Ladies and gentlemen, good day, everyone, and welcome to Vipshop Holdings Limited's Q3 2021 Earnings Conference Call. At this time, I would like to turn the call to Miss Jessie Zheng, Vipshop Head of Investor Relations. Please proceed. Thank you, operator. Hello, everyone, and thank you for joining Vipshop's Q3 2021 earnings conference call. With us today are Eric Shen, our Co-founder, Chairman, and CEO, and David Cui, our CFO. Before management begins their prepared remarks, I would like to remind you that the discussion today will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from our current expectations. Potential risks and uncertainties include, but are not limited to, those outlined in our safe harbor statements in our earnings release and public filings with the Securities and Exchange Commission, which also applies to this call to the extent any forward-looking statements may be made. Please note that certain financial measures used on this call, such as non-GAAP operating income, non-GAAP net income, and non-GAAP net income per ADS, are not presented in accordance with U.S. GAAP. Please refer to our earnings release for details relating to the reconciliations of our non-GAAP measures to GAAP measures. With that, I would now like to turn the call over to Mr. Eric Shen. Okay. Good morning and good evening, everyone. Welcome and thank you for joining our Q3 2021 earnings conference call. During this Q3, our business demonstrates resilience despite macro headwinds and the general weakness in the retail industry. We continued our efforts to execute on our merchandising strategy while refining our operations. Everything we do as a business is intended to strengthen our core competence for long-term growth. As a result, key operational metrics, including our overall user base, GMV, and ARPU, achieved year-over-year growth. Specifically, total active customers increased to 43.9 million, and the total GMV grew by 5% to RMB 40.2 billion. Our most valuable customer group continued its strong momentum during the quarter. Super VIP members grew over 40% year-over-year, and they contributed more than one-third of our total GMV. In the Q3, we focused to strengthen our position and the value proposition as a leading discount retailer among our brand partners and customers. In line with this goal, we prioritize core brands to better match traffic and the resourcing for them and optimize our customers' operations, especially for high-value customers, including our Super VIP members. We are happy to see some encouraging results from these initiatives. For example, during the Super Brand Day sales event in the quarter, multiple brands recorded higher than expected sales, with a few even hitting their highest single-day GMV in recent years. These brand partners are increasingly aware that Vipshop remains a reliable platform for them to increase sales efficiencies. As this perception is strengthened, more brands are motivated to maintain a closer relationship with us and supply Vipshop with a great varieties of unique and price-competitive products. This was further evidenced in the past quarter by the solid increase in the number of SPUs and the value of merchandising, as well as improving quality of branded products available on our platform. Moving to the customer side, in the Q3, we were more integrated in our approach to managing our existing and potential customers. We are committed to driving new customers' growth but are now doing this in a more efficient and effective way. We have put great emphasis on recapturing inactive customers and, more importantly, become better engaged with our Super VIP members. We have seen rapid growth in our number of Super VIP members who, compared to regular customers, are significantly more resilient in terms of consumption, boast higher retention rate, and generate higher ARPU. Through these consistent and sustained effects, we aim to increase our competitiveness in China's discount retail market. Going forward, we will create more business synergy by empowering our co-brand partners and optimize user experience to drive the solid quality and sustainable growth of our business. At this point, let me hand over the call to our CFO, David Cui, who will go over our financial results. Thanks, Eric, and hello, everyone. In the Q3 of 2021, our top line growth was in line with our expectations despite external challenges. Thanks to the effective implementation of our merchandising strategy and refined operations. Notably, the increasing contribution of our high-value customers helped improve our overall average revenue per user. We also continued to deliver solid profitability as we had greater discipline in spending and more focused on improving operating efficiency. Looking ahead, we will continue to drive business synergies on both our merchandising and operational sides to deliver steady financial performance. Now, moving to our detailed quarterly financial highlights. Before I get started, I would like to clarify that all financial numbers presented below are in renminbi, and all the percentage changes are year-over-year changes unless otherwise noted. Total net revenue increased by 7.5% to RMB 24.9 billion, from RMB 23.2 billion in the prior year period, primarily driven by our growth in the average