Ladies and gentlemen, thank you for standing by and welcome to the PDD Holdings, Inc. second quarter 2025 earnings conference call. At this time, all participants are in listen-only mode. There will be a presentation followed by a question and answer session, at which time, if you wish to ask a question, you will need to press the star key followed by the number one on your telephone. 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 go ahead.

Thank you, Operator, and 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 and also through the Globe Newswide Services. Before we begin, I would like to refer you to a safe harbor statement in earnings price 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 press release which contains a reconciliation of non-GAAP measures to GAAP measures joining us today on the call co-chief executive officer Mr. Zhao Jiazhen our executive director and co-chief Executive Officer, and Mr. Liu Jing, our VP of Finance. Lei and Jiajun will make some general remarks on our performance for the past quarter and our strategic focus. Jing will walk us through our financial results for the second quarter ended June 30, 2024. During the Q&A session, Lei and Jiajun will answer questions. Please note that English translation is for reference only, and in case of any discrepancies to introduce our chairman and Co-Shift Executive Officer, Mr. Chen Lei. Lei, please go ahead.

Hello, everyone, and thank you for joining our second quarter 2025 earnings conference call. The first half of 2025 has seen rapid change in the external environment. At this critical juncture, when merchants doing business on the platform face challenges, we stepped up our commitment in high-quality development and launched the $100 billion support program. Through this program, we have invested and will continue to invest substantial resources to support the merchant ecosystem. Together with our merchants, we are actively exploring new business models for the global business, seeking new growth opportunities, and navigating the ups and downs of the market cycles. These significant ecosystem investments were reflected in our Q2 financial performance. Revenue growth further moderated, and operating profits declined by 21% year-over-year. However, as we have emphasized in the past, we prioritize long-term value creation over short-term financial results. Our focus remains on investing for the long term, such as strengthening the ecosystem, driving value chain upgrades, and delivering tangible benefits to our consumers. As a result of our investments in the $100 billion support program, we are pleased to see that the platform ecosystem is making steady progress towards sustainable and high-quality development. Since August last year, our $10 billion fee reduction initiative has brought substantial savings for our merchants, creating room for them to innovate and to offer a wider selection of high-quality products to the consumers. At the same time, our logistics support initiative significantly reduced the cost of shipping to remote areas and led to a 40% growth in order numbers from the regions, injecting new energy into the economy. In this past quarter, the entire company rallied behind the $100 billion support program to deliver innovative solutions to help merchants grow their business, while further reducing costs and commissions for merchants. We are seeing business of all sizes from established brands to small merchants gaining new momentum in our ecosystem. Let us look at a few examples. We are seeing established consumer brands successfully reinventing themselves by leveraging consumer insights to shorten product launch cycles, lower R&D costs, and enter into new market segments. Many industrial belt manufacturers were able to make the transition from white label products to a branded offering, breaking away from commoditized competition. With the help of the Door Door Premier Produce program, we are seeing farmers and growers earn higher margins by improving quality control and by moving into food processing to capture higher value ads. Alongside merchant support, we have also expanded our consumer give back program. In addition to the 10 billion program, we introduced new long-term consumer campaigns, such as the $10 billion coupon program. During this year's June 18 shopping festival, we provided additional coupons on top of the national trading program, driving record sales across multiple categories including fresh produce, electronics, home applicants, and apparel, offering more value for the consumers. Meanwhile, in our global business, merchants and our platform face more complex business environment. To navigate through the market cycles, we are working together with merchants to explore new business models and new markets, while at the same time deliver innovative solutions to drive efficiency. As a platform that has its root in agriculture, we continue to invest in agri-tech through initiatives like the Smart Agriculture Competition, which is now in its fifth iteration. 46 global teams competed in a preliminary held interline this year, showcasing cutting-edge technology in AI farming, hydroponics, and econestrian systems. This event is emerging as an important platform for agricultural technology research and application. Later in this year's competition, the participants will bring their technology from labs to fields, testing the commercial applications of their research findings. Looking ahead, as external environments continue to evolve and competition intensify, We remain committed to long-term value creation over short-term results. Our team will prioritize high-quality growth by creating long-term opportunities for merchants and investing in consumer experience. As we ramper our investments, profitability will inevitably fluctuate, and this quarter's results may not represent future earning trends. And now I will hand it over to Zhao Jiazhen to share more details about our performance in the second quarter.

