PDD Holdings Inc. (PDD) This fall 2023 Earnings Name Transcript

PDD Holdings Inc. (NASDAQ:PDD) This fall 2023 Earnings Convention Name March 20, 2024 7:30 AM ET

Firm Individuals

Lei Chen – Chairman & Co-Chief Government Officer
Jiazhen Zhao – Government Director & Co-Chief Government Officer
Jun Liu – Vice President of Finance

Convention Name Individuals

Joyce Ju – Financial institution of America
Kenneth Fong – UBS
Thomas Chong – Jefferies

Operator

Girls and gents, thanks for standing by and welcome to PDD Holdings, Inc. Fourth Quarter and Fiscal 12 months 2023 Earnings Convention Name. [Operator Instructions] Please be suggested that immediately’s convention is being recorded.

I’d now like handy the convention over to your host immediately. Sir, please go forward.

Unidentified Firm Consultant

Thanks, operator. Hey, everybody and thanks for becoming a member of us immediately. PDD Holdings earnings launch was distributed earlier, obtainable on our web site at investor.pddholdings.com in addition to via the GlobeNewswire providers.

Earlier than we start, we wish to refer you to our secure harbor assertion within the earnings press launch which applies to this name as properly. We’ll make sure forward-looking statements. Additionally, this name contains discussions of sure non-GAAP monetary measures. Please check with our earnings launch which comprises a reconciliation of non-GAAP measures to GAAP measures.

Becoming a member of us immediately on the decision are Mr. Chen Lei, our Chairman and Chief Government Officer; Mr. Zhao Jiazhen, our Government Director and Co-Chief Government Officer; in addition to Ms. Liu Jun, our VP of Finance. Lei and Jiazhen will make some normal remarks on our efficiency for the previous quarter and our strategic focus. Jun will then stroll us via our monetary outcomes for the fourth quarter and monetary yr ended December 31, 2023. Through the Q&A session, Lei and Jiazhen will reply questions in Chinese language and can assist translate. Please kindly observe that English translation is for reference solely. In case of a discrepancy, statements within the unique language ought to prevail.

Now it is my pleasure to introduce our Chairman and Co-Chief Government Officer, Chen Lei. Lei, please go forward.

Lei Chen

Hey, everybody. Thanks for becoming a member of our earnings name for the fourth quarter and monetary yr of 2023. 2023 was an essential yr for PDD Holding. We started a journey devoted to high-quality improvement aligned with our technique, we rolled out a collection of initiatives to empower companies and improve shopper worth. This effort has resonated properly with our customers and retailers burning their constructive suggestions [ph]. Pushed by a rebounding shopper market, our complete income within the fourth quarter was RMB88.9 billion which represents 123% year-on-year improve. GAAP web earnings for this quarter was RMB23.3 billion.

Over the previous yr, our income was RMB247.6 billion which represents a 90% year-on-year improve. In 2023, amid a constructive shopper sentiment, our platform noticed a wholesome resurgence. Within the fourth quarter, we centered on bettering shopper well-being by making excessive core higher-quality merchandise extra accessible. This was achieved via a collection of occasions reminiscent of a Double 11 and Double 12 buying pageant. Our aim has all the time been clear; to unlock unrealized shopper potential and empower people to retrieve greater high quality of life. On account of these efforts, we have now seen sustained development in shopper engagement in our platform all through the fourth quarter. In 2024, we are going to proceed to ramp up our help for high-quality provide and improve our capability to ship good worth and wonderful service.

We’ll refine our provide chain perception and the know-how capabilities to assist producers scale back prices improve effectivity and develop extra product and resonate deeply with shoppers. Our help for a brand new era of farmers and retailers expert in each agriculture and e-commerce is unwavering. That is a part of our ongoing effort to spice up native employment and elevated farmer’s earnings. By our RMB10 billion ecosystem initiative, we develop alongside our high-quality retailers, manufacturers and small to medium-size companies to construct a extra sustainable ecosystem [ph] is on the core of our development as a know-how firm. And final yr, we proceed to spend money on know-how innovation with R&D expense reaching RMB11 billion.

