Q1 2024 Sea Ltd Earnings Call
Operator: Good morning and good evening to all, and welcome to the Sea Limited first quarter 2024 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again.
Good morning, and good evening to all and welcome to the C. O Limited first quarter 2024 results conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question press the star one again.
Operator: For operator assistance throughout the call, please press star zero. And finally, I would like to advise all participants that this call is being recorded. Thank you. I'd now like to welcome Mr. MC Call to the conference. Please go ahead.
For operator assistance throughout the call. Please press star Zero, and finally, I would like to advise all participants that this call is being recorded.
I'd now like to welcome Mr. M C call to begin the conference. Please go ahead.
M C: Hello, everyone and welcome to cease to all 24 first quarter earnings Conference call.
MC Call: Hello everyone and welcome to SEAS Tool 24 First Quarter Earnings Conference Call. I am MC, SEAS Investor Relations Director. On this call, we may make forward-looking statements, which are inherently subject to risk and uncertainties and may not be realized in the future for various reasons.
M C: EMC <unk> Investor Relations director.
M C: On this call we may make forward looking statements.
M C: <unk> are inherently subject to risks and uncertainties.
M C: Not be realized in the future for various reasons.
MC Call: As stated in our press release, and also, this call includes the discussion of certain non-GAAP financial measures, such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as a complement to our GAAP disclosures. For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures, please refer to the section on non-GAAP financial measures in our press release.
M C: In our press release.
M C: Also this call includes a discussion of certain non-GAAP financial measures such as adjusted EBITDA.
M C: We believe these measures can enhance our investors' understanding of the actual cash flows.
M C: Major businesses when used as a complement to our GAAP disclosures.
M C: For a discussion of the use of non-GAAP financial measures and reconciliation with the closest GAAP measures. Please refer to the section on non-GAAP financial measures.
M C: Our press release.
MC Call: I have with me, Chairman and Chief Executive Officer, Forrest Li, President, Chris Feng, and Chief Financial Officer, Tony Ho. Our management will share strategy and business updates, operating highlights, and financial performance for the first quarter of 2024. This will be followed by a Q&A session in which we welcome any questions you have. With that, let me turn the call over to Horace.
M C: I have with me Sea's, Chairman and Chief Executive Officer Firstly.
Christopher: Christopher <unk>.
Christopher: And Chief Financial Officer, Tony Hull.
Management will share strategy and business updates.
Christopher: Operating highlights and financial performance for the first quarter of 224.
This will be followed by a Q&A session.
Speaker Change: We welcome any questions you have.
With that let me turn the call over to parse.
Parse: Hello, everyone and thank you for joining today's call.
Horace: Hello everyone, and thank you for joining today's call. I'm pleased to share that we're kicking off 2024 with a strong quarter. All our three businesses have delivered solid growth with an improved profit profile. The macroenvironment in the past few years has been challenging. Many of you have been with us through this journey. Going through this period has made us leaner, fitter, and savvier. But, we will always face new
Parse: I'm pleased to share that we're kicking off 2024 with a strong quarter.
Parse: Our three businesses have delivered solid growth with an improved profit profile.
The macro environment from the past few years have been challenging many of you have been with us through this journey.
Parse: Going through the PRA has made us leaner speaker and Savio.
Parse: Well, we will always face new challenges we.
Horace: We are now much more confident of our ability to weather headwinds well and adapt quickly to changing environments. With that, let me take you through each business performance, starting with e-commerce. We are pleased to report that Shopee delivered strong growth this quarter, achieving its highest-ever quarterly orders, GMV, and revenue. In the first quarter, on a year-on-year basis, gross odor revenue was up 57%.
Parse: We are now much more confident of our ability to weather headwinds well.
Quickly to changing environment.
Speaker Change: With that let me take you through each business' performance.
Speaker Change: Starting with e-commerce.
Horace: GMB was up 36% and revenue was up 33%; unit economics has also improved. Our overall adjusted EBITDA loss narrowed to $22 million, and our Asian market achieved a positive adjusted EBITDA of $11 million this quarter. Shopee's operational priorities for 2024 continue to be enhancing our price competitiveness, strengthening our content ecosystem, and improving service quality for our buyers. We are making good progress on all these problems.
Speaker Change: We are pleased to report that choppy delivered strong growth this quarter, achieving its highest ever quarterly order GSV and revenue.
Speaker Change: In the first quarter on a year on year basis.
Speaker Change: Gross odor was up 57 per ton GMB was up 36% and revenue was up 33%.
Speaker Change: Unit Economics has also improved.
Speaker Change: Our overall adjusted EBITDA loss narrowed to $22 million.
Speaker Change: And our Asian market achieved a positive adjusted EBITDA of $11 million.
Speaker Change: This quarter.
Speaker Change: Shock is operational priorities for 2024 continue to be key.
Has been our price competitiveness.
Speaker Change: <unk> our content ecosystem.
Speaker Change: And improving service quality for our buyer.
Speaker Change: We are making good progress.
This problem.
Speaker Change: Enhancing our price competitiveness.
Horace: We continue to help sellers with upstream supply chain access to sell more easily on Shopee, and we are strengthening our content ecosystem. Shopee has become the largest live streaming e-commerce platform in Indonesia, based on average daily live streaming orders in the first quarter.
Speaker Change: We continue to help sellers with upstream supply chain access to sell more easily on shopping.
Speaker Change: Strengthening our content ecosystem.
Speaker Change: <unk> has become the largest in live streaming e-commerce platform in Indonesia.
Based on average daily live streaming order in the first of quarter.
Horace: Live streaming e-commerce unit economics also continue to improve quarter on quarter, on Improving Service Quality for Buyers. Our integrated logistics capability has become a key depreciating factor of our service quality. We have put a lot of hard work into XPS Express. And today, it is one of the fastest and most intensive logistics operators in our market, greatly enhancing our customer experience. In the first quarter, about 70% of XPS Express orders in Asia were delivered within three days of order placement.
Speaker Change: Live streaming E Commerce unit economics also continued to improve quarter on quarter.
Speaker Change: Our improving service quality for buyer.
Speaker Change: Our integrated logistics capability has become a key depreciating factor of our service quality.
Speaker Change: We have put a lot of hard work into SPX Express.
Speaker Change: And today it is one of the fastest and the most intensive logistics operator in our market.
Speaker Change: Greatly enhancing our customer experience.
Speaker Change: In the first quarter above 70% of <unk> Express order in Asia with deliver within three days of order placement.
Horace: And because of the skill we have achieved in our market, we have managed to steadily reduce its cost. XPX Express's cost per order decreased by 15% for Asia and 23% for Brazil year-on-year in the first quarter.
Speaker Change: And because of the scale, we have achieved in our market we.
Speaker Change: We have managed to steadily reduce its cost.
Speaker Change: Ex TX expressive cost per order decreased by 15% for Asia, and a 23% for Brazil year on year in the first quarter.
Speaker Change: Having <unk> express in the Shockey ecosystem also allows us to efficiently roll out new feature.
Horace: Having XTX Express in the Shopee ecosystem also allows us to efficiently roll out new features that benefit our buyers, such as the On-Time Guarantee Program that we launched in Southeast Asia. This program provides a guaranteed delivery time for orders, and this certainty is well appreciated by our buyers. Another initiative we implemented is having Shopee directly manage the return and refund process. This test resulted in a 30% year-on-year decrease in resolution time.
Speaker Change: Fifth our buyer.
Speaker Change: Such as the uptime guarantee program.
Speaker Change: Launched in Southeast Asia.
Speaker Change: This program provides a guaranteed delivery time for order and as the certainty is well.
Speaker Change: Appreciated by our buyer.
Speaker Change: Another initiative, we implemented is having sharpie directly manage the return on a response for that.
Speaker Change: This test resulted in a 30% year on year decrease in resolution time.
Horace: In the first quarter, about 45% of cases were resolved within one day. So taken together, these efforts increase operational efficiency, improve customer experience, and reinforce Shopee's reputation as a reliable shopping destination. We will continue to push more on these operational priorities in the coming quarter and year. We expect this to further differentiate Shopee from its competition and bring greater value to both our buyers and sellers.
Speaker Change: In the first quarter above 45% of cases were resolved within one day.
Speaker Change: So taken together.
Speaker Change: This effort increased operational efficiency.
Speaker Change: <unk> customer experience and reinforced shop this reputation as a reliable shopping destination.
Speaker Change: We will continue to push more on this operational priority in the coming quarter and a year.
Speaker Change: We expect this effort to further depreciated choppy from its competition and bring greater value to both our buyer and a seller.
Speaker Change: Next turning to digital financial services.
Speaker Change: We are pleased to report that <unk> has continued its strong growth momentum and the profitability into 2024, while maintaining prudent risk management.
Horace: We are pleased to report that Simony has continued its strong growth momentum and profitability into 2024 while maintaining prudent risk management. Our efforts in user acquisition have produced significant growth in both user numbers and the loanbook size in the first quarter. Our digital financial services revenue grew 21% and adjusted EBITDA grew 50% year-on-year. Consumer and SME loan active users, defined as those with loans outstanding by the end of the quarter, increased 42% year-on-year to more than 18 million this quarter. As of March 31, 2024, our consumer and SME loans' principal outstanding reached $3.3 billion, up 29% year-on-year and up 5% quarter-on-quarter.
Speaker Change: Our efforts on user acquisition.
Speaker Change: Produced significant growth in both user number and the loan book side.
In the first quarter.
Speaker Change: Our digital financial services revenue grew 21% and adjusted EBITDA grew 50% year on year.
