Vipshop Holdings Limited

Everyone, and welcome to the VIP Shop Holdings Limited First Quarter 2021 Earnings Conference Call. At this point, I would like to turn the call to Ms. Jessie Fan, VIP Shop's Director of Investor Relations. Please proceed, ma'am.

Thank you, Operator. Hello, everyone, and thank you for joining VIP Shop's First Quarter 2021 Earnings Conference Call. Before we begin, I will read the Safe Harbor Statement. During this conference call, we will make forward-looking statements within the meaning of the Private Securities Litigation and Reform Act of 1995 that are based on our current expectations, assumptions, estimates, and projections about VIP Shop Holdings Limited and its industry. All statements other than statements of historical fact we may make during this call are forward-looking statements. In some cases, these forward-looking statements can be identified by words or phrases such as anticipate, believe, continue, estimate, expect, intend, is or are likely to, may, plan, should, will, aim, potential, or other similar expressions. These forward-looking statements speak only as of the date hereof and are subject to change at any time. And we have no obligation to update these forward-looking statements. Joining us on today's call are Eric Shen, our co-founder, chairman and CEO, and David Tui, our CFO. At this time, I would like to turn the call over to Mr. Eric Shen.

Good morning and good evening, everyone. Welcome and thank you for joining our first quarter 2021 earnings conference call. We delivered another quarter of strong financial and operational results in the first quarter of 2021. driven by the continued robust growth momentum in our number of active customers. During the quarter, our total number of active customers grew by 54% year-over-year to 45.8 million from 29.6 million in the same period last year. As a result, our GMV for this quarter increased by 59% year-over-year to 46.1 billion from 28.9 billion in the same period last year. GMV for apparel-related categories, which are our bread and butter, grew even faster by 70% year-over-year. These successes are the result of our focus on the execution of our merchandising strategy. We have long-term collaborative relationships with our suppliers, particularly in our core categories. Leveraging those relationships, we aim to deepen our partnerships with them to increase contributions from our made-for-VIP products. As we continue to offer value to our customers through differentiated offerings from marketplace platforms, we believe we will acquire more new customers while increase the stickiness of our existing customers. Going forward, we remain committed to continuing to strengthen our leadership in China's discount retail market, aiming to generate sustainable value for our customers and suppliers. At this point, let me hand over the call to our CFO David Cui so that he may discuss our strategy in more detail and go over our operational and financial results.

