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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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Hello, and thank you for standing by for JD.com's Third Quarter 2019 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I'd like to turn the meeting over to your host for today's conference, Jia Dong.
Thank you, and welcome to our third quarter 2019 earnings conference call. Joining me the call today are Mr. Richard Liu, JD.com Group CEO; Mr. Lei Xu, CEO of JD Retail; Mr. Zhenhui Wang, CEO of JD Logistics; Sidney Huang, CFO; and Jon Liao, our Chief Strategy Officer.
For today's agenda, our CFO Sidney Huang will discuss highlights for the third quarter of 2019, followed by Richard Liu, our CEO. Other managements will join the Q&A session. Before we continue, I refer you to our safe harbor statement in the earnings press release, which applies to this call as we will make forward-looking statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB. I would now like to turn the call over to our CFO, Sidney Huang.
Thank you, Jia. Hello, everyone. Thank you for joining us today. We are very pleased to report another strong set of results for the third quarter 2019. Our net revenue growth continued to reaccelerate, reaching 28.7%, the highest growth rate in the past 5 quarters driven by our lower-tier city penetration strategies. In particular, the growth rate for electronics and home appliance categories in lower-tier cities was more than double that of Tier 1 and Tier 2 cities. And the most other top 25 categories saw higher and accelerated growth rates in lower-tier cities as well. Overall, over 70% of new customers in Q3 came from lower-tier cities, which is a new record.
And the growth rates for both purchase orders and GMV in lower-tier cities reached the highest levels in the past 6 quarters.
In terms of traffic, due to innovative marketing activities and better user engagement through our upgraded mobile interface, the JD mobile MAU grew 36% in September, the highest growth rate in the past 8 months, while our mobile DAU, 35% in Q3, the fastest in 5 quarters. This may surprise some people, who are not familiar with China's lower-tier city consumers and think they are only interested in low-priced and low-quality products, which have seemingly flourished on other platforms. The reality is that consumption upgrade has been quietly occurring in these regions, where average consumers may have relatively lower absolute income, but have somewhat similar or even higher disposable income than Tier 1 city residents due to significantly lower housing costs. As these consumers learned to shop online, they gradually discovered the different value propositions, unique to different e-commerce platforms. For JD.com, our obsession with customer experience since day 1 continued to help us win over the better half of middle-class consumers, even in those lower-tier cities.
It is a universal truth that middle-class customers value quality assurance, everyday low prices, and first-class services, especially for high-value products such as 3C and home appliances, all products where consumers pay particular attention to the quality, such as the food, baby products, home furnishings, cosmetics and healthcare products. For that, we thank our competitors for not only introducing e-commerce to many first-time users, but also providing easy benchmarks for us to readily differentiate and secure the most valuable customers. This can be validated by our average ticket size of over RMB 200 in lower-tier cities, a very important indicator for the quality and sustainability of our customer base. Thanks to lower-tier city consumers, our market-leading position in the electronics and home appliance categories has been further strengthened with revenue growth rate accelerating to 22% in the third quarter, the fastest in the past 5 quarters, amid everlasting competition and a slowing industry, which grew in low single digits in Q3 according to China's National Bureau of Statistics.
In other words, we have been taking tremendous market share during the quarter. Some of you may wonder what happened to all the subsidies that people have been raving about from our competitors. Well this time, our archrival itself confirmed publicly that subsidies cannot win sustainable business. This -- it has learned the hard way from the a too costly experience over the year. Hundreds of million of people may happily spend RMB 0.99 spend on a impulse and they may spend RMB 0.99 of every day on heavy items just for fun. But for serious purchases, most consumers don't just look at price alone. They will evaluate at least 2 other elements before any large purchase decisions. The first is trust. Can I trust the sellers on the platform? Are you selling authentic products? Will I get what I see or will I end up on the waitlist for months before getting that discounted item? The answers are mixed, at best, on the overcrowded marketplace platforms.