Consumer and SME loan active user defined as loans with loan outstandings by the end of the quarter increased 42% year on year to more than $18 million this quarter.
Speaker Change: As of March 31, 2020 for our consumer and SME loan principal outstanding reached $3 3 billion.
Speaker Change: Up 29% year on year, and up 5% quarter on quarter.
Speaker Change: Yeah.
Speaker Change: Credit business is currently the primary driver of <unk> revenue and the <unk>.
Horace: The credit business is currently the primary driver of C-money's revenue and profit growth. Our credit business benefits from Shopee's transaction warrants and user base. In addition, we are also seeing strong growth in off-shopping loans, which include cash loans and off-shopping as pay later consumption loans. By the end of the first quarter, off-shope loans accounted for over 40% of our total consumer and SME loans outstanding.
Speaker Change: Market growth.
Speaker Change: Our credit business benefits from shock is transaction Walden and the user base.
Speaker Change: In addition, we are also seeing strong growth in offshore pilon.
Speaker Change: Which include cash loans and off Shockey SBA later consumption alone.
Speaker Change: By the end of the first quarter.
Speaker Change: Op sharpie alone accounted for over 40% of our total consumer and SME loans outstanding.
Speaker Change: Going forward we.
Horace: We see further opportunities to improve our off-shopping penetration across different markets as we continue to grow. Furthermore, as we build up our credit business, we continue to maintain a prudent approach to risk management. We generally begin by granting low credit limits and short-term loans to users to build their credit history. For users with a good track record, we gradually increase the credit limit, the loan tenure, and the credit product offering. As we gain more users and more data, we continuously fine-tune the risk model for each market. This allows us to grow our business while maintaining good risk control. Non-performing loans passed the deal by more than 90 days as the percentage of total consumer and SME loans remained stable at 1.4%.
Speaker Change: We see further offset to improve our off shockey penetration across different market as we continue to grow.
Speaker Change: Okay.
Speaker Change: As we scale up our credit business, we continue to maintain a prudent approach to risk management.
Speaker Change: We generally begins by granting low credit limit short 10 year loan to users to build their credit history.
Speaker Change: For users with good track record with gradually increase the credit limit.
Speaker Change: On tenure and a credit product offering.
Speaker Change: As we gain more user and the more data we continuously fine tune the referral model for each market.
Speaker Change: This allows us to grow our business, while maintaining good risk control.
Speaker Change: Nonperforming loans past due by more than 90 days as a percentage of total consumer and SME loans remained stable at one 4%.
Speaker Change: We anticipate further growth for our digital financial services business throughout the year.
Horace: We anticipate further growth for our digital financial services business throughout the year. As we healthily grow our user base, we will be able to offer a broader set of financial services to meet our users' needs in the future. Finally, turning to our digital entertainment business, we are pleased to share that Garena is back to positive growth, with bookings up 11% year-on-year. This was led by Free Fire's strong performance across markets. In the first quarter, Free Fire's average MAU increased 24% year-on-year. Our operational priorities for Free Fire will remain consistent in 2024.
Speaker Change: As we healthily grow our user base.
Speaker Change: We will be able to offer a broader set of financial services to meet our users' needs in the future.
Speaker Change: Finally.
Speaker Change: Turning to our digital entertainment business.
Speaker Change: We are pleased to share that arena is back to positive growth.
Speaker Change: With bookings up 11% year on year.
Speaker Change: This was led by <unk> strong performance across market.
Speaker Change: In the first of quarter three.
Speaker Change: <unk> average and au increased 24% year on year.
Speaker Change: Our operational priorities for free fire will remain consistent in 2024 <unk>.
Horace: Improving user acquisition, engagement, and retention. We continue to introduce play modes, redesign features, and launch new content at a high rate, all at a high frequency, allowing Free Fire to sustain high player engagement with this huge user base. In January, we launched Chaos, a major version update allowing players to vote for key events in the game setting.
Speaker Change: Improving user acquisition engagement and retention.
Speaker Change: We continue to introduce play mobile redesign feature and launched new content.
Speaker Change: At a high all at a high frequency.
Speaker Change: Allowing <unk> to sustain high player engagement with this huge user base.
Speaker Change: In January we launched payout a major version update allowing players to both for key events in the <unk> setting.
Horace: This interactive feature has made Chaos highly successful. And in April, we launched the Mechadrink version update, allowing players to team up to combat a mechanical monster in addition to the EURO PVP gameplay. Our constant effort to understand the user's needs, address key issues from a product perspective, and frequently introduce fresh and exciting content is paying off. In its 7th year, Free Fire is still one of the largest mobile games in the world by user scale, and remains highly effective in attracting new users. According to Center Tower, Free Fire was the most downloaded mobile game globally in the first quarter, giving it a track record of being able to sustain and grow its massive global user base.
Speaker Change: This interactive feature has made clear highly successful.
Speaker Change: And in April we launched the <unk> version update.
Speaker Change: Allowing players to team up to combat the mechanical Master in addition to the Europe Pvp game play.
Speaker Change: Our constant effort to understand the users' needs.
Speaker Change: The address key issues from a product perspective, and frequently introduced fresh and exciting content are paying off.
Speaker Change: In its seventh year.
Speaker Change: <unk> is still one of the largest mobile games in award by user scale.
Speaker Change: And the remains highly effective.
Speaker Change: <unk> new users.
Speaker Change: According to sensor tower three power was the most downloaded mobile games globally in the first quarter.
Speaker Change: Given this track record of being able to sustain and grow <unk> massive global user base we.
Horace: We are confident of building Free Fire into an evergreen franchise. To conclude, we have a clear roadmap for profitable growth. Our results in the first quarter have given us a strong start to 2024, and we are well on track to deliver our four-year guidance. With that, I will invite Tony to discuss our financials. Thank you. And thanks to everyone for joining the call.
Speaker Change: We are confident of building <unk> into an evergreen franchise.
To conclude we have a clear road map for profitable growth.
Speaker Change: Our results in the first quarter have giving us a strong start to 2024.
Speaker Change: And we are well on track to deliver our full year guidance.
Speaker Change: With that I will invite Tony to discuss our financial.
Speaker Change: Okay.
Tony Hull: Thank you Forrest and thanks to everyone for joining the call.
Tony Ho: We'll see overall, total gas revenue increased 23% year-on-year to $3.7 billion. This was primarily driven by GMB growth in our e-commerce business and the growth of our credit. Our total adjusted EBITDA was $401 million in the first quarter of 2024, compared to an adjusted EBITDA of $507 million in the first quarter of 2021. On e-commerce, our first quarter GAP revenue of $2.7 billion included GAP marketplace revenue of $2.4 billion. Up 33% year-on-year, and Gap Product Revenue of $0.3 billion. Within Gap Marketplace, Poor Marketplace Revenue, mainly consisting of transaction-based fees and advertising revenue, was $1.7 billion, at 47% year-old.
We will see overall total GAAP revenue increased 23% year on year to $3 $7 billion.
Tony Hull: This was primarily driven by our GMB growth of our e-commerce business and the growth of our credit business.
Tony Hull: Our total adjusted EBITDA was $401 million in the first quarter of 2020.
<unk> 24, compared to an adjusted EBITDA of $507 million in the first quarter of 2023.
Tony Hull: On E Commerce, our first quarter GAAP revenue of $2 7 billion.
Included marketplace revenue of $2 $4 billion.
Tony Hull: Up 33% year on year.
Tony Hull: And gas product revenue of <unk> 3 billion.
Within gas marketplace revenue core marketplace revenue, mainly consisting of transaction based fees and advertising revenues was $1 7 billion.
Tony Hull: 47% year on year.
MC Call: Value Added Services Revenue, mainly consisting of revenues related to logistics services, was $0.7 billion, up 8% year-on-year. E-commerce adjusted EBITDA loss was $22 million in the first quarter of 2024, compared to an adjusted EBITDA of $208 million in the first quarter of 2023 for our Asia market. We had an adjusted EBITDA of $11 million during the process, compared to an adjusted EBITDA of $276 million in the first quarter of 2020 in our other markets.
Tony Hull: Value added services revenue, mainly consisting of revenues related to logistics services was 057 billion.
Tony Hull: 8% year on year.
Tony Hull: E Commerce, adjusted EBITDA loss was $22 million.
Tony Hull: In the first quarter of 2024 compared to an adjusted EBITDA of $208 million in the first quarter of 2023.
Tony Hull: While our Asia markets, we had adjusted EBITDA of $11 million during the quarter compared to an adjusted EBITDA of $276 million in the first quarter of <unk>.
Tony Hull: 'twenty three.
Tony Hull: Our other markets.
MC Call: The adjusted EBITDA loss was $33 million, narrowing meaningfully from last year, when losses were $68 million. Contribution margin loss per order in Brazil improved by nearly 88% year-on-year to reach 94%. Digital financial services gap revenue was up by 21% year-on-year to $499 million, and adjusted EBITDA was up by 50% year-on-year to $149 million. Digital entertainment bookings were $512 million, and gap revenue was $458 million. Adjusted IPTA was $292 million. Returning to our consolidated number, we recognize a net non-operating loss of $18 million in the first quarter of 2024, compared to a net non-operating income of $23 million in the first quarter of 2020.
Adjusted EBITDA loss was $33 million net.
Tony Hull: Narrowing meaningfully from last year, when losses were $68 million.
Tony Hull: Contribution margin loss per order in Brazil improved by nearly 88% year on year to reach negative forces.
Tony Hull: Digital financial services, Scott revenue was up by 21% year on year to $499 million.
Adjusted EBITDA was up by 50% year on year to $149 million.
Tony Hull: Digital entertainment bookings were $512 million.
