Financial Data and Key Metrics Changes - Consolidated net sales increased by 36.3% to $4.17 billion, driven by approximately $931 million from the Foot Locker acquisition and a 5.7% comp increase for the DICK'S business [26][27] - Non-GAAP EPS for the DICK'S business was $2.78, up from $2.75 in the prior year's quarter [30] - Consolidated gross profit was $1.38 billion, or 33.13% of net sales, down 264 basis points from last year, primarily due to the lower gross margin from the Foot Locker business [27][30] Business Line Data and Key Metrics Changes - DICK'S business comp sales increased by 5.7%, with growth in average ticket and transactions, on top of a 4.3% increase last year [17][26] - Foot Locker's proforma comp sales for Q3 declined by 4.7%, with a 10.2% decline internationally [8][27] - DICK'S opened 13 new House of Sport locations in Q3, the highest number in a single quarter, bringing the total to 35 [18] Market Data and Key Metrics Changes - DICK'S business saw broad-based strength across footwear, apparel, and hard lines categories [26] - Foot Locker's comparable sales in North America decreased by 2.6%, while international sales decreased by 10.2% [27] Company Strategy and Development Direction - The acquisition of Foot Locker is seen as a transformative opportunity to build a global platform at the intersection of sport and culture [7][9] - The immediate priority for Foot Locker is to clean out underperforming assets, including inventory and stores, to reset the business for long-term success [10][34] - DICK'S is focused on leveraging its operational excellence and supplier relationships to return Foot Locker to profitability [9][12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround of Foot Locker, emphasizing the need for operational improvements and inventory management [55][81] - The back-to-school season in 2026 is expected to be an inflection point for Foot Locker's recovery [13][38] - DICK'S raised its full-year outlook for comp sales growth to 3.5%-4% and EPS to $14.25-$14.55 [16][36] Other Important Information - The company expects Q4 margin rates for Foot Locker to decline between 1,000 and 1,500 basis points due to aggressive inventory clean-up [11][38] - Future pre-tax charges related to the Foot Locker acquisition are anticipated to be between $500 million and $750 million [34] Q&A Session Summary Question: How is DICK'S driving strong comp growth and confidence going into the holiday season? - Management highlighted the differentiated product assortment and engaging athlete experience as key drivers of growth, with strong performance across key categories [42][44] Question: What assumptions were made about Foot Locker's inventory cleanup and store closures? - Management indicated that they are still assessing which stores to close and expect significant markdowns on unproductive inventory [45][46][48] Question: Can you walk through the building blocks for Foot Locker to be accretive to EPS in 2026? - Management emphasized the need for cleaning out old inventory and underperforming assets, along with confidence in the new management team [52][55] Question: How will markdowns at Foot Locker be managed, and will they impact DICK'S sales? - Management expressed confidence that markdowns on older products will not affect the ability to sell new products at full price [66][68] Question: Is Foot Locker's underperformance due to historical issues, and what is the plan for improvement? - Management acknowledged historical underperformance and emphasized the importance of inventory management and merchandising improvements [73][81]

Financial Data and Key Metrics Changes - For Q4 2025, Embecta generated $264 million in revenue, reflecting a 7.7% decline year-over-year on an as-reported basis or a 10.4% decline on an adjusted cost and currency basis [10][11] - GAAP gross profit for Q4 2025 totaled $158.5 million with a margin of 60%, compared to $173.8 million and 60.7% in the prior year [15] - Adjusted net income for Q4 2025 was $29.4 million, up from $25.9 million in the prior year, with adjusted diluted earnings per share at $0.50 compared to $0.45 [17][20] Business Line Data and Key Metrics Changes - In Q4 2025, U.S. revenue totaled $142 million, reflecting a year-over-year decline of 15.2% on an adjusted cost and currency basis, primarily due to unfavorable comparisons from the previous year [11][12] - International revenue for Q4 was $122 million, representing a 2.8% increase on a reported basis but a decline of 4% on an adjusted cost and currency basis, driven by lower volumes and pricing headwinds in China [12][13] - For the full year, pen needle revenue declined approximately 7.1% to $784.1 million, while safety products grew 6.3% due to improved