PDD Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to the PDD Holdings Inc fourth quarter and fiscal year 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 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 go ahead.

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 Globe Newswire Services. Before we begin, I would like to refer you to our safe harbor statement in earnings price 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 Co-Chief Executive Director and Co-Chief Executive Officer, as well as Ms. Liu Jun, our VP of Finance. Lei and Jiazhen 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 fourth quarter and fiscal year ended December 31st, 2024. During the Q&A session, Lei and Jiazhen will answer questions in Chinese and will help translate. Please note that 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, Chen Lei. Lei, please go ahead.

Hello, everyone. Thank you for joining our earnest call for the fourth quarter and the fiscal year of 2024. 2024 is a pivotal year for advancing our high-quality development strategy. To drive the sustainable growth of our platform and supply chain ecosystem, we extended our high-quality development vision for the platform to supply chain through a series of initiatives, such as fee reductions, merchant support policies, and trust and safety updates. We systematically implemented proactive measures in platform operations, merchant services, supply chain and logistic innovations, leading our platforms into a new phase of high-quality driven growth. We delivered stable results over the past quarter. Our Q4 revenue reached RMB 110.6 billion. Up 24% year-on-year and full-year 2024 revenue totaled RMB 393.8 billion, growing 59% year-on-year, which represents a moderation in revenue growth. As mentioned in previous quarters, our significant ecosystem investment coupled with fast-changing external environment and intensified competition landscape will impact short-term financials. However, our commitment to ecosystem investments remains unwavering, and we are confident that these efforts will deliver sustainable long-term returns. In the second half of 2024, we accelerated our high-quality development strategy through several major initiatives. including a 10 billion fee reduction program, logistic support measures to promote e-commerce services in remote regions, and a high-quality merchant support program. We are pleased to see that these initiatives have started to bear fruit. Among these, The 10 billion fee reduction program has enabled over 10 million merchants to enhance operational efficiency and reduce costs, while a promotion service fee rebate program alone has begun to deliver significant savings to eligible merchants. All logistics support measures tailored for remote regions, through double-digit order volume growth, and extended free shipping to nearly 100 million consumers in these regions. The first phase of high quality merchant support program supported a large number of high quality merchants and brands across 1,000 agricultural regions and industrial zones in their transition towards high quality development. At the same time, We also established the Merchant Rights Protection Committee to formalize communication channels with merchants. We have rolled our upgrades to an up-to-sale survey system and introduced a range of improvements and government measures to address issues such as other dispute resolution issues. These initiatives aim to enhance the overall business environment for merchants and build a platform ecosystem that benefits all participants. The platform rooted in agriculture, we remain committed to supporting agriculture industry through sustained investments in agriculture technology, supply chain innovation, and training for next generation farmers. Over the past year, our long-term initiatives such as Pinduoduo Smart Agriculture Competition, Global Agriculture Innovation Challenge, Pinduoduo Academy Growing Competition, and the Agriculture Research Fund have delivered encouraging results. For example, The six finalist teams in the fourth Pinduoduo Smart Agriculture Competition achieved breakthroughs in yield, efficiency, and energy consumption through digitally optimized new farmland, with the innovations now being applied in real-world settings. In terms of our global business, our mission to provide global consumers with high-quality products remains unchanged. Guided by this vision, we will continue to focus on supply chain efficiency, service innovation, and ecosystem development while observing high compliance standards. Our goal is to build a trusted global platform and shopping environment that serves consumers worldwide. Looking ahead, high-quality development will remain at the core of our strategy in 2025. We will continue to focus on the healthy and sustainable development of merchants and supply chain, and certainly advance the high-quality development strategy. One step at a time, we will work on strengthening merchant rights protection, stepping up support for high-quality merchants, and broadening quality supply on the platforms. In addition to supply chain investments, we aim to accelerate the supply of high-quality products to remote regions, and in doing so, enhance the product offerings for consumers in less accessible areas and foster a win-win ecosystem for consumers, merchants, and the communities we serve. Together, we will drive the sustainable development of our platform and the broader e-commerce ecosystem. And now, I will hand it over to our co-CEO, Zhao Jiazhen, to share more about our development plans in 2025.

Thank you, Chen Lei.

