PDD Holdings 1Q 2026 Earnings Conference Call

Thank you for standing by, and welcome to the PDD Holdings Incorporated 1Q2026 Earnings Conference Call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key, followed by the number 1 on your telephone keypad. I would now like to hand the conference over to our host today, Please go ahead.

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 to the Globe Newswire services. Before we start, I'd like to refer you to our safe harbor statement in the press earnings release, which applies to this call, as well as make certain forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our readiness release, which contains a reconciliation of non-GAAP measures to GAAP measures. Joining us today on the call are Mr. Chen Lei, our Co-Chairman and Co-Chief Executive Officer, Mr. Jia Jiazhen, our Co-Chairman and Co-Chief Executive Officer, as well as Mr. Li Zhong, our Financial Director. Lei Yang Jiazhen will make some general remarks on and our performance for the past quarter and our strategic focus. And John will then walk us through our financial results for the first quarter ended March 31st, 2026. During the Q&A session, Lei and Jiajun will answer questions in Chinese and will help translate. Please note that English translation is for reference only and in case of any discrepancy, statements in the original language should prevail. Now it's my pleasure to introduce our co-chairman and Co-Chief Executive Officer, Zhao Jiaxin. Jiaxin, please go ahead.

大家好,我是 Zhao Jiaxin.

感谢各位参加我们2026年第一季度业绩的公开发布.

Hello, everyone. This is Zhao Jiaxin. Thank you all for joining the first quarter of the 2026 Energy Corps. 今年是拼作多第二个十年的开局之年, 也是我接任董事长后, 围绕新十年高阶段发展, 启动公司组织与文化整体重塑的关键一年.

And this year marks the beginning of PDD's second decade. Following my appointment as chairman, this is also a critical year for the complete reinvention of a corporate organization and culture, which is centered on the high-quality development of a new decade. We are calling on everyone across all levels of the company to pull together in a sustained effort to drive a deep transformation in our business lines, teams, internal processes, and organizational management. The whole team is required to treat safety, compliance, and social responsibility as the absolute prerequisite for everything we do, and maintain a clear focus on high-quality development. We are committed to stepping up to our responsibilities as a platform enterprise to create positive value for users, the industry, and society as a whole. In Q1, the company entered the new phase of the three-year strategy to build another Pinduoduo, which was launched last year. our new first-party brand business is making steady progress and we are doubling down on our supply chain to innovative models and fresh investments at the same time our long-term hundred billion support initiatives continue to generate value for merchants and a broader industry the team is accelerating a rollout of free shipping to rural villages enhancing platform governance and compliance and proactively taking on broader social responsibility.

We delivered solid results in the past quarter.

Group revenue in a quarter with R&B 106.2 billion, a year over a increase of 11%. As communicated in the past, our priority is long-term value creation to sustain investment in the ecosystem and the supply chain, rather than short-term results.

深入产业一线,加快整合供应链资源,联合全球知名IP进行深度共创, 孵化面向不同市场,不同品类的品牌,全方位的赋能供应链卖相品牌化,推动供应链体系实现价值跃迁。

In March, we incorporated a dedicated company in Shanghai, marking the official launch of our first-party brand business with an initial cash injection of 15 billion RMB and a plan to invest 100 billion RMB over the next few years. Currently, our team is steadily advancing this business by going deep into industry hubs to accelerate the consolidation of supply chain resources. We are also collaborating closely with global ITs for deep co-creation to incubate new brands tailored to various markets and product categories. This holistic approach will empower our supply chain's transition toward brand development, catalyzing a breakthrough across the entire supply chain.

In the past first, we owe it. We will see more than any latest During the first quarter, our 100 billion support program continue to see high levels of investment, rolling out upgraded iterations of initiatives such as DoDo premium produce, new quality supplies, and logistic support to remote regions.

In agriculture, we launched the 2026 DoDo premium produce program. Building on last year's support for products and merchants, we are now deepening our support across the entire value chain, including planting and cultivation, culture and logistics, and deep processing of agricultural products. This helped improve the quality and efficiency of the agricultural supply chain, and enabled production regions to move up the value chain.

