Ruhnn Holding Ltd (RUHN) Q1 2021 Earnings Call Transcript

Ruhnn Holding Ltd  (NASDAQ: RUHN) Q1 2021 earnings call dated Sep. 14, 2020

Corporate Participants:

Sterling Song — Senior Director of Investor Relations

Lei (Ray) Sun — Founder, Director and Chief Executive Officer

Jinbo (Jacky) Wang — Chief Financial Officer

Analysts:

Vicky Wei — Citi — Analyst

Corrine Hu — UBS — Analyst

Min Feng — Founder and Chairman

Lingyi Zhao — SWS Research — Analyst

Presentation:

Operator

Hello, ladies and gentlemen, thank you for standing by for Ruhnn Holding Limited’s Earnings Conference Call for the First Quarter Fiscal Year 2021. [Operator Instructions]. I will now turn the call over to your host, Mr. Sterling Song, Senior IR Director of Ruhnn. Please go ahead.

Sterling Song — Senior Director of Investor Relations

Thank you. Thank you, Operator. Hello everyone, and welcome to Ruhnn’s earnings conference call for the first quarter of fiscal year 2021. As a reminder, this conference is being recorded. The Company’s financial and operating results were issued in a press release earlier today and are available online. You can download the earnings release and sign up for the Company’s e-mail distribution list by visiting our IR section of the Company’s website at ir.ruhnn.com.

Mr. Lei Sun, our Founder, Director and CEO; and Mr. Jacky Wang, our CFO will begin with some prepared remarks. Following those prepared remarks, Mr. Min Feng, our Founder and the Chairman of the Board of Directors will also join us for the Q&A session. Before we continue, please note that today’s discussion will contain forward-looking statements made under the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995.

Forward-looking statements involve inherent risks and uncertainties. As such, the Company’s actual results may be materially different from the views expressed today. Further information regarding these and other risks and uncertainties is included in certain filings of the Company with the US Securities and Exchange Commission, including its Annual Report on Form 20-F.

The Company doesn’t assume any obligation to update any forward-looking statements except as required by law. Please also note that the Company’s earnings press release and the conference call may include discussions of unaudited GAAP financial information as well as unaudited non-GAAP financial measures.

The Company’s press release contains a reconciliation of the unaudited non-GAAP measures to the unaudited most directly comparable GAAP measures. I will now turn the call over to Lei Sun, Founder, Director and CEO. Mr. Sun, please go ahead.

Lei (Ray) Sun — Founder, Director and Chief Executive Officer

Thank you, Sterling. Hello everyone. Thank you for joining our earnings conference call for the first quarter of fiscal year 2021. We delivered a strong start to our new fiscal year, driven by the successful transition of our business focus to our service business under the platform model. Service revenue reached RMB113.7 million with a year-over-year increase of 74%, maintaining its rapid year-over-year growth momentum for the fifth effective quarter following our IPO in April 2019.

The percentage of service revenue as compared to total net revenue increased to 41% from 21% in the same quarter of last fiscal year. In addition, we generated a non-GAAP adjusted net income of RMB10.7 million compared to a net loss of RMB21.6 million in the same quarter of last fiscal year.

In fiscal year 2021, we will continue to deepen our efforts in the e-commerce area as well as emphasize improving operational efficiency and the profitability. Our outstanding performance once again demonstrated our capabilities in our incubation and cultivation. As of June 30, 2020, the total number of KOLs signed by Ruhnn through long-term agreements grew 31% year-over-year to 174. While the aggregate number of fans grew 53% year-over-year to over 263 million with our focus on growing service business and with all our signed KOLs having being involved in the platform model as of June 30, 2020.

We now classify all of our signed KOLs based on the total service revenue generated by them under the platform model during the previous 12 months as an updated method to assess our KOLs’ performance. As of June 30, 2020, our Platform top-tier KOLs increased to 8 from 2 as of June 30, 2019. Services revenue generated from our platform top-tier KOLs accounted for 35% of total service revenue which indicated that each top-tier KOLs’ average contribution was less than 5% of total service revenue.

