Q4 2024 GigaCloud Technology Inc Earnings Call

March 3, 2025

Welcome ticket to Google Cloud technologies fourth quarter and year end 'twenty 'twenty four earnings conference call.

Larry Lee: Joining us today from Giga cloud of the company's founder Chairman and C. I, Larry Lee its president Dr. Even truck and its chief Financial Officer, Eric away.

Larry Lee: Larry will start with a brief introduction eamonn will provide an overview of the company's operations and Erica will discuss the financial results. After that there will be a question and answer session. As a reminder, this conference call contains statements about future events and expectations that are forward looking in nature and actual results may differ materially.

Larry Lee: Additionally, today's call will include non-GAAP measures within the meaning of SEC regulation G. When required a reconciliation of all non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in the press release issued by <unk> today issued today by Giga cloud as.

Larry Lee: Well as on the company's website.

Larry Lee: I would now like to turn the call over to Larry for his opening remarks. Please go ahead Sir.

Larry Lee: Thank you operator, and welcome everyone to today's call.

Larry Lee: Q4 was a landmark year for Google cloud as we continue to enhance and diversify our rural bias would be to be online marketplace.

Larry Lee: Not only did marketplace <unk> grew almost 70%, but also for the first time in our history, you got cloud surpass $1 billion in total revenue for the year.

Larry Lee: And we did and despite the industry and macroeconomic headwinds.

Larry Lee: Art impacting so many.

Larry Lee: I'm incredibly proud of the <unk> team for this milestone and we are not in the business of standing steel.

Larry Lee: There is still tremendous opportunity ahead, and we're pursuing it with the right strategy and the right platform and right execution.

Larry Lee: In times of uncertainty true strength is revealed by the macroeconomic climate to remain challenging.

Larry Lee: How to continue to stand strong demonstrating resilience adaptability and long term vision.

By enabling our participant to streamline operations enhancing.

Larry Lee: In efficiency and the scale seamlessly we have created cohesive ecosystem build for sustained success.

Larry Lee: We're pleased with our progress on <unk> turnaround efforts.

Larry Lee: With the mountain and Eric will.

Larry Lee: Discussing more detail about shortly.

Larry Lee: Meanwhile, one sign as to be rebranded as wonder to reflect this evolution from Chios app to a comprehensive sales enablement platform for brick and mortar retailers.

Larry Lee: A key part of this transformation is the launch of the Wonder App.

A mobile first solution designed to streamline training engagement and performance for retail sales associate.

Manuel: Manuel dive deeper into these developments later in the call.

Manuel: Our balance sheet remains a pillar of strength.

Manuel: With zero debt and strong cash flow generation from operations, we're well equipped to execute our strategic initiatives and invest in future growth.

Manuel: Beyond financial performance, you've got close to lead our ship was widely recognized across the industry. We just secured a number one spot on Forbes America's most successful small cap companies for 2025 list.

Manuel: Multiple wins in furniture, today's readers ranking for the secondary mineral and we're able.

Manuel: To be added to the Russell 2000 index.

Manuel: Well accolades are gratifying their real value lies and what they represent a validation of the marketplace, we pioneered and transformative impact that we continue to make in large parcel b to B E Commerce.

Manuel: For US success isn't just about growth, it's about impact, we make where it matters most.

Manuel: In response to the recent wildfires in southern California, we donated over a million dollar in home furnishing to support those affected.

Manuel: Beyond this.

Manuel: We remain committed to keeping back supporting city of hope and other community initiatives.

Manuel: We also reaffirm our commitment to our shareholders in 2024.

Manuel: Our $46 million share repurchase program approved in September.

Manuel: As a testament to our confidence in the cost of long term growth strategy.

Manuel: Today, we have executed approximately $29 million share repurchase under the rule <unk> one plan.

Manuel: Before we wrap up I want to take a moment to share a an important leadership update.

Speaker Change: Eric away, who has been serving as our interim CFO.

Speaker Change: Officially stepping in as the Chief Financial Officer.

Speaker Change: She has played a key role in strengthening our financial strategy and elevating our financial reporting quality.

Speaker Change: Reinforcing our commitment to transparency and robust financial governance in.

Speaker Change: In line with this we have made significant progress in the Lansing, our reporting standards and the financial controls, which Eric will provide more details on this later in the call.

Speaker Change: Our leadership will be key as we continue to scale, our business and drive sustained the growth.

Speaker Change: Congratulations Erika.

Speaker Change: With that I will turn the call over to email.

Speaker Change: Thanks, Larry and congratulations to Eric on her appointment as CFO, everyone. At Giga cloud is proud of what we accomplished in 2024, but as Larry said, there's always more work to be done growth is more than what we achieved its about what comes next we continue to diversify our marketplace across geographies.

Speaker Change: Product categories of participants, while making strategic investments to enhance our services and strengthen our platform. These efforts are designed to drive consistent profitable growth positioning us for long term value creation.

Speaker Change: Before diving into marketplace metrics I want to take a moment to address the broader macroeconomic environment conditions.

Speaker Change: Conditions remain challenging, especially for the furniture industry, which is closely tied to consumer discretionary spending high interest rates persistent inflation and shifting consumer priorities have created a more cautious spending landscape.

Speaker Change: As a result furniture demand has softened according to Smiths lettered new orders in November declined 9% year over year and full year orders trailed 2023 levels.

Speaker Change: While these headwinds present, a short term challenge Giga cloud is built for resilience.

Speaker Change: Even against this backdrop the Giga cloud marketplace is still growing here are some notable stats.

Speaker Change: For the trailing 12 months ended December 31, 2024, Giga cloud marketplace, <unk> grew almost 70% to $1 $3 billion as we empowered buyers and sellers of non standard items to transact seamlessly on a highly efficient global platform.

Speaker Change: Growth in the number of marketplace participants also saw continued expansion with our active <unk> seller base, adding more than 1100, and our active buyer base growing to more than 9300. It is becoming clear that a wide variety of buyers and sellers see the immense value we have built into the platform and <unk>.

Speaker Change: Increasing recognition of our supplier fulfilled retailing model.

Speaker Change: <unk> in our Threep seller marketplace grew 63% from one year ago and totaled $694 million for the trailing 12 months.

Speaker Change: <unk> currently accounts for about 52% of our total marketplace GMB, maintaining a stable mix alongside our <unk> throughout the year average buyer spend declined slightly compared to last year and again reflects the onboarding of a large number of buyers who typically begin on our platform.

Speaker Change: Lower trading volumes.

Speaker Change: We remain encouraged by the trends within our marketplace and we will continue educating the industry on the many advantages of our supplier fulfills the retailing model one that is clearly resonating with our users given its ability to enhance efficiency and profitability, it's an obvious choice.

