Treasure Global Inc (TGL) 2023 Q4 法說會逐字稿

Good day, everyone, and welcome to Global Treasure Inc.'s Fourth Quarter and Fiscal Year 2023 Conference Call. (Operator Instructions). 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 conference over to Sophia Bashford, Senior Account Director, Investor Relations for KCSA for introductions and the reading of the safe harbor statement. Please go ahead.

Good morning, everyone, and welcome to Treasure Global's Fourth Quarter and Fiscal Year 2023 Results Conference Call. With us on today's call are Sam Teo, Chief Executive Officer; Michael Chan, Chief Financial Officer; and Jeremy Roberts, Independent Director. Before we begin, I would like to remind you that today's call contains certain forward-looking statements from our management made within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities and Exchange Act of 1934 as amended concerning future events. Words such as may, should, project, expect, intends, plans, believes, anticipates, hopes, estimates 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 section of the company's Form 10-K for the year ended June 30, 2022, 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, please go ahead.

Thanks, Sophia, and thank you, everyone, for joining us today on our fourth quarter and fiscal year 2023 Earnings Conference Call for the period ended June 30, 2023.

I'm happy to be here with to provide an update on our business. Firstly, I will reiterate Treasure Global and our main growth driver followed by a review of specific highlights from the fourth quarter and subsequent to the quarter end. I will then repeat our vision for growth and how we have (inaudible) to achieve this. Our Chief Financial Officer, Michael Chan, will then discuss the financial highlights for our fourth quarter and fiscal year financial results.

Following that, we will be happy to answer your question. Treasure Global or TGL is a Malaysian solution -- big innovative technology platform. We have a strong track record of developing cutting-edge solutions for our customer base. And through our proprietary technology platform, we developed 2 primary technology solutions, ZCITY and TAZTE. They are providing online e-commerce with offline physical retailers. Given our experience and success within the food and beverage industry, we established a [third] growth driver to this year as a food and beverage master franchisor, which we launched as fully. We believe opportunity to leverage our platform to reach a more extensive consumer base and are able to introduce new products and innovation, which we expect to track our growth in the year ahead.

Before discussing the various new growth opportunity that we are now advancing, I would like (inaudible) the advancement that we made with ZCITY and TAZTE in fiscal 2023 and in the fourth quarter, which has expanded our market footprint and help grow our reach to new markets and customer segments.

Our first proprietary product, the ZCITY app, is a digital ecosystem that simplifies lifestyle [mixed] with its instant rebate and asset cashback program. ZCITY serve both consumers and merchants to maximize value creation and enhance the shopping experience. To date, we have been highly successful in recruiting a large and growing number of units, gaining more than 2.6 million registered users and over 2,000 merchants. We have achieved this growth through innovative enhancement and strategic partnership. In the fourth quarter, we integrated AI technology into our ZCITY app with a user-friendly chatbot powered by our data analysis engine and ChatGPT, allowing us to offer consumers a more personalized and targeted reward experience our [Nextgen].

But on the light chatbot assistant, which we have named, Jojo, went live in August for ZCITY users and is serving as a key market differentiator positioning the Treasure Global as a leader in the AI-driven e-commerce space. Jojo used AI and deep learning to track user personal preferences to recommend idea promotion and products for them. The asset functionality is expected to enhance user retention and attract new customers to drive revenue growth as well as spending pattern. We secured a number of partnerships during the fourth quarter, which continues to be key to growth strategy.

First, Treasure Global secured an exclusive partnership with enogy, health and wellness brand to expand the range of products available on e-commerce marketplace, Zstore, which is housed within the ZCITY app. This partnership opened a new market, targeting the large and growing health and wellness industry. The new revenue stream for enogy and other [affiliate] partner products sold on the ZCITY app is contributing to Treasure Global revenue growth, margin expansion and (inaudible) as we continue to expansion through (inaudible) in July. Treasure Global collaborate with the Malaysian Ministry of Domestic Trade and Cost of Living for the launch of the Package Rahmah program, which offer various financial saving initiatives reducing the cost of living for lower-income group, including university students.

As part of this ZCITY offered a comprehensive package of living essential e-voucher on the app for items such as petrol, food and bills. The initiative showcased ZCITY cutting-edge digital ecosystem and (inaudible) so supporting this important social program in September.