The first phase of these projects has been launched in specialty regions such as Ninning Oranges, Hainan Pineapples, Tongren Matcha, Ningxia, Cozy Berries, and Lian Ingang 在产业代,新一轮的薪资供给专项行动继续向时向深推进,先后的走进张州零食,郑州护肤,义务首饰,金字发廊,中山照明,天津巧克力等产业代,我们看到很多商家和工厂正在走出别人卖什么,我们卖什么的同色化竞争,转向以用户为中心的自主研发模式,不断挖掘平台商品者的细分化,差异化需求, 完成了品牌化的转型

为当下的产业升级 创造了新的办事

原来的螺丝刀工厂 也快速升级为 自动化、智能化的工厂 实现了标准化的效率和资料

Within the industrial growth the latest brand of our new quality supply initiative continues to deliver tangible results The initiative has been introduced to manufacturing hubs such as Genzo Snacks Genzo Skin Gear Uduri Qintao Porcelain Inamo, Zhongshan Lighting, and Tianjin Chocolate. And merchants and factories are starting to move away from the homogeneous competition of selling whatever others are selling and shifting towards a consumer-centric R&D-driven They are uncovering highly specific and differentiated consumer demands on platform and successfully building their own brands. Former school driver factories are rapidly growing into automated smart factories. The efficiency and quality achieved through this transformation offers a new roadmap to industry upgrades. In addition, our logistic support to remote regions has also unlocked new growth opportunities to a wide range of merchants. Take the lighting industry in Zhongshan as an example. Shipping a large ceiling light from Zhongshan to Gansu used to cost 40 to 50 RMB. By covering the transshipping fees for the merchants, the platform is able to cut the shipping cost to around 10 RMB. Many merchants are seeing order volume to Western provinces growing at an annual rate of over 30%. Since the beginning of this year, building on our logistics support to remote regions, we are rolling out the Free Shipping to Villages initiative at full speed and have achieved some initial results. Taking some counties in Henan as an example, by setting up last mile delivery networks such as county-level transport warehouses and village pickup points, we have expanded the direct-to-village coverage to over 70% of local villages by March. The daily order volume at these transport warehouses has approached 10,000 orders. This not only brings more rural areas into free shipping zones, but also creates more local job opportunities, injecting greater vitality into county and rural The global economy. and strengthen the technology and people to use it, and will be able to fix the conditions

of the security of the market, to protect the security of the market.

Starting platform governance, multiple rounds of initiatives have been rolled out to continuously strengthen platform oversight, enhance our compliance capabilities, and improving the overall experience for our users and merchants. In the first quarter, the platform introduced over 20 food safety initiatives. These include compliance review of business qualifications, food advertising content moderation, food live streaming monitoring, and building a dedicated food database. We have also enhanced compliance inspection of live streaming, upgraded food safety reporting channels, and strengthened automated and manual monitoring. Further, the turnaround time for handling store violations has been shortened to within hours, safeguarding food safety for consumers. Initial challenges are inevitable, but these difficulties will be the very few that powers our self-transformation. This new phase of growth also provides a good opportunity to build new teams, new systems, and culture. Our current leadership team will tackle these challenges head-on, putting our heads down and working diligently. We will answer the public concerns and expectations with concrete actions and measurable results, and leave up to the trust and support that are placed in us by our stakeholders.

