Q2 2021 JD.Com Inc Earnings Call

[music].

Hello, and thank you for standing by for JD, Dotcoms twenty-first 2021 second quarter and interim earnings conference call.

At 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 now like to turn the meeting over to your host for today's conference Mr. Sean Zhang Director of Investor Relations. Please go ahead Sir.

Thank you Leslie and good morning, everyone welcome to our 2021 second quarter and interim results conference call.

Joining me on the call today are Mr. Lei Xu CEO of JD retail Mr issue digital comps therefore.

For today's call <unk>.

We will kick off with opening remarks.

Randy will discuss the financial highlights.

F N D. What explained the Q&A session.

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

Also this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release.

Contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Finally, please note that unless otherwise stated all figures mentioned during this conference call are in RMB.

And now I'd like to turn the call to CEO of JD retail installation stuff.

Sure.

Thank you Sir.

Good morning.

Yeah.

Gotcha.

Hello, everyone.

JV retail thank you for joining other Ernie talked about.

It doesn't matter at all since you set a kilowatt tocopilla.

Oh, yes.

Jonathan.

Thank you.

Sure sure.

The products are still want to keep up with that.

Some of them are going to accrue to the box and housing that will come down.

Yeah Yeah.

Another poodle.

Without telling me that do not look at that.

We do have all paid attention too concerned about regulatory timken.

Sure, it's two months ago JV.

Our observation is that changing are you essentially adopted efforts made by the government and industry undergoing high speed growth regulators are working to bring platform economy based enterprises into any thunder, a regulatory framework, which can effectively rectify and congratulate me to come back such as it is utterly capital.

Sanction monopolistic come back then so long.

Let me go back to you Jim in terms of a positive level somewhat.

Okay.

On a constant.

Welcome to Cleveland <unk> in Ohio.

<unk> therefore, what do you mean these policies are not intended to restrict.

The internet and relevant industry, but rather to create a fair and orderly business environment to promote long term and sustainable development of these industries.

Yes.

You'll do it.

With a major U move donkey.

Cleveland two for your thoughtful and disciplined when.

It wasn't just about in the past Elisa.

California comes out for that at the time.

Jim why don't you found out we believe that the regulatory costs I can feel safe to JV long term business growth.

Part of our business maintained steady growth, while committing to that compliance practices.

That JV is development of the population yes.

Business model and strategy.

To better position us.

And in line with the general direction of regulation in China.

<unk> market.

So jumping on turnkey juncture, they turned off and go find other wealth managers.

We're finding that some time ago.

I'm kind of detail.

Here, we can see some movement.

You mean, how much do you call that kind of ballpark.

Political budge.

So I think people don't understand.

Your political about yeah.

Yes, Hello, Dr. Tina Fey that desk.

Just one or two months in total because we want to come back.

Okay got it.

Even though.

But Jay just loves getting business principles of doing business, the right way I call. It the movement towards the principal business was good since day one.

We always good customers' needs at the core respect every employee and remain respect every employee and provide them with all round safeguards woken up other capabilities to fully empower our business partners to achieve.

On this journey, we keep on creating and sharing value for stakeholders, while doing our utmost to take on as much social responsibility as possible some of which is even beyond our scale. We believe these acts are worthy of recognition in China and across the world.

Sanofi doctors, you should each year from here.

Seasonally the citizens should each year.

Sure.

In North Dakota, Colorado.

Moving down the Shanghai.

Welcome aboard.

Would you say that you can tell Joe your budgets you won't even picture.

On the peso Triple Pudong estrogen.

So combining chunky things, sometimes 2000 Chinese solar Google.

<unk> has often won't going on at the moment.

So you can imagine.

She's uncle necessary.

That actually failing charter can call second kidney dot com is a new type of industrial enterprise that has spoke to trade a real economy, and digital technologies, which inherently differentiates us from the platform economy modal JD creates value along the entire value chain from providing market.

The transaction technology support delivery and optical services, all the way to the industry upstream of warehousing inventory management product selection pricing and manufacturing.

Opening up all the various capabilities accumulated over here as to the real economy offering one stop selection, one stop solutions and continuous supply chain efficiency, we can truly achieve another trigger some value.

Co creation with our users and business partners.

Fourth of July and it's really either Ebola virus.

So I'm wondering you're wanting to talk to somebody about kidney that's helpful.

I pulled up the injunction would you love to move guidance from idea.

The hallmark for my Dad.

So you shouldn't hoelscher he won't be on the deal.

You can talk with them fully but you can see how much.

Net income.

$20.

Indeed, a timber say them again.

The same time, keeping dotcom itself as part of the real economy operating of managing more than 23 million square meters of warehouses nationwide and over 90 million self operated asking us. We also upper tens of thousands of offline stores, including fantastic Georgia.

This digital product pharmacies.

Omnichannel supermarket convenience towards JV auto car maintenance service towards and more while at the same time leverage our omnichannel model and supply chain capabilities to connect with nearly 1 million brick and mortar stores out there on the market demand, usually bogo official frequently or too literal about my uncle Okay.

And on the peso Kung Fu.

On the full credit for that one.

What we're signaling too.

On the jumbo by vintage will start to ship revenue policy shown in Salvador focus a whole lot of thought about what sort of.

In addition, we have close to 400000 employees, including those in our listed subsidiaries and affiliates and a majority of them work on the Frontlines of delivery warehousing customer service positions on more the services they provide to cover more than 550000 indebtedness.

The messaging villages across China, and neighboring countries, 92% coffees, and 84% of Hulu customers to enjoy the same or next day delivery services.

Certainly we don't even see mobile as a royalty, but if you do a full quite achievable.

The bulk of that nature.

Thank you Bob.

Turning to them with a lot of little or no.

It's really unusual John I wish I could do I pay very well by the Shanghai Sanya Vulture peripheral blood Invacare. He was he changed yet you don't want to get it done.

Youtube Gmail with silver down here.

So you can do that but Joe your budget.

Yeah.

What are you an opinion I think the most.

Take our deliberate personnel as an example different from many of express delivery companies. We offer full time jobs with formal employment contract to nearly 300000 Blue collar workers. In addition to social insurance and housing fund. We also provide the accident insurance subsidies for working under special environment.

And insurance employee relief fund them more these demonstrate social value that can be quite AIDS, which sets us apart from platform economy model companies and week out.

It's a high profit out of traffic and transaction flow.

Human will yield what district interchangeable.

Okay.

So does that lack of Nevada gold.

So now to come down to the most usual jumbo product.

We want to caution until we humans I'm trying to understand so without issue.

Looking more closely we charged off by acknowledging the adoption I don't even talk about honey chicken patent licensing what J.

Ladies business business philosophy is to promote quality products under the rational consumption.

Providing best in class shopping experience, we are driving healthy growth of brands and merchants, which in turn helped to create stable and large scale high quality jobs. This enables us to form a virtuous cycle between commercial and social value is.

Also fundamentally in contracts to driving the economy into a vicious circle you reach normal market competition is disrupted by excessive price subsidies and to merchants profits are reasonably squeezed.

You'll be familiar with what's your computer to forgive my talk about longhorn.

Users can seamlessly move things out.

Yeah.

Green shoots are conducting on Nevada.

Please go ahead.

Of course, you got to do similar things with the automation engine.

With all that in mind, we believe JV business model and strategy position us well to move forward in line with the general direction of regulatory policy and will foster healthier growth in the future now I would like to walk you through some of JD retail isn't as high.

In Q2.

Yeah.

But.

Tissues, like Ulta and Amazon.

So, but you know constantly to grow.

So you should look at Google Docs closure, some of whom themselves.

So that.

Koby Cogent chalk portion of the book.

The other thing nobody else can.

They are about potential branch available obviously got.

To the point that I don't want our funding sources.

Critical to.

So thats another two months or whatnot.

It's overdue gross profit.

Great.

It seems that the tissue.

J D. Retails continued high quality growth in Q2, not only did we achieve continued top line growth from a high base last year, but also maintain steady margin expansion on a comparable basis, thanks to our improved supply chain and operating efficiency.

Like the complex the competitive landscape, we achieved at GMB growth of 27, 7% year on year during the 6008 Grand promotion.

The recovery momentum of entire retail market and the upstream industry for China in China in a challenging market environment. Such result is solid proof of JV striking recognition and much time, among my chair among customers suppliers and brands.

Sure.

Ultra left a little unusual, but you might Wanna Wheeler these favorable orange anymore.

New equipment, it will be stronger income in.

In the central number that people can build out that the slides and at least with you.

Sure.

For people, who are affirming the bundle.

What kind of human.

Sure.

The last notable.

Each of them going into the upstream boxes come down just wondering do you pull the trigger.

From do it yourself perhaps.

You got yourself, there with you to help them do that because I would have them.

So we will send an equal reduction in shipping.

This is also evident in the high quality growth active users in Q2, following the milestone of 500 million active users that we achieved.

We're excited to see our annual active users increased by nearly $32 million setting a new record of single quarter nudge increments at the same time, we see the quality of new users continue to improve aspects of retention rate shopping frequency them more. Furthermore, the average revenue per user of existing users.

As well as all new post blended continue to growth. This means that both of the user base and all of them and.

Their lifetime value and can be increased there are many other operating and financial highlights in the quarter that centene will elaborate on later.

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Well, that's a bit of a kind of 100, and I'll say and I'll, let Vince you talked a little bit with annuity for Daugherty moving toward 25 kilowatt that we don't have turned out to.

Yeah on the southern water handling only on countries.

Got it.

Second we press ahead on the Omnichannel strategy.

Third during the Investor day that the rationale behind our Omnichannel strategy is to break the glass ceiling for Jd's long term growth I'd like to reiterate at only JV business model has the ability to truly omnichannel plan.

Your initial he doesn't tell me that one extra ammonia and I'll go there with that model.

Simple formula to handle neutral Shawn tomasello who's on my view.

Donnelley.

Oh boy.

And finally, the ongoing trials for that.

And we hope it will turn out.

Tricia I don't care, what people say more short months schedule.

