PDD Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to PDD Holdings, Inc. Fourth Quarter and Fiscal Year 2025 Earnings Conference Call. At this time, all participants are in 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 1 on your telephone. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your host today. Sir, please go ahead.

Thank you, Operator, and 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 price release, which applies to this call, as we will make certain forward-looking statements. This call also 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 are Mr. Chen Lei, our co-chairman and co-chief effective officer, and Mr. Zhao Jiazhen, our co-chairman and co-chief effective officer. Our VP of Finance, Ms. Liu Jun, is unfortunately on medical leave. Delivering the prepared remarks today will be Mr. Li Jiong, our finance director. Jiazhen and Lei will make some general remarks on our performance for the past quarter and our strategic focus. Jiong will then walk us through our financial results for the fourth quarter and the fiscal year ended December 31, 2025. During the Q&A session, Lei and Jiazhen will answer questions in Chinese and will help translate. Please kindly 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 co-chairman and co-chief executive officer, Zhao Jiazhen.

Jiazhen, please go ahead. Hello everyone, and thank you for joining our earnings call for the fourth quarter and fiscal year of 2025. we launched the first 1000 billion-level exchange strategy in the e-commerce industry. The company put all its efforts into it and raised the exchange rate to a new level. At the year-end shareholders' meeting, we upgraded the company's governance structure, implemented the contact president system, and further upgraded the company's strategic center to a heavy-duty supply chain, focusing on the development of high-quality branded supply chains, and promoting the entire supply chain system to achieve value-added

In 2025, we celebrated the 10th anniversary of the company's founding, and it is also the year in which we made our largest investment in high-quality development. For the first time in the e-commerce industry, we launched a $100 billion support program to support merchants. The entire company joined efforts in stepping up our support to farmers and merchants. And during the shareholders' meeting at the end of last year, we improved our corporate governance structure by introducing the co-chair structure and further sharpened our strategic focus to investing deeply in the supply chain, concentrating on high-quality, brand-oriented growth to drive the entire supply ecosystem to move up the value chain.

过去一年,我们的业绩保持稳健。 本季度集团收入1239亿元,同比增长12%, 全年集团收入4318亿元,同比增长10%, 本季度及全年集团净利润均同比下降。 In the past year, we delivered steady results.

This quarter, the group's revenue reached 123.9 billion RMB, growing 12% year-on-year, while full-year revenue reached 431.8 billion RMB, up 10% year-on-year. Both this quarter and the annual net income decreased year-on-year, which primarily reflects our sustained investment on both the supply side and demand side. As we have communicated in the past, we prioritize long-term value generation by nurturing our ecosystem rather than short-term financial results.

受益于千亿福祉的政策对供需两策的长期投入, 平台及产业生态实现稳步向好发展, 农产区产业贷等供应链体系,

已经成为自身平台及生态的关键力量,也为广大消费者带来了更多实惠的优质好物。 Benefiting from long-term investments on both supply and demand sides, through initiatives like the 100 Billion Support Program, the platform and supply chain ecosystem have been moving steadily in the right direction. Key participants of the supply chain, such as agricultural regions and the industrial belt, have become core pillars supporting the platform and ecosystem. while also bringing consumers more affordable, high-quality products.

With the continuous investment of thousands of people, many specialties, new products, e-sports, etc. are continuously promoted. The range of support for the supply chain, from the top to the bottom, gradually deepens into the various segments of the industry chain, helping the customers of various categories achieve differentiated development, completing the cross-reference from category, quality, to brand, greatly improving the efficiency and integrated capabilities of the supply chain,

with the continued investments under the $100 billion support program, dedicated projects such as Duoduo local specialties, new quality supply, and logistics support for remote regions have gradually broadened our support from top merchants and SMEs to every segment of the supply chain, helping businesses across all categories pursue differentiated growth. This has enabled the transition from merely supplying products to pursuing quality and to brand building, greatly improving supply chain efficiency and overall industrial capabilities, while at the same time, create room for profit and innovation for agricultural regions and industrial belts.