Tony Hull: GAAP revenue was $458 million.
Tony Hull: Adjusted EBITDA was $292 million.
Returning to our consolidated numbers, we recognized net nonoperating loss of $18 million in the first quarter of 2024 compared to a net nonoperating income of $23 million in the first quarter of 2023.
Tony Hull: We had a net income tax expense of $79 million in the first quarter of 2024 compared to net income tax expense of $62 million in the first quarter of 2023.
Tony Hull: As a result net loss was $23 million in the first quarter of 2024 as compared to a net income of $87 million.
Tony Hull: In the first quarter of 2023.
Thank you Forrest and Tony we're now ready to open the call for questions.
MC Call: We had a net income tax expense of $79 million in the first quarter of 2024 compared to a net income tax expense of $62 million in the first quarter of 2024. As a result, our net loss was $23 million in the first quarter of 2024, as compared to net income of $87 million in the first quarter of 2020.
Speaker Change: The writer.
Speaker Change: Thank you we will now begin the question and answer session. If you would.
Operator: Thank you. We will now begin the question and answer session. If you would like to ask a question during this time, simply press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, press the star one again. In the interest of time, we will take a maximum of two questions at a time from each caller. If you wish to ask more questions, please request to join the question queue again after your first questions have been answered. At this time, we will pause momentarily to assemble our roster. The first question comes from the line of Pang Vitt of Goldman Sachs. Please go ahead.
Speaker Change: Like to ask a question during this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question press. The star one again in the interest of time, we will take a maximum of two questions at that time from each caller.
Speaker Change: If you wish to ask more questions. Please request to join this question queue again. After your first question has been addressed.
Speaker Change: At this time, we will pause momentarily to assemble our roster.
Speaker Change: Okay.
Speaker Change: The first question comes from the line of Ben <unk> of Goldman Sachs. Please.
Ben: Please go ahead.
Ben: Hi, Good morning, Good evening management team and congratulations for a solid set of results two questions from me number one how do you get the right confidence that you will be able to type sustainable growth, especially once people start to lower subsidies and move toward especially profits.
Pang Vittayaamnuaykoon: Hi, good morning, good evening, management team, and congratulations on a solid set of results. Two questions from me. Number one, how do you derive confidence that you will be able to drive sustainable growth, especially once you start to lower subsidies and move toward profitability? If your competitors decide to turn more aggressive, is there a way for you to properly react to that? That's question number one. On number two, on gaming, given a very strong first quarter trend and results, how are you seeing trends toward the second quarter and rest of the year? Can you provide color on what exactly you have done in order to derive growth and any thoughts on the run rate of margin going forward as well?
Ben: Ability if your competitor cytokine more aggressive is that way for you to publicly you react to Westpac. That's question number one or number two on gaming given a very strong first quarter trends can be house, how are you seeing trends towards second quarter and wrap up the year can you provide color on what exactly you have.
Ben: Dun <unk> <unk> and <unk>.
Ben: Any thoughts on the run rate of the margin going forward as well.
Chris Feng: It's quick here. I will take the first question on the e-commerce side. I think for us, the most important thing is to work on the long-term competitive modes for e-commerce. I think for us, as I shared in the previous call, number one, the cost to serve, to make sure that we can serve the transactions to our buyers and sellers at a lower cost. Number two is the price competitiveness of the product, to make sure that the price for the same product or platform is always better than other platforms.
Ben: It's Chris here I'll take the first question on the E Commerce side.
Ben: I think for us the.
Ben: The most important thing is to work on long term competitive moat for E Commerce, I think to us as I shared in the previous call.
Number one the cost to serve to make sure that we can.
Ben: So the transactions.
Ben: To our buyers and sellers in a lower cost number two is the price competitiveness of the product to make sure that the.
Ben: The price for the same put on our platform is always better.
Chris Feng: To do that, we have to work closely with the sellers, especially after the value change, to ensure that we can offer a lower price to the buyers always. Number 3 is the quality of services. As I mentioned quite a few times, this is one of the key areas we're focusing on to improve not only the delivery services to our consumers but also the return services and the customer service experiences, etc.
Ben: The other platforms.
Ben: To do that we have to work closely with the Astellas.
Ben: Specially offered the beverage cans.
Ben: Ensure that we can offer a lower price to the buyer.
<unk>.
Ben: Number three is the quality of services.
Ben: As far as I mentioned quite a few times that this is Ralph.
Ben: The key areas, we are focusing on to improve not only the delivery services to our consumers, but also of the year.
Ben: The return services and the customer service experiences et cetera, I think all those three things will contribute to our long term compares.
Chris Feng: I think all three things will contribute to our long-term competitiveness in our e-commerce businesses. As long as we can do this well, we believe that we can deliver better value to our buyers and sellers, so we can grow faster than the market that we operate in. At the same time, if you look at, you know, in the past few months, we do observe that the overall market is in a stable, more stable situation, really, regarding the competition point that you mentioned.
Ben: Competitiveness.
Ben: For our e-commerce businesses.
Ben: As long as we can do this well we believe that we can deliver better value to our buyers sellers solar can grow better than the market.
Ben: That we operate in.
Ben: At the same time.
Ben: If you look at it all.
Ben: In the past few months that we do observe the overall market is in a stable more stable situations in regarding to the competition that you mentioned and and if the competitor does get more aggressive I think we'll have to evaluate.
Chris Feng: And if the competitors do get more aggressive, I think we have to evaluate exactly what they did and how they did it. We will look market by market, category by category, to evaluate what's the best response we have. But all in all, in the long term, it's the three things I mentioned earlier; the long-term company mode will create value for our market, for our consumers, and for our sellers.
Ben: Exactly.
Ben: What they did and how they did it we will look at market by market category by category.
Ben: Evaluate what the best response, we have all of that.
Ben: All in all in the long term.
Ben: It's the three things I mentioned earlier, the long term of the mode will create value for our market to our consumers and our sellers and we do believe that as largely do well that we should be able to grow well regardless of what competitor.
Chris Feng: And we do believe that as long as we do well on that, we should be able to grow well, regardless of what competitors do in the short term. I think that will, you know, bring us to a better position in the market over the years.
Ben: In the short term.
Ben: I think that will.
Ben: Bringing us to a better percentage of the market over the years.
Of course, there might be a fluctuation in the short term up and down but it shouldnt change the long term future.
Ben: Okay.
Chris Feng: On the gaming side... We are very happy to see what we achieved in Q1, and it's a pretty strong result and a strong trend. And we see this trend continue in Q2 so far, and in general, we are pretty optimistic about the rest of the year. I think, as we shared in the last quarter, we expected we were going to achieve double-digit growth for the whole year.
Ben: On the gaming side.
Ben: Uh huh.
Ben: We are great. We're very happy to see what we have achieved in the in the Q1 right.
Ben: Strong.
Ben: The result, and the strong trend and we see this.
Ben: Trends continued.
Ben: In Q2, so far and in general we're pretty optimistic about the rest of the year I think as we shared in the in the last quarter right and we expect data we're going to achieve specific for free fire.
Ben: P J it's growth right.
Ben: The whole year, and I think like that.
Chris Feng: And I think the current growth and the trend is pretty much a reflection of not just what we have done in the past quarter, but actually, it's a reflection of what we have done in the past two years. And we have gone through some challenges and faced some tremendous headwinds, especially after COVID. But I think we always believed that our ambition and our aspiration was to build Free Fire into an evergreen franchise. So with that kind of fundamental belief, we didn't rush to monetize things. The gain rate may continue to go down until it's completely gone.
Ben: The current the growth and the trend is.
Ben: Is it pretty much kind of a reflection on what not just to what we have done in the past quarter.
Ben: Actually it's a reflected what we have done in the past two years right on the wafer cost.
Ben: Challenges.
Ben: Based on the tremendous headwind, especially after Colgate, Brian on the end, but I think like.
Ben: We always believe okay ambition and our aspiration is that building to refer into every bring franchise, so with that kind of fundamental belief.
Ben: We didn't end up like a rush to monetize things that gateway may may kind of continue to go down Q Q2 choices <unk> Gov, and we very very much for costar.
Chris Feng: And we very, very much focus on all the user experiences and try to fine-tune the product with a very, very user-centric approach. And in the past two years, we have conducted a lot of study trips and surveys, and gone to talk to gamers, ask them what they like and what they don't like about Free Fire, why they play, and why they do not play. And the tremendous development effort is also spent continually fine-tuning the game based on the feedback we've received. I think that that is kind of what we have seen now, the accumulated result of those three efforts. And another factor I want to mention is that we kind of observed a...
Ben: Oh, the user experience and to try to fine tune the product and the tool and with a very very much a user centric.
Ben: Approach right on the past two years, we have been.
Ben: Conducted a lot of.
Ben: The study trip right on the survey is right in our go to talk to the Kmart after what they like and what they don't like about the avast require wireless play on the wagon to now play and the tremendous the development effort is.
Also spend.
Ben: Continuing to fine tune the game based on the feedback we received.
Speaker Change: I think that that is kind of what we have seen now is a.
Speaker Change: Cumulated result through those relief efforts.
Speaker Change: Efforts and another factor I want to mention is so we kind of absorbed.
Chris Feng: The whole market has gone through the post-COVID situation now after almost two years of that period. And we've seen gamers refocus on gameplay. As we shared before, during COVID, gamers could play a lot of games, and there were not many other options for entertainment, and they felt burned out. And that's why right after COVID, we see there's a tremendous trend, and the gamers start to focus on other entertainment. But after another two years, I think now that...
Speaker Change: The whole market has gone through the post COVID-19 situation now after almost two years of product period, and we've seen kind of a gamer.
