GigaCloud Technology, ticker symbol GCT. We are very pleased to have GigaCloud once again at our conference. With us from the company, we have Iman Schrock, the President of GigaCloud. The format for today will be a management presentation for the first 20 or so minutes, followed by Q&A. We will have a total of 30 minutes. For those of you in the audience who would like to ask a question, please type your question into the Q&A box at the bottom of your Zoom screen, and I'll read the questions out later. With no further delay, Iman, the floor is yours. Hello, everybody. I appreciate the opportunity to present GigaCloud Technology. Without further ado, I jump into the PowerPoint that we have prepared for you. GigaCloud, publicly traded on Nasdaq under the ticker GCT, is a pioneer business-to-business marketplace for big and bulky. On one end, we connect manufacturers from China and Southeast Asia. To the other side, retailers and resellers in the number of 12,500. The two are transacting with each other. Within the same marketplace, we have two components in terms of ownership of inventory, very similar to the Kirkland brand positioning at Costco. We have the 1P brand and the 3P brand. There is no distinction on the platform. It's simply availability of products, gaps in assortment. We try to present products to the buyers that are present, and the two parties are transacting with each other, generating GMV for us. The business actually started in 2010 in e-commerce and in the country of Japan. Rakuten was the market that we first launched on. We became the number one seller of suitcases. This is a famous story in the company. Larry, our CEO, stopped work, and he's like, "We need to diagnose what is the contributing factor to this success." They came up with two keywords, big and bulky, and non-standard. To that, to date, is in our DNA. We like non-standard products because the opportunity exists for the price not to be visible, so it's easier to create value in those categories. Also big and bulky because the big and bulky is hard, and that requires a trusted partner, reliance, and a logistics network. Also it's a low value dense proposition. The bigger the product, the more the cost is involved, and with that, we can add value by accumulating demand. Anyways, the business expanded in 2012 into the U.K. market. That's where I am. My apologies if there's wind blowing here. I'm sitting outside on a balcony, and it's 4:30 P.M. here, and I appreciate the opportunity to speak to you all. We just opened a brand new warehouse. We entered the U.S. market in 2013 and the German market, which is currently serving our European Union business, in 2017. In 2019, we did something even more meaningful than the previous pivot. This time, we pivoted the business to B2B. At that point, until this point, we were a distributor of the business. That's our legacy 1P business. At this point, we launched a marketplace. We actually practically brought the factories we were buying from, we told them, "Hey, you can transact with our buyers. As long as you don't sell the same product, you can give them availability." We used the chicken and egg to propagate the marketplace. The marketplace was seeded with 1P in 2019. I'm proud to tell you guys that we surpassed, I believe, $1.7 billion in GMV as of last quarter. We went IPO in 2022 on a smaller $41 million ticket, with a smaller boutique bank named Aegis Capital. We raised only $41 million. Since then, we have acquired Noble House in bankruptcy court, $87 million. There was a lot of fit in terms of the logistics network and the product category that they operated within, outdoor. A smaller technology play, Wondersign. They had kiosks in 5,000 retail locations that we have since made transactional. We were named by Forbes as America's most successful small-cap company. Honestly, a very proud moment for a small company like ours to be recognized. I was joyous when they told us we're included, but when we saw we were ranked number one, it's quite a proud moment. Included in the Russell 2000. We made a new acquisition in 2026. This one is quite the strategic one, smaller in nature, $18 million, New Classic Home Furnishings. These folks do LTL big and bulkier stuff that are meant for brick and mortar retailers. Our intention is to expand the capability and the fulfillment methodology and availability of the marketplace to the offline channel, which, as you guys may know, represents about 70%-75% of the market in a roughly $65 billion tab. That's our history. I'm going to click on the financials to glance over it. Last quarter, $360 million, growing 32%. Gross profit, $86 million, 35% growth. Net income, $38 million, 41% growth. The diluted EPS, $1.04, 53% growth year-over-year. I will call out this last line here, $364 million of cash on the balance sheet and $0 of debt. The only liability on the balance sheet is currently unpaid rent, which is an accounting treatment. Like I mentioned, $1.7 billion in GMV transactions on the marketplace, growing for us at a clip of 18%. The 3P, remember we seeded the marketplace with 1P, 3P was practically zero, surpassed $909 million. These are the folks that are transacting through our marketplace. The business model is sticky because we not only help them flow their goods end to end, but we help them transact. That is growing for us at a clip of 24%. The