PDD Holdings Inc. (NASDAQ:PDD) Q3 2024 Earnings Conference Call November 21, 2024 7:30 AM ET

Company Participants

Lei Chen - Chairman & Co-Chief Executive Officer
Jiazhen Zhao - Executive Director & Co-Chief Executive Officer
Jun Liu - Vice President, Finance

Conference Call Participants

Kenneth Fong - UBS
Charlene Liu - HSBC
Joyce Ju - Bank of America

Operator

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings Inc. Third Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your host today. Sir, please begin.

Unidentified Company Representative

Thank you, operator. Hello, everyone, and thank you for joining us today. PDD Holdings earnings release was distributed earlier and is available on our website at investor.pddholdings.com as well as through the GlobeNewswire services.

Before we begin, I would like to refer you to our safe harbor statement in earnings press release, which applies to this call as we will make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures.

Joining us today on the call are Mr. Chen, Lei, our Chairman and Co-Chief Executive Officer;

Mr. Zhao Jiazhen, our Executive Director and Co-Chief Executive Officer; as well as Mr. Liu Jun, our VP of Finance. Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then walk us through our financial results for the third quarter ended September 30, 2024. During the Q&A session, Lei and Jiazhen will answer questions in Chinese, and we'll help translate. Please kindly note that the English translation is for reference only. In case of any discrepancy, statements in the original language should prevail.

Now, it's my pleasure to introduce our Chairman and Co-Chief Executive Officer, Mr. Chen Lei. Lei, please go ahead.

Lei Chen

Thank you. Hello, everyone. Thank you all for joining our earnings call for the third quarter of 2024.

In the third quarter, we stepped up our efforts in execution of high-quality development strategy and invested firmly in building a healthy platform ecosystem. We rolled out several initiatives that extended our ecosystem upgrade to the whole supply chain, such as RMB10 billion fee reduction program and a high-quality merchant support program. This effort brought cost saving and efficiency gains to over 10 million merchants, and during the process, encouraged the agricultural regions and industrial belts that we serve to embark a new phase of high-quality development.

This past quarter, we delivered robust results with revenues and net income reaching RMB99.4 billion and RMB25 billion, respectively. When compared to last quarter, we have seen a moderation in revenue growth and profits have also trended lower. This was partially due to intensified competition in the e-commerce sector and the various challenges faced by our business. At the same time, as noted last quarter, our investments in ecosystem development are expected to impact short-term financial results, and this is within our expectation.

Beyond the financial results, we placed greater value on our long-term benefits of ecosystem investments. Over the past quarter, our initiatives in fee reductions and merchant support policies have received positive feedback from merchants, manufacturers, as well as from the consumers. In mid-August, we first launched the RMB10 billion fee reduction program, which included several measures, such as service fee refunds, fee reduction for buy now pay later services, lower security deposit and an easier fund withdrawal process. In addition, we also upgraded aftersales service support for merchants, which brings further cost savings while improving service quality. These efforts injected fresh energy into our ecosystem and created opportunities for growth and transformation that benefits both our merchants and industry [they serve] (ph).

As a first among the e-commerce platform, we also adopted the logistic support vendors to promote e-commerce services in remote regions across Western China. Last quarter, we eliminated the transhipment fees for orders to these regions with all such costs covered by the platform. This innovation marked a first upgrade to our fulfillment experience that builds on our earlier initiatives that provide free shipping to some villages in Western China. Programs like this not only benefit local consumers, but also enable merchants to enter these underserved markets, which further strengthens the economic link between different regions.

In addition to fee reductions, we also launched the high-quality merchant support program, which aims to empower merchants and brands that demonstrates strong product and technology innovation capabilities. Leveraging our digital capabilities, we offer comprehensive support in product development, marketing, operation and supply chain management. The examples set by these quality merchants and brands also served as a driving force behind the growth and transformation of agricultural production regions and industrial belts in the future.

At the moment, the RMB10 billion fee reduction program covers all product categories on our platform with over RMB10 billion in fee reductions planned for the coming year. The logistic support measures continue to benefit consumers from remote areas, driving significant order volume growth from these regions compared to the last quarter. Meanwhile, the high-quality merchant support program has already implemented in dozens of agriculture regions and industrial zones in reaching the platform supply chain for high-quality products.

