GigaCloud Technology (GCT) 9 May 242024 Q1 Earnings call transcript

Welcome to GigaCloud Technologies First Quarter 2024 Earnings Conference Call.

Joining us today from GigaCloud Technology are the company's Founder, Chairman and CEO; Larry Wu; its President, Dr. Iman Schrock and its Chief Financial Officer, David Lau. Iman will give a performance and operational review. And David will share the financial results. conduct session. will we that, a question-and-answer After

will as As and nature, expectations, call of contains SEC and and the When measures future of events statements about directly can on and all webcast presented release call that Today's with a GAAP results Regulation differ be financial our non-GAAP meaning I may in to financial calculated as company within would measures conference for in turn actual materially. over include required, are the reconciliation measures G. remarks. well forward-looking to website. With in non-GAAP that, the comparable financial the to press found most opening today's like accordance Larry call

on demonstrated considerable of amidst you, first quarter ability our GigaCloud's industry last year's and welcome, operator, challenges call. Thank and profitable XXXX success drive everyone, to sustainable to headwinds. growth, and Building today's

ever consecutive comes results consumer are GigaCloud's quarter and pleased This growth. first revenue fifth strongest our even softness. of share to spending We as quarter

For almost and improvement achievements retail ability X% also the our doubled significant instance, while line these key XXXX. Despite other thrive results to year-over-year reported These the GigaCloud top headwinds, year-over-year, an Bureau sales QX amidst in to furniture generating decline operational nearly and U.S. metrics. downturns. in financial Consensus the demonstrate achieved resilience market

believe synergies efficient we sign expect and to we market. that and create see more acquisitions, As growth continue Wonder Noble revenue and integrate BXB we powerful House to an online ongoing robust will even

to these grow steps to taken further nature accelerate extra of addition have business. we strategic In acquisitions, our to

or cloud service their sellers marketplace marketplace. product a Service competitiveness launched we called help branding the new amplify as in to Firstly, BaaS a

and adding our products supplier Turkey. base Mexico Secondly, we expanded Colombia, from by

expanded further our a As a we for our from world-class our markets. marketplace, buyers to and demand these to increased new have diversity, range enhancing sellers. And source product lastly, global address result, increasing our fulfillment for quality buyers of wider products network allowing we support

You'll shortly. about initiatives these hear more important

believe We are leader will very e-commerce excited enhance further to and and position technology a of solution. continue its growth disruptor BXB the that GigaCloud journey our as

Going the marketplace global for streamlining our journey all participants. forward, committed we supply remain to chain

to I will Iman. over it turn Now

welcome Despite to X,XXX market my conditions for March joining we're us year-over-year, the also new GMV industry, with I'd new to for to of by the the months like XX everyone share add challenging trailing GigaCloud today. sellers XX buyers. experienced thrilled Marketplace and as by increased XXX XX% that

that and Our suppliers growth is suite transforms driven way parcel connect facilitates items and technology retailers the of by robust large transact. GigaCloud's highly and

fulfilled retailing supplier model seamless chain, Our supply global end-to-end a streamlines experience. offering the

the House services and company Our are progress on and I'll to by further provide acquisition integration offerings. an Wondersign adding of update our transforming shortly. Noble diversified robust already our products

the only program changing attempting [indiscernible] time, and furniture capital brand [indiscernible] brand course. But and sellers groundbreaking difficulties our great nature, to BaaS marketplace First, including that, developed unique is low of I'd yet second also gear market. The recognition, established to the have qualified program and associated or purchase This not we're effective in with creating BaaS By month. This as industry, the of new need enables an our the building and join initiative, We're and of transaction resources banner significant GigaCloud when last for its to This vibrant which both their long-standing to eager branding both offer holds up latest another with qualified to frequency a providing example GigaCloud discuss had toolbox. an challenges solution is BaaS amount out traditionally first game. the to suppliers we those our to and opportunities for like for as to challenges, addition new seasoned launched significant GigaCloud. more inaugural suppliers products tackle the [indiscernible] was industry-leading and the service compete is to for powerful of magnet platform. industry sellers stand participants allows At sellers core, quarter. margins for the the effectively, we our solution create industry enjoy under community the the marketplace for greater to in but translates services attracting marketplace. veterans marketplace from enthusiasm the widespread program

online some partner, favorite largest products through best-known Home Knight ] [ generated world's a million and been that Christopher with retailers. and reviews has brand first of consumer sold the Our currently X X-star have over

