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Neils Christensen has a diploma in journalism from Lethbridge College and has more than a decade of reporting experience working for news organizations throughout Canada. His experiences include covering territorial and federal politics in Nunavut, Canada.
Stocks blessed investors with a rebound during the shortened Thanksgiving week of trading. After a rocky month, the S&P 500 and Dow Jones Industrial Average rose by 3.7% and 3.2%, respectively, in last week through Friday. For the S&P 500, this was the best performance during the holiday week since 2008.
Operator: Good morning and good evening, ladies and gentlemen. Thank you for standing by, and welcome to Chagee's Third Quarter 2025 Earnings Conference Call. [Operator Instructions] Please note that today's event is being recorded. With that, I'll now turn the call over to the first speaker today, Ms. Alicia Guo, Investor Relations Director of the company. Please go ahead, ma'am. Alicia Guo: Thank you. Hello, everyone, and welcome to Chagee's Third Quarter 2025 Earnings Call. With us today are Mr. Junjie Zhang, our CEO; and Mr. Aaron Huang, our CFO. The company's financial and operating results were released by the Newswire earlier today and are currently available online. Before we continue, I refer you to our safe harbor statement in the earnings press release, which applies to this call. Any forward-looking statements that we make on this call are based on assumptions as of today, and Chagee does not undertake any obligation to update these statements. Also, this call includes discussions of certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to GAAP measures. With that, I will turn the call to our CEO, Mr. Junjie Zhang. Please go ahead, sir. Junjie Zhang: [Interpreted] Hello, everyone. Thank you all for joining the Chagee's Third Quarter 2025 Earnings Conference Call. First and foremost, I would like to express my sincere gratitude to every member of the Chagee team. In a dynamic and challenging markets, our resilience and strong execution have driven steady progress and built a durable foundation for the long-term future we envision. Over the past few years, we have consistently asked one core question. Why does Chagee exist? Our answer is clear that is bringing people together through tea. This founder mission and commitment drives us to focus on user value as the starting point for all strategies. Every decision and initiative aims to expand and depend a community of people, who connect with our brand value. Guided by this belief, we will steadfastly execute our high-quality development strategy. We're dedicated to delivering high-quality products rather than chasing traffic and trends. We prioritize our product excellence. Our ongoing raw material upgrades ensure tea that is authentic, wholesome, warm and culturally rich serving as cornerstone of every experience and a key trust pillar for our brand. We emphasized the user experience, creating engaging content and building emotional connections to make each cup a shareable story. Our offering goes beyond a beverage to a distinctive experience rooted in Eastern Aesthetics. Store quality remains our focus and global expansion will depend on each store's health and profitability. We pursue health growth across our network, identify high potential locations and strive to make every Chagee store the go-to place for friends gathering over tea. In the face of short-term market fluctuations, we would maintain our strategic results. We're deeply confident in a vast potential of global tea beverage and in a distinctive path, Chagee has chosen the one driven by culture and quality. These are my reflections on the core of our business and future direction. Now I will turn the call over to our CFO, Aaron, who will detail the specific results of our strategic execution this quarter. Thank you. Hongfei Huang: Hello, everyone. Thank you for joining our earnings call. Before we dive into the detail, please note that all amounts are in RMB and all comparisons on a year-over-year basis, unless otherwise stated. So in the third quarter, our total net revenue were RMB 3,208.3 million, a decrease of 9.4% year-over-year and 3.7% sequentially. Total GMV for the quarter was RMB 7,929.5 million. Despite the challenging macro environment and the intensified competition, we maintained our focus on profitable growth and the disciplined execution. Non-GAAP net income was RMB 502.8 million with a non-GAAP net margin of 15.7%, reflecting underlying resilience of our business model. Let me highlight several key operational achievements. First, our global teahouse network reached 7,338 with a net addition of 300 teahouses in the third quarter. Overseas expansion accelerated, contributing 54 net new teahouse as we successfully entered the new market, including the Philippines and Vietnam. Second, product innovation continued to drive the momentum. In the home market, we will launch the low caffeine, Jasmine Green Tea Latte become top 3 best seller driving strong user acquisition. BOYA Jasmine Green milk tea earned the best in nature or organic beverage title at the 2025 World Beverage Innovation awards, underscoring our strong product quality and the leadership in healthy beverage innovation. In Asia Pacific, the [indiscernible] tea launch performed exceptionally well, validating our regional product strategy. Furthermore, our member ecosystem remains robust. Total registered members reached 222 million by the end of the third quarter, representing an increase of 15 million sequentially and 36.7% year-over-year. Our franchisee network also demonstrated a remarkable stability. The store closure rate remained low at 0.3% for 3 consecutive quarters, underscoring the health and the confidence of our franchisee partners. Now let me provide a more detailed financial analysis. Starting with the revenue. Our total net revenue for the third quarter were RMB 3,208.3 million mainly driven by the continued expansion of our teahouse network. Among them, net revenue from franchisee to teahouse worth RMB 2,811.6 million, representing 87.6% of our total net revenue. Net revenue from company-owned teahouses increased by 63.8% to RMB 396.7 million, accounting for 12.4% of total revenue. The increase was primarily driven by the expansion of our company-owned teahouses network in both Greater China and overseas markets. In Greater China, total GMV decreased by 6.2% year-over-year to RMB 7,629.2 million. The average amongst the GMV for teahouses in Greater China was RMB 378,506, a year-over-year decline in reflecting both high base in last year and a more severe competitive environment, including the impact of the delivery platform subsidy competition. Even so, our commitment to maintain premium position and the brand integrity remain central. Meanwhile, overseas markets continue to show substantial progress with GMV increasing 75.3% year-over-year and 27.7% quarter-over-quarter to RMB 300.3 million. This growth is mainly driven by strategic store expansion and growing brand awareness, positioning the overseas market as a key pillar of our future growth. In the third quarter, we expanded our overseas presence by adding a net 54 stores, bringing our total store number to 262 stores as of September 30, 2025. This growth was fueled by our successful entries into Philippines and Vietnam as well as we continued steady expansion in Malaysia, Thailand and Indonesia. During the quarter, we added 18 new stores in Malaysia and then 9 each in both Thailand and Indonesia. Our commitment to being an exceptional employer has earned the prestige award in key markets, including HR Asia's Best Companies to Work For in Asia 2025 in Malaysia and certified OJT center plus NS Mark Gold status in Singapore. These honors strengthened our brand and help us attract the top talent needed for the growth. While our store expansion continues, we recognize pressure on GMV performance at existing stores with domestic and overseas same-store sales GMV declining by 27.9% and 23.4%, respectively. This softness is attributed to a high base from the same period last year and intensified competitive pressure. However, our franchisees' fundamentals remaining solid as evidenced by consistently lower closure rate. We expect the same-store GMV growth to remain under pressure in the near term. Turning to margin. Our gross profit calculated by excluding cost of materials, storage and logistics from net revenue reached RMB 1,726.5 million this quarter, resulting in a strong gross margin of 53.8%. This marks a solid improvement both year-over-year, up from 50.1% in the third quarter of last year. The margin improvement results primarily from 2 factors. The first is the benefit of expanding economic upscale and the second is decrease the purchase costs driven by our persistent procurement optimization initiatives. On operating expenses, share-based compensation expenses this quarter were RMB 104.9 million. This results our -- this reflects our commitment to long-term employee engagement and align their goal with shareholders to provide greater clarity on underlying operational performance. We will reference non-GAAP operating results with a full reconciliation available in our earnings release and the Form 6-K. Operating income was RMB 454.4 million, representing an operating margin of 14.2%. Excluding share-based compensation expenses, non-GAAP operating income was RMB 559.3 million, representing a 17.4% margin. The above-mentioned margin differences reflects our step-up investment in talent recruitment for global expansion, including brand building to support new product launch, R&D to enhance our offering and the digital infrastructure to elevate customer experience. The operating costs for company-owned teahouses were RMB 271.4 million, up 94.7% from a year ago and up 47.4% from the second quarter of 2025. As of September 30, 2025, we operated 367 company-owned teahouses, up from 239 in the second quarter of 2025. On a per store basis, operating costs have decreased compared to the second quarter of 2025, showing continually improved efficiency at the store level. Other operating costs increased by 7.3% to RMB 178.9 million largely due to high payroll support to the expansion of our global store network. On a non-GAAP basis, other operating costs accounted for 5.4% of revenue compared to 4.7% a year ago. Sales and marketing expenses for the quarter were RMB 304.5 million, down 13.4% from a year ago, achieved a strong discipline with branding promotion. On a non-GAAP basis, sales and marketing expenses representing 9.2% of revenue compared to 9.9% a year ago. General and administrative expenses reached RMB 517.4 million, up 59.7% year-over-year driven by an expanded workforce and additional office facility supporting global operations. On a non-GAAP basis, G&A expenses represented 13.4% of revenue compared to 9.1% a year ago. Income tax expenses represent 21.4% of income before tax, slightly higher than 20% a year ago. This was primarily driven by the impact of share-based compensation expenses recognized during the quarter. We achieved our 11th consecutive quarter of profitability with GAAP net income of RMB 397.9 million. Non-GAAP net income, excluding share-based compensation expenses was RMB 502.8 million with a non-GAAP net income margin of 15.7% compared to 18.3% last year. This demonstrates our ability to maintain healthy profitability and margins while continuing to invest for future growth. During the quarter, basic net income per ordinary share was RMB 2.07 and diluted net income per ordinary share was RMB 2.03. On a non-GAAP basis, basic net income per ordinary share was RMB 2.63, and diluted was RMB 2.57. Turning to liquidity. We ended the quarter with roughly RMB 9,142 million in cash and cash equivalents, restricted cash and time deposits. This robust balance sheet, coupled with our 11th consecutive quarter of profitability, provides a solid foundation. Our Board has approved a special cash dividend of USD 0.92 per ordinary share or ADS totaling approximately saw USD 177 million payable on or around December 15, 2025, to shareholders of record as of December 8, 2025. This distribution underscores our commitment to enhance shareholder value and reinforce investment -- investor confidence in our business model. Our strong cash generation ability enables us to return capital while continue to invest in growth. This special dividend also demonstrates our conviction in the company trajectory and our dedication to reinforce our market confidence in our long-term prospects. At this time, we will not provide formal financial guidance. Our strategic focus is on key pillars that foster sustainable long-term shareholder value. We are dedicated to continue product innovation and strategic brand investment to enhance market presence. At the same time, we are boosting operational efficiency to optimize resources and drive improved performance, positioning the company for agile and sustained growth. We are confident in delivering our long-term strategy and growth potential. We will persistent with prudent management, strategic investment in future drivers and commitment to creating durable value for shareholders. We believe our solid financial foundation, clear strategic road map and the exceptional team will help us capitalize on long-term opportunity despite the market dynamics. With that, I will turn the call back to the operator to begin the Q&A session. Operator, please go ahead. Operator: [Operator Instructions] Our first question comes from the line of Sijie Lin from CICC. Sijie Lin: [Interpreted] Sijie Lin from CCC. Could you please speak more about how will the high-quality development strategy be executed? Junjie Zhang: [Interpreted] Thank you for your question. Regarding our high-quality development strategy, we have a clear execution path across 4 core dimensions: brand, product, experience and channels. First, in high-value brand building, we're upgrading our brand to speed up the launch of brand experience, Teahealth and streamline the customer journey. At the same time, we're growing specialty houses like tea culture theme locations and intangible culture heritage theme teahouses to deepen our cultural rules and highlight what makes the brand stand out. Meanwhile, we are building a high-quality product system with 4 core priorities. First, we will define and uphold strict premium tea centers. Second, we'll enhance our core raw materials. Third, we will improve food quality from end to end. Finally, we will introduce the 4.0 menu and guarantee uniform quality for all customers wherever they are. Next, we are driving cross-category innovation and new consumption scenarios. With the 4.0 menu, we're adding exciting new categories like special tea to make things up. We're also expanding into additional consumption scenarios, including breakfast and evening hours to improve store utilization across different times. In addition, we'll fine-tune how products are shown while they are being prepared to make the experience even better for customers. We're also enhancing the membership experience with the revamped membership system to build a true member community in a mutual benefit network. This will boost the stickiness and repeat purchases for our 222 million members. At the same time, we're optimizing store facilities and technologies to improve efficiency and customer satisfaction. Finally, we're reshaping a strong channeled strategy. Our teahouse network is expanding at a healthy pace with 300 new teahouses added this quarter, and we will maintain a steady place to teahouse expansion. We're also pushing ahead with standout flagship teahouses such as the Chagee Teahouse in Hong Kong and the product store at 2025 Rolex Shanghai Masters. These showcases really highlight what the brand stands for and enhance our brand awareness. Operator: Our next question comes from Xiaopo Wei of Citigroup. Xiaopo Wei: [Interpreted] Could you share more color on the overseas network -- overseas market network expansion as well as a store operating in the non-China regions? Hongfei Huang: All right. Thank you, Xiaopo. So our overseas markets are a pivotal growth driver. The momentum is solid across our channels. This quarter, we entered into the 2 new markets, Philippines and Vietnam. While our store count in Malaysia has exceeded 200 currently. So this is a big milestone. Our local operations are showing strong signal. Our localized products and the marketing campaigns will achieve the greatest success. So for example, our September collaboration with Pop Mart generated a tremendous response across the Southeast Asia. In Malaysia, the Green Grab series made up 50% of cups sold on the first day, making our all-time high. So during the campaign first week, teahouses in Singapore achieved average daily sales of over 500 cups of the product. Our Peach Oolong Milk Tea also performed exceptionally well. It captured over 30% of cups sold in Indonesia within 15 days since launch and about 16% in Thailand, making a top seller in both markets. So this successful localization efforts, combined with our steady store expansion pace giving -- give us strong confidence in overseas growth in Southeast Asia. So moving forward, we will continue to deepen our presence in those markets we've entered. Steadily expand into new markets and keep improved per store profitability and the brand impact. Operator: As there are no further questions, I would like to hand the conference back to management for closing remarks. Alicia Guo: Thank you again for joining our call today. If you have any questions, please feel free to contact us or request through our IR website. We look forward to our next call with everyone. Have a great day. Operator: Today's conference. Thank you for participating. You may now disconnect. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
Operator: Good morning, and welcome to Gelion plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to CEO, John Wood. Good morning to you, sir. John Wood: Good morning. Thank you very much. Look, I'm really pleased this year to be able to give you this update. for Gelion. We're calling it now the sulfur battery company, and you will understand that as we proceed through this presentation. Okay. So first of all, our lawyers say hello, and they are absolutely not paying me to say this, but a big call out to Fieldfisher in the U.K. and Aspen Legal in Australia, who have been extraordinarily supportive and available to us through a big year of transactions. Okay. First, I would like to introduce your presentation panel today. Amit? Amit Gupta: Thank you, John. Good morning, and good evening all. My name is Amit Gupta. I am the CFO of Gelion. I've been with Gelion for over 4 years now. Prior to joining Gelion, my professional life was largely consulting, Deloitte and KPMG, where I worked on a number of M&A and IPO transactions. Louis? Louis Adriaenssens: Yes. Thanks, Evan. So my name is Louis Adriaenssens. I've been with Gelion for almost exactly 2 years now. I'm the CTO here. Prior to that, I worked for Panasonic at the Tesla Gigafactory. I was the supervisor of chemistry there, and we made batteries at an absolutely astounding rate. And it's my pleasure to be here and speak to you all today and tell you about some really significant things that have happened at Gelion, which moved us closer to that level of manufacturing. Pass back to John. John Wood: Thank you, Louis. I'm John Wood. I'm your CEO. It is an honor to run this company for you. It is a battery innovation company and technology company, and we are aiming to be the world leader in sulfur battery technology. This is something I've been doing my whole career, something I love doing, which is taking out the work of creative resources and making it commercially successful. We have a presentation panel today, but behind us, of course, stands the company. And I think it's an appropriate opportunity to call out our Chairman, Mr. Steve Mahon, who's been exemplary this year. Our founder, Thomas Maschmeyer, always in the front line with us. Our Non-Executive Directors, Joycelyn Morton, Graham Cooley and Michael Davie, I always value their support. And then, of course, our teams. And I do say teams, the great team working on lithium sulfur technology in Australia and our integration group in Australia, our OXLiD team up in the U.K., and our Battery Minerals team. We are blessed with the quality of the people that we work with in Gelion. Okay. We have a succinct presentation for you today, and we are going to be concentrating particularly on a key aspect of our lithium sulfur technology. That's because we believe we have a tiger by the tail. We think we've got something that is really important. We're making really solid progress with it. So the course of this presentation will focus on that. We will be giving you a corporate update. Amit will be taking you through the annual results. Louis will talk about products and technology. I'll come back and put that in a commercial context for you and then summarize at the end of the presentation. This has been an extraordinary year. I'm going to put it in context for you looking around the world. First of all, I want to discuss Australia. Call out the enormous support from the Australian government through ARENA. We announced to you earlier in the year about our ACPC grant, great support coming from there. That led to announcements that followed announcements in the U.K., the tremendous support that we get in the U.K. from Faraday and the Advanced Propulsion Center. We talked about how in the U.K., we are now doing some very important solid-state work that was being supported by the government there. Most recently, we announced our partnership with QinetiQ, once again being supported to make very important full pouch cells in the U.K. this year. We talked to you this year through our announcements about our relationship with the Max Planck Institute of Colloids and Interfaces out of Germany. The remarkable Professor Markus Antonietti and his team, a priceless relationship that is delivering outstanding results. Then we started to introduce to you what we were doing with Tier 1 manufacturers around the world, and we told you that we were doing a materials testing agreement with a Tier 1 manufacturer. A little later in the year, we revealed to you that, in fact, that was a TDK Corporation out of Japan, one of the world's most important battery manufacturing companies. Happy to highlight for you that the next place we will be going is the U.S.A., and we are starting work in that direction, which I'll describe a little more as we progress through the presentation. So I mentioned a tiger by the tail at the start of the presentation. We are working very hard in sulfur battery technologies. Why sulfur battery technologies and why particularly sulfur cathode active material? There is a $44 billion market today for cathode materials for batteries. That's going to be $132 billion market by 2032. It is serviced today primarily by 2 formulations. It's called Nickel Manganese Cobalt, NMC, and Lithium Ferrous Phosphate, LFP. Now I've got a picture in front of you and it says that a picture can tell a thousand words. Well, there's more than 1,000 words in this one because on the right, what you have is a traditional cathode material. Now this is either an LFP or an NMC. You can see what it looks like and how it's used in manufacture. On the left-hand part of this screen, you can see our cathode material, our sulfur cathode material that's in the bottle of the black powder there. And in the middle, there is a role of our cathode material. And you can see that cathode material looks like just like the one on the right. And so this is where Gelion is heading. So the market for cathode materials today, I've told you the size of the market, but it's dominated by nickel and cobalt materials or LFP. We aim through the course of our program of work to get to where we can offer a third option alongside those other materials into the cathode market. That's the size of the ambition that Gelion has. We aim for our cathode material to be a drop-in into that market. Now that's going to be very important because it opens a world of opportunity in energy storage. We aim very high. And in doing that, you must work to a very high standard. Now to have a compelling -- a truly compelling commercial product, it's not good enough just to be a high power product or to be a high-energy product. You must deliver the full suite of performance criteria. And on the screen here now, you can see that you must be low cost. You must have stable high energy, high power in charge and discharge, wide temperature tolerance, long cycle life, and you must do them all with one material at the same time. And that's where we're going with Gelion. That's why we're so excited. Okay. How do we deliver the low cost? Well, firstly, the material itself is made from low-cost materials. And we use a very low-cost fabrication material. So this is sulfur. Sulfur is abundant, low-cost carbon materials like sulfur and carbon. Stable and high energy. That comes because our sulfur is what is described as being nano confined by self-forming method. What that means is that in making this material, we can find the sulfur in such a way that it's in a high energy state that delivers this high power, this ability to work in a wide range of temperatures. Now this is not traditional for sulfur battery technologies. This is unique to the sulfur battery technology that we're developing inside Gelion. And that comes from a combination of the work in the IP and everything we acquired through the progression of the Oxus IP acquisition for Johnson Matthey, the OXLiD acquisition, the wonderful team that came on board with our Gelion [indiscernible] and our work with the Max Planck Institute. So no polysulfide shuttle, the nano confinement separating the sulfur from the electrolyte, opening a wealth of opportunity for sulfur battery technologies. So how do we apply that? One material and here, what we're doing is effectively 3 configurations or flavors of the material, however you would like to consider that. On the left, we have the material that we're doing in the shortest term. So this is a material where we take our sulfur CAM and we pair it with lithium metal. Now this makes an extremely high-performance cell. This is high power. This is high energy density, wide temperature range. You put that cell in a drone, it goes into