MOGU Inc. (MOGU) on Q3 2021 Results - Earnings Call Transcript
Operator: Ladies and gentlemen, thank you for standing by, and welcome to MOGU's Third Quarter Fiscal Year 2021 Financial Results. I would now like to hand the conference over to your speaker today. Mr. Roger Hughes . Thank you. Please go ahead, sir.
Unidentified Company Representative: Thank you. Hello, everyone, and thank you for joining us today. MOGU's earnings release was distributed earlier today, and it's available on the IR website at ir.mogu-inc.com as well as on the Business Wire services. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations in the current market and operating conditions and relate to events that involve known or unknown risks, uncertainties or other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these risks and other risks, uncertainties or factors is included in the company's filings with the U.S. Securities and Exchange Commission.
Qi Chen:
Raymond Huang: Hello, everyone. Thank you for joining us on the third quarter results announcement for the fiscal year 2021 today. We got MOGU 10 years ago in 2011. For the last 10 years, we have been very persistent on the mission of make fashion accessible to everyone. We have been continuously innovating towards the new format of fashion shopping, from curation to e-commerce, from live e-commerce to short video e-commerce. At our 10th anniversary, we have also achieved positive EBITDA for this quarter on a non-GAAP basis, reflecting our operating efficiency improvement and disciplined capital allocation in this severely competitive environment. This turning point made our development more sustainable and provide a stronger foundation for our new business incubation. We continue to see a high growth rate in MOGU Live. MOGU Live GMV increased by 20.9% year-over-year to RMB4.1 billion in the third quarter. MOGU Live continuously maintain leading position in user experience innovation, KOL incubation and supply chain development since we innovate live e-commerce in 2016. As contribution to our overall GMV also jumped to 80.3% this quarter. MOGU Live continuously drives our future growth opportunities. MOGU is a shopping inspiration platform as well as a vibrant community. Inside and outside of our live showrooms, people connect, interact and they influence and support each other. Because of this vibrant community, our users have been attracting more users to join MOGU. Our active buyers of the live video broadcasting business has achieved a year-over-year growth of 9.7% -- 9.4%. During the 11.11 and 12.12 promotion, 2 KOLs on our platform have each achieved over RMB 100 million sales in these 2 festivals, respectively, marking them top-tier KOLs of the live e-commerce industry. In the future, we will explore new business opportunities, including cross-border e-commerce and off-line business. We will make sure that we can leverage all the strategic assets we have built over the last 10 years, and take advantage of opportunities emerge from the industry landscape change. Let's stay tuned for next 10 years.
Operator: Your first question comes from the line of Charlie Chen with China Renaissance.
Charlie Chen:
Raymond Huang: So Charlie has 2 questions. The first question is about the EBITDA. So seems that the EBITDA has been, has turned positive for this quarter. So what's the company's strategy going forward? Do we focus more on the revenue growth, revenue and GMV growth? Or we want to expand the margins and improve the EBITDA margin? And the other question is about the growth on the user number. 3.5 million user number seems to be more conservative. So what's the company's strategy going forward in terms of user acquisition strategy?
Qi Chen:
Raymond Huang: So basically, we're thinking that yes. So live e-commerce is apparently we're thinking that the growth credential for the live e-commerce sector is very, very high. However, it has come to a relatively mature stage. And most of the moving parts in the industry has been settled. And going forward, we'll be seeing that there will be more brands and more other business partners that will come in to the live e-commerce space. Instead of just purely focused on KOL live streaming, we will be seeing more merchants or more brands to join live e-commerce as well. So, of course, we're just, we'll continue to invest in the live e-commerce segment of our business and to maintain and to enhance our competitive advantage over the other competitors. We'll continue to innovate and to optimize our user interface. However, we will also close the, forego the monetization strategy as we, as this is actually, we are on track to have a stronger monetization in our live e-commerce business. And we also want to achieve a balance between different roles in the live e-commerce, different players in the live e-commerce space, including KOLs, merchants, brands and also other supply chain partners. We want to strike a balance between all these different players while we achieve the monetization.
Operator: Your next question comes from the line of Locky Lau with AJ Asset Management.
Locky Lau:
Raymond Huang: Okay. Sure. The question from Locky that congrats to the company's positive EBITDA this quarter. So he has 2 questions. One is that what's the company's strategy going forward for category expansion? The other one is that can we elaborate a little bit more on the carriers other than the top 2?
Qi Chen:
Raymond Huang: So the question about category expansion. Of course, we always want to expand categories. But our tactics in this -- with regard to this question is that, our tactic is to -- we will expand into higher-margin categories. Because traditionally, I think apparel has been a very good category to retain customers. Customers always like to come back and check out the latest release of fashion brand, so that's why they always come back. It's a retention category. But apparently, the margin for this category is not as thick as we otherwise wanted to be. And going forward, we'll be expanding into high-margin categories like cosmetics, skin care and nutritions. So these categories are probably higher-margin categories, we can actually monetize more.
Operator: We do have another question. This comes from Sabrina Hu, Jefferies. Your line is open.
Sabrina Hu:
Qi Chen:
Raymond Huang: So Sabrina has 2 questions. One is the competitive landscape of live e-commerce in China, and the other one is she wants the management to elaborate a little more on the cross-border e-commerce opportunity. Okay. Sabrina, maybe I would just answer your question directly, okay? So for the competitive landscape in China, we are seeing that a lot of the companies has been extremely focused on live e-commerce across different segments. Apparently, we, as the innovator of live e-commerce back in 2016, we have proved that we are very much a pioneer in terms of product innovation.
Operator: There are no further questions. I will turn the call back over to the Roger Hughes for closing remarks.
Unidentified Company Representative: Thank you, and thank you, everyone, for joining the call today. If you have any further questions or comments, please don't hesitate to reach out to any one of us here at MOGU. This concludes the call today.
Raymond Huang: Okay. Thank you.
Operator: Ladies and gentlemen, this concludes today's call. Thank you for participating. You may now disconnect.
