Q4 2024 111 Inc Earnings Call
Hello, everyone and thank you for joining one on one conference call today on the call today from the company are Dr Gang Yu co founder and executive Chairman, Mr. John Laing Leah co founder Chairman and CEO, Mr. Luke Chen CFO of one on ones major subsidiary and Mr. Harvey.
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As a reminder, today's conference call is being broadcast live via webcast at the company's earnings press release was distributed earlier today and along with the earnings presentation are available on the company's IR website.
Before the conference call get started let me remind you that this call may contain forward looking statements made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Such statements are based upon management's current expectations and current market and operating conditions and relate to events that involve known and unknown risks uncertainties and other factors all of which could cause actual results to differ materially for more information about these risks. Please refer to the company's filings with the FCC one one.
One does not undertake any obligation to update any forward looking statements as a result of new information future events or otherwise except as required under applicable law. Please note that all numbers are in RMB and all comparisons refer to year over year comparisons unless otherwise stated.
Please also refer to the earnings press release for detailed information of the comparative financial performance on a year over year basis.
Speaker Change: I will turn the call over to Juan Lin CEO, Mr. Shan Li.
Good morning, and good evening everyone.
Thank you for joining the call.
Speaker Change: 'twenty 'twenty earnings call.
Speaker Change: Formation will be discussing yes. He is also available in the slides posted earlier today on the company's website.
Speaker Change: I encourage everyone to download the presentation as well as <unk>.
Speaker Change: The earnings report.
Speaker Change: Investor Relations website.
Speaker Change: <unk> dot one dot com CN.
Speaker Change: Anytime before was it significant challenges stemming from the macro economic pressures and ongoing health care reforms.
Speaker Change: These headwinds have impacted the broader health care industry.
Speaker Change: Yeah, we'll deliver our first ever.
Speaker Change: Operational profitability and positive operating cash flow.
Speaker Change: An important milestone in our company's history.
Speaker Change: This solid performance is a direct result of our diligent execution of strategic initiatives to boost operational efficiency and cement us as one of the most efficient operators in the sector.
Speaker Change: It also underscores our agility and the <unk>.
Speaker Change: Billings amount of detail okay.
Speaker Change: Complex market conditions.
Speaker Change: Beyond financial performance, we also advance our technology and strengthened our supply chain infrastructure laying the foundation for long term growth.
Speaker Change: These improvements position us to meet future demand.
Speaker Change: Greater speed and lower cost ultimately driving value across the industry.
Speaker Change: And then I will provide a deeper look into the current industry landscape outline all outlook and opportunities and highlight key financial achievements I.
Speaker Change: I'll also share updates on our advancements in technology, and our supply chain infrastructure as well as the recent industry reclamation.
Speaker Change: Finally, I will discuss our growth strategy for navigating this challenging environment before handing over to <unk> CFO, Mr. Luke Chen for a detailed analysis of our financial performance.
Speaker Change: Turning to the macroeconomic landscape.
Speaker Change: Economic uncertainties in China have led to increasingly cautious consumer behavior slowing discretionary spending and retail.
Speaker Change: Retail sales growth.
Speaker Change: The health care sector is no exception.
Speaker Change: According to the National Bureau of statistics.
Sean: Sean I just saw a three 6% year over year growth in 2020 fold per capita health care expenditure.
Speaker Change: Expenditure.
Speaker Change: This represents a sharp decline of 12 full percentage points from the 16% growth in the price and the lag behind the 5% GDP growth during the same period.
Speaker Change: At the same time downstream pharmacies continued to face pressure from ongoing health care reforms, including adjustments to individual medical accounts phased rollouts.
Speaker Change: Outpatient benefits and heightened regulatory oversight.
Speaker Change: These reforms aimed to build a more sustainable and efficient health care system ultimately benefit from our well managed pharmacy chains with a strong product offering and service capabilities.
Speaker Change: However.
Speaker Change: In addition period presents a shocked some operational challenges.
Speaker Change: The industry adapts to the new policies and the regulatory frameworks.
Speaker Change: Another piece that are impactful pharmacies.
Speaker Change: And the aggressive expansion.
Speaker Change: During the pandemic.
Speaker Change: Optimism about lump sum health care demand led to a surge in new store opening.
Speaker Change: But market growth has not kept pace.
Speaker Change: As a result, China's total retail pharmacy sales dropped by 2.2% equal.
Speaker Change: These cool according to telecom data.
Speaker Change: With more stores competing in a stagnant market plus stall revenues have Poland intensifying industry competition.
Speaker Change: Newest stores still in the growth phase.
Speaker Change: This additional pressure weighing on short term profitability.
Speaker Change: Large pharmacy chains are already feeling the impact.
Speaker Change: Yeah, Oh, Jay Z Jade Cheng got installed.
Speaker Change: Its net profit attributable to shareholders, excluding non recurring gains and losses to decline by up to 16, 9% in Tennessee and plentiful.
Speaker Change: Load by 66%.
Speaker Change: 45% decline or eastern PA, Oh Wow.
Speaker Change: Hello.
Speaker Change: Hi.
Speaker Change: All some higher number why pharmacy cold respectfully.
Speaker Change: Independent pharmacies with limited resources.
Speaker Change: Great financial strain.
Given this challenging backdrop digital transformation is no longer optional.
Speaker Change: The essential.
Speaker Change: Pharmacy must cope with weaker consumer sentiment.
Speaker Change: Slower how home health care spending.
Speaker Change: And 16 patient behavior, while managing cost pressures and operational inefficiencies.
Speaker Change: The key to survival and growth lies in emulation.
Speaker Change: Banking service delivery optimizing product categories, enhancing client management and improving operational automation across stores.
Speaker Change: This is where digitalization and AI driven solutions come in.
Speaker Change: As a pioneer in the digital Revolution will have integrated leading technologies across our operations from sales and procurement to customer demand.
Speaker Change: <unk> inventory optimization and the warehouse allocation.
Speaker Change: Our fully digitized operating system also empowers all upstream and downstream partners to reduce costs improve efficiency and service quality.
Speaker Change: Beyond the necessity of digital transformation.
Speaker Change: Ali confidence in China's lump sum health care market supported by two key structural trends.
Speaker Change: First.
Speaker Change: Ongoing anti corruption campaign in the health care sector is driving greater transparency in the hospital procurement, which is anticipated to expedite the shift of sales and prescriptions to retail pharmacies.
Speaker Change: This transition represents a trillion RMB out of hospital pharmaceutical distribution market that.
Speaker Change: Could eventually account for nearly half of the entire pharmaceutical distribution sector.
Speaker Change: Yeah.
Speaker Change: In the short term, however policy execution remains uneven across provinces and cities.
