Vipshop Holdings Limited

Ladies and gentlemen, good day, everyone, and welcome to VIP Shop Holdings Limited's third quarter 2021 earnings conference call. At this time, I would like to turn the call to Ms. Jessie Zhang, VIP Shop Head of Investor Relations. Please proceed.

Thank you, Operator. Hello, everyone, and thank you for joining VIP Shop's third quarter 2021 earnings conference call. With us today are Eric Chen, our co-founder, chairman, and CEO, and David Tsui, our CFO. Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include but are not limited to those outlined in our safe harbor statements in our earnings release and public filing with the Securities and Exchange Commission, which also applies to this call to the extent any forward-looking statements may be made. Please note that certain financial measures used on this call, such as non-GAAP operating income, non-GAAP net income, and non-GAAP net income per ADS, are not presented in accordance with U.S. GAAP. Please refer to our earnings release for details relating to the reconciliation of our non-GAAP measures to GAAP measures. With that, I would now like to turn the call over to Mr. Eric Shen.

Good morning and good evening, everyone. Welcome and thank you for joining our third quarter 2021 earnings conference call. During the third quarter, our business demonstrated resilience despite macro headwind and the general weakness in the retail industry. We continued our efforts to execute on our merchandising strategy while refining our operations. Everything we do as a business is intended to strengthen our core competence for long-term growth. As a result, key operational metrics, including our overall user base, GMV, and our pool achieved year-over-year growth. Specifically, total active customers increased to 43.9 million and the total GMV grew by 5% to RMB 40.2 billion. Our most valuable customer group continued its strong momentum during the quarter. Super VIP members grew over 40% year-over-year and contributed more than one-third of our total GMB. In the third quarter, We focus on strengthening our position and value proposition as a leading discount retailer among our brand partners and customers. In line with this goal, we prioritize co-brands to better match traffic and resourcing for them and optimize our customers' operations, especially for high-value customers, including our super VIP members. We are happy to see some encouraging results from these initiatives. For example, during the Super Brand Day sales event in the quarter, multiple brands recorded higher than expected sales, with a few even hitting their highest single-day GMV in recent years. These brand partners are increasingly aware that VIP Shop remains a reliable platform for them to increase sales efficiency. As this perception is strengthened, more brands are effectively motivated to maintain a closer relationship with us and supply VIP Shop with a great variety of unique and pricey competitive products. This was further evidenced in the past culture by the solid increase in the number of SPUs and the value of merchandising, as well as improving quality of branded products available on our platform. Moving to the custom side, in the third culture, we will more integrate in our approach to managing our existing and potential customers. We are committed to driving new customers' growth but are now doing this in a more efficient and effective way. We have put great emphasis on recapturing inactive customers and more importantly, become better engaged with our super VIP members. We have seen rapid growth in our number of super VIP members who compare to regular customers and are significantly more resilient in terms of consumption, boast higher retention rate, and generate higher output. Through these consistent and sustained effects, we aim to increase our competitiveness in China's discount retail market. Going forward, we will create more business synergy by empowering our co-brand partners and optimize user experience to drive the solid quality and sustainable growth of our business. At this point, let me hand over the call to our CFO, David Cui, who will go over our financial results.

