PDD Holdings Inc

NASDAQ:PDD

Q1-2025 Earnings Call

[Operator]

Ladies and gentlemen, thank you for standing by, and welcome to PDD Holdings, Inc. First Quarter 2025 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your host today. Sir, please go ahead.

[Unknown Executive]

Thank you, operator. Hello, everyone, and thank you for joining us today. PDD Holdings' earnings release was distributed earlier and is available on our website at investor.pddholdings.com as well as through the Globe Newswire services.

Before we start, I'd like to refer you to our safe harbor statement in the earnings press release, which applies to this call as we'll make certain 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 GAAP measures.

Joining us today on the call are Mr. Chen Lei, our Chairman and Co-Chief Executive Officer; Mr. Zhao Jiazhen, our Executive Director and Co-Chief Executive Officer; and Ms. Liu Jun, our VP of Finance. Lei and Jiazhen will make some general remarks on our performance for the past quarter and our strategic focus. Jun will then walk us through our financial results for the first quarter ended March 31, 2025. During the Q&A session, Lei and Jiazhen will answer the questions in Chinese and we will help translate. Please kindly note that the English translation is for reference only. And in case of any discrepancy, statements in our original language should prevail.

Now it's my pleasure to introduce our Chairman and Co-Chief Executive Officer, Chen Lei. Lei, please go ahead.

[Lei Chen, executive]

Hello, everyone. Thank you for joining our earnings call for the first quarter 2025. Over the past year, we accelerated the execution of a high-quality development strategy, expanding our efforts from platform operations to the broader ecosystem covering both the price side and demand side to initiatives such as $10 billion fee reduction program, logistics part for the remote regions and high-quality supply initiatives, we broadened the product reduction for consumers and accelerated supply chain transformation. This marks a new chapter in the e-commerce sector that prioritize merchant support and ecosystem investments.

Starting at the beginning of this year, we made substantial investments in our platform ecosystem and in a rapid ship in external environment. To increase merchant support, we established the Merchant Right Protection Committee and launched the 100 billion support program, which is a major strategic decision for the next phase of high-quality development strategy. On one hand, the program is designed to further lower fees for our merchants, improving the business environment of our platform. On the other hand, we'll also invest more to drive sales for our merchants and to help them better that to new challenges.

In Q1, our revenues were RMB 95.7 billion, which slowed down notably amid rapid change in the external environment and at the same time due to the mismatch between business investment and retail cycles. Through our revenue growth and our sustained ecosystem investments led to a significant drop in profit.

As communicated a few times in the past quarters, as our business grows and new challenges emerge, a slowdown in growth rate is inevitable. This trend has been further accelerated by the trends in the external environment in the past quarter. While a disproportionate drop in profit this quarter can be attributed to 3 different factors, they all trace back to an underlying consideration, and that is during a period of uncertainty, where merchants face difficulties, we choose to invest more to help our merchants grow their business and reduce costs.

Looking at the factors one by one. First, competition in Chinese e-commerce sectors have further intensified. As a third-party marketplace, we face inherent limitations when it comes to passing on policy incentives to consumers, which put our merchants a clear disadvantage compared to our competitors that has a first-party business. While this issue has been discussed last year, the challenge is still here due to limitations in our team's capabilities.

And second, in our global business, radical change in external policy environment such as tariffs has created significant pressure for our merchants who often lack the capability to adapt quickly and effectively.

And third, since the second half of last year, we significantly expanded our fee reduction program for merchants under the CNY 10 billion fee reduction program, which is a key initiative in driving high-quality development of the platform ecosystem. And this year, after it has become increasingly clear that the merchants are expected to face further pressure and convinced in the long-term value of our merchant support initiatives, the management team made the strategic decision to launch the CNY 100 billion support program. Under this updated program, we are committing significant resources to support the platform ecosystem through uncertain times. This is not an empty slogan, but a real commitment back by tangible investments.

We understand a marketplace platform is built on collective success of the merchants. In charity times like this, it's essential for us to step forward to help our merchants endure and emerge more resilient. If we do nothing, merchants could be overwhelmed by these external shocks. Our merchants strive can consumers to receive quality products and services and only then our platform achieve long-term sustainable development.

