Good afternoon, ladies and gentlemen. Welcome to the momo.com Teresa Liu conference. Teresa, please begin your call and I'll be standing by. Thank you.
Thank you. Good afternoon, everyone, and welcome to momo.com third quarter earnings conference call. It's great to see everyone once again. This is Teresa, Momo's head of investor relations. Today's event is being webcast through our website, where you can also download our presentations and earnings report. The format for today's event will be as follows. First, President Jeff will provide industry overview, message, and also outlook. Afterwards, I will jointly share operations updates for the quarter. Last, Jeff will take your questions during Q&A session.
As usual, I would like to remind everyone today's discussion may contain forward-looking statements that are subject to significant risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements. Please refer to the Safe Harbor notice that appears on our presentation. For now, I would like to turn the microphone over to Jeff.
Okay. Thank you, Teresa. Thank you all for joining us today. Let me begin with the industry overview and the competition landscape. Taiwan's GDP for the third quarter of this year is estimated to grow by almost 4% year- over- year, driven by resilient exports and manufacturing investments. However, domestic consumption slowed further in the third quarter. Total retail sales grew by 2.5% year- over- year, which is lower than in the previous quarters. Conversely, spending on travel and recreational activities remained strong. In the online retail industry, growth was 3% year- over- year, falling short of expectations.
There was a continuous high demand for outbound travel this summer, with outbound travelers increasing by 29% year- over- year in July and August only, according to government data. This increased overseas travel has led to lower domestic consumption, particularly for the luxury goods and the branded cosmetics. Regarding the industry landscape, recent investments made by Uni-President into Yahoo Taiwan and PChome highlight the growing importance of Taiwan's online market. More industry leaders are recognizing its potential and making significant investments.
This illustrates a substantial runway for e-commerce growth and reinforces our belief in considerable untapped demand. However, the impact of Uni-President's M&A activities and the resulting change in competition dynamics are yet to be seen. Moving on to our operational highlights. Increased overseas travel and the trend of trading down pressured our third quarter revenue growth. Additionally, revenue recognition for our 3P business is commission-based only. As a result, our third quarter revenue growth slowed to 1.9%. Within this, the media business dropped by 15.8% year- over- year, while the e-commerce business increased by 2.6% year- over- year.
After excluding the difference resulting from the different accounting practice on mo Coin, the company's revenue growth would be 2.4% year- over- year, with the tax rate remaining stable at 14.3% compared to 14.4% a year ago. Among different product categories, fashion and luxury experienced negative growth, while sports and leisure performed the best. This reflects the macro trend and consumer behavior shift we described earlier. On the other operational indicators, we are pleased to report steady growth in our key customer metrics.
Our quarterly active users increased by 10% year- over- year, the highest growth rate in the last six quarters. On the cost front, operational efficiency resulted in stable gross margins. The increased operating expenses this quarter reflect investments in new business development and related marketing activities. Over the first three quarters, we generated 1.6 billion TWD in free cash flow, supported by an increase in operating cash flow, which reached 2.9 billion TWD. Regarding logistics, the Southern Distribution Center is now in service, and we will hold an opening ceremony in late November.
This development is expected to enhance our logistics efficiency, allowing us to provide faster and better service experiences for customers in Southern Taiwan. In early September, we launched the mo+ membership program aimed at enhancing customer engagement and loyalty. This program offers a base 4% cashback in mo+, plus an additional 4% cashback from 100 selected brands. Members can also enjoy other benefits, including exclusive cross-platform discounts with partners like Uber Eats and the LINE GO taxi service, as well as member-only coupons.
More than 10,000 customers have already signed up for this program. As we are entering the Double 11 campaign period, we are fully prepared for this crucial marketing campaign and the first quarter shopping season, and optimistic about first quarter's performance. In the meantime, we will continue investing in your strategic initiatives, namely MoShop, RMN, and live streaming. So far, they have demonstrated their potential, and we are confident in the long-term benefit they can bring to the company. Now, I'll turn the call over to Terrisa.
Thank you, Jeff. In the third quarter, we generated revenue of TWD 25.5 billion, a 1.9% increase year- over- year. Our e-commerce business, which now represents nearly 97% of our revenue, saw a year-over-year growth of 2.6%, primarily impacted by the sluggishness of the overall retail industry, while media business continued to be affected by the structural downturn in the cable TV industry. EBITDA came in at TWD 1.15 billion, with an EBITDA margin of 4.5%. During the quarter, we continued to invest in new business development, including marketing promotion to boost new business growth, along with our R&D investment in new business to drive long-term growth and innovation.
