Q4 2020 JD.Com Inc Earnings Call

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[music].

Hello, and thank you for standing by for JD, Dotcoms fourth quarter and full year 2020 earnings conference call. At this time, all participants are in a listen only mode.

After managements prepared remarks, there will be a question and answer session.

Today's conference is being recorded if you have any objections you may disconnect at this time.

I'd now like to turn to meeting over to your host for today's conference.

Liam.

Thank you. Please go ahead.

Thank you operator, and welcome to our fourth quarter and full year 2020 earnings Conference call. Joining me on the call today on Mr. Lei CEO of JD retail on the Sunday Hu, our CFO for.

For today's agenda, Mr. Hu will share haynesville on it.

With on the President's tweet.

All of our vehicles that'd be who will discuss highlights for the fourth quarter on a full year 'twenty 'twenty both on them will join for Q&A session.

Before we continue I refer you to our safe Harbor statement.

Earnings press release, which applies to this call we may make forward looking statements.

Also this call includes discussions on certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most direct comparable GAAP measures.

Finally, please note that unless otherwise stated all dosing course mentioned during this conference call on on me.

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Now I would like to turn the call over to our CEO of JD retail lifestyle issues.

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Thank you Li Hello, everyone. Thank you for joining our Q4 earnings call that the Chile V O JD retail and collect to take this opportunity today to share with you JD retail 2020 with you and other.

Outlook for the new year.

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For your finances deductible for Trinity.

2020 was no ordinary year, we observed the significant changes in the macro economy, the retail industry and the way on our customers' leap day or night the.

The global pandemic greatly impacted society and everyone's line.

It also brought many uncertainty to the global economy.

For total revenue.

For your survey for.

Tangible book senior debt it will kick off for one quarter.

For now.

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Thank you for sure Shelby.

Sure.

Thanks Richard.

For that type of deal.

For great opportunities can be pumped on me amidst the great challenges with a profound challenge for changes in consumers' mindsets and behaviors. During this period Chinas online Greenfield penetration continues to deepen.

Consumers' needs attention span content formed and means of communication or <unk> 19 changes.

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Got cut off for a quarter.

Consumer demographics, and use cases became increasingly segmented and diversified.

The lower tier market for silver economy for users who were born after the 19 nineties and for year 2000.

Community economy on the on demand consumption and many more engaging trend has presented us a wide range of growth opportunities.

Richard.

Got it.

Couple of them for you to install to Richard.

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And for the total credit et cetera with debt.

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Hello.

Other question, though.

Moving to a multimodal account for the government.

In the face of these challenges and opportunities.

<unk> business model has proven to be resilient through different economic cycles.

We adopted a more open approach to running our business on to continuously enhance our ability to enable our business partners.

Our long standing business philosophy of Novo principle of doing business.

<unk> at our two north in navigating the uncertainties and changes.

These efforts have helped us to gain the trust of many more users and business partners.

For the past year, we have not only successfully withstood the challenges, but also see the opportunity for free.

For further growth and iterations.

Part of the year.

Thank you for the power they don't talk too low.

For your listing for the coalition of tranches.

Forgivable loans.

JD Com delivered a strong set of financial results. In 2020. This is mainly attributable to our continuous investment improving our user experience and also always put our customer first in running our business and moving.

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By the end of Q4, we hit a new high with annual active customers for the past for 12 months, reaching 472 million, we saw accelerated user growth and added 110 million new active customers compared with a year ago. This is the largest expansion in our history.

We continue to see exciting user growth in the lower tier cities, which contributed over 80% off on a new users for the first time in Q4 of 2020.

For sure Michael.

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For us.

Thanks, Phil.

For single customer for the old for us.

Goldman for Gannett.

We're even more delighted to see increased engagement from other customers for example for US the answer from our 2015 customer cohort increased more than five times by 2020, and we also see a very active engagement of our J D plus members.

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Josh Thanks for some projects.

In 2020, we maintained healthy growth in on our core businesses and achieved a significant progress in new business initiatives.

Retail is jd's earliest and most mature core business. It plays the fundamental low in JD, achieving its long term strategic growth.

We are pleased to say that in the past year JD retail volume at the high quality and accelerated growth and meaningful and sustainable innovation.

Sure Robert.

Unless you're getting for range.

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For sure.

But you would impact.

For $2 per cut.

Congrats on bad debt.

Looking ahead in 2021 on beyond.

The supply chain based technology and service provider JD retail will continue to focus on three key strategies enhancing our remedial platform capacities for supply chain and technology.

The omni channel strategy, and our online marketplace ecosystem.

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But on the media platform for supply chain and technology really has been investing intensively into building our supply chain infrastructure for a long time at the end of 2020, we managed more than seven moving skus on our direct sales products in over 900 west warehouses across China.

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On the revenue forecast.

Income.

During COVID-19 supply chain has impacted volume.

Some cooperation among industries and enterprises around the world the need for a reliable supply chain for the more imminent in on environmental increased uncertainty.

But J D of price to do it too.

Video aspire to do.

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Total higher future Vishal.

We're coming up on our sector that.

That's a meaningful tangible book.

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Other than that.

With this go in line, we have been investing as swimmingly in supply chain and technologies to help merchants for online and offline speak on small including brand per factory.

Prove their operations efficiency to enhance their customer experience and to improve the risk of resistance capacity, which will also help promote high quality growth of the whole industry and create value for the entire society for J D. This endeavor for that.

Diversifying our revenue streams and drive our service revenue in the future.

And Walter if you look on it maybe you guys.

For our senior debt.

Moving to go for sure.

Okay.

Peace River.

We're excited for the future.

So therefore, there's room for more debt.

Thank you Daniele for June launching for Gaslog.

For those new charging for it.

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Second in face of a broad range of business channel and use cases on the Ami.

The channel strategy aimed to increase the overall retail efficiency to satisfy customers' diverse needs to provide people with immediate access to products and services and to create value for merchants and customers.

Omni channel business is complementary to JD platform named retail model.

The channel is not only a key strategy for J D. But also a new trend for all the retailers must address.

Penetration rate of this model is still quite low among offline businesses for belief that there is a huge potential to integrate omni channel and on demand fulfillment element.

Many in the industry in the future.

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Good day did this omni channel business has already covered for various offline scenarios ranging from contract for stores convenience stores current maintenance stores fresh groceries and fresh flowers to pharmaceuticals, connecting with milling on off line stores.

In the future based on on our unique supply chain and technology ability, we will develop LP assay technology tailored for the on demand consumption market.

We'll also continue to do that our omnichannel supply chain omni channel marketing and offline store digitalization ability.

Port their applications and many more industry businesses and scenarios.

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Mobile GAAP.

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Here, we have a cohort and youll get a simple change.

In Chicago that ultra rapid growth.

Third quarter index.

Meanwhile, we will work on cash they can customers much share on demand fulfillment through innovative measures such as our omni channel fulfillment initiatives and cooperation with external partners.

The partnership ABB day, and that our group in 2021.

And a recovery to more retail verticals and drive for quality growth of our omni channel business.

He will provide us additional monetization opportunities.

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Building up on online market ecosystem. This is an area of great potential for JV with several years of development. We have now established a good foundation for the online platform ecosystem, notably we have made good progress in building a healthy platform environment and improved for merchants quality NPT.

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Cumulative cash transaction volume.

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Unit volume.

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And what we're gonna be ultra motivate us always go for the full year.

For the Shanghai for instrument a couple for loans.

Luxury jewelry for the contractual growth.

We are pleased to see that the NPS net promoter scores of our online market place continues to improve over the course, so far this year of a merchant renewable rate is much higher than in the past, reflecting a significant improvement in merchant satisfaction and the recognition on our platform.

Looking ahead capitalizing on a healthier industry environment, we will continue to experiment with new models and strategies to find the optimal strategy for Jd's online marketplace.

These attempts will still be guided by J D. Ultimate business purpose to improve customer shopping experience and provides an open and empowering platform for merchants.

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Great job here for several years.

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Jonathan on for Jeff.

Demand for cliffs.

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First on Ultrashape for a total control.

Even though.

Albeit on a few weeks.

So while adhering to the strategic directions for the continuing to entertain other business Foundation keep an open mind incubate new business and use innovation to face trends whether it is on our first growth curve represented by all of our established businesses, such as consumer electronics and consumer goods or.

On our second growth term represented by on a growing business such as healthcare and on our own categories, where the third growth curve represented by emerging businesses, such as Rachel innovation service and technology initiatives.

JD retail can always on Jakafi and incubate new growth opportunities.

For that.

Firstly, the patient type of operating the triangulation.

Net reduced logo.

For full year.

Walter talking to usual.

We'll get the people hired.

Hello.

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Vacation.

Here's what we can do for you.

Total cash.

Net settlement.

Here I would like to emphasize that these strategic positioning as a supply chain base of technology and service provider, we uphold our long term business philosophy since day, one of JD Sidney we chose to Taco to harvest on most valuable problem in the industry and society.

No matter, how far we have come as low as we remain committed for our customer for the core value and supply chain based on value creation for all.

