Ladies and gentlemen, thank you for standing by, and welcome to MOGU's Third Quarter Fiscal Year 2021 Financial Results. [Operator Instructions] I would now like to hand the conference over to your speaker today. Mr. Roger Hughes [ph]. Thank you. Please go ahead, sir..

Thank you. Hello, everyone, and thank you for joining us today. MOGU's earnings release was distributed earlier today, and it's available on the IR website at ir.mogu-inc.com as well as on the Business Wire services.

Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995.

These forward-looking statements are based upon management's current expectations in the current market and operating conditions and relate to events that involve known or unknown risks, uncertainties or other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements.

Further information regarding these risks and other risks, uncertainties or factors is included in the company's filings with the U.S. Securities and Exchange Commission.

The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. On the call today from MOGU are, Mr. Shark Chen Qi, Chairman and CEO; Mr. Raymond Huang, Chief Strategy Officer; Mr. Le Li, Investor Relations Director; and Ms.

Huiqing Ellie Wang, Financial Controller. Mr. Chen will review the business operations company highlights, followed by Mr. Huang, who will discuss the financials. They will all be available to take your questions during the Q&A session. Now, it is my pleasure to introduce our Chairman and CEO, Mr. Chen. Please go ahead..

[Foreign Language].

Hello, everyone. Thank you for joining us on the third quarter results announcement for the fiscal year 2021 today. We got MOGU 10 years ago in 2011. For the last 10 years, we have been very persistent on the mission of make fashion accessible to everyone.

We have been continuously innovating towards the new format of fashion shopping, from curation to e-commerce, from live e-commerce to short video e-commerce.

At our 10th anniversary, we have also achieved positive EBITDA for this quarter on a non-GAAP basis, reflecting our operating efficiency improvement and disciplined capital allocation in this severely competitive environment. This turning point made our development more sustainable and provide a stronger foundation for our new business incubation.

We continue to see a high growth rate in MOGU Live. MOGU Live GMV increased by 20.9% year-over-year to RMB4.1 billion in the third quarter. MOGU Live continuously maintain leading position in user experience innovation, KOL incubation and supply chain development since we innovate live e-commerce in 2016.

As contribution to our overall GMV also jumped to 80.3% this quarter. MOGU Live continuously drives our future growth opportunities. MOGU is a shopping inspiration platform as well as a vibrant community. Inside and outside of our live showrooms, people connect, interact and they influence and support each other.

Because of this vibrant community, our users have been attracting more users to join MOGU. Our active buyers of the live video broadcasting business has achieved a year-over-year growth of 9.7% -- 9.4%.

During the 11.11 and 12.12 promotion, 2 KOLs on our platform have each achieved over RMB 100 million sales in these 2 festivals, respectively, marking them top-tier KOLs of the live e-commerce industry. In the future, we will explore new business opportunities, including cross-border e-commerce and off-line business.

We will make sure that we can leverage all the strategic assets we have built over the last 10 years, and take advantage of opportunities emerge from the industry landscape change. Let's stay tuned for next 10 years. Thank you. Thank you, Shark. Thanks again, everyone. This is Raymond speaking. Thank you for joining our conference call today.

So now I'll walk you through our third quarter fiscal year 2021 financials. We believe year-over-year comparison is the best way to review our performance. Unless otherwise stated, all percentage changes I'm going to give you will be on that basis. Let's review the financials first.

Our GMV for the first -- for the third quarter fiscal year 2021 was RMB5.046 billion, a decrease of 19.9% year-over-year. GMV for the 12-month period ended December 31, 2020, was RMB13.698 billion, a decrease of 21.5% -- 25.1% year-over-year.

Our focus has been growing the GMV from live video broadcasting, which has increased by 20.9% year-over-year to RMB4.051 billion. LVB-associated GMV for the third quarter of fiscal year 2021 accounted for 80.3% of the total GMV. Active buyers of the LVB in the last 12 months ended December 31, 2020, grew by 9.4% year-over-year to 3.5 million.

So let's now turn to revenues. During this quarter, total revenue decreased by 45.6% to RMB146.5 million from RMB269.5 million during the same quarter of the fiscal year 2020.

Commission revenue decreased by 29.8% to RMB99.2 million from RMB141.2 million in the same period of fiscal year 2020, primarily due to the restructuring of the company's business towards an LVB-focused model.

Marketing services revenue, which is mainly generated from our marketplace business -- marketplace business unit decreased by 75.9% to RMB17.4 million from RMB72.5 million in the same period of fiscal year 2020. The decrease was primarily due to restructuring of the company's business towards the LVB-focused model.

