JS Global Lifestyle Company Limited

All right, good morning, dear investors. I am Venus, Head of Investor Relations, Public Relations and Compliance of JS Global Lifestyle. Ladies and gentlemen, welcome to the third quarter 2022 Investors and Analyst Briefing of JS Global Lifestyle. If you're connected via Zoom, please change your Zoom name by using your institution plus your name and you can choose interpretation. down there at the toolbar. So before you're asked to raise your hand to start your question, please remain muted. And now you can check out our viewers at the upper right of our slides. And so now please allow me to introduce our management. They are CFO and Executive Director of JS Global Lifestyle, Ms. Han Run, Financial Director of JS Global, CFO of Shark Ninja, Mr. David Stevenson, and also Financial Director of JS Global, Mr. Leon Liu, Broad Secretary of Zhou Yang, Mr. Max Miao, and me, Venus Zhao, Head of Investor Relations, Public Relations, and Compliance of JS Global Lifestyle. So because Madam Han is on a long distance flight, ladies and gentlemen, let's welcome Mr. Leon Liu to start opening remark. Go ahead, please. Thank you, Venus. Dear investors, hello, everyone. Dear investors, good morning. Thank you all for participating in the third quarter 2022 investor and analyst briefing of JS Global Lifestyle. JS Global disclosed yesterday the gross revenue growth of its subsidiary Shark Ninja in the third quarter of 2022 and the market share of each category by the end of Q3 in this year. I would like to give a brief summary for the Q3 operating updates during Q3. We've achieved strong growth, sales growth year over year across US, Europe, Japan, and rest of the world, which not only reflects consumers' trust in Shark Ninja products and willingness to buy, but also proves that the resilience of the growth strategy we have been implementing. At the same time, we have also seen that the US dollar remains strong since the second quarter of this year, and major currencies such as and continue to depreciate against U.S. dollars, which has had a certain negative impact on Shark Ninja's foreign currency revenue. If calculated at a constant currency basis, our Q3 growth was even higher, close to 15%. Although the overall market sentiment is not strong, the market share of Shark Ninja's major categories is among the top, especially in two largest countries where Shark Ninja is located, the U.S. and the U.K., as it continues to make progress. We launched a series of revolutionary new products, including Shark Flex Style, a multifunctional styling hair dryer, Shark Stratos, a upright vacuum with odor neutralizer technology, and Ninja Woodfire Outdoor Grill, which is our first outdoor grill. Ninja Speedy, Rapid Cooker, and Air Fryer retailers have more positive feedbacks on almost all of our product categories than our peers, including new products, and have confidence on us towards the future. In terms of supply chain, it actually resumed to normal a year later, with zero backlog by now. We continue to optimize ocean freight rates through our close partnership with Steam Shiplines. Shark Ninja is becoming more and more popular with consumer and customer due to its innovative products and capabilities that truly solve consumers' problems, coupled with its advertising and marketing strategies to drive sales globally in various growing categories. Next, I would like to invite Mr. Dave Stevenson, CFO of Shark Ninja to share with you the performance of Shark Ninja in the third quarter. Ladies and gentlemen, let's welcome Mr. Dave Stevenson.

