YI - Earnings call transcript Q3 2020

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Monica Mu

Hello, everyone, and thank you for joining us today for 111 Third Quarter 2020 Conference Call.

On the call today from 111 are Dr. Gang Yu, Co-Founder and Executive Chairman; Mr. Junling Liu, Co-Founder, Chairman and CEO; Mr. Luke Chen, CFO of our major subsidiary; Mr. Mr. Co-COO; Wang, Harvey Ms. Co-COO; Zhu, Barry Monica Mu, and Relations Director; Mr. Investor Liu, Finance Director. Alex

is reminder, live today's a being conference As call broadcast via webcast.

under Safe In forward-looking on get me this our Company's IR Company's the are of Act upon results will started earnings actual presentation be the the let of events of the known with at statements on unknown and XXXX. conditions replay may was call materially. management's The differ the available and today, release that to earnings Reform addition, provisions Securities call. Litigation to and that operating risks, Harbor Private press ir.XXX.com.cn our expectations they could remind and earlier together website Such made you are website based current all contain a uncertainties following which cause distributed relate involve available factors, Before and and we statements market current other

the on in performance stated. a are comparisons our year-over-year for over release all With to our call these to a except result any under information, more to our any Please required press as to Junling financial unless obligation statements risks, Liu. undertake refer all basis. law. For events that or Please forward-looking numbers I year-over-year and RMB future please note comparisons to otherwise not applicable filings earnings about the refer with of SEC. does refer CEO, as of information turn update will also detailed XXX comparative Mr. the that otherwise, Company's new information

Junling Liu

earnings for joining call. Thank Good morning XXXX our you and third good everyone. quarter evening

to topic some make to to I'd like the start context on pandemic to this As call. globally, COVID-XX headlines provide this continues

with downturn pick the of spots China a result, the pandemic economic and the starting been as and As to successfully up. of is continued economy few control the one cases bright of the under world has resurgence the coronavirus much see

something environment to in being own to positive the addition economic in has our its for right, be In a celebrated China operations. created recovery also

country, vigilant to all to staff our want stay However, a the and couple scientists this I'd for any dedication pandemic. long determination customers diligent and needs news healthcare to company wave and numbers, update a workers consumers infections. as of new their of we I their the And thank unwavering meeting corporate a the you against the for of of continue XXX for diving and fight into like in before on. to the

the strong the will his of of financial will in Luke XXX thank Fang and foundation In appointed. growth IPO. work, in Firstly, a Fang new role Mr. Information Yao a successful recently STAR as Exchange's in addition position, alongside CFO Technology for to a meantime, CFO setting Yao believe that CFO listing his for appointed is until during has CEO, new the to I step Luke transition acting my guide he trajectory Shanghai in as preparing until Luke for We CFO been board. and Chen, on Shanghai, XXX's Stock XXX strong subsidiary

discuss institutions. tackle Partnership Secondly, digitally companies, to healthcare patients our industry as omni-channel pharmaceutical attracted experts, September Summit Healthcare able transforming platform by XXX China as well these hosted developed was take to XXX leaders on our medical innovations showcase the healthcare facing challenges healthcare around to opportunity that the this annual connecting our various XXX opportunity to challenges. medicine the and healthcare with government globally, the leading and executives and is participants been industry services. in Conference, XX, and Online from China conference including third guests investment paved the which This

with insurance innovation and These omni-channel advance the pharmaceutical company's XXX's including will innovation at companies, to fits leverage China, busy Pharmaceutical Healthcare, Uniondrug. well Bayer in high a their partnerships. to partnerships Shanghai the partnerships each Huluwa Xiangxue more agreements, strategic partnership a company Novartis expertise as leverage These access through conference, expertise also we During each provide advance Pharmaceutical, healthcare platform, announced will several time company's and manner shortly. able consumers will and quality that products through to schedules. into will conveniently I detail as be

agenda the which to earnings our on an you operational Section business performance, can QX overview of of cover find Moving The and deck. results. today Company's the in will X

the We X. performance in financial Company's review Section will then

QX will with the opening We call end for Q&As. before guidance for

another begin. Let's quarter delivered We're we have stellar that of pleased growth. report to

consecutive Slide We increased from XXXX the growth. revenue Net this to mission. see execution where IPO, narrow QX million. continued X% consistently showing billion, the XX% to triple-digit to towards above eighth our -- believe been Non-GAAP while of net of three-digit have revenue this growth a as strong a performance robust is can strategy or quarter, multifaceted of revenue delivering XX% the net XXX% profitability. is to RMBXX gross you validation As of successful quarter growth percentage our RMBX.XX loss accomplish X, profit rose in approximately momentum from we since to our reach near