Thank you, Lei, and hello everyone.

This is Zhao Jiazhen. Thank you for joining our second quarter 2025 earnings call. In Q2, to help merchants tackle emerging challenges, we actively leveraged our role as a platform to take on more social responsibilities. We accelerated our execution of the 100 billion support program, which represents a significant commitment to high-quality development. This also marks the first merchant support program of this scale. These substantial investments once again affected our quarterly revenue and profit. As Lay noted, comparing to short-term financial performance, We focus more on investments that bring long-term value to the platform ecosystem, and this is why we're willing to accept lower profits to consistently reinvest in the platform ecosystem.

极大丰富了偏远地区消费者的物质生活和精神生活

为产业升级创造了更多动力和空间

This half quarter, under the unprecedented investment through the 100 billion support program we dedicated significant resources to initiatives such as 10 billion fee reduction program program, logistics support initiative, and new quality merchant support program. We continued to lower costs and increase efficiencies for millions of merchants. Many saved millions of RMB each year just from service fee reductions. These efforts created more momentum and space for industrial upgrades. The logistics support initiative also bridged supply and demand and helped drive rapid order volume growth from remote regions, greatly enriching the daily lives of consumers in these regions. On the supply side, the 100 billion support program expanded support for SMEs, new quality merchants, and branded merchants, ensuring all types of businesses. could benefit from the platform's resource support. This helped agriculture and manufacturing regions achieve all-rounded, high-quality development to meet diverse consumer needs. 繼續實施定制化扶持,通過豐富產品、店舖矩陣,解決生鮮商家、季節性供給不足的問題,實現長效發展。 Our Dodo Premium Produce Team visited multiple agricultural regions, including隋州 rice, Zhaotong potatoes, Kui Ming flowers, Shangqiu eggs, bamboo shoots in Fuzhou, seafood in Xian Tao and Zhou Shan, and prickly bear pears in Guizhou to provide customized support based on local specialties and industry advantages.

在电商吸进的推动下 东西部供需双向奔赴 西部地区的定量量飞快增长

By enriching product offerings and store metrics, we've helped fresh-produced merchants overcome seasonal shortages and achieve sustainable growth. 在云南昭通的乌蒙山腹地,当地生产的环形土豆口味好,营养丰富,一直都是村民的主要收入来源,但已经受限于地理位置,长期只能以触及农材品进行销售,产业附加值低,最近几年,我们的商家在当地开设工厂,已经智能化成了设备, 将昭通土豆研发出了不同口味的薯片,在平台的服饰下成功打开全国市场,初步形成了网红薯片的品牌效应,把小土豆做成了大产业,还带动当地1.1万户农民增产征收。

In Zhaotong Yunnan, for example, local potatoes are particularly tasty and nutritious and have been a main source of income for local farmers. However, due to geographic constraints, these potatoes were traditionally sold as low added value raw produce. In recent years, one of our merchants set up automated production to turn these potatoes into flavored chips. With the platform's help, the product gained national popularity, creating its own online followings. This turned agriculture produce into a key local industry that increased income for 11,000 local farmers.

In this季度, our Chinese供给团队, through the走坊 of small products, 竹架零食、冠云服饰、佛商铜装、微海鱼具等产业带, 淨江零食、冠雲服飾、佛山铜砖、威海鱼具等产业带,深入了解商家的需求,分析产业的发展困境,然后利用平台的数字技术,以及黑标店铺、多多视频等新方式,积极探索产业升级的新思路、新模式。 Newquarties' supply team also visited industrial belts, such as EU small merchandise, 淨江 snacks, apparel in 冠元, children's wear in 佛山, and fishing gears in 威海.

By making these visits, we gained deeper understanding of merchant needs and challenges faced by them.