Hello, everyone. I'm Zhao Jiazhen. Thank you for joining our fourth quarter and full year 2024 earnings call. In the past year, we have focused on high-quality development strategies, continuously investing in the ecosystem and industry, and working hard to build the supply ecosystem of users, business, industry, and society, and continue to advance high-quality development.

Over the past year, we remain focused on advancing our high-quality development strategy, driving ecosystem upgrades and supply chain transformation to foster a mutually beneficial environment for consumers, merchants, industries, and society. Supported by sustained progress of our high-quality development strategy, and steady microeconomic recovery. We deliver stable performance in quarter four and throughout 2024.

In the past year, we have landed a series of hundreds of millions of dollars in revenue, and through the support of the whole chain, we have developed a batch of new technologies. Not only have we explored new models for business innovation, but we have also added new energy to the industrial upgrade. In addition, our e-commerce supply plan

Since last year, we have rolled out a series of initiatives on the 10 billion fee reduction program and cultivated a wave of quality supplies through comprehensive end-to-end merchant support. Our initiatives have not only empowered merchants with innovative business models, but also drove supply chain upgrades. In addition, our logistic support measures have significantly improved the efficiency and quality of new supplies to the western regions, providing consumers in these regions with a more diverse selection of high-quality products.

In the fourth quarter, our new three-storey service plan will continue to enter the agricultural area industry belt all over the country. We will move forward into roadside wedding, In Q4, our Quality Merchant Support Program

expanding its reach across agricultural and industrial zones in China. This includes areas known for specialties such as Lu'an bridal wear, Huidong women's footwear, Qingpu maternal infant products, and Foshan pistachio. By providing comprehensive support throughout the value chain, covering product development, marketing, operations, and supply chain management, we have neutraled a new generation of merchants and brands with strong innovation capabilities. These trailblazers are leading their industries beyond homogeneous competition towards sustained high-value growth.

举例来说, 广东省惠东县, 城市国内女协产业的领头羊, 大营市场变化, 产业一度陷入了停摆的边缘。 去年冬天, 当地三家依托平台的数据分析能力 For example, Huidong County in Guangdong Province, once a leading production hub for the Chinese women's footwear industry was nearly brought to standstill

due to market shifts. Last winter, local merchants utilized our platform's data analytics to create a free line standard tailored for female consumers. Through the transformation of traditional supply chains, a mid-sized factory managed to reach a daily output of 15,000 pairs. This not only saved tens of thousands of jobs, but also charted a path for quality supply chain driven transformation.

In order to increase the performance of the new supply chain, the platform's various flow engines are also constantly improving. The Baiyi Supply Chain Channel has recently launched the Baiyi Consumption Chain, a new play method for super-high-end supply chains, to help new competitors accelerate their sales to the market. During the Double 11 last year, the platform repeatedly presented super-high-end supply chains and made super-high-end supplies for new supply chains. The previous two rounds of orders amounted to more than 61 million orders.

To amplify this momentum, we strategically allocate the platform traffic resources. For example, the $10 billion program has rolled out new campaigns like $10 billion consumption vouchers and super double savings, accelerating branding building for quality merchants. During last year's Double Eleven Shopping Festival, we launched multiple rounds of super double savings, offering excessive support to quality supplies. In just the first two rounds, the other volume exceeded 61 million.

从消费车来看,我们对生态建设的投入, 也为广大消费者的美好生活, 提供了更丰富,更实惠的优质供给, 进一步提升了消费者的满意度,信赖度, 也进一步激活了广大消费者的新需求。 来自农产区产业带的生鲜, 新食,美妆,母婴等新制产品,新制品牌, From the consumer side, our ecosystem investments

has enriched their lives by delivering a broader range of affordable, high-quality products. These products span across categories like fresh produce, snacks, beauty, and baby care, further boosting consumer satisfaction and trust while also activating new consumer needs. These offerings have gained traction in both urban and rural markets, becoming daily essentials for diverse groups and catering to increasingly segmented demand. During the Chinese New Year, our logistics support measures for remote regions drove a surge in orders for seasonal specialties, with western regions witnessing remarkable growth in several trending categories.

This also strengthens our determination to invest in platform infrastructure.

Our long-term investments in high-cost developments are now bearing fruit. The platform ecosystem continues to create value for both supply and demand sides. These tangible outcomes reinforce our resolve to deepen investments in ecosystem development.

In early January this year, we set up three full-fledged protection committees. As the director of the committee, In January 2025, we established the Merchant's Rights Protection Committee, which I chair.

