Dada Nexus - Q1 2024

Transcript

Operator (participant)

Good morning, ladies and gentlemen, and thank you for standing by for Dada's first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After the management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I will now turn this meeting over to your host for today's call, Ms. Caroline Dong, Head of Investor Relations for Dada. Please proceed, Caroline.

Caroline Dong (Head of Investor Relations)

Thank you, operator. Hello everyone, and thank you for joining our first quarter 2024 earnings conference call. On the call today from Dada, we have Mr. Bing Fu, Interim President, and Mr. Henry Jun Mao, CFO. Mr. Fu will talk about our operations and company highlights, then Mr. Mao will discuss the financials. They will both be available to answer your questions during the Q&A session. Please kindly note that Mr. Fu will give his remarks and answer questions in Chinese, and a consecutive translation will be provided. In case of any discrepancy between the original remarks and the translated version, statements in the original remarks should prevail. Before we begin, I'd like to remind you that this conference call contains forward-looking statements. Please refer to our latest forward-looking statements in the earnings press release on our IR website, which applies to this call.

Also, during this call, we will discuss certain non-GAAP financial measures. Please also refer to our earnings press release, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures. Finally, please note that, unlike otherwise stated, all figures mentioned during this conference call are in RMB. It is now my pleasure to introduce our Interim President, Mr. Fu. Mr. Fu, please go ahead.

Bing Fu (Interim President)

谢谢 Caroline。欢迎大家参加我们的业绩会。

Caroline Dong (Head of Investor Relations)

Thank you, Caroline, and thank you all for joining us.

Bing Fu (Interim President)

相信大家已经注意到，公司近期进行了品牌升级。我们的即时零售业务全面升级为京东秒送、JD Now，以全新的品牌形象携手超过50万家实体门店，为全国2,300多个区县市的消费者提供毫无门槛的即时消费服务。

Caroline Dong (Head of Investor Relations)

I believe it has come to your attention that we recently launched a brand upgrade. Our on-demand retail service has been rebranded as JD Now, delivering quality goods at top-notch speeds. Partnering with over 500,000 brick-and-mortar stores, JD Now provides on-demand shopping experience to consumers in more than 2,300 cities and counties.

Bing Fu (Interim President)

目前我们在京东主站原小时达的各类消费者触点已全面更新为秒送，包括顶部的双首页入口名称、搜索结果标签等。此外，京东 APP 首页也即将新增秒送专区，秒送商品和商家将获得更多的曝光机会。从今天开始，公司将推出一系列面对消费者的推广活动，进一步强化秒送品牌的心智建设。

Speaker 6

Our various consumer touchpoints of the former 小时达 or 消费者服务 on the JD APP have all been renamed, including the parallel tab at the top of the homepage and tags of search results. In addition, there will soon be a new JD Now section on the homepage of the JD APP, enabling products and merchants on our platform to gain incremental exposure. Today, we'll also kick off a series of consumer-facing awareness campaigns to enhance consumer mindshare of the JD Now brand.

Bing Fu (Interim President)

随着品牌升级，我们也进入了新的篇章，聚焦可持续的平台生态建设。今年，公司全面回归以用户为中心，聚焦健康增长，实现业务的长期可持续发展。第一季度，达达集团总收入为 CNY 25 亿元，其中达达快送业务同比增长 57% 至 CNY 12 亿，增速达到过去八个季度的最高水平。京东秒送业务方面，我们也看到随着战略聚焦的显效，核心经营数据出现了显著的回升。

Speaker 6

Along with the introduction of our new brand, we've entered a new chapter with a focus on building a sustainable ecosystem. Heading into 2024, we've decided to further strengthen our commitment to customer experience and focus on healthy growth to deliver sustainable long-term development. In the first quarter of 2024, our total net revenues were CNY 2.5 billion. In particular, revenue from Dada Now increased by 57% year-over-year to CNY 1.2 billion, accelerating to the highest growth rate in the past eight quarters. For JD Now, we noted a significant turnaround in our core operating metrics as our investments in the core business to uplift customer experience payoff.

Bing Fu (Interim President)

现在我们介绍京东秒速和达达快送两个平台的业务亮点。首先先看京东秒速。

Speaker 6

Now let's turn to the operating highlights for our two platforms, JD Now and Dada Now. Starting with JD Now.

Bing Fu (Interim President)

第一季度，京东秒送聚焦京东 APP 场域，也就是原来的小时达和京东首页的一级入口，积极拥抱京东生态，在需求和供给两个方面持续发力，改善用户体验，丰富平台供给，提升即时配送服务在京东用户间的渗透率。

Speaker 6

In the quarter, JD Now focused on integrating into the JD.com ecosystem to drive growth on the JD APP through entry points including the former 小时达 service and the Level 1 icon entry point on its homepage. Our efforts on the demand and the supply side yielded encouraging results on our user experience and product offerings, driving up the penetration of on-demand retail among JD users.

