PDD Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to PTZ Holdings, Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question and answer session. At which time, if you wish to ask a question, you will need to press star then one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your host today. Sir, please begin.

Thank you, operator. Hello, everyone, and thank you for joining us today. PDD Holdings earnings release was distributed earlier and is available on our website at investor.pddholdings.com, as well as through the Globe Newswire services. Before we begin, I would like to refer you to our safe harbor statement in earnings press release, which applies to this call, as we will make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Mr. Chen Lei, our Chairman and Co-Chief Executive Officer, Mr. Zhao Jiazhen, our Executive Director and Co-Chief Executive Officer, as well as Ms. Liu Jing, our VP of Finance. Lei and Jiajun will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then walk us through our financial results for the third quarter ended September 30th, 2024. During the Q&A session, Lei and Jiajun will answer questions in Chinese and will help translate. Please kindly note that the English translation is for reference only. In case of any discrepancy, statements in the original language should prevail. Now it's my pleasure to introduce our chairman and co-chief executive officer, Mr. Chen Lei. Lei, please go ahead.

Thank you. Hello, everyone. Thank you all for joining our earnest call for the third quarter of 2024. In the third quarter, we stepped up our efforts in execution of high-quality development strategy and invested firmly in building a healthy platform ecosystem. We rolled out several initiatives that extended our ecosystem upgrades to the whole supply chain, such as a $10 billion fee reduction program and a high-quality merchant support program. These efforts brought cost savings and efficiency gains to over 10 million merchants. and during the process, encourage the agricultural regions and industrial belts that we serve to embark a new phase of high-quality development. This past quarter, we delivered robust results with revenues and net income reaching RMB 99.4 billion and RMB 25 billion, respectively. When compared to last quarter, we have seen a moderation in revenue growth and profits have also trended low. This was partly due to the intensified competition in the e-commerce sector and the various challenges faced by our business. At the same time, as noted last quarter, our investments in ecosystem development expected impact short-term financial results, and this is within our expectations. Beyond the financial results, we placed greater value on long-term benefits of ecosystem investments. Over the past quarter, our initiatives in fee reductions and merchant support policies have received positive feedback from merchants, manufacturers, as well as from the consumers. In mid-August, we first launched the $10 billion fee reduction program, which included several measures such as service fee refunds, fee reduction for buy-now-pay-later services, lower security deposits, and an easier fund withdrawal process. In addition, we also upgraded after-sales service support for merchants, which brings further cost savings while improving service quality. This effort injected flash energy into our ecosystem and created opportunities for growth and transformation that benefits both our merchants and industry labors. As a first among the e-commerce platform, we also adopted a logistic support measures to promote e-commerce services in remote regions across Western China. Last quarter, we eliminated the transshipment fees for orders to these regions with all such costs covered by the platform. This innovation marked a first upgrade to our fulfillment experience that builds on our earlier initiatives that provide the free shipping to some villages in Western China. Programs like this not only benefit local consumers but also enable merchants to enter these underserved markets, which further strengthen the economic link between the different regions. In addition to fee reductions, we also launched the high-quality merchant support program, which aims to empower merchants and brands that demonstrate strong product and technology innovation capabilities. Leveraging our digital capabilities We offer comprehensive support in product development, marketing, operation, and supply chain management. The examples set by these quality merchants and brands also serve as a driving force behind the growth and transformation of agricultural production regions and industrial belts in the future. At the moment, the 10 billion fee reduction program covers all product categories on the platform, with over 10 billion RMB in fee reductions planned for the coming year. The logistic support measures continue to benefit consumers from remote areas, driving significant order volume growth from these regions compared to the last quarter. Meanwhile, the high-quality merchant support program has already been implemented in dozens of agricultural regions and industrial zones, enriching the platform's supply chain for high-quality products. On the demand side, consumers are experiencing a shift in their preferences, with greater focus on quality and personalization. This has posed new demands on supply chain innovation. At the same time, our initiatives in fee reductions and merchant support policies are encouraging more merchants to innovate, which enables them to better meet the consumer's demand for more quality products, thereby creating a positive cycle. This reaffirms our commitment to make investments that drive impactful results over the long run. we will continue to firmly execute our high-quality development strategy and to nurture a healthy platform and supply chain ecosystem, which brings sustained benefits to consumers, merchants, and manufacturers. As a platform rooted in agriculture, we continue to make our own contributions in this field, with a particular focus on advancing research and technology innovation. On September 20, we hosted the final round of the fourth Smart Agriculture Competition, where six finalist teams explored cutting-edge technologies in agriculture digitalization and experimented with real-world applications. On September 26, We hosted the Global Agri-Inno Challenge 2024 in collaboration with leading research institutes. Legends of young entrepreneurs from around the world presented innovative digital solutions to tackle agriculture challenges faced by farmers around the world. As mentioned last quarter, as a global company in the new era, We are committed to driving innovation and adapting to change. We are also prepared to do more to give back to the society, to support agriculture and other industry sectors, and to take on greater social responsibility in the regions across the globe. And now, I will hand it over to our co-CEO, Song Jiazhen, to talk in more detail about our development plan.

