency, customer engagement, and product innovation. But doing so would aim to unlock new growth avenues, improve customer experiences, and streamline operations. Digital transformation is not just a strategy for us.
Speaker Change: And the error.
Speaker Change: Allergy is continually reshaping industries, we'll aim to stay ahead by embracing digital transformation across all facets of our business. This includes investing in digital tools and platforms to enhance our operational efficiency customer engagement and product information and product innovation.
Speaker Change: <unk>.
Speaker Change: But doing so with aim to unlock new growth avenues, improving customer expenses and streamline operations.
Speaker Change: Digitization is not a strategy but.
Junling Liu: It's a fundamental aspect of our vision for the future. Together, these initiatives present our comprehensive approach to ensuring long-term growth and success. By focusing on these key areas, we are confident in our ability to navigate the challenges ahead and seize opportunities that the future holds. As we approach the conclusion of my remarks, I want to reflect on the journey 111 has undertaken. An expedition marked by both adversity and triumph. Nevertheless, our commitment has remained unshaken.
Speaker Change: It's a fundamental aspect of our vision for the future.
Speaker Change: Together.
Speaker Change: These initiatives present, our comprehensive approach to ensuring long term growth and success.
Speaker Change: By focusing on these key areas, we are confident in our ability to navigate the challenges ahead.
Speaker Change: These opportunities the future holds.
Speaker Change: As we approach the conclusion of my remarks, I want to reflect on the journey Beaumont has undertaken.
Speaker Change: And expedition marked by both adversity in the trial.
Speaker Change: Our commitment has remained unaffected.
Junling Liu: We steadfastly pursue our mission to lead the wave of innovation in the healthcare industry. Our passion for launching groundbreaking initiatives and our dedication to excellence in service delivery shine even against the backdrop of the industry's dynamic challenges. It's this very landscape that has tested our resilience and sharpened our strategic vision, transforming potential obstacles into avenues for growth and innovation.
Speaker Change: We steadfastly pursue our mission to lead the waves of innovation in the health care industry.
Speaker Change: Passion for launching groundbreaking initiatives and our dedication to excellence and service delivery scheinman, even against the backdrop of the industry dynamic challenges.
Speaker Change: It's very landscape.
Tested our resilience and sharpened our strategic vision transforming potential obstacles into avenues for growth and innovation.
Speaker Change: I extend our heartfelt gratitude.
Junling Liu: I extend our heartfelt gratitude to not only our investors, whose unwavering support has been a cornerstone of our journey, but also to our dedicated employees. Your hard work, creativity, and perseverance have been instrumental in our achievements this year. Together, we've navigated the challenges and seized opportunities, embodying a culture of collaboration and excellence. It's a profound appreciation.
Speaker Change: Our investors.
Speaker Change: Whose unwavering support has been the cornerstone of our journey, but also for our dedicated employees.
Speaker Change: Book Creativity unopposed sicker Anderson has been instrumental in our achievements this year.
Speaker Change: Together, we've navigated the challenges and have seized opportunities and building a culture of collaboration and excellence.
Speaker Change: With profound appreciation.
Luke Chen: I pass the microphone to Mr. Luke Chen, who will present an in-depth analysis of our financial outcomes. Thank you each and everyone of you for contributing to our shared vision of a healthier future. Thank you, Dr. Lin. Good morning or evening, everyone.
Speaker Change: Pass the microphone to Mr. Luke Chen who will present, an in depth analysis of our financial outcomes.
Luke Chen: Thank you each and everyone of them.
Luke Chen: While contributing to offset vision of a healthier future.
Okay.
Luke Chen: Thank you <unk> and good morning, or evening, everyone I want to begin by thanking all of our colleagues for their resilience and how work over fiscal year 2023, as we navigated a challenging environment for making necessary changes to improve our operational and cost efficiency.
Luke Chen: I want to begin by thanking all of our colleagues for their resilience and hard work over fiscal year 2023 as we navigated a challenging environment for making necessary changes to improve our operational and cost efficiency while maintaining our competitive edge. Moving to the financials, my prepared remarks will focus on a few key business and financial highlights. You can refer to the details of the fourth quarter and the fiscal year 2023 results from slides 22 to 25 in section 2 of our presentation. Again, all comparisons are year over year, and all numbers are in IMB unless otherwise stated. Let's start with the first quarter results. Considering the sudden fast surge during the pandemic in Q4 last year,
Speaker Change: While maintaining our competitive edge.
Moving to the financials.
Speaker Change: Prepared remarks will focus on a few key business and financial highlights.
Speaker Change: You can refer to the details of the fourth quarter and fiscal year 2023 retails from slides 20 to 25 section two of our plants.
Speaker Change: Again, all comparisons are year over year, and all numbers are in RMB unless otherwise stated.
Speaker Change: Let's start with the fourth quarter results.
Speaker Change: Considering the sudden surge during the pandemic in Q4 last year.
Luke Chen: We have managed to maintain our net revenue for the quarter, which slightly decreased 1% to $4.1 billion. Gross segment profit for the quarter amounted to $214 million, while gross segment margin was 5.2% for the quarter. Total operating expenses for the quarter were up 16.3% to $421 billion. Excluding the share-based compensation expenses of $151.4 million for the quarter and $68.7 million for the same quarter last year, respectively, total operating expenses as a percentage of net revenues decreased to 6.6 percent from 7.1 percent in the same quarter last year. During the first quarter, the company recorded unrecognized share base compensation of RMB 153 million upon the cancellation of the share option plan at the company's subsidiary level.
Speaker Change: We have managed to maintain our net revenue for the quarter, which.
Speaker Change: Which has slightly decreased 1% to $4 1 billion.
Speaker Change: Cross segment profit for the quarter amounted to 214 million by Cross segment margin was five 2% for the quarter.
Speaker Change: Total operating expenses for the quarter were up 63% to 421 billion.
