Good afternoon. Thank you for attending our second quarter earnings call. I will begin with an overview of the industry environment. In the second quarter, total retail sales in Taiwan reached NT$1.17 trillion, representing a year-over-year decline of 1.6%. This was the weakest performance since the third quarter of 2021, and it indicated a weak market and concerns over the economic environment. Despite the challenging situation and the intensifying competition, we remained focused on targeted marketing strategies to defend our market share and deepen user engagement. While promotional efforts brought some margin pressure, we were able to offset most of it through structural and efficiency improvements, which kept our headcount and the gross margin from operations relatively stable compared with last year. Our operations have remained resilient in the face of these macroeconomic headwinds.
Our 3P business has continued to grow steadily, extending our long-tail product offerings, contributing to overall GMV growth, and attracting young segments. User metrics also remain solid, with active purchasing customers increasing by 5.1% year over year. These numbers reflect stronger customer relationships in both engagement and stickiness. Besides gaining young segments, our existing user base, particularly with age 30 and above, shows high engagement and consistent purchasing behavior. In terms of product categories, we saw steady momentum in 3C, pets, cosmetics, and travel. However, the trading down behavior and competition had some impact on our sales momentum in home essentials and FMCG. Moving to financials, our consolidated revenue for the second quarter was NT$26.03 billion, bringing first half revenue to NT$52.4 billion. Throughout the quarter, we continued to invest in technology, marketing, and new growth engines to strengthen our foundation and the long-term competitiveness.
Operating income came in at NT$773.73 million, and the net profit attributable to owners of the company was NT$652 million, or NT$2.58 per share, thanks to the disciplined execution and the efficiency in all aspects of the operation. Our balance sheet remained healthy, with NT$5.25 billion in cash and equivalents, offering a strong cushion and enabling our flexibility. Looking ahead, driving GMV growth remains our long-term objective. Our actions will be adapted to meet the dynamics of the market and the competition. Our strategy will be extended to capture all opportunities, organically and non-organically. We will stay focused on disciplined operations practice and be efficient as our 3P business continues to scale and helping our GMV growth, and our retail media network keeps expanding its business. We have successfully diversified our business beyond our original 1P business.
We will keep investing in those new business areas with focused execution and disciplined resource allocation. We believe Momo is well positioned to navigate market uncertainty and manage the competition. Now I will hand over to Lynn.
Thank you, Jeff. I will now walk you through our consolidated financial and operational performance for this quarter. Despite continued uncertainty in the retail market and relatively soft consumer sentiment, active users grew 5.1% year over year. This helped offset some of the pressure and supported stable GMV growth. In the second quarter of 2025, Momo delivered solid operational results. Revenue reached NT$26 billion, and operating income was NT$773 million. Net profit attributable to owners of the company came in at NT$652 million, translating to earnings per share of NT$2.58. For the first half of 2025, total revenue reached NT$52.4 billion. Despite the macroeconomic headwind in the retail sector, GMV growth remained steady, supported by our marketing campaigns and gaining good traction in Momo Shop Plus.
Operating income for the first half was NT$1.56 billion, impacted by intensified promotional discounts driven by market competition, increased costs in supporting our expanding 3P business, and continued investing in logistics and technology. Net profit attributable to owners of the company totaled NT$1.51 billion, with earnings per share of NT$5.99. Now, let us take a look at our balance sheet as of June 30, 2025. Total assets reached NT$28.8 billion, with the majority allocated to cash and cash equivalents, as well as property, plants, and equipment. The increase in fixed assets mainly came from continued investing in Southern Distribution Center and ongoing construction at our Central Distribution Center. Total liabilities stood at NT$20.5 billion, reflecting lower warehouse lease payments.
Shareholder equity was NT$8.3 billion, with a decrease primarily driven by valuation losses under other comprehensive income, mainly related to fair value adjustments on our investing in Wacom Medicine Company Ltd and Lifebank Taiwan Ltd. Next, I would like to highlight our cash flow performance in the first half of the year. Net cash inflow from operating activity totaled NT$1.76 billion. Capital expenditure reached NT$1.17 billion, which included NT$140 million for Southern Distribution Center, NT$740 million for construction at the Central Distribution Center, NT$92 million for warehouse equipment purchase, and about NT$100 million for computer hardware and software. Let us now take a look at how we are applying AI and big data to drive smarter logistics operations. At Momo, we continue to leverage technology to enhance decision-making across inbound allocation, warehouse selection, and delivery routing.