Always be able to go full steam ahead, this attitude and bodies on a longstanding business philosophy that is the Lenovo principal upstream business.

Welcome to call and it will flow through on assortment.

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For example, however, we are on wholesale.

The California received promising what total.

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The share count as you go for that purchasing the product.

The road ahead is low unwinding, but taking one step ahead, we will preserve we believes the core values and mission that Jamie has been abiding by relevant to the new macro environment and industry developments.

Andy will continue to innovate and invest in these strategic direction with a constantly and continuously deliver operability and create value for society industry on our partners and our customers on insurance achieved long term high quality growth at J D.

Revenue in the individual commodities are favorable and thank you for your time I will now give the floor for our CFO Sandy. Thank you Li Hello, everyone.

Pleased to finish 2020 with exceptional business and financial performance in the fourth quarter, we outperformed our expectations with accelerated user and topline growth and exciting complex in multiple new businesses, while maintaining solid bottom line performance and strong cash flow during the fourth quarter.

And two out for full year 2020.

These results were driven by our relentless focus on customer experience and investments in supply chain capability technology and logistics infrastructure over the past year.

Which has become a hallmark of digital com.

As we embrace change and position our business for the loans that did he has been at the forefront of many innovative initiatives and structural shifts that are taking place in China.

In addition to the exciting developments at Genie retail debt later this path back to further elaborate on some operating and financial highlights.

But let me add more color on our user base for the end of Q4, we hit a new high water Mark for our <unk>.

Annual active customers in the past 12 months at $472 million, we saw accelerating user growth to 30% year on year and added 110 million new active customers on a year ago.

The addition, we managed to grow our user base, we are continuing to reduce operating cost ratio in 2020. This.

This improved marketing efficiency was driven by our long terms with Lucentis operating philosophy, and technology teams and marketing efficiency improvement.

The way for our sustainable user growth going forward.

Let's turn to a number of our new business initiatives, which are making exciting progress.

On JD logistics.

SDE groups in House Logistics Department in 2017, JD logistics has been building market.

Fixed infrastructure and technology.

Well as operational and industry knowhow for over a decade.

Got.

It has become a leading technology driven supply chain solutions and logistics services provider in China, and accreted over 900 warehouses with on equities gross floor area of 21 million square meters.

On February 16, 2021, JD logistics submitted on listing application for growth.

Hi for the listing.

The channel on the main board of Hong Kong Stock exchange.

These notes back day, no guarantee at whether on the proposed listing will take place.

Some of our smaller businesses are also experiencing rapid growth for.

Simple BB property recently announced the first for logistics property development, Bob with some 50 ish strategic investor So.

Total redo on of JV properties, both on the development path.

We did 19 billion RMB.

TD property also entered into a partnership agreement with series a financing the total amount expected to be Li is approximately 700 million U S. Dollar.

We also restructured some business units recently to better coordinate our internal resources and capture market opportunities.

For example, we established most efficient frequently to further strengthen our supply chain capacity at reserve customer on empower Smes in the lower tier cities.

To achieve better synergies, our total ecommerce platform.

On the new store business since at home, formerly known as <unk> and commodity purchases since the companion for consolidated under the PC business group planner and in December we announced that BT cloud and AI business will merge with BCG.

For the board and regulatory approvals.

Proposal <unk>.

For designed to drive synergies in the development of innovative technologies and product solutions.

This will allow to dot com to focus more on core retail and logistics businesses and gain more flexibility in allocating resources for new business.

Within our retail business.

<unk> achieved an important milestone with the successful listing on the Hong Kong stock exchange on December eight 2020 with.

With a gross proceeds.

Similarly, 31 billion Hong Kong dollar.

And for technology, driven platform centered on the supply chain of pharmaceutical and healthcare products and healthcare services Division.

<unk> Health, Inc to provide easily accessible.

High quality and affordable healthcare products and services covering our users who lifespan.

J D has demonstrated a proven track record.

Successfully integrating developing and growing new businesses on our core E Commerce business.

Belief. This is enabled by our relentless focus on superior customer experience and our efforts in building and investing on supply chain capabilities and technology for infrastructure.

Each of us on cycle, allowing us to identify new opportunities for him.

Power is channel business partner.

And for beyond our core E Commerce business.

Therefore, we will continue to invest in exciting new initiatives that can drive long term sustainable growth for our group.

Our financial performance reflects the trajectory of our long term development. Our net revenue grew 31, 4% year on year to 224 billion RMB in the fourth quarter.

Continuing our strong growth momentum with a successful promotion season for you.

Importantly, we are driving our top line demand passageway on.

<unk> home appliance category increased 5% year on year in Q4, continuing to outperform the industry for a large market.

And on merchandise revenue.

Opinions to grow faster X, 34% year on year in Q4, net but the FMC health cash cosmetics and home products category.

Order volume for the supermarket category grew by 45% year on year in Q for another key metric shows that we are growing our top line in a more diversified way is our net service revenue growth.

You accelerated to 40 50, 53% year on year in Q for the highest growth we had in the past 11 quarters.

This is mainly driven by the strong growth momentum of JD logistics external revenue as well as our advertising revenue.

For the full year of 2020 net revenue reached 746 billion with year on year growth accelerated to 39, 3% from 24 nine percentage in 2019 electronics and home appliance revenue recorded solid growth of 22% year on year.

Amid challenging market conditions.

General merchandise revenue grew 38% year on year in 2020.

Net service revenue grew by 42% on accounted for $12 eight per cycle for our total revenue in 2020.

Our non-GAAP operating margin improved by 13 basis points year on year to <unk>, 5% in Q4, and up 52 basis points year on year to two 1% for the full year cash expenses.

Genie Retail's operating margin in one five percentage in Q4 and reached two 8% on a full year basis two.

2020.

For 2008 basis points from 2019.

Driven by improved operating efficiencies and to a lesser extent the relief on social security during the COVID-19 pandemic.

The market improvement in 2020 with Blue line.

EBIT as we shift our category mix.

For the high frequency of small ticket price consumer sales.

Home categories that are still in the early stage of realizing earnings potential and per activating that some of our social security benefits and value creation for our users on the logistics infrastructure, we are well on track of our long term margin trajectory.

Moving to the bottom line, our two for non-GAAP net income attributable to ordinary shareholders was $2 4 billion RMB and non-GAAP net margin improved 59 basis points year over year to one 1%.

Our full year 2020, non-GAAP net income attributable to ordinary shareholders.

$16 8 billion RMB up 57% as compared to $10 seven building on the last year.

Non-GAAP net margin for the full year 2020 improved 39 basis points year over year to two 3% against our profitability has improved meaningfully in 2020, even as we incurred additional expenses related to COVID-19, and excludes the benefit of the social situation.

Good day, which had about 75 basis points.

It's worth highlighting that we continue to strengthen our financial position for us.

Okay.

Our business partners.

On the inventory caliber sales further reduced to 33 three day in the last 12 months one of the lowest among the top global retailers and our own historical record again, despite the continuous expansion of total SBU directly managed by us.

This is achieved good for continuous improvement of our technology and operating efficiency on.

Our free cash flow for the trailing 12 months peak on new debt cost of 35 billion RMB.

80% from a year ago as of December 31, 2020, cash and cash equivalents.

Ticket cash and short term investments added up to a total of 151 billion RMB.

Belief on solid profitability and financial position provide us with a strong foundation for investments in a range of growth opportunities.

In summary, digital Comtech attendance per year of increased uncertainty with a remarkable performance will further improve our technology and tools.

Enhanced our ability to serve users and ecosystem partners, which paved the way for our future growth.

We continue to witness and deepening.

Online penetration across many categories.

And the technology driven transformation in many aspects of consumers' daily lives and for society in China, We expect to maintain the growth momentum that we generated in 2020 on multiple fronts. In 2020 plan in spite of continued macro challenges and the high comparable base in.

We also expect our long term margin trajectory will continue however, we do not forecast total margin as we believe taking dot com.

Fast growing stage.

Enviable growth market with many exciting opportunities.

With our core retail supply chain and logistics capabilities.

He is well established with convincing value proposition to benefit from secular strength and drive the long term sustainable growth of our business in 2021 and beyond.

This concludes my prepared remarks, let's open the call for questions. Thank you.

The question and answer session. At this conference has worked for us in a moment.

In order to be fair to all callers, who wish to ask questions.

We'll take one question at a time from each caller.

If you have more than one question. Please request to join the question for you again.

For your first question has to be med direct.

Ladies and gentlemen, we will begin the question and answer session. If you wish to ask a question. Please press star one on your telephone and wait for you to be announced.

If you wish to cancel your request.

Expressed about our hedge book.

Once again to ask a question.

And the number one on your telephone keypad.

Your first question comes from the line of Eddie Leung of Bank of America. Please ask your question.

Good evening.

Couple of quick follow ups after your presentation.

Firstly the user growth is pretty impressive for a strong wondering if there is a N. The impact on the ticket size if the ticket.

Price is coming down because of our new users.

It affects the operating loss for each of your line, which is the future.

It seems like the fulfillment cost as a percentage of.

Uh huh.