revenue per user. Gross profit was RMB 4.8 billion as compared with RMB 4.9 billion in the prior year period, and gross margin was 19.4% as compared with 21.1% in the prior year period. Total operating expenses was RMB 4.2 billion as compared with RMB 3.9 billion in the prior year period. As a percentage of the total net revenue, total operating expenses was 17.0% as compared with 16.9% in the prior year period. Fulfillment expenses was RMB 1.6 billion and largely stayed flat as compared with the corresponding period in 2020. As a percentage of the total net revenue, fulfillment expenses decreased to 6.5% from 7.0% in the prior year period. Marketing expenses were CNY 1.2 billion, compared with CNY 1.1 billion in the prior year period. As a percentage of the total net revenue, marketing expenses was 5.0% as compared with 4.9% in the prior year period. Technology and content expenses were CNY 366.8 million as compared with CNY 305.1 million in the prior year period. As a percentage of the total net revenue, technology and content expenses was 1.5% as compared with 1.3% in the prior year period. General and administrative expenses were CNY 1.0 billion as compared with CNY 848.6 million in the prior year period. As a percentage of the total net revenue, general and administrative expenses was 4.1% as compared with 3.7% in the prior year period. Income from operations was RMB 770.8 million as compared with RMB 1.2 billion in the prior year period. Operating margin was 3.1% as compared with 5.4% in the prior year period. Non-GAAP income from operations, which excluded the share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, was RMB 1.1 billion as compared with RMB 1.5 billion in the prior year period. Non-GAAP operating margin was 4.2% as compared with 6.4% in the prior year period. Net income attributable to Vipshop's shareholders was RMB 628.4 million as compared with RMB 1.2 billion in the prior year period. Net margin attributable to Vipshop's shareholders was 2.5% as compared with 5.4% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS decreased to $0.92 from $1.80 in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders was RMB 1.0 billion, as compared with RMB 1.4 billion in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders was 4.1% as compared with 6.0% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS decreased to $1.50 from $2.01 in the prior year period. As of 30 September 2021, the company had cash and cash equivalents and restricted cash of CNY 13.2 billion and short-term investments of CNY 3.7 billion. Looking forward to the Q4 of 2021, we expect our total net revenue to be between CNY 35.8 billion and CNY 37.6 billion, representing a year-over-year growth rate of approximately 0% to 5%. Please note that the forecast reflects our current and preliminary review of the market and operational conditions, which is subject to change. With that, I would now like to open the call to Q&A. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone keypad and kindly wait for your name to be announced. If you wish to cancel your request, you can press the pound or hash key. Once again, it is star one on your telephone keypad if you wish to ask a question. Please note there might be a slight pause as we collate the questions. The first question comes from the line of Thomas Chong from Jefferies. Please go ahead. I will translate myself. My first question is about SVIP. How should we expect the growing trend of SVIP as well as its GMV in Q4 and next year? My next question is about the competitive landscape, especially in the discounted retail sector. Any thoughts on the live streaming commerce? Thanks. SVIP. In terms of your question on SVIP, you know, we have been focused on adding more SVIP members to our platform, and we've seen solid increase of over 40% in the Q3. We will continue to improve their experiences so that more high value users could be converted into SVIP members. You probably noticed that SVIP members, as compared to regular users, their purchase and retention rates are much higher. In the future, we expect they will continue to contribute more to our platform, as they already accounted for over 1/3 of our total GMV for the past quarter. In Q3, we also further expanded and optimized. The SVIP membership privileges to drive the user growth. For example, we provided extra 5% off benefits, expanding to more of our corporate brands. We also have dedicated Super VIP membership stores and also a Super Brand Day sale day for them. We also have cross-platform benefits, including buy one get nine campaign together with a lot of other platforms. So we've seen a very solid growth in SVIP members and for the foreseeable future, we will continue to expand the SVIP members, and as they contribute 8-9 times in terms of ARPU as compared to a regular user, we expect they will contribute more to the bottom line. We have the next question coming to the line of Bella Zhang from Daiwa Capital. Please go ahead. Hello, can you hear me? Yes。 