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spk04: Good day, everyone, and welcome to Treasures Global Inc. second quarter fiscal year 2023 conference call. At this time, participants are in a listen-only mode. A question-and-answer session will follow management's remarks. This conference call is being recorded. A replay of today's call will be available on the investor relations section of TGI's website and will remain posted there for the next 30 days. I will now hand the call over to Alison Soss, Investor Relations, for introductions and the reading of the Safe Harbor Statement. Please go ahead.
spk02: Thank you, Operator. Good morning, everyone, and welcome to Treasure Global's second quarter fiscal year 2023 earnings conference call. With us on today's call are Sam Teo, Chief Executive Officer, and Jovin Chan, Chief Financial Officer, and Jeremy Roberts, Independent Director. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities and Exchange Act of 1934, as amended, including with respect to the company's recent IPO and the anticipated use of net proceeds as well as concerning future events. Words such as may, should, reject, expect, intend, plan, believe, anticipate, quote, estimate, and variations of such words and similar expressions are intended to identify forward-looking statements. These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the risk factor section of the company's registration statement, and final perspective for the company's initial public offering filed with the SEC. Copies of these documents are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. It is my pleasure to introduce Sam Teah, Chief Executive Officer of TGI. Sam, please go ahead.
spk00: Thanks, Alison, and thank you all for joining us today. I would like to begin by reviewing our second quarter of fiscal year 2023 highlights, followed by an update on the subsequent months and our 2023 outlook. TGI Chief Financial Officer, Jerry Chan, will then review the highlights of our second quarter financial results. Following that, we will be happy to take your questions. QGI continues to evolve as an innovative online to offline e-commerce platform, providing seamless technology-enabled solutions for lifestyle needs. We are developing a portfolio of digital platforms for use throughout the Southeast Asia region and Japan. And we are more than just a payment vehicle, with our app facilitating a diverse range of lifestyle functions Our products bring together the world of online e-commerce with offline physical retailers, increasing convenience and offering instant rebate and effect cashback programs. During the second quarter of fiscal year 2023, we were pleased to report total revenue of $20.4 million, improved gross profit up 68% year-over-year and strong active user retention rate up 98.1%. We were very proud to announce in December that Taste, our innovative digital food and beverage management system, was now ready and available. Taste is the first product as part of our solution strategy and will modernize the F&B industry in Malaysia by providing merchants with a one-stop automated solution to digitalize their businesses. The F&B sector currently faces many inefficiencies that we believe Taste will address. improving operational efficiency and achieving cost savings for merchants. PACE offers digitalized processes including e-menus, ordering and e-payment, translation recording with online payment or QR digital payment technology. PACE smart F&B system also provides a device queue system that has been proven to reduce staff labor and will offer a private domain of delivery services to access multiple dedicated delivery partners. There were more than 220,000 small to medium F&B business owners in Malaysia in 2021, and the market is growing at an annual rate of 5.1% since 2015. We are aiming for Taste to become the market leader in automated solutions for the F&B industry. We expect Taste to increase engagement and retention between users and merchants. as well as gathering user data and insights. During beta testing and since our official launch, we have gathered strong positive feedback from merchants on how TACE has helped them to improve operational efficiency and reduce costs. TACE has the ability to gather important data and customer insights such as demographics, spending habits, purchase trends, allowing merchants to identify opportunities to increase sales or optimize offerings. This enables them to make smarter decisions with data and see how their business is performing from their mobile devices, anyway and anytime. PACE uses Jack City as CRM analytics software to attract and retain consumers through personalized data-driven engagement to generate greater profitability. Our goal is to continue increasing user engagement through new products and services development, such as taste, that will increase retention rate and generate better margins. At TGI, we continuously focus on innovation and the initial version of taste made available in December was just the beginning. We also have a pipeline of extra features enhancement that our development team has in the world. Brand enhancement includes the ability to set discount, provide redemption, and reward to customers online, remote approval of staff action, instant refunds for customers, drive-through food ordering, and pre-ordering deals. These features will help F&B businesses to better manage operational processes, thus thereby reducing wastage of resources and increasing revenue. In addition, Customer will be able to benefit when using taste by assessing discounted pricing in comparison to original menu prices. Turning to our strategy partnership, TGI continue to secure diverse strategy partnership, which is key to our marketing and growth strategy. This collaboration are important in broadening our market penetration, growing our user base and driving revenue. In January 2023, we signed an MOU with Boost, a regional full-spectrum fintech player. As a continuation of our business collaboration with Boost, the new partnership will leverage on AI-based digital financing solution from Boost Credit, which offers a range of renting services such as working capital financing, invoice financing, and supply chain financing to financially empower small and medium-sized enterprises. Boost Credit Digital Financing Solution will be onboarded into TGI