Treasure Global Q1 2024 Earnings Call Transcript

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Provided by Quartr
November 15, 2023

There are 4 speakers on the call.

Operator

Good day, everyone, and welcome to Treasure Global Inc. 1st Quarter of Fiscal Year 20 24 Results Conference Call. Play of today's call will be available on the Investor Relations section of TGL's website and will remain posted there for the next 30 days. I will now hand the call over to Sofia Bashford, Senior Account Director, Investor Relations at KCSA, for introductions and the reading of the Safe Harbor statement. Please go ahead.

Speaker 1

Thank you, operator. Good morning, everyone, and welcome to Treasure Global's 1st quarter fiscal 2024 results conference call. With us on today's call are Sam Teo, Chief Executive Officer Michael Chan, Chief Financial Officer and Jeremy Roberts, Independent Director. Before we begin, I'd like To remind you that today's call contains certain forward looking statements from Treasure Global's management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as may, should, project, expect, Intent, plans, believes, anticipates, hopes, estimates and variations of such words and similar expressions are intended to identify forward looking statements.

Speaker 1

These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the Risk Factors section of the company's Form 10 ks for the year ended June 30, 2023, and subsequent filings filed with the SEC. Copies of this document are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now it is my pleasure to introduce Sam Teo, CEO of TGL.

Speaker 1

Sam, please go ahead.

Speaker 2

Thanks, Sophia, and thank you, everyone, for joining us today on our Q1 of fiscal 2024 earnings conference call for the period ended September 30, 2023. I'm pleased to speak to you today to provide an update on Treasure Global Business. Before covering our Q1 operational highlights, I want to discuss some of the exciting recent innovation we have announced to our key revenue stream as well as new market opportunity post quarter end, which we are confident will drive revenue and build value for shareholders. We have continued to prove our capability as a dynamic technology solutions company that is able to follow shift Consumer demand to ensure we are in touch with recent market trends, helping to further drive market share. Firstly, our pillar of the ZexCity app, a unique digital ecosystem that transforms and simplifies The e payment experience for consumer, while also allowing them to earn rewards.

Speaker 2

In October, we announced The introduction of an artificial intelligent robot through acquisition of AI technology of Tencent. The robot can conduct extended hour live commerce session on TikTok with users of our Zexipy app and can demonstrate products and services in real time on the TikTok platform. This innovative push to marketing not only capture The attention of the TikTok community but also create a dynamic and immersive shopping experience for viewers. The robot can answer queries, provide productivity tools and offer personalized recommendations, ensuring that every customer interaction is tailored to their needs. Its ability to operate for extended hours on TikTok make it a game changer in the live commerce arena, allowing for unparalleled reach and engagement.

Speaker 2

We believe this development will not only drive significant revenue growth for Zelixity but also set new standard in the live commerce industry. TGL will tick tock live commerce as a significant opportunity To diversify our revenue stream and showcase product, Oncity in an innovative and engaging manner, CCTOR's status as the world higher traffic live commerce platform made it the ideal stage for ZexCity To unveil this groundbreaking technology, with millions of active users daily, TikTok provides an incomparable platform to showcase ZCT product and services, reaching a global audience like never before. We also recently announced the launch of a merchant AI engine for Xexitie that can tailor highly personalized eVoucher deal for users. Collaborating with Boost, the regional full spectrum fintech arm of Asiada, Treasure Global will revolutionize both extensive network of over 600,000 merchant spending diverse industry. The AI engine will redefine ZexCity offering of eVoucher deal by creating and deploying Superdew eVoucher directly within the ZexCity app, within the ZXCT user community.

Speaker 2

The eVulture deal will undergo a sophisticated personalization process, ensuring they are resonating with the specific user that is being targeted. This will drive the city user base growth significantly And expand its brand present in the region while generating anticipated revenue growth. This personalization We withdraw from user behavior, spending patent, preferences and transaction history, setting a new standard for targeted marketing and value Furthermore, the rich data insight derived from user interaction and preferences We'll empower Treasure Global to further optimize its offering, driving additional revenue through targeted marketing campaigns and expanded merchant partnership. Next, for our 2nd period, Taste. In October, we released Taste 2.0, which is an upgrade to our transformational digital food and beverage management system.

