Q1 2022 JD.Com Inc Earnings Call

Hello, and thank you for standing by for JV Dot Com first quarter 2022 earnings conference call.

At this time, all participants on a listen only mode.

After management's prepared remarks, there'll be a question and answer session.

Today's conference is being recorded.

You have any objections you may disconnect at this time.

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

Thank you Michelle.

Good evening and good morning, everyone welcome to our first quarter 2022 earnings conference call.

On the call today are Mr. <unk>, our CFO CEO and Mr. <unk>, our CFO for today's call. They will kick off with opening remarks, Cindy will discuss the financial highlights after that we'll open the call to questions I noticed before we continue let me remind you today's call.

It will include forward looking statements and please refer to our latest cobblers statement in the earnings press release on our IR website.

Which applies to this call also during this call we'll discuss certain non-GAAP financial measures and you can also refer to our earnings press release, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures.

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

Now I would like to turn the call over to Mr. <unk> our CEO .

Got it got it.

Okay.

Yes.

Hello, everyone. This is sheila thank you for joining thank you Dot Com 2022 first quarter earnings call.

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So when you can lever cheaply.

Typically for tier two.

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Southwest Changsha, Hunan Yorkshire.

Our total fuel.

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Yes.

Since the start of 2022, we have seen many challenges arise our external environment, including the kind of resurgence supply chain disruption.

Consumer sentiment among others.

Changes in technology and service provider JV, so as to maintain social responsibility.

Citizenship and back to Mr. Cheng.

Got it.

We are able to take concrete actions to help ensure supply sustaining the strategy.

And to mitigate the impact.

Nick.

Thanks.

Jimmy.

Thanks, Jeff.

Let's start off with the trading floor.

Okay.

Kimberly I don't normally do it.

Gotcha.

Yes.

Congrats on the Shire Moshe Cumulus that easily assess the total of culturally on it yet.

He was always Sheila partnership other agenda.

Shallow Goldman Sachs.

Sure.

<unk>, yes.

And those are you pushing you will point out one year.

Okay.

And if I don't get a lot.

Kimberly yoga shown very high adoption trading team Ghansham.

Gilenya tomboy in Charlotte attrition for the year.

Your password Europe , Australia industrial carbon steel.

Solid business foundation positions us to navigate the current challenges.

We believe are short term in nature in the first quarter. We once again delivered high quality results, thanks to over supply chain capability.

This business model, our total revenue so a solid year on year growth.

18% this.

This reflects increasing trust.

Inc.

Consumers and businesses.

It also demonstrates that we have better control across our entire business processes supply chain.

Therefore, we possessed with greater visibility that the overall sector. During this time assuming.

Okay.

We also reported steady profitability in this quarter, driven by better operating efficiency and more focused business strategy.

And then you can charge up to Moshe <unk> with Citigroup.

Alright.

Paul Fisher you may begin.

Okay.

Jordan Keytruda mutual bank in.

In.

In terms of Q1, a fortune of Google.

Does that <unk> got somebody equals two months that you thought was an appointment only be.

You should get total seaborne Chevrolet now trending toward our <unk> sorry.

Sorry departmental Shanghai.

Good morning Joel.

Do you call.

Adam.

<unk>, yes.

Okay.

Well I'll pick up the whole block jumbo home email Daniel.

William You mentioned London.

Strong locally in Shanghai that somewhat.

Total switchover quite detailed.

Chinese Shanghai, <unk> Jaco will do Tycho.

National type of agenda to the younger issue.

Our strategy vision swimming Amendment will still fall season got off to a 200 acre here.

So we can ship all strategically the decision should each year enormous shortage in 'twenty there were some gaps between us.

Eliza who can both Wichita staff into that truly jostled Yoshi Tejas Juno cultural <unk> wish I had thought leadership and deal with Michelle continue.

<unk> got our Georgia too.

Walter will follow up disproportionately to lose you.

How long will shed a little pullback in the charter.

We've got two mutual opportunities total culture.

In terms of coffee.

As always clock.

Spared no effort.

Ill quantify what first of all come in January 2020, we mobilized quickly to establish that.

Sure.

To ensure the transport capacity provided essential to effective regions.

Protection.

Sure.

Urgent need constant set of supportive measures former merchant supplier. This time facing the war chest municipal omnicom borrowings Jamie once again, putting that relates to our supply chain and formalized all of the groups.

Some clients.

And ensure supply of signals.

China.

<unk> Shanghai.

Retail logistics health data.

Of course, the good allocation transports on logistic resources delivered tens of thousands.

Two Shanghai, including stable.

Baby care products.

We have also recruited and deployed over 4000 employees.

Only support operations into deliveries in Shanghai.

On behalf of Jamie I'd like to express.

<unk> and respect to all the employees, especially those points.

For their selfless devotion.

Sure.

In addition, as a new type of real economy.

<unk> has also introduced.

Relief and assistance initiative on merchant.

I have suffered from the epidemic in order to lower their operating costs and help them gradually.

JD supermarket also works together with J P. J to help thank you Dorothy Shanghai to resume operation and providing delivery manpower in a timely manner by seven reaching that.

Sure.

We hope to join hands with all of our partners to tackle these challenges and difficulties and together contribute to stabilizing people.

Hence the economy.

It helped us to move to central.

We are pleased with Australia.

Well no.

They don't know your portfolio for total.

What other tools or we'll go downloadable yogurt Pseudomonas yourself.

Alrighty, arguing digital Julia Louise.

I don't know what our Bayou.

Sure.

It's Linda.

Sure.

Okay.

Lasalle.

How much of that opportunity.

But generally for Cingal.

That's helpful. Thank you Sir.

Junior yogurt Gordon Dunn, a few choppy.

Fuddruckers, who total tapping into short let's call. It a kind of a cumulative sooner will materialize.

Shouldnt change with our photonics from kind of Joshua.

How do you ensure per months.

As usual once you concurrently.

We got hurt in <unk>.

So challenges did you always.

Always plays to our advantages.

That moves the needle firstly, we have made adjustments to our user strategy with steady expansion of reducer.

Gail we have been increasingly focused on improving performance in Q1.

This equates to 580 women and more importantly user purchasing frequency and offering.

The region.

Also please.

Well Netflix right.

Nearly reflects the increasing recognition and shrunk.

Yeah.

Thank you Kate.

Okay.

Sure.

Okay.

Okay.

Happy to see is tied to the growth.

Yeah, and Chinas Internet industry is entering a more of a.

Q1 development stage going forward that will be up.

<unk> expense of an omni channel ecosystem, and we continue to understand at least for that purpose.

This.

Long term value.

Let me just due to the higher so Amazing chart again, you have to do it.

<unk> 2000.

But all else equal that charter.

<unk> studio shop, when Mccabe with Jimmy Choo tonnage is up you don't.

Adult swim also showed effects, where you got shot closer pushing neutral youll ship kimco choose your time.

Thank you Joshua.

Tissue tissue.

Yes, sure sure sure.

The likelihood of imaging.

Pull it out on the shelf to schedule that.

But you can buy all the changes going on in Europe .

Yes.

<unk> is a big industry.

So you talked about <unk> in that region Jeremy here.

Eastern Chad Pseudology ebay.

Oh sure in shoulder, but union mortgage.

In Shanghai shop, where as you know.

Junk ratio buffer chip I'm talking to you shortly.

Sorry, Brito Shouldnt Genco Leerink junk on the ultra.

Ultra on Cingal.

We're also actively optimizing and adjusting the investment pace, our new businesses based on our analysis of the macro and industrial landscape in Q1 before the ship this quarter.

Where we saw improving scale and efficiencies as well as better synergies with our core business.

Such region since its effort to improve.

Experiments sales channels local supply chain as well as digital operations have begun to bear fruit.

We our prospects to see supply chain capabilities.

This model has proven themselves that would go into five.

Against that the epidemic.

This banking research and stuff.

April .

Our community groups purchase business has been.

In every state.

Thank you.

With better operational efficiency.

In future, we will continue to optimize over the operating efficiency and drive sustainable high quality growth with healthy cash flow and profitability.

Minnesota will be a chronology you continue the Chooser, Georgia Chimbonda Egypt.

Yes.

Thanks for that.

Jason.

But to do either fully yet.

The surveys.

Sheila.

Which you saw to the metallic sheet judiciously.

Yeah.

To me it is you'll recall that what you mean Laguna pneumonia.

Nonetheless, the outlook, let's get out of 2014 with gesture.

Traditional Judd will accordingly.

Since we started with Tim Hortons.

Congrats on page 20.

<unk> third quarter, two so you've out accordingly.

Cologuard younger the corner toward your dog food in Charlotte.

I'm a little bit.

Jonathan.

You might get into the 'twenty, two Virginia midstream team.

Towards that.

Cool.

No not at all.

So you'll see if I can answer that one.

So they wont grow.

Showing up on me.

Titled recent going on there.

All of them.

So that engine the easier of the two issues here.

<unk> cash retention structure, especially on the social so only in the good shape.