Following these visits, leveraging the platform's digital capabilities and promotional tools such as the black-labeled stores and dodo short videos, we were able to help merchants explore new growth models. 义武的小商品市场经过数十年的发展 商品的同质化竞争愈演愈烈 很多商家工厂陷入了低匿血学 低利润软权圈 我们的团队将商家系统进行升级 在后台为商家精准筛选 具备报款潜质的产品 并进行相应的资源扶持 大大降低了商家试倉的成本 提高了新品研发的成功率 为广大商家带来了巨大的创 projeto

In Yiwu, after decades of development, the local small merchandise market is facing intense commoditized competition, with many merchants and factories operating with thin profit margins and low barriers to entry. Our team integrated merchant systems with the platform's back end to help them identify heat products. Together with the refro support from the platform, This significantly improved the success rate of new product development, reducing the cost of support measures create and innovate, and injected new energy in the transformation of the local industries. In addition to merchants in agricultural regions and industry belts, the 100 billion support program is also empowering consumer brands, especially traditional national brands, Facing new consumer trends, many of these traditional brands are dealing with challenges such as lack of product innovation and slowing growth. Leveraging deep consumer insights, our team worked with brand partners on an end-to-end solution covering product planning, marketing, and store operations. These partnerships have enabled brands to successfully tap into younger and niche market segments, unlocking new growth opportunities and achieving strategic transformation. Our supply-side investments also stimulated consumption demand. During the June 18th promotion, sales hit new heights across dozens of categories. The Super Double Discount event alone reached over 3.76 million orders in a single day, meeting consumers' evolving needs. And as competition in the e-commerce industry intensifies around new business models, we remain committed to long-term thinking. We will continue to deepen the 100 billion support program, investing in substantial resources in improving user experience, merchant services, and industrial upgrades to build a win-win ecosystem. We also hope our efforts can help guide industry toward a more inclusive and more open environment, creating greater value for the society. 接下来,我把时间交给刘俊,由他为大家介绍我们二季度的财务表现。 I will now hand it over to俊. She will provide you with an update on our Q2 financial performance.

Thank you, Jia Zhen. Hello, everyone. Let me walk you through our financial performance for the second quarter ended June 30, 2025. In terms of income statements, in the second, total revenues increased 7% year over to R&B $104 billion. This was driven by an increase in revenues from online marketing services and transaction services. Revenue's growth further moderated as competition intensified, and as we help, merchants increase efficiencies. Revenues from online marketing services and others were RMB 55.7 billion this quarter, up 13% from the quarter of 2024. Revenues from transaction services were RMB 48.3 billion, up 1% from the same quarter last year. Moving on to costs and expenses. Our total cost of revenues increased 36% from R&B $33.7 billion in Q2 2024 to R&B $45.9 billion this quarter, meaning due to increase in fulfillment fees, bandwidth and server costs, and payment processing fees. To get basis, total operating expenses this quarter increased 5% to R&B $32.3 billion. from R&B $30.8 billion in the same quarter of 2024. On known gases, total operating expenses increased to R&B $30.4 billion this quarter from R&B $28.4 billion in Q2 2024. In the second quarter, invested in significant resources in rolling out a series of merchant support initiatives. Looking ahead, we are committed to supporting the vitality of the ecosystem and will continue to prioritize long-term value creation over short-term results. Our total loan gap operating expenses as percentage of total revenues this quarter was 29%. In line with the second quarter last year, looking into specific expense items, our known gap sales and marketing expenses this quarter were R&B 26.7 billion of 5% versus the same quarter last year. Sales and marketing expenses as a percentage of our revenues this quarter was 26% in line with the same quarter last year. Our known gap general and administrative expenses were R&B $667 million versus R&B $594 million in the same quarter of 2024. Our research and development expenses were R&B $3.1 billion this quarter on a non-gap basis, R&B $3.6 billion on a gap basis, up 23% year-over-year. On a gap basis, operating profit for the quarter was R&B $25.8 billion. versus R&B 32.6 billion in the same quarter last year on 21 times year-over-year. Non-GAAP operating profit was R&B 27.7 billion versus R&B 35 billion in the same quarter last year. Non-GAAP operating profit margin was 27% this quarter, down from 36% from the same quarter last year. The year-on-year decline of operating profit reflects our continued investments in supporting our merchants and ecosystem. Netting contributable to ordinary shareholders was R&B $30.8 billion for the quarter, compared to R&B $32 billion in the same quarter last the year. Down 4% year-over-year. Base earnings per ADS was R&B 22.01 and diluted earnings per ADS was R&B 20.75 versus base earnings per ADS of R&B 23.14 and diluted earnings per ADS of R&B 21.61 in the same quarter of 2024. Non-GAAP net income attributable to ordinary shareholders was R&B $32.7 billion versus R&B $34.4 billion in the same quarter last year. Non-GAAP diluted earnings per ADA was of R&B $22.07 versus R&B $23.24 in the same quarter of 2024. The net income in Q2 benefited from e-commerce seasonality and may not represent future earnings. As we remain focused on long-term value creation, the sustained investments may continue to weigh on short-term profitability. That completes the income statement. Now let me move on to cash flow. Our net cash generated from operating activities was R&B 21.6 billion, compared with R&B 43.8 billion in the same quarter last year. As of June 30, 2025, we have R&B 387.1 billion in cash, cash equivalents, and short-term investments. Thank you. This concludes our proud remarks.