在第四季度,多多好特产专项团队深入安越柠檬,普洱咖啡,武汉瓜子,梅州柚子,文山梁梅,福州鲍鱼,连元港海苔等农特产区,通过一品一方案的定制化扶持, In the fourth quarter, the Duoduo local specialties team visited agricultural regions such as Anyu Lemons for coffee, Wuhan seeds, major pomelos, Wenshan blueberries,

Fujo abalone, and Leringang seaweed. To customize one product, one plant support program, the team addressed issues such as the lack of product standardization and low value add. These efforts guided farmers and growers to adopt standardized planting, premiumization, and deep processing, effectively increasing the added value of agricultural products and retaining more profits in their places of origin, thereby enable sustained sustainable growth in specialty agriculture industries.

In the industrial era, the growth rate and the speed of cultivation are constantly increasing. Our specialized team is focusing on the production of raw materials, such as Pinghu Yurong, Hunan chili, Anhui Chaohuo, Tianjin Shupian, Zhongnan Xiaojiaodian, Shanghai Chocolate, and other manufacturing industries, and deepening the production of raw materials, accessories, and other products. By simplifying the double-layer approach, we can further demonstrate the advantages of production,

In Industrial Belt, we accelerated the execution of new quality supply program by doubling down on our support efforts. Our dedicated teams visited manufacturing clusters such as Yiwu accessories, Pinghu down jackets, Hunan spicy snacks, Anhui roasted seeds, Tianjin potato chips, Zhongshan small appliances, and Shanghai chocolate, and delved deep into every segment of the supply chain, from raw materials to components. Through a combination of fee reduction and support, we helped unlock the potential in the supply chain, driving an overall upgrade in supply chain operations and helping industrial belt transition from commoditized competition to brand building.

At the same time, we also activated the consumption potential of remote areas to actively contribute to the expansion of the business. In the fourth quarter, we are still on the basis of the development of e-commerce in Xijing. In the last mile, many provinces and cities across the country continue to build expressways into the village. The new e-commerce general meeting will continue to expand from the western region to the vast rural areas. So far, we have deployed and built more than 10 provinces and cities across the country, including the county central city center, the village reception point, and other end-to-end base network.

While stepping up our investments in the supply chain, we also unlocked consumption potential in remote regions through our logistics support program, driving new growth opportunities for merchants. In the fourth quarter, building on the success of this campaign, we continue to tackle the last mile of parcel delivery into villages across multiple provinces and cities. extending the benefits of new e-commerce from western provinces to vast rural areas. To date, we have deployed and built end-to-end delivery networks, including county-level transfer warehouses and village-level pickup points in over 10 provinces and municipalities. We also cover the transshipping fees for orders delivered to villages, bringing more remote rural areas into the free shipping zones.

在平台治理上,我们不断完善平台的消费和经营环境, In terms of trust and safety, we continue to improve the business environment and further enhance the service levels for both consumers and merchants.

During the Spring Festival, we rolled out a series of food safety measures, including compliance checks on business qualifications, reviews of food advertisements, controls on food live streaming, protection of minors, IP protection, and the development of a food database, all to safeguard the food safety for consumers during the festivities.

在全球电商的业务上,虽然外部环境剧热变化,我们的全球电商业务在过去一年 and still maintain the stable development. This is also the business advantage of our long-term Zaken supply chain accumulation. At the previous shareholders' meeting, we announced that we would do our best to upgrade the supply chain to a multi-capacity supply chain, and to build a Pinot Noir. This is our duty. In the past few months, the three-year major strategy that we officially announced at the shareholders' meeting is turning into a specific action. Business and organization inside are undergoing profound changes. At the next stage, the company's strategic focus is not on diversification of business,

In our global business, despite the drastic changes in external environment, we deliver a steady growth over the past year, mainly reflecting the competitive advantages built through our long-term focus on the supply chain. At the last shareholders' meeting, we announced our all-out efforts in investing in the transformation of the supply chain and in building another Pinduoduo. This remains our duty and primary focus. Over the past few months, the three-year strategy we committed to during the annual general meeting has been translated into concrete actions, and fundamental changes are taking place within the business and our organizations. In the next phase of our journey, our strategic priority will now be business diversification but rather concentrating on the high-quality development of the supply chain. Leveraging our strength in the supply chain accumulated over the years, we will reinvent the platform and propel the ecosystem up the value chain.