Our management team believes that in the fast-changing market where merchants are facing challenges, it's our obligation to invest decisively to support consumers and merchants, putting their needs ahead of those of the platform. And we believe that these initiatives are investments that will ultimately lead to a stronger and higher-quality merchant ecosystem over the long run. This effort will likely weigh on our profitability in the short term and even for a considerable period of time to come. However, as stated in our first shareholder letter, we are not a conventional company, and we do not evaluate our strategic decisions based on quarterly financial results. Instead, our focus is on long-term intrinsic value over 5 years, 10 years or even longer. And we believe our long-term investors will share this perspective.

When seen from another angle, the decline in profit this quarter can be attributed to one overreaching -- overarching factor, which we consider our merchants put initiatives, long-term investments. They are treated as an accounting expenses, the timing mismatched between when expenses are recorded and when the long-term returns materialize is expected to persist for some time to time and will continue to weigh on our profitability.

We are firmly committed to long-term investments in our platform ecosystem and to deepen our execution of high-quality development strategy. And we believe by prioritizing the needs and interest of our merchants and consumers through these uncertainties, we can help them emerge stronger and create a room for focus on high-quality, sustainable growth.

And now I will hand it over to our co-CEO, Zhao Jiazhen, to share more about our development plans in 2025.

[Jiazhen Zhao, executive]

[Interpreted] Thank you, Lei. Hello, everyone. This is Zhao Jiazhen. Thank you for joining our first quarter 2025 earnings call. Over the past few quarters, our high-quality development strategy has entered a new phase. A series of initiatives such as fee reductions and merchant support programs have delivered solid results. Our fully committed efforts to build a win-win ecosystem are now generating tangible benefits to a broad base of users and tens of millions of merchants.

Since the beginning of this year, as Chen Lei mentioned, to tackle new challenges together with our merchants, we have built up our commitment to high-quality development and upgraded initiatives such as the CNY 10 billion fee reduction program to the more comprehensive CNY 100 billion support program. This upgraded strategy calls for the entire company to work together and fully devote ourselves to take on our social responsibilities as a platform at such a critical stage, providing merchants with greater certainty and offering consumers a more trustworthy shopping environment.

On the supply side, under the CNY 100 billion program, we will further increase investments in high-quality supply, expanding our support for high-quality merchants from top and mid-tier merchants to small and medium sized. We are committed to focusing more on supporting the smaller merchants, which is the heart of critical step towards achieving high-quality growth. On one hand, we will continue exploring more fee reduction initiatives to help merchants lower costs and create more room for cost flexibility, business growth and innovation.

On the other hand, we will extend experiences -- we will extend comprehensive support, including traffic resources, less label premium store program, digital resources and technology capabilities to empower small- and medium-sized merchants, the lovely potential and drive broader, higher-quality upgrades across the supply chain.

Since the beginning of this year, our dedicated team for high-quality merchant support program has visited top line manufacturing bases such as cookware and Yukon, women's footwear in Guangzhou, consumer electronics in Shenzhen, Atlantic shoes in Xinjiang and running shoes in Singen. We're pleased to see that the merchants and the broader supply chain has made notable progress in transformation with the platform's comprehensive support.

Many merchants are transitioning from traditional OEM and distribution mindset toward user-oriented and brand-driven approaches. The shift has enabled them to pursue differentiated development path, amid homogeneous competition. Moreover, fee savings are being reinvested into new product development, warehouse upgrades and supply chain transformation, accelerating high-quality transitions across major industries.

As a platform rooted in agriculture, our CNY 100 billion program will also enhance support for agriculture products. Recently, we officially launched the 2025 Dodo specialty initiatives. The first phase of the initiative has covered key agriculture regions, including Jiangsu and Inka, Gudin, Sensing 10, Panlong Main, Strachan and Mainland. We're implementing tailored strategies across agricultural product categories such as local farm products, fruits, safe and poultry, deeply integrated with regional agriculture industries and providing one-on-one guidance to small merchants. Through these initiatives, we aim to explore new models for agriculture product distribution, enhanced value adds and drive production and income growth across the agriculture industry.

In the Papaya producing region of Finland, with the support from our platform, local merchants have developed a digital system for agriculture product operations, enabling automation across harvesting, listing, pricing, logistics, after-sale services and traceability. This system addresses key industry pain points such as unclear pricing and high spoilage rates, driving the transition from experience base to data-driven operations, and enabling the modernization of the traditional agriculture supply chain.

