Treasure Global - Q3 2024

Transcript

Operator (participant)

Good day, everyone, and welcome to Treasure Global Inc.'s Third Quarter Fiscal Year 2024 Earnings Call. At this time, participants are on a listen-only mode. A question-and-answer session will follow management's remarks. This conference call is being recorded. A replay of today's call will be available on the investor relations section of TGL's website and will remain posted there for the next 30 days. I will now hand the call over to Sue Chuah, Chief Marketing Officer of Treasure Global Inc., for introduction and the reading of the safe harbor statement. Please go ahead. Ladies and gentlemen, please do remain online. The conference is due to resume shortly. Good day, everyone, and welcome to Treasure Global Inc.'s third quarter fiscal year 2024 earnings call. At this time, participants are on a listen-only mode.

A replay of today's call will be available on the investor relations section of TGL's website and will remain posted there for the next 30 days. I will now hand the call over to Sue Chuah, Chief Marketing Officer of Treasure Global Inc., for introductions and the reading of the safe harbor statement. Please go ahead.

Sue Chuah (CMO)

Thank you, Operator. Good morning, everyone, and welcome to Treasure Global's third quarter fiscal year 2024 results conference call. With us today, we have our Chief Executive Officer, Sam Teo. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from Treasure Global's management made within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning future events. Words such as may, should, project, expect, intend, plans, believe, anticipate, hopes, estimate, and variations of such words and similar expressions are intended to identify forward-looking statements.

These statements are subject to numerous conditions, many of which are beyond the control of the company, including those set forth in the risk factors sections of the company's Form 10-K for the year ended June 30th, 2023, and subsequent filings filed with the SEC. Copies of this document are available on the SEC's website at www.sec.gov. Actual results may differ materially from those expressed or implied by such forward-looking statements. The company undertakes no obligation to update these statements for revisions or changes after the date of this call, except as required by law. Now, it is my pleasure to introduce Sam Teo, CEO of TGL. Sam Teo, you may now begin.

Sam Teo (CEO)

Thanks, Sue, and good morning, and thank you, everyone, for joining us today on our third quarter of fiscal 2024 earnings conference call, covering the period ended March 31st, 2024. I will start with the highlights of our third quarter business performance, followed by our financial results. At Treasure Global, we maintain a positive outlook and grow steadily in this ever-changing macro environment. We are proud to say that we have developed a strategy that works in all conditions, allowing us to grow regardless of the situation. Our focus remains on delivering value to our customers and consumers, which ultimately enables us to drive sustainable growth for all our shareholders. Before I begin, I'm happy to announce the achievement of the new ZCITY Premium Store, which we've discussed last quarter. This addition has not only broadened our product portfolio but has also significantly boosted our gross profit margin.

This growth perfectly aligns with our strategy vision and path forward. In this quarter, we have successfully filed an S-3 and initiated an ATM offering, securing an aggregate offering price of up to $2.99 million. This strategy financing effort has provided us with the necessary capital while maintaining flexibility and alignment with our growth strategy. The fund will be put toward driving forward our business initiative, fostering innovation, and ultimately creating more value for our shareholders. We'll dive deeper into our AI initiative, market expansion efforts, and key achievements shortly. Additionally, we are pleased to further solidify our competitive advantage in the blockchain market and open up new avenues for revenue expansion and portfolio growth. Our recent partnership as the exclusive provider of an AI blockchain wallet on Telegram places us at the forefront of innovation in the blockchain sector.

This strategy decision not only expands our portfolio but also reinforces our competitive edge by securing the first right of refusal. Furthermore, it unlocks promising new business opportunities within the blockchain market. Let's now proceed to explore the highlights of our third quarter. In the third quarter of 2024, Treasure Global remains laser-focused on innovation, utilizing artificial intelligence to enhance products and foster better customer connections. Our AI initiative empowers us to anticipate customer needs, strengthen market share, and identify lucrative opportunities in high-profit sectors. Expanding on this AI enhancement success, we ventured into Meta Platform for our live shopping event. Utilizing AI-powered robots equipped with advanced language capabilities, we hosted events in multiple languages, breaking down language barriers and engaging thousands of viewers.

With Malaysia's e-Commerce market projected to reach $20.93 billion by 2029 and Meta Platform boosting millions of active users, our presence on Meta represents a significant opportunity. The move to Meta Live opened up the West market with unparalleled reach and engagement potential. With its extensive user base and robust infrastructure, Meta Platform provides an ideal platform to showcase our products and engage with a global audience. By leveraging Meta Live, we aim to not only drive sales but also enhance brand visibility and customer engagement on a scale previously unseen. Treasure Global and AIO Synergy have joined forces to revolutionize the AI landscape, capitalizing on the booming digital economy of Southeast Asia. With the Southeast Asia AI market expected to grow significantly, at an anticipated annual rate of 17.83% by 2030, our collaboration is strategically positioned for success.

Our strategic alliance highlights our commitment to delivering innovative AI solutions and establishing a state-of-the-art data center dedicated to AI education, catering to the evolving needs of businesses across various industries. By leveraging our collective expertise and resources, we aim to drive transformative changes in the Southeast Asian AI landscape, positioning ourselves as a key player in this dynamic market. We have taken a significant step forward by announcing a strategic partnership to become the exclusive partner for an AI blockchain wallet on Telegram. This move forward further strengthens our competitive edge in the blockchain industry, securing Treasure Global's position as a leader in innovation. With the global crypto wallet market projected to grow significantly, this collaboration positions us for significant expansion. Treasure Global's strong focus on innovation and partnership puts us ahead in the world of the new technology.