Bing Fu (Interim President)

在需求侧，我们通过满 CNY 29 免运、产品功能优化等举措持续优化用户体验。

Speaker 6

On the demand side, we enhanced user experience with initiatives including a delivery fee waiver campaign for orders over 29 RMB and better interface designs.

Bing Fu (Interim President)

CNY 59 下降至 CNY 29。截止三月末，满 CNY 29 免运活动已覆盖近80%门店，提升了拉新效率和用户粘性。相较于活动前，免运之后的新客转化率改善了 20%，次日留存率提升了 10% 以上，老客的复购率提升近 30%。

Speaker 6

In the first quarter of 2024, we further reduced the free delivery threshold to 29 CNY from 59 CNY in cooperation with our merchant partners. By the end of March, nearly 80% of active stores on our platform were enrolled in the campaign, which has significantly improved our new user acquisition efficiency and user stickiness. Compared with pre-campaign levels, the conversion rate of new users improved by 20%. The seven-day retention rate of new users rose by about 10%, and the repeat purchase rates among existing users were up by nearly 30%.

Bing Fu (Interim President)

同时我们持续进行产品功能的优化，提升全链路购物流畅度。比如我们对秒速频道进行全新的改版，在搜索展示进一步丰富了购买决策信息。第一季度，秒速频道以及搜索曝光的转化率均同比提升约一个百分点。

Speaker 6

In the meantime, we continue to work on upgrading our platform features and interfaces to enable seamless shopping experience. For instance, we redesigned the page layout of the JD Now tab, adding more decision-useful information in search results. The revamp helped improve the user conversion rate of both the JD Now tab and search result exposure in the first quarter by around one percentage point year-on-year.

Bing Fu (Interim President)

得益于以上举措，即时零售在京东用户中的渗透率持续提升。第一季度，京东 APP 场域的月均下单用户数和订单量均实现同比 70% 以上的增长，较去年第四季度加速 50 个百分点以上。在刚刚过去的四月，用户数和订单的同比增速进一步加速至 100% 以上。与此同时，用户的粘性也在增强。三月，京东 APP 场域的用户四月复购率同比提升超 30%，证明我们的用户心智在不断地增强。

Speaker 6

Driven by these initiatives, our penetration rate among JD users continued to rise. In the first quarter, both our monthly transacting users and orders through the JD APP recorded year-on-year growth rates of above 70% and with a significant acceleration of over 50 percentage points sequentially. What's more, we are encouraged to see these two metrics gain even stronger momentum, growing by more than 100% year-on-year in April. Meanwhile, our user stickiness is also improving. In March, the 30-day repeat purchase rate of consumers on the JD APP increased by over 30% year-on-year, indicating stronger user mindshare.

Bing Fu (Interim President)

随着用户体验的优化和规模的增长，第一季度来自京东 APP 场域的 GMV 同比增长超 30%，其中秒速频道的 GMV 同比增长超 200%。

Speaker 6

As user experience improves and our user base grows, our GMV on the JD APP grew by over 30% year-on-year, among which GMV generated by the JD Now tab more than tripled year-on-year in the quarter.

Bing Fu (Interim President)

在供给侧，我们通过增加门店覆盖、提升产品价格力，持续丰富平台的优质供给。为了进一步提升京东秒送的门店密度，我们持续拓展与酒水、家电、生鲜、鲜花等品类优质商家的合作。2024年一季度，我们在京东 APP 场域的活跃门店数同比增长超 80%。

Speaker 6

On the supply side, we focused on expanding store coverage and enhancing price competitiveness. To further increase the store density on our platform, we onboarded more high-quality merchants across various verticals, such as liquor stores, home appliance stores, fresh produce stores, and flower shops. In the first quarter, the number of our active stores on the JD APP had increased by more than 80% from a year earlier.

Bing Fu (Interim President)

在提升产品价格力方面，我们持续基于同城价格星级运营工具，协同商家提高秒速商品的价格竞争力，建立低价的心智。截至3月末，秒速在京东 APP 场域的高价格星级商品占比同比提升超过6个百分点。

Speaker 6

In an effort to be more competitive on prices, we are working with merchants to enhance the price competitiveness of JD Now products, leveraging the price-based star rating pool, thereby increasing users' mindshare of JD Now's price competitiveness. As of the end of March, the proportion of high-star JD Now products on the JD APP increased by more than six percentage points from a year earlier.

Bing Fu (Interim President)

从品类来看，在便利店品类2024年第一季度的 GMV 同比增长超过5倍。我们与每一家等头部便利店品牌持续加深合作，新增门店数超5,000家。

Speaker 6

Now let's move on to business updates by category. In the convenience store category, GMV increased by more than 5x year-on-year. In particular, we became more involved with top convenience store chains like Mei Yijia, the number one convenience store chain by the number of stores in China. In the first quarter, we onboarded more than 5,000 new convenience stores.