Speaker Change: Uncertainties.
Speaker Change: And medical reform refinements.
Speaker Change: Meditation.
Speaker Change: In the 10 to 25 government work report, China promoting the court developments on a governance of healthcare medical insurance.
Speaker Change: Pharmaceutical sector.
Speaker Change: I aim to steadily advance.
Speaker Change: Eventual level across the nation of basic medical insurance, while in the Caribbean.
Speaker Change: I see.
Speaker Change: Adjustments.
Speaker Change: Yes.
Speaker Change: Once these adjustments are fully in place, particularly on time payments from governments National Medical insurance. Some state change will be among the primary beneficiaries.
Speaker Change: As a trusted partner to chain pharmacies, we're well positioned to capitalize on this growth.
Speaker Change: With an with an extensive class attractive product portfolio and a relentless focus on customer experience, we strive to strengthen our leadership and expand market share in this dynamic landscape.
Speaker Change: Second China's rapid aging population will fuel sustained growth in health care consumption, while the government to encourage the still the economy.
Speaker Change: Despite recent fluctuations China's health care expenditure as a percentage of GDP remains significantly lower than that of developed countries, indicating ample room for expansion.
Speaker Change: As health care needs continue to rise, but believe the overall trajectory.
Speaker Change: And the health care market will remain strong over the long term.
Speaker Change: Turning to our financial highlights.
Speaker Change: A rigorous and disciplined approach to raising operational efficiency.
Speaker Change: Both improvements in Q4, despite ongoing shops.
Speaker Change: We effectively reduced total operating expenses by half year really yeah bearings, then suggest five 5% of revenues down 470 basis points from the prior year.
Speaker Change: While few months expenses rose slightly as a percentage of revenues, primarily due to one time warehouse relocation seat.
Speaker Change: We drove reductions across multiple cost categories.
Speaker Change: Selling expenses declined by 220 basis points to 2% of net revenues from hopefully, 2% a year ago.
Speaker Change: While the general and administrative expense ratio fell by 190 basis points and the technology expense ratio decreased by 80 basis points.
Speaker Change: Excluding share based compensation, our operating expense ratio improved by 170 basis points to a record low five 3%.
Speaker Change: For the full year 2024.
Speaker Change: We achieved a yearly profit from operations for the first time with income from operations, reaching $2 1 million RMB, representing a sharp turnaround from an operational loss of 359 million RMB in two.
Speaker Change: 2023.
Speaker Change: Our bottom line improved by $332 7 million RMB, all 40, 94% plus 1% from a year ago.
Speaker Change: On a non-GAAP basis income from operations was $22 3 million RMB compared to the $123 9 million last year.
Speaker Change: Yeah.
Speaker Change: non-GAAP bottom line improved by $126 6 million RMB or 99, 5% from 'twenty to 'twenty three.
Speaker Change: Additionally, we generated.
Speaker Change: Positive operating cash flow.
Speaker Change: 263 million RMB for the first time.
Speaker Change: These milestones highlight the efficiency of our strategic initiatives and the resilience of our business model.
Speaker Change: In 2010 the fall.
We reduced operating expenses by 31% year over year.
Speaker Change: Lowering them to five 7% of revenues down 230 basis points from 8% in 'twenty three.
Speaker Change: While fulfillment expenses remain largely unchanged as a percentage of revenues the general and administrative expense ratio declined 100 basis points, 0.5%.
Speaker Change: Selling expenses fell to two 2% of revenues compared to 3% in the pie.
Speaker Change: While technology expenses dropped to 0.5% of revenues from zero, 8% Oh, yeah.
Speaker Change: Excluding share based compensation.
Speaker Change: <unk> expenses as a percent.
Speaker Change: <unk> revenues decreased 90 basis points to five 6%.
Speaker Change: Our high operational efficiency, driven by strategic investments and infrastructure.
Speaker Change: Optimized personnel arrangements.
By prioritizing sustained growth will have to continuously enhance our industry, leading digital capabilities for operations marketing.
Speaker Change: Supply empowerment and a supply chain.
Speaker Change: This ensures that all technology driven efficiency remains a key competitive advantage.
Speaker Change: In Q4, our advanced digital infrastructure are contributing to further reductions in technology and staffing expenses reinforcing our ability to adapt to evolving market conditions, while positioning us for future opportunities.
Speaker Change: Although our revenues are smaller that some more established players.
Speaker Change: Operational efficiency is a key differentiator.
Speaker Change: As one of the most efficient health care E Commerce platforms, we remain committed to driving further cost reductions.
Speaker Change: Hence in profitability through scalability and the refining execution.
Speaker Change: This unwavering focus on leveraging technology to drive operational excellence across various aspect is a cornerstone of our strategy.
Speaker Change: The savings generated from our continuous optimization will bolster our financial flexibility, allowing us to strategically allocate resources and reinvest in PEC advancements business growth and our customer experiences at the moment.
Speaker Change: From a technological standpoint will have been strengthening our digital capabilities by investing system development advanced models algorithms.
Speaker Change: Applications.
Efforts are designed to fortify our coal company competitiveness in the digital landscape.
Speaker Change: Results will have made further strides in leveraging digital and AI technologies.
Speaker Change: Bus powered by our proprietary intelligent JV platform and the inventory Sharon technology will have achieved foundational system level integration with upstream partners.
Speaker Change: Tablets shade unique decentralized inventory in that what that means is stockpiling and availability.
Speaker Change: This development enabled by smart demand forecast and algorithms and vast inventory management system has successfully expanded platform accessible skus by 33000.
Speaker Change: Inventory availability by 290 million RMB in plenty of plentiful.
Speaker Change: By strengthening our supply capability, where not only optimize efficiency, but also ensuring our real time elastic response capabilities to meet customer demands.
Speaker Change: Uh huh.
Speaker Change: Optimized our marketing strategies to stimulate demand and to build intelligent operational systems to support key events by leveraging touch on etch technology.
Speaker Change: During the all flash sales events from November to December.
Speaker Change: Utilizing advanced data analytics, and AI, driven insights to fine tune discount mechanisms or implement necessary technology upgrades.
Speaker Change: Operational system nearly every week.
Speaker Change: These tech driven efforts drove user retention and higher transaction volumes.
Speaker Change: The results speak for themselves.
Speaker Change: Gross merchandise volume at G. M day in December increased by 17% from the prior month.
Speaker Change: While gross profit grew by 8%.
Speaker Change: Notably average revenue per user or a pool searched about 18% and average revenue per order Paul rose by 14%.
Speaker Change: These results underscore the strategic value of our technology investments and effectiveness about precision targeted promotions on a tech enabled intelligent platform.
