A：Mr. CFO Tao will first report on the specific performance of the first half of 2025 for everyone, and then Mr. CEO Zhu Ning will report on the business development and outlook for 2025.

A：Yes, in the first half of 2025, Youzan achieved the three performance indicators set earlier, namely a slight increase in revenue, operating profit margin slightly higher than in 2024, and achieved bottle line profitability.

A：Starting from 2022, Youzan will continue to promote organizational performance strategies and focus on target customer group strategies for three years, continuously increasing per capita output value and the depth of solution value. In early 2025, Youzan set business growth goals and maintained a steady increase in profit margins. The transaction volume reached 49.8 billion in the first half of the year, an increase of 11% year-on-year, and revenue increased by 4% year-on-year. Net profit turned from loss to profit, reaching 72.57 million yuan.

A：As of June 30, 2025, the number of employees at Youzan was 1509, a decrease of about 5% compared to the previous year. However, the proportion of sales staff has increased to around 50%, reaching about 750 people, an increase of 9% compared to the previous period. Youzan is improving organizational efficiency through job responsibilities clarification and the application of intelligent tools. At the same time, the company is accumulating experience in sales system construction and talent development. It is expected that the size of the sales team will continue to expand in the second half of the year to support future business growth in the coming years.

A：In the first half of this year, the revenue of merchant solutions was approximately 340 million yuan, with a year-on-year growth of about 10%, outperforming the change in GMV. This growth was mainly attributed to the value-added services launched by Yun as well as to meet the operational needs of merchants, such as worry-free shopping, supplementing the distribution market selection, and Yun logistics solutions. In particular, significant progress has been made in the service of cross-border transaction solutions, which has made a major contribution to the growth of revenue from merchant solutions in the first half of this year.

A：Our artificial intelligence commercialization strategy is to meet the needs of businesses by offering different versions of products. The basic version (6,800 RMB) includes the addition of our intelligent assistant, used for functional consultations and data retrieval. The advanced version (annual fee of over 10,000 RMB) provides automatic task capabilities and intelligent bodies, such as image generation, copywriting, intelligent WeChat store hosting, inventory management, order monitoring and after-sales processing, helping businesses reduce costs and minimize losses from operational errors. The flagship version includes business opportunity management, distribution agent operation intelligence, store decoration intelligent assistant, and marketing expert capabilities, aiming to help businesses improve performance through more advanced artificial intelligence capabilities. Businesses can choose the suitable SaaS version based on their own scale and needs, without additional payment for artificial intelligence capabilities.

A：Of course, in May of this year, after commercializing our intelligent products, the proportion of high average selling price versions increased, driving revenue growth. Among them, the revenue of merchant solutions increased by 22% year-on-year, reaching 63.04 million yuan. The gross profit for the first half of the year was 470 million yuan, with a gross profit of 290 million for subscription solutions and 180 million for merchant solutions. The gross profit margin remained in a healthy and stable range. The decrease in gross profit margin for merchant solutions was mainly due to the impact of changes in revenue structure.

A：Sales expenses in the first half of 2025 were 260 million yuan, a decrease of about 2% compared to the same period last year. The sales expense ratio decreased from 38.7% to 36.4%, mainly due to the strengthening of sales management capabilities and continuous improvement in sales efficiency. Administrative expenses in the first half decreased to 63 million yuan, a decrease of about 9% compared to last year, and the administrative expense ratio decreased to 8.9%. R&D costs decreased from 94 million yuan to 80 million yuan, and the R&D cost ratio decreased from 13.7% to 11.2%, attributed to the reasonable and scientific allocation of R&D resources and the active use of AI tools within the production and research line, thereby improving overall work efficiency.

A：Overall, our operating results show a positive trend. Revenue increased to 710 million yuan, a year-on-year growth of 4%. Net profit was 72.55 million yuan, with a net profit margin of 10%, achieving profitability at the financial statement level. Operating cash flow for the first half of this year was 86.53 million yuan, marking two consecutive years of positive operating cash flow and reflecting the health of our business operations.

A：Thank you to Selina and Mr. Yu. From a business perspective, I believe we have ended the phase of sacrificing growth for operational health over the past three years. In the past three years, we did not pursue revenue growth but focused on operational health. With the improvement of operational health, we started to recover growth in 2025, although the growth rate did not meet expectations. I believe there are three main reasons for this change: first, AI-related products are widely used internally, significantly improving collaboration efficiency, especially in research and development and sales departments; second, a deeper understanding of merchant needs leads to more in-depth solutions, resulting in good growth in value-added services and solution revenue; third, an increase in chain merchants and high-margin industry merchants, as well as an increase in average order value.

A：There are two main reasons. The first is the decline in the overall consumer environment, which has led to a decrease in the average order value due to the lower prices Chinese people are willing to pay for online shopping. As a result, the Gross Merchandise Volume (GMV) growth is not as expected. The second reason is the increasing number of offline customers and the variety of offline scenarios, where the average order value is generally lower than in e-commerce. This is also why the GMV of local life platforms is usually smaller than that of e-commerce.

A：This is mainly due to the improvement of internal efficiency by AI technology, which increases the unit price and value-added services of merchants, improves the quality of customers, enables them to provide deeper solutions for customers, and thereby generate more revenue. The company is no longer pursuing an increase in the number of customers, but focuses on the quality of customers and the growth of value creation.