Hi, good that knock on wood expectation. So just wondering your thoughts.

And then on finger Sheila Angel mentioned.

Mention debt.

You will weigh each of your platform merchants.

Last year, so I'm just wondering how quickly.

As the number of our markets based on low returns are slowly because of the improved on the new Li Thank you.

Yes, Andy this is Sandeep, let me take the first question regarding the for margin.

So on.

I think for gross margin.

We would look at <unk> 13 separately on if we look at the pure <unk> to see our gross margin in.

In Q4 in one fell a little bit.

If we include the advertising revenue in relation to on one key product.

Second call internally, we manage the operating income the gross profit margin for one key actually slightly increased.

After considering all of our investments in Q4.

For the additional profit balance generated from the first nine months in the year.

As I mentioned at our analyst call last quarter, we plan for getting back some of the additional profit generated from the first nine months in the fourth quarter too.

To really provide value to our customers and also to lean back to build our logistics infrastructure.

So again to emphasize that the gross margin for <unk> actually slightly increased.

<unk> for the same quarter last year.

You look at the fulfilled gross margin for one key.

There is also a slight improvement on last year.

Capital for Q4 and RBC Barry.

Meaningful improvement for the full year compared with last year by our strength.

Basis points.

So this is driven by the steady improvement of gross margin by many categories.

Including the category mix shift towards lower margin supermarket category.

So the relief.

Our social benefit cash flow impact on the improvement for the full year of fulfilled gross margin as we have for 180 benefit in 2019 total.

The amount is almost the same.

Really what's dragging down.

Total fulfilled gross margin for our book is the <unk> revenue contribution.

You can see that the.

The contribution for on the.

The three PS revenue went down a little debt in the fourth quarter, even though total repeat contributed more.

In Q4 as compared to Q4 last year, we were quite encouraged by the healthy performance of our marketplace for this model, but the cash brand mix within the marketplace with its low though also changed slightly the healthcare supermarket electronics and home appliance category.

Outperformed for apparel and home per product for them.

The pet growth with relatively lower take rate on.

Moving faster low tax rates with higher take rates.

Our marketplace business model again, we believe this is a healthy move on.

On a good indicator of our efforts in building our bench strength.

As for marketplace ecosystem, particularly for our historically strong lumpy category.

Yes.

For us.

So what did I cover the debt.

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Solar senior loans.

Greetings.

Yes.

Sure.

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Sure.

And to answer your second question you know you have one on that JV our reputation.

On the strongest in terms of the consumer's impression on our service experience.

But any other kind of all women from Dr.

Shortly after that.

Quarter.

And for the year, you can see that a number of merchants on our platform has enjoyed a steady growth.

So rather than each other.

So with the low.

For sure.

On Java water Bill for Carlos.

So each other.

Although the total.

So on Yahoo.

Okay.

Yes.

As.

Consumers have a higher expectations on our service. We will also have a higher expectations on the qualities on the products on our cost from our merchants on the platform.

The women that Australia for example, we share due to hold each other shutdown on OTC JV for timberland portfolio with renewable.

She just like other exhibitor harsher.

So on that premium on LIFO.

Yeah.

Per month.

So in the last year, we have done.

We have done some on screening work on over a low efficiency on the low accretion merchant.

And still we have seen over a number of other merchants on the platform is steadily growing and this year, we have been recruiting more high quality merchants they have a day.

They are on more experienced under renting their business on a more efficient way.

For the wellness.

Revenue growth.

So that has shown great credit over time.

Back on production.

Sure.

Anything unusual or so on.

Got it.

GAAP fulfillment.

So on the hospital.

This philosophy.

Thanks, Paul.

On the bandwidth engine.

For the economy.

Go on.

Additionally on a multiple.

And we'll move towards for net debt.

Thank you for.

So we will pay close attention on the efficiency of our internal platform and also the operating efficiency.

The other on merchants on our platform and how well they are running their stores and for this year. The cutoff time for the merchants renewable ads on March 13th. So we have seen the renewal rate is much higher than in the past and we're also seeing that improvement on from.

On a merchant satisfaction rates on other.

Platform.

Thank you for the question.

Your next question comes from the line of Ronald Keung of Goldman Sachs. Please ask your question.

Thank you. Thank you for taking my question. Thank you for you they don't Sandy on management and congratulations on the strong 2020 performance My question would be on.

They don't want it's Andy you mentioned about a lot of new business debt, which are very exciting and.

Could be launched I think see also other different initiatives.

Okay, and that kind of new businesses, how should we think about kind of.

Plan to invest in these.

Of course, JD retail is very strong on itself.

Net income so many exciting initiatives could you go through.

These initiatives, maybe one by one or the biggest key and how should we think about how commitment on the plan to invest in terms of magnitude. Thank you.

Yes.

That channel and this is something maybe let me take the <unk>.

<unk> got on CMC, and then I can comment on some other new initiatives.

So in Q4 as I mentioned, we did a restructuring for our therapeutic approach.

True really tie for January images from the three percentage.

Net.

We see there is a breach of.

Opportunity in this group purchase.

Business.

Purchase industry, all the fresh produce category.

Yes.

So we firmly believe based on structural opportunity the huge market size and highly fragmented supply chain.

Lots of opportunity and its potential to improve the operating efficiency through technology and innovative business model.

And we also see batch the book participation model works better for smaller ticket items in the lower tier market I think can generate better fulfillment efficiency to shortchange logistics and be more efficient inventory management and marketing, especially for perishable and non fuel per GAAP and provides the users from.

The largest market with Patrick.

So even though at present small players in this market due to their book purchase business model, primarily driven by check we believe they entered per day. It will go back to the basis of retail business.

E platforms will compete on comparable products operating efficiency and customer experience.

So we see this to be a long term initial EPS.

Ultimate goal is to improve the operating efficiency of supply chain, the wholesale and retail business in the lower tier market through technology and improve People's living standard.

JV is fully dedicated in this initiative and we will take a somewhat differentiated approach to be more focused on supply chain and logistics network and try to leverage our existing capabilities.

So we launched our chicken business and circumstances from January and it's still in a very early stage.

We were entering into the book participate day, we need to build a localized supply chain short chain logistics network as well as technology and tools to support the operation.

Also need to recruit growth leaders business development teams at agitate on new users.

GAAP city by city. So there are lots of areas seed investments.

As we announced that entirely from the scratch.

We test it we have been testing the book purchase business model for a while.

Very small scale.

For our convenience store business in total now remains consistent.

We already established company to be supporting primarily in the FMC day tax rate.

Including some localized supply chain, we also have existing <unk> logistics network and localized for business development teams in certain regions of the country.

<unk> now has over 1 million SME customers and some of these convenience store owners can naturally be tagged to the group leaders of our CPG business.

Yes.

Our existing centralized procurement platform.

Middle platform message for later now for FMC Chi home products or other categories cash support ticket Fitments and provides users a campaign with more product selection.

At the same time as we generate scale benefits for core retail gross sales from continued channel.

So we are working with various partners, including channel.

And the manufacturing bases for agricultural products to strengthen our supply chain capabilities for their upstream and try to source the best value product for our users.

At the same time, helping the existing market players on the supply chain with digital transformation.

Moving the agricultural product tanker market.

Our <unk> e-commerce platform aimed to assess the users from the lower tier cities and they have accumulated a lot of loyal users since it is tablet strength based on.

Initial cash small groups of users. We are pleased to see a good conversion of growth user to continue that.

So we believe J E book, they contain current capabilities in the lower tier cities for a good basis to start our tissue business, although not sufficient true.

<unk> supports the growth of that new business at retail quickly replicate adjust and apply our existing scholarship industry Knowhow on.

<unk> capabilities to the new model.

<unk> can also help increase the engagement of users and merchants from the lower tier markets, including coming stores for <unk> and <unk> business as well as for supporting our me App. So these are also the logic of reorganizing and consolidating the three business units into one business growth.

Most importantly, JV fully dedicated in this initiative, we expect our best people for this new business growth and they also got supply chain support from our core retail and logistics business growth.

So talking about reinvestment.

Have put aside sufficient buckets to start a growth business.

As we move to invest in many areas as I, just mentioned and we will evaluate the LOI for the investments line.

During August adjustments based on the market situation.

It's pretty difficult to accurately predict at this stage how much we're going to spend on this new initiative as you can see the market is very dynamic with many many players.

What I can tell you is our strategy is not for acquired users through short term and crazy subsidies, but to really impact in building the hard core capabilities and technology presents for business.

And create long term value for our users and impairments and for society.

So this is also consistent with our groups operating philosophy.

To improve the transparency of our communication with investors.

We plan to take helps the opportunity for our subsea business book from JD retail segments annually.

Reported under new business, starting from Q1 this year.

We are excited about the efficiency opportunities and we look forward to share more with investors as we develop the business.

Okay.

One other point.

Good day.

Let me add something on the new business.

Do you know children's book continue to favorable operating for goodwill versus non quota.

True.

And not only for e-commerce, but essentially for other retail business, we will focus on our customers' products and for platform.

Good day.

Moving toward the final lease on credit losses on the flow through.

