Dingdong (Cayman) Ltd ADR

Good morning and good evening, ladies and gentlemen. Thank you for standing by and welcome to the Ding Dong Limited fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. Please note that this event is being recorded. I would now like to turn the conference over to the first speaker today, Nicky Chen, Director of Investor Relations. Please go ahead.

Thank you. Hello, everyone, and welcome to Ding Dong's fourth quarter 2023 earnings call. With me today are Mr. Changlin Liang, our founder and CEO, and Mr. Song Wang, our CFO. You can refer to our fourth quarter 2023 financial results on our IR website at ir.100.me. You can also access a replay of this call on our IR website when it becomes available a few hours after its conclusion. For today's call, management will go through their prepared remarks, which will be followed by a question and answer session. Before we continue, I would like to refer you to our state property statement in our earnings press release, which also applies to this call. As we will be making forward-looking statements Please note that all numbers stated in the following management-prepared remarks are in RMB terms, and we will discuss non-GAAP measures today, which are more thoroughly explained and reconciled to the most comparable measures reported in our earnings press release and filings with the SEC. I will now turn the call to our first speaker today, the founder and the CEO of Dingdong, Mr. Liang.

谢谢各位投资人,各位分析师,各位丁东买菜的朋友。 欢迎大家来参加丁东买菜2023年Q4的财报分析会。 Hello everyone and welcome to Dingdong's fourth quarter 2023 earnings call. 首先我想简单回顾一下丁东买菜2023年Q4以及全年的业绩情况。 As we continue to advance our strategic development strategy with priority on efficiency, we have not only achieved profit under the long gap of five consecutive seasons, but also achieved profit under the long gap standard for the first time in a season. In Q4, Dingdong Grocery previously received 44.9 billion yuan, GNV 55.3 billion yuan, and the interest rate increased by 30.6%. First, let me give you a brief overview of Dingdong's performance in Q4 and for the full year 2023.

As we consistently implemented our development strategy of efficiency first with due consideration of scale, we not only achieved non-GAAP profitability for the fifth consecutive quarter, but also marked our first full year of non-GAAP profitability. In Q4, we generated revenue of 4.99 billion RMB with a gross merchandise volume, or GMV, of 5.53 billion RMB. Our gross profit margin increased to 30.6% sequentially with a net operating cash inflow of 120 million RMB. Our non-GAAP net profit margin was 0.3%. For the full year, our revenue was 19.97 billion RMB with a GMV of 21.97 billion RMB. Our gross profit margin was 30.7%. and our non-get-net-profit margin was 0.2%. 本季度GNV同比下跌, 主要原因是在2022年同期疫情封控下, 消费者居家下单需求增加, 同时也受到我们2023年暂停部分城市及站点运营的影响。 虽然2023年全年受到猪肉蔬菜等CPI价格持续下滑的影响, 但受益于我们在商品结构的持续优化和商品力上的生根。

tmv declined on a year-over-year basis in the fourth quarter primarily due to the high base effect during the same period of 2022 when continuing pandemic restrictions

drove a surge in order volumes it was also partly caused by the suspension of operations in some cities and stations in 2023 nevertheless we have continued to optimize our commodity structure and enhance our product development capabilities to mitigate the impact of declining consumer prices for certain commodities such as pork and vegetables throughout 2023 as a result The average order value, or AOV, remained stable at 72.1 RMB in Q4. Despite declining year-over-year, the AOV was still 23% higher than in the same period of 2021.

We will continue to strengthen the product and service innovation and continue to serve our new and old users.

During the fourth quarter, Dingdong's users placed over four orders per month, a year-over-year increase of 4.5%. Notably, users who were onboarded in 2017 increased their purchasing frequency sequentially in year-over-year to 5.8 times per month. Additionally, Q4 saw a 1.9% sequential increase in the number of members who placed orders per month. Members' contributions to the order volume and GMV also increased. We thank our loyal users for their trust in Dingdong's products and services. We're committed to innovating our offerings to better serve new and existing users.