Now, I'll hand it over to Chen Lei for further remarks. year, dedicated company was established to launch the first-party brand business, making the first full quarter under the three-year strategy. In the first quarter, steady progress was made in our first-party brand business. The teams went deep into the industrial belts across different product categories to operate the integration of high-quality supply chain resources and to lay the foundation of the first-party business model. Big corporations are taking place with merchants and manufacturers across different categories to design and develop first-party brand products tailored to different global markets. These initiatives aim at raising supply chain standards and driving the transformation and upgrade the supply chain. This quarter, our global business continues to grow at a steady pace. opening great market opportunities. At the same time, the continuous investments under the 100 billion support program have yielded valuable insights and first-hand experiences which will guide the future investment in the supply chain. Since the beginning of this year, we have stepped up our investment in our platform and evolved the ecosystem through multiple initiatives under the hundred billion support program, we enhance the overall experience for our merchants and customers, making agriculture supply chain more efficient and resilient. We have merchants upgrade their business model, extending free shipping coverage to more remote areas and rural regions. The company is consistently delivering value to both supply and demand side of our platform. In the industrial belt, many merchants are leveraging our platform support to build their own brand. Many merchants have been optimizing their product portfolio to be more focused and curated, and transitioning from standard bench manufacturing to demand-driven customization. This transition is enabling them to quickly grow into emerging brands in the respective categories. At the same time, many traditional OEM factories are also moving beyond basic productions. Investing in product development, technology, branding, and distribution channels, that evolving from a volume-driven model to quality-driven, bringing more resilience and value to a supply chain, acting as a new catalyst for the industry transformation. The results from our 100 billion support program demonstrate that brand development is the next major opportunity for supply chain upgrades, which gives us conviction in the first-party brand model. Branded products are in getting started on our global platform, with consumer demands still underserved in different markets. This creates significant potential in launching branded products in various product categories. Through the first-party brand model, our goal is to systematically incubate a portfolio of globally recognized brands, which in turn will drive transformation of the supply chain. And this year has been continued investment in agricultural research. Just recently, we launched the finals of the fifth smart agriculture competition. The four finalist teams have designed and built their own plant factories. Relying on these facilities, the participants will explore strawberry cultivation solutions that maximize yield and quality, minimizing cost energy use. This year marks the sixth iteration of the Smart Agriculture Competition. Over the years, it has evolved from an industry contest to a testing ground for turning agricultural technology innovations into real-world applications. It has also become an incubator for the next generation of agricultural research talents, making its own contribution to the modernization of agriculture. 2026 marks the new starting point for PDD's next decade. Zia-Tzen just mentioned, we have reflected carefully on our shortcomings and have taken decisive steps to rectify our operations. Destructuring our internal management and strengthening our team's compliance awareness, we are building a foundation that benefits the long-term health growth of the company and the industry. grounded in gratitude and a deep sense of duty, we move forward with the firm belief that staying true to our roots is the foundation, prerequisite, and guiding principle for all our future undertakings. And we will serve as a compass for the next phase of our journey. We will increase investment in a new business, resolutely advance the first-party brand business and step up investments in the supply chain. Through these efforts, our objective is to build another Tinduoduo in the next three years and to drive the transformation of the supply chain as a whole. And now, let me hand it over to Li Zhong, who will walk you through our financial performance for the first quarter of 2026.