Yeah. He's at all if you walk into all four key that Josh.

Are you able to lock in low volume.

I have a couple of songs, but easy to tissue boxes go dark fiber.

Some trouble illusions about cingal.

Sure Jim <unk> CEO , Bob earlier, Gerald do you want to you don't need a keyhole cohorts Yoko the Tricia to normal unit profitability picture until Harper.

Yes.

Unfortunately, the general <unk>.

Thank you Julien.

Congress will executing each of survival.

One is you.

Can you talk about.

Perhaps you want me to hit over one <unk> higher than can be pretty nimble quite actually a follow up.

Q2.

The current challenges also provided JV with upside opportunity firstly, our efforts and commitment to social responsibility during harvest enabled us to fulfill social social society truck and result in stronger reputation and appreciation among our users and partners.

Clearly significance for our long term development differently JD supply chain as well as our optimizing and automating capabilities.

<unk>.

Pressure of the epidemic and to become stronger thirdly, despite increasing uncertainties we have persistently.

Our long term strategy and to build a foreign competencies that yourselves supplanting platform marketplace ecosystem and omnichannel infrastructure capability.

Thank you Beth.

Efficiency City also helps business partners to generate higher efficiencies.

Great.

External disruption.

Such gains.

Recognition from our business partners during the epidemic.

Because see that merchant participation and engagement has reached a higher level than previous years in the preparation for the upcoming six eight planned promotion.

Sure.

The complex the academic situation the macro economy.

The company to breakeven there.

Our sales and supply chain and fulfillment system.

Many of them have realized that you replace the book value of integrated supply chain logistics services.

This helps to drive the growth of JD logistics revenues from external customers retail countries.

Hi, Neil.

Total revenues in Q1 further optimizing our.

Revenue structure.

In this quarter <unk> profitability improved year on year, thanks to optimized operation better customer structure. ADL also made steady progress in building up its logistical capacity by the end of Q1 is operating at approximately 1400 warehouses.

With a total gross floor area of over 25 million square meters Andrew.

All of these advantages constitute a solid foundation to further expand.

Three.

And why.

For context.

Tore up alright.

Sure.

Yes.

So coming out of charter.

Terrific.

Turning to <unk> your account she looks about one year.

Joseph <unk> blood sugar.

Some of your core.

Cumulatively, the sugar nearly Egypt homeowner shutdown, but maybe you could talk a little bit hemodialysis.

And if you can get.

But putting that aside what do you figure out yourself.

Joe mentioned, the Taiwan, Siam authorizations I put on that based on my projection so extra joint juncture for strategic Ashish Syngenta two months, what's your real question, but.

Yep.

Having been at the 25 <unk> five.

Bella mushroom.

She is a fluctuation.

So you move a bit after telling you actually don't.

Cogeco <unk> down further I hit that other Cumulus Sheila but for sure in terms of what you're going to finish out some older Hudson's yoga technologies available.

It is evident that the first half of 2022 has brought many challenges and uncertainties at this time I believe it is important for companies to have a long term mindset remain.

Our strategic priorities, while maintaining flexibility to adapt to short term dynamics.

J D has experienced many challenges over the past 19 years.

Taking each one that opportunity for the company's development.

Our business logic that with the supply chain at the court unclear on our core competency is highly differentiated and the resilience of our business model has been proven many times and continues to evolve as a new type of enterprise that is based on and always served the real economy.

Today I will cover more salvage ground looking ahead, we will continue to build upon our strength, we remain confident and determined to achieve healthy high quality long term development. Thank you all for your support and trust.

Concludes my remarks, now I'd like to give the floor to sandy.

Hello, everyone.

The latest the omnicom outbreak across several regions in China in the past several months has been challenging for everyone.

So I'd like to Echo what lease that and add my thanks to our colleagues, especially the frontline workers for their heroic efforts in serving our customers.

Providing us with essential supplies during this critical time.

In the first quarter net revenues reached 240 billion RMB.

Representing a solid 18% year on year growth against a high base from last year in face of various uncertainties.

Has been increasingly focusing on serving our users well and increasing user lifetime value.

Our annual active user base reached a total of 585, maybe well average <unk> per user in the last 12 months continue to increase.

We are also glad to see improvements in other user quality key metrics. For example average orders per user recorded a healthy increase for both new and repeat customers.

Our quarterly average the au has been trending up and growing over 20% year on year, reflecting deepening user engagement.

Not only did we see a spike in the a year ago. During the spring Festival gala effectively promoting JD nationwide. We were also is back to live up to our users.

While we saw a notable increase in D U during COVID-19 resurgence in March and April.

As our revenue base continues to diversify we also saw the bearing impact of Covid on different segments in Q1 hour.

Our net product revenues, which mainly consist of our one P. Retail business grew at a solid 17% year on year, demonstrating remarkable resilience and Europeans by our proprietary supply chain infrastructure.

Service revenues continue to grow faster at 26% year on year further diversifying our revenue base.

Well marketplace and marketing revenues grew at 25% year on year, our advertising revenues still grew at nearly 30% year on year in line with the improving a lot of our advertising services.

Our marketplace ecosystem continue to optimize our street retail continued to grow third party merchant base by over 20% year on year in Q1.

This showed that the support and value creation.

Perfect.

Are resonating with more and more third party merchants, who are struggling in a time of uncertainties.

Logistics and other services revenues grew by 28% year on year in Q1, <unk> continued to gain traction from external customers with its enter interrupted supply chain services during the Chinese new year.

I will discuss more about this later.

Now, let's turn to our segment performance.

Genie retail continued to deliver a resilient top line growth amidst the latest Colby developments.

BT Retail's revenue reached 218 billion RMB in Q1 growing at 17% year on year in the quarter.

The Covid impact began to appear across the performance of our categories.

Merchandise revenues grew 21% year on year in Q1, all performing the electronics and home appliance category growth of 14% year on year.

The latest outbreak customers, notably shifted their purchases from non essential product to essential items.

Our supermarket category saw stronger demand with its order volume outgrow in retail in Q1 and in the first half of Q2.

And attracted the most number of first time buyers among all categories.

Although our supply chain was heavily disrupted in certain regions GT retail and JD logistics quickly worked together to source and dispatch essential products by utilizing our nationwide warehouse.

Warehouse and delivery networks.

Once again this demonstrated our customer first operating philosophy, and our unique business model that enables us to quickly respond to.

It changes and mobilized our proprietary supply chain capabilities in upholding customer service.

We even went beyond our traditional <unk>.

Model to adjust pricing customer needs.

Growth of our Omnichannel supermarket, including some fresh accelerated in Q1 as they provided our customers with timely omnichannel fulfillment for grocery and household staples in this critical time in Brazil.

Moving onto JD Retail's profitability.

Operating margin was three 6% this quarter.

Paired with 4% a year ago, primarily due to the marketing expenses in relation to the spring Festival gala sponsorship.

And to a lesser extent the softer fulfilled gross margin during the outbreak.

That said, we expect to see additional COVID-19 related costs and expenses, particularly in fulfillment as well as margin impact caused by product mix shift due to the uneven performance of our different product categories in the short term.

Did your logistics OTT L maintained a healthy top line growth with an improved revenue mix and a continued year on year margin improvement.

Q1 revenues grew 22% year on year to 27 billion RMB.

Revenues from external customers to maintain growth momentum driven by both the number and a pool of external customers.

And once again achieved a record high revenue contribution of 58%.

Did he al acted quickly and spared no effort to ensure continued fulfillment of essential products to customers and support our business partners in the COVID-19 affected areas.

As a result, it incurred additional costs and expenses due to the operational difficulties and disruption.

Particularly as it mobilizes workforce and resources across different regions, well some of our warehouses the delivery stations to work under lockdown restrictions in certain affected areas.

However, we still found some silver linings.

The customer awareness of the unique advantages of JD power integrated supply chain logistics services has meaningfully increased boding well for the future customer conversion and total addressable market expansion.

And thanks to the growing how big tunnel business and continuous improvement in operating efficiencies driven by technology J D. L was able to absorb the additional costs to a certain extent and continued to improve its margin in Q1.

non-GAAP operating loss narrowed by more than 55% from a year ago.

<unk> has once again improved the design and efficiency of its nationwide supply chain network in this challenging market situation.

Yeah.

Since we received all required regulatory approvals and completed the additional investment in Battle group by the end of February we consolidated financial results of that out in our segment reporting starting from March this year.

During the consolidation period that our reported revenues of 688 meeting RMB and operating loss of 191 million RMB.

That is a in the possible part of our Omnichannel strategy.

Shop now they all demand retail brand that we launched together David Mee App has been spending at a triple digit growth rate year on year in Q1, and now maybe service available to users in over 400 cities.

We are excited to further expand our supply chain service network in the fast growing on demand options with Dada.

Finally, turning to our new business segment.

We took proactive optimization measures to improve operating efficiency.

Particularly in TMC business, we further focused our resources in a fewer number of selected markets to strengthen local supply chain capabilities and improve the UE model.