The annual GDP of China is 219.7 billion yuan. Although the decline in online consumption after the epidemic and the impact of our economic and urban adjustment have decreased compared to 2022, there has been a significant growth compared to 2021. In the core of the Huadong market, since 2021, the overall scale has achieved a 10% increase in annual compound growth. We made significant progress at the operational level during 2023. Despite the decline in online consumption post-pandemic and the operational adjustment we undertook,

Our full year GMV declined slightly year over year to 21.97 billion, but grew substantially from 2021. Specifically, when compared to 2021, total GMV in our core East China market grew at a staggering CAGR of 10% and 13.5% on the same store basis. The AOV also increased from 58.6 RMB in 2021 to 72.1 RMB in 2023. Additionally, the average monthly order frequency increased from 3.7 orders per month in 2021 to 4 orders per month in 2023.

The Q4 first broke through 20% and reached 21.1%, which increased 3.1% in the same period last year. The user penetration rate reached 73.6%, which increased 1.6% compared to the same period last year. The free brand GNV penetration rate, which includes non-fresh products, has reached 34.3%, which increased 7.7% in the same period last year.

Genome has made remarkable progress in building its product development capabilities. In Q4, our private label products accounted for more than 20% of total GMB for the first time, hitting 21.1%, a significant year-over-year increase of 3.1 percentage points. Moreover, the user penetration rate of our private label products also increased by 1.6 percentage points year-over-year. reaching an outstanding 73.6%. Notably, for non-fresh grocery categories, including prepared meals, the GMV contribution from our private label products has skyrocketed to 34.3%, a striking year-over-year increase of 7.7 percentage points.

We always stick to the freshness and food industry. High-efficiency and sensitive user needs have cultivated a batch of successful free brands and branded products. Formed a unique brand system, established a consumer mindset, and won the customers' reputation and repurchase. In more than three years, we successfully operated the pre-made vegetables, pork, and bean products. These three categories of free brands in 23 years, these three categories of free brands, the GNV success rate has exceeded 50%.

We remain committed to providing our customers with fresh and high quality grocery and food products. We're quick to identify and respond to the changing case about users, which has created opportunities for us to launch several popular and highly successful private label products. As a result, we have built a unique brand portfolio that has earned the trust and loyalty of our customers. Over the past three years, we have successfully launched private label products across three major categories, prepared meals, pork, and soy products. And these three categories of private labels penetrated over 50% of GMV in 2023.

Let me share some examples.

First is Cai Changqing, a private label product specializing in prepared home-cooked meals. In 2023, GMV totalled approximately 840 million RMB, a significant increase of 43% from 2022. In the fourth quarter of 2023, the average number of monthly repurchasing users reached 37%, showcasing the brand's popularity among its customers.

Second is Good Craftsman Noodles, which specializes in pastries

And it recorded GMV of approximately 500 million RMB in 2023, an increase of 19% from 2022, with an average monthly repurchase rate of nearly 40% in the fourth quarter. 三,只卖一天的日间注入品牌是我们最早成立的品牌。 23年,GMV约3亿元,同比增长了7%,四季度月均复古率32%。 Third, our oldest brand, Fresh Everyday Pork, which has a shelf life of only one day. In 2023, it drove GMB of approximately 300 million RMB, an increase of 7% from 2022, with an average monthly repurchase rate of 32% in the fourth quarter. 四,同时我们聚焦特色黑猪肉,打造的以黑钻世家为代表的黑猪肉资物品牌,

We also launched a specialty black pork brand called Black Diamond Family, which was well received by consumers. GMV in 2023 reached around 230 million RMB, a 68% increase from 2022.

In the fourth quarter, its average monthly repurchase rate exceeded 36%.

Finally, our You Dou Zhi brand launched in late 2021.

is dedicated to producing soy products. Over the past two years, it has gained significant popularity among consumers, with an annual GMB surpassing 250 million RMB, representing a year-over-year increase of 24%. In the fourth quarter, its average monthly repurchase rate exceeded 41%.

At the same time, in 2023, we will also put our free brand and free supply chain products into the e-commerce platform and directly compete with other products in the market. In a year, the export scale has reached about 500 million yuan. In the future, we will continue to bring more high-quality and low-price goods to the market.

In 2023, we started selling our private labels and supply chain products through external 2B channels, where they began competing directly with other products. In just one year, we generated around 500 million RMB in sales through external channels, which I believe showcases the strength of our brand and supply chain. Moving forward, we aim to continue delivering high-quality and affordable products to consumers and market.