This is because that the strategy is founded on JD supply chain capabilities, which we have built and honed over the past 18 years with our supply chain digital operation and integrated marketing capabilities in their shopping scenarios, both online and offline, we can synergize with suppliers and partners to effectively meet the customers' need.

That can be met.

That can be like that cannot be matched by a pure online platform or b to C model.

Moreover, we have built and open platform to adapt to the ever changing market with ultimate.

With ultimate go to sell products from all over the world and sell products everywhere in the world.

Did you all do more human.

Oh go ahead for no change at all you can tell them, what sort of forgot about Kazakhstan.

Thank you Julia Chung calling for sure.

So what she told us about that.

Actually sanya.

That actual by either coming out of Germany.

Sure.

Finally, taking a two two vote.

We're not gonna do they get that lets you do.

Hum.

As of Q2, two out to our supply chain solutions Omnichannel marketing and other models JV Omnichannel business has coverage millions often break them out or a merchant.

And our goal this year is to further expand our universal capabilities in Omnichannel, making breakthroughs in key areas and then introducing these capabilities into more business format and region.

If you go to the public indefinitely.

Our maturity you're going to send out a fix yourself to do it.

We will go to the public.

T J talked about transactional isn't done if you're if you have a corner at the fab.

The issues on the other two are in car Ts.

I'm not showing it.

Third and probably the merchants on the third party.

Marketplace, we have been working to alleviate the burden and improve efficiency for merchants. This year, we introduced a series of smart I appreciate tools such as simple on boarding process intelligent customer service management simple advertisement placement Merchants' square center as well as our integrated supply chain solution, which helped to lower the entry.

For new merchants and improve their operating and growth efficiency.

As you probably know what you're going to supplement the Zimbra E. Some of the other two.

Junior Street in Pingo.

So another thing you Shouldnt see my neighborhood, she really bad.

So I see it.

Gotcha.

Assuming tubular pool, so the only thing that would change that.

We'll go to the luxury condominium.

In this quarter, our marketplace business made progress in three areas first the overall number and types of merchants grow both year on year and quarter over quarter second merchants operating efficiencies satisfaction levels and retention rates further improved and third.

The net promoter scores of our marketplace business continued to improve this I'll speak to the increasing recognition of merchants and customized and healthy business growth.

That's the message we don't usually is eligible genome tissue that Sheila.

Tim do putting Basel IV I imagine Piedmont Shar can look at paragould poverty.

Pat.

Don't you do need to go towards utilizing social media.

So if you kind of.

But we really didn't do well when we do that in EMEA.

Are you pleased when you said it well.

We're encouraged to welcome a number of new brands on <unk> Dot com, including Bulgari menswear brands polluting and other brands enter the Lv MH group as well as many returning brands, including Victoria Secrets.

You've seen many form and hurdles.

Sure good morning.

In the phase them in Gabon with alcohol in Egypt, what is if you remember telling them what we're trying to it's everywhere.

How did you know Nicola will further.

Gotcha.

Dr Anja.

Well, there's no one even though Julian pull that come to your account you kind of a usual debate yourself beautiful, though it seemed apparent to you probably hear that if you want to take a whole lot when youll see she won't come up literally without other tumor treating human study.

Traditionally goldfield, Nevada.

If you go out you talked about you know where the official mobile home communities can be.

It helps about sharing can help you better understand that JV business philosophy, and markdown strategies and developments are moving ahead in line with the general direction of the regulatory and market development in the current market environment. We believe J D is that to have more strategic advantages and development opportunities over the long term finally.

I'd like to reiterate that JD is committed to delivering certainty and high quality growth in a time of uncertainty and living up to everyone's support and faith in US. This concludes my remarks today now I would like to keep the floor to Cindy for more details.

Thank you Li Hello, everyone.

<unk>.

There is probably content with healthy growth across many of our operation and financial metrics I smell as many exciting progress along our new strategic direction.

This is particularly encouraging amidst the dynamic competitive landscape.

I'd like to Echo what they have said that persistence for cooling.

Yearly guidance from day, one our business philosophy.

New creation for all and supported by our unique business model that is deeply rooted in the real economy.

As you May recall, we demonstrated the resilience of our business model and execution a year ago at the height of the challenge.

I believe we will continue to show resilience and thrive in the current changing environment as well.

Before going through the financials.

Let me share a few convincing business progress we have delivered and some of the positive trends we saw during the quarter.

Sure.

I want to add some color on user time.

We are encouraged by the continued growth of our active user base with our LTM total active users, reaching 532 million in Q2 up 10% year on year, a high comp from last year. We are excited to welcome 32 million new users this quarter, which.

Is the largest quarterly addition in our history.

We are heartened by the fact that this is driven by the increase in costs and engagement from users with different demographics and diverse demand.

We continue to win over price sensitive users with our broad selection of value for many products and diverse services.

Users from lower tier market not only continued to contribute nearly 80% of our new users in Q2. They also accounted for over 70% of our total active users in the last 12 months by shipping address.

Along with the healthy growth of our new users.

We're also encouraged by the higher engagement from our existing users.

More notably the number of paying members in GB plus program grew 30% year on year during the quarter further strengthened its position as the largest PE E Commerce membership program in China.

As plus member now enjoy a broader array of benefits on the JV app and in offline store.

Ah pool continued to increase reaching over nine times that of non stop users.

So for our brands and the merchants.

City plans to create both the effective engagement with the JV is high value users.

A meaningful incremental sales.

Overall, the improving engagement of our users what's reflected in the higher average number of order per user and the acceleration of total order volume growth to over 40% in Q2, which is faster than our LTM active user growth.

We believe our strong user growth is healthy and sustainable.

Now, let's turn to our financial performance in the second quarter.

We set a new quarterly revenue record of 254, beating RMB in the second quarter up 26% year on year against a high comparable base from last year and maintained a robust 30% two year kickoff.

Our net service revenues continued to grow rapidly at 49% year on year more than double the 23% year on year growth of net product revenues in the quarter.

Net service revenues were mainly driven by 72% year on year growth of logistics and other service revenue.

35% year on year ago of marketplace and advertising revenue.

Nope that within logistics and other services.

Nearly triple digit growth of JD logistics external revenue was partially offset by the deconsolidation of cloud and AI business.

Net service revenue contributed 13, 4% of total revenue in Q2 of 200 basis points from a year ago, demonstrating the potential of our diversifying revenue growth.

Turning to the segment performance.

Our core business D. D. Retails revenue reached 233 billion RMB in Q2, with a 23% year on year growth.

Hi, Collyn.

3% year on year growth in Q2 last year.

The two year revenue <unk> was 28%.

We continue to see successful category expansion as general merchandise revenue grew 29, 5% year on year and 37% to your pick up in Q2.

This was led by our supermarket categories, including food and beverage cleaning and personal care categories.

Meanwhile, our electronics and home appliance revenue grew 20% year on year on the high comp with a two year peak of 24%.

Furthermore, our third party marketplace business continued to grow faster than our lumpy business in terms of both year on year and two year kicker in the second quarter.

Especially during our June 18 anniversary sale boding, well for the healthy improvement of our marketplace ecosystem.

It's worth highlighting that Genie retails lung LTM active users grew 27% year on year and remains the predominant driver for our new user growth.

Two its superior user experience and a strong user mindshare.

The solid revenue growth of our core retail business was accompanied by remark believes resilient margin performance.

In the second quarter TT retails fulfilled gross margin improved 30 basis points year on year and operating margin remained stable at two 6%.

Considering the one off COVID-19 related impact, resulting in less resources patch our marketing activities.

As well as the social security benefit we received in the second quarter last year.

Operating margin of JD retail actually improved in Q2 this year on a comparable basis.

Mainly thanks to technology that overall operating efficiency improvement.

Our core retail business is that to maintain its trajectory of sustainable healthy growth and steady market improvement.

Our JD logistics business remains high secular growth stage.

Logistics revenue grew 46% year on year, and 45% two year pick up two to 226 billion RMB in the second quarter.

It's worth highlighting that JD logistics is accretive example of JV commitment to investing in long term value creation for the benefit of society and taking a more social responsibility.

This includes not only creating high quality employment, but also providing sufficient protection and social as well as commercial insurance coverage for all of our broadband employees.

This is daniel in effort deeply resonate with our employees.

<unk> provides best in class services to and build personal connection with our customers.

Our efforts have also resonated with the government and regulators evidenced by the social insurance reduction benefits and other supportive measures from the government. We received last year did.

<unk> logistics has COVID-19 impacted these investments.

The Spanish.

Logistics infrastructure and technology to expand its total addressable market and to support E Commerce development in the less developed regions.

Well at this long term focused investments continued to weigh on near term profitability is encouraging to see that JD logistics operating loss has.

Largely naval sequentially.

<unk> logistics currently operates over 1200 warehouses with an aggregate gross floor area of 23 million square meters.

Our new business segments revenue reached <unk> 7 billion RMB in the second quarter with both year on year, and two year take or accelerating approx.

Approximately 60%.

The revenue growth of new business. It was primarily driven by triple digit growth of CMC business.

And partially offset by the deconsolidation of our cloud and AI between.

Operating loss in new business. It was 3 billion RMB as compared with $2.3 billion in the first quarter, mainly driven by the investments in infrastructure and capabilities in lower tier markets.

You can see business is on track to meet its long term goals of improving agricultural supply chain and retail infrastructure and efficiency in order to your market.

Serving price sensitive customers entered the CST brands and creating value for the local economies.

During our June 18th anniversary sale and sold a total of $22.5 million kilograms of agricultural products with order delivered from over 200 industrial pouch.

We are better positioned to empower local smbs.

<unk>, the mom and pop stores.

By providing supply chain support for their businesses and creating diverse revenue stream for that overall, we will continue to pursue new growth opportunities with financial discipline for the long term sustainable growth for our business.

Now turning to the consolidated margin non-GAAP net income attributable to ordinary shareholders was $4.6 billion RMB with non-GAAP net margin was one 8% down from $2 nine in the same quarter last year, mainly due to the social security reduction we've received.

