Ladies and gentlemen, thank you for standing by, and welcome to the MOGU Second Quarter Fiscal Year 2020 Unaudited Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. [Operator Instructions]. Thank you. I would now like to hand the conference over to your speaker today [René Vagenštajn]. Please go ahead.

Thank you, Melisa. Hello, everyone, and thank you for joining us today. MOGU's earnings release was distributed earlier today and is available on the IR website at ir.mogu-inc.com, as well as on Business Wire services. On the call today from MOGU are Mr. Shark Chen Qi, Chairman and Chief Executive Officer; Ms. Helen Wu, Chief Financial Officer; and Mr. Sean Zhang, IR Director. Mr. Chen will review business operations and company highlights followed by Ms. Wu, who will discuss financials. All three will be available to take your questions during the Q&A session that follows. Before we begin, I'd like to remind you that this conference call contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 as amended and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as will, expect, anticipate, future, intends, plans, beliefs, estimates, targets, going forward, outlook and similar statements. Such statements are based upon management's current expectation and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the company's control, which may cause the company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the company's filings with the U.S. Securities and Exchange Commission. The company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law. It is now my pleasure to introduce Mr. Chen. Mr. Chen, please go ahead.

Hello, everyone. And thank you for joining our second quarter earnings call today. China’s Internet space has evolved deeply over the years with verticals that once stood apart from each other, such as social media, e-commerce, entertainment, and lifestyle services, now merging with one another. A constant stream of new breeds of business models are being created every day. This trend has picked up in recent years, something which we are acutely aware of. MOGU was built with a mission to make fashion accessible to everyone. It has been a challenging journey. But like the new breed of companies, we have evolved with times; overcome many challenges in the past nine years while remaining fully committed to our mission. To swiftly adapt our business to a changing market and capitalize the growth trend, we strategically began building an innovative KOL-driven social shopping destination model equipped with an integrated supply chain. We believe this model offers a unique value to our consumers and is more in line with the future direction of the fashion industry in China and is more suitable than the traditional storefront and merchandise-based marketplace models. Individuals, to be precise, KOLs plays a central role in here with their exceptional ability to understand, influence and serve our users, at the same time significantly improve overall industry efficiency by consolidating the existing fashion supply chain in China. Building on this KOL-driven model will allow us to evolve and remain focused on our mission while driving long-term growth Empowering KOLs is the key for MOGU to creating an engaging and comprehensive social shopping experience for our users. In our last earnings call, we outlined three strategies that will drive the next phase of our growth. I want to share some of these exciting highlights. First, we expanded the talent pool…

Thank you, Shark. Thanks again everybody for joining the call today. I will walk you through our second quarter fiscal year 2020 financials. And we believe that year-over-year comparison is the best way to review our performance. So unless otherwise stated, all percentage changes I'm going to give will be on that basis. So let's review the financials. F or the overall platform, we generated pretty steady GMV growth over the past 12 months with GMV increasing nearly 10% when compare to the same period last year, while our Live Video Broadcasting business continued to grow strongly with the associated GMV for the second quarter of fiscal year 2020 increased 115.2% a year-over-year to RMB1.6 billion and an average APP MAUs who clicked on a Live Video Broadcast in the quarter increasing 76% -- 76.2% year-over-year. And the LVB associated GMV contributed roughly 40% of total GMV during the quarter and active buyers of the LVB business in the 12 month period ended September 30, 2019 grew 64%. And our -- the total revenue came in at RMB197.9 million, a decrease of 15.3% year-over-year primarily due to the decrease in marketing service revenues and the other revenue that was partially offset by an increase in the commission revenue. The commission revenue increased by 3.3% to RMB101.3 million, mainly driven by the increase in the LVB-associated GMV. Marketing service revenues decreased by 30.8% to RMB63.1 million, which is primarily due to our decision to strategically increase our focus on the LVB and allocate more of our resources towards it, and as well as the initiatives in merchant structure upgrade, that to a certain extent led to the -- to a lower number of long-tail merchants spending on marketing service in our marketplace. Other revenue decreased by 24.3% to RMB33.5 million, mainly…

Thank you. [Operator instructions]. We do have a question from the line of Ashley Xu from Credit Suisse. Your line is open.