That is the second consecutive yr that our R&D expense has shocked RMB10 billion. Within the fourth quarter, R&D bills grew by 19% reaching RMB2.9 billion. This yr, we proceed to channel investments into new drivers of high-quality improvement. We’re devoted to advancing the function of cutting-edge know-how in agriculture and in manufacturing. Within the fourth quarter, we strengthened our agriculture technique via supporting initiatives such because the agricultural cloud initiative and Pinduoduo Academy rising competitors. We hope to encourage the event of extra resilient digital agriculture area to additional revitalize rural neighborhood. [Indiscernible] rising competitors for example, it offers a platform for faculty college students to showcase the agricultural innovation. Pinduoduo has been an lively supporter for this occasion for the previous yr working and we additionally pay shut consideration to [indiscernible] of agriculture merchandise pushed by know-how as an illustration, Pinduoduo artwork of help [ph] for specialty agriculture merchandise via initiatives reminiscent of zero fee and program for agriculture producers reminiscent of orange and ring grain [ph] meals sector.

We shaped a strategic partnership with sure producers to broaden their market attain and supply steady platform help. We additionally actively [indiscernible] risk. In December final yr, as earthquake struck [ph], we promptly donated RMB20 million. The donation [indiscernible] buy of decreased costs and post-disaster restructuring. We set ourselves accountable for making constructive contributions to our communities. As for our world operations, since launching in September 2022, we have now expanded into 5 international locations, 50 international locations and areas. As a brand new craft [ph], we’re excited to be taught from our numerous world shoppers and markets as we discover know-how innovation. With our provide chain experience, we’re devoted to serving to every shopper stay a extra fruitfully life and we stay dedicated to this mission.

2023 remarks the eighth yr because the founding of PDD Holdings. Since our inception, we have now all the time stayed carefully to our focus. We’ve all the time put shoppers first and embrace innovation with an open thoughts. All through this journey, our group has skilled exceptional development and improvement and we have now seen bold younger leaders emerge able to tackle higher duties. Our firms drive on creativity and power of the youthful era, giving us the boldness to create distinctive worth for our rising shopper base.

And now I’ll hand it over to our Co-CEO, Zhao Jiazhen, to additional discuss our high-quality improvement technique.

Jiazhen Zhao

Thanks, Lei and whats up, everybody. That is Zhao Jiazhen. Thanks all for becoming a member of the fourth quarter and full yr ’23 earnings name. 2023 is a yr of restoration guided by the [indiscernible] of restoration, profit and innovation, we proactively responded to consumption restoration insurance policies by bringing collectively the provision of high quality merchandise and the demand of consumption improve. We performed an element in releasing consumption potential. We achieved first rate development in 2023 which we imagine is the mixed results of our efficient promotional actions and the general restoration of consumption. [Indiscernible] is constructed to serve the wants of an unlimited and numerous shopper base. In recent times, via interactions with our customers, we’re observing a rising demand of consumption upgrades. However on the similar time, we additionally observed that our shoppers are taking a look at methods to improve in a extra rational method. Consumption improve isn’t about excessive consumption or overspending. It’s extra about proudly owning our customers higher services and products at extra accessible costs to carry extra financial savings.

Being this development, we paid particular consideration broadening in collection of high quality merchandise bought on our platform and deal with promotional efforts on premium shopper items, reminiscent of trending nationwide manufacturers, imported items and high-quality merchandise. For instance, via our RMB10 billion program, we’re making it more and more straightforward to get pleasure from imported merchandise and we’re additionally investing firmly to help nationwide manufacturers. Through the Singles Day final yr, we helped our retailers promote extra and our consumer SaveMor [ph], our flash cell channel acted as a development engine for over 100,000 SME retailers. And by the tip of the occasion, greater than 40 product classes, stable gross sales doubled. These included agricultural merchandise, nationwide branded merchandise and high quality imported items. The variety of retailers promoting agriculture merchandise and nationwide branded items that benefited from our RMB10 billion program greater than doubled in our complete development worldwide channel devoted to imported merchandise, 21 out of the 100 manufacturers achieved a year-on-year development of over 300%. 59 gadgets recorded every day gross sales of over RMB1 million throughout Singles Day [ph].