In addition to the recognition from the consumers, we have also gained recognition in the industry in the field of fresh and food research. In the 7th PLF Golden Star Awards, and won 13 grand prizes, including an award for the best product, an award for the best team, and an award for the best partner. The prizes include beans, jade, fruits, condiments, drinks, baking, and many other types. At the same time, in the third round of the Grand Prize for the best brand, the free brand of the Jade Department, Cai Changqing and Dingdong Wang Bai Cai, won more than 300 brands, and won about 1,300 competitions.

Our products have received widespread consumer and industry recognition in fresh groceries and food product R&D. We won 13 awards at the 7th PLF Gold Star Awards, including 11 Outstanding Product Awards, 1 Outstanding Team Award, and 1 Outstanding Trader Award. our award-winning products and across various categories such as short products preparing meals fruit dairy beverages baked goods and more at the third golden power awards shop brand awards our prepared meal product labels and ding dong top dish stood out from a highly competitive market of over 300 participating brands and approximately 1,300 participating products by securing three awards. The awards were based on the evaluations by over 100 judges and 20,000 consumers.

At the same time, we also achieved the first annual long-gap performance. It is very meaningful to Jindong Grocery and our industry.

We achieved full-year non-debt profitability for the first time in 2023, a critical milestone for both Dingdong and the industry. 第一,说明我们度过了艰难时期,早些时候因为宏观环境的调整和进程格局的变化,公众对丁东买在有生死存亡的怀疑。

It is the only profitable company in this industry. To start, this reflects how we have successfully navigated a highly challenging macroeconomic and competitive environment in which many raised doubts about the company's sustainability.

Second, it reflects our outstanding corporate flexibility and adaptability. With the market changing rapidly, these attributes will remain critical to our long-term sustainability. Third, it makes us the first among many in the sector to achieve profitability. Getting here was a long and difficult journey, but we stuck to our principles and vision. Lastly, having attained profitability, we're looking confidently to the future as we focus on maintaining sustainable long-term growth.

Finally, let's take a look at the situation of the whole year and the whole quarter of 2024. We are confident that the GNV of 2024 will be able to return to the growth track and continue to achieve the profit under the non-GAAP approach of the whole year. After the cost and expense of the QE of 2024, considering the non-GAAP approach, we can still achieve the profit under the non-GAAP approach. We are confident that our GMV will regain growth momentum in 2024 and are confident that we will be able to maintain non-GAAP profitability once again.

Even after factoring in the costs and expenses incurred by staying open during the Chinese New Year holiday, we expect to be profitable on a non-GAAP basis during the first quarter of 2024. Maintaining profitability in the current environment highlights the viability of our business model and provides us with additional resources to fuel our future development. Thank you all for listening. I would like to invite our CFO, Wang Song, to go over the company's financials.

Thank you, Mr. Liang. And hello, everyone. Before I review our financial performance, please note that all our figures are in RMB. In 2023, Dingdong Grocery achieved a year-round turnover of 219.7 billion yuan and a revenue of 199.7 billion yuan. The non-GAF profit margin is 0.2%, which is 2.6% better than last year. We have achieved our promise and completed the profit of the non-GAF branch of the whole year. Since Q3 2021 established the strategic strategy of efficiency priority and building scale, In 2023, Dingdong generated GMB of 21.97 billion RMB, revenue of 19.97 billion RMB, and a non-GAAP net profit margin of 0.2%,

an improvement of 2.6 percentage points when compared to last year. We successfully met our targets and achieved full-year non-GAAP profitability. Our efficiency first, with due consideration of scale strategy, which we began implemented in Q3 of 2021, has paid off. After two years of hard work, we are proud to have moved from a non-GAAP annual loss margin of 30.4% in 2021 to a non-GAAP annual profit margin of 0.2% in 2023.

At the same time, in Q4 of 2023, Dingdong Maicai achieved a revenue of 49.9 billion yuan, 0.3% of Nangaba's net cash flow rate, and a net cash flow of 1.2 billion yuan. Since Q4 of 2022, we have achieved a profit of Nangaba's net cash flow rate of 5 consecutive weeks. In Q4 of 2023, Dingdong achieved a revenue of 4.99 billion RMB, a non-GAAP net profit margin of 0.3%.

and a net operating cash inflow of 120 million RMB. We have achieved non-GAAP profitability for five consecutive quarters since Q4 of 2022. Additionally, we once again achieved net operating cash inflow. At the end of 2023, after deducting the balance of short-term borrowings, our actual self-owned fund balance was 2.01 billion RMB and that increased for the second consecutive quarter.

