NASDAQ:GCT GigaCloud Technology Q1 2024 Earnings Report $17.93 +0.37 (+2.11%) Closing price 06/2/2025 04:00 PM EasternExtended Trading$17.87 -0.06 (-0.36%) As of 06/2/2025 07:46 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast GigaCloud Technology EPS ResultsActual EPS$0.84Consensus EPS $0.51Beat/MissBeat by +$0.33One Year Ago EPS$0.39GigaCloud Technology Revenue ResultsActual Revenue$251.08 millionExpected Revenue$235.00 millionBeat/MissBeat by +$16.08 millionYoY Revenue GrowthN/AGigaCloud Technology Announcement DetailsQuarterQ1 2024Date5/9/2024TimeBefore Market OpensConference Call DateThursday, May 9, 2024Conference Call Time8:00AM ETUpcoming EarningsGigaCloud Technology's Q2 2025 earnings is scheduled for Tuesday, August 5, 2025, with a conference call scheduled on Wednesday, August 6, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by GigaCloud Technology Q1 2024 Earnings Call TranscriptProvided by QuartrMay 9, 2024 ShareLink copied to clipboard.There are 7 speakers on the call. Operator00:00:00Thank you all for standing by. Welcome to Giga Cloud Technologies First Quarter twenty twenty four Earnings Conference Call. During today's call, all participants will be in listen only mode. Joining us today from Giga Cloud Technology are the company's Founder, Chairman and CEO, Larry Wu its President, Doctor. Iman Sharat and its Chief Financial Officer, David Lau. Operator00:00:23Iman will give a performance and operational review, and David will share the financial results. After that, we will conduct a question and answer session. A reminder, this conference call contains statements about future events and expectations that are forward looking in nature and actual results may differ materially. Today's call and webcast will include non GAAP financial measures within the meaning of SEC Regulation G. When required, reconciliation of all non GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company website. Operator00:01:01With that, I would like to turn the call over to Larry for opening remarks. Please go ahead. Speaker 100:01:07Thank you, operator, and welcome, everyone, to today's call. Building on last year's considerable success, our first quarter of twenty twenty four demonstrated the GIGA Cloud's ability to drive sustainable and profitable growth. Amidst industry challenges and headwinds, we're pleased to share Geekapal's strongest ever first quarter results and our fifth consecutive quarter of revenue growth. This comes even as a consumer spending softens. For instance, the US Consensus Bureau reported an almost 8% year over year decline in retail furniture sales in Q1 twenty twenty four. Speaker 100:01:49Despite these headwinds, Githa Cloud achieved the top line results nearly double the year over year, while also generating significant improvement in other key financial and operational metrics. These achievements demonstrate our resilience and ability to thrive amidst the market downturns. As we continue to integrate NobleHouse and the WunderSign acquisitions, we expect to see ongoing revenue growth and the powerful synergies that we believe will create an even more robust and efficient online B2B marketplace. In addition to strategic nature of these acquisitions, we have taken extra steps to further accelerate the growth of our business. Firstly, we launched a new marketplace service called the branding as a service or BaaS to help seller amplify their product competitiveness in the GIGA Cloud marketplace. Speaker 100:02:48Secondly, we expanded our supplier base by adding products from Colombia, Mexico and Turkey. As a result, we have increased our product diversity, allowing buyer to source a wider range of quality products from these new markets. And lastly, we expanded our global fulfillment network to address increasing demand for our marketplace, further enhancing our world class support for buyers and sellers. We will hear more you will hear more about these important initiatives shortly. We are very excited to continue our growth journey and believe that Giga Cloud will further enhance its position as a leader and the disruptor of a b to b e commerce and technology solution. Speaker 100:03:36Going forward, we remain committed to streamlining the global supply chain journey for all our marketplace participant. Now I will turn it over, to Imam. Speaker 200:03:49Thanks, Larry. I'll also like to add my welcome to everyone for joining us today. Despite challenging market conditions experienced by the industry, we're thrilled to share that the Giga Cloud Marketplace GMV for the trailing twelve months as of March 31 increased by 64% year over year with 263 new sellers and 1,238 new buyers. Our growth is driven by Giga Cloud's highly robust technology suite that transforms and facilitates the way suppliers and retailers of large parcel items connect and transact. Our supplier fulfilled retailing model streamlines the global supply chain, offering a seamless end to end experience. Speaker 200:04:32Our acquisition of Noble House and Wunderstand are further transforming our company by adding diversified products and services to our already robust offering. I'll provide an update on the integration progress shortly. First, I'd like to discuss our latest groundbreaking initiative, BaaS or branding as service, which we launched last month. This program is an industry first and holds significant opportunities for both our marketplace participants and for Giga Cloud. This unique solution was developed to tackle the long standing challenges associated with brand spending and furniture industry. Speaker 200:05:09Crowded, and low purchase frequency nature, furniture suppliers have traditionally had great difficulties when attempting to create brand recognition, including the need for significant amount of capital resources and time, of course. But with that, Giga Cloud is changing the game. At its core, the vast program enables qualified sellers for the Giga Cloud marketplace to offer their products under the banner of industry leading A effectively the disability brand building and allows qualified sellers to compete more effectively, enjoy greater margins, and stand out in the market. The VAST program is an example of yet another addition to our services toolbox. Speaker 200:05:57By providing effective solution to the industry challenges, we're creating a powerful magnet for the mark marketplace. We're attracting not only established sellers, but also new suppliers eager to join our vibrant marketplace community as we gear up for the inaugural transaction in the second quarter. This translates to widespread enthusiasm both from seasoned veterans and those new to the platform. Our first brand partner, Christopher Knight Home, has been a consumer favorite with products that have generated over 1,000,005 star reviews online and currently sold through some of the world's largest and best known retailers. We also look forward to expanding this program with additional industry leading brands in the future. Speaker 200:06:41As part of the BaaS program, we've created the Giga Cloud Brandcenter Group. The brand center equips sellers with the tools they need to thrive, including strategic guidance to maximize their visibility and marketability while simultaneously maintaining strict quality standards and stylistic standards set by participating brands Through inspections and imposing other quality control processes and suppliers, we aim to protect the reputation of participating furniture brands and ensure that end consumers receive products that not only meet, but also exceed their expectations. As always, sellers will be able to utilize