Great. Thank you, Leon. And thank you to everybody for joining us today. We'll discuss the gross sales and market share data that we released and give some additional context for those numbers. We'll also talk through some key issues that we dealt with in Q3. We're also very excited to give everyone an update on the great new products that we've recently launched that contributed to our success in Q3. For the three months ended September 30th, 2022, the unaudited gross sales of the Shark Ninja segment of JS Global recorded a year-on-year increase of 11.7%. On a constant currency basis, that increase would have been 14.9% as a result of the devaluation of the British pound and Japanese yen. The growth of Q3 came from all of the areas that we've talked about in previous presentations. We've gained market share in our existing categories. We've launched a tremendous amount of new products and new categories that are driving incremental sales, and we've continued to grow internationally. From a geographic standpoint, sales increased in all three geographies that we report on, including North America, Europe, and other parts of the world, including Japan. This reflects the strength of our strategy around the world, the versatility of our operations, and the commitment from our employees to deliver on our strategy with a focus on outsized success. In North America, the gross sales of Shark Ninja for the three months ended September 30th, 2022 increased by 11.1%. In Europe, the gross sales of Shark Ninja in that same period increased by 11.2%, which on a constant currency basis would have been an increase of 30.2%. In the rest of the world, including Japan, the gross sales of Shark Ninja during Q3 increased by 29.2% compared to last year. which on a constant currency basis would have been an increase of 43.6%. As a reminder, gross sales are different than the revenue that is reported in our audited financial statements since they do not take into account allowances for customer returns and promotional funding. In the next slide, we've shown the impact our strategy has had on our market share. As you can see, our market share grew at a respectable pace within food preparation appliances and cleaning appliances in both the US and the UK for the nine months ended September 30th, 2022. In the US, our market share within food preparation and cleaning appliances grew 320 basis points and 300 basis points respectively year over year. In Great Britain, our market share within electrical cooking pots, vacuum cleaners, and food preparation appliances recorded growth of 970 basis points, 170 basis points, and 400 basis points respectively year over year. The only category that we did not grow market share in was cooking appliances in the United States, which declined 50 basis points versus last year. After experiencing the massive growth in this category that we have over the past three years, we are seeing the market soften overall, which has led to many of our competitors heavily discounting their products to deal with excess inventory. We view this as a temporary correction in the market and fully expect to continue expanding our presence within this category in 2023, driven by great new products like the Ninja Speedy that just launched. I would also like to point out that the data in this category excludes outdoor grills, which we also just launched in Q3. We'll cover more on that later, but it's worth pointing out here, since we're building off the success that we've had with indoor grills and developing our first outdoor grill, and the outdoor grilling category is a multi-billion dollar category in its own right. As I mentioned before, we want to spend a few minutes discussing some of our recent new product launches, which is always our favorite part of these discussions. We know that our ability to grow at a market-leading rate is based on our ability to continually innovate, especially into new product categories that we have not been in before. The pace at which we're doing that now is more rapid than it's ever been, and the first example that I'd like to cover is Shark FlexStyle. which builds upon our first entry into the personal care space following the launch of the Shark Hyper Air Hair Dryer last year. We launched the Flex Style on August 23rd, and it has quickly become the most successful direct-to-consumer launch in Shark Ninja history. Whenever we launch new products, we're focused on providing great performance along with highly differentiated features and functionality, and the Shark Flex Style is a great example of that. You can style your hair while you dry it with no heat damage, and it quickly transforms between a powerful, fast-drying hair dryer and an ultra-versatile multi-styler. This product sold out on Amazon and Best Buy in record time and is currently averaging more than 1,000 units per day sold through our direct-to-consumer site. The momentum is just getting started abroad, and consumers and media can't stop raving about us after the Shark Flex Style has been in the UK market for just a few weeks. The next slide shows the new Ninja wood fire grill, allowing consumers to grill, air fry, and even smoke meats faster and easier than a leading smoker with 100% natural wood fire flavors. As most of you know, I'm sure the outdoor grilling market in the U.S. and globally is massive, and it's a multibillion-dollar category. We're launching into it with a product that is highly differentiated from anything else that's on the market today. This product allows users to grill, smoke, roast, bake, dehydrate, air crisp, and broil all in one relatively compact design, whereas other products on the market usually only allow you to do one or two of those things. In addition, since it does not require charcoal or propane to operate, it's a great option for folks living in apartment buildings or that otherwise may not want to cook with propane or charcoal. Again, beauty and outdoor grilling are new categories for us, and the results so far have been really exciting. It's ventures into these new categories that give us even more confidence to enter other new categories, disrupt the traditional players, take a market share, delight consumers, and grow. The new Shark Stratos vacuum cleaner represents another key innovative feature in a category where there hasn't been a lot of innovation other than for sharks. Our new odor neutralizing technology guards against bad odors inside your vacuum for a fresher smelling home. Staying with the Shark brand for a moment, we also launched the Shark Hydrovac. This is one tool that does it all. The Shark Hydrovac mops, vacuums, and cleans itself. It tackles wet and dry messes at the same time with its powerful suction and hydro mopping for deeper cleaning on hard floors and faster results. Consumers are able to seamlessly transition between four types and messes with a touch of a button. This product has been selling extremely well, both online and at brick and mortar stores. The last product we'll discuss is the Ninja Speedy Rapid Cooker and Air Fryer, which promises one touch meals in 15 minutes. This unit builds off the success we've had in recent years with Ninja Foodi Multi Cookers by giving people the ability to steam and air fry simultaneously for faster, easier cooking. I encourage you to go online and read the reviews of the Speedy as well as the other products that I've mentioned, the Flex Style, the Woodfire, the Stratos, and the Hydrovac. They're selling very well and have been very well received on social media. Turning towards the future and what's next for Shark Ninja, a strategy of introducing products into existing categories, new products into new categories, and then bringing those products internationally has guided our growth for over 10 years. Our strategy is elemental to what we do every day, and that will not change. With that, I think we'll turn it over to Q&A at this point.

All right, thank you, Dave, for your introduction. Now, let me enter Q&A session. If you need to ask questions via Zoom platform, please use raise hand function. The moderator will announce your name and then ask you to unmute yourself. At that moment, please confirm and unmute yourself and start your question. So we can see there are some hands on line right now. So first of all, let's welcome Renny Pan to raise the question. Welcome.