Good afternoon, ladies and gentlemen. Welcome to the conference call. Terrisa, please begin your call and I'll be standing by for the question-and-answer session. Thank you. Hi, good afternoon, everyone, and welcome to momo's first quarter 2024 earnings conference call. It's great to see everyone again. This is Terrisa, momo's head of investor relations. Today's event is being webcast live through momo's website, where you can also download our earnings report and the presentation. The format for today's event will be as follows. First, Jeff will provide company key message, followed by outlook. Afterwards, I will jointly share operational updates for the first quarter. Last, Jeff will take your questions during the Q&A session. As usual, I would like to remind everyone that today's discussions 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 statement. Please refer to the safe harbor notice that appears on our presentation. Now I would like to turn the microphone over to Jeff. Hi, hello everyone. Thank you for joining us today. I will start with the industry status and Q1's financial performance. Then move on to the new business initiatives, and lastly, we will touch upon the outlook. First, the industry and our operation highlights. In the first quarter of 2024, the overall retail industry showed a modest growth of YoY 3.1%, lower than previous quarters. Among them, supermarkets, convenience stores, and e-commerce recorded higher than the industry growth rate. The store product consumption may be partially impacted by future economic uncertainties and better service consumption across transportation, travel, dining, etc., which took more share of consumers' wallets. As for momo, our e-commerce began the year with 7.2% year-on-year growth in revenue and continues to outpace the total online industry, which had a 3.6% year-on-year increase. All our product categories have experienced, to a certain extent, market recovery from post-COVID, but the recovery speed varied. Noteworthy products such as camera, food, jewelry, health supplements, skincare, cosmetics all reported stronger customer demand, while certain segments such as consumer electronics, home appliances, home furnishings, and fashion saw relative weaker consumptions. Key customer metrics also displayed encouraging trends, with a 7% year-on-year increase in quarterly active users. This growth was primarily driven by an uptick in male customers, underscoring our effort to attract and broaden our customer segments. On our operational performance, the total company's EBITDA reached TWD 1.45 billion, an increase of 5.8% year-on-year. The company's EBITDA margin held well at 5.4%, primarily driven by a favorable business mix attributed to improved TV shopping revenue and margin contributions. The operating profit increased 2.3% year-on-year, lower than EBITDA's growth, mainly due to increased warehouse rental amortization. With continuous warehouse storage optimization by returning those temporary rented warehouse spaces and moving into those larger ones, this unfavorable amortization factor can be neutralized with time. EC EBITDA growth at 4.5% year-on-year maintained a solid EBITDA margin of 5.1% despite unfavorable product mix compared with last quarter and higher promotional expenses. However, the low 0.3% EC operating profit growth was mainly caused by internal depreciation and the amortization and administration cost allocation, and the costs incurred by new businesses. Because of those reasons, we encourage you to focus more on take rate and EBITDA rather than operating margin. Media business reported a 3% year-on-year revenue growth, with EBITDA 33% year-on-year and operating profit 60% year-on-year, which has benefited from competitive product selections, cost reduction, and favorable internal cost allocation. Q1 generated TWD 910 million in free cash flow, reflecting a healthy business operation, and our net cash position stood at TWD 6.9 billion. This demonstrates our company's ability to maintain a strong financial position to support future dividend growth initiatives and strategic investments. Meanwhile, the board has decided to distribute a cash dividend of TWD 14.80 and a stock dividend of TWD 0.50 per common share. We will hold a shareholder meeting on June 19th to approve the dividend proposal. Now, turning to our new businesses. Building upon the solid foundation of our 1P business, customer base, and online industry growth potential, our three new growth drivers, momo Shops, momo app, and live streaming, all have made good progress according to our plan. momo Shops 3P model marks a strategic milestone in expanding our EC business scope. Launched as a trial service in March to test out the overall customer experience, merchant interfaces, and other supporting functions. At this stage, it is on an invitation-only basis. So far, we have selected and invited more than 1,000 merchants on board, offering products ranging from apparel, shoes, food, home decor, street accessories, etc. Mall Shops target broader demographics, particularly the younger segment, to offer more product selections and expand our total addressable market. Mall Shops has officially launched on May 1st. One thing to be noted is that Mall Shops, due to its business nature, only book its commissions and fees as revenue, which is different from our current 1P practice. momo app, a retail media network, offers a comprehensive solution for brands and merchants seeking to maximize their online presence and drive sales. As a way to monetize our data and traffic using first-party information, there are many technologies to be deployed in this