PDD Holdings Inc.

you will need to press the star key followed by the number 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 the Globe Newswire services. Before we start, I'd like to refer you to our safe harbor statement in the earnings press release, which applies to this call, as well as makes 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 Jiajun, our Executive Director and Co-Chief Executive Officer, and Ms. Liu Jun, 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 first quarter ended March 31st, 2025. 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, and 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 first quarter of 2025. Over the past year, we accelerated the execution of our high-quality development strategy, extending our efforts from platform operations to a broader ecosystem covering both the supply side and demand side. Two initiatives, such as $10 billion fee reduction program, logistic support for the remote regions, and high-quality supply initiatives We broadened the product selection for consumers and accelerated supply chain transformation. This marks a new chapter in the e-commerce sector that prioritizes merchant support and ecosystem investments. Starting at the beginning of this year, we made substantial investments in our platform ecosystem and made a rapid shift in external environment. To increase merchant support, we established the Merchant Rights Protection Committee and launched the 100 Billion Support Program, which is a major strategic decision for the next phase of high-quality development strategy. On one hand, the program is designed to further lower fees for our merchants, improving the business environment on our platform. On the other hand, we also invest more to drive sales for our merchants and to help them better adapt to new challenges. In Q1, our revenues were IMB 95.7 billion, which slowed down notably amid rapid change in the external environment and at the same time due to the mismatch between the business investment and return cycles. Through our revenue growth and our sustained ecosystem investments, led to a significant drop in profit. As communicated a few times in the past quarters, as our business grows and new challenges emerge, a slowdown in growth rate is inevitable. This trend has been further accelerated by the trends in the external environment in the past quarter. While a disproportionate drop in profit this quarter can be attributed to three different factors, they all trace back to one underlying consideration, and that is, during a period of uncertainties where merchants face difficulties, we choose to invest more to help our merchants grow their business and reduce costs. Looking at the factors one by one, at first, competition in Chinese e-commerce sector has further intensified. As a third-party marketplace, we face inherent limitations when it comes to passing on policy incentives to consumers, which puts our merchants at a clear disadvantage compared to our competitors that have a first-party business. While this issue has been discussed last year, the challenge is still here due to limitations in our team's capabilities. And second, in our global business, Radical change in external policy environments, such as tariffs, has created significant pressure for our merchants, who often lack the capability to adapt quickly and effectively. And third, since the second half of last year, we significantly expanded our fee reduction program for merchants under the $10 billion fee reduction program. which is a key initiative in driving a high-quality development of our platform ecosystem. And this year, after it has become increasingly clear that the merchants are expected to face further pressure and convince in a long-term value of our merchant support initiative, the management team makes the strategic decision to launch the $100 billion support program. Under this updated program, we are committing significant resources to support a platform ecosystem through uncertain times. This is not an empty slogan, but a real commitment backed by tangible investments. We understand a marketplace platform is built on collective success of its merchants. In challenging times like these, it's essential for us to step forward and to help our merchants endure and emerge more resilient. If we do nothing, merchants could be overwhelmed by these external shocks. Only when merchants strive can consumers receive quality products and services, and only then can a platform achieve long-term, sustainable development. Our management team believes that in a fast-changing market where merchants are facing challenges, it's our obligation to invest decisively to support consumers and merchants putting their needs ahead of those of the platform. And we believe that these initiatives are investments that will ultimately lead to a stronger and higher quality merchant ecosystem over the long run. This effort will likely weigh on our profitabilities in the short term, and even for a considerable period of time to come. However, as stated in our first shareholder letter, We are not a conventional company, and we do not evaluate our strategic decisions based on quarterly financial results. Instead, our focus is on long-term intrinsic value over five years, 10 years, or even longer. And we believe our long-term investors will share this perspective. When seen from another angle, the decline in profit this quarter can be attributed to one overreaching overarching factors, which we consider our emerging support initiatives, long-term investments. They are treated as accounting expenses. A timing mismatch between when expenses are recorded and when the long-term returns materialize is expected to persist for some time to come, and will continue to weigh on our profitability. We are firmly committed to long-term investments in our platform ecosystem and to deepening our execution of high-quality development strategies. And we believe by prioritizing the needs and interests of our merchants and consumers through these uncertainties, we can help them emerge stronger and create a room for focus on high-quality, sustainable growth. And now, I will hand it over to our co-CEO, Zhao Jiazhen, to share more about our development plans in 2025.