We industry-leading also additional future. look the in forward to with brands expanding this program

As created protect ensure quality by standards brand and brands products set expectations. and of center GigaCloud the standards we tools consumers equips but the stylistic strategic their maintaining to imposing need group. quality brand furniture guidance part participating control maximize The and simultaneously the their to the of and that only suppliers, with visibility participating marketability, brands. Through aim thrive, strict center other processes BaaS that receive not to reputation and sellers exceed including meet inspections while also program, end they we've

XXXX. X will always, advanced the U.S. fulfillment to new X center fulfillment during the we accelerating able BXB utilize Germany demand, sellers capabilities. of have quarter As be marketplaces to and centers first fulfillment our Due in added in

racking with to XX [indiscernible] product use efficiency. By Our growth keep experience currently dynamic to locations suppliers global infrastructure the are in broad action attention brought our place. and enhancing what strategic us to. April by growing will our believe expansion new transactions will already seeing breadth. add and X to increased space. We alluded efficiencies combined GigaCloud million our further of installation, prime well XXXX feet over A clear latest of indication fulfillment is to global network fulfillment operation The seamless, and a ease from we facilities and of addition as participants. has designed we pace expanding capitalize market, amazing enhance believe the for of regions, our by at countries a We're market among positioned XX marketplace Larry in improving soon are square undergoing in with new

to growing our We a through design community and of selection diversifying the untransparent furniture broader are buyer range. provide committed marketplace

of Noble Wondersign integration original in Our and innovation more and advancements fostering has planned remain empower they transformation. The successfully combined our technological ongoing are of enhanced even The and to is House our is on will driving integration the of additional us is Noble that reach as break global just an new for of unlock business signify drive progressing House customers. powerful greater testament we innovation synergy XXXX. track to Wondersign and helping entire with deliver integration our our presence, expertise plan to will acquisitions our avenues and ecosystem. Together, than expansion, these and a value innovation across a and

transactions generated XXX. increase ordered GMV active XX% ending Now nearly XXXX, our ending into Marketplace, year-over-year. third-party our in XP months million, XX% GigaCloud Showcasing gross March of of We XX the a sellers, through let's operational merchandise the highlights. the strength marketplace dive trailing value an XX, was our total the of the or a for $XXX of or total platform, with increase quarter

forward and efficient to continuing of which XX% XX% larger, believe to the drive virus sustained million our X,XXX grow from organic of grew our approximately average active trailing last ever-growing for we sellers and XP GMV strategy. $XXX,XXX XP and XP the period. We of participation our and totaled supplier same GMV product growth organically year continue more seller GMV buyer grew XP combination fulfilled XX% retailing We also more to should almost metrics. the year. The marketplace XP are period portfolio, to XX spend of build growing to months. network, XX in with in months, $XXX more increased House. adding our to active same successfully represented ago a marketplace, for buyer additional to Noble acquisition an and to a increase focus per marketplace of our are of high-quality than from scale our through expansion our a is which seller total for marketplace on the vital substantially look growth the trailing our the With XX%