The second is service. Do you have professional in-store service for large appliances and return it easily if I don't like the product? People may not care about a service when they buy and RMB 0.99 petty item because they can just throw it away. But when they're buying large ticket products, they definitely care. Here comes the hard truth. It takes years of heavy lifting, build the supply chain expertise, service capabilities, and fulfilling infrastructure needed, perfect the customer experience in those categories, and in that process to optimize operating efficiency while solidifying our competitive mode. The best example is 3 years ago, when the largest marketplace platform listed the largest off-line home appliance and electronics retailer in China to jointly attack us with massive subsidies throughout the past 3 years. But they have failed rather miserably as we predicted 3 years ago, now widely reported in the Chinese press. But anyone still worrying about subsidiaries hurting our core categories should refresh their memory and think again. It's driven by the same retail fundamentals that we have reiterated all these years. There's no shortcut in this business. By the same token, our general merchandise categories enjoyed accelerated growth of 36% in Q3, led by FMCG products, another extremely different category for a pure marketplace operator to reach meaningful scale with or without significant subsidies. We are also pleased to see that net service revenue grew 47% year-over-year, the fastest in the past 4 quarters, and contributed 11.9% of our overall revenues driven by strong momentum from third-party logistics and advertising revenue.
The external revenue has now contributed 40% to JD Logistics total revenues on a stand-alone basis, up from less than 20% just 2 years ago. It has grown more than 300% from the same quarter of 2017 when we decided to expand logistics into a self-sustaining business, supported by its consistently top-ranked customer satisfaction scores in the industry.
In the third quarter, our gross margin was 14.9% compared to 15.4% in the same quarter last year. This reflects the reinvestment of the first half onetime gains that I mentioned on our last earnings call. Yet we have reinvested roughly 40% of the RMB 1.8 billion nonrecurring gains from the first half through the gross margin in Q3 to drive our lower-tier city strategies. It worked very well, and you have to admit, it's a much more effective strategy than the massive subsidies by some of our peers. The highest sales we achieved will give us the further economies of scale, in both procurement and operating efficiency, which will afford our customers even more pricing benefits, setting an even higher bar for competitors, while driving our further growth and margin expansion next year. This is the beauty of our 1P business model, a self-reinforcing virtuous cycle that has worked extremely well for all the number 1 third-party retailers, either by country or by category around the world. You have to be number 1 to enjoy this virtuous cycle, and you have to have a lower cost structure than everyone else.
JD.com is number 1 in China and in multiple countries. And the snowball is just willing to roll. Another aspect of the snowball effect is operating leverage. During the third quarter, our fulfillment expense ratio improved by 91 basis points, 6.5% compared to 7.4% in the same quarter last year. The improvement was driven by economies of scale as JD Logistics expanded its external order volume rapidly, benefiting both it's 3P operating margin, and JD's 1P fulfillment expense ratio.
Our marketing R&D and G&A expense ratios also improved meaningfully in the same quarter driven by highly-effective management and operating leverage from higher sales. As a result, non-GAAP operating margin reached at 2.2% in the third quarter, setting a new record.
JD Retail, in particular, achieved the record segment operating margin of 3.3%, and it was achieved in the quarter of heavy new investments. I hope this solid performance can begin to shed light on our path to our committed, high single-digit, long-term profit margin for the JD Retail business. Our free cash flow also increased significantly year-over-year during the quarter driven by lower CapEx and the proceeds from the Phase 1 closing of the GIC logistics core front.
In our free cash flow table, as I mentioned in recent quarters, this JD Logistics, JD profit management group was formed to financial returns as a [Audio Gap]
managed business. We have broken out related CapEx into a separate line specifying the available for sale nature, which has been reported net of related proceeds on the sales. This is the second time when recorded a net cash inflow on design, following the first time in Q1 this year. We hope to see more cash inflows from this business in the future.
For the trailing 12 months, our free cash flow was RMB 15.6 billion, 50% higher than our non-GAAP net income in the same period, which was another bright spot in our business.
Now let's discuss our fourth quarter financial outlook. We expect net revenues to grow between 21% and 25% on a year-over-year basis, in light of a highly successful single state promotion season, while taking into account the potentially slowing national retail sales growth based on the MBS report published yesterday. On the bright side, our October growth remained resilient, and we are clearly gaining market share. Finally, with better-than-expected earnings in the third quarter, we are raising the full year non-GAAP net income guidance to be between RMB 9.8 billion and RMB 10.5 billion, reflecting Q4 seasonality and continued reinvestment of the first half onetime gains discussed earlier. At the midpoint of this guidance, we would grow our 2019 non-GAAP net income by over 200% from the 2018 level and grow a CAGR of 43% from the 2017 level. More importantly, this robust earnings growth is on top of our ongoing reinvestment in our core business, which positions JD.com to enter 2020 with tremendous growth momentum.