These numbers additionally present that the expansion of our platform is the results of the worth we create for our shoppers and retailers. 2024 will likely be a yr of consumption promotion guided by the precept of Shopper First, we are going to proceed to enhance the number of services and products provided on our platform, being our price for cash thoughts share, improve our buying expertise and improve consumer exercise. And consequently, we will provide extra visibility and gross sales alternatives for high quality retailers, thereby strengthening the constructive suggestions on our platform.

2023 proved to be a pivotal yr for us as we embark on the journey in direction of high-quality improvement. And 2024 will likely be one other crucial yr to implement this technique to each a part of our operations. We’ll step up our investments within the 3 key areas of top quality consumption, provide and platform ecosystem to additional optimize our capabilities in providing extra financial savings and higher providers.

By way of high-quality consumption, we are going to proceed to place ourselves in shoppers’ truths and alter our product choices following carefully the adjustments in shopper demand with tailor-made promotional occasions, that includes holidays, seasons and particular product classes, we are going to make it simpler for shoppers to meet their demand for high-quality merchandise at enticing costs.

Along with extra financial savings, we’ll additionally proceed to improve our providers. We’ll roll out a collection of initiatives that profit shoppers, strengthen shopper safety and additional enhance the buying expertise for distant areas and on the privileged teams.

By way of high-quality provide, since This fall, we have now been allocating platform assets reminiscent of site visitors help coupons to assist manufacturing manufacturers increase the inflows via a collection of promotional actions reminiscent of devoted stay stream infections and the nationwide items pageant, our retailers make nice progress on our platform. The rise of nationwide manufacturers to industry-leading positions requires the joint efforts from each the manufacturers and our platforms. This yr, in partnership with new and established nationwide manufacturers, we are going to proceed to discover new market alternatives and produce to our shoppers higher merchandise and a high-quality buying expertise.

Agriculture is the inspiration of Pinduoduo as the biggest agriculture platform in China. In This fall, we continued our help for the Pinduoduo Academy rising competitors. We additionally supplied ongoing site visitors help and different platform assets for agritech enabled merchandise backed by taking part groups. By doing so, our aim is to advertise a real-world software of analysis findings and to speed up the advance in farming productiveness.

Final yr, our agricultural cloud initiative went resulting from manufacturing areas in [indiscernible] bringing e-commerce coaching and one-on-one session to native agriculture retailers. This yr, we are going to improve our investments in agriculture via initiatives such because the cloud agricultural cloud initiative and good agriculture competitors to proceed to carry digitization options to native producers to enhance the resilience and the competitiveness of the native provide chain, thereby supporting rural revitalization and rising farmers’ earnings.

Constructing a high-quality platform ecosystem will stay our high precedence this yr via the RMB10 billion ecosystem initiative and platform governance insurance policies, we are going to proceed to foster an surroundings that encourages high-quality provide and providers, advancing a inexperienced, wholesome and fashionable platform ecosystem.

Now let me hand over to Jun, she is going to offer you an replace on our monetary efficiency.

Jun Liu

Thanks, Jiazhen. Hey, everybody. Now let me stroll you thru our monetary efficiency within the fourth quarter and monetary yr ended December 31, 2023. [Indiscernible] earnings assertion in This fall, our complete revenues elevated 123% year-over-year to RMB88.9 billion and 90% year-over-year to RMB247.6 billion for full yr 2020. This was primarily pushed by a rise in revenues from on-line advertising providers and transaction providers. Revenues from on-line advertising providers and others had been RMB48.7 billion this quarter up 57% in comparison with the identical interval of 2022. Our transaction providers income this quarter had been RMB40.2 billion, up 357% versus the identical interval of 2022.

Transferring on to prices and bills. Our complete price of revenues elevated 293% from RMB8.9 billion in This fall 2022 to RMB35.1 billion this quarter. For the complete yr, our complete coal ship revenues elevated 192% to RMB91.7 billion, primarily resulting from elevated achievement charges, fee processing charges, [indiscernible] and name heart bills. On a GAAP foundation complete working expense for this quarter elevated 44% to RMB31.4 billion from RMB21.8 billion in the identical quarter of 2022. On a non-GAAP foundation, our complete working bills elevated to RMB29.3 billion this quarter from RMB19.3 billion in This fall 2022.

