MOGU Inc. American Depositary Shares (each representing 25 Class A Ordinary Shares)

Ladies and gentlemen, thank you for standing by and welcome to the Mogul Fourth Quarter and Fiscal Year 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star 1 on your telephone. I would now like to hand the conference over to your speaker today, Mr. Roger Hu. Thank you. Please go ahead, sir.

Thank you. Hello, everyone, and thank you for joining us today. MoGU's earnings release was distributed earlier today and is available on the IR website at ir.mogu-inc.com, as well as on the BusinessWire services. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and the current market and operating conditions and relate to events that involve known or unknown risks, uncertainties, or other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company to ask for results, performance, or achievements to differ materially from those in the forward-looking statements. Further, information regarding these and other risks, uncertainties or factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. On the call today from Mogu are Mr. Shark Chen Qi, Chairman and CEO, Mr. Raymond Huang, Chief Strategy Officer, and Ms. Feng Qi, Financial Controller. Mr. Chen will review the business operations and company highlights, followed by Mr. Huang, who will discuss financials. They will be available to take your questions during the Q&A session. Now, it is my pleasure to introduce our Chairman and CEO, Mr. Chen. Please go ahead.

Hello, everyone. Hello everyone, thank you for joining us today on our first quarter fiscal year 2021 earnings conference call today. In the past one quarter, our live streaming business has continued to grow. This quarter, the Gmv of live streaming has increased by 42% to 22.45 billion yuan. The Gmv of live streaming business has increased by 87.2% During the past quarter, we continue to see a consistent and steady growth in the live e-commerce business. the GMV from live e-commerce increased by 42% year-over-year to RMB 2.245 billion in the fourth quarter, contributing to 87.2% of the total GMV during this period. This demonstrates that Mogul has successfully executed on the transformation of its business and has essentially become a pure-play live e-commerce powerhouse. As an early mover in live e-commerce, we have witnessed the advancements in the live e-commerce business in China during the last five years, and have established a very differentiated shopping experience for our users. This allows us to continue capturing new growth opportunities in the e-commerce space in China. Wujie is a company that continues to innovate. After the invention of live e-commerce in 2016, we have now invented short-wave. And in the past few months, we have made some breakthroughs. So continuous innovation is an essential quality in mobile's culture. After establishing our live e-commerce business in 2016, we have also developed a product feature called Short Live, which has really begun to make a breakthrough over the past few months. Short Live is basically a short video clip produced by KOLs in Mogul Live Room and can be distributed as a structured and tagged information to a wider audience in public. This information can be searched, structured, categorized, and recommend in the feed. Different from the one-off performance in the live show, short live can have very long shelf life for consumers to browse and purchase. For MuguJie users, short live greatly improves the user experience of live broadcasts and also reduces the threshold of new users of live broadcasts. The connectivity of live broadcast users is very strong, but live broadcasts consume more time And the flow of live broadcasts allows users to enter the live broadcast room at any time. Its experience is also unstable. This is also the reason why the penetration rate of live broadcasts in the e-commerce industry has increased relatively slowly. We invented a short broadcast that is different from other platforms. The product explanation is that the live broadcast is self-recorded and the quality is stable. This kind of live broadcast content is the goal of the live broadcast. It greatly reduces the threshold for users to accept live broadcasts. As for our users, Shor Live has significantly enriched their live mobile shopping experience. It has also lowered the entry barriers for new users in our live e-commerce business. Although the user stickiness of live e-commerce is very strong, it's also very time consuming and presents a higher entry barrier for new users. That's what makes it difficult to fully improve the penetration rate of live e-commerce in e-commerce space. Short video is not just a simple recording of product presentation. It also captures the best moment of the host, of the live host, and also the personal touch on the product issue. For small and medium-sized streamers, short-streaming is a good path for them to grow. Even without the advantage of streamers in the live broadcast room, they can also compete fairly by short-streaming participation. Low thresholds get new fans, get stable and considerable short-stream revenue. After we launched short-streaming, in just a few months, more than 100 new streamers have started through short-streaming. And for business and brands, in addition to explosive sales cooperating with streamers, As for our partners, our short-life product is also a disruptive innovation. Short-life can be easily recorded during the mobile live shows, and their production costs are very low. Apart from real-time sales in the live showroom, short-life allows for KOLs to fully expand their sales channels in the long term. Furthermore, ShoreLife also provides an excellent growth path for small and medium KOLs. By leveraging the lower entry barrier for gaining new fans, they can generate stable