Taste Program, connecting TGI with a growing network of merchants and F&B providers as potential users of our Taste and Zest City platform. In addition, the partnership will increase TGI brand exposure, building awareness among the F&B businesses in Malaysia. In November 2022, we secured a partnership with iPay88, Malaysia Reading Payment Gateway to become PGI exclusive payment gateway partner for Zach City, as well as a partner for TASTE. iPay will provide e-commerce and retail payment solution for Zach City, not only in Malaysia, but also additional Southeast Asian country, including Indonesia, Thailand, and the Philippines, supporting Zach City future regional expansion. Important for the growth of TASTE, IP88 also provides access to its large F&B merchant list. As part of the agreement, IP88 has begun to promote TACE as one of its exclusive collaboration partners, prompting F&B merchants to sign up for TACE as their managed software as a service solution. These partnerships are key examples of TGI executing on our strategy plan to secure relevant partnerships in Southeast Asia. through which we can offer solutions to their members and increase our reach and conversion to users on our channels. We have also secured strategy brand partnership to be the sole marketing and selling platform on our e-commerce marketplace, Zestor. This partnership enables Zaxity to provide our Zestor customers with tailored product offerings while providing TGI with an additional revenue stream as a portion of product sales. The first of this type of collaboration was Enology, a health and wellness plan whose first product is available on Zestor. As a strategy brand partner, Zest City provides two promotional strategies for Enology products. Firstly, as promotion to the existing and growing Z member database, and secondly, as a combination of traditional and innovative digital marketing. The new revenue stream from Enogy and other affiliate partner products sold on the ZagCity app will enhance the acceleration of the TGI revenue growth and brand presence as we continue to expand in Malaysia and Southeast Asia. We also continue to look to collaborate with leading regional lifestyle brands as an affiliate for ZagCity to further drive user acquisition and revenue growth. Our partnership with renowned industry brands are another important part of our strategy to spread our plan to a wider market. Now, I will pass the call on to Jeremy, who will review our financial results in greater detail.
spk05: Thank you, Sam, and good morning, everyone. Today, I will review our financial results for the second fiscal quarter ended December 31, 2022, compared to the corresponding period the year prior. Total revenue for the second quarter of fiscal year 2023 were $20.4 million. This is approximately $2 million less than total revenue for the second quarter of fiscal year 2022, which were approximately $22.4 million. The decrease was mainly attributed to the resources being allocated to membership subscription that generate revenue with better margin. As Sam has mentioned, we are focused on increasing margin and gross profit. This has already begun to show in our results. With gross profit for the three months to December 31, 2022 of $0.23 million compared to $0.14 million for the same period the prior year. This translates to the growth of 68% year-over-year. The increase in gross profit was primarily due to an increase in the membership revenue with higher gross profit margin. Our goal is to continue increasing user engagement to new products and services, such as recently launched PACE that will increase retention rate and generate higher profit and margin. Zed City has over 2.3 million registered users and 240,000 monthly active users as of December 31, 2022. Growth of quarterly active users year-over-year at December 31 is 8.8% higher than the prior year. Active user retention rate for the quarter to December 2022 were 98.1% higher than in the second fiscal quarter the year before. This means that we have acquired repeat users compared to new users, showing higher levels of engagement on our platform that keep them coming back. A total of 0.9 million transactions by our registered users were transacted over the second quarter of fiscal 2023 up by 28% compared to the prior corresponding quarter. Net loss was approximately $2 million for the second quarter, down by approximately $1.2 million from approximately $3.2 million for the prior year's second quarter. A reduction of 36.7% year-over-year is mainly due to lower operating and other expenses. Our operating expenses for the second fiscal quarter of $2.3 million were down 20.2% compared to prior corresponding period, mainly due to reduced selling expenses. Cash and cash equivalent were approximately $4.7 million as of December 31, 2022, compared to approximately $7 million as of September 30, 2022. TGI has a positive working capital of approximately $4.7 million as of December 31, 2022. I will now hand the call back to Sam.
spk00: Thanks, Jerry. To conclude, we were particularly excited for our innovative new product, TASTE, as well as the progress we made in advancing our strategy priorities. We anticipate TASTE to generate revenue, which will become a significant contributor to TGI total revenue in the future. And a pipeline of extra features enhancements plan to further grow TASTE for fiscal year 2023. TGI continues to focus on increasing user engagement and margins. The company expects to achieve this through the release of innovative new products and solutions, as well as executing its regional expansion plan into Southeast Asia and Japan, with a solid balance sheet and proven infrastructure. CGI is well-placed to achieve its strategy priority and further develop as a leading innovative e-commerce provider in the Southeast Asia region. This ends our prepared remarks.
spk04: Ladies and gentlemen, at this time, the management will not be taking any questions and answers. I'd like to turn the call over to Sam Teo, the CEO, for closing remarks.
spk01: Thank you again for joining us for today's call. As always, we appreciate the continued support of our investors and stakeholders.
spk03: Thank you. The conference of Treasures Global Inc.
spk04: has now concluded. Thank you for your participation. You may disconnect your lines.
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