Good morning and good evening to all and welcome to the C limited first quarter 2026 results conference call All lines have been placed on mute to prevent any background noise After the speaker's remarks there will be a question and answer session If you would like to ask a question during this time simply press star followed by the number one on your telephone keypad If you would like to withdraw your question press star one again For operator assistance throughout the call, please press star zero and finally if you like to if you would like to advise all participants that this call is being recorded thank you i'd like to now turn and welcome the call over to miss rebecca lee to begin the conference please go ahead hello everyone and

welcome to c2026 first quarter earnings conference call i am rebecca from c's investor relations team on this call we may make forward-looking statements which are inherently subject to risks and uncertainties and may not be realized in the future for various reasons as stated in our press release. Also, this call includes the discussion of certain non-GAAP financial measures such as adjusted EBITDA. We believe these measures can enhance our investors' understanding of the actual cash flows of our major businesses when used as complement to our GAAP disclosures. For discussion of the use of non-GAAP financial measures and reconciliations with the close GAP measures, please refer to the section on non-GAP financial measures in our first I have with me Steve Chairman and Chief Executive Officer, Horace Lee, President, Chris Fung, and Chief Financial Officer, Tony Ho. Our management will share strategy and business updates, operating highlights, and financial performance for the first quarter of 2026. This will be followed by a Q&A session in which we welcome any questions you have.

