Q1 2024 ATRenew Inc Earnings Call
Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to AT Renew Inc's first quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. We will be hosting a question and answer session after management's prepared remarks. Please note today's event is being recorded. I will now turn the call over to the first speaker today, Mr. Jeremy Ji, Director of Corporate Development and Investor Relations of the company. Please go ahead, sir.
Good morning, and good evening, ladies and gentlemen, thank you for standing by and welcome to a tee renew inc's first quarter 'twenty 'twenty four earnings conference call.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: We will be hosting a question and answer session. After management's prepared remarks. Please note today's event is being recorded.
Speaker Change: I will now turn the call over to the first speaker today, Mr. Jeremy G director of corporate development and Investor Relations of the company. Please go ahead Sir.
Jeremy Ji: Thank you, Ju. Hello, everyone, and welcome to ATR News' first quarter of 2024 earnings conference call. Speaking first today is Kerry Chen, our Founder, Chairman, and CEO, and he will be followed by Rex Chen, our CFO. After that, we'll open the call to questions from the audience. The first quarter 2024 financial results were released early today. The earnings release and investor slides accompanying this call are available on our IR website
Joe: Thank you Joe Hello.
Carrington: Hello, everyone and welcome to <unk> first quarter 2024 earnings Conference call speaking first today is Carrington.
Speaker Change: I'm, the chairman and CEO and he'll be followed by registering our CFO.
After that we'll open the call to questions from analysts.
Speaker Change: The first quarter 2024 financial results were released earlier today.
Speaker Change: The earnings release and the slides accompanying this call are available at our IR website.
Speaker Change: Todd's HQ move don't call will also be a transcript or in this call for your questions.
Jeremy Ji: There will also be a transcript following this call for your convenience. For today's agenda, Kerry will share his thoughts on our quarterly performance and business strategy, followed by Rex, who will address the financial highlights. Both Kerry and Lixin will join the Q&A session.
Speaker Change: For today's agenda Cary will share his thoughts of our quarterly performance and business strategy, followed by Rex who will address the financial highlights.
Speaker Change: Those carry index will join the Q&A session.
Jeremy Ji: Let me call this a SIGCHR statement. Some of the information you hear during our discussion today will consist of forward-looking statements, and I refer you to our safe harbor statements in the earnings price review. Any forward-looking statements that management makes on this call today are based on assumptions, and AT Renew does not have any obligations to upgrade our assumptions on these. Also, this talk includes discussions on certain gap financial measures.
Speaker Change: Let me cover the Safe Harbor statements some of the information you'll hear during our discussion today will consist of forward looking statements and I.
Speaker Change: I refer you to our safe Harbor statements in the earnings press release.
Speaker Change: Any forward looking statements that management makes on this call today are based on assumptions.
Speaker Change: Today and that.
Speaker Change: Hey, T renew does not take any obligations to upgrade our assumptions on these statements.
Speaker Change: Also this call includes discussions of certain non-GAAP financial measures.
Speaker Change: Please refer to our earnings press release, which contains a reconciliation of non-GAAP measures to GAAP measures.
Jeremy Ji: Please refer to our earnest press release, which contains the reconciliation of non-GAAP measures to GAAP measures. Finally, please note that, unlike otherwise stated, all figures mentioned during this conference call are in RMB, and all comparisons are on a year-over-year basis. I'd now like to turn the call over to Kerry for business and strategy updates.
Speaker Change: Finally, please note that unless otherwise stated all figures mentioned during this conference call RMB and all comparisons.
Speaker Change: Our year over year basis.
Speaker Change: I'd now like to turn the call over to Kerry for business and strategy update.
Speaker Change: Yes.
Xiaoxin Chen: Hello, investors and analysts. Welcome to the 1st quarter of WanWu Xinsheng Group's Business Calls for 2024. We are very happy to share with you our latest progress, the growth of the core drive, and our strategic direction.
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Xiaoxin Chen: Hello everyone and welcome to HM Renews' first quarter 2024 earnings conference call. We are very pleased to share with you our recent developments, pivotal growth drivers, and business strategies.
Speaker Change: Hello, everyone and welcome to the age of Radians first quarter 2024 earnings Conference call. We are very pleased to share with you. Our recent development he muscle growth drivers and this is the strategy.
Xiaoxin Chen: In terms of revenue, the total revenue of the first quarter reached 36.5 billion yuan, reaching the peak of the revenue-guiding area, a 27.1% growth rate. Among them, a batch of products contributed 28.5% to 33.1 billion yuan to the main growth drive.
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Xiaoxin Chen: [inaudible] The 3P platform revenue is 3.4 billion yuan, which is a 15.1% growth. The platform revenue has grown by double-digits in the past two quarters. The business growth of the PaiqiTang and Paipai trading platforms has also contributed to the recovery of the multi-platform business, which has increased the company-level capital and operating profit contribution. In terms of profit, the non-GAAP operating profit of the first quarter was 80.22 million yuan. The corresponding profit rate has increased by nearly 70 levels to 2.2%. It has also achieved solid growth.
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Xiaoxin Chen: Let's begin with some first quarter financial highlights. On the top line, our total revenues increased by 27.1% to $3.65 billion, the high end of our guidance. Next, product revenues from the 1P business continue to be the primary growth driver, increasing by 28.5% year over year to $3.31 billion. Later on, I will elaborate on the growth drivers of our 1P business. Net service revenues were $341 million, marking year-over-year growth of 15.1% and continuing its double-digit growth.
Speaker Change: Let's begin with some first quarter financial highlights.
Speaker Change: Top line, our total revenues increased by 27, 1% to three point 65, beating the high end of our guidance.
Speaker Change: Product revenue from what the business continue to be the primary growth driver increasing by 28, 5% year over year to $3 31 billion later on I will elaborate on the growth drivers of our <unk> business.
Speaker Change: Service revenues were $341 million marketing year over year growth of 15, 1% and continuing its double digit growth. This was a screen with most of the growth of E. J D. M anti marketplace service revenues and multi pet grade with pumping service revenues, which contributes to the company's gross and operating profit.
Xiaoxin Chen: This was attributable to the growth of PJC and PiPi marketplace service revenues and multi-category restructuring service revenues, which contributed to the company's growth and operating profit. In terms of profit, land-gap operating income for the first quarter was $80.2 million, and our land-gap operating margin increased by 70 basis points year-over-year to 2.2%, representing meaningful improvements.
Speaker Change: In terms of profit non-GAAP operating income for the first quarter was 81 2 million and our non-GAAP operating margin increased by 70 basis points year over year to 2.2% representing meaningful improvement.
Xiaoxin Chen: In terms of strategy, WanWuXinZheng is committed to the second-hand industry's core development technology of scene processing. At the scene of recycling, we insist on using Jingdong, Apple, and the official Exchange of Heart, AiHuiShou's best conversion scene, low-cost, high-efficiency locking, and first-hand high-quality source. We build its quality and service quality through scene acquisition. At the supply chain end, we continue to improve operating efficiency through automated self-checking, standardization of recycling, standardization of non-standardized second-hand products, and increase the supply chain supply for 2C retail.
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Xiaoxin Chen: Strategically, we remain committed to our core development principles, which focus on developing recycling scenarios and supply chain capabilities. For sourcing used products, we continue to leverage effective user conversion scenarios to secure first-hand, high-quality supplies through JD.com, Apple's official trading program, and our offline AHS Recycle Stores. We acquire customers and build our brand through these scenarios. In the supply chain, we enhance operational efficiency through our next-level automated quality inspection systems. With compliant refurbishment, we also improve product standardization and customer access to more ample choices of like-new electronic products.
Speaker Change: Strategically we remain committed to our core development principles, which focused on developing the restocking scenarios and supply chain capabilities.
Speaker Change: Sure thing here's products, we continue to leverage in fact that user conversion scenarios. So secure firsthand high quality supplies to J D Dot com and wholesale Vishal training program and our all by age has recycled stores, we acquire customers and build our brand through these scenarios under supply chain, we wholesale.
Efficiency is through our next level automated quality inspection systems with compliance refurbishment, we also improved product standardization and customer access so more ample twice, it's all like new electronic products.