Speaker Change: Re <unk> four cuts under the gameplay.
Speaker Change: As we shared before like during the case during the Covid time in a gateway market play a lot of game.
Speaker Change: Game right now there is not much other options for entertainment and any kind of a fuel burned out.
That's why it's a red offer Colgate dairy received there is a tremendous.
Speaker Change: Black.
Speaker Change: Trends right under the game or start to focus on other entertainment and but after another two year I think right now the whole game community globally, we see kind of that trend started coming back in the game or to start kind of.
Speaker Change: <unk> joined <unk> as its gameplay is specifically for for free power and this is the Chinese are not just our perspective beyond any single market and actually saw happen across all of the market.
Speaker Change: I know we have the game operated.
In summary, I think black based off what has happened in the market on what we have done for free fire.
Speaker Change: It's a pretty much a very very good product market fit right on I think like we make the <unk>.
Speaker Change: Ideal product for gamers at the right timing when they are kind of help.
Speaker Change: Have a strong appetite for tween joined the game play. So we will do our best to continue these trends right.
Speaker Change: Hopefully to continually to growth <unk> the user base.
Speaker Change: And also the monetization part as well for the rest of the year.
Speaker Change: Okay.
Speaker Change: Your next question comes from the line of Alicia Yap of Citigroup. Please go ahead.
Operator: Your next question comes from the line of Alicia Yap of Citigroup. Please go ahead.
Alicia Yap: Hi can you hear me okay.
Alicia Yap: Hi, can you hear me okay? Yeah. Hello. Yeah. Okay. Hi. Good evening, management. Thanks for taking my questions. I have a question related to Shopee.
Alicia Yap: Yes, Hello, yeah, Okay.
Alicia Yap: Good evening management, Thanks for taking my questions I have a question related to chassis.
Chris Feng: I wonder if you were willing to return to loss-making to defend your share if the competition is indeed getting more aggressive? What other levers can you further pull to allow you to defend your share while also maintaining your profitability trend? And if we look at the commission take rate, excluding advertising, how much more room can we actually still raise the commission take rate across different countries? Thank you.
Speaker Change: Just one.
Speaker Change: Are you willing to return to loss, making to Easter.
Speaker Change: If the competition is getting more aggressive.
Speaker Change: I mean can you put a pool to allow you to defend your share while also maintaining our profitability.
Speaker Change: And if we look at the commission take rate, excluding the advertising how much more room can be actually still weighs the commission take rate across the country. Thank you.
Speaker Change: Yeah.
Operator: On the commission tick rate, generally, we still see there is a meaningful room to increase the commission tick rate, although probably not as aggressive as last year in terms of increase. We also see there's a meaningful room on the ad tick rate that we can look at. I think I shared this in the previous call as well, that we believe that our ad tick rate is still slightly lower than the peers that we see in other markets, so there is meaningful room there.
Speaker Change: On the commission take rate.
Speaker Change: Generally we still see that.
Speaker Change: There is a meaningful room.
Speaker Change: To increase the commission take rate.
Speaker Change: Although probably not aggressive not as aggressive as last year in some of the increase.
Speaker Change: We also see that the meaningful room on the AD takeaways that we can look at.
Speaker Change: I think I shared this in the pivot call as well that we believe that our <unk> rate is still slightly lower than the peers that we seeing other markets. So there is a meaningful room there.
Operator: And in terms of the competition, I think, similar to the previous question that was raised, for us, the most important thing is to focus on long-term core competitiveness. The cost to serve, the price competitiveness, the service experience, and all those things will give us a long-term advantage over our competitors in the market. In the short term, we have observed a more stable competition environment in the past few months, and if it changes, we will study country by country, category by category, and evaluate what's the best way to respond to that.
Speaker Change: And in terms of the competition I think similar to that.
Speaker Change: A question that I've been I've been ready.
Speaker Change: For us the most important thing to focus on the long term core competitiveness.
Speaker Change: The price competitiveness.
Speaker Change: The service experience.
Speaker Change: And all those things will bring us a long term advantage for.
Speaker Change: So off to our computer competitive in the market in.
Speaker Change: In the short term.
Speaker Change: Observed more stable competition environments in the past few months and if it changes.
Speaker Change: That is country by country category category.
Speaker Change: What's the best way to respond to that.
Okay.
Speaker Change: Your next question comes from the line of Navin from UBS. Please go ahead.
Navin Killa: Your next question comes from the line of Navin Killa from UBS. Please go ahead.
Hi.
Chris Feng: Hi, good evening, and thank you for the opportunity. I actually have a couple of questions. The first one was Just trying to understand the strength in the GMB for e-commerce. How much of that is attributable to seasonality given the movement that we have seen around Le Baron this year? And therefore, I guess in the context of that, I noticed that you haven't changed your GMB guidance of high single-digit, sorry, high team growth.
Navin: Good evening and thank you for the opportunity.
Navin: Actually I had a couple of questions. The first one was.
Navin: Just trying to understand.
Navin: The strength in.
Navin: The GMB for E Commerce.
Navin: How much of that is attributable to seasonality given given the movement that we have seen a doctor to button this year.
Navin: And therefore, I guess in the context of that I noticed that you haven't changed your guidance of high single digits, So any high teens growth.
Navin: I'm just wondering how you think about that and I guess the second question is.
Chris Feng: I'm just wondering how you think about that. And I guess the second question is, you know, on the logistics strategy. Clearly, we are starting to see some results. Could you share some numbers on the percentage of orders that are delivered on your own platform and how do you see that number evolving in the medium to long term?
Navin: On the logistics strategy clearly we are starting to see some results.
Navin: Sure.
Numbers on the percentage of orders that are delivered on your own platform and how do you see that number evolves in the medium to long term.
Navin: Okay.
Operator: For the GMVs, as Horace said in the opening, in Q1, we did see very strong GMV growth, and part of that is contributed by seasonality, as this year we have both the Lunar New Year and also the Ramadan holiday falls into Q1, versus the different patterns in the past few years. But we don't think that's the only reason; I think that's a contributing part of the reason.
Navin: For the <unk>.
Navin: As far as churn in the ultimately.
Navin: Q1, we did see very strong <unk> growth.
Navin: And part of that is contributing by soon relative to us this year, we have both.
Navin: Lunar new year and also the.
Navin: Ramadan falls into Q1.
Navin: And.
Navin: The Ramadan holiday falls into Q2 versus.
The the different patterns in the past few years.
Navin: But we don't think that's the only reason I think that that's contributing part of reasons. Another part of the reason is that Oh. The execution work, we have done in the past few quarters Sato.
Operator: Another part of the reason is that all the execution work we've done in the past few quarters is starting to give us benefits in terms of top-line growth, and also the bottom-line improvement, in fact, is coming ahead. The exact split is probably hard to really split that in terms of both, but I do emphasize that it's not only the analogy but also the hard work we've been doing, giving us a benefit on both the top-line and bottom-line.
Navin: US benefit in terms of the topline growth and also the bottom line improvement impact is coming ahead actually.
Navin: The exact split it's probably hard to.
Navin: We split that.
Navin: In terms of both but I do.
Navin: <unk> is not only seasonality, but also the.
Navin: However, we have been doing I was giving us the benefit on both the topline and Bottomline.
Operator: For logistics, in Asia, we deliver more than half of our orders through our own SPX Express. In Brazil, we probably have more than 70% now, and we will be looking at increasing that percentage over time. I think both percentages will increase over time.
Navin: For the logistic.
In Asia.
Navin: The we do deliver more than half of our orders through our own <unk>.
Navin: <unk> Express.
Navin: In Brazil, we probably have more than 70% now and we will be looking at increasing our percentage over time I think both if any will increase over time.
Navin: Okay.
Speaker Change: Your next question comes from the line of <unk> of Morgan Stanley. Please go ahead.
Divya Gangahar Kothiyal: Your next question comes from the line of Divya Kothiyal of Morganstownie. Please go ahead.
Divya Gangahar Kothiyal: Thank you very much. Good evening.
Morgan Stanley: Thank you very much good evening. My first question is on the E. Commerce business could you talk about the drivers for the 23% quarter on quarter reduction that we've seen in our sales and marketing expense for the segment.
Chris Feng: My first question is on the e-commerce business. Could you talk about the drivers for the 23% quarterly-on-quarter reduction that we've seen in sales and marketing expense for this segment, especially with regard to where we are in terms of unit economics for live streaming e-commerce versus marketplace? And also, if you can comment, in which scenario do you think we can get back to the profitability levels of over 1% of GMB that we were able to achieve at the beginning of last year?
Morgan Stanley: With regards to where we are in terms of unit economics for live streaming E. Commerce lessons marketplace and also if you can comment then with scenario do you think we can get back to the profitability levels of over 1% of GMB that'd be very able to achieve in the beginning of last year.
Chris Feng: My second question is on the DFS business. The marketing expenses remained elevated in this quarter. Could you talk about what parts of the fee money are these being allocated to and what kind of traction you're seeing? And would it be fair to say that this segment's top-line growth may actually deviate from the e-commerce growth going forward as you build new cases? Thanks.
Morgan Stanley: My second question is on the BFS business are the marketing spends have remained elevated in this quarter could you talk about what parts of the money are these being allocated to and what kind of traction you are seeing and would it be fair to say that the segment's top line growth may actually deviate from the e-commerce growth going forward as you both new cases thanks.
Morgan Stanley: Yes.
Morgan Stanley: Yes.