This concludes my prepared remarks, and I will now turn the call to Richard for a few quick remarks.
[Foreign Language] Thank you, Sidney. Hello, everyone. I would like to take this opportunity to give you a brief introduction on our strategy plan in 2020, and for this year, as you have seen that we have achieved promising results in terms of our revenues and net margin as well as cash flow. And for the next year, based on the list on achievements of the previous 3 factors, we'll continue to work on increasing our GMV and consumption -- customers space as well as technology services. And we believe that only by improving every aspects of the 4 element, we'll achieve [ still ] quality growth of the whole company. [Foreign Language] And in the past 6 years, we have been investing heavily on the -- on investment of our technology services, and this has been quite larger than the growth of our revenues. And we will -- and for this year, you have seen significant growth on the revenues of our technology services. We actually achieved 3-digit growth this year. And in the future, for the next 5 years, we will continue to gain the benefits and the improvement on the revenues of our technology services, and this will be even bigger than our overall revenue growth. And we believe the technology services revenue will be the key engine for the increase of our revenues and...
Net income.
Net income, yes.
[Foreign Language] We have 2 strong bricks, and no matter that's our JD Retail, Logistics and JD business, the technology is our key driving forces. Only through technology we are working as a long-term core competitiveness. [Foreign Language] Technology will always help us to bring up our users experience, lower the cost and improve our operating efficiency. [Foreign Language] And the second belief is that we strongly believe the income from tax -- technology services will bring even further benefits and returns and profits for our stakeholders. [Foreign Language] And overall, we believe, for the next year, no matter it's on the revenues and other profits, we will achieve even better results. Thank you, everyone.
We can now move to the Q&A session.
[Operator Instructions] Your first question comes from the line of Ronald Keung from Goldman Sachs.
Very strong results. And a further accelerating of revenue particularly for the 1P retail and profitability. So I would love to hear just your thoughts particularly as Richard talked about the 2020 strategy, just what do we see as the positive and maybe less positive drivers just into the 2020 1P growth that could pick up a larger base, that could pick up a 5G? So anything you see are the drivers for the next year's 1P growth, and particularly for electronics, appliances and FMCG? My sense is mostly whether we are targeting a similar growth as last year, sort of above 20%. Any color on that would be great.
[Interpreted] Let me just give you 2 reasons for the positive development of our 1P business. First, JD is a retailing company based on the capacities of our very strong supply chain. So that in the past, now or in the future, will continue to improve our ability on the supply chain. And working together with our partners to increase our efficiencies and lower the cost on the supply chain side to provide unique advantages to this market. And secondly, we attach great importance to users experience, and we believe as a retailer, it's -- ensuring user experience is a must and for this year, we have done a lot of work overall across the company to ensure the enhancements of user experience. And through our NPS monitoring, we have seen user's experience has very tangible progress. Since we are continuing our investment on improving the user's experience, not only on the new customers and also our existing customers, we are looking on every front to ensure they have unique experience shopping on our platform. So in all, our supply chain and our commitment to our user experience has ensured our 1P business fast development.
Your next question comes from the line of Eddie Leung from Bank of America.
Two quick questions about the lower-tier city competitions. Number 1 about the users, just wondering, are we seeing a similar users using different apps, but buying different products? Or are we seeing a more unique user segment that coming to JD? And then secondly, how our cooperation with Weixin and the off-line retail partner network can help us in the accommodation in the lower-tier cities?
