Good afternoon, everyone. Welcome to momo Fourth Quarter 2025 Earning Conference. I'm Liu, IR manager at momo. Joining me today is our President, Jeff, who will later walk you through the key operational highlight for the year. Today's agenda is as follows. First, Jeff will review our overall operating performance and key development of 2025 and share our view on 2026. I will present our fourth quarter financial and business result. Finally, we will open the floor for a Q&A session, during which Jeff will address your questions. The financial statement, earning presentation, and operating report used in today's conference have all been published on our official website and are available for download. Before we begin, I would like to remind everyone that today's presentation may contain forward-looking statement. This statement involve risk and uncertainties, actual result may differ materially from expectations.
Please refer to the disclaimer section of the presentation for further details. With that, I will now turn the call over to Jeff.
Hello, good afternoon, everyone. Welcome to momo's earnings conference. I'm Jeff Ku, President of momo. 2025 was a challenging year for momo. The retail and the EC market were soft. Besides that, the new entrant deployed an aggressive pricing strategy to attack the market. However, our total 1P plus 3P GMV still remained resilient, and our annual active user increased year on year by 3%. Our 2025 full year revenue recorded the first negative growth in recent years due to TV business downtrend, some of the merchants shifted from 1P to 3P, and the competition. However, thanks to our prudent business practices and the continuous improvement in efficiency, our EPS was at TWD 11.29.
Regarding to industry outlook, although Taiwan's retail market and the EC market were slow in the past few years, we are confident that Taiwan EC market penetration rate will reach global and the regional level in the long term. On a global basis, e-commerce penetration has reached approximately 25%. Taiwan is still at around 14%. The leading player in its market normally had a commanding market share. In Taiwan market, there is no clear winner yet, leaving substantial room for leading platform to gain share. With relatively low EC market penetration and a diverse and a sophisticated consumer base, we believe that sustained market share gain will not be driven simply by aggressive short-term pricing strategies. Instead, long-term market leadership will favor platforms with durable structural advantages.
These advantages include solid partnership with brand principals, efficient and well-covered logistic services, value-added membership ecosystem, and a scalable secure technology infrastructure. We believe these capabilities can translate into sustained and long-term market share growth. Looking forward, growth is our foremost priority in this year. In 2026, our focus will be firmly centered on GMV growth and market share expansion. Building on the progress we have made in those new business initiatives and the logistic infrastructure fundamentals, we will proactively unlock those advantage to drive GMV growth and further extend our leadership position. Our strategy can be viewed across three key dimensions. First, on the business strategy, we are continue pushing for a 1P plus 3P strategy to make them complementary to each other and offer a well-integrated one-stop shopping experience to our customers.
Our 1P business will further deepen partnership with brand principals, concentrate on core categories, and continue to strengthen supply chain stability and the differentiated products. Meanwhile, 3P will continue to complement long-tail assortment and the product depths, enhancing the overall completeness of product selections. Our objective is not simply to expand the SKU count, but to optimize the merchandise mix. The combined 1P plus 3P business model will drive the GMV growth and is supported by our momo Ads to monetize traffic and improve marketing efficiency. Although TV shopping viewership is on a downward trend, our TV shopping business will continue to optimize its operating model with a clear focus on efficiency and differentiation, and with the goal of serving this niche market and making a positive contribution to overall business. Second, technology and data capabilities.
With the increasing importance of data and AI technology, we will write down our existing tech platform and enhance it with latest AI technology to offer the best customer experience. We have followed closely with the latest development of AI, and we'll adopt it according to its maturity. For instance, our customer service chatbot has been upgraded to AI-based. It has shown great improvements. In the meantime, we have always set security as the highest priority in our technology investments. In wake of the increasing threats from online scam and the data breaches, it is imperative to secure systems, and more importantly, to safeguard our data. Third, on the logistic capability. The other key advantage of momo is our logistic infrastructure.