谢谢,陈磊。大家好,我是赵家珍。 感谢大家参加2025年第一季度业绩的发布会。 Thank you, Lei.

Hello, everyone. This is Zhao Jiazhen. Thank you for joining our first quarter 2025 earnings call.

过去几个季度,我们的高质量发展战略进入了新阶段。 Over the past few quarters, our high-quality development strategy has entered a new phase.

A series of initiatives, such as fee reductions and merchant support programs, have delivered solid results. Our fully committed efforts to build a win-win ecosystem are now generating tangible benefits to a broad base of users and tens of millions of merchants.

今年以来,如陈磊所说,为了与上下共同一个新的挑战,我们加大了对高质量发展的投入,将百亿减免等举措升级为千亿扑尺,要求公司上下力出一孔,全面投入这一新战略。

在关键时刻,发挥平台企业的社会效能和责任担当, 努力为商家提供更多确定性, 同时也为消费者创造更值得信赖的购物环境。 Since the beginning of this year, as Chen Lei mentioned, to tackle new challenges together with our merchants, we have scaled up our commitment to high-quality development and upgraded initiatives such as the $10 billion free reduction program to the more comprehensive $100 billion support program. This upgraded strategy calls for the entire company to work together and fully devote ourselves to take on our social responsibilities as a platform at such a critical stage, providing merchants with greater certainty and offering consumers a more trustworthy shopping environment.

在供给车,千亿扶持针对新资供给的资源投入将进一步加码。 新资商家办公范畴也将从头部腰部逐步拓展到中小商家。 We will focus our efforts on the small and medium-sized business owners, and dare to take a firm stand in high-quality development. On the other hand, we will continue to explore more of the advantages and disadvantages of the small and medium-sized business owners, continue to reduce costs for the business owners, create more cost space, business space, and innovation space. On the other hand, the platform's traffic engine, blacklist stores, data resources, technical support, and so on, will also give the small and medium-sized business owners full support, and maximize the potential of the small and medium-sized business owners, and push the industry to achieve a larger scale.

On the supply side, under the $100 billion support program, we will further increase investments in high-quality supply, expanding our support for high-quality merchants from top and mid-tier merchants to small and medium-sized. We are committed to focusing more on supporting the smaller merchants, which is a hard but critical step toward achieving high-quality growth. On one hand, we will continue exploring more fee reduction initiatives to help merchants lower costs and create more room for cost flexibility, business growth, and innovation. On the other hand, we will extend comprehensive support, including traffic resources, black label premium store programs, digital resources, and technology capabilities to empower small and medium-sized merchants, unlock their potential, and drive broader, higher quality upgrades across the supply chain.

今年以来,金字供给三项团队先后深入永康厨具, 温州女鞋深圳数码,竞家运动,竞安跑鞋等产业一线。 我们也可喜地发现,在平台的全方位扶持下, 商家及产业的转型升级已经颇具成效。 很多商家自然从传统的代工思维、 经销思维转变为用户思维、品牌思维, 从而在产业带的同质化竞争中,

Since the beginning of this year, our dedicated team for high-quality merchant support program has visited frontline manufacturing bases such as cookware in Yongkang, women's footwear in Wenzhou, consumer electronics in Shenzhen, athletic shoes in Xinjiang, and running shoes in Xin'an. We're pleased to see that the merchants and the broader supply chain have made notable progress in transformation with the platform's comprehensive support. Many merchants are transitioning from traditional OEM and distribution mindsets toward user-oriented and brand-driven approaches. This shift has enabled them to pursue differentiated development paths amid homogeneous competition.