Okay.

Got you.

In general and so you will kind of hit on in other words on camera.

Growth was laid out a quarter on quarter low.

The other one for June funeral insurance for the shareholders.

Richard partially on Carters obsolete.

So Chicago Goldcorp Chuck.

Thanks for squeezing bulk low.

Yeah.

Good morning, gentlemen.

So.

Since the beginning of Judy Richard.

Development, we started from other.

Product and we start to expand other product selection. So we do our first party and then the third party product offering and for the next step we will book, we focused on other customers and we starts with providing products to the targeted customer cohorts or interest rates in the.

Customer consumer electronics and digital products and then we will continue to expand our consumer base for more people in the lower tier cities and the female users et cetera.

But that's a formula one.

For the quarter, making losses on currency moving on purchase accounting charge on the true day did you did on.

Cash flow.

Sure sure value.

You change for channel.

Just a girl fingers on either.

Quadrant.

Somehow pay for deepwater.

True.

But putting on that.

Total Joan.

Total debt.

For the officer Jay for you.

For the quarter credit related.

We're going to share.

Sure.

Two items each quarter.

<unk>.

And in terms of the platform we started to be recovered.

In a centralized way and then now we are moving to more decentralized for formats and in part for two years, we have been exploring new formats with the offline businesses and on our omni channel initiatives. So this is the basic J D business logic and behind that the most important things that.

We are thinking and doing things to see.

What are the pinpoints, what we can solve the pinpoints about bringing down the cost and improve the efficiencies and getting better share.

And experiences for our customers. So this you can see is the process. We are looking for some.

Some solutions for the pinpoints and also whether there will be new ways.

There'll be new.

One more leading a robust model where methodologies to do retail.

Hello.

Before I close in June for cohort.

For the Genco book, Richard Cheever, with both a woman colleagues.

For the for variable rate.

From a doctor Richard you, However, Korea.

On the provider demand.

For the visa Europe.

For some growth.

We'll go to the bottom line.

Total water juices.

Cash shooting range.

Great.

You bet you on.

So what we said that go into other Sidney jockey for 22 cash.

True.

Low.

True.

Sure.

On the U S approximately stable.

So based on channel.

So volume.

Hello.

Slowly.

Also with us.

So for the team.

But overall you reported.

So you haven't seen that in the past years on JD retail has incubated assuming house and J D on our own and all of it on <unk>.

<unk> facing on a principle to solving for pinpoint and created value for this industry and on.

We have seen debt in.

In J D Zone development history, and this has happened to many other companies as well when we are considering to enter a new on market well first of all the cash the scale of the market. However, we will seek deeper and see.

See whether this new business will truly create long term value for the industry and for society. So this is as I mentioned to the basic logic, while we are making other decisions to enter a new business. We're not so eventually we would love to create a sustainable and.

On sustainable on a constant value to the society and other customers.

And also supplement our businesses other than for detailed business.

For JD logistics JD logistics, it will continue to build on technology and infrastructure to further expand its production.

And we also have to be international.

So we have a small operation in southeast Asia. They are in the fast hyper growth stage backfill in the investment stage.

Yeah.

Next question please.

Your next question comes from the line of Alicia Yap of Citigroup. Please ask your question.

Hi, Thank you good evening management change on.

Sandy Thanks for taking my questions and also congrats on the solid results.

Just very quickly.

Wonder have you already generate any revenue from community group buy in the fourth quarter.

Just wondering you know FMC G categories have you seen any inc.

<unk> given the rising intensity of these community group buy platform from the peers and then just quickly on the first quarter Chinese new year, so any qualitative.

Color that you could share with us.

Given this share is also and other.

A little bit special year, giving the sales in the city's measure so what's happening for us.

In terms of the category demand.

Compared to the Navajo Chinese new year period.

The category that you have seen abnormally strong Fisher. Thank you.

Okay.

You may begin.

Okay.

This is Julia will answer questions related to FMC G and the Chinese new year on current promotion.

Loans.

Good news for you on Golar.

But could you do that.

True.

Sure Jamie.

Okay.

So for the hardware sales.

Direct connectivity.

<unk>.

And overall, our speaking we have seen the focus of our other community group buying.

In these in the following areas first is the fresh produce and also the FMC cheese and some may related to the digital products, but mainly focusing on the first true.

There's always a mix income.

For the figures.

Got.

We made with each other to the Kohl's singer Li.

She got job.

Strength in going forward.

And we don't see quite speak impact.

We don't see the J D business has been on.

Having a big impact from the fast development of community for buying I think this is mainly <unk>.

<unk> two on our customers' shopping behaviors and for their mindset much on my shares and also their preference on AMR.

Our products.

Christy I'll share with us.

Women the pullback for you for.

Our total artificial to go.

Sure.

Thanks for the commodity.

Uhm.

It's also worth mentioning that some of our Skus has been.

Of some favorable items that some community group buying companies want to work with them through our supply chain, enabling our business formats.

But for now.

Other hallmark.

Operating Megan.

Sure.

Youre looking for market.

Sure.

Okay.

Yes, one other.

Thank you Michelle we'll take on board.

Yeah.

I appreciate it.

They are simple.

And regarding the question about the Spring Festival.

On shopping festival kits compared with last year's covet situation. This year, there's on major changes on the Consumptions, we do see a healthy.

Consumption on our results and our consumers participation in this year's the shopping festival.

Sure.

For all of your peers.

Good day.

The bulk of switching growth.

Got it on.

For both.

For the bulk of that.

On the inventory on the ultra low latency range.

Looking forward.

So a year ago.

It looks like a shortfall.

And then.

Hum.

Net income.

For weather.

On a call.

For Neutrolin in the channel.

And on the terms of donor material share.

That mix changing for good.

A question for you if at all.

Thank you.

Hey, Paul.

We have seen some category for enjoying a very faster growth rate during this year some on spring.

Spring Festival Grand promotion for <unk>.

For gifts beauty products and food and also home appliances for home appliances suffered from the pandemic most of last year and this year the demand is coming back hard and on.

And on.

In contrast, some categories, which has a good sales performance last year, especially for some home cleaning and healthcare and Mark's theyre coming back to the normal level. So generally speaking we do see this is a very healthy consumption trends.

Simple.

Well that's true.

Thank you.

Factor D D.

On the shareholder.

On the Opex.

The level of losses.

Particularly on the Bush on Yahoo.

Sure.

For the children that Virginia.

The hedge.

Purchase volume.

Fourth quarter losses.

On the other.

Tracy.

On the audio with Goldman.

And one more point to add is that because the governance governments encourage people to stay at their working place to celebrate for new year.

You see a surge of remote orders and among our platform the remote orders other photos for buyers that make the order and sending to the recipients living in other cities and the sales of the remote.

So for other extra double down on our platform and also because of the vacation on other.

Merchants continue to operate their business on our platform during the Grand promotion and even extent their working hours. There. So we do see they are very engaging and very active in participating lease sales sales.

The bank.

Yeah and on the <unk>.

Revenue contribution from commodity purchase in Q4.

Only experimented in very small scale in the fourth quarter and went on to cities. So you've taken on the revenue contribution.

Yeah.

Yeah.

We are now approaching the end of the conference call I will now on the call over to <unk> Dot Coms real Li for closing remarks.

Thanks, operator, thank you for joining us today on the call. Please feel free to contact us. If you have any for the actions. We look forward to talking with you in the coming months. Thank you.

Yes.

Thank you for your participation on today's conference. This concludes the presentation you may now disconnect good day.

Okay.

[music].

[music].

[music].

Hello, and thank you for standing by for JD, Com's fourth quarter and full year 2020 earnings conference call.

This time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.

Today's conference is being recorded if you have any objections you may disconnect at this time.

I would like to try and to meeting over to your host for today's conference.

Thank you. Please go ahead.

Thank you operator, and welcome to our fourth quarter and full year on the income to your earnings conference call. Joining me on the call today almost for Nike.

After he read health on a Sunday Hu, our CFO for today's agenda, Mr. Hu will share his thoughts on our recent business trends followed by our CFO.

Who will discuss highlights for the fourth quarter on a full year 2020, both of them will join for Q&A session.

Before we continue I refer you to our Safe Harbor statement in the earnings press release, which applies to this call. We may make forward looking statements.

Also this call includes discussion on certain non-GAAP financial measures. Please refer to our earnings release, which contains a reconciliation of non-GAAP measures to the most direct comparable GAAP measures.

Finally, please note that unless otherwise stated all dosing course mentioned during this conference call on me.

<unk>.

Now I would like to turn the call over to our CEO of JD retail most on the issue.

For example, thanks for that day.

Cash and diverse and document you were on it.

Yeah hopefully.

Total sales related.

The other thing you don't usually on the jumbo.

Hi, guys.

What you can tell on right now.

Thank you Li Hello, everyone. Thank you for joining our Q4 earnings call that the Chile V O off JD retail I'm glad to take this opportunity to day share with you JD retail 2020, with you and all of our outlook for the new year.

Regarding our strategic value.

Yes.

On the left that.

Thanks for.

Finally on some other vehicle.