pricing and volume increases [14][19] Market Data and Key Metrics Changes - The decline in international revenue was primarily attributed to lower contributions from China, influenced by heightened competitive intensity and local brand preferences [12][14] - The company anticipates launches of generic GLP-1 products in Canada, Brazil, and India during Calendar Year 2026, which could represent a significant revenue opportunity [8][35] Company Strategy and Development Direction - The company ended its Patch Pump Program and executed a restructuring plan to enhance profitability and free cash flow, generating approximately $182 million in free cash flow and paying down $184 million of debt in FY 2025 [5][9] - Embecta is focusing on advancing its GLP-1 strategy, collaborating with over 30 pharmaceutical partners to co-package pen needles with generic GLP-1 therapies, aiming for a $100 million annual revenue opportunity by 2033 [7][35] - The company is prioritizing financial discipline and debt reduction while exploring organic and inorganic growth opportunities [9][64] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's direction despite a complex geopolitical and trade backdrop, emphasizing the importance of maintaining leadership in core categories and advancing innovation programs [75] - The initial guidance for FY 2026 anticipates flat to down 2% revenue compared to 2025 levels, with expectations of modest volume declines in core injection business [22][24] Other Important Information - The company completed the implementation of its ERP system and operationalized a new distribution network in Latin America and India, marking a significant milestone in its strategic roadmap [5][10] - A recent agreement to sell certain intellectual property rights associated with the discontinued Patch Pump Program for $10 million is expected to increase cash flow but will not impact adjusted results [21][68] Q&A Session Summary Question: Details on GLP-1 partnerships - Management is in discussions with over 30 potential GLP-1 partners, with several already providing orders for development purposes, and anticipates commercial launches in 2026 [33][34] Question: Consumer willingness to buy non-Chinese products in China - Management noted that Q4 2025 performance in China met expectations, and steps have been taken to stabilize the situation, including introducing a more price-competitive pen needle [38][39] Question: Increased cannula costs and sourcing alternative suppliers - The company is working on identifying alternate cannula suppliers to mitigate increased costs from the sole-source agreement with BD, which is expected to last until 2032 [44][46] Question: Clarification on milestone payments to a U.S. pharmacy customer - Management explained that milestone payments are tied to contract terms, including rebates and marketing spend, which can lead to year-over-year price fluctuations [49][50] Question: Structure of contracts with generic GLP-1 providers - Management indicated that initial contracts focus on quality agreements and vendor qualification, with commercial contracts to be discussed once generic manufacturers receive approval [55][56]

Financial Data and Key Metrics Changes - For fiscal year 2025, the company generated adjusted revenues of approximately $1.08 billion, reflecting a decline of 3.9% on an adjusted cost and currency basis [13] - The fourth quarter revenue was $264 million, a 7.7% decline year-over-year on an as-reported basis, or a 10.4% decline on an adjusted cost and currency basis [10] - GAAP net income for fiscal 2025 was $95.4 million, compared to $78.3 million in the prior year, while adjusted net income was $173.9 million, up from $143.1 million [21][22] Business Line Data and Key Metrics Changes - Pen needle revenue declined approximately 7.1% year-over-year, totaling $784.1 million, primarily due to advanced distributor ordering in the prior year and pricing headwinds [14] - Syringe product revenues grew by 1.7% year-over-year, driven by improved pricing, while safety products grew 6.3% due to a combination of improved pricing and volume increases [15] - Contract manufacturing revenue grew approximately 53.9% compared to the prior year [15] Market Data and Key Metrics Changes - U.S. revenue for the fourth quarter totaled $142 million, reflecting a year-over-year decline of 15.2% on an adjusted cost and currency basis [11] - International revenue for the fourth quarter was $122 million, representing an increase of 2.8% on a reported basis but a decline of 4% on an adjusted cost and currency basis, primarily due to lower volumes and pricing headwinds in China [12] - The decline in international revenue was largely attributed to lower revenue contribution from China, driven