2026 is the 11th year of Pinduoduo's establishment, and it is also the starting point for our next 10 years. We will restart, and we will start again with an all-in attitude, a little spirit, and a big step. We will invest more manpower and resources, continue to expand the supply chain,

2026 marks PDD's 11th year and a new starting point as we head into our next decade. We are starting afresh and moving forward with an all-in attitude and a persistent focus on execution. We will dedicate more talent and resources to deepen our investments in the supply chain, accelerating its upgrade and transformation. We believe that in the next three years, we will have the opportunity to build another Pinduoduo. Now, I'll hand it over to Chen Lei for further remarks.

Thanks, Jackson. And hello, everyone. 2025 marked our 10th anniversary. As Jackson just mentioned, We took on greater risk possibilities this past year and launched a $100 billion support program to give back to the emerging ecosystem. We also established a culture structure to further improve our governance and firmly anchored our company's strategic focus on the high-quality development of supply chain. Through these efforts, we continue to create long-term value for consumers, for merchants, the industry, and the society. ETA has been here nearly a year since we launched the 100% support program. During this time, we continue to reinvest in our ecosystem through measures such as fee reductions, merchant support, child safety initiatives, Our dedicated team has gone deep into agricultural regions and the manufacturing hubs to help hundreds of regions establish standardized production systems and to explore differentiated and brand-oriented growth models. This effort has significantly improved the efficiency and quality of supply chain operations, driving supply chain transformation from scale-driven to value-driven. This also brings more high-quality, affordable products to our consumers. Our consistent investment in the supply chain has unlocked strong consumer demand on the Google platform. The platform delivers strong performance during major promotions, such as June 18, 2011, and Spring Festival. Quality products from different regions go through geographic boundaries and offering consumers more diverse selection and further enhancing the quality of life. Our global e-commerce business continues to deliver steady growth and has reached a meaningful scale in most countries in the third. Accomplished in three years, we were able to let Pinduoduo business 10 years to complete. However, over the past year, The global geopolitical landscape has grown more complex. Trade and regulatory policies across different countries and regions continue to evolve. This has introduced greater uncertainty to our global business and will impact and even reshape our development model. In this context, we need to rely more than ever on the collective capabilities of our supply chain ecosystem. Therefore, we will continue to anchor our strategy in investing deeply in supply chain capabilities and direct more efforts, capital, and resources to its transformation. We aim to empower our merchants and manufacturers to become innovators with direct global market capabilities, developing consumer insights, coming up product size, and building graphs. This will drive expression towards high-quality and breadth-oriented growth, creating real value for consumers. Over the past few months, we have been making steady progress on the execution of three-year strategies adopted at a shareholder's meeting, and we are pleased to see some results. In the fourth quarter, our long-term investments in agricultural research achieved new results Last October, for the second consecutive year, we were invited to attend a World Food Forum hosted by UN Food and Agriculture Organization, representing Asian enterprises. We shared our experience and achievements in supporting digital agriculture innovation, and we also sponsored two great agricultural research teams that took a stage at the forum. bring new energy into agricultural research and development. Since the start of 2026, competition in e-commerce sector has continued to intensify around new business models and new technologies. At the same time, the global environment has become more complex than last year, with increased uncertainty in the economy and trade climate, as well as in regulatory policies across various countries and regions. This will inevitably bring more challenges and weight on our future performance, putting pressures on our profitability in short term. However, we will continue to uphold our long-term philosophy and faithfully execute our strategy of investing deeply in the supply chain, dedicating more resources to give back to industry and society. And now, I will turn the call over to Li Zhou, who will talk you through our financial performance for the fiscal year of 2025.