Bing Fu (Interim President)

40%, among which XTC, HP, and other brands' year-over-year growth exceeded 100%.

Speaker 6

Turning to consumer electronics. In the smartphones subcategory, GMV of Xiaomi among other mobile phone brands nearly doubled from a year earlier in the quarter. In the computer and accessories subcategory, we expanded our slate of offerings by adding more than 3,000 new stores, and total GMV maintained rapid growth of nearly 40% year-on-year. Specifically, GMV for XTC, a local watch phone brand, and Hewlett Packard more than doubled year-on-year.

Bing Fu (Interim President)

在家电家居品类，本季度我们新签约 云米 等智能家电品牌，推动超过 6,000 家新门店的上线。第一季度家电 GMV 同比增长近 150%，家居 GMV 同比增长超 40%。

Speaker 6

Now I would like to move on to discuss the home appliance and home furnishing category. During the quarter, we launched new partnerships with smart home appliance brands, including Viomi, the leading IoT at-home technology company in China, and added more than 6,000 new stores onto our platform. As a result, in the first quarter, GMV for home appliance brands increased by nearly 150% from a year earlier, while GMV of home furnishing merchants increased by more than 40% on a year-on-year basis.

Bing Fu (Interim President)

在酒水品类，持续优化与酒水行业头部连锁商家的合作。第一季度 GMV 同比增长近两倍。

Speaker 6

In the liquor category, we continued to deepen our partnerships with leading alcohol retailers. In the first quarter, GMV of the category nearly tripled year-over-year.

Bing Fu (Interim President)

在服饰品类，顺应户外运动的消费热潮，深化与运动户外品牌的合作，带动2024第一季度整体服饰品牌 GMV 同比增长超过2倍，其中 骆驼 等户外鞋服品类同比增长超过7倍。

Speaker 6

For the apparel category, we made a greater inroad with sports and outdoor brands. As demand for outdoor sports products boomed, driving GMV for the whole apparel category to more than double from a year earlier, among which some outdoor footwear and apparel brands like Camel, the leading player in China, increased by more than seven times year-over-year.

Bing Fu (Interim President)

以上是京东秒送的业务进展。接下来与大家同步达达快送的业务进展。2024年第一季度，达达快送业务收入为12亿元，同比增速持续加速到57%，是过去八个季度以来最高的水平。

Speaker 6

This covers JD Now's efforts and results on both demand and supply side. I would now like to turn to Dada Now, the leading local on-demand delivery platform open to merchants and individual senders across various industries and product categories. In the first quarter of 2024, net revenues from Dada Now reached CNY 1.2 billion, and the year-over-year growth rate accelerated to 57%, reaching the highest rate in the past eight quarters.

Bing Fu (Interim President)

从业务线看，首先是 KA，也就是连锁商家业务。第一季度得益于餐品和饮品的高速增长，KA 业务收入保持良好势头，持续拉动达达快送整体收入增长。我们渗透更多餐品行业 KA 与百事中国等头部客户的合作取得了突破。在平台业务方面，得益于专业市场等场景的持续渗透，高价值订单服务体验的提升以及定价能力的优化，完单量同比持续稳定增长。

Speaker 6

In terms of business progress, let's start with our KA or chain merchants business. The net revenues maintained solid momentum and continued to drive the overall revenue growth of the Dada Now segment, with revenues in restaurant and beverage KA categories growing even faster. We expanded into more restaurant KAs and made breakthroughs with top brands like PepsiCo China. In our SME and C2C business, the number of fulfilled SME and C2C orders grew steadily in the quarter, driven by further penetration into vertical markets, enhanced service quality and customer experience of high-value orders, and optimized pricing strategy.

Bing Fu (Interim President)

以上是两个平台的业务进展情况。总的来看，今年以来公司聚焦健康增长战略，对各个业务线进行了全面的梳理，目前已经基本完成。我们将持续专注于提升用户体验，强化即时零售心智建设，同时进一步发挥即时零售和即时配送业务的协同效应。接下来请 Henry 介绍一下我们第一季度的财务表现，谢谢。

Speaker 6

This concludes our operational update. To sum up, since the beginning of this year, we've conducted a comprehensive review of our various businesses, which is now nearly complete. Going forward, we'll continue to focus on healthy growth by stepping up our efforts to improve user experience, increase the mindshare of on-demand retail, and further exploit the synergies between the on-demand retail business and the on-demand delivery business. I'll now pass the call over to Henry to go through our financials. Thank you.