Year and increased investments in our logistics and new business opportunities to position us for the long term.

Our inventory turnover days further shortened to 31 days in the last 12 months.

Meaning at the lowest level among leading global retailer.

Thanks to our continuously improving operating efficiency.

Even as the total number of X P use directly managed by US under the <unk> model continued to expand to over 9 million in the second quarter.

One 8 million last quarter.

As of June 32021, cash and cash equivalents restricted cash and short term investments added up to a total of 178 billion RMB up from 139 billion at the end of Q1.

Our free cash flow for trailing 12 months was $31.9 billion up from $22.7 billion a year ago.

In summary, we achieved healthy.

User and top line growth with diversified growth drivers, while maintaining solid profitability in our core retail business.

Going forward, we will continue to balance growth and investments while remaining committed to our business philosophy shouldering, our responsibilities as a corporate citizen and creating long term value for shareholders and the society.

With that let's now open the call for Q&A. Thank you.

Thank you maam.

The question and answer session.

This conference call will start in a moment in order to be fair to all callers who wish to ask questions. We will take one question at a time from each caller. If you have more than one question. Please request to join the question queue again. After your first question has been addressed.

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Once again its star followed by the number one on your telephone keypad and wait for your name to be announced.

Yeah.

We have the first question from the line of Ronald Keung from Goldman Sachs. Please ask your question.

Thank you and congratulations on the strong results.

They don't say Nbn, Sean My question would be on new businesses, and we have seen the new business most of widened sequentially. So just wondering here.

The chairs of the latest development.

Let's see.

Key business unit.

Any user trends overlap.

So let me touch slightly on usage trends just then.

JD retail group and our expectations into the second half this year, particularly on Oh I focused.

But also we commented in the past six months lag of the ramp up of investments.

So some of the company.

Let me translate my mic.

My question if that helps.

Sandy Sean just yet.

Now when you go by as you know whether you could just.

Well I know Jake Archie due to cool one Peter Queensland caught up right now is to get all of them.

T J D.

Yeah.

You can't project, but you won't see Ben 19 only.

The downtown core.

Right.

Sure.

Sure.

Okay cool.

What kind of target.

And then Tom as well.

Sure sure.

And how do we get there you go.

Can you tell me.

Yeah.

Right.

That's done that and this is Andy let me take this question since he is well on track.

Long term goals of better serving the price sensitive customers with value for money product.

In Q2, we are seeing some initial results of our efforts.

Just it can be expanded by <unk>.

Over 300, a quarter over quarter in both daily order volume and <unk> in the second quarter.

With active users growing even faster.

I want to emphasize that we believe.

Cost efficiency and customer experience are always the key to the long term success of <unk>.

Retail industry.

Which translates into the supply chain and logistics capabilities.

Rather than merely compete.

Competing subsidies to expand scale at whatever cost.

To reflect this we made some strategic adjustments for this business recently as you may have seen from the media.

First we focus on building capabilities in certain selected regions with strategic superiority I E. In the regions that we can achieve better customer experience and operating efficiency with our fixed line business development.

Development treats out.

We will continue to drive efficiency in this selected region totaled.

So the interesting order density and he has the local supply chain and logistics network.

And second on the supply chain side, we will collaborate with local governments to better promote the vegetable basket project and better integrate our way.

And the leverage of our 15th our retail supply chain.

Third we will explore to better integrate our customers' interfaces of Wechat mini program and our Tennessee App.

And then we will also further integrate our logistics network for the long chain shocking and B to B network to drive better efficiency and user experience.

We will also increase the penetration of <unk> business in the mom and pop stores that are already our customers for our b to b convenience store business, creating more traffic and value for these store owners.

So last timken business is a good supplement of JD Retail's omni channel strategy, which can provide users with different product selections and shopping experience.

We have more confidence in this business model under the current.

Macro environment, Chief everyone competes on building capability and driving efficiency instead of competing on subsidies.

On the investment side for this new business.

Mentioned in the.

Opening remarks that we will going forward, we will continue to balance.

Growth and investments.

And drive.

Growth potentials for our long term sustainable growth.

And at this stage, we will continue to focus on customer experience and service colleagues for the new business and the investment level would be.

Somewhere.

Relatively consistent with what we communicate communicate with the market before.

Yeah.

Thank you Dan.

Yeah.

Operator next question please.

Okay.

We have the next question from the line of.

Thomas Chong from Jefferies. Please ask your question.

Yes.

Let me tell me they are somewhat UN.

The Mustangs.

Well they wouldn't issue.

D retails.

Kind of a TBD.

Tuesday.

I imagine that those shares.

No.

When you bought the insurable, meaning that the mark on the second half so you do retail bond.

Hi, Mark.

Market leader in the outlook.

Sure.

But Paul Barlow Boy.

It's not one and the data.

Thanks management for taking my question and congratulation on labor.

We think that's what we saw in particular J D retails in the globe and the margin where we started.

Thinking about JV retail our second half outlook on the revenue and margin side given that we have in the recent outbreak of Covid.

Thank you.

Sure.

Sure.

The challenge.

Southern people total income growth.

This is Julie from JD retail to give you a brief introduction of the outlook for the second half of the year.

Hum.

Now turning to home Hydrobomb Politico.

Oh sure.

These women.

For the movie.

And we have seen that in July we have kept a steady growth momentum. Thanks to all of our yourself are accumulated.

Capabilities on supply chain services.

So there will be a one well be without some degree right now.

One the ones, even though you'll have lots of dry bulk.

So your problem with Genesis.

Consistent with other inflation the issue.

Sure.

Genius usual hurdles for them either.

The bulk of powering assumptions that you are going to go with a poodle.

21 million children Arkoma Chopra.

Well the AVO hired she I know you do then.

From a new loan.

Sure sure injuries should you do either to the Yorkshire room hydro to walk her phone number.

Fortunately the illusion digital <unk>.

We're trading too much you wont get them shortly.

So without doing the trading literature.

Women How's your partially with somebody look.

At the same time, we also see that in Q3, we are faced with a multiple challenges from the micro environment, including some extreme weather.

Occurrence of Covid cases, and complicated international economic situation.

The commodity price fluctuations fluctuations at a high level. So these are all the challenges we're facing and we all see that for the government and all the companies were making our effort to save these adverse factors and Virginia Dot Com a JV is development is deeply rooted in our growth.

The real economy, so for the second half half of the year. We will continue to open up all of our capabilities in supply chain and services to provide more stable and the certainty and support for our customers and partners and or.

A time of uncertainty so at this point, we're optimistic on our performance in our SEC.

Half of the year.

When we're kind of on the southern Israel governs the rubble zone.

But in the Pilbara.

Yes.

Don Quixote missile, the sofa and higher political for <unk> treated patients showed little tissue.

So I'm kind of JV.

So the windows the hydrogen so poorly to showcase those oh, well lit or sugar bother to look like.

So that's just going to go higher from here.

Shoulder Bogo <unk> shares on such a tremendous you will further.

They shoot attrition that we're looking at with a tissue.

Oh sure.

Gotcha, shortly hung up with water pollution and windows chauffeur.

Sure sure Okay, no equivalent come up with somebody from Asia.

Despite of all these uncertainties from the external environment, we also see some.

Coming back off the.

The consumers are shopping demand and our consumption power. So overall I think so.

<unk> policy is in.

In favor to support the domestic consumption and to encourage the digital transformation of our industry to strike a balance of development, both online and offline and to promote the power capability construction of the modern industrial chain. So all this has also.

As well as the promotion of the promote domestic consumption.

So overall, we think it's all over.

Right track. However, we also noticed that for some consumption.

Consumption areas, such as those related to travel and the physical contract related.

Areas, they're coming back will be slower.

At the beginning of the year, we said that for 2021, we expect our retail business to largely maintain the growth momentum from 2020 on Apple to Apple basis.

That means we.

We need to take out the impact of some COVID-19 related.

Turning to sales.

At this stage in our expectation for JD Retail's full year growth remain unchanged.

For the second half and then on the user side, we continue to see healthy user growth and improving engagement. So for the second half weeks past to see continued momentum in user order frequency and order volumes from both new and existing.

Yes.

Katherine why we expect to see that the Petro mix change will continue general merchandise categories to grow faster than electronics and home appliance.

In particular, the supermarket and health care packaging.

On the bottom line.

Looking ahead we.

We remain confident that we can deliver steady improvement in that margin in the long term for JD retail.

So first the margin for most of our key categories is still much lower than the industry level and our business partners. So we have healthy upside for sustainable margin improvement.

Second are the underlying drivers for our margin improvement are the technology driven improvement in scale economies and operating efficiency.

Again.

I want to emphasize we don't manage the short term our quarterly profitability due to the dynamic market condition and the flexibility required to manage our growth strategy, including to adjust our promotion in the marketing strategy from time to time.

If you look at a relatively longer time period, we have been delivering and are well on track of our long term margin trajectory for our retail business.

Got it thank you.

Thank you Thomas.

Okay.

We have a question please.

All right.

Eddie Leung from Bank of America. Please.

Please ask your question.

Good evening.

A question on the gross margin for the second quarter, and we understand that there must be.

Factors at work cause I think Cindy you also mentioned that you thought JD logistics, you kept revenue mix shifts.

We have some of the new pieces such as a JV.

J D.

Growing so could you talk a little bit more about the different factors behind the trend of gross margin in the second quarter perhaps.

The upcoming couple of quarters.

With us on my first question and then there was just a follow up question on the accounting side how.

How should we expect can be.

The.

Forward Opex rate given some of the other internet companies mentioned that potential change in policy of the some of the.

Preferential tax.

Policy.

There wouldn't be too.

Uh huh.

Sandy Chaco cannot be whole yields useful powerpoint.

Sogou.

Yes.

And there you see some buda.

So he is on that day, so you see here.

Carlos for sure.

Meanwhile, you threw in <unk>.

Sure.

<unk> will maintain Jim we think who they want to see.

Yeah.

Shin young.

This is Jason.