We are leveraging the entire KOL metrics to drive the future service revenue growth. I would like to further point out that following the significant expansion of our business under the platform model and the business model transition, we started to review our results of operations according to operating segments, when making decisions about allocating resources and assessing performance. The two segments are serviced through the platform model and the product sales under the fullservice model.

For the first fiscal quarter, the services segment under the platform model demonstrated excellent profitability with income from operations of RMB22.2 million and the operating margin and adjusted operating margin reaching 20% and a 22% respectively. Since fiscal year 2019, we started the business transition as we discussed in our previous earnings call.

As of March 31, 2020, we had achieved certain milestones in our business transition to the service business. For the service business, we are offering various KOL monetization channels for KOLs, and providing sales and advertising services for the third-party brands and merchants, like e-commerce live-streaming, advertising and after-sale services through online sharing stores and the joint-stores.

The platform model had already become the focus of our business and will be the primary driver of overall profitability in the future. E-commerce live-streaming sales services through online sharing stores and advertising services are the main drivers to support our sustained growth in this fiscal year.

Firstly, e-commerce live-streaming has emerged as an important monetization channel. It has maintained a strong growth momentum in the first fiscal quarter, generating approximately 21% of the total service revenue and increasing about 700% year-over-year. Leveraging our high quality KOL metrics, we offer third-party brands a strategy that combines both quality and efficiency, helping them receive a premium payment on their brands, to lessen the impact from lower price promotion during e-commerce live-streaming.

In addition, we have set up a strategic cooperation with multiple platforms to explore e-commerce live-streaming monetization channels. Our KOLs also expanded their monetization channels beyond pure live-streaming including online sharing stores and the branch advertisement to name a few.

Secondly, moving to service through our online sharing store methods, we collect service fees from the parking merchant based on their — either the extra traffic directed or extra skills facilitated in their online stores. Related service revenue, representing 15% of the total service revenue in the current quarter increased by nearly 62% year-over-year.

Our plan is to continue setting up more diverse types of virtual online sharing stores for more and more newly signed KOLs who exhibit excellent marketing skills. Through our KOLs shifting to personal styles and our precise matching capabilities, we can effectively realize traffic and content monetization.

Thirdly, turning to our advertising services. Advertising services revenue accounting for 48% our total service revenue in the current quarter increased 53% year-over-year. As of June 30, 2020, we had partnered with a total of 1,186 brands in our advertising services representing nearly 70% growth from 701 brands as of June 30, 2019.

The recurring brands accounted for over 60% of the total number of brands we served in the current quarter. For the branded categories, skin care and cosmetic accounted for over 50%. Top ten brands accounted for around 31% of total advertising service revenue and there was no one brand accounted for over 10%. With minimum concentration risk, in addition, the major social media platform for us to provide advertising services have extended even further beyond just Weibo and Bilibili with Xiaohongshu and Douyin now being added to the roster.

And advertising services revenue generated with Xiaohongshu accounting for nearly 10% of total — of total advertising service revenue. We will continue growing the advertising business and look forward to collaborating with more brands, both domestically and globally.

Now, I will provide an update on the Company’s recent strategy initiatives. To act as a supplement to our core incubated KOLs, we launched the BK Plan to target the top KOLs, who have a large number of followers and a strong influencing power on major social platforms in China, drawing on our extensive experience and in-depth knowledge of best practices across the industry. We can provide these KOLs with new monetization opportunities, such as e-commerce live-streaming, advertising campaigns and online sharing stores as well as strengthen the monetization capabilities. This strategy has been proved practical — practicable by the performance of recently signed top KOLs through long-term agreements.

For example, [Indecipherable] a prime entertainment KOL on Kuaishou had zero net increase in the number of her fans during the six-month periods prior to joining Ruhnn. Her monetization channel was relying on virtual gifts. After collaborating with Ruhnn, we soon discovered her potential in the e-commerce live-streaming business. Her sales performance has been consistently exceeding expectations. Meanwhile, through the continuous efforts of our content production and few of our incubation teams, the number of [Indecipherable] followers on social platform has increased by over 1 million in the three-months period. Her personal monthly income has increased over three times.