On demand side, consumers are experiencing a shift in their preferences with greater focus on quality and personalization. This has posed new demands on supply chain innovation. At the same time, our initiatives in fee reductions and merchant support policies are encouraging more merchants to innovate, which enables them to better meet the consumers' demand for more quality products, thereby creating a positive cycle. This reaffirms our commitment to make investments that drive impactful results over the long run. We will continue to firmly execute our high-quality development strategy and to nurture a healthy platform and supply chain ecosystem, which brings sustained benefits to consumers, merchants and the manufacturers.

As a platform rooted in agriculture, we continue to make our own contributions in this field with a particular focus on advancing research and technology innovation. On September 20, we hosted the final round of fourth Smart Agriculture Competition, where six finalist teams explored cutting-edge technologies in agriculture digitalization and experimented with real-world applications. On September 26, we hosted a Global AgriInno Challenge 2024 in collaboration with leading research institutes. Dozens of young entrepreneurs from around the world represented innovative digital solutions to tackle agriculture challenges faced by farmers around the world.

As mentioned last quarter, as a global company in a new era, we are committed to driving innovation and adapting to change. We are also prepared to do more to give back to the society, to support agriculture and other industry sectors, and to take on greater social responsibilities in the region across the globe.

And now, I will hand it over to our Co-CEO, Zhao Jiazhen, to talk in more details about our development plan.

Jiazhen Zhao

[Foreign Language]

[Interpreted] Thank you, Lei. Hello, everyone. This is Zhao Jiazhen. Thank you all for joining our earnings call for the third quarter of 2024.

[Foreign Language]

[Interpreted] In the third quarter, thanks to the steady recovery of macro consumption, our business performance remained robust. As we continue to firmly execute our high-quality development strategy, as Lei just mentioned, we have been actively optimizing the platform ecosystem. This includes a series of fee reductions and initiatives to support our merchants, all aimed to ensuring benefits for both the supply and demand side. Let me now take a moment to share some of our efforts in supporting merchants.

[Foreign Language]

[Interpreted] As we discussed last quarter, our investment in platform ecosystem focused on two key areas. First, we have reduced transaction fees for high-quality merchants. On the other hand, we have committed billions of resources to empower merchants in emerging industrial clusters with strong product and technology innovation capabilities.

[Foreign Language]

[Interpreted] In the third quarter, our RMB10 billion fee reduction program introduced a series of measures which played a key role in helping merchants lower costs and improve efficiency through substantial fee reductions and refunds. Many merchants, especially agriculture and national goods, saved hundreds of thousands RMB a year, largely reducing their operating costs. This allows them to free up more resources for product development and technology upgrades, driving the industry towards a new phase of high-quality growth.

[Foreign Language]

[Interpreted] Additionally, we have enhanced aftersales service system for merchants. We introduced a green channel alongside a dedicated aftersales service team to fully support merchants with abnormal orders, complaints and customer dissatisfaction. Once the merchants appeal is approved, the platform compensates for the relevant orders. This improves not only the merchants' experience, but also the overall business environment on the platform.

[Foreign Language]

[Interpreted] As part of our logistics support initiative, we cover all transhipment fees across Western China. This substantially reduces delivery cost for orders in these regions. For categories like agricultural products and daily essentials, delivery fees were cut by up to 70%, greatly encouraging merchants to enter these markets. Quality products from across the country are now reaching Western China, promoting further infrastructure development in e-commerce and logistics. It also opens new opportunities for the region's abundant resources to access national markets.

[Foreign Language]

[Interpreted] Following our RMB10 billion fee reduction program, we also launched the high-quality merchant support program. For example, during the Harvest Festival in early September, we have allocated RMB1 billion in subsidies and RMB2 billion in online traffic resources to support high-quality agricultural merchants from various regions. This effort helped seasonal agricultural products reach urban markets, boosting yields and income in agricultural communities.

[Foreign Language]

[Interpreted] Beyond agricultural regions, the high-quality merchant support program also extended towards to other industrial communities. Leveraging the platform's digital capabilities, we're collaborating with manufacturers to explore full supply chain models. This helps them advance manufacturing process, strengthen brand recognition and drive industries toward high-quality developments.

