Confident, ladies and gentlemen. Welcome to the conference call. Terrisa, please begin your call, and I'll be standing by. Thank you.
Good afternoon, everyone, and welcome to Momo's first quarter 2025 earnings result. It's great to see everyone once again. This is Terrisa, Momo's Head of Investor Relations. Today's event is being webcast live through our website, where you can also download the earnings report and the latest presentation. The format for today's event will be as follows. First, our President, Jeff, will provide an overview of our operational highlight, followed by management key message. Afterwards, I will jointly share financial performance and business updates for the first quarter. Next, Jeff will take your questions during the Q&A session. As usual, I would like to remind everyone today's discussion may contain forward-looking statements that are subject to significant risk and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statement. Please refer to the safe harbor notice that appears on our presentation.
I would like to turn the microphone over to Jeff.
Hello. Good afternoon. Thank you for joining our 2025 first quarter earnings call. Let me begin with an overview of the industry environment. In the first quarter, the total retail sales reached TWD 21.19 trillion, representing year-over-year growth of 0.9% only. This marks a continued deceleration from 1.6% growth in the fourth quarter and 3.8% in the same period last year, making it the sector's weakest performance since the third quarter of 2021. The slower growth reflects widespread concern about economic uncertainty, which has in turn impacted consumer confidence. In e-commerce, sales remained flat, underperforming physical retail formats like convenience stores and supermarkets. This reflects a shift in spending patterns, including weaker demand for durable goods and an increased spending on overseas travel. The competitive landscape remains largely unchanged. Some categories such as diapers, toilet paper, and others continue to experience price competition.
We have also observed an increase in cross-border shipments. Despite the microeconomic challenges, continuous competition, and a decline in our TV shopping sales, our total GMV still achieved year-over-year growth. Our 3P business continues to deliver good performance in reaching our long-tail product portfolio and supporting GMV momentum. Enhanced data-driven capability has improved current conversion rates, resulting in steady transaction growth. Additionally, repeat order growth remains healthy, underscoring the resilience and efficiency of our platform. User engagement metrics were also encouraging. Monthly active users rose 11% year-over-year, and quarterly active users increased 7.5%. We also saw growth in male and younger customer segments. Now, let's look at the financial result. In Q1, Momo reported consolidated revenue of TWD 26.4 billion. Operating profit came in at TWD 786 million, and the net income attributed to the parent company was TWD 860 million, translating to an earning per share of TWD 3.41.
These results reflect an increase in investment in marketing, technology, and new business initiatives. Our balance sheet remains strong, with TWD 4.5 billion in cash and cash equivalents, providing a good foundation for ongoing operations. From a product category perspective, we saw strong momentum in laptop PCs, cameras, growth-related items, health supplements, and beauty products. In contrast, demand was softer in fashion, apparel, furniture, kitchenware, and bedding. In April, we expanded the reach of Momo's ads network by integrating both onsite and offsite media channels. This new platform allows brands to streamline marketing activities, run multichannel campaigns, and increase return on ad spending. Our 3P business continues to onboard new merchants and broaden product selections, enhancing the one-stop shopping experience for customers and increasing our penetration among younger users. Initial results are promising, and we will continue to iterate and improve. Our MO+ membership program also continues to grow steadily.
Members are shopping more frequently and spending more, validating the value of the program. Looking ahead, as we mentioned earlier this year, our primary focus remains on driving long-term growth, and we will continue to invest in those strategic initiatives to support that objective. At the same time, we are aware of potential microeconomic headwinds that could impact our performance. That said, we are confident that with disciplined execution and agility to adapt as needed, we can effectively balance growth and profitability and deliver long-term value to our shareholders. Thank you once again. I will hand it over to Terrisa.