system. This system is under intensive development and will roll out new features and services down the road. In the meantime, the sales has already started, and the initial responses from customers are very positive. Live streaming has demonstrated positive outcomes as well, marked by notable increase in sales, traffic, and user engagement and time spent. This year, we will expand our collaboration with influencers and merchants. This move aims to make our live streaming business as a platform, which can host both our own products and also enable merchants to run their own live content as talent. Finally, let me make some comments on the outlook. We think the EC industry will continue to recover throughout this year, and the market should grow faster in the second half of the year. As a result, we anticipate our second half revenue growth to outpace that of the first half. Our 1P business will continue to grow and enjoy the scale benefits, although the competition from the new entry will persist for a while. Part of the profit will invest in the new initiatives, namely mall shops, momo apps, and live streaming. We firmly believe these new initiatives are important in driving future growth and profitability. Hence, we estimate that the OP margin for 2024 may experience a slight decline compared to 2023. Looking ahead, we will continue demonstrating strong execution capability and optimizing our operation. We'll be striking a balance between growth and profitability. That's all for me, and now I will turn the call over to Terrisa. Thank you, Jeff. momo reported company revenue of TWD 26.8 billion, reflecting a 7% year-over-year increase. Our market shares in EC industry continue to rise. EC increased by 7.2% year-over-year, primarily driven by an increase in the number of transactions. You can refer to slide 14. Our major five product categories continue their growth runway, underpinned by the improved online consumption and also the market share gain. Beauty and healthcare increased 14% year-over-year, reported the strongest growth, followed by sports and leisures up 9%, household up 7%, and 3C and home appliances up 7%, fashion luxuries up 5%. Notably, during the first quarter this year, 3C and home appliances household improved sentiment from low single digit last year. On key customer metrics, demonstrated positive trend, with a notable 7% year-over-year increase in quarterly active users, driven by the growth in male customers. Despite a 3% year-over-year decline in the average ticket size attributed to the lower contributions from 3C and home appliances, customer engagement remained robust. The proportion of revenue from momo and Fubon co-branded credit card holders increased to 34% compared to 32% in first quarter last year, indicating growing customer loyalty and retention. While the company EBITDA reached TWD 1,455 million, reflecting an increase of 5.8% year-over-year, the company EBITDA margin held up well at 5.4%, primarily driven by improved TV shopping revenue and margin. Meanwhile, EC maintained a solid EBITDA margin of 5.1% compared to 5.2% a year earlier, in the meantime outperforming last year's 4.9%. EC EBITDA margin was resilient in spite of unfavorable product mix and higher promotional expenses, demonstrating resilience through efficiency gains in fulfillment and logistic operations. Admitting the upward pressures from increase in warehouse costs and labor expenses, we effectively managed operating costs. That resulted from our ongoing cost efficiency measures, including operational streamlining, package reductions, route optimization, and cost management. Meanwhile, we continue to make progress in optimizing inventory control, fraud detection, and automation. In terms of operating profit, the company OP margins actually reached 4.2%, slightly beat last year's average. The company OP profit increased by 2.3% year-over-year, was lower than EBITDA, mainly due to the increased warehouse rental amortizations. While the B2C OP margins actually impacted by promotional discount and one-time losses caused by Japanese contaminated red yeast rice product recall, first, the higher amortizations due to the newly added warehouses put pressures on the OP margin as well. On balance sheet, the net cash position stood at TWD 6.9 billion, increased by 10% quarter-over-quarter. Other receivables reached to TWD 2.4 billion, an increase of 48% year-over-year. This increase can be attributed to the higher purchase of more coins from our brand and merchant partner for the purpose of a marketing campaign. Other non-current assets increased by 87% year-over-year. That's owing to the higher warehouse rental, deferred income tax, deferred tax asset, and also the increase in the prepayment of the equipment. On cash flow, in the first quarter, we generated TWD 910 million free cash flow, with outflow CapEx TWD 379 million, mainly for the DC construction and equipment expenditures, warehouse facilities, and IT equipment expenditure. Also, you can refer to page 11 regarding the dividend. Our board further increased the cash dividend payout ratio to 98% for the last year's performance. While the working capital remained healthy of negative TWD 4 billion, 1% difference on a yearly basis, cash conversion cycle was healthy, maintained at 16.2 days with an increase in the AR days, mainly due to an increase in other receivables. Finally, regarding the business development, apart from the three new businesses Jeff just mentioned, on the logistic infrastructures, which we have built up for years, it's essential to support our further market share gains. This year, we expect a 15% year-over-year