Moreover, fee savings are being reinvested into new product development, warehouse upgrades, and supply chain transformation, accelerating high-quality transitions across major industries. As a platform rooted in agriculture,

Our 100 billion support program will also enhance support for agriculture products. Recently, we officially launched the 2025 Duoduo Specialty Initiative. The first phase of the initiative has covered key agriculture regions, including Jiangsu Lianyingang, Fujian Ningde, Hainan Wanlin, Shanxi Yuncheng, Guangdong Maoming, Sichuan Chengdu, and Liaoning Dalian. We're implementing tailored strategies across agricultural product categories, such as local farm products, fruits, seafood, and poultry, deeply integrating with regional agricultural industries and providing one-on-one guidance to small merchants. Through these initiatives, we aim to explore new models for agricultural product distribution, enhance value-add, and drive production and income growth across the agricultural industry.

Under the support of the company, we developed a digital system for the operation of agricultural products. We realized the automation operation of the production of agricultural products, delivery, pricing, logistics, acquisition, and supply. We solved the industry problem of the pricing of agricultural products and the high return rate. We realized the transformation of the operation of agricultural products from artificial experience to digital drive. We completed the upgrade and transformation of the traditional agricultural industry supply chain.

In the papaya-producing region of Yunnan, with the support from our platform, local merchants have developed a digital system for agriculture product operations, enabling automation across harvesting, listing, pricing, logistics, after-sales services, and traceability. This system addresses key industry pain points, such as unclear pricing and high spoilage rates. driving the transition from experience-based to data-driven operations, and enabling the modernization of the traditional agriculture supply chain.

在消费策,千亿补贴也落地了多项补贴政策为消费者带去实惠。 平台百亿补贴频道新增了100亿三家分贵计划,先后投入100亿消费券。 通过百亿消费券、百亿加倍补等专项活动,对全品类商品进行超额补贴。 On the demand side, the $100 billion support program has also launched several give-back initiatives to benefit consumers.

Our $10 billion program has introduced a new $10 billion merchant give-back program, rolling out RMB $10 billion consumer coupons. Through dedicated campaigns such as the 10 Billion Coupon Program and 10 Billion Level Up Program, we deliver additional coupons across all product categories to meet consumers' functional and personalized needs while improving supply-demand matching efficiency and supporting business growth for high-quality merchants and brands.

In addition, we further enhanced our direct discount program

For fully safeguarding merchants' interests, we benchmarked prices against the National Subsidy Program across multiple categories to provide real savings to consumers and stimulate consumer demand, aiming at compensating for the defect advantages under the National Subsidy Scheme and support merchants in strengthening their overall market position. While such investments may weigh on short-term profitability, we believe they are necessary and worthwhile as they help create unique opportunities to achieve high-quality grades for the small and medium-sized merchants on our platform.

面对复杂多边的环境,我们将继续坚持构建用户、商家、平台多方供应的商业生态, 在消费和供给社加大投入, 助力参加创业周期,为消费者创造更低价值的体验, 也为社会创造更大的增强价值。

In the face of a complex and evolving environment, we remain committed to building a business ecosystem in which users, merchants, and the platform thrive together. We will continue to increase investments on various supply and demand sites to help our merchants emerge stronger than these uncertainties, create more valuable experiences for consumers, and generate greater positive impact for the society.

Next, I'll give the floor to Liu Jing. I will now hand it over to Jing.

She will provide you with an update on our Q1 financial performance.