Henry Jun Mao (CFO)

Thank you, Mr. Fu. Before we go over the numbers, just a few housekeeping items. We believe year-over-year comparisons are the most useful way to evaluate our performance. And as a result, all percentage change that I'm going to give will be on a year-over-year basis, and all figures are in RMB unless otherwise noted. Our total net revenues in the first quarter of 2024 was CNY 2.5 billion. Net revenues from JD Now was CNY 1.3 billion, mainly due to a decrease in online advertising and marketing service revenues and a decrease in fulfillment service revenues as a result of the full rollout of delivery fee waiver program for orders exceeding CNY 59 in August 2023, which was further lowered to CNY 29 starting in February 2024.

Net revenues from Dada Now increased by 57% to CNY 1.2 billion, mainly driven by an increase in order volume of intracity delivery services provided to various chain merchants. Moving over to cost and expense side, operations and support costs were CNY 1.8 billion. The increase was primarily due to an increase in rider cost as a result of the increase in order volume for intracity delivery services provided to various chain merchants. Selling and marketing expenses decreased to CNY 818 million, primarily due to a decrease in promotion activities conducted on the JD Now platform. General and administrative expenses decreased to CNY 51 million as a result of a decrease in the amortization of intangibles arising from the acquisition of JD Now in 2016. Research and development expenses decreased to CNY 94 million, mainly attributable to a decrease in research and development personnel costs.

Our non-GAAP net loss for the first quarter 2024 was CNY 195 million, and the non-GAAP net loss margin was 7.9%. As of March 31, 2024, we had CNY 3.8 billion in cash equivalents, restricted cash, and short-term investments. Pursuant to our $40 million share repurchase program announced in March 2024, as of April 30, 2024, we had repurchased approximately $8.4 million of ADS under this repurchase program. This concludes our prepared remarks. Operator, we are now ready to begin the Q&A session. Thank you.

Operator (participant)

Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Thomas Chong with Jefferies.

Thomas Chong (Managing Director)

早上好，谢谢管理层接收我的提问。我有两个问题。第一个是关于2024年京东秒送还有达达快送的业务的趋势。另外一个问题是我们看京东那边，我们可以分享一下未来的协同的一个进展。Thanks, management, for taking my question. My first question is about the business trend for JD Now and Dada Now in 2024. My second question is about the progress of JD Now on the JD app and synergy with JD going forward. Thank you.

Bing Fu (Interim President)

谢谢 Jeffrey。那我先回答一下这个第一个问题。那先从京东秒速来看的话，近期我们将即时零售的业务正式升级为京东秒速，以全新的品牌形象为消费者提供毫无立场的购物体验，以用户为中心构建了可持续的平台生态。那在巨大的即时零售的市场的潜力下，京东秒速首要的目标是追求高质量增长。

Speaker 6

Thank you, Thomas. I'll take the first question first. For our on-demand retail business, we've recently officially upgraded the brand to JD Now, I mean, to bring quality goods to consumers at top-notch speeds under our new brand identity and build a customer-centric, sustainable platform ecosystem. Given the tremendous potential of the on-demand retail market, JD Now's primary goal is to pursue high-quality growth.

Bing Fu (Interim President)

那我们下面讲一下具体举措。一个是在需求端，我们战略聚焦于京东 app 的场域，来助力京东全面实现全面的时效升级。那在京东的 app 场域内，除了原先主要的秒送频道、搜索露出以及 icon，我们近日还将在京东首页新上线秒送专区。那这也体现了京东极大的资源支持以及即时零售对京东的战略的重要性。那同时我们会围绕着曝光、转化、复购做全面的产品和运营能力的升级迭代，通过丰富的供给以及精细化的营销活动来满足京东用户多场景的这些需求。那同时在用户体验提升，我们会持续投入，包括履约服务的进一步升级、坚定的落实免运举措等这些方面。

Speaker 6

Now I'd like to share some operating initiatives that we've taken, starting with our demand side efforts, with strategically focusing on the JD app to help JD achieve a comprehensive upgrade and fulfillment timeliness. Within the JD app, in addition to our primary entry points, including the JD Now tab, search exposure, and the level one icon entry point, we will soon launch a new JD Now section on the JD homepage. This also demonstrates the substantial traffic support from JD.com, which underscores the strategic significance of on-demand retail for JD. Secondly, we plan to enhance consumer interface and operational capabilities around exposure, conversion, and repeat purchase to meet the diverse needs of JD users across multiple scenarios through enriched supplies and refined marketing initiatives.

We're also making ongoing investments to enhance user experience, including further upgrades to our fulfillment services and the full rollout of the delivery fee waiver program.