[Interpreted] Since our Jingxi platform, which is mainly the new channel which targets the lower-tier city customers has been introduced online by the end of October, it has been less than 2 weeks since it was online. So based on the current results, I would just share a few observations. And for the Jingxi platform, it include 2 access points, 1 is the first-tier access point on WeChat, and another is a standalone app we introduced a month ago. The characteristics of the users of on Jingxi, most of them -- majority of them are coming from the lower-tier cities, and their shopping behavior is more a social in-house and has a very high conversion rate. But in terms of their ARP value and stickiness, it's relatively lower compared to the main site. And in terms of the product, Jingxi platform products are quite different from our main site. On JD's main site, the products is mainly brand products. On Jingxi platform, we are developing products based on China's manufacturer potential. Now we are working with over a hand full of industrial belts and in the future, it's going to develop into 1,000 industrial house. So identify the high-quality manufacturers and help them to bring the products on Jingxi platform to reach the customers from lower-tier cities.
And also we realized that the Jingxi users, their shopping preferences is rather complicated. They like to be more interactive, and having more entertainment and [indiscernible] factors in their shopping behaviors. It's not a matter of very simple buying habit. So by using these feature, we will work on our own products as well as recheck module functions for user's buying behaviors on our platform. I also want to share with -- the development and expansion of JD platform. We've also identified those quality products and, for instance, who have very premium service ability to give them more presence on our main site. And we believe there's a group of lower-tier city customers, they also having the willingness and need to shop on the site in the long run. And I just want to respond a little bit more on our relationship with Tencent. Tencent is our shareholders and very important partners. And some of you have realized that at the end of October, we just had made certain rules to prevent some over promotional activities to impact the social interaction behaviors we had. And these rules, I think, for the long term, is a good sign because for us, we always emphasize on the user's experience and this will help us to guarantee these aspects.
So I'll just add one more point on Eddy's first question, whether users are -- lower-tier cities users are buying from different apps for different categories, or just stick to one app? Our survey -- before we got more data from Jingxi, our survey in the lower-tier cities suggest that majority of the lower-tier city users do use multiple apps from -- basically use multiple platforms. And they will pick the platform based on the categories they are buying. So that's the current observation.
In the Tier 1, Tier 2 cities, you may see relatively more users stick to one app for majority of their purchases. Now with our Jingxi application, basically we are creating a dual-brand strategy, where our main app, JD app will continue to target the entire income consumers in the lower-tier cities, while the Jingxi app will target the relatively lower-income consumers in those regions. And then we can also then gain more insight on the lower-tier city consumers, so that we can better target them for promoting our JD main app, our core category product.
Your next question comes from the line of Alicia Yap from Citigroup.
Congratulations on the strong set of results. My questions is related to your C2M initiative on the appliance brands. What are some of your differentiator on attracting the brands to partner with JD? And given the C2M model is also getting more competitive, if competitors going after the same brands, will they have any negative impact to JD margins? And for the -- on -- related question is that for the same appliance brand, is the C2M SKU has a higher or lower margin than the standardized SKU? If you could share also roughly the percentage of GMB coming from C2M category this quarter and how much you expect that to grow into?
[Interpreted] Let me share with you some key achievements that we have made on C2M so far.
And 2 to 3 years ago, we have started our C2M model, and this is started in the categories of IT product and have achieved amazing success. And on this IT categories, actually, our platform, over 70% of product are C2M to JD. And this has not only impacted all our platform but actually have quite a deep influence to the China's IT industry, online and offline. And for this year, we have also made our strategic proposal to further categories especially on the 2 categories on home appliances and FMCG product. And compared with other online platforms, I believe there are 2 advantages to produce C2M products on JD platform. First of all, we are a company driven by technologies. We have a vast data in the terms to -- in the terms of our users comments and just searching data and reviewing data. And combining all this data and working together with our partners will help us to generate the most tailor-made product in a timely manner. And secondly, per se, JD is a retail platform and especially our 1P business. So this gives us an advantage to work closely together with our brand, our partners together on producing those C2M products. And in between, we have our capacities on the supply chain. This gave us a better responsibility and the capacity to produce the most effective product together with the partners, and the partners will become more and more willing to work with us to reach success. And we have realized that for different categories and industries, the progress to produce C2M product will be different. And some of them are doing C2M product to avoid press conflict. And by doing C2M, more tailor-made product, will help them to reduce the complex -- conflict opportunities. And for some of the brand partners, they want to go deeper into China's market to the lower-tier cities, and we know that based on our traditional supply chain, this is not an easy way. And for JD, we would like to be the company on this process with our partners to together reach new users in the lower-tier cities together. That's why based on our powerful supply chain, it will be very unique opportunity for the partners -- for our brand partners to work with us to be more attractive to reach our customers in the lower-tier cities. And in terms of the [indiscernible] margin, because different brands have different goals and different format. It's very difficult to give a unified measurement, but generally speaking, the C2M price is very competitive and there is always ways we can also make reasonable interest benefit -- profit out of that. And the overall, you have already seen the success we have made on the IT categories, and it has occupied a strong market share, and we believe this will be copied in other categories as well. And in the future, we'll continue our efforts on C2M, and increase the proportion of their products on our platform. Thank you
So just to put in layman's terms, just to give you a example on C2M margin, it's a triple-win situation. So for example, for -- because a lot of the brands will try to protect their offline retail network. So they will monitor the sales price, which limit our ability to give more value to consumers. So for select -- only very large brands can do that. And then at the same time, they would also resist giving us even lower procurement price just to prevent us from selling lower price to consumers.