our b two b marketplace's advanced fulfillment capabilities. Due to accelerating demand, we have added three new ware fulfillment centers in The US and one fulfillment center in Germany during the first quarter of twenty twenty four. Our latest addition in April 2024 has brought us to 42 prime locations in five countries with over 10,000,000 square feet of fulfillment space. Speaker 200:07:47We believe the expansion will enhance our global fulfillment operation by further improving efficiencies and transactions among marketplace participants. The new facilities are currently undergoing racking installation and will soon add to what is already a seamless, broad, and strategic global network designed for ease for ease of use and efficiency. By growing our infrastructure to keep pace with a dynamic market, we believe we are well positioned to capitalize on the amazing growth of the Giga Cloud marketplace. We're seeing increased attention from, suppliers in new regions, as Larry alluded to, a clear indicator of our growth and awareness. Which reinforces our focus enhancing transaction experience by expanding our product breadth. Speaker 200:08:34We are committed to growing our marketplace buyer community through diversifying the selection of untransparent furniture designs and providing a broader product range. Our integration of Noble House and Wunderstand is progressing as planned, and it's helping drive additional innovation and transformation. The integration of Noble House has successfully enhanced our reach and global presence, and we remain on track with our original plan to break even in 2024. The integration of Wunderstand is a testament of our ongoing technological advancement, and our combined expertise will unlock new avenues for innovation across the entire business ecosystem. Together, these acquisitions signify more than just an expansion. Speaker 200:09:19They are driving innovation and fostering a powerful synergy that will empower us to deliver greater value to our customers. Now let's dive into our operational highlights, showcasing the strength of our platform for the trailing twelve months ending 03/31/2024, our Giga Cloud Marketplace GMV or the total gross merchandise value of transactions ordered through the marketplace was $908,000,000, an increase of 64% year over year. We generated a nearly 44% increase in active three p or third party sellers, ending the quarter with a total of 865. We are successfully adding scale to our supplier fulfilled retailing network, which should continue to grow organically and through our acquisition of Noble House. GMV in our three piece seller marketplace grew almost 72% from the year ago and totaled approximately $490,000,000 for the trailing twelve months. Speaker 200:10:21Three piece sellers represented 54% of our total marketplace GMV for the same period. We believe the combination of our three p and one p are vital to our growth strategy with a focus on continuing to drive organic growth of three p GMV to build a larger, more efficient, and more sustained marketplace. Active buyers are also grew substantially to 5,493 for the trailing twelve months, which is an increase of more than 29% from the same period last year. The average spend per active buyer increased 27% to a hundred and $65,000. With ever growing high quality seller participation in our marketplace and a growing product portfolio, we look forward to additional expansion of our buyer metrics. Speaker 200:11:09Before I wrap up, I want to provide a brief update on the fire in one of our Japanese fulfillment centers that we disclosed last quarter. On March '41 of our facilities in Japan suffered damages due to a warehouse fire. Estimated approximately $1,800,000 with respect to the cost of inventory held at this fulfillment center. Insurance coverage is expected to extend up to 1 and a half million dollars. It's worth noting that the impact on our overall operation is expected to be minimal as the effective inventory in the fulfillment center represented less than 1% of our total inventory holdings. Speaker 200:11:46I hope today's discussion has showcased our enthusiasm for Giga Cloud's ongoing evolution and its promising future. Our financial performance remains robust with consistent growth quarter after quarter. We're strategically expanding our global fulfillment network to better serve our marketplace participants and to meet organic growing growing demand. And let's not forget the integration of two key acquisitions, further accelerating our scalability and technological innovation. We're actively driving the future of global ecommerce, and we're thrilled to have you with us on this journey. Speaker 200:12:23Now I will turn the call over to David for a more more detailed review of our financials. Speaker 300:12:28Thanks, Simon. For the benefit of those who are new to our company, I'll be defining some of our most used metrics. First, some quick housekeeping. The numbers I'll be discussing today are for the first quarter of twenty twenty four compared with the first quarter of 'twenty three unless otherwise stated. Additionally, please note that this quarter we began providing the non GAAP measures of adjusted EBITDA and adjusted EPS in our first ten Q filings after the transition of S filer. Speaker 300:12:55As Larry and Aman previously discussed, we had a great first quarter by all measures. Total revenues nearly doubled to $251,000,000 and increased roughly 2.4% on a sequential basis. Notably our first quarter's performance exceeded our fourth quarter which is typically our strongest period due to seasonal trends in the industry. This achievement underscores our continued growth trajectory. Service revenues from Giga Cloud 3P which mainly include platform commission, ocean transportation, warehousing, last mile delivery, and packaging services, grew 92 to $67,000,000. Speaker 300:13:31Product revenues from Giga Cloud one p, which mainly include product sales of our inventory through the Giga Cloud Marketplace, improved to $90,000,000, an increase of nearly 47% year over year. Product revenues from off platform e commerce, which mainly include the sale of our inventory to and through third party e commerce channels, increased almost 200% year over year to over $93,000,000 These increases were in line with a 64% gain in total market GMV, which equaled to $9.00 $8,000,000 at the end of the first quarter on a trailing twelve month basis. GMV is defined as the total gross merchandise value of transactions ordered through our Ginkgohio marketplace before deductions for value added tax, goods and services tax, shipping charge paid by buyers to sellers, and refunds. Cost of revenues were a hundred and $85,000,000 or 74% of total revenues compared with $98,000,000 or 77% of total revenues. The reduction in cost of revenues as a percentage of total revenues underscore our success in enhancing and sustained operational efficiency across our business operations. Speaker 300:14:41Gross profit for the first quarter increased more than 125% to $67,000,000 which resulted in an improved gross margin of 27% versus 23% in the prior year period. I want to briefly touch on ocean shipping rates. Ocean shipping rate fluctuations have impacted the industry in the first quarter with cost rise compared to the same period last year. We have secured a substantial amount of our shipping volume under a fixed rate contract to effectively hedge against future price uncertainties. As a result of our continued growth and increase in volume, total operating expense were $32,000,000 compared to $12,000,000 last year. Speaker 300:15:20Breaking down