Good day, ladies and gentlemen, thank you for standing by and welcome to Boqii’s Fiscal 2023 First Half Earnings Conference Call. Currently all participants are in listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, we are recording today's call. If you have any objections, you may disconnect at this time. Now, I will turn the floor over to [indiscernible], Boqii’s Head of Investor Relations. [indiscernible]?

Thank you, operator, and good morning, everyone. Before the conference starts, I need to explain that I am currently at home and my cat is sick. So there may be some voices and I hope you could understand it. Welcome to Boqii’s fiscal 2023 first half earnings conference call. Joining us today are Ms. Lisa Tang, Co-CEO and CFO; Mr. [indiscernible] our Financial VP and Ms. [indiscernible], our Head of Investor Relations. [Foreign Language] We released results earlier today. The press release is available on the company's IR website at ir.boqii.com as well as from Newswire services. A replay of the call will be available on the site later today. [Foreign Language] Before we continue, please note that today's discussion will contain forward-looking statements made under the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements involve inherent risks and uncertainties as such, the company's actual results may be materially different from the expectations expressed today. Further information regarding these and other risks and uncertainties are included in the company's public filings with the SEC. The company does not assume any obligation to update any forward-looking statements except as required under applicable law. [Foreign Language] Please note that certain financial measures that we use on this call such as non-GAAP net loss, non-GAAP net loss margin EBITDA and EBITDA margin are expressed on non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. [Foreign Language] Also please be reminded that unless otherwise stated all figures mentioned during the conference call are in Chinese RMB. [Foreign Language] With that, let me now turn the call over to our Co-CEO and CFO Ms. Lisa Tang to go over our first half performance and highlights. Over to you Lisa? [Foreign Language]

Thank you, Lou and many thanks to Lou's cat and we wish you, will recover soon. And many thanks to everyone for joining the call today. During the first half of typical [indiscernible], thanks to the efforts of our colleagues, and many thanks to the customers and the partners. Despite the uncertainties of the epidemic, we still achieved the main goals as before and continue in the past optimization from obtaining accurate traffic and integrating upstream and downstream and true for building the delivery. At the same time, we also rationally analysis the influence of the various environmental factors and actively faced challenges from raw materials manufacturing and logistics, which further improved the integration timeliness and assistance of our system. [Foreign Language] Due to the impact of the objective above market environment, leading to a year-over-year slight increase of 2.4% in revenue to RMB 589.6 million during the first half. In spite of this, we are still actively search market opportunities, adjusted appropriately our operating strategies and achieve satisfactory results in the first half. As we continue to integrate upstream and downstream of the industrial chain, optimize our product mix and adjust the product category. [Foreign Language] During the first half of fiscal year '23, our GMP recorded a notable increase to 240 basis points to 21.0% a margin that GMP of private labels increased from 27.4% to 33.0%. Our posted fulfillment margin also increased 170 basis points to 9.5%. [Foreign Language] On company management we also further optimized our cost structure and achieved remarkable macro success. Our operating expenses were able to report 21.0% year-over-year decreased in the first half in terms of revenue we also dropped from 32.2% of total revenue to 26.1% of total revenue, highlighting our effectiveness in cost control. [Foreign Language] That lays the foundation for narrowing loss from operation and the net loss, which equate to 15.42% to RMB 29.6 million from RMB 82.6 million and 52.0% to RMB 29.5 million from RMB 81.9 million respectively. All these have demonstrated our business resilience and improved profitability. [Foreign Language] Looking back to our journey Boqii has established its leading position go to pet platform in China by creating values for pet [indiscernible] and pet parents. We will continue to expand our ecosystem in the future and hope to become the preferred channel for our users as well as the leading market development as we further expand our production selection and the network reach. [Foreign Language] Now let me pass the time to [Al] [ph] again to further update you on the market insight and our operation in the first half. [Foreign Language]