Thank you, judges. Hello, everyone. Let me walk you through our financial performance for the first quarter ended March 31, 2025. In terms of income statements, in the first quarter, Our total revenues increased 10% year-over-year to RMB 95.7 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 48.7 billion this quarter, up 15% from the same quarter of 2024. Revenues from transaction services for RMB 47 billion. Up 6% from the same quarter last year. Moving on to costs and expenses. Our total cost of revenues increased 25% from RMB 32.7 billion in Q1 2024 to RMB 40.9 for Linda's cotton. mainly due to increase in fulfillment fees and payment processing fees. On a gap basis, total operating expenses per quarter increased 37% to RMB 38.6 billion from RMB 28.1 billion in the same quarter of 2024. On a gap basis, Total grading expenses increased to RMB 36.5 billion this quarter, from RMB 25.6 billion in Q1 2024. In the first quarter, we further increased our platform ecosystem investments through expanded merchant support initiatives to help merchants increase sales and reduce costs. Our total non-GAAP operating expenses as a percentage of total revenues this quarter was 38%, compared to 29% in the same quarter last year. Looking to specific expense items, our non-GAAP sales and marketing expenses this quarter were RMB 32.8 billion, up 44% versus the same quarter last year. In the past quarter, we continued to give up to consumers through promotional programs and increased marketing support for high quality merchants to help grow their businesses. On a gap basis, our sales and marketing expenses as a percentage of our revenues this quarter was 34% versus 26% for the same quarter last year. Our non-GAAP general and administrative expenses were RMB 735 million, versus RMB 572 million in the same quarter of 2024. Our research and development expenses were RMB 3 billion this quarter, on a non-GAAP basis, and RMB 3.6 billion on a GAAP basis, up 23% year-over-year. On a GAAP basis, operating profit per quarter was RMB 16.1 billion versus RMB 26 billion in the same quarter last year. Non-GAAP operating profit was RMB 18.3 billion versus RMB 28.6 billion in the same quarter last year. Non-GAAP operating profit margin was 19% this quarter, down from 33% for the same quarter last year. Net income attributable to ordinary shareholders was RMB 14.7 billion for the quarter, compared to RMB 28 billion in the same quarter last year. Basic earnings per ADS was RMB 10.59, and dilute earnings per ADS was RMB 9.94, versus basic earnings per ADS of RMB 20.33, and delayed earnings per ADS of RMB 18.96 in the same quarter of 2024. Non-GAAP match income attributable to ordinary shareholders was RMB 16.9 billion versus RMB 30.6 billion in the same quarter last year. Non-GAAP delayed earnings per ADS was RMB 11.41 versus RMB 20.72 in the same quarter of 2024. In the first quarter, we see a slowdown in revenue growth as our business skills and challenges match. Looking ahead, our financial results may continue to reflect the impact of sustained investments in the ecosystem as we support merchants and consumers through on certain time. That completes the income statement. Now I'll move on to cash flow. Our net cash generated from operating activities was RMB 15.5 billion, with RMB 21.1 billion in the same quarter last year. As of March 33, 2025, we have RMB $364.5 billion in cash, cash equivalents, and short-term investments. Thank you. This concludes my prepared remarks.

Thank you, Jun.

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 will 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're 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 one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. Participants are requested to restrict the number of questions to two at each time. Your first question comes from Alicia Yap with Citigroup. Please go ahead.

Thank you. Good evening, Manager Chen. Thank you for accepting my question. I have two questions. I will ask in Chinese first. The first is that we actually noticed that Manager Chen mentioned in his speech just now, including a series of changes in public policy in tariffs, which has caused considerable pressure on platform merchants. The market is also very concerned. 所以在这种高度不确定的环境中,平台自身面对这样的外部环境,我们都做了哪些准备,然后有怎么样的应对措施,我们在一些市场的业务模式上会有怎么样的去做调整,然后目前的进展如何。 The second question is, this quarter, we actually also saw that the company's profit rate has significantly decreased, and then the profit volume has also dropped. Can you please analyze some of the factors that led to a drop in profit? And then from the situation of the second quarter, can you predict that this trend will actually continue in the future? I will translate it myself. I have two questions. First is that we notice in management prepared remarks that reason macro policy changes including the tariffs have placed considerable pressures on the merchants and the market is also keen to understand what preparations and measure the platform has taken in response to such a highly uncertain external environment. how are we adjusting our business model in certain markets and also what's the current progress? The second question is on this quarter we are obviously noticing a very significant decline in the company's net profit margins along with a year we have decreased in the net profit number. Can management elaborate a little bit more on the factors that contributing to this decline? And what are we seeing in the second quarter? Does the management expect this trend to continue?