And for the social media platforms, we cooperated with in addition to Weibo, at iconic social media platforms such as Bilibili, Douyin, Kuaishou and Xiaohongshu are becoming more and more important. For example, Kuaishou has grown faster in e-commerce live-streaming businesses and Xiaohongshu is becoming very attractive in the advertising business.

A total of more than 22 KOLs on Xiaohongshu have joined Ruhnn this year. Ruhnn has benefited tremendously as we have been incubating our KOLs metrics through various social media platforms. Beauty blogger [Indecipherable] who was incubated by Ruhnn on Kuaishou platform has made substantial progress in performance through an approximate six month tier-rate of continuous recommending and introducing our beauty and make up products to her followers. GMV facilitated by [Indecipherable] increased to over RMB4 million in August 2020 from RMB2 million in April 2020, purely on Kuaishou.

Within Ruhnn, we are also working on various new business initiatives such as artificial intelligence to enable the selection system of women’s apparel products which have served an accumulated number of approximately 100 third-party merchants and brands since its inception. As a leading KOL facilitator in China, we are building a technology-driven KOL platform to cope with the increasing demand for our service on the platform model.

Our KOL platform, a proprietary technology platform enables brands and merchants to place their orders for KOL serviced online, as well as complete the whole process online, including submitting product samples and pictures, arranging KOL live-streaming schedule, signing cooperation agreements. The KOL platform capitalizing on AI technology will intelligently match brands and merchants with suitable KOLs in our KOL pool.

Moreover, given that the key opinion consumers, also known as KOCs who test and review products and share their opinions and the comments on social media are playing an increasing — increasingly important role in many consumers decision making processes. We are also developing KOC community, a proprietary technology platform aiming to reach a broader population of KOCs and monetize their content.

KOCs will be able to earn credits and awards by sharing content on our KOC community. And we plan to provide KOCs who helped reach potential with free training and cultivate them to be successful KOLs. As of June 30, 2020, we had a technology team with more than 40 engineers. Our continuous hard work has begun to bear fruits and our achievements are increasingly recognized by the market.

In July 2020, we won two [Indecipherable] award, the first, was gold award of best short video by MCN for picking city characteristics as the topic to shooting skincare advertising. The other was bronze award of the most valuable commercial video from a KOL which was a comment by [Indecipherable] vlog of her visit to PNG [Phonetic] Research Center. We are honored that these two awards are not only a recognition of our past efforts, but also an encouragement to the future development of Ruhnn.

Lastly, let me provide an update on our share repurchase program. In June 2020, our Board of Directors approved a share repurchase program of up to $15 million of our outstanding ADS for a period, not to exceed 12 months beginning on June 2, 2020. We commenced this share repurchase program on June 9, 2020 and between that day and the end of September 11, 2020. Approximately 891,000 ADS were repurchased for an aggregate consideration of approximately $3.1 million. We funded the repurchase made on this program from our existing cash balance. This program reflects our solid financial position and our commitments to increasing shareholders’ — shareholder value and our confidence in our business fundamentals and the long-term prospects.

We expect to continue to implement our share repurchase program in a manner consistent with market conditions and the interest of our shareholders, subject to the restrictions with recent volume, price and the timing on the applicable law. With that, I will now turn the call over to Mr. Jacky Wang, CFO of the Company who will provide an update on our financial performance for the first quarter of fiscal year 2021.

Jinbo (Jacky) Wang — Chief Financial Officer

Thank you, Mr. Sun and hello, everyone. We achieved excellent result for the first fiscal quarter. Services revenue through the platform model increased 74% year-over-year, amounting to 41% of total net revenue. Net loss attributable to Ruhnn was RMB56.6 million inclusive of non-cash amortization and impairment of exclusive cooperation rights under the full-service model. Adjusted net income attributable to Ruhnn was RMB10.7 million as compared to a loss of RMB21.6 million in the same period of last fiscal year. Furthermore, net cash provided by operating activities increased 11 times year-over-year to RMB11.6 million.

Now, let’s move to detailed financial performance for the first quarter of fiscal year 2021. Total net revenue was RMB280.4 million, a decrease of RMB32.4 million or 10% from RMB312.8 million for the same quarter of last fiscal year, which was mainly due to the decrease in product sales revenue through the full-service model, and partially offset by the significant increase in services revenue through the platform model.