high-value markets. In the center, what we've done is we've taken our sulfur cathode material and with what's called pre-lithiated it. So we put lithium into the sulfur cathode material. Louis will talk to you a bit more about this later. But what we're doing here is doing the work to make our sulfur cathode material a drop in. We can then pair it with standard anodes and standard electrolytes. So this is a product still in development, but we have made test cells that work as the configuration you see it here. Where does this configuration take us? Well, it takes us towards a cell that will be very important we believe, in e-vehicles. So this is a cell that can get you out of range anxiety. It has very high energy density, very high power, but a low cost and abundant cell. And then on the right, this third cell, this is the one that really -- I find most exciting of all. This is a room temperature sodium sulfur cell, sodium, sulfur and carbon and electrolyte. Now these are materials that you can find everywhere in the world. These are abundant materials, and this is the cell -- this cell is a very low-cost cell. So think of this cell in terms of being a technology that can be manufactured at a national level around the world and think of the impact and the contribution that, that will be making, also the commercial merit of those 3 cells, material. We told you recently about a collaboration agreement that we put in place with TDK Corporation. I cannot talk more highly of the amazing people that we have had the pleasure to work with at TK. These are rigorous scientists. TDK has been a leader in battery technology from the very start all the way through. It's a true honor for us to be able to work with them. And what does it bring to us? It allows us to focus on the things that are most important. It allows us to move forward quickly, taking advantage of the experience and the complementary technologies of that organization. So we're very, very honored to be able to work alongside TDK on this sulfur journey. There were 2 partnerships that we announced towards the end of last -- or the end of this year or in the last couple of months, in fact. The first one was this TDK partnership, which is actually a multiyear collaboration agreement. It doesn't preclude us from working with others, but we are working very closely with TDK. It leads to the onset of partner revenue. It will work towards what we'll be doing is making commercial -- large-format commercial prototype cells together. We will work together towards optimum product market fit. So by working with collaboration partners who already are supplying the market today with other chemistries, we make it real. We keep it real. So we're spending your shareholder dollars in ways towards getting our important materials to market and keeping it real in doing that rather than making things that we think might be a good idea. And so that product market fit is very, very important. And then as we progress, the goal is to get to where we're actually on their prototype production lines as well. The relationship with QinetiQ supported in the U.K. by the government, GBP 1.1 million project, including a GBP 0.5 million grant to Gelion. This is defense and aerospace, a scale-up of our CAM into, once again, commercial prototype pouch cells, and we're going to demonstrate that one for you in 12 months' time in Cemex in the U.K. So you can see these announcements are essential very, very important commercial progressions, points of progression for your company, Gelion. Now it builds on our IP. Our goal is to be a Tier 1 battery innovation about what that means a little bit later in the presentation for you. But we need to protect our position as we go as well. And that is [indiscernible] we are working very hard. We have more than 200 patents, but we are continuously evaluating our patents, adding to the portfolio and moving forward. I think we had more than 5 year [indiscernible]. I'll pass to Amit now, who will take you through the year's results. Amit Gupta: Thank you, John. So John has walked you all through the impressive piece of work that the business has done, both not just technologically but also commercially. We have established commercial collaborations with reputed Global one manufacturers, and that derisks the entire business. What I want to walk you through is how we have transformed the financial side of the business as well. And on that note, I will talk about Integration Solutions. That's a new division that we started in September, October last year. We got our first contract. We delivered the first contract successfully, and we recognized our first revenue. So first revenue for Gelion in FY '25, GBP 910,000 and margin associated with that as well. What this contract or this project has done for us is this has established a site for future projects for future customers to see what we have delivered and to actually go and see. So this is kind of a show and tell. Our pipeline continues to grow. It's approximately GBP 17.5 million now. If you think about this, the business only started 12 months back. The sales cycle is rather long, 9 to 20 months. It's because there are a number of steps during the course of actually identifying the opportunity and signing the contract and requires government and regulatory approval before you actually sign a sales contract. So in 12 months' time, a long sales cycle, the pipeline is growing really, really strongly. I spoke about the first revenue, GBP 900,000. That is recognized in FY '25. You can see that product revenue. and the margin associated with it as well. So you see direct costs, GBP 0.7 million. So the margin started coming from the first project itself. If you consider the pipeline that we have and even if you give a 25%, 30% chances of converting those pipeline into actual sales, you're looking at GBP 4 million to GBP 5 million of sales coming through the business in the next 12, 18 months. So what we are doing is we are building the pipeline, which will convert into kind of regular flow of sales and revenue and margin into the business, helping us reduce our cash burn. This is the third year in a row where we have exceeded market expectations, not just at the income level, but also at an adjusted EBITDA level, which further reduced to GBP 4.1 million. We went from GBP 5.5 million, GBP 6 million in FY '23 to GBP 4.8 million in FY '24 and to 4.1 million in FY ’25. Our cash position -- pro forma cash position was $4.1 million at 30th of June. This is slightly higher than what the market was expecting. I want to remind everyone what we have achieved over the course of the last 12, 15 months, whilst we are decreasing our cash burn and decreasing our losses. So the underlying message on this slide is we are taking really, really good care of shareholder capital. We're ensuring the capital is deployed in the most efficient manner, and every spend is being thoroughly and rigorously checked by myself and John. This slide brings home what I've been talking about. So if you look on the left, total income grew by 33% between FY '23 and FY '25, obviously, because of the integration solutions revenue in FY '25. I spoke about the pipeline. I spoke about the potential conversion of this pipeline. If those pipeline opportunities convert successfully, we hope to see continuous growth in the total income as well. Whilst we're doing all of that, our OpEx continued to decrease. It decreased by 22.9% or GBP 1.8 million over the last 3 years, which is phenomenal given we have gone through a rigorous cycle of high inflation and everything, but we have managed to bring our costs down. We have acquired OXLiD in FY '24. So in FY '23, we did not have OXLiD, just Gelion. We acquired OXLiD in FY '25, we established Battery Minerals, but we continue to reduce our expenses. The most interesting chart is on the right, underlying net cash flow, which everyone kind of talks about. You can see that decreasing from over GBP 6 million, GBP 6.5 million to GBP 4.6 million. That's approximately GBP 1.9 million reduction. Again, the same message from us as an executive team and from the company that your capital has been really, really well looked after. As you all know, we -- very, very recently, we completed an oversubscribed very successful capital raise round. We raised GBP 10.5 million. We had very, very strong participation from both existing and new investors, institutional and retail. Once the institutional shareholders reach that particular threshold, it will be announced to the market, and we have some very, very large U.K. funds. Retail participation was fantastic as well. The round was supposed to be open for a week. We closed it in 1.5 days because of the demand. What are we going to do with those proceeds? So John spoke about commercial power sales in Asia, U.K. and U.S.A. We are already -- those plans are already in progress. We will complete the QinetiQ program, work with TDK to achieve the product market fit. We'll expand our relationship in the U.S., additional sales and integrations business unit and general working capital to provide growth and the balance sheet strength of the business. So I thank you, everyone, for participating in the round, and it's very exciting to be part of Gelion. I will now pass it on to Louis. You're on mute, Louis, I think. Louis Adriaenssens: Thank you, Amit. Sorry about that. So to understand the significance of our technology, it really helps to understand the significance of sulfur. We all know that a very, very large number of batteries are produced every year. And we also know that, that amount of batteries is going to have to increase in rate by at least an order of magnitude in order to hit global energy Net Zero. Now if you look at the current situation with batteries and battery supply chains, there's an obvious issue here. Almost all battery supply chains terminate in one region of the world. And that means that, that one region of the world dominates battery production. Having all your eggs in one basket like this is a very, very bad idea. And it is completely counterproductive in trying to achieve Net Zero. The critical minerals, the toxic materials, the politics that underpin current battery manufacture and commercialization are just not compatible with achieving Net Zero. Now there have been some notable examples of groups that have tried to produce batteries using these conventional materials. So this is the NMC and LFP that John spoke about before. And with a few -- very, very few exceptions, all of these have fallen flat on their face, and there are some very notable examples of this reason. Now if you look at the right-hand side of this slide, you can see that there is, however, hope. We know that it's very difficult, maybe impossible to do it with incumbent materials. But on the right-hand side, we can see the global distribution of those incumbent materials compared to the global distribution and availability of sulfur. And so clearly, at least in terms of abundance, sulfur offers an opportunity. It offers a possible avenue. And what we're here to tell you today is that with our technology, we're able to take that abundance and we're able to turn it into batteries that are competitive with the incumbent batteries on performance and that blow them out of the water in terms of cost and abundance, enabling Net Zero for the world. And very significantly, it's not just us telling you that. We're super pleased, as John has said, to talk to you about our collaboration with TDK, who is one of the world's largest battery manufacturers. They dominate in certain sectors of battery provision. And we're super proud to be with them, and we're super proud to have it just not be us talking to you about this, but to have them standing beside us as we take our technology forward and bring it towards commercialization. Now as John said, when talking about our technology, one of the key issues in sulfur batteries is something known as the polysulfide shuttle. And this is something that we've managed to solve and which we think gives us the advantage and the edge and the ability to take that abundance of sulfur and turn it into a really, really fantastic battery. Now the way that we've gone about solving this issue is a phenomenon that we term as a nano confinement. And in order to understand that phenomenon, it helps to look at a picture. On the left, you can see a scanning electron microscopy image of our material. And if you look at that material, you can see the first layer of core structure that defines the way this material works. What we do is we take 2 very simple input materials. One of them is sulfur, and we heat them in a very, very simple process. There are, of course, tricks, there always are. And this allows us to in-situ form this fantastic material, which is defined by this core structure in which we have sulfur molecules and sulfur atoms organized within this pore structure. This allows us to do 3 very important things. First of all, because the pores are 3-dimensional, even though they're nano-sized pores are 3-dimensional, that means we can fit a lot of sulfur in a small space. That means that we can fit a lot of energy in a small space, making lightweight cells. Also, because we can define the opening of the ports, we can define what can and cannot enter into those ports. This allows us to optimize for productive processes to facilitate the transfer of lithium and sodium from outside of the port and into the port where it meets with the sulfur. And it also critically allows us to design out undesired pathways, degradation pathways, such as the escape of sulfur from that pore structure. And it's this escape of sulfur, which is known in the industry as the polysulfide shuttle. And this is what we're able to shut down and that at a high level is how we do it. And also very importantly, because we can define the size and shape of the pore itself, we can indirectly define the size and shape of the sulfur that exists within that pore. That allows us to intentionally present the sulfur to the lithium and sodium ions that transfer into that pour in such a way that the sulfur is highly reactive. What this means is that the sulfur reacts quickly with the lithium and the sodium and that translates into operation of the battery at a very, very high discharge rate and a very, very high charge rate. Now, there's some chunk data shown at the plot on the right, and this underlines the 3 things that I've just talked about. First of all, at a very aggressive C-rate, this is a 1-hour full discharge 1C, we are able to maintain full theoretical capacity of sulfur. That means that every single sulfur at in our material accepts lithium adds and sodium atoms to its fullest capacity. This means we have the possibility to hit a really, really lightweight battery. Second of all, you can see that the capacity fade over 100 cycles, again, at extremely aggressive C-rates of up to 7.5 minutes full discharge and charge is almost negligible. So we are clearly able to keep the sulfur in place and be able to use that sulfur reversibly during each charge discharge cycle, showing that we solved the polysulfide shuttle. And last of all, because we're able to present that sulfur in a really, really reactive state, you can see that we can operate the battery maintaining high percentage of capacity from 1C, which is a 1-hour charge and discharge all the way to 8C, which is a 7.5-minute charge and discharge. And in other plots, we've even done that down to 10C, which is a 6-minute charge and discharge. So these results are really, really phenomenal, and this is what has opened up all of these commercial opportunities and gotten us these relationships like with TDK and QinetiQ, which allow us to take our technology out and push it towards commercialization. Now as John said, we have 3 configurations or flavors of our battery. The one on the left, this is the first target market. This is going to be for drones. This is going to be a very, very lightweight battery. We're looking at 400 to 500 watt hours a kilogram. It is going to be a battery that is able to achieve a good cycle life, but the threshold is 400. We know we can compete that easily. It is going to be able to engage in high power, which is essential for applications like this where things need to take off vertically and land vertically. If you can't do that, you don't have a competent battery, and we're very pleased to say that we do. In the middle, you have one of the drop-in solutions that John talked about. This is the lithium sulfur variant, which uses standard graphfitic anodes and electrolytes, which are established in current lithium-ion battery gigafactories. When you model the performance at a relevant cell size, you see that we're getting performance aligned with NMC. This is the cell type that currently dominates high-performance automotive and automotive in the United States, for instance. And we're pleased to say that we can bring that to you at a model cost of about LFP for the performance of NMC. This is a significant cost advantage. And of course, the materials used to make the cell can come from domestic supplies. On the right, you have the sodium sulfur variant of the middle cell. This uses established anodes and electrolytes used in sodium-ion battery technology. And this allows us to make a battery, as John said, out of carbon, sodium and sulfur. These are materials that are available everywhere in the world. And very importantly, when you model the performance coming out of this battery, you get a performance which is commensurate with LFP, but at a fraction of the price. So these are the 3 flavors of batteries we have. I'm very pleased to say that we have made every single one of these batteries in coin cell format, and we're super excited to tell you how they develop in the future and of course, tell you how they develop with our partners as well. With that, I will pass back to John. John Wood: 00:52:00 Thank you very much, Louis. Okay. I'm going to now try to put that into a commercial context for you. And we will start, though, by reminding everyone that as well as what we're doing at our lithium sulfur and with our integration activities that Amit took you through. We also were very fortunate to have picked up some very important IP along the way, which we acquired from Johnson Matthey in the area of battery recycling. And young Jacob Carpenter, if he doesn't mind me calling young Jacob Carpenter, has done an extraordinary job of structuring that and bringing it along as an independent subsidiary, Battery Minerals. Now this division has been running extremely well. Jake managed to hire some key team members, fantastic experience, former Johnson Matthey. We've got a very tight product road map defined. We've validated the technology. We're very excited. This technology can contribute to the recycling of lithium manganese cobalt, lithium ferrous phosphate and LCO as well. We are doing demonstrations at the moment, and we're planning towards scale up, so this is a business that we are developing as a subsidiary with the intent of eventually spinning that business to the benefit of our shareholders. Now we talked about our progression in 2025, last year, 2024-'25 and what we've been doing around the world and the tremendous support that we've been getting along the way. This year will be our most important. This year, we will produce commercial prototype pouch cells using our sulfur cathode material. In Japan, in the U.K., we'll be making pouch cells in Australia as well, and we will be making commercial pouch cells in the U.S. as well through the course of this year. We will be scaling up the production of the standard cathode active material. That's the one that was on the leftmost side of the 3 cells that we showed you going along. That's the one that's paired with lithium metal. And we'll be scaling it up in the earlier stages of scaling up, scaling up to the stage where we can be providing the materials out to our channel partners to be making those commercial prototype pouch cells and moving towards being able to do the prototype production quantities at the end of the coming year. We also will be developing in our laboratory level, the second 2 materials, the material to go into the drop-in lithium graphitic cell and the material to go into the room temperature sodium sulfur cell. So you understand that this coming year will be, again, another one of strong growth for your company, strong growth for your company, Gelion and important milestones. The objective, of course, is to progress now through the course of this coming 12 months with the goal of moving forward to a commercial business model for our sulfur technologies which will be based on materials sales, licensing of our technology and also sale of cells and systems built on our technology, but we will be having those cells toll-manufactured. So we have no intention as a company of becoming and investing in our own gigafactories. We are developing on a material sales model and licensing model, a capital-light model in our progression with our goal of getting the maximum return for our shareholders. And what should you look to see from that activity as shareholders? So upfront, our goal is to get Gelion recognized globally as the leader in sulfur cathode active materials at the time of most importance for that technology. So what I've given you here is some examples of companies in our peers. I might be being a little bit kind to us here. Maybe what I should be saying is that in the course of the next 12 months, what I want to do is lift us in sulfur cathode materials up into a per analogy against some of these companies, particularly those on the right. So the 3 companies I've given you on the right, they do an additive, a silicon additive that can be used with the anode of lithium-ion batteries and that can increase the performance of the cells by about 10% to 30%. So this is a very important area of development. And you can see that the valuation of these companies is all north of $1 billion. So they're all competing to be the leader in silicon additives for anode technologies as materials companies. Some of them make themselves as well, but this is an analogy for what it means to be a Tier 1 battery innovation company. On the left, you've got Gelion. Now today, obviously, our valuation is not in that class. And alongside us, you've got Lyten. Now Lyten is the considered the gorilla of the lithium sulfur companies. It is following a capital-intensive model, a capital-heavy model and is publicly out saying that Lyten wants to invest in the development of gigafactories. Now gigafactories do take a lot of investment. They're doing exceptional development. They're a great company, doing great technology development, but their path at the moment is towards having their own anode technology and their own cathode technology and their own formulations and investing in gigafactories. That takes a lot of capital. And most recently, they acquired most of the assets of Northvolt to continue that campaign. We aim to follow a strategy more like the 3 companies on the right-hand side that are doing the silicon anode development, but we'll be doing that for sulfur cathode development. What makes that possible? The thing that makes that possible is what Louis has just explained to you. This is our focus on breaking through with sulfur to make sulfur a drop in cathode material. We're very excited by that. And our goals this year in the next 12 months have been set at achieving what we believe it will be -- it will take to have your company recognized in the same class of Tier 1 battery innovators as the others that I've put on this slide. That's our goal in the next 12 months. We have the team to do it. Probably the most exciting thing about being your CEO is to walk into the office each day and to see the excitement on my team. Now I'm not talking out of shot, but I've had to send Louis home the last 2 Friday evenings, and he told me both times that he wasn't the last team member to be leaving the office. When you're doing something that is genuinely important, you see it in the eyes of your team every day, and Gelion is absolutely in that slot. Okay. So a derisked path to market leadership, exceptional technology, very exciting technology, large addressable market. You heard Amit talk about our financial discipline. We are a growth company, but we are focusing on every dollar of -- every one of your dollars that we spend. We have great backing from the U.K. government and the Australian government. We are very, very grateful to Faraday, the Advanced Propulsion Center and also to ARENA. We are transitioning to commercial pouch cells this year with partners in Japan, U.K., and we will be making them in the U.S.A. as well. The TDK collaboration to us is very important. I'll be in Japan again next week. Louis will be in Japan with the tech team early in the new year. He'll be in the U.K -- in the U.S.A. Very few partners achieved this OEM partnership status and the Tier 1 innovation status. We're very pleased to have your company, Gelion, on that path. We'll be working on relationship and partnership expansion in the U.S. and other geographies and a call out to Tracy, if he's on this call, Tracy, so, you're doing a brilliant job, my friend, and growing interest across multiple international markets. Thank you very much for this opportunity to present today on behalf of our team, Gelion, the cell battery company. And we will now, as is traditional, go to the questions, and we'll try to get through all the questions. We'll try to answer quickly. I will pass some of the questions as we go. Amit, #2 is coming at you. Louis, #3 is coming at you. So just be prepared on that. John Wood: First question, well over to the team for another fantastic year, great progress. Thank you. It's a nice question. I like [indiscernible] that one. Now the commercial relationships are starting, merge, can you expand on your longer-term commercial approach? Will it be involved being a battery material supplier in your sulfur division rather? Yes, it will. We will be a battery material supplier in our sulfur division rather than just a license or IP, but we will license as well. Secondly, are you also looking for other commercial partners? Or will this after TDK and QinetiQ validation in 12 months? So in the market that we're developing, we've told you that we're working with TDK and QinetiQ. We're out actively doing commercial partnership meetings