On the demand side, the CNY 10 billion support program has also launched several giveback initiatives to benefit consumers. Our CNY 10 billion program has introduced a new CNY 10 billion merchant giveback program, billing out RMB 10 billion consumer coupon. The dedicated campaigns such as the RMB 10 billion coupon program and RMB 10 billion level of program, we deliver additional coupons across all product categories to meet consumers' functional and personalized needs, while improving supply-demand matching efficiency and supporting business growth for high-quality merchants and brands.

In addition, we further enhanced our direct discount program. For fully safeguarding merchants interest, we benchmarked prices against the national subsidy program across multiple categories to provide real savings to consumers and stimulate consumer demand, amid compensating for TD advantages under the national subsidy schemes and support merchants and strengthening their overall market position. While such investments may weigh on short-term profitability, we believe they are necessary and worthwhile as they help create unique opportunities to achieve high-quality grades for the small and medium-sized merchants on our platform.

In the face of a complex and evolving environment, we remain committed to building a business ecosystem enriches merchants and the platform drive together. We will continue to increase investments on very -- supply and demand side to help our merchants emerge stronger and these uncertainties, create more available experiences for consumers and generate greater positive impact for the society.

I will now hand it over to Jun. She will provide you with an update on our Q1 financial performance.

[Jun Liu, executive]

Thank you, Jiazhen. Hello, everyone. Let me walk you through our financial performance for the first quarter ended March 31, 2025.

In terms of income statement, in the first quarter, our total revenues increased 10% year-over-year to RMB 95.7 billion. This was mainly driven by an increase in revenues from online marketing services and transaction services.

Revenues from online marketing services and others were RMB 48.7 billion this quarter, up 15% from the same quarter of 2024.

Revenues from transaction services were RMB 47 billion, up 6% from the same quarter last year.

Moving on to costs and expenses. Our total cost of revenues increased 25% from RMB 32.7 billion in Q1 2024 to RMB 40.9 during this quarter mainly due to increase in fulfillment fees and payment processing fees.

On a GAAP basis, total operating expenses this quarter increased 37% to RMB 38.6 billion from RMB 28.1 billion in same quarter of 2024. On a non-GAAP basis, total operating expenses increased to RMB 36.5 billion this quarter from RMB 25.6 billion in Q1 2024. In the first quarter, we further increased our platform ecosystem investments through expanded merchant support initiatives to help merchants increase sales and reduce costs.

Our total non-GAAP operating expenses as a percentage of total revenue this quarter was 38% compared to 29% in the same quarter last year.

Looking to specific expense items. Our non-GAAP sales and marketing expenses this quarter were RMB 32.8 billion, up 44% versus the same quarter last year. In the first quarter, we continue to give up to consumers through promotion programs and increased marketing support for high-quality margins to help grow their businesses.

On a non-GAAP basis, our sales and marketing expenses as a percentage of our revenue this quarter was 34% versus 26% for the same quarter last year.

Our non-GAAP general and administrative expenses were RMB 735 million versus RMB 572 million in the same quarter of 2024. Our research and development expenses were RMB 3 billion this quarter on a non-GAAP basis and RMB 3.6 billion on a GAAP basis, up 23% year-over-year.

On a GAAP basis, operating profit for the quarter was RMB 16.1 billion versus RMB 26 billion in the same quarter last year. Non-GAAP operating profit was RMB 18.3 billion versus RMB 28.6 billion in the same quarter last year. Non-GAAP operating profit margin was 19% this quarter, down from 33% for the same quarter last year.

Net income attributable to ordinary shareholders was RMB 14.7 billion for the quarter to RMB 28 million for the quarter last year. Basic earnings per ADS was RMB 10.59 and diluted earnings per ADS was RMB 9.94 versus basic earnings per ADS of RMB 20.33 and diluted earnings per ADS of RMB 18.96 in the same quarter of 2024. Non-GAAP net income attributable to ordinary shareholders was RMB 16.9 billion versus RMB 30.6 billion in the same quarter last year. Non-GAAP diluted earnings per ADS was RMB 11.41 versus RMB 20.72 in the same quarter of 2024.