During the fourth quarter, our momentum in Europe, continuing to evolve as I've said diversification is a key to our strategy and is one of our core strengths and operating a global business to business marketplace <unk> from Europe grew over 150% organically year over year, we see a.

Speaker Change: Long runway for further expansion as we continue to scale, our operations and enhance our local market presence to support this growth we opened a new fulfillment center in Germany at the start of 2025.

Speaker Change: Further strengthening our infrastructure and commitment to serving the European customers efficiently.

Speaker Change: As Larry mentioned, we are happy with the progress on noble House during our last call I outlined a four phase approach and elective brief.

Speaker Change: Briefly recap our progress in 2024 in phase one immediately after closing the acquisition, we prioritize placing large orders of existing skus.

Speaker Change: Not expect it to be strong margin contributors. These orders served two important purpose.

Speaker Change: Providing stability for noble house's factory vendors, many of whom had been negatively impacted during the bankruptcy and to ensuring adequate inventory supply for a downstream channel partners, while we continue to deepen our relationships.

Speaker Change: In the second quarter, we turned to focus on our on addressing the void of the new product development left by noble house's bankruptcy.

Speaker Change: A constant supply of new competitive in quality products is critical to profitability as such phase two centered on revitalizing the product development process. One that has been shut down for over 18 months due to the bankruptcy process with significant efforts from the team, we reestablished and improve the product development process.

Speaker Change: I am proud to share that by the end of the phase II production orders had been put in for approximately 300, new skus setting the runway for long term future profitability.

Speaker Change: We began receiving the first of many shipments of the newly developed Skus in November.

Speaker Change: These consist of smaller order quantities of each SKU aimed for the purpose of identifying an optimal product mix now as we are in phase III. Our focuses on collecting market feedback on the newly developed skus in identifying successful skus for scaling our larger reorders with respect to retiring the older Skus.

Speaker Change: This will be an ongoing effort given the time required for production in ocean shipment, we expect to receive our scaled reorders by the end of the second quarter in 2025 and for volume to pick up towards the end of 2025 looking ahead phase four will be all about capitalizing on successful new skus for the profitability.

Speaker Change: For profitability and further optimizing our operations and development process for sustained long term returns we continue to work on better streamlining the giga cloud ecosystem to maximize legacy noble house's bottomline contribution and expect a more meaningful profit contribution from legacy Noble house as we move towards 2025.

Speaker Change: Year end.

A quick word on one they are signed before I turn things over to Erica.

Speaker Change: We are continuing to advance Wonder science Tech stock by further aligning it with our own as a part of its evolution. One theyre signed will officially be rebranded as one there which better reflects a shift from a kiosk app provider to a comprehensive sales enable that platform for brick and mortar retail the centerpiece of this.

Formation is the one of their App, a mobile first sales acceleration tool that bridges the gap between suppliers and retail sales associates. It gives suppliers a direct connection to sales teams on the showroom floor offering real time training performance tracking and rewards to keep them engaged and selling more.

Speaker Change: This is all part of our larger Giga IQ pack.

Speaker Change: Package, our technology stack that powers, both the Giga cloud <unk> marketplace ecosystem in our backend BDC, enabling system, including the one their app. The goal is simple.

Speaker Change: Use technology to help the industry participants 16, the wonder App is a great example, give suppliers real time visibility into retail sales activity, making it easier to engage train and drive better outcomes where sales habit.

Speaker Change: We're already seeing strong early adoption with leading furniture and sleep industry suppliers being the first to roll it out across their retailers network. This is a great example of how wonder is helping suppliers connect with frontline sales boost engagement and drive better outcomes in store. We are excited about where this is headed and C wonder as a key.

Speaker Change: Driver for our continued push into the brick and mortar market.

Speaker Change: Our unique <unk> model is the backbone of our marketplace and our growing base of buyers and sellers understand its clear value.

Speaker Change: We are more than just the marketplace Giga cloud as an ecosystem that empowers our partners wood resources infrastructure and strategic support they need to thrive. Thanks.

Speaker Change: Thanks, again, everyone now, Eric who will share a detailed review of our financial results.

Eric Away: Thank you Ron.

Speaker Change: Larry in Amman mentioned 2024 was a real milestone year for us we.

Speaker Change: We saw strong growth across key metrics, including GMB market participant numbers and a strengthening geographic footprint.

Speaker Change: On top of that I am pleased to share that we have fully remediated. The previously identified material weaknesses in our internal controls.

Speaker Change: Enforcing our commitment to operational excellence and sound corporate governance.

Speaker Change: Before diving into our financials I'd like to provide important context for our year over year comparisons.

Speaker Change: In Q4 of fiscal year 2023, we completed the acquisitions of Noble House on November one and Wonder signed on November 15th.

Speaker Change: As a result, our reported figures for the first three quarters of 2024 reflects both organic and inorganic growth while Q4, mostly reflects organic performance.

Speaker Change: This is a key distinction to keep in mind, when evaluating our year over year trends.

Speaker Change: Now, let's get into our financials.

Speaker Change: Please note that all figures I'll be discussing today have been rounded for clarity.

Speaker Change: Total revenues grew 21% year over year for the fourth quarter to $296 million.

Speaker Change: Principally driven by ongoing market recognition and increases in the number of active participants on our platform.

Speaker Change: Our annual revenues have exceeded $1 1 billion, which represents a 65% increase from 2023 levels.

Speaker Change: Approximately one third of our overall year over year growth was inorganic with the remaining two thirds being organic.

Speaker Change: Let's take a closer look by revenue stream and start with services.

Speaker Change: In the fourth quarter service revenues exceeded $97 million, representing a 40% year over year increase driven by strong demand and heightened engagement across our platform.

For the full year service revenues reached 350 million.

Speaker Change: Marking a 76% increase year over year.

Speaker Change: Our service margin was 19, 5% in the fourth quarter.

Speaker Change: Expanding approximately two percentage points year over year, but declining two five percentage points sequentially.

Speaker Change: As discussed during our previous earnings call, we experienced high service margins related to Ocean shipping services in the third quarter of 2024 due to the combination of high ocean freight spot prices in that period and lower fixed rate contracts from our vendors.

Speaker Change: Ocean freight prices began returning to their normal levels in the fourth quarter and as such we see a reduction in service margins, reflecting this dynamic.

Speaker Change: On a full year basis service margin was 18, 6% compared to 19, 1% in 2023.

Speaker Change: The slight decline primarily resulted from ocean freight related cost volatility and the earlier half of 2024 prior to our use of large scale fixed rate contracts that started in the third quarter and will continue to be used for future periods.