Speaker Change: Finally, 2025 marks a pivotal year for AI technology development in China and the world.
Speaker Change: As an industry leader in the whole from a technological innovation will have made AI a key focus in advancing our capabilities and it plays a critical role in driving our intelligence demand analysis optimizing supply chains and.
Speaker Change: Same market responsiveness.
Speaker Change: For example by integrating technology advancements with deep business collaboration.
Paula Brooklyn: I am Paula Brooklyn catalog and better utilize procurement data per mile operations and thousands of partners pharmacies.
Paula Brooklyn: Market trends analyze consumer behavior shifts and update the mentalist more precisely.
Speaker Change: We assigned wait till wait to high demand product in the assortment strategy, while giving original attention to long tailed goods to meet specific demands.
Speaker Change: On the technology front, we improved forecasting accuracy from 71% to 82%.
Speaker Change: As a result, they bought padlock introduced the 6598 new products in 2020 full contributing.
Speaker Change: 905 million RMB in G M D.
Speaker Change: The platform might still count rate dropped from four 9% to 4% say tuna industry benchmark.
Speaker Change: <unk> Chan efficiency.
Speaker Change: We're also re engineered all it takes a pipeline reducing demand at least generation time from five hours to just 30 minutes.
Speaker Change: Tenfold efficiency boost.
Speaker Change: By prioritizing precision and forecasting Crowne Plaza real time response will have established a model to demonstrate smart integration cost reduction operational efficiency business growth and ecosystem synergy in the health care E Commerce industry.
Speaker Change: The young technology without.
Speaker Change: With a leading supply chain management, we've expanded infrastructure and the continuous innovations in warehousing and older delivery for enhanced efficiency cost reductions ensuring high quality services.
Speaker Change: Next I'd like to move to new achievements made.
Speaker Change: The initiation and expansion of the network is one of the most important milestones achieved.
Paul: Hey, Paul.
Paul: It's designed to streamline logistics services, while lowering costs, both internally and externally.
Paul: Advanced across fulfillment simply try and shipment model has established an integrated highly efficient logistics network connecting all five major super hubs across east Central South North and southwest China.
Paul: By incorporating first mile and the last mile services.
Paul: Heading towards a comprehensive.
Paul: National network with seamless end to end supply chain consult.
Paul: In Q4, we expanded last mile delivery coverage, so additional metropolitan areas, including why Guangzhou, Chongqing and attendee.
Paul: With 28 transportation routes now in operation our network continues to strengthen this reach.
Paul: Our ability to execute at scale is reflected in our growing external customer base, which increased by 17 in Q4, a 20% rise from the previous quarter.
Paul: Operationally.
Paul: We also achieved significant improvements for the school yet.
Paul: Paul.
Paul: All of the damage rate dropped by 66%, while average delivery time improved by nearly a full day.
Nationally.
Paul: That will generate $7 1 million RMB in total gains.
Paul: The fall including cost savings.
Paul: In the future we plan to integrate fulfillment centers on the corporation into the network further enhancing our distribution infrastructure and the logistics efficiency.
Speaker Change: Motorola in 'twenty plentiful negotiations with key logistics partners led to a 5% reduction in JD logistics delivery fees and the total savings of one to 2 million.
Speaker Change: RMB from SF Express and D T O.
Speaker Change: In addition through rent negotiations and the strategic Whitehouse relocations, we achieved $8 six 3 million annual.
Speaker Change: And our cost savings, including one time relocation expenses.
Speaker Change: Leasing demos combined with improvements in warehouse labor efficiency and packaging optimization resulted in a four 9% year over year reduction in fulfillment costs, So 381 million RMB in 2024.
Speaker Change: Furthermore, please.
Speaker Change: Hence our supply and distribution capabilities and aligned with our strategy for the nationwide network would have expanded our supply chain infrastructure with seven new fulfillment centers coming online in Q4.
Speaker Change: These additions include centers in Guangzhou.
Speaker Change: She got long Jinan, twitching, Xinjiang and a whole lot.
Speaker Change: Right.
Speaker Change: The new centers will reduce delivery times for our local customers, while expanding our national network to a total of 18 fulfillment centers.
Speaker Change: This will enable us to deliver a whole bunch of 100.
Speaker Change: It's within 24 hours on a nationwide within 72 hours.
Speaker Change: Our rapid fulfillment center expansion is a testament to the effectiveness of our current margins.
Speaker Change: Science model.
Speaker Change: Our collaborative approach that transforms existing.
Speaker Change: Warehouses into a full fledged fulfillment centers and.
Speaker Change: In short a timeframe.
Speaker Change: Posted by our fully digitized systems, and our processes, especially remote regions.
Speaker Change: Under this model I'm on my own holds a share of the gross merchandise value.
Speaker Change: In 2025 with plans to expand our fulfillment centers footprint by adding at least 15 Molson Coors.
As it reflect in Q4 performance I'd like to highlight several key industry recognitions that underscore our market leadership and a strong original influence.
Speaker Change: Well, that's the nice as the most valuable health care and pharmaceutical companies for investments highlighting our strong growth potential and the lump sum value creation.
Speaker Change: Second was the length among the top 100 private enterprises and Chongqing.
Speaker Change: But will the all nodes.
Speaker Change: Outstanding pace of less productive and Internet service platform in Shanghai's Pudong District.
Speaker Change: Our innovative approach to digital transformation in health care.
Speaker Change: E Commerce.
Speaker Change: Yeah.
Speaker Change: Meanwhile, our tech portfolio now includes 33 patents upon full new additions in Q4.
Speaker Change: This latest patents reflect our commitment to technological advancements and the strategic focus on it.
Speaker Change: Financing efficiency safety and user experience.
Speaker Change: This includes a group chat content semantic analysis based incident monitoring system at a method, which leverages AI driven language processing, some crude real time risk detention detection and practice management.
Speaker Change: We have also developed a doctor allocation algorithm based on consultation data optimizing physician Maxim to enhance service efficiency and patient outcomes.
Speaker Change: Additionally, we introduced and advanced a drunk sophomore methods in our system, improving fulfillment accuracy and efficiency.
Speaker Change: Lastly, our emotional analysis system based on pharmaceutical purchase pathways provides deeper insight into customer behavior, allowing us to refine personalized services and consumer engagement.
Speaker Change: We are deeply grateful for the rest of the nation from both local markets and the industry.
Speaker Change: These accolades will undoubtedly boosted our credibility as well continuing to solidify our market position and foster innovation within the sector.
Speaker Change: Last but not least.
Speaker Change: I will provide an overview of our growth strategies for revenue margin and profit.
Speaker Change: Yes.
Speaker Change: As we look ahead to 2020 five we'll remain optimistic although felipe for pad for many challenges lie in my head.