Services revenue through the platform model was RMB113.7 million, an increase of RMB48.2 million or 74% from RMB65.5 million for the same quarter of last fiscal year. The increase was mainly attributable to first, the increase in the number of KOLs serving the Company’s platform model, which increased to 174 as of June 30, 2020 from 133 as of June 30, 2019; second, the improved performance of such KOLs as evidenced by the increase in the aggregate number of the product’s — of the platform top-tier, established and emerging KOLs to 45 as of June 30, 2020 from 28 as of June 30, 2019; and finally an increase in the number of brands that the Company cooperated with in its advertising business to 431 in the first quarter of fiscal year 2021 from 278 for the same quarter of last fiscal year.

Product sales revenues through the full-service model was RMB166.8 million, a decrease of RMB80.5 million or 33% from RMB247.3 million for the same quarter of last fiscal year. The decrease was primarily attributable to the following factors. First, the transition of the business model of some online stores from the full-service model to the platform model. This led to the number of our own online stores decreasing to 19 as of June 30, 2020 from 40 as of June 30, 2019, and the number of our KOLs serving the full-service model decreasing to 3 as of June 30, 2020 from 11 as of June 30, 2019.

This factor contributed to the majority of the decrease. Second, we experienced a decrease in product sales generated from the online stores served by a top KOL who suffered from negative publicity since April 2020; and finally, the ongoing impact of the COVID-19 pandemic in China during the first fiscal quarter, although to a lesser extent as compared to the previous quarter.

Cost of revenue was RMB173 million, a decrease of RMB28.3 million or 14% from RMB201.3 million for the same quarter of last fiscal year, which was primarily in line with the decrease in total net revenue. Cost of product sales decreased by RMB55.3 million or 32% year-over-year to RMB118.6 million. Gross profit was RMB107.4 million, a decrease of RMB4.1 million or 4% from RMB111.5 million for the same quarter of last fiscal year, primarily as a result of the decrease in product sales revenue. Gross margin increased to 38% from 36% for the same quarter of last fiscal year, primarily attributable to the increase in services revenue as a percentage of total net revenue to 41% from 21% for the same quarter of last fiscal year. Services revenue has a higher gross margin as compared to product sales revenue.

Total operating expenses were RMB171.9 million, an increase of RMB33.1 million or 24% from RMB138.8 million for the same quarter of last fiscal year. Included in the total operating expenses was an aggregate of RMB67.3 million of noncash amortization and impairment of intangible assets in relation to exclusive cooperation rights, noncash share-based compensation expense, and litigation costs in the first quarter of fiscal year 2021 compared to a noncash amortization of exclusive cooperation rights of RMB5.2 million in the same quarter of last fiscal year.

Total operating expenses accounted for 61% and 44% of the total net revenue for the first quarter of fiscal year 2021 and 2020, respectively. Excluding the non-cash charges and litigation cost as mentioned above, the percentage were 37% and 43% for the fiscal first quarter of fiscal year 2021 and 2020 respectively.

Fulfillment expenses were RMB18.8 million a decrease of RMB16.2 million or 46% from RMB35.0 million for the same quarter of last fiscal year. The decrease was largely in line with the decrease in product sales. Fulfillment expenses accounted for 11% and 14% of product sales revenue for the first quarter of fiscal year 2020 — 2021 and 2020, respectively.

Sales and marketing expenses were RMB69.5 million, an increase of RMB0.5 million or 1% from RMB69 million for the same quarter of last fiscal year. Sales and marketing expenses consist primarily of expenses for KOL incubation, cultivation and training for the Company’s platform KOLs, as well as expenses incurred for the Company’s advertising, marketing and brand promotion activities under the full-service model. Following the expansion of KOL pool from 133 signed KOLs as of June 30, 2019 to 174 as of June 30, 2020, related expenses incurred for KOL incubation, cultivation and training in order to support increased activities for the Company’s KOL sales and advertising business increased accordingly.