by heightened competitive intensity and local brand preferences [14] Company Strategy and Development Direction - The company ended its patch pump program and executed a restructuring plan aimed at enhancing profitability and free cash flow [5] - The company is advancing its GLP-1 strategy, collaborating with over 30 pharmaceutical partners to co-package pen needles with generic GLP-1 therapies, anticipating a $100 million annual revenue opportunity by 2033 [6][8] - The company aims to maintain leadership in core product categories while expanding its portfolio through new product development programs [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's direction despite a complex geopolitical and trade backdrop, focusing on maintaining leadership in core categories and delivering strong profitability and cash flow [58][59] - The company anticipates flat to down 2% revenue growth on an adjusted constant currency basis for fiscal year 2026, with expectations of modest declines in core injection and contract manufacturing revenue [25][26] - Management highlighted the importance of stabilizing the situation in China and remains optimistic about long-term growth in that market [39] Other Important Information - The company generated approximately $182 million in free cash flow during fiscal year 2025 and repaid approximately $184 million of debt, ending the year with a net leverage level of approximately 2.9 times [23] - The company sold certain intellectual property rights and long-lived assets associated with the discontinued patch pump program for $10 million, which will not impact adjusted results for fiscal year 2026 [54] Q&A Session Summary Question: Details on GLP-1 partnerships - The company is in discussions with over 30 potential GLP-1 entrants, with several already providing orders and submitting regulatory submissions [33][34] Question: Consumer willingness to buy non-Chinese products in China - The company has taken steps to stabilize the situation in China and introduced a more price-competitive pen needle [38] Question: Increased cannula costs and sourcing alternative suppliers - The company is working on identifying alternate cannula suppliers to mitigate cost increases and has made significant progress [41][43] Question: Milestone payments to a large U.S. pharmacy customer - Milestone payments are related to contract terms that include rebates and marketing spend, which can lead to year-over-year price fluctuations [44] Question: Capital deployment and M&A opportunities - The company remains focused on paying down debt but is open to organic and inorganic investments if value-creative opportunities arise [52]

Financial Data and Key Metrics Changes - Consolidated net sales increased by 36.3% to $4.17 billion, driven by approximately $931 million from the Foot Locker acquisition and a 5.7% comp increase for the DICK'S business [25] - Non-GAAP EPS for the DICK'S business was $2.78, up from $2.75 in the prior year's quarter [30] - Consolidated gross profit was $1.38 billion, or 33.13% of net sales, down 264 basis points from last year, primarily due to the lower gross margin from the Foot Locker business [26] Business Line Data and Key Metrics Changes - DICK'S business comp sales increased by 5.7%, with growth in average ticket and transactions, following a 4.3% increase last year [17] - Foot Locker's proforma comp sales for Q3 declined by 4.7%, with a 10.2% decline internationally [7][26] - DICK'S opened 13 new House of Sport locations in Q3, the highest number in a single quarter, bringing the total to 35 [18] Market Data and Key Metrics Changes - DICK'S business saw broad-based strength across footwear, apparel, and hard lines categories [25] - Foot Locker's comparable sales in North America decreased by 2.6%, while international sales decreased by 10.2%, primarily due to softness in Europe [26] Company Strategy and Development Direction - The acquisition of Foot Locker is viewed as a transformative opportunity to redefine sports retailing and expand the total addressable market [6] - The immediate priority for Foot Locker is to clean out underperforming assets, including inventory and stores, to position the business for future success [9][33] - DICK'S is focused on maintaining momentum through a differentiated product assortment and an industry-leading omnichannel athlete experience [6][16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the turnaround of Foot Locker, emphasizing the need for operational excellence and strong supplier relationships [8][49] - The back-to-school season in 2026 is anticipated to be an inflection point for Foot Locker's recovery [12][38] - DICK'S raised its full-year outlook for comp sales growth to 3.5%-4% and EPS to $14.25-$14.55 [36] Other Important Information - The company expects Q4 margin rates for Foot Locker to decline between 1,000 and 1,500 basis points due to aggressive inventory clean-up [10][38] - Future pre-tax charges related to the Foot Locker acquisition are expected to be between $500 million and $750 million [33] Q&A Session Summary Question: How is DICK'S driving strong comp growth and confidence going into the holiday season? - Management highlighted the differentiated product assortment and engaging athlete experience as key drivers of growth, with strong performance across all key categories [41][43] Question: What assumptions were made about Foot Locker's inventory cleanup and store closures? - Management indicated that they are still assessing which stores to close and expect significant markdowns on unproductive inventory [45][46] Question: What are the building blocks for Foot Locker to be accretive to EPS in 2026? - Management emphasized the importance of cleaning out unproductive inventory and optimizing the store portfolio as foundational steps for future profitability [47][49] Question: How will markdowns at Foot Locker impact the market and DICK'S sales? - Management expressed confidence that markdowns on older inventory will not negatively impact DICK'S sales, as new, innovative products will be introduced [54][55] Question: Is Foot Locker's expected accretion based on current EPS guidance? - Management confirmed that the expectation for Foot Locker to be accretive is based on the current EPS guidance for DICK'S business [62]

Financial Data and Key Metrics Changes - The company reported third-quarter revenue of $9.7 billion, with an adjusted operating income rate of 4% and adjusted earnings per share increasing by 11% year-over-year to $1.40 [4][24] - Comparable sales growth was 2.7%, exceeding expectations [4][24] - Domestic revenue increased by 2.1% to $8.9 billion, while international revenue rose by 6.1% to $794 million [24][25] Business Line Data and Key Metrics Changes - Strong sales performance was noted in computing, gaming, and mobile phones, with computing achieving its seventh consecutive quarter of positive comps [4][5] - Desktop computers saw nearly 30% year-over-year growth, while gaming demand remained strong for the Nintendo Switch 2 [5][6] - Online revenue increased by 3.5% on a comparable basis, representing 31.8% of domestic revenue [24][25] Market Data and Key Metrics Changes - The domestic gross profit rate decreased by 30 basis points to 23.3%, primarily due to lower product margin rates [25] - International gross profit rate increased by 30 basis points to 22.8%, attributed to favorable supply chain costs [25][26] Company Strategy and Development Direction - The company aims to strengthen its position as a leading omnichannel destination for technology while building new profit streams [9][10] - Strategic priorities include enhancing omnichannel experiences, driving incremental profitability streams through the Best Buy marketplace, and improving operational efficiencies [9][13][17] - The company is focusing on leveraging AI for customer support and product recommendations, aiming to enhance customer experience [18][60] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the upcoming holiday season, highlighting compelling deals and strong marketing efforts [18][22] - The company expects fourth-quarter comparable sales to range from down 1% to up 1%, with an adjusted operating income rate of 4.8%-4.9% [28][29] - Management noted that the high end of the fourth-quarter outlook assumes growth in computing, gaming, and mobile, with improved trends in TVs [22][28] Other Important Information - The company recorded pre-tax non-cash asset impairments of $192 million related to Best Buy Health, which were excluded from adjusted results [27] - Year-to-date, the company returned $802 million to shareholders through dividends and share repurchases [27] Q&A Session Summary Question: Insights on Q4 guidance and expectations - Management indicated that the high end of the Q4 sales guide is similar to previous expectations, with a slight adjustment to the bottom end [31] Question: Product momentum and demand outlook - Management expects continued growth in computing and mobile phones, driven by the need for upgrades and innovation [32][33] Question: Marketplace performance and EBIT impact - The marketplace has onboarded over 1,000 sellers and significantly increased SKUs, with positive early indicators for customer experience [38][39] Question: Loyalty program performance - The loyalty program has over 100 million members, with nearly 8 million paid members, focusing on personalized promotions to drive engagement [41][42] Question: Store investment and future plans - The company plans to continue investing in store aesthetics and exploring smaller format stores to enhance customer experience [44][46] Question: Impact of tariffs on pricing - The effective tariff rate is in the mid-teens, but overall ASP remains flat due to competitive pricing pressures [49][50] Question: Vendor support in labor - Vendor labor support varies by time of year and product launches, with a focus on maintaining customer service quality [52][53]