Thanks, Eric. And hello, everyone. We are pleased to have delivered another quarter of solid top-line growth coupled with strong profitability. During the quarter, our total net revenue continued to see strong growth. increasing by 51% year over year to $28.4 billion from $18.8 billion in the prior year period. In addition, our profitability improved on a year over year basis. Our non-GAAP net income attributable to VIP stock shareholders for the quarter increased by 74% year-over-year to 1.7 billion from 986 million in the prior year period. And our non-GAAP net margin attributable to VIP shops shareholders for the quarter increased to 6.0% from 5.2% in the same period last year. Looking ahead, We aim to grow our top line as fast as possible while keeping our margins stable. Through offering diversified desirable products carefully procured by our strong merchandisers on a daily basis, we will attract new customers and retain existing customers while growing their R pool over time. we are committed to delivering long-term sustainable value to all of our shareholders. Now moving on to our quarterly financial highlights. Before I get started, I would like to clarify that all the financial numbers presented today are in RMB a month, and all the percentage changes refer to year-over-year changes. unless otherwise noted. Total net revenue for the first quarter of 2021 increased by 51.1% year over year to $28.4 billion from $18.8 billion in the prior year period, primarily driven by the growth in the number of total active customers. Gross profit for the first quarter of 2021 increased by 54.7% year-over-year to $5.6 billion from $3.6 billion in the prior year period. Gross margin for the first quarter of 2021 increased to 19.7% from 19.2% in the prior year period. Total operating expenses for the first quarter of 2021 were $4.4 billion as compared with $3.0 billion in the prior year period. As a percentage of a total net revenue, total operating expenses for the first quarter of 2021 decreased to 15.4% from 15.9% in the prior year period. Fulfillment expenses for the first quarter of 2021 were $1.8 billion as compared with $1.4 billion in the prior year period. As a percentage of a total net revenue, fulfillment expenses for the first quarter of 2021 decreased to 6.3% from 7.4% in the prior year period. Marketing expenses for the first quarter of 2021 were $1.3 billion, as compared with $412.3 million in the prior year period. As a percentage of the total net revenue, marketing expenses for the first quarter of 2021 were 4.6%, as compared with 2.2% in the prior year period. primarily attributable to increased investment in advertising activities relating to customer acquisition and retention. Technology and content expenses for the first quarter of 2021 decreased to 337.5 million from 338.4 million in the prior year period. As a percentage of total net revenue, technology, and content expenses for the first quarter of 2021 decreased to 1.2% from 1.8% in the prior year period. General and administrative expenses for the first quarter of 2021 were $956.7 million as compared with $839.2 million in the prior year period. As a percentage of total net revenue, general and administrative expenses for the first quarter of 2021 decreased to 3.4% from 4.5% in the prior year period. Our income from operations for the first quarter of 2021 increased by 93.2% year over year to 1.5 billion from 782.2 million in the prior year period. Operating margin for the first quarter of 2021 increased to 5.3% from 4.2% in the prior year period. Non-GAAP income from operations, which excluded the share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, increased by 66.0% year-over-year to 1.7 billion from 1.0 billion in the prior year period. Non-GAAP operating income margin for the first quarter of 2021 increased to 6.1% from 5.6% in the prior year period. Our net income attributable to VIP shop shareholders for the first quarter of 2021 increased by 125.7% year over year to 1.5 billion from 684.8 million in the prior year period. Net margin attributable to VIP shops shareholders for the first quarter of 2021 increased to 5.4% from 3.6% in the prior year period. Net income attributable to VIP shops shareholders per diluted ADS for the first quarter of 2021 increased to 2.18 RMB from 1.00 RMB in the prior year period. Non-GAAP net income attributable to VIP shops shareholders for the first quarter of 2021, which excluded share-based compensation expenses, impairment loss of investments, amortization of intangible assets resulting from business acquisitions, tax effect of amortization of intangible assets resulting from business acquisitions, investment gain and revaluation of investments excluding dividends, tax effect of investment gain and revaluation of investments excluding dividends, and share of the loss or gain in the investments of limited partnerships that are accounted for as equity method investees increased by 73.7% year over year to 1.7 billion from 986.1 million in the prior year period. Non-GAAP net margin attributable to VIP shops shareholders for the first quarter of 2021 increased to 6.0% from 5.2% in the prior year period. Non-debt net income attributable to VIP shops shareholders per diluted ADS for the first quarter of 2021 increased to 2.41 RMB from 1.44 RMB in the prior year period. As of March 31st, 2021, our company had cash and cash equivalents and restricted cash of 15.1 billion and short-term investments of 3.7 billion. For the first quarter of 2021, net cash used in operating activities were 439.0 million. Looking at our business outlook for the second quarter of 2021, we expect our total net revenue to be between 28.9 billion RMB and 30.1 billion RMB, representing a year-over-year growth rate of approximately 20% to 25%. These forecasts reflect our current and preliminary view on the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or the hash key. Please note, due to a time constraint, we will take one question at a time from each participant. If you have a second question, please disconnect and rejoin the queue by pressing star 1 on your telephone keypad and waiting for your name to be announced.

We have the first question from the line of Eddie Wang.

Please go ahead.

Thank you, Benjamin, for taking my question. My question is about the outlook for the second quarter as well as for the second half of this year. We noticed that we had quite a successful promotion event in April. So just want to check whether or not the 20-25% revenue growth in guidance for the second quarter already affecting this very strong promotion event in April. And if Shen Zong can give more color on the revenue growth outlook for the second half, it will be very helpful. Thank you.

Thank you, Eddie. Shen Zong, Eddie's first question is about the guidance for the second quarter, 20 to 25. He wants us to talk about our views on the second quarter. For example, does the guidance for 20 to 25 already include uh uh

The growth of users is stable in all aspects. We also have confidence in Q2. We also have confidence in Q3 and Q4, because we believe that the good trend right now is the growth of users. Whether it's the growth of new customers or old customers, the growth of users is a good trend. These users will give us Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan Taiwan At the second quarter guidance, we see it as rather conservative. There are a couple factors in consideration. One is that

