Simon Cai: Thank you, Brian. On a year-over-year basis, the improvement in our gross margin primarily stems from the ongoing optimization of our revenue structure. Notably, the contribution from commission-based and value-add basis services to total revenue continues to rise, and these two segments tend to have a much higher gross margin compared to that of freight brokerage business, and driving the improvement in the company’s overall gross margin. In the second quarter, after excluding the impact of freight brokerage business, the approximate gross margin increased to 85.6% compared with 84.4% in the same period last year. On a quarter-over-quarter basis, the change in gross margin is mainly impacted by the timing difference in tax rebates due to the — and due to variations in the processing time of tax procedures and different tax rebate policies in various regions.
This factor could lead to short-term fluctuations in the gross margin. However, it is important to clarify that the timing difference in tax rebate does not affect the company’s overall profitability. It simply causes slight variations in the gross margin within a certain timeframe.
Brian Gong: Thank you. That’s very helpful.
Operator: Thank you. And our next question comes from Jiulu Li with CICC. Please go ahead.
Jiulu Li: [Foreign Language] Thanks for taking my question. I have one question about the recent announcement from several freight platform companies about lowering the maximum commission fees or membership fees on business. What are your views on the impact of this announcement? Thank you.
Simon Cai: Thank you. Throughout our whole operational history, we have maintained a very prudent approach and attitude towards commission rates. And our current commission rate is still low and far from reaching any limits. The recent regulatory guidelines issued by authorities like Ministry of Transportation can be seen as more of a positive development for our platform instead of suppressing commission fees. These regulations are intended to encourage platforms to adopt a more transparent and reasonable practice in their commission structures. We welcome these regulatory measures and view them as a positive step towards providing a stable and sustainable operating environment, enabling us to operate with greater confidence in the future.
In regards of our business, the recent adjustments to the maximum commission fee has not had a negative impact on the platform. For instance, the upper limit of commission for our entrusted shipment model has been lowered by roughly 10% from the original RMB199 per order, yet it still remains significantly higher than the actual average commission per order we charge at the moment. In the future, we will introduce various types of products and value-added services for shippers, thereby diversifying our revenue streams. We believe that by optimizing fee composition and expanding service offerings, the platform economy will embrace more opportunities as well as creating more room for growth. Additionally, our ecosystem and strategic positioning in the industry provide us with inherent competitive advantages.
We’ll continue to strengthen the development of our ecosystem, introduce innovative services and solutions to bring greater value to our users, and this approach will further drive the development and advancement of the freight transportation industry as a whole.
Operator: Thank you. And ladies and gentlemen, that concludes the question-and-answer session. I’d like to turn the conference back over to Mao Mao for any closing remarks.
Mao Mao: Thank you, operator, and thank you, everyone, for joining us today. If you have any further questions, please feel free to contact us at Full Truck Alliance directly or TPG Investor Relations. Our contact information for IR in both China and U.S. can be found in today’s press release. Have a great day.
Operator: Thank you. Ladies and gentlemen, this concludes today’s conference call. You may now disconnect your lines, and have a wonderful day.