Excluding the share based compensation expenses of $151 4 million for the quarter and a $68 seven minutes for the same quarter last year, respectively. Total operating expenses as a percentage of net revenues decreased to six 6% from seven 1% in the same quarter of last year.
During the quarter the company recorded the unrecognized share based compensation of RMB $153 million.
Speaker Change: Upon the cancellation of the share option plan at the Companys subsidiary level.
Luke Chen: The company also reported 17 million surveillance expenses in the quarter as a result of organization optimization. For human resources, as a percentage of net revenue for the quarter, it was down to 2.5% from 2.9% in the same quarter of last year. Excluding the share-based communications, sales, and marketing services as a percentage of net revenue for the quarter was 2.6%, down from 2.7% in the second quarter of last year. General and administrative expenses accounted for 0.9% of net revenue, which is the same as last year, and technology expenses accounted for 0.6% of net revenue, which was the same as last year. That's the result. The gap loss from operations was $55.2 million compared to $39.7 million in the same quarter of last year. As a percentage of net revenues, and gap loss on operations accounted for 1.3% in the quarter as compared to 1% in the same quarter last year. The gap in net loss attributable to ordinary shareholders was $59 million compared to $45.7 million in the same quarter last year.
Speaker Change: The company also reported seven 2 million civilians expenses in the quarter as a result of organization optimization.
Speaker Change: Fulfillment expenses as a percentage of net revenue for the quarter was down to two 5% from two 9% in the same quarter of last year.
Speaker Change: Excluding share based compensation sales and marketing two inches.
Speaker Change: Percentage net revenue per quarter was two 6% down from two 7% in the same quarter of last year.
General and administrative expenses accounted for <unk>, 9% of net revenue, which is same as last year and a technology expenses accounted for 6% of net revenue, which was same as last year.
Speaker Change: As a result.
Speaker Change: GAAP loss from operations was $55 2 million compared to 39 seven.
Speaker Change: 7 million in the same quarter of last year.
Speaker Change: As a percentage of net revenues than GAAP loss from operations accounted for one 3% in the quarter as compared to 1% in the same quarter last year.
Speaker Change: non-GAAP net loss attributable to ordinary shareholders was <unk> 9 million compared to $45 7 million in the same quarter last year as a percentage of net rapid pace.
Luke Chen: As a percentage of net revenues, the gap in net loss attributable to ordinary shareholders accounted for 1.4 percent in the quarter as compared to 1.1 percent in the same quarter of last year. As for our fiscal full year 2023, I would like to run through a few highlights. Again, you can refer to the details in our deck and early release of comparisons to full year 2022. Full year net revenues toward 14.9 billion.
Speaker Change: GAAP net loss attributable to ordinary shareholders accounted for one 4% in the quarter as compared to a one 1% in the same quarter of last year.
As for our fiscal full year 'twenty, three I would like to run through a few highlights.
Speaker Change: Again, you can refer to the details in our deck and early release all comparisons are to full year 2022.
Speaker Change: Full year net revenues were.
Speaker Change: $14 9 billion.
Luke Chen: Representing a year-over-year growth of 10.6%, our B2B segment revenue grew 11.4% to $14.6 billion, and the B2C segment revenue decreased 14.5% to $377.4 million.
Speaker Change: Presenting a year over year growth at 10, 6%.
Speaker Change: Our <unk> segment revenue grew 11, 4% to $14 6 billion.
Speaker Change: And the <unk> segment revenue decreased 14, 5% to 377 four.
Speaker Change: For billing.
Luke Chen: We have achieved a cross-sectoral profit growth of 1.1%. As a result, the combined raw segment margin was 5.7%, with the B2B segment margin at 5.3%, and the B2C segment margin at 21%. For full year 2023, total operating expenses decreased 1% to $1.2 billion. Excluding the share-based compensation expenses of $226.2 million for this year and $157.4 million for last year, respectively, total operating expenses as a percentage of net revenues decreased to 6.5 percent this year from 7.8 percent last year. For human expenses, accounting for 2.7% of net revenues this year, as compared to 3% last year. Excluding the share-based conversations, selling and marketing expenses as a percentage of net revenues were reduced to 2.5% this year from 3% last year. General and administration expenses account for 0.7% of net revenue this year, down from 0.9%.
Speaker Change: We have achieved a cross segment profit growth to one 1%.
Speaker Change: As a result.
Speaker Change: Buying broth segment margin was five 7% with <unk> segment margin at five 3% and a <unk> margin.
Speaker Change: 12, 21%.
Speaker Change: For full year 2023, total operating expenses decreased 1% to $1 2 billion.
Excluding the share based compensation expenses.
Speaker Change: $226 2 million for this year and $157 4 million for last year, respectively total.
Total operating expenses as a percentage of net revenues decreased to six 5% this year from seven 8% last year.
Speaker Change: Fulfillment expenses accounted for 7% of net revenue this year as compared to 3% last year.
Speaker Change: Excluding the share based compensation and selling and marketing expenses as a percentage of net revenues reduced to two 5% this year from 3% last year.
Speaker Change: General and administration expenses account for 7% of net revenue this year down from 0.9% technology expenses accounted for 6% of net revenue this year as compared to <unk>, 9% of last year.
Speaker Change: As a percentage of net revenues non-GAAP loss from operations decreased to 0.8%.
Speaker Change: This year from one 6% last year.
Luke Chen: Technology expenses accounted for 0.6% of net revenue this year as compared to 0.9% last year. The percentage of net revenues in the debt loss from operations decreased to 0.8% this year from 1.6% last year. The gap net loss attributable to ordinary shareholders as a percentage of net revenues decreased to 1.1% this year as compared to 1.9% last year.
Speaker Change: non-GAAP net loss attributable to ordinary shareholders as a percentage of net revenues decreased to one 1% this year as compared to one 9% last year.
Speaker Change: We are confident that we are headed the right path to profitability.
