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BEST Inc. (NYSE:BSTI)
Q3 2018 Earnings Conference Call
November 9, 2018, 7:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and good evening ladies and gentlemen. Thank you for standing by and welcome to Best Inc.'s third quarter 2018 earnings conference call. At this time, all participants are in listen-only mode. Following management's prepared remarks, there will be a Q&A session. This conference call is being recorded. I would now like to turn the call over to Mr. George Chow, Chief Strategy and Investment Officer of Best Inc. George, please go ahead.

George Chow -- Chief Strategy, Investment Officer

Thank you, Operator. Hello everyone and welcome to Best, Inc.'s third quarter 2018 earnings conference call. With us today are Johnny Chou, our Chairman and CEO and Alice Guo, our Chief Accounting Officer and Senior Vice President of Finance. For today's agenda, Johnny will give a brief overview of our business and operational highlights. Then, Alice will explain the details of our financial results. Following the prepared remarks, you may ask your questions. Please note this call is also being webcasted with an Investor Presentation on our IR website at ir.best-.com. A replay of this call will be available on our IR website later today.

Now, let me quickly remind you of our Safe Harbor statement. Today's discussion will contain forward-looking statements. These forward-looking statements are based on management's current expectations. They involve inherent risks, uncertainties, and other factors, all of which are difficult to predict and many of which are beyond the management's control. The company does not undertake any obligation to update any forward-looking statements as a result of new information, future events, or others except as required under applicable law. Please also note that certain financial measures that we use on this call are expressed on a non-GAAP basis such as EBITDA, adjusted EBITDA, and a non-GAAP net loss.

Our GAAP results and the reconciliation of GAAP to non-GAAP measures can be found in our earnings press release. Finally, please note that unless otherwise stated, all the statements mentioned during this conference call are in RMB. Now, I would like to turn the call over to Johnny Chou, Chairman and CEO of our company. Johnny, please go ahead.

Johnny Chou -- Chairman, Chief Executive Officer

Thanks, George. Hello, everyone. And thank you, all for joining our 2018 third-quarter earnings call today. We continued to experience strong growth in the quarter which combined with our focus on execution, delivered strong results. Best continues to benefit greatly from demand for our integrated supply chain services and solutions. As a result [audio cuts out] e-commerce and a new retail growth and the further industry consolidation. During the third quarter, we continued to focus on our strategic priorities, including improving service quality, driving further operating efficiencies and synergies across our businesses, as well as expanding the depth and the breadth of our services offerings to deliver quality growth. As a result of that sharp focus and execution, our total revenue reached ¥7.2 billion, an increase of 34% year-over-year. Gross profit was ¥390 million, an increase of 93% year-over-year. Gross profit margin improved 1.6 percentage points to 5.4% year-on-year.

We continue to achieve positive EBITDA for a second consecutive quarter. EBITDA was ¥55 million. And adjusted EBITDA was ¥1 million. Now, let me discuss more some of our business highlights. As discussed in the previous earnings call, our strategic priority for Best Express in 2018 are to further improve operating efficiency, enhance service quality, and gain market share. We believe our advantages in service quality, seamless integration, and the sharp execution allow us to achieve a long-term growth strategy and remain above the highly competitive environment. Our results reflect substantial execution of our strategy. In the quarter, parcel volume increased by 36% year-on-year, approximately 1.4 times of industrywide growth rate of ¥0.26. Our market share increased to 10.8% from 10% in the same period of 2017. Leveraging critical scale and level coverage Best Express has achieved, we continue to improve operating efficiency through network optimization and technology application.

Total number of hubs and sortation centers were reduced by 24% year-on-year to 117. We added eight high speed automated sorting lines and 226 dimension and weight scanning systems in this quarter. Digital waybill usage increased up to 99%. As a result, gross profit for parcel increased by 22% year-on-year to ¥0.13. Best Freight continues to deliver outstanding performance in the third quarter. Freight volume grew by 24% year-on-year, significantly higher than industrywide growth. Similar to Best Express, as volume grows, we continue to optimize our freight network, increase operating efficiency, and reduce cost. The total number of hubs and sortation centers were reduced by 10% year-on-year to 120. As a result, gross profit margin increased significantly by 9.6 percentage points year-on-year from negative-5% to a positive-4.6%.