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

Thank you, ladies and gentlemen. We will now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Participants are requested to restrict the number of questions to two at each time. Your first question comes from Alicia Yak with Citigroup. Please go ahead.

Thank you. 管理权晚上好. 我有两个问题. 两个问题 第一个问题是这个季度我们看到电商平台围绕即时零售做了非常大的投入 然后也限起了新一轮行业的投入 我们也看到一些内容平台在电商业务上还是持续的加大投入 这体现在这个季度的业绩 我们公司收入增速和一些其他平台相比 其实优势有缩载 想请管理层谈一下这里主要的原因是什么 然后公司会用什么样的一个策略来做应对 然后第二个问题是 今年其实上半年外部环境也发生了非常快速的变化 那经过半年的发展 公司对未来全球化业务的发展 有什么样新的想法 未来业务模式 有哪些新的演化方向呢 然后从财务表现来看 全球化业务未来的增长点在哪里 我们应该如何思考这个增速的目标 我自己翻译一下 Thanks management for taking my questions Two questions First is that this quarter we saw e-commerce platform have made substantial investment in the instant retail, instant shopping, launching a new wave of industry investment. At the same time, we also saw some content platforms also continue to step up their e-commerce effort. So compared to the peers, the lead in the company's revenue growth rate has narrowed this quarter. So could management elaborate on the reasons behind these and how management is thinking about navigating these competitive dynamics? And then the second question is the external environment has shifted rapidly in the first half of this year. So looking ahead, how does management think about the next phase for your global business? What new directions or evolutions do you see in terms of the business model? And then from a financial perspective, where do you think the main growth opportunities are and how should we think about the growth target? Thank you.

Hello, I'm Ziazhen. I'm going to answer your first question.

Hello, this is Zhao Ziazhen. Let me teach you a first question. And in the past quarter, industry competition intensified further, as the major market participants invested heavily in new business models. And again, in this backdrop, our revenue growth slowed further in Q2, while operating profit declined meaningfully for the second consecutive quarter.

That to be able to do this more powerful and powerful way of doing this, the platform will also be more powerful to do it. From the perspective of the market, we see the competition.

In response to this question, to the intensified competition, we will adopt a proactive and long-term approach, taking the competition as an opportunity to strengthen the high-quality development of the platform ecosystem. And then accordingly, we have chosen to increase investment and to forego part of the profits in order to create growth opportunities for the SME merchants. And from management's perspective, we believe this is a responsibility that the platform is best placed to take on, and at the same time, represents a long-term investment in strengthening our ecosystem. We do not believe this quarter's profit level are sustainable, and fluctuations in profitability is likely to continue in the coming quarters. Currently, the industry is going through a critical stage of high-quality development. We realize that only by taking the initiative and working closely with the supply chain partners, can the platform drive sustainable growth for the industry and also achieve high-quality development? Amid intensifying competition, we would choose to turn our focus on individual merchants and specific merchant support cases to deepen our merchant support measures one case at a time.

For example, we saw the new entrepreneurs on the platform This is a production of the U.S.