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Xiaoxin Chen: Occupying these precise recycling scenarios fortifies the competitive edge of our 1P business. First, JD.com continues to bring strong momentum to the growth of our product revenues. As JD pays greater attention to the second-hand goods business, our refurbishing and trading business penetrated further into JD's new product sales business. In addition, in March 2024, China's State Council released an action plan to promote large-scale trading of consumer goods, and municipal action plans followed.
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Speaker Change: Firstly J D. Dotcom continues to bring strong momentum to the growth of our product revenues as J D pains greater attention to the second handle fitness, our recycling and trading business penetrated further into Jd's new product sell fitness. In addition in March 'twenty 'twenty four China's State Council released.
Speaker Change: An action plan to promote large scale screening consumable and municipal action plans followed by manufacturers are also enthusiastically participating by offering training promotion.
Xiaoxin Chen: Brand manufacturers are also enthusiastically participating by offering trading promotions. JD has announced the launch of a dedicated plan promoting trading for consumer electronic products, which includes a 3 billion RMB subsidy. The goal is to drive new product sales exceeding 100 billion RMB in the next three years. To implement this initiative, JD has partnered with AHS Recycle, its exclusive used consumer electronics supply chain partner, to enhance end-to-end solutions and continuously optimize the service process and user experience related to trade-in. In the first quarter of 2024, the growth in transaction value of trading products sourced from JD.com increased by 43% year-on-year. Together with JD.com, we will continue to strengthen strategic cooperation.
Speaker Change: J D has announced the launch of a dedicated fan promotion trading for consumer electronic products, which include our three RMB subsidy. The goal is to drive new product sales exceeding 100 being a RMB in the next three years to implement this initiative J D has partnered with trying to recycle it's exclusive.
Speaker Change: Is it was consumer electronics supply chain partner to enhance end to end solutions and continuously optimize the service process and user experience related to trading in the first quarter of 2020 for the block we're talking transaction value off trading products sourced from J D Dot com increased by 43% year on year.
Speaker Change: Together with J D Dot com, we will continue to strengthen our strategic cooperation.
Xiaoxin Chen: Second, in Apple's official recycling scene, we provide a competitive price for users of the Apple Store, Apple Store Offline, and Apple Store in China and Apple Power to provide users with a simple and elegant recycling experience. Users can also save money by participating, purchasing, and upgrading equipment.
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Xiaoxin Chen: YiJuShanDou, Due to Apple's official channel's special pricing mechanism and some market factors, the operation of the fourth quarter of last year had some negative effects on the profit margin. But starting this year, we have optimized the recovery pricing strategy. We believe that Apple is irreplaceable in the mainstream market and in the hearts of users. We will continue to optimize services through cost-controllable ways to obtain high-quality resources, as well as more powerful and efficient sales capabilities for popular models to obtain stable operating profits.
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Xiaoxin Chen: For trading originating from Apple's official program, we serve Apple's customers with competitive offers through Apple's official website and 47 Apple stores in mainland China. At these flagship retail stores, Apple staff provide hassle-free trading services. Customers pay a smaller amount of money when buying a new device if they choose to trade-in. It's a joyful way to upgrade electronic products.
Speaker Change: Trade is originating from Apple's official program, we serve apples customers with competitive competitive offers.
Alcohol official website, and 47 of Apple stores in mainland China.
Speaker Change: This flagship retail stores at whole staff provide hassle free trading services customers pay a smaller amount of money when buying a new device they choose to trading it's a joyful way to upgrade the electronic products.
Xiaoxin Chen: Due to Apple's unique pricing mechanism and some market factors, in the fourth quarter of 2023, it had a negative impact on our gross profit margin. However, since 2024, we have optimized our front-end bidding strategy. Our approach is rooted in Apple's predominant customer mindshare, especially in major cities in China. Looking ahead, we remain committed to optimizing our services by, first, obtaining high-quality products through more disciplined sourcing costs and, second, improving sales efficiency for popular models. We believe these measures can ensure stable operating profits for the Apple business.
Speaker Change: Due to apples unique pricing mechanics, and some market sectors in the fourth quarter, all 20th one year's rate it had a negative impact on our gross profit margin. However, it's 'twenty one before we have optimized our France and bidding strategy. Our approach is rooted in apples predominant customer mindshare, especially in.
Speaker Change: A major cities in China.
Speaker Change: Looking ahead, we remain committed to optimizing our services by first obtaining high quality products through more disciplined sourcing cost and second improving sales efficiency for popular models. We'd leave these measures kind of ensure stable operating profit for the ethanol business.
Xiaoxin Chen: ??,???????,??????????????,?????,????,??????????????????,?????????????????,?????,????,?????????????????????????,?????????,?????????? At the end of the first quarter, our self-owned stores sold 711 stores, and our annual standard stores sold 557 stores. Compared with the same period in 2023, our store performance has improved significantly, consolidating the ability of a second-hand mobile phone and a third-hand business platform. This store and LianYin's standard store have always been the core of our service users' completion, recovery, and delivery, ensuring that the user experience continues to improve.
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Xiaoxin Chen: It is also the main contributor to the store's revenue and operating profits. For the e-commerce platform that cooperates with offline retail stores, this year, we have made adjustments to this business model. We have switched to Ji Daxia's business model or the door-to-door way of recycling. The adjustment of the power supply has reduced the total number of power outlets, but the impact on our income and profits is very limited.
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Xiaoxin Chen: Third, we further leverage our offline stores. We have opened self-operated stores in first- and second-tier cities that mainly focus on refactoring and standard jointly-operated stores in the broader mass market with a focus on retailing as well as refactoring. As of the end of March, we had 711 self-operated AHS stores and 557 standard jointly-operated AHS stores.
Speaker Change: Third we further leverage our offline stores. We have opened itself offers his doors in first and second tier cities that mainly focused on recycling and stand up once the operated stores in a broader mass market with a focus on retaining as well as recycling.
Xiaoxin Chen: Both store formats achieved quality growth compared to the same period in 2023. These standard stores ensure primary sources of product supply, and they are crucial user touch points as we provide recycling and trading services with a premium user experience. In addition, they generate revenue and operating profit at a store level. In contrast, for the shopping shop format that opens in offline retail scenarios, we have made some adjustments, migrating them to PGT sellers or using doorstep collections. The adjustment of the shopping shop format has reduced the total number of our stores, but its impact on our revenue and profit is limited.
Speaker Change: As of the end of March we had 711 self operated stores and 500 and 557 stand up Dwight operated EHS doors, both store formats have achieved quality growth compared to the same period in 2023.
These standup doors and sure primary forces of Tav product supply and they are crucial use our touch points as we provide with sparkling and training services with our premium users theory.
Speaker Change: In addition, they generate revenue and operating profit at a store level. In contrast for the shop in shop format that all kind of thing offline late helping area. We have made some adjustments my working them computers used others or using doors that collection.
Adjustments of shop in shop format has reduced the total number of our stores, but its impact on our revenue and profit is limited.
Xiaoxin Chen: Our multi-product recycling strategy promotes further optimization of the store's economic model, allowing us to open up more main-store stores and improve store sales and profits. 2022, 3C,,, Since this year, we have seen a significant increase in such demand. For example, in the first quarter, the recycling business of multi-products, including second-hand sachets, wristwatches, gold accessories, wine, and other products, recycled 600 million yuan, which is four times more than the same period in 2023.
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Xiaoxin Chen: Our multi-category recycling strategy uplifts our store economics, allowing us to open more stores, especially those with higher sales per square meter and better profitability. Since the introduction of the multi-category strategy in 2022, the transaction value of non-electronics categories has grown rapidly quarter over quarter. As such, such a strategy meets consumers' needs to nimbly dispose of idle goods and convert them into cash at hand in the current economic cycle. Since the beginning of this year, we have seen a significant surge in such user demand. For instance, the transaction value of our multi-category recycling business, including second-hand bags and watches, gold, jewelry, and fine liquor, quadrupled year-over-year to 600 million RMB in the first quarter of 2024.
Speaker Change: Our multi category, where you're starting a strategy update our store economics, allowing us to open more stores, especially those with higher sales per square meter and better profitability. Since the introduction of the monthly cash burn is directly in 2022 the transaction value offline electronics categories has grown rapidly quarter.
Speaker Change: Our culture at such strategy means consumers me minimally to dispose of Idaho and convert them into cash at hand in the current economic cycle since.