For the third quarter, we reported a net income of TWD 666 million, resulting in an EPS of TWD 2.64 based on 252 million outstanding shares after dilution. On the balance sheet and cash position, ending the quarter with TWD 3.3 billion in cash and cash equivalents, we have achieved a notable increase in free cash flow, reaching TWD 1.6 billion over the first nine months. Operating cash flow totaled TWD 2.9 billion, while our capital expenditures of TWD 1.27 billion have been strategically directed towards enhancing our logistics infrastructure, automation, and IT equipment.
Moving on to the e-commerce business performance, you can refer to our presentation, page 4 and page 9. With adjusted figures, our e-commerce revenue growth will be 3% year- over- year, growing much faster than the total online industry of 1.4%. However, gross momentum fell short of our previous expectations. This was influenced by the following factors. First, the overall sluggishness in the retail environment. Second, a surge in outbound travel during summer vacation, which impacted domestic consumption. We observed more demand for low-priced products.
This shift has increased low-priced shares of our revenue mix. Third, revenue recognition for our 3P business is commission-based, which also affected our top-line growth. In terms of category highlights, which you can refer to slide page 11, among our top performing categories, sports and leisure, together with 3C electronics and home appliances, demonstrated stronger growth with 7% and 4%, respectively. Customer demand in this area remained resilient on the back of interest in leisure activities and tech upgrades. Conversely, increased international travel led to a decline in domestic spending for apparel and luxury products.
Therefore, our fashion and luxury segment declined 3% year- over- year. Beauty and healthcare category also saw slower growth, moderating to 2% year- over- year. Now, let's touch on customer metrics. Despite external challenges, we have been seeing the positive trend in our core customer metrics. Enhanced customer acquisitions and a strong focus on customer loyalty and retention continue to yield results. Cumulative App download demonstrated robust and sustained growth, reflecting both our promotional effectiveness and improved App engagement.
Our monthly average visitors grew by 1.3% year- over- year, while quarterly active users saw a strong 10% increase, a notable improvement from 4% during the same period last year. This was our strongest active user growth in the past six quarters. Last, let me update our latest corporate events. This year, we launched our 20th anniversary brand transformation project, a key milestone in elevating our brand image. Our new brand identity and slogan, "More and More," reflects our commitment to continually enhance the shopping experience for our customers and further strengthening the value of Momo.
With that, we are now ready to open the call to questions. Operator.
Thank you, Terrisa. Ladies and gentlemen, we will now pull for questions. If you'd like to register for a question, please press star one on your telephone. Thank you. And our first question comes from Daniel Chen with UBS. Please go ahead. Thank you.
Hi, Jeff and Terrisa. Thank you for taking my questions. Could you hear me?
Yes.
Okay. Thank you, Jeff, so I think in Q3, our gross margin is down by 0.3 percentage point year- on- year. Could you break this down into different factors like depreciation, product mix, or business mix? And also, specific on e-commerce take rate, could you share what's the year-on-year change and what are the factors that drive that change? Thank you.
Right. If you look at our operating margin, first, you can look at our operating cost. Actually, our operating cost year- on- year is negative growth, which means we gain operational efficiency there, and so the main reason why you see the operating margin drop year- over- year is mainly because of different treatment of mo+ accounting practice. As far as take rate is concerned, third quarter this year, take rate is 13.6%. Last year was 14.1%. It's around 0.5% lower. However, if we adjust the number to restore the different practice effect, you will find this year take rate will become 14.3%, so only 0.1% lower than last year, so actually, our take rate remained quite stable.
However, our operating profit was lower than last year, mainly because operating expenses. Those are resulting from the new investment made in the new initiative and the marketing expenses.
How about the e-commerce take rate, not the overall take rate? Is this under the same trend as the overall take rate?
Right. Actually, the TV shopping business still continues under the downward trend. The revenue actually was dropped. So the margin contribution from TV shopping was lower. So it doesn't help on our margin per se. So the e-commerce margin actually remained quite stable. However, we spent more marketing dollars on, one, promoting the new business, and the secondary, of course, offer more of the discount and other benefits to our customers.
Thank you. And second question, how's the initial sales through for the Double 11 festival compared to the same period last year? Have you seen any demand recovery so far?
I don't think we are ready to disclose any number related to the Double 11 yet, and it's still kind of early on as well, but I have to repeat what I just said. We remain optimistic in terms of the first quarter's performance. I remember last quarter, I have mentioned we expected the outbound travel will continue to prosper during the summer holiday season, and it did, and now we see people may come back to resort to more of the domestic consumption, but that's still too early to tell, and we don't think we are ready to disclose those internal estimates yet.