We excellent have doctor-patient solutions our related our for other patients response and education digital received and from made services customers. our solid in management, areas capabilities, interaction, the of pharmacists enhancing progress cloud-based doctors, patient

The management solid of one is industries. more and drug fastest China's chain our omni-channel growth making is for our foundation supply efficient. in operation growing platform more commercialization future smart laying Our

retail platform progress pharmaceutical healthcare few companies of to all. and last benefit the insurance pharmacies, significant the we in in together infrastructure doctors, platform a the digital companies strengthening Over our of the healthcare made partners, the brings stakeholders online that quarters, ecosystem, key

China, into serve of XXX,XXX management, largest smart in and cloud-based greater reach, and our our and strong network cost broader the market potential consumers. product end solutions an enhanced to ability For our our customers, resulting system, optimal higher retail and in effective sourcing inventory machine-learning better pharmacy part efficiency, sourcing, a assortment, translate earnings

innovations technology better achieve hands to latest for our health of puts their their in doctors, outcomes smart For the patients. medical the power

For materials, medications the education medication follow-up holistic them across access at of to home e-prescription and patients, obtaining best disease the doctors service. our through platform consultations, guides our disease management gives the country, benefits

The years. chain infrastructure last The we business pharmacy the other continues and to the segment be important these to is to hard This strong pharmacy three with storefronts. growth. that solutions. and is opportunity build network been over virtual family-run have of part retail of the better particularly working by the showing technology sector highly We a enable dominated vast see owners supply fragmented business

in pharmacies goal achieved providing China, of reporting China. as the retail in virtual all retail quarter we surpassed in our pharmacies from which grown representing aggressively our over largest three the will of years, the XX% building the increase third future date, XXXX a and be reports. this not of the last number over pharmacy have network of the Having We retail earnings network XXX,XXX pharmacies half of

strategy Another validation demonstrated. to we've of the further increase strategic our is partnerships, on based value

more digital services, pharmaceutical at return, supply management support we together help XXX's and cloud-enabled and earn and For a our but In only marketing access customer lower patient with tools smart do base for much services companies, valuable. wider to a the chain cost. gain provide, them something not also gain fees we

commercialization are company more choosing pharmaceutical gain to their a efficiency. us as reach customers Our partner better and

improved both that and consumers, at sticky gain they and turn and customers, this and enhance of the the network for demand in of the pharmacy means healthcare pharmaceutical a which their pricing, ARPU translate retail business other innovative products, portfolio in margin. our into better broader For generic products higher more

For XXX, it when well, goes without our that customers do saying well. do we

over pharmacies in news increase same the around of retail made period XXX and strategic we provided progress quarter strategic network in up XXX, sales, XXX% partners performance last the the see our a the expanding customer at we partnerships. revenues, In good As of year. number in over excellent for I improves, the Earlier product fees preview loyalty. this corresponding to

Beyond lower the This have us power another to healthcare enhance to and chain. digital pharmaceutical In Uniondrug. insurance consumers the partner, at prices. better pharmaceutical offer company, enabling the partnerships access Shanghai we've to products partnership developed further will quarter, to insurance value healthcare added give us we with companies,

to services companies all All key personalized partnerships that us ecosystem, The gain than care. these to addition, better health. our better the rather a In med consumers and curative consumers. consumers creating emphasize including enhanced an leverage stakeholders integrate from are other, end stakeholders and allow customers high at services, greater preventative together, supporting will healthcare who XXX. to and of on and of costs tools for taken the also care insurance all, needs their platform all retailers, from ecosystem our a that of manufacturers, this virtuous each and result digital omni-channel drug winner lower is the are And us circle and depend at ultimately profitability benefit end benefit where end sticky

our performance. Now let's minutes spend on a business few

results. by spun-out our business Our the latest

For joined area as increase our customers network BXB our in grew were million. XXX% existing gross to profit by XXX% Revenue contributed quarter the RMBX.X RMBXX incremental versus sales number almost as of XX.X% revenues from segment, added the strength of the grew customers third by of new the was up well quarter. quarter-over-quarter. from who newly greatest XXX% quarter-over-quarter customers the base Revenue in and existing orders of of XX.X% from this customers growth to the and billion recently