Bing Fu (Interim President)

在供给侧，我们目标不仅是要做全，而且要做深。我们继续巩固在商超、手机等品类优势的同时，在酒、小家电、鲜花等品类重点发力，同时探索新的供给方式。此外，我们从覆盖、价格、库存、内容、服务等五个角度持续完善供给能力，在活跃的门店数、高价格新级商品占比、缺货治理、售后服务等方面坚定地投入。

Speaker 6

On the supply side, our aim is to improve supply in both breadth and depth. While continuing to solidify our advantages in categories, including supermarkets and mobile phone stores, we're also focusing on categories, including liquor stores, small home appliance stores, and flower shops. At the same time, we are exploring new forms of supply. In addition, we're focusing on improving our supply capabilities from five aspects, namely coverage, pricing, inventory, content, and service. To onboard more active stores, boost the price competitiveness of our products, lower the stock out ratio, and enhance after-sale service.

Bing Fu (Interim President)

那第一季度从以上举措取得初步的进展，并且进入到第二季度，我们也看到各项运营指标进一步向好的态势是非常强劲的。那在2024年的第一季度，京东 app 场域月均下单用户数和单量同比增长超过70%，较2023年的第四季度加速约50个百分点。那4月份进一步加速至超过100%。那2024年的第一季度，京东 app 的 GMV 同比增长33%，较2023年Q4也是有显著的加速，且3月份比1、2月份加速超过14个百分点。此外，4月同比增速进一步比2024年的一季度加速18个百分点至超过50%。

Speaker 6

In the first quarter, these efforts made initial progress, and entering into the second quarter, we've seen a strong momentum of further improvements in various operational metrics. In the first quarter, our average monthly transacting users and orders through the JD App grew by over 70% year-over-year, accelerating by about 50 percentage points from the growth rate of the fourth quarter in 2023. In April of 2024, the two metrics further surged by over 100% year-over-year. Also, in the first quarter, our GMV through the JD App increased by 33% year-over-year, a significant acceleration from the growth rate of the fourth quarter of 2023, with March accelerating by 14 percentage points over January and February. Furthermore, in April, the year-over-year growth rate further accelerated by 18 percentage points compared with the growth rate in the first quarter to over 50%.

Bing Fu (Interim President)

下面我再介绍一下达达快速。过去两年我们在市占率提升和盈利能力改善方面均取得了显著的进展，其中今年第一季度的收入同比增速超过50%，这也是远超于即时配送的行业增速。接下来我们会继续发力于KA的业务，推动订单量和收入高质量增长，成为最大的第三方即时配送平台。能力建设方面，我们继续致力于提升生态建设、履约能力提升以及订单匹配效率提升，为京东秒速以及广大的外部客户提供兼具成本效益以及履约质量的同城配送服务。在品类方面，我们将巩固好商超的领先地位，同时积极拓展产品、饮品的连锁商家，争取进一步扩大整个市场份额。

Speaker 6

Now let's turn to Dada Now. Over the past two years, we've made significant progress in increasing our market share and improving our profitability. In particular, the year-over-year revenue growth rate of over 50% in the first quarter significantly outpaced the industry growth of on-demand delivery. Going forward, we will continue to focus on our KA or chain merchants business to drive high-quality growth in both order volume and revenue, to become the largest third-party on-demand delivery platform. In terms of service capability, we will remain committed to improving our rider ecosystem, enhancing fulfillment capabilities, and upgrading our order matching efficiency. This will allow us to provide cost-efficient and high-quality intercity delivery services, both JD Now and extensive external clients. In terms of industry focus, while solidifying our leading position in supermarkets, we will actively expand into chain restaurants and beverage customers to further increase our market share.

Bing Fu (Interim President)

谢谢Thomas。我是Henry。那我从财务的角度也补充一些信息。那我先用中文回答，然后我再翻译成英文。

Henry Jun Mao (CFO)