Thank you, Lei. Hello, everyone. This is Zhao Jiazhen. Thank you all for joining our earnings call for the third quarter of 2024. 我们通过减免加扶持的一系列举措 不断优化平台生态 持续普惠供需两策 接下来就由我来进一步的介绍 我们在商家扶持政策上所做的一些努力 In the third quarter, thanks to the steady recovery of macro consumption, our business performance remained robust. As we continue to firmly execute our high-quality development strategy, as Lei just mentioned, we have been actively optimizing the platform ecosystem.

This includes a series of fee reductions and initiatives to support our merchants, all aimed to ensuring benefits for both the supply and demand side. Let me now take a moment to share some of our efforts in supporting merchants. As we discussed last quarter, our investment in platform ecosystem focus on two key areas. First, we have reduced transaction fees for high quality merchants. On the other hand, we have committed billions of resources to empower merchants and emerging industrial clusters with strong product and technology innovation capabilities.

In the third quarter,

Our $10 billion fee reduction program introduced a series of measures which played a key role in helping merchants lower costs and improve efficiency through substantial fee reductions and refunds. Many merchants, especially in agriculture and national goods, saved hundreds of thousands RMB a year, largely reducing their operating costs. This allows them to free up more resources for product development and technology upgrades. driving the industry towards a new phase of high-quality growth. Additionally, we have enhanced the after-sales service system for merchants. We introduced a green channel alongside a dedicated after-sales service team to fully support merchants with abnormal orders, complaints, and customer dissatisfaction. Once a merchant's appeal is approved, the platform compensates for the relevant orders. This improves not only the merchant's experience, but also the overall business environment on the platform.

In the e-commerce westbound plan, the platform has accounted for all the logistics transfer fees and greatly reduced the express cost of orders in the western remote areas. The express cost of agricultural goods, fresh goods, daily goods and other goods is reduced by about 70%. This greatly encourages the business to open up the western market. The high-quality goods from all over the country are accelerating to enter the western region and drive the further improvement of e-commerce, logistics and other infrastructure construction in the western region. The rich property in the western region

As part of our logistic support initiative, we cover all transshipment fees across Western China. This substantially reduces delivery costs for orders in these regions. For categories like agricultural products and daily essentials, delivery fees were cut by up to 70%, greatly encouraging merchants to enter these markets. Quality products from across the country are now reaching Western China. promoting further infrastructure development in e-commerce and logistics. It also opens new opportunities for the region's abundant resources to access national markets. Following our 10 billion free reduction program, we also launched a high-quality merchant support program. For example, during the harvest festival in early September, we have allocated 1 billion RMB in subsidies and 2 billion in online traffic resources to support high-quality agricultural merchants from various regions. These efforts helped seasonal agricultural products reach urban markets, boosting yields and income in agricultural communities.

to accelerate the high-quality development of the industry.