Speaker Change: Our strong technology capabilities will continue to enable us to build a scale.
Speaker Change: Improved efficiency.
Speaker Change: Deliver profitability and maximize value for shareholders.
Speaker Change: Please refer to slides 26 to <unk> 33 of the appendix section selected financial statements.
Luke Chen: We are confident that we are heading the right path to profitability. Our strong technology capabilities will continue to enable us to build scale, improve efficiency, deliver profitability, and maximize value for shareholders. Please refer to slides 26 to 33 of the appendix section for selected financial statements. And a quick note on our cash position as of December 31st of 2023. We had a cash and cash reprieve; we still had cash and short-term investment of $674 million. As of the date of this early release, we had a total outstanding amount of $1.1 billion, which has been included in the balance of redeemable and controlling interest, accrued expenses, and other current liabilities.
Speaker Change: And a quick note on our cash position as of December 31st with funding for this week, we had a cash and cash equivalents boosted cash and short term investments of 674 million.
Speaker Change: As of the date of this earnings release.
Speaker Change: We had total outstanding amount of $1 1 billion.
Speaker Change: Which has been included in the balance of redeemable non controlling interest and accrued expenses and other current liabilities.
Speaker Change: Owned to a group of investors, one pharmacy technology pursued to get equity investments made in 2022 as previously disclosed.
Speaker Change: As of the date of this earning release, we have received redemption requests from certain of such investors, but total redemption amount of 0.2.
<unk> 2 billion in accordance with the terms of the initial investments in one pharmacy technology.
Luke Chen: Owned by a group of investors of one pharmacy technology, pursuant to their equity investment made in 2022, as previously disclosed. As of the date of this early release, we have received redemption requests. From certain of such investors, a total redemption amount of 0.2 billion in accordance with the terms of the initial investment in one pharmacy technology. We are currently in the process of negotiating with these investors and other relevant stakeholders regarding the repayment and restructuring of such redemption obligations. This concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session. Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2.
Speaker Change: We are currently in the process of negotiating with these investors and other stakeholders regarding the repayment and a restructuring all such redemption obligations.
Speaker Change: This concludes our prepared remarks thank.
Speaker Change: Thank you.
Speaker Change: Operator, we are now ready to begin the Q&A session.
Speaker Change: Thank you 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 star two if you're on a speakerphone. Please pick up the handset to ask your question.
Speaker Change: Your first question comes from fee paying Fang from CIC. Please go ahead.
Brian: Hi, This is Brian.
Brian: Thank you for taking my questions and congratulations on the progress.
Brian: I have two questions actually.
Brian: First question.
Brian: Mento.
Brian: The market seems to be in a depression, what my model do you prefer while in 'twenty three.
Brian: Revenue and gross profit.
Operator: If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Xipeng Feng from CICC. Please go ahead.
Brian: Gotcha.
Brian: Wonder what is the reason behind this growth.
Brian: Will that be for tenable and the co chair.
Brian: My second question is about the strategy.
Brian: Could you please share some more color on the company get back with on strategy other than Mexico years. Thanks.
Xipeng Feng: Well, hi, this is Xipeng Feng from CSC. Thank you for taking my questions and congratulations. Well, I have two questions. And the first question is about, while the market seems to be in a depression, 111 still performs well in 2023 in both revenue and gross profit. I just wonder, what is the reason behind this growth?
Speaker Change: As you can can you repeat the second question again, what was the question of <unk> strategy.
Speaker Change: Okay sure.
Speaker Change: So.
Speaker Change: Yeah, I'm not really at would you. Please share some more color on the company the bulk of the construction.
Speaker Change: Regarding that Max Okay got it.
Speaker Change: Oh got it. Thank you Shannon, Okay Festival related.
Speaker Change: With regards to your first question.
Speaker Change: How we achieved growth in the antidepressant market fundamentally it comes too.
Speaker Change: Our capability to adapt and our strategic agility on the really the team's resilience if you'll recall.
Xipeng Feng: And will that be sustainable in the future? And my second question is about the strategy. Would you please share some more details on the company's development strategy for the next few years? Thanks. Xipeng, can you repeat the second question again?
Speaker Change: We really achieved continuous operational efficiency, we continuously reduce our operational expenditure and we continuously pursue there.
Xipeng Feng: What was the question again? Strategy on... Okay, sure. Yeah, not really.
Speaker Change: A big part of increasing productivity per unit output.
Xipeng Feng: Would you please share some more color on the company's development strategy for the next three years? I have it. Thank you, Xipeng. Okay. First of all, with regard to your first question, how we achieve growth in a depressed market, fundamentally, it comes to our capability to adapt and our strategic agility and, really, the team's resilience. If you recall, we really achieved continuous operational efficiency. We continuously reduce our operational expenditure, and we continuously pursue the path of increasing productivity per unit output.
Speaker Change: And the second thing.
Speaker Change: Beat was really to expand our selection.
Speaker Change: It could provide the bodies for selection across the whole industry. So our customers can have more choices on our platform.
Speaker Change: And suddenly a cost center.
Speaker Change: Not really.
Speaker Change: In addition to our selection we offer unparalleled services.
Speaker Change: This includes a.
Speaker Change: From order placement to order fulfillment the whole process.
Speaker Change: And can be sustained yes, absolutely and not only will this sustain it is my belief that we're going to pick up even more momentum.
Junling Liu: And the second thing we did was really to expand our selection. We wanted to provide the widest selection across the whole industry so our customers could have more choices on our platform. And certainly, of course, you know, really, in addition to selection, we offer unparalleled services. And this includes, from order placement to order fulfillment, the whole process. And can this sustain?
Speaker Change: And with regards to your second question.
Speaker Change: I'd like to.
Can you talk a little about our future strategy.
Speaker Change: At least in the following.
Speaker Change: Sequence of priorities and are firstly.
Speaker Change: We still believe that.