I we GigaCloud's coverage is hope expected and future. center Insurance is damages fulfillment one with our our today's our Before XXXX, approximately noting in represented of update enthusiasm On minimal to $X.X March facilities X, center. provide holdings. as its up, promising the be on in million. It's of wrap Estimated of total discussion inventory the the warehouse a million that to [indiscernible] quarter. fulfillment X% up inventory that operation the $X.X our evolution respect of due for brief Japanese to effect Japan impact to suffered the at cost want our showcased I last worth to of a I disclosed ongoing at centers X to the fire held overall expected has on extend in fire. inventory

further the this key and of with remains after Our accelerating fulfillment actively and forget, scalability We're quarter robust global thrilled technological journey. the not future And with financial our acquisitions, on two global you consistent to and expanding growing let's strategically better us integration to participants we're our network of serve performance driving meet marketplace e-commerce, innovation. to have our quarter. growth demand. We're

will a detailed Now turn financials. for of David call the I over review our to more

discussing some quarter benefit some used those quick The of the first who most stated. defining our I'll of otherwise of be unless the with are housekeeping. first, of today quarter 'XX, are for first XXXX I'll to the numbers be new For company, metrics, our compared

EPS of we S measures Additionally, please EBITDA note and adjusted the first our filer. that after this providing non-GAAP filings of XX-Q the transition began quarter, adjusted in

Notably, for equal million. an trajectory. Service the transportation, inventory GigaCloud XP, GigaCloud gain of quarter, almost which previously by of platform XX% increase the As mainly $XXX to over tax, XX-month touch man million. refunds. Cost on I which at Total include shipping e-commerce, fluctuations $XX rates. a of our last is from defined prior on operational were charges revenues impacted basis. profit These XX% $XX third-party of deductions all Larry seasonal basis. GMV in paid by merchandise than e-commerce million nearly sequential to typically with strongest increased first our success first grew to and period and services delivery for resulted XX% Product gross to of which total million total is efficiency our revenues last-mile million a costs compared from and X.X% to tax first marketplace marketplace Ocean our $XX trends sales cost first ocean value our of and had XXX% packaging million, $XXX GigaCloud transactions the our same fourth the revenues roughly enhancing versus want total of of achievement mainly product with an ordered briefly to total in underscore year-over-year. Product market to have due with off-platform revenues, in year a and the operations. Gross quarter margin increased increased The first sale channels which inventory end quarter's increases growth shipping nearly doubled business in before year-over-year line $XXX the from a in warehousing, the commission, million, continued in ocean industry. goods the rate measures. through as $XX rise GMV, trailing year. revenues the shipping quarter discussed, underscores as XX% include which to to exceeded mainly value-added our great services quarter our period which $XX improved and revenues buyers performance include to sellers percentage our This or to in across through through XP, XX% we XX% revenues of of compared in quarter, improved a revenues a sustained on of XXX% XX% the reduction total gross industry revenues. or were GigaCloud the period. million more

contract secured fixed a volume substantial to have price uncertainties. hedge a We of our future effectively under shipping amount rate against

the costs, totaled operating growth including expense admin our million. due marketing efforts operating higher million and costs. General to and $XX of with our staff to was platform to $X expense and million our business Staffing total professional higher of $X primarily increase R&D volume, by compared last services expansion the million with further. Selling higher This costs are Breaking higher $XX and preparation, mold. fulfillment include with primarily expense and our accommodate along compared new set million paid the driven added third-party company related continued continued required growth were full fulfillment the in operational to to personnel the newly commission fee As e-commerce a in increase increase compared of volume, expense rental certain leased for advertising expense centers result reach expense year. certain centers currently million, under that to the $XX were to $XX websites. services and support down of

Our XX% to growing with million $XX bottom line XX% $XX million expanded EBITDA grew compared more quite Adjusted nicely more than year. with last net than $XX income million. by to

We Moving cash incurred flow sheet. investments. million a we in of million now to fulfillment during in season meet strategically pallet build to furniture with ended capabilities. To and can our expansion our towards network, we to CapEx, balance our total infrastructure in growing investment outdoor cash of $X anticipated including inventory. million sufficient facility ensure the QX, sales managed and enhance quarter strategically cash racks $XX have of allocated restricted have cash, the our first $XXX in our we support we upcoming

quarter, as that financial flow addition, were terms a Noble House on for cash usual provide in delivery sheet mentioned we previous difficulties, In balance our facing less cash the favorable generation our suppliers into in for quarter. than resulting we

quarter. associated Additionally, our have we network expanded acquisitions. I'll joining Thank today, continue we fulfillment presented organically million. [indiscernible] million revenues as $XXX the no center all up through $XXX you our outstanding represent balance with have obligations are debt for questions. second with finish our free. outlook and for and us currently on ready substantially Liabilities remain We're expecting and our borrowings our sheet leases for we between and to