Beyond agricultural regions, the high-quality merchant support program also extended support to other industrial communities. Leveraging the platform's digital capabilities, we're collaborating with manufacturers to explore full supply chain models. This helps them advance manufacturing process, strengthen brand recognition, and drive industries toward high-quality developments.

In the just-finished Double C event, In the recently concluded W11 Shopping Festival,

our 10 billion program partnered with numerous national brands to launch customized high-quality products. This initiative led to impressive growth with sales of national brands, both new and established, rising more than tenfold quarter on quarter. In the coming quarters, we will further broaden our support for high-quality merchants, covering more agricultural and industrial regions to drive industry transformation and advancement.

Thanks to the strong investment of supply and demand, the platform has brought a richer supply and demand for consumers, constantly satisfying the consumer's day-to-day diversified consumption concept. From the trend of consumption, the platform provides more new mobile phones, large-scale makeup, healthy food for users in the first and second-tier cities, and satisfies the needs of the urban white-collar young community's individualized consumption. For users in the third and fourth-tier and county areas, we have provided more high-end home appliances, hardware, fruit and seafood,

Our firm investment on the supply side has enabled us to provide consumers with a more diverse selection of high-quality products, allowing their evolving preferences. In response to shifting consumption trends, we have expanded offerings of new smartphones, top-brand cosmetics, and healthy food to users in first- and second-tier cities. addressing the personalized demands of urban professionals and younger generations. For those in third- and fourth-tier cities and rural areas, we have focused on offering more premium home appliances, maternity and baby products, and fresh produce, driving a wave of consumption upgrades. 不断突破团队能力边界,以更好的应对接下来的挑战。 As they noted, over the next few quarters, we will stay committed to our high-quality development strategy. We will carry on with the fee reductions and merchant support initiatives, further enhance our ecosystem, and keep improving our capabilities to navigate the challenges ahead.

接下来,我把时间交给刘俊,由他为大家介绍我们上届度的财务表现。 Next, I will hand over to Jun.

She will provide an update on our financial performance for the third quarter.

Thank you, Jiajian. Hello, everyone. Let me walk you through our financial performance for the third quarter ending September 30, 2024. In terms of income statements, in the third quarter, Our total revenues increased 44% year-over-year to RMB 99.4 billion. This was mainly driven by an increase in revenues from online marketing services and transaction services. Revenues from online marketing services and others were RMB 49.4 billion this quarter, up 24% from the same quarter of 2023. Revenues from transaction services were RMB 50 billion, up 72% from the same quarter last year. In Q3, our top-line growth has further moderated in comparison to the last few quarters amid intensified competition and external challenges. Moving on to costs and expenses, our total cost of revenues increased 48% from RMB 26.8 billion in Q3 2023 to RMB 39.7 billion this quarter, mainly due to increase in fulfillment fees and payment processing fees. On GAAP basis, total operating expenses this quarter increased 39% to RMB 35.4 billion from RMB 25.4 billion in same quarter of 2023. On a non-GAAP basis, total operating expenses increased to RMB 32.9 billion this quarter, from RMB 23.9 billion in Q3 2023. In Q3, we further increased our investment to promote high-quality development of a sustainable platform ecosystem. Our total non-GAAP operating expenses as a percentage of total revenues this quarter was 33%. compared to 35% in the same quarter last year. Looking into specific expense items, unknown gap sales and marketing expenses this quarter were R&B 29.8 billion, up 40% versus the same quarter last year. Throughout Q3, we remained focused on giving back to consumers throughout promotional campaigns and continue to invest in marketing to promote our platforms. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter was 30%, versus 31% for the same quarter last year. Our non-GAAP general and administrative expenses were RMB $647 million. versus RMB 403 million in the same quarter of 2023. Our research and development expenses were RMB 2.4 billion this quarter on a non-GAAP basis, up 10% year-over-year, and RMB 3.1 billion on a GAAP basis. Our R&D expenses reached a new high this quarter. reflecting our focus on strengthening the core technology capabilities of our platform. As a foundation for our supply chain innovation and a trustworthy shopping environment, we are committed to further increasing our investment in R&D. On a gap basis, operating profit for the quarter was RMB 24.3 billion versus RMB 16.7 billion in the same quarter last year. Non-GAAP operating profit was RMB 26.8 billion versus RMB 18.1 billion in the same quarter last year. Non-GAAP operating profit margin was 27% this quarter, compared with 26% for the same quarter last year. Net income attributable to ordinary shareholders was RMB 25 billion for the quarter. compared to RMB 15.5 billion in the same quarter last year. Basic earnings per ADS was RMB 18.02 and diluted earnings per ADS was RMB 16.91 versus basic earnings per ADS of RMB 11.38 and diluted earnings per ADS of RMB 10.60 in the same quarter of 2023. Loan gap net income attributable to ordinary shareholders was RMB 27.5 billion versus RMB 17 billion in the same quarter last year. Loan gap diluted earnings per ADS was RMB 18.59 versus RMB 11.61 in the same quarter of 2023. As noted last quarter, our profitability may gradually trend lower over the long run, as we continue to invest to support high-quality merchants and promote a sustainable platform ecosystem. Moving forward, we will remain committed to long-term investment to build a healthy platform ecosystem, bringing sustained benefits to consumers, merchants, and other ecosystem partners. To complete the income statement, Now, let me move on to cash flow. Our net cash generated from operating activities was RMB 27.5 billion, compared with RMB 32.5 billion in the same quarter last year. As of September 30, 2024, we have RMB 308.5 billion in cash, cash equivalents, and short-term investments. Thank you. This concludes my prepared remarks.

