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Start Time: 08:30
End Time: 09:25
Jumei International Holding Limited (JMEI)
Q4 2014 Earnings Conference Call
March 17, 2015, 08:30 AM ET
Leo Ou Chen - Founder, Chairman and CEO
Mona Meng Gao - Co-CFO
Yusheng Zheng - Co-CFO
Sterling Song - IR Director
Tian Hou - T.H. Capital
Wendy Huang - Macquarie Securities
Binnie Wong - Bank of America Merrill Lynch
Robert Lin - Morgan Stanley
Henry Guo - JG Capital
Alicia Yap - Barclays
Evan Zhou - Credit Suisse
Xiaoyan Wang - 86Research Ltd.
Sisi Lu - China Renaissance Securities
Ella Ji - Oppenheimer
Fawne Jiang - Brean Capital
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I would now like to turn the conference over to your host for today's conference, Mr. Sterling Song, Director of Investor Relations. Please go ahead, Mr. Song?
Thank you, Glen. Good evening. Hello, everyone. I’m Sterling Song and I’m pleased to be with you today. Joining me today on the call are Leo Chen, Founder, Chairman and CEO of Jumei; Ms. Mona Gao and Ms. Yusheng Zheng, Co-CFOs of Jumei.
First, I will remind you about forward-looking information. Our conference call today may include forward-looking statements made under the Safe Harbor provisions of the Private Securities Litigation Reform Act. Although we believe that the expectations reflected in our forward-looking statements are as reasonable and up to date, those statements are subject to risks and uncertainties that could cause the actual results to differ dramatically from those projected. There can be no assurance that those expectations will prove to be correct.
Further information of this and other risks are included in our filings with the Securities and Exchange Commission. The company doesn’t assume any obligation to update any forward-looking statements as a result of new information, future events, changes in market conditions or otherwise except as required by laws.
Now with that, I’d like to turn the call over to Leo Chen. Leo, please.
Leo Ou Chen
Thank you, Sterling. Thank you everyone for joining us. As always, I will try to keep my comments very short so that we get more time for Q&A. Hopefully, you all had a chance to look at our earnings release that we published about 12 hours ago. As mentioned in our earnings release, we are pleased to deliver our 11th consecutive quarter of profitability on a non-GAAP basis, as our business continued to recover.
The fourth quarter was a quarter of transition and we continued our move from beauty product marketplace sales to merchandize sales. Our outlook for the first quarter of this year reflects the encouraging progress we have met. The particularly strong sequential and year-on-year guidance was driven by a strong performance of our Jumei Global business, which started to really pick up momentum in late December 2014.
We were not only able to fully replace former beauty product marketplace SKUs with Jumei Global business, but we were also able to take our cost controls and customer satisfaction to another higher level. On the quality control side, over the close of 2014, the State Administration for Industry and Commerce tested multiple samples of products that are sold on our platform and our products passed 100% on the test.
As we look forward, Jumei Global will play a crucial path of our growth strategy in 2015. Premier Li Keqiang mentioned the importance of cross border ecommerce development in his annual work report through the last National People’s conference earlier this month. Jumei has already become the largest cross border ecommerce platform in China, because we source very strong brands overseas in large quantities, we can upgrade the price to the customers. And in a very fast efficient manner, we can do delivery.
This brings cost savings to our end users by moving many of the inflation layers and global logistics and meet demand. We expect even larger scale from Jumei Global in the year ahead. As transition period nears completion, we are very confident that our growth strategy will be set on track in the coming quarters.
With that, I’ll pass the call over to Mona for a review of the financials. Mona, please.
Mona Meng Gao
Thank you, Leo. As Leo mentioned, during the fourth quarter we continued our efforts to implement the most stringent anti-counterfeit efforts in the industry, and in the process we have seen a transformation in our business mix as well. We have emerged with better supply chain, better cross border logistics and in a much better position to ensure a stable, long-term growth.
As part of our effort to ensure that consumers receive only the best products, we attracted a number of new globally renowned brands to the Authentic Beauty Product Alliance including Elizabeth Arden, Jurlique, OPI, et cetera. We also began to cooperate directly with prestige brands such as Givenchy.
By the end of 2014, there were a total of 153 beauty brands in the Authentic Beauty Product Alliance with more brands expected to join this year. Brands around the world are starting to see the real value of joining our cause. We look forward to developing even deeper relationships with these prestigious brands as we jointly strive to eliminate fake beauty products in China in the near future.
With that, I’ll move on to the numbers. As we mentioned last quarter, given the seasonal nature of our business, we believe year-over-year comparisons are the most useful way to judge our performance. So all the percentage changes I’m going to give will be on that basis. While our earnings release contains full GAAP figures, I’ll only discuss non-GAAP numbers here. So again, we think it’s a better gauge of our true performance. Our non-GAAP figures simply exclude share-based compensation.