So that by C2M, we can really break through both. One is that because it's a customized product, so we wouldn't disrupt the brands offline retail channels. So we can price the products lower to give consumers more benefit. Two is that, because of that same reason, and we tend to buy a very large volume for the C2M products. So we can get even lower procurement price.
So we can also maintain very healthy margins. And while we can also support the brands to sell a much larger volume through our powerful channel. So it's a triple-win situation for the C2M.
Your next question comes from the line of Thomas Chong from Jefferies.
I have a question about JD Logistics. Can management comment about the strategy in 2020? And how should we think about the top line and the margins as we go through the year? Any color would be great.
[Interpreted] [ Wang Zhenhui ] of JD Logistics. Next year, our JD Logistics strategy will continue to focus on the efficiency increase and user's experience enhancement. And will also step up efforts on reaching the lower-tiers market by expanding our logistic network. And we'll also work further on improving our progress and our capacity to further open the external market. And we will also invest further -- we'll will also step up efforts on our technology deployment, and the revenues from technology will continue to grow next year. And for our external orders, revenues from external orders has accounted for over 40% of the overall revenues of JD Logistics. For the next year the ratio continues to grow. In terms of the fulfillment of the profit, we will seek further improvement in stability. Seeing the results from this quarter, our fulfillment fee ratio has been dropped, thanks to our increasing scale. And since we are continuing to going down into the lower-tier cities, it will have some short-term impact on our cost. But in the long run, we believe the fulfillment fee was -- are still having a space to improve.
Your next question comes from the line of John Choi from Daiwa.
Congratulations on the great set of results. I have a question on the user growth, and obviously, as we go into lower-tier cities, thus, we start to see a user growth acceleration. Can management give some color on what kind of user growth momentum we'll further see throughout 2020 and onwards? How much opportunity do you see if you compare it to yourself and your peers? And secondly, just quickly on -- Richard I think mentioned about the technology, given that industrial internet is one of the key themes that a lot of the other internet companies are talking about. Can you provide us how this will change our business strategy for JD? And what are the areas that we're looking into?
[Interpreted] On the question about user's growth. And as I mentioned in last quarter's call, we are targeting our efforts for the user growth on the both new customers acquisitions and old customers maintenance. In the first half of the year, we have done a series of internal organization optimization. And on the existing customers, we are setting up our efforts on their operation to increase their activity on our platform, and their maintenance on our platform, their ask value and satisfaction rate keeps going up. And also I want to emphasize that we focus on benevolent growth of our users. And we don't -- we want to supply users through the fragmented space and a unsustainable way. And we believe that eventually the quality of the users will be manifested through our careful or healthy fostering process. On the maintenance of our users, what we pursues is the indicators improving all aspects. It's not only mere number improvement to say -- to see how many users we have acquired in a short period of time.
So [ Nicholas ], it's Huang. So I don't know if he has heard the question, but I can quickly share that the technology services we have in mind is more about the retail structure that we have accumulated over the years. The call -- we had retail-as-a-service concept. So much of the technology know-how and -- is already being transformed into solutions, and we have seen a demand from the industry for these solutions. So those could be clearly the starting point. There will be more in the pipeline that we will discuss more when we have products available.
Your next question comes from the line of Tina Long from Cr?dit Suisse.