Speaker 2

PACE provide merchants With a one stop management and automated solution to digitalize their businesses, allowing Food and Beverage Machine to streamline their operations, Improving operational efficiency and achieving cost savings. In particular, we believe TACE Provide a significant opportunity to drive further margin and profit growth for Thresher Global, which is a major focus for us. Please increase users' stickiness and engagement as the merchant increasingly become reliant on the system for their business needs. This upgrade is focused on increasing functionality on both the merchant and customer side. Treasure Global has been focused on Spending pace throughout Malaysia and also to new markets, which we are confident 2.0 will help to do.

Speaker 2

The additional functionality will provide a complete solution offering, including merchant supply chain management and upstream purchasing, which we expect to attract merchants to the platform. It will also provide a more user friendly interface For customer and merchant, it's a larger console version. Thirdly, through our strategy to become a master franchisor, Under the subsidiary name, Footlink, we will manage brand loyalty and related intellectual property through lease ownership or joint venture agreement with brands that we secure partnership with. Just last week, we announced that ABYU's, A popular Malaysia food and beverage business under our umbrella of brands is expanding its supply chain to distribute its best selling credit path to the world's largest convenience store. This marked a significant milestone in diversifying the group The first phase of expansion will focus on supplying the high selling credit path to 250 convenience stores in Malaysia.

Speaker 2

Subsequent phase will encompass additional store location and introduce more products, Signifying notable expansion into the food and beverage market, stepping into a new revenue stream through the accessory network of convenience store. To the brand we are acquiring into Footlink, we will also provide food and beverage consulting, including market and product optimization as well as supply chain monetization. This unique business model allowed Treasure Global to establish synergy with our Technology solution deepening our position in the food and beverage industry in Southeast Asia. Not only can we strategically grow our TIFF user base as we adopt it into new restaurant. Additionally, we are securing a new revenue stream for monthly licensing fee and start up fee.

Speaker 2

And lastly, in a complementary move, we have unveiled a significant development this month that will help grow further into the new market of Health and Wellness. We announced a partnership with Malaysia Leading Health Care Group, UCSI Hospital, to promote the Malaysian wellness healthcare tourism program, Zecity Inoji, an e commerce provider of health and wellness product are available in our Exact City app. With Speed Head Health Horizon and stem cell therapy, we view CSI Hospital in the Indonesian, Hong Kong and China markets. We believe that this partnership will support additional revenue growth from new marketing and strategy alliances within the wellness tourism industry. This partnership will deliver a substantial new revenue stream from Wellness Healthcare Tourism Package and commission earned on health screening, exclusive sales and the upselling of Inogen Healthcare product and ATA Stemshares therapy offering that Treasure Global will earn a commission on.

Speaker 2

Treasure Global expects a projected As I have discussed above, we are consistently developing innovative product The complement of our existing proprietary offering, ZX City and Taste, as well as opening up new market opportunity. In particular, We have cemented our leadership position in the AI driven e commerce space. With our major business peers as well as new market opportunity, we strongly believe we are well positioned to deliver value innovation and growth. I would like to discuss the operational highlight in the Q1 of 2024, which show Precisely, the number of Zelestity users has further growth to over 2,660,000 as for November 6, 2023. In the Q1, we successfully integrated AI technology into our Zecity app with a user friendly chatbot powered by Our data analysis engine and Chart GBT, the next gen personalized chatbot assistant, which we have named Jojo, Ran live in August for Zexcity user.