To enhance end user experience, we extended a lot our service coverage extensively, increasing the total number of franchise and last mile service stations by 54% year-on-year to nearly 12,000 from over 7,000. Going forward, we are confident that economics of skill, network optimization, and customer service focus as well as increasing demand from e-commerce and our new retail-related transactions will continue to drive Best Freight growth and margin expansion. Best Supply Chain management continue to win new customers and grew its franchise cloud OFC business. In the third quarter, we added 49 new corporate customers. The total number of orders fulfilled by cloud OFCs increased 31% year-over-year to 57 million, of which, the number of orders fulfilled by franchise and cloud OFCs increased significantly by 81% year-on-year to 19 million.

Gross margin was reduced by 3.4 percentage points, primarily due to the ramp-up from certain newly started larger projects and additional cost of social service temporary resources prepared for 4Q promotion period. Leveraging our core competencies in B2B2C, Supply Chain Management, and technology application. We continue to invest in and grow Best Store+ platform. The total number of store orders fulfilled the increase by 17% year-over-year to now over 35,000. We continue to expand footprint of membership stores. The number of membership stores reached to 415,000, representing a year-over-year increase of 19%. As mentioned in our previous earnings call, our strategy this year is to focus on growing the scales of granular stores, accelerating its integration with Best Express, Best Supply Chain, and Best Cloud with the goal of building out last mile service network and reaching more end consumers to offer more services.

As of September 30th, total number of branded stores reached to over 1,300, representing a year-over-year increase of 258%. In keeping with our strategic focus on long-term efficiency, we continue to deepen engagement with those stores to optimize merchandise selection and product offerings to minimize losses which also resulted in slower top-line growth. Store+ development has reached a key stage as it has achieved a critical skill which allow us to invest and move forward onto the next phase of building the last mile B2C platform and services. We are very excited with this business and are in the process of evolving the business and launching new products and service which I will share with you as they develop. Other service to revenue increased almost fivefold in the quarter to ¥351 million, primarily driven by significant growth of new cargo. In the third quarter, revenue generated from external customers on our UCargo platform increased significantly to ¥257 million.

The total number of transactions increased threefold year-over-year to over 135,000. As of September 30th, 2018, the number of registered agents increased 59% year-over-year to over 4,200. And the number of registered trucks increased to 51% year-over-year to over 241,000. The fast growth of UCargo demonstrates our commitment in investing in smart and efficient customer-facing solutions and the power of our integrated platform and ecosystem. We expect [audio cuts out] significantly in coming quarters. Best Capital, our financing operating to our ever-growing ecosystem deepened and expanded strategic corporation with multiple truck manufacturers to leverage the resources and network to expand its financing offering and solutions for transportation service providers. As of September 30th, it has provided a leasing service to over 6,000 trucks, a year-over-year increase of 19%.

We see tremendous synergy between UCargo platform and Best Capital in terms of aftermarket and the financing services. As we scale up UCargo business, we will create significant additional revenue opportunities for Best Capital as well. Best Global continued to expand its presence in regions outside of mainland China. As of September 30th, Best Global reached 15 countries and regions including new coverage in India and Indonesia through partners. Best Global is a key gross area for us as we continue to roll out services and solutions in Southeast Asia and North America to support the dynamic growth in e-commerce. Overall, we are pleased to see continued strong momentum in the third quarter. We were also driven by significant progress in executing against our key strategic priorities, despite competitive market conditions, our growth continued to outpace the market thanks to our superior platform that is better equipped to capture the opportunities created by the trend toward daily commerce.

Best as a platform, and its robust technology and nationwide services networks enriches the life of customers by making possible an omnichannel shopping experience. It empowers businesses by providing one-stop total supply chain solutions. In the age of artificial intelligence and digital economy, we are confident that our investments in business model and technology innovation will drive us to become a leading global smart supply chain and logistics company. With that, I will turn it over to Alice, our chief accounting officer and the senior vice president of finance. Go ahead, Alice.

Alice Guo -- Chief Accounting Officer, Senior Vice President, Finance

Thank you, Johnny. Hello, everyone. We are very pleased to announce that we've delivered another solid quarter. Our revenue increased by 34% year-over-year to ¥7.2 billion with our business showing stronger also momentum. For the second consecutive quarter, Best generated positive EBITDA and the adjusted EBITDA. EBITDA was ¥54 million. And the adjusted EBITDA was ¥1 million compared to net [audio cuts out] 66 million and a net of ¥86 million respectively in the same quarter of 2017. Adjusted EBITDA margin improved by 1.6 percentage points. Moreover, net also was ¥51 million, a decrease of 89 points to 1% year-over-year. And the non-GAAP net loss was ¥101 million, a decrease of 45 [audio cuts out] year. Now, GAAP net margin improved by 2 percentage points. We recorded ¥39 million of 79 million in other income due to gain from our investment to an AI solution provider.