These measures resulted in a moderation of revenue growth to 12% year on year, but a meaningful reduction in operating loss of nearly 1 billion RMB sequentially in Q1.

Our JV property business remained a profitable business hyper growth stage. It has successfully acquired a controlling stake in China logistics property holdings.

<unk> seen our team further enhancing its logistics infrastructure.

CDP has also entered into definitive agreements with approximately 800 million dollar non redeemable series B financing in the quarter.

So far you can tell that this unique supply chain based business model not only ensured our capabilities in navigating different economic cycles.

It also allowed us to proactively and quickly adjust our business strategy for bipolar sustainability.

Moving to the consolidated bottom line.

Penetration in Q1 declined by 53 bps year on year.

As a result.

Q1, non-GAAP net income attributable to ordinary shareholders was <unk> 4 billion RMB with non-GAAP net margin of one 7%.

Our free cash flow for the trailing 12 months.

Water was healthy at $27 2 billion RMB.

At the end of Q1 cash cash equivalents and chip.

Restricted cash and short term investments grew to 186 billion RMB.

To the stable cash flow contributed by our core businesses in the past few years.

Earlier. This month, we also announced a special cash dividend of <unk> 63 tiers dollar per ordinary share or $1 26 sets.

AVX, which reflects our confidence in <unk> long term growth trajectory and strong balance sheet well.

Well, we continue to explore the height.

<unk> investment opportunities.

We constantly take a holistic view can't consider different measures.

Hoping to get back to our shareholders in the long term.

Looking ahead, the army cross situation remains very fluid and add a lot of variables to our business.

The magnitude and duration of the Covid impact will pick that many uncertainties to the overall customer behavior supply chain and our fulfillment infrastructure.

But one thing for certain after 19 years of efforts in building our core supply chain capabilities.

And differentiated business model, we are uniquely positioned to swiftly adjust and respond to any dynamic situations and able to be among the first to help our customers partners and communities. During this time.

When the Covid disruption subsides, we are confident that <unk> will emerge stronger with expanded customer mind share more trusted partnerships and deeper ties with our communities and users.

All of this will reinforce our mid to long term growth prospects.

This concludes my prepared remarks, and we can now move to the Q&A.

No.

Okay.

Okay.

Okay.

Okay.

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

Be fair to all policy was to ask questions.

One question at a time for me to call but.

If you have more than one question. Please request to join the queue again. After your first question has been addressed.

Our first question comes from Ronald <unk> with Goldman Sachs.

Your line is open.

Yeah.

See you later on if any at all.

Youre going to see if you call agenda.

Jay.

So go ahead Mike.

Yes.

Some people don't.

No woman coming in I don't know a woman.

Yes.

No.

And so you can kind of do you do that.

So yes.

Sure.

Jim.

When it comes to the people at each entity.

So.

And again as if.

We young at depot.

A woman.

Senior.

Sure.

Now moving along.

Thank you management my question would be when we compare with two years ago that we've gained a lot of share and grew much faster than industry during the first quarter.

Colgate outbreak, we've seen some of the industry numbers for April was relatively weak. So I want to know how are we doing in retail business compared with the industry. Some of the differences that we see versus two years ago and our targets.

The second quarter and second half growth as a result, thank you.

Well, just you know I don't think of it.

This is Cuba, Sheila let me answer your question.

Uh huh.

For our culture.

So you mean bulk water.

Thank you Laura.

Yes.

Good morning, Sean.

Sure.

Yes.

It runs well covered after a satisfactory Shanghai in other places also.

<unk>.

A huge seller China's retail inventory as well as <unk> dot com.

So it's really been about two hours.

Jimmy on the issue.

Turning now to our in our Union contract or you got it.

Let me share.

Some observations on the different regions.

Great now and two years ago.

Even though there are only two that are nimble assume production beat our chunk for most of the block.

Our internal technology, though.

Tricia third hub.

Yeah.

Jim go ahead Andrew.

Sure. So we've got to work.

Waterboarding Golar ship owner.

Sure Andrew.

Interconnect from what Sudhakar arguably the.

The motto that drove you to conclude.

Correct.

There's a shortage issue.

Sure of course shortage.

Joe are you already are in the region.

On the other.

China is one of them.

Yes, I'll ask Leopoldo.

Hello, Doug.

So you shouldn't matter be onshore.

Sure sure sure Venezuela mentioned at our Shanghai.

Our first trip to the Jewish in Los Angeles.

The front shop.

So for the Army Corps virus.

It's highly contentious and spreads rapidly.

Are not valid.

Slide startup that delta well, it generates and timing only to 83 days.

Also a certain proportion of and in fact, it's people have no symptoms and making it more difficult to track in Kentucky.

And control policies remain unchanged.

Our cities and consumers.

Got it.

And the supply chain and a much bigger impact than that.

In 'twenty one.

Last two years the impact of Covid.

Hum.

Positive with respect to the Internet e-commerce sector.

There were only a limited number of regions affected for limited time during that time period. Some offline businesses has been shifted online at accelerated pace, but this time around both our both the online and offline actually are.

Our taxes.

Sure.

Julian are pushing to the cardholder.

Thank you.

The cleanup.

Shown in the room for them to call another photo shop.

Thank you <unk>.

You may never be intolerant.

<unk> done this resulted in a new manager in assumption.

Furniture also hardware that has a goal you chanelle.

Locked out of our warehouses and delivery stations in certain key regions have matching fulfillment challenges.

Both inbound and outbound shipping of merchandising from warehouses or factories fulfillment requires much longer time.

There have been these has resulted some order cancellation rates increased in April and the situation is getting better in may but the cancellation rate remained high level year on year.

To summarize those are based on a function.

King.

So the Asian come true.

Rakesh or not at all for a total of $14 2 million Michelle.

Seeing syngenta somebody build what measure Charlotte, Michigan should you be at home.

Sure.

Judy the shuttle tankers should.

So coal, which is during the year ago interim water surely vertical geography.

So this year for China's four big Big cities, the first tier cities, Beijing, Shanghai, Guangzhou and Shenzhen of all these factors well control center, where only affected what period of time and the Beijing and Shanghai have been factors for a longer period of time and the sales contribution.

The four cities account for a higher proportion of JV then.

Contribution in the total retail sales in China.

Hello. This is the agenda.

You can go to adoption doubled from the chip to chip auto industry.

Have a great partner.

Susan <unk> <unk>.

The auction Powershares.

The June <unk>. Please go to <unk>.

Paccar trucks should also come down.

So a majority of brands and merchants lowered budgets at the beginning of the year considering the economic situation.

Focus more on profitability for the business environment also does not support a high growth.

Supply perspective.

She is option later I was wondering what the kind of.

Culture.

Uncomfortable that portfolio shortly.

Thanks, a lot and amortize them schlegel thrown up and let you guys go to sort of fit the bill.

So in terms of the category Besides the supermarket and health related categories, which continued to enjoy supply growth for the market of electronics and home appliances and apparel categories.

Changing dramatically.

Hum.

Sure Rajeev.

You can go to the level achieved.

Sure.

To ensure the Daimler blodgett drop.

But Jean Charles pressured onshore the two Montana wheel freedom.

Sure.

Julian.

Actually the optional juncture before that should be able to do that.

How does that jive around that.

Ill take the IP and electronic categories. For example in the past two years due to the global a supply shortage and GDP to our supply chain capabilities, we performed relatively well this year, it's got a great space with the overall efficiency.

That's the correct level goes down.

Tim to Atlanta, which are huge opinion film can you drive a chunk so simply relevant here.

Okay.

Sure.

<unk>.

And for the telecommunications for the mobile phone category due to the price rise in the chip shortage.

Women need to replace their devices the cycle has been extended.

The full launch Atlanta at Cumulus software to your engine.

The answer to the higher the <unk> draw the full specialty auto.

You'll notice on the short walk.

In calculating Wilson cutoff.

And for the apparel category due to the epidemic and the sluggish consumption. There is high level of inventory backlog of spring collection and as a result, many factories are considering skip the production plan for the summer collection.

The larger issue with ultra.

I'll do a survey.

As usual, we'll do that.

Give me that I cannot thank you.

Hello.

<unk> some people shopping trip with Shandong.

On a whole new level.

Total non machine wash I'm a fool.

When the current job.

No.

Academic has affected consumer income and confidence.

Consumption as depressed as you can see from the April statistics, and this especially affected sales of some large ticket items and ease of use of <unk> as reported.

April .

We have seen.

Ticket side a shocking.

We're one year in April and May.

So let me do it on a computer.

Children are you doing.

Hi, Joe.

No.

Modular Chihuahua to low friction diacritic carnival that jumping from charter for the ship.

Hi, Olivia.

Vishal.

<unk>.

Good good thanks.

Got.

Could you talk with the Bogo cheer that means that some of the thinking on the bottom left hand of appraisal northern Colorado.

Okay.

Gotcha.

Let me respond to the above mentioned the situation here are two aspects we have been doing.

Yes.

We have been conducted active communications with the local government and we've gotten out of why so many enterprises.