However, I repeat myself again, we remain optimistic on the first quarter.
Thank you. And last question, I might have missed it, but I think a couple of customer metrics is not in the presentation this time. For example, the purchasing frequency and ticket size. I'm wondering, could you share the year-on-year change for that two metrics? Thank you.
We have discontinued to provide that mainly because we have now the different mix of business, and we are in the transition on how we report the numbers, and with the increased percentage of our mo+ and RMN, we might change how we're going to report those numbers in the future, so this quarter, we only disclose our active user, which means the customer has made a purchase. The mo+ in third quarter has increased 10%, and the overall traffic increased to 1.3% in terms of the unique visitor per month, and under that, you can figure out actually customer per ticket side actually lower, however, their frequency higher.
Okay. Thank you, Jeff.
Thank you. And our next question comes from Bill Lin with J.P. Morgan. Please go ahead. Thank you.
Hi, Jeff and Terrisa. Thank you for taking my question. I would like to know, can you share more color with us about the current progress of MoShop and the growing of MoShop, how it led to the growing of the ad business? And my second question is about your distribution center. I would like to know, since the launch of the Southern distribution center and also growing MoShop business, when do you expect the company will start to offer the 3PL business for those MoShop merchants? Thank you.
Those new initiatives are still in their early stage of development. We are still continuing investing in the technology part, and we're hiring more people to support those businesses. So far, we don't have any number we can share with you. Regarding the Southern distribution center, now the warehouse mainly benefits our 1P business. However, with the warehouse, may also link to our delivery service, which can benefit on both the 1P and the 3P. With the Southern distribution center, we are going to have more of our own fleet ready there, and that can be used to serve our customers and also our merchants in the future.
Okay. Got it. Thank you, Jeff.
Thank you. Once again, ladies and gentlemen, if you'd like to register for questions, please press star one on your telephone. Thank you. Once again, ladies and gentlemen, that is star one for questions. Our next question comes from Casey Chen with Aletheia. Please go ahead. Thank you.
Hi, Jeff and Terrisa. I have a question on your membership program. Glad to see that you just launched a program. I've been waiting for this program. But one thing I've noticed is that the value you offer is still mainly discount. Just curious, any other values you're probably going to add into the membership? For example, like the video content, the live streaming content from Taiwan Mobile, any possibilities that you guys can probably collaborate and offer some, I mean, bundle some of the live streaming programs into your membership and maybe just profit sharing with Taiwan Mobile? Thanks.
I think the membership benefit is an evolving process. We are still engaging a lot of different partners, of course, including Taiwan Mobile, to bring more of the benefit to our customer and make this program more attractive, and it certainly includes the video service. A lot of membership programs now include that part as the member benefit, but so far, we don't have anything concluded yet, so once that's ready, we'll report to everyone.
Okay. Thanks. And a follow-up question on your ad business. Could you maybe comment on any progress on this business, like how much of the GMV already comes from ad business?
Ad business actually performed better than we expected because it's more of it's very technology- and platform-dependent, and we start all the technology development from zero, so we're basically from scratch. But luckily, because the data has proven its usefulness, it has been regarded as a very good marketing tool by our merchants, and we are in the process of engaging them more and have them understand how to use this system well so that I think that can benefit their business and also drive up our RMN revenue.
But again, those are still in the early stage compared to what happened in other markets like the U.S. and China. Yet that accounts only a very small portion of our revenue, so we're pretty excited for the upside potential in the future.
Understood. But if we want to sort of rank the momentum of the three new businesses, is it fair to say right now, from what you can see, ads is better than MoShop and then better than live streaming?
It's difficult to compare that way. I think probably if you say compare with our original expectation, I think RMN performed the best. In the early on, we expected we were going to encounter a lot of technical problems and platform readiness, and I think so far, we have overcome those hurdles and made some progress, so if you talk about comparing that regard, yes. However, in terms of the GMV contribution related to your first question, of course, 3P business has more contribution on the GMV overall.
Got it. Thank you.
All right. Jeff, thank you. And everyone, this concludes our Q&A session. Before we conclude today's conference, please be advised the updated ESG report and video are available through our website. So thank you, everyone, for joining us today. We hope everyone continues to stay well, and we hope you will join us again next quarter. Thank you. Have a great day.
Thank you for your participation. This concludes the conference. You may now disconnect. Goodbye.