With that, let me turn the call over to Forrest. Hello everyone, and thank you for joining today's call. We have had a strong start to the year. In the first quarter, this generated over $7 billion of revenue, representing 47% year-on-year growth. Adjusted EBITDA exceeded $1 billion for the first time. As we have shared before, 2026 is a year where we are leaning into growth investment to deepen our competitive mode while maintaining financial discipline. Our strong revenue growth reflects the effectiveness of these investments and we are already seeing unique economics start to improve for some of these initiatives. We believe this is the right approach to maximize long-term value, giving the significant runway for growth still ahead of us in our market. With that, let me take you through each business's performance. Starting with Shopee. Shopee delivered another record-setting quarter, achieving new highs in GMB gross order wallets and revenue. GMB grew 30% year-on-year in the first quarter. At the same time, we maintained financial discipline, generating an adjusted EBITDA of over 220 million dollars. Our monetization strengthened further in the first quarter. Ad revenue grew 80% and ad take rate increased by more than 90 basis points year on year. Ad paying sellers and their average ad spend both increased by around 35% year on year, reflecting the strong value sellers see in our ad offering. Our results validate the operational priorities we have laid out for Shopee, improving price competitiveness, service quality, and our content ecosystem. Execution across these priorities drove user acquisition and engagement in the first quarter. Average monthly access buyers increased 16% year on year, and the buyer purchase frequency grew around 12% year on year. We continue to deepen our structural modes across logistics, Shopee VIP, and the content. Logistics continues to be one of our most important depreciators. XPX Express remains one of the largest e-commerce logistics solution providers in our market. We have developed a strong capability to dynamically optimize for speed, cost, and the user preference. In the first quarter, we continued to scale delivery options serving different consumer demands while maintaining cost leadership. We have seen strong adoption of our instant and same-day delivery services. With greater economics of scale, we are seeing lower delivery costs for order for these faster services compared to last year. For example, in Indonesia, our instant delivery service can deliver orders in as little as two hours in urban areas. Order volumes for this service to over 35% in the first quarter, with cost per order reducing by around 20% year-on-year. Building this service has enabled us to extend our product assortment into higher frequency categories. We expanded partnerships with major convenience stores and the pharmacy chains, such as Indomerate. At the end of March, we had around 7,000 offline stores available on our instant services. This has shifted more offline purchasing behavior online and into the Shopee ecosystem. Buyers using instant delivery enjoy greater convenience, and we are seeing such buyers spending more with better retention on Shopee. Beyond delivery, we are increasing our focus on fulfillment as a natural extension of our logistics capability. We are making good progress. In the first quarter, fulfillment order volumes grew by around 25% sequentially. Fulfillment allows for faster and more reliable delivery, while enabling sellers to operate and scale more efficiently on our platform. workforce. We already see this happening with our fulfillment orders consistently delivering faster than the platform average. In Asia, over one-third of puzzles fulfilled by us were delivered within the next day in March, much higher than the platform average. The combination of fulfillment with our extensive delivery network allows us to drive significant improvement in both service quality and cost efficiency. For example, in Taiwan, our collection point network expanded to over 3,100 locations at the end of the first quarter, nearly 50% more locations compared to just a year ago. We leverage our growing fulfillment capability to scale initiatives such as shipping directly to lockers without additional packaging improving speed while reducing costs with this effort average buyer rating time improves 12 percent in the first quarter year on year we recorded double-digit gmv growth year on year in the first quarter in taiwan deepening e-commerce penetration and strengthening our market leadership there our shocking vip program this subscription-based the membership program continues to gain strong traction and drive user engagement. By the end of March, total subscribers across our Asian market surpassed the 10 million, up more than 40% from the previous quarter, with strong program retention averaging above 80%. Across all markets, our Shopping VIP members have consistently demonstrated double-digit spending uplift after subscribing by as much as 30% to 40% in some markets. Shopee VIP members now contribute around 20% of GMV across Asia. Due to this success, we have rolled out our Shopee VIP program in Brazil in April. Our content ecosystem continues to grow healthily. In the first quarter, orders from live streaming and short-term video more than 50 percent year-on-year. This orders accounted for more than 25 percent of total physical goods orders in Southeast Asia. To further strengthen our content ecosystem, we continue to deepen our content partnerships. Orders driven by YouTube more than doubled year-on-year. Our collaboration with Meta is scaling well, with over 4.5 million affiliates across our market of nearly 30% quarter-on-quarter. In Indonesia, we have extended our meta collaboration to enable seamless product promotion and checkouts, not just on Facebook, but also on Instagram. I would also like to highlight our strong performance in Brazil and the growing role AI is playing in our business. Brazil was our fastest growing market in the first quarter while continuing to be profitable. We continue to outpace the market on GMB growth proven by increasing active buyers, purchase frequency, and average basket size. This strong performance was supported by solid fundamentals, including wide product assortment at competitive prices and our structural logistics cost advantage. We also made steady progress strengthening our presence in the upmarket segment enabled by our strong logistics capability. We continued to improve delivery time by more than one day in the first quarter compared to last year. We opened three new fulfillment centers bringing our total to five. These efforts allowed us to onboard more merchants especially to shopping more supporting stronger spending among buyers. In the first quarter, GME from shopping mall sellers more than doubled year-on-year and now contributes around 15% of GME. We remain confident in Brazil's long-term growth potential and in our ability to further strengthen our competitive position in this market. On to AI. We have taken a practical resource-oriented approach, embedding AI into our operations to drive better outcomes for our users and a greater efficiency across our platform. It is already making a meaningful impact. AI-powered enhancements to our search and recommendation algorithms have led to better product discovery. Our AI-generated content tools are helping sellers create more compelling product listings. This efforts supported a 14% improvement in purchase conversion rate year-on-year in the first quarter. An AI-driven personalization and the targeting helped to contribute to the strong year-on-year ad revenue growth we saw this quarter. On the cost side, around 80% of customer queries are now handled by our AI chatbot. AI usage helped reduce customer service cost per contact by around 30 percent year-on-year while maintaining high satisfaction rates looking ahead we are exploring authentic ai experiences for buyers we are testing an ai shopping assistant that leverages purchase history and preferences to deliver personalized recommendations and optimized savings for sellers we are building an ai agent that acts as a virtual business advisor providing diagnostic and actionable insights on shop performance. Both are in early stages, with plans to load them out more widely over time. In summary, Shopee has had a great start to 2026, delivering strong growth while maintaining financial discipline. We are being deliberate about where we invest in delivery, fulfillment, our Shopee VIP membership program, and user acquisition. We are already seeing some improvements in unique economics, and we expect this to continue over time. Looking ahead, we are confident in the strength of our shopping ecosystem and our ability to execute our strategies. Try to deliver our 2026 guidance to grow shopping's annual GMV by around 25% year on year, with full year adjusted EBITDA no lower than 2025 in absolute dollar term. Next, moving to money. Money also had a strong start to the year, with robust year-on-year growth across both revenue and adjusted EBITDA. Credit continues to be the primary driver of our growth. Our loan book reached $9.9 billion at the end of March, an increase of more than 70% year-on-year while maintaining stable asset policy. We continue to expand the credit business along three fronts by deepening existing user relationships, offering them more credit as we get to know them and their repayment behavior better. Second, by acquiring new users, especially in segments with better risk scores and greater effluence. These users tend to have better repayment behavior and higher borrowing capacity. Our campaign to attract such new users with competitive pricing, higher limits, and longer tenures are showing early signs of success. And third, by expanding our credit use cases beyond Shopee, an important runway for future We are making good headway with off-Shopee expansion, progressing from on-Shopee SP later to off-Shopee SPLator and personal cash loans. Following strong momentum in Malaysia, we are also seeing good traction in some other markets. Off-Shopee SPLator loans in Thailand and Indonesia exceeded 20% of the SPLator portfolio at the end of the quarter. Notably, we are seeing strong growth in higher-value categories such as electronics and two-wheelers in Indonesia, where installment credit plays a meaningful role in enabling such purchases. Taken together, this effort resulted in strong growth in both user numbers and the loan outstanding per user. In the first quarter, we added 4.9 million first-time borrowers. Our active credit users cost 38 million at the end of the quarter, an increase of more than 35% year-on-year. An average loan outstanding per user grew to around $250 year-on-year. Brazil has become our fourth market to cost $1 billion in loan book size, growing over 250% year-on-year. The strong growth momentum was supported by a localized product we introduced last year, a combined escalator and a cash loan limit that aligns well with how Brazilian consumers utilize credit. This led to strong user growth with higher repeat usage, where average loan outstanding per user more than doubled compared to last year. As pay later penetration on Shopee is around 10% of GMV in Brazil, well below our more mature market, indicating substantial headroom for growth. We also obtained the SDFI license in Brazil during the quarter, allowing us to broaden the scope of financial services we can offer. We are still in the early stages of scaling this business in Brazil with a strong foundation in place to support future growth. Risk management remains our top priority. Our 90-day NPL ratio remains stable at 1.1% at the end of the quarter. This reflects the strength of our underwriting capabilities and the disciplined way we expand across users and markets. Our deep understanding of our markets and the borrowers allows us to respond quickly to macro changes. Our loans typically have short tenures and we can adapt our product success credit limit and the tenure in real time these attributes enable us to adjust our risk appetite and optimize our asset quality as we feel in summary money continues to grow healthily expansion into more user segments offshore key use cases and early markets like brazil are giving us a much larger addressable opportunity across our portfolio we remain confident that money will be a significant long-term profit contributor for c to garena 26 delivering its best supporter since 2021 bookings were up 20 and adjusted ebda to 25 year on year This performance was driven by the continued strength of Free Fire alongside the record contribution from Arena of Valor. In January, Free Fire launched a major collaboration with the popular anime Fujitsu Kaizen. As with our previous collaboration, we invested significant effort in bringing core elements of the anime into gameplay. We transformed the part of the map into settings from the jujitsu haiku and introduce a cursed energy resource that the players could collect to activate special character abilities unlimited voice one of the highest level techniques from the anime allow the players to draw their opponent into a separate domain for a one-on-one fight players resonate strongly with the campaign's attention to detail and authentic visual effects. This collaboration generated over 700 million official content views, making this one of our most successful IP partnerships to date. Taken together with the highly successful Naruto Shifton collaboration last year, we have demonstrated our ability to consistently execute high-impact partnerships with global IP owners. We are also evolving how we steal our content globally. One of Free Fire's longstanding strengths is our ability to hyper-localize the game for players. This year, we have challenged ourselves to both localize and globalize some of these content, making it highly resonate for target market and also enjoyable for everyone else. A good example from the first quarter is our Ramadan campaign. In past year, this campaign was only launched in Ramadan observance markets. This year we scaled it into a global event under a lost treasure theme. Players from markets celebrating Ramadan recognized this as a festive event catering to them, while players from other markets saw it as a desert themed campaign that was new, interesting, and fun to play. During matches, players could find treasure maps triggering team-based missions, guiding them to hidden treasure locations. This highly interactive campaign resonated strongly across markets. Campaigns let us pool resources, elevate content quality, and deliver more frequent tinted. Beyond Free Fire, Arena of Valor delivered record high quarterly bookings in the first quarter in its 10th year of operation. The sustained success of both games demonstrates our unique ability to operate games well across genres, in multiple markets, and over long periods of time. Garena has started in 2026 with great momentum. We will remain focused on delivering fresh experiences and building the long-term value of our game portfolio. In conclusion, we have started 2026 well, with each business expanding its addressable opportunity while strengthening its competitive position. Meanwhile, across our ecosystem, we see the AI era creating significant opportunities for a company like ours. We've established the scale, reached cross-vertical data, and the deep local expertise. We are investing deliberately to capture the growth runway ahead, and we are confident of continuing to deliver robust top-line growth while improving our adjusted EBITDA year-on-year. With that, I invite Tony to discuss our financials.