Speaker Change: On the supply side will have a strategically consolidated resources from major commercial players across the country throughout JBT initiative, and we will continue to prioritize investment in the GBP platform to optimize the range of product offerings.
Speaker Change: This model has already proven they see value in connecting new partners and enhancing our supply capabilities.
Speaker Change: Additionally, our wholesale purchasing models will expand the promotion of products from leading pharmaceutical company.
Speaker Change: Leveraging our strong digital marketing network.
Speaker Change: To further strengthen our capabilities when increasing the number of franchise film instances and multiple underserved provinces, thus expanding our reach.
Speaker Change: Finally, our national network will ensure our integrated approach to managing product and the logistics across the entire country.
Speaker Change: These enhanced the supply capabilities.
Speaker Change: That's a customer.
Speaker Change: Customers the most comprehensive selection of pharmaceutical products at competitive prices.
Speaker Change: On the other side with strategically stimulating customer engagement and loyalty through high impact initiatives, such as flash sales events, which.
Speaker Change: Led to substantial traffic and the demand and enhance customer retention.
Speaker Change: Together with grow project aims to increase customers' share of wallet strengthening our relationships and driving further growth.
Speaker Change: It focuses out mid tier customers enhancing service quality across all sales stages to meet their coal needs skew their business development and ultimately elevate our platform's value on a scale.
Speaker Change: Motorola.
Speaker Change: Utilizing innovative online and offline integrated marketing models, including brands Livestreams and the number one salad with directly connect some industries and the customers, creating new growth avenues, while reinforcing our brand as a leader in customer centric.
Speaker Change: They didn't hold driven solutions.
Speaker Change: Yeah.
Speaker Change: We remain steadfast in our commitment to driving operational efficiency.
Speaker Change: <unk> as a critical factor of our continued success in a competitive and fast evolving market.
Speaker Change: The integration of AI and fully fledged digitization essential for us. So we'll maintain our industry, leading efficiency, but also deepen customer engagement and enable the creation of innovative products and services.
Speaker Change: These initiatives are well aligned to reinforce our market leadership.
Speaker Change: Technology is not just an enabler.
Speaker Change: It is the backbone of our strategy empowering us to build a more agile intelligent and customer centric business and evolving health care landscape.
Speaker Change: At the heart of this transformation is AI.
Speaker Change: We are leveraging to redefine how they interact with customers optimize decision, making and enhance operational efficiency.
Speaker Change: We have made significant investments in AI, driven analytics automation and digital infrastructure, so elevate customer engagement customized experiences and improve service delivery.
Speaker Change: Our AI powered tools.
Speaker Change: Analyze vast amounts of data in real time, enabling predictive insights that allow us to anticipate market shifts refined resource allocation and to drive smarter decision, making.
Speaker Change: All 100% digitized platform is not just about efficiency.
Speaker Change: It is a dynamic intelligence engine that continuously learns and adapts, allowing us to proactively industry trends rather than react to them.
Speaker Change: As the industry undergoes rapid transformation, our commitments, so leading edge technologies and saw we remain at the forefront.
Speaker Change: Steadfast in advancing our AI driven digital transformation embedding intelligent automation machine learning and next generation customer interfaces into our operations.
Speaker Change: Our goal is to seamlessly integrate technology and human expertise, creating frictionless intelligent engagement experiences that will define how customers and businesses interact in the health care sector.
Speaker Change: With that I'll hand, the call to our CFO, Mr. Luke Chen to walk through our financials. Thank you.
Luke Chen: Thank you Jamie and good morning.
Speaker Change: Everyone.
Speaker Change: And I want to begin by thanking all of our colleagues for their resilience and hard work over the school year plenty plenty for as we navigated a challenging environment for became necessary changes to improve our operation and our cost efficiency, while maintaining our competitive edge.
Speaker Change: Moving to the financials.
Speaker Change: My prepared remarks will focus on a few key business and financial highlights.
Speaker Change: You can refer to the details.
Speaker Change: The fourth quarter and fiscal year, 2020 poorer result from 17 to 20 in section two of our presentation.
Speaker Change: Again, all comparisons are year over year, and all numbers are in RMB unless otherwise stated.
Speaker Change: Let's start with the fourth quarter results.
Speaker Change: Total net revenues were RMB, three 8 billion and our broth segment profit plus <unk> 202.
Speaker Change: $2 5 million.
Speaker Change: Due to an unfavorable macro environment macro economic environment.
Speaker Change: Revenues in our <unk> segment profit decreased six 3% and five 5% respectively.
Speaker Change: Total operating expenses for the quarter decreased 51% to the corn and $9 8 million.
Speaker Change: As a percentage of net revenues total operating expenses for the quarter were down to five 5% from 10, 2% as we continue to enhancing our operating leverage and optimizing our operating efficiency.
Speaker Change: Fulfillment expenses accounted for two 7% of Q4 net revenues as compared to $2, 5% in the prior year.
Speaker Change: Sales and marketing expenses as a percentage of net revenue for the quarter with 2% downfall, four 2% a year earlier.
Speaker Change: G&A expenses accounted for 5% of net revenue.
Speaker Change: Two 4% in the previous year and in technology expenses accounted for <unk>, 4% on net revenue down from one 2% in the second quarter plenty of 'twenty three.
Speaker Change: And as a result.
Speaker Change: GAAP loss from operations was RMB $2 3 million, representing an improvement of 95, 8% from RMB could it be.
Speaker Change: $5 2 million in the prior year.
Speaker Change: As a percentage of net revenues and GAAP loss from operations accounted for 0.1% in the quarter down from one 3% a year ago.
Speaker Change: non-GAAP net loss attributable to ordinary shareholders was RMB 14, 8 million, representing an improvement of 774, 9%.
Speaker Change: And the 59 million in the previous year.
Speaker Change: As a percentage of net revenues.
Speaker Change: Net loss attributable to ordinary shareholders accounted for 4% in the quarter.
Speaker Change: One 4% a year earlier.
Speaker Change: For our fiscal full year 'twenty 'twenty four I would like to run through a few highlights again, you can refer to details more gas in the earning release.
Speaker Change: The comparison to our two full year couponing Tony.
Speaker Change: Our full year <unk> revenue was RMB 14 billion in the broth separate them carpet was RMB $829 2 million net.
Speaker Change: Net revenues in the glass segment pocket headed.
Speaker Change: Our three 7% and a two 3% decrease respectively.
Speaker Change: For full year 'twenty for total operating expenses decreased 31% to RMB $827 1 million.
Speaker Change: And as for net revenues total operating expenses decreased by 230 basis points to five 7% at about 8% a year earlier.