Financial Data and Key Metrics Changes - Total revenue increased by 15% year-over-year, reaching RMB 247.8 billion, excluding revenue from Sun Art and InTime [12][5] - GAAP net income decreased by 53% to RMB 20.6 billion, primarily due to a decrease in income from operations [13] - Operating cash flow was RMB 10.1 billion, a decrease of RMB 21.3 billion compared to the same quarter last year [14] - Free cash flow was an outflow of RMB 21.8 billion, reflecting significant investments in quick commerce and AI+ cloud infrastructure [14] Business Line Data and Key Metrics Changes - Revenue from Alibaba China e-commerce group was RMB 132.6 billion, an increase of 16% [14] - Customer management revenue (CMR) increased by 10%, benefiting from improved take rates [14] - Revenue from the quick commerce business surged by 60% [15] - Adjusted EBITDA from Alibaba China e-commerce group was RMB 10.5 billion, with potential fluctuations due to competition and investments [15][16] Market Data and Key Metrics Changes - Alibaba Cloud's revenue grew by 34%, with external customer revenue increasing by 29% [16] - AI-related product revenue continued to grow at a triple-digit pace, accounting for over 20% of revenue from external customers [16] - In the hybrid cloud market, Alibaba Cloud grew more than 20% year-over-year, outpacing the industry [7] Company Strategy and Development Direction - The company is focusing on two core strategic pillars: AI+ cloud and consumption, aiming to deepen synergies across its businesses [11] - The launch of the QN app signifies Alibaba's commitment to both enterprise and consumer AI, integrating various services into a single platform [8] - The company aims to generate CNY 1 trillion in GMV for the platform within three years, driving market share gains across related categories [30] Management's Comments on Operating Environment and Future Outlook - Management expressed strong conviction in future AI demand growth, citing robust customer demand and the need for increased server deployment [21][22] - The company anticipates fluctuations in CMR and EBITDA due to ongoing investments and market competition [33] - Management highlighted the importance of enhancing user experience and average order value to drive future growth [38] Other Important Information - The company has a strong balance sheet with $41 billion in net cash, supporting its reinvestment strategy [14] - The all other segment revenue decreased by 25% due to the disposal of Sun Art and Intime businesses, with a loss of RMB 3.4 billion in Adjusted EBITDA [17] Q&A Session Summary Question: Growth outlook for cloud business - Management noted strong customer demand for AI, with orders outpacing server deployment capabilities, indicating accelerating demand for AI [21][22] Question: Progress in quick commerce and its synergy with core e-commerce - Management reported significant improvements in unit economics and logistics efficiency in quick commerce, with a focus on optimizing user experience and expanding retail categories [26][30] Question: CapEx outlook and correlation with incremental revenue - Management indicated that the previously mentioned RMB 380 billion CapEx figure may be on the small side due to high customer demand, with ongoing investments in AI infrastructure [45][46] Question: Allocation of resources in the current macro environment - Management emphasized the importance of continually training foundation models and optimizing AI resources to meet growing customer demand [50][51] Question: Investment opportunities in the consumption market - Management highlighted ongoing investments in various consumption sectors, including Freshippo and local services, while focusing on driving synergies across existing businesses [62]