MKM. question comes first Instructions] Our Matt with Koranda Roth [Operator from

first the just contribution wanted experienced with rate Noble versus off the and growth organic House. start you quarter that to Maybe from

you looks that particularly if basically where but year-over-year is it's clarify on House Just incremental from basis. Noble revenue curious strong could from. would I off the revenue assume a coming platform, stream all

the there So first. just drivers could maybe you unpack

take Matt, maybe this I'll one.

call, inorganic. kind out discussed So as what's integrating what's we organic business. in Because it between fully now, the our right last in the of break don't and we're of we middle

break the mostly revenue really by driven that e-com out we Noble you're So business. But we pointing correct don't business. is off-platform see out that the the as generation House

So that's correct.

it. Got

third-party driving I up. rates mentioned freight the was margins, the there? gross what's On going You ocean curious strength service

third-party for would margins in the So speak margins quarter? if segment. service revenue that I could, compress you the the assume would in typically that in strength in about Maybe moment, gross a you that just experienced

Yes.

now of alluded momentum the a we're sellers Man that side I of a lot little in for seeing season. XP a think of our lot earlier our are the particularly up house, and gearing outdoor furniture

So fluctuations. we we And shipping we're ocean yes, up, rights that are of velocity been don't hedging a us has as lot momentum I mentioned effectively seeing others impacted that have overall materially future we really it the as shipping rates while would expected. think against see going and now but also

So we're fairly enjoying. the current comfortable profile that at margin we're

and about you around the it's mentioned quarter that how then program you the launch hear guidance? may release, quantifiable the the the And quarter. I in provide bit more any a Service second business. you. metrics Got in just wanted into little think, I second branding noticed, can a to as built

whole? do this? of how acquisition retention just, you on simply, a from is So from more revenue to thinking as just the Maybe a service as it or view maybe that about brand sellers? And a already effectively that tool? way third-party -- Is your licensing you sort we're bit then the Just speak program that about just revenue branding Service why into that. program to little stream Is maybe get how layers of revenue do think like seller a a sort tool? right that it contribution the licensing is

this? take Larry, you guys to want

happy more to, be than David. I'll

will day, tool about contributes retention make more I which to to build sellers. And in like business comes that mentioned, So through because service tackle base. off whole process, branding recognition that those the the tool, talked definitely highly that seller an the so service buyer little one kind frequency as at bit issues listed time is is recruitment basically margins also trying manage and a a when business the able just furniture model far of as industry building to this, in offered of but as base to optimization amount network, to that process entire process our is of you a this end purchase be end-to-end the we're the is both is the significant with additional of the requires the a the to being all nature as as the you -- it third-party basically, of And even it those sticky the resources investment we're brands. behind this biggest idea our fragmented, the as and low. the brand capital far and

access the chance a products truly increased market. good we're we And giving to usage with but the good hoping by we flip a to chance on So add choices also of we buyers side and brands, to products have the by And the fueling for to existing that attract style the that, seller give definitely base, new sellers better and marketplace. from. the choose supplier join base, these variety

within around we're we second Got product range. Noble the not and that? out versus very outlook, think of guys to you. $XXX provided $XXX maybe revenue least, breaking revenue just outlook third-party million then think about quarter the service quarter in in House at how a some contribution just second revenue the that commentary you the range should I Maybe And for just million since

for steady X terms of don't drastic we ratio X as there a while. the a it business between balance any way be the business of revenue. of changes lines percentage between fairly these remain that we will the the think think will in is I if see I

one to last release operating just the at a from go-forward drag positive within set profit we margins. of on me just beyond. sort may Maybe sort integration that a on help I When a of creating guess, little when Noble of and XX to a us bit basis. and least terms contribution in reach that happens Noble House. it's expect for Maybe or it. margin a breakeven of House the of if we level around Got understand profile be do

Yes.

within mind. I XX even we're fairly breaking that I [indiscernible] with our think and goal, think is confident

profitability of if I think some early year, the generating probably the the end not XXXX. House to by see business we're starting Noble from

question next Sophie Huang [ with from Our comes ] CMBI.