The combination of non-GAAP measures to comparable GAAP measures and the relevant adjustment can be found in our earnings press release. Now, let's take a look at our third quarter financial performance. On a year-over-year basis, Best Express revenue increased by 33.4% to ¥4.4 billion, primarily due to our 35.7% increase in parcel volume. Gross profit increased by 66% to ¥280 million. As Johnny just mentioned, our continued focus on service quality and the network stability allowed us [audio cuts out] strong competition. And the average of revenue per parcel decreasing by 1.7% to RM [audio cuts out] 18. Average cost per parcel decreased by 2.7% to ¥3.02, primarily due to improved economies of scale from volume growth and the enhanced operating efficiency from ongoing platform optimization, network planning, and the technology application. As a result, our gross profits per parcel increased by 22.3%.

Best Freight revenue increased by 25% to ¥1.1 billion, primarily due to our 23.5% increase in freight volume. Average cost per ton decreased by 8% due to improved economies of scale from volume growth and the enhanced operating efficiency from ongoing platform optimization and the network planning. Best Freight has achieved positive gross profit for two quarters in a row. Gross profit margin increased significantly by 9.6 percentage points to positive-4.6% compared to negative-5% in the same quarter of 2017. Best Supply Chain revenue increased by 27.3% to ¥492 million, primarily due to 31.4% increase in the numbers of orders fulfilled by our Cloud OFC. Gross profit decreased by 31.4% to ¥20 million, and the gross profit margin decreased by 3.4 percentage points to 4%, primarily due to onboarding of large projects that are incurred up from cost to lease, agreement, and the label. Additional costs associated with temporary resources per pad for 4Q promotion period as well as overloading and pricing pressure.

In the third quarter, we continued to invest in Best Store+ to further enhance our presence and the control over the [inaudible] operation. Best Store+ revenue increased by 15.3% to ¥886 million, primarily due to our 17.2% increase in the number of store orders fulfilled in connection with the ongoing expansion of our Store+ networks. We maintained a gross margin to around 8%, despite the strong competition by using safer medicine, better supply chain, and the logistic planning and the optimization of merchandise for sale. Our other service lines include Best UCargo, Best Capital, and Best Global continue the strong growth momentum during the surplus of 2018. Revenue from those service lines increased about 500% to ¥361 million. This significant revenue growth was primarily due to the increase in UCargo's revenue generated from its total customers. It was also due to a 51.1% year-over-year increase in the number of trucks financed by Best Capital and Best Global's ongoing business expansion.

Gross profit increased by 45.9% to ¥31 million. Of the major operating expense items, all excluding share base compensation expenses, selling expenses as a percentage of revenue decreased by 0.4 percentage points to 3.3% from the same quarter of 2017. This improvement was primarily due to enhanced operating leverage across business units. General and administrative expenses as a percentage of revenue increased by 0.2 percentage points to 3.4%, primarily due to investments in the growth of the company's operation. Research and the development expenses as a percentage of revenue remained at 0.6%. Net cash generated from operating activities was ¥86 million compared to ¥33 million in the same quarter of 2017. Our cash and the cash equivalent registered cash and the short-term investment were ¥3.9 billion or US dollar $570 million as of September 13, 2018 compared to ¥4.3 billion as of June 13, 2018.

The decrease is primarily due to CapEx and the investment [audio cuts out] is partially offset by positive cash flow from operation. We continue to invest heavily in technology and automation. In the third quarter of 2018, our CapEx was ¥412 million or 5.7% of total revenue compare to ¥100 and ¥76 million or 3.3% of total revenue in the same quarter of 2017. As explained, most of the CapEx this year is to upgrade the automation system in major hubs and the sortation centers including investment in high-speed automated sorting lines and the dimension and the weight scanning system. We believe our operational efficiency will be further improved in the long run due to those investments. As we enter fourth quarter peak season, we will continue to execute our work strategy of strong top-line growth and operational efficiency enhancement to drive market expansion. Finally, I would like to discuss our financial guidance.

For the fourth quarter of 2018, we expect revenue to be between ¥7.9 billion and ¥8.1 billion. As a result, our full fiscal year 2018 guidance to be between ¥26.8 billion and ¥27 billion. With that, we will now open the call to Q&A. Thank you.

Questions and Answers:

Operator

Thank you. We will now begin the question and answer session. To ask a question, you may press * then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press * then 2. At this time, we will pause momentarily to assemble the roster. And the first question comes from Ronald Keung with Goldman Sachs.