The committee coordinates efforts across our platform. Our goal is to fully understand merchant needs, systematically collect feedback, optimize their experiences,

and refined service framework, all critical steps toward fortifying our platform ecosystem. Following its launch,

we introduced the pro-merchant initiative, such as abnormal order alerts and low price risk warnings, alongside upgraded services to boost the net merchant transaction efficiency. These efforts are complemented by granular data and latest tools designed to optimize merchants' return on investment.

Recently, Yuwen Huai and his business have established a long-term communication mechanism and held the first business meeting.

Recently, the committee has formalized a regular communication mechanism with merchants and hold its inaugural merchant roundtable. Following extensive consultation with business across sectors, we unveiled four major upgrades including a non-compliance alert system to intensify protections for merchant's rights.

In 2025, as Chen Lei said, we will continue to observe the main responsibility of the high-quality development strategy and active travel platform, play the digital advantage of the platform, continue to increase the investment in supply and demand, accelerate the promotion of new supply and demand, continue to advance the economic activity between the East and the West,

As Chen may emphasize, 2025 will see us make double efforts to advance our high-quality development strategy. We will leverage our digital capabilities and amplify investments across both supply and demand chains. At the same time, we will accelerate the delivery of high-quality products to the Western regions, This will help revitalize economic vitality across regions and build an ecosystem where merchants, industries, consumers, and society thrive collectively.

I will now hand over to June.

She will provide you with an update on our quarter four and four-year financial performance.

Thank you, Judge Anne. Hello, everyone. Now let me walk you through our financial performance in the fourth quarter and fiscal year ended December 31st, 2024. In terms of income statement, in Q4, our total revenues increased 24% year-over-year to RMB 110.6 billion. and 59% year-over-year to RMB 393.8 billion for full year 2024. This was mainly driven by an increase in revenues from both online marketing services and transaction services. Revenues from online marketing services and others were RMB 57 billion this quarter. of 17% compared to the same period of 2023. Our transaction services revenue this quarter were RMB 53.6 billion, up 33% for the same period of 2023. Moving on to costs and expenses. Our total cost of revenues increased 36% from RMB 35.1 billion in Q4 2023 to RMB 47.8 billion this quarter. For full year, our total cost of revenues increased 68% to RMB 153.9 billion, mainly due to increased fulfillment fees and payment processing fees. On a gap basis, Total operating expenses this quarter increased 19% to RMB 37.2 billion, from RMB 31.4 billion in the same quarter of 2023. On a non-GAAP basis, our total operating expenses increased to RMB 35.1 billion this quarter, from RMB 29.3 billion in Q4 2023. During the first quarter, we continue to invest in the platform ecosystem through a range of initiatives, including fee reductions, merchant support policies, and trust and safety updates. Our total non-GAAP operating expenses as a percentage of total revenues was 32% in Q4, compared to 33% same quarter 2023. For full year 2024, total non-GAAP operating expenses were RMB 122 billion, up from RMB 90.3 billion in 2023. Looking into specific expense items, our non-GAAP sales and marketing expenses this quarter were RMB 31.1 billion, up 19% versus the same quarter of 2023. During Q4, we continue to give back to consumers through promotional campaigns, while keeping up our investment in marketing to strengthen our platform's visibility. Our non-GAAP basis ourselves in the marketing expenses as a percentage of our revenues this quarter was 28%, versus 30% for the same quarter in 2023. For the full year, known gap sales and marketing expenses increased from RMB 79.8 billion to RMB 109.1 billion in 2024. Our known gap generated expenses for RMB 998 million in Q4 versus RMB $674 million in the same quarter of 2023. Our annual known gap generated expenses were RMB $2.8 billion in 2024 versus RMB $1.8 billion last year. Our research and development expenses were RMB $3 billion in the fourth quarter on a known gap basis. and RMB 3.8 billion on a gap basis. We are committed to advancing the core technology capabilities of our platforms, and we continue to increase our investment in RMB, laying a solid foundation for our high-quality development strategy and a driving ecosystem upgrade and the supply chain transformation. On a gap basis, operating profit for the quarter was RMB 25.6 billion, versus RMB 22.4 billion in the same quarter of 2023. Non-GAAP operating profit was RMB 28 billion, versus RMB 24.6 billion in the same quarter of 2023. Non-GAAP operating profit margin was 25 this quarter, compared with 28% for the same quarter of 2023. For the full year, known gap operating profit increased from RMB 65.8 billion to RMB 118.3 billion in 2024. Net income attributable to ordinary shareholders was RMB 27.4 billion for the quarter and RMB 112.4 billion for the full year. In the fourth quarter, base earnings per ADS was RMB 19.76 and dilute earnings per ADS was RMB 18.53 versus base earnings per ADS of RMB 17 and dilute earnings per ADS of RMB 15.83 in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders was RMB 29.9 billion for the quarter and RMB 122.3 billion for the full year. In the fourth quarter, non-GAAP diluted earnings per ADS was RMB 20.15 versus RMB 17.32 in the same quarter of 2023. This quarter, We delivered stable financial results supported by the resolute execution of our high-quality development strategy. Looking ahead, we will continue to prioritize investments in platform ecosystem as the cornerstone of our long-term value creation strategy. That completes the income statement. Now let me move on to cash flow. Our net cash flow generated from operating activities was RMB 29.5 billion in Q4 and RMB 121.9 billion for the full year of 2024, compared with RMB 36.9 billion in the same quarter of 2023 and RMB 94.2 billion in 2023. As of December 31, 2024, the company had RMB $331.6 billion in cash, cash equivalents, and short-term investments. Thank you. This concludes my prepared remarks.