Over the past few years,

We have achieved great success by prioritizing efficiency while considering the scale of our operations. The success has enabled us to overcome challenging times and establish ourselves firmly in the market. We have ample resources available to resume our growth trajectory.

Next, let's take a look at Q4's specific financial situation. Q4's revenue is 49.9 billion yuan, Next, let's review the financial performance of Q4 in detail. Revenue for the quarter was 4.99 billion RMB, down by 19.5% year-over-year,

mainly due to the high base effect created by pandemic restrictions during the same period last year and the suspension of operations in some cities and stations. However, it's important to note that regions such as Jiangsu and Zhejiang provinces have performed exceptionally well despite the challenging environment. Both GMV and order volume in these provinces grew by over 8% year-over-year throughout 2023. Q4毛利率为30.6%,同比去年降低了2.3个百分点。在消费者越来越理性的当下,我们更多的让利于消费者,毛利率符合我们的预期。未来,我们会继续为消费者提供更高的价值,让消费者买得实惠,吃得放心。

In Q4, our gross profit margin was 30.6%.

a decrease of 2.3 percentage points from the same period last year. With consumers reducing their spending, we're working to entice them to our platform by offering added benefits while maintaining a reasonable gross profit margin. Moving forward, we'll focus on providing consumers with more value so that they can buy affordable and quality products without any worries. We also plan to explore new food consumption scenarios beyond the dining table. We're leveraging our supply chain and product development capabilities to create private label and best selling products while also carefully managing slow moving commodities to improve supply chain efficiency. It's important to note that our supply chain loss rate was 1.3% in Q4, an improvement of 0.4% points compared to the same period last year.

Q4's travel fee is 23.6%, which is 0.5% better than last year. In 2023, we successfully completed the optimization of the branch network layout of the branch center. Q4's travel fee is 1.0% better than the previous year. It is 1.8% lower than the previous year. At the same time, in order to further improve our service, we actively increased the investment of the pre-workshops and travel schools. In the 4th quarter of 2023, the time limit of the time limit is 36 minutes, which is 2 minutes faster than the 3rd quarter. In the whole year, the time limit of the time limit is controlled within 38 minutes. In 2024, we will optimize the transport structure, upgrade the transport system, reduce the number of goods in the warehouse, and thoroughly operate the front-row warehouse such as energy-saving signage, and reduce the cost-effectiveness of the front-row warehouse.

Q4 fulfillment expense ratio improved by 0.5 percentage points year-over-year to 23.6%. Throughout 2023, we implemented various optimization measures for our network of regional processing centers, which resulted in a 1 and 1.8 percentage points year-over-year decline in fulfillment expense ratio in Q4 and in full year 2023, respectively. Additionally, we increase our investment in frontline fulfillment stations efficiency to enhance our service capabilities. As a result, we reduce our fulfillment time to rush orders to 36 minutes during the quarter, two minutes faster than in Q3. Throughout the year, we maintain rush order fulfillment times to within 38 minutes. In 2024, we plan to reduce costs and increase the efficiency of frontline fulfillment stations through further operational refinement, such as optimizing transportation capacity, iterative upgrades to our fulfillment system, reduction of packing and consumables, and implementation of energy conservation, and emissions reduction policy in frontline fulfillment stations.

The current sales rate is 2%, which is 0.5% higher than last year. As mentioned above, under the premise of good financial performance and sufficient cash reserves, in 2024, we will appropriately increase our investment in marketing.

Selling and marketing expense ratio in 2004 was 2% up 0.5 percentage points year-over-year. As mentioned, we plan to allocate additional resources towards marketing in 2024 due to our strong financial performance and sufficient cash reserves.

General and administrative expense ratio in Q4 improved to 1.9%, up 0.5% from the same period last year.

Additionally, R&D expense ratio improved to 3.8% up to 0.3 percentage points from the same period last year. As always, we remain committed to investing in food research, agricultural technology, and data algorithms.

In the fourth quarter of 2023, we achieved a net profit of 0.3% under the Nanggat standard. This is our profit under the Nanggat standard for the fifth consecutive quarter.

In Q4 2023, we achieved a non-GAAP net profit margin of 0.3%, our fifth consecutive quarter of non-GAAP profitability.