In this process, it was also filled with new products in this process. pay special attention to these technology-enabled agriculture products, and provided targeted support under the 100 billion support program, which helped merchants increase its online sales, offered tangible savings to consumers, and at the same time, broadened the supply of high-quality innovative products on the platform. Like this, there are still a lot of different types of products, but each of these types of products, There are many more examples of such cases that benefit all parties involved, and each of these cases is made possible only through the close collaboration between the platform, the merchant, and the supply chain.

We understand that to deliver effective support and to ensure that a hundred billion support program truly gets to the SME merchants who need it most, we need to go deep into agricultural regions and the industry belts, and carefully understand the pain points and difficulties that merchants are dealing with. 接下来,对外部环境的变化,行业竞争的持续加码,我们会持续进一步的加大对商家生态的投入,这些因素的叠加,不可避免的会造成公司转期财务表现的波动,但是长期来看,只要我们可以把一个一个这样具体的商家办法案例做好,我们就有信心和商家一起,真正实现高质量可持续的增长,这个也是我们目前应该竞争的想法。

And looking ahead, changes in the external environment and intensifying competition will inevitably lead us to step our investments in the merchant ecosystem. And these factors combined will cause the short-term financial results to fluctuate. However, in the long run, if we execute well on each and every one of these merchant support cases, we are confident in achieving sustainable, high-quality growth together with our merchants. This is how we are approaching today's competitive environment.

Alicia, you are. I am Chen Lei. Now, let me answer the question about the international business.

Hello. This is Chen Lei. Let me take your questions on our global business.

We have seen that in the past few months, the countries and regions have been very big. The global economy has become a big change. 那我们在不同的地区呢 短期呢 会有一些波动 但是总体上来说呢 我们看到的是消费者的需求稳健 同时呢 消费者对我们平台的信任呢 也在逐步的加深 那么基于此呢 我们会积极的顺应各个地方的变化 快速的做出调整 以满足各个地区不同政策的变化 以及不同市场消费者多样化的需求 We noted that in the past few quarters, we have seen significant changes across countries and regions, and also shifts in the global environment.

We may continue to see some short-term volatility in different markets. Overall, however, we observe steady consumer demand and consumer trust in our platform is gradually growing. We will proactively adapt to changes in each region, make timely adjustments, and meet the changing regulatory requirements of each region, as well as the diverse needs of consumers. Now, our global business has gone through an initial phase of growth. We are encouraged to see that our products and services are well received by consumers around the world. But at the same time, our business is still in its early stages, and there is plenty of room for improvement. The vision of our global business has always been to bring more high-quality products to consumers worldwide. Looking ahead, we will continue to invest in our supply chain capabilities, surface capabilities, and compliance capabilities to strengthen the fundamentals for the next phase of the global business. On the supply chain capabilities, we are continuously strengthening our localized operations, working closely with local merchants to diversify product offerings and improve supply stability and delivery efficiency. On the surface capabilities, we are constantly iterating collaborations with our logistics partners to enhance the fulfillment experience. We are continuously building our team's capabilities to meet the high expectations of consumers worldwide. Looking forward, the level surface we currently provide is still in its early stage. Our team will continue to work hard day by day through the continuous improvement in service quality. We hope to win over more and more consumers. Thank you for your questions.

Thank you. Your next question comes from Thomas Chong with Jeffries.

Thank you. Thanks, management, for taking my question. My first question is about since the launch of the $100 billion support program last quarter, what are the key changes that management has observed in your business operations? From a financial perspective, how is the impact of these investments shown in your financial performance? and on a mid-to-long-term horizon. What will this affect the company's monetization and spending? My second question is about what's the company's view on the多多 grocery business. We noticed that some of the company's main competitors in this business have exited certain markets. What are the company's future plans for this business? Thank you.

Hi, Thomas. I'm Zhang Yai-Zhen. I'll answer your first question.

Hi. Thank you, Thomas. This is赵佳琳.

Let me answer your first question. 去年下半年以来,行业竞争进一步的加剧,外部环境也在加速变化,我们加大了平台对商家整体的降费的规模,我们也相继的推出平台的百亿减免,新制商家扶持计划,电商期进等举措,来全方位的降级商家的经营成本,助力商家经营的提志增效。 And since the second half of last year, with escalating competition and accelerating changes in the external environment, we have scaled up commission reductions across the platform.