I have a quick one. Just want to get an idea about our future marketing strategy and the way to -- for new user acquisition and thinking on that? And would there be any changes in the budgeting for marketing? Thank you.

I briefly mentioned in our opening remark that we're shifting our strategy or model from user traffic operating model to high value customer operating model. I have two points to share with you here. First of all, look at our Live Video Broadcast business, the ARPU and repeat purchase rate of our Live Video Broadcast user are multiple times of those of non-Live Video Broadcast users, and the model has proven to be more suitable than the traditional merchandise-based models. Right now the live-streaming broadcast contribution to GMV is still not big, less than 40%. So, our priority is to grow this high ARPU user for our Live Video Broadcast business. Okay. Right now within our own active user base, the live-streaming active user actually contribution is very little, although GMV is almost 40% but the user contribution is much smaller. So, our priority is to convert more of our user to Live Video Broadcast users. In this way, we can improve the ROI. We have already launched live short video content channel. This actually will help to convert user from non-Live Video Broadcast to Live Video Broadcast. Yes. Externally, we acknowledged that the user acquisition cost has been -- due to competition has -- going -- has been going up and it’s a challenge for us. So, we are trying to innovate our user growth strategy. So, from very simple acquire and convert model to a more deep operating kind of maintenance model, we want to have repeat user and we want to have high ARPU user. So we’ll invest more in the user loyalty program. So, I expect we will have some encouraging results in terms of user acquisition costs and cost structure. Okay. Do you have any more questions?

[Operator Instructions]. You next question comes from the line of Charlie Chen from China Renaissance. Your line is open.

[Foreign Language].

Okay. Let me briefly translate for the benefit of other audience. So basically, Charlie asked a question. He has seen the number of Live Video Broadcast hosts and KOLs increasing rapidly on our platform. The first question is, how do you handle the management issue? Would that impact kind of efficiency in terms of how to better manage large number of KOL hosts? Second is, we have seen many other platform or other verticals are also adopting KOL-driven e-commerce model. He wants to understand how to MOGU differentiate ourselves from other players?

Okay. The answer to your first question is, we have been building our Live Video Broadcast for more than three years. So we already have very established organizational structure and actually technology in place. So it's easy for us to leverage on our infrastructure to recruit more hosts and KOLs. So we are seeing very stable cost structure and we expect our cost structure to remain stable in the future. Okay. We are seeing, yes, more other players from other vertical entering the space. While this is a typical attribute of China Internet space, when there is a higher efficient business model, everybody will chase it. But in my view there are two strong attribute a company to have in order to establish a live streaming e-commerce. Number one, the platform need to have established infrastructure with capacity to empower KOL. MOGU has established capacity in the field. We have been accumulating KOL ever since our day one. We know how to operate people. Number two, the platform needs to have established supply chain capacity. In order to provide a smooth e-commerce live streaming experience, it's more than setting up a software or setting up a tool. You have to provide a full service e-commerce -- full e-commerce services, otherwise the service costs will skyrocket. So, both operating people and supply chain, I think we have established advantage. And for the KOL, for the people who are live streaming hosts, MOGU provides a very comprehensive solution, include more than live streaming technology but also software, hardware, customer service, e-commerce solution payment and of course supply chain. So, these are -- this is very -- I think in the sector, not many other players, if any, have all these capacities in-house. So, this is where MOGU will stand out. Okay. Next question please.

[Operator Instructions]. There are no further questions at this time. Mr. [Vagenštajn], I’ll turn the call back over to you.

Thank you, Melisa. Thank you everyone for joining the call tonight. If you have any questions or comments, please don't hesitate to reach out to anyone here at MOGU. This concludes the call. Have a good night.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.