with efforts deliver and unique slight before this the management network, back X.X% live. deliver prices around focus wellness consumers on will tens revenue decline, growth of position of conveniently our patients of can the that an most with is track is gross segment, government primarily we're a other to end these encouraging that health favorable a and digitization, the value and along down our believe to needs RMBXX they regardless efforts we because in health platform. position doctors RMBXXX a example the at and of country. advantage are we initiatives which For X.X% take One -- year-over-year our health available already access enviable products soon on the to driven a results. to will the shareholders only to the them have efficiently, confident again consumers provides The our policies decision our to patient for million, and care in our where platform, BXC pharmacy on superior backdrop yielding and and their quarter Against our million by Company delivered immense of of We're to by saw retail best and XXX's be care, here outpatient decrease Combined respectively. care filled we country the to prescriptions competitive profit, thousands towards

more our improving our favorable efficiency, health care enhancing we're platform market achieve and pharmaceutical strengthen to providing for we companies chain our its doctor-patient infrastructure their and better outcomes. supply products, patients As digital help tools smart to and

the Looking and of last gaining we and new the to towards existing while enhancing ones, on done stickiness what stay year, increasing expanding narrowing sales net loss from well, focused furthering will base quarter of partnerships. strategic we've deepening and our customers,

the leading digital execution a of enabled immense With believe to presented the we us healthcare economy, also country advantage platform recovery the opportunities Chinese by us will of the that allow have strategy build take this the market. and to that in Chinese

of ecosystem financial power next work With sustainable the and will to delivering to drive our call I that the to tirelessly Luke value we to shareholders. proven our Luke. our quarter the have its walk profitability a in long-term Thanks, increase the growth, and beyond will through continuing to results. and hand and ascend to We

Luke Chen

you, Thank Junling.

Moving and financial on like XXXX results few our unless year-over-year details and section key our you from XX are third numbers to otherwise quarter the all of stated. in XX highlight of the metrics can Slide presentation. business would to Slide to a focus the the financial on XX, I comparisons, see RMB

guidance for which total RMBX.XX exceeded XXX% our end range. Our of net quarter revenue to grew the top billion

added XXX% to was network. now segment customers which growth disclosed customers our segment contribution RMBX.X strong a well from the this E-Channel, attributed our as existing separate quarter. Our Revenue into grew as strong segment growth in in incorporated was BXB BXB as newly from billion. to segment BXB revenue previously The

mainly restructure a our to investment our Our to in down business BXC BXC segment, reduced RMBXXX revenue due million, platform. was third-party X.X% as of we

expenses XX% for a to business RMBXXX gross rapid X.X%, grew while the which operating to with ability reflected BXB BXC margins Total to top effect continue remained XX.X% Our a by improvement line year BXB ago, gross stable our our to combined BXB the our compared maintaining the our and RMBXX X.X%, margin. lower by margin margin gross around XX%. X.X% the gross of up mainly was expansion growth. million, amount from of in gross to up was to Overall, business margin margin improve triple-digit from The dilution quarter due the profit X.X%, were million.

quarter in percentage to X% a and net As operating as our to quarter XX.X% of improve in percentage down for for X.X% expenses X.X% XX.X% from expenses the quarter our for to year leverage quarter percentage from quarter same X.X% increased net Fulfillment for as X.X%, and X.X% operating revenue same quarter was and down same a from the expenses expenses last net of operating as last last total G&A revenue efficiency. down accounted the expenses down the X.X% marketing decreased year, year. revenue, and quarter the same the revenue, same year. the was of was to compared in optimize as from quarter year. we compared down Sales last from continued was X.X%, which a year. of last a last for the net same of the net this quarter the Technology of amount in revenue quarter X.X% XX.X% percentage quarter as

X% to the revenue, same total on for year-over-year a to for between the Company XXXX as net for X.X%. quarter, narrowed last XX. year, RMBXXX [indiscernible] expect net in of ordinary result As compared Slide fourth a RMBX.XX be the customer position. RMBXX quarter appendix Slide demand, statements, loss based to subject RMBX.XX to the which billion, The net above XX%. and Company's the and to non-GAAP to million to million attributable on representing down well shareholders billion accounted revenue from quarter guidance outlook which section as our of refer and selected cash change. quick and current growth as current the our conditions market are is of The estimates the Please to financial XX XX% note operating reflect market for a approximately XX conditions, on preliminary of of

our operating had cash achieved And we amounted investments RMBXXX we positive quarter. we XXXX, of This million Operator, RMBXX to we activities cash flow and billion positive to flows begin restricted the totaled Thank As to cash XXst, cash December concludes equivalents, compared of And as XXth, September prepared period now for RMBX.X and cash year-to-date. which the are achieved activities the also for remarks. short-term Q&A million from session. ready operating from XXXX. you.