continuously. I mean absolutely continuously. I'm in Japan next week. I told you that Louis is going across the U.S. It's not just the battery manufacturers that we're talking to. So we are talking to the cell manufacturers. We're talking at the level above that as well. So already, we're engaging with the application companies. And I can't talk to you about who they are, but I can tell you that we are having discussions at the level above the cell manufacturers, the people that they make cells for. And I will tell you that we're having discussions at the level below as well. And that level below is where materials are made for the people who make batteries, for the people who use batteries. Our commercial objective is to be capital-light and to maximize our margin acceleration and growth in the industry. So we are super active commercially. And I will pass question number 2, which is what is your current cash runway? And how long can you sustain operations without additional funding? Amit? Amit Gupta: Thank you, John. As we stand today, with the recent capital raise, the fund that we have raised will last us over 24 months. What I would also want to add is we are regularly working on a number of opportunities. I spoke about integration solutions pipeline. We are always looking for nondilutive funding from the Australian government, from the U.K. government, and we have been very lucky to get that as well. As these things or these opportunities eventuate, there is all the likelihood of this runway being extended further. John spoke about the TDK collaboration agreement, and he spoke about the onset of partner revenue. So that revenue will start coming in when we start sending them sizable kind of decent volumes of cathode active materials, which will happen approximately 12 months' time. So we are doing everything that we can to extend this runway as far as possible. But at a minimum, I'm looking at 24 months from today. Back to you, Louis. John Wood: So Louis, I'm going to throw the first half of this, which is unit economic targets. Can you talk about the performance targets that you're looking for in the material? And then I'll go on to the economic targets for you. Louis Adriaenssens: Yes, sure. So the unit -- so is there -- there was one on milestones -- anyways, I'll just answer the question. So the performance targets. So for the lithium metal cell targeted to drones, the key target is 400 watt hours per kilogram. That's the main one we want to hit. We want to do that critically providing a cell that has enough power for the drone to take off and land. For the drop in lithium sulfur, we're looking at somewhere between 200 to 300 watt hours per kilogram. My model suggests around 240 to 250 to give you a little bit of a more exact number. And similarly, we need to hit the performance targets required for application to automotive. So that's a broad temperature range of operation, the ability to put your foot down and the car accelerates and the ability to plug it in and the car charges really, really fast, which is again a power issue, which we know that our chemistry performs brilliantly. Regarding the sodium sulfur, we're looking at about 150 watt hours a kilogram there, which matches nicely with LFP. Good power and excellent cycle life, which is critical if you're going to have a cell which matches LFP and of course, very, very critically cost. my cost modeling brings us in at about 60% of the price of LLP. That matches, I think, with the performance expectations. John Wood: Thank you, Louis. And so building on Louis's performance expectations and now taking that across to gross margins and scale and that for you. The first one that Louis talked about for you, the 400 watt hours per kilogram, that is a high-performance cell that will be going into a market that has high margin for high performance. The second and the third cells that we're developing, they're the progressively higher volume products. Because we're doing a material business model and licensing business model, our intent is to maintain margin as we grow across all 3. Next question is, what key steps and time line do you anticipate to improve shareholder value? Well, I went through that earlier on today. What are we doing today this year? Very deliberately, we told you what we achieved in last year in terms of our technology performance goals. Those technology performance goals brought us our collaboration commercial goals now working through this year, working with our partners, making our commercial prototype cells in the U.K., in the U.S.A., in Japan and then working to deliver more partnerships on top of that. That's got to be exciting, and that's got to start bringing home shareholder value. But that's the market. We'll let the market decide. Next question is, why is the share price dropping so much? There's been great progress as manipulation or a large holder selling out. Well, that's a hard question to answer. The share market is the share market. I concentrate on the performance of the company and on letting everybody know what we're doing. So we're continuously trying to educate the market about what we're doing, and we're continuously trying to let people know about the progress that we're making. So I agree, there has been great progress. I expect there will continue to be great progress. And at the end of the day, we'll have to let the market take care of itself from there. Looking ahead, if successful, what would be the revenue split between pairing the sulfur CAM with lithium or graphite or sodium? Do you see the sodium sulfur batteries as having the biggest potential commercial returns? That is a really astute question. And -- to understand the answer, the earliest will be with lithium metal. And as I said, I anticipate that being a high-value market. I anticipate the graphite market when we pair it with lithium and graphite as being a premium and large market. And then the sodium is a huge market. So Gelion is nicely hedged by being able to operate across all of those 3 activities. I can tell you that it is working strongly to your company's advantage in a geopolitical context right at the moment that we actually are aiming across all 3 targets. When do you expect to fully commercialize the first sulfur CAM products? When do you expect to achieve breakeven? So there's 2 questions here. I'll go to the first one. When do you expect to fully commercialize the first sulfur CAM products? You will see progression towards that in the next 18 months. I can't predict for you exactly when the work with our partners will convert from commercial prototype cells to people saying, Hey, we need these cells right now. We want you to accelerate everything we're doing and bring that product to market. We'll be working towards trying to achieve that as fast as we can. So I'm not duck in the question. We'll be getting there as fast as we can. But equally, I anticipate because Louis is rigorous and his team is rigorous in their approach to disciplined science and disciplined progression that we will be balancing that with making sure that what we do is done right first time. So we want to progress carefully, and we will be developing value for you in the company even as we progress towards commercialization. When do you expect to break even? Now Amit did talk to you about all the things that we're doing and have been doing around cost management and around earning revenue, our hard-working integration services division, in particular. Now our goal is to be the leader globally in sulfur technologies, unashamedly. That's where we want to go. I think that there's a whole lot of exciting things that can be happening in that journey. And will that pull us towards the goals of going towards breakeven? Or will that pull us towards a rapid acceleration and rapid acceleration coming with it from recognition and support. I don't want to predict that for you. I only want to call out what we're doing in the next 12 months to create what I anticipate and hope will be growth in recognition and value for your business. Amit Gupta: John, if I can add to the first part of the question, as everyone knows on the presentation. In the presentation, that we are working with TDK, one of the largest battery -- global battery manufacturers, we don't have to set up large plants to actually go and commercialize. We are one of the -- in the best spots globally to make the product work and the commercialization will follow automatically because they have got everything that we need to commercialize the product. So the route to market or the time to market will be much, much shorter than us trying to do it ourselves. John Wood: Very good answer, Amit. That's 100% correct. And the next question was, what will be the expected cost of mass manufacturing factory be? I'm thinking of the setup cost for [indiscernible] a 25 gigawatt hour factory. And of course, we're avoiding that. We're avoiding the time that it costs to set up a factory. We're avoiding the cost that it takes to set up a factory following the path that Amit has declared. And I've also said earlier in this presentation that our plan is to work with partners below the manufacturers, the cell manufacturers, above the cell manufacturers as well. So even when you're considering the quantity of material that we will be producing, we aim to produce for a 20 gigawatt hour factory, also understand that when we work towards that, we will be working towards achieving that in a capital-light and fast way as well. In everything that we'll be doing, we'll be seeking to achieve leadership as quickly as we can and as effectively as we can for our shareholders. On Slide 25, you show manufacture of a pouch cell. You show the U.S. layer. Is this with an existing partner or a TBA? TBA. We're not telling people about what we're doing in the U.S.A. at the moment, but we will produce pouch cells in the U.S.A., commercial prototype pouch cells in the U.S.A. this year. Great presentation, very prudent management of the company's resources by the exec team and CFO. That's you, Amit. Well done. And I look forward to hearing more positive news coming out in the future. Thank you. Amit Gupta: Thank you. John Wood: I look forward to giving you more positive news. How does Gelion intend to raise its valuation to be equivalent Tier 1 anode suppliers in 2026 when commercial revenue from sulfur cathode materials and licenses is not expected until 2027? Now that's -- I did give you comparables in terms of Tier 1 battery innovation companies. We aim to increase our valuation by hitting all our goals by making our commercial prototype cells in each of the territories that we've identified by scaling the production of our first cathode materials so that we can start to produce more of those cells and by advancing the second and the third material. I think they're the goals that people look for when they're looking at valuation assignment or valuation being assigned to a leader. If we are identified in the next 12 months as being a leader or the leader in sulfur with a path resolved, more resolved, risk reduced for drop-in cathode material, then I think valuation will take care of itself. When do you expect to be paying a dividend? And can you see the share price recovering to the listed value? Now dividend is secondary to achieving our role as a Tier 1 battery innovator at this point in time and getting the value associated with that. Can I see the share price recovering to the list of value? I really want to answer that question. I'm confident in Gelion being able to establish strong value growth. I've got to stay within the boundaries of what I am allowed to say. All I will say is I am ambitious and confident and I would love to go well beyond where it is identified in the question. What is the margin on the ESS business? How is the business expected to affect the cash burn? And will it use sulfur cathodes in 2026? The margin is appropriate. I shouldn't give exactly what our margin is. It's a margin that is being set in order to have a sustainable business and a growing business. How is this business is expected to expect that to affect the cash burn this year? Of course, it helped because we had margin coming in. It's our goal to continue to develop that. Will it use sulfur cathodes in 2026? No, it will not use sulfur cathodes in 2026. Gelion has already achieved impressive and competitive performance targets with sulfur cathodes in the lab. This is early days. Do you expect further improvements in energy density and life cycle? Hell, yes, absolutely. We do. I go over to you. We have brilliant scientists in Australia and in the U.K. I cannot tell you just how good these people. And we have access to brilliant scientists in Germany with Max Planck Institute of Colloids and Interface and team. And we're getting the benefit of brilliant scientists in Japan who are bringing the complementary technologies to make full cells using the part that we bring in the sulfur cathode material. That combination is dynamic. It is powerful. It is early days. Do we expect further improvements? I don't expect further improvements. I see them every day. Every time I go to an R&D review, it's exciting. It's exciting when the team brings in achievements. It's exciting when they bring in things where they haven't been successful because we're learning from what they do at every stage. It's a real honor to be running this company. It's an exciting journey. it's really something special. That is actually our last question. I'm pleased that, again, we've managed to get through all the questions that have been lodged. Thank you very much. Operator: That's great. Well, John, Amit, Louis, thank you very much for answering those questions from investors. Of course, the company can review all the questions submitted today, and we will publish those responses on the Investor Meet Company platform. But just before redirecting investors to provide you their feedback, that's particularly important to the company. John, could I just ask you for a few closing comments? John Wood: Look, I just want to say thank you to everybody. I've got the best job in the world right now. I've got an amazing science team. I've got an amazing group of people I'm working with. We've got great support from all of our advisers. [indiscernible], thank you, all our lawyers, our accountants, our auditors and our Board. And most importantly, to the shareholders that have stood beside us, behind us, with us and are moving forward with us. You're the most important at the end of the day, you are with a company that absolutely realizes every day that it goes to work that the reason that we are here is to convert the funding that you've given us to value for you and the creative input that our teams put in every day into impact around the world. So thank you all. Operator: That's great. Well, thank you once again for updating investors today. Can I please ask investors not to close the session as you now be automatically redirected to provide your feedback and all the management team can better understand your views and expectations. On behalf of the management team of Gelion plc, we'd like to thank you for attending today's presentation, and good morning to you all.
Operator: Good morning, and welcome to Gelion plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll. And I'd now like to hand you over to CEO, John Wood. Good morning to you, sir. John Wood: Good morning. Thank you very much. Look, I'm really pleased this year to be able to give you this update. for Gelion. We're calling it now the sulfur battery company, and you will understand that as we proceed through this presentation. Okay. So first of all, our lawyers say hello, and they are absolutely not paying me to say this, but a big call out to Fieldfisher in the U.K. and Aspen Legal in Australia, who have been extraordinarily supportive and available to us through a big year of transactions. Okay. First, I would like to introduce your presentation panel today. Amit? Amit Gupta: Thank you, John. Good morning, and good evening all. My name is Amit Gupta. I am the CFO of Gelion. I've been with Gelion for over 4 years now. Prior to joining Gelion, my professional life was largely consulting, Deloitte and KPMG, where I worked on a number of M&A and IPO transactions. Louis? Louis Adriaenssens: Yes. Thanks, Evan. So my name is Louis Adriaenssens. I've been with Gelion for almost exactly 2 years now. I'm the CTO here. Prior to that, I worked for Panasonic at the Tesla Gigafactory. I was the supervisor of chemistry there, and we made batteries at an absolutely astounding rate. And it's my pleasure to be here and speak to you all today and tell you about some really significant things that have happened at Gelion, which moved us closer to that level of manufacturing. Pass back to John. John Wood: Thank you, Louis. I'm John Wood. I'm your CEO. It is an honor to run this company for you. It is a battery innovation company and technology company, and we are aiming to be the world leader in sulfur battery technology. This is something I've been doing my whole career, something I love doing, which is taking out the work of creative resources and making it commercially successful. We have a presentation panel today, but behind us, of course, stands the company. And I think it's an appropriate opportunity to call out our Chairman, Mr. Steve Mahon, who's been exemplary this year. Our founder, Thomas Maschmeyer, always in the front line with us. Our Non-Executive Directors, Joycelyn Morton, Graham Cooley and Michael Davie, I always value their support. And then, of course, our teams. And I do say teams, the great team working on lithium sulfur technology in Australia and our integration group in Australia, our OXLiD team up in the U.K., and our Battery Minerals team. We are blessed with the quality of the people that we work with in Gelion. Okay. We have a succinct presentation for you today, and we are going to be concentrating particularly on a key aspect of our lithium sulfur technology. That's because we believe we have a tiger by the tail. We think we've got something that is really important. We're making really solid progress with it. So the course of this presentation will focus on that. We will be giving you a corporate update. Amit will be taking you through the annual results. Louis will talk about products and technology. I'll come back and put that in a commercial context for you and then summarize at the end of the presentation. This has been an extraordinary year. I'm going to put it in context for you looking around the world. First of all, I want to discuss Australia. Call out the enormous support from the Australian government through ARENA. We announced to you earlier in the year about our ACPC grant, great support coming from there. That led to announcements that followed announcements in the U.K., the tremendous support that we get in the U.K. from Faraday and the Advanced Propulsion Center. We talked about how in the U.K., we are now doing some very important solid-state work that was being supported by the government there. Most recently, we announced our partnership with QinetiQ, once again being supported to make very important full pouch cells in the U.K. this year. We talked to you this year through our announcements about our relationship with the Max Planck Institute of Colloids and Interfaces out of Germany. The remarkable Professor Markus Antonietti and his team, a priceless relationship that is delivering outstanding results. Then we started to introduce to you what we were doing with Tier 1 manufacturers around the world, and we told you that we were doing a materials testing agreement with a Tier 1 manufacturer. A little later in the year, we revealed to you that, in fact, that was a TDK Corporation out of Japan, one of the world's most important battery manufacturing companies. Happy to highlight for you that the next place we will be going is the U.S.A., and we are starting work in that direction, which I'll describe a little more as we progress through the presentation. So I mentioned a tiger by the tail at the start of the presentation. We are working very hard in sulfur battery technologies. Why sulfur battery technologies and why particularly sulfur cathode active material? There is a $44 billion market today for cathode materials for batteries. That's going to be $132 billion market by 2032. It is serviced today primarily by 2 formulations. It's called Nickel Manganese Cobalt, NMC, and Lithium Ferrous Phosphate, LFP. Now I've got a picture in front of you and it says that a picture can tell a thousand words. Well, there's more than 1,000 words in this one because on the right, what you have is a traditional cathode material. Now this is either an LFP or an NMC. You can see what it looks like and how it's used in manufacture. On the left-hand part of this screen, you can see our cathode material, our sulfur cathode material that's in the bottle of the black powder there. And in the middle, there is a role of our cathode material. And you can see that cathode material looks like just like the one on the right. And so this is where Gelion is heading. So the market for cathode materials today, I've told you the size of the market, but it's dominated by nickel and cobalt materials or LFP. We aim through the course of our program of work to get to where we can offer a third option alongside those other materials into the cathode market. That's the size of the ambition that Gelion has. We aim for our cathode material to be a drop-in into that market. Now that's going to be very important because it opens a world of opportunity in energy storage. We aim very high. And in doing that, you must work to a very high standard. Now to have a compelling -- a truly compelling commercial product, it's not good enough just to be a high power product or to be a high-energy product. You must deliver the full suite of performance criteria. And on the screen here now, you can see that you must be low cost. You must have stable high energy, high power in charge and discharge, wide temperature tolerance, long cycle life, and you must do them all with one material at the same time. And that's where we're going with Gelion. That's why we're so excited. Okay. How do we deliver the low cost? Well, firstly, the material itself is made from low-cost materials. And we use a very low-cost fabrication material. So this is sulfur. Sulfur is abundant, low-cost carbon materials like sulfur and carbon. Stable and high energy. That comes because our sulfur is what is described as being nano confined by self-forming method. What that means is that in making this material, we can find the sulfur in such a way that it's in a high energy state that delivers this high power, this ability to work in a wide range of temperatures. Now this is not traditional for sulfur battery technologies. This is unique to the sulfur battery technology that we're developing inside Gelion. And that comes from a combination of the work in the IP and everything we acquired through the progression of the Oxus IP acquisition for Johnson Matthey, the OXLiD acquisition, the wonderful team that came on board with our Gelion [indiscernible] and our work with the Max Planck Institute. So no polysulfide shuttle, the nano confinement separating the sulfur from the electrolyte, opening a wealth of opportunity for sulfur battery technologies. So how do we apply that? One material and here, what we're doing is effectively 3 configurations or flavors of the material, however you would like to consider that. On the left, we have the material that we're doing in the shortest term. So this is a material where we take our sulfur CAM and we pair it with lithium metal. Now this makes an extremely high-performance cell. This is high power. This is high energy density, wide temperature range. You put that cell in a drone, it goes into high-value markets. In the center, what we've done is we've taken our sulfur cathode material and with what's called pre-lithiated it. So we put lithium into the sulfur cathode material. Louis will talk to you a bit more about this later. But what we're doing here is doing the work to make our sulfur cathode material a drop in. We can then pair it with standard anodes and standard electrolytes. So this is a product still in development, but we have made test cells that work as the configuration you see it here. Where does this configuration take us? Well, it takes us towards a cell that will be very important we believe, in e-vehicles. So this is a cell that can get you out of range anxiety. It has very high energy density, very high power, but a low cost and abundant cell. And then on the right, this third cell, this is the one that really -- I find most exciting of all. This is a room temperature sodium sulfur cell, sodium, sulfur and carbon and electrolyte. Now these are materials that you can find everywhere in the world. These are abundant materials, and this is the cell -- this cell is a very low-cost cell. So think of this cell in terms of being a technology that can be manufactured at a national level around the world and think of the impact and the contribution that, that will be making, also the commercial merit of those 3 cells, material. We told you recently about a collaboration agreement that we put in place with TDK Corporation. I cannot talk more highly of the amazing people that we have had the pleasure to work with at TK. These are rigorous scientists. TDK has been a leader in battery technology from the very start all the way through. It's a true honor for us to be able to work with them. And what does it bring to us? It allows us to focus on the things that are most important. It allows us to move forward quickly, taking advantage of the experience and the complementary technologies of that organization. So we're very, very honored to be able to work alongside TDK on this sulfur journey. There were 2 partnerships that we announced towards the end of last -- or the end of this year or in the last couple of months, in fact. The first one was this TDK partnership, which is actually a multiyear collaboration agreement. It doesn't preclude us from working with others, but we are working very closely with TDK. It leads to the onset of partner revenue. It will work towards what we'll be doing is making commercial -- large-format commercial prototype cells together. We will work together towards optimum product market fit. So by working with collaboration partners who already are