Thank you, Jun. Next, we will move on to the Q&A session. In today's Q&A session, Lei, Jiazhen, and Jun will take questions from analysts on the line. We could take a maximum of two questions from each analyst. Lei and Jiazhen will answer questions in Chinese and will help translate for convenience purpose. Operator, we are now open for questions.

Thank you. We will now begin the question and answer session. If you wish to ask a question, please press star then 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or the hash key. Participants are requested to restrict the number of questions to 2 at each time. And our first question will come from Kenneth Fong with UBS. Please go ahead.

Hi, good evening. Thank you for introducing my question. The first question is that we focused on We will invest in the development of the business. During this period, we have seen that the company has gradually introduced many policies to support the business. Can you share some of the current results and the future of the project in this direction? My second question is about the globalized business of the company. Currently, it is still actively exploring new markets. Last quarter, management placed great emphasis on your commitment to invest in the merchant ecosystem, and we have also seen the company implementing a series of merchant support initiatives since then. Can management share the current progress of this initiative and elaborate on the plans moving forward? And my second question is, we are seeing that the company is still actively exploring new markets in this global business. But at the same time, we also noted that external environment is evolving and we are hearing different views on the business from external stakeholders. Could management share your thoughts on this and also provide an update on the future plans for the global business. Thank you.

你好,我是赵家珍。 有我来回答一下关于我们三家福祉政策的问题。 Hi, this is Zhao Jiazhen. Let me take your question on our merchant support initiative.

As we have always emphasized, it's crucial for us, along with all our ecosystem partners, to collaborate closely in creating value for consumers. Merchants, as essential partners in serving consumers, are vital in this effort. A healthy and sustainable merchant ecosystem is therefore fundamental to our high-quality development.

For this reason, we have made a lot of investments in the business environment this quarter, and have strongly supported high-quality merchants, and have launched a plan to save 10 billion yuan. As mentioned in our speech just now, we have already laid the groundwork for the return of service fees, the reduction of insurance, and the upgrade of commercial and social services, and so on.

To this end, we have made substantial investments in the merchant ecosystem this quarter, giving strong support to high-quoting merchants through the $10 billion fee reduction program. As just mentioned, we have implemented several policies, including service fee refunds, lower security deposits, weaving trans-shipment fees for orders from remote regions, and enhancing after-sales support for merchants.