Thanks, Eric. And hello, everyone. In the third quarter of 2021, our top-line growth was in line with our expectations despite external challenges thanks to the effective implementation of our merchandising strategy and refined operations. Notably, the increasing contribution of our high-value customers helped improve our overall average revenue per user. We also continue to deliver solid profitability as we have greater discipline in spending and more focused on improving operating efficiency. Looking ahead, we will continue to drive business synergies on both our merchandising and operational side. to deliver steady financial performance. Now, moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in RMB, and all the percentage changes are year-over-year changes, unless otherwise noted. Total net revenue increased by 7.5% to $24.9 billion from $23.2 billion in the prior year period, primarily driven by our growth in the average revenue per user. Gross profit was $4.8 billion as compared with $4.9 billion in the prior year period, and gross margin was 19.4%. as compared with 21.1% in the prior year period. Total operating expenses was 4.2 billion as compared with 3.9 billion in the prior year period. As a percentage of a total net revenue, total operating expenses was 17.0% as compared with 16.9% in the prior year period. fulfillment expenses was 1.6 billion and largely stayed flat as compared with the corresponding period in 2020. As a percentage of a total net revenue, fulfillment expenses decreased to 6.5% from 7.0% in the prior year period. Marketing expenses were 1.2 billion compared with 1.1 billion in the prior year period. As a percentage of the total net revenue, marketing expenses was 5.0% as compared with 4.9% in the prior year period. Technology and content expenses were 366.8 million as compared with 305.1 million in the prior year period. As a percentage of a total net revenue, technology and content expenses was 1.5% as compared with 1.3% in the prior year period. General and administrative expenses were 1.0 billion as compared with 848.6 million in the prior year period. As a percentage of a total net revenue, general and administrative expenses was 4.1% as compared with 3.7% in the prior year period. Income from operations was $770.8 million as compared with $1.2 billion in the prior year period. Operating margin was 3.1% as compared with 5.4% in the prior year period. Non-GAAP income from operations which excluded the shared based compensation expenses and amortization of intangible assets resulting from business acquisitions was 1.1 billion as compared with 1.5 billion in the prior year period. Non-GAAP operating margin was 4.2% as compared with 6.4% in the prior year period. Net income attributable to VIP shop shareholders was 628.4 million as compared with 1.2 billion in the prior year period. Net margin attributable to VIP shop shareholders was 2.5% as compared with 5.4% in the prior year period. Net income attributable to VIP shops shareholders per diluted ADS decreased to 0.92 from 1.80 in the prior year period. Non-GAAP net income attributable to VIP shops shareholders was 1.0 billion as compared with 1.4 billion in the prior year period. Non-GAAP net margin attributable to VIP shops shareholders was 4.1% as compared with 6.0% in the prior year period. Non-GAAP net income attributable to VIP shops shareholders per diluted ADS decreased to 1.50 from 2.01 in the prior year period. As of September 30, 2021, the company had cash and cash equivalents and restricted cash of 13.2 billion and short-term investments of 3.7 billion. Looking forward to the fourth quarter of 2021, we expect our total net revenue to be between 35.8 billion and 37.6 billion, representing a year-over-year growth rate of approximately 0% to 5%. Please note that the forecast reflects our current and preliminary view of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A.

Certainly, 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 keypad and kindly wait for your name to be announced. If you wish to cancel your request, you can press the pound or hash key. Once again, it is star 1 on your telephone keypad if you wish to ask a question. Please note there might be a slight pause as we collate the questions. The first question comes from the line of Thomas Chong from Jefferies. Please go ahead.

I have two questions. The first question is about SVIP. I would like to ask about the growth of Q3 and SVIP in 2022. So my first question is about SVIP. how should we expect the growing trend of SVIP as well as its GMV in Q4 and next year? And my next question is about the competition landscape, especially in the discounted retail sector. And any thoughts on the live-stream e-commerce? Thanks.

我来回答一下,就SVIP我们其实增长, Because we focus on SVIP, so the growth of SVIP is not bad. We recently saw that this quarter is 40%. We believe that we are also continuously increasing our investment in SVIP. So we believe that the total number of people in the future, including their consumption, etc., will also increase. So we believe that in the future, the consumption of SVIP will probably exceed one-third of our consumption. In addition, we have provided more benefits to SVIP, for example, more 95% of the rights. In addition, we have cooperated with other platforms to promote our SVIP members. In addition, we have SVIP membership day every month. In addition, we have a dedicated membership store. 那么专门给他们提供一些 特别的精心安排的商品 那么让他们觉得有价值感 那么所以说我们其实认为 因为SVIP的用户的年度贡献 是普通用户的大概八倍到九倍 所以说我们其实也认为说 我们会长期的持续的 那么照顾好我们这批SVIP用户 和扩大我们的用户群体 扩大SVIP的用户群体 其实对未来唯品会的

In terms of your question on SVIP, we have been focused on adding more SVIP members to our platform, and we've seen a solid increase of over 40% in the third quarter. to improve their experiences so that more high-value users could be converted into SVIP members. And you've already noticed, probably noticed that SVIP members, as compared to regular users, they are up and the retention rates are much higher. In the future, we expect they will continue to contribute more to our platform as they already accounted for over one-third of our total GMV for the past quarter. In Q3, we also further expanded and optimized the SBIP membership privileges to drive the user growth. For example, we provided extra 5% of benefits expanding to more of our corporate ranks. We also have dedicated super VIP membership stores and also a sales day for them. And we also have cross-platform benefits, including buy one, get nine campaign together with a lot of other platforms. So we've seen a very solid growth in SVIP members. And for the foreseeable future, we will continue to expand the SVIP members. And as they contribute eight to nine times in terms of approval as compared to a regular user, we expect they will contribute more to the bottom line.