Thank you, Jeff. We will now walk you through our consolidated financial and operational performance for the quarter, highlighting category dynamics and customer behavior trends, provide updates on our strategic initiatives, and close with the review of our balance sheet, cash flow, and capital investment. Let's begin with top-line performance. We closed the first quarter with consolidated revenue of TWD 26.4 billion. Of this, e-commerce contributed TWD 25.55 billion. Media business contributed TWD 850 million. During the quarter, consumer sentiment remained subdued. The operating environment this year was notably more constrained, influenced by reduced consumer spending, persistent inflation pressures, and ongoing macro uncertainties. While the headline growth appears modest, we want to underscore the positive underlying development across several strategic areas. First, our 3P business and retail media network demonstrated solid progress. This growth came through expanding product assortment, with 3P SKU expanding to 2 million.
More importantly, investment in personalization and targeting technology. This effort led to a sustained increase in transaction volume, indicating we are effectively enhancing the quality of shopping experience for customers while driving greater efficiency for brands and merchants. On GMV and ticket size dynamics, as expected, we saw a shift in product mix. High-priced product sales declined, a clear reflection of cautious consumer behavior. At the same time, there was an increased mix of 3P products, which tend to have lower ASP. As a result, our average ticket size declined by 6.4% year-over-year. However, this was largely offset by a 7.5% increase in active users, reflecting our ability to grow the user base and keep customers engaged. The net result was stable GMV growth, underscoring the resilience of our business fundamentals in navigating a challenging operating environment. Let me now turn to the category performance.
We observed stronger demand in several key categories: laptop PC and camera, benefiting from continued demand related to travel and content creations. The gourmet items continue to see a strong uptick in sales, likely reflecting increased interest in alternative investments amid economic uncertainties. Beauty and health supplement products continue to outperform thanks to rising consumer awareness around health and wellness. On the other hand, fashion and home-related categories such as apparel, furniture, kitchen, dining, and bedding segments show weaker demand. This was partly due to the lack of clear seasonal transitions, which led to a weaker consumer appetite in this area. The promotion calendar was less favorable compared to the prior years, and the discretionary spending remained light. On the customer engagement front, we continue to make meaningful progress. An 11% year-over-year increase in MAU.
We also saw an uptick in purchase frequencies, supported by improved targeting personalization and the seamless shopping journey. Moreover, we have been successful in attracting and retaining male and younger customers who are showing higher engagement and a stronger repeat rate. This shift in customer profile is encouraging as they support a more diversified, healthier long-term cohort base. Now, turning to the EBITDA and profitability. The first quarter EBITDA came in at TWD 1.40 billion compared to TWD 1.47 billion in the same period last year. Let me unpack the drivers of this variant. This primarily reflects our strategic investment in several areas: marketing, technology infrastructures, and new business initiatives. These investments are intentional and necessary, designed to strengthen our platform, expand our addressable market, and ensure we are well-positioned for the long-term growth.
We believe this disciplined approach to investing, despite short-term margin pressures, will yield greater shareholder value in the long term. Net income to parents for the quarter stood at TWD 860 million, composed of company operating profit of TWD 786 million and non-op gains of TWD 16 million. Also, tax credit of TWD 218 million, which we recognized from the Central Distribution Center BOO project. There will be a remaining TWD 19 million in tax credit to be recognized in the following quarters. Turning to the balance sheet, our cash position remained very solid, and our capital positions provide us flexibility to invest in the infrastructure and growth. Regarding CAPEX for the quarter, total TWD 565 million primarily allocated as follows: TWD 121 million for the Central Distribution Center Construction Project, TWD 285 million for the Southern Distribution Center Construction Project, and TWD 92 million for the automated storage equipment procurement.
These investments are crucial to enhance our logistic efficiency, fulfillment speed, and that is all the cornerstone for our long-term competitiveness. In terms of fulfillment and delivery updates, in the late fourth quarter, we launched our Taishan Distribution Center, which is now directly shipping high-frequency items. This helps take some of the pressures off our Northern Distribution Center and improve overall logistic efficiency. It is already making a difference in the delivery experience of our customers. On top of that, with the NDC freed up a bit, we are gaining more warehouse spaces, which helps us optimize both delivery speed and cost. Looking ahead, we plan to continue expanding our in-house transportation fleet, especially in Central and Southern Taiwan. The move will be a key to strengthen our logistic competitive advantage, and we expect it will allow us to expand our one-day delivery services outside the Northern Taipei area.