Potential that you true shortly.

For two.

For yourself.

Thank you for that just basketball for Trinity.

2020 with no Ogden every year, we observed a significant changes in the macro economy, the retail industry on the way our customers live their lives.

The global pandemic greatly impacted society and everyone's lives.

It also brought many uncertainties to the global economy.

Okay.

For your.

Tangible book.

For one quarter down.

Thank you for joining for the future.

So based on moving faster.

For the happier.

For great opportunities can be pumped on Amit great challenges with a profound challenge for changes in consumer mindsets and behaviors. During this period.

For us online Greenfield penetration continues to deepen.

You must needs a tighter sense content form and means of communication all under one management.

Yes.

He told me because I really urge to growth.

On pages long.

Okay.

<unk> global call, maybe being pulled on retention.

Due to Covid on Patricia.

Kind of on our fourth quarter non-GAAP.

Consumer demographics, and use cases became increasingly segmented and diversified.

Lower to your market for silver economy for users who were born after the 19 nineties and for the year 2000, the community economy on the on demand consumption and many more engaging trends has presented us a wide range of growth opportunities.

Yeah. Thanks Richard.

And well go ahead Paul.

Importantly for you can install Julien.

The archived on yield.

Excellent.

And then can you just.

For the accounting et cetera.

Congrats on John discussed.

For the debt to EBITDA.

Results for bolt on.

For a total of about two months.

Moving on to what helped us.

Okay. Good.

In the face of these challenges and opportunities.

This business model has proven to be resilient through different economic cycles.

We adopted a more open approach to running our business on to continuously enhance our ability to enable our business partners.

Our long standing business philosophy of Novo principle of doing business served as our true north in navigating the uncertainties and changes.

All of these efforts have helped us to gain the trust of nine more users and business partners over the past year, we have not only successfully withstood the challenges, but also seek opportunities for fourth quarter growth and iterations.

Thank you for the power.

I forgot about your radio listing for the coalition of tranches.

Share buybacks for good level.

<unk> Com delivered a strong set of financial results. In 2020. This is mainly attributable to our continuous investment improving our user experience and also always put our customer first in running our business.

Moving on any of our clinical module for total.

Total of 30.

Yeah.

On the fee for the fifth Avenue trading.

Turning on to hit on the population.

700.

By the end of Q4 reshaping new high with annual active customers for the past for 12 months, reaching 472 million, we saw accelerated user growth and other.

110 million, new active customers compared with a year ago. This is the largest expansion on our history. We continue to see exciting user growth in the lower tier cities, which contributed over 80% off on a new users for the first time in Q4 of 2020.

For sure.

So the global debt.

On a single gene are calculated for good actually.

Yes.

We will wait for that.

<unk> get done on Angola.

Or any other app you can follow up on Venezuela.

For single Cup holders.

Volume performance.

We're even more delighted to see increased engagement from other customers. For example, the ox value for the odds from our 2015 customer cohort increased more than five times by 2020, and we also see a very active engagement of our J D plus members.

On hardware.

Looking back on the ultra deepwater given up on us.

That agenda.

For Covid for a total accordingly.

Thank you for actually getting <unk> seven for LTE.

So I think we've known each other.

Non-GAAP income.

Josh Thanks for some time.

Yes.

In 2020, we maintained healthy growth in our core businesses and achieved a significant progress on new business initiatives.

Retail is jd's earliest and most mature core business. It plays a fundamental low in JD, achieving its long term strategic growth.

We are pleased to say that in the past year, JD retail, who you want the high quality and accelerated growth and meaningful and sustainable innovation.

John I'll take that question.

Unless you're getting for range.

On average.

Chemical for.

Moving on the infrastructure globally.

But you are on track.

Cobalt congressional debt judgment about seven for yet.

Looking ahead in 2021 on Bianca.

Supply chain based technology and service provider JD retail will continue to focus on three key strategies.

Counting on Romito platform capacities for supply chain and technology.

Omni channel strategy, and our online marketplace ecosystem.

Thank you.

In particular.

Net which enabled.

<unk> will shortly you mentioned during the balance.

We'll get that on the terminal.

Do you have on the cohort one.

Total, Cuba, I feel that fee income.

Yes.

First on the media platform for supply chain and technology JD has been investing intensively in building our supply chain infrastructure for a long time at the end of 2020, we manage more than revenue in asking us on our direct sales products in over 900.

Warehouses across China.

So thats only industrial award at the average ticket is actually on some initiatives.

Good day.

For Q2 dividend of tumor control.

And who knows for sure physical contributor.

On the call this a simple bolt on.

GAAP net income.

During COVID-19 supply chain has impacted for development in cooperation among industry on enterprises around the world the need for a reliable supply chain for the more imminent in on environmental increased uncertainty.

For JD are fine to do <unk>.

Video provider to do is built on needle platform ability that can be applied in more diverse use cases and channel.

T mobile agenda for you the highest reported to us.

On the accordingly.

For the volume share count ticked up Shanghai.

We'll go to apology for sure.

On page two.

Got it for sure.

You can hold up in children.

On the one year trading.

Thanks, Sean.

Can we come up on on taxes.

Okay, that's a meaningful change for you.

And for February that's not true comparable growth.

For this go in line, we have been investing on swimmingly in supply chain on technologies to help merchants for online and offline figure small including brand for factories to improve their operations efficiency to enhance their customer experience and to improve their risk of resistance capacity.

It will also help promote high quality growth of the whole industry and create value for the entire society for.

J D. This endeavor.

Diversifying our revenue streams and drive all of our service revenue in the future.

And we'll try to knock on your guidance.

For further productivity and have the accounting rules.

Thank you for growth.

Well on them.

The format for the Street.

Therefore for more debt.

For June.

I was hoping for for those new charging for.

That will be sustainable for the color.

Premium volume for example, tightened our current inquiry.

Industrial Johnny on the changed at all for supporting hybrid.

Okay, maybe that's for Qdoba teachers, hoping Washington capital value for mortgage.

Gotcha.

Adjusted on too long.

Second in face of a broad range of business channel and use cases.

Omni channel strategy aimed to increase the overall retail efficiency to satisfy customers' diverse needs to provide people with immediate access to products and services and to create value for merchants and customers on the omni channel business is complementary to JD platform named retail model.

How many channel it's not only a key strategy for JD, but on.

Also a new trend for all retailers must address.

The penetration rate of this model is still quite low among offline businesses. We believe that there is a huge potential to integrate omni channel and on demand fulfillment element with many in the industry in the future.

For a moment switched on loans you don't forget for mobile.

All.

These rule changes.

Yahoo wallet share.

Okay.

Yes.

You may download growth.

For complete about 42 for children shoes on the Rguest, particularly on.

Gotcha.

We are forthcoming loss potential losses.

<unk> <unk> from a different product.

The day did this omni channel business has already covered for various offline scenarios ranging from contract for stores convenience stores current maintenance for fresh groceries and fresh flowers through pharmaceuticals, connecting with milling of off line stores.

Future based on on our unique supply chain and technology abilities, we will develop Lps based technologies tailored to the on demand consumption market.

Also continue to do that our omnichannel supply chain omni channel marketing and offline store digitalization ability to support their applications and many more industry businesses and scenarios.

Walter moving just geography over future Covid.

The singer overall for inkjet.

For mobile.

GAAP.

We thought of other property losses could you pay debt.

Revenue for that part of our year.

And you'll get a call center.

Centered on deals that low production growth.

For the quarter industrial.

Meanwhile, we will work on cultivating customers much share of on demand fulfillment through innovative measures such as our omni channel fulfillment initiatives and cooperation with external partners.

The partnership ABB day, and that our group in 2021, we will expand on recovery toward retail verticals and drive the quality growth of our omni channel business. This for.

Will provide us additional monetization opportunities.

So things are compelling cash flow.

Couple of things I introduced remote work without having any other issues.

According to your specialty.

Distributable cash flow conversion.

We'll take on hedges, our drilling costs and the other thing that for getting it up I think on.

I forgot what you signed up for that.

Yes.

Third on the building up on online market ecosystem. This is an area of great potential for JBT with several years of development. We have now established a good foundation for the online platform ecosystem, notably we have made good progress in building a healthy platform environment and improved our merchants.

Quality and.

Your line.

For me somebody to come out and will come on.

As such for digital.

The net looking cash transaction volume.

On the property sales.

<unk> shown GAAP.

But volume.

Total.

We had I think nearly uniformly.

On the products Fisher with other.

Similar to current industrial looking we'll have a whole lot of political for them.

We will look on VR for motivate us always go for the full year.

Peter just on geography, chairman of Corona for the luxury jewelry vivo compaction credit.

We are pleased to see that for NPS net promoter scores of our online marketplace continues to improve over the cliff.

So far this year of our merchants renewable rate is much higher than in the past, reflecting a significant improvement in merchant satisfaction and your recognition on our platform.

Looking ahead capitalizing on a healthier industry environment, we will continue to experiment with new models and strategies to find the optimal strategy for <unk> online marketplace.

Attempts will still be guided by J D is ultimate business purpose to improve customer shopping experience and to provide an open and empowering platform for merchants.