Sales and marketing expenses accounted for 25% and 22% of the total net revenue for the first quarter of fiscal year 2021 and 2020, respectively. Excluding the non-cash share-based compensation expense, the percentage was 23% and 22%. General and administrative expenses was RMB25.2 million, a decrease of RMB5.3 million or 17% from RMB30.5 million for the same quarter of last fiscal year.

General and administrative expenses accounted for 9% and 10% of the total net revenue for the first quarter of fiscal year 2021 and 2020, respectively. Excluding non-cash share based compensation expense and the litigation cost, the percentage was 7% and 10% respectively. Amortization of exclusive cooperation rights of RMB5.2 million represented the amortization of intangible assets in relation to exclusive cooperation rights granted by a top KOL.

Impairment of exclusive cooperation rights was RMB53.2 million compared to nil in the same quarter of last fiscal year. We experienced a significant decrease in the product sales revenue generated from the online stores served by a top KOL who suffered from negative publicity since April 2020. We assessed the continuing impact of our operations and recognized an impairment on the intangible assets relating to the exclusive cooperation rights granted by this KOL as of June 30, 2020.

Net loss attributable to Ruhnn was RMB56.6 million, inclusive of an aggregate of RMB67.3 million of noncash amortization and impairment of the intangable assets. Noncash share-based compensation expense, and the litigation costs compared to RMB26.7 million, inclusive of amortization of exclusive cooperation rights of RMB5.2 million, for the same quarter of last fiscal year. Adjusted net income attributable to Ruhnn was RMB10.7 million compared to a loss of RMB21.6 million for the same quarter of last fiscal year.

In terms of our balance sheet and cash flow as of June 30, 2020, the Company had cash and cash equivalents, restricted cash and short-term investment of RMB795.4 million compared to RMB800.6 million as of March 31, 2020. Net cash provided by operating activities was RMB11.6 million for the first quarter of fiscal year 2021 compared to RMB1.0 million for the same quarter of last fiscal year.

Net cash used in financial activities was RMB11 million, primarily as a result of the share repurchase program as updated by Mr. Sun just now. Before moving to the outlook, I would like to spend a few minutes to discuss further our segment performance. As discussed by Mr. Sun above, we started to review our results of operations by two operating segments.

During the current quarter for the services segment, we achieved income from operations of RMB22.2 million, which was equal to the services revenue minus, related cost of revenue and all operating expenses like sales and marketing, general and administrative expenses, with the operating margin reaching 20%.

Adjusted income from operations of services was RMB25.1 million with adjusted operating margin reaching 22%. Product sales segment suffered a loss in the current quarter, the adjusted net — the adjusted loss from operations of product sales segment was RMB11.6 million. With respect to our outlook, we are reiterating that for the full fiscal year 2021, we currently expect our net revenue from services through the platform model to be between RMB520 million and RMB610 million, representing a year-over-year growth of between 72% and 101%.

This forecast reflect our current and preliminary view on the current business situation and market conditions, which are all subject to change. We do not provide outlook for our product sales revenue for the full fiscal year of 2021, because of the uncertainty in the continued impact of the negative publicity of the top KOL serving certain online stores under the fullservice model as discussed previously.

This concludes our prepared remarks, we will now open the call for Q&A. Operator, please go ahead.

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions]. Your first question comes from the line of Vicky Wei of Citi. Please ask your question.

Vicky Wei — Citi — Analyst

Thank you. [Foreign Speech].

Good evening, management. Thanks for taking my questions. My first question is about — so will management provide some color about the revenue contribution from the top KOL, Ms. Zhang Dayi this quarter and the revenue year-over-year growth? And my second question is about the e-commerce live streaming competition. So what does management think of the intensified competition with increasingly more KOLs in this sector and how can Ruhnn’s KOLs differentiate? Thank you.

Lei (Ray) Sun — Founder, Director and Chief Executive Officer

Thank you. Thank you, Vicky. Let me take your first question, and regarding the percentage of the revenue generated by Dayi, I probably will divide it into two segments. For the services revenue under the platform model, service revenue generated by Dayi, primarily e-commerce live-streaming accounted for 8% of the total service — services revenue less than a 10%. For the product sales revenue and the fullservice model, the product sales revenue generated by online stores served by Dayi accounted for about 70% of the total product sales revenue in both the current quarter and the same quarter of last fiscal year.