number of sellers as of last quarter, 1,377, growing 19%, 12,473 retailers and resellers for us. The buyer is growing at a 25% clip. The average spend is $133,000. One important call-out, we have a lot of people that get into this game. I'm going to show you how easy we make it for people. We remove all the barriers so you can literally start becoming a reseller of furniture tomorrow. With that, we have a lot of people that start but don't really take it seriously, or they're just doing it as a hobby. That is dragging down. The point is that the number with the buyer is quite sticky. This is our capital allocation. To kind of highlight that, you see the acquisitions on the bottom and the $41 million that we raised. Since then, we've also been buying back shares, $2 million, $23 million, $67 million, and $12 million. You can kind of see the revenues by region. The U.S. versus Europe. Europe has been growing for us quite a bit. You guys can see it representing 24% versus 33%. I think year-over-year growing for us 80%. Obviously, we don't expect it to continue to grow at that rate. It would be lovely that it did. We have to be realistic. We don't know when it's going to normalize, but it's tremendous growth. We're going to continue to see growth, but not at the same clip. You guys can kind of see this is the call at 86% year-over-year. The $120 million in the quarter was generated. Our business model, as I mentioned, non-standard, big and bulky, and fragmented market. That means many players, nobody has dominance. Like I like to say, there is no Fortune 500 furniture manufacturers, and usually it's very hard for you to recognize the name brand of a furniture piece if you see it in person, even for myself, that I've spent quite a bit of time in the furniture industry. This is one thing that I call out for you in understanding our business is critical, that the B2B marketplace, which I'm going to show you in just a second, is tied at the hip to the global logistics fulfillment network. Allow me to quickly go forward here to kind of show you guys this quick snapshot of the marketplace, because this brings all the picture together. This is a typical product page on the marketplace. You see the factory that listed it wants to sell this chaise lounger for $175, and this can ship to any zip code in America for $37.08. Two call-outs. That $37 is definitely quite attractive. I've shipped books into New York and it certainly has cost more as a retail customer. Also as a retailer, I know the all-in cost for me to trade this on my website or in my store or on a marketplace is $212.08. All I need to do is to mark this up, to market it, and we allow the retailers to focus on what matters most to them, converting traffic and making money. While we make it easy for suppliers because once they introduce the products into the network, we remove the frictions, making it as easy as possible for anybody to transact with them. Allow me to go back to the slides that I skipped. Our business model, Supplier Fulfilled Retailing model, stipulates that the manufacturer will take inventory risk and forward position the inventory, hence allowing the retailer to focus on conversion of traffic. Just a concept that I just showed you in that one slide. Our idea is not that, of course, this is very attractive to the buyers because it's asset-light transactions, but also this is better for the industry. When the buyers take inventory risk, if they don't sell. Mind you, we call that fragmented market. You're dealing in a furniture store with thousands of SKUs. Inventory depth is quite shallow. If you order 10 items and you don't sell through four, even though the number is small, that's 40% error rate. In the case of the manufacturer taking advantage of the inventory forward positioning, even though the model is cash prohibitive to them, we talk about that, the manufacturer is able to maybe sell a couple retailers strategically across the nation, and hence lowering the risk on the entire system. Even though this retailer may not sell through four, another retailer may, and that's the whole idea. The other retailer would have customers that don't have products to fulfill, and this retailer would have too much product on their hands. The SFR is a solution to both. I just wanted to go over this slide. This is our flywheel. This is how we make the magic happen. It's quite important because a lot of the times people kind of misunderstand the fact that in order to replicate our success, it's none of the functions working alone, but all three working together. The 1P, the 3P, and the logistics complement each other in creating the flywheel that you see. We have the product margin generated by us lowering the 1P goods. At the same time, the manufacturers come to market through us. They bring additional choices, competitiveness to the marketplace. It's a cash flow positive business for us. While the business of trading product is cash flow prohibitive because the product sits for extended periods of time. Of course, the logistics is important because, as I said, we talk about that low value density category logistic represents a big portion of the product cost, especially the last mile. With that, the more we ship, the more we're able to save through economy of scale, and that saving is passed on to the marketplace to fuel the growth. This is the marketplace GMV