Li Zhou Well, thank you, Lei. Hello, everyone. This is Zhou. Now, let me walk you through our financial performance in the fourth quarter and the fiscal year ended December 31st, 2025. In terms of income statements, in Q4, our total revenues increased 12% year-over-year to RMB 123.9 billion and 10% year-over-year to RMB 431.8 billion for full-year 2025. 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 60 billion this quarter, up 5% compared to the same period 2024. Our transaction services revenues this quarter for RMB 63.9 billion, up 19% versus the same period of 2024. Moving on to costs and expenses. Our total costs of revenues increased 15% from RMB 47.8 billion in Q4 2024 to RMB 55.2 billion this quarter. For the full year, our total costs of revenues increased 23% to RMB 188.8 billion mainly due to increased fulfillment fees, bandwidth and server costs, and payment processing fees. On a GAAP basis, total operating expenses this quarter increased 10% to RMB $41 billion from RMB $37.2 billion in the same quarter of 2024. On a non-GAAP basis, our total operating expenses increased to RMB $39.3 billion this quarter from RMB $35.1 billion in Q4 2024. our total non-GAAP operating expenses as a percentage of total revenues was 32% in Q4. For full year 2025, total non-GAAP operating expenses will arm the $140.7 billion up from $122 billion in 2024. Looking to specific expense items, our non-GAAP sales in the market expenses this quarter will arm the $34 billion up 9% versus the same quarter of 2024. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter was 27%, compared to 28% in Q4 2024. For the full year, non-GAAP sales and marketing expenses increased from RMB 109.1 billion to RMB 123.3 billion in 2025. Our non-GAAP G&A expense will RMB 907 million in Q4 versus RMB 998 million in the same quarter of 2024. Our annual non-GAAP G&A expenses will RMB 3.2 billion in 2025 versus RMB 2.8 billion last year. Our research and development expenses will be 4.4 billion in the fourth quarter on a non-GAAP basis and RMB 5 billion on a GAAP basis. On a GAAP basis, Operating profit for the quarter was RMB 27.7 billion versus RMB 25.6 billion in the same quarter 2024. Non-GAAP operating profit was RMB 29.5 billion versus RMB 28 billion in the same quarter 2024. Non-GAAP operating profit margin was 24% this quarter compared with 25% for the same quarter 2024. For the full year, non-GAAP operating profit was RMB 102.6 billion compared with RMB 18.3 billion in 2024. Net income attributable to ordinary shareholders was RMB 24.5 billion for the quarter and RMB 99.4 billion for the full year. In the fourth quarter, basic earnings per ADS was RMB 17.50 and diluted earnings per ADS was RMB 6. versus basic earnings per ADS of RMB 19.76 and diluted earnings per ADS of RMB 18.53 in the same quarter of 2024. Non-GAAP net income attributable to ordinary shareholders was RMB 26.3 billion for the quarter and RMB 107.3 billion for the full year. In the fourth quarter, non-GAAP diluted earnings per ADS was RMB 17.69 versus RMB 20.15 in the same quarter of 2024. That completes the income statement. Now, let me move on to cash flow. Our net cash flow generated from operating activities was RMB 24.1 billion in Q4 and RMB 106.9 billion for the full year of 2025. Compared with RMB 29.5 billion in the same quarter of 2024, and RMB 121.9 billion in 2024. As of December 31, 2025, the company had a RMB 422.3 billion in cash, cash equivalents, and short-term investments. Thank you, and this concludes my prepared remarks.

Thank you, Joey. Next, we'll move on to the Q&A session. Today's Q&A session, Lei and Jiajun will take questions from analysts on the line. We could take a maximum of two questions from each analyst. Lei and Jiajun will answer questions in Chinese and will help translate. Operator, we're open for questions.

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 the pound or hash key. Participants are requested to stick to two questions at each time. Your first question comes from Alicia Yap with Citigroup.