Essential supply of more regions and also to ensure the normal operations of our warehouses fulfillment facilities and situation.

No.

Got it.

Last.

Questions.

Children innovative itching.

Number compares on the Shanghai Auto show regarding sort of freedom.

Colorado, Virginia, and Maryland are somewhat how you do you know the all of our people.

Let me assure there is your hardware that you need on a number of legal.

The shuttle Julia argued about 10 years.

And on the preparation of the <unk> promotion.

We have seen that the majority of brands and merchants that are under pressure this year.

They have been more proactive in participating in J D.

Promotions that in previous years.

Hope that.

This event, we have brought them to put their sales ended Q O Q to perform.

<unk> provided the carbon situation is getting better.

Turning to the foundries or the each single a bunch here.

Finally, I just wanted to share a little bit more of the relationship between supply chain and academic.

The Virginia chunky.

General each month.

So Nevada.

<unk> got all of them regarding Canada, although loan Carla.

Sure.

Home and ensure the Teamhealth and Sheila.

And first.

Given the current macro environment, coupled with the impact of the pandemic. It has left the governments and the street has a very high recognition of the importance of the modernized the supply chain.

A very positive.

A signal.

What are you doing.

Leila.

Could you sort of thought the options of Condor.

We'll either be room to come and pay for the year by law.

Fernando Kandel.

He is on the Ohio.

Sure.

Well no.

Still have plenty of the Knowhow.

Central to that.

Seattle, but.

Okay.

Pleasure.

Sure.

No.

Paul.

Our push for a.

Mortgage yes.

Orders are solid.

With each other.

And second when <unk> talk about our supply chain capabilities. It does not only referred to those are tangible things people know about about all their logistics.

And warehouses.

Vehicles.

It is also our algorithm and to the industry Knowhow that we have been accumulated over the years as well as our synergy capabilities with some key brands and all of this is a combination of the tools and expertise that know how and our collaboration with all of our brands and all of these cannot be immediately achieved.

Some of them extensive.

<unk> subsidy what cash procurement.

Sure.

We don't know for sure, but things Youre trading to shares issued to <unk>.

She loves our total lifting cost feminine woman.

Brian Let me go to your competitor.

Fortunately, we have that kind of almost all of them.

Vishal Feijoada jungle.

And thirdly.

The key points for the supply chain.

Stability and predict.

<unk> and uncertainty under the extreme circumstances of the Covid situation will continue to leverage our professional.

Expertise and infrastructure capabilities to reach some innovative new solutions in a difficult situation and so far we have gained recognition among all of our partners and users and delivered them some things weighing performance so far.

Thank you.

Yes.

Our next question comes from Thomas Chong with Jefferies. Your line is open.

One is that how I should say one is from a J.

So what.

Uh huh.

Pardon me so when you sign a woman.

We see the whole hydro doshi.

Okay.

In that spending.

Tuesday.

Sure, but between here and there.

Good morning.

Typically you have someone that bogey.

The PPI.

Hello.

What do you see this.

So when you saw those sure.

No makes sense.

Hi, Sue.

Predicting the timing.

Women to enrollment.

I am a woman.

Senior.

George when you could come back.

Uh huh.

So when you sell them.

Omnichannel.

Yeah.

John .

So you've been seeing recently.

Thanks management for taking my questions.

My first question is relating to the upcoming generic things like marketing campaign.

A comment about how we should think about the logistics situation just a situation the consumer sentiment and.

We are doing.

When it differently compared to previous years and GPI and my second question is regarding to our spending in particular.

With the acquisition as well as the investments in our new business.

Just.

Investment strategy, given the dynamic situation right now and then finally on Omnichannel can management comment about our long term strategies as well as the revenue contribution that we should expect thank you.

Uh huh.

Finally, all other Ana.

The long term nature.

<unk> strong quarter for <unk>.

Chicago.

Do you actually can achieve a voucher Tom Tom.

So normally we show you each.

Diminishing the territory talking about yourself and without.

Shanghai tissue.

Gosh agenda, Ginger, so low in the houseware youll important.

And then the Geos.

But what we're all about.

Jim Connor.

Sure I can treat Tibetan adulthood.

It was helpful.

Thank you.

And just a more clear where it's front as you lay on the six eight we have seen so far that extract Shanghai and overall in China, and our fulfillment and so coming back to a normal operational level. So every day there was some sporadic situations due to the coffee situations, but overall it maintain a normal operations and in Shanghai.

There are still a few orders continue to be fulfilled.

Overall for the Goose preparation.

On the right track.

When you take the Humira sungard.

Howard.

The update about the take up on the Gd shields and pull the leader in that actual of 101.

Total ammonia.

Export.

Anticipating and engagement of our breast center merchants to this year's grant promotion.

Active and.

Outside of our expectations and everything that's going on in Mexico.

Do you need to keep you all know was something that we all can answer.

Where you saw sort of as you call them.

The kitchen that issue, which showed images shot show that which isn't in Shanghai, China Chiller woman.

T J Maxx in May.

<unk> immune sugar that'll do it.

<unk> got your thoughts.

Chi yet.

To do a merger.

And in terms of the GPI I think you are.

Thinking about the sales targets, because we are still facing uncertainties on the coffee situations.

Function within it.

I don't have a very clear a number to share. However, we continue to focus on improving.

In this experiment.

Efficiency most.

Importantly, we will safeguard our shopping festival.

When you take.

If all that you're calling out.

Two of the Dart.

Actually our target.

Two Joe surely Youll ship coach was your father.

And so for our new business development with a focus on the priorities of our strategy and focus on efficiency and sustainable development.

The most cities on the.

So children and young adults.

Pleasure.

In the quarter.

Sure.

Yes.

You can get to that one to you.

When do you see in the quarter.

Thinking about the EU.

So I'm not sure.

But you can do it by that kind of the issue.

On the tubular should put under control.

And.

This growth there are certain pressures, but we will continue to focus on the operations of the existing users and also the quality growth of the knee.

Users and we haven't seen a positive trend on both sides.

Well this year with the final womens Ebola, finishing law.

John you should see some of your block.

But she got something of a breather from license in La <unk>.

Okay.

Adjustments in optimization.

New businesses, we have done.

Justin.

Business that were enabled to deliver results after a certain period of time.

Exactly.

Great.

But I don't know that we're making of how quick going changing.

Yes.

Yoda to jobs at home kind of how much we can pull.

That was helpful.

In the coming in.

In the coming period of time will continue to occupy.

Perfect.

Our businesses.

Some of it some more optimization.

Adjustments will.

It will be done.

Well in terms with Aloha.

Janine.

Considering your children or parents would fit in.

I'm sure.

Good morning.

We'll do the call you talked about Japan.

Sure.

Tricia, who is your usual fashion womens.

Three other pollutants.

Are the contracts.

And you don't know what was the I'm going to go to Iowa somewhat fully autonomous level, which is what it is.

She had a target of cleanup the approval of <unk>.

Yep.

But with our visual number to judge 2020.

Sure.

So if you want to go.

You would hope and think it worth that.

And JD omni channel strategy in the past a year it has delivered very fast growth.

Growth and in Q1.

You have higher than overall revenue growth rate.

This.

As koby situations will not affect our long term strategies in this aspect, but we will make adjustments on these estimates.

Even though our macro environment situation.

The Omnichannel business is composed of two parts with both self operated and other collaboration with external partners.

A letter in this format.

Not only help them offline.

Offline fitness center.

To stop the traffic that uses traffic difficult just given the economy situation. It also help JD to reach all of our supply chain and all that.

The line of Heath to satisfy the needs of our customers.

Given the impact of the Covid situation.

Our self developed Omnichannel were affected but overall the volume is not speak.

Has limited impact so far.

Could you at all.

You don't have mobile doesn't go through strategic neutral.

So <unk> you.

You guys were all women.

Good.

Two zero.

You've gotta subject will come down and we're doing a full dialogue from what you said.

Sure sure.

Yes.

Sure.

Sure John .

Sure He amendment, yet you'll see like Egypt, Xinjiang <unk> plasma.

Alright.

And for our own demand and radio business as part of all of our Omnichannel business and achieved three digit growth in Q1, and so far our show.

Now with a one hour delivery service coverage over 1700 country after country, providing various.

Product category and it has been connected with over 15000.

50000 offline stores and.

Okay.

The rapid growth during the comments.

Nation.

Sure Joe I'll, let you mentioned together.

I said that 2014.

Okay.

Now as you talk pilot according to them to put a message out to go yet.

Some of it was it would have been down.

That was one of our more bundled <unk> shutdown the dealers on the Chancellor hazard ratio.

For the total of about $20 of hybrid cloud only.

So video tables and sort of as usual.

<unk> not all of them, but let me start with Italy.

I couldnt quite cohorts, finishing the full year.

The shopping on our program.

Supported by diverse deliberate.

Restructure we aren't using the existing networks deliveries.

I've got two.

Perform our on demand delivery and these celebrated changing offline business expansion and currently together, we thought that we are supporting us.