Thank you. Thank you. Over the past few years, we have long-term investment in the supply chain, and recently, in the exploration process of the new business model, we have also accumulated certain supply chain and operation capabilities. Based on this, we will continue to maintain our focus on our own business. Under the precondition of high-quality development and regulation, we will continue to rely on the supply chain, supply level, and the ecosystem of the platform to make further investment and further enhance our core advantages.

As we have emphasized in the past few quarters, in response to macro policy changes and external headwinds, we'll continue to take proactive action while strictly upholding regulatory compliance. Over the past few years, our long-term investments in the supply chain, together with our work in advancing new business models, have enabled us to accumulate substantial supply chain and operational know-how. And guided by our high-quality development strategy, and operating under strict regulatory compliance, we will stay focused on our core business and enhance our competitive strength through sustained investments in supply chain, service capabilities, and the platform ecosystem.

When our business faces such policy changes, there will be enormous pressure and lack of capacity to respond, and changes cannot be made. In this case, as a platform, we feel that it is necessary to shoulder the responsibility of our platform, then spend a lot of effort to increase the investment of the platform, then prioritize protecting the business. What we just mentioned is the 100 billion support plan. Its purpose is to increase the help and support of small and medium-sized businesses, help platform businesses stabilize their sales, and reduce the cost of business. In addition, it is better to deal with individual environmental changes and related risks.

Our merchants are under considerable pressure given the recent policy changes, and many lack the capability to respond effectively, making it very challenging for them to keep up. In light of these circumstances, we believe it is our obligation as a platform to increase support for merchants and invest platform resources to support their businesses. The $100 billion support program we mentioned earlier is designed for this exact reason, and to increase our support efforts for small and medium-sized merchants. And through stabilizing sales and lowering costs for them, we help them manage risks arising from the rapidly evolving market environment, and giving them the time and flexibility that will be necessary to pursue sustained growth.

此外,我们也会持续在右模式上 to make new attempts, and thus deepen the depth of the various markets, expand new categories and new services to build a more stable platform environment. In a rapidly changing external environment, our globalized business is working together with businessmen from different regions to do their best to bring price stability and supply to consumers all over the world. No matter how the policy changes, In addition, we'll continue to explore new business models, deepen our market presence,

and expand into new product categories and services to build a more robust platform ecosystem. Amid the rapidly changing external environment, our global business is working with merchants across the region to bring stable prices and abundant supply to consumers around the world. No matter how policies shift, we'll continue to strengthen our operations in the markets we serve, helping more local merchants grow on our platform, and enabling more orders to be fulfilled from local warehouses. And right now, we're seeing these merchants becoming more proactive with better stock inventory and more value passed on to consumers to differentiate its products and services.

平台其实是商家的聚合。 只有商家长期稳定的发展, 我们的消费者才有可能享受到更好的产品和服务。 Therefore, in the face of changes in the environment and policy, when there is insufficient response from the business community, the platform provides support for the business community, and together with the business community, respond to the uncertainty of the foreign market. We think this is the responsibility that the platform must bear. Because of this reason, we have launched a plan to support thousands of people, to create a long-term healthy business environment, in order to achieve high-quality development goals. Thank you.

The platform is a collective of merchants. We believe only when merchants achieve long-term sustainable growth can our consumers receive high-quality products and services. And therefore, in times of external shocks or policy changes, when merchants face difficulties, we feel a strong obligation to support our merchants to navigate through these external uncertainties. And this is why we launched a $100 billion support program to foster a long-term and healthy merchant ecosystem that will be essential to achieving high-quality development.

