Vipshop Holdings Limited

Ladies and gentlemen, good day, everyone, and welcome to VIP Shop Holdings Limited's fourth quarter and full year 2025 earnings conference call. At this time, I would like to turn the call to Ms. Jessie Tseng, VIP Shop's Head of Investor Relations. Please proceed.

Thank you, operator. Hello, everyone, and thank you for joining VIP Shop's fourth quarter and the full year 2025 earnings conference call. With us today are Eric Shen, our co-founder, chairman, and CEO, and Mark Wong, 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 Security Liquidation 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 statement 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 attributable to VIP shop shareholders, and non-GAAP net income per ADS, are not presented in accordance with this 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 fourth quarter and full year 2025 earnings conference call. This year has been defined by strategic alignment Operating resilience and a firm commitment to high-quality growth in a dynamic market. While we entered 2025 facing a multi-consumer environment, I'm pleased to report that the agility of our off-price retail model has allowed us to stabilize our top-line performance and continue to deliver robust profitability for the full year. Our first quarter results came in slightly below our expectations. This was primarily due to a deceleration in December sales as customer activity slowed. We attributed it to the weak winter apparel demand alongside delayed holiday shopping due to a later spring festival. While we saw short-term pressures this quarter, our long-term roadmap remains unchanged. We continue to make solid progress that reinforced our flywheels from merchandising, customer engagement to operations. In 2025, we implemented a strategic reorganization of our merchandising and customer engagement team to enhance agility, and long-term competitiveness. By enabling faster decision-makers and breaking down internal silos, we have unlocked a strong foundation for long-term growth. Throughout the year, our merchandising strategy centered on three pillars, enhancing customer relevance, building differentiations, and deepening category expertise. Advancing these capabilities has been fundamentally allowing us to consistently and effectively align high-value brand supply with involving customer demand. We are building a stronger, more connected portfolio of brands blended products. Last year, our merchandising team further deepened our supply network. This enabled us to acquire more quality, deep discount inventory, driving steadily sales growth across our most valued brands. Leveraging data-driven insights, we are proactively shaping a resilient assortment that wins in growth categories while keeping our supply chains responsive to shifts in customer needs. We are seeing encouraging early signal of cross-sell from apparel into related categories like mother and baby, childcare, and lifestyle. We will remain focused on refining these synergies to better serve our customer diverse needs. Our made-for-VIP line has become a key driver of differentiation, with sales in these exclusive categories grow by over 40% to account for 5% of online apparel sales in 2025. Having successfully built these foundations of scale, we are now in the position to evolve our approach for the next stage of growth. We are streamlining our exclusive products to build a clear identity and drive mindshare. When customers see an exclusive tag, they should instantly recognize a promise of high value and reliability. This is how we transfer the line into competitive definitions. Reliability, courage, on-trend selection, and exceptional value. Our optimistic buying pro-axis is another key differentiator allowing us to select a portfolio of high-demand items from top global and domestic partners. This delivers a compelling value proposition based in quality, price, and style. Combined with dynamic fresh sale and the trailer hunt experience, it drives wild custom apparel, food, excitement, and encourage repeat visits. We are moving faster to lock in more exclusive, low-priced inventory to attract high-value shoppers and deepen the discovery drive viable of our platform. To enhance customer experience, one team now manages the entire journey from initial brand and acquisitions to value-driven growth and lifelong engagement. We have enhanced our capabilities to target and engage user efficiency, which serves as the co-foundations of our full lifecycle customer strategy. Early progress is promising and we are focused on the sustainable runway ahead to build a more seamless, cross-category experience that maximizes lifetime value. The SuperVIP program remains the cornerstone of our growth. Active SVIP members sustained double-digit growth for the first quarter. For the full year 2025, Active SVIPs grow by 11% to $9.8 million, contributing 52% of our online spending. Through exclusive upgrades such as provide sales and family benefits, SVIPs consistently demonstrate significantly higher retention and repeat purchase than those of regular customers. Their sustained loyalty and spending power provide a reliable revenue stream and increase our apparel to brand partners, thinking high-quality customer access. Turning to the operations, we have enhanced our capabilities to better think merchandise with customer intent, delivering measurable results. We implemented multi-objective optimization in our search engine, directly improving convention rate. We also prioritized diversity and freshness in our recommendation engine, which has enriched the discovery and drive high browsing frequency and return visits. Look ahead, we are exploring generative search and recommendations to enable more dynamic, interactive, and integrate the discovery experience. Lastly, we have made great strides in deploying AI across our business to drive an tangible value with advanced AI applications in searching and recommendations customer service, and marketing. We are enhancing the customer experience and empowering our brand partners, laying strong foundations for deeper company-wide integration. Notably, our AI-powered customer service effectively automates routine interactions, improving the overall speed and the relevance of customer support. The system now manages the majority of products, inquires, and generates personalized recommendations with an automated resolution rate approaching 90%. AI-generated content is now widely used in marketing, driving efficiency and effectiveness taking our own campaign, for example, by leveraging AIGC to automate creativities and placements. We have reduced the production costs while optimizing the customer acquisition efficiency. Furthermore, we have used AIGC to generate, summarize our customer reviews and product portfolio, helping brand partners boost their sales effectiveness. With its full-scale launch, our AI virtual try-on feature has proven to be an effective driving of customer engagement. Initial dates confirm its impact on loyalty, showing that engaged customers have a high rate of repeat visits. Our next phase is fundamentally integration of AI, moving beyond stand-alone workflows to embed it within our co-operations, making it primarily drive our growth and business-wide efficiency. As we're looking back on 2025, we have become a more agile, customer-central, and technology-driven organization. We are enhancing our leadership in an off-price sector as a dispensable gateway for brands, navigations, China's shifting consumption landscape. As value shopping becomes a structural trend, we are uniquely positioned to capture high-value customers and expand our share of wallet through merchandising and the supply chain reliability. While the micro-environment remains dynamic, our focus strategy and the strength of the execution giving us great confidence in delivering sustainable profitability growth in 2026 and beyond. At this point, let me hand over the call to our CFO, Mark Wang, to go over our financial results.