In the first quarter, we see a slowdown in revenue growth as our business scales and challenges emerge. Looking ahead, our financial results may continue to reflect the impact of sustained investments in ecosystem as we support management and consumers do on a certain time.

That concludes the income statement. Now let me move on to cash flow. Our net cash generated from operating activities was RMB 15.5 billion compared with RMB 21.1 billion in the same quarter last year. As of March 31, 2025, we have RMB 364.5 billion in cash, cash equivalents and short-term investments.

Thank you. This concludes my prepared remarks.

[Unknown Executive]

Thank you, Jun. Next, we'll move on to the Q&A session. Today's Q&A session, Lei, Jiazhen and Jun will take questions from analysts on the line. We will take a maximum of 2 questions from each analyst. Lei and Jiazhen will answer questions in Chinese and we will help translate for convenience purpose.

Operator, we're open for questions.

[Operator]

[Operator Instructions] Your first question comes from Alicia Yap with Citigroup.

[Alicis a Yap, analyst]

[Foreign Language] I have 2 questions. First is that we noticed in management's prepared remarks that recent macro policy changes, including the tariffs have placed considerable pressures on the merchant. And the market is also keen to understand what preparations and measure the platform has taken in response to such a highly uncertain external environment. How are we adjusting our business model in certain markets? And also what's the current progress?

The second question is on this quarter, we obviously noticed a very significant decline in the company's net profit margins, along with a year-over-year decrease in the net profit number. Can management elaborate a little bit more on the factors that contributing to this decline? And what are we seeing in the second quarter? Does the management expect this trend to continue?

[Lei Chen, executive]

[Interpreted] Alicia, this is Chen Lei. Let me take your first question. As we have emphasized in the past few quarters, in response to macro policy changes and external headwinds, we will continue to take proactive actions while strictly upholding regulatory compliance. Over the past few years, our long-term investments next supply chain, together with our work in advancing new business models have enabled us to accumulate substantial supply chain and operational know-how. And guided by our high-quality development strategy and operating under strict regulatory compliance, we'll stay focused on our core business and enhance our competitive strength through sustained investments in supply chain service capabilities and the platform ecosystem.

Our merchants are under considerable pressure given the recent policy changes and many like capability to respond effectively, making it very challenging for them to keep up. In light of these circumstances, we believe it is our obligation as a platform to increase support for merchants and invest platform resources to support their businesses. the CNY 100 billion support program we mentioned earlier is designed for this exact reason and to increase our support efforts for small and medium-sized merchants. And through stabilizing sales and lowering cost for them, we see help them manage risks arising from the rapidly evolving market environment and given them the time and flexibility that will be necessary to pursue sustained growth.

In addition, we will continue to explore new business models, deepen our market presence and expand into new product categories and services to build a more robust platform ecosystem. Amid a rapidly changing external environment, our global business is working with merchants across the region to bring stable prices and abundant supply to consumers around the world. No matter how policies shift, we'll continue to strengthen our operations in the markets we serve, helping more local merchants grow on our platform and enabling more orders to be fulfilled from local warehouses. And right now, we are seeing these merchants becoming more proactive with better stock inventory and more value passed on to consumers through differentiated products and services.

Platform is a selective of merchants. We believe only will merchants achieve long-term sustainable growth, can our consumers receive high-quality products and services. And therefore, in times of external shocks of policy changes, for merchant space difficulties, we feel a strong obligation to support our merchants to navigate through these external uncertainties. And this is why we launched the CNY 100 billion support program to foster long-term and healthy merchant ecosystem that will be essential to achieving high-quality development. Thank you.

[Jun Liu, executive]

Alicia, this is Jun. Let me take your second question regarding profitability. As we have communicated over the past few quarters, a slowdown in growth rate is inevitable as our business scales, competition intensifies and external uncertainty match. This trend has been further accelerated by changes to make internal environment in the first quarter. And our revenue growth has slowed significantly.

At the same time, the slowing revenue growth and our continuous ecosystem investments result in a significant drop in profit this quarter. This is mainly due to the mismatch between the business investment and writing cycles. As mentioned in our prepared remarks, the market is ongoing road changes at the moment. FM e-commerce platform, merchants and platforms work together in serving our consumers. It has done the best to such changes. We have increased our investments in the platform ecosystem. Putting our consumers and merchants first, we believe this responsibility, the platform must take on in this environment.