Operator

the Yin. line We Sherry question. have Please you, ask first Thank the sir. [Operator your Instructions] question from of

Sherry Yin

my the taking for from This you Sherry on saw quarter is my today. updates. many Amazon's few question XXX results. key you We change. in strategy for Thank questions Dr. was past Congratulations JPMorgan. My question. first third established business is major strategy encouraging strong Could about specifically that Dr. has Yu give I have if Yu. us chain revisit, months. know three business question partnerships management We over And second worldwide a operation. supply any that is

about is about marching XXX's major Could the drug pharmacy you into and announcement China of the us Amazon's and business and competition this the move the That's big on share As Thank these question difference regulation you of more online is pharmacy online U.S. recently NNPA between change. online my landscape. updates last help to a lot market. week's the all And implication Could you. question. to my color turning attention regulatory market industry. last operation

Junling Liu

and and to -- first question close to strategy, revenue be believe this then profitability. first About to over billion the Yu so the we will future continue. well on $X deliver take I'll all very we I Sherry. you, Thank let will year up in of

out and have services. connect healthcare is medicine our this business However, a to which mission, patients we start-up, run still with we laid digitally as want to

use mission, like keywords. accomplishing to So three that I'd

is keyword want to first I The use digitization.

pharmacist on would stuff tracking this infrastructure. agree value keyword consumers two the sales had digitization. And investing digital next think can in We to million generation industry use our delivery RMBXX so in I laying reach to doctor-patient within backward when everybody is Essentially, healthcare directly of that hours. whole our and heavily move we interaction on from infrastructure app is can also digitally drug the XXX we through patient to the all our leaves I We're relatively China, doctors how the platform, to infrastructure. network And were to We over solutions, our enthusiasm using the generate chain comes of I'd patients world. it very use patients. keyword able etc. I way also our want China. are It's education, next pharmacy have two our from the our the for amazing on through then when realize One internal doctor commercialization. all including this factory, like digital imagined education, and the the as could point doctors. BXDXC the to live chain, the is the XXX,XXX cast that can education, to the marketing, through BXC, data, the not big cloud-based plus supply [indiscernible] part third understand and BXBXC this And the of much in

is to Our implementation the that with to the of going BVP pretty companies the of going the the pharmaceutical majority companies pharmaceutical competition are and focus future innovative drugs. on are view bio-tech tough face

those unless know we biotech get all, and there recently well, Exchanges, no Kong will Stock the are take in new in not going commercialization to companies listed. I challenges drugs that long -- were all approved. newly And many think face all their listed maybe Hong Shanghai most got companies of As

have heavily. been investing is this pretty So where an area we

great great omni-channel be -- them. position Our will a will a in be commercialization help platform to

the digitization, the commercialization. and infrastructure me three let keywords, So recap

really those areas strategy implementing investing. we're the are is and this So we're the

Dr. questions pass I'll next So, on the to Yu.

Dr. Gang Yu

question. the asking Sherry Thanks, for

recent their store second sales. your about that of one launch online Amazon's answer drug me let So mentioned you

in Amazon, I in as the XXXX, for has called Drugstore.com. fact think other XXXX as But this for fast and many product I category when been early think was serving, years that company Amazon I not developing started that categories.

more think consultation penetration online think doctor online, and is more a devices mobile terms we China, aggressive reasons. online, and acceptance One of the that I is -- also market drug policy also of wide I open. to Chinese customers, certainly several by purchase, vast more it's in government the the e-commerce in think due in great I are

online know encouragement prescription online as consultation recent doctor online and by that and healthcare. policy consultation, allowing allowing insurance of Just drug being covered you medical sales more

the growth about And think facilitated week's health all I really you second last new... the China's this question, mentioned of the industry. online

Junling Liu

question. Third

Dr. Gang Yu

third mainly feedback. industry The The fact, very the right. the -- to Chinese also and gave them is more It whole positive is will feedback. feel have question, the care participated this and very online in government the us. it whole in monitoring, control will of the I and retention that And a of certainly discussion a we we to the with quality. and management positive open tune really health more of policies by more to whole scientific be our rigorous,