Speaker Change: Since the beginning of often here, we have seen a significant surge in such user demand for instance, the transaction value of our multi catchwords satcom business, including second handbags, and watches gold jewelry, and finding or harder about year over year to 600 million RMB in the first quarter of 2024.
Xiaoxin Chen: ??,????????????????,????????????????????,?????,?????????,??????????7000????????,???????????,???????, The growth of users' trust in the AiHuiShou brand, strong door-to-door, front-end e-commerce ability, and second-hand standard ability is a reflection of AiHuiShou's ability to accumulate over the past 10 years. ???????????,??????,???????????,18%????30?????????????? ??????????,???????? ??????????,?????????????????????????, ???NPS??????????????? We look forward to the further development of multi-channel recycling business on the existing store network and to further launch our new store. We believe that the transaction scale of multi-channel business in 2024 will continue to grow rapidly.
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Xiaoxin Chen: At the same time, the multi-category recycling business itself is profitable. Conducted under a platform business model, it not only has a live structure without the risk of inventory and price decline but also brings an additional profit of $7,000, or 7,000 RMB per month to each store. As a remarkable incremental business, MultiCash will result in growth on the foundation of users' trust in the AiHuiShou brand and the strong performance of existing stores and our capability of establishing industry standards in the spring-on sector. It is a reflection of the accumulated capabilities of AiHuiShou over the past decade.
Speaker Change: At stake at the same time, the market kept where it recycling business itself. It's profitable conducted and there are a platform business model is not only has the line structure without the risk of inventory and price decline, but also brings an additional profit of 7000.
Speaker Change: All 7000 RMB per month to each store as a remarkable incrementals is that lots of cuts where we start seeing growth on.
Speaker Change: The foundation of Users' trust in the brand and strong performance of existing stores and our capability of installation industry standards, and there's plenty of arm sector. It.
Speaker Change: It is a reflection of the accumulated capabilities of I wish all over the past decade.
Xiaoxin Chen: Looking at cross-category orders, 18% of users who completed an order to recycle luxury products came back for other product recycling services within 30 days. We believe that the conversion rate can be further enhanced if we extend the time frame. In terms of user satisfaction, our gold recycling business ranks first in all categories with a top net promoter score due to transparent pricing, legitimate channels, and trusted brands. We look forward to expanding multi-category recycling within our existing store network and further promoting the opening of new stores. We are confident that the GMV of our multi-category succulent business will continue to achieve scalable growth this year.
Speaker Change: Looking at cross category others.
Speaker Change: 10% of users who completed in order to recycle a luxury product came back for other product recycling services within 30 days, we believe that the commercial rate can be further enhance if we extend the timeframe in terms of user satisfaction, our golden recycling that theres ranks first in all categories without that.
Speaker Change: Before promoter score due to transparent pricing, there just mass channel and trusted brand.
Speaker Change: We look forward to expanding the multi category recycling within our existing store network and further promoting the opening of new stores.
Speaker Change: We are confident that the G M b of our multi category recycling business will continue to achieve scalable growth this year.
Xiaoxin Chen: , [inaudible] In the first quarter of this year, the return on investment of 2.8 billion yuan has been further improved on the ratio of one batch of business. We further optimize the operating process of return on investment. Based on a rich number of first-hand members, in the process of comparison and selection, we have identified the consumer needs of the board, and the level of support has the potential to be improved. [inaudible] Xiaoxin Chen, Weiting Tang, Xiaoxin Chen, AiHuiShou Intl. QC's business ratio increased to 24.5%.
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Xiaoxin Chen: Now let's take a look at our supply chain capability from two aspects. Firstly, the 1P business improves product standardization through compliant refurbishment. Secondly, the overall business enhances fulfillment efficiency through quality inspection automation in the operation center. During the first quarter, our robust supply chain capabilities yielded solid results. In particular, the revenue from refurbished devices sales was 282 million RMB, further increasing its share in our 1P business. We have made additional improvements to our operational process, expanded access to a wider range of product sources, and identified devices that are both popular among users and have the potential for improved quality. Adding to our retail offerings through AHS stores and AHS websites, the total retail sales revenue as a percentage of 1P product revenues jumped to 24.5%.
Speaker Change: Now, let's take a look at our supply chain credibility from two aspects firstly once the business improved product standardization through combined with furbished meant secondly, the overall, let's see how this fulfillment efficiency through a quality inspection automation in the operation centers.
Speaker Change: During the first quarter, our robot supply chain capabilities yielded solid results, mostly the revenue from refurbished devices self was 200 and.
Speaker Change: 82 million RMB further increasing its share in our <unk> business. We have made additional improvements to our operational processes expanded access to a wider range of product sources and our 95 devices that are both popular among users and have the potential for improved quality.
Speaker Change: Adding to our retail offerings through Asia stores, and EHS what size. The total retail sales revenue as a percentage of one P product revenue jumped to 24, 5%.
Xiaoxin Chen: In terms of operating efficiency, the non-gap of the first quarter is 8.3%, which is 0.8% lower than the same period in 2023. This is mainly due to the continuous improvement of the efficiency of the Huanan Automated Operating Center over the past year. The non-gap sales cost is 6.1%, which is 1.4% lower than the same period. This is mainly due to the increase in the scale of the official recycling business of Apple without marketing costs, which reduces the average promotion cost of its business. In terms of platform business, digitalization, customer management tools, enhanced applications, platform business, customer relationship maintenance, and promotion costs have been effectively resolved.
Speaker Change: So he showed me some yet you did note that non-GAAP or do you feel new weight back with the audience and Joe Army I'll send you an home cipriani shutdown La India Basel F&B F&B so yeah.
Speaker Change: Yeah, you're right on in to the Hawaii, Johnson's Shelby that sushi bar more T cell non-GAAP, but a social feed all the way back to the annuity Palm Beach I've done that he did indeed.
Speaker Change: E P equal went bonkers mail email feel way more that'd be the T cells don't need a three year production in <unk> family.
Speaker Change: Yeah, with EMEA Pseudopod cocoa Gwatney countries judge on yield.
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Xiaoxin Chen: In terms of operational efficiency, our non-gap fulfillment expense as a percentage of revenue for the first quarter was 8.3%, a decrease of 0.8 percentage points from the same period last year. This was mainly due to cost efficiency improvements at our Southland China Dongguan Automated Operation Center over the past year.
Speaker Change: In terms of operational efficiency, our non-GAAP fulfillment expense as a percentage of revenue for the fourth quarter was eight 3% a decrease of 0.8 percentage points from the same period of 'twenty 'twenty. Three this was mainly due to cost efficiency improvements at our Southland China have done.
Speaker Change: What automated operation center over the past year, our non-GAAP selling and marketing expenses as a percentage of revenue was six 1% a year over year, a decrease of one four percentage points. The reduction in promotional expenses is mainly due to the growth of our trillium business with Apple which operates independently of <unk>.
Xiaoxin Chen: Our non-gap selling and marketing expenses as a percentage of revenue were 6.1%, a year-over-year decrease of 1.4 percentage points. The reduction in promotional expenses is mainly due to the growth of our trading business with Apple, which operates independently of our marketing efforts. For our platform business, we are gradually increasing the utilization of digital customer management tools. This approach helps us to reduce expenses associated with customer relationship management and promotional expenses on the platform.
Speaker Change: Our marketing efforts.
Speaker Change: Our platform business, we are gradually increasing the utilization of digital customer management tools. This approach helps us to reduce expenses associated with customer relationship management and promotional expenses on the platform.
Xiaoxin Chen: In the long term, we will firmly upgrade the basic version of the second-hand mobile phone 3C. Through a multi-screen recycling strategy, we will enhance the user's experience and cognition, and explore more high-screen and high-end service scenarios to solve the pain of more recycling services for users, and establish the first recycling brand in the user's heart, and create a one-stop solution for the consumer's short-circuit economy.
Speaker Change: So long term sheet or Magellan Tianjin Megumi also saw defense. He said the Japan patent cobalt talk Nate what you sold some weird to some young with a T M called Lindsey Hasbro pinching casual golf and country got Futon gene J J O Gamble, we solved for that content Jimmy Yamaguchi agenda.