Thank you, Boris, and thanks to everyone for joining the call. To see overall, total gap revenue increased 47% year-on-year to $7.1 billion in the first quarter of 2026. This was primarily driven by growth in Shopee and money. Our total adjusted EBITDA was up by 9% year-on-year to $1 billion in the first quarter of 2026. From Shopee, gross orders increased 29% year-on-year to $4 billion in the first quarter of 2026. and GME increased by 30% year-on-year to $37.3 billion in the first quarter of 2006. The first quarter GAP revenue of $5.1 billion included GAP marketplace revenue of $4.5 billion, up 44% year-on-year, and GAP product revenue of $0.6 billion. Within GAP marketplace revenue, core marketplace revenue, mainly consisting of transaction-based fees and advertising revenues was $3.8 billion, up 61% year-on-year. Value-added services revenue, mainly consisting of revenues related to logistic services, was $0.7 billion. Shopee adjusted EBITDA was $223 million in the first quarter of 2026, compared to an adjusted EBITDA of $264 million in the first quarter of 2025. This year-on-year change primarily reflects our increased investment in delivery, fulfillment, our Shopee VIP membership program, and user acquisition, partially offset by higher monetization. Money gap revenue was up by 58% year-on-year to $1.2 billion in the first quarter of 2026. Adjusted EBITDA was up by 14% year-on-year to $275 million in the first quarter of 2026. As of the end of March, our consumer and SME loans principal outstanding reached $9.9 billion, up 71% year-on-year. This consists of $8.8 billion on-book and $1.1 billion off-book loan principal outstanding. Non-performing loans, tough due by more than 90 days as a percentage of total consumer and SME loans was 1.1% at the end of the quarter. Main-up bookings grew 20% year-on-year to $931 million. Gap revenue was up by 41% year-on-year to $697 million. The growth was primarily due to the increase in our active user base and deeper paying user penetration. Jarena adjusted EBITDA was up by 25% year-on-year to $574 million. Returning to our consolidated numbers, we recognized a net non-operating income of $62 million in the first quarter of 2026 compared to a net non-operating income of $89 million in the first quarter of 2025. We had a net income tax expense of $214 million in the first quarter of 2026, compared to net income tax expense of $136 million in the first quarter of 2025. As a result, net income was up by 7% year-on-year to $438 million.