expansion in the warehouse spaces, primarily driven by the upcoming launch of our South D istribution Center in the second quarter. This expansion aims to bolster momo's warehousing capability and accommodate the growing demand of customers' needs. In addition, momo is strategically improving its last-mile delivery process by setting up additional satellite stations throughout Central and Southern Taiwan. This means reduced delivery distance, faster transit times, and enhanced customer satisfaction. Leveraging AI technology for intelligent product selections and route optimization, momo aims not only to boost the delivery efficiency but also minimize the energy consumption during the product transit, leading to a notable decrease in carbon emissions. With that, we are now ready to open the call to questions. Operator. Thank you, Terrisa. Ladies and gentlemen, we will now move on to questions. If you'd like to register for questions, please press star one on your telephone. Thank you. Sorry, before you raise any question, let me make a quick correction on the number I just said in the conference. Our media business EBITDA growth actually is 20.8% year-on-year. I misquoted the number. Also, please forget about that operating profit year-on-year growth rate. That's also misquoted. I don't have that number on my hand. Okay. Operator, we can start the Q&A session. Thank you. Thank you. The first question comes from Daniel Chan with UBS. Please go ahead. Thank you. Hi, Jeff and Terrisa. Thank you for taking my questions. Could you hear me? Yep. Okay. Thanks. My first question is on the B2C margin side. B2C take rate, although not disclosed, but seems to be still under pressure due to high promotion. How long would you expect this high promotion to last? And what's our strategy to support take rate or margin back to increase amid this high promotion environment? Right. The current market, we have a sluggish consumer demand. As I said in my previous statement, customers prefer to spend money on those leisure activities. So in order to cater to that situation and also the competition, more promotional discounts are used. I think that this situation is going to last for another few months. I think it will get better in the second half of the year. So the take rate, I think, should remain similar level as the first quarter. Our strategy to support the margin amid this high promotion environment? Well, I think we still enjoy that scale benefit. Also, we engage a few of the cost reduction activities to realize that scale benefit. So with those big downward pressure on the take rate, however, we also have some new business initiatives to support. So I think probably the profit will be invested in those items. So I see the take rate pressure is okay, but the operating profit mainly is pressurized by a few other things. I see. Thank you. And my second question is on the TV shopping side. So what drives the TV shopping back to growth in Q1? And what's your outlook on this business in terms of growth? I think the seasonal effect during the New Year and excellent product selections. We'll exercise the marketing campaign all that to a good result for the first quarter. However, I don't think we can reverse that downward trend, but we will do more to slow down the downward speed. I think overall, this year, media business will do better than last year, but I think the long-term trend will still sustain. Because it's a high-margin business, it does support on the bottom line. You mean TV shopping will be better this year than last year? A YoY growth? I think the last year YoY is in the mid-10. I don't think it will become that worse this year. Oh, okay. Okay. Got it. Got it. Yeah. And I think previously, you mentioned you think this year, the company's total sales growth will be higher than 2023. So do you still expect the same, or would you give out any quantitative guidance on the sales growth? I think with lack of clarity for the second quarter, I think the consumer demand is still sluggish. However, we're still confident on the second half of the year. So I think overall, the whole year, I think, should be better than last year. Okay. Thank you. And final question is on the dividend side. So what's the reason behind the increase in payout ratio? And will the company sustain above 90% payout ratio in the future? Thank you. I think it's not a sudden increase. That's because we did a calculation. We take into consideration all the investment dividend outflow. And we think our operation can still support it. So we are confident our future business and our cash flow is healthy. And I think under that background, so we think we can reward our shareholders with a better dividend payout. I see. Thank you. That's all my questions. I'll get back to the queue. Thanks. Thank you. Next question comes from Angela Hsu with Citi. Please go ahead. Thank you. Hello, Jeff and Terrisa. Can you hear me? Yep. Yes, please. Okay. Thanks for taking my questions and a few from my end. First question, so in first quarter, our household category still managed to grow 7% year-over-year. That's actually further accelerated from low single-digit growth in 2023 despite no slowdown in competition. So what's our read on that? And any strategic move we have adopted in household category, and have we seen any changes in the competition landscape? Thank you. Well, I think it reflects the fact that we described before. More competition, although put pressure on us, but it also drives the market to become bigger. So I think that reflects that fact. E-commerce, there are more players joining the e-commerce. We're going to enlarge the market. We