Last year, we didn't run the April 19th promotional event, but we did run it this year. So on that basis, it's quite positive. But then also last year, we saw extremely strong growth in May, particularly during the May holidays, because that was when everyone started to come out of their quarantine and really starting to travel and buy new clothes after the lockdown in China. So this year we're facing much tougher comps in the beginning of May. We are going to have to see how the June promotional event period and the summertime goes to get a full picture of the second quarter. However, we are growing quite steadily and we are achieving sustainable growth driven by strong user growth. So we are confident about our growth in the second half and in the long term. More specifically, we saw quite strong user growth, especially in the number of male customers that shopped with us. We believe that this is driven by our expansion into more categories focused on sportswear, for example, as well as better personalization. In addition, we also saw strong growth in the number of paid super VIPs. which are our most loyal customers that contribute to quite a sizable chunk of the overall revenue. So we are quite confident about the long-term growth of the business and the long-term healthy development of the business.

Once again, ladies and gentlemen, if you wish to ask a question, please press star 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the pound or the hash key. Please note, due to a time constraint, we will take one question at a time from each participant. If you have a second question, please rejoin the queue. We have the next question from the line of Joyce Chu from Bank of America. Please go ahead.

Good evening, management. Thanks for taking my question and congrats on the solid quarter. My question was related to the gross margin profit this quarter. It seems like this number actually down sequentially and also quite meaningfully. So just want to get colors in terms of the future, like gross margin trends. Is it because, like, you know, we have new discounting strategy, or it's because, like, probably we changed our take-free scheme with the brand, like, just want to get more colors on it? Thanks.

Thanks, Joyce. 沈总,那个,Joyce这个问题问的是我们的毛利率的一个趋势, 因为看到我们一季度的毛利率其实年对年或者是这个季度对季度都是下跌的, 所以她想知道未来我们怎么看毛利的一个趋势。

Yes, we actually have a relatively optimistic attitude towards毛利. Because we don't really look at毛利 too much, we actually look at the overall progress, the final progress. In addition, for毛利, we said that we saw that this quarter will fall a little bit, because we will spend a lot of money. We bought it last year, but we didn't buy it this year, so we replaced it. Also, in order to increase our SVIP, we opened up 95% to some users. But this is a test, because if it is a test, the money will come out first. Then, if the test is successful, the money will be excluded. So, in the short term, we may see that QE is not as profitable as it used to be. But we are also happy to see that when it is integrated, we are doing our best. Hi, Joyce. Your question on the growth profit and growth margin outlook.

In fact, we're quite optimistic about the long-term growth margin trend. We focus more internally on managing to the bottom line. As we've communicated in the past, we aim to grow top line as fast as possible, provided that our bottom line remains relatively stable and healthy. So in the first quarter, we've spent more money on reactivating old customers, getting their shopping frequency up, as well as paying more benefits to our SVIPs. So for our paid super VIP members, we are offering selectively to some members an actual 5% off, which during the test period, the cost is mostly bared by our own company. But in the future, more brands will participate to share the cost. And we're happy to see the net margin trend in the first quarter continues to be very solid, increasing on a net margin basis, on a year-over-year basis. So over the long run, we're still quite confident and quite optimistic about the long-term outlook of our growth profit as well as our net margins.

We have the next question from the line of Thomas Chong from Jefferies. Please ask your question.

Hi, management. Thanks for taking my question. So I have a question about customer acquisition. So do we have any new initiatives or channels for customer acquisition that can share with us this year? Thanks.

Thank you.

Then, for example, we are still related to most of the old ones. For example, we said that there is precision marketing, there is installation machine. Then, in addition, it includes that we have a lot of media outside. That media advertisement, what TV station direct entry, similar to this kind of new class. Then, in addition, we actually this year will be on the efficiency of the new class acquisition. We use this kind of call, we call it integrated operation. Then we will be more precise. Then we will be more precise. We believe that the efficiency will be higher than before. So in fact, in addition to saying that we will do some live broadcasts this year, but we estimate that we will not say that the proportion of our entire new customers will be large. But we think that in the original optimization of these foundations, we think it is

We actually have various, very diversified customer acquisition channels, including targeted advertising, including endorsements on TV shows and reality shows, as well as cell phone pre-installation. And at the same time, we're also exploring more into short videos, live streaming, and so on. What's different this year is that we are going to start to try to be even more personalized in our customer acquisition, uniformed, improved, more optimized operations in terms of how we invest our marketing dollars. So we do believe that is going to be more targeted and give us better results than what we have done in the past. The one thing that is worth mentioning is that we are looking to invest a little more into live streaming in terms of customer acquisition. We don't think that will be a much more meaningful portion of the overall marketing budget, but we do think that it's going to be increasing as compared to before.