Thank you, Thomas, for your question. I will supplement from a financial perspective. I will first respond in Mandarin and then translate in English。那首先是京东秒送的部分。其实大家可以看到，从刚刚发布的财报，一季度京东秒送的整体收入是遭遇了一些挑战。总体来说，是受以下三个因素的影响。那第一个就是，其实今年整个公司新的管理团队就任以来，我们从一季度到目前，也是带领整个业务团队做了一个全面的业务梳理，并且达成共识，决定并开始对低效的渠道和业务进行逐步的清理。同时，我们也更加聚焦核心的京东 app 场域。如傅冰老师刚才也提到的，来自京东场域的用户和 GMV 的增速都实现了加速的这样的一个效果。那从一季度来看，我们整体的佣金收入是相对同比来说是比较稳定的。那高质量用户的积极的表现部分抵消了我们低效业务清理对收入的负面影响。那相信经过一段时间以后，随着京东场域核心指标的进一步拉动，京东秒送的佣金收入可以重回到同比正增长的趋势。那第二个就是对于核心的京东 app 场域，我们其实已经并将坚定不移地继续加大对用户体验上的投入。那举个例子就是，我们其实平台在不断地加强免运的权益。那去年8月开始，我们推出了满CNY 59免运的项目。那在2024年的2月份，我们进一步把免运的门槛降到了CNY 29。我们也是希望通过免运门槛的下调，能够降低用户下单的阻碍，强化用户对于京东秒送及时零售又省又快的心智。那所以大家可以看到，一季度其实履约收入有一些下降，但是这一举措其实有效地推动了京东秒送获取长期的高质量的客户。那我们也相信长期来看，能够引领 GMV 和佣金收入的增长。那最后就是我们的广告收入。那随着我们的渠道重点的转移，我们正在协同京东集团优化我们的 LBS 的广告的产品。目前面向商家和品牌逐步推出我们的新的产品。当然，大规模的推广仍需要时间，所以一季度广告收入同比也有明显的下降。但是随着产品的优化和高质量用户的持续的增长，以及京东秒送在行业领先的 LBS 的技术能力，我们对于秒送长期广告的业务的潜力是充满信心的。以上的这些对业务的一些主动调整和持续的对用户的投入，在短期来看对我们的收入和利润会带来一些挑战和影响。但是长期来看，我们相信这些举措会进一步驱动用户和业务高质量的增长。那最后其实是达达快送这一方面。那大家可以看到，一季度其实我们的单量和收入都实现了高速的增长。我们达达快送一直在及时配送的市场上持续获得市场份额。那今年全年，我们相信达达快送会以高质量的增长为更高的优先级，也有信心能够继续保持高于行业的这样的一个增速。那同时兼顾运营效率的提升。那下面我也用英文来回答一下。For JD Now, as you can see from our earnings released earlier, we encountered some challenges in revenue growth in the first quarter 2024, primarily due to the following factors. Firstly, since our new management team has assumed the roles earlier this year, we have led our business team through a very comprehensive review of our business and reached a consensus to gradually clear out inefficient channels in the business. At the same time, we have strategically focused more on the JD app as our core channel. As Mr. Fu mentioned earlier, the growth rate of users and GMV through the JD app has significantly accelerated.

As a result, our commission revenue remained relatively stable year-on-year in the first quarter, with a positive performance of high-quality users partially offset the negative impact of clearing inefficient operations. We believe that after some time, as our core metrics on the JD app continue to grow, JD Now's commission revenue can return to a positive year-on-year growth trend. Secondly, for our core JD app channel, we have consistently increased our investment in user experience, and we will continue to do so. For example, we have enhanced free delivery benefits. Starting in August 2023, we launched a free delivery program for orders exceeding CNY 59, and in February this year, we further lowered the free delivery threshold to CNY 29.

By reducing the free delivery threshold, we aim to lower the barriers for users placing orders and reinforce the perception of JD Now's on-demand retail service as both cost-effective and fast. Therefore, in the first quarter, fulfillment service revenue saw a notable year-over-year decline. But I want to emphasize that this initiative effectively enables JD Now to acquire high-quality users, thereby boosting GMV and commission revenue growth in the long term. Thirdly, in our advertising business, with a shift in channel focus, we are collaborating with JD Group to optimize our location-based advertising products. We are gradually introducing new advertising products to merchants and brand owners. But large-scale adoption will take time. As a result, advertising revenue saw a notable year-over-year decline in the first quarter.

However, with production optimization and the continuous growth of high-quality users, along with our industry-leading LBS technological capabilities, we are confident in the long-term potential of JD Now's advertising business. Above-mentioned voluntary business adjustments and investment in user experience will bring challenges to our revenue and profitability in the near term. However, these initiatives will drive high-quality growth in users and the business in the long run. For Dada Now, in the first quarter, our orders and revenue achieved rapid growth, continuously gaining market share in the on-demand delivery industry. Throughout the year, our priority will remain on high-quality growth and is confident in maintaining growth rates higher than the industry average, while also focusing on improving operational efficiency. 以上是我的补充。下面请傅老师针对Thomas的第二个问题进行回答. That's my part. And Mr. Fu, please go ahead with the second question regarding the progress of JD Now on the JD app and the synergy with JD.