[Foreign Language]

[Interpreted] In the recently concluded Double 11 Shopping Festival, our RMB10 billion program partnered with numerous national brands to launch customized high-quality products. This initiative led to impressive growth with sales of national brands both new and established rising more than 10-fold quarter-on-quarter. In the coming quarters, we will further broaden our support for high-quality merchants, covering more agricultural and industrial regions to drive industry transformation and advancement.

[Foreign Language]

[Interpreted] Our firm investments on the supply side has enabled us to provide consumers with a more diverse selection of high-quality products, allowing their evolving preferences. In response to shifting consumption trends, we have expanded offerings of new smartphones, top brand cosmetics and healthy food to users in first- and second-tier cities, addressing the personalized demands of urban professionals and younger generations. For those in third- and fourth-tier cities in rural areas, we have focused on offering more premium home appliances, maternity and baby products and fresh produce, driving a wave of consumption upgrades.

[Foreign Language]

[Interpreted] As Lei noted, over the next few quarters, we will stay committed to our high-quality development strategy. We will carry on with the fee reductions and the merchant support initiatives, further enhance our ecosystem and keep improving our capabilities to navigate the challenges ahead.

[Foreign Language]

[Interpreted] Next, I will hand over to Jun. She will provide an update on our financial performance for third quarter.

Jun Liu

Thank you, Jiazhen. Hello, everyone. Let me walk you through our financial performance for the third quarter ended September 30, 2024.

In terms of income statements, in the third quarter, our total revenues increased 44% year-over-year to RMB99.4 billion. This was mainly driven by an increase in revenues from online marketing services and transaction services. Revenues from online marketing services and others were RMB49.4 billion this quarter, up 24% from the same quarter of 2023. Revenues from transaction services were RMB50 billion, up 72% from the same quarter last year. In Q3, our top-line growth has further moderated in comparison to the last few quarters amid intensified competition and external challenges.

Moving on to costs and expenses. Our total cost of revenues increased 48% from RMB26.8 billion in Q3 2023 to RMB39.7 billion this quarter, mainly due to increase in fulfillment fees and payment processing fees. On a GAAP basis, total operating expenses this quarter increased 39% to RMB35.4 billion from RMB25.4 billion in same quarter of 2023. On a non-GAAP basis, total operating expenses increased to RMB32.9 billion this quarter from RMB23.9 billion. In Q3, we further increased our investment to promote high-quality development of a sustainable platform ecosystem. Our total non-GAAP operating expenses as a percentage of total revenues this quarter was 33% compared to 35% in the same quarter last year.

Looking into specific expense items. Our non-GAAP sales and marketing expenses this quarter were RMB29.8 billion, up 40% versus the same quarter last year. Throughout Q3, we remained focused on giving back to consumers [throughout] (ph) promotional campaigns and continue to invest in marketing to promote our platforms. On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenues this quarter was 30% versus 31% for the same quarter last year. Our non-GAAP general and administrative expenses were RMB647 million versus RMB403 million in the same quarter of 2023. Our research and development expenses were RMB2.4 billion this quarter on a GAAP -- non-GAAP basis, up 10% year-over-year, and RMB3.1 billion on a GAAP basis. Our R&D expenses reached a new high this quarter, reflecting our focus on strengthening the core technology capabilities of our platform. As a foundation for our supply chain innovation and the trustworthy shopping environment, we are committed to further increasing our investment in R&D.

On a GAAP basis, operating profit for the quarter was RMB24.3 billion versus RMB16.7 billion in the same quarter last year. Non-GAAP operating profit was RMB26.8 billion versus RMB18.1 billion in the same quarter last year. Non-GAAP operating profit margin was 27% this quarter compared with 26% for the same quarter last year.

Net income attributable to ordinary shareholders was RMB25 billion for the quarter compared to RMB15.5 billion in the same quarter last year. Basic earnings per ADS was RMB18.02 and diluted earnings per ADS was RMB16.91 versus basic earnings per ADS of RMB11.38 and diluted earnings per ADS of RMB10.60 in the same quarter of 2023. Non-GAAP net income attributable to ordinary shareholders was RMB27.5 billion versus RMB17 billion in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB18.59 versus RMB11.61 in the same quarter of 2023.