distribution between 1P and 3P. You guys can see the evolution of this over the past 12 months, and obviously 3P's taking over, and that is not by design. It's the natural course of event. Of course, the manufacturers have the cost advantage. Our 1P is in the business of filling in gaps in assortment because we cannot compete with factories on cost. We try to bring variety and styles to the market and appeal, and I guess it's a probability game. As the consumers show up to transact with us, as the buyers continue to show up to transact with us, there's a likelihood that 43% of the time they pick a 1P product and that's fantastic for us. In the cases that we lose, of course, we're participating in generating service revenue, which is transaction, first mile, storage, and last mile. This is the breakdown of GMV in the U.S. You guys can see the 1P and 3P and how that's evolving over time. This is Europe. I call that Liberation Day. Let's call it Q1 of 2025, and you guys can see the increase into Europe. I believe that demand will continue to favor 3P in the long term as they are finding opportunities in Europe, and we're making a lot of investments in terms of facilities into the European market, and that's an important call-out. This is the buyer trends. As you guys can see, the age of the buyers when they onboard and the numbers and how much they contribute. Again, back on the marketplace. This is the Giga Index. It's a reputation score because the marketplace itself is also an escrow because the two parties that show up to transact with each other, they need to know each other, and we escrow that trust and handle the transaction itself, so it's a seamless process for the two parties. One other call I'll make is we allow the manufacturer to be contacted here. He can send a message because we find no value in matching. Actually, we believe that our business model is superior to the existing setup, and we know that our business model is sticky, so we allow open communication, and we use that as a tool to allow the buyers to negotiate and negotiate something competitive to benefit their business. You guys can see the seller momentum increasing. This is the most important indicator of a healthy marketplace, the number of sellers and their success and stickiness and growth in the ecosystem. That speaks tons about the trust that they have in the system, but also the success they create within the system. 70,000 SKUs and counting. Our biggest vertical happens to be furniture, but we're in outdoor, gardening, fitness, auto parts, toys, bath, appliances, and Christmas trees, chicken coops. Some bizarre categories. Anything that is fragmented, non-standard, and big and bulky. Our tech really focuses on connecting the seller and buyer, fulfilling to the end consumer, being very lean and mean when it comes to warehousing. Load balancing. This is how we make that nationwide flat rate, is properly positioning the product closer to the demand instead of land bridging the country and hoping to ship from California because California is the closest port to Asia. Of course, the product business. Last year, we shipped 35,000 containers. This is FEUs, and that's roughly 70,000 TEUs or T-E-Us out of 19 ports. Currently, our global fulfillment network is 36 facilities in five countries and 12 million sq ft of space. You guys can see the global footprint. One distribution center in U.K., six in Germany. That service is our EU operation. Three in Japan, 25 in the U.S., and one call-out, 15 in California, one in Dallas, five in the state of Georgia, which is one in Atlanta and four in Savannah, and four in the state of New Jersey, and one in Milton, Ontario, which services the Canadian marketplace, a newcomer. With that being said, that was my last slide. I appreciate your time and your patience, and I will hand it off for any questions. Thank you very much, Iman, for sharing the GigaCloud story. Thanks for the update. Just as a reminder to those in the audience, if you do have a question, please type it into the Q&A box, and I'll get to the questions here. First one here that we have is about just competition. Maybe if you could just speak on the competitive landscape. Do you guys compete with a firm like a Freightos, for example? If you could speak to that. What was the name of the company? Freightos. F-R-E-I-G-H-T-O-S. I've never heard of them, surprisingly so. I will definitely do research. Okay. Yes, I will answer the question, it will make sense once I answer the question. If you guys recall the flywheel, we had the 1P, the 3P, and the logistics. If you zoom in into any of those businesses, we do have competition. When it comes to 1P, technically anybody that distributes products is competing with us on the 1P front. When it comes to logistics, any 3PL provider, maybe that Freightos sounds like a 3PL provider, competes with us. When you talk about the 3P side, that's the marketplace side. Many people have tried and failed, actually. We've had quite a bit of competition in that end, and none of them have withstood. The real magic is all three of them working together within the ecosystem. When you combine everything together, we have no competitors. The closest thing to the GigaCloud ecosystem is a Silicon Valley private company called faire.com, F-A-I-R-E. They actually raised money based on a valuation of $12 billion a couple of