Thank you, Forrest and Tony. We are now ready to open the call to questions. Operator?

We will now begin the question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, simply press star 1 again. In the interest of time, we will take a maximum of two questions at a time from each caller. If you wish to ask more questions, please request to join the question queue again after your first questions have been answered. At this time, we will pause momentarily to assemble our roster. Your first question comes from the line of Alicia Yap of Citigroup. Your line is open.

Hi. Good evening, management. Thanks for taking my questions. Congratulations on the strong results. I have two questions. First of all, on e-commerce, so looking at your 30% GMV growth, 29% order growth seems to be suggesting is a decent increase in the ASP. So could management share what you have observed during this past quarter? So how much of the strength of the GMB is attributed to your deeper penetration in the higher end user and higher ASP product in Brazil? Obviously, follow your strategic expansion in your warehouse fulfillment. And how much of that could be attributed to the higher stickiness of your VIP members across the Southeast Asia region and also Taiwan? And then following up on that is that despite delivering the 30% GNV growth, management still maintain the full-year GNV growth of 25%. So is that because of the higher base of the second half of 2025, or is it management being conservative in light of the macro uncertainty? So any colors management could share or elaborate would be helpful. And then a second very quick one is on your gaming. a very strong booking growth. So do you expect this strong rebound of Arena of Wallow could set a tone for the continuous strength and rebound of the game for the rest of this year, or is it just more a one-off due to the seasonality and promotion?