Speaker Change: Now let's.

Speaker Change: Let's move on to product revenue.

Speaker Change: Fourth quarter revenue increased by more than 13% and full year product revenue grew by 61% to $811 million.

Speaker Change: The moderation in growth rate seen in the fourth quarter has a few drivers.

Speaker Change: A significant reason is the timing of the noble House acquisition.

Speaker Change: The first three quarters of 2024 included both organic and inorganic growth while the fourth quarter, primarily consisted of organic growth.

Speaker Change: Other drivers included softening of general consumer demand and headwinds for our sector as previously discussed.

Speaker Change: We were also negatively impacted by channel specific softness from some of our largest e-commerce retail partners that have faced significant sales declines during this time.

Speaker Change: Despite these headwinds we continue to grow effectively expanding our marketplace broadening our product offerings and increasing transaction volumes to scale.

Speaker Change: We are also actively looking to further diversify our channel and by our relationships.

Speaker Change: Product margin declined both year over year and sequentially, primarily due to the elevated ground delivery fees. During the holiday season increased procurement costs reflected in our cost of goods sold and overall headwinds in the category.

Speaker Change: As discussed in our previous earnings call from the third quarter, we expected a higher than usual holiday season search on the fulfillment cost front for the quarter fourth quarter of 2024.

Speaker Change: Which resulted in short term compression to our quarterly product margins.

Speaker Change: Margins were also negatively impacted as we continue to move through inventory that had been procured during times of elevated ocean freight spot rates prior to give the cloud utilization of large scale long term ocean rig contracts in the third quarter.

Speaker Change: While these costs were unavoidable ocean freight rates have since moderated.

Speaker Change: We are also focused on transitioning more of our procurement volumes to fixed rate contracts, which will provide us with more cost stability moving forward.

Speaker Change: With that said, we expect we expect to still see some margin impact in the first quarter of 2025 as we move through the last of our high capitalization Ocean freight inventory.

Speaker Change: Our rapid growth and higher sales volumes naturally lead to increased spending driving a year over year rise in both Q4 and full year operating expenses.

Speaker Change: We see these investments as essential for scaling the business and strengthening our market position and we anticipate continued investment to support future growth.

Speaker Change: By category on a full year basis.

Speaker Change: Selling and marketing expenses remained steady at approximately 6% of total revenues.

G&A expenses were $74 million versus $30 million last year, primarily due to an increase in rental and insurance expenses as we expanded our fulfillment infrastructure to support rapid growth.

Speaker Change: Driven by the factors discussed we ended the fourth quarter with net income of $31 million down 13% from $36 million in the fourth quarter of 2023.

Speaker Change: Full year net income was $126 million, an increase of 34 million, 34% from $94 million in 2023.

Speaker Change: We ended the year with liquidity of approximately $303 million, including cash cash equivalents restricted cash and short term investments, which is up 65% from $184 million at the end of 2023.

Speaker Change: Now we have gone through the company's financial results for the year, let's turn to the integration of noble House.

Speaker Change: As previously discussed we.

Speaker Change: We had set the goal of breaking even for this operation by the end of 2024.

Speaker Change: I am happy to share that we have successfully completed this task.

Speaker Change: I would also like to add a minor clarification.

Speaker Change: As legacy Novo House operations processes and team members have been fully integrated into the <unk> cloud ecosystem Standalone financials for legacy Noble house are not available given the shared infrastructure costs.

Speaker Change: However, we are able to confirm breakeven by deducting prorated costs from legacy Noble House channel gross margins.

We are extremely proud of the combined efforts of the Giga cloud and noble house teams for this accomplishment.

Before the acquisition, which was in 2023 and not all that long ago.

Speaker Change: <unk> had over $35 million in annual net losses.

Speaker Change: Through combining the relationships and talent from noble house with the Giga cloud model, we have not only reverse the final trajectory of the operation, but also positioned it for sustainable growth within our ecosystem.

Speaker Change: Our focus moving forward will be on leveraging synergies enhancing operational efficiencies and expanding our market reach.

Speaker Change: We anticipate that these initiatives will not only improve profitability, but also contribute significantly to our overall business objectives in the coming years.

Speaker Change: Moving to our first quarter outlook.

Speaker Change: Revenues are expected to range between $250 million and $265 million.

Speaker Change: Looking further ahead, we anticipate further temporary softening in Q2 with potential year over year revenue declines.

Speaker Change: This is due to our planned contraction as we execute phase III of our legacy Noble House integration plan.

Speaker Change: During this time, we expect to be retiring a number of older less profitable skus, which may temporarily impact revenues.

Speaker Change: As always our sites are focused on profitable growth not just growth.

Speaker Change: We believe that having an optimized product mix and strong supporting process that is constantly adjusting to new market demands is critical for long term success and continue to be focused on disciplined execution, while scaling our marketplace.

Speaker Change: Thank you so much for joining us today, we appreciate your support.

Speaker Change: Operator, we're ready to take audience questions.

Speaker Change: Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two and if youre on a speaker phone. Please pick up the handset to ask your question.

Speaker Change: First question comes from Ryan Meyers from Lake Street Capital markets. Please go ahead.

Ryan Meyers: Hey, guys. Thanks for taking my questions first one for me. So obviously the implied guidance for the first quarter is kind of a low to mid single digit growth rate, which is a bit of a deceleration based on what we've seen at least here in Q4 from an organic growth rate basis. I'm. Just wondering if you can kind of call out what the main drivers are there.

Speaker Change: Is it predominantly just a softer macro environment and you guys are trying to look at that conservatively and then even if we think about the commentary Eric that you just gave on the second quarter, how much of that is that sort of SKU rationalization versus how much of that is just kind of overall macro softness that you are expecting to see it.

Ryan Meyers: Yes, absolutely. Thank you Ryan.

Speaker Change: There's a few items to be considered there.

Speaker Change: The overall environment or macro environment, you mentioned is definitely one of them.

Speaker Change: Other factors are so.

Speaker Change: We have.

Speaker Change: Some specific.

Speaker Change: Channel partners that have been hit a little harder during this time given that we do have buyers that have strong relationships with them and ourselves as well that does create a temporary negative impact.

Speaker Change: And then the main player for Q2 is the noble House integration. So as you know noble house's strongest quarter is typically Q2, given the outdoors focus.

Speaker Change: As we move into phase III of the execution plan and we have successfully developed a number of new skus that are being scaled for order sizes. It's now time to really scaled back and retire on a lot of the older less profitable skus, so considering the timing of peak sales and the seasonality.

Speaker Change: And Thats why Youll see a slower growth in the first two quarters and especially Q2.