supplying the market today with other chemistries, we make it real. We keep it real. So we're spending your shareholder dollars in ways towards getting our important materials to market and keeping it real in doing that rather than making things that we think might be a good idea. And so that product market fit is very, very important. And then as we progress, the goal is to get to where we're actually on their prototype production lines as well. The relationship with QinetiQ supported in the U.K. by the government, GBP 1.1 million project, including a GBP 0.5 million grant to Gelion. This is defense and aerospace, a scale-up of our CAM into, once again, commercial prototype pouch cells, and we're going to demonstrate that one for you in 12 months' time in Cemex in the U.K. So you can see these announcements are essential very, very important commercial progressions, points of progression for your company, Gelion. Now it builds on our IP. Our goal is to be a Tier 1 battery innovation about what that means a little bit later in the presentation for you. But we need to protect our position as we go as well. And that is [indiscernible] we are working very hard. We have more than 200 patents, but we are continuously evaluating our patents, adding to the portfolio and moving forward. I think we had more than 5 year [indiscernible]. I'll pass to Amit now, who will take you through the year's results. Amit Gupta: Thank you, John. So John has walked you all through the impressive piece of work that the business has done, both not just technologically but also commercially. We have established commercial collaborations with reputed Global one manufacturers, and that derisks the entire business. What I want to walk you through is how we have transformed the financial side of the business as well. And on that note, I will talk about Integration Solutions. That's a new division that we started in September, October last year. We got our first contract. We delivered the first contract successfully, and we recognized our first revenue. So first revenue for Gelion in FY '25, GBP 910,000 and margin associated with that as well. What this contract or this project has done for us is this has established a site for future projects for future customers to see what we have delivered and to actually go and see. So this is kind of a show and tell. Our pipeline continues to grow. It's approximately GBP 17.5 million now. If you think about this, the business only started 12 months back. The sales cycle is rather long, 9 to 20 months. It's because there are a number of steps during the course of actually identifying the opportunity and signing the contract and requires government and regulatory approval before you actually sign a sales contract. So in 12 months' time, a long sales cycle, the pipeline is growing really, really strongly. I spoke about the first revenue, GBP 900,000. That is recognized in FY '25. You can see that product revenue. and the margin associated with it as well. So you see direct costs, GBP 0.7 million. So the margin started coming from the first project itself. If you consider the pipeline that we have and even if you give a 25%, 30% chances of converting those pipeline into actual sales, you're looking at GBP 4 million to GBP 5 million of sales coming through the business in the next 12, 18 months. So what we are doing is we are building the pipeline, which will convert into kind of regular flow of sales and revenue and margin into the business, helping us reduce our cash burn. This is the third year in a row where we have exceeded market expectations, not just at the income level, but also at an adjusted EBITDA level, which further reduced to GBP 4.1 million. We went from GBP 5.5 million, GBP 6 million in FY '23 to GBP 4.8 million in FY '24 and to 4.1 million in FY ’25. Our cash position -- pro forma cash position was $4.1 million at 30th of June. This is slightly higher than what the market was expecting. I want to remind everyone what we have achieved over the course of the last 12, 15 months, whilst we are decreasing our cash burn and decreasing our losses. So the underlying message on this slide is we are taking really, really good care of shareholder capital. We're ensuring the capital is deployed in the most efficient manner, and every spend is being thoroughly and rigorously checked by myself and John. This slide brings home what I've been talking about. So if you look on the left, total income grew by 33% between FY '23 and FY '25, obviously, because of the integration solutions revenue in FY '25. I spoke about the pipeline. I spoke about the potential conversion of this pipeline. If those pipeline opportunities convert successfully, we hope to see continuous growth in the total income as well. Whilst we're doing all of that, our OpEx continued to decrease. It decreased by 22.9% or GBP 1.8 million over the last 3 years, which is phenomenal given we have gone through a rigorous cycle of high inflation and everything, but we have managed to bring our costs down. We have acquired OXLiD in FY '24. So in FY '23, we did not have OXLiD, just Gelion. We acquired OXLiD in FY '25, we established Battery Minerals, but we continue to reduce our expenses. The most interesting chart is on the right, underlying net cash flow, which everyone kind of talks about. You can see that decreasing from over GBP 6 million, GBP 6.5 million to GBP 4.6 million. That's approximately GBP 1.9 million reduction. Again, the same message from us as an executive team and from the company that your capital has been really, really well looked after. As you all know, we -- very, very recently, we completed an oversubscribed very successful capital raise round. We raised GBP 10.5 million. We had very, very strong participation from both existing and new investors, institutional and retail. Once the institutional shareholders reach that particular threshold, it will be announced to the market, and we have some very, very large U.K. funds. Retail participation was fantastic as well. The round was supposed to be open for a week. We closed it in 1.5 days because of the demand. What are we going to do with those proceeds? So John spoke about commercial power sales in Asia, U.K. and U.S.A. We are already -- those plans are already in progress. We will complete the QinetiQ program, work with TDK to achieve the product market fit. We'll expand our relationship in the U.S., additional sales and integrations business unit and general working capital to provide growth and the balance sheet strength of the business. So I thank you, everyone, for participating in the round, and it's very exciting to be part of Gelion. I will now pass it on to Louis. You're on mute, Louis, I think. Louis Adriaenssens: Thank you, Amit. Sorry about that. So to understand the significance of our technology, it really helps to understand the significance of sulfur. We all know that a very, very large number of batteries are produced every year. And we also know that, that amount of batteries is going to have to increase in rate by at least an order of magnitude in order to hit global energy Net Zero. Now if you look at the current situation with batteries and battery supply chains, there's an obvious issue here. Almost all battery supply chains terminate in one region of the world. And that means that, that one region of the world dominates battery production. Having all your eggs in one basket like this is a very, very bad idea. And it is completely counterproductive in trying to achieve Net Zero. The critical minerals, the toxic materials, the politics that underpin current battery manufacture and commercialization are just not compatible with achieving Net Zero. Now there have been some notable examples of groups that have tried to produce batteries using these conventional materials. So this is the NMC and LFP that John spoke about before. And with a few -- very, very few exceptions, all of these have fallen flat on their face, and there are some very notable examples of this reason. Now if you look at the right-hand side of this slide, you can see that there is, however, hope. We know that it's very difficult, maybe impossible to do it with incumbent materials. But on the right-hand side, we can see the global distribution of those incumbent materials compared to the global distribution and availability of sulfur. And so clearly, at least in terms of abundance, sulfur offers an opportunity. It offers a possible avenue. And what we're here to tell you today is that with our technology, we're able to take that abundance and we're able to turn it into batteries that are competitive with the incumbent batteries on performance and that blow them out of the water in terms of cost and abundance, enabling Net Zero for the world. And very significantly, it's not just us telling you that. We're super pleased, as John has said, to talk to you about our collaboration with TDK, who is one of the world's largest battery manufacturers. They dominate in certain sectors of battery provision. And we're super proud to be with them, and we're super proud to have it just not be us talking to you about this, but to have them standing beside us as we take our technology forward and bring it towards commercialization. Now as John said, when talking about our technology, one of the key issues in sulfur batteries is something known as the polysulfide shuttle. And this is something that we've managed to solve and which we think gives us the advantage and the edge and the ability to take that abundance of sulfur and turn it into a really, really fantastic battery. Now the way that we've gone about solving this issue is a phenomenon that we term as a nano confinement. And in order to understand that phenomenon, it helps to look at a picture. On the left, you can see a scanning electron microscopy image of our material. And if you look at that material, you can see the first layer of core structure that defines the way this material works. What we do is we take 2 very simple input materials. One of them is sulfur, and we heat them in a very, very simple process. There are, of course, tricks, there always are. And this allows us to in-situ form this fantastic material, which is defined by this core structure in which we have sulfur molecules and sulfur atoms organized within this pore structure. This allows us to do 3 very important things. First of all, because the pores are 3-dimensional, even though they're nano-sized pores are 3-dimensional, that means we can fit a lot of sulfur in a small space. That means that we can fit a lot of energy in a small space, making lightweight cells. Also, because we can define the opening of the ports, we can define what can and cannot enter into those ports. This allows us to optimize for productive processes to facilitate the transfer of lithium and sodium from outside of the port and into the port where it meets with the sulfur. And it also critically allows us to design out undesired pathways, degradation pathways, such as the escape of sulfur from that pore structure. And it's this escape of sulfur, which is known in the industry as the polysulfide shuttle. And this is what we're able to shut down and that at a high level is how we do it. And also very importantly, because we can define the size and shape of the pore itself, we can indirectly define the size and shape of the sulfur that exists within that pore. That allows us to intentionally present the sulfur to the lithium and sodium ions that transfer into that pour in such a way that the sulfur is highly reactive. What this means is that the sulfur reacts quickly with the lithium and the sodium and that translates into operation of the battery at a very, very high discharge rate and a very, very high charge rate. Now, there's some chunk data shown at the plot on the right, and this underlines the 3 things that I've just talked about. First of all, at a very aggressive C-rate, this is a 1-hour full discharge 1C, we are able to maintain full theoretical capacity of sulfur. That means that every single sulfur at in our material accepts lithium adds and sodium atoms to its fullest capacity. This means we have the possibility to hit a really, really lightweight battery. Second of all, you can see that the capacity fade over 100 cycles, again, at extremely aggressive C-rates of up to 7.5 minutes full discharge and charge is almost negligible. So we are clearly able to keep the sulfur in place and be able to use that sulfur reversibly during each charge discharge cycle, showing that we solved the polysulfide shuttle. And last of all, because we're able to present that sulfur in a really, really reactive state, you can see that we can operate the battery maintaining high percentage of capacity from 1C, which is a 1-hour charge and discharge all the way to 8C, which is a 7.5-minute charge and discharge. And in other plots, we've even done that down to 10C, which is a 6-minute charge and discharge. So these results are really, really phenomenal, and this is what has opened up all of these commercial opportunities and gotten us these relationships like with TDK and QinetiQ, which allow us to take our technology out and push it towards commercialization. Now as John said, we have 3 configurations or flavors of our battery. The one on the left, this is the first target market. This is going to be for drones. This is going to be a very, very lightweight battery. We're looking at 400 to 500 watt hours a kilogram. It is going to be a battery that is able to achieve a good cycle life, but the threshold is 400. We know we can compete that easily. It is going to be able to engage in high power, which is essential for applications like this where things need to take off vertically and land vertically. If you can't do that, you don't have a competent battery, and we're very pleased to say that we do. In the middle, you have one of the drop-in solutions that John talked about. This is the lithium sulfur variant, which uses standard graphfitic anodes and electrolytes, which are established in current lithium-ion battery gigafactories. When you model the performance at a relevant cell size, you see that we're getting performance aligned with NMC. This is the cell type that currently dominates high-performance automotive and automotive in the United States, for instance. And we're pleased to say that we can bring that to you at a model cost of about LFP for the performance of NMC. This is a significant cost advantage. And of course, the materials used to make the cell can come from domestic supplies. On the right, you have the sodium sulfur variant of the middle cell. This uses established anodes and electrolytes used in sodium-ion battery technology. And this allows us to make a battery, as John said, out of carbon, sodium and sulfur. These are materials that are available everywhere in the world. And very importantly, when you model the performance coming out of this battery, you get a performance which is commensurate with LFP, but at a fraction of the price. So these are the 3 flavors of batteries we have. I'm very pleased to say that we have made every single one of these batteries in coin cell format, and we're super excited to tell you how they develop in the future and of course, tell you how they develop with our partners as well. With that, I will pass back to John. John Wood: 00:52:00 Thank you very much, Louis. Okay. I'm going to now try to put that into a commercial context for you. And we will start, though, by reminding everyone that as well as what we're doing at our lithium sulfur and with our integration activities that Amit took you through. We also were very fortunate to have picked up some very important IP along the way, which we acquired from Johnson Matthey in the area of battery recycling. And young Jacob Carpenter, if he doesn't mind me calling young Jacob Carpenter, has done an extraordinary job of structuring that and bringing it along as an independent subsidiary, Battery Minerals. Now this division has been running extremely well. Jake managed to hire some key team members, fantastic experience, former Johnson Matthey. We've got a very tight product road map defined. We've validated the technology. We're very excited. This technology can contribute to the recycling of lithium manganese cobalt, lithium ferrous phosphate and LCO as well. We are doing demonstrations at the moment, and we're planning towards scale up, so this is a business that we are developing as a subsidiary with the intent of eventually spinning that business to the benefit of our shareholders. Now we talked about our progression in 2025, last year, 2024-'25 and what we've been doing around the world and the tremendous support that we've been getting along the way. This year will be our most important. This year, we will produce commercial prototype pouch cells using our sulfur cathode material. In Japan, in the U.K., we'll be making pouch cells in Australia as well, and we will be making commercial pouch cells in the U.S. as well through the course of this year. We will be scaling up the production of the standard cathode active material. That's the one that was on the leftmost side of the 3 cells that we showed you going along. That's the one that's paired with lithium metal. And we'll be scaling it up in the earlier stages of scaling up, scaling up to the stage where we can be providing the materials out to our channel partners to be making those commercial prototype pouch cells and moving towards being able to do the prototype production quantities at the end of the coming year. We also will be developing in our laboratory level, the second 2 materials, the material to go into the drop-in lithium graphitic cell and the material to go into the room temperature sodium sulfur cell. So you understand that this coming year will be, again, another one of strong growth for your company, strong growth for your company, Gelion and important milestones. The objective, of course, is to progress now through the course of this coming 12 months with the goal of moving forward to a commercial business model for our sulfur technologies which will be based on materials sales, licensing of our technology and also sale of cells and systems built on our technology, but we will be having those cells toll-manufactured. So we have no intention as a company of becoming and investing in our own gigafactories. We are developing on a material sales model and licensing model, a capital-light model in our progression with our goal of getting the maximum return for our shareholders. And what should you look to see from that activity as shareholders? So upfront, our goal is to get Gelion recognized globally as the leader in sulfur cathode active materials at the time of most importance for that technology. So what I've given you here is some examples of companies in our peers. I might be being a little bit kind to us here. Maybe what I should be saying is that in the course of the next 12 months, what I want to do is lift us in sulfur cathode materials up into a per analogy against some of these companies, particularly those on the right. So the 3 companies I've given you on the right, they do an additive, a silicon additive that can be used with the anode of lithium-ion batteries and that can increase the performance of the cells by about 10% to 30%. So this is a very important area of development. And you can see that the valuation of these companies is all north of $1 billion. So they're all competing to be the leader in silicon additives for anode technologies as materials companies. Some of them make themselves as well, but this is an analogy for what it means to be a Tier 1 battery innovation company. On the left, you've got Gelion. Now today, obviously, our valuation is not in that class. And alongside us, you've got Lyten. Now Lyten is the considered the gorilla of the lithium sulfur companies. It is following a capital-intensive model, a capital-heavy model and is publicly out saying that Lyten wants to invest in the development of gigafactories. Now gigafactories do take a lot of investment. They're doing exceptional development. They're a great company, doing great technology development, but their path at the moment is towards having their own anode technology and their own cathode technology and their own formulations and investing in gigafactories. That takes a lot of capital. And most recently, they acquired most of the assets of Northvolt to continue that campaign. We aim to follow a strategy more like the 3 companies on the right-hand side that are doing the silicon anode development, but we'll be doing that for sulfur cathode development. What makes that possible? The thing that makes that possible is what Louis has just explained to you. This is our focus on breaking through with sulfur to make sulfur a drop in cathode material. We're very excited by that. And our goals this year in the next 12 months have been set at achieving what we believe it will be -- it will take to have your company recognized in the same class of Tier 1 battery innovators as the others that I've put on this slide. That's our goal in the next 12 months. We have the team to do it. Probably the most exciting thing about being your CEO is to walk into the office each day and to see the excitement on my team. Now I'm not talking out of shot, but I've had to send Louis home the last 2 Friday evenings, and he told me both times that he wasn't the last team member to be leaving the office. When you're doing something that is genuinely important, you see it in the eyes of your team every day, and Gelion is absolutely in that slot. Okay. So a derisked path to market leadership, exceptional technology, very exciting technology, large addressable market. You heard Amit talk about our financial discipline. We are a growth company, but we are focusing on every dollar of -- every one of your dollars that we spend. We have great backing from the U.K. government and the Australian government. We are very, very grateful to Faraday, the Advanced Propulsion Center and also to ARENA. We are transitioning to commercial pouch cells this year with partners in Japan, U.K., and we will be making them in the U.S.A. as well. The TDK collaboration to us is very important. I'll be in Japan again next week. Louis will be in Japan with the tech team early in the new year. He'll be in the U.K -- in the U.S.A. Very few partners achieved this OEM partnership status and the Tier 1 innovation status. We're very pleased to have your company, Gelion, on that path. We'll be working on relationship and partnership expansion in the U.S. and other geographies and a call out to Tracy, if he's on this call, Tracy, so, you're doing a brilliant job, my friend, and growing interest across multiple international markets. Thank you very much for this opportunity to present today on behalf of our team, Gelion, the cell battery company. And we will now, as is traditional, go to the questions, and we'll try to get through all the questions. We'll try to answer quickly. I will pass some of the questions as we go. Amit, #2 is coming at you. Louis, #3 is coming at you. So just be prepared on that. John Wood: First question, well over to the team for another fantastic year, great progress. Thank you. It's a nice question. I like [indiscernible] that one. Now the commercial relationships are starting, merge, can you expand on your longer-term commercial approach? Will it be involved being a battery material supplier in your sulfur division rather? Yes, it will. We will be a battery material supplier in our sulfur division rather than just a license or IP, but we will license as well. Secondly, are you also looking for other commercial partners? Or will this after TDK and QinetiQ validation in 12 months? So in the market that we're developing, we've told you that we're working with TDK and QinetiQ. We're out actively doing commercial partnership meetings continuously. I mean absolutely continuously. I'm in Japan next week. I told you that Louis is going across the U.S. It's not just the battery manufacturers that we're talking to. So we are talking to the cell manufacturers. We're talking at the level above that as well. So already, we're engaging with the application companies. And I can't talk to you about who they are, but I can tell you that we are having discussions at the level above the cell manufacturers, the people that they make cells for. And I will tell you that we're having discussions at the level below as well. And that level below is where materials are made for the people who make batteries, for the people who use batteries. Our commercial objective is to be capital-light and to maximize our margin acceleration and growth in the industry. So we are super active commercially. And I will pass question number 2, which is what is your current cash runway? And how long can you sustain operations without additional funding? Amit? Amit Gupta: Thank you, John. As we stand today, with the recent capital raise, the fund that we have raised will last us over 24 months. What I would also want to add is we are regularly working on a number of opportunities. I spoke about integration solutions pipeline. We are always looking for nondilutive funding from the Australian government, from the U.K. government, and we have been very lucky to get that as well. As these things or these opportunities eventuate, there is all the likelihood of this runway being extended further. John spoke about the TDK collaboration agreement, and he spoke about the onset of partner revenue. So that revenue will start coming in when we start sending them sizable kind of decent volumes of cathode active materials, which will happen approximately 12 months' time. So we are doing everything that we can to extend this runway as far as possible. But at a minimum, I'm looking at 24 months from today. Back to you, Louis. John Wood: So Louis, I'm going to throw the first half of this, which is unit economic targets. Can you talk about the performance targets that you're looking for in the material? And then I'll go on to the economic targets for you. Louis Adriaenssens: Yes, sure. So the unit -- so is there -- there was one on milestones -- anyways, I'll just answer the question. So the performance targets. So for the lithium metal cell targeted to drones, the key target is 400 watt hours per kilogram. That's the main one we want to hit. We want to do that critically providing a cell that has enough power for the drone to take off and land. For the drop in lithium sulfur, we're