Bing Fu (Interim President)

好，那下面我来说一下与京东的协同的进展。本季度开始，京东秒送全面拥抱京东生态，协同京东产研和运营团队进行品牌升级，并在京东首页的各个入口强化曝光与转化。对于秒送频道，我们进行全面的改版，提升全链路的购物流畅度。一季度的曝光同比提升了30%，点击率提升超过了0.4个百分点，转化率提升一个百分点。对于整个的搜索露出，我们显著丰富了权益展现等购买的决策信息，并开展基于用户分层的精细化运营。一季度曝光量同比提升了超过60%，点击率提升超过一个百分点，转化率提升近一个百分点。此外，本周我们还将在京东首页新上线秒送专区，进一步拓展用户触点。这也体现了京东极大的资源支持以及即时零售对京东的战略的重要性。

Speaker 6

Now I'd like to address the second part of Thomas's question on the progress of JD Now on the JD app and the synergies with JD. For JD Now, starting this quarter, we have fully embraced the JD ecosystem, collaborating with JD's R&D and operational teams to upgrade the brand and enhance exposure and conversion at various entry points on the JD homepage. Specifically, the JD Now tab has undergone a complete redesign to improve the end-to-end shopping experience. In the first quarter, exposure of the JD Now tab increased by over 30%, the click-through rate by over 0.4 percentage points, and the conversion rate by 1 percentage point year-on-year. For the search exposure, we have significantly enriched the display of physically useful information, including discounts and user benefits, and refined operations based on user segmentation.

In the first quarter, search exposure increased by over 60%, the click-through rate of search results by over 1 percentage point, and the conversion rate by nearly 1 percentage point year-on-year. In addition, later this week, we will launch a new JD Now section on the JD homepage for expanding our touchpoints among JD users. This also demonstrates the substantial traffic support from JD, which underscores the significance of on-demand retail for JD.com.

Bing Fu (Interim President)

第一季度即时零售在京东用户间的渗透率仍在个位数。长期提高渗透率的空间还是非常大的。我们会继续在供给、体验等方面投入，推动用户渗透率的进一步提升。

Speaker 6

In the first quarter, the penetration rate of on-demand retail among JD users was still in single-digit %, indicating substantial upside. In the long run, we will continue to invest in supply expansion and user experience improvement to further increase user penetration. Thank you.

Operator (participant)

Your next question comes from Lei Zhang with B of A.

Lei Zhang (Analyst)

嗨，管理层的大家好。谢谢接受我的提问。我有两个问题。第一个问题是关于宏观的，想请教管理层帮我们分析一下达达这边看到的整体的宏观的趋势，还有对我们业务可能潜在的影响。然后第二个问题是在今天的 call 中，管理层也多次提到了用户体验这个词，然后可不可以帮我们总结分析一下，就是整体公司未来在整个用户体验投入方面会有哪些举措。谢谢。我自己翻译一下。 Thanks management for taking my question. Fourth question is regarding the macro. Can you give us more color on the macro consumption trend and the potential impact to our business? Secondly, I think you mentioned several times about user experience and any measures you can share to improve our user experience, especially after we upgrade our brand. Thank you.

Bing Fu (Interim President)

谢谢您的问题。那我先回答第一个问题，就是宏观趋势对业务的影响。那对于整个京东秒送的业务，我们核心主要关注于整个消费的意愿以及趋势。那我们看到在2024年的第一季度，社零总额较2019年的同期复合增速为4.4%，比2023年的第四季度加快了一个百分点。那也可以体现出整体消费者的信心和意愿在持续回升。在整个趋势方面，一方面消费者更加追求性价比，另外一方面消费者对于便捷的需求仍在持续的增长。作为即时零售的平台，我们一方面天然占据了便捷的优势，并在基础上不断地优化整个履约体验，另外一方面协同商家提升整个商品价格的竞争力，免运等举措持续地去优化省钱的心智。因此，我们坚定地相信即时零售在未来整体的社零中渗透率将持续地提高。事实上，我们也看到了京东秒送来自京东 app 场景的 GMV 在4月份和5月份至今还是一个持续加速增长的趋势。

Speaker 6

Thank you, Lei, for your question. To address the first part of your question on the macro consumption trend and impact on our business. So for JD Now, we focus on the overall consumption willingness or the willingness to spend and the consumption trend. In the first quarter of 2024, total retail sales grew at a figure of 4.4% from the same period in 2019, accelerating by 1 percentage point compared with the figure in the fourth quarter of 2023. This reflects a continuous recovery and overall consumer confidence and willingness to spend. On one hand, consumers are increasingly seeking value for money. On the other hand, the demand for convenience continues to grow. So as an on-demand delivery platform, we are inherently well-positioned in convenience. And on top of that, we are constantly optimizing the fulfillment experience on our platform.

Additionally, by collaborating with merchants to enhance the price competitiveness of products and implementing measures such as the delivery fee waiver, we continually strengthen the mindset of value for money among our consumers. Therefore, we firmly believe that the penetration rate of on-demand retail in the overall retail market will continue to rise. And indeed, we've seen that JD Now's GMV through the JD App channel accelerating in year-over-year growth rate in April and month-to-date in May.