Hello, thank you. 管理层,晚上好,谢谢接受我的提问。 有两个问题,一个问题是我们公司去年底, 我们在股东大会上对这个组织架构做了一些调整, 然后我们看到目前公司其实在90多个市场运营, 也受到蛮复杂的一些监管环境的新挑战。 I would like to ask Manager Chen how the company can maintain the unity and execution of the team in such an environment. The second question is, in the past quarter, we have seen the growth of e-commerce platforms is slowing down. The company's advertising revenue in the past two quarters has also declined. I would like to ask Manager Chen to share his views on the current Chinese e-commerce market. 我们的行业下阶段的一个增长有可能会来自哪些地方? 我自己翻译一下。 I have two questions. First is that the company makes some organization adjustment at the shareholder meeting at the end of last year. So currently, the company is operating in over 90 markets and at the same time also face new challenges from the complex regulatory environment. So how does the company maintain the flexibility and also the quality of execution in such an environment? And then second question is, over the past quarter, we have seen a slowdown in the growth of e-commerce platform in China. And the company's online marketing revenue growth also show slow down over the past two quarters. So could management share with us your view on the current state of China e-commerce market and where the next phase of growth for the industry might come from? Thank you.

大家好,我是戴耀正。 我来回答第一个问题。 在过去的几年,我们的全球业务确实取得了突破性的进展。 现在已经覆盖了近百个市场, 也形成了一定的规模。

Hi, this is Zhao Jiazhen. Let me take your first question. Over the past few years, our global business has indeed achieved some progress and now serving nearly 100 markets and achieving meaningful scale.

In this process, we feel that the development of our company's governance and internal talent is not in line with the development of business. In many places, there is a lot of construction. Of course, the change in international geopolitics is fast.

And throughout this process, our corporate governance and the development of internal talents had lagged behind the business growth, and that leaves us difficult to keep up in many areas. At the same time, the international geopolitical landscape is evolving rapidly, with trade and regulatory policies across regions changing quickly and becoming increasingly tightening. This places new demands on our company as a whole.

因此,我们认为有这个机会也有这个必要, 进行系统性的、结构性的组织、文化和公司治理的再造。 当然,这肯定是需要一个过程的。 去年的12月,我们在股东大会上宣布的联系董事长的制度,

And therefore, we believe there is both an opportunity and a necessity to undertake a systemic and structural transformation of our organization, culture, and corporate governance. And of course, this will be a gradual process. The culture, structure, and deployment of new leaders that was announced at our shareholders' meeting last December is the beginning of this systematic In the period ahead, we will dedicate greater energy, capital, and resources to upgrading and reinventing the supply chain and to achieve an overall transformation of our supply chain operations.

I'll also address the second question.

As you mentioned, over the past few quarters, we have seen the e-commerce industry enter a new phase of intensified competition and slowing growth. In this new stage, our strategy of investing deeply in the supply chain was formulated. It was formulated from the recognition that an e-commerce platform should not just be a simple transaction platform. Rather, it can and should do more. and creating greater value for all participants across the entire supply chain.

Our deep investments in the supply chain cover multiple aspects, and initiatives launched recently

such as DODO's local specialties and logistics support for remote regions, are all projects empowering the supply chain to be more inclusive. Here, I will also highlight two specific programs.

第一个是免费送货入村。 这是我们去年第四季度试点的一个新的项目。 初中是为了解决偏远的行政村, 它的物流配用成本很高, 商家发货意愿低的难题。 The first program is free delivery to villages.

This is a new project we piloted in the fourth quarter of last year. aimed at addressing the challenges of high logistics costs and merchants' lack of incentives to ship to remote rural villages, bringing more villages into the free shipping zone. And currently, we have built last mile logistics infrastructure, including transit warehouses at the county level and pickup points at the villages level across multiple regions in China, and with a platform covering the transshipping fees for orders delivered to these villages.

Under this new model, merchants only need to send their products to the transport warehouses

and the transportation from the warehouse to the village level pickup point is then handled by the transit warehouse. In building on our existing experience, we apply the transshipping model to the last mile delivery to the villages, improving the shopping experiences in remote areas, and helping merchants to tap into new market opportunities.