Financial Data and Key Metrics Changes - Total revenue increased by 15% year-over-year, reaching RMB 247.8 billion, excluding revenue from Sun Art and InTime [12][5] - GAAP net income decreased by 53% to RMB 20.6 billion, primarily due to a decrease in income from operations [13] - Operating cash flow was RMB 10.1 billion, a decrease of RMB 21.3 billion compared to the same quarter last year [14] - Free cash flow was an outflow of RMB 21.8 billion, reflecting significant investments in quick commerce and AI+ cloud infrastructure [14] Business Line Data and Key Metrics Changes - Revenue from Alibaba China e-commerce group was RMB 132.6 billion, an increase of 16% [14] - Customer management revenue (CMR) increased by 10%, benefiting from improved take rates [14] - Revenue from the quick commerce business surged by 60%, with significant improvements in unit economics and user retention [15][29] - Revenue from AIDC grew by 10%, with AliExpress enhancing its offerings through the AliExpress Direct model [15][16] Market Data and Key Metrics Changes - Alibaba Cloud's revenue grew by 34%, with external customer revenue accelerating by 29% [12][16] - In the hybrid cloud market, Alibaba Cloud grew more than 20% year-over-year, outpacing the industry [7] - The AI-related product revenue continued to grow at a triple-digit pace, accounting for over 20% of revenue from external customers [16] Company Strategy and Development Direction - The company is focusing on two core strategic pillars: AI+ cloud and consumption, aiming to deepen synergies across its businesses [11][12] - The launch of the QN app marks Alibaba's commitment to both enterprise and consumer AI, aiming to integrate various services into a single AI-powered entry point for everyday life [8][9] - The company plans to generate CNY 1 trillion in GMV for the quick commerce platform within three years [30] Management's Comments on Operating Environment and Future Outlook - Management expressed strong conviction in future AI demand growth, citing robust customer demand and the need for increased server deployment [21][22] - The company anticipates fluctuations in CMR and EBITDA due to ongoing investments and market competition [33] - Management highlighted the importance of enhancing user experience and average order value to drive future growth [38] Other Important Information - The Adjusted EBITDA margin remained stable at 9%, with expectations of continued investment in customer growth and technology innovation [16] - The all other segment revenue decreased by 25% due to the disposal of Sun Art and Intime businesses, with a loss of RMB 3.4 billion in Adjusted EBITDA [17] Q&A Session Summary Question: Growth outlook for cloud business - Management noted strong customer demand for AI, with orders outpacing server deployment capabilities, indicating accelerating demand for AI across enterprise operations [21][22] Question: Progress in quick commerce and its synergy with core e-commerce - Management highlighted significant improvements in unit economics and user retention in quick commerce, with expectations for continued integration and synergy with core e-commerce [26][30] Question: CapEx outlook and correlation with incremental revenue - Management indicated that the previously mentioned RMB 380 billion CapEx figure may be on the small side given current customer demand, with plans to invest aggressively in AI infrastructure [45][46] Question: Allocation of resources in AI investment cycle - Management emphasized the importance of continually training foundation models and optimizing inference services to meet growing customer demand [50][51] Question: Opportunities for investment in the consumption market - Management identified various subsectors, including Freshippo and local services, as areas for potential investment, focusing on integrating and driving synergies across existing businesses [62]

Financial Data and Key Metrics Changes - Total revenue increased by 15% year over year, reaching RMB 247.8 billion, excluding Sun Art and InTime [11] - GAAP net income decreased by 53% to RMB 20.6 billion, primarily due to a decrease in income from operations [11] - Operating cash flow decreased by RMB 21.3 billion year over year to RMB 10.1 billion, attributed to increased strategic investments [12] - Free cash flow was an outflow of RMB 21.8 billion, reflecting significant investments in quick commerce and AI+ cloud infrastructure [12] Business Line Data and Key Metrics Changes - Revenue from Alibaba China e-commerce group increased by 16% to RMB 132.6 billion, with customer management revenue growing by 10% [12] - Quick commerce business revenue surged by 60%, with improvements in unit economics and user retention [13] - Revenue from AIDC grew by 10%, with AliExpress enhancing its product offerings through the AliExpress Direct model [13][14] - Cloud business revenue grew by 34%, driven by public cloud revenue and AI-related product adoption [15] Market Data and Key Metrics Changes - Alibaba Cloud gained market share in the hybrid cloud market, growing over 20% year over year [5] - In the AI cloud market, Alibaba holds a market share larger than the combined total of the second to fourth largest providers [6] - Daily active users for AMAP reached