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Management, via a moderator, attributed the over 40% YoY growth in active customers and shopping frequency to both core retail enhancements and the launch of JD Food Delivery, which attracted younger users. While short-term margins may fluctuate due to these investments, the long-term goal of a high-single-digit profit margin remains intact, driven by supply chain efficiency, improved category profitability, and the growth of the 3P ecosystem.

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Chairman and Co-CEO Lei Chen addressed competition by emphasizing that PDD's marketplace model allows it to directly support its merchants, who are facing challenges. He highlighted the RMB 100 billion support program as a key initiative to build a robust ecosystem. Executive Director and Co-CEO Zhao Zhao Zhen commented on the June promotion, stating PDD continues to focus on simplified mechanisms and real savings. He noted the introduction of a 'price drop protection service' to improve consumer experience and build trust.

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Executive Lei Chen addressed the platform ecosystem, explaining that initiatives like the CNY 10 billion fee reduction and high-quality merchant support programs are central to their strategy. These efforts aim to lower merchant costs, encourage product innovation, and drive supply chain upgrades for long-term, quality-driven growth. Co-CEO Jiazhen Zhao discussed the consumer side, highlighting the upgraded 'super level savings' initiative and '10 billion consumption vouchers' which provided significant savings and served as a growth engine for brands during Q4 promotions.

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Co-CEO Jiazhen Zhao noted strong growth in online consumption, highlighting the success of the '10 billion voucher campaign' during Double 11. Regarding competition, he acknowledged it remains intense and that the growth slowdown was inevitable. He stated that due to limitations in its third-party platform model and operational experience, the company might face disadvantages and higher costs than peers for some time, but will continue its long-term investment strategy in the ecosystem.

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Executive Lei Chen stated that recent profit growth is not a long-term guide and profitability will trend down due to a new investment phase. He confirmed there are no plans for share repurchases or dividends in the foreseeable future. Co-CEO Jiazhen Zhao elaborated on the merchant ecosystem, explaining the strategy is to support high-quality merchants with incentives, including a planned CNY 10 billion in transaction fee reductions, while removing bad actors to foster a healthy, sustainable platform.

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Founder, Chairman & CEO Kerry Chen confirmed the national subsidy program has significantly boosted the 1P business, citing strong user incentives and collaboration with JD.com. He expressed confidence in long-term growth due to low market penetration. CFO Rex Chen attributed the improved non-GAAP operating margin to optimized pricing strategies for the Apple trade-in and overseas businesses, which turned profitable year-over-year. He explained that higher fulfillment and marketing expenses were strategic investments in store expansion and brand promotion to support growth, while reiterating the full-year goal of accelerating revenue and gradually improving operating margins.

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Xuefeng Chen Kerry, Founder, Chairman and CEO, stated that national subsidies are a significant growth engine. He detailed plans for accelerated top-line growth in 2025 by expanding the fulfillment network with a net addition of 800 stores and 1,000 to-door service staff, increasing brand investment on new media platforms, and utilizing compliant refurbishment capabilities to capitalize on the expected surge in C2B recycling volume.

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Xuefeng Chen Kerry, Founder, Chairman & CEO, explained that the partnership with JD.com is a primary driver. In Q3, recycling and trading business through JD.com grew over 40%, with the trading business doubling. During the Singles' Day promotion, the value of products collected via trading surged 246% year-over-year. He highlighted the success of cross-category trade-ins, such as phones for home appliances, and noted that trade-in adoption is still in its early stages, presenting a significant growth opportunity.

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CFO Xiaofan Wang highlighted that overall bookings on the Trip.com platform grew over 60% YoY in Q1. She identified the APAC region as the top priority and a key growth driver, while also noting rapid expansion in new markets like the Middle East. Wang added that cost efficiency is improving with scale and that marketing ROI remains aligned with requirements.

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CFO Xiaofan Wang noted healthy Chinese New Year travel demand with more even distribution. She highlighted that outbound bookings grew over 20% YoY and inbound saw triple-digit growth. Post-holiday, momentum remained healthy. She added that hotel prices are still below last year's levels but are gradually recovering, and supply has increased. The company anticipates stabilizing hotel prices in 2025.

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CEO Jane Sun responded that travel demand remains resilient. She noted that the gross merchandise value (GMV) per traveler has remained consistent with the previous year, and higher prices for overseas travel are partially offsetting domestic pricing pressure. Furthermore, high search volumes indicate that customer interest in both domestic and international travel remains strong.

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CFO Xiaofan Wang reported that bookings during the Labor Day holiday set new records, with outbound travel surpassing 2019 levels by over 10%. Quarter-to-date, domestic bookings saw double-digit growth while outbound bookings fully rebounded to pre-pandemic levels, significantly outperforming the market. Management remains confident about the summer travel season, anticipating significant growth in the outbound sector as flight capacity continues to recover.

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Jianfeng (Fan Jiang), CEO of Taobao and Tmall Group, confirmed that the short-term priority for instant commerce is rapid user conversion on the Taobao platform. Regarding the 618 campaign, he indicated there would be changes to marketing and pacing to adapt to the competitive landscape and enhance the consumer experience, but declined to share specific details as the event had not yet officially commenced.

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Fan Jiang, CEO of Alibaba e-commerce Business Group, stated that the short-term priority for instant commerce is rapidly converting Taobao's existing users. Regarding the 618 campaign, he confirmed that changes are being made to adapt to the competitive landscape and improve the consumer experience. However, he declined to share specific details as the campaign had not yet officially launched, promising a fuller report on the next earnings call.

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