Congratulations again on the results. I have one quick follow-up on Jingxi first. So I want to know -- I know that we recently launched it, but I want to know in 2020, have we earmarked like a meaningful amount of sales and marketing expense to promote it? Will that have any impact on the overall sales and marketing ratio? And my main question is actually on the GP margin. I understand that third quarter GP margin was impacted because of reinvestment of the first half one-off gain. So I want to know, after we reinvest all the gains for the remainder of the year, in 2020, are we going to see a uptrend from GP margin from a year-over-year perspective?
[Interpreted] Xu, Lei of JD Retail. On the question about Jingxi. The Jingxi platform is one of our business model to raise further margin. And as I mentioned that we will seek different ways and different models to grow our market. So the Jingxi platform will not make a great impact on our marketing fee next year. As I just described, in our last question, we are seeking a comprehensive improvement indicators. So we won't just pursue like what indicator growth for that.
And so on the second question, generally, obviously, we haven't done our 2020 budget process. So I can't give you a definitive answer. But in general, all else being equal, gross margin should expand and -- for the same categories because of the economies of scale, as we mentioned in the past. So -- but I just wanted to also point out that the gross margin and expense line, sometimes you should look at them holistically. I'll give you one example, and sometimes and more often than not, lower price if used effectively, can be the best marketing spending. In other words, you can save marketing cost by promotions. And so sometimes lower gross margin could mean lower marketing expense as well. Clearly, that's what happened in Q3. Our marketing expense ratio actually decreased by 0.6%, more than compensate the gross margin shortfall. So you really have to look at this gross margin and expense lines in a holistic fashion.
Just to add a few things from Xu, Lie.
[Interpreted] And I -- so I Just want to add that since the end of last year, we have made our strategy to grow our business based on quality development and sustainability. So you have seen from all the numbers the past 3 quarters this year, these are all the demonstrations of our commitment on the quality growth. And in the future, we will stick to this principle to achieve quality and sustainable growth.
Your next question comes from the line of Natalie Wu from CICC.
Congratulations on the solid results. Just curious, can you share some things with us about the incremental margin profile from your lower-tier city orders? And also about the take rate on Jingxi, wonder is it different relative to your JD platform?
Yes. Let me quickly answer the first question. We haven't really internally analyzed in a very detailed way, but we have the same price in lower-tier city and higher-tier cities and cost structure is also similar. So in general, the cost structure and the margin profile should be rather similar. But there are differences in, for example, category consumption pattern that might be different. So we -- but we have not analyzed this in more detail, but they should be more or less the similar.
But what about the fulfillment expenses?
Fulfillment expenses, in terms of order density, clearly, Tier 1 city will clearly enjoy most benefit. But we have covered 99% of counties and districts, and we don't necessarily have the same fulfillment promise in the very remote areas. We do cover 90%, roughly 90% of the orders within 24 hours, and they tend to be in Tier 1, Tier 2 cities, and in major town areas in the most populated lower-tier cities. So it's actually well-designed to optimize the cost structure in the lower-tier city as well.
[Interpreted] Zhenhui of JD Logistics. I'll add on this question. It is true that different categories will have different performance in the lower-tier cities, for example, for iPhone and Huawei smartphones, the growth mainly comes from lower-tier cities. And for the big-size refrigerators, lower-city customers like them pretty much -- very much because they have a larger house. And also for the luxury products, the lower-tier city customers are buying more and more on our platform because the traditional channels do not support their purchase needs. But all this examples cannot get the conclusion that the lower-tier cities like the big-ticket product. So we have to really analyze it and with different categories.
And what about the take rate on Jingxi?
Right now, it's 0.6% covering the payment cost.
[Interpreted] And for the take rate in the Jingxi platform, in general, we will have a very low take rate to encourage merchants on our platform. Most of the products will have 0.6%, and for some of the products will be above 1 point.
We are now approaching the end of the conference call. I will now turn the call over to JD.com's Jia Dong, for closing remarks.
Once again, thank you for joining us today. Please don't hesitate to contact us if you have any further questions. Thank you for you continued support, and we look forward to talking with you in the coming months.
Thank you all for your participation in today's conference.
[Foreign Language]
This concludes the presentation. You may now disconnect. Good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]