Thank you. Hello, Alicia. This is Jane. Let me take your second question regarding profitability. As we have communicated over the past few quarters, a slowdown in growth rate is inevitable as our business scales, competition intensifies, and external uncertainties emerge. This trend has been further accelerated by the changes in the external environment in the first quarter. And our revenue growth has slowed significantly. At the same time, the slowing revenue growth and our continuous ecosystem investments result in a significant drop in profit this quarter. This is mainly due to the mismatch between the business, investment, and return cycles. As mentioned in our previous remarks, the market is undergoing rapid changes at the moment. As an e-commerce platform, merchants and platforms work together in serving our consumers. To help them adapt to such changes, We have increased our investments in the platform ecosystem, putting our consumers and merchants first. We believe this is a responsibility the platform must take on in this moment. And only by doing so, we can build an ecosystem that benefits all stakeholders in the long term. Our initiative to support emerging ecosystem include merchant fee reduction and marketing support for high-quality merchants. This will have financial impacts on revenue growth and expenses. While we view these expenses as long-term investments, they remain a mismatch between the return and business investment cycles. Therefore, our profitability is likely to face challenges in the near term and potentially over a longer period. As I mentioned, we're not a conventional company. In our investment decisions, we do not place too much emphasis on financial performance in a single quarter, but prioritize long-term intrinsic value. Short-term fallout creations will not change our focus on long-term ballot creation. In the past two quarters, through initiatives such as the Tian Wu and Xi reduction program, we're already seeing positive impacts on the ecosystem. Going forward, we will expand the reach of our management support initiatives to benefit more SME businesses, helping them navigate market cycles, and achieve high quality growth.

Thank you.

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

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

Hey, good evening. Thank you for accepting my question. I have two questions. The first one is that we saw that the company launched a policy of 8-1 subsidy last year to support the business. Based on this, we have a new 1,000-year subsidy plan this year. In fact, the market is also very concerned about what form this 1,000-year subsidy will be given to the business. What should we think about the long-term impact of our performance? Another question is that Guan Yicheng last year and in his speech just now also said that we are facing some policies that Thank you management for taking my question. We noted that following the company's substantial support for the merchants through the $10 billion fee reduction program last year, you have initiated an upgrade $100 billion support program. The market is keen to understand how this initiative will be delivered to the merchants, and how would they think about the long-term impact on the company's financial performance? And the second question is, a few quarters ago, and they prepared remarks just now, Management mentioned that the company has certain limitations and disadvantages when it comes to benefiting from the macro policy initiative. Could management elaborate on how the company responds to the policies, such as the national subsidies program, and what plans are in place to address the current situation? Thank you.

Hello, I'm Zhaozhen Zai. Let me answer your question about the financial support.

Hello, this is Xiao Jiajun. Let me take a question on the 100 Billion Support Program.

Since the second half of last year, we launched the 100 Billion Support Program. We have achieved good results in some of the projects such as the 100 Billion Support Program, the Electric Mountain Restoration Program, and the New Business Business Support Program. We have also achieved positive results for tens of millions of businessmen. The new business business and the solar generation are gradually moving towards the new supply and supply stage.

Since the second half of last year, our merchant support initiatives, including the $10 billion fee reduction program, logistics support for remote regions, and the high-quality merchant support program have delivered solid results, enabling tens of millions of merchants to enhance operational efficiency and reduce costs, and building merchants and the broader supply chain transition towards a new stage of high-quality supply.

We are fully aware that our investments in the merchant ecosystem and supporting measures for supply chain transformation

but ultimately translate into higher quality product offerings and services, which benefit consumers and create a win-win platform ecosystem.

We believe this is the path to long-term healthy development for our platform.

In the face of increasing external uncertainties, we believe it is our responsibility as a platform to strengthen ecosystem support and prioritize the interests of merchants and consumers. Therefore, our Upgrade 100 Billion Support Program will be backed by substantial financial commitments and it's not an empty slogan.