Speaker Change: Well you saw the huge impact tongue in cheek top shelf into bunch in one Jim do you does it change your thought.
Xiaoxin Chen: In the long term, we are committed to reinforcing the foundation of Korean-owned smartphones and consumer electronics business. Through a multi-category recycling strategy, we aim to improve user experience and increase brand awareness for AiHuiShou. We will focus on addressing users' pain points in recycling services by exploring more high-frequency and essential recycling scenarios, aiming to establish ourselves as a top-of-mind brand in consumers' minds. Ultimately, our goal is to create a one-stop circular consumption solution for consumers.
Speaker Change: The long term, we are committed to reinforcing the foundation offering on smartphones and consumer electronics.
Speaker Change: Through a multi task where recycling strategy, we aim to improve user experience and increase brand awareness for <unk> ratio, we will focus on addressing the pain points in recycling services by exploring more high frequency and essential recycling scenarios aiming to establish ourselves at the top of mind brand and consumer.
Speaker Change: Ultimately our goal is to create one stop circular consumption solution for consumers.
Speaker Change: Yeah.
Xiaoxin Chen: First of all, we will continue to strengthen the recovery of scene coverage and penetration rate to enhance users' understanding of recovery and recovery innovation. China has 400 million mobile phones, tablets, laptops, and other digital products shipped every year. Because of the low recovery penetration rate, the value-added old-fashioned quality is still growing. In the scene penetration, we will use the recovery innovation business ability to better integrate into the new machine sales scene of e-commerce and brands, to achieve long-term business growth. First, we'll-
Speaker Change: So she had sushi Jojo leasehold Thunder Tongan forget simple Buda T. So she's going to tell you what you saw going to watching the vinci the Romanian youll see that assault G. P. M. P debate EG past remarks ambulance will follow in with somebody who is also a little bit deeper than that.
Speaker Change: C N jobs with the charges. She ended up credit data that's hungry assembled on the junk you still wise Yolo Nico call a general 10 songs <unk>, Google, We don't put up with some questions ritual Easter shifts tongue in cheek.
Xiaoxin Chen: First, we will cover more recycling scenarios, improve the penetration rate, and raise user awareness of recycling and trade-ins. Due to the low second rate, the 400 million units of new smartphones, tablets, laptops, and other consumer electronics that are shipped in China annually indicate a growing supply of idle devices with huge value. As part of our ongoing efforts, we integrate our trading services into new product sales scenarios on e-commerce and the brand's official platforms. By doing so, we cater to users' demands for product renewal and realize sustained growth in the long term.
Speaker Change: First we will call them more recycling scenarios improved the penetration rate and raise the awareness of recycling and trade ins.
Speaker Change: Second rate the 400 million units of new smartphones tablets laptops and other consumer electronics that are shipped in China annually indicate.
Speaker Change: Indicate a growing supply of idle devises with huge value.
Speaker Change: As part of as part of our ongoing efforts, we can see where it all our training services into new product sell arrows on E Commerce and brand official platform by doing so we create we patrons who users' demand for product renewal and realised sustained growth in the long term.
Xiaoxin Chen: Second, in the current consumer environment, we need to seize the opportunity to develop the second-hand purchase demand growth of users online and offline. Our first quarter's 1P business 2C retail revenue increased by more than 80% through the PaiPai selection channel, JD channel, live-streaming new media channel, AiHuiShou store, and AiHuiShou official website. , For this, we rely on the business services of Pakistan to explore more offline opportunities, for example, through the retail focus of the new retail business to expand our retail members and further enhance the 2C sales revenue of our self-employed members.
Speaker Change: Yeah.
Speaker Change: Alright, puncture and shove it by nature charter with young who she has something changed also coal Mac huge whole genome.
Speaker Change: Back to you.
Speaker Change: Well the easy to each year with the Tuesday evening, social Pogo Parabiont inkjet chimbote subordinated to the abdomen get UGI with Rockwell wants to talk about the positive comps.
Speaker Change: Some goddamn thing being sold so the installed occult in Sudan also lumped into future old home you don't want them.
Speaker Change: While materially hedged on the southern Gulf wouldn't meet casual can vote or change out to India being commvault changing in Georgetown gap Finjan is short term that means so to poke our lending so Hogan T. Booties, a woman theme or you end up to sell those apps.
Xiaoxin Chen: Second, seize the opportunity in the current consumer environment with an increasing demand for used products, online and offline. In the first quarter, we achieved over 80% year-over-year 1B2C sales growth through PiPi and OnJD.com, live streaming platforms, AHS stores, and official websites. Meanwhile, as business owners' need for ready-to-go retail products increases, we explore more opportunities based on the existing B2B service capability. For instance, the dispersed retail touchpoints of new phone retailers can help us extend our sales channels and increase the proportion of 2C sales from our self-operated supply.
Speaker Change: Second these opportunity in the current consumer environment with an increasing demand for used products online and offline.
Speaker Change: In the first quarter, we achieved over 80% year over year wanted me to see sales growth through high pie and on JD Com live streaming platform H as stores and office of websites.
Speaker Change: While our business owners need already all retail products increases week for more opportunities based on the existing needs would be service capabilities for instance that the first retail touch points of new phone retainers.
They extend our sales channels and increase the proportion of T cells from our self operated supply.
Xiaoxin Chen: Thirdly, on the basis of end-to-end supply chain capabilities, we will further play the role of returning to core business value production and improve the quality of goods and services., to lock in more machines that are suitable for retrofitting and to standardize the function and appearance of more brands, products, and models. In terms of sales, both supporting 2C sales and enriching the high-quality supply of 2B sales in Tai Chi Tang comprehensively improve the contribution of the return on investment business to the main business interest rate.
Speaker Change: The Sunday to dwindle Thunder clean them and meet them. Some people frankly have closely thanking yogurt chubb's attachment to some corporate items.
Speaker Change: Lethal than me to answer.
Speaker Change #100: So I think on border so Huawei pension from beta to cheat Tianjin cookbooks, and Pat something she can call the Golden Corral Wideband, Belgium autism to.
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Speaker Change #100: Each also thoughtful hydrogen to be shelves you also for your calls.
Speaker Change #101: What you saw great. Thank you you too we have a multitude of courtship Tung T E Chunky, Chuck O'neil Burda Sudhakar.
Xiaoxin Chen: Third, leverage compliant refurbishment capabilities to enhance the grade of 1P recycled products. We anticipate organic growth in the proportion of compliant refurbishment income within our product revenues. By building more in-house capabilities, we expand the coverage of product categories, brands, models, and functions, etc. On the sales side, we open the supply of those products to support both B2C sales and enrich. Overall, this shall contribute to improving the growth profit margin of all our 1P businesses. In the long term, we aim to gain more market share through a combination of scenarios and supply chain capabilities.
Speaker Change #102: Third la Roche compliant refurbishment capabilities capabilities to enhance the grade of one P. Recycled product, we anticipate organic growth in the proportion of complying refurbishment income within our product revenue.
Speaker Change #102: Building more in house capabilities, we expand the coverage of product categories brands models and functions et cetera.
Speaker Change #102: On the self on the sell side, we opened the supply of those products to support both VITAS T cells and he reached a high quality supply to business owners on P. J P marketplace.
Speaker Change #102: Overall, this shall contribute to improving the gross profit margin of a lumpy business.
Speaker Change #102: In the long term, we aim to gain more market share through a combination of scenarios and supply chain capabilities.
Xiaoxin Chen: ???????????????????
Speaker Change #103: You talk to us a woman the tongue in cheek could certify them and Youll shovel gene.
Xiaoxin Chen: In conclusion, we are confident in our strategic path for effective and long-term sustainable development.
Speaker Change #103: In conclusion, we are confident in our strategic path for effective and long term sustainable development, which I mentioned concert a sample Rex GSO exempt how would you.
Jeremy Ji: ??????CFO Rex ????????
Jeremy Ji: Now, I'd like to turn the poll over to our CFO, Rex, for financial updates.
Speaker Change #104: Now I'd like to turn the call over to our CFO for financial update.
Xiaoxin Chen: Okay, hello everyone. We are pleased to report another profitable quarter in the NADEP measures. Our revenue set was again reached the top end of our guidance. Now, let's take a detailed look at the financials. Please note that all amounts are in RMB and all comparisons are on a year-over-year basis unless otherwise stated.