Thank you. The second question is about the current competitive pattern and the impact of live streaming. We see that the competition in the e-commerce industry is still very intense. The more we do this, the more we need to see what our positioning is. We think we are doing brand specialization. We used to do brand specialization, but now we need to focus more on brand specialization. We also say that we are like the online Atlas. Taiwan Taiwan Taiwan The impact of live e-commerce, in fact, now because live e-commerce is indeed very popular, it will pull away some users from all the current e-commerce, or pull away some markets. But we believe that in fact, users are ultimately, in fact, they come, whether it is our kind of goods e-commerce, or live e-commerce, or say this kind of interest e-commerce, in fact, it is ultimately to buy something. So, in fact, the more we see the current situation, the more we feel that In terms of your question on competition, competitive landscape, you know, VIP Shop is actually fundamentally different from other marketplace platforms. We are keenly focused on discount sale for brands.

And we are tapping the potential of becoming China's online outlets. We have to be more professional and more dedicated to discount sales. We believe discount sales is a resilient and long-proved business model. And with the middle class in China increasing and their spending power growing, we believe we still have plenty of room to grow. We do notice that live streaming platforms, they do attract to user traffic, but from what we've observed so far, they are more of a part of the brand's multi-channel marketing strategy that brings incremental traffic. No matter whether it's shelf-based or short video-based or content-based e-commerce, We believe it really depends on how good is your merchandise. And from the perspective of our customers, actually, our customers are clearly value-oriented. The IP Shop brings them quality branded products with competitive price as well as hassle-free return on exchange services. In addition, not to say good brands, good quality, good pricing, good services. So we believe customers will have their awareness and make the right choice. We believe we are still leading in this discount sale for brands, this market segment, and we do have a lot of room for growth.

thank you once again ladies and gentlemen it is star followed by the number one on your telephone keypad if you wish to ask the question once again it is star one on your telephone keypad if you wish to ask the question please note there might be a slight pause as we collect the questions we have the next question coming from There might be a slight pause as we collate the questions. We have the next question coming from the line of Bella Zhang from TH Capital. Please go ahead.

Hello. Can you hear me? Yes. okay thanks management for taking my question but i have two my first one is about your marketing and user base i know your the marketing efforts in previous quarters were quite impressive however we have noticed that the number of your sponsorship in tv shows came down in this quarter so i was wondering if you can shed some light in the on the marketing strategy and how that will continue to feel the growth of your user base. And some highlights on your progress of mail customer acquisition will be great. The second one is we have noticed that you established several new companies lately. You know, it looks like that your business scope was expanded into new areas such as consumer finance results and advertising, et cetera. So can we assume that you are stepping into new business to diversify your revenue growth? That's it. Thanks. Let me translate myself. Then we observed that the recent sponsors are a lot less. Then I want to ask about a recent marketing strategy and user growth strategy. Is there any change? Specifically, how do you drive our growth? In addition, is it difficult for users to get the current update? Another question is about our observation that many new companies have been established frequently recently. The scope of business is also gradually expanding to some For example, financial consumption and some advertising services, etc. Are you considering building a new business field?

Okay, to answer the first question, we are actually still continuously investing in acquiring customers. But our strategy for acquiring customers this year has some adjustments. We used to pursue new customers, but we now also found that We bought it in the past, but it didn't come later. We bought it in the past, but it didn't come later. We bought it in the past, but it didn't come later. We bought it in the past, but it didn't come later. We bought it in the past, but it didn't come later. We bought it in the past, but it didn't come later. We will continue to use some new media to try to get new customers. For example, we are constantly trying to get new customers on Bilibili, Xiaohongshu, Douyin, etc. trying to get customers. So in general, we think that our sales has always been the same as before, which means we will continue to get customers. On the other hand, when you asked about male users, we actually saw three points of growth in the same ratio, including male users. For example, in terms of sports equipment, we did a relatively strong job, which also led to the growth of these male users. So we actually consider that our future male users will continue to increase in proportion.