So more higher that will certainly compliant, are these have transparent more that a are allow to service. efficiency companies and policies the

great it positive I definitely change, feel new all think these we is that policies, a we in very to great be us. all this a certainly are -- in think those so, is I and -- to industry all

Sherry Yin

and clear helpful. you. Yes. That's very Thank

Operator

line question We ask of Bingyu Please Chen. your question. from the the have next

Bingyu Chen

Thanks questions. these my results. Actually questions I several for congratulations taking have and on

how you and is fulfillment profit will please is we BXC the how us because seen costs. managed achieve on question segment about you orders. of third reason increased we is behind that keep and the and all, number momentum. the once margin gross more developing side share And there growth know second maybe the it a of what's see see First rapidly And increased about, BXB the color you in is And Thanks. to segment let the you please that. would increase have

Harvey Wang

and This I would three increase. the well these the take Okay. order is Harvey. as BXB growth margin question regarding as volume BXB

revenue about increasing mainly digital for on BXB strength all customer customers rapidly. one growth, other total has side is the BXB existing our the XX% on our capability market. is So, And hand hand, our representing The China exceeded of coming XXX,XXX first increasing of growth our also on is from and of which marketing.

example, their to pharmaceutical total For XXX to commercialize tools. through marketing we drugs offer digital companies solution a

internally to cloud-based services, We our and customers CRM. two mechanism as Turbo we tools, services such data our inventory pharmacy develop more customers cloud use call digital build also a existing well to to also activate enable customers, clinic, sales other as to internet one the BXB the sales to improve as major business. the we These tools which can part force, cloud trend, there with cloud growth technology acquire cloud of digital called Hawkeye how also for And up big on we BAU, force keep improve margin lower-tier three-digit improving especially three in reason us side, improve cities revenue, technology I Then rate. a our and contribute efficiency. our BXB keep and good help marketing meanwhile, think are margin

all, sourcing of and companies. just Junling just direct and are mentioned, more more First from we now pharmaceutical

smart pricing Secondly, our sales is build System that to we Intelligence and our PIS improve while negative profit any without expansion. a to launched impact mechanism to growth Price

in third think digital answered volume. I've reason, to a through in also companies BXB Yes, we hope the meanwhile margin promote SKU and past capture quarter, I Third platform help And of regarding the big on higher bringing margin. your in increase marketing the SKU these volume. pharmaceutical sales BXB question. which order order it's good I Well, our our question more in the the more bring

we customer have operational lower on chain and supply in to firstly our to SKU costs X.X% selection SKU efficiency We important through experience. Luke And model the the is managed we has highlighted. think fulfillment our selection as of network, quarter, selection supply have and increased innovation the secondly just our increased our chain new our improve element supply most I believe several times. past technology continuous chain through and

order improve free frequency shipping our lower returned saving their and volume net threshold, ARPU, We have customer our also by and our improve fulfillment cost the revenue. and on improve buying customers to which our

any Okay. question? other follow-up Is clear or it

Bingyu Chen

I no It's you for And your clear Thanks. and very Yes. questions. answer. thank other have

Harvey Wang

you. Thank

Operator

We Yang. the of your have next question from questions. Rachel ask Please line

Rachel Yang

result. such you. thank Okay, This Hi, I questions. four Rachel HSBC. quarter first from is strong a actually third have congratulations for

first your healthcare digital one The is platform. on

platform. And medication us because progress competitive achievement online for So is many could that. with recent for And jumping the the you market the what's and please plan nowadays quite year? share internet next giant into that with

technology the So you over over the from giants? behind differentiate digital This on those first do how could facility platform. question think or is us internet

one on your The second is clouding service.

So, what is that? are And do you the charge the This service number two. clouding is standalone them. pharmacies you for providing

question third you have read cities. logistic have the The systems. that's a province reach covering the delivery a the capability that from -- all XXX your is and for in XX-hour to PPT logistic you you capability We have over system or the

to your is Last financial online front. capability compared that other is players. on how medication So one

of So already RMBXX some top would that we billion. cash line are eagerly we and the at know we reaching flow next I year total positive guess

we are far think do how financially break-even. you from So

So these are the questions. four

Junling Liu

the If progress drug built those out of question suppliers. flow the tool, and really smart which day and they understood of capability few platform the digital and And Patient in pharmacies of they years to minutes our marketing, is digital course, thing greatly have smart sourcing, an when a can digital track orders. the right. they to transactions tremendous Program. day. helping those done say, the digitally they what of instead is think replenish, and I past, first And we they in procurement different addition industry patients. you course Thank use factory is So to lot a examples, some heart at And solutions, half half correctly, place which then we've give to Care complete In really digital the doctor-patient of the sourcing last the we just have will our other our happening a you one you. SKUs figure -- the of past, called over is I'll that let's digital really seen spend paper the sheet In actually offline. our we they also I'll within, a their from in five take our the then. I best right? out call the With need about interaction platform. it's

