Good afternoon, ladies and gentlemen. Welcome to the momo conference. Terrisa, please begin your call and let us know if you have any further questions and answer session. Thank you. Good afternoon, everyone, and welcome to momo's fourth quarter earnings conference call. It's great to see everyone once again. This is Terrisa Liu, momo's Head of Investor Relations. Today's event is being broadcast live through our website, where you can also download our earnings report and presentation. The format for today's event will be as follows. First, President Jeff Ku will provide company key message, operation highlight, followed by 2024 outlook. Afterwards, I will jointly share some operational updates for the fourth quarter. Next, Jeff will take your questions during the Q&A session. As usual, I would like to remind everyone today's discussion may contain forward-looking statements that are subject to significant risk and uncertainty, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the safe harbor notice that appears on our presentation. Now, I would like to turn the call over to Jeff. Hi, hello everyone. Happy New Year. Thank you for joining us today. I will start with a brief overview of the industry landscape. After that, I will touch upon the company's performance and then the outlook of 2024. First, the industry. For the previous year, two factors that impacted the retail industry most were post-reopening consumer behavior shifting in favor of physical activities and the competition dynamics change. In fourth quarter of 2023, despite the traditional high season for e-commerce, the online sales growth still lags behind the physical stores, with 2.4% and 5.3% YoY growth rate, respectively. However, the growth rate gap between the two groups has further narrowed, and momo continued to outperform the market. It is an early sign that the reopening effect starts receding. Looking ahead, we anticipate that reopening and the high base effect from the COVID period will diminish. Consumer spending behavior will soon return to the long-term evolution path. Online will continue gaining market share. Regarding the competition landscape, we are all aware that there are a few equity deals announced. The industry is going through a new round of consolidation. Besides that, the new entrant has been aggressively acquiring market share with high spending in advertising and price discounts, particularly on FMCG. Its impact is not limited to online. It has also impacted physical stores. Although it has put pressure on us as a competitor, on the other hand, it also helped increase the online penetration of the whole market. Taiwan Online Retail, as a percentage of total retail, excluding auto and the fuel, stood around 13%-14% on fourth quarter of last year. Taiwan's e-commerce penetration still lags behind that of its regional peers such as Korea, China, and Indonesia, even after the strong growth during the COVID period, suggesting that there is still considerable room to grow. Therefore, we still strongly believe that the total addressable market is substantial for momo. On back of our strong warehousing and logistics capability, extensive product offerings, and track record of execution, momo is best positioned to capitalize on the structural growth of e-commerce over the next several years. Now let's move on to the fourth quarter operations performance. Our fourth quarter revenue was TWD 32.8 billion, marking only a 3.2% year-on-year increase. The rising competition and the softer consumer spending resulted in lower-than-expected revenue growth. As a result, e-commerce revenue growth was 3.6% year-on-year, compared to 20% year-on-year growth a year earlier. Nevertheless, the five major product categories continue to gain market shares. However, the operating profit margin remained resilient at 4.2%, supported by an improving e-commerce operating margin of 4%, up from 3.9% a year earlier. The healthy operating margin reflects our advantage as a market leader and excellent management discipline. On the cost side, operating costs were effectively managed, driven by enhanced bargaining power and efficient cost management practices. Concurrently, we have made a significant stride in optimizing inventory management, packaging material conservation, and automation. Although facing competition, we have smartly managed our marketing expenses and avoided direct price competition while still keeping a good customer engagement. We are pleased to see that the number of quarterly active users has reached an all-time high, with a 5% year-on-year increase for order frequency as well. In the meantime, momo- Fubon co-branded credit card holders' spending contributed to 34% of the total EC revenue, demonstrating a good customer loyalty and stickiness. Now let's look at our warehousing and logistics development. Momo's island-wide logistics infrastructure, which we have built over the last few years, represents a key competitive advantage. In 2024, with the addition of the Southern Distribution Center and a few main warehouses added in Q4 last year, the total space will expand by 15% year-over-year. Southern Distribution Center is expected to be operational in the middle of the year. Now let's move to the ESG part. Our efforts to engage customers in environmentally friendly practices, such as promoting the use of recycled packaging, combining multiple shipments within the same order, and supporting environment-related community services, have all yielded some success. Since the launch of our Green Life membership program in September last year, we have more than 330,000 registered members. Momo Recycled Bag was developed and launched back in 2020. To facilitate easier ways to recycle these bags, we have expanded our collection pool to include around 1,000 Taiwan Mobile branded stores on top of the existing collection