Speaker Change: In order to survive in this room.
Junling Liu: Yes, absolutely. And not only will this sustain, but it is my belief that we're going to pick up even more momentum. And with regard to your second question, I'd like to talk a little about our future strategy, at least in the following sequence of priorities. First, we still believe that in order to survive in this razor-thin margin market, it is extremely competitive, and we have to be efficient.
Speaker Change: As a thin margin market. It is extremely competitive we have to be efficient. So operational efficiency is going to be at the heart.
Speaker Change: Our company's strategy because this is going to be our key competitive advantage.
Speaker Change: We want to be the most efficient operator in the industry full stop and I believe we are well on our way to become.
Junling Liu: So operational efficiency is going to be at the heart of our company's strategy because this is going to be our key competitive advantage. We want to be the most efficient operator in the industry, full stop, and I believe we are well on our way to becoming the most efficient operator. And secondly, we want to continue with the strategy we had in the past of providing the widest selection for our customers so they can have all choices on our platform, and they can do a one-stop shop. They don't have to go to various places.
Speaker Change: They most efficient operator.
Speaker Change: Secondly, we want to continue with the strategy we had in the past.
Speaker Change: Provides the widest selection for our customers. So they can have.
Speaker Change: All choices on our platform and they can do one stop shop. They don't have to go to various places.
Speaker Change: In addition to that we want to provide the best prices.
Speaker Change: We believe that.
Speaker Change: <unk>.
Speaker Change: They have great selection and the best price.
Junling Liu: In addition to that, we want to provide the best prices for them. We believe that, you know, with a great selection and the best price, that's going to build customers' loyalty. And the other thing we wanted to focus on is to really invest in our capabilities in digitization. And we believe this area is going to help to really transform the industry through digital technology. So that pretty much illustrates our strategy and our vision for the future. Thank you. Thank you. Your next question comes from Victor Yang, a private investor. Please go ahead.
Speaker Change: That's going to build customers loyalty.
Speaker Change: And.
Speaker Change: The other thing we wanted to focus on this to really invest in.
Speaker Change: Our capabilities and Digitization.
Speaker Change: We believe.
Speaker Change: This area is going to help to really transform an industry.
Speaker Change: Digital technology, so that pretty much.
Illustrates our strategy our vision.
Speaker Change: For the future ahead. Thank you.
Speaker Change: Thank you. Your next question comes from Victor Yang Private Investor. Please go ahead.
Speaker Change: Okay.
Victor Yang: Thank you for taking.
Victor Yang: Giving me the chance to raise questions I have two questions into expect.
Victor Yang: Thank you for giving me the chance to raise questions. I have two questions on two aspects. First, there is an increase in operational loss as a percentage of net revenues. This is notable. Could you provide more insights into the factors contributing to this increase and how you plan to address them moving forward?
It is about the increase in operational loss.
Victor Yang: Percentage of.
Victor Yang: Revenues and this is a notable could you provide more insights into the factors contributing to this race and how you plan to address them moving forward.
Victor Yang: The second question is about what Jinling just mentioned about digitalization. What progress has the company made in technological innovation last year, and how will this advancement help the company gain a competitive edge in the future? Thank you. I think it's great you noticed that there was an increase in operational expenditure and that the loss was greater than, you know, we initially anticipated. Let me just explain.
Victor Yang: The second question is about what changing just mentioned about a fixed total isolation.
Victor Yang: What progress has the company made in technological innovation last year and how will this advancements helped the company gain a competitive edge in the future.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change:
Speaker Change: I think.
Speaker Change: It's great you noticed you noticed that there is.
The increase in operational expenditure and the loss was greater.
Speaker Change: Then.
Speaker Change: We initially anticipated let me just explain in a first of all.
Junling Liu: You know, first of all, there is a huge sum of ESOPs there because we, as a management company, decided to cancel the ESOPs for the years 2024 and 2025. And there is an accounting practice, and they really have to put the numbers into Q4 of last year. Secondly, we also made a decision in Q4 to further streamline our organization, and we had a whole series of organizational optimization exercises. And that created a lot of severance pay. Those two expenditures actually took up the majority of the loss.
Speaker Change: There is a.
Huge song.
Of Aesop there.
Speaker Change: Because we are.
Management: As a management decided to cancel the Aesop's full year 2024, 25, and there was a accounting practice I know they have to.
Management: It really put the numbers into Q4 of last year.
Management: Secondly, we also.
Management: Made a decision in Q4 to further streamline our organization and we had a whole series of organization optimization exercise that.
Management: That created a lot of severance pay.
Management: Those two expenditures.
Management: Actually took up majority of the over the last if you take that out our operational loss actually made of.
Junling Liu: If you take that out, our operational loss actually made a very impressive improvement. And, you know, of course, with all the measures that have been taken, we look forward to a lot of great things in 2024. Thanks.
They are impressive improvement.
Management: And.
Management: Of course with all the matches.
That have been taken.
Management: We look forward to a lot of great things in 2024.
Luke Chen: Let me take the second question from Victor on the progress of technology. You know, we have invested heavily in technology. Last year, we as a company made remarkable progress in leveraging AI, big data, and supply chain optimization technologies. Let me give some examples.
Management: Thanks.
Speaker Change: Let me take the second question from Victor.
Speaker Change: Technology.
Victor Yang: We will have Uh huh.
Victor Yang: ABB technology.
Victor Yang: Last year we.
Victor Yang: We are as a company have made remarkable progress leveraging AI big data and supply chain optimization technologies.
Luke Chen: Unknown Attendee, Stephanie Lee, Adam Frank, Joe Bead, Loren Kai, Jessie Lu, Nguyen Anh, Gang Yu, Ethan Ling, Demand Forecasting and Pricing Strategy Organization. Binning also mentioned that our company had received four new patents, and our information, the so-called 111 Information Brain, was listed on the Shanghai Data Exchange. That's quite a milestone. We have exceeded 1.2 million entries, covering more than 99.6% of market data. By employing GP-based large-language models and through minimal manual annotations, model training, and fine-tuning techniques.