Okay. To our first question on marketing strategy, we actually have been continuously investing in acquiring new users. But in the past, we have not been that efficient in new customer acquisition. Recently, we were more integrated in allocating our marketing stores in terms of existing and potential customers, especially when we found that people that used to come to our platform, these inactive customers, actually, we can spend less money to acquire them back than a new customer. So we are just trying to be more efficient and effective In terms of TV drama sponsorships, it's not a regular thing. Not every quarter we're going to spend money on sponsorships, but we are continuing to do so depending on whether it's the right drama, a TV drama, and the right user group for us. We are also leveraging other new media formats such as, you know, Bilibili, Little Red Book, and Douyin to tap further customer acquisition channels to attract younger shoppers to our platform. In terms of the male customers, the contribution from male customers increased by actually around 3% in terms of the number of customers year over year. And we've seen an increasing proportion of male customers come to our platform to buy menswear, sportswear, and shoes and bags. We will continue to drive the growth of male customers. Okay.

The second question is about opening a lot of new companies and so on. In fact, we have recently opened a consumer finance company. This is something that we started to apply for a license a long time ago. It means that we are preparing to open a company recently. Including seeing some new companies. These are not to say that we have some other special new businesses recently. Then we actually focus on doing our brand special sales. Then we didn't say today. Then we said that in other aspects, we put too much effort into it, saying that we hope to have other performance growths to, for example, supplement our overall revenue. So we actually see in the future, we see that Vipshop is still quite simple, which is actually online business with a small amount of offline business.

As for the new ventures we recently established, actually for the consumer finance entity, we've long ago applied license for that, and that entity has just opened. It doesn't mean that we're going to have new business lines. Remember, we are still focused on discount sales for brands. We haven't spent too much on other business. We think that discount sales for brands is a green market and it has a lot of growth potential. We're still focused on our online business as well as offline business as a complementary to our overall business.

The next question comes from the line of Guohan Wang from Daiwa. Please go ahead.

Okay, thank you for management to grant opportunity to this opportunity. I'm Gohan from Taiwan Capital on behalf of John Choi. We understand the super VIP is one of our core parts contribute substantially to our upper growth this quarter. Want to have a better understanding on the new, the conversion rate from new user acquired to our VIP programs. and specific initiatives to convert its users? And also, do we have additional room for improvement for SVIP? So that's my question. Thank you.

Eric's main question is, how is the transfer rate of SuperVIP? and then switch to Super VIP users, is there a possibility of further improvement?

What is the conversion rate of SVF currently? For example, let's say 100 people see that we welcome them to join SVIP. For example, we have a fixed proportion, right? This is the conversion rate. But we don't seem to have any statistics on this. But the second question I will answer first is about the up of SVIP. We see that it will continue to improve in the future. In fact, in recent years, the up of SVIP will increase every year. So including us in the future, we think that including us, in fact, in addition to our belt type, we also have standard products. In fact, we are completely compatible with these SVIPs. So we actually Okay.

In terms of question on SVIP, I'm not sure what you mean by conversion rate, but there are a couple of numbers that I can give it to you for a reference as compared to a regular user SVIP retention rate and are much stronger. and their consumption pattern is much more resilient. We believe that there is still a lot of room for SBIP members to improve their APU because we have seen consistently for the past several years, we see solid increases in the APU for SBIP members. And in addition to apparel related categories, we can also offer them standardized products for these SVIP members. So we do see there is a lot of room for up-growth for SVIP members.

I can add on a little. So on our platform, we do have a considerable number of, we call it high-value customers. and who have higher spending frequencies and buying powers. So we were trying to convert these high value customers to our super VIP members. Of course, we do have brand new customers who become our super VIP. And while by providing, you know, targeted membership benefits and services for these people and to improve their experience on our platform so that more and more high-value users can be converted to SuperVIP members. And compared to regular customers, SuperVIP members have much higher retention rates. So if we don't have a conversion rate, we do have a higher retention rate. And, of course, an annual R pool is significantly higher than the regular customers. So I just want to add this. Thank you.