Thank you, Jing.

Next, we'll move on to the Q&A session. 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. Operator, we are open for questions.

Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. Participants are requested to restrict the number of questions to two at each time. Your first question comes from Joyce Du from Bank of America. Please go ahead.

Hello, Jiazhen Jun. Thank you for accepting my question. I have two questions. The first one is that we have observed that Erdogan has continuously invested and landed many important platforms in the past two seasons, including in the field of business support. We also heard from the management that the company will continue to invest in this area in the future. My question is, in terms of platform ecological construction, what is the long-term goal and vision of the company? 我们应该觉得会带来什么样的影响? I will translate my question. First, we noticed that over the past two quarters, the company has taken several major initiatives in platform ecosystem development and merchant support. As management just mentioned, the company plans to further increase investment in these areas. How should we think about the long-term goals for platform ecosystem development and how this will drive the platform's further growth? My second question is on top of the supply side and merchant ecosystem investments. Could management also share what has been done on the consumer side recently? For example, what new initiatives were launched during the past fourth quarter e-commerce peak season, and what will be the strategic priorities for consumer side in the future? Thank you.

Joyce, hi, I'm Chen Lei. I'm going to answer your first question about platform ecology.

Hi, Joyce. This is Chen Lei. Let me take your question regarding our platform ecosystem.

Since the second quarter of last year, we have launched a series of proposals around the three-party rights of high-quality development along the main line of platform ecology. Through the Baiyi-Jianmian High-Quality Business Support Program, Since the second quarter of 2024, in line with the overall direction of high-quality development of our platform ecosystem,

we have rolled out a series of initiatives that's centered around the protection of merchants' rights. For example, measures such as the $10 billion fee reduction program and the high quality merchant support program have been effective in lowering the operational cost for merchants. By leveraging our platform's digital technologies and resources, we are also enabling manufacturers to invest in their product innovation and also technology. while at the same time broadening their marketing access.

This series of statements further deepens the supply chain of the long-term ecological construction of the platform, thus achieving a deep change in the supply chain.

This is also the focus of our high-quality development strategy.

These initiatives are deepening our long-term efforts in building a stronger ecosystem and also extend that into the supply side, driving meaningful supply chain upgrades, which is central to our strategy of pursuing high-quality development.

At present, we see that in some industrial chains, there is a certain kind of homogenization competition.

We are noticing that in certain industries, some merchants are facing homogeneous competition, which squeezes profits for businesses and also undermines innovation and investments.

As an important bridge between the industrial generation, the merchant, and the consumer, we have entered into a series of new supply and supply policies. By reducing the cost of time and effort, we have reduced the cost-effectiveness of the merchant's operation. We continue to provide the merchant with innovation and service upgrades for the product.

We, as a platform connecting manufacturers, merchants, and consumers, have launched a series of policies to support high-quality suppliers. By cutting fees and streamlining operations, we are encouraging merchants to invest more in their products and services. This is leading our platform onto a new stage of quality-driven growth.