Speaker Change: Got it makes sense and then if we think about the gross margins at least for the first quarter and as we progress through 2025, I think you had provided some commentary that you expect things to be somewhat similar to what we saw here in the fourth quarter. So should we expect to see improvement in gross margins as we progress through the year any.

Speaker Change: Metairie there would be helpful.

Yeah, Great question, so with all of the different moving parts, especially in the macro environment, it's hard for us to give specific guidance on that however, the key things to consider here.

Speaker Change: Similar to revenue we are expand experiencing the same pressure points for margin on Q1 and Q2. The other special component for Q1 is we still have some of the higher capitalization ocean freight inventory that need to be moved through in Q1. These are inventory that were purchased in.

Speaker Change: Q2 during the very high spot rates. So if you recall, we started using a fixed rate contracts in large scale start in Q3. So moving forward, we wont really experienced the same issue, but we do have to kind of.

Speaker Change: Take that pressure in Q1.

Speaker Change: Got it thank you for taking my questions.

Speaker Change: Of course.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Matt Koranda from Roth Capital. Please go ahead.

Matt Koranda: Hey, guys.

Matt Koranda: Can we talk a little bit more about the impact from noble House Thats built into the first quarter Guide I guess any color on sort of the amount of Skus that you are scaling back that are legacy skus.

Matt Koranda: That are impacting the product revenue guide for the first quarter.

Matt Koranda: Yes, great question. Thank you Matt.

Matt Koranda: So we don't have a fixed target number of exact amount of Skus. We are looking to retire. This is more of a dynamic process. So.

Matt Koranda: As new developed products are coming in we send them to market to identify based on market feedback, which ones are what we call winners the ones that we believe will show good sales results and good margin results. Those are sent back for scaled larger sized reorders for future profitability capture.

Matt Koranda: This process does take time, though if you think about how long it takes for a new order to be manufactured and then shipped this takes up to several months and as we identify more of more and more of these winners we kind of remove roughly a similar amount from the old.

Matt Koranda: Pile of Skus that are less profitable does that makes sense.

Speaker Change: Yes, I guess I'm, just looking for something more simple to quantify the headwind here because it's a big step down in terms of growth rate to sort of the 3% at the midpoint of the guide.

Speaker Change: I'm just trying to figure out how much of this is sort of a headwind from noble house can we quantify it I think last year.

You guys haven't provided a lot of data on what Noel has contributed but I would assume that contributed north of $30 million of revenue in the first quarter last year. So what do you have it sort of contributing.

Speaker Change: In the first quarter or maybe what is the what's the drop in noel's revenue that we're assuming in the first quarter.

Speaker Change: So I would say roughly speaking we expect Q1 for noble House maybe.

Speaker Change: Be flat or a little bit lower depending on how much of the skus we retire.

Speaker Change: This also depends on noble house's channel partners performance, so compared to Google cloud the noble house channels are a little more concentrated so.

Speaker Change: It really depends on their performance as well.

Speaker Change: Okay, Alright got it and then maybe just since tariffs or the hot topic for the last week plus or.

Speaker Change: Several weeks plus.

Speaker Change: Maybe I just wanted to give you guys a chance to address sort of how we built that into the first quarter guide how were thinking about the impact of tariffs both for your <unk> business.

Speaker Change: I think youre, probably less exposed.

Speaker Change: The <unk> business, how that sort of.

Speaker Change: Will impact your third party.

Speaker Change: Sellers.

Speaker Change: Yeah. Great question. So we have we don't really expect any terribly material impact from tariffs directly I think we had this discussion last quarter. So since we last spoke it's been since the new administration, it's been a 10% increase to be already 25% for cattle.

Speaker Change: Laurie.

If you think about the cost structure of large and bulky such as furniture, that's a very non value dense category, which means impact from the increased cost, which usually takes up around maybe half of the total Cogs stack.

Speaker Change: When you add our margins and convert that to retail pricing impact converse to a very very low single digit and given the infrequent purchase nature of this category, we don't particularly expect very strong.

Speaker Change: Negative pushed down and similarly from our solar group that's on our platform. We haven't at this point observed any amount of meaningful pull forward on the inventory as you wedge during times such as.

Speaker Change: Hi, Ocean freight where folks are worried about the uncertainty down the line.

Speaker Change: And in terms of free P. Giga cloud is really here to provide a platform or a solution for folks to transact across borders more seamlessly.

Speaker Change: We're channel agnostic and the solution is not really fixated on a specific route. So during times like this I think is your cloud would be a good partner to provide support for folks who are looking to change or maneuver with their supply chain as they need during times like this this could mean a U S based REIT.

Speaker Change: Taylor potentially looking to source more from southeast Asia, or China based factory Youre looking maybe to export more to Europe.

Speaker Change: Okay got it I'll take this one offline thanks guys.

Speaker Change: Thank you.

Thomas Forte: Thank you. Your next question comes from Thomas Forte from Maxim Group. Please go ahead.

Thomas Forte: Great. So first off Larry I Hope you and your colleagues are okay. When it comes to the California, wildfires, I think youre more than a $1 million in donations for those affected is very admirable.

Thomas Forte: Yeah.

Thomas Forte: And then second congratulations Erik on being named CFO.

Thomas Forte: So I have one question and one follow up.

Thomas Forte: So my question then wait for the answer and then ask my follow up.

Speaker Change: So Larry it seems like the number of major sales and E. Commerce space has increased over time.

Speaker Change: Amazon Prime there used to be a signal that now it seems like that company holds multiple private type sales during the year I think we could say the same thing for wafer with where it is.

Speaker Change: What are the implications to you for more big sales reps and e-commerce to what extent is an opportunity and then to what extent is the incremental competition.

Speaker Change: Yes.

Go ahead.

Speaker Change: Go ahead.

Speaker Change: Yes, it's definitely we see this space really becoming more and more competitive and like you said a lot more sales has been observed during this time.

Speaker Change: To us it really does seem like the consumers are.

Speaker Change: Showing a little more price sensitivity right. So the sales have been really big driver sales events Hasnt really big drivers in the last few periods and we do see differences when there are and are not.

Speaker Change: So for US I think a few things the.

Speaker Change: The platform or the marketplace is really a place that offers.

Speaker Change: Retail operators, whether e-commerce or not to find ways to find more efficiency from supply chain and also a more diversified and less.

Reliant or concentrated form of sourcing.

Erika: Okay and then thank you Erika my follow up is.

Erika: Can you give your current thoughts on strategic M&A, we have a very strong balance sheet.

Erika: Being presented with a lot of opportunities.

Erika: Yes, yes, we are.