Speaker Change #105: Okay Hello, everyone. We're pleased to report another profitable quarter in the newspaper measures on revenues that was again increased to the top end of our guidance now let's take a detailed the brokerage. So financials. Please note that all amounts are in RMB and compresses.
Speaker Change #105: Our year over year basis, unless otherwise stated.
Xiaoxin Chen: In the first quarter, total revenues increased by 27.1% to $3,621.8 million, primarily driven by the strong growth in ad product revenues. Net product revenues increased by 28.5% to $3,309.8 million, while net service revenues were $341.3 million, representing an increase of 52.1%. Growth in net product revenues was primarily driven by an increase in the recycling channel expansion and sales of pre-owned consumer electronics through both online and offline channels, of which sales of 1P refurbished devices totaled 282.4 million, representing a year-on-year increase of 94.8%.
Speaker Change #105: In the first quarter total revenues increased by 27 upon the 1% two or three songs.
Speaker Change #105: Okay.
Speaker Change #105: Primarily driven by a strong U S.
Speaker Change #105: Product revenues net product revenues increased eight 5% to three songs $309 8 million, while net service revenues was 341 3 million.
Speaker Change #105: Representing an increase of script coupon of 1%.
Speaker Change #105: <unk> net product revenues was primarily driven by an increased use of recycling channel expansion and the sales of consumer electronics through both online and offline channels of which sales of Wuxi refurbished devices totaled $282 4 million, representing a year on year increase of 94, 8%.
Speaker Change #106: So increase the service revenues was primarily due to an increase in service revenues generated from P. J T marketplaces, and our mochi category recycling businesses.
Xiaoxin Chen: The increase in service revenues was primarily due to an increase in service revenues generated from PG&T marketplaces and our multi-category recycling business. The overall transaction value of our marketplaces increased consistently with service revenues, and the take rate of our marketplaces was 5.41% in the first quarter of 2024.
Speaker Change #106: The overall transaction value of marketplaces increased consistently with service revenues and the take rate of our market crisis was 541% in the first quarter, putting it on before.
Xiaoxin Chen: Now let's discuss our operating expenses. To provide greater clarity on changing our actual operating expenses, we will also discuss our NGAP operating expenses, which better reflect how management views our results of operations. The reconciliations of GAAP and NGAP results are available in our earnings release and the corresponding Form 6K furnished with the SEC.
Speaker Change #106: Now lets discuss our operating expenses to provide greater clarity on the changing our actual operating basis expenses. We will also describe our.
Speaker Change #107: Operating expenses, which better reflects how measurement abuse our results of operations, so reconciliations of GAAP and non-GAAP.
Speaker Change #107: <unk> are available in our earnings release and corresponding form 6K furnished do we say FCC.
Xiaoxin Chen: Merchandise costs increased by 30.9% to 2,947.8 million in line with the growth in product sales. Gross margin at the group level was 19.3% in the first quarter. Gross margin for our 1P business was 10.9%. Fulfillment expenses increased by 16.3% to 309.8 million, excluding share-based compensation expenses, which we will refer to as SPC from here on. Nangap fulfillment expenses increased by 16.3% to 303.4 million. Under the Nangap measures, the increase was primarily due to an increase in personnel expenses as we conducted more cycling and transaction activities compared with the same period last year. The gap for film expenses as a percentage of total revenues decreased to 8.3% from 9.1%.
Speaker Change #107: <unk> costs increased by two 9% to Tucson.
Speaker Change #107: The $47 8 million in line with our grocery product sales gross margin and that's a group level was 19, 3% in the first quarter gross margin for our wouldn't be finishes with pinpoint 9%.
Xiaoxin Chen: Selling and marketing expenses increased by 7.5% to $321.3 million, excluding SBC expenses and amortization of intangible assets and deferred costs resulting from asset and business acquisitions. Then GAAP selling and marketing expenses increased by 3.6% to $224.5 million. Primarily due to an increase in expenses related to marketing activities, then gap selling and marketing expenses as a percentage of total revenues decreased to 6.1% from 7.5%. General and administrative expenses decreased by 3.4% to $33.8 million.
Speaker Change #107: Fulfillment expenses increased by.
Speaker Change #107: So people is 3% to 398 million excluding share based compensation expenses, which we would have put you as SPC from Chiara.
Speaker Change #107: Fulfillment expenses increased by 16, 3% to $303 4 million.
Speaker Change #107: The non-GAAP measures the increase was primarily due to an increase in personnel expenses as we conducted in motorcycling in transaction activities compared with the same period of last year.
Speaker Change #107: non-GAAP fulfillment expenses as a percentage of total revenues decreased to eight 3% from the micron, 1% set.
Speaker Change #107: Selling and marketing expenses increased by seven 5% to $321 3 million, excluding SBC expenses and amortization of intangible assets and the deferred cost.
Speaker Change #107: Starting from assets and business acquisitions.
GAAP selling and marketing expenses increased by <unk>, 6% to $224 5 million.
Speaker Change #107: Primary due to an increase in expenses related to marketing activities, non-GAAP, selling and marketing expenses as a percentage of total revenues decreased to 261% from seven 5%.
Speaker Change #107: General and administrative expenses decreased by three 4% to city strip out $8 million.
Xiaoxin Chen: Excluding SBC expenses, NGAP GIA expenses increased by 1.2% to 58.1 million, primarily due to increases in office-related expenses. NGAP GIA expenses as a percentage of total revenues decreased to 1.6% from 2%. Technology and content expenses increased by 5.9% to $52.2 million, excluding SBC expenses and amortization of intangible assets and deferred costs resulting from assets and business acquisitions. Non-GAF technology and content expenses increased by 7.6% to $45.5 million, mainly due to an increase in personnel expenses in connection with the ongoing upgrade of the NGAP. NGAP technology and content expenses as a percentage of total revenues decreased to 1.2% from 1.5%.
Speaker Change #107: Excluding SBC expenses non-GAAP G&A expenses increased by one 2% to $58 1 million, primarily due to increases in office related expenses and <unk> expenses as a percentage of total revenues decreased to one 6% from 2% chicken.
Speaker Change #108: Origin content expenses increased by <unk>.
Speaker Change #108: <unk>.
Speaker Change #108: Point 2 million, excluding SBC expenses, and amortization of intangible assets and the deferred cost, resulting from asset and business acquisitions.
Picking the origin hunker.
Speaker Change #108: Christa.
Speaker Change #108: 6% to 40.
Speaker Change #108: Okay.
Speaker Change #108: Farmer.
Speaker Change #109: Increased personnel expenses.
It actually moves the ongoing upgrade.
Speaker Change #109: <unk> Operation Center and it systems than.
Speaker Change #109: And then got taken in Oregon content expenses as a percentage of total revenues decreased to one 2% from one 5% as.
Xiaoxin Chen: As a result, our NGAP operating income was $88.2 million in the first quarter of 2024, representing a significant increase of 88.6% year-on-year. NGAP's operating profit margin was 2.2%, compared to 1.5% in the first quarter of 2023.
Speaker Change #110: As a result, our non-GAAP operating income was $18 2 million in the first quarter of content for representing a significant increase of 18, 6% year on year.
Speaker Change #110: GAAP operating profit margin with two 2% compared to one 5% in the first quarter of Unpunished Street.
Xiaoxin Chen: As of March 31st, 2024, cash and cash requirements, restricted cash, short-term investments, and funds receivable from third-party payment service providers totaled $2.6 billion. Our strong cash position safeguards a sustainable growth outlook. Now turning to the business outlook for the second quarter of 2024, we anticipate total revenues to be between $3,670 million and $3,770 million, representing an increase of 23.8% to 27.2% year-
Speaker Change #111: As of March 31st continue for cash and the crush recurrence restricted cash short term investments and advances receivable from third party agreement to service providers totaled two 6 billion, our strong cash position safeguard for sustainable growth outlook.
Speaker Change #112: Now turning to the business ultra for second quarter before we.
Speaker Change #112: We anticipate total revenues to be between Switzerland six countries.
Chris: 17 million and the Swiss on the 770 million, representing an increase of 23, 8% to $2 27, 2% year over year Chris.