Through the fourth quarter, we proceed to deal with key areas crucial to the high-quality improvement of our platform, reminiscent of investing in our extra financial savings for our manufacturers and our R&D capabilities. Our complete non-GAAP working bills as a proportion of complete revenues was 33% in This fall in comparison with 48% similar quarter 2022. For full yr 2023, complete non-GAAP working bills had been RMB90.3 billion up from RMB61 billion in 2022. Trying into particular expense gadgets. Our non-GAAP gross sales and advertising bills this quarter had been RMB26.2 billion, up 53% versus the identical quarter of 2022. Throughout This fall, we stepped up our funding in collection of year-end promotion wins to surrender — to provide again to shoppers and improve in promoting to advertise our manufacturers.

On a non-GAAP foundation, our gross sales and advertising bills as a proportion of our income this quarter was 30% versus 43% for a similar quarter in 2022. For full yr, non-GAAP gross sales and advertising bills elevated from RMB52.2 billion to RMB79.8 billion in 2023. Our non-GAAP G&A bills had been RMB674.5 million in This fall versus RMB360.8 million within the second quarter of 2022. Our annual non-GAAP G&A bills had been RMB1.8 billion, in 2023 versus RMB1 billion final yr. Our analysis and improvement bills had been RMB2.4 billion within the fourth quarter on a non-GAAP foundation and RMB2.9 billion on a GAAP foundation. For full yr 2023, our annual GAAP R&D bills supposed RMB10 billion the second consecutive yr. Expertise is on the core of every part we do. We’ll proceed to construct on our R&D capabilities to advertise faucet adoption [ph] in agriculture and manufacturing sectors to enhance provide chain effectivity, an intent of our shoppers’ rising collection of high quality merchandise at enticing costs.

On a GAAP foundation, working revenue for the quarter was RMB22.4 billion versus RMB9.1 billion in the identical quarter 2022. Non-GAAP working revenue was RMB24.6 billion versus RMB11.6 billion in the identical quarter 2022. Non-GAAP working revenue margin was 28% this quarter in contrast with 29% for a similar quarter 2022. For the complete yr, nonoperating revenue elevated from RMB38.1 billion to RMB65.8 billion in 2023. Web earnings attributable to unusual shareholders was RMB23.3 billion for the quarter and RMB60 billion for the complete yr. Within the fourth quarter, base earnings per ADS was RMB17 and diluted earnings per ADS was RMB15.83 versus base earnings per ADS of RMB7.42 and diluted earnings per ADS of RMB6.52 within the second quarter of 2022.

Non-GAAP web earnings attributable to unusual shareholders was RMB25.5 billion for the quarter and RMB67.9 billion for the complete yr. Within the fourth quarter, non-GAAP diluted earnings per ADS was RMB17.32 versus RMB8.34 in the identical quarter of 2022. Lei talked about 2023 is the primary yr on our half in direction of high-quality improvement and we’re inspired by the early outcomes. Trying forward, whereas we’re excited in regards to the new journey, there are challenges and uncertainties alongside the best way. And we have to be ready to speculate decisively for the long-term worth of our platforms.

Our monetary outcomes might proceed to fluctuate and previous efficiency might not function a benchmark for future quarters. That completes the earnings assertion. Now let me transfer over to money movement. Our web money movement generated from working actions was RMB36.9 billion in This fall and RMB94.2 billion for the complete yr of 2023 in contrast with RMB26 billion in the identical quarter of 2022 and RMB48.5 billion in 2022. As of December 31, 2023, the corporate had RMB217.2 billion in money, money equivalents and short-term investments.

Thanks. This concludes my ready remarks.

Unidentified Firm Consultant

Thanks, Jun. Subsequent, we are going to transfer on to the Q&A session. Immediately’s Q&A session, Lei, Jiazhen and Jun will take questions from analysts. We might take a most of two questions from every analyst. Lei and Jiazhen will reply in Chinese language and can assist translate for comfort functions.

Operator, we’re open for questions.

Query-and-Reply Session

Operator

[Operator Instructions] Your first query comes from Joyce Ju with Financial institution of America.