Chris Feng: Yes, on the e-commerce side of the question, we do see a sizable reduction in sales and marketing. Part of that is contributed by the better UEEs from live stream that we see from Q4 to Q1, but part of that is also contributing to just general better performance in the marketplace in general. So for live streaming, just a little bit of context on that, I think we do see our live stream volume still growing in most of our markets, but the UEE actually improved significantly in various of our markets. And in general, I think in the coming quarters, we will see similar patterns that our UEE will continue to improve for live streaming.
Morgan Stanley: Our e-commerce side of the.
Morgan Stanley: Questions.
Morgan Stanley: We do see a sizable reduction in the sales and marketing.
Morgan Stanley: Yes.
Morgan Stanley: Part of that is contributing that competing by the better you use from lifespan that we see from Q4 to Q1, but part of that is also contribute to just general better performance in the marketplace in general.
Morgan Stanley: So for live streaming just a little context on that I think we do see our livestream volumes.
Morgan Stanley: Still growing.
Morgan Stanley: In most of our markets.
Morgan Stanley: But the you actually include improved significantly for both of our markets and in generally in general I think in the <unk>.
In quarters, where we will see a similar pattern that our <unk> will continue to cause it to improve for a lifetime.
Chris Feng: In terms of the EBITDA for GMVs, I think we will eventually go to that. I think the number you mentioned of 1% is a reasonable number to look at. And in the long term, I think we shared that we believe that 2% to 3% is a meaningful number to look at. I think just to add a little bit on the previous question so I make sure I don't miss that, I think the question was about guidance for high-tech growth in GMVs for e-commerce.
Morgan Stanley: The in.
In terms of the.
Morgan Stanley: EBITDA for <unk>.
Morgan Stanley: I think we will eventually go to.
Morgan Stanley: To that I think the number you mentioned the 1% I think that's a reasonable number to look at and in London.
Morgan Stanley: I think we shared that we believe that 2% to 3% is a meaningful number to look at that I think just to add a little bit on the previous question that I.
Morgan Stanley: Make sure I didn't Miss that I think the question was on the guidance.
Morgan Stanley: For the high teen growth on the <unk>.
Chris Feng: I think the number we see in Q1 has given us much stronger confidence in terms of terms of achieving, you know, achieving both the high single-digit GNV growth and even in the second half of the year. And we have been seeing, you know, a good trend in the last months as well. I think we will monitor the numbers. We will update the market when we see through the quarter. I think there are many factors impacting the numbers; part of that is just human nature; part of that is also in terms of the forex, the US exchange rate, etc.
Morgan Stanley: For E Commerce, I think the number we see in Q1.
Morgan Stanley: Is giving us much stronger confidence in terming AR.
<unk> that both they're high.
Morgan Stanley: High single digit GDP growth and the Eva in the second half of the.
Morgan Stanley: Yeah.
Morgan Stanley: We're thinking of it.
Morgan Stanley:
Morgan Stanley: Good trends in the latest month.
Speaker Change: And so I think we will monitor the numbers.
Speaker Change: We will update the market when.
Speaker Change:
Speaker Change: See the see through the quarter.
Speaker Change: I think there are many factors impacting the numbers part of that is just seasonality as part of that is also.
Speaker Change: In terms of the Forex of the U S exchange rates et cetera, but you know I think we will update the market when we.
Chris Feng: But, you know, I think we'll update the market when we see more numbers. Regarding the CFS... For the DFS, we do believe that, as we shared in the opening, still a large part of the DFS is contributed by the credit businesses. If you look at the credit businesses at this point in time, still a sizable part of that is contributed by the Shopee Pay Later, which is growing together with Shopee, but we do see there are better penetrations over time within Shopee for Shopee Pay Later.
Speaker Change: A few more numbers.
Speaker Change: Regarding the DFS.
Speaker Change: For <unk>, we do believe that.
Speaker Change: Still a large part of the DFS.
Speaker Change: To date by the credit businesses I think as we shed in the opening.
Speaker Change: If you look at the credit businesses.
Speaker Change: At this point in time, it's still a cycle of PA that is currently being by the year shall be paid later, which is growing together with the choppy, but although.
Speaker Change: We do see a better penetration over time.
Speaker Change: Within shopping for a replay later, besides what I feel as though there's also many other use cases like the bi.
Chris Feng: Besides Shopee Pay Later, there are also many other use cases, like the bike cash loan, we call it BCL, which is not part of the Shopee payment system. It's a cash loan you can take out to spend in any other places, and we are increasing the use cases in other scenarios, for example, the offline Shopee Pay Later. For example, in Indonesia, you can scan a QR code and use Shopee Pay to scan a QR code and pay for that with SBL, similar to a credit card experience.
Speaker Change: Our cash flow.
Speaker Change: PCL.
Speaker Change: Which is not.
Speaker Change:
Speaker Change: Part of the choppy payment system, it's our cash flow and can take out to spend any other places and also we are increasing the use cases.
Speaker Change: In other scenarios for example, the year offline so until later.
Speaker Change: 17, Vijay can scan a QR code.
Speaker Change: And.
Speaker Change: Using Shelby pages kind of QR code and pay that was STL similar to a credit card experience. We also have our hands.
Chris Feng: We also have handphone loans in Indonesia as well, and we are expanding to other markets. I think all those use cases will expand our financial businesses beyond the Shopee ecosystem. In terms of sales and marketing, I think our businesses have a very good margin, as you can see from the EBITDA. At the same time, our business is still in a very early stage. The penetration of shopping during the early stage, cash loans during the early stage, and many other use cases during the early stage.
Speaker Change: A handful loans in Russia as well.
Speaker Change: Turning to other market I think all of those use cases will expand.
Speaker Change: Just your financial businesses beyond the choppy ecosystem.
In terms of the sales and marketing.
Speaker Change: Our businesses has a pretty good margin as you can see from the EBITDA.
Speaker Change: Same time, our business is still in very early stage.
The penetration on shopping during the early stage.
Speaker Change: The cash loans during the early stage and many other use cases early stage. So we see that as a huge potential there to grow over time.
Chris Feng: So we see there's a huge potential there to grow over time, and in some quarters, we do see, you know, there are good acquisition channels. In some quarters, we see a new product mix change because our new products are coming out, etc. So there is an intention to acquire more users to our digital financial service ecosystem, given the very good economics we have seen so far. And the actual marketing spending depends a little bit on what we see in the customer representative cost and the UE we see from the new users, plus the new products we're launching in different markets. So it will fluctuate a little bit, just in practice.
Speaker Change: And in some quarters, we do see good.
Speaker Change: Good acquisition channels in some quarters, we see a new product mix change because our new products coming out et cetera, so that that.
Speaker Change: That is.
Speaker Change: Our intention to acquire more users to our digital financial services ecosystem, given the variable genomics Westin so far.
Speaker Change: And the actual marketing spend it depends a little bit on what we see on the peso was in Cogs and <unk>, we saw from the new users plus.
Speaker Change: Plus the new products, we're launching into a market. So it will fluctuate a bit.
Speaker Change: In practice.
Speaker Change: Your next question comes from the line of sight Ciena, Chad Cohen from Bank of America. Please go ahead.
Operator: Your next question comes from the line of Sachin Salgaonkar from Bank of America. Please go ahead.
Chad Cohen: Alright, congrats on a good set of numbers I have two questions. First question is on Sharpie breakdown, you already achieved breakeven and choppy for southeast Asia.
Sachin Shrikant Salgaonkar: Hi, congrats on a good set of numbers. I have two questions.
Sachin Shrikant Salgaonkar: The first question is on Shopee EBITDA. You have already achieved EBITDA break-even in Shopee for Southeast Asia. So, should we think this is sustainable going forward and we could see improvement in EBITDA out here, or was there some seasonality factor specifically in this quarter? Should we see some volatility in EBITDA, or should it directly continue to improve? And the second question is on average revenue per user in the gaming business. We saw it being lower than the historical trend. So, just wanted to check if anything specific happened in the quarter, or is this a new trend going forward?
Chad Cohen: Should we think this is sustainable going out here and we could see improved maintain a breakout here or there was some seasonality factor specifically in this quarter are you should we see some volatility in Colorado that exclude should continue to improve.
Chad Cohen: And second question is on average revenue per user in the gaming business.
Chad Cohen: We saw it being lower than the historical trend. So I just wanted to check anything specific happened in the quarter or is this a new trend.
Speaker Change: Thank you.
Chris Feng: On the EBITDA side, it does contribute partially by the net here as well, simply because in most of the market, we are contribution margin clusters, so we see a higher top line. It will help us on the EBITDA as well. Similar to the top line, we are observing the trend of how the market evolves during the quarter. I think we are about one and a half months into the quarter.
The EBITDA side it does contribute partially by.
Speaker Change: Isn't that as well.
Speaker Change: Simply because.
Speaker Change: In multiple market we are.
Speaker Change: Confusion margin posture, but we see a higher top line.
Speaker Change: It will help us on the EBITDA as well.
Speaker Change: There are similar to the topline.
Speaker Change: We are observing the trend on how the market evolves.
Speaker Change: During the quarter I think we are about one five months into the quarter.
Chris Feng: Our guidance, shared privacy, we are pretty confident of achieving that. Whether there are any changes to that, I think we will share with the market. For the game, I think that it simply reflects that we have a lot of new users coming to our game, especially for Free Fire. Even though Free Fire is in its 7th year, we see it very effectively attract new users. That's why we believe the game can still go on for a very long time.
Speaker Change: Yeah.
Speaker Change: Uh huh.
Speaker Change: Our guidance.
Speaker Change: She had previously we're pretty confident of achieving that end.
What they are.
Speaker Change: Any changes to that I think we will share.
Speaker Change: With the market.