Thank you, Lei. Hi, everyone. This is John. Let me walk you through our financial performance for the first quarter ended March 31st, 2026. In terms of income statements, in the first quarter, our total revenues increased 11% year over year to RMB 106.2 billion. This was mainly given by the increase in revenues from transaction services. Revenues from online marketing services and others will R&B 49.9 billion this quarter compared with R&B 48.7 billion in the same quarter 2025. Revenues from transaction services will R&B 56.3 billion of 20% from the same quarter of last year. Moving on to costs and expanses. Our total costs of revenues increased to 15% from R&B 40.9 billion in Q1 2025 to RMB 46.9 billion this quarter, mainly due to increase in fulfillment fees, bandwidth and server costs, and payment processing fees. On a gap basis, total operating expenses this quarter will RMB 39.8 billion compared with RMB 38.6 billion in the same quarter of 2025. On a non-gap basis, total operating expenses increased to R&B's 38.3 billion this quarter from R&B's 36.5 billion in Q1-2025. Our total non-GAAP operating expenses as a percentage of total revenues this quarter was 36% compared to 38% in the same quarter last year. Looking into specific expense items, our non-GAAP sales and American expenses this quarter were R&B's 33.4 billion compared to R&B 32.8 billion in the same quarter last year. On a non-GAAP basis, our sales and marketing expanses as a percentage of our revenue this quarter was 31% versus 34% for our same quarter last year. Our non-GAAP general and administrative expanses were R&B 872 million versus R&B 735 million in the same quarter of 2025. Our research and development expanses for RMB $4 billion this quarter on a non-GAAP basis, up 32% year-over-year. On a GAAP basis, operating profit for the quarter was RMB $19.6 billion versus RMB $16.1 billion in the same quarter last year, up 22% year-over-year. Non-GAAP operating profit was RMB $21.1 billion versus RMB $18.3 billion in the same quarter last year. Non-GAAP operating profit margin was 20% this quarter compared to 19% for the same quarter last year. Net income attributable to ordinary shareholders was RMB 12.5 billion for a quarter compared to RMB 14.7 billion in the same quarter last year. Basic earnings per ADS was RMB 8.94 and diluted earnings per ADS was RMB 8.48 versus basic earnings per ADS of RMB 10.59 and diluted earnings per ADS of RMB 9.94 in the same quarter of 2025. Non-GAAP net income attributable to ordinary shareholders was RMB 14.1 billion versus RMB 16.9 billion in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB 9.51 versus RMB 11.41 in the same quarter of 2025. That completes the income statements. Now let me move on to cash flow. Our net cash generated from operating activities was R&B 16.4 billion compared with R&B 15.5 billion in the same quarter last year.

As of March 31st, 2026, we had R&B 436.1 billion in cash, cash equivalents, and short-term announcements and thank you this concludes my prepare remarks so thank you Jim next we'll move on to the Q&A session today's Q&A session Lei, Jiazheng and Zhong will take questions from analysts on the line we could take a maximum of two questions from each analyst Lei and Jiazheng will answer questions in Chinese and will help translate for convenience purposes operator will open for questions thank you if you wish to ask a question please press star one on your telephone and wait for your name to be announced.

If you wish to cancel your request, please press star 2. If you're on a speaker phone, please pick up the handset to ask your question. Your first question today comes from Alicia Yap with Citigroup. Please go ahead.

Thank you. 地度公司发布的这个品牌自营项目,想请公司介绍一下现在这个10点发起品牌自营的主要考虑是什么,然后我们是否应该把它理解为公司整体的一个战略的转型,然后第二个问题是通过第三方数据,我们看到公司在全球化业务取得了不错的这个用户增长, 接下来这块业务,公司的发展重心会是在哪里,然后从用户增长的角度是否已经达到预期,然后公司计划如何留住,并且服务好这些消费者。 Thanks, management, for taking my questions. First is that the company has been positioned as an e-commerce platform, but we saw the company launched the new first-party brand initiative last quarter. So could management elaborate on the key considerations behind doing this at this current moment? And then, should we interpret this as a major pivot in the company overall strategy? Number two, second question is from the third-party data that we see, you know, PVD's global business has achieved good user growth. What will be the primary focus for the business moving forward? Has user growth met expectations, and how does the company plan to retain and serve this consumer?

Hi, this is Xiaojiazhen. Regarding your first question, since the beginning of this year, we have been driving a deep restructuring for our organization and internal management, and these efforts are centered on safety, compliance, and social responsibility, and we are striving to create greater value for users, the industry, and the society. The formation of the dedicated company in the first quarter and the launch of the first party brand model represents a continuation in this direction. Through years of deep engagement with the industrial fields, it has become clearer to us that supply chain is facing certain challenges at the moment. And many good manufacturers, constrained by factors such as talent, information, and scale, have not yet completed their brand transformation and are caught in homogeneous competition. 推进品牌自营的新模式. Through the first-party brand model, the platform takes on greater responsibility and also risks, allowing our industrial partners to focus on high-quality production. We believe this is necessary in order to drive the platform and the entire e-commerce ecosystem towards the next stage of high-quality growth. And leveraging the platform scale, we will take on more risks while sharing rewards with the supply chain manufacturers, providing certainty for the participants across the whole ecosystem. certainty will significantly enhance the overall efficiency of the supply chain and empower factories to reinvest into product development and r&d and driving a positive cycle and in a complex and fast changing marketing environment the platform must take on greater responsibility and deepen our operations and we will remain highly focused continue to invest heavily in the supply chain and drive the next phase of high quality development for the supply chain 陈磊 我要回答一下你的第二个问题 经过近三年的发展 我们的全球化业务在全世界各地