Thanks. Sorry, may I have a follow-up? So given more interest into new channels such as B2B and short videos, so from a management perspective, so which channels do we think have the highest ROI and users with a relatively longer lifetime value? As I understand that some channel users may not have strong such an appetite on our discounted retail models given their incomparable user profiles. So I will translate myself. Thank you for your detailed answer. We are currently entering more channels for customers, such as BDB or short videos. Based on your current views, which channels are more accessible to our discounted sales? Which channels have a longer life cycle in our entire company platform or ecosystem? Thank you.

Then we are now actually the main part of the customer For example, it is still in the precise customer we said Precise customer and That pre-installed mobile phone This is what we mean by the two main main components of the new customer So what's inside the precise customer? Including Douyin, including that header, including WeChat, etc. This kind of information flow, this kind of Then in addition, we are like in, for example, on the B station, Xiaohongshu Then we have a lot of them. In fact, we let him expose, for example, to show them a short video at Bilibili, and so on. So these are some of them that we can track down and then immediately produce purchases. Then there are some of them that we let him see for the first time and then see in the future to strengthen his knowledge. So in fact, what we are talking about is currently on these new platforms. We are also testing, so we also found that some channels are quite effective, but we will combine them.

We still mainly rely on target marketing for customer acquisition, including Douyin, Toutiao, WeChat, etc. We also sponsor TV dramas and variety shows, and also pre-installation apps on mobile phones. And for some new emerging channels like Bilibili, we actually have two types of advertising. One is actually looking for targeted transactions, and the other is trying to increase customer awareness of VIP shops. We are exploring different channels and we will use multiple, you know, channels to acquire customers.

Thanks.

Thank you. We have the next question coming from the line of from CICC. Please go ahead.

Hi, management. It's Feitong from CACC. Thanks for taking our question. We have one question regarding to the fourth quarter guidance. How should we interpret this guidance? Is it conservative? What's the newest trend we are seeing in November and December? And my second question is regarding to the inventory trend. What is the trend of the amount of industrial inventory? Is it impacted by the weak macrobe? so the industry has more inventories, or we experienced a shortage of supplies from overseas brands, so industry has less inventories. How would this impact our business? Let me simply translate my question. I have two questions. The first question is to ask about the guidance of China. How should we understand the guidance this time? Is it more conservative? Or is it that we saw some, as mentioned just now, some anti-theft, China China China China China China China China China I would like to answer the first question. Our guidance for Q4 is 0 to 5.

Obviously not very high, but we ourselves also see that mainly we feel that there are still uncertain situations outside, especially like the epidemic, including our double 11 everyone's order. In fact, there are many areas that have been sealed because of the epidemic, so there are still a lot of goods in hand that have not been sent out. In addition, if we look at the situation in November and December, We actually did a good job in November. Double 11 sales did a good job. So we believe that in the future, especially this winter, it will be colder. So we think that November and December won't be too bad.

So the guidance for Q4 is based on a few factors, especially the external environment is not optimistic. There are still lingering uncertainties affecting consumer sentiment. So our guidance of 0 to 5% is apparently not high. And we have observed that, for example, during the W11 event, orders placed on our platform hasn't reached to many of the places because of the resurgence of the COVID-19 cases here and there. And in terms of the W11 event itself, we did see some good developments. And we expect our anniversary event on December 8 to fare relatively better, because autumn and winter closing sales picked up as the weather is getting colder. So we do see some positive signs.

Yes, I would like to add something about the four seasons. Since Q3, we have been focusing on key brands. In addition, we also give more focus to key brands in terms of traffic distribution. In addition, we also eliminate some very unreliable brands. So in this period of deepening reform, there may be some fluctuations in performance. So we give ourselves some space

And for guidance, I just want to add actually internally, you know, we are upgrading our business strategy to focus on the core brands, the quality brands, and phase out unqualified ones. This will actually have more or less impact on our business in the short term. So we want to give ourselves some leeway to do our business.

Thank you very much. We also have a lot of brands that are dedicated to us, customized for us. In addition, there are also those that are specially distributed to us online. Then there are also those that are not sold well online and immediately transferred to us. So we actually look at it at the moment, there are actually quite a lot of suppliers of these brands that we cooperate with.