For the product sales revenue, the revenue generated by Dayi decreased about 33% as compared to the same quarter of last fiscal year primarily attributable to the following two factors. One is because we transited her cosmetics online stores from the fullservice model into the platform model in the — I think in August 2019. So the second factor is since April 2020, there was negative publicity and — which affected the revenue generated by Dayi.

So for your second question, you are talking about the competition of the KOLs in the e-commerce live-streaming sector, and I would say that the service revenue generated through the live-streaming played more and more important role in our platform model and increased over 700% as compared to the prior year. And — but we are playing differently as compared to our players, and although the competition is intense, we are operating you know, [Indecipherable] we are operating differently.

First, we are leveraging on our high quality KOL and we offer third-party brand, a strategy that combines both quality and efficiency, helping them to receive a premium payment on their brand to lessen any impact from the lower price promotion during e-commerce live-streaming and in addition, we also set up strategic cooperation with multiple platforms to explore the e-commerce live-streaming monetization channels. I’m talking about in addition to the Taobao platform, we are working with other social media platform.

And for the live streaming and including the Kuaishou, Douyin and Xiaohongshu, they are becoming more and the more important. And for example, Kuaishou has grown fast in e-commerce live-streaming business and Ruhnn has benefited tremendously as we have been incubating our KOL metrics through various social media platform. And our service revenue from the e-commerce live-streaming on Kuaishou accounted for currently about 5% in Q1, but we will see it trending up. And we also kick off the cooperation with the Xiaohongshu for the live streaming in September 2020.

I hope that answers your question.

Vicky Wei — Citi — Analyst

Thank you.

Lei (Ray) Sun — Founder, Director and Chief Executive Officer

Thank you.

Operator

Your next question comes from the line of Corrine Hu of UBS. Please ask your question.

Corrine Hu — UBS — Analyst

[Foreign Speech]. I will translate myself. My first question is about how is your view on competition dynamics in the e-commerce industry, like Taobao versus Douyin and Kuaishou? And will Ruhnn collaborate more with these emerging platforms in the future?

The next one is about top KOL. I was wondering how is Ruhnn planning to retain its top talents? Shall we expect higher motivation costs or revenue sharing ratio, which will hit the P&L maybe in next few quarters? Thanks.

Min Feng — Founder and Chairman

[Foreign Speech]

Thank you. Actually, I’m Feng Min. I will answer your question. To my understanding that your first question is more focused on the effect on Taobao platform from the e-commerce characteristics of other social media platforms. You know, e-commerce live-streaming has been quite popular in 2019, attracting a large number of social media platform and e-commerce players. Of course, that includes Douyin and Kuaishou as well.

Especially since 2020, both Douyin and Kuaishou have made great effort to focus on KOLs and supply chain in their internal e-commerce segments in order to get a piece of the cake. In our opinion, those mainstream e-commerce players will face quite intense competition in the e-commerce live streaming sector in the next one to two years. Especially those large platforms with a huge amount of traffic, which mainly rely on their traffic advantage will see more monetization panels and to speed up the overall process to achieve more competitive advantage. Of course, that has some effects on Taobao platform.

Currently, the overall market size for e-commerce live-streaming in China is tens of trillions of RMB with quite a huge potential, but still far away from the sector saving. So, we believe the sector still has a long way to go.

[Foreign Speech]. Ruhnn has been in in-depth cooperation with such mainstream social media platforms like Douyin and Kuaishou for long. In September 2019, we internally set up the e-commerce live-streaming operation team in Taobao and Douyin. And this year, in March, we did the same in Kuaishou. As mentioned above, this year, Ruhnn has signed long-term KOL contracts with top tier KOLs, such as ChoZan, [Indecipherable], etc. Through a continued effort by the content production cultivation team, the Company has empowered KOLs all the way to achieve a much higher repeat purchase rate and a much larger number of fan base.

Specifically, each KOL performed quite well in their e-commerce live-streaming business and made quite a lot of progress. The transaction volume for each KOL in their — each live streaming is approximately several million RMB. Therefore, it is quite clear that the KOL monetization channel is becoming more and more multiple and more and more flexible.