第二个是薪资供给。 平台针对愿意提升品质优化服务的优质商家, The second example is new quality supply.

For merchants willing to improve their product quality and services, the platform empowers them by providing industry insights and supply chain support. These measures support merchants to upgrade their operations across the entire product lifecycle, from R&D and production to manufacturing and sales, and driving the transformation of the supply chain system.

There are many things that the platform can do. For example, product development. In the traditional mode, psychological development often has the component of communication. But in the current ecosystem of the platform, some key information of the product can be delivered to the customer in time after the integration of the team, and the testing of the new product can be completed through the support of traffic. There is actually a lot the platform can do here.

For instance, in product development, traditional approaches often rely on trial and error. However, within today's ecosystem, critical product information is compiled by our merchant development teams and promptly relates to the merchants. Together with traffic support for new product testing, These measures enable merchants to iterate their products with more success and improve the ROI of their R&D investments.

这是我们供应链升级再造的两个具体的案例。 面对行业增速放缓和竞争的加剧,我们主动选择把资源投入到高质量供应链的建设中。 平台在新制供给、送货入村等底层能力上的扎实的投入。 And these are two examples of our efforts to upgrade the supply chain.

Faced with slowing industry growth and heightened competition, we are proactively choosing to channel resources into building a high-quality supply chain. Our investments in foundational capabilities like new quality supply and delivery to villages will become the driving force behind the company's sustainable and healthy growth in the next decade.

Operator, we are ready for the next analyst on the line.

Your next question comes from Kenneth Long with UBS. Please ask your question.

Hi, thank you for accepting my question. I have two questions. The first is that the company has experienced a lot of fluctuations in global business over the past period of time. Since last year, we have also seen some important markets and some high-profile monitoring and investigation, as well as some trade policies related to the company's business. There have also been some major changes. Can you share with us your views on the current environment? 在这个环境里面公司的传说化业务的发展的重心会在哪里? 第二个问题就是关于利润率的 其实过去公司这个季度的利润率也会有些起伏 跟管理层可不可以分享一下 就是公司过去一段时间在推出了不同的业务的模式 对我们利润率会有什么影响呢? 以及我们应该怎么思考公司的长期利润率的水平呢? 我自己翻译一下 The company global business has experienced some ups and downs. Since last year, we have seen high-profile regulatory inquiries in some key markets and significant changes in trade policy highly relevant to our operations. Could management share your thoughts on the current external environment and under such condition, where is your global business strategic focus in the next phase? My second question is about the profitability. The company profitability over the past two quarters has experienced some fluctuation. So could management share how different business model launch that may impact the profitability? And how should we think about the company long-term profit margin level? Thank you.

Hello, Kenny. My name is Chen Lei. I would like to answer your first question. In the past few years, Hi, this is Chen Lei.

I will take your first question. Over the past period, we have indeed received inquiries from regulatory authorities. As our global business grew rapidly and reached a meaningful scale in different countries, it is understandable that this has drawn surprise, concerns, and closer scrutiny.

At the same time, we strongly believe that the current state-of-the-art policies will be the basis for us to enter the next phase of growth. At the same time, there is no direction for us in this fast-growing international policy environment. Since our globalization has started to open up, we have been holding this kind of long-term goal. Then, based on the concept of growth and development, it is possible to achieve growth in various markets.

We hope to create real value for consumers.

However, our management believes that the current regulatory scrutiny would lay a solid foundation for our next stage of growth and will also provide direction for iterating our model amid the rapidly evolving international political and regulatory landscape. Since the launch of our global business, we have consistently focused on the long term. Building on our deep roots in the supply chain, we are committed to achieving sustainable development in each market, and creating real value for consumers.

