David Lau: Yes, maybe I’ll take this one. Actually, it’s a very quick question and I’m very glad you brought it up. Yes, we incurred close to $4 million in R&D expense in 2023, and as Iman alluded earlier, we have over 300 team members dedicated to our R&D efforts, which includes developing and testing of our platform, collection of data and analytics, etc. Some of those R&D efforts are actually being accounted for in our costs, so therefore our total cash or costs associated with R&D is actually far larger than the $4 million that you see in our R&D expense in our P&L.
Sophie Huang: Okay, thank you. Very clear, thank you.
David Lau: Thanks Sophie.
Operator: Thank you. We will now move onto our next question. Our next question comes from Brian Kintslinger from Alliance Global Partners. Please go ahead, your line is open.
Brian Kintslinger: Great, thanks so much for taking my questions. From an organic growth perspective, I may have missed it, can you highlight the number of SKUs your platform had at the end of the year versus the end of 2022, and then I’m curious if you’re seeing strengthening demand per SKU on average in the fourth quarter, maybe compared to last year or even the first half of the year.
David Lau: Yes Brian, I think the SKU point, I don’t have the exact number in front of me, but if I recall, we have roughly 30,000 SKUs as of the end of last year. I think that number for 2022 was somewhere in the 20,000 range.
Brian Kintslinger: Great, and then on the demand side, I think in the first half of the year, demand per SKU on average was down, but did that change in the fourth quarter? Are you starting to see strengthening demand on your SKUs?
David Lau: Iman, do you want to do that, or–?
Iman Shrock: I’ll be more than happy to, David. Hi Brian. Obviously when it comes to home furnishings, the entire industry is still experiencing a headwind with the cooling of the housing market and the softening of consumer spending on durable goods. But with our business model, we’re really well positioned in a very slow growth market, and as far as the SKU density and the performance, we don’t really make that information available but by default, some of the best metrics to look at is the growth in the 3P supplier base, and on the reverse side, the average spend per active buyer up 27% while the base of buyers grew by 20% to over 5,000.
Brian Kintslinger: Got it, thank you. A little bit more forward-looking, if you can, you’ve done great at growing the SKU count. I know you’ve made acquisitions that will drive an increase, but again from an organic basis, can you continue to rapidly grow the number of SKUs?
David Lau: Yes, we’re pretty confident on growing SKUs, both on the 1P side and now that we acquired Noble House, which directly would give us access to 8,000 new SKUs from the Noble House business, so there are a lot of new ways for us to keep growing that SKU number.
Brian Kintslinger: Great. Lastly maybe for David, can you quantify the cost synergies you realized from the recent acquisitions thus far, and then you talked about a big chunk of them will be realized again in 2024. Can you talk about maybe what those–can you quantify those synergies?
David Lau: Yes, I guess it’s kind of hard for me to quantify what the synergies are from both a revenue or a cost savings standpoint at this point, but what we can see from the health of the business is that we basically incurred a minimal loss in Q4. Q1 is starting to stabilize, we’ve got new products coming in for the outdoor furniture season, so Q2 we expect there’s going to be a pick-up from the business. That’s kind of the health of the business, but hard for me to actually quantify what those synergies are at this point in time.
Brian Kintslinger: Great, congrats on a great 2023.
David Lau: Thanks Brian.
Operator: Thank you, we’ll now move onto our next question. Our next question comes from the line of Rommel Dionisio from Aegis Capital. Please go ahead, your line is open.
Rommel Dionisio: Thank you, good morning. I wonder if I could just inquire about the new 3P business from Colombia and Mexico. Could you just maybe describe in a little more detail how–you know, the potential evolution there of that region of the world, which you haven’t about too much in the past. Also, are you going to require the building of infrastructure, a sales force? I wonder if you could talk about how you see that potential market opportunity playing out here over the next few years, and the long term opportunity there. Thank you.
Iman Shrock: Thank you Rommel. As far as the new sellers, as GigaCloud is getting more known in the global arena as a better way to make trades into the market, I think organically we’re going to see interest coming from a lot of the global suppliers in regions we do not currently operate in, into becoming members. In addition, as far as recruitment of sellers, the existing infrastructure can support the expansion with outreach, and if need be, we can definitely expand into the region. But those countries that you mentioned are new to the marketplace. That kind of speaks volumes to the true reach of the GigaCloud business model globally as a better way of doing big and bulky, because in reality, we kind of transformed the industry into making it more a seamless end-to-end–better way of trading, you know, for big and bulky.
With that being said, I do expect the same trends to continue as we get to share our story with more and more manufacturers and distributors across the board, to see them on-boarding and adopting the business model.
Rommel Dionisio: Okay, thanks very much, and congratulations on the quarter.