We currently have the largest e-commerce warehouse network in Taiwan, which consists of two fully automated distribution center in south and north of Taiwan, plus 29 supporting warehouses to establish an integrated logistics service network covering whole Taiwan. We have two more distribution center under construction, and they will be in service in 2027 and 2029 respectively. On delivery side, our own fleet transport more than 40% of our shipment and expects it to reach more than 50% this year. Beyond capacity, we continue to invest in automation and the information technology to maintain our leadership in both fast delivery and high customer satisfaction. In summary, we will actively pursue GMV growth with 1P plus 3P hybrid model supported by the best logistics services. Our goal is to maintain the customer most trusted easy brand in Taiwan.
I will now hand over to Liu.
I would like to update you on the progress of our 3P business and advertising business. Starting with our 3P business, we continue to see the solid and steady growth momentum. As of December 31, 2025, the number of curated 3P merchants reached about 9,000 with listed SKU expanding to over 3.4 million. For full year 2025, 3PGMV has triple-digit growth. For a platform perspective, the 3P business has significantly expanded both the depth and breadth of our product assortment, while also bringing in more diversified traffic. This has been particularly impactful among younger customer segment, contributing to ongoing improvement in our overall user mix.
Turning to our advertising business, our app system offer an integrated on-site and off-site advertising solution, and is designed to enable brand and merchant to tailor their advertisement to meet its marketing objective, such as awareness or conversion rate. momo Ads has proved to delivering a attractive return on ad spending. Overall, the 3P business continue to expand product selection, attracts broader customer segment, and offer one-stop shopping experience. At the same time, the advertising business further enhance the monetization efficiency and generate new revenue stream. Together, these two business have become key growth engines supporting momo GMV growth strategy. We continue to enhance fulfillment efficiency through a well-covered logistic network and ongoing investment in automation while building the infrastructure needed to support future growth.
Through a nationwide warehouse and distribution network consisting of NDC, SDC, and regional warehouses, we deliver the best logistics experience to our customer by enabling fast and highly integrated warehousing and delivery service. Our central DC is expected to commence operations in 2027, followed by the Hukuo DC in 2029. Once completed, it will be integrated with our northern and southern DC, further enhancing overall capacity and delivery flexibility. We continue expanding in-house logistics capabilities with the share of parcel handled by our own fleet, increasing in about 40% in 2025, and expected to exceed 50% this year. Our logistics-related investment are centered on efficiency optimization and capacity expansions, establishing a competitive fulfillment service. I would like to walk you through the momo Coins ecosystem. momo Coins is not simply a reward or cashback tool.
It also serve as hub in how we link up and leverage our group resource. Its role goes beyond promotional subsidies. It function as a value circulation mechanism. It's helped connect groups, financial service, telecommunications, and retail business to offer customer a more valuable momo Coins ecosystem. On the financial service side, spending made through our momo co-branded credit card account for about 30% of total sales. More importantly, cardholder demonstrate meaningfully higher purchase frequency and average ticket size, creating a positive loop of card spending, rewards, and repeat purchase, while significantly increasingly overall member value. For a telecommunications perspective, momo Coins has been integrated across multiple Taiwan Mobile application scenario, spanning connectivity service, digital content, and everyday lifestyle consumptions. This facilitate member across selling and increase customer loyalty.
At a broader level, we will actively enlarge the ecosystem by adding more third-party partners to make it more vibrant and generating value to both participating partner and customer. Turning to our full year 2025 operating performance, total revenue reached TWD 108.67 billion, despite an increasingly competitive market environment. Our take rate remained stable at 13.6%, supported by continued contribution from our third-party marketplace business, as well as advertising revenue. Operating profit total TWD 3.35 billion, and earning per share come in at TWD 11.29. Turning to our balance sheet, our financial position remained solid throughout 2025.
As of December 31, our total cash and cash equivalents stood at TWD 2.24 billion, thanks to the investment in the Central DC and the distribution of cash dividends, reflecting a healthy level of liquidity and financial flexibility. This balance sheet strength allow us to support the long term and growth initiative, capital investment, and shareholder interest. On this slide, we present the result of our 2025 ESG maturity issue. For the second consecutive years, personal data and information security has been identified as our most critical topic. In response, our action focus, structure, and systematic approach, we continue to enhance API security monitoring and anomaly detections and data access controls, while strengthening internal control through comprehensive system and data flow review.