We have the next question from the line up there. Natalie Wu from Haitong International, please ask your question.

Hi, good evening. Thanks for taking my question. Just wondering if we take a longer-term view, let's say after the completion of COVID-19, what kind of growth rate could be the most comfortable under a stable state and also relate to the margin profile at that time to expect? Just want to get some sense of your thoughts on that and also regarding the competition just wondering what's mentioned thoughts on recent dynamic change considering anti-monopoly moves and also considering new entries including some short video platforms thank you thank you natalie uh natalie

What kind of level is it? And how do we look at the long-term profit rate and the balance of income growth? And the second question is about our customers. Do you have more thoughts on short-term development?

Because we don't disclose the long-term development, including the number of weeks in the future, the number of years in the second half of the year, the number of years in the next year. But we ourselves, for our entire...

我们还是很有信心,但是我们总体的原则就是很稳健的一个增长。 Natalie, in the long term, we are aiming to achieve a more steady and sustainable long-term growth, and we're quite confident about the long-term growth potential of our business. 对,我们其实也在积极探索,像短视频啊,

Then it includes the sharing of small programs, and so on, or new customers. But that is to say, we actually include this kind of young group now. We also want to actively acquire. So because of the user's preferences, there will be changes with the platform you usually stay on. But we are all actively exploring at the moment. There is still no channel that says, oh, for example, occupies our new customers. For example, it is 15%, 20%. Natalie, on the customer acquisition channels, we are actively exploring many programs as well as short videos and testing with all the partners in terms of customer acquisitions.

But there isn't a single channel that is at 15 to 20% of the overall customer acquisition contribution. So in the future, we will continue to explore and enhance the performance of our marketing dollars.

We have the next question from Ronald Kim from Goldman Sachs. Please ask your question.

Thank you, management, for taking my questions. I will be asking on behalf of Ronald. In terms of development of the VIP shop products, as management shared with us in last quarter, VIP has collaborated with a few hundred brands. Just wondering how many brands have we expanded collaboration with in the past quarter, and if there's any related operating metrics can be shared would be great. For example, scale of the sales. And how many users have purchased VIP shop products on our app, the AOV, et cetera? Thanks.

Thank you for the question. in the past quarter. And secondly, do we have any other data that we can share, including the data of the users who will buy these products? So far, we should be cooperating with more than 500 brands to make custom-made products.

But each company's progress, performance, and scale are actually different. So we also hope that to enhance this ability. This is actually a very important ability that Weiping will differentiate in the future. So what I just asked is what numbers are there? Other data, we actually see that it is currently our customized products, that is, its conversion rate, including the reception rate, is actually better than that of our existing products, because the existing products may be distributed or stored, or On the made for VIP shop collaboration, we are currently already working with around 500 brands.

on the Made for VIP Shop products. However, every brand's level of sophistication and how much product that they're working with us and the contribution for that brand sales on our platform is a bit different. The good news is that we've seen improved conversion rates and higher sell-through rates for these products than the other products on our platform, meaning that the metrics are quite solid and proof that this strategy is on track. However, as it hasn't been long enough, we need more time to figure out what kind of brands this works best with and how to deepen our collaboration with brands on the Made for VIP Shop products. But we do believe that these products will be very important for our long-term growth and to create more differentiation from other platforms over time.

We have the next question from the line of Tian Hao from TH Capital. Please ask your question.

Thanks, management. 我的这个问题是关于咱们3P的业务。 3P业务咱们今年有什么样的一个发展计划? 如果说看到年底的时候, 我们的3P大概在我们总业务当中的占比会达到一个什么样的比例? For our 3P business, what is our strategy for developing this part of the business? By the end of the year, what is the management expectation for 3P business to be percentage of total business? Thank you.

Yes, the 3P business that we are currently seeing is currently less than 5 points, around 4.7 or 4.8. We actually think that in the 3P business, if we manage the user experience well, we can actually develop to supplement our shortage of products. Because some products Thank you, Mr. Shen.