Operator: Please note that this forecast only reflects our current and preliminary views on the market and operational conditions, which are subject to change. This concludes our prepared remarks. Operator, we are now ready to take questions. We will now begin the question and answer session.
Speaker Change #114: Please note this forecast reflects our current and the preliminary views on the market and operational conditions, which are subject to change. This concludes our prepared remarks, operator, we're now ready to take questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. When asking the question, please state your question in Chinese first and then repeat your question in English for the convenience of everyone on the call. At this time, we will pause momentarily to assemble our roster. The first question comes from Joyce Ju with Bank of America. Please go ahead.
Speaker Change #115: We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
Speaker Change #115: When asking the question. Please state your question in Chinese first then repeat your question in English for the convenience of everyone in the call.
Speaker Change #115: At this time, we will pause momentarily to assemble our roster.
Speaker Change #116: The first question comes from Joyce Ju with Bank of America.
Speaker Change #117: Please go ahead.
Lixin Ju: Good evening, Management Team. Congratulations on a very good performance this quarter. Thank you very much for accepting my question.
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Speaker Change #119: Uh huh.
Speaker Change #120: That said, what he country critical event, where.
Lixin Ju: My first question is, we have recently seen that countries and local governments have also issued various action plans to promote large-scale consumer goods renewal. We also understand that this policy promotion may bring some growth promotion to the company in the future. Can the management team do some analysis and interpretation of the benefits of these policies to our future income, including the contribution of our sales revenue and the growth path of these policies? In particular, can you give us a quantification of the specific scale of the impact?
Speaker Change #121: Where the T cells and tissue to show up because that's kind of what that how good your phone Jennifer not yet found though they don't have way more south 18, you'll find in the Codell.
Speaker Change #122: Now with me and I would say a Jewish walk Hello, J T phone and it turns out we don't kind of way. It goes the whole ship with that she had her in countless ways.
Speaker Change #122: A couple of creating one eat hungry to get down to it.
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Speaker Change #123: Got you that's contributing sound gway mush toward that Oh, God Co-venture sure won't maintain yeah, and you get one of them are singing the eco show the treatment. They found the idea is that that woman arts opinion that is a shuttle train downtown Ward I wish all the <expletive> out Jim Don how Kimco account Cynthia I will hand that issue you got somebody else.
Lixin Ju: My second question is, we have also issued an income guidance for the next 24 years. I would like to know, in our income guidance for the next 24 years, what kind of growth contribution will we expect from our own channels, such as Jingdong and Apple, and what are our assumptions? In the next 24 years, how should we predict what kind of growth will occur? Let me translate my question. Good evening, Maggie Jun.
Speaker Change #124: Oh, Yeah, I wouldn't mind okay.
Speaker Change #125: To get down on the assumption that you should not I got whole machine have foods that are threatened by King has swoosh all with the arts and yet you guys put me out she took twilio, but to be honest, they're sort of dropped Oh, how are things that we see that when she batch.
Lixin Ju: Congratulations on the solid results. My first question is, we have seen this year that the national and local governments have issued action plans to promote large-scale replacement and trading of consumer products, which could potentially benefit the growth of iHuishou. Could management help us understand the potential impact on sales and revenue, especially some quantitative colors? Secondly, we note there are multiple growth drivers contributing to the company's 2024 revenue guidance. Could management walk us through the key drivers of the guidance? What are the growth assumptions behind each of the drivers, such as AiHuiShou's own channel, JD.com, and Apple, respectively? What also will be the growth outlook for service revenue in 2024? Many thanks.
Speaker Change #125: Matthew Jim Congrats on the solid results. My first question is we have seen this year the national and local governments have issued action plans to promote large scale replacement and trading of consumer products, which could potentially benefit gross after isolation could management help us understand the potential impact.
Speaker Change #125: On sell in revenue, especially some quantitative colors. Secondly, we know there are multiple growth drivers contributing to the company's 'twenty 'twenty four revenue guidance.
Speaker Change #126: Can management walk us through the key drivers of the guidance, what's the growth assumption behind each of the driver and such as I wish I was phone channel JD dot com and Apple respectively.
Speaker Change #127: Also what will be the growth outlook for the service revenue in 2020 for many thanks.
Xiaoxin Chen: We believe that the main driving force of our income growth in 2024 still comes from our income. Among them, in terms of the EP business of ZuYing, the level of the recovery business, we expect that in 2024, there will still be a significant increase in the number of peers beyond the consumer market. There are three main points.
Speaker Change #128: I'll figure Chippewa.
Speaker Change #129: Oh, no wait on the Austin element. So that's what's in our Formula and I imagine you so long.
Speaker Change #130: <unk> ovens Joseph J E T.
Speaker Change #131: She has all that bad Julian J E T E.
Speaker Change #132: That's a minimum will meet E. G on the Australian Chileans in New York Central Hudson shall be done in a commutation geology.
Xiaoxin Chen: The first point, first of all, mainly comes from the AiHuiShou store where we have received the trust of our users. In the offline expansion of the core business circle, in 2024, we will continue to open more of our own stores to improve the service and output of our stores. Second, we will focus on the new product retail scene in Jingdong, and we will combine Jingdong and the brand's dedicated investment in E-JiuHuanXin to further encourage consumers to participate in the recycling and increase the penetration rate of E-JiuHuanXin services in Jingdong channels, which are now in every digit.
Speaker Change #133: Andy Eagerness was young woman geology missile down you're pushing that I was on mute.
Speaker Change #133: And celgene, but since I'm sure on the also available monthly tissue.
Speaker Change #133: Border theme and getting a peso T.
Speaker Change #133: Mcgivney potential.
Speaker Change #133: The Ogden.
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Speaker Change #133: EBITDA for each of interchangeably sold piece of Woodland Mall Genco was would've gingold GW store base and put us in Dolby.
Xiaoxin Chen: Third, we will cooperate with a series of leading consumer brands to increase the power of E-JiuHuanXin for users and increase the conversion rate of E-JiuHuanXin and E-JiuHuanXin for E-JiuHuanXin to transfer more users to the recycling of Asus phones, 3G, and other recycling services. Through the above three scenarios, E-JiuHuanXin will In the recycling scene on Apple's official website and flagship store, we will balance the recycling price this year with the acquisition of members.
Speaker Change #133: Even in the Congo.
Speaker Change #133: We see this means in the sulfate keeping kind of stay at home those waste your pricing was important in that chain to your phone.
Speaker Change #133: So apples ourselves to that point.
Speaker Change #134: So John welcome aboard.
Speaker Change #134: Awesome.
Speaker Change #136: Global leader, whose Williams.
Thomas: Hello This is Thomas.
Thomas: And so each of them.
Speaker Change #137: Oh yeah.
The people at Wawa, but you didnt in the Huntington.
Speaker Change #138: Huntington woman.
Speaker Change #138: <unk> was about dilution.
Speaker Change #138: Cleveland.
Xiaoxin Chen: It is expected to achieve an income of about 10 billion RMB by the end of the year. In terms of platform business, we will further improve the ability of the Pajitang industry member center to open our platform and improve the solution of retail. ????????60????????,?????????????????????????,??????????????????? ??????????????? ?,??? Thank you for the question.
Speaker Change #138: The whole issue.
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Speaker Change #138: That's additional Virginia.
Speaker Change #138: But you won't get a moment gene for the Keystone pegged at Olive Hong you don't assume that to go together.
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Speaker Change #140: And so Joe.
Speaker Change #141: Well in combo with home, yet with Sundance, one talking about jobs at the pharmacy.
Speaker Change #142: Yes, we ship.
Speaker Change #142: Our solutions with Tim Hortons.
Speaker Change #142: Sure.
Xiaoxin Chen: Thank you for the question. We believe that our primary growth driver in 2024 will continue to be our self-operated business, which contributes approximately 90% of our total revenue. Domestically, we expect the annual growth rate of our core self-operated business to significantly outpace the broader consumer market in 2024. There are a few reasons.
Thank you for the question.
Speaker Change #143: We believe that our primary growth driver in 2024 will continue to be our self operated business, which contributes approximately 90% of our total revenue.
Speaker Change #143: Domestically, we expect the annual growth rate of our core self operated business, so significantly outpaced the broader consumer market in 2024.
