LightInTheBox Holding Co., Ltd.

Good morning, everyone, and welcome to the third quarter 2021 earnings conference call for Light in the Box Holding Company Limited. Today's conference is being recorded. At this time, I would like to turn the call over to Ms. Sophie Tang for opening remarks and introductions. Please go ahead, Sophie.

Thank you, Annie. Hello, everyone, and welcome to Light in the Box third quarter 2021 earnings conference call. The company's earnings results were released earlier today and are available on the company's IR website as well as through PR Newswire. Today, you will hear from Light in a Box CEO, Mr. Jianhe, who will give you an overview of the company's strategies and recent developments, followed by Ms. Yuanjun Ye, the company's chief financial officer, who will go over financial results. Together with them today is Ms. Yuanjun Yu, the Company's Chief Growth Officer. All of them will be available for the Q&A session at the end. Before we proceed, I would like to remind you of our Safe Harbor Statement. Please note that the discussion today may contain certain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risk and uncertainties that may cause actual results to differ materially from our current expectations. To understand the factors that could cause results to materially differ from those in the forward-looking statements, please refer to our Form 20-F filed with the Securities and Exchange Commission on April 21, 2021. We do not assume any obligation to update any forward-looking statements except as required under applicable law. At this point, I would like to turn the call over to Mr. He. Mr. He, please go ahead.

Thanks, Sophia, and thank you, everyone, for joining us today. We had a challenging third quarter with much uncertainty in turbulent markets. and the decelerating growth of the global e-commerce industry as a result of uneven pace of market reopening and global supply chain challenges. Total revenues decreased slightly year-over-year to $98.7 million in the third quarter. While for the first nine months of 2021, total revenue increased 25.5% year-over-year Gross profit margin improved to 44.5% from 43.1% in the third quarter of 2020. During the third quarter, we experienced several cost pressures from various markets. Cost of digital advertising increased much higher than what we anticipated due to the widening effects of the APOS APB checking transparency feature since April release of iOS 14.5. Since then, the new privacy feature has allowed users to control how their data is used for online advertising. Cost of shipping and delivery continued to raise. The fluctuation in foreign exchange rates also increased our operation costs. At the same time, Europe countries implemented the new VAT rules from July 1st, which basically removed the tax exception on small consignments. Meanwhile, since July 16th, the new market surveillance regulation has also increased the compliance and the product safety requirements on imported products into Europe. which has increased costs for manufacturers. As a result, we had to remove uncompliance products from our product listing and partially raise some of our prices, which impaired our competitiveness in the short term and had a certain negative impact on our top line. To confront these challenges, We continue to optimize our product mix with a particular focus on the apparel categories because of higher margins compared to standard categories like electronics. With our wide exposure and experience in apparel, we can also respond much quicker to market demand and fashion trends and adjust our strategies to counteract different kinds of uncertainties. In Q3, apparel sales represented 64.5% of total product sales, up by 39.6% from $44.4 million in 2020 Q3 to $61.9 million in 2021 Q3. The year-over-year growth in apparel sales has been the most successful result from our continuous efforts and investments R&D. Our in-depth research provides designers and suppliers with powerful insights on fast-changing fashion trends, which has actually helped us mitigate the impact from online advertising prejudice mentioned earlier on. As fashion is one of the largest B2C market segments for the e-commerce industry and also for our platforms, We will continue to leverage on the capabilities we have developed to meet our customers' evolving needs and optimize practical decision-making down to the design, style, and even fabric materials. In conclusion, the overall macroeconomic environment in 2021 has been more challenging, which in turn generated higher requirements for our operations compared to a year ago. Our continuous investment into R&D and ability to optimally balance our apparel product mix to appeal to different markets have all proven to be highly effective in responding to these new challenges. We will continue to achieve better growth momentum through optimizing our platforms to showcase the best curated and most comprehensive variety of quality and trending products sourced globally. As always, we remain firmly committed to provide our customers with value-added service to stand out as a reliable shopping destination. I will now turn the call over to Yuanjun to go through the financial results.