The agenda for just a follow up.

I don't see you fall for yield.

Come on line.

He'll be talking video losses.

Moving for Washington.

Yes.

For sure Okay.

W provision.

Hi, Richard.

Jonathan on for Jeff you can calculate for four years.

Before for the confusion.

First on options for total control.

No.

Hopefully you've seen what's going on.

While adhering to the strategic directions, where we're continuing to entertain our business Foundation keep an open mind incubate new business and use innovation to face trends whether it is on our first two growth curve represented by all of our established businesses, such as consumer electronics and consumer goods for on a second.

Growth term represented by our growing business, such as healthcare and on our own category, where the third growth curve represented by emerging businesses, such as Rachel innovation service and technology initiatives JD retail can always on Jakafi and incubate new growth opportunities.

Well for that.

Patient touches that Canadian travel behavior going on.

As usual before.

And Walter talking to neutral in 2000.

We will get for people hired for that.

On a gallon.

One of the.

Total sales cooperation.

Kevin.

And all the changes between the other clinical here's what we continue on schedule for that.

Oh settlement.

Here I would like to emphasize the strategic positioning after supply chain based on technology and service provider, we uphold our long term business philosophy since day, one of Jd's business, we chose to talk on the hardest on most valuable problems in the industry and society.

Matter, how far we have come as low as we remain committed for our customer for the core value and supply chain based on value creation will always be able to go full steam ahead.

Attitude embodies a longstanding business philosophy that is the novo principle of doing business.

Total.

Roger on the government.

And the only true Joseph Jack Waldo sawmill school children.

By being a high volume of wholesale.

And we'll go there for sure.

Richard was talking about total.

So on either jump on that for.

For sure.

<unk> received a full formed on the only for Jonathan.

On Utica share Alex you go for that pushes you to for that.

The road ahead as low unwinding, but taking one seven had we will preserve we believes the core values and mission that JD has been abiding by on relevant to the new macro environment and industry developments steady will continue to innovate and invest in these strategic direction, we will constantly and.

Continuously deliver our ability and create value for society industry on our partners and our customers on insurance achieved long term high quality growth at J D.

Revenue in the official kind of on.

For <unk>, our federal presence. Thank you for your time I will now give the floor for CFO sandeep. Thank you Li Hello, everyone.

Were pleased to finish 2019 with exceptional business and financial performance in the fourth quarter, we outperformed our expectations for the accelerated user and top line growth.

And if I can on complex in multiple new business.

While maintaining solid bottom line performance and strong cash flow during the fourth quarter and two out for full year 2020.

These results were driven by our relentless focus on cash.

Customer experience and investments in supply chain capability technology, and logistics infrastructure over the past year.

Which has become a hallmark of digital com.

As we embrace change and position our business for the longer Sidney has been at the forefront of many innovative initiatives and structural shifts that are taking place in China.

In addition to the exciting developments at Genie retail debt later this tough FX reported to elaborate on some operating and financial highlights.

But let me add more color on our user base.

For the end of Q4 will hit on new conduits for Mark for <unk>.

Annual active customers in the past 12 months at 472, meaning we saw accelerated user growth to 30% year on year and added 110 million new active customers from a year ago.

The addition, we managed to grow our user base, we are continuing to reduce our market loans cash neutral in 2020. This improved marketing efficiency was driven by our long term as a percentage operating philosophy and technology teams and marketing efficiency improvement.

The way for our sustainable future growth moving forward.

Let's come to a number of on our new business initiatives, which are making exciting progress.

On JD logistics began SDE groups in half roughly 60 comment in 2007 <unk> six.

<unk> has been building market logic.

The logistics infrastructure and technology, as well as operational and industry non harp for over a decade.

It has become a leading technology driven supply chain solution.

And logistics services for Robyn, China, and accreted over 900 free of healthy rebound acquisition gross floor area of 21 million in Colombia.

On February 16, 2021, BP logistics submitted on this the application for a high per dilute share. It on the main board of Hong Kong Stock Exchange. Please.

Please note that no guarantee at whether on the proposed for this team will take place.

Some of our smaller businesses are also experiencing rapid growth.

For example, PV poverty recent two balance sheet first on logistics property development, Bob with some <unk> strategic investments.

<unk> total EUR of television properties for Fox and the development path has exceeded 19 billion RMB.

TD property also entered into a second net premium which is a financing the total amount expected to be Li is approximately 700 million U S. Dollar.

We also restructured some business units recently to better coordinate our internal resources and capture market opportunities.

For example, we established most efficient patiently to further strengthen our supply chain capacity as a result customer and empower ethane east in the lower tier cities.

To achieve better synergies, our social ecommerce platform.

Convenience store business for <unk>, formerly known as <unk> and commodity purchase business since it keeps moving were consolidated and on the P&C business Group banner and in December we announced that BT cloud and App business will merge with CPG.

<unk> for the for any regulatory approval.

The proposal for.

For <unk> to drive synergies in the development of innovative technologies and product solutions.

This will allow you to dot com to focus more on core retail and logistics business and gain more flexibility in allocating resources for new business.

Within our retail business.

<unk> achieved an important milestone with the successful listing on the Hong Kong stock exchange on December eight 2020 with a gross proceeds of approximately 31 billion Hong Kong dollar.

So technology driven platform centered on the supply chain of pharmaceutical and healthcare products and healthcare services Sidney.

<unk> aims to provide easily accessible.

High quality and affordable healthcare products and services covering our users for lifespan.

J D has demonstrated a proven track record for.

Definitely integrating developing and growing new businesses from our core E Commerce business.

We believe this is enabled by our relentless focus on superior customer experience and our efforts in building and investing on supply chain capabilities and technology for infrastructure.

This creates a virtuous cycle alone for <unk>.

Quantify new opportunities, we empower external business partner and flow beyond our core E Commerce business.

Therefore, we will continue to invest in exciting new initiatives that can drive long term sustainable growth for our group.

Our financial performance reflects the trajectory of our non term development.

Our net revenue grew 31, 4% year on year to 224 billion RMB in the fourth quarter, continuing our strong growth momentum with a successful promotion season volume.

Importantly, we are driving our top line demand passageway on.

Tony can hold on.

<unk> increased 5% year on year in Q4 on continuing to outperform the industry.

It's Marty.

And on merchandise revenue continued to grow faster at 34% year on year in Q4, net but the FMC health cash cosmetics and home product category.

Order volume for the supermarket category grew by 45% year on year in Q for another key metric shows that we are growing our top line in a more diversified way is our net service revenue growth, which accelerated to 40 50, 53% year on year in Q4.

The highest growth we had in the past 11 quarters.

This is mainly driven by the strong growth momentum of JD logistics external revenue as well as our advertising revenue.

For the full year of 2020 net revenue reached 746 billion with year on year growth accelerated to 39, 3% from $24 nine consulting for 2019 enough.

Electronics and home appliance revenue recorded solid growth of 22% year on year on maintenance challenging market conditions.

General merchandise revenue grew 38% year on year in 2020.

Net service revenue grew by 42% on accounted for 12% per site of our total revenue in 2020.

Sure.

Our non-GAAP operating margin improved by 13 basis points year on year to <unk>, 5% in Q4, and up 52 basis points year on year to two 1% for the full year cash expenses.

BT Retail's operating margin containing one five percentage in Q4 and reached two 8% on a full year basis.

2020 opportunity.

<unk> thousand eight basis points for 2019, mainly driven by improved operating efficiencies and to a lesser estimate for relief of social security during the COVID-19 pandemic.

The margin improvement in 2020 withdrew line.

EBIT as we shift our category mix towards the high frequency of small ticket price consumer simple.

The categories that are still in the early stage of realizing earnings potential and proactively being debt some of our social security benefits and value creation for our users on the logistics infrastructure.

We're well on track of our long term margin trajectory.

Moving to the bottom line.

Two for non-GAAP net income attributable to ultimately shareholders was $2 4 billion on beef and non-GAAP net margin improved 59 basis points year over year to one 1%.

Our full year 2020, non-GAAP net income attributable to ordinary shareholders reached.

<unk> 16, 8 billion RMB up 57% as compared to $10 7 billion on the last year.

Non-GAAP net margin for the full year 2020 improved 39 basis points.

Over year to 12, 3% against our profitability has improved meaningfully in 2020 EBIT as we incurred additional expenses related to COVID-19, and excludes the benefit of the social security relief, which has about 75 basis points.

Yes.

It's worth highlighting that we continue to strengthen our financial position growth.

Total.

Our business Commerce on.

On the inventory caliber sales further reduced to 33 for three days in the last 12 months one of the lowest among the top global retailers and our own historical record again, despite the continuous expansion of total SBU directly managed by us.

This is achieved good for continuous improvement of our technology and operating efficiency.

Our free cash flow for the trailing 12 months take on new debt cost of 35 billion RMB.

80% from a year ago as of December 31, 2020, cash and cash equivalents ticket cash and short term investments added up to a total of 151 billion RMB.

Belief on solid profitability and financial position provide us with a strong foundation for investments in a range of growth opportunities.