On the growth for Shopee, we see a combination of growth from both Brazil and South Asia. Overall, Brazil does grow slightly faster than South Asia, but I think it's probably not only driven by the Brazil side. I think as you already pointed out, we try to have more fulfillment businesses in Brazil. We also have more sellers running out in Brazil, which contribute to high-end user segment attractiveness. The Shopee VIP has been driven quite a lot of growth in Asia as well, as far as mentioned in the opening. For the GMV guidance, Q1 has Ramadan and also both, and also 10 New Year falls into the We see very good seasonality attributed to part of the growth. We also see that the many initiatives we implement from last year, including the VIPs, including the instant deliveries, including the AI-enabled better discoveries that we roll out to our platform. All this contributes to a better growth than we expected in Q1. As of the future guidance, I think we will observe how the market evolves. It's a bit early to sort of forecast the full year at this stage. We will communicate with the market as we see better indications from the growth trend in the market.

Your next question, customer line of Divya Kothial of Morgan Stanley. Your line is open.

Thank you very much. My first question is on Brazil. So the growth in Brazil has been clearly very strong for Shopee, but how should we think about the margin cadence there for this year, especially since we are seeing the market leader has dialed up their own investments in the market? Brazil has been profitable this quarter, but would love to hear your thoughts on how you're thinking about Brazil profitability when you give the full year guidance for e-commerce EBITDA targets. Also, are there any early learnings from the loan book ramp up in Brazil, and how different are the returns versus ASEAN? So, that's my first question on Brazil. My second question is on e-commerce stake rates. We're seeing e-commerce stake rates have risen very consistently this quarter, especially in ASEAN. I would like to hear your perspective on how much of these increases are being reinvested back into seller rebates or consumer incentives, and are you seeing ASEAN e-commerce margins actually improve? Also, given the rise in cost inflation, there has been some pushback by sellers in markets like Thailand about these hikes, but are you broadly seeing these increases being well accepted by sellers, or are we kind of reaching a cap on commissions per se?

In terms of the Brazil growth, we see, as you pointed out, we see very strong growth in Brazil. If you look at Q1, we grow well ahead of the market growth in the market, which is able to gain better market shares, which in turn gives us better scale to drive down our cost to serve in the market. We have been profitable in Brazil for the last few consecutive quarters. I don't foresee any change towards that at this point of time. We will still continue to grow healthily in Brazil, likely with the profitable margins as we see right now but again while saying that we do commit to invest into Brazil especially for the few areas we mentioned like the fulfillment network that we are building we are further expanding our send date delivery in Brazil we also launching the we also have the VIP program in Brazil as well I think all those will be rolled out in Brazil over time to drive further growth. In terms of the loan book in Brazil, we've been doing very well in Brazil on the loan We actually have more than one billion outstanding in Brazil already, which is kind of very high growth year-to-year if you look at last year Q1. I think the key driver for us is to localize the product. We didn't take the Asian products, you know, just take the Brazil. We localize the product. For example, we have a single flexible limit the user can draw on across the escalator and the personal cash loans based on what they need. We also spend up effort on localizing the data sources not only from the shopping data but we also draw data from the open banking networks in Brazil which give us a pretty good impact in terms of the risk profiles I think that's part of we think that we see better risk in Brazil which enable us to expand more user pools while maintaining the profit profile in the market. Overall we're seeing the very early days of the market penetration in Brazil for the lending businesses. If you compare our sizes versus some of our peers in the market financial services, there's a huge room ahead of us in terms of growing the businesses in Brazil. In terms of the e-commerce tick rate, I think the simpler way to look at this was we just increased part of the tick rate. We also have our EBITDA margin reasonably similar to previous quarters. So a big part of that will be reinvested into the market to drive the growth. Again, the area we invest in, the few areas mentioned, the fulfillment networks, we're building the VIP programs, et cetera. But generally, we see that in most of the markets, we see a good margin quarter over quarter for our R&M markets. On the seller commission reactions from the market, the most important thing for us is to look at how the seller commission impacts the pricing. We look at the impact of commission increase on pricing compared to the peers in the online market and we also compare with the pricing compared with the offline market. Pricing is one of the most important things for us, as we mentioned over time. We still see a very price competitiveness in our platform. We – I think going forward, I think we will still kind of look at the dynamics and decide what's the best way to manage the commission part. But again, I think the most important thing is we are able to deliver profit to the sellers. The profit is depending on number one is how much commission we're taking, number two is how much cost they're running on our platform, number three what's the volume we're driving for them on our platforms. With Sally Hire Commission, we spend a lot of effort on reducing the cost of running businesses on our platform. For example, we offer an AI-powered chatbot for the sellers so they can do customer service with their buyers automatically without sort of hiring more customer service agents. For example, we help them technosize their businesses a lot easier with our AI-powered agents in our seller centers, et cetera. And at the same time, as we always share that with a still fast growth in our market, you know, SELA has a bigger pie to join from. So all this contributes to sort of a healthy ecosystem when we look at the SELA Commission