So you sound like kind of a meal, so I'm with you.

You want to dig a hole billions of them away.

C C.

Thanks, Andrew for your questions.

For gross margin I guess, let me walk you through segment by segment.

I mentioned in my opening remarks that for GT retail if you look at the fulfilled gross margin.

Actually went up by 30 basis points this quarter compared to same quarter last year. So it's a positive improving churn and this was driven by our technology driven scale economy and fulfillment efficiency.

Because of the category mix shift internally, we don't manage them, we don't know catch the gross margin movement.

On one side. It is a factor of mix shifts that will affect the overall gross margin trend and secondly.

We are adapting our.

Omni channel strategy.

Because we are leveraging warehouse and inventory resources of offline business partners.

In this case, sometimes we would share some of the gross profit with them, but at the same time it helps us save the fulfillment costs. So the fulfilled gross margin improve slowly while you may see a decline in gross margin under the Omnichannel strategy. So gross margin is no longer very meaningful for our retail business.

So and going forward I would also encourage the investors and analyst to look at that fulfilled gross margin for retail.

And then secondly.

Our logistics.

I talked about their operating margin a little better.

It's mainly due to the social security reform that we received last year. So on the consolidated financial statements. This refunding is going to actually affected two financial statement line items, one is our cost of sales.

The logistics business and second is the fulfillment hospital retail business.

So so this and for the margin of logistics. The it is also affected by the pace of investments in capacity because in the first half year last year, we didn't.

Making investments in capacity to support their future growth.

So I really the that we'd make some on a forward investments in the second half, which will be gradually absorbed them as we grow in scale.

And then third on the new business at this stage.

And it is operated under a relatively lower gross margin compared to our core retail business as we are still in the process of building our supply chain capabilities.

These investments have on future growth potential as I mentioned and so that's why on the consolidated level, you'll see our gross margin may affected a little bit.

And on your second question regarding the effective.

Tax rate.

I'll say so first of all a JV has been generating very thin profit margins.

Compared to some other technology companies we.

We had significant accumulated losses at a consolidated level until the end of 2019.

And you can see from our disclosure in the annual report as of December 31st 2020, some of our subsidiaries still has significant net operating loss carryforward.

Which can be used in the future after tax deduction and the second most of our subsidiaries in China are subject to an income tax rate of 25%. We are certain subsidiaries benefits from the preferential tax treatment under the relevant tax law and regulation, including the Hyatt.

Technology enterprises.

Software enterprises and encourage the industry is in the Western region.

Certain R&D expenses.

Of our subsidiaries are also qualify for super deduction of 175%.

These were all disclosed in our annual report.

As of today, and we have not received any notice that <unk> 15 tax preference preferential treatments. We applied has been has been rejected and we have not received any market.

So the recent news regarding tax rebates from other companies.

How hard.

It's focused on the key software enterprises so.

So now of JV subsidiaries have ever applied for the key software enterprise in our history. So we believe going forward. It is a new type of real economy based enterprise.

With revenue, mainly coming from retail and the logistics business as well as supply chain related service fees.

Therefore, our tax treatment won't be affected by the change of the policy of the key software enterprises.

Got it thank you.

Thank you.

Next question please.

We have the next question from the line of Jerry Liu from UBS. Please ask your question.

Right.

And what.

They can teach us that sounds good.

So it's unclear.

So I'm going to do.

Okay.

<unk>.

Two two.

Can a woman.

Who wants to take.

She couldn't be nicer.

Good.

Sure.

Good for me.

Sure.

No.

Yeah.

Uh huh.

I'll do them in Asia.

A woman GT.

The weakness we are seeing.

I was hoping you could do them in particular GMB.

Some kind of shooting.

That's great.

You can do in Asia.

Hum.

My question is related to regulation and I, just wanted to get a little bit more color around the.

The puts and takes on potential impact for example.

Waiting too.

And their user data or ability to two events.

After year end.

On potential side, if regulation has a bigger impact on our peers.

For example, user or it can be growth in the second half of the year.

Thank you.

Okay.

Sheila.

<unk> switching ddos choices for how you see the other way.

Thank you.

Some of them alumina tons at Hunter.

Yeah like order towards either.

You mean, the guava and move on a business owner wants you to sort out.

Put them down this year.

After a year or so but it would you put on the quota share that you do them.

Your balance sheet.

So through the freedom.

Josh.

The JV from Ohio.

So you go to a competitor.

Shelly undoubtedly relief that the introduction of regulation and policies on Internet industry recently is a good thing for the long term and healthy development of the industry in JV development history, we have suffered from unfair market behaviors, such as that people want them too excessive price up there.

Other disorders capital expansion and more will come from stepping up regulation in this industry. We firmly believe this will be good for the long term development of the industry and related companies.

Uh huh.

Those risks without him.

Investing Sonya.

Similar to what you put up.

Q4, there is onshore.

So on the label.

She can be.

Uh huh.

For me it does.

And your JV, Georgia.

Okay.

Yes.

Anything on the.

Zero.

And they want to use.

The Jimmy Choo Jimmy Choo.

But even without it.

We work with you.

Good morning.

Two minutes.

Okay.

Oh yeah.

Great.

Gotcha.

The option window.

Based on our observation on the status of the recent wave of regulation to focus on the following areas just ordered expansion of capital.

Market monopolies data security and privacy misuse of technologies and algorithm close to system that tracks a fair market competition and so on so for now we have completed a round of our internal review and rectification. According to the regulatory requirements and we have.

Also set up our internal supervision system to work on the.

Security.

System and we also carry a carryout active communications with the regulators and got very positive feedback so far that now we don't see a major impact.

So far.

So two.

To finish it off.

Uh huh.

The quality of life.

Some of it.

Who knows what will undergo.

Agreement measurement, you just got to James crucial with either.

You guys should be at the moment.

Gotcha.

Total operating revenue between Linda.

Okay.

Gotcha Gotcha.

And also I want to mention that Jay has always paid great importance on the data security and personal information so the write off venue.

The new regulations were not making a big impact on in terms of our.

Advertising business.

Therefore, you should not reoccur.

Oh, gosh I would for sure, though with all the things that we're going to try and potentially to the doctors will shoot.

Hello.

It won't go away.

Welcome back.

And we can push that we can see that this will be a main trend to strengthen the regulations on personal data personal information not only in China, but on the global Harrison and this will have a greater impact.

Advertising driven platforms.

But remember what's up with that equation.

We're going to Chicago.

Fortunately and unfortunately for us.

So Sidney.

Jonathan.

All of our European panel.

People forget is a couple of quarters about the national debt how much is dependent on just in general what was that.

What are the synergies.

Chip.

Pamela.

Perfect.

Women are yet to be a decision we grew production jobs.

Tissue and nimble to income.

The other two for tumor bulk others, who don't have a cumulative voting.

Not only in the Blue box.

What do we do on the Florida Schindler.

Vehicle General option package from job without you go sooner.

Oh sure.

What time of day during certain times.

Oh, what a typical especially I mentioned.

Sure Paul.

Sure.

So with regulation with syndrome.

She's with apparel.

And I'm more worried about the pick one from two actually I've seen since early this year, we have welcomed a number of new products and also somewhat product. Some brands are returning to our platform those returns platform returns brand.

Starbucks after a long day and more and for the new products as I mentioned in my remarks that there was a galleys and a number of emerging Chinese brands. They are also.

Carrying out a number of innovative ways to collaborate with us and for US. We are also providing different reports if our initiatives for this brand.

To better operate on our platform. For example, we have a special initiative to support new brands to.

To grow and thrive on our platform and we also plan on some growth.

And lurking out there go through for the K Amer.

So.

As I mentioned earlier.

Earlier call that before this new brands there.

Join me or Theyre rejoining to our new platform. It takes time for them to adapt to Denise platform. He turned softer operating styles and how they interact with their customers. So this will take a bit of time and to help them. We will also make our efforts to help them to build up their brands and their my shares.

Like any customer.

Meanwhile, all have opinions and you talk to her.

Alex agenda.

We achieved positive same store volume.

Over there.

Hello Marcelo.

Shouldn't be.

Sure.

Paul a couple of things you should welcome the shareholders innovating there you go.

<unk>.

You've got the junction later Williams.

Adoption rate shows you can piggyback.

And then distribution.

Probably it doesn't get paid off.

So either poverty.

She just told.

I'll walk back from Dubai number two is creeping into moving Chongqing Shanghai.

So that shouldn't go.

How much available opportunities that help okay.

Okay. The pulp the bogo changed at all.

Yeah.

Traditionally traditional I'm sure you're absorbing motors.

Developing that.

I also have mentioned that I want to mention during this year of $6 eight Grand promotion, we have seen a big rush hour.

Marketplace platform.

Growth rate of our top business, where the marketplace platform Inc.

A 9% nine basis points higher growth rates than our south operating platform actually the pulp business has become a main the main driver for our business quotes.

And a lot of a lot of analysts and consumers might believe that Jamie it's a platform to better serve our self operated products standout products, such as mobile phones or Pcs actually for this quarter, we have seen that our marketplace platform sales.

For example, the mobile phones have increased 100%, which also confirms the healthy growth trends of our ecosystem and.

For our marketplace platform and in the future JV has the JD will continue to committed to building on multiple channels platform.

Our <unk> model.

Marketplace marketplace platform Omnichannel.

And our on demand consumption model.

Thank you.

Excuse me.

Ladies and gentlemen, who we are.

We are approaching the end of the conference call I will now turn the call over to J D Dotcoms, Sean Zhang for closing remarks.

Thank you for joining us today on the call and for your questions. If you have any further questions. Please contact me and our team. Thank you for your continued support and J D and we look forward to talking to next quarter. Thank you.

Thank you Sir.

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

[music].

[music].

[music].

Hello, and thank you for standing by for JD, Dotcoms twenty-first 2021 second quarter and interim earnings conference call at.

At 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 now like to turn the meeting over to your host for today's conference Mr. Sean Zhang Director of Investor Relations. Please go ahead Sir.