Ronald Keung -- Goldman Sachs -- Analyst

Thank you. Hi Johnny and George and Alice. Thank you for taking the time to speak with us. Just a few questions if I can Firstly, we've seen some macro slowdowns on the companies that we cover, talking about slower growth. So, I just wonder, are you seeing any macro driven -- any slowdown in the business in the recent, for example, the past month or so? And is that reflected in your revenue guidance for the fourth quarter? I'm looking at low-20s to mid-20s growth at this point. My second question would be on store. We've seen evolving strategy where you're now moving more toward the branded stores more and more. So, can you share just any store targets there, any revenue margin targets and outlook for this segment? And if we exclude store, is it fair to say that Best is already above break even in the third quarter if we exclude store? Thank you. So, two questions for now.

Johnny Chou -- Chairman, Chief Executive Officer

Okay, Ron. It's Johnny. All right. First of all, macros. As I mentioned in my call, we're still seeing very strong growth across all our business line. So, if you look at our third quarter result, our parcel gross was about 35-some percentage. Actually, the government's post-bureau. Also announced it was about 26 and some percent. So, it's in part of what our estimate in the beginning of the year. So, from a parcel side, we still see a very strong e-commerce online-driven. On the freight side, we still grow about 23.5 or 24 percentage points. We assimilate from Q1 to Q2. So, each quarter it seems like we do see also a good demand on the e-commerce-driven large volumes of the freight shipment. So, on macro side, we don't see a big slowdown or any kind of impact on the current business line. So, you mentioned about the fourth quarter guidance of 20-ish. So, actually, we are still forecasting about 30% or so growth for the fourth quarter. And also, the 40 store business, which you were mentioning about, we do -- we do try some strategy.

The previous strategy was more about a generic B2B, mom and pop shop type of services. And starting second quarter this year, we are doing more branded store. Brands will probably have much more control of the shipment in term of pulse system usage in term of a higher per order transactions in terms of imaging and etc. So, we are doing much more expansion into the branded storefront. So, that will help us to -- even though the growth rate will slow down slightly in the number of the order being shipped. But in fact, the quality of a shipment is much more healthier and also more predictable and hopefully will drive us for a larger margin. So, with that question, you were also asking about margin expansions on the store business. We do see store business as efficiency is coming out.

So, quarter by quarter, we should see less of a loss for the business. In fact, you said if we take this out completely, the store, the rest of the business should be positive. So, store, itself, is right now a major investment we add onto our business. So, without that, the other whole businesses should be all positive. And that's my answer.

Ronald Keung -- Goldman Sachs -- Analyst

Thank you.

Operator

Thank you. And the next question comes from Scott Schneeberger with Oppenheimer.

[Crosstalk]

Daniel -- Oppenheimer -- Analyst

 Good morning. Thank you. This is Daniel on for Scott. Can we talk about freight margins and how you think about that going forward? And if you can elaborate on how e-commerce related to transactions and network optimization and technology is contributing. Thank you.

Johnny Chou -- Chairman, Chief Executive Officer

Okay. Freight fiduciary is more toward manufactured to manufactured. So, if the last four was e-commerce related, the shipment -- but as you see, on way more big items like the refrigerators or these bigger items -- so far, our furniture's being sold online. So, we see a tremendous need for this kind of service. So, in order to keep up a higher growth rate, I think that we are purposely moved toward more of e-commerce. Of course, we would not think that we're not doing the factory related shipment but also more toward a e-commerce. So, e-commerce has several characteristics for the freight. No. 1 is the pricing on typical is a little bit higher. So, it's per kilogram or per tonnage income that are higher than a more bulky and a heavier product. And second is that they require much more broader coverage areas. So, to a lot of competitors in the freight business which they don't have full coverage, blank space spot for coverage, it's more difficult to do.

So, that'll give us more advantage since we have spent the last three-four years to covering the whole countries with these. And so, the margin should be gradually improved. But however, as we mentioned in the call that the market's also competitive in the sense that there's also the parcel business is starting getting integrated. There are more and more integrations into the fuel players. That's why I think that in the next couple years, we'll have seen a volume growth in e-commerce side as well as market expansion. But our regular pricing is also that expensive.

Daniel -- Oppenheimer -- Analyst

Thank you.

Operator

Thank you, and --

[Crosstalk]

Operator

Oh, I'm sorry. Thank you. And the next question comes from David Ross with Stifel.

David Ross -- Stifel -- Analyst

Yes. Good morning, gentlemen. Or good evening. Could you continue on the chat about the China market? Although most of your business is domestic China, have you seen any impact from the US or Chinese tariffs?