a historical high of 360 million, with significant user engagement from the AMAP Street Stars feature [10] Company Strategy and Development Direction - The company is focusing on two core strategic pillars: AI+ cloud and consumption, aiming to deepen synergies across its businesses [10] - The launch of the QN app signifies Alibaba's commitment to both enterprise and consumer AI, integrating various services into a single platform [6] - The company aims to generate CNY 1 trillion in GMV for the quick commerce platform within three years [27] Management's Comments on Operating Environment and Future Outlook - Management expressed strong conviction in future AI demand growth, citing robust customer demand and the need for increased server deployment [20][21] - The company anticipates fluctuations in CMR and EBITDA due to ongoing investments and market competition [31] - Management highlighted the importance of enhancing user experience and average order value to drive future growth [35] Other Important Information - Adjusted EBITDA margin for the cloud business remained stable at 9%, with continued investments in customer growth and technology innovation [15] - The all other segment revenue decreased by 25% due to the disposal of Sun Art and Intime businesses, with a loss of RMB 3.4 billion in adjusted EBITDA [16] Q&A Session Summary Question: What is the growth outlook for the cloud business? - Management noted strong customer demand for AI, with expectations for continued acceleration in growth driven by enterprise operations [20][21] Question: Can management share key progress for quick commerce and its synergy with core e-commerce? - Significant progress was made in optimizing unit economics, with a 50% reduction in per order loss and increased average order value [24][25] Question: What are the plans for CapEx over the next three years? - The previously mentioned RMB 380 billion CapEx figure may be on the low side due to strong customer demand, with potential for increased investment [43][44] Question: How will cost savings from efficiency improvements be allocated among stakeholders? - Management indicated that cost savings will be used to enhance user experience and increase average order value, while maintaining competitive subsidies [35] Question: What other subsectors in the consumption market are seen as good investment opportunities? - Apart from quick commerce, management highlighted investments in Freshippo, offline O2O models, and local services as key areas for growth [61]

Financial Data and Key Metrics Changes - In Q3 2025, the company delivered 87,071 smart EVs, representing a year-over-year growth of 40.8% [5] - Total revenues reached RMB 21.8 billion, an increase of 16.7% year over year and 14.7% quarter over quarter [25] - Vehicle sales were RMB 19.2 billion, up 15% year over year and 19% quarter over quarter [25] - Overall gross margin improved to 13.9%, the highest in nearly three years, compared to 10.7% in Q3 last year [9][26] - Non-GAAP operating loss was narrowed by 30% quarter over quarter, with positive operating cash flow and free cash flow generated in Q3 [10][28] Business Line Data and Key Metrics Changes - The vehicle gross margin improved to 14.7%, compared to 13.1% in Q3 last year and 10.3% last quarter [26] - Other sales reached RMB 6.2 billion, up 31.2% year over year but down 9.8% quarter over quarter [25][26] - The ONVO brand's L90 delivered over 33,000 units in three months since its launch, leading the large battery electric SUV segment [13] - The All-New ES8 surpassed 10,000 deliveries within just 41 days, making it a top seller in the premium large three-row SUV segment [12] Market Data and Key Metrics Changes - In October, the company delivered 40,397 smart EVs, up 92.6% year over year, marking three consecutive months of record-high deliveries [8] - The penetration rate of battery electric vehicles (BEV) in the premium segment increased from 12% last year to 18% in Q3 this year [67] - The sales volume of BEV models increased by 33% year over year, while range-extended vehicles decreased by 10% [66] Company Strategy and Development Direction - The company remains committed to a battery electric vehicle roadmap featuring chargeable, swappable, and upgradable batteries [11] - The strategy includes leveraging full-stack R&D capabilities across 12 key tech areas to meet diverse user needs [11] - The company plans to introduce five new large models next year, targeting the premium segment and aiming for a vehicle gross margin of around 20% [71][72] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving quarterly break-even in Q4 despite challenges from the phase-out of trade-in subsidies [31] - The company anticipates strong demand for high-margin