Care Patient plus have Program, T the D minus with seven So we T seven, D XX. one, a minus and plus

go me just Let quickly through that.

so DB, what diagnosis. For let's say instance, is

the compliance the to related going of the education importance they send we're the to material diagnosis, out And on. a so diagnosed On the obviously to when based out patient disease, able assuming and after doctor's course on to the following of the a T got will types day one, and patient, the algorithm refilling. send platform a means we're first material. chronical I'm going DB is And different this and DX, on is be the prescription on over time drug the our and different day use And prescribed be delivered, should

So up time still not if the actual a T our is and send or try by about out system We're it's obviously our zero, can remind how he on And on. a English, or know education. to going And [indiscernible]. other And patient It's a the pharmacists to companies, of note going this we high we describe automatically in education, calculate. digital the traffic to with pharmacist the essentially to her, it it thing to to to going minus, to for her, follow patient it's proud very have is comes different especially when day, out pharmaceutical refill. of built then conducting matrix I doctors' really the and don't minus happening, find T him what's call out the -- the are we education, are marketing is media.

from biggest and traffic For instance on. came so in China, WeChat from Toutiao, from the Doyin,

the actually run we compared actually a we participate education, have the big million traditional accounts education had obviously over live next an that example. conducted overall by know much give sites single who can we is in I follow-up that and when we session, can during we digital and we company So advantage diabetic patient should company you people question. Eli we a viewed reach a a with much, X all million more solution do. capability that in audience those ways we We'll Lilly set as session, then users all session. the We XX up sponsored the a traffic over to have. -- and broader and program, That than to don't going exploit really and actually pharmaceutical recorded clear we're

Dr. Gang Yu

answer. Let me

the take me services. cloud question Let on

cloud pharmaceutical companies provide insurance basically we pharmacies, companies, service etc. So doctors, all systems, ecosystem, including persistent on

So just let example. use an me pharmacies as

So pharmacy. we'll throughout provide

will their move We online. pharmacy

the So a transform online coverage. Also clinical pharmacy their pharmacies. clinic, so really the increase into coverage -- of provide

we've So hold, kind we drug prescription of combination that in find our to get a a into store. pharmacies that to will our and from of transfer drug doctors order innovations got got reach or pharmacies piece and

provide that so also so large selection We online with product inventory inventory, cycle. that the --

measure With We We I gain loyalty with coverage. answered the also the help that. this we cities mentioned have provide Also more question way, customers. customers. that on to pharmacy cloud of the cover CRM, to the we thickening XXX

cover [indiscernible]. with In fact, more we customers than XX% of

experience. the with you services. we thing that So hold can you the asked that feel mentioned customer We other

provide we customer our feel that, and are XX%, satisfaction So we of is to right satisfaction. going that proud is that customer now

focus that that price certainly selection, see We delivery, on-time So that includes as the customer we services. other three about. the metrics and

Luke Chen

Yeah, Luke. this is

position financial question performance and break-even our the answer as point. cash me Let well about the

continue We cash positive about of our on cash in are third And RMBX.X the operating for XX, especially and as flow from believe in well we position. September quarters. flow cash billion, we positive the that XXXX, the future activities year-to-date. at we trend period achievements to will achieved and cash from that continue as total have as quarter, activities for generate We operating quarter have hand to our amounting very excited

end will the it opportunity In growth the point, this we that, mode. the We terms do that which are of not investment. just we said net in as able still also. will of of as Having questions. well lose that foreseeable revenue as profile, profitability that we give year answer lead will the top still We we surprising strong lower at stage, quarters. Rachel, hope to as be ourselves efficiency, break-even growth, line to next your believe operating well because in investment we loss margin further want a was any as that expansion anything not we our percentage hope improve will to to and and in guidance net the as in the