Speaker Change #143: This is for a few reasons.
Xiaoxin Chen: First and foremost, our growth is fueled by our consumer-trusted AHS stores, which are strategically located in malls within client commercial areas. We will continue our growth with dozens of new self-operated store openings in 2024 while improving the services and output of our stores. Second, we are boosting our recycling penetration rate, which is currently in the low single digits, through precise recycling scenarios integrated into new product sales on JD.com, supported by trading subsidies from the platform and brands.
Speaker Change #143: First and foremost our growth its sales by our consumer trusted address stores, which are strategically located in more within client commercial areas. We continue our growth with dozens of new self operated store opening in 'twenty 'twenty four while improving the services and output of our store.
Speaker Change #143: We are boosting our recycling penetration rate, which is currently in the low single digits. So precise recycling scenarios integrated into new product felt J P. Dot com supported by trade in subsidies from the platform and brand.
Xiaoxin Chen: Third, by collaborating with a series of premium high-frequency consumer brands, we bring more benefits to our users. We are upgrading the AHS mini program, which offers richer and more day-to-day scenarios for users to visit our stores and try our second-hand consumer electronics and multi-category recycling service. These scenarios consistently provide us with high-quality product sources. In our collaboration with Apple's official trading program, we balance the pricing mechanism and target models at the recycling end.
Speaker Change #143: Third by collaborating with a series of premium high frequency consumer brands, we bring more benefits to our users. We are upgrading the H as mini program, which offers richer and more day to day scenarios for users to visit our stores and try our secondhand consumer electronics and multi category with second and third.
Speaker Change #143: This scenario consistently provide us with high quality product sourcing.
Speaker Change #143: Our collaboration with apples official training program, we balance the pricing in Canada and target models at the recycling and in the full year of 'twenty 'twenty four we anticipate the product revenue coming from Apple training program to increase by approximately 1 billion RMB.
Xiaoxin Chen: In the full year 2024, we anticipate the product revenue coming from Apple's trading program to increase by approximately 1 billion RMB. For our open platform business, we have enhanced the full-service offerings for over 600,000 merchants, including professional business owners, electronic product franchisees, and mom-and-pop store owners on PJT Marketplace. These enhancements include empowering our users with retail business solutions and ample sources of retail supply, which consolidates our 1P high-quality second-hand products. By generating additional value for both merchants and the industry, we are driving healthy growth in service realm use. Thank you.
Speaker Change #143: For our open platform business, we have a full service offering for almost 600000 merchants, including professional business owners and electronic product franchisees and mom and pop stores owners on P. J T marketplace.
Speaker Change #143: Leasing how funds include empowering our users with retail with our solutions and ample sources of retail supply, which consolidates, our one P high quality secondhand products.
Speaker Change #143: By generating additional value for both merchants and the industry, we're driving healthy growth in service revenues. Thank you. Thank you.
Speaker Change #143: Okay.
Speaker Change #144: Was there a follow up Ms. Zhu.
Operator: Was there a follow-up, Ms. Ju? Okay, the next question comes from Jiajing Chen with CICC. Please go ahead.
Speaker Change #145: Okay. The next question comes from judging Chen with TICC.
Please go ahead.
Xiaoxin Chen: First of all, I would like to thank the management team for accepting my question. I have three questions. The first question is whether the company can share the long-term profit goal and how to achieve it. The second question is that we see that the overall interest rate of the two institutions and the interest rate of EP are somewhat suppressed. How should we look at the future trend of the interest rate?
Speaker Change #145: So that's the background.
Speaker Change #146: You got to buy any timetable that Sheila I'll tell you where families have lunch afternoon, as Helen Shan Shan outlets and also sometimes back home to build even more PL did you teach amounts you can ship okay.
Xiaoxin Chen: The third question is whether the management team has any comments on the current comprehensive cash reserve situation. Let me translate these questions for you.
Speaker Change #147: So I'm not going to say that lets you does that change your mind and how each of them all you're doing how can we shift from the other.
Speaker Change #148: T O.
Speaker Change #148: You covered I think I'm all you knew that you ship against.
Speaker Change #149: I guess I have LNG, Oh, I had something more challenging of a phone call that's a neutral.
Speaker Change #149: Oh, great reception derma.
Speaker Change #150: And let me translate myself congratulation for achieving solid growth. Our Q1 results I have three questions. The first question is on what is the company's long term profit goals and what's the path to achieve that.
Xiaoxin Chen: Congratulations on achieving solid growth for the Q1 results. I have three questions. The first question is what the company's long-term profit goals are and what the path to achieve those. The second question is that we saw some pressure on the overall gross profit margin and 1P gross profit margin. So how do you view the trend of the GP margin in the future? The third question is: what's your comment on the cash position? That's all my questions. Thank you. Okay, thank you.
Speaker Change #150: Second question is we saw some pressure on the overall.
Speaker Change #150: As one peak margin. So how do you view the trend all kinds you can imagine in the future that that question head on what's your comment on the cash position. That's all my question. Thank you.
Speaker Change #151: Okay. Thank you so I will take your questions.
Xiaoxin Chen: Okay, thank you. So I'm Rex. I will take your questions.
Xiaoxin Chen: To answer the first question, Abbas Ghassan Professor in the Operating Systems Department. First of all, we prioritized a variation of the NGAP operating profit margin, which has been improving over the past quarters. We are currently in the educational stage of consumer recycling. We are a company that promotes sustainability with self-use as the price of the recycling site. So the relative cost of markup, coupons, and the recycling end is included in our merchandise costs, which affects the gross profit of our product revenues. But we will comprehensively balance our sales and marketing expenses in order to improve our operating profits. The promotion of 1P recycling affects our cost instead of expenses and its common characteristics in the second-hand recycling industry.
Speaker Change #152: And so as a first question.
Speaker Change #153: Both gross profit and operating profit.
Speaker Change #154: First of all we prioritized the variation of the non-GAAP operating profit margin, which has been improving over the past quarters. We're currently.
Let's take job consumers sort of cycling.
Speaker Change #154: Great.
Yes.
Speaker Change #154: Yes.
Speaker Change #155: Sorry, sorry.
Speaker Change #156: Mockup pumps to recycling and are included in our merchandise costs, which are perhaps a gross profit of our product revenues.
But we will comprehensively balanced our sales and marketing expenses in order to improve our operating profits for promotion of Whoopi recycling affects our cost instead of expensive and its common characteristics of the secondhand recycling industry.
Xiaoxin Chen: Looking specifically at the first quarter, the gross profit margin was 19.3%, an increase of 0.6% from the fourth quarter. The net profit margin was 10.9%, an increase of 0.3% from the fourth quarter. Excluding the negative impact of sales of overseas inventories, the gross profit margin of our core recycling business has increased steadily, with a quarter-over-quarter increase of 1.6%. In the medium to long term, the path to improving our NGAP operating profit margin mainly comes from three aspects. First, compliance and refurbishment.
Speaker Change #157: Looking specifically Pepsi.
Speaker Change #157: Gross profit margin was 19, 3%.
Speaker Change #157: Increase of six six.
Speaker Change #157: 6% from the fourth quarter.
Speaker Change #157: Gross margin was 10, 9% increase off the setup on strip center from the fourth quarter, excluding the negative impact of sales of overseas new entries. So gross profit margin of our core recycling opinions has increased the increased steadily with a quarter over quarter increase of one 6% in the medium to long.
So it has two improving our non-GAAP operating profit margin mainly comes from.
Speaker Change #157: Spreads.
Speaker Change #157: Comprised of refurbishment, we improved product standardization throughout our supply chain to gain more profits. So gross profit margin of compliant refurbished products has remained stable above 20% for several consecutive quarters secondly increased propel.
Xiaoxin Chen: We improve product standardization through our supply chain to gain more profits. As a result, the gross profit margin of compliant refurbished products has remained stable above 20% for several consecutive quarters. Second, an increased proportion of retail sales revenue as we have established end-to-end recovery. For online channels, JD.com supports reasonable product standards, pipeline, and we list more products with a broader price range to meet buyer demand. For offline channels, retail sales through our stores rapidly increased by 21% compared with the previous quarter. Furthermore, more consumers from medium to low-tier cities are happy to visit our stores, not only for recycling but also for buying used products.