pool, such as postal mailboxes, iBoxes, and Simple Mart chain stores. Now finally, let me make some comments on 2024 outlook. We have observed ongoing efforts by offline players to enhance their online presence. In the meantime, we have also noticed the new entrant has increased their investment in this market. All of these activities are expected to accelerate the growth and penetration of Taiwan's e-commerce sector. For sure, momo will be one of the major beneficiaries riding on this trend. We estimate that our sales growth in 2024 will surpass that of 2023 and will be getting better quarter by quarter. As for profit, there are still a lot of uncertainties, and it's kind of hard to predict at this moment. That said, we estimate the Q1 profit margin would be close to last year's average. Also, we think our B2C business will continue enjoying the economies of scale and the efficiency improvement, which can support the investment of the new initiatives. In terms of the new initiatives, we have committed to invest in areas such as 3P services, Retail Media Network, and live streaming shopping to foster long-term sales growth, profitability, and shareholder value. We are taking a balanced approach between growth and profitability. The scope of those new initiatives will be rolled out in phases. Some of them have already been launched, such as live streaming, and others will be launched soon this year. Now I will turn the call over to Terrisa, and I will take your question after that. Thanks, Jeff. In the fourth quarter, momo achieved a record high company revenue of TWD 32.8 billion, marking an increase of 3.2% year-over-year. Our e-commerce contributed 96.6% of our total revenue and increased 3.6% year-over-year, compared to 20% year-over-year a year earlier. The decelerated revenue growth mainly reflected overall product demand slowdown and consumers refraining from stockpiling as happened during the COVID period. Despite encountering macro headwinds, we continue to gain shares across our major five product categories. You can refer to presentation page 11 and 12. You can see the chart. 3C and home appliances increased 3% year-over-year, households 1%, beauty and healthcare 17% year-over-year growth, fashion luxury 4%, and sports and leisure 6% year-over-year increase. Among the notable subcategories, communication, healthcare supplements, skincare, and cosmetic products report stronger customer demand. On the other hand, home improvement, kitchenware, bedding, fashion items saw tipping momentum, as unusual warm weather hurt sales of winter collections across fashion. Our steadfast commitment to customer engagement yielded positive results. Key customer metrics, such as numbers of orders, active user growth, repeat purchase, and average revenue per user, all continued to grow year-over-year, demonstrating growing customers' loyalty and stickiness. While ticket size was down 2.6% year-over-year, mainly due to fewer purchases in the 3C and home appliances items. Moving on to our operating margins, it remained resilient at 4.2%, supported by EC/OP margin improving to 4% from 3.9% a year earlier. The improvement was mainly driven by favorable product mix and efficiency gains in logistics operations, offsetting higher marketing expenses. Plus, our net income to parents increased by 12.4% year-over-year, resulting in a basic EPS of TWD 4.78. Moving on to the balance sheet in page seven, net cash position was TWD 6.3 billion, compared to TWD 8 billion in the fourth quarter of 2022. The decrease was mainly due to higher cash dividend distribution and higher Capex in warehousing and logistics infrastructure. Now regarding cash flow and Capex in page eight and nine. In 2023, momo reported a free cash flow of TWD 2.3 billion. You can see the chart. The cash Capex was paid TWD 1.3 billion, including, first, TWD 846 million directly toward the construction, procurement of equipment, and implementation of a solar power system for the Southern Distribution Center. Second, TWD 279 million allocated for construction-related costs associated with the establishment of the new central warehouses. Among the other expenditures, such as IT equipment and software enhancement, warehouse-related facilities, and the vehicle purchase, these reinvestments reflected our dedication to innovation, efficiency, and sustainability, which are the key factors ensuring our long-term success and growth. Meanwhile, 2024 CapEx is budgeted at TWD 1.28 billion. TWD 457 million is for implementations of automation equipment for the central distribution center to enhance operational efficiency and streamline processes. TWD 350 million investment in infrastructures and facilities directly related to the warehouse operation to optimize storage capacity and logistics management, while TWD 378 million is for the IT infrastructure to support the developing of our new business and also enhance technology capacities. Last, TWD 92 million primarily focused on expanding and improving our in-house fleet to meet the growing operational demand and maintain service quality. Finally, let's look at a recap of our performance in 2023. 