In Q4 2023, we achieved a non-GAAP net profit margin of 0.3%, our fifth consecutive quarter of non-GAAP profitability. Finally, let me update you on our performance during the Spring Festival. On February 24, the day of the Lantern Festival, our single-day sales exceeded 100 million yuan, which is the highest level of single-day sales after the epidemic. In addition to the same-day data of the Lantern Festival, the unit volume increased by 6%, and the GNV increased by 5%. In the East China region, the unit volume increased by 9%, and the GNV increased by 7%. Considering that during this year's long-term holiday, the number of residents traveling back to their hometowns has increased significantly, the above performance is more difficult to compare.

We generated a positive operating cash inflow of 120 million RMB in the fourth quarter, As of the end of Q4, the total balance of our cash and cash equivalent, short-term restricted cash, and short-term investment was 5.31 billion RMB. After deducting the balance of short-term borrowings, we have ample cash on our balance sheet with 2.01 billion RMB. I would like to update you on how we did during the Chinese New Year. On February the 24th, which was the Lantern Festival, we achieved a GMV of more than 100 million RMB in just one day, setting our highest single-day record post-pandemic. Additionally, between the Chinese New Year's Eve and Lantern Festival, on the same store level, our overall order volume increased by 6% year-over-year and GMV by 5%. And in East China, our order volume increased by 9% year-over-year and GMV by 7%. It's worth noting that this performance is even more impressive considering that during the Chinese New Year, there were significantly more outbound residents from Jiangsu, Zhejiang, and Shanghai.

Our financial reserves are full. In 2024, we will continue to use high-quality services to provide high-quality products for consumers. At the same time, we will also use our all-terrain supply chain and system capabilities to continue to improve our operating efficiency and profitability.

For 2024, our primary focus will be to maintain our high-quality services and deliver products that offer the best cost-effectiveness and quality ratio to our valued customers. Furthermore, we'll take advantage of our comprehensive supply chain and system capabilities to improve our operational efficiency and drive profitability.

That's all for today's speech. Oblata, you may now enter the question and answer session.

This concludes our speech today. Operator, we can now start the question and answer session.

Thank you. We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. When asking the question, please state your question in Chinese first, then repeat your question in English for the convenience of everyone on the call. At this time, we will pause momentarily to assemble our roster. The first question today comes from Jiajing Chen with CICC. Please go ahead. Hi.

Hello, Mr. Liang and Mr. Wang. I am Chen Jiajing from CICC. Congratulations on achieving five consecutive quarters of non-GAAP profitability. Dingdong recently announced that the company plans to repurchase up to 20 million US dollars of its shares by January 2025. Could you give us more color on this? Thank you.

Thank you for your question. As you mentioned, we recently announced a stock repurchase plan that will last one year, with a total limit of $20 million. We expect to begin buying back shares once the blackout period ends following earnings. From a long-term perspective, we believe that the current stock price has been severely underestimated. For a company with plenty of cash reserves, return to stock is a good way to distribute funds, especially when the stock price is underestimated. This is both beneficial to the company itself and to the shareholders. According to the internal situation of the company and the confidence in the future, Our stock is significantly undervalued at the current price, especially in view of our long term growth prospects. Given our ample cash reserves, buying back stock is an effective way to allocate capital.

especially when the stock is undervalued. This program will be beneficial for both the company and its shareholders. Based on the company's internal operations and our confidence in its future, we're convinced that our overall operations are in very good condition. We have ample cash reserves and zero concern about cash flow for the next year. leaves us in an ideal situation and position to carry out a share buyback with our own cash.

Stock repurchasing is just a market behavior. The key to improving the comprehensive value of the enterprise is still the ability to continue to improve our business. This way, we can continue to develop for a long time.

Thank you. Given current economic and market conditions, this share repurchase program reflects our strong financial position. Our goal is to increase the company's intrinsic value and show that we have confidence in its long-term growth. However, it's important to note that buying back shares is just market activity. The key to enhancing the company's overall value lies in our ability to continuously improve our operational capabilities, ensuring sustainable and long-term development. Thank you.

The next question comes from Thomas Chong from Jefferies. Please go ahead.

I will translate myself. Thanks for taking my question. My question is, can you provide a summary of the year and are there any changes in strategies? Thanks.