Erika: Great question. Thank you Tom.

Erika: So we are still looking for the right M&A opportunity. We are very open to different ideas and have been presented with a number of different things in the past period. So similar to what we discussed last quarter. This really focuses on how the.

Erika: The right target could help giga cloud expand in the right way, meaning a few things. So Europe. For example is growing very very quickly and we would like to see infrastructure Thats very strong. This includes not only just a fulfillment network, but relationships that are strong and support.

Erika: Better pricing more efficiency that in turn supports better margins for us.

Erika: Other than the Europe specific focus we're also open to other forms of targets that really expand our reach to ultimate participants of the marketplace. So for example, brick and mortar penetration is something we're always very interested in.

Erika: This doesn't necessarily mean restriction too.

Erika: Product type sector focused businesses, such as noble house.

Erika: Something like winter sign a SaaS company that provides a reach to that buyer base as such.

Erika: We're also very interested in.

Erika: Great. Thank you for taking my questions.

Speaker Change: Of course.

Erika: Thank you.

Erica: I would now like to turn the call back to Erica for closing comments.

Erica: Thank you all for your continued support we believe the future continues to look extremely bright for Google cloud as we work to bring even greater value to all of our stakeholders.

Erica: We look forward to speaking to you again after our first quarter, but in the meantime, please don't hesitate to reach out to us if you have any additional questions. Thank you.

Erica: That does conclude our conference for today.

Erica: For participating you may now disconnect.

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Speaker Change: Welcome ticket ticket to cloud technologies fourth quarter and year end 2024 earnings conference call.

Larry Lee: Joining us today from Giga cloud at the company's founder Chairman and CEO, Larry Lee President, Dr. Ayman shock and its chief Financial Officer, Eric Le <unk>.

Larry Lee: Larry will start with a brief introduction even will provide an overview of the companys operations and Eric will discuss the financial results. After that there will be a question and answer session. As a reminder, this conference call will contain statements about future events and expectations that are forward looking in nature and actual results may differ materially.

Larry Lee: Well as on the company's website.

Larry Lee: I would now like to turn the call over to Larry for his opening remarks. Please go ahead Sir.

Larry: Thank you operator, and welcome everyone to today's call.

Larry: Before was a landmark year for Google cloud as we continue to enhance and diversify our robust would be to be online marketplace.

Larry: Not only did marketplace <unk> grew almost 70%, but also for the first time in our history. If you go cloud surpass $1 billion in total revenue for the year.

Larry: And we did and despite the industry and macroeconomic headwinds.

Larry: Are impacting so many.

I'm incredibly proud of the Kiko call team for this milestone and we are not in the business of standing steel.

Larry: There is still tremendous opportunity and we're pursuing it with the right strategy and the right platform and right execution.

Larry: In times of uncertainty true strength is revealed by the macroeconomic climate remains challenging because of how the continue to stand strong demonstrating resilience adaptability and long term vision.

Larry: By enabling our participant to streamline operations enhancing.

Larry: <unk> and the scale seamlessly we have created cohesive ecosystem build for sustained success.

Eric Away: We're pleased with our progress on <unk> turnaround efforts with Elong and Eric will.

Larry: Discussing more detail about shortly.

Larry: Meanwhile, one sign as to be rebranded as wonder to reflect this evolution from kiosk to app to a comprehensive sales enablement platform for brick and mortar retailers.

Larry: A key part of this transformation is the launch of the Wonder App.

Larry: A mobile first solution designed to streamline training engagement and performance for retail sales associate.

Larry: Manuel dive deeper into these developments later in the call.

Speaker Change: Our balance sheet remains a pillar of strength.

Speaker Change: With zero debt and strong cash flow generation from operations, we're well equipped to execute our strategic initiatives and invest in future growth.

Speaker Change: Beyond financial performance, you've got cost leadership was widely recognized across the industry. We just as a secure the number one spot on Forbes' America's most successful small cap companies for 2025 list.

Speaker Change: Multiple wins in furniture, today's readers ranking for the second year in mineral and we're able.

Speaker Change: To be added to the Russell 2000 index.

Speaker Change: Well accolades are gratifying real value lies and what they represent a validation of the marketplace, we pioneered and transformative impact that we continue to make in large parcel b to B E Commerce.

Speaker Change: For US success isn't just about growth, it's about impact, we make where it matters most.

Speaker Change: In response to the recent wildfires in southern California, we donated over a million dollars in home furnishing to support those affected.

Speaker Change: Beyond this.

Speaker Change: We remain committed to keeping back supporting city of hope and other community initiatives.

Speaker Change: We also reaffirm our commitment to our shareholders in 2024.

Speaker Change: Our $46 million share repurchase program.

Speaker Change: Prove that in September.

Speaker Change: As a testament to our confidence in the cost of long term growth strategy.

Speaker Change: As of today, we have executed approximately $29 million in these share repurchase under the rule <unk> one plan.

Speaker Change: Before we wrap up I want to take a moment to share.

Speaker Change: Important leadership update.

Speaker Change: Eric way, who has been serving as our interim CFO.

Speaker Change: Officially stepping in as the Chief Financial Officer.

Speaker Change: She has played a key role in strengthening our financial strategy and elevating our financial reporting quality.

Reinforcing our commitment to transparency and robust financial governance in.

Speaker Change: In line with this we have made significant progress in advancing our reporting standards and the financial controls, which Eric will provide more details on this later in the call.

Speaker Change: Our leadership will be key as we continue to scale, our business and drive sustained growth.

Speaker Change: Congratulations Erika.

Speaker Change: With that I will turn the call over to email.

Speaker Change: Thanks, Larry and congratulations to Eric on her appointment as CFO, everyone. At Giga cloud is proud of what we accomplished in 2024, but as Larry said there is always more work to be done growth is more than what we achieved its about what comes next we continue to diversify our marketplace across geographies.

Speaker Change: Before diving into marketplace metrics I want to take a moment to address the broader macroeconomic environment conditions.

Speaker Change: As a result furniture demand has softened.

Smith: According to Smith lettered new orders in November declined 9% year over year and full year orders trailed 2023 levels.

Smith: While these headwinds present, a short term challenge Giga cloud is built for resilience.

Smith: Even against this backdrop the Giga cloud marketplace is still growing here are some notable stats.

Smith: For the trailing 12 months ended December 31, 2024, Giga cloud marketplace <unk> grew almost 70% to $1 3 billion as we empower buyers and sellers of non standard items to transact seamlessly on a highly efficient global platform.

Smith: Growth in the number of marketplace participants also saw continued expansion with our active <unk> seller base hitting more than 1100, and our active buyer base growing to more than 9300. It is becoming clear that a wide variety of buyers and sellers see the immense value we have built into the platform and the.