Through long-term, efficient land-based execution, We aim to guide high-quality merchants towards sustainable growth,

through consistent implementation of this policy over the long term. For instance, the fee reduction efforts, such as service fee refunds and deposit reductions, not only lower merchants' operational costs, but also improve their efficiency. This, in turn, empowers merchants to invest more in improving their products and services over time.

In addition, in the third quarter, we also put a lot of effort into logistics. The logistics cost reduction policy In the third quarter, we also made substantial progress in logistics with our logistics fee reduction policy.

Merchants are no longer charged for transshipment fees for all orders shipped to Western regions. This enables merchants to reach a broader customer base at lower cost. It also furthers our strategy to extend logistic services across Western China, encouraging the distribution of high-quality goods to their regions. 这些政策的落地目前已经收到了不少商家的真相的反馈。

This policies have received notable positive feedback from merchants. Moving forward, we're committed to making more meaningful long-term investments in this direction. By fostering a stronger merchant ecosystem,

We aim to establish a more robust supply chain and deliver better products and services to consumers, together with our merchants.

Hi Kenny, this is Chen Lei. Let me take your question on the global business. In the globalized business, our goals and intentions are always to bring value to consumers from different countries. This point will not change. For this, we will continue to use our own capabilities and continue to invest and optimize in various aspects such as supply chain capabilities and service level for a long time.

Our goal in the global business has always been to deliver our unique value to consumers across the different countries. This commitment remains unchanged. To achieve this goal, we will continue to strengthen our capabilities to improve our supply chain and upgrade our services. 随着我们的业务的发展,我们的消费者以及各外部的消费方呢?

are also making higher demands on us. In response to these situations, we have always maintained an active and open attitude. Over the past period of time, we have actively communicated with all the relevant parties in the field of business and listened carefully to the opinions and suggestions of all parties on our business. as well as valuable feedback to respond to our daily business needs, thus continuously optimizing service standards and compliance standards.

As our business continues to grow, consumers and external stakeholders have placed higher requirements on us. In response to this, we have always maintained a proactive and open attitude. And over the past few months, we are actively engaging with external stakeholders in the markets where we operate. We carefully listen to their feedback and suggestions, and we promptly incorporate their suggestions into our daily operations. In this way, we were able to continuously enhance our service standards and compliance posture.

At present, we see that these communication jobs have begun to show some preliminary results. We are demanding ourselves with higher standards in our respective businesses. With the development of globalized businesses, we will continue to focus on strengthening these aspects of ability construction. For global users, it is more suitable for local use habits and standard advantage services.

At the moment, we are already seeing some initial results from these communication efforts, and we are bringing our operations to higher standards in various markets. As our global business grows, we will continue to strengthen our capability in this regard to deliver high-quality services that meet the preferences and expectations of the consumers in each market.

At the same time, As we mentioned last season, our globalized business is facing a competition that is getting more and more intense. This competition is in addition to the complex external environment, so that our business will inevitably be affected by some fluctuations. But these short-term effects will not shake us to continue exploring forward. The magic of the environment and the exposure to the outside world will make us continue to focus on ourselves.

At the same time, as mentioned last quarter, the impact of the intensifying competition in the global market and the complex external environment combined will bring ups and downs to our business. This is inevitable. However, this will not deter us from exploring the way forward. Challenges from the outside and external expectations motivate us to continue to strengthen our capabilities to deliver a safer and better shopping experience for global consumers. Thank you.

Thank you.

Operator, we can move on to the next analyst on the line.

The next question will come from Charlene Lu with HSBC. Please go ahead.

Thank you. 谢谢管理层给到我这个提问的机会。 我是汇丰的Charlene。 我这边两个问题。 第一个是有关合规还有平台的治理的。 那我们从管理层刚才的发言还有公开的信息里边, 我们注意到公司近期其实对于合规还有平台生态给予了非常多的关注。 This is the first question. From your prepared remarks and from public information, we noticed that the company recently paid a lot of attention to compliance and platform ecosystem, and we also saw some new initiatives being launched. Can management share some detailed measures you've taken and what goals you expect to achieve in this area going forward? The second question is, is that we noticed that this quarter's profit and profitability saw a slight decline Q&Q. Can management kindly share your thoughts on this, and how does this align with the trend discussed by the management on last quarter's earnings call? And looking ahead, how does management think about longer-term profitability trends? Thank you very much.