获得了不少的消费者的支持 随着业务的增长 我们的管理层也在不断的思考 在这样的竞争激烈的全球市场 怎样才能够为消费者 更加可持续且有差异化的长期价值 Hi, this is Chen Lei.

Let me take your second question. After nearly three years of growth, our global business has received support from many consumers worldwide. As the business grows, management team has also been reflecting on how to create more sustainable and differentiated value for consumers in a highly competitive global market. We believe the key is to return to the roots of e-commerce, which is supply chain capabilities. to get to the market's market market market market. Centered on this core priority, we will direct our efforts on two fronts. First, we will advance the integration and optimization of our supply chain, eliminating bottlenecks from end to end. This will not only expand the platform's product offerings, but also meaningfully enhance the consumer shopping experience. Throughout this process, we were actively on board high-quality merchants and ecosystem partners, integrating the platform into the business ecosystem of various markets. Second, we will deepen the development of the first-party brand model. In the global market, brands are particularly crucial in strengthening consumers' mindshare of the value proposition of great quality and great value. At the same time, brand development is also an important pathway to raising product quality standards, enabling us to strengthen the platform's compliance capabilities in an increasingly complex regulatory environment. The e-commerce industry is highly competitive with low switching costs for consumers. While people often see platforms winning over consumers through marketing, the true driver of long-term and sustainable competitive advantage lies in the supply chain capabilities that are often unseen.

也是一项长期的系统的工程 无论我们短期面临怎样的波动 或者挑战 都会不忘初心 那么持续的推动团队 业务流程 股市管理的深刻的变革 希望是以切实的供应链投入 推动全球化业务 下一个盡量的增长

谢谢 supply chain investment is a long-term systematic undertaking regardless of the challenges we may face we will stay true to our roots continue to drive deep transformations across our teams business process and organizational management and continue to grow our global business with tangible supply chain improvements thank you thank you all right thank you alicia uh operator let's move on to the next analyst on the line thank you your next question comes from ronald kong with goldman Saks.

Please go ahead. 这个战略可能带来的一个增量的空间 第二就想问我们看到这个整体的消费大盘这个摄灵数在一季度的增长也不错 线上这个渗透率其实还在提升 那在这个背景下我们广告收入这个季度增速有所放缓 那想请管理层介绍一下我们介绍来平台GMV和广告收入的这个增量 Thank you, Manager, for taking my question. Two questions. One is we note the announcement of the three-year 100 billion investment plan for the first-party brand initiative. So my question is, in which areas do the company plan to allocate these investments? When can we expect this to begin to reflect in the company's financials? And how should we evaluate the incremental growth potential driven by this strategy?

My second question is we've seen from the National Bureau of Statistics consumption growth.

In the first quarter, it was quite solid. Online penetration rate for fiscal goods is still rising. So in that backdrop, we see the online marketing service growth rate slowed in the first quarter for PDD. So could you outline just where the future growth for GMB and online marketing services from here?

不少产业代中的中小的制造企业 他们在量产交付和产品控制方面确实做得很极致

但是因为缺乏品牌化的能力 到现在还没有完成价值链上的跃迁 Hi, this is Joe Jensen To your first question First, brand building involves a range of capabilities From product design, standard setting, manufacturing to quality control Warehousing and fulfillment, live-on compliance customer service and so on, and each requires long-term and patient investment, and many SME manufacturers in the industrial belt are very good at mass production and cost control. However, due to a lack of branding capabilities, they have not yet moved up the value chain.