looking at somewhere between 200 to 300 watt hours per kilogram. My model suggests around 240 to 250 to give you a little bit of a more exact number. And similarly, we need to hit the performance targets required for application to automotive. So that's a broad temperature range of operation, the ability to put your foot down and the car accelerates and the ability to plug it in and the car charges really, really fast, which is again a power issue, which we know that our chemistry performs brilliantly. Regarding the sodium sulfur, we're looking at about 150 watt hours a kilogram there, which matches nicely with LFP. Good power and excellent cycle life, which is critical if you're going to have a cell which matches LFP and of course, very, very critically cost. my cost modeling brings us in at about 60% of the price of LLP. That matches, I think, with the performance expectations. John Wood: Thank you, Louis. And so building on Louis's performance expectations and now taking that across to gross margins and scale and that for you. The first one that Louis talked about for you, the 400 watt hours per kilogram, that is a high-performance cell that will be going into a market that has high margin for high performance. The second and the third cells that we're developing, they're the progressively higher volume products. Because we're doing a material business model and licensing business model, our intent is to maintain margin as we grow across all 3. Next question is, what key steps and time line do you anticipate to improve shareholder value? Well, I went through that earlier on today. What are we doing today this year? Very deliberately, we told you what we achieved in last year in terms of our technology performance goals. Those technology performance goals brought us our collaboration commercial goals now working through this year, working with our partners, making our commercial prototype cells in the U.K., in the U.S.A., in Japan and then working to deliver more partnerships on top of that. That's got to be exciting, and that's got to start bringing home shareholder value. But that's the market. We'll let the market decide. Next question is, why is the share price dropping so much? There's been great progress as manipulation or a large holder selling out. Well, that's a hard question to answer. The share market is the share market. I concentrate on the performance of the company and on letting everybody know what we're doing. So we're continuously trying to educate the market about what we're doing, and we're continuously trying to let people know about the progress that we're making. So I agree, there has been great progress. I expect there will continue to be great progress. And at the end of the day, we'll have to let the market take care of itself from there. Looking ahead, if successful, what would be the revenue split between pairing the sulfur CAM with lithium or graphite or sodium? Do you see the sodium sulfur batteries as having the biggest potential commercial returns? That is a really astute question. And -- to understand the answer, the earliest will be with lithium metal. And as I said, I anticipate that being a high-value market. I anticipate the graphite market when we pair it with lithium and graphite as being a premium and large market. And then the sodium is a huge market. So Gelion is nicely hedged by being able to operate across all of those 3 activities. I can tell you that it is working strongly to your company's advantage in a geopolitical context right at the moment that we actually are aiming across all 3 targets. When do you expect to fully commercialize the first sulfur CAM products? When do you expect to achieve breakeven? So there's 2 questions here. I'll go to the first one. When do you expect to fully commercialize the first sulfur CAM products? You will see progression towards that in the next 18 months. I can't predict for you exactly when the work with our partners will convert from commercial prototype cells to people saying, Hey, we need these cells right now. We want you to accelerate everything we're doing and bring that product to market. We'll be working towards trying to achieve that as fast as we can. So I'm not duck in the question. We'll be getting there as fast as we can. But equally, I anticipate because Louis is rigorous and his team is rigorous in their approach to disciplined science and disciplined progression that we will be balancing that with making sure that what we do is done right first time. So we want to progress carefully, and we will be developing value for you in the company even as we progress towards commercialization. When do you expect to break even? Now Amit did talk to you about all the things that we're doing and have been doing around cost management and around earning revenue, our hard-working integration services division, in particular. Now our goal is to be the leader globally in sulfur technologies, unashamedly. That's where we want to go. I think that there's a whole lot of exciting things that can be happening in that journey. And will that pull us towards the goals of going towards breakeven? Or will that pull us towards a rapid acceleration and rapid acceleration coming with it from recognition and support. I don't want to predict that for you. I only want to call out what we're doing in the next 12 months to create what I anticipate and hope will be growth in recognition and value for your business. Amit Gupta: John, if I can add to the first part of the question, as everyone knows on the presentation. In the presentation, that we are working with TDK, one of the largest battery -- global battery manufacturers, we don't have to set up large plants to actually go and commercialize. We are one of the -- in the best spots globally to make the product work and the commercialization will follow automatically because they have got everything that we need to commercialize the product. So the route to market or the time to market will be much, much shorter than us trying to do it ourselves. John Wood: Very good answer, Amit. That's 100% correct. And the next question was, what will be the expected cost of mass manufacturing factory be? I'm thinking of the setup cost for [indiscernible] a 25 gigawatt hour factory. And of course, we're avoiding that. We're avoiding the time that it costs to set up a factory. We're avoiding the cost that it takes to set up a factory following the path that Amit has declared. And I've also said earlier in this presentation that our plan is to work with partners below the manufacturers, the cell manufacturers, above the cell manufacturers as well. So even when you're considering the quantity of material that we will be producing, we aim to produce for a 20 gigawatt hour factory, also understand that when we work towards that, we will be working towards achieving that in a capital-light and fast way as well. In everything that we'll be doing, we'll be seeking to achieve leadership as quickly as we can and as effectively as we can for our shareholders. On Slide 25, you show manufacture of a pouch cell. You show the U.S. layer. Is this with an existing partner or a TBA? TBA. We're not telling people about what we're doing in the U.S.A. at the moment, but we will produce pouch cells in the U.S.A., commercial prototype pouch cells in the U.S.A. this year. Great presentation, very prudent management of the company's resources by the exec team and CFO. That's you, Amit. Well done. And I look forward to hearing more positive news coming out in the future. Thank you. Amit Gupta: Thank you. John Wood: I look forward to giving you more positive news. How does Gelion intend to raise its valuation to be equivalent Tier 1 anode suppliers in 2026 when commercial revenue from sulfur cathode materials and licenses is not expected until 2027? Now that's -- I did give you comparables in terms of Tier 1 battery innovation companies. We aim to increase our valuation by hitting all our goals by making our commercial prototype cells in each of the territories that we've identified by scaling the production of our first cathode materials so that we can start to produce more of those cells and by advancing the second and the third material. I think they're the goals that people look for when they're looking at valuation assignment or valuation being assigned to a leader. If we are identified in the next 12 months as being a leader or the leader in sulfur with a path resolved, more resolved, risk reduced for drop-in cathode material, then I think valuation will take care of itself. When do you expect to be paying a dividend? And can you see the share price recovering to the listed value? Now dividend is secondary to achieving our role as a Tier 1 battery innovator at this point in time and getting the value associated with that. Can I see the share price recovering to the list of value? I really want to answer that question. I'm confident in Gelion being able to establish strong value growth. I've got to stay within the boundaries of what I am allowed to say. All I will say is I am ambitious and confident and I would love to go well beyond where it is identified in the question. What is the margin on the ESS business? How is the business expected to affect the cash burn? And will it use sulfur cathodes in 2026? The margin is appropriate. I shouldn't give exactly what our margin is. It's a margin that is being set in order to have a sustainable business and a growing business. How is this business is expected to expect that to affect the cash burn this year? Of course, it helped because we had margin coming in. It's our goal to continue to develop that. Will it use sulfur cathodes in 2026? No, it will not use sulfur cathodes in 2026. Gelion has already achieved impressive and competitive performance targets with sulfur cathodes in the lab. This is early days. Do you expect further improvements in energy density and life cycle? Hell, yes, absolutely. We do. I go over to you. We have brilliant scientists in Australia and in the U.K. I cannot tell you just how good these people. And we have access to brilliant scientists in Germany with Max Planck Institute of Colloids and Interface and team. And we're getting the benefit of brilliant scientists in Japan who are bringing the complementary technologies to make full cells using the part that we bring in the sulfur cathode material. That combination is dynamic. It is powerful. It is early days. Do we expect further improvements? I don't expect further improvements. I see them every day. Every time I go to an R&D review, it's exciting. It's exciting when the team brings in achievements. It's exciting when they bring in things where they haven't been successful because we're learning from what they do at every stage. It's a real honor to be running this company. It's an exciting journey. it's really something special. That is actually our last question. I'm pleased that, again, we've managed to get through all the questions that have been lodged. Thank you very much. Operator: That's great. Well, John, Amit, Louis, thank you very much for answering those questions from investors. Of course, the company can review all the questions submitted today, and we will publish those responses on the Investor Meet Company platform. But just before redirecting investors to provide you their feedback, that's particularly important to the company. John, could I just ask you for a few closing comments? John Wood: Look, I just want to say thank you to everybody. I've got the best job in the world right now. I've got an amazing science team. I've got an amazing group of people I'm working with. We've got great support from all of our advisers. [indiscernible], thank you, all our lawyers, our accountants, our auditors and our Board. And most importantly, to the shareholders that have stood beside us, behind us, with us and are moving forward with us. You're the most important at the end of the day, you are with a company that absolutely realizes every day that it goes to work that the reason that we are here is to convert the funding that you've given us to value for you and the creative input that our teams put in every day into impact around the world. So thank you all. Operator: That's great. Well, thank you once again for updating investors today. Can I please ask investors not to close the session as you now be automatically redirected to provide your feedback and all the management team can better understand your views and expectations. On behalf of the management team of Gelion plc, we'd like to thank you for attending today's presentation, and good morning to you all.
Wei Ching: Good morning to those in Europe. Good afternoon to those in Asia. Welcome to Jinhui Shipping and Transportation Limited Q3 2025 results presentation. I hope anyone -- sorry, I mean everyone can hear me. If you cannot, please, let me know on the message, on the chat. It seems like everyone can hear, no complaints on the audio. I trust that all of you have got the results announcement as well as a copy of the presentation. If not, please just look at the screen. Going through the Q3 highlights. Revenue for the quarter USD 40 million. Earnings before interest, tax, depreciation and amortization, $17 million. Net quarter -- sorry, net profit for the quarter $0.08 million. Basic earnings per share $0.001. For the 9 months into 2025, Revenue for the 9 months period, USD 120 million, EBITDA of $67 million. Net profit for the period USD 15 million. Basic earnings per share $0.139 and the gearing ratio as of end September 2025 2%. If we look at the Q3 2025, the revenue has dropped 11% relative to Q3 2024. I think it's a combination of both a weaker freight rate compared quarter-on-quarter as well as we have been selling off some ships. In preparation for the new buildings that we have ordered. I think you can see that. Net profit is down to $0.08 million. Some of the bookings of -- when we sell off these new buildings, we have to book at a loss because on our books, the asset value has -- were high and we have decided to sell them off. So it's a noncash flow item, but we have to mark the loss. Average TCE is down 4% Q3 2025 relative to Q3 2024 as well. Overall 9 months into the year highlights, it show a better picture. Revenue is up 4.6%, so 9 months 2025 is USD 120 million compared with same period last year, $114.7 million. Net profit down is USD 15.2 million compared to same 9 months 2024, it's down $3.6 million, average TCE 9 months 2025, $13,878 relative to $14,446 down 3.9%. There is nothing astonishing about, this is just some of our ships will be on spot and the market goes up and down, there's some volatility is nothing alarming from our perspective. The group reported consolidated net profit of $0.08 million for the third quarter. Charter revenue declined 11% to USD 40 million, mainly due to a reduced number of owned vessels. For the first 9 months of 2025. The group reported consolidated net profit of $15 million and chartering revenue increased 4.6% to USD 120 million. To stay competitive in the market, we focus on enhancing and adjusting our fleet profile. So during the 9 months, we entered into agreements to dispose of 6 aged Supramaxes at a total consideration of USD 63 million and 3 Ultramaxes shipbuilding contracts of $33 million each. 5 of the old sold Supramaxes were delivered to the purchases and incurred an aggregated loss of $6.2 million on disposal during the first 9 months of 2025. Shipping related expenses for the current quarter decreased to $21 million, down from $24 million in Q3 2024. This reduction was primarily due to a lower number of owned vessels as well as a decline in hire payments for chartered in vessels. Hire payment on short-term leases amounted to $2.6 million during the quarter, compared to USD 8 million in the same period of last year. The daily running costs of owned vessels increased from Q3 2024 of $5,302 to Q3 2025 of $5,750, mainly from increase in crew costs and expenditures of spare parts and vessels, driven by an increase in operational demands and the need for maintenance to ensure optimal performance. As a rise in finance cost as well, mainly attributable to loan drawdown for financing of vessels upon deliveries from second half of 2024 to first half of 2025. CapEx of $3.2 million incurred for the current quarter, mainly for dry docking costs and vessel improvements. As of the end of September 2025, our total secured borrowings increased to $126 million, with current portion and noncurrent portion of USD 11 million and USD 115 million. The rise mainly was due to the sale and leaseback arrangements the group entered into for 2 owned vessels for the amount of $28 million. Other borrowings were denominated in renminbi, offshore. These -- I'm talking about these other borrowings as in the $28 million sales and leaseback. I think it's not a bad timing, denominating in renminbi because of the exchange rate, we can -- is in our advantage given the U.S. -- the Hong Kong dollar is pegged to the U.S. dollars. Financial highlights for the quarter and 9 months ended. I think this is fairly self-explanatory is -- so I'm not going to details, if you have any questions, please shoot afterwards. As of Q3 2025, our total assets has increased from previous quarter, USD 514 million to USD 571 million plus. Total equity has increased from $367.5 million to $383 million almost, rounding it up USD 383 million. As explained in the total borrowings has increased in Q3 2025 to USD 125.5 million. But as a result of disposing our older tonnages, we have replenished our liquidity. The current ratio is 3.03:1. The gearing has further dropped to 2%. Available liquidity, $116.4 million. Return on equity, $0.02 million. We are replenishing our liquidity, lowering the gearing, of course, because we do have CapEx going forward. So part of it will be for payments for our new building program and beefing up our war chest would allow us to further look for renewal opportunities. There's no particular plan. We have always viewed the shipping market as very volatile, and we need to tread carefully, but we need to get ready. So we are preparing a war chest to remain flexible and nimble should opportunities arise. During Q3 2025, we completed disposals of 4 Supramaxes, total consideration amounting to $44 million. In addition, another Supramax was disposed in August 2025 and reclassified to assets held for sale as at end of September 2025. This Supramax will be delivered before end of December 2025. To sum up, the group entered into agreements for the disposal of 6 old Supramaxes a total consideration of USD 63 million. 3 Ultramax shipbuilding contracts of $33 million each for the period ended September 2025. As at 30th of September 2025, 29 vessels, of which 21 owned vessels, including the 2 under sale and leaseback agreements, and 1 which has been disposed of and reclassified under assets held for sale and 8 chartered in vessels with total carrying capacity of 2.2 million metric tonnes. Subsequent to the reporting date, the group entered into agreements to dispose of 2 Supramaxes with consideration of $13.2 million and $10.3 million, respectively. I think again, this chart is for your reference. From our recent actions, I think it should be fairly apparent that we are taking the opportunity of a very compelling global fleet profile, where they are already in quite a significant proportion of old vessels, especially in the Supramax/Ultramax space. And they will reach -- quite a good proportion of it will reach over 20 years old in going forward. And we see this as a good opportunity to go on a renewal program. The chartering market is also fairly robust. So this also gives good support to secondhand vessels. And of course, coinciding with the fairly strong interest in old tonnages. So I think it's a pretty good timing to monetize some older vessels. And put on and purchase some new buildings to -- it's a little bit like refreshing our fleet, our assets has also started with a pretty clean slate. You would have noticed that in some of the older vessels, where we have sold them, they need to book at a loss. This is because it was -- these were ordered at fairly high price in the previous cycle. So this is the reason why we are being very, very careful and need to look carefully and opportunistic when it comes to buying a new -- ordering new buildings. This is the list of our owned vessels, should be self-explanatory. We expect this age profile, average age will decrease as our new buildings get delivered going forward. And this is the list of chartered-in vessel. So for long-term, we have chartered in 1 Capesize, 2 Panamax and 2 Ultramax. We have also short-term chartered in 1 Ultramax, so total 6 chartered-in vessels. In order to have a healthy debt maturity profile. We have done some work further. So out of the USD 126 million of interest-bearing debt, 8% will be repayable within 1 year, 9% will be repayable within 2 years 83% will be repayable within 3 to 5 years. We will, of course, continue to monitor this debt profile. For shipping, the nature of our assets is very long term. So we will stretch this maturity profile whenever we can and whenever it's beneficial to our balance sheet. In terms of cargo mix, 60% of the cargo that our ship carry, our vessels carry is minerals, 16% coal, 6% steel products, 5% agricultural products, 2% cement, 1% fertilizers and 10% various other cargoes. In terms of distribution of cargo, in terms of where we load our cargoes, we have 29% of the cargoes are being loaded in Asia, excluding China, 20% in China, 15% Australia, 26% from Africa, 9% in South America and 1% North America. In terms of discharging 44% of the cargoes are destined for China, 28% in Asia, excluding China, 13% Africa, 2% Australia, 3% Europe, 8% South America and 2% in North America. You would notice that we -- throughout all these years, we have been not very active in the North American ports. In light of the current trouble or difficulties, I would say, I would -- maybe I should use the word, due to geopolitical conflicts, I think we will continue to -- our current business mix to -- I think we are comfortable with this mix and minimize our North American exposure. In terms of time charter equivalent, as of Q3 2025, Capesizes $22,018 a slight decrease from Q3 2024. Panamax fleet $15,032 slightly increase relative to the Q3 '24 numbers. Ultramax/Supramax fleet $13,618 a drop from Q3 2024. Overall average $14,629, which is a drop from the Q2 '24 figures. And if you look at the 9 months figures, this average has further dropped down. However, we are fairly confident that the chartering market should stay robust and numbers should slowly improve, especially in 2026. Daily vessel running costs of owned vessels as of Q3 2025. The total running cost plus depreciation, plus finance cost, $8,927. And as previously explained, the finance cost has increased due to further debt drawdown of sales and leaseback. Depreciation has lowered because we have a lower number of ships. Running costs it's because of the new vessels coming online. In terms of outlook, we are cautiously optimistic. We're forever cautious, I don't know why we're like that, but we are seeing cycles. We are very careful. We -- even when the stars shows that they are going to align, we will always remain cautious because this is a very risky industry. But we see stable and robust demand for dry raw materials. Because of the aging global fleet profile, we have been embarking on a search for renewal opportunities. And I've explained what we have been doing for the past 9 months. Going forward, we will continue to look for renewal opportunities. We are cautious. One of the reasons is because uncertainties remain given from the economic perspective -- macroeconomic perspective, a lot of large economies, the economic growth is somewhat slowing down. That's number one. And of course, this is something that we are all very familiar with. There's a lot of potential geopolitical risk that remains. And we need to be aware of and we need to stay alert. We have been disposing off older vessels to beef up our balance sheet, in order to stay nimble, in order to stay flexible, should we see attractive opportunities going forward. That is all from me and I shall take any questions that you may have. Wei Ching: Thank you for your question. Rising China, Japan tensions. If you look at our trade routes, I think we have been selecting fairly neutral routes in order to try to minimize any potential disruptions for our business. Right now, I mean, in terms of identified routes, ports most at risk, so far, we don't think the Asian ports is -- will be high risk. The more high risk will be more the Middle East, Ukraine, Russian related ports, Red Sea, et cetera. There -- to be honest, there aren't much changes to insurance premiums or security costs, to be honest. If there are any business that we require us to go to visit any ports that are questionable. Well, number one, if you go to an unsafe port or if during journey before you arrived, the cargo that was destined to, let's say, port A, and it's suddenly declared as unsafe port, you have to divert. Otherwise, there will be additional, let's say, more premium, more risk insurance that we will have to purchase, but this will be borne by charters. Majority of our business we do -- we conduct through the time charter mode, so in terms of time charter contracts. So such additional costs, even for example, arm guards will be borne by charters. I hope that answer your questions. But right now, I don't think the tensions between China, Japan, is not something that is at the very top of the risk, priority risks. I think -- hopefully, I think that it will ease down. No one has any further questions? Not even dividend policy? The one some -- I think some of you have your favorite question is the dividend policy. But I can give you the answer right away. We will just have to wait for the Board of Directors' decision if there is any dividend at the end of the year? There you go. Okay. I think the -- what we have done, I have tried my best to explained and it should be quite clear. I would describe it as almost like we want to refresh our assets and enter the new -- pretty much a new start, a new cycle with better assets for -- and better serve our customers and hopefully will generate better returns for shareholders. If there are no further questions, this all from me. And I wish all of you a good day in Europe. And good afternoon, good evening in Asia. Thank you.