our operating expense further, selling and marketing expense were $15,000,000 compared with 7,000,000 driven primarily by higher platform services paid to certain third party e commerce websites. Staffing costs include the added personnel to support the continued growth of the company and higher commission and advertising costs. General and admin expense totaled $15,000,000 compared with $4,000,000. This increase primarily was due to higher staff costs, including our r and d efforts to accommodate the expansion of our business volume, higher professional services fee, and increase in rental expense related to certain newly leased fulfillment centers that are currently under preparation, along with the setup expense required for the new fulfillment centers to reach full operational mode. Our bottom line expanded quite nicely with net income growing more than 71% to $27,000,000 compared with $16,000,000 last year. Speaker 300:16:14Adjusted EBITDA grew by more than 74% to $35,000,000 Moving now to our balance sheet. We ended the first quarter with a total of $196,000,000 in cash, restricted cash and investments. We have strategically allocated our cash towards investment of $10,000,000 in support of our growing infrastructure network. We we incurred $4,000,000 in CapEx, including facility expansion and pallet racks to enhance our fulfillment capabilities. To ensure we can meet anticipated sales during the upcoming outdoor furniture season in q two, we have strategically managed our cash flow to build sufficient inventory. Speaker 300:16:53In addition, as we mentioned in the previous quarter, we provide favorable cash on delivery terms for Noble House suppliers that were facing financial difficulties, resulting in a less than usual cash flow generation into our balance sheet for the quarter. Additionally, we continue to have no outstanding borrowings and remain debt free. Liabilities presented on our balance sheet represent obligation associated with our fulfillment center leases as we have substantially expanded our network organically and through acquisitions. I'll finish up with our outlook for the second quarter. We're currently expecting revenues between 265,000,000 and $280,000,000. Speaker 300:17:30Thank you all for joining us today and operator, we're ready for our questions. Thank you. Operator00:17:53Our first question comes from Matt Koranda with ROTHMKN. Your line is now open. Speaker 400:18:00Hey, everybody. Good morning. Maybe just wanted to start off with the first quarter, and the organic growth rate that you experienced versus contribution from Noble House. Just curious if you could clarify where the incremental revenue from Noble House is coming from. I would assume it's basically all off platform, but but that revenue stream looks particularly strong on a year over year basis. Speaker 400:18:26So maybe you could just unpack the the drivers there first. Speaker 300:18:32Hey, Matt. Maybe I'll take this one. So as we discussed in our last call, we don't break it out between what's organic and what's inorganic because right now, we're kinda in the middle of fully integrating the business. So we don't really break that out, as we see the business. But you're correct pointing out that the off platform ecomm, revenue generation is driven mostly by the normal house business. Speaker 300:18:56So that's correct. Speaker 400:18:59Okay. Got it. On the third party service, gross margins, was curious what's driving the strength there? It's You mentioned ocean freight rates going up, so I would assume that typically would compress margins in that segment. Maybe just speak for a moment if you could about the strength in gross margins that you experienced in in the third party service revenue in the quarter. Speaker 300:19:31Yeah. I think we're seeing a lot of momentum in our three p side of the house, particularly now, and and and Mon alluded a little earlier that a lot of our sellers are gearing up for the outdoor furniture season. So we're seeing a lot of velocity momentum. Yeah. While that, we see the overall shipping rates has been going up, but I I don't think it really impacted us as materially as others would have expect. Speaker 300:19:58And we also mentioned that we are, now effectively hedging against future, ocean shipping rates fluctuations, so we're fairly comfortable, at the current margin profile that we're enjoying. Speaker 400:20:11Okay. Gotcha. And then just wanted to hear a little bit more about the branding as a service business. Any quantifiable metrics you can provide around that and how it's built into the the second quarter guidance? I I noticed, I think, in the release, you mentioned, the program may launch in the second quarter. Speaker 400:20:34So maybe just speak to sort of how we're thinking about revenue contribution from that. Is the right way to think about that program effectively, like, licensing or licensing revenue stream that that layers into the third party service revenue that you get already from your sellers? And then maybe just is that how do you view the branding as a service program as a whole? Just simply, is it a seller acquisition tool? Is it a retention tool? Speaker 400:21:03Maybe just a little bit more on sort of why why do this. Speaker 300:21:10Larry, are you mind do you guys wanna take this? Speaker 200:21:14I'll be more than happy to, David. So, basically, branding as a service is an additional service that is being offered to make the business model even more sticky, you know, with our you know, both our seller base and the buyer base. And the whole idea behind this process is that through the end to end optimization process, we're able to manage the entire process in network, which kinda contributes to all those margins that you just, you know, listed off as far as the third party sellers. And at the end of the day, like you mentioned, you know, this will be definitely a recruitment tool, but also a retention tool as we're trying to basically tackle one of the biggest, you know, issues in in in furniture, you know, business when it comes to building brands. I talked a little bit about this that, you know, the the the nature of the industry is highly fragmented, and it requires significant amount of investment as as far as the capital resources and time to build those brand recognition because the purchase frequency is so low. Speaker 200:22:18So by giving the good products a chance to have access to good brands, we're hoping that, you know, we truly give these products a chance to better market. And with that, you know, we increase, you know, the usage of existing, you know, supplier base, but also attract new new sellers to to join the marketplace. And by fueling the seller base, you know, we definitely, you know, add variety and style and choices for the buyers on the on the flip side to choose from. Speaker 400:22:48Okay. Gotcha. And then just for the second quarter outlook, I think you guys provided a range of of revenue in the $2.65 to $280,000,000 range. Maybe just since we're not breaking out Noble House, at the very least, maybe just some commentary around, you know, third party service revenue contribution within that outlook versus product revenue, in the second quarter and how we should think about that. Speaker 300:23:19I think the way we see it is that the ratio, between these two lines of business, if we will remain fairly steady for a while, I don't think there will be any drastic changes in terms of the balance between the two business as a percentage of revenue. Speaker 400:23:41Okay. Got it. Maybe just last one for me in terms of the the margin profile on a go forward