Speaker Change: Fulfillment expenses accounted for 6% of revenues.
Speaker Change: Third to two 7% in the previous year.
Speaker Change: So the marketing expenses as a percentage of net revenues reduced to two 2%. This year about 3% in front of me probably three G&A expenses accounted for two 5% up net revenue down from 24.
Speaker Change: 5% a year earlier.
Speaker Change: Technology expenses accounted for 0.5% of net revenues as compared to <unk>, 8% and plenty plenty sweet.
Speaker Change: As a result.
Speaker Change: Income from operations was RMB, two 1 billion.
Speaker Change: Loss from operations of RMB 351.
Speaker Change: In plenty plenty sweet.
Speaker Change: non-GAAP income from operations was RMB 22 3 million compared.
Speaker Change: Compared to a non-GAAP loss from operations.
Speaker Change:
Speaker Change: $123 9 million in plumbing sleep.
Speaker Change: GAAP net loss attributable to ordinary shareholders as a potential Avenue Avenue.
Speaker Change: <unk>.
Speaker Change: <unk>, two 0.3% about 1.1% a year ago.
Speaker Change: We are confident that we are on the right path towards profitability driven by our mobile technology capabilities and these capabilities will continue to.
Speaker Change: Eight of us to scale, our business efficiently and enhance our operational performance.
Speaker Change: Really delivery profitability and maximize value for our shareholders.
Speaker Change: Please refer to slides 21 to 25 appendix fashionable selected financial statements.
Speaker Change: A quick note on our cash position as of December 31st before we had a cash and cash equivalents, we sit in cash and short term investments.
Speaker Change: $518 3 million.
Speaker Change: And we have achieved first ever annual positive operating cash flow.
Speaker Change: To date the company.
Has the total outstanding amount of RMB one.
Speaker Change: 0.0, 8 billion recorded in the redeemable non controlling interest and accrued expenses and other current liabilities.
Speaker Change: This amount is home to a group of the Masters, one pharmacy technology pursuant to their plenty plenty adequate investment as previously disclosed in accordance with terms of this investment.
Speaker Change: <unk> has received the redemption request from certain of such investors.
Speaker Change: Our following communication and negotiation our company has reached agreements obtained the containment matters master representing approximately 97%.
Speaker Change: Total amount to reschedule it'll be payments, allowing full phrased repayments over extended periods, if the holders exercise their redemption rights.
Speaker Change: To date the company has already paid a portion of to put repurchase depends upon signing the agreement.
Speaker Change: In January 2025 and application.
Speaker Change: So in Shanghai route in baseball and investments seeking redemption.
Speaker Change: The comedy Hong Kong subsidiary to repurchase the investment share.
Speaker Change: In lung pharmacies technology for RMB 30 million plus accrued interest.
Speaker Change: We do not expect the arbitration outcome should have 80 impact.
Speaker Change: This operations all of our PRC entities.
Speaker Change: And we really need in active discussion with that investors to negotiate and finalize a mutually agreed revised repayment schedule.
Speaker Change: We will provide updates to matches.
Any significant developments.
Speaker Change: This concludes our prepared remarks, thank you.
Speaker Change: Operator, we are now ready to begin the Q&A session.
Speaker Change: Thank you. Thank you wish to ask a question. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: If you wish to cancel your request please press star two.
Speaker Change: If you're on a speaker phone please pick up the handset to ask a question.
Speaker Change: Your first question comes from Robert Sassoon with water Tower research.
Robert Sassoon: Hi, How're you doing.
Speaker Change: A very resilient performance in the face of hazardous conditions. So let me ask you on that point.
Robert Sassoon: Verbal microwave.
Robert Sassoon: Economic environment can you actually specify how that has actually affected the companys performance.
Robert Sassoon: And of course for 2024.
Robert Sassoon: No.
Robert Sassoon: Moneygrubber yeah.
Sure So first of all.
Speaker Change: Even with the tough macro environment, we achieved a major milestone in our company's history.
Robert Sassoon: By delivering the first step.
Robert Sassoon: Operating profit both at the non-GAAP and GAAP level.
Robert Sassoon: We also achieved I'll stick.
263 million.
Robert Sassoon: In the meantime, we slashed operating expenditure by 30 basis points to five 3% of revenue.
Robert Sassoon: Making us one of the most efficient operator in the industry.
Robert Sassoon: And even compare with some of the.
Robert Sassoon: Really gigantic state owned are established companies.
Robert Sassoon: And also our bottom line improved by almost <unk>.
Robert Sassoon: 360 million RMB at the GAAP level.
Robert Sassoon: And I'm very proud of the team.
Robert Sassoon: Tirelessly throughout the year.
Robert Sassoon: The dedication and focus on executing our strategies are really outstanding.
Robert Sassoon: In plenty of time at all.
Robert Sassoon: Managed to significantly increase our product range by innovative business models like the response times that warehouse I spoke about in my script and said inventory without the upstream market supplying partners, who worked extremely hard to offer.
Robert Sassoon: Competitive prices.
Robert Sassoon: We substantially increased our human centered on to increase our reach and AI also has become a core part of our business operations and.
Robert Sassoon: It made us extremely efficient so a level where we can.
Speaker Change: Pete a desktop.
Robert Sassoon: Just giants in the industry.
Speaker Change: The accomplishments.
Speaker Change: Our team achieved in that which translated into the operating profit and positive cash flow. Thank you.
Speaker Change: Right that's.
Speaker Change: Good answer thank you.
Speaker Change: Your gross margin. Nevertheless has still continued to improve it year on year in the fourth quarter, rather than the full year.
Speaker Change: So what are the main factors driving that and can you provide more color on gross margin trends.
Speaker Change: Yeah.
Speaker Change: We achieved gross margin improvements.
Speaker Change: Yet at the same time I also customers very competitive prices.
Speaker Change: Yeah.
Speaker Change: <unk> here, so first of all in order to offer the best selection for our customers and system and providing both a low margin at a high margin products and <unk>.
Speaker Change: <unk>.
Speaker Change: The low margin products don't make money.
Speaker Change: What we did is that because the outsourced part of the low margin products.
Speaker Change: <unk>, who reside closer to their customers and to save on shipping costs in order to.
Speaker Change: Having in order to have a reasonable margin with competitive pricing.
Secondly, and and the team have specific goes in the P. P is to sell the higher margin products, including our own private label products.
Speaker Change: The other thing we do we've done you know we try to use a decentralized model to encourage our suppliers to store their inventory into our warehouses.
Speaker Change: A consignment basis, and we offer holistic services and I'm speaking of the services.
Speaker Change: In addition to what I just mentioned also developed out of a set of small groups such as supply chain financing they live screening and so long. So the service revenue stream will continue to be one of the core metrics, we managed with great diligence.