Operator: Thank you for standing by, and welcome to the Meituan Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Scarlett Xu, VP and Head of Capital Markets. Please go ahead. Scarlett Xu: Thank you, operator. Good evening, and good morning, everyone. Welcome to our Third Quarter of 2025 Earnings conference call. Joining us today are Mr. Xing Wang, Chairman and CEO; and Mr. Shaohui Chen, Senior Vice President and CFO of Meituan. For today's call, management will first provide a review of our third quarter of 2025 results and then conduct a Q&A session. Before we start, we would like to remind you that our presentation contains forward-looking statements which include a number of risks and uncertainties and may differ from actual results in the future. This presentation also contains unaudited non-IFRS accounting standards financial measures that should be considered in addition to and not as a substitute for measures of the company's financial performance prepared in accordance with IFRS Accounting Standards. For a detailed discussion of risk factors and non-IFRS accounting standard measures, please refer to disclosure documents in the IR section of our website. Now I will turn the call over to Mr. Xing Wang. Xing Wang: Thank you, Scarlett. Hello, everyone. We are in the third quarter, we actively responded to the shift in the competitive landscape of food delivery and quick commerce. Meituan remains the go-to platform of local services for Chinese consumers. Over 800 million consumers use our services, covering everything from food and dining, quick commerce to services retail and more. Specifically, the Meituan's app DAU jumped over 20% year-over-year in the third quarter. On average, users transact with us at least once a week and our top-tier and high-quality users engage with the platform every day. Across all local commerce businesses, we have stepped up product and service iteration to enhance user mindshare and strengthen our competitive advantages. Thanks to our fully upgraded Meituan membership [ Mei tuán huìyuán ] we have effectively boosted for selling activities and enhanced the core user stickiness. We are also the primary platform for merchants' long-term growth, empowering them with the technology and supply innovations and helping them to integrate AI into their operation to improve efficiency. First, let's talk about our food delivery business. Here, we continue to leverage our competitive strengths to deliver industry-leading operational efficiency and a superior consumer experience. Our sustained focus on service quality and the healthy development of the industry has enabled us to navigate a quite dynamic market, strengthen our consumer mindshare and reinforce our leadership in the food delivery sector. Amid intense competition, we stepped up supply side innovation and service upgrades. For our innovative supply models like Ping Hao Fan, or Shen Qiang Shou or Pingbai Weiqing Dian as branded satellite stores. And we further deepened our collaborations with quality merchants. It allows us to offer consumers a wider range of high-quality products across all price bands. And we also selected top-tier restaurant merchants on [Foreign Language] based on real and authentic data and matched the quality offerings precisely with our high-quality food delivery users. Additionally, we have rolled out premium services like on-time guarantee [ Zhunshí baozhèng ] and one-to-one express delivery, [ yi duì yi jí sòng ]. These measures have strengthened our core competitiveness in fulfillment and elevated the delivery experience for consumers and solidified our advantages in user structures. We remain as the Chinese consumers' go-to food delivery platform. In the third quarter, both DAU and MTU as Monthly Transacting User for food delivery hit an all-time high. We further expanded our advantage in user structures. In addition, we stepped up our efforts to address ecosystem issues and invested in the ecosystem development, specifically for couriers' welfare, we expanded the courier pension insurance subsidy program to a nationwide publish beginning in November and extended an occupational injury insurance to 17 provinces and cities. We have also implemented a comprehensive courier welfare scheme, which include critical illness support, educational funds for couriers' children and skill development and academic advancement opportunities for couriers as well as benefits such as work meals, health checkups and travel subsidies. Moreover, we have built couriers homes [ qishou zhi jia ] rather stations across the country to provide our couriers with convenient facilities and services. Going forward, we will keep enhancing couriers' welfare and protection. And as consumers' preferred quick commerce platform, Meituan Instant Shopping continues to lead the industry's rapid growth and service upgrade. In Q3, both new user growth and core user purchase frequency further increased. As we continue to diversify supply, the proportion of users buying across multiple categories has been steady on the rise. This shows our everything now consumer mindshare is getting even stronger. New supply formats like Meituan InstaMart, Shandiàn Sòng expanded rapidly, bringing this high certainty lifestyle to more regions across China. We also teamed up with the leading brands in the liquor and apparel categories, which reflected these top brands recognition of quick commerce's value and their trust in Meituan. In October, we officially launched a branded flagship InstaMart Pingbai Guanqi Shandian Chang, providing retail brands with full quick commerce infrastructure, warehousing, on-demand delivery and the digital system. By leveraging our strengths in user traffic ecosystem and online capabilities, we empowered brands to drive user growth, boost sales and connect more deeply with younger consumers. Beyond that, we are committed to continuously upgrading our quick commerce services. After rolling out the industry's first full cycle service assurance program, [ Anxin San Gou ] we recently introduced an end-to-end authentic product verification process for chinese [indiscernible] and launched the industry's first alliance for high-quality fresh-cut fruits brand [ Huo Qian ]. As the industry leaders, we will keep setting benchmarks that focus on premium quality and top-tier service. Overall, we have built the world's largest and most efficient intracity on-demand delivery network, delivering a best-in-class fulfillment experience to consumers. Our platform has accumulated a large user base of high-quality users with a very strong purchasing power. We also provide merchants with industry-leading services and create the most diverse supply. These valuable assets built up over more than a decade will fuel the long-term growth of our food delivery business. They will also serve as a solid foundation for our efficient expansion in the broader quick commerce space. Now let's turn to our in-store business. In the third quarter, both our merchant base and user base reached new highs with a nearly 20% year-over-year increase and user transaction frequency continued to grow robustly. We further refined our product and content ecosystem. Our goal is to give every consumer simple, more reliable reference for purchase decisions. To date, our platform has accumulated over 20 billion authentic user -- consumer reviews with nearly 3.5 billion new reviews added in the past 12 months. Additionally, we are now using AI to filter out low-quality reviews and those manipulative contents. This way, we can ensure a comprehensive authentic review ecosystem that provides a truly useful decision-making support for consumers. We also expanded the reach and influence of our high-quality list, including the Black Pearl Guide, hidden Jewels and our Must-Eat list Bi Chi Bang. Currently, these 2 lists cover 34 and 144 cities, respectively. Moving forward, we will expand to more regions and welcome more quality restaurants to join our list. Beyond that, we have iterated products like pickup now, [indiscernible] 12:26 smart ordering and one-click payments, extending coverage to more merchants and meeting consumers' more diverse and personalized needs. Moreover, we further promoted our safe learning program, [ Anquán xuéxí jìhuà ] in the broader education space and expanded our safe series, [ Anquán xìliè ] to more categories such as fitness. We offer flexible redemption options, which has significantly boosted consumer trust in prepaid services. For self-service formats such as an unmanned chess and cards, playing cards rooms and self-service KTV, we upgraded our booking system to deliver a smoother hassle-free experience for consumers from reservation all the way to service fulfillment. In healthcare and pharmaceuticals, we expanded our video and phone consultation services to include more doctors from Grade 3A hospitals, [ San jí jia deng yiyuàn ] and offering -- we offered 24/7 instant consultations plus 30 minutes prescription drug delivery. We improved in-store verification service for dental care and medical aesthetics and standardized supply chain management to build end-to-end consumer trust. During the third quarter, we launched the 2025 Polaris medical aesthetic guide [ Beijing Yi Mei Bang ] which has set industry standards and raised the bar for service quality. These are just a few examples. Going forward, we will continue to leverage our deep industrial and consumer insights to turn more offline services transactions into trusted online transactions for consumers. And now let's turn to our new initiative segment. And this segment delivered another solid performance in the third quarter. Our grocery retail businesses, especially for Xiaoxiang Supermarkets and Kuailvdian sustained a strong growth momentum. We not only solidified our market position, but also achieved improvement in operational efficiency. And additionally, Keeta accelerated its global coverage. After launching in Qatar in August, we entered Kuwait and the UAE in September, deepening our presence in these key Middle Eastern markets. In October, Keeta also kicked off a pilot operation in Brazil. Going forward, we will continue to leverage our strengths in product technology and operation know-how to deliver superior consumer -- and delivery experience for consumers in more parts of the world. After 6 months of iterating our promoting Meituan membership, we have achieved good progress. We added new member benefits and exclusive offers across multiple local service categories. This has notably strengthened our user mindshare and boosted member transaction frequency. Specifically, a large number of our mid-tier users have upgraded their membership tiers and the number of high-value members kept growing steadily even in the recent very fierce competitive environment. It's a clear sign of our unique edge in serving high-value users. What's more, our enhanced Meituan membership program is driving growth across businesses in key areas. It supports user acquisition and traffic operation and transaction growth and marketing while also effectively fueling cross-selling among various businesses and consumption scenarios. Moving forward, we will leverage our competitive advantages, broad coverage in local services, continue to refine the membership program and increase user engagement and transaction frequency. During the third quarter, we continued to invest in AI and achieved multiple milestones. For example, we launched several models in our LongCat-Flash series, all delivering leading performance. And we rolled out a range of AI decision-making and application tools tailored specifically for restaurant merchants. And we also launched Xiaomei app, a smart life assistant for consumers. and currently is in larger-scale testing. Going forward, we will make our AI tools more industry-focused and service oriented. We will provide effective solutions for merchants across all operational decision-making scenarios and make consumers' decision-making process and consumption experience more intelligent, more convenient and more personalized. Founded in 2010, Meituan has witnessed and led the digital transformation for China's local service industry. Since 2010, we have built the online purchase, offline consumption user mention in local services through group purchase model. And back in 2013, we stepped into the food delivery space and our intracity on-demand delivery network made food delivery services more accessible than ever, turning it into a key food consumption habit for Chinese consumers. And as leading -- as industry competition keeps evolving, we are confident in maintaining our leading position by continuing to strengthen our core competitiveness. guided by our retail plus technology strategy. We will continue to refine our products and services to better meet consumers' very diverse local services needs while empowering merchants through technology innovation and AI application, altogether to drive the sustainable and healthy development of the whole industry. So we are as ever committed to helping people eat better, live better. And with that, I will turn the call over to... Shaohui Chen: Thank you, Xing. Hello, everyone. I will now go through our third quarter financial results. During this quarter, our total revenue increased by 2% year-over-year to RMB 95.5 billion. Cost of revenue ratio increased 12.9 percentage points year-over-year to 73.6%. This was primarily driven by: first, higher incentives for our couriers to maintain industry-leading delivery service quality and experience; second, the increased cost in our overseas operations. These factors were partially offset by the improved gross margin of our grocery retail business. Selling and marketing expenses ratio increased 16.7 percentage points year-over-year to 35.9%, driven by our increased investments in promotion, advertising and user incentives to enhance our brand awareness, user acquisition and core user engagement. R&D expenses ratio slightly increased to 7.3% as a result of our increased investment in AI, while G&A expenses ratio maintaining stable year-over-year at 3.1%. This quarter, irrational competition within the on-demand delivery industry significantly distorted sector-wide profitability. Our deliberate strategy investments to sustain leadership and competitiveness resulted in a total segment operating loss of RMB 15.3 billion and an adjusted net loss of RMB 16 billion. However, we maintained uncompromised service standards while continuing to drive initiatives that foster the industry's sustainable development. As of September 30, 2025, we held cash and cash equivalents and short-term treasury investments totaling RMB 141.3 billion. However, cash generated from operating activities turned to negative RMB 22.1 billion, primarily due to our investments in response to the intensified competition. Now turning first to our core local commerce segment. Revenue declined year-over-year this quarter, primarily driven by 2 factors. First, intensified competition caused a significant drop in food delivery average order value, weakening commission revenue growth. Second, delivery service revenue saw negative growth due to substantially higher incentives deducted from delivery service revenue. Despite these headwinds, we strategically increased investment across our ecosystem to reinforce market leadership and drive sustainable growth. For consumers, we strengthened marketing efforts to enhance brand positioning and price competitiveness while boosting user engagement. For couriers, we expanded incentives to guarantee deliver service quality and experience. Besides, supporting merchant partners remains a priority for us. Having empowered over 360,000 restaurant merchants nationwide, we recently committed an additional RMB 2 billion in merchant support funds. We hope to enable more restaurant partners to achieve efficient and sustainable operations. While these investments waived on the segment profitability in this quarter, they solidified our leadership in both food delivery and Meituan Instashopping. Our market position in core in-store categories also remained stable throughout this period. We sustained our role as consumers go-to platform for local services. Both order volume and GTV for core local commerce maintained healthy growth this quarter. Notably, on-demand delivery saw accelerating order growth. Core user base grew steadily year-over-year with more low-to-medium frequency users moving up to high frequency. These users are transacting more often, staying more engaged and exploring more consumption scenarios. I mean the recent demand boost from the intensified industry competition, we secured the highest quality incremental orders. Moving forward, we will keep focusing on consumption frequency and engagement of core users through better supply and fulfillment capabilities. In-store business also sustained its strong growth momentum with continued outperformance in lower-tier markets. Turning to our new initiatives segment. During this quarter, segment revenue grew by 15.9% year-over-year to RMB 28 billion this quarter. Despite the impact of strategic transformation of Meituan Select, our revenue remained solid growth driven by the expansion of our grocery retail business and overseas business. The segment's operating loss and operating loss ratio both narrowed on a quarter-over-quarter basis to RMB 1.3 billion and 4.6%, respectively. Thanks to our efforts in improving operating and marketing efficiency in our grocery retail business and other new initiatives. The year-over-year increase in operating loss was mainly due to our increased investment in overseas business. As we look ahead, we remain confident in our ability to navigate a dynamic and competitive environment. We are making deliberate investments in technology, service quality and our ecosystem. These investments will strengthen our competitive position and unlock new growth opportunity for the industry over time. We have full confidence in our ability to deliver healthy, high-quality growth over the long run when competition normalize. With that, we are now open for Q&A. Operator: [Operator Instructions] Your first question comes from Ronald Keung from Goldman Sachs. Ronald Keung: So I want to ask, can management comment on any notable changes in the competitive landscape of the food delivery sector, particularly as we head into the fourth quarter. Have we seen any industry subsidies that is starting to scale back? And we've noticed your competition has stepped up investments in membership programs like 88VIPs and these membership programs. So how is the engagement and retention trending for your core customers? And sorry for a long question. But from a financial standpoint, I want to also ask how should we expect fourth quarter performance for the food delivery has there been any change in the long-term outlook for growth and profitability of the business? Xing Wang: Well, Ron, thank you for your questions. Before I get into the question, let me restate what we have said very clearly over the last 2 quarters. First, I think the food delivery price war is an example of evolution nature and low price, and low quality and essentially a race to the bottom. We are firmly against it. And the last 6 months have proved the one thing, and it doesn't create any real value for the industry, and it cannot be sustainable. And second, we are doubling down on curious rise and protections and on supporting for small and mid-sized merchants. That's the only way to keep the industry healthy in the long run. And the third, we will focus on doing the right things, that's serving consumers, merchants and couriers as well. And we are fully confident in defending our leadership in on-demand delivery in creating real long-term value. In October and November in the industry, the subsidy level temporarily went down versus the summer peak season and especially after the Double 11 promotion period. And we are still closely monitoring the market dynamics and we'll adjust our strategy accordingly. And recently, we have seen a rebound in our market share in order volume. We maintained a consistent leading addition in GTV market share for mid- to high AOV orders. For example, I think it's very important to focus on higher AOV sector. Our GTV market share for orders with a net AOV above RMB 15, it's more than 2/3, while our GTV market share for orders with a net AOV above RMB 30 is above 70%. I think those are more valuable sectors we want to focus on. Our net AOV per order remained much higher than other platforms. And our core users continue to show high retention rate. with their consumption frequency, stickiness still growing steadily, I think this clearly reflects the strong user mind share we have built in the food delivery sectors and as well as our competitive edge in serving our core users. It's common for consumers to have a multiple local service app installed on their phone. However, Meituan remains the go-to platform of food services for hundreds of millions of consumers. This is especially true among our core users. Their consumption frequency has been several times higher than that of the average consumers. Even in such a highly competitive market, they show strong brand recognition and deeper consumer loyalty. This is because high frequency or higher AOV consumers value the delivery experience and the supply quality, service reliability far more than just a lower price. Our faster and more reliable delivery provides greater certainty, particularly during extreme weather and holiday periods. Our diverse and valuable money offerings across all price ranges allow us to precisely match consumers' needs. Through our Meituan membership program, we offer more attractive deals and exclusive service upgrades to our core users, and we are confident in our ability to deliver higher quality and more comprehensive services to our core users. This will help us further strengthen their stickiness and engagement in the long run. In addition, continued investment by industry peers in the premium user segment will expand the overall addressable market benefiting us as well. We will leverage our strength in service quality and brand to further strengthen our position among a broader base of premium users. In terms of financial data, and although I believe food delivery losses has peaked in Q3, and our food delivery business will still incur a substantial loss in Q4, we will make necessary investment to maintain our leadership. But we are not interested in engaging price war. So we would adjust our investment dynamically based on the competitive landscape. And we will continue to strengthen our advantage in service experience and operational efficiency. In the medium to long term, the competitive landscape will remain dynamic; however, the business or industry revolution typically follows a clear trajectory from capital-driven to efficiency-driven, and ultimately to innovation-driven. China's food service has now entered a stage where supply-side innovation and service upgrades and technological solutions are critical for sustainable growth and traffic gain and scale expansion purely driven by very aggressive subsidy will not be sustainable. And we believe the current irrational competition in food delivery will inevitably transit to a more rational and mature phase. Ultimately, the platform with deeper industrial insights and proven operational excellence and ability to sustain high-quality growth will be the industry leader. Therefore, as I mentioned last quarter, Meituan will stay focused on doing the right things to expand high-quality selections to ensure a fast and reliable delivery and offer consistently affordable prices. We will defend our market position while continuing to create greater value for the whole industry. Food delivery has become a high society lifestyle for more and more consumers with clear long-term growth prospects. Our long-term target of reaching 100 million high-quality daily order remains unchanged. We remain confident in maintaining industry-leading unit economics with proven operational efficiency advantages. Long term, even with higher subsidy in a dynamic market, we expect food delivery profit to return to a reasonable level. Thank you. Operator: Your next question comes from Gary Yu from Morgan Stanley. Gary Yu: I have a question regarding Instashopping. The other e-commerce platforms are doubling down on Quick Commerce and bringing more traditional e-commerce brands to this space. How does management view our competitive edge? And after our own Double 11 event, could you share Meituan Instashopping strategy going forward? Will you scale up investment in the fourth quarter? Shaohui Chen: Thank you, Gary, for your question. First of all, I would like to highlight that we have a particularly strong competitive advantage in our quick commerce native supply. That is even stronger than that of our food delivery business in which we are already a leader. From our perspective, quick commerce operates on a fundamentally different logic than traditional e-commerce as well as half-day delivery or next-day delivery. Quick commerce means no stockpiling. You get what you see right way. Platform needs to identify real consumer needs and get the right supply in place. Leveraging years of understanding of the market demand and merchants pain points, we have digitized offline supply and deploy our InstaMarts to better address the quick commerce demand. Simply shifting traditional e-commerce supply to the quick commerce channels creates no incremental value for either merchants or consumers. To better serve the lifestyle shaped by quick commerce, we are also driving industry-wide upgrades in infrastructure and the service experience. For example, we extended 207 Meituan InstaMarts and pharmacies, roll out chilling facility for alcohol and beverages and introduced quality guarantee services for fruit cart such as Bright Kitchen [ míng chú liàng zào ] and damage guarantee Huabei pay. More importantly, our food delivery business has already cultivated a group of users who highly rely on 30-minute certainty. Our platform is the best fit for quick commerce. We delivered the highest conversion rates and incremental sales for merchants. As such, we managed to solidify mindshare among our core user group and defend our leadership across categories despite intensified competition. Under the new competitive landscape, we are deepening omnichannel partnerships with brands beyond physical stores and Meituan InstaMart. We also launched branded flagship InstaMart Pingbai Guanqi Shandian Chang, which operates 24 plus 7 operations for 30-minute delivery of diversified and quality brand products through the native quick commerce channel. We provide brands with 4 quick commerce infrastructure, warehousing, delivery and digital systems. Hundreds of brands have already joined during Double 11. We also stepped up user education for this initiatives. On the first day of the Double 11 event,[ Hangzhou's ] brand saw 300% sales growth in their branded flagship InstaMart. We hope to help brands move beyond the evolution in traditional e-commerce and tap into new growth opportunities in quick commerce. Our branded flagship InstaMart enables lower operating costs, faster turnover, stronger brand awareness and more sustainable repurchase for brands. We are also enhancing our brand service tools. For instance, we offer smart distribution tool and AI-powered decision hub for our FMCG