This is leading our platform onto a new stage of quality-driven growth. As the supply chain evolves and modernizes, more high quality merchants and products have been emerging.

This gives consumers greater variety, higher quality, and a smoother shopping experience, bringing real benefits to consumers, and creating a healthy ecosystem that benefits all stakeholders in the long run. This is our thoughts on the platform ecosystem investments.

您好,我是赵嘉珍。 由我来回答一下您的第二个问题。 Hello, this is Zhao Jiazhen.

Let me take your question.

那我们在这个供给车和商家生态上所做的努力, Our initiatives on the supply side and merchant ecosystem complement our consumer-centric strategy.

We remain dedicated to serving consumers, providing more value and better services, which has been fundamental to us.

In the majority of 4G, we have upgraded the super-duplicated supplement. On the basis of the daily price of 100 billion subsidies, we have added the same benefits. While providing real benefits to consumers, it has also become a new engine for the growth of this brand. The number of brands and products participating in the event has increased again. The accumulated order volume has also broken through. For example, in the event of the double 12, the 100 billion subsidy has also upgraded the 100 billion consumer coupon activity. to provide consumers with a wide range of consumer incentives.

During the promotion campaigns in the fourth quarter, we upgraded our super-level savings initiative by layering additional savings on top of the discounted price from our $10 billion program. This not only provided substantial savings to consumers, but also served as a new growth engine for brands. Both the number of participating brands and products in the campaigns reached a rather high, with total order volume achieving a significant milestone. For the double-top promotion, we further enhanced the program by launching 10 billion consumption vouchers, reinforcing our focus on consumer benefits.

At the same time, we focused on supporting new entrepreneurs, promoting e-commerce, and leading the new consumer trend on the platform.

At the same time, our 10 billion RMB supply chain investments have prioritized empowering quality merchants and driven our logistics for measures in remote regions, sparking fresh trends. For example, during the Chinese New Year shopping festival this year,

The platform accelerated the flow of Chinese New Year specialties into Western regions by offering both traffic support and promotion programs.

By investing in both supply and demand, we have seen a surge of quality supply, enriching consumer choices with premium options, and fostering a virtual cycle. Moving forward, we will continue to focus on a long-term, high-quality investment on the consumer side to build a mutually beneficial platform ecosystem.

Thank you.

Thank you.

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

Your next question comes from Alicia Yap from Citigroup. Please go ahead. Thank you.

Thank you. 我们评问一下管理层其实近期是否有观察到竞争格局的一些趋势上的变化,然后为了应对新的竞争形势,公司未来的一个战略中心上会有什么的一个调整? The second question is about the globalized business of the company. We have also noticed that in recent years, the globalized business of the company may face some changes in the macroeconomic situation and policy. I would like to ask Guan Yicheng how to view these changes in foreign policy and the impact on the company's business and what kind of response measures the company will take. I will translate it myself. So I have two questions. The first one is the competitions in the domestic e-commerce market has been intensifying for some time. Could management share some insights into any recent developments in the competitive landscape and whether there will be any adjustment to the company's development strategies in the future? The second question is regarding our global business. We noticed that recently the global business may face some changes in macro conditions and policy. Could management share more about these external changes that might impact the company's business and what measure the company plans to take in response? Thank you.

Hello, this is Zhao Jiazhen. Let me take this question regarding competition. Let me take this question regarding competition.

We have consistently emphasized that competition is not only inherent to the e-commerce industry, but also a critical driver of its continuous advancement. Our major platforms are actively refining their strategies and services to better respond to shifting consumer preferences, a dynamic that underscores the sector's robust and healthy evolution.

随着行业和技术的不断演进, As industry and technology continue to evolve, e-commerce platforms are actively exploring innovative business models

and technological applications to elevate user experiences and operational efficiency. We're closely monitoring this development and continuously optimizing our platform, ecosystem, and services to better meet consumer demands under our quality-driven strategy.

From a strategic point of view, we have achieved good results in terms of investment in consumer, supply, and platform ecology.

Our strategic investments across the consumer side, supply side, and platform ecosystem have delivered tangible results, demonstrating that the viability of hardcore development as a sustainable growth pathway. Over the years, We have cultivated a trusted brand reputation and deep consumer loyalty, which remains our core strength.