Speaker Change: And a lot back east.
Speaker Change: Constantly tweak our assortments management's and the.
Speaker Change: The AI big data analytics.
Speaker Change: Analytics enable us to really optimize our softness.
Speaker Change: Thank you.
So moving onto the operating operating expenses side. It seems that you've managed to decrease that's quite significantly.
Speaker Change: And the corridor fourth quarter operating expenses as a percentage of revenues decreased year on year to five point of purpose and so how was how has this achieved.
Speaker Change:
Speaker Change: Yeah, I mean, it's always a tough battle.
Speaker Change: Our bottom line and top line.
Speaker Change: Deep cuts in the Opex could end up big loss and the top line.
Speaker Change: But our confidence really comes from being efficient and over the years would have developed it.
Chris: Chris found approach.
Speaker Change: Staffing optimization is critical.
Speaker Change: We constantly review and adjust our own structure.
Speaker Change: Uh huh.
Speaker Change: This is where.
Speaker Change: Expenses can easily get out of control.
Speaker Change: The other thing we're doing sign you know there are a few buckets of expenses in our operations.
Speaker Change: Very very simple they put it.
Speaker Change: Fulfillment, which is that.
Speaker Change: This portion of our.
Speaker Change: Opex you have sales and they have G&A.
Speaker Change: G&A also includes the technology team we.
Speaker Change: A breakdown each line item of those expenses and manage with very fine Brian.
Speaker Change: Granularity.
Speaker Change: Now I'll give an example, like fulfillment we break it down into warehouse rental.
Speaker Change: The number of employees.
Speaker Change: Sheldon cost, but picking costs a retro material.
Speaker Change: Seafood costs of damage rates return et cetera, and in each of the above category had someone responsible and also hit the targets.
Speaker Change: Lastly, a pulse on and off.
Speaker Change: The most essential elements.
Speaker Change: Our digital capabilities over the years.
Speaker Change: We have invested hundreds of millions of UN info technology and our whole operation is 100, digitized, which provides real time data on that.
Speaker Change: You know that real time data enable us to make real time adjustments and they see every month to ensure that the.
The company will need to go through an AI transformation and and I'm really looking forward to updating you know.
Robert Sassoon: And customer interfaces and the underlying system architecture. Thank you Robert.
Speaker Change: Thank you for that a detailed answer just a final question for me you obviously are quite impressive that you did.
Speaker Change: But the really adverse conditions that you are facing.
Speaker Change: She posted your first ever.
Speaker Change: Operating profit and positive operating cash flow. So can you just.
Speaker Change: Go through what the key drivers behind that milestone.
Speaker Change: Well and how sustainable is this profitability going forward.
Speaker Change: Yeah, Robert Let me answer. This question, yes, we all notice we have achieved sort of annual operating profit and positive cash flow in 2024 basis.
Speaker Change: Basis, and we believe the key drivers behind it.
Speaker Change: Landless efforts to improve our operating efficiency.
Speaker Change: You can cut out there.
Speaker Change: <unk> our revenue scale all of our operating expenses decreased 230 basis points year over year in 2024 amount.
Speaker Change: Mount turns improved by 31%.
Speaker Change: We also managed our working capitals to generate positive operating cash flow.
Speaker Change: 26 3 million.
Speaker Change: Our accounts payable days about about 45 days and our accounts receivable days is 10 to 12 days and our inventory turnover rate was about 25% to 30 days.
Speaker Change: So we are highly efficient and well managed.
Speaker Change: Hum.
Speaker Change: Compared to getting the dispatch of even compared to those that dynamic all players.
Speaker Change: We believe that we have built a solid foundation for 2025 and onwards.
Speaker Change: In 2025, we will continue to build up the scale and meaningful margin and.
Speaker Change: Efficiently always.
Speaker Change: With this AI support.
And in all profitability and positive cash flow generation, we believe will be sustainable. Thank you Robert.
Speaker Change: Yeah. Thanks for 11 ill jump back in the queue.
Speaker Change: Yeah.
Satang Fang: Your next question comes from Satang Fang with TICC.
Satang Fang: Okay. Thank you for taking my question because she can swing from Texas State and congratulations on your great progress in 2024.
Satang Fang: I have two questions actually the first one is just a quick follow up question on expense control.
Satang Fang: I just wonder if there's any further expense control action, we could look forward to in 2025.
Satang Fang: And another question is about revenue and earnings given the current market environment, what's the driver to support revenue growth.
Satang Fang: Especially considering that we also need to maintain a good profit margin. Thank.
Satang Fang: Thank you.
Satang Fang: Look good to take a bit of cost.
Satang Fang: Hum.
Satang Fang: Uh huh.
Satang Fang: This is Bobby I'll take your question regarding with the operation cost.
And.
Satang Fang: Actually looking back on it.
Satang Fang: Operation.
Satang Fang: Yeah.
Satang Fang: On an annual perspective.
Satang Fang: They were basically optimize in a very structurally.
Satang Fang: Well of course, many of these optimization will gradually upgrade wrong.
Satang Fang: Small and temporary recruitment tool.
Satang Fang: To structural optimization.
Satang Fang: This 2025 of course.
Speaker Change: Yeah in the future, we would definitely continue to utilize it.
Satang Fang: AI and.
Satang Fang: Our Internet technology.
Satang Fang: To continuously optimize their costs.
Satang Fang: And this has already been com.
Satang Fang: Yeah.
Ingrained in our DNA of our company and Oh now it's you can call it.
Speaker Change: And the second question.
Speaker Change: Regarding with the girls.
Speaker Change: And.
Speaker Change: Yes.
Speaker Change: Actually.
Speaker Change: I'll now a supply side, we adopt a decentralized model.
Speaker Change: And adding more and more are those for whom in Santos at student Jeff mentioned.
Speaker Change: And actually it was the new fulfillment.
Speaker Change: Fulfillment Center just opened this week.
Speaker Change: And we also bring a greater variety of our product selection.
Speaker Change: And we establish a digitally.
Speaker Change: X 10, they'll computation mechanic then.
Speaker Change: Eastern Canada from upstream supplier.
Speaker Change: All options, especially look the.
Speaker Change: Pharmaceutical company to continuously reduce our costs and also to offer more and more competitive.
Speaker Change: Okay.
Speaker Change: While on the demand side.
Speaker Change: Our focus is.
Speaker Change: Oh eating the most.
Speaker Change: As shown in competitive Kanthal customer.
Speaker Change: That's true.
Speaker Change: We launched the growing together program.
Speaker Change: Recently and also last year, we launched fresh sales basketball.