2023 was a challenging year for Taiwan e-commerce industries, mainly due to the macro backdrops. Nevertheless, leveraging our core competence, momo continued to outpace the growth of Taiwan's online industry. Our company revenue continued to reach a record high of TWD 109 billion, with the e-commerce revenue increasing by 6.6% year-over-year, continuing to outpace the industry growth of 2%. Our operating profit increased by 2.3% year-over-year, and OP margin held up resiliently at 4%. Basic EPS reached TWD 15.10, reflecting a 5.7% year-over-year increase, while recurring EPS reached TWD 15.44, demonstrating an 8.9% year-over-year growth. In conclusion, our performance in the fourth quarter and 2023 underscores our resilience and the capability to navigate challenges while driving both growth and profitability. We remain optimistic about our future prospects in this dynamic e-commerce landscape. Operator, we are now ready to begin the QA session. Thank you, Terrisa. Ladies and gentlemen, we will now poll for questions. If you'd like to register for your question, please press star 1 on your telephone. Thank you. Once again, ladies and gentlemen, there is star one for questions. Our first question comes from Daniel Chen with UBS. Please go ahead, Daniel. Thank you. Hi, Jeff. Hi, Terrisa. Happy New Year. Thank you for taking my questions. Could you hear me? Yes, please. Okay. Thank you. So first question is about you mentioned there are still uncertainties around 2024 operating margin. Could you share with us what's the uncertainty, what's the moving part you are seeing? Well, two things I think mainly. One is the speed of customer behavior shifting going back to normal. Last year, we were mainly affected by the reopening effect. People were just so into the physical activity they have been missed for four years. That activity, sooner or later, is going to go back to normal, and their spending will be reallocated as well. Just the speed of that change. And secondly, of course, it's related to the competition level. What kind of competition we will see in the coming quarters? And that will also affect the profit margin. Yeah, basically these two things. I see. Thank you. In terms of the revenue growth, and also you mentioned about the competition, do you think we're still able to grow above industry in 2024, or are we willing to sacrifice profit margin to outgrow the market? Firstly, we're pretty confident that we will grow more than the industry average since we have been the clear leader on the B2C e-commerce side. And we'll enjoy that position and the scale-induced benefit on that part. And sorry, what's the other part? That's just a fresh olive oil fun fact. Are we willing to sacrifice profit margin in terms of more marketing? Oh, right. Yeah. Thank you. As I said before, no, we don't think we need to go down to that level. From past years' experience, I think we will still take a balanced approach. It can achieve both revenue growth, maybe a little bit lower than it was a few years ago, but maintain still a reasonable profitability. Okay. Thank you. My second question is about the new business. I see some media reports say our new 3P business will be launched soon, probably in March. Could you share with us what's momo's strengths and weaknesses compared to the current 3P market share leader, Shopee? What would be the impact on our financials from this new 3P business and your target and outlook? Thank you. Yeah. We're still testing a lot of things and make ourselves well prepared before we launch our 3P services. So whether it will be marginal or not, we haven't really made the final call yet. Regarding what's our advantage, I think our biggest advantage are two things. One is our brand. I think we have a very trustable brand on the Taiwan e-commerce market. And secondly, our customer base. We have more than 10 million registered customers. And for the past few years, we have been concentrating on working with the brands on the B2C side of the business. We haven't reached some level of penetration. And we also noticed on the long-tail part, which we still don't have enough product can be presented and sell to our customers. That's the reason why I think it's a time we can bring in more merchandising and make it available to our customers. All that operation still will ride on the same thing with the same operation. I think our past record could be one of our major advantages in entering into this new business. Thank you. My last question is about this quarter's company's overall take rate. I read in your operating report, you mentioned under previous accounting treatment, company take rate actually increased year-over-year. I remember company take rate tends to decrease because high-margin 3P shopping business is declining. I'm just trying to understand why take rate increased this quarter. Is it due to B2C take rate increase or other business take rate increase? Well, I think for one is the product mix. If you can look at the numbers just shared by Terrisa, our beauty and health product category outperformed our 3C and home appliances, which means the high-margin ones grow more than the low-margin ones. But more importantly, I think still it's a scale thing. I think the scale gives us some advantage in all aspects of this business, so not only on the product side, also on the operation. So all that, I think, has been showing as a market leader, you can enjoy that benefit. Do you think this strong take rate increase, it's more like one time or we can observe that it can sustain into future quarters? Except that product mix difference, if you talk about individual product category, we don't see the take rate will vary that much, and we'll continue gaining that scale benefit. Okay. Got it. Got it. Okay. Thank you, Jeff. Thank you so much. I'll go back to the queue. Thank you. Thank you. Our next question comes from Helen Chien with Daiwa. Please go ahead, Helen. Thank you. Hi, Jeff and Terrisa. Thank you for taking my call. I have three questions. First, regarding the reinvestment in the future growth engine, what's the OpEx impact in 2024? I can't give you a number, but what I said in the previous section was we intend to use a balanced approach. And we translate that word is we certainly will have our EPS in mind. We don't want that fluctuating a lot. And fortunately, our B2C business is still doing well and churn out good money, and so can support us into this new business. And also, not all of this new business need a lot of investment. And for example, live streaming, we have started a few