Joyce Ju

I’ve two questions immediately. Firstly, as administration talked about within the opening remarks, 2023 was a vital yr for PDD from the strategic perspective. Trying again on the fourth quarter and the complete yr 2023, might the administration share how you’ll consider your execution of the previous yr methods? And the way does the precise outcomes are in contrast towards the group’s unique expectations. For 2024, will there be any like main change in your strategic focus. And my second query was really in regards to the fourth quarter promotions. Everyone knows the fourth quarter is the height season for the e-commerce platforms. How would administration assess PDD’s efficiency within the fourth quarter buying fasteners? Are there any fascinating traits of shoppers, retailers or platforms might be shared with us. Additionally, might you additionally assist us a bit of bit when it comes to understanding the connection between the promotional season, seasonality and your very robust fourth quarter outcomes.

Lei Chen

That is Chen Lei. Let me take your query on technique. As talked about in our remarks, 2023 marks the start of our high-quality improvement technique. After devoted [ph] execution, we have now seen constructive outcomes on the development facet, provide facet and inside our platform ecosystem. This additional reaffirms our lasting dedication in high-quality improvement. As we expanded into a number of international locations and areas, we encountered numerous shopper habits, cultures and quickly evolving market panorama. We firmly imagine that the shoppers’ demand for extra financial savings and higher providers is common. Due to this fact, in This fall, we continued our funding in alignment with our high-quality improvement technique.

First, from the patron facet, our high precedence has all the time been to know and meet shopper wants. Through the peak season in This fall, we launched tailor-made promotional actions throughout completely different markets future modern direct and fascinating campaigns. These initiatives permit shoppers to enhance their high quality of life with ease and grid financial savings, making it simpler for our shoppers to realize high-quality consumption. The response to those promotions has been constructive.

On the provision facet, we proceed to allocate platform assets in direction of high-quality merchandise and respected retailers to supply shoppers extra high quality merchandise. As well as, we even have retailers drive quantity, enhance turnover effectivity, scale back working prices, decrease product threat and consequently decrease product costs, forming a virtuous cycle. Wholesome ecosystem is the basic for the sustainable development of the platform and we’re decided to place extra efforts on this space. We proceed to make forward-looking investments in platform governance using know-how to establish threat early and reply shortly. We feature out product screening and service provider assessment on points reminiscent of ship guarding minus, IP safety and product compliance and achieved favorable end result. Transferring forward, we are going to proceed to tackle social duties, fostering a good surroundings for each shoppers and retailers.

After a yr of execution, we’re delighted to see the constructive adjustments led to by our high-quality improvement technique. Going ahead, we are going to keep on with our strategic focus, deepen and strengthen our technique, additional refined platform capabilities and ship our distinctive worth to shoppers and society. Thanks.

Jiazhen Zhao

That is Jiazhen Zhao. Let me take your query on buying pageant. As all the time, throughout final yr’s Singles Day and Double 12, we supplied shoppers with simple value low cost to strengthen our extra financial savings mindshare. For instance, in the course of the Double 11 final yr, for the primary time, we launched direct value discount on high of our RMB10 billion program for the — so we additionally expanded the manufacturers and merchandise lined by our promotions. That is to satisfy the rising demand for upgrades.

We acquired constructive suggestions from our continued efforts. And through Singles Day, over 620 million shoppers benefited from RMB10 billion program with order quantity greater than doubled. On the similar time, we’re pleased to see that the worth of our platform has been more and more acknowledged by our retailers. The variety of retailers, manufacturers and merchandise taking part in our promotional actions reached the brand new top. Our retailers are rising along with our platform. And whereas we’re very happy to see the outcomes from our buying festivals, our group really chooses to pay extra consideration to the continuing enchancment in our platform’s capabilities and the way we are able to higher meet shoppers’ demand for high quality merchandise at enticing costs all yr spherical. For the reason that funding of Pinduoduo 8 years in the past, we have now all the time stored our deal with our core e-commerce enterprise. By patiently given again to the shoppers reserve, we progressively earn a constructive consumer mindshare. I feel the outcomes we have now immediately isn’t solely introduced by the promotions prior to now quarter but in addition the return on investments we made prior to now.