basis. I guess the integration of Noble House may be creating a little bit of a drag on on margins. When do we expect that to sort of release and and we reach sort of at least a breakeven to a positive operating profit contribution from from Noble House. Speaker 400:24:11Maybe just help us understand a level set around when that happens, if it's within '24 or beyond. Speaker 300:24:18Yeah. I think breaking even within '24 is, our goal, and I think we're fairly confident with that, that that coal in mind. I think we're starting to see some profitability generating from the Noble House business, probably by the end of the year, if not early twenty twenty five. Speaker 400:24:38Okay. Thanks, guys. Speaker 300:24:42Thanks, Matt. Operator00:24:43Thank you. One moment for our next question. Our next question comes from Sophie Huang with CMBI. Your line is now open. Speaker 500:24:57Thank you. Congratulations on the top line growth, really a great first quarter of this year. So I noticed that revenue and gross margin was improved year on year, but net income margins seems to have decreased slightly. So could you please provide us with some insight into the reason, and how do we look at the margin channel in the next few quarters? Thank you. Speaker 300:25:21Hey, Sophie. Great question. I think from a high level, I think we can, categorize two main factors that contributed to, a temporary downward compression on margins for first quarter. I think the first one is the cost associated with some of the new fulfillment centers that we opened during Q1. Eman and I talked a little bit earlier that we leased four new facilities in Q1 to keep up with our growing demand. Speaker 300:25:48It typically takes around four to six months to set up a new facility, you know, with all the racking systems, to make sure that, everything is working out. So this is, something that we are working on, and it's also fairly standard for the industry that we receive a standard kinda seven to nine months of rent free, for our new facilities in The US. But because, we're leasing, these facilities, we have to expense the cost evenly throughout the life of the lease. So that's why you see there's a temporary downward compression to our margin profile, during the setting up phase. And to give you a little bit more color around, what the kind of the lease, or the establishment costs for these new fulfillment centers. Speaker 300:26:35So for q one, the expense for new fulfillment centers amount to around $2,000,000, and we're fairly confident that we'll see the benefits of these new added facilities in the near future. And the second factor contributing to the margin is, as you know, we have a global business, and it's because of the foreign exchange fluctuations that we experienced in first quarter. As you see, US dollar is very strong against the euros, the British British pounds, during the first quarter. And because of the fluctuation, we experienced some foreign exchange losses from our cash receivables balance as of March 31 that are unrealized, and that amount is roughly $2,000,000. So, hopefully, that'll explain, kind of the margin profile for our q one. Speaker 500:27:31Very clear. Thank you. Operator00:27:32Thanks, Sophie. Thank you. One moment for our next question. And our next question comes from Brian Kinstlinger with Alliance Global Partners. Your line is now open. Speaker 600:27:49Great. Nice results and thanks for taking my question. A follow-up on Noble House, if you will. To get that to a more profitable status, is that a combination of revenue growth and cost cuts? Or is it just cost cutting that needs to get you there? Speaker 300:28:10Yeah, Brian. I think it's both. So on the revenue side, we mentioned a little bit in our last call that we're expanding and plugging in the Noble House SKU into our marketplace, And we're also utilizing some of the warehouse footprint that Noble House, from that acquisition from Noble House. And then on the cost side, because we also have a sizable warehouse footprint. We also have personnel on the ground, so we're able to extract some synergies, from the cost side of the house. Speaker 600:28:41Great. That's helpful. And then on the branding as a service, again, a follow-up there. Is that going to be a fee per unit, or is that going to be more of a recurring fee or license to use the brand name? Speaker 300:28:59Yeah. I think I see it. Sorry. Yeah. Go ahead. Speaker 300:29:02I'm sorry. No. No. No. No. Speaker 300:29:03No. Sorry. Speaker 200:29:04So, basically, the the the best the way it operates is per SKU. So once the SKU is qualified through that brand center mechanism that we discussed, then, you know, a fee is charged, a fixed fee. And that nominal fee as of right now is, I believe, about 4%, and the industry standard are about 10%. So it's very, very competitive. Speaker 600:29:29Great. Then my last question is the three piece seller account continues to grow at a solid clip. Can you remind us about the recruiting process? How long is the recruiting cycle? And then on average, how quickly do they ramp the number of SKUs once they're onboarded? Speaker 600:29:47Thank you. Speaker 300:29:50So our recruiting efforts is mostly meeting kinda the suppliers locally, mostly out here in Asia. I don't know if I actually have the numbers in front of me, but I would imagine it'll be a couple months for them to join. And I think, usually, suppliers would put a couple of SKUs to kinda just try it out, and then they'll start ramping up when they see success. So that's typically kinda the supplier profile for our three p business. Speaker 600:30:24Great. Nice result. Thanks, guys. Speaker 300:30:27Thanks, Brian. Operator00:30:29Thank you. This concludes the question and answer session. I would now like to turn it back to David Lau for closing remarks. Speaker 300:30:37Great. Well, thanks, everybody, for joining call. If you have any questions, feel free to email our IR, email address, and we look forward to discussing our results in our next earnings call. Thank you all for joining. Thank you. Operator00:30:50This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by Key Takeaways Giga Cloud delivered strongest ever Q1 with revenues nearly doubling year-over-year to $251 million, marking the fifth consecutive quarter of growth despite a soft consumer environment. Marketplace gross merchandise value (GMV) rose 64% YoY to $908 million on a trailing-12-month basis, with active buyers up 29% and average spend per buyer increasing 27% to $165,000. Launched Branding as a Service (BaaS), an industry-first program enabling qualified sellers to leverage top furniture brands for enhanced margins and stickiness, with the inaugural transaction expected in Q2. Expanded global fulfillment network to 42 centers across five countries (over 10 million sq ft), adding four new facilities in Q1 to boost efficiency and meet rising demand. Integration of Noble House and Wunderstand is on track, driving product diversification and technological capabilities, with Noble House expected to break even by the end of 2024. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallGigaCloud Technology Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release(8-K) GigaCloud Technology Earnings HeadlinesWe Think GigaCloud Technology's (NASDAQ:GCT) Solid Earnings Are UnderstatedMay 20, 2025 | finance.yahoo.comAnalysts’ Opinions Are Mixed on These Technology Stocks: GigaCloud Technology, Inc. Class A (GCT), Uber Technologies (UBER) and Dynatrace (DT)May 17, 2025 | theglobeandmail.comWatch This Robotics Demo Before July 23rdJeff Brown, the tech legend who picked shares of Nvidia in 2016 before they jumped by more than 22,000%... Just did a demo of what Nvidia’s CEO said will be "the first multitrillion-dollar robotics industry."June 3, 2025 | Brownstone Research (Ad)GCT Semiconductor Announces $11 Million Registered Direct OfferingMay 15, 2025 | businesswire.comAnalysts Offer Insights on Technology Companies: GigaCloud Technology, Inc. Class A (GCT) and Shopify (SHOP)May 15, 2025 | theglobeandmail.comGigaCloud Technology Stock Surges On Upbeat Q1 Earnings, Jump In Active Buyers: Retail Turns ExuberantMay 14, 2025 | msn.comSee More GigaCloud Technology Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like GigaCloud Technology? Sign up for Earnings360's daily newsletter to receive timely earnings updates on GigaCloud Technology and other key companies, straight to your email. Email Address About GigaCloud TechnologyGigaCloud Technology (NASDAQ:GCT) provides end-to-end B2B ecommerce solutions for large parcel merchandise in the United States and internationally. The company offers GigaCloud Marketplace integrates product discovery to payments to logistics tools into one easy-to-use platform. Its marketplace connects manufacturers primarily in Asia with resellers in the United States, Asia, and Europe to execute cross-border transactions across furniture, home appliance, fitness equipment, and other large parcel categories. The company was formerly known as Oriental Standard Human Resources Holdings Limited and changed its name to GigaCloud Technology Inc. in February 2021. GigaCloud Technology Inc. was incorporated in 2006 and is headquartered in El Monte, California.View GigaCloud Technology ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Ulta’s Beautiful Q1 Earnings Report Points to More Gains Aheade.l.f. Beauty Sees Record Surge After Earnings, Rhode DealCrowdStrike Stock Slips: Analyst Downgrades Before Earnings Bullish NVIDIA Market Set to Surge 50% Ahead of Q1 EarningsAdvance Auto Parts: Did Earnings Defuse Tariff Concerns?Booz Allen Hamilton Earnings: 3 Bullish Signals for BAH StockAdvance Auto Parts Jumps on Surprise Earnings Beat Upcoming Earnings Haleon (6/4/2025)Broadcom (6/5/2025)Oracle (6/10/2025)Adobe (6/12/2025)Accenture (6/20/2025)FedEx (6/24/2025)Micron Technology (6/25/2025)Paychex (6/25/2025)NIKE (6/26/2025)PepsiCo (7/10/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
There are 7 speakers on the call. Operator00:00:00Thank you all for standing by. Welcome to Giga Cloud Technologies First Quarter twenty twenty four Earnings Conference Call. During today's call, all participants will be in listen only mode. Joining us today from Giga Cloud Technology are the company's Founder, Chairman and CEO, Larry Wu its President, Doctor. Iman Sharat and its Chief Financial Officer, David Lau. Operator00:00:23Iman will give a performance and operational review, and David will share the financial results. After that, we will conduct a question and answer session. A reminder, this conference call contains statements about future events and expectations that are forward looking in nature and actual results may differ materially. Today's call and webcast will include non GAAP financial measures within the meaning of SEC Regulation G. When required, reconciliation of all non GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP can be found in today's press release as well as on the company website. Operator00:01:01With that, I would like to turn the call over to Larry for opening remarks. Please go ahead. Speaker 100:01:07Thank you, operator, and welcome, everyone, to today's call. Building on last year's considerable success, our first quarter of twenty twenty four demonstrated the GIGA Cloud's ability to drive sustainable and profitable growth. Amidst industry challenges and headwinds, we're pleased to share Geekapal's strongest ever first quarter results and our fifth consecutive quarter of revenue growth. This comes even as a consumer spending softens. For instance, the US Consensus Bureau reported an almost 8% year over year decline in retail furniture sales in Q1 twenty twenty four. Speaker 100:01:49Despite these headwinds, Githa Cloud achieved the top line results nearly double the year over year, while also generating significant improvement in other key financial and operational metrics. These achievements demonstrate our resilience and ability to thrive amidst the market downturns. As we continue to integrate NobleHouse and the WunderSign acquisitions, we expect to see ongoing revenue growth and the powerful synergies that we believe will create an even more robust and efficient online B2B marketplace. In addition to strategic nature of these acquisitions, we have taken extra steps to further accelerate the growth of our business. Firstly, we launched a new marketplace service called the branding as a service or BaaS to help seller amplify their product competitiveness in the GIGA Cloud marketplace. Speaker 100:02:48Secondly, we expanded our supplier base by adding products from Colombia, Mexico and Turkey. As a result, we have increased our product diversity, allowing buyer to source a wider range of quality products from these new markets. And lastly, we expanded our global fulfillment network to address increasing demand for our marketplace, further enhancing our world class support for buyers and sellers. We will hear more you will hear more about these important initiatives shortly. We are very excited to continue our growth journey and believe that Giga Cloud will further enhance its position as a leader and the disruptor of a b to b e commerce and technology solution. Speaker 100:03:36Going forward, we remain committed to streamlining the global supply chain journey for all our marketplace participant. Now I will turn it over, to Imam. Speaker 200:03:49Thanks, Larry. I'll also like to add my welcome to everyone for joining us today. Despite challenging market conditions experienced by the industry, we're thrilled to share that the Giga Cloud Marketplace GMV for the trailing twelve months as of March 31 increased by 64% year over year with 263 new sellers and 1,238 new buyers. Our growth is driven by Giga Cloud's highly robust technology suite that transforms and facilitates the way suppliers and retailers of large parcel items connect and transact. Our supplier fulfilled retailing model streamlines the global supply chain, offering a seamless end to end experience. Speaker 200:04:32Our acquisition of Noble House and Wunderstand are further transforming our company by adding diversified products and services to our already robust offering. I'll provide an update on the integration progress shortly. First, I'd like to discuss our latest groundbreaking initiative, BaaS or branding as service, which we launched last month. This program is an industry first and holds significant opportunities for both our marketplace participants and for Giga Cloud. This unique solution was developed to tackle the long standing challenges associated with brand spending and furniture industry. Speaker 200:05:09Crowded, and low purchase frequency nature, furniture suppliers have traditionally had great difficulties when attempting to create brand recognition, including the need for significant amount of capital resources and time, of course. But with that, Giga Cloud is changing the game. At its core, the vast program enables qualified sellers for the Giga Cloud marketplace to offer their products under the banner of industry leading A effectively the disability brand building and allows qualified sellers to compete more effectively, enjoy greater margins, and stand out in the market. The VAST program is