At the same time, we are fully aware that in the current electronic environment, the depth of the supply chain has reached a breaking point. In order to invest in the health development of the business and the industry, from a long-term perspective, through the protection of the business, the service and the improvement of the satisfaction,

At the same time, we recognize the imperative for profound supply-side transformation in the e-commerce industry. Our current investment in merchant welfare and industrial sustainability will over time improve consumer experience by safeguarding merchant rights enhance service quality and satisfaction, and diversify quality supply. This in turn will drive the healthy growth of the platform ecosystem.

We will continue to strengthen our advantage by making meaningful, long-term,

high-quality investments. By doing so, we aim to deliver an expanding range of premium products and a seamless, trustworthy shopping experience for consumers.

Thank you. Hi, Alicia.

This is Chen Lei. Let me answer your question about the global business.

In the case of globalized business, as we have communicated in the past few seasons, the external environment is indeed changing rapidly. The competition is still intense, and there may be changes in some of our business-related policy. In the face of this situation, we will first strictly abide by the law and regulations, For global business, as we discussed in recent quarters, changes in the external environment have been accelerating.

and competition remains fierce. And in addition, there may be changes in my core policies that are related to our operations. And in response to this, first and foremost, we will strictly comply with the laws and regulations to ensure full compliance in our operations. And on that basis, we are also proactively communicating with external parties across the market to continuously refine our services and compliance standards. However, these external changes taken together will inevitably bring some challenges to our global business.

面对着快速变化的外部环境, 我们为全世界各地的消费者连接优质好物的目标和初心是始终不会改变的。 我们会始终保持对自身业务的专注, And despite the changes in the external environment,

we remain very committed to delivering high-quality products to the global consumers. This will not change. We will stay focused on our business, investing in supply chain improvement, service quality, and platform ecosystems while ensuring high-quality growth and upholding compliance standards. By doing so, we strive to further deepen our core strength in supply chain efficiency and operations capabilities that we have accumulated over the years.

And furthermore,

We will continue to explore new business models, experiment with innovative localized supply chain solutions, deepen our market presence, introduce new product categories and services, and to build a more robust and sustainable platform infrastructure for the long run.

We will continue to explore new business models, On the basis of low-price goods, we hope to meet the higher requirements of global consumers for platforms. Just like what we have been emphasizing in the previous few seasons, we insist on a way of maintaining and self-management in the supply chain and platform ecology. Maintain innovative and powerful high-end manufacturers, At the same time, we will enforce the rule that violates platform rules and harms the rights of consumers. These measures have gradually achieved a positive feedback.

We will also carry out long-term implementation.

Our commitment to high-quality sustainable development applies equally to our global business. Beyond offering high-quality products at affordable prices, we aim to meet global consumers' rising expectations of us. As highlighted in previous quarters, we implemented merchant support policies and trust and safety updates across the supply chain and platform ecosystem, empowering innovative, high-quality merchants. At the same time, we firmly regulate merchants who violate platform rules and harm consumer interests. These efforts have started to yield positive results. and we are committed to executing them for the long term.

At the same time, as an e-commerce platform with a certain scale, we also pay attention to the attention of global consumers to corporate and social responsibility. We are also actively looking for opportunities. On the basis of e-commerce services, we hope to use our technical ability

At the same time, as a growing e-commerce platform, we are aware of the rising attention our global consumers are paying to corporate social responsibility. We are actively seeking opportunities to utilize our technological capabilities and platform resources to create greater value for the communities we serve.

In terms of the social responsibility of global market, we are already making some attempts.

We will have a lot of new ideas in the future. The team will work hard to do research in this area. In terms of becoming responsible global business citizens, we will take a firm step.

We have launched several initiatives in global corporate social responsibility and have a few new ideas for the future. Our team is dedicated to exploring this area and taking concrete steps towards becoming a responsible corporate citizen on a global scale. There is much more we can do, and our team is very excited about the opportunities ahead.

Through long-term investment and consistently doing the right thing, we hope to strengthen our core competitive advantages and build long-lasting

trustworthy relationship with merchants and global consumers. This is my thinking on the global business.

Thank you.

Operator, I think we have time for one more analyst.

Thank you. Your next question comes from Kenneth Fong from UBS. Please go ahead.