Speaker 2

Jojo used AI and deep learning to track user personal preferences to recommend idea promotion and products for them. This allows XCT to offer consumer a more personalized and targeted reward experience. The enhanced functionality is expected to drive user retention and attract new customer to further grow revenue, while at the same time allowing merchants to capture expanded data on user behavior and spending patterns. During the beta phase, we gathered significant insight through market testing, showcasing strong user engagement and interest in the new features. This collected data will guide us in refining strategy, improving user experience and providing merchants with variable insight into user behavior and spending pattern.

Speaker 2

During the quarter, we announced the company has signed and letter of intent to form an e commerce venture in Indonesia with Harmony Bagi Dunia or HPD. Under the agreement, Treasure Global will hold a 70% major stake in HPD, and Treasure Global will grant HPD exclusive rights to promote and operate a city in Indonesia. The LOI marked a significant milestone of our expansion into the Indonesian market, aligning with our strategy to grow internationally with innovative local partners, the venture will provide Treasure Global and its propriety at Zexiti, with access to an extensive network of 200 merchants and data of 5,000,000 users within the several industries in Indonesia. The Indonesian market has a substantial Internet user base of 213,000,000 out of a population of 276,000,000, providing a large opportunity for growing our daughter addressable market. In July, we announced a partnership agreement with VCI Global to develop AI powered Travel platform as a new offering for Travelers in Malaysia.

Speaker 2

Treasure Global and VCR Global will share ownership and profit from this collaboration, positioning the company to tap into the post pandemic driver bump, expected to contribute significant to the Malaysia digital economy by 2025. The offering will provide a high-tech portable concierge that can suggest real time recommendation for travel branding, Dining, exploring and seamless booking for flight, hotel and car vendors. This also offers advanced translation function Taste is now the MRCA preferred food and beverage system of choice, and it is recommended to its members to subscribe as PACE Merchants. The MRCA has over 500 merchant members across Malaysia, representing more than 40 outlet, our 2nd proprietary solution, which we were proud to launch during fiscal 2023. Taste provide an opportunity for Treasure Global to generate higher gross margin through increasing user engagement and stickiness.

Speaker 2

Taste is a product that merchants have come to realize for their business needs, making them less likely to stop using Taste. TACE continued to receive positive feedback from users as well as growing the number of merchants and users. In particular, observation fee based suggests that merchants who have adopted Taste has seen an increase in Transaction and Basket Radio as well as an increase in user retention and stickiness. PACE continued to enhance user engagement on the platform. Achieving remarkable milestone in the current quarter, pace have achieved a notable 1.5x Increase in the gross merchandise value, or GMV, and continue to have a 2x growth in total transaction And 2.5x increase in monthly transacted user.

Speaker 2

This showcased the platform's sustained success in driving both user Next, we have also continued to secure several partnerships during the Q1, which are centered to our growth and strategy marketing strategy. In July, we announced a partnership with the Ministry of Domestic Trade and Cost of Living for the launch of the Package Rama program, which offer various financial savings initiatives, reducing the cost of living for lower income group, including the youth and university students. For the program, ZexCity offers package of living essential e voucher on the app for items such as petrol, food and bills. The initiative demonstrated Jaxity's leading digital ecosystem and new users while also supporting this important social program. And finally, in September, We collaborated with the Borderland Music Festival in Sarawak to offer the 1st cashless and ticketing platform Powerless Music Festival in Malaysia, Powered through the Zechcity app, Treasure Global also charged fees for each ticket sold, providing a new revenue generation opportunity for the As a result of the festival, Jazz City received significant exposure during the event as a leader in ticketing solution as well as penetrating the new market of corn.

Speaker 2

To sum up, we are pleased with the progress we have made recently to progress our strategy for Grow our addressable market and develop innovative new revenue generation opportunity. We have established our leadership position in the area of AI e Commerce and continue to release innovative service offering, which are increasing user engagement. I will now pass the call over to Michael to discuss our financial results in greater detail.