通过设立专项公司 我们正在深度地整合平台的技术 规模与组织能力 通过强化底层能力的建设 来补齐产业链品牌化的短板 在品牌自营模式下 平台将销量的确定性 直接带给了产业链 让制造端有体气 去投入产品研发和供应创新 能够大幅地降低 试授成本 还有品牌化过程中的不确定性

Through the creation of the dedicated company, we are leveraging the platform's strengths in technology, scale, and organization to build the foundational capabilities that are required to help our supply chain partners in developing brands. Under our first party brand model, we provide a certainty of sales volume to the supply chain and empowering the manufacturers to confidently invest in R&D and process innovation and significantly cutting down the cost and risks that are inherent in the innovation and brand building. We believe it is the right strategic direction for the platform to step in and to play this role. So, our advantages in technology scale and market insights allows us to take on and digest these uncertainties. By internalizing some of the risks faced by the manufacturers, we empower the supply chain with certainty, creating a win-win situation for the industry ecosystem. The manufacturers are enabled to break free from the homogeneous competition and focus on quality of upgrades.

Consumers can enjoy quality products at reasonable prices And the platform further defends its supply chain capabilities Enabling the reinvention of the platform 为故我们创立以来的发展轨迹 从最早的农产品上行到后来的多多买菜 全球化业务还有千亿辅持计划 那平台呢始终在看到问题和解决问题的过程中 我们在不断地加深在工业的参与度 如果我们想要从根本上能够解决平台商家同质化竞争的挑战,就必须承担起更多的责任,推动更深的供应链整合。 那我们认为这是平台生产眼镜的必经之路。

And looking back at our history, from the early initiative of improving agriculture supply chain to later efforts such as total grocery, the global business, and the 100 billion support program, the platform has continuously deepened its operations in the supply chain through the process of identifying and solving problems. And if you are to fundamentally address the challenge of home-engineers competition that is faced by platform merchants, we must take on greater responsibility and enable deeper supply chain integration, and we believe this is an inevitable path in the evolution of the platform ecosystem. and this year kicks off a new decade of our high-quality development. We will start afresh, taking this opportunity to reshape our organization and internal management and focus on building supply chain capabilities. And the first-party brand initiative is the first strategic move that we implemented after announcing the strategy of happy investment supply chain a few months ago. As we roll out more supply chain initiatives, we believe we will have the opportunity to build another Pinduoduo over the next three years. 关于你的第二个问题, 线上的零售市场目前依然充满了潜力, 我们也觉得我们能做的事情还有很多, 但是与此同时, 行业已经全面进入了高自然发展的攻坚期, 我们觉得平台只有主动的作为, 深度的赋能供应链,才有可能去推动行业的长期的健康增长。 And to our second question, the online retail market continues to hold great potential and there's much more that we can do. However, at the same time, the industry has entered a critical phase of high quality development. The only way to realize sustainable and healthy industry growth is to take the necessary initiative to deeply empower the supply chain. Based on this understanding, following the launch of the 100 billion support program in April last year, we wrote out a series of supply chain support initiatives. Our team has gone deep into the agricultural regions and industrial belts. By solving practical supply chain issues, we are unlocking further growth for both the industry and the platform.

For example, our team is currently taking the春季 E-站 into the number of different components of the數字-鄉村 non-종合体. 这个新业态既是村民收集包裹的自体点 也是当地特色农场品扇行的最初一公里的枢纽 它帮助农户一战式的解决打包基地的需求 也让更多优势的农场品走向市场 这样我们通过直接就业和农场品外销 这些为综合体 为当地的居民带来了征收征利 For instance, our team is in the process of upgrading the village pick-up point to