an example of yet another addition to our services toolbox. Speaker 200:05:57By providing effective solution to the industry challenges, we're creating a powerful magnet for the mark marketplace. We're attracting not only established sellers, but also new suppliers eager to join our vibrant marketplace community as we gear up for the inaugural transaction in the second quarter. This translates to widespread enthusiasm both from seasoned veterans and those new to the platform. Our first brand partner, Christopher Knight Home, has been a consumer favorite with products that have generated over 1,000,005 star reviews online and currently sold through some of the world's largest and best known retailers. We also look forward to expanding this program with additional industry leading brands in the future. Speaker 200:06:41As part of the BaaS program, we've created the Giga Cloud Brandcenter Group. The brand center equips sellers with the tools they need to thrive, including strategic guidance to maximize their visibility and marketability while simultaneously maintaining strict quality standards and stylistic standards set by participating brands Through inspections and imposing other quality control processes and suppliers, we aim to protect the reputation of participating furniture brands and ensure that end consumers receive products that not only meet, but also exceed their expectations. As always, sellers will be able to utilize our b two b marketplace's advanced fulfillment capabilities. Due to accelerating demand, we have added three new ware fulfillment centers in The US and one fulfillment center in Germany during the first quarter of twenty twenty four. Our latest addition in April 2024 has brought us to 42 prime locations in five countries with over 10,000,000 square feet of fulfillment space. Speaker 200:07:47We believe the expansion will enhance our global fulfillment operation by further improving efficiencies and transactions among marketplace participants. The new facilities are currently undergoing racking installation and will soon add to what is already a seamless, broad, and strategic global network designed for ease for ease of use and efficiency. By growing our infrastructure to keep pace with a dynamic market, we believe we are well positioned to capitalize on the amazing growth of the Giga Cloud marketplace. We're seeing increased attention from, suppliers in new regions, as Larry alluded to, a clear indicator of our growth and awareness. Which reinforces our focus enhancing transaction experience by expanding our product breadth. Speaker 200:08:34We are committed to growing our marketplace buyer community through diversifying the selection of untransparent furniture designs and providing a broader product range. Our integration of Noble House and Wunderstand is progressing as planned, and it's helping drive additional innovation and transformation. The integration of Noble House has successfully enhanced our reach and global presence, and we remain on track with our original plan to break even in 2024. The integration of Wunderstand is a testament of our ongoing technological advancement, and our combined expertise will unlock new avenues for innovation across the entire business ecosystem. Together, these acquisitions signify more than just an expansion. Speaker 200:09:19They are driving innovation and fostering a powerful synergy that will empower us to deliver greater value to our customers. Now let's dive into our operational highlights, showcasing the strength of our platform for the trailing twelve months ending 03/31/2024, our Giga Cloud Marketplace GMV or the total gross merchandise value of transactions ordered through the marketplace was $908,000,000, an increase of 64% year over year. We generated a nearly 44% increase in active three p or third party sellers, ending the quarter with a total of 865. We are successfully adding scale to our supplier fulfilled retailing network, which should continue to grow organically and through our acquisition of Noble House. GMV in our three piece seller marketplace grew almost 72% from the year ago and totaled approximately $490,000,000 for the trailing twelve months. Speaker 200:10:21Three piece sellers represented 54% of our total marketplace GMV for the same period. We believe the combination of our three p and one p are vital to our growth strategy with a focus on continuing to drive organic growth of three p GMV to build a larger, more efficient, and more sustained marketplace. Active buyers are also grew substantially to 5,493 for the trailing twelve months, which is an increase of more than 29% from the same period last year. The average spend per active buyer increased 27% to a hundred and $65,000. With ever growing high quality seller participation in our marketplace and a growing product portfolio, we look forward to additional expansion of our buyer metrics. Speaker 200:11:09Before I wrap up, I want to provide a brief update on the fire in one of our Japanese fulfillment centers that we disclosed last quarter. On March '41 of our facilities in Japan suffered damages due to a warehouse fire. Estimated approximately $1,800,000 with respect to the cost of inventory held at this fulfillment center. Insurance coverage is expected to extend up to 1 and a half million dollars. It's worth noting that the impact on our overall operation is expected to be minimal as the effective inventory in the fulfillment center represented less than 1% of our total inventory holdings. Speaker 200:11:46I hope today's discussion has showcased our enthusiasm for Giga Cloud's ongoing evolution and its promising future. Our financial performance remains robust with consistent growth quarter after quarter. We're strategically expanding our global fulfillment network to better serve our marketplace participants and to meet organic growing growing demand. And let's not forget the integration of two key acquisitions, further accelerating our scalability and technological innovation. We're actively driving the future of global ecommerce, and we're thrilled to have you with us on this journey. Speaker 200:12:23Now I will turn the call over to David for a more more detailed review of our financials. Speaker 300:12:28Thanks, Simon. For the benefit of those who are new to our company, I'll be defining some of our most used metrics. First, some quick housekeeping. The numbers I'll be discussing today are for the first quarter of twenty twenty four compared with the first quarter of 'twenty three unless otherwise stated. Additionally, please note that this quarter we began providing the non GAAP measures of adjusted EBITDA and adjusted EPS in our first ten Q filings after the transition of S filer. Speaker 300:12:55As Larry and Aman previously discussed, we had a great first quarter by all measures. Total revenues nearly doubled to $251,000,000 and increased roughly 2.4% on a sequential basis. Notably our first quarter's performance exceeded our fourth quarter which is typically our strongest period due to seasonal trends in the industry. This achievement underscores our continued growth trajectory. Service revenues from Giga Cloud 3P which mainly include platform commission, ocean transportation, warehousing, last mile delivery, and packaging services, grew 92 to $67,000,000. Speaker 300:13:31Product revenues from Giga Cloud one p, which mainly include product sales of our inventory through the Giga Cloud Marketplace, improved to $90,000,000, an increase of nearly 47% year over year. Product revenues from off platform e commerce, which mainly include the sale of our inventory to and through third