years earlier, and that takes advantage as part of our TV operation. And 3P service is really a 1P extension based on the same platform. And also, we will take a phased approach. So I think, yes, it will spend some money, but I think so far, we think it can be very well managed. Thank you. My second question will be, I consider Taiwan EC growth normalization post-COVID, and also you mentioned about the warehouse base will expand by 15% year-over-year. Can we expect double-digit revenue year-over-year growth in 2024, or what should we expect? I don't have that number. I just know in terms of the sales growth, we're going to get better quarter by quarter. It will affect by the same reason I talked about before. Regarding the warehousing space expansion, 50%. As a part of it, actually, was added in the first quarter of last year. It's just because those are the big warehouses. Once it launched, you just have a big chunk of the space added to your capacity. What we will do is we used to rent a lot of the space from the third party because in the high season, we always run out of space. Now, we just need to cut down on that. We basically take those rental needs back to in-house. We don't see that as a problem. Okay. My last question will be more on the Taiwan e-commerce markets. Why the reason behind the recent slowdown and the long-term outlook? Because do you think the long-term structure growth is still reworking in the Taiwan markets as we see the offline growth overall actually very solid after the COVID? And why Taiwan's EC penetration rate is quite low compared to, as you mentioned, China, Hong Kong, Indonesia? And you think what will be the key driver for the further penetration rate increase? Thank you. I think the key driver is the technology trend. However, why Taiwan's EC penetration rate is low compared to other countries, I think for one is because we are a small country and highly populated. Everything seems convenient. So that need is not that urgent. However, when doing an evolution, no matter for what reason, you will go along with that trend. So one good example is Uber. When Uber When Uber Eats, that kind of a food delivery service, when they first launched in Taiwan, people always said, "There's no need. I can go downstairs and just grab whatever I want to eat." But still, you can see even after COVID, people's behavior doesn't return 100% before COVID because they just get used to it. I think Taiwan has a reason why the penetration rate is behind because of its natural inherited characteristic. Secondly, because if you look at markets, for example, Korea and China, they have been through a period of very highly competitive market on e-commerce. There are so many players, and they're putting so much money on it. That accelerated its penetration rate for sure. I think, as I said before, with the new investment coming in, we don't see it just only the competition getting intensified. It also helps to drive the overall market penetration. The pie becomes bigger for us. It's also the positive side of the competition. Thank you. Thank you. Our next question comes from Bill Lin with JP Morgan. Please go ahead, Bill. Thank you. Okay. Thanks. Hi, Jeff and Terrisa. Thanks for taking my question. My first question is about the growth because we can see, I think, the competition in Taiwan is rising. If you're looking into the category growth, I think for beauty, the category is doing well. But for household, our category, in the last year, actually, the growth rate is decelerated. If looking into 2024, as you guided, the comparison base will be easing, and maybe shopping behavior will come back. What is the company's strategy to enhance the growth of the sales growth in slower categories among that? I also have a second question that is about the new business. Going forward, I want to clarify about the accounting treatment for the new business because it's 3P. I want to understand, will momo just record it as a service fee model, or that will also incorporate into our revenue top-line group? Thank you. Okay. Your last question first. For the 3P service, we only will take in the commission part. So we are not taking the overall sales as the revenue. Your first question regarding different product categories, how do I see it in this year's growth? I think competition really collapsed. I don't think our slow growth on, say, for example, household is mainly comes from competition. Rather, it really comes from the high base. For example, face masks were selling a lot during the COVID, but it didn't sell any last year. So that comparison. For example, the 3C, so it's really nothing to do with the competition. Just the overall market for the notebook and the PC hasn't really recovered yet. So I think it still depends on the product and the economy situations. I think the product innovation certainly will drive the demand. Of course, also, there's a continuous shifting from the physical store to online. That part, I think, will be benefited once the reopening effect is receding. Okay. I understand. And also, Jeff, can I clarify a question with you? I think in your comment, you are saying the quarterly revenue will be better and better each quarter. Do you mean year-over-year growth or the absolute number? Year-over-year growth rate. Okay. Got it. Thank you. We have some questions, actually, from our web page. The first question actually comes from the U.K. Please comment on which e-commerce companies in Taiwan that are winning and losing market shares? Who is the most aggressively on advertising, pricing, and also promotion? I probably cannot really comment on this one. I think you can all read on their financial report. You will know how the market share changes. And I already mentioned the new entrant has spent a lot of money on advertising and offering price discount. So yes. Okay. The