Total transformation of more and more friends and offline retailers and together, we explore dividend of the Omnichannel development after trends become more and more clear.

R J.

<unk> is committed to bring faster and quicker service based on user experience.

The key to our consumer.

Yeah.

This is sandy.

On the revenue and <unk> contribution to our Omnichannel business. So in terms of <unk> and revenue contribution there both at a level of around 10% of our retail business that includes our.

<unk> on demand sales, our some fresh offline fresh product business as well as our offline home appliance franchise store business.

Yeah.

Yes.

Yeah.

Our last question comes from Kenneth Fong with Credit Suisse. Your line is open.

Oh excuse me I'm wondering if it isn't what if you went quickly.

Thank you.

When do you see when you're talking about.

When we come out do you do to grow stronger.

Hum.

Well.

I hope you can see in the U S.

Woman.

<unk>.

Yes.

So we like GBP two one when you guys took on some will come to you.

Susan.

What do you define Asia.

Congratulations on another strong set of results.

Thank you management for taking my question.

Looking back we did very well in cost discipline and control.

Core GDR in new business.

With margin better than expected.

More and one of the way that we should expect.

For further cost reduction optimization over the next few quarters.

Thank you.

This is Andy let me take this question. So since since mid March we have been taking project costs and control our cost and expense control measures so step ups financial discipline.

Face of the challenging.

Environment.

Focus more on cash flow.

For new business is that yet to show a trend of a yogi turnaround as Susan just mentioned our operating efficiency.

We adjusted the pace and further focused on fewer selected regions.

As a result of all these measures.

Despite of additional it had cost expenses.

Specialty fulfillment.

So we expect overall our group level above the line, we will try to manage that to be less impacted by the COVID-19 situation compared to top line in <unk>.

So as I mentioned that our control measures are just started in mid March. So we will continue that in Q2, and we will manage our.

Profitability and cash flow dynamically based on the overall macro.

Environment.

Yeah.

We are now approaching the end of the conference call I will now turn the call over to Jamie Dot Com, Sean Zhang for closing remarks.

Thank you thank you for joining us.

On the call.

Your question please.

And your interest in <unk> Com and we look forward to talking to you again next quarter. Thank you very much.

Okay.

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

Yeah.

[music].

[music].

Hello, and thank you for standing by for JD Dot Com first quarter 2022 earnings conference call.

At this time, all participants on a listen only mode.

After management's prepared remarks, there'll be a question and answer session.

Today's conference is being recorded.

You have any objections you may disconnect at this time.

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

Thank you Michelle.

Good evening and good morning, everyone welcome to our first quarter of 2022 earnings Conference call.

On the call today are Mr. <unk>, our CFO CEO and Mr. <unk> Hu, our CFO for today's call. They will kick off with opening remarks, and Sandy will discuss the financial highlights after that we'll open the call to questions I noticed before we continue let me remind you today's call.

It will include forward looking statements and please refer to our latest safe Harbor statement in the earnings press release on our IR website.

Which applies to this call also during this call well discuss certain non-GAAP financial measures. Please also refer to our earnings press release, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures.

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

And now I would like to turn the call over to Mr. <unk> our CEO .

Go ahead.

Thank you.

Yes.

Hello, everyone and thank.

Thank you for joining dot Com 2022 first quarter earnings call.

Morning.

And then so that each of the four.

So obviously influences the important role that these are the level of funding.

So when you call.

Typically for tier two northern digit Valencia.

Sure.

Concrete.

Sure.

Our total debt.

So Dr.

Dr. Gerald you shouldn't do it.

Can you just talk with partners.

Yes.

Since the start of 2022, we have seen many challenges arise our external environment, including the resurgence supply chain disruptions such consumer sentiment among others.

Blanching better technology and service provider JBT can be taken to social responsibility corporate citizenship and back to Mr. <unk>.

We are able to take concrete actions to help ensure supply sustainable secondly.

To mitigate the impacts of the pandemic on society and economy.

Yes.

Let's start off a particular issue.

Thank you Dave.

You don't normally don't do it.

Gotcha.

Yeah, Cornell concentration the Shire Moshe cumulative easily passage open a culture around that yet.

Which is all about <unk> and <unk>.

So for instance, yellow women die.

So that's all there.

Yes.

Are you pushing your low point now one year concern the boxes.

So I don't see a harsher Kimberly yoga, showing very high adoption trading team ghansham.

Julian you assemble a team shortly that triggered for the yield or Youll parts of Europe , Australia and Dr. Jon Cohen.

JD solid business foundation positions us to navigate the current challenges.

We believe are short term in nature in the first quarter. Once again delivered high quality results, thanks to our supply chain capabilities.

This business model, our total revenue so a solid year on year growth.

18%.

This reflects increasing trust with me.

Some of our consumer and business partners. It also demonstrates that we have better control across our entire business processes supply chain. Therefore, we progressed with greater visibility that the overall sector. During this time, assuming some type of times. Moreover, we also recorded static.

In this quarter, driven by better operating efficiency and more focused business strategy.

Yes.

Hello, Moshe <unk> with GBM.

Alright.

Somebody jump ball harsher hemo B <unk> C.

All right.

To the mutual funds <unk> and <unk>.

<unk>.

You bet.

Fortunately she.

Beyond that <unk> got somebody on the call.

What was an appointment only be issued yet darden coupon Chevrolet now trending toward our Chunghwa brought it up.

Sure Hi, Randy.

Good morning, Sean colonial chemo Genco that Adam.

For <unk>, yes.

Okay.

Well I'll pick up the whole block jumbo home email Daniel here.

Wendell will do.

Chung locally in Shanghai that Chunghwa.

George Utah law, whichever quietly shall go off again.

International Hi, Nisha <unk>, certainly wish all type of agenda to them the younger issue and all that.

Thank you.

I'm, assuming you remember the worst scenario.

So a 200 acre here.

So retention for strategic negotiations should each year to normalize so issued some gap between us.

Elisa <unk> thoughtful generally become the interim that Julia Johnson.

Cancel yoshi Tejas Juno culturally ileocolostomy montage outbound who saw heightened leadership human deal with Michelle continue in Q.

Walter will follow up digital portfolio.

And then with shares of about 20 in the charter for the long run.

But two mutual opportunity sure.

This base of call it maybe.

Frontline.

Frontline spared no effort one quantify what's first of all come January 2020, we mobilized quickly today.

First of all like local bank to ensure the transport capacity, providing essential to a faster decision making.

Protection.

Sure.

RJ.

And once in service.

Measured former Murchinson supplier this time facing a war chest mythical omnicom borrowings JD once again, putting that relates to our supply chain normalized all of 14.

Dominic and ensure supply of.

Across China.

Taking Shanghai.

Thank you <unk>.

Retail logistics health data and others.

Of course, the good advantageous transport and logistics resources delivered tens of thousands of likes.

Two Shanghai, including Baby.

Baby care products.

We are also recruiting and deployed over 4000, plus 19 points.

We support operations and delivery in Shanghai.

Behalf of Jason I'd like to express our growth.

Gratitude and respect.

Especially the first one.

For their selfless devotion.

In addition, as a new type of real economy petrified.

We have also introduced.

And our system initiatives for merchants.

That have suffered from the epidemic in order to lower their operating costs and help them gradually.

JD supermarket also works together with Jacobs J to help thank you Dorothy Shanghai to resume online operation and providing delivery manpower in a timely manner by seven reaching that.

Sure.

We hope to join hands with all of our partners to tackle these challenges and difficulties and together contribute to stabilizing people.

Hence the economy.

Net charge offs.

So we don't see going forward with Australia.

So although they don't know your portfolio, Florida total.

What other tools or when we'll go downloadable youll water down that you saw already on your digital junior loan equivalent I don't know what our Bayou.

Good luck sure we'll do it.

Some of that.

I mean should that.

Oh, Okay. This was off the charts Lasalle.

Are you sure that once you've got auto Virginia, Alicia Cingal.

That's helpful. Thank you so.

No.

Gordon on the Cheetah choppy due to foreign currency total company too sure sure.

<unk> video.

<unk> you want me on only the tissue Shouldnt change with our photonics from kind of Joshua.

Yes.

Satya you can shop for months.

Sure sure well as you can.

Balance sheet.

In terms of challenges did he always says to harness our advantages and that moves the needle for instance, we have made proactive adjustments to other users packaging with a steady expansion of our user scale, we have been increasingly focused on improving the performance in Q1.

This creates the platform driven engineering and more importantly user purchasing frequency and salaries.

Also please.

That looks like.

This merely reflects the <unk>.

Legal resolution and shrunk.

Thank you Kate.

Alright.

Okay.

You have a tight.

Hi, Ross.

Yeah.

China's internet industry.

Entering a more mature development phase going forward as we optimize and expand our omnichannel ecosystem.

To an extent at least in Denver.

2008.

Long term value.

Let me assure you that well behind us. So many children that you can't you have to do it.

<unk> 2000 <unk>.

But all of the total net charge offs.

Digital is I think as Johan will achieve which is going to have a solid result, you don't see you end up with.