Speaker Change:
Speaker Change: Every Monday and Tuesday.
Speaker Change: A week and.
Speaker Change: And here now.
Speaker Change: And also our AI powered in Paragon procurement system.
Speaker Change: With all that.
Speaker Change: And we aim to obtain more share of wallet from our customers, especially from both a chance to all customers.
Speaker Change: While expanding our scale, we will reduce cost and that we can count all of them.
Speaker Change: Perfect.
Susan: Thank you Susan.
Speaker Change: Okay, that's very clear I have no further questions. Thank you.
Speaker Change: Your next question comes from Sergey <unk> with Citi.
Uh-huh RBC was only from.
Speaker Change: Oh boy.
Speaker Change: My question.
Speaker Change: My first question is about.
Speaker Change: Can you talk about more about your technology advancement of passenger you, especially AI application.
Speaker Change: And some of your competitors are offering AI powered solutions too.
Speaker Change: Groucho medical institution.
Speaker Change: Are you considering.
Speaker Change: Right.
Speaker Change: Considering launching similar business and it will be a key part of your future growth.
Speaker Change: And my second question is about.
Speaker Change: Uh huh.
Speaker Change: Our film and costs.
Speaker Change: What are you on <unk> last year to further reduce the cost.
Speaker Change: But that kind of shows in the future.
Speaker Change: My third question.
Speaker Change: For Uh huh, how much how much.
Speaker Change: Yeah.
Speaker Change: How much are you budgeting for AI investment.
Speaker Change: Okay.
Speaker Change: Let me answer the question.
Speaker Change: Our review.
Speaker Change: The accomplished last year.
Speaker Change: Yeah last year with two critical initiatives.
Speaker Change: The initiative studies why is it that you would be in technology too.
Speaker Change: As you can see towards profitability.
Tom Jeanette: Tom Jeanette.
Speaker Change: The second thing was to.
Speaker Change:
Speaker Change: More towards the platform.
Speaker Change: Yes.
Speaker Change: Instead of a heavy at that.
Speaker Change: First of all in the business.
Speaker Change: So let me address both of that.
Speaker Change: Talk more about AI, helping best in Idaho have accomplished.
Speaker Change: So.
Speaker Change: First of all it we buy more toward a.
Speaker Change: Platform.
Speaker Change: Okay.
Speaker Change: The system's one system, where the tenant self services system or.
Speaker Change: Beating RMB subsidy system. So we can do that.
Speaker Change: Merchant platform.
Speaker Change: <unk>.
Speaker Change: Monitoring instead of somebody.
Speaker Change: Pricing in our prior to adjust in the system.
Speaker Change: Kind of a day.
Speaker Change: Yeah.
Speaker Change: Why did we buy themselves a food that we got a handle on it.
Speaker Change: All merchants.
Speaker Change: 30000, Skus promotions per week and all the promotions are achieved.
We know no more than notable Marcellus through that promotion so Bob.
Speaker Change: The behind the technology was.
Speaker Change: What was the.
Speaker Change: It's kind of all over.
Speaker Change: Everything was on technology.
Speaker Change: It was important.
Speaker Change: Look on shared inventory and we were the first in the industry to start.
Speaker Change: Sure.
Speaker Change: Yes.
Speaker Change: All of these.
Speaker Change: It sounds are you talking about.
Speaker Change: Thanks.
Speaker Change: Yeah.
Speaker Change: And the first understanding the processes because customers purchase.
Speaker Change: Hudson C customers.
Speaker Change: This Halloween build a system not only to handle the different fees, but also.
Speaker Change: Uh huh.
Speaker Change: But let me see.
Speaker Change: So biogen to manage the whole different processes. So we've talked to you that while we did not.
Speaker Change: Two <unk>.
Speaker Change: Sure in between all of the inventory and alloy.
Speaker Change: It can be good partners.
Speaker Change: Well as you mentioned.
Speaker Change: And Brian.
Speaker Change: Brian Hi.
Speaker Change: Understood.
Speaker Change: Okay, the fulfillment center.
Speaker Change: Franchise centers.
Speaker Change: We have.
Speaker Change: They are all meaningfully.
Speaker Change: And our.
Speaker Change: Our system.
Speaker Change: Sure.
Speaker Change: The hours.
Speaker Change: And presenting from customers.
Speaker Change: Okay.
Speaker Change: Realize the bills wages.
Speaker Change: The vault platform.
Speaker Change: It's a very complex.
Speaker Change: I don't know right now we already have a lot of them.
Speaker Change: Franchise fulfillment centers.
Speaker Change: Sure.
Speaker Change: Zero.
Speaker Change: So with more of that.
Speaker Change: We quickly increased our selection with a much later.
Speaker Change: Much higher efficiency.
Speaker Change: So.
Speaker Change: No information about the bolt on data and that is also where you seem to see.
Speaker Change: Our own data, we use Oh pardon me.
Speaker Change: Customers paid off by Greg connections with their ERP systems. So.
Speaker Change: Yes.
Speaker Change: Persistent power.
Speaker Change: Empowerment, we are able to achieve verified ambitious the accuracy.
Speaker Change: About 95% accuracy and forecasting accuracy.
Speaker Change: 2%.
Speaker Change: So I mean I would have thought.
Speaker Change: Last year, so we build the whole quarter.
Speaker Change: AI powered price index tool to better.
Speaker Change: Our pricing strategies.
Speaker Change: It's already in use.
Speaker Change: So although a lot of data.
Speaker Change: Microsemi models to build the.
Speaker Change: So for the.
Speaker Change: Oh.
Speaker Change: The charter.
Speaker Change: Okay system, you said generated AI product.
Speaker Change: Market funding model.
Speaker Change: Well right now.
Speaker Change: All of our employees.
Speaker Change: All the people we can all using a chart with the system a crime.
Speaker Change: System inflammation, we've done but we're not.
Speaker Change: Why.
Speaker Change: The conversion rate goes down.
Speaker Change: Megan last week.
Speaker Change: Hi.
Speaker Change: Natural language and then getting the data back.
Speaker Change: The work will you build a customer service.
Speaker Change: Hollywood by AI system.
Speaker Change: Reducing hours.
Speaker Change: So none of us stop.
Speaker Change: This year, we'll make me either.
Speaker Change: Our strategy Okay.
Speaker Change: Okay.
Speaker Change: We would have a bias to various agents and new store or down way.
Speaker Change: Well integrated.
Speaker Change: Core engine to drive end to end integration spend I mean pricing has been product selection.
Speaker Change: On the product.
Speaker Change: So that's probably I heard of the word.
Speaker Change: Question about.
Speaker Change: Halloween.
Speaker Change: Technology.
Speaker Change: Yeah.