In summary, <unk> compact on a calendar year of increased uncertainty with a remarkable performance.

Total improved our technology and tools.

Enhance our ability to serve users and ecosystem partners, which paved the way for our future growth, we continue to witness and keeping us on.

Online penetration across many categories and.

And the technology driven transformation, you may expect plus consumers' daily lives and for society in China, We expect to maintain the growth momentum that we generated in 2020 on multiple fronts. In 2020 plan in spite of continued macro challenges and the high comparable base in.

We also expect our long term margin trajectory will continue however, we do not forecast total margin as we believe dot com is still a fast growth stage.

On the above growth market with many exciting opportunities.

With our core retail supply chain and logistics capabilities.

He is well established with completing value proposition to benefit from secular trends and drive the long term sustainable growth of our business in 2021 and beyond.

This concludes my prepared remarks, let's open the call for questions. Thank you.

Okay.

The question and answer session of this conference call will start in a moment.

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Ladies and gentlemen, we will begin the question and answer session. If you wish to ask a question. Please press star one on your telephone.

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Once again to ask a question.

Star and the number one on your telephone keypad.

Your first question comes from the line of Eddie Leung of Bank of America. Please ask your question.

At one time.

Good evening.

A couple of quick follow ups after your presentation.

Firstly the user growth is pretty impressive for a strong wondering if there is a and the impact on the ticket size. If the ticket price is coming down because of our new users.

It affects the operating loss for each of you along with just the features seems like the fulfillment cost as a percentage of sales.

Yeah.

Uh huh.

Hi, all expectations. So just wondering your thoughts.

Then on Cingal, Sheila Angel mentioned.

Mention debt.

Neil will weigh each of your platform merchants.

Last year also just wondering how quickly you.

The number of our markets based on low churns out slowly because of the improved up the new Li Thank you.

Thanks, Eddie This is Sandeep, let me take on our first question regarding the for fuel margins.

So on.

I think for gross margin.

We would look excellent Tien <unk> separately, if we look at the pure <unk> to see our gross margin in.

In Q4 in one fell a little bit.

If we include the advertising revenue in relation to on one key product.

Second call internally, we manage the operating result, the gross profit margin for one key actually slightly increased.

After considering all of our reinvestment.

Q4.

For the additional profit that was generated from the first nine months in the year.

As I mentioned at our analyst call.

Last quarter, we planned for getting back some of the additional profit generated from the first nine months in the fourth quarter too.

To really provide value to our customers and also to lean back to build our logistics infrastructure.

So again to emphasize that the gross margin for <unk> actually slightly increased.

<unk> for the same quarter last year.

Look at the fulfilled gross margin for one key.

There is also a slight improvement from last year.

Compared to the Q4, and we see very new.

Meaningful improvement for the full year compared with last year.

20 basis points.

So this is driven by the steady improvement on gross margin by many categories.

Including the category mix shift towards lower margin supermarket category.

So.

The relief.

Social benefit cash flow impact on the improvement for the full year for.

Gross margin as we have for 180016th 2019, so the amount is almost the same.

Really what's dragging down the total fulfilled gross margin for our book is the <unk> revenue contribution we can see that.

On the contribution for.

On the.

Repeat revenue went down a little bit in the fourth quarter, even though total repeat contributed more.

In Q4 as compared to two for last year, we were quite encouraged by the healthy performance of our marketplace business model, what's the cash flow mix within the marketplace with a slow though.

Also changed slightly the healthcare supermarket electronics and home appliance categories outperformed for apparel and home for products. So that means the pet growth with relatively lower take rates are growing faster low tax rates with higher take rates.

Our marketplace business model again, we believe this is a healthy move.

A good indicator of our efforts in building our bench strength.

For marketplace ecosystem, particularly for our historically strong lumpy category.

For a holdup.

Doug on the dilution.

Yeah.

For the entire shoulders into the zone.

For fleet.

Got it.

Sure.

Sure.

And to answer your second question.

You have one on that JV our reputation.

It's the strongest in terms of the consumer's impression on our service experience.

But any other kind of on the assembly or shortly after the second quarter.

And for the year, you can see that a number of merchants on our platform has enjoyed a steady growth.

Relative to others.

The low teens for repo.

For some job losses.

What other assumptions.

Each day.

For <unk>.

So for them.

Okay.

Awesome.

Awesome.

Consumers have a higher expectations on our service. We will also have a higher expectations on the quality on the products from our cost from our merchants on the platform.

Enrollment is that Australia, presumably share due to hold each other shutdown on attrition Chinese 14, direct outperformers with reasonable strength.

Sure.

So on that.

Our premium on liquid.

Sure.

Sure.

During the last year, we have done.

I went down some of our screening work on over a low efficiency on the low accretion merchant and still we see that over a number of other merchants on the platform is steadily growing and this year, we have been recruiting more high quality merchants day.

They are a more experienced under running their business on a more efficient way.

But it all growth.

So that is shown to work with credit Suisse.

But on collection.

Teleconference share.

Based on these institutions.

<unk> got on June.

Sure.

So Jon Hauck with losses.

Yes.

Sure.

Thanks, Paul.

On the global fixed.

On the economy.

Our search for example.

Or is there something on a module.

For significant growth.

Yes.

Sure.

So we will pay close attention on the efficiency of our return on our platform and also operating efficiency.

On merchants on our platform and how well they are running their stores and for this year. The cutoff time for the merchants renewable on March the <unk>. So we have seen the renewable rates much higher than in the past and we all first lien debt improvement.

All of our merchant satisfaction range on other platforms.

Thank you for the question.

Your next question comes from the line of Ronald Keung of Goldman Sachs. Please ask your question.

Thank you. Thanks. Thank you for taking my question. Thank you see they don't Sandy on management and congratulations on the strong 2020 performance My question would be on.

<unk> Nathan when it's Andy you mentioned about a lot of new business of which are very exciting and.

Good day.

You've launched I think see also on the different initiatives.

Okay, and that kind of new businesses.

Should we think about kind of.

Plan to invest in these.

Of course, JD retail is very strong on itself.

So many exciting initiatives could you go through these initiatives, maybe one by one or the biggest key and how should we think about how commitment on the plan to invest in terms of magnitude. Thank you.

Thanks, John on this is Sandeep, maybe let me take the cash.

<unk> got on CST and <unk>.

Comment on some other new initiatives.

So in Q4 as I mentioned, we did a restructuring for our therapeutic approach for.

Really tie to generate synergies from the three per page.

Net.

We see there is for each.

Opportunity in this group purchase.

Business.

Purchase industry other fresh produce category.

So we firmly believe there is a structural opportunity the huge market sized and highly fragmented supply chain with lots of opportunity and its potential to improve the operating.

Efficiency through technology and innovative business model.

And we also see batch the book purchase business model works better for smaller ticket items in the lower tier market I think can generate better fulfillment efficiency to shortchange logistics and be more efficient inventory management and marketing, especially for <unk> and the non fuel products and provides the users from the.

Our lower tier markets with petrochemical company.

So even though at present small players in this market due to their book purchase business model, primarily driven by check we believe the end of the day. It will go back to the basis of retail business.

E platforms will compete on.

Cost of product operating efficiency and customer experience.

So we see debt to be a long term initial EPS and ultimate goal is to improve the operating efficiency of supply chain, the wholesale and retail business in the lower tier market through technology and improve People's living standard.

JV is fully dedicated index initiative, and we will take a somewhat differentiated approach to be multiple cuts on supply chain and logistics network and try to leverage our existing capabilities.

So we launched our chicken business on certain species from January and it's still in a very early stage.

We were entering into the book participates day, we need to build localized supply chain Shortchanged logistics network as well as technology and tools to support for the operation. We also need to recruit group leaders at this day.

<unk> asked agitate on new users.

City by city. So there are lots of areas need investment.

As we announced that entirely from the scratch.

We have been testing the book participates is volatile for a well.

Very small scale.

For our convenience store business in total now remains true.

We already established some fleet would be supply chain, primarily in the FMC day tax rate.

Including some localized supply chain. We also have existing fleet will be logistics networks and localized for business development teams in certain regions of the country.

<unk> now has over 1 million SME customers and some of these convenience store owners can naturally be tagged to the group leaders of our <unk> business.

Yes.

Our existing centralized procurement platform.

<unk> platform message for later now.

For us on <unk> com.

Home per caps or other cash growth.

Our tissue segment.

Provides users a campaign with more product selection.

At the same time as we generate still benefit for core retail through sales on <unk> channel.

So we are working with various partners, including channel.

The manufacturing basis for agricultural products to strengthen our supply chain capabilities for their upstream and try to source the best value product for our users.

At the same time, helping the existing market players on the supply chain with digital transformation, including the agricultural products fulfill market.

Our <unk> E Commerce platform aims to assess the users from the lower tier cities and they have accumulated a lot of loyal users since the establishment.

Our initial cash more users we are pleased to see a good conversion of GAAP user to continue debt.

So we believe vehicle for specialty income capabilities in the lower tier cities for a good basis to start our PC business, although not sufficient true.