Speaker 3

Thank you, Sam, and good morning, everyone. Today, I will review our financial results for the Q1 of fiscal year 2024 ended September 30, 2023 compared to the same period in 2022. For the Q1, total revenue of $13,500,000 compared to $15,600,000 for the same period last year. Revenue were down year over year as we shifted our focus to growing our higher margin business channel such as Taste. While ZEC City revenue streams are historically low margin, we are focused on growing Taste, which, as Sam has explained, offer a new avenue for growth with a stronger margin.

Speaker 3

In addition to focusing on higher margin revenue channel, We also intend to increase user engagement and stickiness by providing our user with new products. And in a case of case, product that merchants come to rely on for their business needs. We believe this objective will lead to increased revenue growth for the company in the long term. Gross profit for the Q1 of fiscal 2024 was approximately 163,000, up from 37,000 compared to the same period last year, demonstrating that the initiative to grow gross profit that we implemented have already started to work. Our net loss of approximately $2,100,000 for the Q1 of fiscal year 2022 compared to approximately $3,700,000 in the Q1 of Fiscal year 2023.

Speaker 3

As of September 30, 2023, our cash balance was approximately CNY2.6 million compared to a cash balance of approximately CNY7 1,000,000 as of September 30, 2022. As Sam mentioned, ZCT has over 2,660,000 registered users and over 2026 registered merchants as of November 6, 2023. Quarterly active users for the quarter ending September 30, 2023 were 187,180, while paid users were up by 4.7%. A total of 1,330,000 transactions were transacted by our registered e user over the current quarter and quarter to date of fiscal year 2024 with paid user transacting 3 or more times in the quarter. As we have mentioned, we remain laser focused on increasing gross profit and margin.

Speaker 3

The measures we have introduced so far are already working, and we expect further improvement going forward as we continue to roll out this and other revenue generating initiatives. Now I will turn the call back to Sam to highlight our growth strategy.

Speaker 2

Thanks, Michael. Treasure Global is pleased with the progress we have achieved over recent quarter to grow our business domestically. We are now focused on further expansion, Looking at executing on the next stage of our growth plan of moving into Indonesia and Southeast Asia more priority. As I have discussed, we have taken several steps to develop new products to further expand our addressable market segment as well as in the new markets altogether. Travel and health and wellness are examples of Thanks for growing population and solid near term economic growth outlook.

Speaker 2

Our broader expansion opportunities are significant, which include entry into other Southeast Asian markets such as Indonesia, Thailand, Vietnam and Japan, With much larger population and similar demographics, particularly Indonesia, which we have already made headway into penetrating, As 10x the population of Malaysia, Treasure Global continue to develop innovative offering to complement our core platform, which have cemented Treasure Global as a leader in the AI driven e commerce space. We are also focused on growing our gross profit Through fiscal 2024, we are increasing user engagement through new products and services development, which we are confident will generate higher profit and margin. Thank you again to everyone for joining us on today's call, And thank you particularly to our investors for their continued support. We look forward to providing further updates soon.

Operator

Thank you, sir. Ladies and gentlemen, thank you for joining us today. I will now close the lines.

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Key Takeaways

  • Treasure Global integrated an AI-powered live commerce robot on TikTok via a Tencent technology acquisition, enabling extended-hour interactive sessions and personalized product demos to boost engagement and revenue.
  • The launch of Taste 2.0, an automated digital food and beverage management system, offers merchants a one-stop solution that drives operational efficiency, merchant stickiness and higher margins.
  • Q1 FY2024 revenue was $13.5 million, down from $15.6 million year-over-year, but gross profit rose to $163,000 and net loss narrowed to $2.1 million, reflecting a successful shift toward higher-margin products.
  • ZexCity’s registered user base exceeded 2.66 million, while Pace delivered a 1.5× increase in gross merchandise value and strong transaction and user growth in the quarter.
  • The company advanced its international expansion strategy by forming a 70% JV for ZexCity in Indonesia and securing new partnerships in AI travel and health-wellness tourism to diversify revenue streams.
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Earnings Conference Call
Treasure Global Q1 2024
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