天逸扶持计划升级的核心 是在于对供需两车投入的进一步的加码 在供给车 产业带半幅的数量将会扩大 新日商家的半幅的范畴 也将从头部、腰部 全部拓展到中小商家 这也意味着会有更多的优质商家 分享到平台高质量发展的红利 我们也希望

The core of the upgraded $100 billion support program is the significant increase in investment on both the supply and demand side. On the supply side, more merchants will receive our support as we extend the coverage of high-quality merchant support program from top and mid-tier merchants to small and medium-sized ones. This means more high-quality merchants will benefit from the platform's high-quality development. We aim to help release the full potential of these smaller merchants and drive broader and higher-quality supply chain upgrades across the platform.

In addition to the upgrade of the supply chain, the service and quality improvement of the supply chain has also led to multiple subsidies. For example, in the one-billion subsidy channel, we have added a one-billion return plan 对全品类的商品进行了超额的补贴, 满足消费者多元化的消费需求。 此外,我们还进一步升级了平台支付的模式, 多类目的对标国股的价格标准, 为消费者提供实在的优惠, 也为参加的托单征收构建了更良性的运营环境。 On the demand side, beyond the improvements in product and service quality brought by the supply side upgrades,

The $100 billion support program also includes a range of new give-back initiatives. For example, under the $10 billion program, we launched a new $10 billion merchants give-back program, offering additional coupons across all categories to meet diverse consumer demands. In addition, we have further upgraded our direct discount program by benchmarking prices against the national subsidy program across multiple categories. offering real savings to consumers while improving sales for merchants, fostering a healthier operating environment.

我们是一个商家聚合的平台, 与广大商家共同为消费者提供优质的产品和服务。 这个是我们发展道路上的根本。 我们也相信对平台生态的长期投入, 以及在不确定的大环境中, 优先保障消费者和商家, 是单下平台实现长期高增量发展,

We are a platform that is a collective of merchants. Working together with merchants to deliver high-quality products and services to consumers is the foundation of our business development. We believe that long-term investment in the platform ecosystem and prioritizing the needs of consumers and merchants amid external uncertainties is the only path to achieving long-term high-quality

and sustainable growth in today's environment. Regarding your second question,

As stated in our prepared remarks, our third-party marketplace model has inherent limitations when it comes to certain policy incentives. And we are at disadvantageous compared to platforms that primarily operate under the first-party model. This also affects the price competitiveness of our merchants in certain categories.

为了保障平台消费者和商家,我们充分调动自身资源,坚决地跟进和投入。

To protect the interests of both consumers and merchants on our platform, we have leveraged internal resources and responded resolutely with increased investments, helping our merchants and medium-sized merchants maintain competitiveness and increase sales.

Since January this year, we have launched a dedicated page for the national subsidy program.

Apart from our support for merchants, under the $100 billion support program, we are also enhancing our promotional efforts on the consumer side. Currently, our dedicated national subsidy channel already covers more than 20 provinces, and we provide additional coupons on top of the government subsidies, delivering further savings directly to consumers.

主要呢,平台海上最标国股的价格力度,将补贴范围扩大到日用版货的类目。 Moreover, the platform will continue to benchmark prices against the national subsidy programs

and expands the promotion coverage to categories such as daily necessity. These measures aim to provide more savings to consumers, stimulate broader consumer demand, and create incremental market opportunities for the merchants. While such investments may weigh on short-term profitability, we believe they are necessary and worthwhile as they help the merchants improve inventory positions, manage capacity, and give the small and medium-sized merchants the room to focus on high-quality, differentiated grades on our platform.

Thank you. Thank you, Kenny.

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

Thank you. Your next question comes from Joyce Zhu with Bank of America. Please go ahead.