So that's where you got shop closer pushing neutral Youll ship Genco Chandler choose your time.

Sure.

Issue tissue Yogurts yet.

The equivalent only joshua towards the bottom end of imaging.

So let's put it on the shelf that tool Shijiazhuang, Egypt, I wont rule changes are going on and we have most of the total.

So I <unk> so each means in the industry.

So you don't go you changed the team in the region Jeremy here.

<unk> Chan Pseudology ebay.

Once you are in Charlotte and one in Shanghai shop.

You know, Josh juncture, Geopoliticians, Chunkier, usually Guizhou <unk> Leerink, Jim Connor.

Cingal.

We're also actively optimizing and adjusting the investment pace in our new businesses based on our analysis of the macro and industrial landscape.

Q1 before the shift this quarter.

Where we saw improving scale and efficiencies as well as better synergies with our core business.

Region <unk> effort to improve.

Experiment sales channels local supply chains, as well with digital operations have begun to bear fruit.

Oh, we are cross vaccine supply chain capabilities.

Model has proven themselves that would go into <unk>.

Again to the epidemic for example, this banking resurgence.

End of April .

Our community groups purchase business has been average stage.

<unk> is a double win.

Better operational efficiency.

In future, we will continue to optimize over the operating efficiency and drive sustainable high quality growth with healthy cash flow and profitability.

Minnesota will be a kind of it's a G G. The Chooser, Georgia gene Lowe Eagle bulk format.

Yes.

No Jason.

Jason.

Well for me, but who either fully yet.

Operator.

She lives in memory to talk with you.

So to the metallic sheet products.

Please proceed.

Yeah.

Two men Unocal LNG.

I mean look we don't normally Hudson.

But all are nonetheless.

Let's get out of 2014 with Joshua Dicker.

So contribution schedule accordingly.

Since we started with <unk>.

We are doing transactions that DSO, 'twenty Dakota City too sure sure Johan Accordingly.

Our younger the corner towards yourself to ensure that Moshe.

Jonathan.

Steve you might youre into the 'twenty, two Virginia midstream here.

Towards that you use on the quote.

You know the dollar has gone up a little girl.

So you'll see Virginia intermodal that absolute level of growth will not come from Shanghai bombing budget issue with Apple titled recent color on that.

All of them.

So with that engine, the etiologies user <unk> sector, especially on the social only it'd be good to see.

Yeah. He's at all if you walk into Oreo cookie that judgment.

If you're able to realize coupled with strong but easy to tissue box. So quite does go down, but we're still projecting controlling dilution.

That will ultimately show Jabil CEO Bob <unk>.

Sure you got shot.

<unk> unique strong profitability Ghansham Punjabi.

And do you have a project with <unk> et cetera <unk>.

<unk> Geelong reopening.

Congress rollouts in each of survival.

One leader Corelogic closer to many of you talk about it until perhaps you want me to hit over 120 high end <unk> products should also occurred in Q2.

The current challenges also provided JV with upside opportunities firstly, our efforts and commitment to social responsibility during harvest enabled us to fulfill social Social Society Trust and resulted in stronger reputation and appreciation among our users.

This is highly significant for our long term development.

<unk> supply chain as well as our other 19 and coordinating capability with.

We have reduced the pressure of the epidemic and become stronger thirdly, despite increasing uncertainties, we have persistently executive suite.

Our long term strategy and build a foreign competencies such as our supply chain platform marketplace ecosystem and omnichannel infrastructure capability.

Pursuit of more discipline in that okay and higher efficiency.

Also helps business partners to generate higher efficiency and more.

Okay.

External disruption.

As such we have gained recognition from our business partners during the epidemic.

See that merchant participation and engagement and reach.

The higher level of the previous year in the preparation for the upcoming $6 eight planned promotion.

The complete the complex the epidemic situation and the macro economy.

Company to reach with their.

Their sales and supply chain and fulfillment systems. Many of them have realized that you reflect the book value of integrated supply chain and logistics services.

Helping to drive the growth of JD logistics revenues from external customers retail companies for Iraq with high yield.

Total revenues in Q1 with an optimizing <unk> revenue structure in this quarter clearly our profitability improved year on year, thanks to optimized operation and better customer roster ADL also made steady progress in beauty App <unk>.

Capacity by the end of Q1.

We paid approximately 1400 warehouses with a total floor area of over 25 meters square meters Andrew manage.

All of these advantages constitute a solid foundation for <unk> to further expand.

<unk> industry, leading position and walking over.

Over the counter.

Tore up.

So coming out of charter, which was this year.

So about <unk> <unk>.

Just to talk to you in the Hood blood sugar.

Children with some of your core funeral.

Cumulatively the pseudo nearly each column on the chart that you can tell that the original down a similar pattern. This year Ginger Cmos pushing the Cheyenne or did you stayed unchanged.

Joe mentioned, the Taiwan, showing them what are the decisions that put on the page.

Tommy projection, so Asia joint venture four strategic themes this year Kinder in the tumor because youre talking about Jeff.

Been at the County further fluctuation of final pillar two machines arbitration I'm showing you move that May last I'm, telling you, but you guys don't see Cogeco culture down further I hit that other Joumana Sheila Patricia It's also looking at some.

Some of our Hudson Jogger technologies available.

Is that fair.

Half of 2022 has brought many challenges and uncertainties.

At times I believe it is important for companies to have a long term mindset remain strategic.

Strategic priorities, while maintaining flexibility to adapt to short term dynamics.

<unk> has experienced many challenges over the past 19 years.

Taking each one that opportunity for the company's development.

Today, our business logic that the supply chain at the court that clear on our core competency is highly differentiated and the resilience of our business model has been proven many times and continues to evolve.

The new type of enterprise that is based on and always served the real economy J D. Today does not have or for salvage ground. Looking ahead, we will continue to build upon our strength, we remain confident and determined to achieve healthy high quality long term development. Thank you all for your support and trust.

This concludes my remarks, now I'd like to give the floor to sandy.

Thank you Li Hello, everyone. So, let's see if the Army corps outbreak across several regions in China in the past several months has been challenging for everyone. So I'd like to Echo what Lee said and add my thanks to our colleagues, especially the frontline workers for their hydraulic efforts in serving.

Our customers and providing them with essential supplies. During this critical time.

In the first quarter net revenues reached 240 billion RMB.

Representing a solid 18% year on year growth against a high base from last year in face of various uncertainties, we have been increasingly focusing on serving our users as well and then increasing user lifetime value.

Our annual active user base reached a total of 585 maybe.

Average <unk> per user in the last 12 months continue to increase.

We are also glad to see improvements in other user quality key metrics. For example average orders per user recorded a healthy increase for both new and repeat customers.

Our quarterly average the au has been trending up and growing over 20% year on year, reflecting deepening user engagement.

Not only did we see a spike in the a year ago. During the spring Festival gala effectively promoting J D. Nationwide. We were also is back to live up to our users.

While we saw a notable increase in D U during COVID-19 resurgence in March and April.

As our revenue base continues to diversify we also saw the bearing impact of Covid on different segments in Q1.

Our net product revenues, which mainly consist of our one P. Retail business grew at a solid 17% year on year, demonstrating remarkable resilience and obtained by our proprietary supply chain infrastructure.

Service revenues continued to grow faster at 26% year on year further diversifying our revenue base.

Well marketplace and marketing revenues grew at 25% year on year, our advertising revenues still grew at nearly 30% year on year in line with the improving a lot of our advertising services.

Our marketplace ecosystem continue to optimize our street retail continued to grow third party merchant base by over 20% year on year in Q1.

This showed that the support and value creation.

J D are resonating with more and more third party merchants, who are struggling yeah time off and certainties.

Logistics and other services revenues grew by 28% year on year in Q1 as D. D. L continued to gain traction from external customers with its anti interrupted supply chain services during the Chinese new year.

I will discuss more about this later.

Now, let's turn to our segment performance.

Genie retail continued to deliver a resilient topline growth amid the latest COVID-19 developments.

BT Retail's revenue reached 200, and the ATM dealing RMB in Q1 growing at 17% year on year in the quarter.

The Covid impact began to appear across the performance of our categories.

Merchandise revenues grew 21% year on year in Q1, all performing the electronics and home appliance category growth of 14% year on year.

Since the latest outbreak customers, notably shifted their purchases from non essential product to essential items or.

Supermarket category saw stronger demand with its order volume outgrowing, taking retail in Q1.

And in the first half of Q2.

And attracted the most number of first time buyers among all categories.

Although our supply chain was heavily disrupted in certain regions CTV tail and JD logistics quickly worked together to source and dispatch essential products are utilizing our nationwide warehouse and warehouse and delivery networks.

Once again this demonstrates that our customer first operating philosophy and our unique model that enables us to quickly respond to unexpected changes and mobilized our proprietary supply chain capabilities in upholding customer service.

Well, you don't want to build out our traditional beatrices health model to adjust pricing customer needs.

Both of our Omnichannel supermarket, including sending fresh accelerated in Q1 as they provided our customers with timely omnichannel fulfillment for grocery and household staples in this critical time for himself.