In owing batteries, we can build an ecosystem that benefits all stakeholders in the long term. Our initiative to support emerging ecosystem include merchant fee reduction and marketing support for high-quality merchants. This will have financial impact on revenue growth and expenses. Well, we view these expenses with long-term investments. They're remaining a match between the return and business investment cycles. Therefore, our profitability is likely to face challenges in the near term, and potentially over a longer period.

As I mentioned, we're not a conventional company. In our investment decisions, we do not place too much emphasis on financial performance in a single quarter, but we already had long-term intrinsic value. Certain fluctuations will not change our focus on long-term value creation.

In the past 2 quarters, through initiatives such as the Canons reduction program, we're already seeing positive impacts on ecosystem. Going forward, we will expand the reach for merchant support to benefit more SME businesses, helping them navigate market cycles and achieve high-quality growth. Thank you.

[Unknown Executive]

Operator, let's move on to the next analyst on the line.

[Operator]

Your next question comes from Kenneth Fong with DBS.

[Unknown Analyst]

[Foreign Language] We noted that following the company's substantial support for the merchants for the CNY 10 billion fee reduction program last year, you have initiated and upgrade CNY 100 billion support program. The market is keen to understand how this initiative will be delivered to the merchants. And would that be -- and how would you think about the long-term impact on the company's financial performance?

And the second question is a few quarters ago and the prepared remarks just now, management mentioned that the company has certain limitation and disadvantage when it comes to benefiting from the macro policy initiative. Could management elaborate on how the company responds to the policies such as the national subsidies program? And what plans are in place to address the current situation?

[Jiazhen Zhao, executive]

[Interpreted] Hello, this is Zhao Jiazhen. Let me take your question on CNY 100 billion support program. Since the second half of last year, our merchant support initiatives, including the CNY 10 billion fee reduction program, logistics support for remote regions and the high-quality merchant support program have delivered solid results, enabling tens of millions of merchants to enhance operational efficiency and reduce costs and building merchants and the broader supply chain transition towards a new stage of high-quality supply.

We're fully aware that our investments in the merchant ecosystem and supporting measures for supply chain transformation will ultimately translate into higher quality product offerings and services, which benefit consumers and create a win-win platform ecosystem. We believe this is the path to long-term healthy development for our platform.

In the face of increasing external uncertainties, we believe it is our responsibility as the platform to strengthen ecosystem support and prioritize the interest of merchants and consumers. Therefore, our upgrade CNY 100 billion support program will be backed by substantial financial commitment and if not an empty's locus.

The core of the upgraded CNY 100 billion support program is the significant increase in investment on bare feet supply and demand side. On the supply side, more merchants will receive our support as we extend the coverage of high-quality merchant support program from top and mid-tier merchants to small- and medium-sized ones. This means more high-quality merchants will benefit from the platform's high-quality development. We aim to help release the full potential of these smaller merchants and drive broader and higher-quality supply chain upgrades across the platform.

On the demand side, beyond the improvement in product and service quality brought by the supply side upgrade, the CNY 100 billion support program also includes a range of new gift-back initiatives. For example, under the CNY 10 billion program, we launched a new CNY 10 billion merchant give back program, offering additional coupons across all categories to meet diverse consumer demand. In addition, we have further upgraded our direct discount programs by benchmarking prices against the national subsidy program across multiple categories, offering real savings to consumers while improving sales for merchants, faltering a healthier operating environment.

We are a platform that is a collective of merchants. Looking together with merchants to deliver high-quality products and services to consumers is the foundation of our business development. We believe that long-term investment in the platform ecosystems and prioritizing the needs of consumers and merchants amid external uncertainties is the only path to achieving long-term, high-quality and sustainable growth in today's environment.

Regarding your second question, as stated in our prepared remarks, our third-party marketplace model has inherent limitations when it comes to certain policy incentives. And we are at disadvantages compared to platforms that primarily operate under the third-party model. This also affects the price competitiveness of our merchants in certain categories.

To protect the interest of both consumers and merchants on our platform, we have leveraged internal resources and responded resolutely with increased investments, helping our merchants and medium-sized merchants maintain competitiveness and increase sales.