Hey, good evening. Thank you for accepting my question. I have two questions. The first is that we have seen that the company's income growth in the past few weeks has been a little slow. There are also some fluctuations in profits. Can you please share with us how we should look at the future in the future? How to think about income and the changes in profit and loss? The second question is that we have also noticed that in the past two seasons, the management will mention that the company is thinking about how to better meet the requirements of this era, and deal with more social responsibility. And today, the management team also mentioned some thoughts on the main responsibility of the platform. In this regard, if we look at the problem from a factory perspective, what are the requirements of the company's responsibility on the platform? In the process of carrying out this social responsibility, how does the management team balance the responsibility of the shareholders? Thank you, I will translate it myself. Thank you, management, for taking my questions. We noticed that the company's revenue growth has slowed in the recent quarters and profits have been fluctuating. So how should we think about the revenue and profits trend in the near term? And my second question is, in the past two quarters, management has talked about taking on more social and platform responsibility. And this topic has also been mentioned by management today. So can management share more about what company hopes to achieve with platform responsibility in the long run, and how to balance that with these duties to shareholders.

Thank you.

Hello, Kenneth. This is Jane. Let me take your first question regarding growth and profits. Well, regarding this quarter's financial performance, as mentioned earlier in the prepared remarks, external uncertainties and intense competition have impacted our short-term revenue growth. And at the same time, our increased investments in merchant support and platform ecosystem development may create fluctuations in profitability. We expected fluctuations in revenue growth and profits when we began this investment as part of building a high-quality platform ecosystem, and achieving sustainable growth. Short-term ups and downs won't shake our confidence in long-term goals. We believe that going through sustained investment and optimization can we create a healthy e-commerce ecosystem. Currently, our efforts have already received positive feedback from merchants And supply-side optimizations are driving new consumption trends on the consumer side, which has started to foster a virtual cycle. Going forward, we will keep focusing on our high-quality development strategy, investing resolutely and patiently to ensure long-term sustainable development. Thank you.

Hi, I'm Zai Aizhen.

Over the past few quarters, we have noted that assessing the company's performance solely through the short-term financial performance or capital returns does not fit where we are at our development stage.

As a global company in the new era, we're embracing innovation, adapting to change, and taking on more social responsibility in the regions where we operate.

This aligns with our long-term accountability to shareholders and reflects thoughtful leadership decisions.

For example, we have provided support to all chains such as product, marketing, operation, and supply chain. We have also trained a number of new entrepreneurs with product technology innovation capabilities. We have opened chains for many entrepreneurs who are self-employed. We have also promoted the optimization of industry generation.

For example, our recent focus on supporting quality merchants has provided comprehensive support across product development, marketing, operations, and supply chains. We have fostered a group of quality merchants with product and tech capabilities, empowering independent entrepreneurs to streamline their operations while driving the transformation of the supply chain.

In addition, our e-commerce policy

Additionally, our logistics support measures tailored for remote regions has spurred double-digit order growth in Western China and extended nationwide free shipping to nearly 100 million consumers in remote areas. This strategy unlocks new opportunities for merchants to grow their orders in Western China, not only expanding business opportunities for merchants, but also benefiting consumers across different regions.

而在农业方面,秉持着长期扎根农业的决心, 我们长期对农业科技,农货供应链, 新农商培训等领域坚定的投入, 也与我们的当下对于新智商家的扶持是一脉相承的。 在促进农业现代化,

In agriculture, we remain committed to supporting the agricultural industry through sustained investment in agricultural technology, supply chain innovation, and training for next-generation farmers. These efforts align with our current support for quality merchants, promoting agricultural modernization, improving supply chain efficiency while at the same time boosting farmer incomes and generating local employment.

从行业整理上来说, 电商行业正在逐步地向注重品质、 服务、体验以及创新的方向转变。 这也对这个电商的平台提出了更高的标准。 我们当前对于商家权益的重视, 新制商家的扶持, 以及供应链的深度变革的投入, 不仅是响应政策的号召, 也是顺应时代对于电商平台更高的要求。 Overall, the e-commerce industry is shifting towards quality, service, experience, and innovation, rising high standards for platforms.

Our focus on merchant strikes, support for quality merchants, and supply chain reforms are both cost-driven and tailored to the growing demand on e-commerce platforms. And in the long run, building an inclusive ecosystem that creates value for all participants will set us up for sustainable growth and long-term returns.

Thank you.

Thank you, Jiajun.

And thank you all for joining us today. We look forward to speaking with you next quarter. And thank you, and have a great day.

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