We collaborated with the Borderland Music Festival to provide the first cashless and ticketing platform-powered music festival in Malaysia, powered by the ZCITY app. ZCITY gained significant exposure during the event ticketing solution as well as penetrating the new market of Sarawak. Treasure Global also charged fees for each ticket so providing a new revenue generation opportunity for the company.

Moving now to TAZTE, our second proprietary solution, which we were proud to launch during fiscal. TAZTE is a transformational digital food and beverage management system, providing merchants with a one-stop management and automated solution to digitalize their businesses. TAZTE allows food and beverage merchant to streamline their operations, improving operation efficiency and saving while adjusted revenue stream are historically low margin. TAZTE offer an opportunity to generate higher gross margin for Treasure Global through increasing user engagement and stickiness. TAZTE is a product that merchants have come to really on for their business needs to start using TAZTE. TAZTE currently offer digital life processes, including e-menu, ordering, e-payment, transaction recording with online payment or QR digital payment technology.

TAZTE smart food and beverage system also provide with the wireless Q system proven to reduce staff labor and will offer a private [domain] of delivery services to assess multiple dedicated delivery partner. We are now excited to announce that we are currently developing TAZTE 2.0, which is expected to be launched within the next month. This upgrade is (inaudible) functionality on both the merchant and customer side. The additional functionality will provide a complete solution offering, including merchant supply chain management and upstream purchasing, which we believe will significantly attract merchants to the platform. It will also provide friendly interface for customer and merchant in a larger console version.

Since its launch, TAZTE has received positive feedback from users as well as very growing the number of merchants and users. For the market (inaudible) suggests the merchant who have adopted TAZTE in transaction and faster value as well as an increase in user stickiness with customers returning more often. Treasure Global has been focused on expanding TAZTE throughout Malaysia and also to new markets. In July, Treasure Global signed [spending] agreement with the Malaysia retain chain association for TAZTE to become the exclusive partners as the recommended digital food and beverage management solution to its member in Malaysia.

Now TAZTE is the MRCA preferred food and beverage system and is recommended to its member to subscribe as TAZTE merchant. The MRCA has over (inaudible) more than 40,000 outlets. Another key partnership, which has helped drive the growth of Treasure Global network (inaudible) and food and beverage provider in our partnership with Boost Credit, a leading regional full-spectrum fintech player. We signed a memorandum of understanding with Boost to leverage their digital financing solution, which include working capital financing, invoice financing and supply chain financing to further strengthen the TAZTE program.

As we expanded further into the food and beverage industry through development of TAZTE, we identified a significant opportunity, which now from the growth driver for Treasure Global. We made a strategic decision to become a master franchisor in Southeast Asia for popular restaurant chains, while also recruiting them to our TAZTE platform. Under the subsidiary named Foodlink, that Treasure Global had established to house, food and beverage master franchisor activity. We will manage our brand and related intellectual property through lease ownership on joint venture agreement with brands that we secured partnership with. We will also provide food and beverage consulting, including market and product optimization, as well as supply chain monetization. By executing Treasure Global and to become the largest food and beverage chain without only earning physical brick and [mortar outlets].

This unique business model allow Treasure Global to establish synergy with our technology solution, depending our position in the food and beverage industry. Not only can we strategically grow our TAZTE user base as we adopt it into new restaurant. Additionally, we are securing a new revenue stream for monthly licensing fee and start-up fee.

In addition, we believe this strategy will help us to expand the use of our innovative solution more rapidly as well as to capture data on vital component of supply chain to better understand improve and innovate our current solution and future solutions. We have already made progress in our execution signing licensing agreement (inaudible) Asia brand.

In May, we signed a licensing agreement with Morganfield, a restaurant chain specializing in Comfort Food and American Star Barbecue. The agreement, granted Treasure Global an exclusive worldwide license to grant sub-licensees to use Morganfield checkmark for the restaurant business. Morganfield will also adopt TAZTE in the ninth franchisee in Malaysia, China and Singapore, accelerating the rollout of TAZTE across the region. Not only we are placed to be adopted into their existing nine franchisees, have the opportunity to grant sublicense to third party to open additional Morganfield restaurant in the region that we also adopt TAZTE.