Rachel Yang

you, Thank Yu and you. Gang Luke. Thank

Just the follow-up system. a small delivery on

medication with can compared us capability share players. with how other So is you online you're

Dr. Gang Yu

our customer entire feel probably are in-time our is our are very We as still customers have thought focus question. fulfillment I industry, chain, the supply flawless efficient and and the with XX% more we the cover experience. lowest optimizing can than I very we the that costs, all a lowest of we answered We we efficient. one, in

Rachel Yang

Okay.

you thank for have the other no you. Okay, you. Thank questions. Thank clarification. I

Operator

We Feng. have line Xipeng the the next of your question. ask Please question from

Xipeng Feng

Any just have have entered such think thank I program. XXX marketing drug Big -- aspects, beyond you have partnerships question. activities procurement have even on known actually question. quarter? building. more well into collaboration -- that I brand And And including pharmaceutical Also with Okay, and that and extends for collaborations. I digital the seen goes this to little many one companies Well, Data, have strategic the I corporate congratulations

what question make when the offer pharmaceutical other is Inc.? you with cooperation could companies advantages Thanks. are XXX So choose Company. And my the what to of

Junling Liu

Okay.

question. take me question. a Let that That's great

pharmaceutical feel We main reason more the certainly global enjoyed more is we partnerships companies. So the have strategic top that on volume. with and peers,

that high capability -- today commercialization we transparency, demonstrated the our very drug have deep scale and digital the of penetration, of innovation and omni-channel is have also and and our are high and breakup and stability. customary chain while we experience coverage our the efficient supply company compliance public and enjoyed broad First we US also know And also in in the have we the in past years going industry. you capability and

companies pharmaceutical are are, reasons the are our we lot main these clients. the preferred think I that of --

Xipeng Feng

again Okay. progress Company, the that's And great helpful thanks. very for congratulations and on the

Junling Liu

you. Thank

Operator

the from Please Cheng. the We of ask question. have line question your Horace next

Horace Cheng

Hi, This Horace results. questions congratulations on the IDEATE three the Investments. for team. have I great is from

Ali side. Health on especially the That's XXX is and Health and question. the question key first JD JD first The Health between BXB the difference

going narrow. on continued Second a this share the also margin listing progress And sustainable? forward? you. loss to the more Is Board. you is last little gross your non-GAAP has some more question Can net is, trend on perhaps light Thank question shed can bit on STAR

Junling Liu

Thanks, I'll Ali Health. take the Health first question. The difference and between XXX and JD

I is and different Ali Health. Health think than very positioning our JD

because you JD it's of the the calling right. Ali and obviously that Ali companies, naming and naming quite Company JD calling business look First actually Yao our interesting is as of of at business that is if Wang, is Health, Health, the all,

focused So on they are more the on more we whereas drugs, consumers health. focused are

ourselves have -- on very in gather, against they but rather from will can are we position those differently this very size traffic. our to can So size to because big never them, traffic compete -- we

geared to look drug model, at much companies. that BXC, and So are the BXB, on And have. has infrastructure want our I to pharmaceutical we we focus if And is, point biz product digital towards much the more industry make our digital more commercialization. you BXC next no solutions one delivering value

about mentioned You JD's BXB.

haven't I'll actually using a that pharmacies, Luke. when seen the deliver and better is to focused on is fullest. experience to but and comes want margin to question on marketplace obviously gross more first-party the advantage we infrastructure value to it run are our we customer much. have to to the We as understand, we much that they business to as exploit account the and unique But this that the rather we pass

Luke Chen

that's narrow profitability the loss believe will we that Yeah, and on we to to we confident -- sustainable. continue are

the business and X.X%, in will improve, from to making are be profile improve sales, the because you to making not build X.X% from that, we already coming our margin we X%. service that pharma continue does gross So even we the X% but believe to actually the to business in reason the love TV for product could next only margin grow would we that with the continue partnership to see also that and to tribute the revenue we up that the direct from on business, triple-digit matters. scale revenue -- scale we of our will and With see but we the quarters, companies, see

products. product mix the those improving focus high-margin a the and with on So

to operating that improve we is efficiency. us believe gross continue So for the improve there our the and continue leverage rooms to margin to profile, plus ultimately

I up, point opportunity. investment net scale continue see But to as margin the are we improvement with net will will, profile will with breakeven revenue we that investors just we will make we that that percentage building -- on very So to that the the loss the continue and we confident shared see of coming. narrow

schedule are the listing rules. according of the we to we to SEC progress disclose will China, plans subsidiary making in On our it and according

encourage SEC So I your when issue that press to in of to we will would according you the the due release we Hope questions. rules. answered course

Horace Cheng

much. Yes, thank you very

Operator

ask We next Chen line have the from of the question your Gu. Please question.