Speaker Change: I'll give you some examples.
Speaker Change: The so called telescope initiative launched for pharmaceutical companies.
Speaker Change: <unk> Leverages big data to enhance Qunar management capabilities, such as penetrating the market with ice.
Speaker Change: Demand forecasting and pricing strategy authorization.
Speaker Change: And you also mentioned that our company is that we see for new patents.
Speaker Change: The following information so called them all online information brain, whereas at least stated.
Speaker Change: Shanghai data, that's quite a milestone.
We have TV, one too many entries covering more than 99, 6% of market data.
By employing PPE base large large language models include minimal annual limitations motto training undefined kuhnian techniques CBD.
Luke Chen: Significant breakthroughs were achieved in drug and pharmacy recognition models, and our accuracy has reached 99 percent. And we also mentioned on the supply chain management side; we launched several digital supply chain products last year. We introduced Firewheel and Qunpeng products for pharmaceutical commercial partners. We provided operational automation tools to our JVP partners, improving system product listing efficiency from hours to minutes. Just these few examples illustrate how much effort we have invested in technology and the programs I have made. Thank you, Victor.
Speaker Change: Medical breakthroughs.
Speaker Change: Breakthroughs were achieved.
Speaker Change: Drug and the pharmacy recognition models and similarity scoring models our accuracy has reached 99%.
Speaker Change: And we also mentioned.
Speaker Change: Supply chain management side.
Speaker Change: We launched several digital stuff I can products last year.
Speaker Change: <unk>.
Speaker Change: Fire will and Quint poll.
Speaker Change: Alex.
Speaker Change: Obviously, the commercial partners, we provided operational automation tools to our GBP partners improving system product listing efficiency from our two minutes.
Speaker Change: These few examples kind of industry that how much.
Speaker Change: Effort.
Technology, having the port work progress I've made thank you Victor.
Speaker Change: Thank you. Yes next question comes from Ethan Wang from Ion Hoffman capital. Please go ahead.
Ethan Ling: Your next question comes from Ethan Ling from Ion Harbour Capital. Please go ahead. Hi, first of all, thank you for your time. I'm Ethan, and I want to ask a few questions.
Speaker Change: Yes.
Haihui Wang: Hi, Oh, thank you.
Haihui Wang: For yours here I'm using.
Haihui Wang: And I won't ask a few questions.
Ethan Ling: First of all, I noticed that the company's operational costs have been continuously decreasing. What actions did the company take last year in supply chain management and warehouse logistics to improve efficiency and reduce costs, and how much potential for improvement remains? And I also want to know, since the company won numerous awards last year, what is the significance of these awards and their value to the company? And also, what is the company's current cash position? And will the company continue to burn cash to grow the business? So I'll take the first two, and Luke will take the last one.
Haihui Wang: First of all I know you started the companies operate in low cost ethane continues decreasing.
Haihui Wang: Since the company picked us here is supply chain management, and our warehouse logistics to improve efficiency and reduce costs and how much potential for improvement remains.
Haihui Wang: And I also want to know if the company won numerous awards last year. What is the significance of these awards and their value to the company and also what is the company's current cash position and where the company continue to burn cash to grow the business.
Speaker Change: Okay. So I'll take the first two I was a little court takes up the last one.
Junling Liu: Okay, the first question you mentioned is about how we reduce our operational costs. Last year, we focused heavily on reducing costs and enhancing our efficiency. In addition to improving our services, we have to apply some breakthroughs, or one that we continuously optimize our fulfillment costs. And you can see quite a remarkable reduction in fulfillment costs, and measures such as improving workforce efficiency, process re-engineering, rent reduction, and increasing the proportion of regional fulfillment allow the fulfillment cost to reach 2.74 percent. Okay, and it's a significant decrease from the 2.94 percent of the year before.
Speaker Change: Okay.
Speaker Change: First question you mentioned its about how we.
Speaker Change: Our operational costs.
Speaker Change: Last year, we focused.
Speaker Change: Heavily reducing costs enhancing our efficiency.
Speaker Change: Yeah.
Speaker Change: Dish into improving our services okay.
Speaker Change: Quite some breakthroughs of wines that we can keep us optimize our fulfillment cost as we can.
Speaker Change: Quite a remarkable reduction fulfillment cost.
Speaker Change: On the measure such as improving workforce efficiency process reengineering rent reduction.
Speaker Change: Creating the propulsion regional fulfillment allowed appropriately cost reached to 274%.
Speaker Change: And we see a significant decrease from the $2 94%.
Speaker Change: Before.
Speaker Change: And just this alone.
Junling Liu: And just this alone reduced car costs, you know, resulting in car savings over 20 million. We also improved the service quality of our supply chain upstream. We launched the so-called Golden Partner Service, thank you, and improved receipt time by, you know, 30%. Last year I mentioned another example of our intelligent supply chain service platform we launched last year. We integrated warehouse-to-warehouse transhipment plus last-mile delivery model, achieved cost savings of 20% for transshipment, and reduced energy on the road by 60%, on top of increased turnover efficiency by 20%.
Speaker Change: Reduced results.
Speaker Change: Results in cost savings over $20 million.
Speaker Change: We're also.
Speaker Change: Increase.
Speaker Change: Improve the service quality of our supply chain upstream.
Speaker Change: We launched <unk> service.
Speaker Change: Company upstream customers comparatively well provided with Huntington's the Weyerhaeuser performance service simplify the entire delivery process, reducing supplier warehouses waiting time by 50%.
Speaker Change: And.
Speaker Change: <unk> received time bye.
Speaker Change: 30%.
Speaker Change: Mafia unless you have another example of our causes.
Speaker Change: Delicate supply chain service platform, we launched last year.