Johnny Chou -- Chairman, Chief Executive Officer

Okay. Hey, David. Yeah. We do see somewhat of a -- as you just said, that majority of our business is domestic in China. But we do have a lot of cross-border shipment, especially to North America, to US. We do see some slowdown in a sense. Fortunately, the exposure there was not that big. So, on global side, we will see little bit of impact on freight front and shipment front. And otherwise, domestically, I think we still enjoy a very healthy and strong growth.

David Ross -- Stifel -- Analyst

And how would you describe the current competitive landscape versus a year ago? Is it getting competitive again on the pricing side? Are there more players? Fewer players? More rational? Less rational?

Johnny Chou -- Chairman, Chief Executive Officer

Okay. The competitive landscape, it's in general, three thing. One is that consolidation happening. So, you're seeing more and more volume consolidating into a top few players. For express, it's all being bigger and consolidation into top five players. And also, we've seen the trend in the freight side in foundation even though the freight's probably lacking express probably two or three years out. So, freight's probably two or three years ago express. But we do see a consolidation, higher levels of competitor among top few players. On the supply chain side, same thing. We see consolidation happening a lot over traditional 3PL company which are in the space doing the B2B fulfillment, all this stuff.

They are gradually losing out. But also, on the fulfillment side, we also see supply chains that are also concentrated integration happening. So, in general, I think the e-commerce is still growing very rapidly. The consolidation on each of the subfield that we are playing and the pricing is competitive. But as the consolidation of the players are getting more and more happening, I think the pricing eventually -- pressure will eventually ease a little bit.

David Ross -- Stifel -- Analyst

Excellent. Thank you.

Operator

Thank you. And next question comes from Eric Zong with Macquarie.

Eric Zong -- Macquarie -- Analyst

Hi. Good evening, Johnny, George, and the team. So, thank you very much for taking my questions. First of all, I would like to ask if you can share with us the unit of cost breakdown for express delivery business like you shared with us in the second quarter. And the second question is on supply chain management business. So, we saw the QP margin has been weak in the third quarter, declined by 3.5 percentage point year-on-year. So, I just wonder what your reason behind the rising trend. Yeah. Thank you.

Johnny Chou -- Chairman, Chief Executive Officer

Okay, Eric. Your first question on the express parcel breaking down, our par -- so, basically, the revenue's about 3.18 which including the last mile delivery. So, we did raise the last mile delivery to about ¥1.59. So, basically, as a per parcel revenue site, it was down about 2% year-over-year. So, last year, it was about 3.23. This year's about 3.18. So, it's ¥0.05 less. However, the delivery side on last mile costs, it was increased by about ¥0.18. So, we do give more on a last mile side. Transportation was down. We reduced about 5% from about ¥0.90 per parcel down to about ¥0.86. We are further driving down this cost. Labor cost is down about 39% from ¥0.43 down to about ¥0.26, primarily due to the automation and reduction of the sorting center and everything. These costs are down about 14%. So, from ¥0.12 to about ¥0.11. Remember, we don't really view them and build it ourself with most of all these. So, it's down about 14%.

Other costs which are including the amortization of the fixed asset and everything else was down about 13%, so go from ¥0.23 into ¥0.20. So, as a result, we are releasing a big reduction in cost, as I mentioned, 55% on transportation, 39% on labor, and 14% on the lease, building on 13%. But also increased the last mile delivery cost by about 12%. Net result is that our gross profits increased about 22 percentage from last year which is from ¥0.13 per parcel to up to about ¥0.16 per parcel. So, that's your first question on the unit cost side. On the SCM side, the pricing side of the margins. Some were lower, just a little bit lower than we had forecasted. The sense is that -- first of all, this year, we have put a lot of automation in the system. And also, we have 200,000 additional space in the third quarter coming to the fourth quarter. So, we really have a large amount of leasable space which we wanted to fulfill the fourth quarter in anticipation of our large customers' needs.

Also, we have signed multiple 40 to 50 major accounts for the fourth quarter. So, basically, we need to ramp up -- I think the third quarter. I'm sorry. Third quarter and the fourth quarter, we signed about the multiple large 48 customers. They're required to buy material, equip the warehouses, getting more people online, etc. So, that does give us a little bit more overhead on that. So, we should see a squeeze on this front as the fourth quarter go into full swing. And this space is gonna be all utilized. And I think going to the next couple quarter, we should see a utilization increase and also, the margin improved.

Eric Zong -- Macquarie -- Analyst

Okay. Thank you. Thank you, Johnny.