From the patron facet, we proceed to see the rising belief from our customers. And along with serving extra new customers, we’re additionally increasing the quantity share of our current customers. We imagine it is the results of our rising capabilities in providing extra financial savings and higher providers. This very encouraging development strengthens our confidence within the total path of the high-quality improvement technique. And from the provision facet, we leverage our know-how and scale to supply differentiated providers for our SME retailers. And thru these providers, we assist SME retailers increase their market attain and on the similar time, broadening the product choice obtainable on our platform. And by doing so, we create a virtuous cycle. And searching forward, we are going to proceed to speculate firmly and patiently to create long-term worth for our shoppers and retailers and in addition to construct a stable basis for the following part of our journey. Thanks.

Unidentified Firm Consultant

Operator, we’re prepared for the following query.

Operator

Your subsequent query comes from Kenneth Fong with UBS.

Kenneth Fong

My first query is relating to Pinduoduo home enterprise. Can administration share your view on the general consumption market within the upcoming yr? What are the brand new traits that you just’re seeing within the first quarter? My second query is on the shareholder return and margin. In fourth quarter, the corporate achieved a good profitability in the most effective drop of intensified competitors and speedy development of your world enterprise. Can administration share your view of how we must always take into consideration the margin in 2024 and going ahead? And in the meantime, on shareholder return, we noticed that you’ve got a really robust stability sheet after which money movement given friends have introduced massive improve in share buyback and dividends. Do we have now related plans?

Jiazhen Zhao

That is Jiazhen. Let me take your query on the consumption market. Previously yr, we really clearly felt that depth with and in addition the resilience of the China shopper market and we’re very assured in its future. And likewise from the actions we see on our platform, we clearly really feel the bettering shopper sentiment and we sit up for seeing that development proceed into this yr with the help of extra macro insurance policies. We see many long-term driving forces behind the constructive consumption traits. And to begin with, shoppers have desired for a greater life which lays a stable basis for consumption development. And secondly, we see new retail codecs and enterprise fashions emerge with the know-how innovation which additionally drives on-line penetration of retail gross sales. This helps the {industry}’s [indiscernible] prospects as properly.

And thirdly, we see super potential in numerous high quality nationwide manufacturers and agricultural merchandise. And this additionally affords additional alternatives for our platform. And on this favorable consumption surroundings, we are going to proceed our funding to reinforce our service capabilities, collaborate with extra retailers to serve our shoppers properly and in addition enhance the platform ecosystem. And by doing so, we hope we are able to create higher worth for our society. Thanks.

Jun Liu

Ken, that is Jun. Let me take your query in regards to the profitability and shareholder return. Effectively, relating to profitability, we all the time emphasize although we’re nonetheless within the improvement stage — not our precedence. Contemplating our present stage of improvement, our strategic focus stays on the high-quality improvement of the platform. So we are going to deal with constructing the platform’s long-term worth which is in line with the curiosity of our traders. Over the previous years, guided by our technique of high-quality improvement.

We’ve made for investments in key areas. For instance, we have now continued to provide again to shoppers to deepen our mindshare. We additionally stay dedicated to R&D which R&D [indiscernible] in RMB10 billion for the second consecutive yr. This funding have yielded favorable preliminary returns. Transferring ahead, we are going to proceed to make a decisive ambition investments the place we see long-term ROI potential. And our enterprise execution cycle is affected by numerous components and should not align with our monetary reporting cycle. Profitability on a quarterly foundation, we’re in eligibly fluctuate primarily based on the completely different funding alternatives we establish. So the monetary ends in This fall might not function a benchmark for future quarters.

And relating to the share repurchase and dividends, you are principally asking about our total capital allocation which can also be affected by the stage of ahead division. Every firm is at a distinct stage of division. And for us, we’re nonetheless within the funding part. So we — our present focus remains to be to spend money on our long-term worth.

Operator

Your subsequent query comes from Thomas Chong with Jefferies.