Speaker Change: We integrated warehouse warehouse Transshipment plus last mile delivery model.
Speaker Change: Achieved cost savings of 20%, which one shipment.
Speaker Change: And reduced energy.
Speaker Change: On the road.
Speaker Change: 60%.
Speaker Change: The increase the tool by efficiency by 20%. So through these efforts you can say that the law would have to improve our operationally.
Junling Liu: So through this effort, you can see what we have done to improve our operation efficiency as well as the supply chain costs. I think the next question is about all the awards we won last year. Ginny mentioned quite a few, you know, including the National E-Commerce Demonstration Enterprise, Shanghai E-Commerce Demonstration Enterprise, the Shanghai Key Productivity Internet Service Platform, et cetera, you know, all those awards. We feel very proud of earning them. This honor signifies that the company has achieved sustainable, robust, and direct development in fields such as diesel technology innovation, intelligent supply chain management, and diesel operations. It holds on your advanced position among domestic peers. And we believe that we are highly recognized in the industry and by the regulatory bodies, playing an important role in promoting tissue transformation and upgrading in the pharmaceutical and health industries. May I let Luke answer the next question?
Speaker Change: Efficiency.
Speaker Change: Throughout the supply chain costs.
Speaker Change: I think that.
Speaker Change: Credit Suisse about although the.
Speaker Change: Words whenever one last year, Jamie mentioned quite a few of them.
Speaker Change: Including the National E Commerce penetration enterprise, Shanghai ecommerce demonstration comprise the Shanghai key productivity Internet service pipeline integrity in order to awards, we feel we're very proud of.
Speaker Change: Are any of those.
Speaker Change: These owners sacrifice that the company has achieved sustainable robust is that good development in fields, such as diesel technology innovation.
Speaker Change: The supply chain management and digital operation.
Speaker Change: Holds on your advanced positioning among domestic peers.
And we believe that.
Speaker Change: We are highly recognized from the industry on the regulatory bodies.
Speaker Change: Many of our important role in promoting the digital transformation and upgrading.
Speaker Change: Of the pharmaceutical and the health industry.
Speaker Change: They like the look.
Speaker Change: Is it like Chris sure sure.
Luke Chen: Sure. Yes, about the cash. We have just disclosed our cash-to-cash equivalent, the risk-to-cash, and short-term investment amounted to RMB674 million as of December 31, 2023. If you're looking at our working capital base, our AP date is around 42 to 45 days. Our average date is around 25 to 30, and our AR date is 7 to 12.
Speaker Change: It's about the cash.
Speaker Change: We have just disclosed.
Speaker Change: Our cash and cash equivalents restricted cash and short term investments.
Speaker Change: Wanted to RMB 674 million.
Speaker Change: December 31 2023.
Speaker Change: It will be looking.
Speaker Change: Our working capital days, our AP days is around 42 to 45 days.
Speaker Change: Our <unk> date is around 25 to 30.
Speaker Change: Our data is 7% to 12, so so.
Luke Chen: So, basically, we have a positive cash flow on the trading level, which means that the cash received for the sales of drugs and the cash paid for the purchase of the drugs. Now, as we discussed, we are very close to profitability, and we believe that with our ability to make profit, we would no longer need cash to grow this business. Instead, we're confident that this business will create overall positive cash flow for the company. I hope we've answered your questions. Thank you. Your next question comes from Jada Wu from Arbor Grove Capital. Please go ahead. Jada Wu Hi everyone.
Speaker Change: Basically we have.
Speaker Change: Positive cash.
Speaker Change: Cash flow on the trading level, which means so the cash received.
Speaker Change: For the sales of trucks and the cash paid.
For the purchase of the drugs.
Speaker Change: Now as we discussed at that time.
Speaker Change: Very close to profitability.
Speaker Change: And we believe that.
Speaker Change: With our ability to make profit we would no longer need for cash to grow <unk> business. Instead, we are confident that this business will create a global positive cash flow for the company.
Speaker Change: Hope we answered your questions.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question comes from Gena Wang from <unk> Capital. Please go ahead.
Haihui Wang: Hi, everyone. This is Jay.
Jada Wu: This is Jada Wu from Aberwood Capital. Thank you for taking my question and congratulations on your success last year. Here I've got two questions.
Haihui Wang: From <unk> capital.
Haihui Wang: Thank you for taking my question and congratulations on your success Lucky here I've got two questions. The first one is about GBP business segments.
Jada Wu: The first one is about the PPP business segment. I want to know what are the expected outcomes of the PPP business segment expansion and how will it enhance customer experience and operational efficiency? And the second one is about your OEM product. What are the company's plans for its OEM products in the future? Thank you. Okay, Jada. I'll take your two questions.
Jay: I want to know what are the expected outcomes of the GBP isn't this segment's expansion and.
Jay: To enhance customer experience and operational efficiency.
Jay: And the second one is about your OEM product what are the concrete.
OEM programs in the future. Thank you.
Jay: Okay.
Speaker Change: I'll take this question.
Speaker Change: Question.
Speaker Change: JBT is one of the hottest Korean business segment in the long run.
Unknown Attendee: JVP is one of the hardest growing business segments in 111. In the last quarter of Q4, 2023, JVP's business was growing 25% year-over-year and is now close to 60% of our total inventory and also our total sales. And JVP is not only a supply channel; it is, in fact, far beyond the channel.
Speaker Change: In last quarter or Q4.
Speaker Change: Thank you Dmitry JBT business has been growing 25% year over year and it's now.
Dmitry: Rose to 60% of our total inventory and also our total sales.
Dmitry: And J D P not only the <unk>.
Dmitry: By channel.
Dmitry: Actually it is in fact far beyond antenna.
Unknown Attendee: JVP provides a total solution for our upstream partners like pharmaceutical companies and also commercial companies, including software management, price management, inventory management, customer acquisition, Digital Marketing, and also Financing Services, the current launch of the third generation of JVP, which provides a much more robust solution for those departments. We can anticipate it will continue the growth momentum and not only in sales revenue but also in Property Protection.