Operator

Thank you. And the next question comes from Hans Chung with KeyBanc Capital Market.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Yeah. Good evening. Thanks for taking my questions, Johnny, George, and Alice. So, a question regarding the express gross margin in the quarter. I know you have investment in automation in the sorting center. So, do we see any near-term impact on this? Because I suppose we still need to win up the automation line. And then I don't know what's the utilization right now. And then when should we start to see the full benefit from the automation in the sorting center going forward? Thank you.

Johnny Chou -- Chairman, Chief Executive Officer

Okay. So, the sorting automation is -- we'll continue to invest heavily on this automation. So, in fact, our total number of our employees in the whole company, the whole group, we actually have less people now than last year. Same period last year, we actually had more people than this year. So, we are increasing about number of automated sortation now to about 29% already. So, 29% of our parcels are now automated and quarter by quarter, be increasing. So, the capacity we put in is not just for fourth quarter this year. Every year, we're putting lot of capacity, giving a gross of 30-some percent, 35%-36%, the volume gross that we enjoyed this year. So, we're not just putting the equipment in the fourth today. We are putting the equipment for future increasing in the volume. So, typically, a new system put in place, we anticipate able to carry three to five years of the future usages. So, the more we put in today, they should be able to support in the three to five years over a long period of time.

So, example, in photo, we're putting about over 100 million ¥s of equipments in photo. Net result is that we combine about six sortation centers nearby into one, nearby like Nantong, Wuxi. So, marketable or these separated sortation centers all combined to one. That will give us a much more efficiency in term of the labor cost, the goods of transportation cost for trucking between each sortation centers. And at that center, we can -- our plan is for five years usages. So, the capacity could be quadruple or three times or four times of what it was today's volume. So, when we're putting a system, it's really not just for today that will go through the -- that will have huge volume, but also for the next year's Q1, Q2, Q3, and the year after. So, part of the question is that we do invest in this center every year to planning for three to five years out of our usages.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Thanks. So, just one follow-up just regarding the 4Q guidance. So, what's the assumption for the cost of express volume for the fourth quarter?

Johnny Chou -- Chairman, Chief Executive Officer

I cannot specifically say what's the volume. But I think we are going to see a stronger growth on the fourth quarter. So far, we have seen -- last quarter was about ¥0.36. So, the Q4, it should be slightly higher than that. I cannot give you a specific exact number. But as of now, we see a very strong growth.

Hans Chung -- KeyBanc Capital Markets -- Analyst

Okay. Thank you.

Operator

Thank you. And the next question comes from Cherry Leung with Bernstein.

Cherry Leung -- Bernstein -- Analyst

Hi, Johnny, George, and Alice. If you don't mind, can I ask two questions about the outlook of the business? In the next quarter, what is your projections on the overall profitability of the company? Is there any chance that the company will return into profitable? And the second question is about the guidance of revenue, that in the second quarter, we looked at the guidance of a full-year revenue of around ¥27 billion. Would you intend to keep this guidance for the rest of the year? Or is there any changes to the forecast?

Johnny Chou -- Chairman, Chief Executive Officer

Okay. So, your first question is about the profitability toward the fourth quarter. We're still very focused on executing our [audio cuts out] which is the customer focusing and also efficiency driven as well as driven the -- and when you have a driving for a high top-line gross and at same time driving for efficiency in the bottom-line. Yeah. So, we are still driving for the breakeven on a fourth quarter on the net side. On the revenue side, yeah. We still maintain the same guidelines as we had done on last call. We said about anywhere from ¥26.8 to ¥27 billion. We still maintain the same guideline.

Cherry Leung -- Bernstein -- Analyst

Sure. Thank you. And can I ask a follow-up question?

Johnny Chou -- Chairman, Chief Executive Officer

Sure Cherry. Sure. Go ahead.

Cherry Leung -- Bernstein -- Analyst

Thank you.

Johnny Chou -- Chairman, Chief Executive Officer

Go ahead, Cherry.

Cherry Leung -- Bernstein -- Analyst

I think the next quarter -- thank you. In the next quarter, how do we see the price competition the macro environment is changing? Because we have seen that delivery fee has increased for the winter out to the three companies. And do you think that the new quarter, in terms of our revenue per parcel in express -- what would be the trend? Is it going to trend down or trend up versus last quarter?

Johnny Chou -- Chairman, Chief Executive Officer

Yeah. So, I cannot speak for everybody else, but macro-side, I think everybody is anticipating a fourth-quarter high-sales season. So, most company like ourself being raising prices. So, our express business, we raised the price multiple times already as well as the last mile delivery fees, as well as the sorting and handling fees that we have been raising on that. So, the pricing side of the per parcel, you should see a ASP increase in fourth quarter. And that will also help to offset some of the additional costs associated with Double 11 peak season, the additional trucks, and everything else. So, the net result I think -- the fourth quarter, basically, the revenue's gonna be higher. Volume's gonna be higher. The AS is gonna be higher. And the margin's gonna be higher.