Speaker Change: Yes.
Speaker Change: For the for the game I think that is.
Speaker Change: It is simply reflect.
Speaker Change: We have a lot of new users to come to our two hour like us, especially for free fire right given that for free fire has been is a 70 year, but we received a very very effectively.
Speaker Change: Factor new user so that's why we believe like the games can still go for very very long time and.
Chris Feng: And when we have new gamers, new players coming to the game, in general, I think their average spending, compared to more experienced gamers who have played the game for a longer time, will be relatively low. Usually, gamers will play the game, and the more they play, the more they spend, better engagement, and then there's a higher chance for monetization. So I think that there's nothing specifically about monetization; it's kind of just a reflective fact that there was very, very strong user growth for the game in Q1.
Speaker Change: When like we have the new gamers and new players come into the game and the general I think lack of.
Speaker Change: <unk> average spending as compared to the.
Speaker Change: Like a more kind of a lack of experience became worse when I go who have played the game for longer time will be relatively low right on the there was a lack of gamers will kind of play the game out of the water play therefore.
Speaker Change: Better engagement and then there is a higher charge for the for the monetization. So I think.
Speaker Change: There is nothing specifically about the about the monetization is a kind of adjust to reflect the fact that there is a very very strong user growth.
Speaker Change: For the game.
Speaker Change: Q1.
Speaker Change: Yeah.
Operator: Your next question comes from the line of Piyush Choudhary from HSBC. Please go ahead.
Speaker Change: Your next question comes from the line of Piyush Choudhary from HSBC. Please go ahead.
Speaker Change: Okay.
Piyush Choudhary: Hi, good evening management, and congratulations on a strong set of results. Two questions.
Piyush Choudhary: Yeah, Hi, good evening management and congratulations on a strong federal prisons.
Piyush Choudhary: Firstly, again going back to 2024 guidance, after such a strong performance, why hasn't the guidance like Shopee of turning EBITDA positive in 2H not been revised upwards? Do you expect volatility in the upcoming quarter? If you can comment on the competitive intensity in Indonesia and across ASEAN, you know, after a merger of TikTok and Tokopedia, like, has there been an increase in competition, and thus, are you keeping guidance unchanged? Any color over there will be helpful; that is the first question.
Piyush Choudhary: Two questions, Firstly again going back to 2020 full guidance after such strong performance.
Piyush Choudhary: Why.
Piyush Choudhary: <unk> guidance of turning EBITDA positive in two which is not been revised upwards.
Speaker Change: Do you expect the volatility in the upcoming quarter. If you can comment on the competitive intensity in Indonesia.
Speaker Change: Across ASEAN after merger of Tic program.
Like has there been an increase in competition in industrial are keeping guidance unchanged any code.
Speaker Change: There would be helpful. There is full screen so.
Chris Feng: Secondly, in DFS, is it higher customer acquisition costs or even higher funding costs that have led to the margin drop? And if you can talk a little bit about the outlook for the margins in DFS, thank you.
Speaker Change: So it can be in DFS.
Speaker Change: Is it a higher customer acquisition cost or even higher funding cost, which reflect a margin drop.
Speaker Change: And if you can talk a little bit about the outlook for.
Speaker Change: The margins in DFS. Thank you.
Speaker Change: Okay.
Chris Feng: On competition, we have seen the market as being relatively stable in terms of competition. We didn't see any particular signs of changes, to be honest. Of course, we cannot predict what the competitors are doing, but we didn't see any particular signs of difference in competition.
Speaker Change: On the competition.
Speaker Change: What we're seeing there.
Speaker Change: Mark has been relatively stable.
Speaker Change: In terms of competition.
Speaker Change: We didn't see any signs of changes.
Speaker Change: To be honest of course, we cannot predict.
Speaker Change: What's the competitive.
Speaker Change: Doing that that Oh, we didn't see any particular signs of.
Speaker Change: Different.
Speaker Change: Competition.
Chris Feng: On the guidance, again, I think we are very encouraged by the number we see in Q1. We are pretty confident of achieving what we shared. I think we are coming to one and a half months in Q2. I think we will... look at the market a bit more. I think at a time when we have a better sense of the numbers, we will share with the market how we look at forward-looking guidance.
Speaker Change: On the guidance again, I think we are very encouraged by the number we see in Q1.
Speaker Change: We are pretty confident on achieving what we shared.
Speaker Change: And I think we are.
Speaker Change: Coming to <unk>.
Speaker Change: I have mark in Q2, I think the.
Speaker Change:
Speaker Change: Look at the market a bit more I think the.
In the time, when we have a better sense of the numbers, we will share with the market on how we.
Speaker Change: Look at the forward looking guidance.
Chris Feng: There's no particular reason for that, you know, from competition or other reasons. For the DFS questions, the margin fluctuations come more from the acquisition cost rather than the funding cost. In fact, our funding cost is actually getting better, quarter on quarter. Again, the acquisition cost is a lot dependent on what we see from the market and how much we spend on client users versus the value they will bring to us in the long term.
Speaker Change: The there's no particular reason of that from competition. The other reasons, yes.
Speaker Change: For the DFS questions.
The.
Speaker Change: The margin fluctuations more coming from the.
Speaker Change: Customer acquisition costs, rather than on the funding cost in fact, our funding cost is actually getting better.
Speaker Change: Quarter on quarter.
Speaker Change: They're there.
Speaker Change: Again that doesn't cost a lot depending on.
Speaker Change: What do we see from the market on how much we spend on prime users versus the data that they will bring to us in long term.
Speaker Change: And also depends on the new product launches we have in various markets.
Speaker Change: Your next question comes from the line of Ryan Gen Sharma from Jpmorgan. Please go ahead.
Operator: Your next question comes from the line of Ranjan Sharma from J.P. Morgan. Please go ahead.
Speaker Change: Yeah.
Ranjan Sharma: Hi, good evening, and thank you for the presentation. Two questions, please.
Speaker Change: Hi, good evening and thank you for the presentation.
Speaker Change: Two questions. Please.
Ranjan Sharma: Firstly, on the sales and marketing expense, seems to have reduced to 2.9% of GMB for the e-commerce business. Based on your comments on competition, should we expect, or are you seeing the same level of spend in the second quarter? Also. And the second question is, on the FinTech side, if you can shed some light on how much of the loan book is coming from Brazil. Thank you.
Speaker Change: Firstly on the sales and marketing expense seems to reduced.
Speaker Change: Two to four 9% of GMB.
Speaker Change: All those businesses.
Speaker Change: Based on your comments on competition.
Speaker Change: Should we expect or are you seeing the same level of spend.
Speaker Change: Second quarter.
Speaker Change: Well as well.
Speaker Change: Second question is on the Fintech side, if you could Oh sure.
Speaker Change: Shed some color on how much of the loan book is coming from Brazil.
Speaker Change: Although that will be our focus.
Speaker Change: The lending business.
Speaker Change: Given.
Speaker Change: What started yourself with your competitors in the market. Thank you.
Speaker Change: Yes on the sales and marketing spend for e-commerce.
Chris Feng: On the self-marketing spend for e-commerce, we do see that there was a reduction in Q1 for many different reasons. Part of that is due to the live streaming that the big investment done in Q3, Q4 last year started to give us the benefit, so we don't need to spend so much. Part of that is general marketplace spending is optimized. In the coming quarter, I believe that we'll continue to optimize our self-marketing spending. We do believe that the general trend will come down, although, honestly, if you look at month-to-month, there will be some fluctuations, even for upcoming reasons or for forest reasons, et cetera.
Speaker Change: We do see that as a reduction in Q1 by many different reasons part of that is due to the live streaming that the big investment in the lab.
Speaker Change: In Q3, Q4 last year spot to give out the benefits and we don't need to spend so much part of that is general.
Speaker Change: General marketplace spending are optimized.
Speaker Change: In the coming quarter, and I believe that will continue to optimize.
Speaker Change: Our sales and marketing spending.
Speaker Change: They're there.
Speaker Change: And we do believe that the.
Speaker Change: General trend.
Speaker Change: It will come down.
Speaker Change: Although honestly if you look at most a month that will be some fluctuations.
Speaker Change: Even for accounting reasons, awful forex ways and et cetera.
Speaker Change: Mm for the loan book.
Chris Feng: For the loan book, we do have high expectations for Brazil. We believe that Brazil can be a very good market for our digital financial services. Although we only started Brazil mid last year, which gives us a very short period of time to accumulate our loan book. So right now, the Brazil loan book is still a relatively smaller share of our entire loan book businesses. I don't think we just closed the country by country split for the loan book. But yeah, it's a small part of it, and it can be a potential good growth driver in the future.
Speaker Change: We do have a high expectation for Brazil, we do believe that Brazil can be a very good market for our digital financial service businesses.
Speaker Change: Although we only start Brazil.
Speaker Change: Brazil mid last year, which gives us a very short pure accumulate our loan book.
Speaker Change: So right now the Brazil loan book is to a let's say a relatively smaller share of our entire loan book.
Speaker Change: I don't think we disclose the country by country split.
Speaker Change: For the loan book, but yeah, but it's a small part of it and it can be a potential growth driver in future.
Speaker Change: Okay.
Operator: Your next question comes from the line of Jiong Shao of Barclays. Please go ahead.
Speaker Change: Your next question comes from the line of <unk> Shao of Barclays. Please go ahead.
Jiong Shao: Thank you for taking my questions. Congratulations on the strong results.
Jiong Shao: Thank you for taking my questions. Congrats on the strong results two quick follow ups.