In terms of the inventory, we think that the current inventory in the pearl industry is okay. Actually, if you look at Q3 and Q4 with the resurgence of the COVID-19 cases, the offline business is actually not doing well. So they have a lot of excess inventory for us to clear. And in addition to clearing inventory for The specific brand partners, we also have other like made for VIP shop products customized with these brand partners. We also secure a more unique and a better priced merchandise from these brand partners. So we think the inventory level is fine, and we are able to leverage our core competencies to secure more inventory from our brand partners.

Thank you. Very helpful.

Thank you. We have the next question. This is coming from the line of Joyce Du from Bank of America. Please go ahead.

Thanks, management, for taking the question. My question was actually regarding our, you know, offline outlet business. Just try to understand. I think in the previous quarters, our offline outlet business indeed had a quite solid growth. Just want to catch up on, like, you know, this quarter's growth for our outlets with our going forward CapEx plan. And also, have we seen any impact from the pandemic to affect our offline traffic in these outlets. Thanks. And also, like, with the GMV contribution and revenue contribution of those, like, you know, offline outlets and also our, you know, offline stores. Thank you.

I'll take on this question. Okay. So even though the COVID-19 impact in this period and our offline businesses still grow quite good, I think it's roughly around 18% in this quarter. And our offline, no, not the offline business, I mean the outlets. Shanshan Outlets grows quite significantly. And then the Outlets provided us 67% of our total revenue, yeah. Total GMV, yeah.

And also the CapEx plan for Outlets or like Shanshan related.

We will continue to grow that business and every single year we will build two or three new outlets. So we do add a couple of new outlets this year and we'll continue to do so in the next three, five years as we originally planned. And for each of the on the size of the new outlets, it does require 5 to maybe to 800 million RMB.

Got it. Thanks. Thanks.

Thank you. We have the next question. This is from the line of Natalie Wu from Haicheng International. Please go ahead.

Good evening. Thank you, Mr. Shen, David, and Jessie for accepting my question. My question is about user call. I would like to ask about the users who were updated in 2020. Their shops and their habits of consumption, for example, Thanks for taking my question. And my question is regarding the user cohort. For those active customers newly acquired last year, just trying to understand if there is any difference that we can notice compared with the past branch of customers, say, pool preference, category, shopping frequency, and retention, et cetera. Thank you.

Okay, let me just briefly talk about the uptrend of our recent users. In fact, in Q2 this year, the up is the same as the down. But in Q3 this year, the up is the same as the growth. This means that our investment in SVIP, including what we said about letting customers buy more good things, has actually played a role. So we hope that in the long term, 那个用户的up其实是要增长,因为我们知道现在那个电商,一些用户在电商上花的钱确实是蛮多的,那么我们也希望更多的投入到我们这里,投入到唯品会。 那么另外我们看到,比如说我们的用户的这个购买的整个那个就是品类方面,那么我们其实最强的还是服装嘛。 Then we see that our clothing ratio is also basically stable. In addition, we did a good job this year, not last year, this year, we did a good job in sports. That is, like physical clothing, shoes, these are our growth is still quite powerful. Then in addition, it is like, for example, like our users here, including what we said, that just mentioned that male users will increase. In addition, we are also happy to see that the consumption ratio of first-tier users is also gradually increasing. OK.

For the user team metrics, I think you've probably noticed that overall our pool declined actually 7% in Q2, but managed to return to positive territory in Q3 because we continue to invest in growing our super VIP members, as well as their spending power We've seen a continued increase in every metric for Super VIP members. And we do believe that there is a lot of room for us to grow our pool going forward. In terms of shopping preferences, actual apparel is still the most preferred category for most of consumers. Its contribution stays relatively stable. We've also seen very good momentum in sportswear and shoes. In terms of user mix, actually we've seen, I just mentioned we've seen increasing contribution from male customers as well as from tier one cities as well as from people in their 20s. So we do see very good momentum in growing our customers. And we believe that we'll be able to continue to expand our customer base.

And how about the retention?

Retention rates for newly added customers for the past year remains relatively stable.

Got it. Thank you.

Thank you. These are time constraints. That concludes today's question and answer session. At this time, I will turn the conference back to Jessie for any closing remarks. Please take over.

Thank you for taking the time to join us today. If you have any questions or follow-up, please don't hesitate to contact me. We look forward to speaking with you next quarter.