GigaCloud Technology Inc

Good day, ladies and gentlemen, and thank you for standing by. And welcome to GigaCloud's Technology's second quarter and half-year 2023 earnings conference call. During today's call, all participants will be in a listen-only mode. Joining us today from GigaCloud Technology are the company's founder, chairman, and chief executive officer, Larry Wu, the company's president, Dr. Eamon Schrock, and the company's chief financial officer, David Lau, on today's call. Eamon will give an overview of the company's performance and details of the company's operation results, and David will share the company's financial results. After that, we'll conduct a question and answer session. As a reminder, this conference contains statements about future events and expectations, which are forward-looking in nature. Statements on this call may be deemed as forward-looking, and actual results may differ materially. Today's call and webcast will include non-GAAP financial measures within the meetings of the SEC's Regulation G. When required, 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 today's press release as well as on the company's website. With that, I'd like to turn the call over to Larry for your opening remarks. Please go ahead, sir.

Thank you, operator, and thank you everyone for joining us here today. I want to start off today by giving my heartfelt thanks to the entire Eagle Cloud family for their diligent effort across the board. As Iman will speak to, our results continue to demonstrate positive momentum led by an over 200% period over period increase in net income in the first half of 2023. We continue to beat our own expectations across the board and are thrilled to deliver this result to our stakeholders. Our three-piece sellers and platform-wide buyers continue to see the inherent value in our supply-fulfilled retailing model, and we're continuing to onboard new buyers and sellers as we reinvest earnings into accelerating our organic growth. Our strong balance sheet and fresh cash flow generation give us the optionality to pursue a number of strategies to grow the business as well. We're also adding a number of corporate positions and key decision-making roles to our headquarters in Walnut, California, supplementing our mature overseas back office personnel. We see this as a key part of our global strategy and the well-expanded Giga Cloud footprint and talent pool. Finally, we are also thrilled to welcome two new board members, Mr. John William Visser and Mrs. Laurie Kelly, who bring deep industry expertise and diverse viewpoints to our board. Now I would like to turn the call to Dr. Iman Sharak, president of GigaCloud. Iman.

Thank you, Larry, and thanks again to everybody for joining us. We could not be more pleased with our second quarter results. And I want to start by thanking the entire GigaCloud team for their tireless work and execution. We are dedicated to changing the way suppliers and resellers do business in buying, selling, and shipping all things large and bulky through the state-of-the-art technology and innovation. We believe this message and mission are resonating well given the success of our marketplace. Our outstanding profitability resulted in an ending cash balance of $181.5 million, up from $143.5 million as of December 31st, 2022. As we have mentioned in the past, the strength of our balance sheet gives us the ability to selectively evaluate targets for tuck-in acquisitions. Our criteria for potential targets range from companies that would further penetrate our existing target markets add new capabilities to our already robust technology stack, penetrate a new segment of market or technology that would further enhance our users' experience on Giga Cloud platform. Our cash balance also gives us the ability to make strategic moves on our share repurchase plan, which was approved for $25 million in June. While we did not repurchase any shares in the second quarter, the approval for the repurchase plan runs through June 2024. We will update the investment community on this initiative as appropriate. We are carefully evaluating the use of repurchase plan to ensure we are striking the right balance within creating shareholder value and protecting our stock fundamentals. Now let's walk through some of the operational highlights for the quarter. Our Giga Cloud Marketplace GMV grew approximately 32% year over year to $607.5 million in the TTM period. On the seller side, the platform also saw an approximately 47% year over year increase in active 3P sellers, ending the total number for the quarter at 665, which was also a 10% sequential increase. Organically, Expanding our ecosystem of 3P sellers is crucial to our achieving scale in our supplier-fulfilled retailing model, and we continue to devote a significant amount of time and resources into quickly vetting and onboarding new 3P sellers and adding new SKUs to our platform. While buyers may churn on and off the platform or consolidate the number of accounts they are working on, we see the number of 3P sellers on the platform as a more important indicator of a healthy marketplace, providing buyers variety in the number of SKUs they can choose from. The trend of our 3P sellers marketplace, GMV, expanding only accelerated in this quarter, increasing 65% year over year to $324.7 million, and now making up approximately 53% of our total GMB. As I mentioned on our last call, While our 1P approach remains an integral part of our business strategy, ultimately we believe that the growth of our organic 3P GMV will be very important to all to scaling our business as we see positive momentum in our organic 3P growth rate continuing to drive a larger, more productive marketplace. On the buyer side, We saw active buyers increasing by over 7% year-over-year, ending the quarter at 4,351, with average spend per buyer increasing by 24% year-over-year to 139,629. The increase in the average spend indicates that we are seeing growth in the number of high-quality, high-volume buyers that we seek to attract to the platform. These buyers tend to be very sticky in their adoption of the platform and growth in their average spend can quickly fuel growth in our results. We will continue to invest in our platform and we believe there is still a very strong runway of organic growth that can be achieved as we penetrate new markets around the world. One area that we continue to invest heavily in is to build out continued momentum in organic growth in our marketing and advertising, particularly to brick and mortar retailers of furniture who historically enjoy a large market share in the furniture space and have a large amount of inventory requirements. We continue to specifically target this segment of resellers through additional advertisement and media campaigns and see a significant amount of white space for our business to continue to expand into this market. I would also like to discuss GigaCloud's transition from a foreign private issuer or FBI to following the same reporting and disclosure obligations as domestic companies. As many of you have already seen on July 3rd, we issued a press release announcing that as of the end of second quarter, it was determined that GigaCloud no longer qualifies as an FBI. Practically, what that would mean for GigaCloud and the investment community is that starting January 1st, 2024, GigaCloud will be subject to the same reporting, disclosure, and filing obligations as the other S-form issuers. Starting next year, you can expect the same cadence of filings, such as 10-K and 10-Q and 10-Q. As you would, any domestic NASDAQ listed company would believe that this is a very important step forward in building confidence in our story for investors. And we are laser focused on becoming even more engaged and transparent with our shareholders and potential shareholders. We are also adding a number of corporate positions and key decision-making roles to our headquarters in Walnut, California, supplementing our mature overseas back office personnel. We also announced a number of changes to our board of directors on August 10th, including the addition of two new independent directors, John Visser and Lori Kelly, Mr. Visser is currently the Vice President of Logistics at doTERRA International, while Mrs. Kelly has previously held a number of senior roles in the furniture industry, most recently as the President of BDI Furniture before founding her own strategic consulting firm. Both Mr. Visser and Mrs. Kelly bring with them critical industry experience and new diverse insights, and we are thrilled to have them come on board. Clearly, We are dedicated to building out our global presence and expanding the giga cloud footprint around the world. And we believe these moves are a strong step in the right direction to building an even stronger tie to the investment community in the US and other nations. Overall, we are encouraged by our progress in second quarter. And we believe we are making significant headway in our mission to build the world's best B2B large parcel shopping experience for both buyers and sellers. We are thrilled by our second consecutive quarter of record profit, and we believe we should see our gross margins support a similar level of profitability for the remainder of the year. Our industry leading marketplace saw significant growth in this quarter. growing in total GMV by 32% year over year, with active buyers increasing by over 7%, and average spend per active buyer by 24% in the same period. Our balance sheet provides us flexibility to pursue potential M&A targets, as well as support a steady pace of organic growth. Finally, our move to become an S-filer demonstrates our commitment to the international capital markets, and increases transparency for shareholders and potential shareholders. And with that, I would like to turn the call over to David for a closer review of our second quarter and first quarter, first half numbers. David?