Moving onto JD Retail's profitability.

Operating margin was three 6% this quarter compared with 4% a year ago.

I'm really due to the marketing expenses in relation to the spring Festival gala sponsorship and to a lesser extent the softer fulfilled gross margin during the outbreak.

That said, we expect to see additional COVID-19 related costs and expenses, particularly in fulfillment as well as margin impact caused by product mix shift due to the uneven performance of our different product categories in the short term.

JD logistics or J D. L maintained a healthy top line growth with an improved revenue mix and a continued year on year margin improvement.

If Q1 revenues grew 22% year on year to <unk> 7 billion RMB.

Revenues from external customers maintained growth momentum driven by both the number and a pool of external customers.

And once again achieved a record high revenue contribution of 58%.

D D. L acted quickly and spared no effort to ensure continued fulfillment of essential products to customers and support our business partners in the COVID-19 affected areas.

As a result, it incurred additional costs and expenses due to the operational difficulties and disruption.

Particularly as it mobilizes workforce and resources across different regions well some of our warehouses. The delivery stations were under lockdown restrictions in affected areas.

However, we still found some silver linings.

The customer awareness of the unique advantages of JD power integrated supply chain logistics services has meaningfully increased boding well for the future customer conversion and total addressable market expansion.

Thanks to the growth of external business and continuous improvement in operating efficiency driven by technology J D. L was able to absorb the additional costs to a certain extent and continued to improve its margin in Q1.

It's not a GAAP operating loss narrowed by more than 55% from a year ago.

<unk> has once again improved the design and efficiency of its nationwide supply chain network in this challenging market situation.

Yeah.

Since we received all required regulatory approvals and completed the additional investment in Battle group by the end of February We consolidated financial result took that off in our segment reporting starting from March this year.

During the consolidation period that our reported revenues of 688 meeting RMB and operating loss of 191 million RMB.

That is an independent of all part of our Omnichannel strategy.

Chuck now they all demand retail brand that we launched together on Jd's me App has been spending at a triple digit growth rate year on year in Q1, and now maybe service available to users in over 400 cities.

We are excited to further expand our supply chain service network in the fast growing on demand options with Dada.

Finally, turning to our new business segment.

We took proactive optimization measures to improve operating efficiency.

Particularly in TMC business, we further focused our resources in a fewer number of selected markets to strengthen local supply chain capabilities and improve the UE model.

These measures resulted in a moderation of revenue growth to 12% year on year, but a meaningful reduction in operating loss of nearly 1 billion RMB sequentially in Q1.

Our JV property business remained a profitable business in a hyper growth stage. It has successfully acquired a controlling stake in China logistics property holdings or.

<unk> seen our team further enhancing its logistics infrastructure.

GDP has also entered into definitive agreements points, approximately 800 million dollar non redeemable series B financing in the quarter.

So far you can tell that state is unique supply chain based business model not only ensures our capabilities in navigating different economic cycles.

It also allowed us to proactively and quickly adjust our business strategy for biotech sustainability.

Moving to the consolidated bottom line.

Expense ratios in Q1 declined by 53 bps year on year as a result.

Q1, non-GAAP net income attributable to ordinary shareholders was <unk> 4 billion RMB with non-GAAP net margin of one 7%.

Our free cash flow for the trailing 12 months.

Water was healthy at $27 2 billion RMB.

By the end of Q1 cash cash equivalents.

Restricted cash and short term investments grew to 186 billion RMB.

To the stable cash flow contributed by our core businesses in the past few years.

Earlier. This month, we also announced a special cash dividend of <unk> 63 is U S dollar per ordinary share or $1.26.

AVX, which reflects our confidence in <unk> long term growth trajectory and strong balance sheet well.

Well, we continue to explore the height.

Fighting investment opportunity.

We constantly take a holistic view can't consider different measures.

Appropriate to give back to our shareholders in the long term.

Looking ahead, the army crossed situation remains very fluid and add a lot of variables to our business the magnitude and duration of the COVID-19 impact will pick that many uncertainties to the overall customer behavior supply chain and our fulfillment infrastructure.

Sure.

But one thing for certain after 19 years of efforts in building our core supply chain.

And differentiated business model, we are uniquely positioned to swiftly adjust and respond to any dynamic situations and able to be among the first to help our customers partners and communities. During this time.

When the Covid disruption subsides, we are confident that JD will emerge stronger with expanded customer mind share more trusted partnerships and deeper ties with our community and users all of this will reinforce our mid to long term growth prospects.

This concludes my prepared remarks, and we can now move to the Q&A.

Sure.

Okay.

Okay.

Okay.

Good question. There just session of this conference call will start in a moment in order to be fair to all policy was to ask questions. We will take one question at a time for me to call, but maybe you have.

More than one question. Please request to join the queue again. After your first question has been addressed.

Our first question comes from Ronald Keung with Goldman Sachs. Your line is open.

Okay.

Thank you.

Youre going to see if you call agenda.

So go ahead Mike.

Yes.

Some people don't.

Well I don't know a woman.

Yes.

No.

So you can kind of take.

So.

Sure.

Jim.

When it comes to people.

People.

Sure.

Ken.

And as if we owned the depot.

Senior to Samsung.

How long would that take.

Sure.

Now moving along.

Yes.

Thank you management my question would be when we compare with two years ago that we've gained a lot of share and grew much faster than industry during the first quarter.

The COVID-19 outbreak, we've seen some of the industry numbers for April was relatively weak. So once they know how are we doing in retail business compared with the industry.

The differences that we see versus two years ago and targets and how we see the second quarter and second half growth as a result, thank you.

Well, just you know I don't think <unk>.

This achievement Sheila let me answer your question.

For our culture.

Oh gosh.

So you've heard us talk.

Kurt.

Morning, Sean.

The meadows.

<unk>.

Yeah.

Okay.

This rounds up the carpet offering satisfactory Shanghai in other races also called.

A huge challenge to China's retail inventory as well as <unk> dot com.

So it's telling me what do I do it.

Jimmy on the issue.

Earning yoga Orange Armenia, itching can cross shop, all you got it let.

Let me share with you some observations of a different region.

I'll break now and two years ago.

Hum.

Can you put a carnival assume financing bigger chunks, where most of the.

Our internal technology.

Tricia third hub.

The effect.

No.

Jim go ahead Andrew.

Sure. So we've got to work on waterboarding bullish of owner.

Sure Jacob.

Rhonda interconnect from what Sudhakar your point number two is that <unk> issue.

Correct.

Sure.

Sure.

I'm sure a crossover.

On the water.

Joe are you already are in the U S dollar.

Our channel and I was wondering when a Youtube channel.

Okay.

What's really hollow dumpsters are so you shouldn't there be onshore.

Sure sure sure Venezuela mentioned sure shot 30, Threep for the Jewish interchange on the sheer inertia is the strong shop.

So for the Army Corps wiring.

It's highly contentious and spread rapidly.

Our notes value was $9 five lifestyle that delta, while in general and timing only to 83 days.

Also a certain proportion of the fact that people have no symptoms and making it more difficult to track and impact.

Apartments.

And control policies remain unchanged.

More cities and consumers of Factset.

And the supply chain.

Much bigger impact than that.

In 'twenty one.

Past two years the impact of Covid.

<unk> pharma.

Positive with respect to the Internet e-commerce sector.

There were only a limited number of regions affected or limited time during that time period. Some offline businesses has been shifted online at accelerated pace.

This time around both our both the online and offline classes are heavily capital.

Yes.

Sure.

Julian are pushing to the cardholder full payoffs alternate thank you would only further cleanup shrunken.

And the real important to corner shop.

Thank you Sheila.

Yes.

You mean, it could be intolerant, partially on a few of our thing done. This resulted in a new manager in the Changzhou.

Therefore, you also hardware that has a goal you chanelle.

Locked out of our warehouses and delivery stations in certain key regions have matching fulfillment challenges as both inbound and outbound shipping of merchandising from warehouses or factories fulfillment requires much longer time.

There have been these has resulted some order cancellation rate increase in April and the situation is getting better in may but the cancellation rates remained high level year on year.

Can someone answers are based.

Based on auction switchover in hurricane, whether it's really about us supervision from true consumer pressure at all for total dollars 14 total himself upon what we're seeing in terms of industry. There is somebody build what pleasure Charlotte, Michigan shipyard.

Or just sort of a concern.

Due to the short term, yes, so called which is a third year ago interim water surely vertical geography.

So this year for all of the China <unk>.

Our big cities first tier cities, Beijing, Shanghai, Guangzhou and Shenzhen.

All the Abaxis well August contraction to only affect imports, what's the rough time, and the Beijing and Shanghai have been affected for a longer period of time and the sales.

You said up to four cities account for a higher proportion of JP then the city's contribution in total retail sales in China.

Hello. This is the agenda.

You can go to adoption doubled production.

Both windows, Rihanna and hungry.

Hum.

Susan <unk> handle that you saw.

Adoption pressure.