Thank you Leslie and good evening and good morning, everyone. Welcome to our 2021 second quarter and interim results conference call.

Joining me on the call today are Mr. Lei Xu CEO of JD retail and missile issue do you need a common CFO.

For today's call play well kickoff with opening remarks, and Sandy will discuss the financial highlights.

What's the latest Andy what's behind the Q&A session.

Before I continue let me refer you to our Safe Harbor statement in the earnings press release, which applies to this call. That's what will make forward looking statements.

Also this call includes discussion of certain non-GAAP financial measures. Please refer to our earnings release.

Which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures.

Finally, please note that unless otherwise stated all figures mentioned during this conference call are in RMB.

And now I would like to turn the call to CEO of JD retail installation.

Chip.

Going over to the whole thing although.

Good morning.

Thank you Doug.

Yes.

Hello, everyone thinks that she likes CEO of JD retail. Thank you for joining other Ernie talked about.

It doesn't matter if I hold off so you should add a kilowatt offer before.

Tonight.

We've got seven of them.

Yeah.

It'd be about a penny per share the highest part of the potash or tailwind can keep up with our thinking.

Some of them are in that sort of your box and housing novel congratulating Jim on Dot.

The higher coupon that's another problem, but.

So when you put on them without a joined up with us.

I believe you have all paid attention to what has been concerned about the recent regulatory changes have shared two months ago JV Investor day. All the observation is that these changes are essentially adaptive efforts made by the government and industry undergoing high speed growth regulators are working to bring platform economy based on <unk>.

Oh crisis into a thunder, a regulatory framework, which can effectively rectify and regulation. These come back such as it is utterly capital expansion monopolistic comeback since a while.

So you had somewhat of a positive level she somewhat higher about yeah.

On the call from the north on the local and Dr. Cleveland to want you to.

So in Ohio County closer she does in Nevada. Therefore, what do you mean these policies are not intended to retreat.

Internet and relevant industry, but rather to create a fair and orderly business environment and to promote long term and sustainable development of this industry.

Yes.

Well the government of Genworth.

Yogurt.

Okay.

It wasn't a major cement junkie coming.

I believe in that country, a box of love indefinitely.

It was almost spot on the fidelity for single ascending and multiple California come doubtful coordinated trend, Georgia why don't you wholesale.

We believe that the regulatory goals are conducive to JV is long term business growth. So far our business maintained steady growth while committing to about compliance practices looking at JV development in the past our business model and strategy to be to better position us moving forward in line with.

In general the direction of regulation in China, and even global market.

So as a single turnkey juncture, they've turned off and we'll find out.

Thanks a million.

Finer detail.

The attention put together items here.

Email young human how much Hugo I kind of cool.

What about <unk>.

Yeah.

So you got a man who political yes.

Yes, Hello, doctors being trained on desktop.

These were all much less Antonio because we want them to come down a silver bullet fire. So that they don't do that.

JV is lost any business principle of doing business, the right way I call. It the movement towards the principle of business for good cause they want all the products.

And the same we always should customers moved Evercore respect every employee.

Respect every employee and provide them with all round safeguards woken up all the capabilities to fully in Colorado business partners to achieve a win win result on this journey, we keep on Covid Angel sharing value for stakeholders, while doing our utmost to take out as much social responsibility as possible some of them.

Which is even beyond our scale. We believe these acts are worthy of recognition in China and across the world.

<unk> costs were seasonally the finishing Cynthia you cannot median worker.

And also tablets our model number one.

You know Paula converted on yet.

So Joe you fund if you will even picture Corona your peso shovel order one yet he is a shareholder.

Well it jumps in India.

In China, they are Soma, Google subsidy JV Python thing won't point out that the whole of money.

Keith I'll go on that journey.

That actually failing.

You can call second city Dot Com is a new type of industrial enterprise that has both the trade a real economy and digital technologies.

So haven't really differentiates us from the platform economy model, Jenny Craig's value along the entire industry vital chain from providing marketing and transaction technology support delivery and after sales services all the way to the industry upstream of warehousing inventory management product selection pricing and manufacturing, but opening up.

The various capabilities accumulated over here to the real economy offering one stop selection one stop solution and continue the thing has been supply chain efficiency. We can truly achieve announced there are some value Crawford cooperation with our users and business partners.

Those are the lawyers should either Ebola virus. So I'm wondering you have one either cobalt so some accumulates Hong Kong Dubai, who appear to play a function would you look at mortgage income idea. So you won't get another hallmark of my desk.

So you had culture you won't be able to do you know if you can talk with them fully monthly dosing haven't yet simple what changed at all modules Laguna, Indiana imbalances in India at the same time, Katy Dot com itself as part of the real economy operating of managing more than 23 million square meters of warehouses nationwide and over 900.

Self operated asking US we also upper tens of thousands of offline stores, including front of the store and appliances.

<unk> 56 per product pharmacies, southern fresh Omnichannel supermarket convenience stores auto car maintenance service towards anymore, well at the same time leverage our omnichannel model and supply chain capabilities to connect with nearly 1 million brick and mortar stores out there on the market.

If you move to hit the ball figure out who mostly all too literal about my uncle.

I will put it on the peso powerful cofferdam Michelle Michelle.

Oh great.

What we're signaling to chunghwa.

And what percentage will start to ship revenue Barracuda shown in Salvador talk us a little thought about what sort of.

In addition, we have close to 400000 employees, including those in our analytics subsidiary and affiliates and a majority of them work on the front lines and delivery warehousing customer service positions on more the services they provide to cover more than 550000 at Atlanta.

Richie villages across China, enabling the country is 92% countries and 84% rural customers to enjoy same or next day delivery services.

Certainly we don't know.

Local was a royalty revenue.

You'd love who quite achievable.

Both of whom I know what that later just spoke about.

Somewhat of a dose level.

And even with the level of hurdle.

And he's really initial work there or not.

Hey, Ben.

Culture peripheral bilingual.

While we can't yet.

Onto Youtube.

Youtube Gmail, Colorado Silver diner.

But Joe you budgeted.

Total audience demos.

Our delivery personnel as an example different from money express delivery companies, we offer full time jobs with formal employment contracts to nearly 300000 blue collar workers. In addition to social insurance and housing fund. We also provide accident insurance subsidies for working under special environment Covid <unk>.

Womens employee relief fund anymore. These demonstrate that the social value that JD creates which sets us apart from platform economy model companies and weak ultra high profit out of traffic and transaction flow.

Do you remember your district interchangeable cognisance open towards <unk>.

Yes.

Of course, yes.

Southern Timberlands show net income got put them a usual shionogi in Nevada.

One of them or not we want to go to.

Humans, who try and Johnson <unk> Johnson.

Tissue.

Which I'm, hoping to get the actual numbers.

But anyway, it's all about.

T J.

Meanwhile, JD has been a business philosophy is to promote quality products under rational consumption.

Providing best in class shopping experience, we are driving healthy growth of brands and merchants, which in turn helped to create stable and our scale high quality jobs. This enables us to form a virtuous cycle between commercial and social values. It is also fundamentally in contrast to driving the economy into a vicious circle you reach north.

More market competition is disrupted by excessive price subsidies and to merchants profits are unreasonable we squeezed.

You'll be familiar.

<unk>, what's your pillar two for what you might talk.

Joe.

But she was a general time zone.

Green shoots are conducting on Nevada.

But even without of course, you're going to see more neutral Yokohama genome with all that in mind.

Believe JV business model and strategy position us well to move forward in line with the general direction of regulatory policy and will foster healthier growth in the future now I'd like to walk you through some of JD retail business highlights in Q2.

So Jeff.

Do you believe at all that you are.

Tissues, you look at genomic going down.

So, but we now got home infusion, how you should look at Golden Brown closure from Laguna.

Sure.

For many reasons that could be consumed portion of the book.

The one other thing over here.

Bill about potential virtual Golar Arctic got to the point.

Yes, I don't want to holdings also attributed.

Surgical too.

That's still another two months sure Fernando Jovito schools are pretty much all brick and mortar but.

But similar to you Sean.

JD retail continued high quality growth in Q2, not only did we achieve continued topline growth from a high base last year, but also maintain steady margin expansion on a comparable basis, thanks to our improved supply chain and operating efficiency.

The complex the competitive landscape, we achieved our GMB growth of 27, 7% year on year.

During the 618 Grand promotion.

The recovery momentum of the entire retail market and upstream industry for China in China in a challenging market environment. Such result is solid proof of JV driving recognition and much time, among my chair among customers suppliers upfront.

Sure.

Both the local level.

But you might want to Wheeler these favorable orange anymore.

Well go module, which will be funded in kingdom.

In the central number doesn't give them the slack in the leash.

Boucher, who will hopefully four pillars are confirming the guidance.

Now that would add.

So that loyal who each coming into the Austin Buffalo Thunder before me.

So Jonathan due 2000 and stood up the guidance you saw there with you to help us.

So we will send them equally that occupancy.

This is also evident in the high quality growth options users in Q2, following the milestone of 500 million active users that we achieved.

We're excited to see our annual active users increased by nearly $32 million setting a new record of single quarter net increments at the same time, we see the quality of new users continue to improve all aspects of retention rate shopping frequency and more. Furthermore, the average revenue per user of existing users.

As well as all users blended continued growth. This means that both the user base and all of them and their lifetime value and can be increased there are many other operating and financial highlights in the quarter that Sanjay will elaborate on later.

Well, that's a little color on it I'll say dollar changes outside of the pivotal study for a doctorate and more neutral quantifying that hill hub.

Sure.

Some of that water handling only on countries, notably SEC.

We pressed ahead on the Omnichannel strategy I've shared during the Investor day that the rationale behind our Omnichannel strategy is to break the glass ceiling for Jd's long term growth I'd like to reiterate that only JV business model has the ability to truly omnichannel player.

The leadership team tells me that one extra Barton I'll go there about what a similar formula to handle neutral shop from one zero or even the corner really frugal hydrogen corridor dominantly.

Sure Joe shows up we don't have currently in final Hidalgo and the travel vertical that goes over months and shortage of turnover.