partners. We will keep working to remain the go-to platform for brands to unlock growth in quick commerce. In Q4, we will keep investing in supply side operations while ensuring best-in-class user experience. We also stepped up our investment in user education around Double 11 and other campaigns. Operating loss for Meituan Instashopping in Q4 may slightly widen versus Q3. That said, our competitive moat across supply, user base and fulfillment will allow us to sustain leadership with higher subsidy and operational efficiency. We are confident in restoring profitability and achieving a reasonable and sustainable margin in the mid- to long term. Thank you. Operator: Your next question comes from Kenneth Fong with UBS. Kenneth Fong: Recently, AMAP has introduced a 3 Star initiative. Taobao also launched the group buy deals. So how do management view the impact of this move on the competitive landscape to our in-store business? And under this new competitive environment, what specific measures will the company implement to address these challenges? Xing Wang: Thank you, Kenneth, for the question about our in-store business. Our in-store business model and operational strategy differ from roles of competitors across category mix, merchant scale and type of marketing of ROI. By building authentic, accurate and easily accessible POI data over time, we have established a dominant consumer mindshare as the go-to platform for local services. Consumers complete most of their local service transactions on our platform. On the other hand, AMAP has a very clear consumer image as a navigation tool. It's a navigation tool that make it difficult to cultivate consumer mindset for searching for local services. We have built a comprehensive user review ecosystem based on our operation in the past decade, accumulating over 25 billion of [indiscernible] reviews. This constitute one of the key reasons why consumers trust and consistently choose Meituan as their go-to platform for local services. We also have the broadest category coverage and selections in the local service space. We offer consumers one-stop service and seamless experience, including table reservation, diverse group buy deals coupons, in-store ordering, payment and membership benefits. Moreover, we maintain industry-leading merchant coverage, leveraging our experienced offline business development team and deep industry insights, we deliver best-in-class service to merchants. These are all the core competence that we believe other people cannot be quickly replicated in response to the evolving and dynamic competition. We continually iterate our product and operational capabilities to provide more diversified and personalized services to more quality merchants and consumers. First, we continue to cultivate an ecosystem conductive to quality merchants by expanding the coverage of our Must Eat list, Must Visit list, Black Pearl Guide and by introducing more specialized leads, we are able to provide merchants with more targeted traffic promotion and better transaction conversion. Second, we have also refined our rating criteria to encourage merchants to focus on product and service quality rather than just the number of consumer reviews. We utilize big data to intelligently identify and help merchants automatically drop abnormal reviews, significantly optimizing both merchant and user experience. We believe with the AI technology further penetrate into our business, we will be able to further improve the system. Additionally, we roll out more consumer-friendly products such as VR merchant tool for reservation, preorder while querying and smart in-store ordering. This digital solutions further enhance consumer experience and improve merchant operational efficiency. The above are just a few examples. In the future, we will continue to focus on 3 key directions: ecosystems optimization, service innovation and operation upgrade. We will drive to provide consumers with a seamless merchant fuller life cycle empowerment across customer acquisition, conversion and retention. We will continue to foster sustainable industry growth through digital transformation. Competition may temporarily impact margins for our in-store business, but we expect long-term competitive landscape for in-store business remain unchanged. With full confidence, we believe we can maintain our leading market position and continue to lead the evolution of the industry ecosystem. Thank you. Operator: Your next question comes from Thomas Chong with Jefferies. Thomas Chong: Company has rolled out AI agent Xiaomei for testing. What's the current progress and future plan for Xiaomei? Additionally, will Meituan app integrate in that AI agent directly in the future. Could management share more about our future plans and investment strategy in AI? Thank you. Xing Wang: Thank you, Thomas. In this quarter, we continue to iterate our AI capability across 3 core dimensions. The first is training our in-house LLM. The second is AI in products and the third is AI at the work. So we have rolled out multiple open source LongCat-Flash series model. So we trained that LongCat and large language model in-house. So these models continue to get quite favorable feedback from the broader developer communities. So I think that's the beauty of open source model. And our LLM are deeply integrated with our core application use cases. It drives effective innovation based on our real-world needs to support our long-term strategic growth and the online to offline convergence. For AI applications, we have upgraded a bunch of AI tools for local services and offering smarter and more tailored services to our merchants. For example, our Kangaroo Advisors Diashu [Foreign Language] can help restaurant merchants with product selections and location planning. And another application, our smart operator, [Foreign Language] integrates multifunctional capabilities such as an AI reception, AI operational analysis and AI review responses, enabling intelligent and efficient store operations for merchants. And we also launched our Smart Life assistant Xiaomei app for users, which is now in quite a large-scale testing period. We also introduced our AI agent [Foreign Language] in our Meituan app. So that answers your question. We are testing both stand-alone AI agent app. But at the same time, we are going to integrate AI agent function in our main Meituan app. And these 2 agents now cover various aspects of local services, including dining, accommodation and transportation, travel, entertainment and shopping. And they can complete the process from searching to price comparison and to order placement, which can provide the users with a more intelligent and more personalized service. We will also continue to develop tools like AI coding and we have an application that's no code to help employees improve their work efficiency. And looking further forward, we will further enhance our competitiveness in our in-house foundational model and explore more AI agent applications in local services. We will also iterate our AI agent strategy based on operational insights and user feedback and driving deeper AI-enabled empowerment in our ecosystem. Operator: Your next question comes from Ya Jiang from Citic. Ya Jiang: And my question is about the new initiatives and related businesses and for your Keeta in Hong Kong, is it on track to reach breakeven thing? And additionally for the Middle East following our Q3 expansion into several new GCC countries. How is performance shaping up in this market? And also with recent reports about Keeta entering Brazil, even when there are strong existing payers like iFood and BD what will Keeta do differently in Brazil to take [indiscernible] even shares there? And lastly, given the particularly intense competition in domestic market, what strategic rationale supports accelerating over and base expansion at this juncture? And how does this align with our overall capital allocation framework? How should we project losses for new initiatives segment next year? Lots of questions. Thanks. Xing Wang: Thank you, Jiang. And thank you for your interest in our new initiatives. In this October, Keeta in Hong Kong has turned profitable. So I think that's a major milestone for us. Remember that we launched Keeta in May 2023, and it become profitable in October 2025. So it took us 29 months to get to that milestone. So it's actually ahead of our original 3 years plan. So I think that proves what really works in this industry is a customer-centric approach, and it proves our deep operational know-how and strong technology capability can bring to better unit economics in and we are going to keep improving on that basis. It will bring more meaningful quarter-over-quarter improvement. So -- and also, we expect to follow the similar path in other markets, for example, in Saudi Arabia and other GCC markets. Regarding the GCC region, building on our foundation in Saudi Arabia, we launched in several additional markets in GCC. For example, right now, they are still in very early stage. It's important to point out, we launched in Qatar in August and launched in Kuwait and UAE in September. Again, still in very early stage. So I think it's premature to share more details. But given the common market structure and user behavior across the Gulf region, I think it's reasonable to believe it remains one of the most attractive markets for food delivery. And also compared to Saudi Arabia, consumers in some other GCC countries not only have more mature food delivery habits, the penetration there is already higher, but they also benefit from more diverse and more richer restaurant supply. So that suggests there's a lot of untapped penetration potential in this market. Regarding our latest market, Brazil, I have already shared some thoughts in previous earnings calls. Brazil ranks among the top 5 food delivery markets in terms of GMV globally, and it's still growing at over 20% annually. But when we did the market research in Brazil, we noticed that the transaction fulfilled through more traditional channels such as through WhatsApp or very older way, phone calls or websites, they are still a very big portion, maybe even exceeding the online food delivery platforms. This indicates immense potential for online penetration over the next few years. And I think it provides an opportunity for Keeta to enter this market in spite of already -- there are already some incumbents. So in the past, our food delivery operation in China have established the world's most efficient tech platforms, including algorithms and the whole tech system. So that system can support over 150 million peak daily orders for very organized and very fast on-demand delivery. And furthermore, Keeta's early success growth in Hong Kong and Saudi Arabia over the past 2 years, that further proves our capability to localize our operation for different markets. So I think we are confident in bringing a better experience service to those markets, because I believe in this industry, it's always important to go back to the basics because there are different stakeholders in the industry. What do consumers want? Maybe they have different preference for different cuisines. But I think in any market, the consumers always want a big selection, a good selection and they want affordable prices, and they want to have reliable and faster deliveries. I think that's the common need across different markets, no matter it's in China -- Mainland China or Hong Kong or Saudi Arabia or other GCC countries or Brazil or in other markets. That's what consumers want. And for merchants, they want to have more businesses and they want to have a reasonable commission rate and they want to have a good delivery experience. And also, we need to think about what regulators want or the general society want. So there, I think they are interested in more job creation. Regulators want to see happy consumers, want to see happy merchants. They want to see more job creation and want to see more talent development. I think we are going to do all that in those markets where we do business. And regarding capital allocation, we should emphasize that Keeta is a part of our new initiatives. Our other new initiatives also includes grocery retail, which is another long-term strategy for us. We scaled back the Meituan Select by the end of Q2, but we will expand our Xiaoshan supermarket that's doing very well. And we will try other offline retail format like [ Happy Monkey Kuai Lu ] in 2026 to further improve our supply quality in grocery. So Keeta and grocery retail, I think these 2 represent a high conviction long-term opportunity for us, given this proven model and our transferable expertise from China to some other markets. But near term, our expansion into GCC markets and Brazil requires a substantial upfront investment in Q4. But given our early success in Keeta in Hong Kong, I think we are confident that we can see a quite good trajectory in those markets, including Saudi Arabia and other GCC markets. There, we already see a rapid improving unit economics and I think those markets are big enough to have multiple players. And yes, overall, we expect Keeta in GCC countries and Brazil to follow a similar unit economic improvement trajectory as we have seen in Hong Kong. And overall, we don't expect to see a bigger loss in -- for new initiative segment in next year compared to 2025. Thank you. Operator: Thank you. There are no further questions at this time. I'll now hand back to Scarlett Xu for closing remarks. Scarlett Xu: Okay. Thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you so much for your support. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
Operator: Thank you for standing by, and welcome to the Meituan Third Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the conference over to Scarlett Xu, VP and Head of Capital Markets. Please go ahead. Scarlett Xu: Thank you, operator. Good evening, and good morning, everyone. Welcome to our Third Quarter of 2025 Earnings conference call. Joining us today are Mr. Xing Wang, Chairman and CEO; and Mr. Shaohui Chen, Senior Vice President and CFO of Meituan. For today's call, management will first provide a review of our third quarter of 2025 results and then conduct a Q&A session. Before we start, we would like to remind you that our presentation contains forward-looking statements which include a number of risks and uncertainties and may differ from actual results in the future. This presentation also contains unaudited non-IFRS accounting standards financial measures that should be considered in addition to and not as a substitute for measures of the company's financial performance prepared in accordance with IFRS Accounting Standards. For a detailed discussion of risk factors and non-IFRS accounting standard measures, please refer to disclosure documents in the IR section of our website. Now I will turn the call over to Mr. Xing Wang. Xing Wang: Thank you, Scarlett. Hello, everyone. We are in the third quarter, we actively responded to the shift in the competitive landscape of food delivery and quick commerce. Meituan remains the go-to platform of local services for Chinese consumers. Over 800 million consumers use our services, covering everything from food and dining, quick commerce to services retail and more. Specifically, the Meituan's app DAU jumped over 20% year-over-year in the third quarter. On average, users transact with us at least once a week and our top-tier and high-quality users engage with the platform every day. Across all local commerce businesses, we have stepped up product and service iteration to enhance user mindshare and strengthen our competitive advantages. Thanks to our fully upgraded Meituan membership [ Mei tuán huìyuán ] we have effectively boosted for selling activities and enhanced the core user stickiness. We are also the primary platform for merchants' long-term growth, empowering them with the technology and supply innovations and helping them to integrate AI into their operation to improve efficiency. First, let's talk about our food delivery business. Here, we continue to leverage our competitive strengths to deliver industry-leading operational efficiency and a superior consumer experience. Our sustained focus on service quality and the healthy development of the industry has enabled us to navigate a quite dynamic market, strengthen our consumer mindshare and reinforce our leadership in the food delivery sector. Amid intense competition, we stepped up supply side innovation and service upgrades. For our innovative supply models like Ping Hao Fan, or Shen Qiang Shou or Pingbai Weiqing Dian as branded satellite stores. And we further deepened our collaborations with quality merchants. It allows us to offer consumers a wider range of high-quality products across all price bands. And we also selected top-tier restaurant merchants on [Foreign Language] based on real and authentic data and matched the quality offerings precisely with our high-quality food delivery users. Additionally, we have rolled out premium services like on-time guarantee [ Zhunshí baozhèng ] and one-to-one express delivery, [ yi duì yi jí sòng ]. These measures have strengthened our core competitiveness in fulfillment and elevated the delivery experience for consumers and solidified our advantages in user structures. We remain as the Chinese consumers' go-to food delivery platform. In the third quarter, both DAU and MTU as Monthly Transacting User for food delivery hit an all-time high. We further expanded our advantage in user structures. In addition, we stepped up our efforts to address ecosystem issues and invested in the ecosystem development, specifically for couriers' welfare, we expanded the courier pension insurance subsidy program to a nationwide publish beginning in November and extended an occupational injury insurance to 17 provinces and cities. We have also implemented a comprehensive courier welfare scheme, which include critical illness support, educational funds for couriers' children and skill development and academic advancement opportunities for couriers as well as benefits such as work meals, health checkups and travel subsidies. Moreover, we have built couriers homes [ qishou zhi jia ] rather stations across the country to provide our couriers with convenient facilities and services. Going forward, we will keep enhancing couriers' welfare and protection. And as consumers' preferred quick commerce platform, Meituan Instant Shopping continues to lead the industry's rapid growth and service upgrade. In Q3, both new user growth and core user purchase frequency further increased. As we continue to diversify supply, the proportion of users buying across multiple categories has been steady on the rise. This shows our everything now consumer mindshare is getting even stronger. New supply formats like Meituan InstaMart, Shandiàn Sòng expanded rapidly, bringing this high certainty lifestyle to more regions across China. We also teamed up with the leading brands in the liquor and apparel categories, which reflected these top brands recognition of quick commerce's value and their trust in Meituan. In October, we officially launched a branded flagship InstaMart Pingbai Guanqi Shandian Chang, providing retail brands with full quick commerce infrastructure, warehousing, on-demand delivery and the digital system. By leveraging our strengths in user traffic ecosystem and online capabilities, we empowered brands to drive user growth, boost sales and connect more deeply with younger consumers. Beyond that, we are committed to continuously upgrading our quick commerce services. After rolling out the industry's first full cycle service assurance program, [ Anxin San Gou ] we recently introduced an end-to-end authentic product verification process for chinese [indiscernible] and launched the industry's first alliance for high-quality fresh-cut fruits brand [ Huo Qian ]. As the industry leaders, we will keep setting benchmarks that focus on premium quality and top-tier service. Overall, we have built the world's largest and most efficient intracity on-demand delivery network, delivering a best-in-class fulfillment experience to consumers. Our platform has accumulated a large user base of high-quality users with a very strong purchasing power. We also provide merchants with industry-leading services and create the most diverse supply. These valuable assets built up over more than a decade will fuel the long-term growth of our food delivery business. They will also serve as a solid foundation for our efficient expansion in the broader quick commerce space. Now let's turn to our in-store business. In the third quarter, both our merchant base and user base reached new highs with a nearly 20% year-over-year increase and user transaction frequency continued to grow robustly. We further refined our product and content ecosystem. Our goal is to give every consumer simple, more reliable reference for purchase decisions. To date, our platform has accumulated over 20 billion authentic user -- consumer reviews with nearly 3.5 billion new reviews added in the past 12 months. Additionally, we are now using AI to filter out low-quality reviews and those manipulative contents. This way, we can ensure a comprehensive authentic review ecosystem that provides a truly useful decision-making support for consumers. We also expanded the reach and influence of our high-quality list, including the Black Pearl Guide, hidden Jewels and our Must-Eat list Bi Chi Bang. Currently, these 2 lists cover 34 and 144 cities, respectively. Moving forward, we will expand to more regions and welcome more quality restaurants to join our list. Beyond that, we have iterated products like pickup now, [indiscernible] 12:26 smart ordering and one-click payments, extending coverage to more merchants and meeting consumers' more diverse and personalized needs. Moreover, we further promoted our safe learning program, [ Anquán xuéxí jìhuà ] in the broader education space and expanded our safe series, [ Anquán xìliè ] to more categories such as fitness. We offer flexible redemption options, which has significantly boosted consumer trust in prepaid services. For self-service formats such as an unmanned chess and cards, playing cards rooms and self-service KTV, we upgraded our booking system to deliver a smoother hassle-free experience for consumers from reservation all the way to service fulfillment. In healthcare and pharmaceuticals, we expanded our video and phone consultation services to include more doctors from Grade 3A hospitals, [ San jí jia deng yiyuàn ] and offering -- we offered 24/7 instant consultations plus 30 minutes prescription drug delivery. We improved in-store verification service for dental care and medical aesthetics and standardized supply chain management to build end-to-end consumer trust. During the third quarter, we launched the 2025 Polaris medical aesthetic guide [ Beijing Yi Mei Bang ] which has set industry standards and raised the bar for service quality. These are just a few examples. Going forward, we will continue to leverage our deep industrial and consumer insights to turn more offline services transactions into trusted online transactions for consumers. And now let's turn to our new initiative segment. And this segment delivered another solid performance in the third quarter. Our grocery retail businesses, especially for Xiaoxiang Supermarkets and Kuailvdian sustained a strong growth momentum. We not only solidified our market position, but also achieved improvement in operational efficiency. And additionally, Keeta accelerated its global coverage. After launching in Qatar in August, we entered Kuwait and the UAE in September, deepening our presence in these key Middle Eastern markets. In October, Keeta also kicked off a pilot operation in Brazil. Going forward, we will continue to leverage our strengths in product technology and operation know-how to deliver superior consumer -- and delivery experience for consumers in more parts of the world. After 6 months of iterating our promoting Meituan membership, we have achieved good progress. We added new member benefits and exclusive offers across multiple local service categories. This has notably strengthened our user mindshare and boosted member transaction frequency. Specifically, a large number of our mid-tier users have upgraded their membership tiers and the number of high-value members kept growing steadily even in the recent very fierce competitive environment. It's a clear sign of our unique edge in serving high-value users. What's more, our enhanced Meituan membership program is driving growth across businesses in key areas. It supports user acquisition and traffic operation and transaction growth and marketing while also effectively fueling cross-selling among various businesses and consumption scenarios. Moving forward, we will leverage our competitive advantages, broad coverage in local services, continue to refine the membership program and increase user engagement and transaction frequency. During the third quarter, we continued to invest in AI and achieved multiple milestones. For example, we launched several models in our LongCat-Flash series, all delivering leading performance. And we rolled out a range of AI decision-making and application tools tailored specifically for restaurant merchants. And we also launched Xiaomei app, a smart life assistant for consumers. and currently is in larger-scale testing. Going forward, we will make our AI tools more industry-focused and service oriented. We will provide effective solutions for merchants across all operational decision-making scenarios and make consumers' decision-making process and consumption experience more intelligent, more convenient and more personalized. Founded in 2010, Meituan has witnessed and led the digital transformation for China's local service industry. Since 2010, we have built the online purchase, offline consumption user mention in local services through group purchase model. And back in 2013, we stepped into the food delivery space and our intracity on-demand delivery network made food delivery services more accessible than ever, turning it into a key food consumption habit for Chinese consumers. And as leading -- as industry competition keeps evolving, we are confident in maintaining our leading position by continuing to strengthen our core competitiveness. guided by our retail plus technology strategy. We will continue to refine our products and services to better meet consumers' very diverse local services needs while empowering merchants through technology innovation and AI application, altogether to drive the sustainable and healthy development of the whole industry. So we are as ever committed to helping people eat better, live better. And with that, I will turn the call over to... Shaohui Chen: Thank you, Xing. Hello, everyone. I will now go through our third quarter financial results. During this quarter, our total revenue increased by 2% year-over-year to RMB 95.5 billion. Cost of revenue ratio increased 12.9 percentage points year-over-year to 73.6%. This was primarily driven by: first, higher incentives for our couriers to maintain industry-leading delivery service quality and experience; second, the increased cost in our overseas operations. These factors were partially offset by the improved gross margin of our grocery retail business. Selling and marketing expenses ratio increased 16.7 percentage points year-over-year