Boqii Holding Limited Class A Ordinary Shares

Ladies and gentlemen, thank you for standing by, and welcome to Bo Chee's fiscal 2022 third quarter earnings conference call. Currently, all participants are in listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I will turn the call over to Mandy Lu, Boqi's IR Manager. Mandy?

Thank you, Andrew, and good morning, everyone. Welcome to Boqi's fiscal 2022 third quarter earnings conference call. Joining us today are Ms. Lisa Tang, co-CEO and CFO, Mr. Kai Fang, Chief Strategy Officer, and Mr. Loyal Dai, Financial VP of Boqi. We released results earlier today. The press release is available on the company's IR website at ir.ochi.com, as well as from Newswire Services. A replay of the call will be available on the site later today. Before we continue, please note that today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties. As such, the company's actual results may be materially different from the expectations expressed today. Further information regarding this and other risks and uncertainties are included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statement except as required under applicable law. Please note that certain financial measures that we use on the call, such as adjusted net loss, adjusted net loss margin, EBITDA and EBITDA margin, are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Also, please be reminded that unless otherwise stated, all figures mentioned during the conference call are in Chinese Renminbi. With that, let me now turn the call over to our co-CEO and CFO, Ms. Lisa Tang. Over to you, Lisa.

Thank you, Mandy, and many thanks to everyone for joining the call today. During Q3 for Physical Tucson 2022, We continued to enhance our value chain position as an end-to-end connector, creating values for both pet parents and industry partners. As we enriched our SKUs, further expanded our distribution network and introduced creative initiatives to satisfy the growing needs of pet parents. We were able to engage more users. On top of that, we observed the struggle for precise vertical traffic of our industry partners, while our proven private domain user traffic has enabled us to grow top-line while contributing the sales and marketing spend. Therefore, we shared our user pool with industry partners and provided effective marketing solutions for brand owners to penetrated markets and educated parents in China. We continue to report pricing performance across our operation figures against the fierce market competition. Active buyers increased by 17.8% quarter-over-quarter, or 26.3% year-over-year. And the number of orders increased by 19.2% quarter-over-quarter, pointing towards our expanding brand value and improving customer engagement. Such thickness was able to translate to growth in total revenue up by 6.3% year-over-year. Remarkably, our gross profit margin increased from 17.9% in Q3 of fiscal year 2021 to 23.1% in Q3 2022. We intend to continue working in users' degrees under cost selling with our rich portfolio of products to effectively turn our traffic into meaningful sales revenue. We remain dedicated to supporting the development of small to mid-sized brands with our established capabilities in supply chain, warehousing, SaaS, membership system, and offline extensive distribution network. We offer brands a cost-effective solution to target the right customer group. This has translated into a significant growth in online marketing, information services, and other revenue. From 0.2% of total revenue in Q3 of fiscal 21 to 4.6% of total revenue in this quarter. As the Instra As the infrastructure for such service revenue is already in place, its marginal cost remains low. Together with our rising post-fulfillment margin, we are confident to reach breakeven in near future. Gucci is looking not just a sustainable growth in user base, but also a comprehensive network infrastructure that allows us to connect the sellers and the buyers. As we achieved a new low in CAC of RMB 8.5 per user, we believe our closed-loop system has taken shape and we will further improve our servicing capabilities. Looking ahead, China's pet industry is expected to continue its growth, reaching more than 400 billion yuan by 2023 according to market research. Huge opportunities lie behind the increasing penetration and expanding needs of parents and the underserved branding owners. Now I will turn the call over to the CSO Kai Fang, who will share more details about our strategy and financial highlights.