I don't think that Moshe what people say more short months with IL two Joe.

This is because the strategy is founded on JV supply chain capabilities, which we have built and honed over the past 18 years with average for our supply chain digital operation and integrated marketing capabilities in various shopping scenarios, both online and offline, we can synergize with suppliers and partners to effectively meet the customers.

Needs that can be much.

That can be that cannot be matched by a pure online platform or b to C model.

Moreover, we have built and open platform to adapt to the ever changing market with ultimate.

With ultimate go to sell products from all over the world and sell product everywhere in the world.

Did you or even more Cumulus engine.

Hello James.

These are the most or forgot about production.

Thank you Julia <unk> closer to that so what you got a higher szuba is on the come that actual by either.

Jeremy you mentioned.

Sure.

Not only taking the truth of what do we get them.

Two on local until they get that material.

Hum.

As of Q2, two out to our supply chain solutions, Omnichannel marketing and other model JV Omnichannel business has coverage millions often break a motor a merchant.

And our goal this year is to further expand our universal capabilities in Omnichannel, making breakthroughs in key areas and then introducing these capabilities into more business format and region.

Do you have the pulp congrats looming maturity.

Maturity, you're going to send out yes, it yourself to do it.

Cheetah mobile.

TJ on that so national leasing done you do have a quantity the fab Pendleton issues on the other two are in car T ramping revenue, which were not children.

Third and probably new merchants on the third party.

Marketplace, we have been working to alleviate the burden and improve efficiency for merchants. This year, we introduced a series of smart operating tools, such as simple on boarding process intelligent customer service management single advertisement placement merchants growth center as well as our integrated supply chain solution, which helped to lower the entry.

For new merchants and improve the operating and growth efficiency.

Thank you Paul you know, what you're going to supplement the agenda.

Some of the other Tom Fuller <unk> junior so we can think about so another JV Charlotte team on that.

So.

So it's only assuming dual approach with the understanding that the changeover.

We'll go to the larger income arena.

This quarter, our marketplace business made progress in three main areas first the overall number and types of promotions grill, both year on year and quarter over quarter second merchants operating efficiencies satisfaction level and retention rates further improved and third the net promoter scores of our marketplace business.

<unk> to improve these I'll speak to the increasing recognition of merchants and customers and healthy business growth.

That's the methodology, we don't usually either annual jingle tissue that <unk> had to do with the bogo imagine demand shock and looks at paragould poverty and wont impact the movie don't Eugene moving a portion.

And those users will do well.

EMEA continental realization, but we can do but what we did on EMEA for you. Please.

Okay.

We're encouraged to welcome a number of new brands on JD Dot com, including Bulgari menswear brands polluting and other brands enter the Lv MH group as well as many returning brands, including Victoria Secrets.

Manny form and hurdles.

Who are you kind of reaffirming the pendulum in Gabon without ethanol at Egypt, what are the single most telling them what we're trying to judge where California, how did you literally even further.

I gotcha.

But duncan on the home lending.

Plenty of room to move through that go to your comments you kind of a usual a major so beautiful dose and the balance you got here that the demand piece of a whole lot when the OTC market more generally.

We're treating human study will trigger tumor, Belgium, fab, who would I rather may even go out.

So what do you do with Athleisure, Tim mobile hunger community tables, and it helped about sharing can help you better understand that JV business philosophy and model strategies in development are moving ahead in line with the general direction of the regulatory and market development in the current market environment. We believe JD is thought to have more strategic advantage.

And development opportunities over the long term finally, I'd like to reiterate that JV is committed to delivering certainty and high quality growth in a time of uncertainty and living up to everyone's support and faith in US. This concludes my remarks today now I'd like to keep the floor to study for more details.

Thank you Li Hello, everyone.

<unk> reported a very solid quarter with healthy growth across many of our operating and financial metrics as well as many exciting progress along our new strategic direction.

This is particularly encouraging amidst the dynamic competitive landscape.

I'd like to Echo what play headset that our persistence performing.

Clearly been guidance from day, one our business philosophy.

New creation for all and supported by our unique business model that is deeply rooted in the real economy.

As you May recall, we demonstrated the resilience of our business model and execution a year ago as the heat of the challenge.

I believe we will continue to show resilience and thrive in the current changing environment as well.

Before going through the financials.

Let me share a few convincing business progress we have delivered and some of the positive trends we saw during the quarter.

Sure.

I want to add some color on user time.

We are encouraged by the continued growth of our active user base with our LTM total active users, reaching 532 million in Q2 up 27 year on year, a high comp from last year. We are excited to welcome 32 million new users this quarter, which.

Is the largest quarterly addition in our history.

Are heartened by the fact that this is driven by the increase in costs and engagement from users with different demographics and diverse demand.

We continue to win over price sensitive users with our broad selection of value for many products and diverse services.

Users from lower tier market not only continued to contribute nearly 80% of our new users in Q2. They also accounted for over 70% of our total active users in the last 12 months by shipping address.

Along with the healthy growth of <unk>.

Our new users.

We are also encouraged by the higher engagement from our existing users.

More notably the number of paying members in JV plus program grew 30% year on year during the quarter further strengthening its position as the largest PE E Commerce membership program in China.

That's a tough number now enjoy a broader array of benefits on the JV app and in offline store.

There are cool continued to increase reaching over nine times that of non soft users.

So for our brands and the merchants to.

<unk> create both the effective engagement with the JV is high value users.

And meaningful incremental sales.

Overall, the improving engagement of our users what's reflected in the higher average number of order per user and the acceleration of total order volume growth to over 40% in Q2, which is faster than our LTM active user growth.

We believe our strong user growth is healthy and sustainable.

Now, let's turn to our financial performance in the second quarter.

We set a new quarterly revenue record of 254 billion RMB in the second quarter up 26% year on year against a high comparable base from last year and maintained a robust 30% two year kickoff.

Our net service revenues continued to grow rapidly at 49% year on year more than double the 23% year on year growth of net product revenue in the quarter.

Net service revenues were mainly driven by 72% year on year growth of logistics and other service revenue.

And 35% year on year ago of marketplace and advertising revenue.

Nope that within logistics and other services.

Nearly triple digit growth of JD logistics external revenue was partially offset by the deconsolidation of cloud and AI business.

Net service revenue contributed 13, 4% of total revenue in Q2 up 200 basis points from a year ago, demonstrating the potential of our diversifying revenue growth.

Turning to the segment performance.

Our core business CD retails revenue reached 233 billion RMB in Q2 with 23% year on year growth.

43% year on year growth in Q2 last year.

The two year revenue <unk> was 28%.

We continue to see successful category expansion as general merchandise revenue grew 29, 5% year on year and 37% two year kicker in Q2.

This was led by our supermarket categories, including food and beverage cleansing and personal care categories.

Meanwhile, our electronics and home appliance revenue grew 20% year on year on the high comp with a two year peak of 24%.

Furthermore, our third party marketplace business continued to grow faster than our lumpy business in terms of both year on year and two year kicker in the second quarter, especially during our June 18 anniversary sale will do well for the healthy improvement of our marketplace ecosystem.

It's worth highlighting that Genie retails non LTM active users grew 27% year on year and remains the predominant driver for our new user growth. Thanks.

Thanks to its superior user experience and a strong user mindshare.

The solid revenue growth of our core retail business was accompanied by remark believes resilient margin performance.

In the second quarter TD retails fulfilled gross margin improved 30 basis points year on year and operating margin remained stable at two 6%.

Considering the one off COVID-19 related impact, resulting in less resources patch our marketing activities.

As well as the social security benefit we received in the second quarter last year.

Operating margin of JD retail actually improved in Q2 this year on a comparable basis.

Mainly thanks to a technology led overall operating efficiency improvement.

Our core retail business is set to maintain its trajectory of sustainable healthy growth and steady market improvement.

Our JD logistics business remains you know high secular growth stage.

Logistics revenue grew 46% year on year, and 45% two year kicker to two to 2006 billing RMB in the second quarter.

It's worth highlighting that JD logistics is a great example of JV commitment to investing in long term value creation for the benefit of society and taking a more social responsibility.

This includes not only creating high quality employment, but also providing sufficient protection and social as well as commercial insurance coverage for all of our frontline employees.

This is Daniel in efforts deeply resonate with our employees.

<unk> provides best in class services to and build personal connection with our customers.

Our efforts have also resonated with the government and regulators evidenced by the social insurance reduction benefits and other supportive measures from the government. We received last year did.

<unk> logistics has COVID-19 impacted leasing investments this benefit in logistics infrastructure and technology to expand its total addressable market and support E Commerce development in the less developed regions.

Well at this long term focused investments continued to weigh on near term profitability is encouraging to see that JD logistics operating loss has largely narrowed sequentially.

<unk> logistics currently operates over 1200 warehouses with equity gross floor area of 23 million square meters.

Our new business segment revenue reached <unk> 7 billion RMB in the second quarter with both year on year and two year pick are accelerating.

Approximately 60%.

The revenue growth of new businesses was primarily driven by triple digit growth of CMC business and.

And partially offset by the deconsolidation of our cloud business.

Operating loss in new businesses was 3 billion RMB as compared to $2.3 billion in the first quarter, mainly driven by the investments in infrastructure and capabilities.

Market.

You can see business is on track to meet its long term goals of improving agricultural supply chain and retail infrastructure and efficiency in order to your market.

Serving price sensitive customers entered the CNC brands and creating value for the local economies.

During our June 18th anniversary sale since we sold a total of $22.5 million kilograms of agricultural products.

With orders delivered from over 200 industrial valves.

We are better positioned to empower local smbs.

<unk>, the mom and pop stores by providing supply chain support for their businesses and creating diverse revenue stream for that overall, we will continue to pursue new growth opportunities with financial discipline for the long term sustainable growth for our business.

Now turning to the consolidated margin non-GAAP net income attributable to ordinary shareholders was $4.6 billion RMB with non-GAAP net margin was one 8% down from two nine in the same quarter last year, mainly due to the social security reduction was received last.