and considerable revenues from the ShoreLife business. Just a few months after launching this product, we have already seen hundreds of KOLs growing their presence. as for brand partners, short-life now enables them to generate continuous sales volume over an extended period of time, in addition to generating explosive sales alive. We have achieved our early success with our short-life product and believe that it will be a breakthrough in live e-commerce industry. Going forward, we'll continue to expand the ecosystem of short-life and to help accelerate our live e-commerce growth. We believe that there will be unlimited possibilities for live e-commerce in the future. And Mogul will be a continuous innovator and a beneficiary of the industry. Thank you. Thank you, Sha. Thanks again for everyone to joining our conference call today. I will now walk you through our fourth quarter and fiscal year 2021 financials. We believe year-over-year comparisons are the best ways to review our performance. Therefore, unless otherwise stated, All percentage changes I'm going to mention will be on that basis. So let's review the financials first. Our GMB for the fourth quarter of fiscal year 2021 was RMB 2,576,000,000, an increase of 6.5% year-over-year. GMB for the 12-month period ended March 31, 2021 was RMB 13,855,000,000, a decrease of 18.8% year-over-year. Our focus has been growing the GMB from live video broadcasting business, which has increased by 42% year-over-year to RMB 2.245 billion. Live video broadcasting associated GMB for the fourth quarter of the fiscal year 2021 accounted for 87.2% of the total GMB. Let's now turn to revenues. During the quarter, total revenues decreased by 23.6% to RMB 90.9 million from RMB 119 million during the same quarter of fiscal year 2020. Commission revenue decreased by 1.7% to RMB 65.2 million from RMB 66.3 million in the same period of fiscal year 2020, primarily due to the restructuring of the company's business towards an LBB-focused model. Marketing services revenue, which is mainly generated through our multi-place business unit, decreased by 34.5% to RMB 11.9 million from RMB 18.2 million in the same period of fiscal year 2020. The decrease was primarily due to restructuring of companies' business towards LVB-focused business. I will now walk you through our major costs and expense. Cost of revenue decreased by 35.4% to RMB 37.9 million from RMB 58.6 million in the same period of fiscal year 2020, which was primarily due to a decrease in the cost associated with the lower online direct sales. Sales and marketing expense decreased by 44.5% to RMB 43.4 million from RMB 78.2 million in the same period of fiscal year 2020, primarily due to optimized spending on branding and user acquisition activities. Research and development expense decreased by 40.3% to RMB 19.6 million from RMB 32.8 million in the same period of fiscal year 2020, primarily due to the optimization of headcount. G&A expense increased by 124.4% to RMB 25.7 million from IMB 11.5 million in the same period of fiscal year 2020, primarily due to the reversal of share-based compensation expense in the fourth quarter of fiscal year 2020. Amortization of intangible assets decreased by 5.7% to IMB 82.1 million from IMB 87.1 million in the same period of fiscal year 2020. Loss from operations was 110.3 million compared to loss from IMB a loss from operations of RMB 149.1 million in the same period of fiscal year 2020. Net loss attributable to Mogul's ordinary shareholders was RMB 108.6 million compared with the net loss attributable to Mogul's ordinary shareholders of RMB 141.9 million in the same period of fiscal year 2020. Adjusted EBITDA was RMB 20.1 million, compared with a negative RMB 83.6 million in the same period of fiscal year 2020. Cash and cash equivalent. Restricted cash and short-term investments were RMB 803.1 million as of March 31, 2021, compared with 1,095.4 million as of March 31, 2020. So let's now move the financials to the entire fiscal year of 2021. Total revenue came in at 482.4 million, a decrease of 42.3%. So the commission revenue came in at 318.6 million, a decrease of 27.3%. Marketing services revenue came in at 71.3 million, a decrease of 70.6 million percent. The overall decrease was primarily due to companies restructuring or transformation of its business towards the LBB focus model. Cost of revenue decreased by 37.7 percent to 183.1 million. Sales and marketing expense decreased by 62.5 percent to 229.8 million. primarily due to optimized spending on branding and user acquisition. R&D expense decreased by 39.5% to 103.5 RMB, and the G&A expense decreased by 19.6% to 103.0 million. Loss for operations was 428.9 million, compared with the loss of operations of $2,072.9 million in the fiscal year 2020. Net loss attributable to mobile's ordinary shareholders was $328.0 million compared with $2,223.6 million in the fiscal year 2020. So adjusted EBITDA was negative $51.5 million compared with a negative compared with negative 320.1 million in the fiscal year 2020, our net loss and adjusted EBITDA improved remarkably by 85.3% and 83.9% respectively, which showcase the positive effects from our effort to optimize customer acquisition and operating efficiencies. By the end of fiscal year 2021, we'll have reached a major milestone in the execution of our strategic transition to a live video broadcasting e-commerce company. Our breakthrough in short video further expands our live video broadcasting ecosystem and is a new revenue growth generator. Going forward, we'll continue to execute on our disciplined approach in terms of customer acquisition, and we'll partner with more capable and innovative KOLs so that they can deliver the best products and the best shopping experience to our consumers. So with that, I would like to open the call for Q&A.