Thanks management for taking my question. I have two. My first one is about your marketing and user base. I know the marketing efforts in previous quarters were quite impressive. However, we have noticed that the number of your sponsorship in TV shows came down in this quarter. I was wondering if you can shed some light in the... on the marketing strategy and how that will continue to fuel the growth of your user base. Some highlights on your progress of male customer acquisition would be great. The second one is we have noticed that you established several new companies lately. You know, it looks like that your business scope was expanded into new areas, such as consumer finance, retail and advertising etc. So can we assume that you are stepping into new business to diversify your revenue growth? That's it. Thanks. Let me translate myself. [Non-English content] [Non-English content] [Non-English content] [Non-English content] Okay, to our first question on marketing strategy, we actually have been continuously investing in acquiring new users, but in the past, we have not being that efficient in new customer acquisition. Recently we were more integrated in allocating our marketing dollars in terms of existing and potential customers, especially when we found that people that used to come to our platform, and these inactive customers, actually we can spend less money to acquire them back than a new customer. We are just trying to be more efficient and effective. In terms of TV drama sponsorship, it is not a regular thing, not every quarter we are going to spend money on sponsorships, but we are continuing to do so, depending on whether it's the right TV drama and the right user group for us. We are also leveraging other new media formats such as, you know, Bilibili, Little Red Book and Douyin to tap further customer acquisition channels to attract younger shoppers to our platform. In terms of the male customers, the contribution from male customers increased by actually around 3% in terms of the number of customers year-over-year. We have seen an increasing proportion of male customers come to our platform to buy men's wear, sportswear and shoes and bags. We will continue to drive the growth of male customers. [Non-English content] Mm-hmm. [Non-English content] [Non-English content] As well some of the new ventures that we recently established. Actually for the customer finance entity, we've long ago applied for a license for that, and that entity is just opened. It doesn't mean that we're going to have new business lines. Remember, we are still continuing to focus on discount sales for brands. We haven't spent too much effort on pursuing, you know, other business. We think that discount sale for brands is a great market, and it has a lot of growth potential. We still focus on our online business as well as offline business as a complement to our overall business. The next question comes from the line of Guo Han Wang from Daiwa. Please go ahead. Thank you, management, for granting us this opportunity. I'm Guohan Wang from Daiwa Capital on behalf of John Choi. We understand Super VIP is one of our core parts that contribute substantially to our ARPU growth this quarter. I want to have a better understanding on the conversion rate from new users acquired to our VIP programs, and specific initiatives to convert these users. Also, do we have additional room for ARPU improvement for SVIP? So that's my question. Thank you. Eric[Non-English content] [Non-English content] Mm-hmm. [Non-English content]？ Mm-hmm. [Non-English content] Mm-hmm. [Non-English content] Okay, in terms of question, on SVIP, I'm not sure if, what do you mean by conversion rate, but, there are a couple of numbers that I can give it to you for a reference. As compared to a regular user, SVIP retention rate and ARPU are much stronger and their consumption pattern is much more resilient. We believe that there is still a lot of room for SVIP members to improve their ARPU, because we have seen consistently for the past several years, we see solid increases in the ARPU for SVIP members. In addition to apparel related categories, we can also offer them standardized products for these SVIP members. We do see there is a lot of room for ARPU growth for SVIP members. I can add a little. On our platform we do have a considerable number of we call it high value customers who have higher spending frequencies and buying powers. We are trying to convert these high value customers to our Super VIP members. Of course, we do have brand new customers who become our Super VIP. By providing you know targeted membership benefits and services for these people to improve their experience on our platform, more and more high value users can be converted to Super VIP members. Compared to regular customers, Super VIP members have much higher retention rate. If we don't have a conversion rate, we do have a higher retention rate. Of course an annual ARPU is significantly higher than the regular customers. I just want to add this. Thank you. Thanks. Sorry. May I have a follow-up? Given more interest in new channels such as Bilibili and short videos, from a margin perspective, which channels we think have the highest ROI and users with a relatively longer lifetime value? As I understand that some channel users may not have strong such appetite for our discount retail models given their incomparable user profiles. I will translate myself. [Non-English content] [Non-English content] We still mainly rely on you know targeted marketing for customer acquisition including doing Toutiao, WeChat etc. We also sponsor TV dramas and variety shows and also pre installation app on mobile phones. For some you know new emerging channels like Bilibili, we actually have two types of advertising. One is actually looking for targeted transactions, and the other is you know trying to increase customer awareness of Vipshop. We are exploring different channels. We will use multiple, you know, channels to acquire customers. Thanks。 