Initiatives such as the 10 billion fee reduction initiative, the new quality merchant support program, and the logistic support initiatives have been rolled out to lower merchant operating costs and help drive efficiencies. And earlier this year, the management unanimously decided to launch the 100 billion support program as our next strategic initiative, dedicating significant resources and sacrificing the platform's profits to cultivate a sustainable and healthy platform ecosystem. The 100 billion support program is very broad in scope. We focus on our support measures where merchants need the most. Over the past quarter, we have begun to see some of the early effects. For instance, in the agricultural sector, we launched the 2025 Dodo Premium Produce Initiative, expanding support to merchants across hundreds of high-quality agricultural regions. It helped our merchants explore new ways, increase the added value captured by the merchants. And beyond agriculture, our dedicated teams for a new quality merchant support program also visited hundreds of manufacturing belts, assisting more SME merchants with their transformation and accelerating the manufacturer's shift towards high-quality development. And similarly, through our logistic support initiatives the platform waived shipping fees from transit warehouses to find a destination for orders shipping to remote regions allowing the merchants to sell their products to these regions by paying only the usual shipping fees which significantly expanded the market reach this initiative not only brought down cost and improved efficiency for merchants but also stimulated regional consumption and allows high quality products to reach more consumers, and benefiting the wider consumer base. Going forward, we'll continue to do our best to understand the pain points and difficulties is faced by a merchant, and through the 100 billion support program, increase our investment to deliver targeted and meaningful support to deepen our support to the merchant ecosystem.

From the financial perspective, in the past year, we have seen a series of contributions in the past, which will lead to the revenue increase in return to the merchant ecosystem.

This is the platform with the right and right and right and right and right and right. 接下来我们将持续加大投入,为商家的发展创造空间,创造长期更健康的平台生态。 因此我们不认为这个季度的利润可以持续,未来的波动依旧会比较大。 From a financial perspective, the investments made over the past quarter have resulted in slower revenue growth and year on year profit decline. This reflects the platform's commitment to invest in substantial resources to support merchants. We will continue to ramp up our investment to enable merchants to thrive while building a more sustainable and robust platform ecosystem. And as such, we do not believe this quarter's profits are sustainable. There will be fluctuations in profitability in the coming quarters. And about your second question on Dodo grocery. and dojo grocery is a hard business, requiring significant long-term investment. The competition chose to exit the business at this juncture to concentrate on investing in new business models. But to us, this is not a time to relax. We need to further increase investments based on our own business model and to address the impact from the intensifying competition with relentless execution. as to the total grocery business itself when evaluating whether to pursue a new business the first question that comes to us is always whether we can create our unique value when we launched the total grocery business in 2020 we viewed it as a natural extension of our e-commerce operations the initial reason for us to start this business was seeing that traditional e-commerce or supply chains struggle to meet the user's demand for fresh produce. For example, certain fresh products incur significant spoilage during traditional e-commerce fulfillment. And in response to these pain points, we decided to increase our investments in the supply chain to better match demand and local supply, building a supply chain suited for agricultural and fresh products, and creating value for both users and merchants in terms of product variety and fulfillment efficiency. After five years of investment, Dodo Grocery now covers 70% of villages nationwide, addressing last mile delivery challenges in many areas and meeting consumer demand for high quality affordable products.

At the same time, we have established an efficient agricultural product distribution network, connecting local farmers and SME merchants with local consumers and expanding the market 今年以来,在千亿福祉计划的加持下,平台向偏远地区加大了补贴和流量的清洁力度,一些地区近期开通多多买菜业务之后,快速的丰富了当地的商品供给, 普惠消费圈的半径持续加大,满足当地消费者对于消费升级的需求, 与此同时,买菜业务也在当地创造了更多有竞争力的就业机会,推动社区就业的稳步发展。

Since the beginning of this year, with the $100 billion support program, the platform has increased support and traffic allocation to remote regions, in regions where Dodo grocery services were recently launched. Local product offerings have greatly improved and expanding the reach of an inclusive consumption network to meet local consumers' growing demand for better products. And meanwhile, the grocery business has created competitive local employment opportunities, contributing to the economic growth in these communities. 但去实账的价值。谢谢。 As I just mentioned, while Dodo Grocery business requires substantial investment, we believe it is quite meaningful and we will continue to increase our investments. And going forward, we will deepen our long-term commitments across product, supplies, service quality, and delivery efficiency for the Dodo Grocery business, creating tangible benefits for consumers and supply chain participants.