We are dedicated to exploring and creating more advanced AI to grow our business. Another exciting development is our recent milestone, which we have secured a $2 million marketing contract with Satria Dunia Sdn. Bhd. The objective is to showcase premium Korean beauty products using ZCITY's advanced AI marketing engine. This strategic partnership marks a significant achievement for us as we expand ZCITY's influence and capability in the beauty sector. By utilizing ZCITY's state-of-the-art AI technology, we are well positioned to increase brand exposure and boost sales, thereby creating a new revenue stream for the company. Moving on, we have got more exciting news about ZCITY. We are talking with the Shanghai Guangxi Chamber of Commerce about running the Malaysia Pavilion. This is a big deal because it is a chance to sell great Malaysian products on huge platforms like Taobao and Douyin.

With China's live shopping market growing fast and over 1.4 billion potential customers, this is an opportunity for us. This move fits perfectly with our goal to make digital shopping better and grow in new markets. As I mentioned earlier, the launch of ZCITY's Premium Store has surpassed expectations since its inception. Leveraging advanced AI tools, the Premium Store not only exceeded sales expectations but also significantly enhanced our user engagement. In just four months, the Premium Store has sold over 6,000 Bill-Saver Bonanza Packs. This notable sales achievement highlights the platform's effectiveness in driving transactions and enhancing gross profit streams. ZCITY has gained valuable insight into users' spending habits and preferences, enabling the Premium Store to offer highly personalized packages tailored to individual user needs and preferences.

As a result, the Premium Store has significantly contributed to our gross profit growth, reflecting its strategy's importance in driving business expansion and profitability for Treasure Global. In addition to the success of the ZCITY Premium Store, we also made strides in the gaming sector by launching an exciting mini-game integrated with our AI Game Creator in ZCITY's 3D World. This mini-game not only enhances the gaming experience for users but also positions us to access the rapidly growing global gaming market, which is projected to reach a revenue of $212 billion by 2026. Through in-game purchases, virtual goods, and AI-driven marketing strategies, ZCITY's 3D World is poised to become a dynamic digital marketplace, capturing a significant share of the booming global gaming industry.

We are proud to share our significant achievement in this quarter, a notable win at the Marketing-Interactive Asia eCommerce Awards 2023, where ZCITY has been honored to have won the Silver Trophy for Best E-Commerce Solution. This recognition highlights our excellence in the fast-changing landscape of online shopping. This achievement demonstrates our firm commitment to innovation and delivering top-notch solutions that cater to the ever-changing needs of our online customers. This quarter, we showcased our dedication to staying ahead of the curve, expanding our reach, and putting our customers first. Moving forward, we are dedicated to driving growth, sizing opportunities, and delivering value to our shareholders. Next, I will now share our financial results for the third quarter of fiscal year 2024. For the third quarter, our gross profit reached $217,000, marking a substantial increase of 47% compared to the same period last year.

This notable improvement is primarily attributable to our ongoing initiatives in optimizing spending and capitalizing on higher profit margin streams. While our total revenue for the quarter was $1.6 million compared to $6.7 million for the second quarter of fiscal year 2024, reflecting a decrease of approximately 76%, it is important to view this figure in the context of our strategy shift towards higher-margin business channels and long-term value creation. We are pleased to announce a substantial decrease in our net losses, approximately $1.7 million compared to approximately $2.9 million in the third quarter of fiscal year 2023. This strategic positive shift was primarily driven by our focus on optimizing cost management, including reductions in selling and administrative expenses. Our disciplined approach to cost management and operational efficiency has enabled us to achieve significant improvements in our bottom line compared to the previous year, despite the challenging market conditions.

As of March 31st, 2024, our cash balance was approximately $0.3 million compared to a cash balance of approximately $4.1 million as of March 31st, 2023. This position is expected to strengthen following future sales of ATM shares. ZCITY had over 2.69 million registered users and over 2,027 registered merchants as of March 31st, 2024. Quarterly active users for the quarter ending March 31st, 2024, were 41,455. A total of 0.19 million transactions were transacted by our registered users in the quarter ending March 31st, 2024. Despite the decline in quarterly active users and paid users compared to the previous quarter, we remain confident in the long-term growth potential of ZCITY, especially as we continue to enhance its features and offerings to meet the evolving needs of our users and merchants.

In summary, our financial results for the third quarter demonstrate significant improvements in gross profit, reductions in net losses, and strengthened financial positions despite the decrease in overall revenue. We remain committed to executing our strategic initiatives and delivering value to our shareholders in the quarter ahead. We are also happy to say that we are back in good standing with Nasdaq. This achievement reflects our commitment to upholding the highest standards of corporate governance and transparency. By meeting Nasdaq's maintenance requirements for listing, we demonstrate our dedication to operating in accordance with regulatory standards. This positions us to manage and grow our business more productively, and we also encourage investor interest, improving the marketability of our common stock to an even broader range of investors. Looking forward, I have a positive outlook on the developments showcased in our Quarter three fiscal year 2024 highlights.

Our unwavering focus on innovation and market expansion has led to significant progress. In recent months, we have strategically taken intentional steps to reallocate resources away from lower-margin offerings like our E-voucher products, despite the anticipated short-term impact on results. We recognize this move as essential for long-term gains. This strategic move aims to enhance our working capital and reorient our strategic branding towards reducing dependency on such offerings. By doing so, we can channel our resources into the development of high-margin solutions, empowering us to capture higher margins and drive sustained growth. As we navigate through fiscal year 2024, our focus remains squarely on innovation and the development of products and services that promise more profitable growth. With an unwavering dedication to excellence and a keen eye on emerging trends, we are well positioned to capitalize on the diverse opportunities that lie ahead.

Thank you again to everyone for joining us on today's call and for your continued support. This concludes our prepared remarks. I will now ask the operator to close the line. Thank you, and have a great day.

Operator (participant)

Thank you for joining today. I will now close the lines.