second question will be, when will media network platforms be launched? What can we expect from this new business opportunity by size and also margin? This is kind of a totally new business line for momo. The first challenge is to build the technology foundation. We have some trial product that is running. So I think this year is mainly building out the capability. The revenue would be still moderate, although the growth margin on those revenues is pretty high, just like a normal advertising business. So, hopefully, we'll see the revenue picking up in the coming years. That will become a major profit margin contributor. Okay. We are ready to take the final question. Actually, it comes from the UBS. Thank you. The question comes from Daniel with UBS. Please go ahead. Thank you. Hey. Hi, Jeff. I got two more follow-up questions. The first question is about the live streaming. So we have seen success of e-commerce in live streaming in the other Asian market. How would you assess the possibility of live streaming e-commerce gaining mainstream popularity in Taiwan? Also, I understand we have already transformed TV shopping into live streaming. When do you expect this to scale up and make meaningful contribution to our business? Thank you. I don't see live streaming will take that kind of significant role like what happened in Southeast Asia or China in Taiwan. However, it's a good complement, at least for momo. For one, we have an existing TV operation with reducing target audiences. It's good media for us to shift the scale to address a new audience. And secondly, I think it's a good way of complementing existing e-commerce by adding more contents. So you're not only coming to momo to buy something. You can really just like you go to the department store. You're not just going to buy things. You browse the window. You see the products. So it has the effect of driving the traffic. As you all know, running an internet service, traffic is very important. And live streaming do drive a lot of traffic and stay a longer time. In terms of the GMV and all that, I think in terms of that, we will still be behind the 1P service by far. I even think a 3P service has a much faster growth rate than live streaming in terms of the GMV. Thank you. Any reason why you think the live streaming e-commerce won't be that successful in Taiwan compared to Southeast Asia? I probably need to rephrase. I think it will be successful in Taiwan, but just not as crazy as what happened in Southeast Asia and in China. I think it also suitable for certain product categories. In other words, it doesn't suitable for other product categories. Product need to be presented, and they need to be explained. I think that's a good way of demonstrating your product and sell it. For product that are pretty centralized, I don't think live streaming has a good role to play. Maybe we come from sort of a general-purpose e-commerce player with 1P, 3P, live streaming. We have all these different channels to reach customers. We don't really depend on one channel. I made that comment. For other guys, if many are working on the live streaming, maybe that's very important to them. I think that's from a different perspective. I see. One final question. I understand our main competitive edge is on our logistics advantage. How difficult or how easy do you think for competitors to follow suit and invest in logistics then catch up in terms of our logistics advantage? Right. I think it's easy to go out and rent some spaces and easy to find someone to deliver your parcels. However, if you want to enjoy the efficiency and the high-level customer service, you have to own it. So far, we don't own everything. We have a lot of warehouses rented from. But we do have our Northern Distribution Center in operation for years. And soon, we'll have the second one. So we noticed a big difference because if you build your own, it tends to be fully automated. That'd be more efficient to operate. If you rent someone's existing warehouse, it may not 100% fit your needs. And you certainly will not spend a lot of money to automate it because once this ends, then you need to write off all the investment. Not to mention, you need to have your own fleet to manage end-to-end service labels. So far, we have 25%-30% of all our parcels delivered by our own fleet. All that, you need time and money invested. And not money alone. Even if you have money, if you build a distribution center automated, the same automation label like ours, you're talking about 3 years-4 years build-out time. I see. Thank you. That's very clear. Thank you so much. Thank you. And our next question comes from Angela Hsu with Citi. Please go ahead, Angela. Thank you. Hi. Thank you for taking my question, Jeff and Terrisa. I have one question regarding the momo and Fubon co-branded credit card. I noticed the rebate is still lower to 3% from 4% starting from this year. I just wonder why we want to lower the cash rebate amid rising competition. And more importantly, do you spot any consumer behavior changes post a decrease in cash rebate? Thank you. Well, that decision is not made solely by us. It's a co-brand card. So we jointly made that decision with the bank. Of course, we have noticed that benefit has reduced year by year. So in the meantime, we have also been working with other banks and institutions to have all the different campaign promotions to compensate for that. And we have ourselves put in more marketing support together with our manufacturers. So far, we're seeing it although we heard customer feedback. And so far, we're seeing it still okay. Okay. Got it. Thank you. Okay. We are running out of time. Thank you again to join our fourth-quarter conference call. We hope to see you again next time. Thank you. Bye-bye. Thank you. Thank you for your participation. This concludes our conference. Goodbye.