Thank you.

Thank you Thomas, and then time for one more analyst.

Thank you, Joyce Chu with Bank of America.

Thank you. 指标上也观察到了一些消费需求改善的迹象 不知道多多在这方面有没有一些新的观察和趋势会和我们分享 管理层怎么看宏观需求在三四季度的这个趋势表现 谢谢 Let me translate my questions First, in last quarter's earnings call management mentioned the mismatch between investment cycles and the return cycle was a primary cause of the profit decline in the first quarter Looking at the second quarter results, it seems companies' expense ratio and profit margin levels show signs of stabilization. Just wonder, does it indicate the company's investment cycle has already stabilized? And how should we actually expect a profit margin trend going forward, both long-term and short-term? My second question is, recently we have seen some signs of improving consumer demand from some industry data. Has management observed a similar trend lately? Any updates on consumer sentiment or behaviors will be appreciated. And how does management view macro trends in the third and fourth quarter this year? Thank you very much.

Hello, Joyce. This is Jane. I would take your first questions. First of all, our profits in Q2 benefited from e-commerce seasonality, and so this quarter may not represent future earnings. And if we're looking at the numbers, our Q2 revenue growth for this low to 7 percent, and operating profits to 21 percent. We believe there are several reasons for this. First, under the ,, the platform has increased its investment to support merchants, which naturally impacts profitability. And for second, intensified industry competition continue to create challenges for our merchants and the platform. So to help merchants navigate market cycles, the platform will continue to scale up investments, so Q2 profit levels should not be seen as a reference for future performance. We do not believe this quarter's profit level is sustainable, fluctuations in profitability in the coming quarters. As we have communicated in the past, in the current market environments, increasing platform investment to help merchants through the cycles as a responsibility the platform can and must take home. We believe that these investments will create a healthier merchant ecosystem in the long Our focus remains on long-term value creation rather than short-term financial performance. As Lei and Jasmine just mentioned, we will continue to increase our investment. Thank you.

Hi, this is赵佳真. Let me answer your second question. China's consumer market demonstrates remarkable potential and resilience, and driven by sustained pro-consumption policies, we have observed steady growth in overall retail sales alongside a continuous rise in online retail penetration in the overall potential of China's consumer market. However, from an industry structure perspective, we are seeing escalating competition, and it is increasingly convenient for consumers to switch between different platforms, and the competitive landscape is at risk of being reshaped. And in this environment, the platform must take on a more proactive role by increasing investment. And during the June 18 shopping festival in Q2, we not only provided substantial support to high-quality agriculture and national brands, but also offered extra coupons to consumers to provide consumers more savings for their mid-year shopping needs. And during the promotion, the number of agricultural and new quality merchants participating in the $10 billion program doubled, enabling many SME merchants across multiple categories to reach new milestones. And moreover, categories such as beauty, skin care, maternity and baby, and pet supplies also experience good growth through the promotion. The 2025 Dodo Premium Produce Program has reached hundreds of high-quality agricultural regions, helping high-quality agricultural products reach urban consumers. For example, leeches from Guangdong Maoming quickly sold over 50,000 kilograms after being featured in the 10 billion program. Our dedicated team for new quality merchant support program also continue to engage with hundreds of manufacturing regions such as footwear and apparel in Xinjiang and cameras in Guangdong. Leveraging the momentum of the shopping festival, we helped a large number of quality products quickly reach the market. And then the platform's proactive investments have created a positive feedback from both consumers and merchants and going forward in this intensifying competitive environment we will continue to increase our support on both the supply and demand sides sacrificing part of the platform's profit to foster a healthier and more vibrant ecosystem and by doing so we hope to help more SME reduce costs and drive sales and offer consumers more tangible benefits. Thank you. Thank you, Joyce. And I think it's about time, and thank you again for joining our call today, and we look forward to speaking to you again next quarter.

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