Speaker Change: Then you also talked about.
Speaker Change: Ken.
Speaker Change: Both my ambition.
Speaker Change: We will achieve better efficiency.
Speaker Change: Sure.
Speaker Change: The big cost is.
Speaker Change: Fulfilling it.
Speaker Change: Also the right.
Speaker Change: Right now.
Speaker Change: More.
Speaker Change: Fulfillment expenses.
Speaker Change: As you know the franchising within the centers.
Speaker Change: We are closer to customers.
Speaker Change: Our last mile delivery costs with them will be reduced however, we need to abandon the distribution of chemistry among the warehouses.
Speaker Change: To make sure that we do.
Speaker Change: The long distance call speaking debris.
Speaker Change: Hi, more visibly so that's that's.
Speaker Change: We are oh.
Speaker Change: Okay, well last year.
Speaker Change: We negotiate with all the carriers to make sure that the way to have a lot of beating those degree.
Speaker Change: The original cost.
Speaker Change: So are we.
Speaker Change: Relocated all of us are much more efficient okay.
Speaker Change: Well of course Super hubs.
Speaker Change: Now, adding more franchise.
Speaker Change: <unk> has been well at this point.
Speaker Change: Much better more regional delivery a better.
Speaker Change: So the clinical network, we're able to we should build our inventory to orders.
Speaker Change: Fulfillment centers as well as all of it.
Speaker Change: Super hubs.
Speaker Change: And we also use a clinical network to first now.
Speaker Change: For our large suppliers.
Speaker Change: The water loss now for large customers.
Speaker Change: When that work is very efficient not only the car Ts.
Speaker Change: There's plenty of 30% or lower.
Speaker Change: In the fourth.
Speaker Change: Third party logistics.
Speaker Change: So.
Speaker Change: Big draw in dentistry, so those out the benefit.
Speaker Change: Global network. So this year, we've been all along.
Speaker Change: To include all franchise partners.
Speaker Change: Okay.
Speaker Change: Conversely, the connection among our Super hub.
Speaker Change: So this is what we really see a.
Speaker Change: Decrease.
Speaker Change: Is it cost.
Speaker Change: So I hope I hope.
Speaker Change: So good question Louise.
Speaker Change: Thank you.
Speaker Change: And my last question is how much are you budgeting for our investments.
Speaker Change: Yeah.
Speaker Change: Okay.
Speaker Change: Yeah, we have some time and so we're building.
Speaker Change: Our platform.
Speaker Change: Serious.
Speaker Change: Yes.
Speaker Change: And when we started this on.
Speaker Change: The first two and we feel that they are immediately.
Speaker Change: Immediately interactions with our customers this will not only improve customer experience, but also.
Speaker Change: The increase.
Speaker Change: Sure.
Speaker Change: That's why as a pool.
Speaker Change: The conversion rate so it will be.
Speaker Change: Patients.
Speaker Change: We hope to achieve.
Speaker Change: More not only in cockpit I came on a little customer activation.
Speaker Change: Perfect.
Speaker Change:
Speaker Change: Yes.
Speaker Change: The team I don't know we are training all of our employees.
Speaker Change: Ah patients and how do you expect to be.
Speaker Change: Come back to work.
Speaker Change: Better user base.
Speaker Change: That's where it comes from management I don't have it.
Speaker Change: Your next.
Speaker Change: Question comes from Sean Zhang private Investor.
Speaker Change: Thank you for taking my questions.
Speaker Change: First of all.
Speaker Change: Congratulations to you on the first half our annual operating profit and a plus.
Speaker Change: Positive operating cash flow I have two questions about future plan and.
Speaker Change: The outlook of 2025 first question is are there.
Speaker Change: Are there any plans to expand partnerships with pharmaceutical companies.
Speaker Change: Pharmacies and other health care providers.
Speaker Change: What will be the key focus areas of these collaborations.
Speaker Change: Second question.
Speaker Change: Is.
Speaker Change: What are your expectations for the market in 2025.
Speaker Change: Are there any changes in the regulations and laws on the horizons that will impact your business model or your profitability.
Speaker Change: Thank you.
Speaker Change: Oh, Okay. Yeah, I think your two question actually correlated I would talk about the market first and then about a partnership with our upstream and downstream are as a company.
Speaker Change: Regarding the MS market I think.
Speaker Change: Like all of the Allah market in China. We know there is a new form of led by our.
Speaker Change: Our state government.
Speaker Change: Our country.
Speaker Change: In the pharmaceutical area.
Speaker Change: And the key focus of this reform.
Speaker Change: We all know it's true in home.
Speaker Change: <unk> of all staff and all links.
Speaker Change: The result is to reduce the cost of medical insurance and all costs and reduce the cost of the medical expenses.
Speaker Change: And I know the residence.
Alex: And Alex keep old pets.
Alex: We asked our Internet technology company a company we.
Alex: We have an inherent advantage and also need to take greater responsibility compared to a.
Alex: Most of the traditional players.
Alex: And they have been.
Alex: Very good practices in our industry like in the <unk> industry and F N C G et cetera.
Alex: So we believe that our government will continue to introduce new policy too.
Alex: And courage.
Alex: Innovation in this industry to improve efficiency and to reduce costs.
Alex: So doing this reform, we will leverage our advantage in AI.
Alex: <unk> Internet Digitization.
Alex: Consolidated.
Alex: And who do I play to that.
Alex: And then talking about football and your second question on partnership.
Alex: Actually our business model.
Alex: So connect.
Alex: The upstream.
Alex: And then other pharmaceutical company.
Alex: The drug provide us with knows that downstream patented medicine pharmacy, the pharmacy terminal.
Alex: Even patient.
Alex: Through our digital platform.
Speaker Change: So in the future we will further expand our cooperation with both upstream and downstream partners.
Speaker Change: The key is also to enable most drugs, who enter our China retail time, you know that is promising.
Speaker Change: Yeah.
Speaker Change: Thank goodness.
Speaker Change: And to help local pharmacy, that's a sale and promote the drug.
Speaker Change: AI powered.
Speaker Change: Digital platform.
Speaker Change: We believe under the wave of AI technology list.
Speaker Change: At least we're totally change and.
Speaker Change: Substitute.
Speaker Change: With the traditional model.
Dropped promotion that.
Relies heavily on human happen.
Speaker Change: I Hope I answered your question. Thank you.
Speaker Change: Oh, Thank you for your detailed answer.
Speaker Change: Okay.
Speaker Change: In closing on behalf of the entire 111 management team if I could thank you for your interest and participation in today's call.
If you require further on crimson or have any interest in visiting them. One on one in Shanghai, China prevent the company now and thank you for joining us that concludes today's call.
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