Our system dynamically adjusts inventory and replenishment plans based on regional demand and real-time stock levels. This helps reduce cross-region shipments and improves overall supply chain efficiency. Through predictable warehouse assignment, we are able to anticipate where orders are likely to come from and where products should be sorted. As a result, about 16% of our orders are now fulfilled directly from the single warehouse at the time of order placement. It maintains the need for inter-warehouse transfer and improves both sorting speed and delivery efficiency. On the delivery side, we have a road optimization model that considers order volume and real-time traffic data. This optimized route is pushed directly to the driver's device, allowing for smarter zone planning and faster delivery. To boost that mileage agility, we have also introduced an electric tricycle. This vehicle offers better load efficiency and enhances safety, especially in dense urban areas.
Under the smart logistics framework, overall delivery efficiency improved by over 10% year over year, while the average energy cost per parcel dropped by around 42%. This improvement not only enhances our cost structure and fulfillment capability but also helps reduce transportation-related emissions, supporting our path towards scalable and sustainable growth. Turning to our new growth driver, Momo Shop Plus continues to deliver strong momentum. Repeat order volume grew by 174% year over year. The number of listed products has now exceeded 2.6 million, and we have onboarded over 7,000 curated machine partners. As our supply base and category coverage continue to expand, we are seeing enriched product offerings and stronger user engagement across this platform. Now, looking at Momo's retail media network, around 20% of our brand partners have started using the service to boost brand visibility and drive conversions.
While the initiative is still in its early stage, we remain focused on enhancing the user experience and closely monitoring performance across different verticals. This insight will help shape our future product rollout and optimizations. Since it launched last year, Momo Plus has been positioned to serve highly active users, identified as VVIP. This group consistently shows high-value behaviors on a year-over-year basis. Momo Plus members' average revenue per user increased by 27%, while net purchase value grew by 36%, highlighting the strong monetization potential of this segment. In addition to high-value user engagement through Momo Plus, we have also made meaningful progress in integrating sustainability into our membership strategy. Since 2023, Momo has launched the GreenLife membership program, designed to foster a more sustainable e-commerce ecosystem.
The program is structured around four core benefits: reusable packaging, consolidated delivery, a carbon dashboard, and green product incentives, enabling consumers to engage with sustainability through their everyday shopping behavior. As of the end of 2024, GreenLife membership has surpassed 700,000 members, contributing to an estimated 238 metric tons of carbon reduction. It maintains over 740,000 cardboard boxes and achieves a 21.4% return rate for reusable bags, more than doubling the rate of service amongst non-members. To further encourage participation, we introduced a GreenPoint system. GreenLife members can earn points by choosing consolidated shipping, store pickup, returning reusable bags, or purchasing green labeled products. These points can then be redeemed for exclusive member benefits, charitable donations, or biodiversity conservation efforts, turning sustainable choices into tangible and rewarding actions. From an operational perspective, GreenLife members also help improve logistics efficiency.
In particular, the consolidated delivery model reduces shipping frequency and packaging waste, lowering emissions while generating real cost savings, creating alignment between ESG impact and business value. Demographically, these members tend to value both quality of life and environmental responsibility. They are more willing to delay shipment for lower carbon options, demonstrate rational and long-term consumption behaviors, and show a higher level of brand affinity and platform engagement. This trait makes them a strong candidate to become part of Momo's long-term core user base. Overall, the GreenLife membership program illustrates how ESG initiatives can be deeply integrated into user strategies, positioning our platform uniquely, reinforcing franchise, and contributing to long-term operational efficiency. Momo remains committed to deepening its efforts in sustainability. We actively align with the United Nations Sustainable Development Goals and continue to embed ESG principles into our core operations.