years ago, but they do this for a light parcel. They have more retailers in the ecosystem, but they really focus on candles and tiny arts pieces. That's very similar. They talk about the industry being too fragmented, needing an aggregator, and also the fact that a manufacturer should take inventory risk. Very similar ideology, but they're not in our space. Got it. Okay. Thanks for that. Then, can you talk about the free cash flow that you hope to generate? The free cash flow has been hovering around, I think, if I'm not mistaken, $35 million-$40 million. That is coming from a variety of avenues. The biggest one is the 1P, the product revenue that are coming in, plus the 3PL logistics. Is your question about sustainability of that long term? Yes. If you could just speak to that, as far as how you think about how should investors think about free cash flow generation and maybe just to add to that. Sure. free cash flow, are share buybacks a part of that equation? Absolutely. Thank you for the question. The business has been fairly stable over the past several quarters in terms of cash flow generation, I think that's indication of the robustness of the business plan. We are, however, affected by our biggest service providers in logistics. If the ocean rates go up so high, that obviously pushes up revenues on the 3P side, the service revenue. Also pressures the 1P because we can't absorb all the cost. We have to pass some of it, that affects sell-through, and vice versa. That whole seesaw balances the ecosystem. As 1P gains, 3P kind of cedes and then back and forth. In terms of the cash flow allocation, we're going to continue the buybacks, and we just did the acquisition of New Classic. The whole idea is to improve our fulfillment and choices for the brick-and-mortar to penetrate that market, become a service provider to the retailer so they can rely on the GigaCloud as a marketplace to source. M&As are part of the playbook. Of course, any distributor with a vast network within the brick-and-mortar that can help us get to the retail stores better and faster, more efficient. In terms of technology providers that help us improve the efficiency of the marketplace and, I think those are the two biggest categories for us. You touched on the acquisition side. Yeah. Can you provide some more details about the New Classic acquisition, how it came to be? Sure. As far as the valuation, how do you anticipate the integration to go? Absolutely. The business was generating, I think, like 70-something million dollars. We acquired for $18 million. They were making a little bit of money, nothing significant, but overall, a good acquisition because it's a legacy brand, highly respected within the brick-and-mortar. They service 1,000 brick-and-mortar retailers, and we want to be able to bring those folks into the ecosystem, allow them to source from the marketplace asset light and improve their businesses. So far, the integrations have been going very nicely. Of course, we think it'll be a few quarters before we stabilize everything. The main reason is our ecosystem has been heavily favoring the e-commerce because that's where it's been growing the fastest. A lot of this stuff has to be retooled in terms of tools to better serve the brick-and-mortar, also that's going to accelerate the infrastructure for perhaps the future acquisitions as they come in. We believe within a few quarters, we're able to generate meaningful contributions from New Classic. You should see stable, steady, paced growth from them. Mm-hmm. We also have a question about your stock price. Over the- Yeah past 12 months or so, the stock's done well. However, if one were to look at the year-to-date chart, it has not looked as attractive. Maybe if you could just speak to investors about that and somebody who's new to the story who like, why is the stock down this spring in particular? Absolutely. I am not a financial guy. I'm an operation guy, sales guy. I will share with you my viewpoint and, of course, I ask you to do your due diligence to verify my facts and, of course, form your opinion. A couple of things. Number one, when we went IPO, it was a small ticket through a boutique bank, Aegis Capital, I called that out on purpose. The original book runner was supposed to be Merrill Lynch, but the ticket size was not big enough for them, and we got the green light from SEC, we pulled forward with Aegis. We missed the boat on getting good research. Our story is complicated, and it leaves the door open for the investors to do a lot of due diligence to fully understand the business and for us to do a better job reaching the investors. That's one component. Outside of that, the two other negatives that I can call out for you guys to look into is that we had two short attacks. I think the first year and then followed up by one that. I think the first one was called. The second one was Grizzly, and the first one was, I forgot, I lost my train of thought. If you guys look that up, that will kind of give you an idea where they attacked our business. Basically, they said the business is fake and all of that. The stock recovered from those but the recent action, to be honest with you, I have no idea. I've tried to understand it personally. I don't. That's my honest answer. I have no idea on how to justify it, of course, but that is the case. Okay. Got you. Okay. I guess a