A：The company will accelerate revenue growth through four main directions while ensuring a basic profit margin: 1) In terms of commercialized products, increase products and services that help businesses attract customers through public welfare, such as content marketing and check-in at stores, to help businesses drive growth; 2) Improve business operational efficiency with intelligent products, such as intelligent marketing experts to plan activities to promote repeat purchases, and intelligent sales to increase order conversion rates; 3) Expand core customer groups, especially by starting to provide services to the restaurant industry, expanding the target market scope; 4) Contact more businesses through Youzan store services, accumulate future sales leads, although this may have a certain impact on performance in the short term, it is crucial for growth in the next two years.

A：We already have tens of thousands of activated stores using Pingle stickers, encouraging customers to check in and share their purchases on Xiaohongshu, Dazhong Dianping, and Moments. This has brought a large number of orders to businesses. At the same time, these businesses have become higher-quality sales leads through active use of Pingle stickers. When they effectively use products such as sprayers, we will gradually convert them into paying customers for Youzan's official products.

A：We not only help businesses with private domain operations and store digitization but also plan to expand into the public domain market, utilizing AI technology for refined operations to improve efficiency. Additionally, we are expanding our target audience, such as starting to cover the food and beverage industry, which will significantly expand our target market. At the same time, with new products like foam stickers, we aim to cover more businesses and encourage active usage, leading to conversion into paying customers.

A：Our core growth strategy includes deeply assisting businesses in private domain customer operations to increase repurchase rates, providing omni-channel public domain marketing customer acquisition services, and improving store digitalization, intelligence, and chain-based infrastructure. Based on these three aspects of a complete solution, we have gained a larger customer base, thereby providing value-added services, solving customer problems and bringing profits to Youzan, forming a relatively complete business operation model and business model.

A：Although GMV data from Youzan does not include all multi-channel transaction amounts, we help merchants achieve automated order management on different platforms and achieve multi-channel business through a set of systems, thereby improving operational efficiency and increasing additional revenue. For example, through cooperation with platforms such as Douyin, merchants can effectively retain private domain customers. Even if transactions do not occur on the Youzan platform, merchants can manage multi-channel orders through the Youzan system.

A：As of June 30, 2025, the number of existing paying merchants on Youzan reached 53,651, including 33,967 e-commerce products and 19,684 offline store products. In the first half of the year, there were 8,583 new paying merchants, and the existing paying merchants of each product line all achieved a month-on-month growth. The average sales volume of merchants on Youzan is 930,000 RMB, a year-on-year increase of 11%, indicating that the scale and average sales volume of merchants continue to rise.

A：Income growth is mainly driven by three aspects: first, sales gradually recover and grow, with the number of new signed merchants and the number of existing paying merchants stabilizing; second, the continuous growth of Abu business; third, the expansion in the field of store SaaS business, with products having high compatibility and value thickness; fourth, starting this year, the target customer base will expand to high-quality restaurants, significantly expanding the potential customer base.

A：The management team has been paying close attention to and considering the issue of transferring to the main board, and has reviewed the new policies of the Hong Kong Stock Exchange regarding the transfer of companies listed on the Growth Enterprise Market to the main board. Currently, the company does not yet meet the requirements for transferring to the main board, but is determined to do so soon in order to provide a more liquid and value-oriented trading environment. Any progress will be announced in accordance with the principle of timely disclosure.

A：The company has implemented multiple share buybacks, with a total repurchase amount exceeding over 30 million Hong Kong dollars. It will continue to consider repurchasing actions when market fluctuations are significant and lower than expected. Additionally, under compliance conditions, dividends may also be considered as a way to return value to shareholders, and the decision to distribute dividends will be made at the end of the year based on the performance in the second half of the year and overall future expectations.

A：Artificial intelligence will significantly enhance SaaS business in terms of product modeling and customer outcomes, but it is not believed that AI can completely replace existing SaaS companies. This is because AI has advantages in content creation marketing, but in basic digital software functions such as managing merchant shops, inventory management, cash register operations, and customer segmentation, SaaS software support is still needed.

A：In the Chinese market, due to the long time required to establish a sales system, AI startups often struggle to keep up with the pace of established players. Mature public companies already have customer resources, data accumulation, and technological foundations, so their speed of AI application is not inferior to that of emerging innovative companies. In the process of catching up with new technologies, established players can quickly reap the benefits of AI. Commercialization in the B2B field in China has not fully occurred yet, mainly because Chinese businesses are cautious about technological innovation and require to see actual results before willing to pay. Additionally, there is limited investment in technology innovation budgets. Furthermore, AI products need to adapt to the habits and sales systems of Chinese businesses, and establishing an independent and efficient sales team and system is a challenge. Therefore, commercialization is a gradual process and we are trying to package AI products into high-end product versions to facilitate sales.

A：Yes, the company is trying to develop AI native applications and is considering charging based on usage or transaction volume. For example, the product that is currently being developed may be launched in the next two to three months. Although the revenue expectations for this type of product are not high, it is still considered to be a basic trial stage.

A：In 2023, most peers in the to b industry were overly optimistic about the effects AI could bring to customers, but the actual products did not meet expectations. By 2024, the industry began to recognize where effects could be achieved and where they could not. In this year, we saw many intelligent body products being used by businesses, but businesses initially had fantasies about the effects of the products, only to gradually discover how the products actually helped improve efficiency and business performance as they continued to use them.

A：The company has mainly done two parts of work in AI application. On one hand, they help businesses acquire customers and traffic through methods such as hosting content on platforms like Xiaohongshu, content assistants, and account management, while providing pre-sales sales hosting to improve conversion rates. They also use intelligent planning of activities and managing customer repurchases. On the other hand, they have developed tools such as intelligent assistants to improve the operational efficiency of businesses, although currently businesses have a low willingness to pay for efficiency improvement, they are still trying out some functions that can significantly improve efficiency.