Speaker Change #157: Propulsion retail sales revenue as we have.
Speaker Change #157: Coverage.
Speaker Change #157: Online channels, Judy talk come supports reasonable product standards adjustments on pipeline.
Speaker Change #157: More progress with our broader price range to meet virus demand.
Speaker Change #157: Offline channels retail.
Speaker Change #157: Sales through our stores restaurants increased by 21% compared with the previous quarter.
Speaker Change #157: As more consumers from medium to low tier cities, our habit to visit our stores.
Speaker Change #157: For recycling, but also.
Speaker Change #157: For buying used products so to the skewing effect further advanced to the efficiency of our operating expenses through the <unk>.
Xiaoxin Chen: Third, the scale effect further advances the efficiency of our operating expenses through the amplification of transaction volume and comprehensively brings an increase in gap operating profit margins. In the first quarter of 2004, there was another loss in income from operations, below operating income. Looking at the full year of 2024, we expect a limited impact on our net income. Regarding this particular other loss... In Q4 2023, we subscribed to shares of Ecosystem Enterprise's Hong Kong IPO.
Speaker Change #157: Amplification of transaction volume and the comprehensively greenfield increasing in GAAP operating profit margins in the first quarter of tenant default so within other loss.
Speaker Change #157: Income from operations.
Speaker Change #157: Below the operating income looking into a full year of 2024, we expect a limited impact on our net income regarding this particular other loss.
Speaker Change #157: In Q4, 2020 Street, we subscribed to shifts of.
Speaker Change #158: Ecosystem enterprises, Hong Kong IPO shift impacted by market conditions, it's stock price experienced a downward pressure in Q1, resulting a loss in our other losses.
Xiaoxin Chen: Impacted by market conditions, its stock price experienced downward pressure in Q1, resulting in a loss in our other losses. To answer your second question, in terms of net cash, at the end of March, we prepared 295 million RMB of inventory in advance to meet users' purchasing needs during the second quarter. We sold the majority of them and received a payment in the second quarter. As a result, it appears to be a timing difference.
Speaker Change #158: To answer your second question in terms of net cash at the end of March we prepared a 294 million a $5 million and the op units in a device to meet users purchase she needs during the second quarter, we sold the majority of them and they received a payment in the second quarter.
As a result of it appears to be a timing difference. In addition regarding Apple trading finishes, we'll have 45 tablet base as mentioned in last quarter and the St. Joe efficient secondhand consumer electronics total kept the ship capabilities. This finished has a limited impact on our cash flow if we extended.
Xiaoxin Chen: In addition, regarding Apple trading businesses, we have 45 payable days, as mentioned last quarter. And thanks to our efficient second-hand consumer electronics turnover capabilities, this business has a limited impact on our cash flow. If we extend the time horizon, our operating cash flow will be consistent with the steady growth of our net operating profit.
Speaker Change #158: Our operating cash flow will be considered to resist the steady growth of our non-GAAP operating profit.
Speaker Change #159: Thank you.
Operator: Yejing, do you have a follow-up question?
Speaker Change #160: Judging do you have a follow up question.
Xiaoxin Chen: No, I don't. Thank you. Thank you.
Speaker Change #161: No I don't think you. Thank you. The next question comes from Michael Kim with Zacks small cap research. Please go ahead.
Operator: Thank you. The next question comes from Michael Kim with Zach's Small Cap Research. Please go ahead.
Speaker Change #160: Okay.
Michael Kim: Great. Good morning or good evening, everyone.
Speaker Change #162: Great Good morning, or good evening, everyone. Thanks for taking my questions.
Michael Kim: Thanks for taking my questions. First, just in terms of capital management, I would be curious if you could provide some perspective on CapEx needs going forward, particularly as it relates to the plan to continue to upgrade your operation centers and open new offices. And then second, just kind of stepping back, what's the plan to increase shareholder return, particularly as it relates to share purchases? Thanks.
Michael Kim: First just in terms of capital management.
Speaker Change #164: Be curious if you could provide some <unk>.
Speaker Change #164: Perspective on Capex needs going forward, particularly as it relates to.
Speaker Change #165: Plan to continue to upgrade your operation centers and opened new offices.
Speaker Change #164: And then.
Speaker Change #164: Second just kind of stepping back what's what's the plan too.
Speaker Change #164: The increase shareholder return, particularly as it relates to share repurchases. Thanks.
Xiaoxin Chen: Okay, thank you for your questions. We invest in our operational capabilities instead of investing heavily in assets. So our business is in a light asset model. Regarding our capex, we expect 100,000 RMB per new store opening. For stores with multi-category recycling offerings, the capex per store will be a little bit higher. For joint-operated stores, the capex is handled by our local partners. On the processing end, as part of our long-term development strategy, we continue to enhance the automated inspection and grading capabilities of our regional operation centers.
Speaker Change #166: Okay single part questions.
Speaker Change #167: We are investing our pushing accountabilities instead of investing heavily into assets. So our opinion says in a lighter asset model regarding our capex we expect.
Speaker Change #168: What kind of sound the IMT produced store opening four stores with motion category recycling offerings.
Speaker Change #168: <unk> per store will be a little bit higher for joint operating those thoughts for Capex are handled by our local partners on the process processing and as part of our long term development strategy, we continue to enhance the automated, especially and grading capabilities of our regional operators are pushing centers.
Xiaoxin Chen: The existing operation centers in Dongguan and Changzhou have incurred approximately RMB30 million each in capital expenditure for automation upgrades. Currently, these two operating centers support 40% of the quality inspection demand for second-hand consumer electronics nationwide. During daily operations, they maintain flexibility in capacity utilization without operating at full capacity. Regarding corporate finance activities, in March, we announced a 12-month buy-back plan to purchase up to $20 million of our ADSes, following consultation with our board of directors.
Speaker Change #168: So existing operating centers and Dunbar in the channel have been cut approximately RMB 13 billion each in Capex for automation upgrades. Currently these two operating centers support 40%. After a party specialty demand for second hand, consumer electronics National mission wide during data operations same main.
Speaker Change #168: Paint the flexibility in Paris, Texas utilization without operation at full capacity.
Speaker Change #168: Regarding corporate finance activities in March we announced that 12 months buyback plan to purchase up to $20 million.
Speaker Change #168: Our ideas.
Speaker Change #168: Foreign consultation with our board.
Xiaoxin Chen: In the long run, we will also consider distributing dividends at the end of this year, depending on our profitability. We'll closely monitor efficient capital deployment into our operations and remain committed to developing our scenarios plus supply chain capabilities. We remain open to innovative investments that support our core business development and adhere to profit-driven strategies. Let us deliver sustainable value to our shareholders and users. Thank you.
Speaker Change #168: Tariff tests in the long run we will also consider.
Speaker Change #168: Distribution dividend.
Speaker Change #168: At the end of this year, depending on our profitability, we will closely monitor efficient.
Speaker Change #168: Capital deployment.
Speaker Change #169: <unk> operations and to remain committed committed to developing our scenarios across supply chain capabilities will remain open to innovative investments so to support our core business development and adhere to profit of German strategists.
Speaker Change #169: Deliver sustainable value to our shareholders and use us.
Speaker Change #169: Good.
Speaker Change #169: Yes.
Speaker Change #169: Okay.
Michael Kim: Mr. Kim, do you have a follow-up question?
Speaker Change #170: Mr. Kim do you have a follow up question.
Speaker Change #169: Yes.
Michael Kim: No, that was it. Thanks for taking my question.
Speaker Change #171: No that was it thanks for taking my questions.
Operator: As there are no further questions at this time, I'd like to hand the conference back to management for closing remarks.
Speaker Change #172: As there are no further questions at this time I'd like to hand, the conference back to management for closing remarks.
Speaker Change #173: Thank you.
Jeremy Ji: Thank you all again for joining us. A replay of today's call will be available on our website shortly, followed by a transcript when it is ready. If you have any additional questions, please feel free to email us at iratrenew.com.
Speaker Change #174: Can you all again for joining us a replay of today's call will be available on our IR website. Shortly followed by a transcript. We're ready if you have any additional questions. Please feel free to email us IR continuing you don't call have a good day.
Operator: Have a good day. This conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change #175: This conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Speaker Change #175: Okay.
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