I will now walk you through our major cost and expense. Cost of revenue decreased by 48.3% to RMB51 million from RMB 98.6 million in the same period of fiscal year 2020, which was primarily due to a decrease in the costs associated with decreased online direct sales and IT-related expenses.

Sales and marketing expenses decreased by 63.4% to RMB76.5 million from RMB209.3 million in the same period of fiscal year 2020, primarily due to optimized spending on branding and user acquisition activities.

R&D expense decreased by 14.5% to RMB27.2 million from RMB31.9 million in the same period of fiscal year 2020, primarily due to a decrease of share-based compensation expense.

General and administrative expenses decreased by 32.4% to RMB29.1 million from RMB43million in the same period of fiscal year 2020, primarily due to a decrease of share-based compensation expenses. Amortization of intangible assets increased by 10.3% to RMB113.5 million from RMB102.9 million in the same period of fiscal year 2020.

Loss from operations was RMB123.2 million compared to loss from operations of RMB1594.9 million in the same period of fiscal year 2020, primarily attributable to a goodwill impairment incurred in third quarter of fiscal year 2020.

Gain from investments was CNY91.2 million compared to loss from investments of CNY33.9 million in the same period of fiscal year 2020, primarily due to one of the company's investee repurchased a majority portion of the company's investment in October 2020.

Net loss attributable to MOGU's ordinary shareholders was CNY36.7 million compared with a net loss attributable to MOGU's ordinary shareholders of CNY1.634 billion in the same period of fiscal year 2020. Adjusted EBITDA was RMB1.2 million compared to a negative RMB86.7 million in the same period of fiscal year 2020.

Cash and cash equivalent, restricted cash and short investments were RMB820.1 million as of December 31, 2020, compared with RMB1,095.4 million as of March 31, 2020. Stock market in 2020 has been very volatile.

And we're of a view that MOGU's share price does not reflect the fundamental growth potential of the company, and we have successfully repurchased 8 million shares for approximately US$17 million, representing 7% of the company's outstanding shares over the course of last fiscal year.

Looking forward, we are very confident that our product innovation and our dedication to KOL-centric system will deliver a very differentiated fashion shopping experience to our customers. So with that, I would like to open the call for Q&A.

Operator?.

[Operator Instructions] Your first question comes from the line of Charlie Chen with China Renaissance..

[Foreign Language].

So Charlie has 2 questions. The first question is about the EBITDA. So seems that the EBITDA has been, has turned positive for this quarter.

So what's the company's strategy going forward? Do we focus more on the revenue growth, revenue and GMV growth? Or we want to expand the margins and improve the EBITDA margin? And the other question is about the growth on the user number. 3.5 million user number seems to be more conservative.

So what's the company's strategy going forward in terms of user acquisition strategy?.

[Foreign Language].

So basically, we're thinking that yes. So live e-commerce is apparently we're thinking that the growth credential for the live e-commerce sector is very, very high. However, it has come to a relatively mature stage. And most of the moving parts in the industry has been settled.

And going forward, we'll be seeing that there will be more brands and more other business partners that will come in to the live e-commerce space. Instead of just purely focused on KOL live streaming, we will be seeing more merchants or more brands to join live e-commerce as well.

So, of course, we're just, we'll continue to invest in the live e-commerce segment of our business and to maintain and to enhance our competitive advantage over the other competitors. We'll continue to innovate and to optimize our user interface.

However, we will also close the, forego the monetization strategy as we, as this is actually, we are on track to have a stronger monetization in our live e-commerce business.

And we also want to achieve a balance between different roles in the live e-commerce, different players in the live e-commerce space, including KOLs, merchants, brands and also other supply chain partners. We want to strike a balance between all these different players while we achieve the monetization.

So since we have been continuously innovate in the live e-commerce space, we have accumulated massive amount of knowledge and know-how in this space. And we do believe that we have more room to apply our knowledge. We would like to apply our knowledge in other space, including cross-border e-commerce as well as offline commerce.

We believe that our experience and our know-how can definitely be leveraged to capture future business opportunities. So, as you can see, the customer acquisition cost on average for the entire industry has been increasing rapidly over the last maybe a year or 2. So very much a focus on the customer retention.

I think as we mentioned on the previous earnings calls, existing users retention is extremely important for us. As you can see that the live e-commerce part, the average users ARPU is way higher than the traditional e-commerce users. So we are seeing much higher up over there.

So that's why we can, and as you can see from the quarterly results, our sales and marketing expense actually decreased by 63%. So we can use a much lower sales and marketing expense to maintain the growth. Going forward, given the magnitude and the scale of the company, we will not be using a cash-burning strategy to acquire customers.

Instead, we will be leveraging our know-how, our knowledge and use innovation to acquire our customers and to use the money more efficiently in other spaces. .