Smith: Increasing recognition of our supplier fulfilled retailing model.

<unk> and our <unk> seller marketplace grew 63% from one year ago and totaled $694 million for the trailing 12 months.

Smith: <unk> currently accounts for about 52% of our total marketplace GMB, maintaining a stable mix alongside our <unk> throughout the year average buyer spend declined slightly compared to last year and again reflects the onboarding of a large number of buyers who typically begin on our platform.

Smith: Lower trading volumes.

Smith: We remain encouraged by the trends within our marketplace and we will continue educating the industry on the many advantages of our supplier fulfills retailing model. One that is clearly resonating with our users given its ability to enhance the efficiency and profitability, it's an obvious choice.

Smith: During the fourth quarter, our momentum in Europe, continuing to evolve as I've said diversification is a key to our strategy and is one of our core strengths and operating a global business to business marketplace <unk> from Europe grew over 150% organically year over year, we see a.

Smith: Long runway for further expansion as we continue to scale, our operations and enhance our local market presence to support this growth we opened a new fulfillment center in Germany at the start of 2025.

Smith: Further strengthening our infrastructure and commitment to serving the European customers efficiently.

Smith: As Larry mentioned, we are happy with the progress on noble House during our last call I outlined a four phased approach and I'd like to.

Smith: Briefly recap our progress in 2024 in phase one immediately after closing the acquisition, we prioritize placing large orders of existing skus.

Smith: Not expect it to be strong margin contributors. These orders served two important purpose.

Smith: Providing stability for noble house's factory vendors, many of whom had been negatively impacted during the bankruptcy and to ensuring adequate inventory supply for our downstream channel partners, while we continue to deepen our relationships.

Smith: In the second quarter, we turned to focus on our on addressing the void of the new product development left by noble house's bankruptcy.

Smith: A constant supply of new competitive in quality products is critical to profitability as such phase two centered on revitalizing the product development process, one that hasn't been shut down for over 18 months due to the bankruptcy process with significant efforts from the team, we reestablished and improve the product development process.

Smith: I am proud to share that by the end of the phase II production orders had been put in for approximately 300, new skus setting the runway for long term future profitability.

Smith: We began receiving the first of many shipments of the newly developed Skus in November.

Smith: These consist of smaller order quantities of each SKU aimed for the purpose of identifying an optimal product mix now as we are in phase III. Our focuses on collecting market feedback on the newly developed skus in identifying successful skus for scaling our larger reorders with respect to retiring the older Skus.

Smith: This will be an ongoing effort given the time required for production in ocean shipment, we expect to receive our scaled reorders by the end of the second quarter in 2025 and for volume to pick up towards the end of 2025 looking ahead phase four will be all about capitalizing on successful new skus for the profitability.

Smith: For profitability and further optimizing our operations and development process for sustained long term returns we continue to work on better streamlining the giga cloud ecosystem to maximize legacy noble house's bottomline contribution and expect a more meaningful profit contribution from legacy Noble house as we move towards 2025.

Smith: Year end.

Smith: A quick word on wonder signed before I turn things over to Erica.

Smith: We are continuing to advance <unk> tech stock by further aligning it with our own as a part of its evolution. When they are signed will officially be rebranded as wonder, which better reflects a shift from a kiosk app provider to a comprehensive sales enable that platform for brick and mortar retail the centerpiece of this trend.

Smith: This is all part of our larger Giga Iq.

Smith: Package, our technology stack that powers, both the Giga cloud <unk> marketplace ecosystem in our backend BDC, enabling system, including the one their app. The goal is simple.

Smith: Use technology to help the industry participants <unk>. The wonder App is a great example, it gives suppliers real time visibility into retail sales activity, making it easier to engage train and drive better outcomes where sales happened.

Smith: We're already seeing strong early adoption with leading furniture and sleep industry suppliers being the first to roll it out across their retailers network. This is a great example of how wonder is helping suppliers connect with frontline sales boost engagement and drive better outcomes in store. We are excited about where this is headed and C wonder as a key.

Smith: Driver for our continued push into the brick and mortar market.

Smith: Our unique <unk> model is the backbone of our marketplace and our growing base of buyers and sellers understand its clear value.

Smith: We are more than just the marketplace Giga cloud as an ecosystem that empowers our partners wood resources infrastructure and strategic support they need to thrive. Thanks.

Smith: Thanks, again, everyone now, Eric who will share a detailed review of our financial results.

Eric: Thank you Omar.

Larry in Amman mentioned 2024 was a real milestone year for us.

Eric: Saw strong growth across key metrics, including GMB market participant numbers and a strengthening geographic footprint.

Eric: On top of that I am pleased to share that we have fully remediated. The previously identified material weaknesses in our internal controls reinforcing our commitment to operational excellence and sound corporate governance.

Eric: Before diving into our financials I'd like to provide important context for our year over year comparisons.

Eric: In Q4 of fiscal year 2023, we completed the acquisitions of Noble House on November one and Wonder signed on November 15th.

Eric: As a result, our reported figures for the first three quarters of 2024 reflects both organic and inorganic growth while Q4, mostly reflects organic performance.

Eric: This is a key distinction to keep in mind, when evaluating our year over year trends.

Eric: Now, let's get into our financials.

Eric: Please note that all figures I'll be discussing today have been rounded for clarity.

Eric: Total revenues grew 21% year over year for the fourth quarter to $296 million.

Eric: Principally driven by ongoing market recognition and increases in the number of active participants on our platform.

Eric: Our annual revenues have exceeded $1 1 billion, which represents a 65% increase from 2023 levels.

Eric: Approximately one third of our overall year over year growth was inorganic with the remaining two thirds being organic.

Eric: Let's take a closer look by revenue stream and start with services.

Eric: In the fourth quarter service revenues exceeded $97 million, representing a 40% year over year increase driven by strong demand and heightened engagement across our platform.

Eric: For the full year service revenues reached 350 million.

Eric: Marking a 76% increase year over year.

Eric: Our service margin was 19, 5% in the fourth quarter.

Eric: Expanding approximately two percentage points year over year, but declining two five percentage points sequentially.

Eric: As discussed during our previous earnings call, we experienced high service margins related to Ocean shipping services in the third quarter of 2024 due to the combination of high ocean freight spot prices in that period and lower fixed rate contracts from our vendors.

Eric: Ocean freight prices began returning to their normal levels in the fourth quarter and as such we see a reduction in service margins, reflecting this dynamic.

Eric: On a full year basis service margin was 18, 6% compared to 19, 1% in 2023.