Year and increased investments in our logistics and new business opportunities to position us for the long term.

Our inventory turnover days further shortened to 31 days in the last 12 months.

Meaning at the lowest level among leading global retailer.

Thanks to our continuously improving operating efficiency.

At the total number of active use directly managed by us under the <unk> model continued to expand to over 9 million in the second quarter up from $8 million last quarter.

As of June 32021, cash and cash equivalents restricted cash and short term investments added up to a total of 178 billion RMB up from 139 billion at the end of Q1 of.

Our free cash flow for trailing 12 months or so.

The $1.9 billion up from $22.7 billion a year ago.

In summary, we achieved healthy user and top line growth with diversified growth drivers, while maintaining solid profitability in our core retail business.

Going forward, we will continue to balance growth and investments while remaining committed to our business philosophy shuttering, our responsibilities as a corporate citizen and creating long term value for shareholders and the society.

With that let's now open the call for Q&A. Thank you.

Thank you ma'am.

The question and answer session.

This conference call will start in a moment in order to be fair to all callers who wish to ask questions. We will take one question at a time from each caller. If you have more than one question. Please request to join the question queue again. After your first question has been addressed.

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Once again its star followed by the number one on your telephone keypad and wait for your name to be announced.

Yeah.

We have the first question from the line of Ronald Keung from Goldman Sachs. Please ask your question.

Thank you and congratulations on the strong results.

They don't say Nbn, Sean My question would be on new businesses, and we have seen the new business most of widened sequentially. So just wondering here.

Sure some of the latest development.

Let's see.

Key business unit.

Any user trends overlap.

Let me touch slightly on the user trends just been versus on JD retail group and our expectations into the second half this year, particularly on Oh I focused.

But also earlier, we commented in the past on a six month lag of the ramp up of investments, especially some of the coming years.

Let me translate my question if that helps so they don't Sandy Sean just yet.

Thanks Noah.

You know whether you could go through.

Well I know Jake argued, though too cool well I'm, Peter Quigley actually caught up.

A chunk of it all of them with <unk>.

Sure.

You can't project, but you won't see Ben.

Sure.

Yeah sure.

Right.

Sure.

Okay.

Okay cool.

What kind of teeth, others go to Danielle.

Sure sure I'll be talking about what do we get there you go you.

You had talked to some element to it.

In the San Fernando.

Right.

Our best on that.

And this is Andy let me take this question.

PMT is well on track of its long term goals of better serving the price sensitive customers with value for money product.

In Q2, we are seeing some initial results.

Our efforts.

Since the campaign expanded by.

Over 300, a quarter over quarter in both daily order volume in the <unk> in the second quarter.

With active users growing even faster.

I want to emphasize that we believe are key.

Cost efficiency and customer experience are always the key to the long term success of <unk>.

The retail industry.

Which translates into the supply chain and logistics capabilities.

Rather than merely compete.

Competing subsidy to expand scale at whatever cost.

To reflect this we made some strategic adjustments for this business recently as you may have seen from the media.

First we focus on building capabilities in certain selected regions with strategic superiority I E. In the regions that we can achieve better customer experience and operating efficiency with our fixed line business development.

Development treats out.

We will continue to drive efficiency in this selected regions through the increasing order density and a half the local supply chain and logistics network.

And second on the supply chain side, we will cooperate with local governments to better promote the vegetable basket project and better integrate our weeks.

And the leverage of our 15, our retail supply chain.

Third we will explore to better integrate our customers' interfaces of Wechat mini program and our GSE app.

And then we will also further integrate our logistics network for the long chain shorting and between network to drive better efficiency and the user experience.

We will also increase the penetration of <unk> business in the mom and pop stores that are already our customers for our b to b convenience store business, creating more traffic and value for these store owners.

So last timken business is a good supplement sticky retails omnichannel strategy, which can provide users with different product selections and shopping experience.

So we have more confidence in this business model under the current.

The macro environment for everyone competes on building capabilities and driving efficiency instead of competing on subsidies.

On the investment side for this new business.

Mentioned in the.

Opening remarks that we will going forward, we will continue to balance.

Growth and investments.

And drive.

Final growth potential for our long term sustainable growth.

At this stage, we will continue to focus on customer experience and service quality for the new business.

On the investment level would be.

Somewhere.

Relatively consistent with what we communicated communicated with the market before.

Okay.

Thank you Dan.

Yeah.

Operator next question please.

Okay.

We have the next question from the line of.

Thomas Chong from Jefferies. Please ask your question.

Yes.

One of your tongue.

It doesn't take that much time I think we'll.

What do you want us to JV.

The retail it may have been.

Kind of about <unk> <unk>.

The downtown market.

So the patient level.

He thought it insurable, meaning that the more second.

Second half so you do retail as I said, we go on higher margin Nathan I'll look at that.

Sure.

But Paul Barlow Boy.

And the data.

Thanks management for taking my question and congratulation on now, but I would say that what we found in particular JD retail that we are seeing the growth and the.

Margin, where we started.

You'll get a sense about JV retail our second half outlook on the revenue and margin side given that we have in the recent outbreak.

Thank you.

Sure.

Sure.

The challenge.

Seven people a total income growth.

This is Julie from JV, Rachel to give you a brief introduction on the outlook for the second half of the year.

Carlo This is Giovanni <unk>, our hydro portfolio.

Puncture the material I believe your woman went into orbit.

Before the movie.

And we have seen that in July we have kept a steady growth momentum, which is thanks to all of our yourself are accumulated.

Capabilities on supply chain services.

Well.

Some people you're right.

Tony when the.

Dry bulk <unk>.

Sorry, you're partnered with Janssen.

Thanks, gentlemen.

Isn't the issue.

Sheila.

Genius usual hurt either.

Got it.

Vocal powering assumptions that you are willing to go with a poodle.

What kind of drove your financials you heard from our charter.

Well the AVO higher G&A till then.

Jim Malone.

Sure.

Strategically, though due to your washer through hydro <unk> co founder of <unk>.

<unk> digital <unk>.

<unk>.

<unk> Nikko redeeming the trading literature.

Women hydro partially with somebody look.

At the same time, we also feedback in Q3, we are faced with a multiple challenges from the micron environment, including some extreme weather there'll be occurrence of Covid cases, and complicated international economic situations, such as the commodity price fluctuations fluctuations at a high level.

So these are all the challenges we're facing and we all see that for the government and all the companies were making our effort to save these adverse factors and Virginia Dot Com JV development is deeply rooted in the growth of the real economy. So for the second half half of the year will continue.

To open up all of our capabilities in supply chain and services to provide more stable and uncertainty.

For all of our customers and partners and or a.

At a time of uncertainty so at this point, we are optimistic on our performance and our second half of the year.

We will move forward on the Chevron yesterday.

Sure.

But in the Pilbara.

Within the region.

Turning to the Jimmy Choo, which also had a higher credit box Regal Trisha <unk> Charlotte tissue.

Sure.

The windows the hydrogen.

Sure sure Faisal.

Or will it or talk about it but I'll, let Stephen Douglas for any of the shows.

<unk> sure.

And then she will further.

They shoot attrition over the last handful of tissue.

Sasha here.

Shortly the hunger for cell approaches and Windows chauffeur, Jeff will share the.

Shortly after approval.

Thank you Susan.

Despite of all these uncertainties from the external environment.

We also see some of them are coming back off.

The consumers are shopping demand and consumption Paula so overall I think the macro policy in favor to support.

Messi consumption and two in car rates that the digital transformation of our industry to strike a balance of development, both online and offline and to promote the power capability construction of the modern industrial chain. So all this has also and as well as the promotion of some of the.

Domestic consumption.

So overall, we think it's on the right track. However, we also noticed that for some consumption for some consumption areas such as those related to travel and the physical contract related areas, they're coming back will be slower.

At the beginning of the year, we said that for fiscal 'twenty, one we expect our retail business to largely maintain the.

Growth momentum from 2020 on Apple to Apple basis.

That means we need to take out the impact of some COVID-19 related non recurring sales.

At this stage our expectations for <unk> retails full year growth remain unchanged.

For the second half and then on the user side, we continue to see healthy.

User growth and improving engagement so for the second half we expect to see continued momentum in user order frequency and order volumes from both new and existing.

Yes.

Yeah.

Temporary wise, we expect to see that the Petro and mix shift will continue general merchandise categories to grow faster than electronics and home appliance.

Particular, the supermarket and health care packaging.

On the bottom line.

We remain confident that we can deliver steady improvement in that margin in the long term facility retail.

So first the margin for most of our key categories is still much lower than the industry level and our business partners. So we have healthy upside for sustainable margin improvement and <unk>.

And the underlying drivers for our margin improvement are the technology driven improvement in scaling economy.

And operating efficiency.

Again.

I want to emphasize we don't manage the short term our quarterly profitability due to the dynamic market condition and the flexibility required to manage our growth strategy, including to adjust our promotion in the marketing strategy from time to time.

If you look at a relatively longer time period, we have been delivering and are well on track of our long term margin trajectory for our retail business.

Got it thank you.

Thank you Thomas.

We have a question please.

All right.

The lung.

Bank of America.

Please ask your question.

Good evening.

A question on the.

Gross margin for the second quarter, and we understand that there must be.

Factors at work cause I think Cindy you also mentioned that you got JV logistics.

Revenue mix shifts.

We have some of the new features such as a JV.

J D.

Growing so could you talk a little bit more about the different factors behind the trend of gross margin in the second quarter and perhaps even the.

The upcoming couple of quarters.

With us on my first question and then they will choose a follow up question on the accounting side how.

How should we expect in the change in the.

Forward Opex rate given some of the other internet companies mentioned that potential change in policy of the some of the.

Preferential tax.

Policy.

There wouldn't be too frequently income aldi.

Sandy Chaco cannot be whole yields Hugo usual hop Alcoa easier sogou.

Yes, yes.

You see some buda.

So he is on that day, so you see here.

Callouts for sure Maldives.

Meanwhile, you threw in visa fees.