are part of the players, so we're going to enjoy that benefit. Facing competition, we can still manage customer buying from us, although we're not always the cheapest. So it also reflects our customer relationship and the brand equity. I think that gives us some long-term competitive advantage. Got it. Thank you, Jeff. And also on the South Distribution Center, when will South Distribution Center start operating? And what's the estimated depreciation and also additional OPEX expense of South Distribution Center for 2024? South Distribution Center will be ready in July. Once it's in operation, the depreciation will start. We estimate the depreciation amount is around TWD 12 million a month. Of course, it has its associated operating expenses. I think that is fine because we are also going through a process of consolidating our warehouses before because we don't have distribution centers. We rent a few of those mid-sized warehouses. Now we are going through the process of consolidating them. I think at the end of it, I don't think that we're going to increase more in terms of the operation cost. Got it. Lastly, on the electricity price hike, so have we done any calculation on potential or additional costs from electricity price hike? Sorry. I think I need to make another correction. I did my division wrong. The South Distribution Center depreciation is TWD 150 million a year. So divided by 12, it's not TWD 12 million. Sorry. It should be anyway, TWD 150 million a year. Okay. Angela, can you please repeat your question? Thank you. Yeah. It's right. Okay. Thank you. It's TWD 12 million. Sorry. It's TWD 12 million a month. That's correct. Oh, TWD 12 million a month. Okay. Sorry. Anyway, please. Okay. For full year. Yes. Please. So TWD 12 million. Okay. So TWD 12 million per month and TWD 150 million per year. All right. Got it. And last question is about the electricity price hike. So have we done any calculation on additional costs from the electricity cost? Yes, we have. The impact is marginal. I think it shouldn't affect our operation costs that much. And in the meantime, as I said, we have been through serious activities trying to optimize our warehouse operation. I think we can compensate that increase by those optimization efforts. Got it. Thank you, Jeff. That will be all my questions. I will go back to the queue. Thank you. And the next question comes from Bill Lin with JPMorgan. Please go ahead, Bill. Thank you. Hi, Jeff. Terrisa. Thank you for taking my question. I think I have one question here. It's about the new business investment. Do the company have any guidance about how much budget the company planned to invest in? And for the revenue contribution, if you're looking forward to next maybe two to three years, what is management's goal for the three new business revenue contribution to the total consolidated revenue? The investment actually will be realized with the project as the project moving in. I don't have a number I can give to you. What I can say is most of the money invested are all associated with technology, the hardware, and all the software. As far as the contribution, I think it's still too premature to name a dollar amount or timeline yet. I think we'll probably have a better idea when the time comes. Got it. Thank you, Jeff. So if we're looking into your financial numbers, I noticed your R&D spends actually go up a bit maybe from second half last year. Can we think that as your investment to the new business, as you mentioned, there will be more investment in the software and hardware side? Yes. We are an e-commerce and internet company. Technology investment is always a major CapEx expenditure. So we have the regular upgrade and the capacity enhancement. And this year, we add the new business initiatives. So yes, we have all those budgeting to our CapEx, and we just do according to our own plan. Got it. Thank you. I have no more questions. Thank you. And the next question comes from [Casey Chan] with [Allianz]. Please go ahead. Thank you. Hi. Thanks, Jeff and Terrisa. Can you hear me? Yes. Yes. So my question is regarding the repeat business. So I'm just curious, are we seeing or do we expect vendors to pay and utilize your current delivery capacities? Not initially because Taiwan's repeat business is actually dominated by Shopee at the moment. The most popular way of delivering goods in Shopee's model actually is convenience store pickup. I think that customer behavior will also happen at our repeat business. However, in the overall logistics, I think we can provide other services to those merchants, for example, warehousing also or part of the home delivery requirement. We don't think that's going to be big at the moment. What we think we can play a better role is we can serve those large merchants by helping them move their goods more efficiently to the convenience store's hub. Because if they are running this convenience store pickup delivery, they need to by themselves to get those packages to the convenience store. Or if they are running a large quantity, they have to really move to the convenience or transportation hub. I think we can have some synergy layer and provide that kind of service. And in the long run, I think together with our old merchant, no matter whether it's 1P or 3P, we do have the chance to run our logistics as a full service, more like whatever Amazon is doing to their supply chain. But that is more a long-term goal. Okay. That's clear. So in that case, how should we think about the impact on your current fulfillment capacities? Meaning, is this going to be complementary so you can take these 3P orders and fill them into the