Cherry Leung -- Bernstein -- Analyst

Thank you. That's very helpful.

Operator

Thank you. And the next question comes from Calvin Wong with JPMorgan.

Calvin Wong -- JPMorgan -- Analyst

Hi, Johnny, George, Alice, and the team. Just a couple questions from my side. First is just on peak season volumes, and especially Double 11. What are we seeing so far? I think there have been some new slow talking about and then including [inaudible] talking about expectations of maybe mid-20s type of growth in terms of volume. Just wanna see what we've been seeing so far and our expected performance there. And just wanted to follow up on the total revenue guidance that we have because the fourth quarter number implies year-on-year growth of about 21% to 24%. So, definitely a bit of a slowdown. We had mentioned express probably should be doing quite well. So, what's really dragging down that overall revenue number in terms of our expectations?

Johnny Chou -- Chairman, Chief Executive Officer

Okay. So, regarding peak season volume, as I mentioned to the answer to Cherry's question, is that we are seeing strong demands for the fourth quarter volume. In fact, as we speak today, we see the volume on fourth quarter should be higher than the third-on-third. Onto the full-year guideline guiding us, last year, we really had a pretty good run third quarter, fourth quarter, and the full year. I think the parcel last year third quarter grew about 90-some percent. In fourth quarter, grew about 70-some percent. So, we still maintain a very high growth on the fourth quarter. And we're confident that the number we've given guidance is from the last quarter. The third quarter actually was very higher than the -- so, I think the 20% or 24%, that is something low. But we didn't really calculate what it is. I think the fourth quarter number should be higher than that.

Calvin Wong -- JPMorgan -- Analyst

Understood. I also wanted to just quickly ask on UCargo. We're seeing it's ramping up fairly quickly. What are the next steps here for us and with respect to actually a better monetization of this particular platform? I just wanna get some idea of how we should be thinking about the future trend and development of this business.

Johnny Chou -- Chairman, Chief Executive Officer

Yeah. So, UCargo actually has been growing significantly. Actually, we have both internal customers and external customers. So, the number we reported was all due to the external customer. So, going forward, we will see a still very high growth rate. Right now is good. We have a 3-400% affecting 20%-ish. Next year, we still want to see couple hundred percent of growth. And the business itself, it should be a profitable growth. We are not required to burn any money, as it could generate the profit into the near future. So, we are very optimistic about this business and the future of the outlook.

George Chow -- Chief Strategy, Investment Officer

Hey, Calvin. This is George. Hey, Calvin. This is George. I just wanna add to what Johnny said to your question about -- and I think another analyst had raised similar issues about seemingly the guidance for the full year is a little bit low on the 20-something percent side. The reason being actually -- another reason other than we grew very fast in the last year -- it's really come down to Store+. So, as mentioned, I think previously, we were very aggressively growing the Store+ B2B platform. So, the revenue forecast for that business was on the same side. So, if you take the Store -- as also Johnny mentioned, we are planning toward the strategy. So, we are much more focused on growing the branded store business.

And so, consequent, as you see, the overall revenue gross for Store+ on the absolute basis is gonna slow down. So, as you look at the -- you might have to look at the third quarter number. The goals for Store+ is only about -- it's about mid-teens, right? So, that's really the main reason. So, if you look at our Express business, you look at our Freight business, you could look at our Supply Chain business, and if you look at the other businesses, they will definitely grow a lot more than 20-something percent. But having the Store business revenue also, that's gonna bring down the revenue numbers.

Johnny Chou -- Chairman, Chief Executive Officer

Calvin, I did not understand. You said 20-some percent gross. You're talking about Q4 or you talking about a full year?

Calvin Wong -- JPMorgan -- Analyst

Q4, year-on-year revenue.

Johnny Chou -- Chairman, Chief Executive Officer

Oh, OK. Got it. It's Q4. Okay. Yeah. So, full-year's still gonna be 30-plus on the gross side. So, Q4, we basically just tried to see from the last earnings call we would give guidance, so we can stick with it. In fact, the current -- what are we seeing now, it should be better than this.

Calvin Wong -- JPMorgan -- Analyst

Understood. Very clear. Thank you very much.

Operator

Thank you. And the next question comes from Tian Hou with TH Capital.