products like the all-new ES8, which is expected to drive profitability [32] - Management noted that the overall impact of the purchasing tax phase-out on gross profit is limited, with confidence in maintaining sales momentum [50] Other Important Information - The company completed a total of $1.16 billion in equity financing, strengthening its balance sheet for long-term commitments [19] - The global charging and swapping network operates 3,641 power swap stations, providing over 92 million swaps [18] - The company has established a partnership for a chip joint venture to enhance its technology capabilities [84] Q&A Session Summary Question: Break-even target and delivery guidance - Management remains confident in achieving quarterly break-even in Q4 despite a lower delivery guidance of 120,000-125,000 units due to market challenges [31][34] Question: Volume targets and new model schedule - Management expects to achieve a monthly run rate of 50,000 units in the first half of next year, supported by new model launches [42] Question: 2026 outlook and purchasing tax impact - The company anticipates limited impact from the purchasing tax phase-out, with a focus on maintaining competitive pricing strategies [46][50] Question: Expense control and R&D spending - R&D expenses are expected to remain around RMB 2 billion per quarter, with a focus on improving efficiency [53][55] Question: Margin drivers in Q3 - The vehicle gross margin improvement in Q3 was driven by cost reductions and the sales of high-margin products like the L90 [81] Question: Chip joint venture details - The joint venture aims to leverage chip design capabilities and sell solutions to other clients, with opportunities in both automotive and non-automotive industries [84]

Financial Data and Key Metrics Changes - In Q3 2025, the company facilitated RMB 32.2 billion in loan volume, a year-on-year increase of approximately 20.6% [6] - Non-GAAP income from operations was RMB 490 million, up around 50.3% year-on-year [6] - Net income for Q3 was RMB 376.5 million, representing an increase of 39.7% from the same period in 2024 [26] - The net margin for Q3 was 25.6%, slightly down from 27.5% in Q2 [35] Business Line Data and Key Metrics Changes - The company maintained cooperation with 75 financial institutions, with another 64 under negotiation, enhancing funding supply stability [7] - The share of repeat borrowers in facilitation volume rose to 78.6%, driving the average borrowing amount per transaction up to RMB 9,115, a year-on-year increase of approximately 19.5% [10] Market Data and Key Metrics Changes - China's GDP grew by 4.8% year-on-year in Q3 2025, with consumption contributing 56.6% to growth [5] - The consumer credit balance increased by 4.2% year-on-year as of September 30 [5] Company Strategy and Development Direction - The company is focusing on high-quality borrower segments and optimizing resource allocation efficiency [10] - A cautious strategy for new customer acquisition has been adopted, emphasizing high-quality borrowers [10] - The company is enhancing its technological capabilities, particularly in AI, to improve operational efficiency and risk management [12][15] Management's Comments on Operating Environment and Future Outlook - The new loan facilitation regulation has created significant downward pressure on pricing and emphasized consumer protection [30] - The company expects Q4 loan facilitation volume to be between RMB 23 billion and RMB 25 billion, with full-year volume projected at RMB 127.8 billion to RMB 129.8 billion, representing a year-on-year increase of approximately 26.8% to 28.8% [21] - Management anticipates that the enforcement of new regulations will raise industry entry barriers and promote healthier sector development [38] Other Important Information - The company ended Q3 with RMB 124.2 million in cash and cash equivalents, down from RMB 316.2 million at the end of the previous quarter [26] - The company has made significant investments in its Indonesian business, achieving nearly 200% year-on-year growth [19] Q&A Session Summary Question: Impact of new regulation on business and strategic adjustments - Management noted that the new regulation has significantly impacted the industry, leading to pricing pressure and a focus on consumer protection. The company has intensified adjustments in traffic acquisition and adopted a more cautious customer acquisition strategy [30][32] Question: Revenue take rate and margin expectations - Management indicated that the net margin for Q3 was 25.6%, slightly down from the previous quarter. They expect profitability for the full year of 2025 to be significantly higher than in 2024, despite short-term pressures from the new regulation [35][38]