At the government level, cybersecurity and data privacy are embedded into our annual groups, monitoring process, and internal training program. As we come to the final part of today's presentation, I want to emphasize that we have put a lot of effort in environment-friendly initiative and have received recognition from government and other institution. The introduction of circular packaging is concrete example of how we are translating the principle of the circular economy into real-life experience. Through our partnership with PackAge+ and supported by a nationwide network of more than 4,700 return location, we have established a system where collections and reuse are fully integrated into closed-loop mechanism. Equally important, this circular's model is designed without disrupt the existing customer journey.
We have embedded sustainability into the shopping experience in a way that feels natural, ensuring that environmental responsibility choice do not come at the expense of user experience or conversion efficiencies. For momo, ESG is not an add-on. It is a social responsibility that is deeply integrated with our daily operation. With that, we conclude our fourth quarter presentation. Would now like to open the floor for the questions. If you have any questions, please send them directly to the momo Jeff account. Thank you. We receive questions. This question is about AI. The question is, in a scenario where AI agent may become the primary shopping entry point for customer. How does the company ensure that platform traffics and advertising monetization are not disintermediated? How does the company sustain long-term competitive advantage and profitability?
Right. I think AI is a very popular topic. Yeah. We do see that AI has the potential to change how consumer access information and make purchase decisions, including how traffic is generated and how user interact with the platforms. That said, when we step back and look at the fundamental of e-commerce or even a procurement, the core value of a transaction still comes from supply chain integration, merchandise sourcing, pricing, and reliable high-quality fulfillment services. As technology continue to evolve, I think the role of the platform, not only those popular AI chatbot, but also our platform, is also expanding. We operate with the first-party transaction data, a full product assortment, and the real-time inventory and the pricing information. These are essential capability for driving a good product recommendation and the purchase decision.
In that sense, AI is more an efficiency and experience enhancer, while the platform itself continue to sit at the center of transaction and fulfillment. I would envision in the future, we will still have the more general super AI agent, if you like, just like currently the chatbot offered by Google, by Anthropic, by OpenAI. There are also specialized agent offered by each individual different application, for example, e-commerce. It's just like our current app. Customer have the choice to go direct to the specific agent owned by e-commerce platform or go to a generic agent to ask for the question, just like they go to the search engine, ask for some suggestion and the finding. I don't see that as so, that much of the change caused by AI per se.
However, AI does change how the customer interact with the technology and both the chatbot and the existing player were all adapting equivalent technology to make the AI agent available to our customers. That's my answer for that.
Thank you, Jeff. We also have the next question, and the next question is about our new business. The question is: Could management provide more concrete guidance on the development of new business this year, particularly 3P and advertising, including growth target, break-even timing, and contribution to overall profitability?
Well, okay. The past two years were investment year for our new initiative. That including our 3P advertising and the live streaming. During that period, we focus on building the fundamentals, including onboarding merchants, add more product selections, and enhance our system functionality, and build up our advertising system to monetize the traffic. This effort laid the groundwork for our core 3P platform and our advertising businesses. We have seen 3P gradually gaining traction and expect its GMV to grow accordingly. momo Ads has demonstrated its effectiveness in terms of higher ROAS, and we will continue to expand its application scenarios. We expect those new initiative, including 3P advertising and live streaming, to be profitable at overall level this year.
Thank you, Jeff. Okay. Our next question is: How does management view the ongoing pricing competition this year? Do you see it as a temporary or becoming structural? How do you balance growth margins and market share under such condition?
Well, I think the market is inherently dynamic, and it will always remain competitive. Promotional activities and price competition are constant features of the market and are unlikely to disappear. However, I don't see a destructive pricing competition where lost. As most of the players are on a certain business scale, the competition will elevate to the next level beyond just pricing. Our core objective this year is to continue strengthening and expanding our market shares through combined 1P and 3P GMV growth. As we pursue the market share expansion across different product categories, certain category may experience competition and, as a result, pressure on the margins. However, we manage this through discipline and the balance of trade-off between sales and the margin, and continuously optimize the return on overall investment.
I think based on our past, track record, we have demonstrated we have the ability to balance our growth and profitability in a way to achieve our objective.
Okay. Thank you, Jeff. Okay, due to a time constraint, that conclude our fourth quarter earnings call. If you have any question, please reach out our IR team. Thank you all, and see you next quarter. Thank you.