low season or off-peak hours so that the over-utilization on your capacities actually increase? Or these 3P deliveries, as you see right now, is pretty similar to 1P. And so when the 3P business hit a certain level of contribution, you will have to expand your capacities? Our own fleet currently delivers around 25%-30% of our products. So basically, we don't have that excess capacity. If we do, then we can deliver more. So we will continue to grow our own fleet. In the meantime, I think by adding 3P business should not cause us to have excessive capacity not to be used or the capacity not able to fulfill their needs. Because if that's the case, we still have all the third-party delivery vendors working with us. So I don't see there's an issue there. And also, as I said, most of the 3P business actually delivers through convenience store. So rather, we should focus on how to streamline the process by connecting the information flow with those convenience stores and help our merchants run their business more smoothly. Okay. So basically, you think you're saying with these 3P orders, the utilization on your fleet or warehouses could be smoother? Yeah. Is it correct? Yeah. So, Jeff. Okay. Okay. Good. Good. Great. And my second question is on the ads, right? So I think you just mentioned you've seen some positive response. I'm curious if you can try to maybe quantify that or try to give us a ranking in terms of the revenue contribution by these three new businesses in terms of timing and contribution. Well, in terms of GMV, of course, 3P has the greatest GMV potential. And in terms of profitability, I think the momo ads, the retail media network has the biggest potential or the profit margin in that sense. How soon that will going to happen, I think they all need to take some time because they all need to have a platform to host them. And there are a lot of functions and features need to be developed. So I think the revenue will come with those platforms' capability because that enables you to sell the services. We're supposed to see some initial numbers by the end of the year or early next year. We'll see. When the time is right, we will share those information with you guys. Okay. Thank you. That's all from me. Thanks. Thank you once again, ladies and gentlemen. If you have any questions, please press the 1 on your telephone. Thank you. Next, we have a follow-up question from Daniel Chan with UBS. Please go ahead, Daniel. Thank you. Hey. Hi, Jeff. I got a few follow-up questions here. First is on the live streaming. Which segment is live streaming classified under? Is it online or TV shopping? And how do we book this revenue? Is it gross revenue or net revenue like 3P? Thank you. Well, at the moment, all the revenue are gross revenue because we don't have the 3P merchant officially launched yet, although they launched it three days ago. How the revenue was classified for the online streaming, I think that's what your question was. It depends. It depends on the product itself. If the product originated from the TV channel, then the revenue goes to and the revenue and the margin goes to the media business. If the product comes from the EC, then the revenue and the profit goes to EC at the moment. That's how we classify them. And then we may change it a bit. As I said, we are building the platform. And also, we are learning how to manage it and also learning how to report them. So as I talked about in my previous statement, 3P business is going to be going only to book the commission and the fees, not the gross revenue, which also implies at one point in time, we have to report our GMV. So because all 3P is still very small, so it will not impact the number yet. So we will find a better time, and we may adjust how we report our numbers. I see. And for now or for Q1, under the live streaming, more product is for TV shopping or it's for online? So in other words, more recognized under TV shopping or more recognized under the e-commerce? I think probably 60% from TV, 40% from the e-commerce, I think. But their numbers are still small compared to their overall revenue. I see. Thank you. My second question is also on the 3P side. I just want to ask, how would you solve the conflict between 1P and 3P suppliers? For example, 3P supplier may sell cheaper product, and this might potentially affect 1P supplier sales. How would you manage this kind of conflict? Well, so that's the reason why I said our streaming model at the moment is on the invitation-only basis. We have 3P merchant selection criteria and a preference, which take into consideration how to complement our existing product portfolios so that can minimize the potential interest conflict or cannibalization. So the reason why we do it in 3P is really expanding our selections and attracting different customer segments. So that's how we guide ours. Those things are actually guiding us how to select our merchant. However, having said that, if you guys remember, before we have this 3P business model, we used to run what we called 1P 2.0 to cater for those long-tail product selections. So maybe down the road, we will move those 2P vendors to the 3P platform, make them more naturally belong to where they belong to because that will make them run their business more flexible and well. But that hasn't happened yet. But I think we will do that in the future. I see. Okay. Thank you, Jeff. Thank you. Okay. Let's conclude our question-and-answer session. Thank you all for joining today's call. We look forward to speaking to all of you again next quarter. Thank you. Thank you. Thank you for your participation. This concludes the conference. Goodbye.