<unk>, Jim we say who.

Hum.

Sure.

Teaching our young fleet.

So you saw I kind of meal.

Wanted to just go quickly and sell them a wheeler.

Thank you.

Thanks, Andrew for your questions.

For gross margin I guess, let me walk you through segment by segment.

I mentioned in my opening remarks that facility retail if you look at the fulfilled gross margin actually went up by 30 basis points this quarter compared to same quarter last year. So it's a positive improving churn and this was driven by our technology driven scale economy and fulfillment.

<unk>.

Because of the tax pro mix shift internally, we don't manage and we don't know catch the gross margin movement costs.

On one side. It is a factor in mixed shifts that will affect the overall gross margin trend and SEC.

Currently.

As we are adapting our.

Omni channel strategy.

Because we are leveraging warehouse in the inventory.

The sources of offline business partners.

In this case, sometimes we would share some of the gross profit with them, but at the same time it helps us save the fulfillment costs. So the fulfilled gross margin improve slowly while you may see a decline in gross margin under the Omnichannel strategy. So gross margin is no longer very meaningful for our retail business.

So and going forward I would also encourage the investors and analyst to look at the fulfilled gross margin for retail banking.

And then secondly.

Our logistics.

I talked about their operating margin a little better.

It's mainly due to the social security reform that we received last year. So on the consolidated financial statements. This refunding is going to actually affected our two financial statement line items, one is our cost of sales.

The logistics business and second is the fulfillment hospital retail business.

So so so this and for the market of logistics is also affected by the pace of investments in capacity because in the first half year last year, we didn't.

Maintain investments in capacity to support their future growth.

Most so I really think that we've made some on a forward investments in the second half which will be gradually absorbed.

We are growing in scale.

And then third on the new business at this stage.

And it is operated under a relatively lower gross margin compared to our core retail business as we are still in the process of building our supply chain capabilities.

These investments are for our future growth potential as I mentioned and so that's why on the consolidated level Youll see our gross margin may affected a little bit.

And on your second question regarding the effective.

Tax rate.

I'll say so first of all a JV has been generating very thin profit margins.

Compared to some other technology companies.

We had significant accumulated losses at a consolidated level until the end of 2019.

And you can see from our disclosure in the annual report as of December 31, 2020, some of our subsidiaries still has significant net operating loss carryforward.

Which can be used in the future after tax deduction and the second most of our subsidiaries in China are subject to an income tax rate of 25%.

We are certain subsidiaries benefits from the preferential tax treatment under the relevant tax law and regulations, including the higher new technology enterprises.

Software enterprises and.

Encouraged industries in the Western region.

Certain R&D expenses.

Of our subsidiaries are also qualify for super deduction of 175%.

These are all disclosed in our annual report.

As of today, and we have not received any notice that the 15th tax preference preferential treatments. We applied has been has been rejected.

We have not received any notice.

So the recent news regarding tax rebates from other companies.

You have heard it.

His focus on the key software enterprises. So now of JV subsidiaries have ever applied for the key software enterprise in our history. So we believe going forward. It is a new type of real economy based enterprise.

With revenue, mainly coming from retail and the logistics business as well as supply chain related service fees.

Therefore, our tax treatment won't be affected by the change of the policy of the key software.

Pricing.

Got it thank you.

Thank you.

Next question please.

We have the next question from the line of Jerry Liu from UBS. Please ask your question.

Right.

And.

We're looking to take.

So we've done quite soon.

<unk> gone to a coupon.

The emissions solution.

Two two <unk>.

Two two times.

Ladies and gentlemen.

Who wants to take.

Of course, the soup and peanuts and music.

Sure.

In the interim.

Sure.

Sure.

Jim one pool.

The issue.

A woman Gigi.

We think the sweet, albeit virtually.

This afternoon, we do them.

Sandy.

Sometimes it's Julie.

Great.

You can do in Asia.

What's the differentiation.

Question is related to regulation, just wanted to get a little bit more color around that.

<unk> takes on potential impacts for example relating to.

Either user data.

Ability to two events.

In the second half of the year and potentially.

Essentially side.

Regulation has.

A bigger impact on our peers.

For example, user or GMB growth in the second half of the year. Thank you.

Okay.

Sheila.

What do you feel about them.

And Ddos.

You see there either.

Some of them alumina 20 harsher.

For the computer.

You mean, the guava and move on.

This was on our judicial at all.

Putting dollars in revenue.

Yes, So bill would you put on the quota share that you do them.

Youll find out.

Through the freedom to highlight to you do you want to just changing the JV.

So you can go check on it though.

Shelly and ultimately we believe that the introduction of regulation and policies on Internet industry recently is a good thing for the long term and healthy development of the industry in JV development history, we have suffered from unfair market behavior such as that.

Welcome to excessive price subsidies disorders capital expansion and more.

Welcome to the stepping up of regulation in this industry with firmly believe.

This will be good for the long term development of the industry and related company.

Can you discuss with us.

Washington virtual formats.

Similar to what you put up.

Full year is onshore.

So on the label.

She wants can be.

Cool.

For me it does.

Can you just you don't really know.

Okay.

Yes.

Enable remains unorthodox between zero.

And then related.

Jimmy Choo.

Shoot.

My opinion is Paypal.

Without any additional equity.

Well there is no typical medical form.

Okay.

Oh, yes.

Probably Q2 here.

The option with them.

Based on our observation is that the recent wave of regulation focused on the following areas disordered expansion of capital.

Market and monopoly state of security and privacy misuse of technologies and algorithm close to system that tracks a fair market competition and so on so for now we have completed a round of our internal self review annual rectification. According to the regulatory requirements and we have.

Also set up our internal supervision system to work on the Beacon.

Security safeguards system, and we also carry a carryout active communications with the regulators and got very positive feedback. So for the for now we don't see a major impact on our business.

Operation.

Okay.

So two things.

All right.

Uh huh.

Jim.

Some of it just the Gulf.

Okay.

How green are initial working interest absolutely crucial with either.

You guys should be at the moment.

Gotcha.

We assumed other income profit somewhat which enable an opportune window.

You're all familiar with.

And Thats a catch all that.

And also I want to mention that Jay has always paid great importance on the data security and personal information so the rigor of venue.

The new regulations, we are not making a big impact on us in terms of our.

Advertising business that's all.

Sheila.

Okay.

Cash equity for sure though.

Congrats vaguine aren't used to try and that potentially could adoptions will true.

Pablo do you won't go away.

We'll come back.

And we can push that we can perceive that this will be a main trend to strengthen the regulations on personal data personal information not only in China, but on a global Harrison and this will have a greater impact.

Advertising driven platforms.

That's without <unk>.

Okay.

Most of these on the junior and unfortunate pseudo progression.

As in the past.

Jonathan.

All of our European panel with our Timberlake.

Before presenting our bondholders asking about sorry, I'm not sure how much is dependent on just in general what was that.

Oh, I wish you well.

The decision.

Sure.

Supporting the profit can do more.

Women are you come to a decision we will projection downward partner like tissue cleaning between 20 to shutdown. The two for Q1, but what you should look familiar to you.

Not only with new box.

Some of it was on the Florida and the general election penchant job I'm glad you could assume that you guys have been coming from Ghana and Australia.

Hum.

Both of the JV.

So as I mentioned and Luciana is finished.

Oh sure.

So you're talking about a.

The syndrome.

Sure.

Pedro.

And I'm more worried about the pick one from two actually we have seen since the early this year, we have welcomed a number of new products and also some more products. Some brands are returning to our platform. Those returns platform returns brands income at Starbucks After a long day and more and for the.

New products as I mentioned in my remarks that there were for Gary and a number of emerging Chinese brands. They are also they.

We are carrying out a number of innovative ways to collaborate with us and for US. We are also providing different supported for initiatives for this brand.

To better operate on our platform. For example, we have a special Luther teams to support new brand to to grow and thrive on our platform and we also plan on some growth.

Letting out their groceries for the K a mark here.

So.

As I mentioned earlier that.

Our earlier call that for these new brands there.

They are joining or theyre rejoining to our new platform. It takes time for them to adapt to Ge's platform. He turned softer operating styles and how they interact with their customers. So this will take a bit of time to have them. We will also make our efforts to help them to build up their brands and their market shares.

Among other JV customer.

Agenda item, which is part of the Salesforce with volume the actual video.

Hello Marcelo.

But you shouldn't be.

Sure.

Paul a couple of things you should consider eliminating the issue you've got the option to a doctor.

You go that direction.

The user adoption.

You can be debated.

And then as Felicia.

Pablo Thank you get paid off deductible sold either poverty.

Okay.

Total wallet from Dubai, <unk> crypto manager moving to option positive action clarify them.

So that should be showing up.

How much available opportunities that go on when they'll do it.

Okay. The pulp the Basel changed at all.

No doubt about it.

And then just traditionally traditional global waters.

Thanks Pat.

I also have question that I want to mention during this year of $6 eight Grand promotion, we have seen a big growth over market.

Marketplace platform and the growth rate of our top business, where the marketplace platform Inc.

As a 9% nine basis points higher growth rates than our south operating platform actually the pulp business has become a main the.

The main driver for our business growth.

And a lot of our malware analysts and consumers who might believe that JV is a platform to better serve our self operated products the standout products, such as mobile phones or Pcs.

But this quarter, we have seen that.

Of our marketplace platforms. The sales of for example, the mobile phones I think creates a 100%, which also confirmed the healthy growth trends of our ecosystem.

Our marketplace platform any future JV has the JD will continue to committed to building multiple channel platform vacuum up our <unk> models of our marketplace marketplace platform Omnichannel.

Our on demand consumption model.

Thank you.

Excuse me.

Okay.

Ladies and gentlemen, who we are.

We are approaching the end of the conference call I will now turn the call over to J D.

Homes, Sean Zhang for closing remarks.

Thank you for joining us today on the call and for your questions. If you have any further questions. Please contact me and our team. Thank you for your continued supporting JV and we look forward to talking to next quarter. Thank you.

Thank you Sir.

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