Okay, thank you for your question. First of all, I would like to share a sentence with you. It's called, Hard times create strong men. It means that in difficult times, we can always create brave people and brave teams. So this sentence corresponds to our two stages. The first is that during the epidemic, we are facing all kinds of challenges and difficulties. Thank you for your question. Before we move forward, I would like to share a saying with you. Hard times create strong men and strong teams.

This sums up perfectly our journey through the pandemic. We faced numerous challenges and difficulties, including issues with our systems, personnel, and supply chains. But we didn't let these obstacles get the best of us. Instead, we stood up and persevered in merging a much stronger company overall. Now we find ourselves facing a new and challenging environment that will present more obstacles going forward. Given our recent experience, however, I'm confident we'll emerge as an even stronger company on the other end.

At our company,

We've always believed in the power of persistence and change. We've worked tirelessly to drive the industry forward and have made significant progress in this regard. But we also recognize the importance of change and made any adjustment over the years. For example, we've built a presence in multiple new cities after 2018, even though it meant incurring losses over the medium term. However, we're proud to say that since July 2021, which is when we adopted a strategy to prioritize efficiency with due consideration to scale, we've been profitable on a non-debt basis for five consecutive quarters. And this is a testament to our commitment to both persistence and change. And we're excited to see what the future holds.

We've always believed in the power of adapting to the changing times and following evolving consumer trends. In the current environment, it's crucial to stay on top of these changes and make the necessary tweaks to remain relevant and successful. One way to do that is by digging deep.

First, we'll focus on strengthening our strongest markets, particularly in Jiangsu, Zhejiang, and Shanghai. We can work towards improving our market penetration in these regions to further expand our reach.

Second, based on the quality of the food, we will also use the advantages of the supply chain to extend the eating scene outside the restaurant and break through the quality circle. On the basis of the free brand, we will now achieve long-term progress and further improve the free brand base of non-fresh products. At the same time, we will create a big single product that is always around the goal of becoming the first choice of Chinese family fresh and food shopping.

In addition, we'll utilize our existing strengths in the meals category and leverage the efficiency of our supply chain to expand beyond traditional dining scenarios. This will enable us to break through into new categories to reach new heights. We'll increase the proportion of private label products in the non-fresh grocery categories, building on the significant progress we already have made At the same time, we'll focus on developing and promoting best-selling products to become the preferred toys for grocery and food shopping for Chinese families.

三,在渠道建设上,同上面所讲,我们会进一步加大在现有区域用户渗透的资源投入,重回CNV增长目标。 与此同时,我们会进一步加大与包括抖音、鄂勒马等外部渠道的合作,增加在上渠道的市场份额。

When it comes to our channel strategy, as I mentioned earlier, we plan to invest more resources in deepening our reach to users in existing regions to achieve our GMB growth target. Additionally, we'll collaborate even more closely with Douyin and Ulema and seek partnerships with other external channels to expand our market share in these channels.

Secondly, we will continue to improve the efficiency of the supply chain in 2024 based on the long-term efficiency of the supply chain. After the initial evaluation of the team, we have already had a relatively clear action plan. At the same time, we will also accelerate the adjustment, improvement, and implementation of the Quizzing area in terms of overall energy efficiency. After these two aspects are done, we can live in winter and welcome the next spring.

Our second priority is to focus on the long-term sustainability of our business. To achieve this, we'll prioritize driving efficiency while scaling our business and improving our supply chain efficiency further. We have already mapped out a number of actionable measures that we'll take this year to do so. Additionally, we aim to speed up the operational adjustments and improvements we're making in loss-making areas at a regional level to stand financial losses. This will ensure that we can survive the challenging environment we currently face and position ourselves to grow once things improve.

Thank you.

As we mentioned in previous earnings calls, retailers need to adapt to a complex new post-pandemic environment. What consumers want most in the current environment is certainty, and instant delivery retail can cater to this by providing reliable service, stable quality assurance, and competitive pricing. Given this climate, we'll continue refining our core competencies, including product, service operational and organizational capabilities. Thank you.

As a reminder, if you have a question, please press star then 1 to be joined into the question queue. That's star then 1 to enter the question queue. As there are no further questions, I'd like to return the call to our management for closing remarks.

Thank you again for joining our call today. If you have any further questions, please feel free to contact us or request through our IR website. We look forward to speaking with everyone in our next earnings call. Have a good day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.