As noted last quarter, our profitability may gradually trend lower over the long run as we continue to invest to support high-quality merchants and promote a sustainable platform ecosystem. Moving forward, we will remain committed to long-term investment to build a healthy platform ecosystem, bringing sustained benefits to consumers, merchants and other ecosystem partners.

That completes the income statement. Now, let me move on to cash flow. Our net cash generated from operating activities was RMB27.5 billion compared with RMB32.5 billion in the same quarter last year. As of September 30, 2024, we have RMB308.5 billion in cash, cash equivalents and short-term investments.

Thank you. This concludes my prepared remarks.

Unidentified Company Representative

Thank you, Jun. Next, we will move on to the Q&A session. In today's Q&A session, Lei, Jiazhen and Jun will take questions from analysts on the line. We could take a maximum of two questions from each analyst. Lei and Jiazhen will answer questions in Chinese, and we'll help translate for convenience purpose.

Operator, we are now open for questions.

Question-and-Answer Session

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Kenneth Fong with UBS. Please go ahead.

Kenneth Fong

[Foreign Language]

Last quarter, management placed great emphasis on your commitment to invest in the merchant ecosystem and we have also seen the company implementing a series of merchant support initiatives since then. Can management share the current progress of this initiative and elaborate on the plans moving forward?

And my second question is, we are seeing that the company is still actively exploring new markets in this global business, but at the same time, we also noted that external environment is evolving and we are hearing different views on the business from external stakeholder. Could management share your thoughts on this and also provide an update on the future plans for the global business? Thank you.

Jiazhen Zhao

[Foreign Language]

[Interpreted] Hi. This is Zhao Jiazhen. Let me take your question on our merchant support initiative.

[Foreign Language]

[Interpreted] As we have always emphasized, it's crucial for us along with all our ecosystem partners to collaborate closely in creating value for consumers. Merchants, as essential partners in serving consumers, are vital in this effort. The healthy and sustainable merchant ecosystem is, therefore, fundamental to our health -- quality development.

[Foreign Language]

[Interpreted] To this end, we have made substantial investments in the merchant ecosystem this quarter, giving strong support to high-quality merchants through the RMB10 billion fee reduction program. As just mentioned, we have implemented several policies, including service fee refunds, lower security deposits, weaving transhipment fees for orders from remote regions and enhancing after sales support for merchants.

[Foreign Language]

[Interpreted] We aim to guide high-quality merchants towards sustainable growth through consistent implementation of this policy over the long term. For instance, the fee reduction efforts such as service fee refunds and deposit reductions not only lower merchants' operational cost, but also improve their efficiency. This in turn empowers merchants to invest more in improving their products and services over time.

[Foreign Language]

[Interpreted] In the third quarter, we also made substantial progress in logistics. With our logistics fee reduction policy, merchants are no longer charged for transhipment fees for all orders shipped to Western regions. This enables merchants to reach a broader customer base at lower cost. It also furthers our strategy to extend logistics services across Western China, encouraging the distribution of high-quality goods to their regions.

[Foreign Language]

[Interpreted] These policies have received notable positive feedback from merchants. Moving forward, we're committed to making more meaningful long-term investments in this direction. By fostering a stronger merchant ecosystem, we aim to establish a more robust supply chain and deliver better products and services to consumers together with our merchants.

Lei Chen

[Foreign Language]

[Interpreted] Hi, Kenny. This is Chen Lei. Let me take your question on the global business.

[Foreign Language]

[Interpreted] Our goal in the global business has always been to deliver our unique value to consumers across the different countries. This commitment remains unchanged. To achieve this goal, we will continue to strengthen our capabilities, to improve our supply chain and upgrade our services.

[Foreign Language]

[Interpreted] As our business continue to grow, consumers and external stakeholders have placed higher requirements on us. In response to these, we have always maintained a proactive and open attitude. And over the past few months, we are actively engaging with external stakeholders in the markets where we operate. We carefully listen to their feedback and suggestions, and we promptly incorporate their suggestions into our daily operations. And in this way, we were able to continuously enhance our service standards and compliance posture.

[Foreign Language]

[Interpreted] At the moment, we are already seeing some initial results from these communication efforts and we are bringing our operations to higher standards in various markets. As our global business grows, we will continue to strengthen our capability in this regard to deliver high-quality services that meet the preferences and expectations of the consumers in each market.

