GigaCloud Technology Inc

Welcome to Giga Cloud Technologies' fourth quarter and year-end 2024 earnings conference call. Joining us today from Giga Cloud are the company's founder, chairman, and CEO, Larry Wu, its president, Dr. Iman Shrock, and its chief financial officer, Erica Wei. Larry will start with a brief introduction. Iman 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. 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 today by GigaCloud. as well as on the company's website. I would now like to turn the call over to Larry for his opening remarks. Please go ahead, sir.

Thank you, operator, and welcome everyone to today's call. 2024 was a landmark year for Giga Cloud as we continue to enhance and diversify our robust B2B online marketplace. Not only did marketplace GMV grow almost 70%, but also for the first time in our history, GigaCloud surpassed $1 billion in total revenue for the year. And we did it despite the industry and macroeconomic headwinds that are impacting so many. I'm incredibly proud of the GigaCloud team for this milestone, but we are not in the business of standing still. There's still tremendous opportunity ahead, and we're pursuing it with the right strategy and the right platform and the right execution. In times of uncertainty, true strength is revealed. While the macroeconomic climate remains challenging, GigaCloud continues to stand strong, demonstrating resilience, adaptability, and long-term vision. By enabling our participants to streamline operations, enhancing efficiency and the scale seamlessly, we have created cohesive ecosystem built for sustained success. We're pleased with our progress on Noble House turnaround effort with Yvonne and Erica will discuss in more detail about shortly. Meanwhile, one sign is to be rebranded as Wonder to reflect its evolution from kiosk app to a comprehensive sales enablement platform for brick-and-mortar retailers. The 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 associates. Iman will dive deeper into these developments later in the call. Our balance sheet remains a pillar of strength. With zero debt and strong cash flow generation from operations, we're well-equipped to execute our strategic initiatives and invest in future growth. Beyond financial performance, Giga Cloud's leadership was widely recognized across the industry. we just secured the number one spot on Forbes America's most successful small cap companies 2025 list. Multiple wins in Furniture of the Day's readers ranking for the second year in a row and were able to be added to the Russell 2000 Index. While accolades are gratifying, their real value lies in what They represent a validation of the marketplace we pioneered and the transformative impact that we continue to make in large parcel B2B commerce. For us, success isn't just about growth. It's about impact we make where it matters most. In response to the recent wildfire in Southern California, we donated over a million dollars in home furnishing to support those affected. Beyond this, We remain committed to giving back, supporting City of Hope and other community initiatives. We also reaffirmed our commitment to our shareholders in 2024. Our $46 million share repurchase program approved in September is a testament to our confidence in GigaCloud's long-term growth strategy. As of today, we have executed approximately $29 million in share repurchase under the Rule 10b-5-1 plan. Before we wrap up, I want to take a moment to share an important leadership update. Eric Wei, who has been serving as our interim CFO, is officially stepping in as the chief financial officer. 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 line with this, we have made significant progress in advancing our reporting standards and financial controls, which Erica will provide more details on this later in the call. Her leadership will be key as we continue to scale our business and drive sustained growth. Congratulations, Erica. With that, I will turn the call over to Iman.

Thanks, Larry, and congratulations to Erica on her appointment as CFO. Everyone at GigaCloud 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. It's about what comes next. We continue to diversify our marketplace across geographies, product categories, and 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. Before diving into marketplace metrics, I want to take a moment to address the broader macroeconomic environment. 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. As a result, furniture demand has softened. According to Smith Leonard, new orders in November declined 9% year-over-year, and full-year orders trailed 20-23 levels. While these headwinds present a short-term challenge, Giga Cloud is built for resilience. Even against this backdrop, the Giga Cloud Marketplace is still growing. Here are some notable stats. For the trailing 12 months, ended December 31st, 2024, Giga Cloud Marketplace GMV 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. Growth in the number of marketplace participants also saw continued expansion, with our active 3P seller base hitting more than 1,100 and our active buyer base growing to more than 9,300. It is becoming clear that a wide variety of buyers and sellers see the immense value we've built into the platform and the increasing recognition of our supplier-fulfilled retailing model. GMV in our 3P seller marketplace group 63% from one year ago and totaled $694 million for the trailing 12 months. 3P currently accounts for about 52% of our total marketplace GMV, maintaining a stable mix alongside our 1P 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 with lower trading volumes. We remain encouraged by the trends within our marketplace and will continue educating the industry on the many advantages of our supplier-fulfilled 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 continued to evolve. As I've said, diversification is a key to our strategy and is one of our core strengths in operating a global business to business marketplace. GMV from Europe grew over 150% organically year over year. We see a 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. further strengthening our infrastructure and commitment to serving the European customers efficiently. As Larry mentioned, we are happy with the progress on Noble House. During our last call, I outlined a four-phase approach and I'd like to briefly recap our progress in 2024. In phase one, immediately after closing the acquisition, we prioritized placing large orders of existing SKUs. While not expected to be strong margin contributors, These orders serve two important purposes, providing stability for Noble House's factory vendors, many of whom had been negatively impacted during the bankruptcy, and two, ensuring adequate inventory supply for downstream channel partners while we continue to deepen our relationships. In the second quarter, we turned to focus on addressing the void of the new product development left by Noble House's bankruptcy. A constant supply of new competitive and quality products is critical to profitability. As such, Phase 2 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 improved the product development process. I am proud to share that by the end of to Phase 2, production orders have been put in for approximately 300 new SKUs, setting the runway for long-term future profitability. We began receiving the first of many shipments of the newly developed SKUs in November. These consist of smaller order quantities of each SKU aimed for the purpose of identifying an optimal product mix. Now, as we're in phase three, our focus is on collecting market feedback on the newly developed SKUs and identifying successful SKUs for scaling and larger reorders with respect to retiring the older SKUs. This will be an ongoing effort. Given the time required for production and 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 profitability and further optimizing our operations and development process for sustained long-term returns. We continue to work on better streamlining the GigaCloud ecosystem to maximize Legacy Noble House's bottom line contribution and expect a more meaningful profit contribution from Legacy Noble House as we move towards 2025 year end. A quick word on Wondersign before I turn things over to Erica. We are continuing to advance Wondersign's tech stack by further aligning it with our own. As a part of its evolution, Wondersign will officially be rebranded as Wonder, which better reflects its shift from a kiosk app provider to a comprehensive sales enablement platform for brick and mortar retail. The centerpiece of this transformation is the Wonder 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. This is all part of our larger GigaIQ package, our technology stack that powers both the GigaCloud B2B marketplace ecosystem and our backend B2C enabling system, including the Wonder app. The goal is simple. Use technology to help the industry participants succeed. 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 happen. We're already seeing strong early adoption, with leading furniture and sleep industry suppliers being the first to roll it out across their retailers' networks. This is a great example of how Wunder is helping suppliers connect with frontline sales, boost engagement, and drive better outcomes in-store. We are excited about where this is headed and see Wunder as a key driver for our continued push into the brick-and-mortar market. Our unique SFR model is the backbone of our marketplace, and our growing base of buyers and sellers understand its clear value. But we are more than just a marketplace. GigaCloud is an ecosystem that empowers our partners with resources, infrastructure, and strategic support they need to thrive. Thanks again, everyone. Now, Erica will share a detailed review of our financial results.