party e commerce channels, increased almost 200% year over year to over $93,000,000 These increases were in line with a 64% gain in total market GMV, which equaled to $9.00 $8,000,000 at the end of the first quarter on a trailing twelve month basis. GMV is defined as the total gross merchandise value of transactions ordered through our Ginkgohio marketplace before deductions for value added tax, goods and services tax, shipping charge paid by buyers to sellers, and refunds. Cost of revenues were a hundred and $85,000,000 or 74% of total revenues compared with $98,000,000 or 77% of total revenues. The reduction in cost of revenues as a percentage of total revenues underscore our success in enhancing and sustained operational efficiency across our business operations. Speaker 300:14:41Gross profit for the first quarter increased more than 125% to $67,000,000 which resulted in an improved gross margin of 27% versus 23% in the prior year period. I want to briefly touch on ocean shipping rates. Ocean shipping rate fluctuations have impacted the industry in the first quarter with cost rise compared to the same period last year. We have secured a substantial amount of our shipping volume under a fixed rate contract to effectively hedge against future price uncertainties. As a result of our continued growth and increase in volume, total operating expense were $32,000,000 compared to $12,000,000 last year. Speaker 300:15:20Breaking down our operating expense further, selling and marketing expense were $15,000,000 compared with 7,000,000 driven primarily by higher platform services paid to certain third party e commerce websites. Staffing costs include the added personnel to support the continued growth of the company and higher commission and advertising costs. General and admin expense totaled $15,000,000 compared with $4,000,000. This increase primarily was due to higher staff costs, including our r and d efforts to accommodate the expansion of our business volume, higher professional services fee, and increase in rental expense related to certain newly leased fulfillment centers that are currently under preparation, along with the setup expense required for the new fulfillment centers to reach full operational mode. Our bottom line expanded quite nicely with net income growing more than 71% to $27,000,000 compared with $16,000,000 last year. Speaker 300:16:14Adjusted EBITDA grew by more than 74% to $35,000,000 Moving now to our balance sheet. We ended the first quarter with a total of $196,000,000 in cash, restricted cash and investments. We have strategically allocated our cash towards investment of $10,000,000 in support of our growing infrastructure network. We we incurred $4,000,000 in CapEx, including facility expansion and pallet racks to enhance our fulfillment capabilities. To ensure we can meet anticipated sales during the upcoming outdoor furniture season in q two, we have strategically managed our cash flow to build sufficient inventory. Speaker 300:16:53In addition, as we mentioned in the previous quarter, we provide favorable cash on delivery terms for Noble House suppliers that were facing financial difficulties, resulting in a less than usual cash flow generation into our balance sheet for the quarter. Additionally, we continue to have no outstanding borrowings and remain debt free. Liabilities presented on our balance sheet represent obligation associated with our fulfillment center leases as we have substantially expanded our network organically and through acquisitions. I'll finish up with our outlook for the second quarter. We're currently expecting revenues between 265,000,000 and $280,000,000. Speaker 300:17:30Thank you all for joining us today and operator, we're ready for our questions. Thank you. Operator00:17:53Our first question comes from Matt Koranda with ROTHMKN. Your line is now open. Speaker 400:18:00Hey, everybody. Good morning. Maybe just wanted to start off with the first quarter, and the organic growth rate that you experienced versus contribution from Noble House. Just curious if you could clarify where the incremental revenue from Noble House is coming from. I would assume it's basically all off platform, but but that revenue stream looks particularly strong on a year over year basis. Speaker 400:18:26So maybe you could just unpack the the drivers there first. Speaker 300:18:32Hey, Matt. Maybe I'll take this one. So as we discussed in our last call, we don't break it out between what's organic and what's inorganic because right now, we're kinda in the middle of fully integrating the business. So we don't really break that out, as we see the business. But you're correct pointing out that the off platform ecomm, revenue generation is driven mostly by the normal house business. Speaker 300:18:56So that's correct. Speaker 400:18:59Okay. Got it. On the third party service, gross margins, was curious what's driving the strength there? It's You mentioned ocean freight rates going up, so I would assume that typically would compress margins in that segment. Maybe just speak for a moment if you could about the strength in gross margins that you experienced in in the third party service revenue in the quarter. Speaker 300:19:31Yeah. I think we're seeing a lot of momentum in our three p side of the house, particularly now, and and and Mon alluded a little earlier that a lot of our sellers are gearing up for the outdoor furniture season. So we're seeing a lot of velocity momentum. Yeah. While that, we see the overall shipping rates has been going up, but I I don't think it really impacted us as materially as others would have expect. Speaker 300:19:58And we also mentioned that we are, now effectively hedging against future, ocean shipping rates fluctuations, so we're fairly comfortable, at the current margin profile that we're enjoying. Speaker 400:20:11Okay. Gotcha. And then just wanted to hear a little bit more about the branding as a service business. Any quantifiable metrics you can provide around that and how it's built into the the second quarter guidance? I I noticed, I think, in the release, you mentioned, the program may launch in the second quarter. Speaker 400:20:34So maybe just speak to sort of how we're thinking about revenue contribution from that. Is the right way to think about that program effectively, like, licensing or licensing revenue stream that that layers into the third party service revenue that you get already from your sellers? And then maybe just is that how do you view the branding as a service program as a whole? Just simply, is it a seller acquisition tool? Is it a retention tool? Speaker 400:21:03Maybe just a little bit more on sort of why why do this. Speaker 300:21:10Larry, are you mind do you guys wanna take this? Speaker 200:21:14I'll be more than happy to, David. So, basically, branding as a service is an additional service that is being offered to make the business model even more sticky, you know, with our you know, both our seller base and the buyer base. And the whole idea behind this process is that through the end to end optimization process, we're able to manage the entire process in network, which kinda contributes to all those margins that you just, you know, listed off as far as the third party sellers. And at the end of the day, like you mentioned, you know, this will be definitely a recruitment tool, but also a retention tool as we're trying to basically tackle one of the biggest, you know, issues in in in furniture, you know, business when it comes to building brands. I talked a little bit about this that, you know, the the the nature of the industry is highly fragmented, and