Most recently, we secured a license agreement with fast-growing Malaysian food and beverage brand Abe Yus granting Treasure Global, the exclusive sub-licensees to third party to use this trademarks under the agreement. Treasure Global [applies] to grant sub-licensee to any third party to operate additional Abe Yus businesses in Malaysia. As the master franchisor, Treasure Global will manage brand and raw material supply. In addition, all the Abe Yus food and beverage outlets will be optically to adopt pace across all their businesses.

Again, Treasure Global will get additional revenue stream from monthly licensing fees, (inaudible) fees for new location management. Abe Yus food and beverage group of businesses, including the high-selling Kari Puffs from grab-and-go food carts as well as the Abe Yus Warung street food kiosk. Abe Yus cafe and restaurant in the Abe Yus mark B2C online e-commerce service. The chain currently has 12 outlets operating across Malaysia, we planned to open 35 outlets by the end of 2023 and 300 outlets to be opened over the next 5 years in the country.

In addition, Abe Yus brand (inaudible) Southeast Asian market in the future. Clearly, Treasure Global has significant opportunities for (inaudible) fully and we are focused on increasing gross margin from the ongoing development of each of this business in China. We'll talk about our significant market opportunity, both in Malaysia specifically and more broadly in Southeast Asia, particularly Indonesia. Our domestic market of Malaysia has a growing population and solid near-term economic growth outlook. Malaysia recorded a strong post-pandemic recovery in 2022. And according to the IMF, Malaysia GDP growth is expected to maintain an average annual rate of 4.5% for the next 5 years, including 2023. It's the [strong] economy including a track record of fiscal prudence and credible monetary policy framework have contributed to the stabilized macro environment.

Importantly, Malaysia has a very high rate of digital connectivity. We have a population of (inaudible) Asia of which 94% are internet users. Looking at our registered user, we have only penetrated 7.3% of our addressable market domestically for ZCITY, which is makeup of digitally connected consumer for TAZTE. In the SMB industry in Malaysia, there were more than 220,000 small to medium food and beverage business owner in Malaysia in the year 2021, and the market has been growing at an annual rate of 5.1% since 2015. We are confident that TAZTE (inaudible) automated solutions for the sector. The expansion opportunity, which include entry into other Southeast Asian market, which has much larger population at similar demographic as significant.

In our (inaudible) we're planning to tap into our neighboring countries such as Indonesia, (inaudible), Vietnam and Japan for regional expansion.

As we have already announced, we are targeting Indonesia first, which has 10 times the population of Malaysia, but similar demographic and language to Malaysia. With both Malaysia and Indonesia the (inaudible) that is the opportunity for several seasonal marketing campaigns throughout the year around the various religious holiday and festivals. We have already taken a significant step to enter the Indonesian market. Recently, we announced the company has [signed] to form an e-commerce venture in Indonesia with Harmoni Bagi Dunia, HBD. Treasure Global will hold a 70% major stake in HBD and Treasure Global will grant HBD exclusive right to promote and operate its proprietary (inaudible) the letter of intent matter beginning of the company expansion into the Indonesian market aligning with our strategy to grow internationally with innovative local partner.

The venture will provide Treasure Global and its proprietary at ZCITY with (inaudible) network of 200,000 merchants and data of 5 million users within the [service] industry in Indonesia. The Indonesian market has a substantial Internet user base of 230 million out of a population of 276 million (inaudible) opportunity for expansion of Treasure Global (inaudible) addressable market. We have also made a [stride] in developing new products to further expand our addressable market segment.

In July, we announced the collaboration agreement with VCI Global to develop power travel platform as a new offering for traveler in Malaysia. The platform serves as a high-tech portable [considered] as offering real-time recommendation for travel branding, dining, exploring and seamless booking for flight, hotel and car vendors. This also includes advanced translation function to break down language barriers. Treasure Global and VCI Global will share ownership and profit from this collaboration, positioning the company to back into the post-pandemic travel [boom] expected to contribute significantly to the Malaysia (inaudible) by 2025.

To sum up, we are proud of the progress we have achieved over the recent (inaudible) our business further.

Now I will pass the call to Michael, who will review our financial results in greater details.

Thank you, Sam, and good morning, everyone. Today, I will review our financial results for the fourth quarter and fiscal year ended June 30, 2023, compared to the same period in 2022. Total revenue for the fiscal year ended June 30, 2023 was $69 million compared with $79.7 million for the fiscal year 2022. For the fourth quarter, total revenue were $15.1 million compared to $16.2 million for the same period last year. Our revenue year-over-year were down because of our change in focus to increasing margin business channel, such as TAZTE. ZCITY revenue stream are historically low margin while TAZTE offer a new avenue for growth with stronger margins.