Congratulations of strategy. on growth, that since top great margin was line improved quarter [indiscernible] have income net the the first really and noticed decreased revenue year. this margins I year-on-year, gross but

So with long in ] how in-termin at few provide you some next [ the look could reason? insight we quarters? And please us the do the

question. Great

think quarter. we can I high compression X factors main to I contributed level, first downward margins a think a categorized on for from temporary that

I keep I that months the opened first with X make that we fulfillment around takes our X to everything set the X QX. Iman that new sure associated out. typically think of new working the X it to talked QX is we leased facilities centers racking facility growing little cost to demand. a bit all to earlier during in And with up some a the and with systems is new

U.S. of to standard cost months something we it's facilities to these the that free lease. front kind in life this the facilities, leasing standard for we we So on, because of But we're industry our received also the a evenly working X X that fairly the are is throughout of expense the have and for new

around you during costs fulfillment temporary or establishment give phase. setting more margin there's to see profile the So our a that's centers. for why little downward you what the new up a bit these lease color the to And compression

business, $X fulfillment amount will the the So global see know, contributing quarter. And U.S. British we first exchange receivables for million, the the of to factor benefits these as some losses of is and for see QX, we exchange very against as are new because during in expense cash XX, experienced a of and the dollar And fluctuations first you margin future. that fairly that foreign that the to strong quarter we of March fluctuation, balance is added have around we the amount foreign $X you as -- the the is million. the facilities the it's from we're centers near second and because roughly that pound unrealized, in experienced confident our euro, new

will hopefully, So that profile our QX. for kind explain margin the of

Alliance next Global And question Partners. our comes from Kinstlinger with Brian

to cost Nice a profitable results. get follow-up Noble to growth will, of that that cuts? house, you to Or cost-cutting combination on is revenue more that status, just A a there? and it is if get you needed

it's think both. I Brian, Yes,

call into we sizable the the also expanding And utilizing have mentioned And cost House our -- So of at a our footprint in that House marketplace. from last little House. on in and side, warehouse a from bit some the revenue we're Noble warehouse Noble the because footprint. that we're SKU also plugging acquisition side, we Noble on then

We personnel ground. the also on have

side So of from the cost some we're synergies able house. to the extract

Great. of service, helpful. a there. a be branding to unit? a that license going a or then on to Is name? the to going be brand And as follow-up recurring is per fee more That's Or fee use that again the

per best SKU. operates So is way basically, the it the

that SKU are And nominal the a charged, mechanism as I center that that discussed, right once through brown is about of and is about So a X%, we fee XX%. believe, fixed now qualified industry is, fee fee. standard then the

competitive. So very it's very,

they're is on cycle? about last count solid the recruiting question you SKUs my And process? the at XP the then of ramp And once Can recruiting then grow average, long quickly to clip. How seller onboarded? continues the do us number how they Great. a remind is

of is here success. ramping me, they numbers would would then our suppliers Asia. it mostly couple out know SKUs out just a in start locally, of for when suppliers they to of try will months of kind front up couple and actually be have think I will see in I them don't meeting but put recruiting the imagine the of I kind I So mostly it effort a to and usually join if

profile kind business. XP of that's supplier for So our typically the

to This concludes turn like David the to for remarks. back Lau closing question-and-answer session. it I would now

Well, for this thanks, Great. call. everybody, joining

you we you and to to any our for results all e-mail joining. questions, discussing look earnings have If our Thank address, feel in our IR next forward free call. e-mail

call. concludes participating. for conference you today's Thank This

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