[Operator instructions] Your next question comes from the line of Locky Lau with AJ Asset Management. .

[Foreign Language].

Okay. Sure. The question from Locky that congrats to the company's positive EBITDA this quarter. So he has 2 questions.

One is that what's the company's strategy going forward for category expansion? The other one is that can we elaborate a little bit more on the carriers other than the top 2?.

[Foreign Language].

So the question about category expansion. Of course, we always want to expand categories. But our tactics in this -- with regard to this question is that, our tactic is to -- we will expand into higher-margin categories. Because traditionally, I think apparel has been a very good category to retain customers.

Customers always like to come back and check out the latest release of fashion brand, so that's why they always come back. It's a retention category. But apparently, the margin for this category is not as thick as we otherwise wanted to be. And going forward, we'll be expanding into high-margin categories like cosmetics, skin care and nutritions.

So these categories are probably higher-margin categories, we can actually monetize more. And then the other question was about the -- how we trade at the top, how we -- what's our tactics for the KOL incubation. And I think, as Shark mentioned, last year, the live e-commerce space was extremely competitive.

So that's why we spend more time and effort to our top KOLs and to make sure that they can be extremely competitive with other platforms and with KOLs from other platforms. And as a result, we can see that the top 2 KOLs, they both achieved RMB100 million sales overnight during the 11.11 and 12.12 promotion days, respectively.

So they have proven -- they are proven to be the top KOLs in China over Internet as of last year. These 2 KOLs are extremely important to us because they become the flag of MOGU Live e-commerce.

And because of their inference and because of their very strong power to sales power, they can attract more merchants, more supply chain partners and even more KOLs to join MOGU platform. So they are extremely important when it comes to expand our live e-commerce platform.

So, as we can see that in 2021, I think we are seeing that the market has been more stabilized and all the KOLs and their respective teams are actually more mature. So we don't need to spend as much effort as we used to be, and we can dedicate more resources to other KOLs and to help them grow.

As we also mentioned earlier, category expansion is very important, is a priority for us this year. So we intend to recruit more KOLs this year, especially the KOLs, they can help us to expand categories. We have spent a lot of time, strategy driving the plans to recruit KOLs and before and after Chinese New Year.

So we will be able to -- you guys can see our effort in the months to come.

So Locky, do you have other questions?.

[Operator Instructions] We do have another question. This comes from Sabrina Hu, Jefferies. Your line is open. .

[Foreign Language].

[Foreign Language].

So Sabrina has 2 questions. One is the competitive landscape of live e-commerce in China, and the other one is she wants the management to elaborate a little more on the cross-border e-commerce opportunity. Okay.

Sabrina, maybe I would just answer your question directly, okay? So for the competitive landscape in China, we are seeing that a lot of the companies has been extremely focused on live e-commerce across different segments.

Apparently, we, as the innovator of live e-commerce back in 2016, we have proved that we are very much a pioneer in terms of product innovation. Continuously we'll do so, because we believe that our strength is really the product innovation.

We can make sure that our customers will have the latest and the most cutting-edge user experience when it comes to live e-commerce. So that's number one. That differentiates us from the other platforms. And number two, we are a live e-commerce-dedicated platform.

I think unlike other platforms who are actually more, I think, have other revenue streams and other things, we are very much a KOL-driven live e-commerce platform. That's why we're also very differentiated from the others. We don't think that the market is really driven by budget or driven by cash-burning capability.

It's really driven by people who can actually innovate, understand Company, understand users' needs and innovate new features, new products and new user experience to make sure that we can provide the most interesting and most immersive and the most interactive shopping experience for our customers.

So we don't think it's specifically a budget-driven landscape. That's the first question. And second question is about cross-border e-commerce. So cross-border has been, always been a very important opportunity we have been closely examining. So as you can see that we have been doing e-commerce in China for the last 10 years.

And we have accumulated a lot of knowledge, experience, know-how and human capital. So, and also our KOLs in China, they are extremely, extremely capable. They are very smart and they can provide a lot of supply chain capabilities.

They have all these world-class fashion curation capabilities, which we can easily leverage to influence customers and audience overseas. So that's why we want to leverage what we have. We want to team up with our KOLS, we want to go out to other countries and to leverage our experience over there..

[Operator Instructions] There are no further questions. I will turn the call back over to the Roger Hughes for closing remarks..

Thank you, and thank you, everyone, for joining the call today. If you have any further questions or comments, please don't hesitate to reach out to any one of us here at MOGU. This concludes the call today..

Okay. Thank you..

Ladies and gentlemen, this concludes today's call. Thank you for participating. You may now disconnect..