follow-up to this is another question, but there is some perhaps concern about the inventory spiking up in Q1. However, as you shift more volume to 3P, do you expect inventory as a percentage of revenue to structurally decline over the next few quarters? Or, maybe you could just speak to that as how you think about inventory management. Then how do you think the mix will be between 1P and 3P, and how to think about those issues? In terms of inventory, it is a lot of the time seasonality to the business. You typically have the second quarter, which has Way Day. It's a pretty big shopping week that Wayfair runs, followed by the beginning of the outdoor season. This is usually when the inventory in the outdoor category spikes up. That's the Noble House acquisition from the year past. It's quite normal behavior from the business, and that cycle continues. You guys can benchmark this against the previous quarters. I think that will stand up. You guys will see the same. In Q3, the inventory spikes, but that's not really for Q3 because that supports sales that is going to come in Q4 and Black Friday. In terms of 3P and 1P, we started with 0% 3P, and 3P is taking over and growing. I think that trend will continue. Our 1P will continue to be there. Our strategy is neither to favor either one. It's an open marketplace. We try to add into gaps in assortment by making products more available, so when the buyers are looking for something that is missing, we have availability. It is actually the case in a lot of the cases that our product is replicated by some of the factories that are out there. In those cases, we simply move on and try to focus the game of R&D and bring in new styles to the market because the factories will, by default, do what they do best, which is drive down the cost because they are the factories, after all. Can you also speak to the tariffs, how those have affected you and the U.S. government's Chinese prohibitions on certain companies? How have those impacted GigaCloud? Sure. In terms of our 1P business, we are pretty much divested out of China, and that has been the case for many years now. I think our exposure in terms of China imports is less than 20%, maybe even less. We're mostly in Vietnam and Malaysia. Obviously, the tariffs did affect those regions as well. In a lot of the cases, the tariff was passed on to the end consumer. We raised prices and the retailers raised prices and, in some cases, we also negotiated with the factories, absorbed as much of it as possible, and portions that was just not able to be absorbed was passed on. In terms of the factories coming to market through us from China and other regions, that continues to be the case, and hasn't seen any slowdown. Since inception. Yeah. Right. Can you also talk about the pricing environment and the potential for pricing actions? Can you elaborate on that question? Yeah. In terms of just overall, as far as the top-line growth, it's been certainly strong. As far as your ability or willingness to raise prices as far as the fees that you're charging and other things, just talk about that as far as if that's something that's in the works, or do you have plans to do that? It's a very interesting question because, for us, the idea is always to make it as easy as possible for the two parties to transact, in some environments, in some conditions, that requires us to remain competitive and lower prices despite what the margins allow for. Mind you, we have the capability of keeping the margin, but we're choosing, in a lot of the cases, giving up the margin in exchange for growth. I think we're barely scratching the surface because I would call out the TAM, the total addressable market in the U.S., about $65 billion B2B. I think Wayfair cites the number as $130 billion retail. We represent, if you do the math, maybe 2% of that. Nothing meaningful yet. We have a lot of meat left on the bone. There's a lot of value we can add. We believe in the value proposition of asset light retailing, SFR, I apologize for the vent. I think, for us, it's secondary, the margin expansion when it comes to 3P services. We would think of growth first. Yeah. Okay. Thanks for clarifying that. Then the last question, given the time constraints here, can you talk about your M&A pipeline and what are the key criteria of companies that you would like to buy? Sure. The M&A pipeline, we just acquired New Classic. Our hands are full. We're fully focused on integrating the New Classic. We have a lot of high hopes for this acquisition. I think within a few quarters, you will see some positive contributions from it. Like I said, 1,000 retailers, many of whom have already adopted the ecosystem or within the ecosystem. The process is starting. We're highly focused on it. I think perhaps towards the end of the year, we get a little bit more active in the market as we fully digest New Classic. Like I said, our intention is to serve the brick-and-mortar retailers better. Any company that helps us get to that channel more efficiently and easier, that will be something that we're definitely interested in working with. Got it. We already are out of time. Thank you very much, Iman, for sharing the GigaCloud- Yes, sir. story. Thanks everyone for asking thoughtful questions. With that, we'll wrap it up and enjoy the rest of your day. Thank you very much. Yeah. Thank you. Take care. Thanks. Bye.