Eric: The slight decline primarily resulted from ocean freight related cost volatility and the earlier half of 2024 prior to our use of large scale fixed rate contracts that started in the third quarter and will continue to be used for future periods.

Eric: Now let's.

Eric: Let's move on to product revenue.

Fourth quarter revenue increased by more than 13% and full year product revenue grew by 61% to $811 million.

Eric: The moderation in growth rate seen in the fourth quarter has a few drivers.

Eric: A significant reason is the timing of the <unk> acquisition.

Eric: The first three quarters of 2024 included both organic and inorganic growth while the fourth quarter, primarily consisted of organic growth.

Eric: Other drivers included softening of general consumer demand and headwinds for our sector as previously discussed.

Eric: We were also negatively impacted by channel specific softness from some of our largest E. Commerce retail partners that have faced significant sales to clients. During this time.

Eric: Despite these headwinds we continue to grow effectively expanding our marketplace broadening our product offerings and increasing transaction volumes to scale.

Eric: We are also actively looking to further diversify our channel and by our relationships.

Eric: Product margin declined both year over year and sequentially, primarily due to the elevated ground delivery fees. During the holiday season increased procurement costs reflected in our cost of goods sold and overall headwinds in the category.

Eric: As discussed in our previous earnings call from the third quarter, we expected a higher than usual holiday season search on the fulfillment cost front for the quarter fourth quarter of 2024.

Eric: Which resulted in short term compression to our quarterly product margins.

Eric: Margins were also negatively impacted as we continue to move through inventory that had been procured during times of elevated ocean freight spot rates prior to give the clouds utilization of large scale long term ocean rig contracts in the third quarter.

Eric: While these costs were unavoidable ocean freight rates have since moderated.

Eric: We are also focused on transitioning more of our procurement volumes to fixed rate contracts, which will provide us with more cost stability moving forward.

Eric: With that said, we expect we expect to still see some margin impact in the first quarter of 2025 as we move through the last of our high capitalization Ocean freight inventory.

Eric: Our rapid growth and higher sales volumes naturally lead to increased spending driving a year over year rise in both Q4 and full year operating expenses.

Eric: We see these investments as essential for scaling the business and strengthening our market position and we anticipate continued investment to support future growth.

Eric: By category on a full year basis.

Eric: Selling and marketing expenses remained steady at approximately 6% of total revenues.

G&A expenses were $74 million versus $30 million last year, primarily due to an increase in rental and insurance expenses as we expanded our fulfillment infrastructure to support rapid growth.

Eric: Driven by the factors discussed we ended the fourth quarter with net income of $31 million down 13% from $36 million in the fourth quarter of 2023.

Eric: Full year net income was $126 million, an increase of 34 million, 34% from $94 million in 2023.

Eric: We ended the year with liquidity of approximately $303 million, including cash cash equivalents restricted cash and short term investments, which is up 65% from $184 million at the end of 2023.

Eric: Now we have gone through the company's financial results for the year, let's turn to the integration of noble House.

Eric: As previously discussed we had set a goal of breaking even for this operation by the end of 2024.

Eric: I am happy to share that we have successfully completed this task.

Eric: I would also like to add a minor clarification.

Eric: As legacy Noble House operations processes and team members have been fully integrated into the <unk> cloud ecosystem Standalone financials for legacy Noble house are not available given the shared infrastructure costs.

Eric: However, we are able to confirm breakeven by deducting prorated costs from legacy Noble House channel gross margins.

Eric: We are extremely proud of the combined efforts of the Giga cloud and noble house teams for this accomplishment.

Eric: Before the acquisition, which was in 2023 and not all that long ago Noble house had over $35 million in annual net losses.

Eric: Through combining the relationships and talent from noble house with the Google Cloud model, we have not only reverse the final trajectory of the operation, but also positioned it for sustainable growth within our ecosystem.

Eric: Our focus moving forward will be on leveraging synergies enhancing operational efficiencies and expanding our market reach.

Eric: We anticipate that these initiatives will not only improve profitability, but also contribute significantly to our overall business objectives in the coming years.

Eric: Moving to our first quarter outlook.

Eric: Revenues are expected to range between $250 million and $265 million.

Eric: Looking further ahead.

We anticipate further temporary softening in Q2 with potential year over year revenue declines.

Eric: This is due to our planned contraction as we execute phase III of our legacy Noble House integration plan.

Eric: During this time, we expect to be retiring a number of older less profitable skus, which may temporarily impact revenues.

Eric: As always our sites are focused on profitable growth not just growth.

Eric: We believe that having an optimized product mix and strong supporting process that is constantly adjusting to new market demands is critical for long term success and continue to be focused on disciplined execution, while scaling our marketplace.

Eric: Thank you so much for joining us today, we appreciate your support.

Eric: Operator, we're ready to take audience questions.

Eric: Thank you if you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two and if youre on a speaker phone. Please pick up the handset to ask your question.

Eric: First question comes from Ryan Meyers from Lake Street Capital markets. Please go ahead.

Eric: Hey, guys. Thanks for taking my questions first one for me. So obviously the implied guidance for the first quarter is kind of a low to mid single digit growth rate, which is a bit of a deceleration based on what we've seen at least here in Q4 from an organic growth rate basis. I'm. Just wondering if you can kind of call out what the main drivers are there.

Eric: Is it predominantly just a softer macro environment and you guys are trying to look at that conservatively and then even if we think about the commentary Eric that you just gave on the second quarter, how much of that is that sort of SKU rationalization versus how much of that is just kind of overall macro softness that you are expecting to see.

Eric: Yes, absolutely. Thank you Ryan.

Speaker Change: There's a few items to be considered there.

Speaker Change: The overall environment or macro environment, you mentioned, it's definitely one of them.

Speaker Change: Other factors are so.

Speaker Change: We have.

Speaker Change: Some specific channel partners that have been hit a little harder. During this time given that we do have buyers that have strong relationships with them and ourselves as well that does create a temporary negative impact.

Speaker Change: And then the main player for Q2 is the noble House integration. So as you know noble house's strongest quarter is typically Q2, given the outdoors focus.

Speaker Change: Thats why youll see a slower growth in the first two quarters and especially Q2.

Speaker Change: Metairie there would be helpful.

Speaker Change: Yeah, Great question, so with all of the different moving parts, especially in the macro environment, it's hard for us to give specific guidance on that however, the key things to consider here.

Speaker Change: Similar to revenue we are expense experiencing the same pressure points for margin on Q1 and Q2. The other special component for Q1 is we still have some of the higher capitalization ocean freight inventory that need to be moved through in Q1. These are inventory that were purchased in.

Speaker Change: Take that pressure in Q1.