Jiong Shao: Two quick follow-ups on the e-commerce side. One is, I was wondering if you could talk about linearity in your improvement in unit economics throughout the quarter? And related to that, the percentage of live streaming in terms of orders now, and that's, I think that's the first question, which is why people are asking why Q2 is not a break-even point for you. And then I had a follow-up question on the Shopee Express SPX business.
Shao: On the e-commerce.
Shao: Right.
Shao: One is I was wondering.
Shao: Could you talk about linearity improvement in unit economics or throw out a quarter and.
Shao: Related to that as a percentage of live streaming in.
Shao: In terms of the orders now.
Shao: And that's.
Shao: I think that's the first question, which is why people are asking why Q2 is.
Shao: The breakeven point for you and then I had a follow up question on the.
Speaker Change: Sure P Express SPX business, you talked about over 50% of orders in Asia.
Jiong Shao: You talked about over 50% of orders in Asia are done through Shopee Express and 70% in Brazil. Do you have a target number for the percentage for orders fulfilled by Shopee Express and the unit economics? of Contribution Margin, for all the stones through SPX, is that any different from your average or better or worse? Any any information on color of data point would be very, very appreciated.
Speaker Change: Done through shortly express and 70% in Brazil.
Speaker Change: Do you have a like.
Speaker Change: Park and number four the percentage for orders fulfilled by <unk>.
Speaker Change: Ah shall be expressed at the unit economics.
Speaker Change: Contribution margin.
Speaker Change: For the all of those storms through SPX is that any different from your average or is it better or worse any any information or color or data point. It would be very very appreciate it. Thank you.
Speaker Change: Paul Auster live streaming in terms of the percentage of orders, it's stable versus last quarter I think we share that.
Chris Feng: For live streaming, in terms of the percentage of orders, it's stable versus last quarter. I think we shared the percentage around 15% in South Asia last quarter.
Paul Auster: That is around 15% and South Asia last quarter, I think is that stable.
Chris Feng: I think it's relatively stable, although the bucket size increased during this quarter because we optimized some of the category mix and the UEs. The live-streaming part of the improvement and general marketplace improvement. Actually, on top of that, you know, things we talked about the logistics piece, we also see a better logistics cost improvement over time, which, you know, drives down the cost as well fundamentally.
Paul Auster: So the basket size interest during this quarter because we optimize.
Paul Auster: Some of the category mix and the <unk>.
Paul Auster: In term of the driver for the improvement as I said earlier, it's a bose.
Paul Auster: The.
Paul Auster: Like streaming part of the improvement in general market place improvement actually on top of that.
Paul Auster: Things, we talked about the <unk>.
Paul Auster: <unk> also see a better loaded a logistics cost.
Paul Auster: Costs improved over time drive down the cost.
Speaker Change: Well fundamentally.
Chris Feng: In terms of the percentage of orders through our own logistics, I think each market might evolve slightly differently, so we probably don't have a fixed target for all the markets. Although, what we can say is that, largely, on average, I think we'll see a bigger part of the share of logistics go to our own SBX. It should be more than what we have right now, but we probably wouldn't set a very specific target for all the markets.
Speaker Change: In terms of the percentage of the year.
Speaker Change: Orders through our own logistics.
Speaker Change: I think each market might evolve side definitely so we probably.
Speaker Change: I don't have a fixed target.
Speaker Change: For the market.
Speaker Change: Although what we can say is.
Speaker Change: Largely in average I think we'll see a bigger part of the share of luxury will go to our own SPX.
Speaker Change: The I should be more than what we have right now.
Speaker Change: We probably wouldn't set a very specific targets for the market.
Speaker Change: In terms of the.
Chris Feng: Unidenomics for those orders. The idea is, given that our cost per order for our own SPX is lower than the cost per order for PPLs in the market, essentially, for every order we deliver in-house, we will be able to save part of that cost, which essentially, you know, contributes to part of the unidenomics improvement that you see here. I think the degree of the EU difference is slightly varied market by market, but I think the trend is pretty stable across most of the markets that have been able to improve this over time, even further.
Speaker Change: Unit economics for those orders.
Speaker Change: Given that our.
Speaker Change: Cost per order for our own SPX is lower than the.
Cost per order for PPL in the market.
Speaker Change: Essentially for every audit with delivery in house, we will be able to say.
Speaker Change: Part of that cost.
Speaker Change: Which essentially are contributed as part of the.
Speaker Change: You economics in tumors.
Speaker Change: That you.
Speaker Change: That you see here.
Speaker Change: I think the degree of.
Speaker Change: Defense is slightly it varies market by market.
Speaker Change: The idea that I think the trend is pretty stable across most of the market that way.
Speaker Change: Able to into this.
Speaker Change: Over time, even further.
Speaker Change: Okay.
Speaker Change: Okay.
Operator: Your next question comes from the line of Pang Vitt from Goldman Sachs.
Goldman Sachs: Your next question comes from the line of <unk> Van <unk> from Goldman Sachs.
Van: Please go ahead.
Van: Thank you, Sarah and Lax and two follow up question from my side.
Pang Vittayaamnuaykoon: Thank you very much. And two follow-up questions from my side. Firstly, on the logistics for Shopee Express, you did share that you see greater unit economics for Shopee Express versus 3PL. Can you explain or walk us through a little bit on how you did it differently? And how are you able to achieve this better unit economics and efficiencies versus 3PL as well? That's question number one.
Van: Firstly on the Chesapeake for online shopping experience as well you did share that you'll see a green economy shopping experience. One that's doing al can you explain or walk us through a little bit on how have you done differently and how are you able to achieve better economies and efficiencies for St.
Pang Vittayaamnuaykoon: Question number two, earlier you mentioned that there is still room for advertisement take rates, especially versus global peers for Shopee. Can you share the current ad take rate you've seen currently for Shopee? And what's the long-term target on what Shopee can achieve?
Van: Alex.
Van: That's question number one question number two earlier you have mentioned that there is still room for advertisement take rate, especially with this global kiosk were choppy can you share of that.
Van: Okay, great you've seen currently for shopping and what's that long term target on what Chuck and his team.
Van: Yeah.
Chris Feng: On the logistics front, there are a couple of reasons that drive better UEs. I think number one is that there's a margin actually that the 3PL takes, so we retain that margin, as simple as that. That's number one.
Van: The largest is from.
Van: Hum.
Van: There are a couple of reasons and drives better use I think number one is.
Van: That's our margin actually that.
Van: The three TL tick so we retained that margin as simple as that that's number one are you willing to take that out I think we're still better for a few reasons one is well.
Chris Feng: Even if you take that out, I think we're still better for a few reasons. One is that we're able to better plan our CAPEX over a longer time because we are able to forecast how our business is evolving, not only just the total volume but the volume split in different regions, in different routes, etc. This helps us to optimize our CAPEX and our operating model for a longer time.
Van: We're able to better plan our capex.
Van: Over Lumpier time, because we are able to forecast.
Van: Our business is evolving.
Van: Not only just the total volume, but the volume split in different regions and different around etcetera, So that should help us to optimize our capex and our operating model.
Van: For a lumpier time, that's one second one is giving that we.
Chris Feng: The second one is, given that... We have a good forecast, even in the short term, on our other volume upstream. For example, what our volume will be the next week, or the next day. This will help us to do a lot of operational planning better. For example, how many workers you want to come into work today versus tomorrow and how many trucks you want to prepare for pickup tomorrow or two days later.
Van: Have a good forecast even in the short term on our although volume Uptrend for example in the next week with our volume would be in the next day. It was the volume will be this will help us to do a lot of operational planning better for example, how many workers do you want to come into work today.
Van: Versus tomorrow.
Van: And how many trucks you want to prepare for pick up.
Tomorrow or two days later I think this will essentially.
Chris Feng: I think this will, essentially, help us to improve on the day-to-day operation efficiencies. Number three is that, even beyond the planning, we are able to retool quite a lot of the seller behaviors to optimize for our logistics. For example, the way that we pick up from the sellers, when the seller should pack their product, whether the seller should drop off or pick up, all those things, we can do quite a lot of influence on the upstream to optimize downstream procurement.
Van: But to improve it.
Van: That didn't day operating efficiencies.
Van: Number three is even beyond the timing, we're able to retool quite a lot of the buyer or seller sorry seller behavior is to optimize our logistics for example, the way that would pick up on the sellers.
Van: When they sell the asset pack that product.
Van: Whether it's electric drop off business pick up and all those things we can do quite a lot of influence.
Van: On the upstream to optimize for the downstream fulfillment.
Chris Feng: And number four is, as a technology company, we do have a better tech capability in terms of how we use technology to optimize our entire supply chain. And all those tools, all those automations, and all those forecasting models we build will help us to essentially have better efficiency through the procurement network. I think number four is, because we can work together with the marketplace side, we can roll out quite a lot of new services to the consumers, but when we roll out new services, we can control the cost because we can do many of the new service planning end-to-end together with the marketplace upstream. I think one example that we gave in the opening we gave is on-time guaranteed delivery. To do that, I think everybody can do that, you know, in theory.
Van: And number four is <unk>.
Van: Now as a company we.
Van: We do have a better tech capabilities in term of how do we are using technology to optimize our Intel our.
Van: Supply chains.
Van: And all of those tools automation and although forecasting models, we build will.
Van: It will help us too.
Van: Essentially have a bet efficiencies through the.
Van: Procurement network.
Van: Number four is.
Van: Because we can work together with the marketplace side.
Van: We can.
Van: Quite a lot of new services to the consumers that when we roll out new services, we can control the cost because you know we can do many of our newest service planning end to end together with the marketplace upstream.
Van: I think one example of that in the opening we gave is.