随着业务规模的扩大 以及各地监管团队的快速变化 我们深刻的认识到 合规是底线 作为一个各地社会中的企业 我觉得我们要符合当地的需要 回归出金 固守本分 合规各地社会的贡献 是一个电商平台的根本责任

As our business skills and regulatory environment across regions change rapidly, we deeply recognize that regulatory compliance is the baseline requirement. As a company operating within local communities, it is our fundamental responsibility as an e-commerce platform to meet local needs and stay true to our core mission fulfill our duties and contribute meaningfully to the societies we operate in.

Therefore, our management team invests significantly in business compliance.

However, trade policies, taxation, data regulations, product compliance requirements, and other regulatory frameworks are undergoing significant changes across different countries and regions. These requirements often vary considerably, and can sometimes contradict one another, inevitably bringing greater challenges and uncertainty.

We are actively learning, adapting to these changes,

and continuously enhancing our compliance capabilities to create sustainable value for society.

刚才您也提到了全球的贸易政策的变化。 从去年开始,我们看到了不少市场贸易政策的改变。 我们的团队在业务合作的前提下, 我们根据不同地区的监管环境和市场情况, You also mentioned changes in global trade policies.

Since the beginning of last year, we have indeed seen some shifts in trade policies in many major markets. Ensuring business compliance, the team has quickly iterated our business model based on the regulatory environment and market conditions in different regions to deliver reliable services to consumers. This is closely tied to the supply chain capabilities we have accumulated over the years.

接下来我们公司全球化业务的发展动机还是会放在投入上。

Therefore, moving forward, the strategic focus of our company's global business will remain on investing in supply chain capabilities. Every aspect of this directly impacts the consumer shopping experience. and accordingly will be a key area of our investment. Thank you.

您好,我是戴耀正,我来回答你的第二个问题。 首先我想明确的是,公司目前依然处于战略的投入期, 当前的外部环境和经济的格局都在发生快速的变化, 为了满足消费者不断演变的需求, 我们正在与这个平台的三家紧密的协同持续探索, This is Xiaojiazhen.

Let me answer your second question. First, I want to emphasize that currently the company is still in a strategic investment phase. The external environment and competitive landscape are changing rapidly. And to meet the consumer's involving needs, we are working closely with our merchants, to explore and launch new business models that is suited to the new conditions. Any new model from launching to a full rollout requires the platform to commit substantial resources in its early stages.

无论是新业务模式的探索 还是我们对供应链的战略性的投入 都是基础的长期的工作 投资与回报之间存在的时间错配

我们此前也多次和大家沟通过, 那在短期的财务表现,

As we have communicated on multiple occasions, between short-term financial performance and the long-term value of the platform ecosystem, we will resolutely choose the latter.

And therefore, As we continue our strategic investments, coupled with a complex and volatile macro environment, it could be normal to see fluctuations in our profit margins from quarter to quarter.

过去的几个月里,我们在股东大会上郑重宣布的重大战略正在转化为具体的项目落地。 业务和组织正在经历深刻的变革。 我们建议大家不要过多地关注单一基础的利润率指标。 And over the past few months, the strategy we announced at the shareholders' meeting has been translated into a concrete project.

The business and organization are undergoing deep transformation. And we suggest not to focus too much on the profitability of a single quarter, but rather pay more attention to the high-quality development of our platform ecosystem. Because only with a healthy platform ecosystem and a robust supply chain can a platform achieve sustainable growth in a long-term intrinsic value.

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

感谢管理层给我这个提问的机会 我的第一个问题也是和利润率相关的 The company has launched a lot of ecological investment plans since last year, including last year's 1000 billion support. In the speech, the management floor also mentioned the heavy supply chain. I would like to ask the management floor to talk about how the company plans to invest in these projects and report the cycle. It is expected that the company's business performance will be affected by the long term. 我第二个问题是今年前两个月的线上零售增长势头也非常好嘛 可不可以请管理层分享一下公司对消费市场的这个趋势是怎么看的 针对市场上增速较快的类目 公司有没有针对性的策略来更好地把握这个市场机会 I will translate myself. My first question is related to the profit margin as well. Since last year, the company launched several investment initiatives, including last year's $100 billion support program, and the management just mentioned heavy investment in the supply chain in the remarks. Could the management elaborate a bit on how the company thinks about investment and return cycles for these projects, and what will be the long-term impact on the company's financial performance? My second question is, online retail sales show very strong growth momentum in the first two months of the year. Could the management share the company's view on the consumer market, like regarding categories with faster growth in the market? Does the company have targeted strategies to capture new opportunities in the fast-growing product categories?