it requires significant amount of investment as as far as the capital resources and time to build those brand recognition because the purchase frequency is so low. Speaker 200:22:18So by giving the good products a chance to have access to good brands, we're hoping that, you know, we truly give these products a chance to better market. And with that, you know, we increase, you know, the usage of existing, you know, supplier base, but also attract new new sellers to to join the marketplace. And by fueling the seller base, you know, we definitely, you know, add variety and style and choices for the buyers on the on the flip side to choose from. Speaker 400:22:48Okay. Gotcha. And then just for the second quarter outlook, I think you guys provided a range of of revenue in the $2.65 to $280,000,000 range. Maybe just since we're not breaking out Noble House, at the very least, maybe just some commentary around, you know, third party service revenue contribution within that outlook versus product revenue, in the second quarter and how we should think about that. Speaker 300:23:19I think the way we see it is that the ratio, between these two lines of business, if we will remain fairly steady for a while, I don't think there will be any drastic changes in terms of the balance between the two business as a percentage of revenue. Speaker 400:23:41Okay. Got it. Maybe just last one for me in terms of the the margin profile on a go forward basis. I guess the integration of Noble House may be creating a little bit of a drag on on margins. When do we expect that to sort of release and and we reach sort of at least a breakeven to a positive operating profit contribution from from Noble House. Speaker 400:24:11Maybe just help us understand a level set around when that happens, if it's within '24 or beyond. Speaker 300:24:18Yeah. I think breaking even within '24 is, our goal, and I think we're fairly confident with that, that that coal in mind. I think we're starting to see some profitability generating from the Noble House business, probably by the end of the year, if not early twenty twenty five. Speaker 400:24:38Okay. Thanks, guys. Speaker 300:24:42Thanks, Matt. Operator00:24:43Thank you. One moment for our next question. Our next question comes from Sophie Huang with CMBI. Your line is now open. Speaker 500:24:57Thank you. Congratulations on the top line growth, really a great first quarter of this year. So I noticed that revenue and gross margin was improved year on year, but net income margins seems to have decreased slightly. So could you please provide us with some insight into the reason, and how do we look at the margin channel in the next few quarters? Thank you. Speaker 300:25:21Hey, Sophie. Great question. I think from a high level, I think we can, categorize two main factors that contributed to, a temporary downward compression on margins for first quarter. I think the first one is the cost associated with some of the new fulfillment centers that we opened during Q1. Eman and I talked a little bit earlier that we leased four new facilities in Q1 to keep up with our growing demand. Speaker 300:25:48It typically takes around four to six months to set up a new facility, you know, with all the racking systems, to make sure that, everything is working out. So this is, something that we are working on, and it's also fairly standard for the industry that we receive a standard kinda seven to nine months of rent free, for our new facilities in The US. But because, we're leasing, these facilities, we have to expense the cost evenly throughout the life of the lease. So that's why you see there's a temporary downward compression to our margin profile, during the setting up phase. And to give you a little bit more color around, what the kind of the lease, or the establishment costs for these new fulfillment centers. Speaker 300:26:35So for q one, the expense for new fulfillment centers amount to around $2,000,000, and we're fairly confident that we'll see the benefits of these new added facilities in the near future. And the second factor contributing to the margin is, as you know, we have a global business, and it's because of the foreign exchange fluctuations that we experienced in first quarter. As you see, US dollar is very strong against the euros, the British British pounds, during the first quarter. And because of the fluctuation, we experienced some foreign exchange losses from our cash receivables balance as of March 31 that are unrealized, and that amount is roughly $2,000,000. So, hopefully, that'll explain, kind of the margin profile for our q one. Speaker 500:27:31Very clear. Thank you. Operator00:27:32Thanks, Sophie. Thank you. One moment for our next question. And our next question comes from Brian Kinstlinger with Alliance Global Partners. Your line is now open. Speaker 600:27:49Great. Nice results and thanks for taking my question. A follow-up on Noble House, if you will. To get that to a more profitable status, is that a combination of revenue growth and cost cuts? Or is it just cost cutting that needs to get you there? Speaker 300:28:10Yeah, Brian. I think it's both. So on the revenue side, we mentioned a little bit in our last call that we're expanding and plugging in the Noble House SKU into our marketplace, And we're also utilizing some of the warehouse footprint that Noble House, from that acquisition from Noble House. And then on the cost side, because we also have a sizable warehouse footprint. We also have personnel on the ground, so we're able to extract some synergies, from the cost side of the house. Speaker 600:28:41Great. That's helpful. And then on the branding as a service, again, a follow-up there. Is that going to be a fee per unit, or is that going to be more of a recurring fee or license to use the brand name? Speaker 300:28:59Yeah. I think I see it. Sorry. Yeah. Go ahead. Speaker 300:29:02I'm sorry. No. No. No. No. Speaker 300:29:03No. Sorry. Speaker 200:29:04So, basically, the the the best the way it operates is per SKU. So once the SKU is qualified through that brand center mechanism that we discussed, then, you know, a fee is charged, a fixed fee. And that nominal fee as of right now is, I believe, about 4%, and the industry standard are about 10%. So it's very, very competitive. Speaker 600:29:29Great. Then my last question is the three piece seller account continues to grow at a solid clip. Can you remind us about the recruiting process? How long is the recruiting cycle? And then on average, how quickly do they ramp the number of SKUs once they're onboarded? Speaker 600:29:47Thank you. Speaker 300:29:50So our recruiting efforts is mostly meeting kinda the suppliers locally, mostly out here in Asia. I don't know if I actually have the numbers in front of me, but I would imagine it'll be a couple months for them to join. And I think, usually, suppliers would put a couple of SKUs to kinda just try it out, and then they'll start ramping up when they see success. So that's typically kinda the supplier profile for our three p business. Speaker 600:30:24Great. Nice result. Thanks, guys. Speaker 300:30:27Thanks, Brian. Operator00:30:29Thank you. This concludes the question and answer session. I would now like to turn it back to David Lau for closing remarks. Speaker 300:30:37Great. Well, thanks, everybody, for joining call. If you have any questions, feel free to email our IR, email address, and we look forward to discussing our results in our next earnings call. Thank you all for joining. Thank you. Operator00:30:50This concludes today's conference call. Thank you for participating. You may now disconnect.Read morePowered by