Tian Hou -- TH Capital -- Analyst

Good evening, management. The question's related to your freight business. And I think your freight business is the second largest business of your business line. So, the year-to-year growth rate was decelerated in the Q3. So, I wonder what's the reason and what's the strategy going forward. So, that's one. And also, the second question is I don't quite understand what is a branded store. And what is the prediction of branded store and the US store before? So, that's much more a basic analogy issue. So, I hope I can get some clarification on that. The third question is much more for the business strategy. You have multiple line of the business. I wonder how come management has all those energy to focus on every single business line when you're facing computations on every single business line front. So, what's the strategy on that? That's all my question. Thank you.

Johnny Chou -- Chairman, Chief Executive Officer

Okay, Tian. First question you had was on the freight business. In fact, we are continuing to grow the freight. If you look at our volume side, our freight business is growing about 24 percentage quarter-by-quarter. I think every quarter we grow about -- say volume grow about 24%. So, we don't see any kind of slowdowns, any kind of slowdown. In fact, we are seeing park every quarter. So, that's No. 1. I think if you look at the volume growth we had on Q1, Q2, it's also about 24%. And actually, we still see a similar pattern in Q3 and Q4. So, that's on freight side. On the Store+ side, when we say branded, branded is meaning that some store is using -- the store is using our name. For example, Best Neighbor. That is branded because basically, it's a storefront. It has a storefront. It's called Best Neighbor. That's branded. But a membership store is not branded. It's basically, "Uncle Joe's Grocer." So, that's Uncle Joe's. That's a mom and pop shop.

So, these are what we call non-branded. So, branded is Best Neighbor stores or the WoWo stores. And these stores are called branded. No. 3, you are absolutely right. There are many people ask the same question, "Why you have multiple business? How the management focus on that?" Because if you look at our business, they're all very integrated and synergetic business because all along, we said we want to provide consumers and businesses with a online/offline integrated omnichannel solutions. So, not just warehouses. Not just a parcel. We can do online, offline, auto, to home, to the store, return, big items, small items. So, that's what our customer needs because our customer no longer just setting to the store using to the retailers to the agents but also to online, to home. So, that's our purpose. So, we think many of our other players, other express players and also other freight players and so and so are not.

And they are also adopting a similar kind of strategy as they start to develop other business, try to have more synergetic solutions. For many years, I said it. We tried to build a smartphone like a iPhone. Not just a digital camera, a gaming machine, a communication device, a digital camera, all this. But it all needs to work together. So, that's what consumer wants. That can go anywhere, any place, and any time. And one device and can get what they wanted. Same thing in today's digital economy. Traditional logistic company cannot support a growing need of consumers' needs and also business needs, able to support anywhere, any time, any place. So, if you have a fragmented services, that means that consumers or the customers would require to talk to working with many, many, many different kind of service providers in order to provide a much more needed services to consumers. So, from that side, I think we have a very capable management team. We got each general manager are responsible for each other business units.

And we got a general manager for Express, a general manager for Freight, general manager for Supply Chains, supported by all our technology group. And that's how we manage our day to day business.

George Chow -- Chief Strategy, Investment Officer

Hi, Tian. I just wanna add one thing to your question about branded and the membership. So, the membership, essentially, it's a B2B platform. So, business stores, they can order from multiple apps, so Best being one of them. The branded stores, so for Best Neighbor, those are franchise stores. So, they actually pay us money to basically use our system. So, everything's integrated. And they order a big part of the merchandise from us. And our WoWo is just cellphone, 100%. So, it's 100%. They do all their business through us. So, that's the difference.

Operator

Thank you. And this concludes the question and answer session. So, I would like to return the floor to Johnny Chou for any closing remarks.

Johnny Chou -- Chairman, Chief Executive Officer

Okay. Thank you, all for joining our call. And we appreciate your support of that. Please reach out to our investor relations team if you have any further questions. We look forward to speaking to you soon. Thank you very much.

Operator

Thank you. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
Duration: 60 minutes

Call participants:

George Chow -- Chief Strategy, Investment Officer

Johnny Chou -- Chairman, Chief Executive Officer

Alice Guo -- Chief Accounting Officer, Senior Vice President, Finance

Ronald Keung -- Goldman Sachs -- Analyst

Daniel -- Oppenheimer -- Analyst

David Ross -- Stifel -- Analyst

Eric Zong -- Macquarie -- Analyst

Hans Chung -- KeyBanc Capital Markets -- Analyst

Cherry Leung -- Bernstein -- Analyst

Calvin Wong -- JPMorgan -- Analyst

Tian Hou -- TH Capital -- Analyst

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