Bing Fu (Interim President)

Okay。那下面我再讲一下达达快送业务。那我们核心关注的是市场的灵活就业趋势以及客户的及时配送的需求。那从24年的第一季度来看，受返乡的影响，达达快送完单的提示速度提示数的速度呢，有所放缓，但是整体的运力的供给还是较为充足的。那且我们观察到在第四季度提示数的增长呢，正在加速。第四，4月份的整个提示数的增长正在加速。那在整个商家的需求方面呢，我们也观察到产品和饮品品类的连锁商家的外卖单量呢，正在持续的增长，且商家追求多渠道经营的意愿较强。这都有助于我们推动第三方及时配送的平台单量的快速增长。

Speaker 6

Turning to Dada Now, we are watching the dynamics and the flexible employment market and merchants' demand for on-demand delivery. In the first quarter of 2024, the year-over-year growth rate of active riders on our platform slowed down as riders went back home for the Chinese New Year celebration. The overall rider supply remained sufficient, and we've observed an acceleration in our rider growth in April. In terms of merchant demand, we note that the on-demand delivery orders from chain merchants and restaurants and beverage categories continue to grow. These merchants are willing to embrace multiple online business channels, which helps to drive the order growth of third-party on-demand delivery platforms.

Bing Fu (Interim President)

好的。那下面我回答一下您的第二个问题，就是用户体验的一些举措。那对于整个京东秒送，我们致力于通过用户体验的优化提升，在京东用户间的渗透率。具体投入的方向主要包括第一个还是我们优化整个产品的功能，提升购物的流畅度。那从第一季度来看，我们积极投入产研的资源，对于搜索、秒送频道等入口进行了迭代升级，提升了用户全链路的交易体验，从而提升了转化率。那第二个方面，我们提升了履约的时效，提升了履约的体验。我们通过优化预测模型，升级运力结构，提升了各个履约环节的衔接度。然后这些举措对于整个的履约，对于提升时效的预估准确度以及实际的履约速度都起到很大作用。第一季度的京东 App 的场景秒送订单的单均履约时长同比下降了 12%。

Speaker 6

Now I'd like to address the second part of your question on measures to improve our customer experience. In terms of JD Now, we are committed to enhancing the penetration rate among JD users through optimizing customer experience. Specifically, we are investing in optimizing product features and upgrading the fulfillment timeliness. Firstly, in terms of the product features that we are optimizing to deliver a smooth shopping journey, in the first quarter, we actively invested in product development and research to iterate and upgrade entry points, including search results and the JD Now tab, to enhance the end-to-end transaction experience and thereby improve conversion rate.

Secondly, in terms of upgrading the fulfillment timeliness and the service experience, we have improved the accuracy of estimated time of arrival and actual time of arrival by optimizing our predictive models and upgrading our operational capabilities to enhance the integration of various procedures and processes across the fulfillment journey. In the first quarter, the average fulfillment time per order for our JD Now business on the JD app decreased by 12% year-on-year.

Bing Fu (Interim President)

CNY免运的活动已经覆盖了近90%的订单。通过免运活动，用户的7日复购率提升了3个百分点，推动了订单增速比非免运门店高出20个百分点。因此，我们会将免运作为长期投入的项目。此外，免运活动对客单价的影响不大。第一季度超市的 AOV 同比基本稳定，4月超市的 AOV 同比小幅下降，体现出用户一站式购买的差异化的心智。

Speaker 6

In addition, we are promoting the free delivery fee waiver campaign to strengthen the cost efficiency mindset of our platform. Starting in August last year, we launched a delivery fee waiver campaign for orders exceeding CNY 59. In February this year, we further reduced the free delivery threshold to CNY 29. By the end of April, the free delivery initiative for orders over CNY 29 covered about 90% of JD Now's orders. The campaign increased users' seven-day repeat purchase rate by three percentage points. Given the encouraging results, we plan to offer the delivery fee waiver as a long-term benefit to our customers. Moreover, the campaign has only a limited impact on the average order value.

For the supermarket category, AOV or average order value remained largely stable year-over-year in the first quarter and only slightly decreased in April, reflecting a differentiated mindset of one-stop shopping among our users for our platform.

Bing Fu (Interim President)

得益于整个体验的提升，我们在京东 app 的场域的曝光、转化、复购均有显著提升。第一季度商超品类的 NPS 也同比提升了 7%。以上就是我对这两个问题的回答。谢谢。

Thanks to the improvements in the user experience, we've seen significant enhancements in exposure, conversion, and repeat purchase rates on the JD app. The Net Promoter Score for the supermarket category also improved by seven percentage points in the first quarter. So I hope this addressed your question. Thank you.

Operator (participant)

Your next question comes from Jiulu Li with CICC.

Caroline Dong (Head of Investor Relations)

Hello, operator, and thank you, everyone, for joining us. For the interest of time, we would like to conclude this call for today. In closing, on behalf of Dada's management team, we would like to thank you for your participation in our today's earnings call. If you require any further information, please feel free to reach out to us directly. Thank you for joining us today. This concludes the call.