Release Date: March 20, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you specify how the unfavorable macroeconomic environment affected the company's performance in the quarter and for 2024 as a whole? A: Despite the tough macro environment, we achieved our first-ever operating profit at both the non-GAAP and GAAP levels, along with a positive cash flow of RMB263 million. We reduced operating expenditure by 130 basis points to 5.3% of revenue, making us one of the most efficient operators in the industry. Our bottom line improved by almost RMB350 million at the GAAP level, thanks to our team's dedication and strategic execution.
Q: What are the main factors driving the improvement in gross margin, and can you provide more color on gross margin trends? A: We achieved gross margin improvement by offering both low-margin and high-margin products. We outsourced low-margin products to partners closer to customers to save on shipping costs. Our teams have specific goals to sell higher-margin products, including private label products. We also use a decentralized model to encourage suppliers to store inventory in our warehouses on a consignment basis, offering holistic services like supply chain financing and live streaming.
Q: How did you manage to decrease operating expenses significantly, and what strategies were employed? A: We focus on staffing optimization and constantly review our cost structure. We break down expenses into categories like fulfillment, sales, and G&A, managing each with fine granularity. Our digital capabilities, developed over years with significant investment, provide real-time data for adjustments. We aim to undergo an AI transformation to further enhance efficiency.
Q: What were the key drivers behind achieving the first-ever annual operating profit and positive operating cash flow, and how sustainable is this profitability? A: Our relentless efforts to improve operating efficiency were key, with operating expenses decreasing by 130 basis points year-over-year. We managed working capital well, generating positive cash flow of RMB263 million. Our accounts payable, receivable, and inventory turnover days are highly efficient. We believe we have built a solid foundation for sustainable profitability in 2025 and beyond.
Q: What are your expectations for the market in 2025, and are there any regulatory changes that might impact your business model or profitability? A: The market is undergoing reform led by the Chinese government to enhance efficiency and reduce medical costs. We expect new policies to encourage innovation, improving efficiency and reducing costs. We will leverage our AI and digital capabilities to consolidate and create greater value. We plan to expand partnerships with pharmaceutical companies and pharmacies to enable more effective drug distribution and promotion through our digital platform.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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