Tian, on the marketplace development, this quarter the contribution is less than 5%, around 4.7%, 4.8% of the total DMV comes from sales through marketplace. We do plan to grow the marketplace business, but only provided if the user experience and the complaint rates are under our control. So we want to offer the same level of experience in the marketplace business as our first-party business. But in terms of how much we want to grow that business, in the first quarter, the contribution, as we said, is less than 5%. And in the fourth quarter of this year, we hope to get it to, say, slightly over 6%. But it wouldn't be a very meaningful increase in the total contribution, as we still want to focus on the 1P business.

We have the next question from the line of Ashley Xu from Credit Suisse. Please ask your question.

Thank you, management, for taking my question. I just want to ask about how do we see the destocking needs from brands in the past few months, and how do we see their needs in second half of this year, and whether the previous boycott against some international brands would impact the overall needs in 3Q and 4Q. Thank you. Thanks, Ashley.

Ashley, this question is about the demand of the brand. In the past few months to the next few months, what trends have we seen? And what are the expectations for the future? In addition, he wanted to ask if the Xinjiang-Mian issue had any impact on the business. The brand is like this.

In fact, Weiping will be their partner. On the one hand, we are cleaning up their past storage. On the other hand, we are doing it as we just talked about, for example, customization. In fact, it is specifically for the users of Weiping. Then there is also a kind of very large variety that is, in fact, micro-products will help him bear it. Then, for example, today they are in other platforms or offline stores. Then when it opens, it finds that the effect is not good or that the sales are very slow. They will quickly turn into micro-products. Then this is like these kinds of words. I think that there are many more. There are other ones. That is, for example, today they have. In other words, in addition to customizing, they actually have to do it themselves. So these are the kinds of products that we think are actually very good at supplementing the problem of online sales of the brand, including the problem of its online customers, as well as solving its inventory problem. In addition, it also solves its sales problem. So we actually see this trend. So what we are talking about now is that basically all the brands are inseparable. We want this kind of online channel. So we think that in the future, this kind of platform, including various platforms, will actually be closer and closer to the cooperation between various platforms. The second is to ask about the Xinjiang cotton incident. The Xinjiang cotton incident will actually have some impact on international brands, but the impact will not be as big as we imagined. But we see an obvious trend. Yes, the number of national goods is the number of searches on us. The number of searches on these heads of domestic brands is soaring. In addition, sales are indeed very popular. So we have not sold enough goods recently. So we actually look at the long-term trend of the future. In fact, the domestic brand will actually as the brand's partner of choice in access inventory clearance we not only clear access inventory that are already in stock for them but we also

grow with them via made-for-VIP shop products, which we've discussed in the past and earlier in the call. And we also do a lot of in-season, slow-moving extra inventory for our brand partners. And we also contribute in many other formats. For example, some brands will choose to allocate different SKUs to different e-commerce channels to be sold. So we're actually a top partner for our apparel brand partners, especially in their e-commerce and online sales, which is a very meaningful channel for a lot of our brand partners. And we grow with our customers in terms of, we grow with our brand partners in terms of both gaining new shoppers for their brand as well as growing their sales. On your second question on the Xinjiang Cotton, the event, the impact on international brands is there, but quite minimal. At the same time, we're seeing domestic brands picking up momentum. So we're seeing the search results for domestic brands and the demand for domestic brands growing quite fast. Over time, we believe domestic brands will likely take share from international brands.

We have the next question from the line of... Feitong Zhang from CICC, please ask your question.

Hi, Shen Zong, Cui Zong, and Jesse. This is Feitong on behalf of Yang from CICC. Thanks for picking my question and congrats on the solid result. I have one question. It's about category expansion. Will we accelerate the category expansion, for example, in 3C category to acquire more users, especially you mentioned we now having more male customers If so, what would be the impact on the margin? Are we going to subsidize or just be stocking for those male brands, like 3C, those categories? Thank you.