Dmitry: JBT provides a total solution for our upstream.
Dmitry: Upstream cutlery pharmaceutical economy.
Dmitry: And also commercial.
Dmitry: Commercial economy.
Dmitry: Improving our software management.
Dmitry: Price management.
Inventory management.
Dmitry: Customer acquisition.
Dmitry: Digital marketing and also financing.
Dmitry: Yeah.
Dmitry: The current launch of a third generation of JBT.
Dmitry: Which provide a much more robust solutions for both the partner.
Dmitry: I anticipate the loss curve.
Dmitry: <unk> continued the growth momentum in not only.
Dmitry: Sales revenue side.
Dmitry: But oracle.
Sure.
Dmitry: Profit perspective.
Unknown Attendee: And as all these value-added services will literally help our partners to gain more sales and more profits. And at the same time, we're also doing a small project. Regarding OEM products, there are some private labels registered in 111. We have Guan Zhao, which is for our chain store customers, and Huangjia Rongyao, Royal Honor, is for our individual store customers, and also Lanyi Deer is for battery supplements. So by last quarter, we had already launched 170 private label SKUs, and almost all of these products have been well accepted by our on-screen customers. And they are now sold in more than 20,000 pharmacies across the country, including those very remote areas like Xinjiang, Xi'an, et cetera. And many more SKUs have been in our pipeline, including OTC, including Rx, including supplements, and also medical devices. As we all know, private label products have been a very important margin contributor of those top-listed chain stores, which have been discussed in their financial reports. But for the majority of our customers, 111 customers, they are small, medium, trend stores, or even individual stores, and they don't have the capability to establish their own brands.
Dmitry: And as all these value added services.
Dmitry: Actually literally help of our partners who gain more scale.
Perfect.
Dmitry: And at the same time, we're also bringing a small perfect.
Dmitry: And regarding the OEM product.
Dmitry: There are a couple of years.
Dmitry: Private label registering a Y O Y O y.
Dmitry: Have one zone.
Dmitry: Which is our chance to all customers.
Dmitry: And armed out or we all royal.
Anna for individuals.
Dmitry: And local.
Dmitry: Non lithia for accurate governance.
Dmitry: Or by last quarter.
Dmitry: Already launched <unk> hundred 78 private label at Keno.
Dmitry: And almost all of this.
Dmitry: So that has been well accepted by our.
Dmitry: Customers.
Dmitry: No.
Dmitry: <unk> sold in more than 20000 pharmacies across the country.
Dmitry: Including those.
Dmitry: Very remote areas like some galaxy Barrick sector.
Dmitry: And much more <unk>.
Dmitry: <unk> in our pipeline.
OTC, including.
Dmitry: Including the abdomen and also.
Dmitry: Medical devices.
Dmitry: As we all know private label products had.
Dmitry: A very important margin countries owner of both.
Dmitry: Top lifted his thought.
Dmitry: And which have been disclosed in our financial report.
Dmitry: <unk>, our majority of our customer <unk> customer they are.
Dmitry: Smart linear tests or the retail stores.
Speaker Change: I don't have that capability.
Speaker Change: British their own brand.
Unknown Attendee: So, Guangzhou Huangjia Longyao has become a very attractive solution for them, and those private labels also help us to build up a very long-term relationship with those customers. Thank you. Thank you. Your next question comes from Mark Su, a private investor. Please go ahead.
Speaker Change: So one go undoubtedly.
Speaker Change: It's become a very attractive solution for them.
Speaker Change: And with those private label also help us.
Speaker Change: Do not a very long term relationship with those customers.
Speaker Change: Okay.
Speaker Change: Thank you. Your next question comes from Mark Smith Private Investor. Please go ahead.
Speaker Change: Yeah.
Right.
Mark Smith: Uh huh.
Mark Su: Hello, thanks for presenting. I have two questions. The first is that we are seeing the company narrowing its losses. What's your future plan to further improve the growth margin and improve profitability? The second is that we understand that the buyer group has terminated the privatization of the company.
Mark Smith: Thanks, Pat and 19 I have to cross that.
Mark Smith: We have seen the company or narrowing or not.
Mark Smith: Future cancers caused by improved gross margin and improved profitability.
Mark Smith: Secondly is that we understand the timing.
Mark Smith: Terminates the privatization of the company what does that mean to the company and what we have in a future plan.
Mark Su: What does that mean to the company? And what will be the company's future plan on the capital market? Thank you. Okay, thank you.
Speaker Change: Capital market. Thank you.
Speaker Change: Yeah.
Unknown Attendee: I will take the first question regarding margin, and our strategy towards a healthy business model has been working very well, and we are seeing significant improvement in our capability to generate more and more profit. And firstly, to reduce our procurement costs, we direct sales from pharmaceutical companies. This has been highly effective in lowering the cost of products.
Okay. Thank you I'll take the first question regarding <unk>.
Speaker Change: The merger.
Speaker Change: Our strategy was a healthy business model working very well and we have seen significant improvement.
Speaker Change: Oh no.
Speaker Change: It will generate more and more profit.
Speaker Change: Firstly.
Speaker Change: We renewed our procurement costs and with IRS thoughts from pharmaceutical companies.
Speaker Change: This has been highly effective lowering the cost of product.
Unknown Attendee: And we now support over 500 local and international pharmaceutical companies. We will continue to deepen our strategic relationship with our existing partners, as well as secure new partnerships. And such relationships provide us with a wide range of product selection at a lower cost. The second level, which is the key strategy for us, as I mentioned just now, is our JVP model. In the past quarter, it has been growing very well. It's about close to 50% of our total inventory.
Speaker Change: And we know cost for over 500.
Speaker Change: Local EM.
Speaker Change: International pharmaceutical companies.
Speaker Change: We will continue to even out.