Last, just a reminder, the board of directors of Momo has approved a proposal to distribute a dividend of TWD 12.30 per share, along with an additional TWD 0.50 cash dividend and TWD 0.50 stock dividend, leading to a total dividend of TWD 13.30 per share. This translates to a payout ratio of 97%. The proposal will be submitted for shareholder approval on May 27. Let's conclude our first quarter result briefing. We are now inviting your questions. We have reserved the phone line for you to dial in should you have any questions in the Q&A session. You are also welcome to send your questions via the chat box on the website page. Operator, we are now ready to take questions.
Thank you, ladies and gentlemen. We will now poll for questions. If you'd like to register for a question, please press star one on your telephone keypad. Thank you once again.
I have one question from Bank of America. The question is, they want to know the near-term and long-term Taiwan e-commerce penetration outlook and what are the drivers behind it.
We still believe in the long-term growth. However, as you all know, recently, we are impacted by a lot of uncertainties originating from the microeconomy. I think until that calms down and consumers resume confidence, we probably will see that slow growth for a while. However, I do not think that is going to impact our long-term view on the e-commerce penetration rate in this market.
Okay. Right now, we are ready to take the first questions from the phone line.
Thank you. Our first question comes from Daniel Chen with UBS. Please go ahead, Daniel. Thank you.
Hi, Jeff and Terrisa. This is Daniel. My first question is on the Q1 gross margin. Other than the favorable product mix and also less sales from high-margin TV business, do you see any other result or factor that led to gross margin year-on-year decline? For example, are you responding to the price competition from your competitor on the household category like the toilet paper and the diaper, as you mentioned?
I think the main reason is from the product mix, particularly for those with the high margins, for example, those luxury goods and some of the durable items. Also, the competition played a role in that as well. It certainly dropped down part of the product margins. Yeah, I think that's probably the main reason you can see the gross profit margin drop in the first quarter. One more point to add is we also tried several new marketing techniques in the first quarter to try to drive our different product sales. That may not be that effective. However, it does have a consequence, which is we may offer some unnecessary discounts in some of the marketing activities.
I see. Also, follow-up on the marketing expense you just mentioned. As you mentioned, the marketing expense increased quite strongly year-on-year in Q1. Is this just in line with our plan in the beginning of the year that we are prioritizing growth over profitability? We spend more on marketing plus the new marketing technique you just mentioned. Could we assume such strong momentum into the rest of the year?
Yes. I remember last time when we had this conference call, we mentioned we would like to drive the GMV growth. As a result, we have been engaging in all the different marketing activities to drive those sales. We have seen some results. However, we also spent more money. Those monies are within our plan, so they are planned spending. However, the environment may not be friendly to us in the fourth quarter. We also made some modifications in terms of how we're going to do it. I think that kind of modification is going to continue through the rest of the year. Once again, I have to emphasize we still want to grow. Growth is still a priority. However, because under this kind of market environment, we need to do it more smartly.
We will see how the market reacts and spend money accordingly.
I see. Just to double-check, under such macro uncertainty, as you elaborate, our strategy for this year is still growth over the margin, right?
We will put the profitability always in mind. We will try to find a good balance there. Growth is important, but that is a long-term goal. Long-term strategy has not changed. Short-term tactic, we might do some modification so that can suit the environment better.
I see. Okay. Thank you, Jeff. Thank you so much. That's all my questions.
Thank you.
Thank you. Once again, ladies and gentlemen, if you'd like to register for questions, please press star one on your telephone keypad. Thank you. Once again, ladies and gentlemen, that is star one for questions. Thank you. Once again, ladies and gentlemen, if you'd like to register for questions, please press star one on your telephone keypad. Thank you.
All right. Thank you, Jeff and everyone, for your participation. Let's conclude our Q&A session. We appreciate your continued support and look forward to speaking with you again next quarter. Stay well and have a good day.
Thank you. Thank you for your participation. This concludes our conference. Goodbye.