[Foreign Language]

[Interpreted] At the same time, as mentioned last quarter, the impact of the intensifying competition in the global market and the complex external environment combined will bring ups and downs to our business. This is inevitable. However, this will not deter us from exploring the way forward. Challenges from the outside and external expectations motivate us to continue to strengthen our capabilities to deliver a safer and better shopping experience for global consumers. Thank you.

Kenneth Fong

[Foreign Language]

Unidentified Company Representative

Operator, we can move on to the next analyst on the line.

Operator

The next question will come from Charlene Liu with HSBC. Please go ahead.

Charlene Liu

Thank you.

[Foreign Language]

From your prepared remarks and from public information, we noticed that the company recently paid a lot of attention to compliance and platform ecosystem. And we also saw some new initiatives being launched. Can management share with us some detailed measures you have taken and what goals you expect to achieve in this area going forward?

The second question is that we noticed that this quarter's profit and profitability saw slight decline Q-on-Q. Can management kindly share your thoughts on this? And how does this align with the trend discussed by the management on last quarter's earnings call? And looking ahead, how does management think about longer-term profitability trends? Thank you very much.

Jiazhen Zhao

[Foreign Language]

[Interpreted] Hi. This is Zhao Jiazhen. Let me take your question on compliance.

[Foreign Language]

[Interpreted] Our business growth, coupled with regulatory trends in various markets, has placed higher demand on our compliance capabilities. We believe that providing a safe and reliable shopping environment is a duty of an e-commerce platform. Therefore, we see compliance and high-quality ecosystem as key components of our high-quality development strategy.

[Foreign Language]

[Interpreted] To this end, we have taken further steps to scale up the execution of a robust set of trust and safety initiatives, all designed to fortify our compliance systems.

[Foreign Language]

[Interpreted] In terms of compliance management, we invested heavily in building a strong expert compliance team to closely track regulatory changes and industry trends across our markets. This allows us to translate insights into actionable compliance guidance. At the same time, we have developed comprehensive educational materials for our merchants to enhance their compliance capabilities and foster the high-quality development of the supply chain.

[Foreign Language]

[Interpreted] Leveraging technology, we have further streamlined our merchant onboarding and product listing processes. We have invested substantial resources to proactive product quality checks and combining technology and menu screening to properly detect and address potential productivity risks. At the same time, we work closely with external stakeholders to meet their requirements, striving to set industry-leading compliance standards.

[Foreign Language]

[Interpreted] Through this investment in compliance and our support for high-quality merchants, we aim to achieve further upgrades in the supply chain. By removing bad actors and empowering top merchants, we are fostering a healthier and more sustainable merchant ecosystem. These efforts will ultimately lead to more valuable products and services for our consumers. Thank you.

Jun Liu

Hi. This is Jun. Thanks for your question. I'll take your second question about the profitability. Well, last quarter, we communicated that our revenue growth may see some moderation as a result of competition and external factors. And in addition, as we invest firmly to drive a healthy and sustainable platform ecosystem, our profitability may gradually trend lower in the long run.

Beyond the financials, we are already seeing good initial results from our investments in platform ecosystem. We are encouraged by the positive feedback from merchants on our merchant support initiative. We believe investment in the merchant ecosystem laid the foundation for the platform's healthy and sustainable development.

In the long run, these efforts will benefit the merchants, consumers, as well as the platform, creating more value to consumers by enabling supply chain upgrades. And I think this is a long journey. And moving forward, we will continue to explore more investment in this direction to drive impactful results. Thanks.

Unidentified Company Representative

All right. Operator, let's move on to the next analyst on the line.

Operator

The next question will come from Joyce Ju with Bank of America. Please go ahead.

Joyce Ju

[Foreign Language]

I will translate myself. I have two questions. My first question is, can management share with us some new consumption trend that you have observed during this year's Double 11 Shopping Festival? How does management rate PDD's performance in this promotion? What are the new initiatives that [Duoduo] (ph) experimented during this event? And does management are satisfied with the results?