Thank you. We have the next question coming from the line of Feitong Zhang from CICC. Please go ahead. Hi management, it's Feitong from CICC. Thanks for taking our question. We have one question regarding to the Q4 guidance. How should we interpret this guidance? Is it conservative? What's the newest trend we are seeing in November and December? My second question is regarding to the inventory trend. What is the trend of the amount of industry inventory? Is it impacted by the weak macro so the industry has more inventories or we experienced a shortage of supplies from overseas brands so industry has less inventories? How would this impact our business? [Non-English content] [Non-English content] The guidance for Q4 is based on a few factors, especially the external environment is not optimistic. There are still lingering uncertainties affecting consumer sentiment. Our guidance of 0% to 5% is apparently not high. We have observed that, for example, during the Double Eleven event, the orders placed on our platform hasn't reached to, you know, many of the places, because of the resurgence of the COVID-19 cases here and there. In terms of the Double Eleven event itself, we did see some good developments, and we expect our anniversary event on eight December to fare relatively better, because autumn and winter clothing sales picked up, as the temperature is getting... As the weather is getting colder. We do see some, you know, positive signs. [Non-English content] For the Q4 guidance, I just want to add actually internally, you know, we are upgrading our business strategy to focus on the core brands, the quality brands and phase out unqualified ones. This will actually have more or less impact on our business in the short term. We want to give ourselves some leeway to do our business. [Non-English content] In terms of the inventory, we think that the current inventory in the apparel industry is okay. Actually, if you look at Q3 and Q4 with the you know resurgence of the COVID-19 cases, the offline business is not actually doing well. They have a lot of excess inventory for us to clear. In addition to you know clearing inventory for this brand partners, we also have you know other like Made for Vipshop products customized with these brand partners. We also secure a more unique and a better priced merchandise from these brand partners. We think the inventory level is fine, and we are able to leverage our core competencies to secure more inventory from our brand partners. Thank you. Very helpful. Thank you. We have the next question. This is coming from the line of Joyce Ju from Bank of America. Please go ahead. Thanks management for taking the question. My question was actually regarding our offline outlet business. Just trying to understand. I think in the previous quarters, our offline outlet business indeed had quite solid growth. Just want to catch up on, like, you know, this quarter's growth for our outlets with our going forward CapEx plans. Also, have we seen any impact from the pandemic to affect our offline traffic in these outlets? Thanks. Also, like with the GMV contribution and revenue contribution of those like, you know, offline outlets and also our offline stores. Thank you. I'll take on this question. Okay. Even though the COVID-19 impact in this period and our offline business is still growing quite good, I think it's roughly around 18% in this quarter. The outlets, Shenzhen outlets grow quite significantly. The outlets provided 6%-7% of our total GMV. The CapEx plan for outlets or like Shenzhen related. We will continue to grow that business, and every single year, we will build two or three new outlets. We do add a couple of new outlets this year, and we'll continue to do so in the next three to five years. That's as we originally planned. For each, it depends on the size of the new outlets, it requires RMB 5 million to maybe RMB 800 million. Got it. Thanks. Thanks. Thank you. We have the next question. This is from the line of Natalie Wu from Haitong International. Please go ahead. Thanks for taking my question. My question is regarding the user cohort. For those active customers newly acquired last year, just trying to understand if there's any difference that we can notice compared with the past batches of customers, say, pool, preference, category, shopping frequency and, retention, et cetera. Thank you. Retention rates. Yeah, retention rates for newly active last-added customers for the past year remains relatively stable. Got it. Thank you. Thank you. Due to time constraints, that concludes today's question and answer session. At this time, I will turn the conference back to Jessie for any closing remarks. Please take over. Thank you for taking the time to join us today. If you have any questions or follow-up, please don't hesitate to contact me. We look forward to speaking with you next quarter.