a multi-functional digital rural micro hubs. This new model operates, I suppose, a parcel pick-up point and a first-mile logistic note for the distribution of local specialty agricultural products. By giving farmers a one-stop solution for packaging and shipping, we're actually helping quality agricultural goods reach the broader markets, and through the creation of direct employment and sale of agricultural products, these micro hubs are increasing the income of local communities. Another example is the logistic support for remote regions. Our team is bringing more consumers from remote areas into the free shipping zones by creating transit warehouses and by covering the trans-shipping costs and through tangible supply chain improvements like these the logistic costs for shipping to some remote regions have been reduced by nearly 80 percent and leveling the operational costs between the different regions many merchants are saving millions of rmb in shipping costs alone with these substantial investments the platform is bridging the gap between supply and demand, and creating more effective demand. These are just a few examples, and looking ahead, we will continue to work on concrete supply chain projects, and through these initiatives, deliver more value to our users, the industries, and the society. Thank you, Ronald. Operator, let's move on to the next analyst on the line.

Thank you. Your next question comes from Joyce Zhu with Bank of America. Please go ahead.

Let me translate myself. First, we have seen the continuous emergence of new e-commerce. models in e-commerce industry, including live streaming commerce and quick commerce. How does the company assess the impact of these new models on the broader industry landscape? And are there any plans of the companies to expand into these areas? Second is, in the first quarter, we saw a slight increase in sales and marketing expense ratio of the company, alongside a fluctuation in overall profit margin. How should we expect margin trends going forward And what will be a reasonable expectation At Stodoro's steady state profit margin level Thank you Hello, I'm Zai-Tzen The internet industry is a traditional market The market is a lower price The market will be faster The performance will be faster The competition will be more激烈 We are also in a close attention to the technology development.

Hi, this is Jojia Chen. Compared to traditional retail, e-commerce has much lower switching costs, which leads to faster industry evolution and more intense competition. The management team is also closely monitoring the development of new technologies. However, regardless of the innovations in the front and business models, the core needs of consumers remain unchanged, which are wider product collection, competitive prices, and better services. As we mentioned earlier, competition among the different e-commerce platforms or business models ultimately works down to competition in the underlying supply chain capabilities.

This is why we have to make sure that we have to make sure that we have to make sure that we have the focus on重投供应链升级的集团战略方向.

In this strategy, And this is why we said this is a clear group strategy at the end of last year to focus on and invest heavily in supply And under this strategy, we're steadily advancing various supply chain initiatives, particularly the first-party brand business, and currently, dedicated teams are working in major industrial belts to accelerate the integration of high-quality supply chain resources and building a framework for the first-party brand business. and we are working closely with manufacturers to design and develop first-party brand products for the different global markets, while elevating the transformation and upgrading of the supply chain. 接下来的这段时间是我们供应链投入的关键窗口期 我们将全力的推进品牌自营 导致供应链的技术能力建设的投入强度 通过不断的为供应链生态创造独特的价值 来应对行业未来可能的变化 The coming period represents a critical window for our supply chain investments We will advance the first party brand initiative at full speed step up the investment in the foundational supply chain capabilities and we also navigated evolving industry landscape by constantly creating our unique value onto the supply chain ecosystem hi this is Joe let me take your second question as we have regularly communicating past our objective is the long-term sustainable growth of the platforms intrinsic value and in this process due to seasonality and our own investment circle it is normal to see

some fluctuation in our quarter to quarter financial results the long-term value of the platform is fundamentally tied to the value we create for consumers and that's why we remain steadfast in our commitment to long-term supply chain investments so our first-party brand strategy direct to village delivery or equality supply chain initiatives these are all high impact projects that unlock long-term value and new growths for the industry We will continue to invest in them resolutely. So instead of focusing on short-term financial performance, we prioritize the healthy development of the platform ecosystem and the accumulation of foundational supply chain capabilities. These more enduring sources of competitive advantage will determine the trajectory of the platform's intrinsic value.

Thank you, Joe. And thank you, Joy. And thank you all once again for joining us today. I think it's about time. We look forward to speaking to you at the end of the next quarter.

Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.