Hello, I'm Zhang Jiazhen. Hi, this is Zhao Jiazhen. Let me take your question on compliance.

Our business growth coupled with regulatory trends in various markets has placed higher demands on our compliance capabilities. We believe that providing a safe and reliable shopping environment is the duty of an e-commerce platform. Therefore, we see compliance and high quality ecosystem as key components of our high quality development strategy.

我们在这个季度继续加大力度推出和落实了一系列的坚决治理的措施,进一步的投入和完善平台的合规和治理体系。 To this end, we have taken further steps to scale up the execution of a robust set of trust and safety initiatives, all designed to fortify our compliance systems. 那从这个合规的管理层面,那我们继续大力的投入专业合规团队的建设。 In terms of compliance management, we invested heavily in building a strong expert compliance team to closely track regulatory changes

and industry trends across our markets. This allows us to translate insights into actionable compliance guidance. At the same time, we have developed comprehensive educational materials for our merchants to enhance their compliance capabilities and foster the high-quality development of the supply chain.

From a technical point of view, we have further optimized the standardization and process of business entry and product delivery. We have invested a lot of resources Leveraging technology

We have further streamlined our merchant onboarding and product listing processes. We have invested substantial resources to proactive product quality checks and combining technology and menu screening to promptly detect and address potential product safety risks. At the same time, we work closely with external stakeholders to meet their requirements, striving to cite industry-leading compliance standards.

Through these investments in regulation and governance, we added to the service policy of this platform for high-quality participants. We hope to achieve the optimized upgrade of supply and demand vehicles, and cultivate a healthier and more sustainable business environment in a way that stimulates the supply and demand, and these results will eventually turn into more affordable products and services, creating more value for consumers. Thank you.

Through this investment in compliance and our support for high-quality merchants, we aim to achieve further upgrades in the supply chain. By removing bad actors and empowering top merchants, we're fostering a healthier and more sustainable merchant ecosystem. This effort will ultimately lead to more valuable products and services for our consumers. Thank you.

Hi, this is Jane, thanks for your question. We'll take your second question about the profitability. Well, last quarter we communicated that our revenue growth may see some moderation as a result of competition and external factors. And in addition, as we invest firmly to drive a healthy and sustainable platform ecosystem, our profitability may gradually trend lower in the long run. Beyond the financials, we are already seeing good initial results from our investments in platform ecosystem. We are encouraged by the positive feedback from merchants on our merchant support initiative. We believe investment in the merchant ecosystem laid the foundation for the platform's healthy and sustainable development. In the long run, these efforts will benefit the merchants, consumers, as well as the platform, creating more value to consumers by enabling supply chain upgrades. And I think this is a long journey. And moving forward, we will continue to explore more investment in this direction to draw impactful results. Thanks.

All right. Operator, let's move on to the next analyst on the line.

The next question will come from Joyce Ju with Bank of America. Please go ahead.

Good evening. Thank you for accepting my question. I have two questions today. The first question is that I would like to ask you to share if you have observed any new consumer trends on our platform in the past Double 11 big stocks. I will translate myself. I have two questions. My first question is, can management share with us some new consumption trends that you have observed during this year's 2011 Shopping Festival? How does management rate PDD's performance in this promotion? What are the new initiatives that Duoduo experimented during this event? And does management are satisfied with the results? My second question is actually regarding competition. From what we observed during this year's 2011, the competition remained intense in China's e-commerce market. And Dodo's growth rate also slightly slowed down during this quarter. Could management help us understand your thoughts on domestic competition pressure? And will there be any adjustment in your strategies going forward? Thank you very much.

Hello, I'm Zhaozhen. Let me answer the questions about domestic consumption and large-scale products.

Hi, this is Zhao Jiazhen. Let me take your question on domestic consumption and shopping festivals.