Chen Gu

margins. Yes, why slight on both side, is revenue can you on BXC the decrease, there explain on and the

profit important with like the Thank -- the it, is very will volume as is margin correlate you. decline. margin decrease So your you

Junling Liu

Yeah.

for better invest longer-term my in conscious to to in deliver our that give to a remarks, really decision business. value explained I infrastructure As first

and if okay within fairly within percentage, going in the the it margin. you. And margin. is above it soon. moving confident platforms it decline but Obviously to it's pretty margins, we that but we gross other the to and the that the the are We a showed very -- percentage, you still also question top that the be with at track back at expect compare are the range if on growth a improvements should forward, in Thank margin about both we're and XX% you line is well great look BXB

Chen Gu

on competition, to the giants you growth more Can to especially or due what JD and infrastructure. growth this have invest why investing did Is you you for from not in for Ali, your decided elaborate before.

Junling Liu

mean, pretty clear obviously Yeah, it's I think out I there.

play We need space. are Right. not compete the to in players against different and big to traffic we a going

clinics the pharmaceutical and offline help infrastructure right building is to the the and procurement doctors to companies virtual So in to patient companies of much hospitals, more acquiring working where they pharmaceutical going hospital's we company number sales manner the for interaction list with a drug pharmaceutical platform. is we not more where delivered us digital for they well. is medical to the is take drug buffer it's are one working now use invest are going patients and even to even when partnering our that be to a the the And traditionally reps, customers like the we're issue want them -- launch products infrastructure And their companies, That drugs or introduce doctor if the approved we we as new. into efficiently. in in new also are year -- actually platform reps prescription their getting a pharmaceutical with to with on a to could with

going to we moving the are generate those And the and line, the bottom using will forward. So this that be business top in is believe, we line much future. infrastructures more both sustainable

Chen Gu

a choose and but to and you company if with just thing, planning do be know I probably I'm JD like I our ignorant know thinking and interact pharmaceutical Ali those want I patient, same right or where or I when doing very you're traffic education significant Yeah. is were companies doing I now. there patient the

Luke Chen

take me that question Let quickly.

drug. I than of think see prescription as our you sales more that can XX% are

to So clearly, we are products instead very prescription awareness professional health and of products. dedicated more

for specialized recently of our press I launched of innovative think So reason we've the lot new diabetes pharmaceutical disease skin the like done, like we is models to this launched we another etc. really what hospitals a release, to typically companies that

are those at. great we examples are So looking that

Chen Gu

you. Thank

Operator

from the have Sheng Hui. Please your ask question We of next line the question.

John Hui

on almost can question. reached then My of other all you the Yes, the like you pharmacy. each the how big Thanks in RMBXXXX. great good question -- but sales to looks on evening. and XX% it like pharmacies you like hand, of terms is taking average It's that of for in can China, you go pharmacies think you for the to sales

Junling Liu

I your Okay. question. take will

is market see have the are current the XXX think are still big. it's XX%, every I of still know covering they We market very our I pharmacy we year, in volume. think business, although size of you the times can -- we

grow business meanwhile, believe have to improve a gross our very a future, have we opportunity and profit. we room our further for we So that still in also big big further

has -- stock, revenue just per our think increased quarter-over-quarter the -- significantly. pharmacy ARPU here it's a means of the remember both it's or average and our pharmacy customer -- individual the if it's I ARPU user,

Luke Chen

think I when we started. got news it great is

low absolutely still Thank is sustain share. for can it high tell, longer you. our And penetration you a growth pretty time. fairly can when wallet As much we comes to

John Hui

thanks. Okay,

Operator

[Operator Instructions]

Junling Liu

already -- we're think I

Operator

like hand I'd Monica call the this time, to any closing. for At back to

Monica Mu

closing, you team, behalf your call. In we'd the Thank you, of this operator. entire management for XXX like participation on to and into interest thank the

concludes any email joining call. information, please require This today. If us you thank for the us and further you

Operator

Thank you, conference that gentlemen, Ladies does the conclude participating. ma'am. for for and Thank today. you

disconnect. You all may

111 (YI) 19 Nov 202020 Q3 Earnings call transcript