Okay. Thank you, Lisa for revealing the performance and business highlights. [Foreign Language] Despite uncertainties and challenges, we remain optimistic about the future of China's pet markets. According to the I research white paper; it is projected that the industry will reach RMB 445.6 billion in value which U.S. dollar 66.1 billion by 2023. With steady growth of the market and the possibility of continued growth in the future and we will continue to be committed to enabling the industry upstream and downstream precise products positioning and expand our online and offline reach so that we will further establish ourselves as the leading pet ecosystem in China and to become the go to platform for pet parents and brand partners. [Foreign Language] On traffic approaching, we put in notable efforts breaking circle linkage and user engagement during the first half. Our number of orders increased by 4.1% year-over-year to 5.03. We also delivered [Technical Difficulty] increasing 16.4% year-over-year to record high of about 3.81 million. Our CC also reported 54.1% year-over-year decreased to RMB 5.2 from RMB 11.3 in the same period last year, which is our record low all these pointed to the fact that online community remains vibrant with new traffic and high stickiness laying a solid foundation for future growth. [Foreign Language] And as one of the company's strategies, we also made great strides in our private labels business in the first half as a keyway to build close cooperation with upstream and tap into new product categories that will drive self-satisfaction and customer stickiness. Our private labels business reported an encouraging performance during the first half with revenue increasing 30.9% year-over-year to RMB 105.1 million and gross profit margin increasing by 560 basis points year-over-year to 33% from 27.44%. The revenue contribution of such high margin business has also increased from 13.3% of total revenue last year to 17.8% this year. [Foreign Language] In addition supported by our increasingly solid financial position and strong operating cash flow, we also believe we may need better infrastructure and support along the supply chain so that we can maintain our competitive needs and expand our ecosystem. Hence, we are actively exploring potential cooperation, investments or acquisition opportunities with other upstream and midstream players and we will be more than happy to update you in the future. [Foreign Language] With the improving financials should be translated to an increase in investment value, especially as we demonstrated our improving profitability for successive quarters. On the other hand, the increase in financial strength should also allow us to pursue more options in boosting shareholders return in the long-term future. [Foreign Language] Now I will turn the call over to our Financial VP [indiscernible] who will share more details on our financials. [Indiscernible]? [Foreign Language]

Thank you, Al. Now please allow me to walk you through our financial highlights in the first half of our fiscal year 2023. Before I go into details, please note that all numbers presented are in RMB and are for the six months ended 30 September 2022 unless stated otherwise, all percentage changes are on a year-over-year basis unless otherwise specified. [Foreign Language] In this first half our total revenue decreased 2.4% to RMB 589.6 million, primarily due to the recurrence of COVID-19 which led to modest decrease in product sales revenue of 1.5% year-over-year to RMB 568.7 million. [Foreign Language] In terms of fulfillment we integrated our back-office service system and then completed the upgrade of our [indiscernible] fulfillment model such as intelligent sorting and cloud warehouses to further enhance our services capability and resistance as a response to the price increase and control restrictions faced by the logistics system in the post-COVID year resulting in increased the transportation and operation costs. In the first half of fiscal year 2023, our procurement expenses slightly decreased -- slightly increased from 10.4% of revenue last year to 11.6% of revenue this year, roughly maintained at RMB 68.2 million. Yet, our total fulfillment gross margins third party increased from 8.2% last year to 9.5% this year as a result of the gross profit margin increased by 240 basis points from 18.6% to 21%. [Foreign Language] Our total sales and marketing expenses were RMB 53.5 million down by 29% from RMB 89.7 million over the same period last year. Sales and marketing expenses as a percentage of total revenue was 10.8% down from 14.8% primarily due to the cost of savings generated from reducing advertisement expenses and increasing proportion of our revenue generated from more cost-efficient channels. [Foreign Language] General and administrative expenses…

Thank you. We will now begin the question-and-answer session. [Operator Instructions]. And today's first question comes from [Jin Jing] [ph] with [Guosheng Securities] ph]. Please go ahead. Hello, Jin Jing, you are live.

[Foreign Language] Let me translate. Jin Jing which from the Goshen Securities asked us about two questions, firstly, she congratulate us on our good performance in the first half of fiscal 2023. And her two questions is, first is which sector is the company's strategic focus in the future? And second question is, do you any expectations for the future revenue, proportion and gross margin and net margin of private labels?

[Foreign Language]

Let me translate. For the first question, Jin Jing asked us about the company's strategic focus in the future. And we answer that we will further optimize the operation of the supply chain. And we'll create a real mechanism supply chain with continuously feedback from the big data in the pet industry. And to make the supply chain to the best and innovation, we will invest more resources into the private labels and to further develop our private labels. [Foreign Language]

[Foreign Language] Based on our platform dictate our capabilities and our rich years of profile, we adjusted product mix in the first half year. We added some new SKU such as snacks and healthcare products to satisfy the needs of pet parents in multiple dimensions. The revenue share or private label has increased from 13.9 in the first half of last year to 18.5 in this year and is expected to exceed 20% in the short-term future. And the gross margin of our private label has also increased a lot from 27.4% to 33%. And it had to increase continuously and [indiscernible] exceed 35% in the short-term future. That’s our response, Jin Jing. Thank you.

Thank you. [Operator Instructions]. And our next question today comes from Matt Maa with China Securities. Please go ahead.

[Foreign Language]

Okay. Let me translate first. Matt Maa from China Securities asked us about how well the company consider buying back or increasing shares in the future. [Foreign Language] Okay. Let me translate. For the question about the buyback and increased shares we answer that we will evaluate market conditions to determine the timing and details of the buyback or increasing shares program. I finished my answer.

[Foreign Language]

[Foreign Language]

And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks. Do you have any closing remarks? And ladies and gentlemen, it appears that there are no closing remarks today. So this concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.