Many thanks.

Hello, I'm David. Let me answer your question.

Hi, this is Zhao Jiazhen. I'll answer your question.

About a year ago, we further recognized the importance of the long term development of the ecosystem, and we launched a series of merchant support initiatives, such as the $10 billion fee reduction and the $100 billion support programs, committing tangible resources to help the merchants and industries creating more room for innovation.

Our management team has always believed that as the platform grows into a public platform with social impact, we should take a more public interest and long-term health of the industry

Our management unanimously agrees that as the platform grows into a public platform with social influence, we should consider the company's development from the broader perspective of public interest and the long-term health of the industry ecosystem. The strategy of focusing on core business and investing deeply in supply chain upgrades that was announced at the shareholders' meeting at the end of last year is an extension and reinforcement in this direction.

The e-commerce industry has been developing for many years, and the ecosystem is constantly growing. The business team platform has also proposed diversification requirements. From the initial trading platform to now being a comprehensive business partner, After years of development, the e-commerce industry's ecosystem is becoming more mature.

and merchants' demand on the platform have also become more diverse. The platform's role has evolved from initially being a transaction platform to now becoming a comprehensive business partner. Accordingly, the support that merchants need the most from the platforms has also extended from traffic support to all aspects of their operations, including R&D, production, and sales. This requires us to go deeper in our operations to come up with targeted support plans tailored to different industries and thereby building a more competitive supply chain.

这样的投入,涉及产业链的千千万万的参加,不可能一蹴而就。 所以我们已经做好了长期耐心的投入的准备。 我们也很高兴的看到不少的投入已经产生了一些效果。 就比如我刚刚提到的这个薪资供给项目的支持下, And such investments involve thousands of merchants and cannot be achieved overnight.

We are prepared for long-term and patient investments and are very pleased to see that many of these investments have already yielded some results. For example, With the support of the new quality supply project I just mentioned, some merchants have chosen to reinvest the fee reduction provided by the platform into expanding their R&D teams and upgrading production lines. And together with the platform's digital solutions, they have started on a path of product differentiation and transformation.

这种长期的结构性的投入不会立刻的体现在短期的财务表现上, 但它是接下来平台和电商生态 These long-term structural investments will now be immediately reflected in the financial performance in the short run.

They are a crucial part of the long-term sustainable growth of the platform and ecosystem. We will diligently implement these long-term projects by reinvesting concrete resources back into the ecosystem. We target to lower merchant costs, enhance supply chain quality, and improve consumer experience. Through investing in the supply chain, we will seek to reinvent the platform and move the ecosystem up the value chain.

Regarding your second question, And regarding your second question, we're also very pleased to see the improvement in the overall consumption market.

However, at the same time, we also clearly recognize that in today's competitive landscape, we still face some challenges. The future performance of e-commerce platforms will increasingly be dependent on how much incremental value they can create for the entire supply chain, rather than relying solely on traffic acquisition and allocation.

Therefore, at this time, we firmly choose the long-term supply chain. For different items, And therefore, at this juncture, we have made a firm decision to invest deeply in the supply chain.

And for different product categories, our merchant development teams will work closely with sellers. And based on industry insights, we will provide them with tailored industry solutions to help merchants achieve new quality transformation and driving the high-quality development of the supply chain. We firmly believe that these investments are essential for the e-commerce high-quality development in the next stage, and we are committed to patiently furthering these efforts in the long run. Thank you.

Thank you, Joyce.

And thank you, Jiazhen. Thank you for joining us today. 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 all disconnect.