Thomas Chong

My first query is that we noticed your world enterprise has acquire good momentum prior to now yr. May you please share any of your view on the longer term plan for world enterprise. Furthermore, the market additionally pays consideration to the corporate’s place on compliance. How would the corporate stability authorized and compliance with your corporation improvement? My second query is about home competitors. Previously yr, a lot of your main rivals have pivoted of their methods, placing extra emphasis on value competitiveness, how does the administration will likely be positioning of your rivals? Are you involved that it would influence the market share of Pinduoduo? How do you alter your individual technique in such [indiscernible].

Lei Chen

Thomas, that is Chen Lei. Let me take your query on world enterprise. Our imaginative and prescient for world enterprise is to make the most of our provide chain and technological capabilites to carry excellent retailers and high-quality merchandise all around the world to world shoppers, serving to shoppers from all backgrounds to realize their desires. At the moment, the enterprise view at a comparatively early stage, taking many uncertainties and challenges forward. To handle these uncertainties, we should consistently enhance ourselves with a real want to be taught from shoppers available in the market, we’re actively search extra improvements in know-how and operation fashions to extend market competitors and overcome challenges.

As I discussed earlier, regardless of shifts available in the market surroundings and aggressive panorama, shoppers demand for extra financial savings and higher providers is common. Due to this fact, we will likely be devoted to integrating our high-quality improvement technique in world operations and be ready for long-term investments. We’ve confidence within the distinctive worth of our platform and welcome like many companions to affix us in creating extra worth for shoppers globally. You additionally talked about compliance, authorized and compliance has all the time been basic to our enterprise. It is a large a part of our strategic planning and the administration group has put in intensive efforts on this space. Final yr, we established a authorized and compliance committee chaired on my own to strengthen our authorized and compliance capabilities throughout areas.

By our continued efforts, we enhanced our inside compliance mechanisms and processes. With the common-or-garden perspective, we attempt to remain abreast of the most recent {industry} legal guidelines and laws and preserve communication and cooperation with regulatory our bodies within the international locations the place we function. We goal to align with excessive {industry} requirements within the subject of authorized and compliance. We’ll proceed to conduct analysis and funding on this space to put a stable basis for our long-term wholesome improvement.

Jiazhen Zhao

That is Zhao Jiazhen. Let me take your query on [indiscernible]. As we talked about earlier on this name, in 2023, we noticed sustained restoration in shopper sentiment and on the similar time, shoppers begin to care an increasing number of about attaining enticing costs. And on this background, we predict it’s regular to see e-commerce platforms elevated promotional efforts and in addition focus extra on value competitiveness.

And competitors is inevitable in our {industry}. Within the face of competitors, we all the time deal with understanding and assembly the wants of shoppers and preserve engaged on our personal capabilities. Over the previous yr, we have now constructed good momentum on our high-quality improvement technique and we’re assured within the total strategic interplay. And shifting forward, we’ll be specializing in implementing our technique each side of our platform operation. First, we’ll proceed to deepen our shopper mindshare and we achieve this by providing extra financial savings to our customers. We’ll very carefully comply with shopper wants and launch quite simple and direct promotional actions concentrating on probably the most fascinating product classes and value ranges. That is the inspiration that we have to preserve investing in.

And naturally, shopper expertise isn’t solely about value. By way of providers, we additionally proceed to refine our complete buying expertise from presale session, achievement, after gross sales providers to shopper safety. Our aim is to supply a secure and pleasing buying expertise for our customers. And on the similar time, as a tech firm, will improve our funding in R&D and we’re guided by the precept of tech for items and we’ll proceed to strengthen our capabilities to empower a variety of SMEs, promote the digitization of the assorted industries and in addition introduce extra fashionable merchandise to the market.

And high-quality provide is a key element of the platform ecosystem and its important to serving our customers properly. And from this angle, we hope that R&D will additional drive the constructive improvement of our ecosystem. And we imagine that by specializing in these areas that crucial to long-term worth creation. We are able to stay calm in a fiercely aggressive surroundings and proceed to enhance ourselves and create higher worth for the shoppers and the society. Thanks.

Unidentified Firm Consultant

Okay. Operator, it is about time and I wish to thanks all for — once more for becoming a member of us immediately. And when you’ve got any additional questions, please attain out to our group and thanks. I am going to see you subsequent quarter.

Operator

Girls and gents, that does conclude our convention for immediately. Thanks for taking part. You might now disconnect.