Secoo Holding Limited

for joining us today. So as you know, this morning, our board of directors approved our set of first half numbers for the year. And in the next hour or so, together with Lorenzo Mazzini, our CFO, we will run you through these figures, leaving ample time for questions at the end. We will also share an update on our recent business performance, as well as some insights into the outlook for the rest of the year. confirming our positive stance on the rebound in 2025. But first, let me hand it over to Massimo Mari, our CEO, for the key takeaways of these first six months.

Thank you, Clarence, and good afternoon to everyone. In the past quarter, as for the rest of our peers, we continue to navigate in a challenging market environment with inventories digestion still beginning underway. This driving some prolonged weakness in demand across all the geographies and industrial verticals. As such, we saw the decline this quarter of the revenue and it ended the first six months at 95.3 million. This was largely expected and we managed to mitigate its impact thanks to the strictness and the resilience of our business model and client base. In particular, the expansion of CLIA, our software business, delivered a profitable, steady growth with a contribution in excess of 13% of the revenue And the clear it's also allow us to improve again our overall gross profit margin by over 300 basis point versus the same period the last year at 52.7%. As we are building our business for a long success, we have continued to invest in our structure. in our OPEX. Therefore, the incidence of our OPEX had a negative effect this quarter on our adjusted ABTDA. For the first half of the year, this figure ended at around 60 million, close to 15% of the revenue. I expect our operating leverage will play again in our favor as we will see revenue pick up into the next year. As we present this number, I want to insist on the fact and in this tough contest that our number one priority is to continue to lead by innovation, create value for our customers and deliver long term profitable growth to our shareholders. We are operating in a very fragmented sector with only few comparable listed stock. so i think we we combined it together in in a slide just to show uh two point against the performance of the two company listed in taiwan advantech and daddy link I think from a revenue perspective, the straightness of our business model has allowed us to be significantly more resilient, both on the 2022 when we were growing more than the competition, also now when we are decreasing, yes, but less on the competition. I think this is also important to look at the gross profit margin, where thanks to our position as industry leading into innovation and our unique business model, we were able to outperform the market. all in all in the gross profit margin as well as the growth that we reached on it over the last two years. This is also thanks to our unique business model that we built around the transition from model to system before and from system also to an end-to-end hardware software solution thanks to CLIA we launched just three years ago. I will come back tweet when we will talk about the business update later. And as well, we will provide you the guidance for the end of the year. And we will share with you also a positive view on the 2025 where we are expecting to bounce back in a normal revenue of growth for our sector. But for now, I leave the floor to Lorenzo to present to you in more details our numbers. Please, Lorenzo, go ahead.

Thank you. Thank you very much, Max. And good afternoon to everybody. Let's have a look together to our key financial allies in the first half of 2024. For what concerns the net sales that we are reacting now is decreasing due to the market context featured by high interest rate which caused a decrease in demand and the stocking trends across all customers all geographies and all industries with really limited exceptions so this is something related to uh the market the macroeconomic trend i think so that we would like to uh point out is for sure uh degree we recorded in the first half of the year regarding our software business which increased by uh 17 percent respect to the same period of last year uh just a couple of words regarding our gross margin performance in particular on relative terms as max already said we increase the gross margin by more than 300 basis point 312 In particular, this is due to mainly two factors. The first is the higher incidence of the software business or revenue that reach 13%, a percentage never reached in the past. And moreover, tends to more favorable market condition for what concern the components that reduce month by month their costs. For what concerns that our performance at adjusted the EBITDA margin, on relative terms, you can see that we have a reduction. This reduction is explained by two main factors. Firstly, obviously, a negative operating leverage effect over our OPEX due to the decrease in sales. Francesco D' And, secondly, and importantly, we have in particular in huge shoe and I Gary incidents of a diet, the production costs of viable production costs over say it's due to an on for an unfavorable production needs in this quarter. Just last words regarding net income. You can see the figure relating to net income. I would like to highlight just a point on this matter that is the tax calculation. Here taxes are calculated with the theoretical rate. So just applying the corporate tax rate of the different company with consolidated. So these adjusted net income do not include all the benefits that we can have in a full tax calculation that, as usual, we are going to perform for the end of the year. Let's pass to the next slides and let's have a look all together to our breakdown of sales that we recorded in the semester by geographic area and by market. An important message that I want to pass here is that we have no differences of respect to the other quarter or to the other reporting period. So the decrease that we are facing in sales is equally spread in geographic area and in markets. So it's defined that this comes from macro market condition. Our customers stay with us. We are just, I like some exception that is vending and fitness that performed really well because these are two niches in which we have important and big customer that performed, let's say outperformed the particular market context. Just the last word on these slides is the performance of CLIA, 12.6 million in the first half of the year, 13% of sales, with for sure a positive contribution to our profitability that will continue for the future. uh adjusting the ebtda here we reported as usual the bridge respect to the first half of 2023 uh i want to comment to matters the the first matters is uh something that they already highlighted before so the fact that this decrease in percentage term of about uh seven points for four points is explained by direct production costs that increase in the second quarter due to an unfavorable uh product mixing sales the second comments that i would like to make is Just a specification regarding the adjustment to ABTDA. As usual, we adjust the actuarial value of the stock option plan and we adjust the extraordinary transaction cost. The biggest part of 3 million is explained by an examination that we had from the tax authority starting at the end of last year and we close the agreement on June of this year for a cash payment of 2.3 million plus an accrual of 600 that our auditors ask to us. What is important and what I want to highlight is that this examination So we have no tax risk up to 2022. And I think this is a pretty important agreement that the company reached for a sum that is for sure reasonable. uh let's go to uh my last slide of this presentation that is our performance in term adjusted net financial position that on the other hand we can see the cash generation of the group in this period you can see that we close the um Second quarter with 61 million in net financial position adjusted, respect 57.3 with let's say an increase of 3.6 million. However, we have to highlight that these figures have been affected by Extraordinary payment, one I have already said before, that is the 2.3 million paid to the tax authority, Italian tax authority. Other than this, we paid a 1.8 million dividend to our final minority. And moreover, under this, we spend 500K to acquire the land for our new plant. So adjusting these extraordinary cash out in the period respect to the first quarter of 2024, we generate more or less 1 million of cash. Last word regarding our leverage, that is absolutely under control. If we do the last 12-month calculation, we are at about 1.4 million, despite the fact in this half we are decreasing EBITDA. I leave the speech again to Max, and thank you very much for your attention.