Speaker Change: Got it thank you for taking my questions.

Of course.

Speaker Change: Thank you.

Speaker Change: Your next question comes from Matt Koranda from Roth Capital. Please go ahead.

Matt Koranda: Hey, guys.

That are impacting the product revenue guide for the first quarter.

Speaker Change: Yes, great question. Thank you Matt.

Speaker Change: So we don't have a fixed target number of exact amount of Skus. We are looking to retire. This is more of a dynamic process. So.

Speaker Change: As new developed products are coming in we send them to market to identify based on market feedback, which ones are what we call winners the ones that we believe will show good sales results and good margin results. Those are sent back for scaled larger sized reorders for future profitability capture.

Speaker Change: This process does take time, though if you think about how long it takes for a new order to be manufactured and then shipped this takes up to several months and as we identify more of more and more of these winners we kind of remove roughly a similar amount from the old.

Speaker Change: Pile of Skus that are less profitable does that makes sense.

Speaker Change: Yes, I guess I am just looking for something more simple to quantify the headwind here because it's a big step down in terms of growth rate to sort of the 3% at the midpoint of the guide.

Speaker Change: I'm just trying to figure out how much of this is sort of a headwind from noble house and can we quantify it I think last year.

Speaker Change: You guys haven't provided a lot of data on what Noel has contributed but I would assume that contributed north of $30 million of revenue in the first quarter of last year. So what do you have it sort of contributing.

Speaker Change: In the first quarter or maybe what is the what's the drop in noel's revenue that we're assuming in the first quarter.

Speaker Change: So I would say roughly speaking we expect Q1 for noble House maybe.

Speaker Change: Be flat or a little bit lower depending on how much of the skus we retire.

Speaker Change: This also depends on noble house's channel partners performance, so compared to Google cloud the noble house channels are a little more concentrated so.

Speaker Change: It really depends on their performance as well.

Speaker Change: Okay, Alright got it and then maybe just since tariffs or the hot topic for the last week plus or.

Speaker Change: Several weeks plus.

Speaker Change: Maybe just wanted to give you guys a chance to address sort of how we built that into the first quarter guide how were thinking about the impact of tariffs both for your <unk> business.

Speaker Change: I think youre, probably less exposed.

Speaker Change: The <unk> business, how that sort of.

Speaker Change: It will impact your third party.

Speaker Change: Sellers.

Speaker Change: Yeah. Great question. So we have we don't really expect any terribly material impact from tariffs directly.

Speaker Change: We had this discussion last quarter. So since we last spoke it's been or since the new administration thats been a 10% increase to be already 25% for the category.

Speaker Change: If you think about the cost structure of large and bulky such as furniture, that's a very non valley intense category, which means impact from the increased cost, which usually takes up around maybe half of the total Cogs stack.

Speaker Change: Hi, Ocean freight where folks are worried about the uncertainty down the line.

Speaker Change: And in terms of <unk>, Google Cloud is really here to provide a platform or a solution for folks to transact across borders more seamlessly.

Speaker Change: Taylor potentially looking to source more from southeast Asia.

Speaker Change: Or China based factory Youre, looking maybe to export more to Europe.

Speaker Change: Okay got it I'll take this one offline thanks guys.

Speaker Change: Thank you.

Speaker Change: Thank you. Your next question comes from Thomas Forte from Maxim Group. Please go ahead.

Thomas Forte: Great. So first off Larry I Hope you and your colleagues are okay. When it comes to the California, wildfires, I think youre more than $1 million in donations for those affected is very admirable.

Speaker Change: Yeah.

Speaker Change: And then second congratulations Erik on being named CFO.

Speaker Change: One question and one follow up.

Speaker Change: I'll ask my question and then wait for the answer and then ask my follow up.

Larry Lee: So Larry it seems like the number of major sales and E. Commerce space has increased over time.

Larry Lee: Amazon Prime based with signals that now it seems like that company holds multiple prime day type sales during the year I think we could say the same thing for wafer with where it is.

Larry Lee: What are the implications to you for more big sales events in ecommerce.

Larry Lee: What excited at the opportunity and then to what extent is the incremental competition.

Larry Lee: Yes.

Speaker Change: Good morning.

Speaker Change: Go ahead.

Speaker Change: Yes, it's definitely we see this space really becoming more and more competitive and like you said a lot more sales have been observed during this time.

Speaker Change: To us it really does seem like the consumers are.

Speaker Change: Showing a little more price sensitivity right. So the sales have been really big driver sales events has been really big drivers in the last few periods and we do see differences when there are and are not.

Speaker Change: So for US I think a few things.

Speaker Change: The platform or the marketplace is really a place that offers.

Speaker Change: Retail operators, whether e-commerce or not to find ways to find more efficiency from supply chain and also a more diversified and less.

Speaker Change: Reliant or concentrated form of sourcing.

Speaker Change: Okay and then thank you Erika my follow up is.

Speaker Change: Can you give your current thoughts on strategic M&A, we have a very strong balance sheet and I imagine you are being presented with a lot of opportunities.

Speaker Change: Yes, yes, we are.

Tom: Great question. Thank you Tom.

Tom: So we are still looking for the right M&A opportunity. We are very open to different ideas and have been presented with.

Tom: A number of different things in the past period, so similar to what we discussed last quarter. This really focuses on how the.

Tom: The right targets could help giga cloud expand in the right way, meaning a few things. So Europe. For example is growing very very quickly and we would like to see infrastructure Thats very strong. This includes not only just a fulfillment network, but relationships that are strong and support.

Tom: Better pricing and more efficiency that in turn supports better margins for us.

Tom: Other than the Europe specific focus we're also open to other forms of targets that really expand our reach to ultimate participants of the marketplace. So for example, brick and mortar penetration is something we're always very interested in.

Tom: This doesn't necessarily mean restriction too.

Speaker Change: Product type sector focused businesses, such as noble house.

Speaker Change: Something like Wonder signed a SaaS company that provides a reached to that buyer base is something we're also very interested in.

Speaker Change: Great. Thank you for taking my questions.

Speaker Change: Of course.

Speaker Change: Thank you.

Erica: I would now like to turn the call back to Erica for closing comments.

Speaker Change: Thank you all for your continued support we believe the future continues to look extremely bright for Google cloud as we work to bring even greater value to all of our stakeholders.

Speaker Change: We look forward to speaking to you again after our first quarter, but in the meantime, please don't hesitate to reach out to us if you have any additional questions. Thank you.

Speaker Change: That does conclude our conference for today.

Speaker Change: For participating you may now disconnect.

Q4 2024 GigaCloud Technology Inc Earnings Call

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