How does the company think about the competition in the current market environment? And how do you see our platform model I will translate myself. First, we know China's e-commerce competition remains intense, and as Manage mentioned, Dodo is facing challenge in competing with first-party online retailers due to disadvantage in getting trading subsidies. How does management view competition in current market environment? And what are strengths and limitations of your third-party platform model? Secondly, may we have an update on overall consumption momentum? As this year's June promotion already underway, could management share some colors on platform performance and also key trends observed so far. Thank you very much.

Hello, my name is Chen Lei. Let me answer your first question.

Hello, this is Chen Lei. Let me take your first question.

As we mentioned earlier, the platform is the core of the business. The development of the platform and the prosperity of the business ecosystem are complementary. In the current competitive situation, As we mentioned earlier in the prepared remarks, a platform is a collective of its merchants, and our development cannot be separated from the health of the merchant ecosystem.

And in today's environment, with increasingly intensifying competition, and rapidly evolving policy landscape, many of our merchants lack the capabilities to respond and adapt, and are indeed facing challenges.

As a platform, we are deeply aware that we cannot rise alone. And because of our position as a pure platform, when we face the current challenges, our thoughts are also simpler and more direct. If the business is in trouble, If the platform is not sacrificed, it is very likely that the business will not be able to withstand too much short-term fluctuations. Only when the business is good can we provide higher quality products and better services for consumers, and meet the demand for new consumption. This is not only the responsibility we think the e-commerce platform should bear, but also our understanding of the healthy and sustainable e-commerce ecosystem.

As an e-commerce platform, we are very aware that we and the merchants are in this together. Our business model is a marketplace, naturally shapes a simpler and more direct response to the challenges we face. If the platform fails to step in and offer support, when merchants are experiencing difficulties, the merchants may be overwhelmed by the short-term market volatilities. It is only when merchants are doing well can we deliver high-quality products and services to consumers, and meet their increasingly diverse consumption needs. We believe this is not only a responsibility that e-commerce platforms should take on, but also fundamental to building a healthy and sustainable e-commerce ecosystem.

In terms of business performance, over the past long period of time, we have been deepening our supply chain, using the advantages of technology and scale, as well as platform digitization capabilities and resources, And over the years, in order to better serve the merchants, we have rooted ourselves in the e-commerce supply chain and made substantial investments.

And leveraging our technology economies of scale, and the platform's digital capabilities and resources, we supported merchants to innovate in their product development, technology, and operations, and we helped them expand market reach. And these long-term efforts have allowed us to accumulate the relevant supply chain know-how and capabilities.

We saw that last year's first 100-Year Announcement, We saw encouraging results from the $10 billion fee reduction program launched in the second half of last year, which brought tangible benefits for our merchants.

And building on this foundation, we decided to launch the updated $100 billion support program to further expand the coverage of our merchant support efforts. And this initiative will extend support to more small and medium-sized merchants, enabling more high-quality merchants to benefit from the platform's high-quality development.

In the current market environment, we believe that the growth of the platform will help businessmen And in this current environment, we believe it is the platform's responsibility to invest more to help merchants navigate the market cycles.

We are confident that such efforts will ultimately lead to a more robust merchant ecosystem over the long run.

When it comes to shopping festivals, what consumers value are simplified mechanisms and real savings, which is the philosophy that aligns with our approach we've always taken on the consumer side.

We've continued to uphold this principle in this year's June 16th Shopping Festival.

By combining the campaign with our $10 billion program, we are enabling consumers to access high-quality products at compelling prices

while driving sales for our merchants.

Building on this, we are also enhancing quality and services to better cater to consumers' evolving needs. This year, we've introduced the price drop protection service for products participating in the June 16 promotions to further improve consumers' shopping experience. We hope that our platform and our merchants can together excel in quality and service, build consumer trust, safeguard consumer rights, and in turn, drive sustainable sales growth. This is part of our vision for a win-win e-commerce ecosystem that benefits our stakeholders. Thank you.

Thank you, Joyce.

And thank you all for joining us today. It's about time, and we look forward to speaking with you again next quarter. Thank you, and have a great day.

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