[Foreign Speech]. Regarding your second question, the KOL service fee percentage is based on the long-term agreements between the Company and the exclusive KOL. Most of the internally incubated KOLs are exclusive to Ruhnn with a five-year to eight-year long-term contract with an excellent support team to serve each KOL. For example, content production, incubation and calculation of services to empower KOLs for their long-term development, etc.

Since Ruhnn is a strong platform to provide KOLs with multiple monetization channels to serve more third-party merchants and third-party brands, so KOLs rely on Ruhnn platform to a larger extent. Therefore, the outcome is quite, quite strong relationship between Ruhnn and these KOLs. Actually, the overall turnover rate for KOLs in Ruhnn, including top tier, established and emerging KOLs is quite, quite low.

[Foreign Speech]. Of course, following the increase in the percentage of services revenue through live streaming as compared to the total services revenue, the gross margin will be, in some way, affected because the KOL service fee percentage is actually higher than other monetization channels. Thank you.

Operator?

Operator

Your next question comes from the line of Lingyi Zhao of SWS Research. Please ask your question.

Lingyi Zhao — SWS Research — Analyst

[Foreign Speech]. Now both platforms and brands attach great importance to the live streaming area. What is the proportion of revenue generated by the live streaming business and what are the main platforms that the KOL is concentrated on?

My second question is about our category mix. What are the main categories of product and service besides all the women’s wearing and what do you think is our most potential categories such as FMCG, etc? Thank you.

Jinbo (Jacky) Wang — Chief Financial Officer

Okay, thank you. Let me take your question. And your first one regarding the service revenue generated through the live streaming. In the current quarter, it accounted for 21% of the total services revenue, in the current quarter, as compared to about less than 4% or 5% in the same quarter our last fiscal year.

Regarding the platforms of our KOLs who having — regarding the social media accounts, I probably will not only mention the KOL who are only doing the e-commerce live-streaming, I’m talking about all our KOLs. As of June 30, 2020, we have assigned the KOL about 174 KOLs. And we are incubating them, as we have been mentioned, all the time. That’s one of our advantage. We are incubating and empower our KOLs across all major social media platform in China. And each KOL has more than two major social media accounts. For example, for the 174 signed KOLs, as I mentioned just now, we are incubating them — about, I think, 90% of our signed KOLs in Weibo account. Or you can say, have Weibo account. And over 60% have account in Xiaohongshu and over 50% in Douyin platform and also 50% in Bilibili. I think nearly 30% of our total KOLs have major social media accounts in Kuaishou. So, you can see from that percentage that we are really incubating them across all the social media platforms.

And for your third question regarding the major category of products, the third-party brands and we are serving, it depending on the actual monetization channel you are referring to. For example, if you are talking about the advertising services under the platform model, which accounted for nearly 50% of our total services revenue, the major category is about the cosmetics and personal care and skin care, right? That I think accounted for over 50% or nearly — or over 60% of all the advertising service revenue. And in the future, we expect those category will continue to play a — the most important role in the future.

But if you’re talking about the live-streaming, e-commerce live-streaming, the categories just now I mentioned still are major categories, but we can see that more and more other category, including the food, the electric appliance or other like fashion products are increasing in the future — are increasing. And we expect that categories will diversify in the future gradually.

But if you are talking about — talking of live-streaming, about 21% of the total services revenue under the platform model. And if you are talking about the services revenue through the online sharing store and the women apparel category are the majority category in that monetization channel. Of course, if you are talking about the full service model, nearly 100% is related to the women apparel.

Hope that answer your question. Thank you.

Sterling Song — Senior Director of Investor Relations

Operator?

Operator

There are no further questions. Now, I’d like to turn the call back over to the Company for closing remarks.

Lei (Ray) Sun — Founder, Director and Chief Executive Officer

Thank you. Thank you, operator. Thank you, everyone. Thank you again for joining us today. If you have any further questions, please feel free to contact the Company’s Investor Relations department on the contact information provided on the website or the Company’s IR agency, TPG Investor Relations. Thank you, everyone. Thank you, operator. Thank you. Bye.

Operator

[Operator Closing Remarks].