This effort has been recognized by the international capital market, reinforcing our long-term direction. Going forward, we will continue to strengthen our sustainability-driven competitiveness and create long-term value for our shareholders and stakeholders. Thank you. With that, we would like to open the floor for questions. You may dial in via the phone line or submit your questions through the chatbot on the webcast page. We look forward to your participation. Thank you.
Thank you. Ladies and gentlemen, we will now poll for our questions. If you would like to register for a question, please press star one on your telephone. Thank you. Once again, that is star one to register for a question. Thank you.
Okay. We have two questions lined up, so let us start with this. Jeff, can we have some updates for the competition landscape?
Right. Taiwan's e-commerce market remains highly competitive, with players actively investing in marketing and frequently use prices as a competitive tool. That's particularly happening during the promotion period, and some of the items even use steady practice. However, it's not only in the negative side of those intensified competitions. We also see the competition can enlarge the overall e-commerce market. As the leading 1P e-commerce player in this market, we just need to react smartly while we have to respond to their pricing attacks and, in the meantime, find a way to grow our existing business and protect our profitability. I think we have proven we have done it pretty well during the second quarter, and we will continue to do so.
We will see this competition will last for some time, and when it reaches to some state, everyone reaches a certain size, and those pricing strategies will not be able to last for long. That's my take on the current competitive landscape in Taiwan.
Okay. Thank you, Jeff. The second question is, how do you grow market shares and what is the company views on the online penetration rate in Taiwan?
Yes. Taiwan's EC penetration rate is still low. We still believe it's going to catch up sometime. However, at this time, we are facing a lot of uncertainties, particularly from the macro environment. We are also facing consumer spending reallocating to traveling, and the consumer spending overseas has grown continuously. Those are all negative impacts in terms of the market penetration rate. However, as I just said, because the competition intensifies, I think there are a lot of resources actually pooling into this market, and that will enlarge the overall e-commerce penetration in the long term. As far as Momo is concerned, we have been leading in the 1P area. However, we can see we still have a lot of potential in 3P, and it has proven we have achieved good growth on the 3P in terms of the GMV.
Overall, although our revenue in the second quarter is negative compared to last year, our overall GMV still grows. I will say the EC market in Taiwan will continue to grow. Although it may not be as fast as we would like to be at this time of the year, in the longer run, we still think it will catch up with the rest of the country in this region.
Okay, thank you, Jeff.
Right. There's a question asking whether we have any AI application used in the company. Yes, we do. As I said previously, we have invested a lot in the new business as well as in technology. We have introduced the AI model and helped us to improve on our recommendation and search engine and a few other areas in logistics and warehousing. We do have those in place and will continue to make it better. Another question regarding short-term strategy. Let me see. Right. There's a question asking, is Momo's short-term strategy to compete with rivals like Coupang? I think we do feel the competition, particularly on the pricing side, and they do offer very attractive pricing to gain customers. However, we do find a way to manage that so that we will not engage in direct price competition with our competitors.
However, we still find a way to retain our customers so we don't lose our customers. As we said previously, our active purchasing customers still grow year on year by 5.1% if I remember correctly. Our strategy is we will try to avoid the price war and try to grow our business in other new areas, particularly in 3P and the retail media network, and we're also looking at other opportunities to extend our business horizontally. So far, I haven't had anything concrete so that I can report to you, but if that's when this comes, I think you will hear from us.
Okay, that is the last question from the list.
Any questions from the audience?
Once again, that is star one to register for a question. Thank you. Excuse me, sir. There's no question at this point in time. Thank you.
Right. It's a question asking the size of the 3P and the retail media network revenue. So far, we are not ready to disclose those numbers yet. The growth rates are very good. Actually, the numbers are still small compared to our existing 1P business. Because the growth rate is good, we would like to run that momentum to make it bigger in the coming times.
Okay, no more questions. Let us end the meeting here.
Okay. Thank you very much for attending today's earnings call, and we'll talk to you next time.
Yes. Thank you for your time joining us today and for your questions. We appreciate your interest in Momo, and we look forward to talking with you again next quarter. Thank you.