to 35.9%, driven by our increased investments in promotion, advertising and user incentives to enhance our brand awareness, user acquisition and core user engagement. R&D expenses ratio slightly increased to 7.3% as a result of our increased investment in AI, while G&A expenses ratio maintaining stable year-over-year at 3.1%. This quarter, irrational competition within the on-demand delivery industry significantly distorted sector-wide profitability. Our deliberate strategy investments to sustain leadership and competitiveness resulted in a total segment operating loss of RMB 15.3 billion and an adjusted net loss of RMB 16 billion. However, we maintained uncompromised service standards while continuing to drive initiatives that foster the industry's sustainable development. As of September 30, 2025, we held cash and cash equivalents and short-term treasury investments totaling RMB 141.3 billion. However, cash generated from operating activities turned to negative RMB 22.1 billion, primarily due to our investments in response to the intensified competition. Now turning first to our core local commerce segment. Revenue declined year-over-year this quarter, primarily driven by 2 factors. First, intensified competition caused a significant drop in food delivery average order value, weakening commission revenue growth. Second, delivery service revenue saw negative growth due to substantially higher incentives deducted from delivery service revenue. Despite these headwinds, we strategically increased investment across our ecosystem to reinforce market leadership and drive sustainable growth. For consumers, we strengthened marketing efforts to enhance brand positioning and price competitiveness while boosting user engagement. For couriers, we expanded incentives to guarantee deliver service quality and experience. Besides, supporting merchant partners remains a priority for us. Having empowered over 360,000 restaurant merchants nationwide, we recently committed an additional RMB 2 billion in merchant support funds. We hope to enable more restaurant partners to achieve efficient and sustainable operations. While these investments waived on the segment profitability in this quarter, they solidified our leadership in both food delivery and Meituan Instashopping. Our market position in core in-store categories also remained stable throughout this period. We sustained our role as consumers go-to platform for local services. Both order volume and GTV for core local commerce maintained healthy growth this quarter. Notably, on-demand delivery saw accelerating order growth. Core user base grew steadily year-over-year with more low-to-medium frequency users moving up to high frequency. These users are transacting more often, staying more engaged and exploring more consumption scenarios. I mean the recent demand boost from the intensified industry competition, we secured the highest quality incremental orders. Moving forward, we will keep focusing on consumption frequency and engagement of core users through better supply and fulfillment capabilities. In-store business also sustained its strong growth momentum with continued outperformance in lower-tier markets. Turning to our new initiatives segment. During this quarter, segment revenue grew by 15.9% year-over-year to RMB 28 billion this quarter. Despite the impact of strategic transformation of Meituan Select, our revenue remained solid growth driven by the expansion of our grocery retail business and overseas business. The segment's operating loss and operating loss ratio both narrowed on a quarter-over-quarter basis to RMB 1.3 billion and 4.6%, respectively. Thanks to our efforts in improving operating and marketing efficiency in our grocery retail business and other new initiatives. The year-over-year increase in operating loss was mainly due to our increased investment in overseas business. As we look ahead, we remain confident in our ability to navigate a dynamic and competitive environment. We are making deliberate investments in technology, service quality and our ecosystem. These investments will strengthen our competitive position and unlock new growth opportunity for the industry over time. We have full confidence in our ability to deliver healthy, high-quality growth over the long run when competition normalize. With that, we are now open for Q&A. Operator: [Operator Instructions] Your first question comes from Ronald Keung from Goldman Sachs. Ronald Keung: So I want to ask, can management comment on any notable changes in the competitive landscape of the food delivery sector, particularly as we head into the fourth quarter. Have we seen any industry subsidies that is starting to scale back? And we've noticed your competition has stepped up investments in membership programs like 88VIPs and these membership programs. So how is the engagement and retention trending for your core customers? And sorry for a long question. But from a financial standpoint, I want to also ask how should we expect fourth quarter performance for the food delivery has there been any change in the long-term outlook for growth and profitability of the business? Xing Wang: Well, Ron, thank you for your questions. Before I get into the question, let me restate what we have said very clearly over the last 2 quarters. First, I think the food delivery price war is an example of evolution nature and low price, and low quality and essentially a race to the bottom. We are firmly against it. And the last 6 months have proved the one thing, and it doesn't create any real value for the industry, and it cannot be sustainable. And second, we are doubling down on curious rise and protections and on supporting for small and mid-sized merchants. That's the only way to keep the industry healthy in the long run. And the third, we will focus on doing the right things, that's serving consumers, merchants and couriers as well. And we are fully confident in defending our leadership in on-demand delivery in creating real long-term value. In October and November in the industry, the subsidy level temporarily went down versus the summer peak season and especially after the Double 11 promotion period. And we are still closely monitoring the market dynamics and we'll adjust our strategy accordingly. And recently, we have seen a rebound in our market share in order volume. We maintained a consistent leading addition in GTV market share for mid- to high AOV orders. For example, I think it's very important to focus on higher AOV sector. Our GTV market share for orders with a net AOV above RMB 15, it's more than 2/3, while our GTV market share for orders with a net AOV above RMB 30 is above 70%. I think those are more valuable sectors we want to focus on. Our net AOV per order remained much higher than other platforms. And our core users continue to show high retention rate. with their consumption frequency, stickiness still growing steadily, I think this clearly reflects the strong user mind share we have built in the food delivery sectors and as well as our competitive edge in serving our core users. It's common for consumers to have a multiple local service app installed on their phone. However, Meituan remains the go-to platform of food services for hundreds of millions of consumers. This is especially true among our core users. Their consumption frequency has been several times higher than that of the average consumers. Even in such a highly competitive market, they show strong brand recognition and deeper consumer loyalty. This is because high frequency or higher AOV consumers value the delivery experience and the supply quality, service reliability far more than just a lower price. Our faster and more reliable delivery provides greater certainty, particularly during extreme weather and holiday periods. Our diverse and valuable money offerings across all price ranges allow us to precisely match consumers' needs. Through our Meituan membership program, we offer more attractive deals and exclusive service upgrades to our core users, and we are confident in our ability to deliver higher quality and more comprehensive services to our core users. This will help us further strengthen their stickiness and engagement in the long run. In addition, continued investment by industry peers in the premium user segment will expand the overall addressable market benefiting us as well. We will leverage our strength in service quality and brand to further strengthen our position among a broader base of premium users. In terms of financial data, and although I believe food delivery losses has peaked in Q3, and our food delivery business will still incur a substantial loss in Q4, we will make necessary investment to maintain our leadership. But we are not interested in engaging price war. So we would adjust our investment dynamically based on the competitive landscape. And we will continue to strengthen our advantage in service experience and operational efficiency. In the medium to long term, the competitive landscape will remain dynamic; however, the business or industry revolution typically follows a clear trajectory from capital-driven to efficiency-driven, and ultimately to innovation-driven. China's food service has now entered a stage where supply-side innovation and service upgrades and technological solutions are critical for sustainable growth and traffic gain and scale expansion purely driven by very aggressive subsidy will not be sustainable. And we believe the current irrational competition in food delivery will inevitably transit to a more rational and mature phase. Ultimately, the platform with deeper industrial insights and proven operational excellence and ability to sustain high-quality growth will be the industry leader. Therefore, as I mentioned last quarter, Meituan will stay focused on doing the right things to expand high-quality selections to ensure a fast and reliable delivery and offer consistently affordable prices. We will defend our market position while continuing to create greater value for the whole industry. Food delivery has become a high society lifestyle for more and more consumers with clear long-term growth prospects. Our long-term target of reaching 100 million high-quality daily order remains unchanged. We remain confident in maintaining industry-leading unit economics with proven operational efficiency advantages. Long term, even with higher subsidy in a dynamic market, we expect food delivery profit to return to a reasonable level. Thank you. Operator: Your next question comes from Gary Yu from Morgan Stanley. Gary Yu: I have a question regarding Instashopping. The other e-commerce platforms are doubling down on Quick Commerce and bringing more traditional e-commerce brands to this space. How does management view our competitive edge? And after our own Double 11 event, could you share Meituan Instashopping strategy going forward? Will you scale up investment in the fourth quarter? Shaohui Chen: Thank you, Gary, for your question. First of all, I would like to highlight that we have a particularly strong competitive advantage in our quick commerce native supply. That is even stronger than that of our food delivery business in which we are already a leader. From our perspective, quick commerce operates on a fundamentally different logic than traditional e-commerce as well as half-day delivery or next-day delivery. Quick commerce means no stockpiling. You get what you see right way. Platform needs to identify real consumer needs and get the right supply in place. Leveraging years of understanding of the market demand and merchants pain points, we have digitized offline supply and deploy our InstaMarts to better address the quick commerce demand. Simply shifting traditional e-commerce supply to the quick commerce channels creates no incremental value for either merchants or consumers. To better serve the lifestyle shaped by quick commerce, we are also driving industry-wide upgrades in infrastructure and the service experience. For example, we extended 207 Meituan InstaMarts and pharmacies, roll out chilling facility for alcohol and beverages and introduced quality guarantee services for fruit cart such as Bright Kitchen [ míng chú liàng zào ] and damage guarantee Huabei pay. More importantly, our food delivery business has already cultivated a group of users who highly rely on 30-minute certainty. Our platform is the best fit for quick commerce. We delivered the highest conversion rates and incremental sales for merchants. As such, we managed to solidify mindshare among our core user group and defend our leadership across categories despite intensified competition. Under the new competitive landscape, we are deepening omnichannel partnerships with brands beyond physical stores and Meituan InstaMart. We also launched branded flagship InstaMart Pingbai Guanqi Shandian Chang, which operates 24 plus 7 operations for 30-minute delivery of diversified and quality brand products through the native quick commerce channel. We provide brands with 4 quick commerce infrastructure, warehousing, delivery and digital systems. Hundreds of brands have already joined during Double 11. We also stepped up user education for this initiatives. On the first day of the Double 11 event,[ Hangzhou's ] brand saw 300% sales growth in their branded flagship InstaMart. We hope to help brands move beyond the evolution in traditional e-commerce and tap into new growth opportunities in quick commerce. Our branded flagship InstaMart enables lower operating costs, faster turnover, stronger brand awareness and more sustainable repurchase for brands. We are also enhancing our brand service tools. For instance, we offer smart distribution tool and AI-powered decision hub for our FMCG partners. We will keep working to remain the go-to platform for brands to unlock growth in quick commerce. In Q4, we will keep investing in supply side operations while ensuring best-in-class user experience. We also stepped up our investment in user education around Double 11 and other campaigns. Operating loss for Meituan Instashopping in Q4 may slightly widen versus Q3. That said, our competitive moat across supply, user base and fulfillment will allow us to sustain leadership with higher subsidy and operational efficiency. We are confident in restoring profitability and achieving a reasonable and sustainable margin in the mid- to long term. Thank you. Operator: Your next question comes from Kenneth Fong with UBS. Kenneth Fong: Recently, AMAP has introduced a 3 Star initiative. Taobao also launched the group buy deals. So how do management view the impact of this move on the competitive landscape to our in-store business? And under this new competitive environment, what specific measures will the company implement to address these challenges? Xing Wang: Thank you, Kenneth, for the question about our in-store business. Our in-store business model and operational strategy differ from roles of competitors across category mix, merchant scale and type of marketing of ROI. By building authentic, accurate and easily accessible POI data over time, we have established a dominant consumer mindshare as the go-to platform for local services. Consumers complete most of their local service transactions on our platform. On the other hand, AMAP has a very clear consumer image as a navigation tool. It's a navigation tool that make it difficult to cultivate consumer mindset for searching for local services. We have built a comprehensive user review ecosystem based on our operation in the past decade, accumulating over 25 billion of [indiscernible] reviews. This constitute one of the key reasons why consumers trust and consistently choose Meituan as their go-to platform for local services. We also have the broadest category coverage and selections in the local service space. We offer consumers one-stop service and seamless experience, including table reservation, diverse group buy deals coupons, in-store ordering, payment and membership benefits. Moreover, we maintain industry-leading merchant coverage, leveraging our experienced offline business development team and deep industry insights, we deliver best-in-class service to merchants. These are all the core competence that we believe other people cannot be quickly replicated in response to the evolving and dynamic competition. We continually iterate our product and operational capabilities to provide more diversified and personalized services to more quality merchants and consumers. First, we continue to cultivate an ecosystem conductive to quality merchants by expanding the coverage of our Must Eat list, Must Visit list, Black Pearl Guide and by introducing more specialized leads, we are able to provide merchants with more targeted traffic promotion and better transaction conversion. Second, we have also refined our rating criteria to encourage merchants to focus on product and service quality rather than just the number of consumer reviews. We utilize big data to intelligently identify and help merchants automatically drop abnormal reviews, significantly optimizing both merchant and user experience. We believe with the AI technology further penetrate into our business, we will be able to further improve the system. Additionally, we roll out more consumer-friendly products such as VR merchant tool for reservation, preorder while querying and smart in-store ordering. This digital solutions further enhance consumer experience and improve merchant operational efficiency. The above are just a few examples. In the future, we will continue to focus on 3 key directions: ecosystems optimization, service innovation and operation upgrade. We will drive to provide consumers with a seamless merchant fuller life cycle empowerment across customer acquisition, conversion and retention. We will continue to foster sustainable industry growth through digital transformation. Competition may temporarily impact margins for our in-store business, but we expect long-term competitive landscape for in-store business remain unchanged. With full confidence, we believe we can maintain our leading market position and continue to lead the evolution of the industry ecosystem. Thank you. Operator: Your next question comes from Thomas Chong with Jefferies. Thomas Chong: Company has rolled out AI agent Xiaomei for testing. What's the current progress and future plan for Xiaomei? Additionally, will Meituan app integrate in that AI agent directly in the future. Could management share more about our future plans and investment strategy in AI? Thank you. Xing Wang: Thank you, Thomas. In this quarter, we continue to iterate our AI capability across 3 core dimensions. The first is training our in-house LLM. The second is AI in products and the third is AI at the work. So we have rolled out multiple open source LongCat-Flash series model. So we trained that LongCat and large language model in-house. So these models continue to get quite favorable feedback from the broader developer communities. So I think that's the beauty of open source model. And our LLM are deeply integrated with our core application use cases. It drives effective innovation based on our real-world needs to support our long-term strategic growth and the online to offline convergence. For AI applications, we have upgraded a bunch of AI tools for local services and offering smarter and more tailored services to our merchants. For example, our Kangaroo Advisors Diashu [Foreign Language] can help restaurant merchants with product selections and location planning. And another application, our smart operator, [Foreign Language] integrates multifunctional capabilities such as an AI reception, AI operational analysis and AI review responses, enabling intelligent and efficient store operations for merchants. And we also launched our Smart Life assistant Xiaomei app for users, which is now in quite a large-scale testing period. We also introduced our AI agent [Foreign Language] in our Meituan app. So that answers your question. We are testing both stand-alone AI agent app. But at the same time, we are going to integrate AI agent function in our main Meituan app. And these 2 agents now cover various aspects of local services, including dining, accommodation and transportation, travel, entertainment and shopping. And they can complete the process from searching to price comparison and to order placement, which can provide the users with a more intelligent and more personalized service. We will also continue to develop tools like AI coding and we have an application that's no code to help employees improve their work efficiency. And looking further forward, we will further enhance our competitiveness in our in-house foundational model and explore more AI agent applications in local services. We will also iterate our AI agent strategy based on operational insights and user feedback and driving deeper AI-enabled empowerment in our ecosystem. Operator: Your next question comes from Ya Jiang from Citic. Ya Jiang: And my question is about the new initiatives and related businesses and for your Keeta in Hong Kong, is it on track to reach breakeven thing? And additionally for the Middle East following our Q3 expansion into several new GCC countries. How is performance shaping up in this market? And also with recent reports about Keeta entering Brazil, even when there are strong existing payers like iFood and BD what will Keeta do differently in Brazil to take [indiscernible] even shares there? And lastly, given the particularly intense competition in domestic market, what strategic rationale supports accelerating over and base expansion at this juncture? And how does this align with our overall capital allocation framework? How should we project losses for new initiatives segment next year? Lots of questions. Thanks. Xing Wang: Thank you, Jiang. And thank you for your interest in our new initiatives. In this October, Keeta in Hong Kong has turned profitable. So I think that's a major milestone for us. Remember that we launched Keeta in May 2023, and it become profitable in October 2025. So it took us 29 months to get to that milestone. So it's actually ahead of our original 3 years plan. So I think that proves what really works in this industry is a customer-centric approach, and it proves our deep operational know-how and strong technology capability can bring to better unit economics in and we are going to keep improving on that basis. It will bring more meaningful quarter-over-quarter improvement. So -- and also, we expect to follow the similar path in other markets, for example, in Saudi Arabia and other GCC markets. Regarding the GCC region, building on our foundation in Saudi Arabia, we launched in several additional markets in GCC. For example, right now, they are still in very early stage. It's important to point out, we launched in Qatar in August and launched in Kuwait and UAE in September. Again, still in very early stage. So I think it's premature to share more details. But given the common market structure and user behavior across the Gulf region, I think it's reasonable to believe it remains one of the most attractive markets for food delivery. And also compared to Saudi Arabia, consumers in some other GCC countries not only have more mature food delivery habits, the penetration there is already higher, but they also benefit from more diverse and more richer restaurant supply. So that suggests there's a lot of untapped penetration potential in this market. Regarding our latest market, Brazil, I have already shared some thoughts in previous earnings calls. Brazil ranks among the top 5 food delivery markets in terms of GMV globally, and it's still growing at over 20% annually. But when we did the market research in Brazil, we noticed that the transaction fulfilled through more traditional channels such as through WhatsApp or very older way, phone calls or websites, they are still a very big portion, maybe even exceeding the online food delivery platforms. This indicates immense potential for online penetration over the next few years. And I think it provides an opportunity for Keeta to enter this market in spite of already -- there are already some incumbents. So in the past, our food delivery operation in China have established the world's most efficient tech platforms, including algorithms and the whole tech system. So that system can support over 150 million peak daily orders for very organized and very fast on-demand delivery. And furthermore, Keeta's early success growth in Hong Kong and Saudi Arabia over the past 2 years, that further proves our capability to localize our operation for different markets. So I think we are confident in bringing a better experience service to those markets, because I believe in this industry, it's always important to go back to the basics because there are different stakeholders in the industry. What do consumers want? Maybe they have different preference for different cuisines. But I think in any market, the consumers always want a big selection, a good selection and they want affordable prices, and they want to have reliable and faster deliveries. I think that's the common need across different markets, no matter it's in China -- Mainland China or Hong Kong or Saudi Arabia or other GCC countries or Brazil or in other markets. That's what consumers want. And for merchants, they want to have more businesses and they want to have a reasonable commission rate and they want to have a good delivery experience. And also, we need to think about what regulators want or the general society want. So there, I think they are interested in more job creation. Regulators want to see happy consumers, want to see happy merchants. They want to see more job creation and want to see more talent development. I think we are going to do all that in those markets where we do business. And regarding capital allocation, we should emphasize that Keeta is a part of our new initiatives. Our other new initiatives also includes grocery retail, which is another long-term strategy for us. We scaled back the Meituan Select by the end of Q2, but we will expand our Xiaoshan supermarket that's doing very well. And we will try other offline retail format like [ Happy Monkey Kuai Lu ] in 2026 to further improve our supply quality in grocery. So Keeta and grocery retail, I think these 2 represent a high conviction long-term opportunity for us, given this proven model and our transferable expertise from China to some other markets. But near term, our expansion into GCC markets and Brazil requires a substantial upfront investment in Q4. But given our early success in Keeta in Hong Kong, I think we are confident that we can see a quite good trajectory in those markets, including Saudi Arabia and other GCC markets. There, we already see a rapid improving unit economics and I think those markets are big enough to have multiple players. And yes, overall, we expect Keeta in GCC countries and Brazil to follow a similar unit economic improvement trajectory as we have seen in Hong Kong. And overall, we don't expect to see a bigger loss in -- for new initiative segment in next year compared to 2025. Thank you. Operator: Thank you. There are no further questions at this time. I'll now hand back to Scarlett Xu for closing remarks. Scarlett Xu: Okay. Thank you for joining our call. We look forward to speaking with everyone next quarter. Thank you so much for your support. Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.
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