My second question is actually regarding competition. From what we observed during this year's Double 11, the competition remained very remain intense in China's e-commerce market. And Duoduo's growth rate also slightly slowed down during this quarter. Could management help us understand your sort on domestic competition pressure? And will there be any adjustment in your strategies going forward? Thank you very much.

Jiazhen Zhao

[Foreign Language]

[Interpreted] Hi. This is Zhao Jiazhen. Let me take your question on domestic consumption and shopping festivals.

[Foreign Language]

[Interpreted] We have seen an overall recovery in consumer spending and a strong growth in online consumption during the second half of this year. Recently, driven by the shopping festivals, we have also seen increasing consumer activities on our platform.

[Foreign Language]

[Interpreted] We have observed more diverse choices of consumers in today's interconnected world and [greater movements] (ph) across platforms. In response, it's essential to stay firmly focused on the consumer and to deepen their trust on our platform. To achieve this, we have consistently invested significant resources on both the consumption and supply side, delivering real benefits that reinforce the trust in our platform.

[Foreign Language]

[Interpreted] During this year's Double 11 Shopping Festival, we introduced the RMB10 billion voucher campaign for the first time, offering consumers direct benefits. The response was extremely positive with strong sales growth across several product categories. Notably, agricultural products, small home appliances and daily necessities saw remarkable surges. This success demonstrates how our platform, in collaboration with merchants, has effectively fulfilled consumers' demand for valuable and cost effective products.

[Foreign Language]

[Interpreted] At the same time, our Super Double discount event supported a group of high-quality merchants with innovative products and technology. Many national brands leveraged our platform to launch new premium products, quickly gaining recognition during the shopping festival. The growth of these quality offerings enriched the selection available to consumers. This in turn strengthened consumer trust in our platform and benefited both demand and supply side.

[Foreign Language]

[Interpreted] Guided by the consumer-first mindset, we have invested patiently and strategically over the long term, gradually earning the trust and preference of our users. Moving forward, we're confident that by maintaining high-quality long-term investments in consumption, supply chain and ecosystem, we will further enhance consumer confidence in us. This forms the foundation of our long-term healthy development.

[Foreign Language]

[Interpreted] Regarding your second question on competition.

[Foreign Language]

[Interpreted] As we have mentioned on several occasions, the overall competition in e-commerce remains intense and our business is no exception. Additionally, as with any business, our growth won't follow a linear path over the long term. Given that, the slowdown in our revenue growth we believe is inevitable.

[Foreign Language]

[Interpreted] Since Q3, the release of additional macroeconomic support policies has opened up new opportunities while also presenting challenges. The Chinese domestic market is highly dynamic, which is characterized by constant changes, diverse business models and intensifying competition. However, our team's gradual aging and lack of certain capabilities might cause us to miss out on some macro opportunities, especially when facing new or evolving situations.

[Foreign Language]

[Interpreted] For instance, multiple macro policies introduced this year have brought significant support to industries and fueled consumer demand. However, our team was unable to fully leverage this macroeconomic shift due to the limitations in our operation experience solely as a third-party platform. Consequently, to stay competitive with similar products, we had to incur much higher cost than peers, which inevitably affects our profitability now and in the near future.

[Foreign Language]

[Interpreted] With the ongoing expansion of consumption boosting policies, we're excited to embrace changes ahead and tap into new opportunities to better serve our consumers. However, due to the limitations imposed by our platform business model and operational mindset shaped by our previous experience, along with shortfalls in our capabilities, we may continue to experience disadvantages relative to our peers for some time. This could further increase the financial impacts, presenting a challenge for us.

[Foreign Language]

[Interpreted] In response to the current competitive environment, we are committed to maintaining high standards and enhancing our core capabilities. We will continue to explore impactful opportunities and make long-term high-quality investments in our supply chain and ecosystem, ensuring these initiatives translate into more valuable products and better services for consumers.

[Foreign Language]

[Interpreted] We believe that the high-quality development of the ecosystem and supply chain is the fundamental for the platform's long-term success and allow us to create long-term value for consumers. This is a long journey, require patience. We are fully prepared for it, and we will not be distracted by the evolving competitive environment. Thank you all.

Unidentified Company Representative

Thank you, Jiazhen, and thank you all for joining us today. It's about time. We look forward to speaking with you again next quarter. Thank you.

Operator

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may all now disconnect.