Thanks, Zetong. Mr. Shen, this question is about our thoughts on the taste. For example, do we have thoughts on the growth of the taste? Because we just mentioned that the growth of male users is very fast. Male users and female users have different needs for the taste. So we want to see if we have the idea of expanding. And then the other thing is, if we expand, will it have some impact on profits? For example, if male users want to buy more of these electronic products, will we spend more money to acquire such users? For example, male users, we have increased by about 5%. That is to say, the ratio has increased by 5%. But that is to say,

We see a huge increase in the purchase volume of men's clothing, including the purchase volume of physical products. But if we assume that there will be more and more male users in the future, but more and more does not mean that our platform will have 55% in the future. It certainly will not be 50% because we have more female users. We actually think that our current category is enough. In addition, for example, if we want to make 3C products or electronic products, in addition to selling mobile phones, our overall profit is still OK. In other words, the profit between our major categories is still relatively stable. In addition, we actually don't see a lot of men come to buy some things with low profit. So we actually increase the growth of male users, but our profit So the contribution from male customers was up by around 5% in terms of the number of customers year over year.

that's why we saw menswear and sportswear sales growing exponentially. Male customers as a total pool of customers in the overall contribution might continue to grow but we will still be primarily focusing our efforts on female customers which are our bread and butter and for women's apparel mainly. Male customers Might be shopping with us a lot more frequently and we might be able to acquire more male customers But still we are acquiring them via apparel related categories So they are not going to come and be buying a ton of cell phones driving down the margins So from our perspective, it's all about the apparel and wearable category And we're confident that we can serve male customers quite well in this category the one really positive The one really positive thing that we see in how male customers shop is that they have much higher conversion rates and make decisions much more quickly. So we will be improving our personalized shopping experiences for male and female customers when they come to our platform.

We have the next question from the line of Charlie Shen from China Renaissance. Please ask your question.

Thanks, management, for taking my question. Actually, I have a question regarding the average revenue per user as well as the trend going forward. So, I did a quick calculation. It seems that the average revenue per user for this quarter If we use U.S. dollar basis, actually it's year-on-year starting to grow. That's actually the first time for the past few quarters. And even if you use RMB, the decline actually is very, very narrow already. So how do you see the momentum or trend of the average revenue trend going forward? And also, can you give us more color on What is driving that is that across the board, everyone is buying more, or in particular, new users are contributing more on the average revenue, or the old core customers are contributing more. Thank you.

沈总,这个问题是问我们的人均消费的一个其实。 Charlie 看到我们这个季度的人均消费, 如果用美元来算,其实年对年已经有所增长。 然后如果是用人民币的话,其实也是只是微跌。 So he wants to ask, what are the reasons why our human resources consumption trend has improved? And what do you think about the future?

Human resources consumption has turned around this quarter. It's not like it fell every quarter last year. Because we actually made user policy adjustments at the end of 2019. So users don't have to collect orders, and so on. So actually, last year, we fell a lot. This year, because it's Q1, which coincides with the fall of last year, it means that we have stopped. In other words, the user's annual up is relatively stable. In fact, for our users, we are confident that we will buy more in the future. For example, we are now going to increase the number of SVIPs. The trend is good, but we still want to make a huge improvement. Because we see that the annual consumption of SVIP users is eight to nine times that of ordinary users. So this is one of the points we want to improve. Secondly, we want to make the users, as we said, greatly improve our individualized computing capabilities. So let the users come here, Charlie?

The ADA RMB free shipping impacted the ARPU in the year of 2020. And therefore, throughout the year, we saw year-over-year decline in ARPU, mostly because customers do not need to get to a certain basket size in order to get free shipping anymore. But now in 2021, you see that trend normalizing. This is, as we've communicated prior, this is what we expect, and this is because our customers are still very sticky to the platform, and this is just a change in the shopping habits due to some of the change in policy last year. We will continue to grow our ARPU going forward. One thing that we like to mention is our focus on the SuperVIP paid members and their spending. On average, a SuperVIP customer spends eight to nine times more than an average customer. So from that perspective, if we can get more customers to join the Super VIP program, we are confident that their ARPU on the platform will also increase over time. Additionally, we continue to focus on personalization and improving the experience of each customer when they come to our platform. So we do believe that over time will also increase the ARPU and stickiness of the customers. If we continue to grow the number of customers that shop with us and be our proof of the customers, we do believe that our long-term growth prospects are quite good.

Thank you. Operator?

Ladies and gentlemen, as we come to the end of today's conference, I would like to hand the call back to our speakers for any closing remarks.

Thank you, everyone, for taking the time to join us, and we look forward to speaking with you next quarter. Thank you.

Thank you.

Thank you.

Thank you, sir. Ladies and gentlemen, this concludes our conference call for today. Thank you for participating. You may all disconnect.