Your next question comes from the line of Navin Khila of UBS. Your line is open.

Thank you for the opportunity, and congrats on the strong results. I had a couple of questions. So, if I look at your e-commerce, I guess absolutely in Q1 this year compared to Q1 last year, you know, there's obviously a moderate decline. I just want to understand if you could help us kind of, you know, get a better sense of where this decline is coming from geographically. If you split between, let's say, Brazil, Taiwan, and Southeast Asia. And also, as things, you know, hopefully improve over the next couple of years, How will the split of that be in terms of the magnitude of growth in EBITDA coming from each of the regions? And secondly, on FinTech, again, the margins have obviously been inching down. Is there a steady-state number that we should be looking at and a timeframe over which you can get there?

First of all, let's start with the e-commerce side. I think you are actually right on that slightly lower EBITDA year to year. I think the other way to look at this was that if you look at last quarter in Q4 2025, we do see an increase on the EBITDA from Q4 last year to Q1 this year. I think there are many reasons driving the dynamics here. Last year was the first year that Ramadan falls into Q1, which is a difference in energy that we had for many, many years. I think there were some adjustments that we have to learn from how does this energy impact the businesses. I think we have better this year compared to last year. I think part of the reason also because we launched a bunch of initiatives to further drive the growth this year as we shared across the course and some of that started from later part of last year which kind of continued from Q1, continued to Q1 this year. For this near term in 2016, I think we share with our guidance we expect a pretty good growth on 25% with the bottom line EBITDA at least not worse than last year. I think we will see how this evolves over the quarter. In terms of the medium to long term, we still maintain our judgment that we believe that 2-3% EBITDA margin is something we target to achieve. In terms of the fintech, the fintech margin, one thing we look at very closely is our absolute returns. When we grow our loan outstanding, we would like to make sure that additional loan will bring a positive EBITDA in absolute terms. We do recognize that if you compare with the outstanding as a ratio, it might fluctuate that eventually might go down a bit over time. If you look at over the quarters, I think largely driven by the mix of different countries and different products. Early in the market, for example, like Indonesia, Philippines, does have a higher ROA compared to the market that's coming a bit later to the portfolio if you look at, let's say, Thailand or Malaysia, Vietnam, et cetera. So this drives, if you look at the ratios, a slightly lower ROA as time goes. I think at this point in time, the business is really early. We see a huge potential in front of us, especially if you look at some of the new market growth. Even if you look at Thailand, Malaysia, or the Brazil we talked about, there is a big potential ahead of us. And just now we talked about Brazil, if you compare our outstanding compared to the peers' outstanding, there's a huge room for us. Then we also try to develop the non-Shopee ecosystem, for example, I think Boris mentioned the cell phone source, the two-wheel source. I think all of these are pretty dynamic. I think it's a bit too early to guide a steady state number at this stage, as it's pretty much impacted by the country and product mix.

Your next question comes from the line of Zhang Xiao of Barclays. Your line is open.

Zhang Xiao, Thank you very much for taking my questions. I have two as well. If I may, I'm going to just ask one at a time. Firstly, would you be able to just talk about the potential impact from a higher fuel prices? I know the conflict in Middle East started in March. You probably did not see too much of an impact in Q1. But if the oil price stayed at the current level for longer, how would that affect your cost? Would you be able to pass on some of the costs to either the sellers or consumers? Any comments would be helpful. Then I have a second question.