Supports the growth of the new business at retail quickly replicate adjust and apply our existing scholarships index.

Industry Knowhow.

And capabilities to the new model.

Pete income also help increase the engagement of users and merchants from the lower tier markets.

<unk> income in stores for 60, and 50 pump business as well as on putting our main app.

These are also the logic of reorganizing and consolidating the three business units into one business group.

Most importantly, JV fully dedicated in this initiative, we expect our best people to this new business growth.

We also got supply chain cost from our core retail and logistics business growth.

So talking about reinvestment.

We have put aside sufficient buckets to start and grow the business as we move to impact in many areas as I just mentioned and we will evaluate the LOI for the investments line make sure other adjustments based on the market situation.

It's pretty difficult to accurately predict at this stage how much we are going to spend on this new initiative as you can see the market is very dynamic with many many players.

What I can tell you on is our strategy is not to acquire users through short term and crazy subsidies, but to really impact in building the hard core capabilities and technology to run the business and create long term value for our users and evident permits and for society.

So this is also consistent with our groups operating philosophy.

On to improve the transparency of our communication with investors.

We plan to take helps the opportunity for our subsea business book from JD retail segments.

Reported under new business, starting from Q1 this year.

We are excited about efficiency opportunities and we look forward to sharing more with investors as we develop the business.

Okay.

One other point between the cost of debt.

Let me add something on the new business.

Of.

Got it.

Would you be sustainable operating for crude oil for loan book.

Sure.

And not only for e-commerce, but essentially for all the retail business, we will focus on our customers' products and for platform.

Good day.

Moving toward a final lease on credit losses on the flow through.

Okay.

So you will kind of hit on in other words on Google.

For the quarter quarter low.

The other one June funeral insurance entity for the shareholders' Association.

Total, reaching partially on Carters com.

So she income with a full quota share.

Certainly we've been vocal issue.

Your line.

On.

True.

Yes.

So since the beginning on from Judy Richard.

Development, we started from other.

Products and should we start to expand our product selections. So we do our first party and then the third party product offering and for the next step we will book, we focused on the cash.

Customers and we starts with providing products to the targeted customer cohorts or interest rates in the customer consumer electronics and digital products and then we will continue to expand our consumer base for more people in the lower tier cities and the female users.

Thank you for Formula one.

Moving on from credit Suisse sort of moving on our two comparable sales on what Youre doing for you.

Cash flow.

Sure Jeremy interchange for Tomorrow.

So just a girl.

Sure.

Somehow pay for deepwater.

But putting on that.

Total Joan.

On them.

Quarter Officer, JF Hollywood for Ya shoulder quarters for critical leg of growth.

Sure.

Sure.

I'm joined on this quarter.

Sure.

And in terms of the platform we started to be recovered.

In a centralized way and then.

Now we are moving to more decentralized formats and in the past two years, we have been exploring new formats with on offline businesses and our omni channel initiatives. So this is the basic jd's business logic and behind that the most important thing is that.

We are thinking and doing things to see what.

What are the pinpoints, what we can solve the pinpoints about bringing down the cost and improve the efficiencies and getting better.

Shopping experiences for our customers. So this you can see is the process. We are looking for some.

Some solutions for the pinpoints and also whether there will be new ways.

There'll be new.

For more leading a robust models, where methodologies to do retail.

Hello.

For acquisition meaningful for hardware, the Genco book, which is true for both a woman called for.

For the provider full rate.

From a doctor.

Claudia.

Just to what we provided.

Unit volume decreases.

For some growth.

For global patent several other than future.

Shooting range, which was on.

Great.

Sure.

Oh, we said that growth whether Sidney.

Joseph Tung sheet to cash.

True.

Low.

Sure.

Yeah.

Sure.

For the U S portfolio.

So based on the covenants.

To go with them.

True.

While the slower Li.

We're here with Covid.

As a result.

Sure sure.

The other product.

Total.

Okay.

So we have seen that in the past years on JD retail has incubator Sidney house and J D. R <unk> and all of it on <unk>.

Spacing on a principle to solving some pinpoints and created value for this industry and on.

We have seen debt in.

In J D Zone development history, and this has happened to many other companies as well when we are considering to enter a new market. We will first of all the cash the scale of the market. However, we will seek deeper and see.

Whether this new business will truly create long term value for the industry and for society. So this is as I mentioned to the basic logic, while we are making other decisions to enter a new business. We're not so eventually we would love to create a sustainable and.

Sustainable on constant value to the society and other customers.

And also supplement on fitness is other than for detailed business for.

For <unk> JD logistics, it will continue to build technology on infrastructure to further expand its production service offerings and we also have to be international.

So we have a simple operation in southeast Asia. They are in the fast hyper growth stage backfill in the investment stage.

Next question please.

Your next question comes from the line of Alicia Yap of Citigroup. Please ask your question.

Hi, Thank you good evening management share nature.

Thanks for taking my questions and also congrats on the solid results.

Very quickly wonder have you already generate any revenue from community bank in the fourth quarter.

Just wondering your FMC G categories have you seen any.

In past given the rising in.

<unk> tends to be of these community group buy platform from the peers and then just quickly on the first quarter Chinese new year. So any qualitative color that you could share with us.

Given this share is also another.

A little bit special year, giving the sales in the cities measure. So what have you lost income for the category demand.

Compared to the Navajo Chinese new year period.

Any category that you have seen abnormally strong Fisher. Thank you.

Okay.

Or should opportunities without limitation.

What would your revenue.

This is Julia will answer questions related to FMC G and the Chinese new year on current promotion.

Loans.

So James for Angola.

Would you like that.

True.

In Germany.

Got it.

So for the hardware so we share.

Yes.

For the political junkie.

And overall speaking we have seen the focus of the community group buying.

In these in the following areas first is the fresh produce and also the FMC cheese and some may related to the digital products, but mainly focusing on the vs. Two.

No.

For sure the solid mix income downward.

For the figures for each.

For what it means is interesting.

It made with each other to the whole U S G.

She got GAAP strength and growth.

And we don't see quite speak impact.

We don't see the J D flow business has been.

Having a big impact from the fast development of coming to you for buying I think this is mainly.

Related to on our customers' shopping behaviors and for their mindset much on my shares and also their preference.

Thanks.

Christi onshore.

Therefore for us.

For our total is essential to Angola.

We see our growth.

For the home.

For the commodity.

Okay.

You can see Richard.

It's also worth mentioning that some of our asking us has been.

Some favorable items that some community group buying companies want to work with us through our supply chain, enabling our business formats.

For example.

For the Hallmark Union revenue.

Making sure each share.

Sure.

As you look at on that shelf space.

Sure.

On the onboard and other.

Thank you Michelle.

Your line.

Other for Chile.

On today's call.

Regarding the question posture on Spring Festival.

Shopping festival.

Compared with last year's Covet situation. This year, there's some major changes on the Consumptions, we do see a healthy.

Consumption on results and our.

On consumers participation in this year's shopping festival.

Good for levels.

Yes.

For the next year for corn.

Right.

The bulk of zone.

Okay.

For Gulfport photoshopped.

Inventory on the.

Ultimately deteriorate for them.

Looking forward to one day.

October 13 units for cash.

Online bidding.

She then.

Gvhd income.

On whether it's in line.

Gotcha.

For Neutrolin.

And number two the ability to share that mixture.

On exchanging tool.

Good afternoon for you if at all for them.

Looking for.

We have seen some category for enjoying a very faster growth rates during this year.

Spring Festival grant promotion for <unk>.

For gifts beauty products and food and also home appliances for home appliances suffered from the pandemic the moat for last year and this year the demand is coming back part and on.

And in contrast, some categories each other.

Good sales performance last years, such as some home cleaning and healthcare and Mark's theyre coming back to a normal level. So generally speaking we do see this is a very healthy consumption trends.

Simple things.

For that.

For all of them.

Good day.

Thank you.

On the shareholder.

Perfect.

For two days on the Bush on volume.

Sure.

For total admissions in the Virginia.

Our hedge book.

Fourth quarter losses, and applicable standard Jordan and other places.

Yes.

We've got on board.

And one more point to add is that because the government. The governments encourage people to stay and Theyre working place to celebrate for new year, we do see.

<unk> remote orders and among our platform the remote orders other powder for buyers and make the orders and sending to the recipients, leaving another city and the sales of the remote the numbers are for low odor <unk> doubled down on our platform and also because of the vacation on other <unk>.

Merchant continue to operate their business on our platform during the grants promotion and even extent their working hours. There. So we do see they are very engaging and very active in participating.

Sales.

60 bank.

Yeah and on the.

Revenue contribution from continental commodity purchase in Q4.

We only experimented in very small scale in the fourth quarter in well true cities. So you've taken on the revenue contribution.

Yeah.

We are now approaching the end of the conference call I will now on the call over to <unk> Dot Coms, where you Li for closing remarks.

Thanks, operator, thank you for.

Joining us today on the call. Please feel free to contact us. If you have any other actions we look forward to talking with you in the coming months. Thank you.

Yes.

Thank you for your participation on today's conference. This concludes the presentation you may now disconnect good day.