Our goal is to focus on higher-margin revenue channel, increasing user engagement and stickiness by providing our user with new products. And in the case of TAZTE, a product that merchants come to rely on for their business needs.

Gross profit for the year 2023 were $0.52 million up from $0.48 million for the fiscal year ended June 30, 2022, showing that initiative to grow gross profit have already started to grow. As Sam mentioned, ZCITY had over 2.6 million registered users and over 2,000 registered merchants as of September 25, 2023. Quarterly active users for the quarter ending June 30, were 378,414, while paid users were up by 4.3%. A total of 1.4 million transactions by our registered users were transacted over the year to June 30, 2023. Our net loss of approximately $11.7 million for the fiscal year 2023 remain the same compared to fiscal year 2022. As of June 30, 2023, our cash balance was approximately $4.6 million compared to a cash balance of approximately $1.8 million as of June 30, 2020.

Active user retention rate was up 280% year-over-year and 41% of paid users transacted 3 or more times in the quarter, which is an increase of approximately 24% year-over-year. Importantly, the quality of ZCITY users has improved, where we see paid users transaction frequency in our ZCITY app. We recorded approximately 1.4 million total transaction by registered users in the fourth quarter fiscal year 2023. As we have already discussed, we are laser focused on increasing gross profit and margin. The mix so far are already working, and we expect this to increase going forward as we roll out pace further.

Now I will turn the call back to Sam to discuss the market opportunities and growth vision.

Treasure Global has made great headway in (inaudible) so far. Through our key products ZCITY, we are now looking to the future and the next stage of delivering on our growth plan of expanding further into the food and beverage industry in Malaysia, through TAZTE and (inaudible) as well as Southeast Asia more broadly. We are focused on increasing through fiscal 2024 by increasing user engagement through new products and services development, such as TAZTE to generate higher profit and margin. We are at the beginning of our journey with significant growth opportunity ahead. Through the application of our proprietary (inaudible) technology, we can offer consumers more personal life and (inaudible) experience as we continue to grow (inaudible) and how we analyze our customer data. We will continue to develop strategy to increase engagement and develop products and services that generate higher margins for our business.

This concludes our prepared remarks. Now I would like to open the call for questions. Operator, please go ahead.

The floor is now open for questions. (Operator Instructions) Today's first question is coming from (inaudible). Please go ahead.

I'm wondering about you mentioned during your prepared remarks, you talked a little bit about some of the agreements you've already formulated within the food and beverage sector. And I think some of those agreements are also designed to facilitate your own expansion as those food and beverage operators expand themselves. Can you talk a little bit about how you see that playing out over time? And whether any of those companies either Morganfield or another Abe Yus whether they've announced any expansion plans recently?

I think it's those agreements, both Morganfield and Abe Yus its mutual benefit to both of us. We're riding on their coattails as they expand and we're helping them expand with TAZTE, which lowers the cost of sort of signing up additional franchisees. And we get benefits from that side as well. So it's mutually beneficial as they expand and as we expand as well. And I think the other thing I would add is as more of these groups sign up via Foodlink, it also just increases the market -- broader market awareness of sort of TAZTE within the wider Malaysian food and beverage market. Sam, do you want to add any comments just specifically in terms of Abe Yus and their expansion plans or Morganfield and their expansion plans near-term?

So basically for Morganfield, Abe Yus [sort of] we're stuck in Malaysia, so actually sharing just now. So we are just start for this year, so coming that we will continue to, especially for Abe Yus that we are targeted for the [research study] outlet, sure that we will adopt TAZTE together so in order that we can be saying that we can digitize the businesses, and we can get more users engagement as to get on the TAZTE platform.

Does that answer your question, Mala?

Thank you. At this time, I'd like to turn the floor back over to Mr. Sam Teo for closing comments.

Thank you again to everyone for joining us on today's call. We are grateful to our investors for their ongoing support and interest in Treasure Global. We look forward to updating you on our progress in the coming quarter. Thank you, and have a great day.

Ladies and gentlemen, thank you for your participation. This concludes today's event. You may disconnect your lines or log off the webcast at this time, and enjoy the rest of your day.