Yeah, it's clearly something we look at very closely in terms of the oil price impact to our businesses. I think there are a few degree of impact when we look at this. The first degree of impact is just absolute oil price. It does impact our operation cost. I think the good thing is that we leverage quite a lot of the subsidies from the government in our countries where it helps us to to absorb the cost increase in many countries especially the last mile delivery which is the largest part of our the delivery cost we also work closely with our partners like for example our line haul partners, our airline partners to match the cost together. So all in all, if you look at actual cost, it does have impact on our cost, but we believe we can manage it within the guidance that we're giving out. And also in terms of timing, you're actually right, that the Q2 will probably see more impact than Q1 in terms of cost. I think that the first degree of impact, I think second degree of impact is potentially this might impact the, essentially the spending powers in some of the countries if they have to spend more money on the gas stations. I think generally we're saying moderate impact in our platform. I think the most important reason for that is our platform is actually the cheapest platform you can find the product that people are essentially needed. So when people are looking for a savings, actually they look at us more. Our platform is also a more essential product platform rather than something that people buy a luxury product from both, or discretionary spending are less spending in our platform compared to, let's say, offline spending, et cetera. So all this helps us to show the impact from the second-degree impact that we have seen.

Okay, great. Very helpful. Thank you for that. My second question is about your fulfillment build-out. you talked about adding three fulfillment centers uh i think in q1 um in brazil could you could you talk about some of your perhaps like near-term targets and long-term targets for example as you know one of your peers in brazil is adding i think over a dozen fcs this year uh in brazil so if you can share with some of your thoughts both near-term and longer long-term and on top of that The pace of the investment is that you're adding, let's say, some fulfillment centers this year, and then next year take a pause to absorb some of the capacity, then perhaps add more after that. So just help us understand the pace when you build out your, you know, fulfillment infrastructure from relatively a low base from timing-wise compared to low base compared to your competitors, obviously, and any sort of a timetable for getting returns of this investment. Thank you so much.

So on the fulfillment businesses, I think especially for Brazil, I think that you referred to, we do have our expectations on growing more percent of businesses from fulfillment as we build out. since we started not too long time ago, we are still in the early stage of building up the for human businesses. I think typically we actually don't overbuild too much. So our capacity utilization in our performance center is relatively high. And I think the core reason for that is we're able to project, predict how much of the volume for procurement well ahead of the time, then we build our fulfillment center according to the timetables. So it's probably unlikely that we're going to do a lot this year and we stop next year while waiting for the fulfillment center to be filled, then we build it again. I think it's going to be a continuous process while we are building the fulfillment center. And ultimately, we would like to have our fulfillment center at the overall size bigger than our close competitors in the market in terms of absolute volumes. But I think it would take a few years to get there, given we'll just stop it later. In terms of the retail investment, if you look at individual fulfillment centers, typically the infrastructure, the capex, is actually not that high as we don't own the fulfillment center itself. We typically rent a fulfillment center. The CAPAC essentially is to make sure that the fulfillment center is well equipped. So if you look at that particular part of investment, the return of investment is pretty fast. It's not that long ahead of the time. The other part of investment we're doing for the fulfillment businesses is more move the seller to be part of fulfillment center and move the buyer and advocate the buyer to understand the fulfillment uh businesses that we have so that's part of the ongoing investment we uh we drive we use to drive business growth your next question comes from line of ranjan sharma

of jp morgan your line is open hi good evening um and thank you for the presentation uh and congratulations on the results. Three quick questions from my side. Firstly, how do you see the economics of the VIP program? Will you consider optimizing the value offered to consumers or the subscription price charged to the customer? The second question is, given the momentum on Free Fire and Renov Valor and the content coming in the coming periods, how should we think about growth of the gross bookings this year. Last question is, can you help us understand how you evaluate the intrinsic value of C? We know you have a billion-dollar buyback, but you have only executed $170 million or so, despite the stock price reaching $78 at some point. So it will help you understand, like, how you're thinking about the buyback going forward.

Thank you. On the VIP program, I think there are two parts of the offering that we are providing to the market product offering is the shopping offering for example the in some markets if you join the VIP you can get a free shipping etc part of that is with our partner offer to the to our users one of the key thing we're working on is expand our partner pools so we can strongly offer the benefits to our users. For example, the CHIGBT program that we offer to our users which is very well accepted and liked. There are quite a few other partners we are going to announce actually not too far away while working on the system integration etc. So all this work, all this partner's offerings will help us in terms of e-economics over time. And also for the pricing, we continue to look at the pricing, there's a potential to have a different tiering as well for the pricing, depends on how the market reactions and how the e-economics look at for different second-op users, and also depends on will we have partner with, et cetera, but at this point in time, you know, we were still going to invest a bit more on the VIP program given that the retention we see on the user base and also the uplift of the activities from the VIP users, but eventually we do see VIP program can be an even more profitable program compared to the program, giving the techniques of the users, giving the ability for us to bring the benefits of our partners.