Speaker Change: Relationship with our existing partners.
Speaker Change: Well, yes.
Speaker Change: Securing new partnerships.
As such relationships provide us with a wide range of product collection.
Speaker Change: The lower court.
Speaker Change: The sector level, we which is a key strategy of us Nathan.
Speaker Change: Nathan just validates our JBT model.
Speaker Change: And in a constant Pos quarter.
Speaker Change: Has been growing very well.
About close to 60% of our total inventory.
Unknown Attendee: We are going to launch a new generation of this JVP, which provides a robust system to enable our partners to better manage their inventory, manage their prices, etc. And all these data-added services will help our partners to gain more sales and make more profits. And also, at the same time, we're also bringing those value-added products to our service. And thirdly, we will continue to optimize our product assortment and structure through our AI technology and big data. We are much more effective at balancing our portfolio of products. Unknown Most High Velocity, but maybe low-margin products, those which drive traffic, together with some very healthy margin products.
Speaker Change: We're going to launch a new generation of these types ACP.
Speaker Change: Yeah.
Speaker Change: Which provide a robust system to enable our partners to better manage their inventory and manage that price et cetera, and all these value added services, we have held our pilots and more sales and more profit.
Speaker Change: And also at the same height.
Speaker Change: Those are value added.
Speaker Change: Oh, sorry.
Speaker Change: Our survey.
Speaker Change: We will continue to optimize our product assortment and structure.
Speaker Change: True.
Speaker Change: Our AI technology.
Speaker Change: Data, we are much more effective to balance our portfolio of products.
Speaker Change: And all of those high velocity, but maybe.
Speaker Change: Maybe low margin products.
Speaker Change: Both of which drive traffic.
Speaker Change: Hello list.
Speaker Change: So very healthy module products.
Unknown Attendee: We now have about 5,000 SKUs with very good margins, including our own private label products and new products from pharmaceutical companies. And we are very confident that we will be able to help those pharmaceutical partners in commercializing their products with high efficiency and high. Good luck, Marge. And last but not least, and as part of the country's health care strategy, the revolution in medical treatment and drug sales separation will bring extra sales to retail markets from hospitals. And, well, I believe it will not only bring sales but also bring more marketing function to the retail market. Because previously, a lot of education was from inside a hospital; now it comes to the retail market.
Speaker Change: And we have now about 5000 ku.
Speaker Change: With very good margin, including all.
Speaker Change: Private label products and new product rollout.
Speaker Change: <unk> <unk> coverage.
Speaker Change: We are very cognizant of that.
Speaker Change: We will be able to help.
Speaker Change: Pharmaceutical partner in commercializing that product.
Speaker Change: With a highly efficient.
Speaker Change: Gross margin.
Speaker Change: And a lot better.
And.
Speaker Change: And as part of the country's health care strategy the evolution of magical chipman.
Speaker Change: Yeah.
Speaker Change: Drug sale separation that we have.
Speaker Change: Extra sales to retail market grow hospital.
Speaker Change: Well I believe we're not only bringing in Dallas, but also bring more marketing powershares core retail market.
Speaker Change: Because greatest.
Speaker Change: Applications.
Speaker Change: Inside of hospitals now at Comscore at the retail market.
Unknown Attendee: And with these marketing functions and with 111's ability to use big data, our digital marketing capability, we will be able to provide a very effective service to pharmaceutical companies. And this will be a good project for 111. And as we already have those capabilities, and both in our B2C and B2B models of digital marketing. Thank you. Yeah, regarding the privatization. As previously announced, the buyer group has officially notified the special committee that it will no longer pursue the privatization of the company. And this means that the company will continue to maintain its listing status on NASDAQ. We think it's good for the company to continue to be a public company and keep the door of the capital market open. As management, we will conduct more meetings with existing and potential investors to help them to understand our business model and update them on our latest developments. The Manningham team will continue to focus on growing the business and delivering profitability to create value for shareholders.
Speaker Change: These multiple functions.
Speaker Change: While our wives capability out.
Big data.
Speaker Change: Our digital marketing capability.
Speaker Change:
Speaker Change: They both provide us.
Speaker Change: In fact it.
Speaker Change: Pharmaceutical companies.
Speaker Change: And.
Speaker Change: We have good profit.
Speaker Change: And we already have.
Speaker Change: Got it.
Speaker Change: Both in our <unk> model.
Speaker Change: Alaska.
Speaker Change: Okay.
Speaker Change: Yes regarding the <unk>.
Privatization.
Speaker Change: As previous announced the buyer group.
Speaker Change: <unk> notified the special committee that.
Speaker Change: It will no longer pursue the privatization of the company.
Speaker Change: And this means that the company will continue to maintain its listing status in Nasdaq.
We think it's good for the company to continue to be a public company and keep it all of the capital market open.
Speaker Change: As the management, we will continue more meetings with existing and potential investors to help them to understand our business model and update them on our latest development.
Speaker Change: But many of them to you will continue to focus on growing the business.
Speaker Change: And delivering profitability to create value for shareholders.
Unknown Attendee: Thank you. Thank you. That is all the time we have for questions. In closing, on behalf of the entire 111 management team, we'd like to thank you for your interest and participation in today's call. If you require any further information or have any interest in visiting 111 in Shanghai, China, please let the company know. Thank you for joining us today. This concludes the call.
Speaker Change: Thank you.
Speaker Change: Thank you that is all the time, we have for questions in closing on behalf of the entire 111 management team, we'd like to thank you for your interest and participation in today's call.
Speaker Change: If you require any further information or have any interest in visiting 111 in Shanghai, China. Please set the company now.
Speaker Change: For joining our call today. This concludes the call.
Speaker Change: Okay.
Speaker Change: [music].
Okay.
Okay.
Speaker Change: [music].
Speaker Change: Yes.
Speaker Change: [music].
Yes.
Speaker Change: [music].