Van: The uptime guarantee delivery to do that I think everybody can do that in a theoretically you can always give you a quarter. Two so the fact that EBIT delivered lately, but how do you do that economically is a big question of how do we make sure that you kind of have a good forecast of your deliveries end to end from the buyer place order.
Chris Feng: You can always give a voucher for the fact that if you deliver late, right? But how do you do that economically? How do you make sure that you can have a good forecast of your deliveries end-to-end from the buyer placing the order to the seller packing the order to the first mile pickup order to the sorting center and to the mid-mile to the last mile?
Van: The seller a pack the order to the first of all I'll pick a pick up with all of that so the sorting center and to the mid <unk> to the last mile.
Chris Feng: And the entire modeling process and the entire retooling part of the seller behavior and associate behaviors that require a lot more joint planning across the value chain. And because we can do it together, we can do it more economically compared to if you work with pure third parties. I think for all those reasons, together, we are kind of able to achieve a better economic. And not only just the cost but also better service levels and differentiated services we can offer to the consumers.
Van: And the income modeling process and the Intel retooling and taught us the.
Van: Seller behavior and associated behaviors that requires a lot more a joint planning.
Van: Across the value chain and because we can't do it together that's what we can do it more economically compared to if you work with a pure third parties.
Van: I think for all of that region, putting together.
Van: We kind of are.
Van: Oh, I able to two to achieve better economics, and not only just the cost, but also a better service levels.
Van: And differentiated services, we can offer to the consumers you know all of the market.
Van: Yeah.
Speaker Change: Your next follow up comes from and for the sorry for the act take rate.
Operator: Your next follow-up question comes from... And for the... Sorry, for the...
Chris Feng: I don't think we've disclosed the actual numbers, but what we can share is that if you compare us with our global peers, for example, in China or in the US, we are still meaningfully lower than where they are. We still have a few percentage points to catch up to them. So there is meaningful room for us to increase the ad tick rate. I think there are a few tools that we can deploy to do that.
Speaker Change: The I don't think we disclose there.
Speaker Change: <unk> right.
Speaker Change: The actual number but what we can share is that if you compare with.
Speaker Change: Our global peers for example, in China or in the U S.
Speaker Change: But we are kind.
Speaker Change: Kind of like a still meaningfully lower than what they are we still have few percentage to catch up to them.
Speaker Change: Data.
Speaker Change: Meaningful.
Speaker Change: Rooms left to Ingrid.
Speaker Change: Great I think there are a few tools.
Chris Feng: I think one is just having more seller participation to enhance the total pool of SKUs that are utilizing the ad. In order to do that, we have to develop simpler ad products for sellers to use. Unlike many of the sellers in a more developed market who are more familiar with the ads, in our market, there are quite some sellers that are less familiar with the ads, so we have to customize our ad tool for those sellers to make sure that it's easier for them to adopt so we can have more SKUs in our ad pool. That's number one.
Ingrid: That we we can.
Ingrid: Deploy to do that I think one is just having more seller presentation.
Ingrid: In term of the two enhance the total pool of the Skus.
Ingrid: That utilizing the AD in order to do that and we have to develop a simpler.
Ingrid: <unk> products for the consumer for the seller to to use.
Ingrid: Unlike many of our sellers in.
Multiple market: Multiple market, who are more familiar with the app in our market. There are quite some sellers are less familiar with that so we have to customize our as tool for those sellers to make sure that that easier for them to adopt so they can so we can have more skus into our ask Paul.
Operator: Number two is to increase ad efficiency through technology. We are spending quite a lot of effort on making sure that we increase the conversion rate for ad products so that the conversion rate is higher, and we can actually serve more ads to our users because of the increased conversion rate. And number three is to find a way to balance organic and ad traffic better. So by having enhanced products to balance the organic and ad products in a common stream, we can essentially dynamically adjust the ad load.
Multiple market: One of the two years to increase efficiencies through technology.
Speaker Change: We are spending club effort on making sure that we increase the conversion rate for AD product. So the congressional Act.
Speaker Change: So we can actually serve more ads to our users because of increased conversion rate.
Paul: And number three is to.
Speaker Change: Find a way to balance organic and <unk>.
Speaker Change: Apps traffic better so bye.
Speaker Change: Having.
Speaker Change: Oh.
Speaker Change: <unk> product to balance organic and as product commerce frame.
Speaker Change: We can essentially dynamically adjust AD load depends on the conversion rate and the scoop hesitation and.
Operator: It depends on the conversion rate and the skill participation and the scenarios within our app. So by doing all three things, we see that there is a meaningful potential to increase the ad traffic rate over the next few quarters. The next follow-up question comes from Navin Killa from UBS. Please go ahead.
Scenarios within our App, so by doing all the three things we see that is meaningful.
Speaker Change: Potential to interest ethic.
Speaker Change: Over the next few quarters.
Speaker Change: Okay.
Speaker Change: The next follow up question comes from Navin from UBS. Please go ahead.
Speaker Change: Okay.
Navin Killa: Hi, thank you for the opportunity again. I just wanted to ask a question with regard to your cash, which obviously, you know, remains strong and continues to grow. I know several of your peers have started talking about buybacks and have even announced buybacks. What's your thinking on the use of the cash balance? Thank you.
Speaker Change: Hi, Thank you for the opportunity again.
Speaker Change: I just wanted to ask.
Speaker Change: Question with regards to your cash.
Speaker Change: Which obviously remains strong and continues to grow.
Speaker Change: Several of your peers have started.
Speaker Change: Talking about buybacks and have announced buybacks.
Speaker Change: What's your thinking on the use of <unk>.
Speaker Change: The cash balance thank you.
Speaker Change: Yeah. Thanks for the question. We currently don't have any.
Chris Feng: Thanks for the question. We currently don't have any plans for buybacks or any sort of thing. Our option results are strong, and we are kind of quite confident in our outlook on each of our business minds and pretty much will be focusing on the
Speaker Change: Buybacks.
Speaker Change: Right.
Speaker Change: Our accretion results are strong and.
Speaker Change: We are kind of like my confidence on our outlook.
Speaker Change: Each of our.
Speaker Change: And pretty much will be focused on these.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: The next follow up question comes from Alicia Yap from Citigroup. Please go ahead.
Operator: The next follow-up question comes from Alicia Yap from Citigroup. Please go ahead.
Yeah.
Alicia Yap: Hi, good evening. Thanks for taking my follow-up questions. Two for me here. One is on DFS; can management share the ranking of the growth by product or service line and the ranking by revenue or profitability contribution for your FinTech product this quarter? And then second, you know, not sure if I missed it, but assuming that you will be relaunched in India at some time in the future, what could be the incremental upside to the user and the growth if this becomes reality? Thank you.
Speaker Change: Hi.
Alicia Yap: Good evening, Thanks for taking my follow up question.
Alicia Yap: To start off on me here when he founded <unk> can management share the wrong King after growth by deploying our service to fly and the ranking by the revenue or profitability contribution for you all seen pet products this quarter.
Speaker Change: And second you.
Speaker Change: Not sure if I missed it but assuming E U will be launch in India in some sometime in the future what could be the incremental upside to the user growth.
Speaker Change: Become reality thank you.
Speaker Change: For our CFS business.
Chris Feng: For our DFS businesses, there are a few main products that we have, the SPL, Shopee Pay Later, and BTL, Buy Cash Loans, and the other offline products that we have. I think at this point in time, their SPL, in terms of outstanding, is still the biggest product. But if you look at the EBITDA contribution, you know, the UE, the by-cash loan will have a higher UE I think that's kind of like a rough picture, if you will.
Speaker Change: A few main business our main product that we have.
Speaker Change: The Ah.
Speaker Change: S. P L. A choppy pay later and BTL by cash loans.
Speaker Change: And.
Speaker Change: The other day.
Speaker Change: Offline product, where we have I think at this point in time.
Speaker Change: Theyre SPL in term of outstanding is still the biggest products.
Speaker Change: But if you look at the EBITDA contribution.
Speaker Change: The <unk> the brackish loan will have a higher <unk>.
SPL: Surely pay later.
Speaker Change: I think that's kind of like a rough patches.
SPL: Okay.
SPL: Okay.
Chris Feng: For a brief re-launch in India, at this moment, we are actively working...
unknown: Four three aspire relaunch in India at this moment, we are actively working with.
Speaker Change: All the lights of stakeholders, including like yeah.
The regulators: The regulators that are perpetual local partners right.
Speaker Change: To figure out what is the best plan to relaunch refinery in India and Ah well if that is successful I think that will be a medium for potential upside in terms of the users and bookings considering India is a very very deep.
Speaker Change: Market and but <unk>.
Speaker Change: Just to clarify at this moment for our outlook for the rest of the year in terms of the Oh.
Speaker Change: Our nightclub like a double digit growth rate I know this is not taking into the consideration of the relaunch of the NDA. So that's basically the makes it to the basically we come out of it.
Speaker Change: Our guidance and outlook based on the current business what they have thing.
Speaker Change: For the existing kind of a trend of four of our current market for free fire.
Speaker Change: Okay.
Mr. <unk>: This concludes our Q&A session I would now like to turn the conference back over to Mr. <unk> for any closing remarks.
MC Call: This concludes our Q&A session. I would now like to turn the conference back over to Mr. MC Koh for any closing remarks.
Mr. <unk>: Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.
Operator: Thank you all for joining today's call. We look forward to speaking to all of you again next quarter. The conference is now concluded.
Mr. <unk>: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Mr. <unk>: Okay.
Mr. <unk>:
Mr. <unk>: Yeah.
Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Mr. <unk>: The conference has now concluded.
Mr. <unk>: Yeah.