Your next question comes from the line of Elise Yang of Macquarie. Your line is open. My apologies, Elise Yang. Your line is now open.

Great. Thank you so much, management, for taking my questions. I've got two. One is follow-up on the prior question on Shopee VIP. Just wanted to have a better understanding of the current progress of the VIP members because clearly you guys have been making pretty good progress on penetrating into many of the core operating markets and seems like it has reflected positively on both user frequency as well as for the ticket size. So going forward, what would be the key KPIs? Would it be, you know, the percentage of penetrations in several key markets, be it over, you know, a certain percentage of their total MAUs, or would it be certain GMB thresholds that you guys will be monitoring? I just wanted to get an understanding of kind of that investment kind of reflection sort of in the next several quarters. So that's first part of the question. The second would be on money. So can management shed some lights on the actual breakdown of the business, including, for example, the country mix, also on Shopee and off Shopee percentage point. Ultimately, the latest quarter of 71% of your increase in consumer and SMA loan principal outstanding was very impressive, especially given that you guys can control the loan quality at a very high level. So can you talk about kind of the key factors in the upcoming years, you know, what will be the key figures to continuously contribute to such strong growth momentum for the long book as well for the revenue growth? Thank you.

I think there are a few key numbers we look at, for example, the penetration of our GMB, the retention of our users, and also the unique for this part of the program. I think there are a few things essentially quite important for us to look at. I think the other key thing we look at is how many partners that we have in the VIP program. As I shared just now, it's important for us to make sure that we bring benefits to our users, not only from Shopee but also from our partner as well the the we started Shopee VIP in some English first I think we see very good progress there as I think as we go out to more countries we see you know essentially learn more from the early countries and roll out similar learning to to other countries for the money businesses, as I shared earlier, we started first in the early countries like Indonesia etc but the newer countries like you know Thailand, Malaysia or Brazil have kind of especially because they are later countries they grow faster compared to the older countries in a way so the share between the countries were dynamically adjusted because of the timing of the rollout of our products. I don't think we give a precise country mix to the market. In terms of the on-shopee and off-shopee, the on-shopee, essentially the on-shopee was the majority when we started with, and now it's less than half of business already and even you compare with the escalator on Shopee and versus off Shopee the percentage of escalator off Shopee is about 20% already as a total escalator on Shopee and off Shopee which is a significant milestone for us This proves that we'll not only be able to drive our expelator or in general lending in the Shopee ecosystem, but also we successfully drive this in the off-Shopee ecosystem. And in fact, we see a higher growth in the off-Shopee ecosystem versus the on-Shopee part of the businesses. The key factor of driving the growth, again, the three elements, one is within our current user base we still see a possibility to drive more credit options and this will come with more product roll-ups to this group of users and better credit assessment as we're commuting more data over time and also deeper integration with Shopee and expanding of our non Shopee scenarios for this group of I think, essentially, even within the same user base, we see a future room for us to deepen the credit penetration. The second one is essentially expanding the new scenarios beyond what we have right now, where the user can spend their credit limits on. This including, you know, for example, we partner with more online merchants who can accept SPLATER, partner with more merchants offline so they can accept SPLATER as well. Even for our, in some of our market where credit card is bigger, we roll out a debit card system leveraging on SPLATER credit limit so they can use our SPLATER credit through a kind of as well so all this will expand the pool addressable market pool for for our user base I think the third thing is for us to continue to expand to new user segment I think that's very important for us well I believe for it's mentioning the opening to that as we started more from a market segment, when we accumulate more risk data and also better our risk models and we are able to expand to a more prime user segment with side different products in various markets. This user might have a slightly lower RAs, but this gives us a bigger outstanding pool for us. I think all this will drive the growth of our lending businesses in the coming years across our market.

This concludes our Q&A session.

I would now like to turn the conference back over to Ms. Rebecca Lee for any closing remarks.

Thank you all for joining today's call. We look forward to speaking to all of you again next quarter.

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.