Since January this year, we have launched a dedicated page for the national subsidy program. In addition, portfolio support for merchants entered CNY 100 billion program, we are also enhancing our promotional efforts on the consumer side. Currently, our dedicated national subsidy churn already covers more than 20 provinces and we provide additional coupons on top of the government subsidies, delivering further savings directly to consumers.

Moreover, the platform will continue to benchmark prices against the national subsidy program and expand the promotion coverage to categories such as daily necessities. These measures aim to provide more savings to consumers, stimulate broader consumer demand and create incremental market opportunities for the merchants. While such investments may weigh on short-term profitability, we believe they are necessary and worthwhile as they help the merchants improve inventory position, manage capacity and get the small- and medium-sized merchants, the room to focus on high-quality, differentiated growth on our platform.

[Unknown Executive]

Thank you, Kenny. Operator, let's move on to the next analyst.

[Operator]

Your next question comes from Joyce Ju with Bank of America.

[Joyce Ju, analyst]

[Foreign Language] I will translate myself. First, we know China's e-commerce competition remains intense. And as Manage mentioned, is facing challenge in competing with first-party online retailers due to disadvantage in getting trading subsidies. How does management view competition in current market environment? And what are strengths and limitations of your third-party platform model?

Secondly, may we have an update on overall consumption momentum as this year's June promotion already underway. Could management share some colors on platform performance and also key trends observed so far?

[Lei Chen, executive]

[Interpreted] Hello, this is Chen Lei. Let me take your first question. As we mentioned earlier in the prepared remarks, platform is collective of its merchant and our development cannot be separated from the health of the merchant ecosystem. And in today's environment, with increasingly intensifying competition and rapidly evolving policy landscape, many of the merchants lack the capabilities to respond and adapt and are indeed facing challenges.

As an e-commerce platform, we are very aware that we and the merchants are in this together. Our business model is a marketplace naturally shaped the simpler and more direct response to the challenges we face. If the platform sells to stepping and offer support when merchants are experiencing difficulties, the merchants may be overwhelmed by the short-term market volatilities. It is only where merchants are doing well, can we deliver high-quality products and services to consumers and meet their increasingly diverse consumption needs. We believe this is not only the responsibility that e-commerce platform should take on, but also fundamental to building a healthy and sustainable e-commerce ecosystem.

And over the years, in order to better serve the merchant, we have rooted ourselves in the e-commerce supply chain and made substantial investments and leveraging our technology economies of scale. And the platform's digital capabilities and resources, we supported merchants to innovate in the product development, technology and operations and we'll help them expand market reach. And these long-term efforts have allowed us to accumulate the relevant supply chain knowhow and capabilities.

We saw encouraging results from the CNY 10 billion fee reduction program launched in the second half of last year, which brought tangible benefits for our merchants. And building on this foundation, we decided to launch the updated CNY 100 billion support program to further expand the coverage of our merchant support efforts. And these initiatives will extend support to more small- and medium-sized merchants, enabling more high-quality merchants to benefit from the platform's high-quality development.

And in this current environment, we believe it is the platform's responsibility to invest more to help merchants navigate the market cycles. We are confident that such efforts will ultimately lead to a more robust merchant ecosystem over the long run.

[Jiazhen Zhao, executive]

[Interpreted] Hello, this is Zhao Jiazhen. Let me take your second question. When it comes to shopping festivals, what consumers value are simplified mechanisms and real savings, which is the philosophy that allies with our approach we've always taken on the consumer side.

We've continued to up this point appearing this year's June 16 shopping festival. By combining the campaign with our CNY 10 billion program, we are enabling consumers to access high-quality products at compelling prices, while driving sales for our merchants. Building on this, we are also enhancing quality and services to better cater to consumers' evolving needs. This year, we've introduced the price drop protection service for product participating the June 16 promotion to further improve consumers' shopping experience. We hope that our platform and our merchants can together excel in quality and service, build consumer trust safeguard consumer rights and, in turn, drive sustainable sales growth. This is part of our vision for a win-win e-commerce ecosystem that benefits our stakeholders. Thank you.

[Unknown Executive]

Thank you, Joyce, and thank you all for joining us today. It's about time, and we look forward to speaking with you again next quarter. Thank you, and have a great day.

[Operator]

Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may now disconnect.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]