We have seen an overall recovery in consumer spending and a strong growth in online consumption during the second half of this year. Recently,

Driven by the shopping festivals, we have also seen increasing consumer activities on our platform. We have observed more diverse choices of consumers in today's interconnected world and greater movements across platforms. In response, it's essential to stay firmly focused on the consumer and to deepen their trust on our platform. To achieve this, We have consistently invested significant resources on both the consumption and supply side, delivering real benefits that reinforce the trust in our platform. During this year's W11 Shopping Festival, we introduced the 10 Billion Voter campaign for the first time, offering consumers direct benefits. The response was extremely positive, with strong sales growth across several product categories. Notably, agricultural products small home appliances, and daily necessities, so remarkable searches. This success demonstrates how our platform, in collaboration with merchants, has effectively fulfilled consumers' demands for valuable and cost-effective products.

At the same time, we have launched this super-duplicated activity, which also focuses on supporting a number of high-quality participants with product and technical innovation capabilities. Many domestic brands have entrusted our platform to launch new products, At the same time, our super double discount event supported a group of high-quality merchants with innovative products and technology.

Many national brands leveraged our platform to launch new premium products, quickly gaining recognition during the shopping festival. The growth of these quality offerings enriched the selection available to consumers. This, in turn, strengthened consumer trust in our platform and benefited both demand and supply sides.

In the past, under the guidance of the consumer, We have invested patiently and strategically over the long term.

gradually earning the trust and preference of our users. Moving forward, we are confident that by maintaining high-quality long-term investment in consumption, supply chain, and ecosystem, we will further enhance consumer confidence in us. This forms the foundation of our long-term healthy development.

Regarding your second question on competition, As we have mentioned on several occasions,

The overall competition in e-commerce remains intense, and our business is no exception. Additionally, as with any business, our growth won't follow a linear path over the long term. Given that, the slowdown in our revenue growth we believe is inevitable.

Since Q3, the release of additional microeconomic support policies has opened up new opportunities while also presenting challenges.

The Chinese domestic market is highly dynamic, which is characterized by constant changes, diverse business models, and intensifying competition. However, our team's gradual aging and lack of certain capabilities might cause us to miss out on some macro opportunities, especially when facing new or evolving situations.

For example, in recent years, our team has been limited in the ability of the third-party platform users to make good use of the PR policies for some industries and consumption. We have not fully grasped the PR policies. For instance, multiple macro policies introduced this year have brought significant support to industries and fueled consumer demand.

However, our team was unable to fully leverage this macroeconomic shift due to the limitations in our operation experience solely as a third-party platform. Consequently, to stay competitive with similar products, we have to incur much higher costs than peers, which inevitably affects our profitability now and in the near future.

With the extension and expansion of the True消費政策, we will actively embrace change, seize new opportunities, and serve consumers better. However, due to the limited operating mode of our platform,

With the ongoing expansion of consumption boosting policies, we're excited to embrace changes ahead and tap into new opportunities to better serve our consumers. However, due to the limitations imposed by our platform business model, and operational mindset shaped by our previous experience, along with shortfalls in our capabilities. We may continue to experience these disadvantages relative to our peers for some time. This could further increase the financial impacts, presenting a challenge for us.

In order to deal with the current financial situation, we will further enhance our own standards, strengthen our core business capabilities, continue to look for new investment opportunities in the supply chain and platform ecosystem, In response to the current competitive environment, we are committed to maintaining high standards and enhancing our core capabilities.

We will continue to explore impactful opportunities and make long-term high-quality investments in our supply chain and ecosystem, ensuring these initiatives translate into more valuable products and better services for consumers. We believe that the high-quality development of the ecosystem and supply chain is the fundamental for the platform's long-term success and allow us to create long-term value for consumers. This is a long journey, require patience. We're fully prepared for it, and we will not be distracted by the moving competitive environment. Thank you all.

Thank you, Dajun, and thank you all for joining us today. It's about time. We look forward to speaking with you again next quarter. Thank you.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all now disconnect.