We all know Julien.

Please also Shandong.

Hi, Richard Goss with them.

So a majority of brands and merchants lowered budgets at the beginning of the year considering this year's economic situations they focus more on profitability.

The business environment also does not support a high growth from the supply.

Hum.

Choose option laid out as one of a kind of top on culture.

Less popular genre.

Thanks, a lot <unk> walnuts.

You guys want to sort of fit the bill.

So in terms of the category Besides the supermarket and health related categories, which are continuing to enjoy supply growth for the market of electronics and home appliances and apparel category the market was changing dramatically.

Sure Rajeev.

Uhm.

The level of ITW.

You've got shrunk shoulder cannula in Belgium.

But I do know that when we have you know Charles Fisher.

I sure don't sure Jonathan will real freedom.

Sure.

Julian.

<unk> actually be able to do that.

Okay.

Take the IGN electronic categories. For example in the past two years due to the global supply shortage and Judy to answer flexing capability, we performed relatively well this year, it's got a great space to get the overall proficient.

That's the correct level, it's going down.

Atlanta, which are huge opinion film can you John Changzhou simply element here.

Okay.

Sheila WEX health.

And for the telecommunications to the mobile phone category due to the price rise in the chip shortage, how consumers are where they need to replace their devices. The cycle has been extended.

The launch of Lennar, you may each year.

Over to you.

And yet on the higher the two pools versus the other.

On the short walk.

And Cox radio Mendelson Carlo.

And for the apparel category due to the epidemic in a sluggish consumption. There is high level of inventory backlog of spring collection and as a result, many factories are considering escape the production plan for the summer collection.

The.

Football Geological survey.

So this is as opposed to the turnkey the salvation beaming that I cannot thank you Sue.

Hello.

We're focused on job shop in the shop manager per channel.

No.

Total merchant China slowdown.

Cologuard two <unk>.

The academic and the fact that consumers in common confidence the overall consumption into practice you can see from the April statistics, and this especially in plastics sales up some are large ticket items and even user traffic as reported.

April .

We have seen.

Ticket sites is dropping.

Year on year in April and May.

So let me do it on a computer.

In China, I know, you're trying to understand what that is.

You can do though.

Modular Chihuahua to love to chat a diacritic Hello, gentlemen, can we charge them for that.

Hi, Olivia quick enough Vishal.

<unk>.

Thanks Vito.

I'm a kingdom later.

Could you talk about what she hasn't been bad.

Some of the thinking on the bottom line total workplace on the calendar year.

Got you okay.

Look at shop.

Let me respond to the above mentioned the situation here are two aspects we have been doing.

Yes.

We have been conducted active communications with the local government and getting out of why so many enterprises official.

Special supply of more regions and also to ensure the normal operations of our warehouses and fulfillment facilities and the situation has improved.

Improved now.

Yes.

<unk>.

Last month, we are going to be no questions Sir.

Each of them.

A number of <unk>, Shanghai Auto show loyalty as Youre thinking about it.

And what kind of Virginia, and Maryland that Shanghai Tang <unk> Lumia.

Shimada issue Hot runner trended down in Guadalajara.

The shuttle junior children material argued with genius.

And on the presentation of the <unk> promotion.

We have seen that the majority of brands and merchants that are under pressure this year.

We have been more proactive in participating in J D eight promotions than in previous years, and we hope that.

If events, we can support them to put their sales ended Q O Q2 performance provided the carbon situation is getting better.

Turning to the foundries or the world each single can learn a bunch here.

And finally, I just wanted to share a little bit more of the relationship between supply chain and academic.

The Virginia in Changzhou.

Funding genre each month genre.

So Nevada.

<unk> got all of them regarding Canada auto loan color.

Sure.

Ensure the Q Hogan Sheila.

And first.

Given the current macro environment, coupled with the impact of the pandemic. It has left the government and industry have a very high recommendation on the importance of the modernize the supply chain.

I'm very positive and its clear signal.

We do know Boonen arena.

Put junior adoptions of Condor.

We'll either be room to come up pretty soon.

For the year about Northern Ontario, Canada.

Okay.

<unk> is an Ohio woman.

Yeah.

The higher.

No.

Warner Center, you showed $2 <unk>.

Buena Shithole, but.

Okay.

The other pressure <unk>.

Brendan the only anomaly arpels.

Our mortgage yeah, but pretty wonderful quarter for selling older ships.

It hasn't for jumbo.

And second when J D talk about our supply chain capabilities. It does not only referred to those are tangible things people know about about all their logistics.

At the warehouses.

Vehicles.

It is also our algorithm and to the industry Knowhow that we have been accumulated over the years as well as all of our synergy capabilities with some key brands and all of this is a combination of the tools and expertise and Knowhow and our collaboration with our brand and all of these cannot be immediately achieve.

Some of them are extensive.

<unk> subsidy or cash procurement.

Sure.

Sure, but things Youre trading to shares issued to <unk>.

I'm not sure she loves our total lifting cost feminine woman.

Brian Let me of course it will.

Do you compare though neither.

The document Entre for June and July kind of Mcdonalds.

Vishal Feijoada Genco.

And thirdly.

The key points for their supply chain.

Stability and predict stability and certainty.

That is the consensus of the Covid situation.

We will continue to leverage our professional.

Expertise and all the infrastructure and capabilities to reach some innovative and new solutions in a difficult situation and so far we have gained recognition among our partners and users and delivered them some things weighing performance so far.

Yes.

Hey, guys.

Our next question comes from Thomas Chong with Jefferies. Your line is open.

One is that how I should say.

Jay Sherwood.

We'll be doing to you that hydrogen can do.

Pardon me gentlemen.

Women.

Great.

You guys are monitoring the Ohio Joshi well monopoly.

Maybe in that spending.

Are you, saying that the more bandwidth.

Sure, but continuing in that debate.

Goodbye.

Typically you have someone that bogey.

The PPI.

Beautiful.

Sure.

Nobody is in China.

Hi, Sue.

<unk> timing woman.

Woman to enrollment.

I am a woman.

Senior.

George when you come back.

We're going to do something when you travel.

Omnichannel.

Yeah.

John .

Good evening gentlemen.

Thanks management for taking my questions.

First question is relating to the upcoming generic marketing campaign.

Determine a comments about how we should think about the logistics situation.

The situation.

Sentiment and how are we.

When it differently compared to previous years and I'll keep you and my second question is regarding to our spend.

In particular.

The acquisitions as well as the investments in the new business.

Our investment strategy, given the dynamic situation right now and then finally on omni.

<unk> now can management comment about our long term strategies as well as the revenue contribution that we should expect thank you.

Whereas virtually all other onno Piet.

Your long term nature.

The other chunk what four <unk>.

Chicago.

Do you actually have on the timber voucher Tom Tom.

So normally we show you managing the diminishing the territory.

And with that.

Hi, Peter you made Shanghai, Shenzhen, Ginger, so low in the houseware Youll important.

And then the Geos Mayo.

But what about <unk>.

Jim Connor.

Shanghai Pietri you about Tibetan adulthood.

The <unk> partnership.

And just a moorefield works front as you lay on the 618, we have seen so far that extract Shanghai and overall in China, and our fulfillment and so coming back to a normal accretion levels of everyday there is some sporadic situations due to the coffee situations, but overall it maintain a normal operation and in Shanghai.

There are still a few orders continue to be fulfilled.

Overall for the Goose preparation is on the right track.

When you're doing well.

Some guy the haulage.

<unk> take a bottleneck issue when you pull the leader in that actual 100 on the phenomenal tore.

All of them yet.

For the participating and engagement.

Rather than a merchant to this year's grant promotion, they're very active and people outside.

Outside of our expectations and everything that's going on in Mexico.

Do you need other casino was something that we all can answer hazard ratio sort of as you call them.

The kitchen that issue, which showed English in one shot just shove it which isn't so much on a chiller wouldn't do it.

T J Maxx in May.

<unk> immune shadow.

Nigel the bottom quarter Youll see your thoughtful.

Chi yet.

To do a merger you wouldn't be doing Aldo.

And in terms of the PPI. Thank you Roman.

Thinking of the sales targets.

We're still thinking uncertainties on the coffee situations in conjunction with them.

Don't have a very clear a number to share. However, we continue to focus on improving the user experience.

<unk> efficiency.

Most importantly, we will safeguard pizza.

Shopping festival.

When you take.

For that you're calling out.

Two of them.

Dr Alhaji <unk> target two.

<unk> surely youll ship could should your father.

And so quality new business.

Momentum with a focus on the priorities of our strategy and focus on efficiency and sustainable development.

The most cities on the.

Fortunately, Andy Karsner don't lose your cautious.

Gotcha.

In the quarter.

Got it.

Your.

Project, you've got condo that want to use.

When do you see in quarter two.

Turning to other EU, but we're doing that.

Sure sure. So if you do it.

Our debt each year.

We are sure that put on the channel.

And all.

This growth they are assured of pressure, but we will continue to focus on the operations of the existing users and also the quality growth of the.

New users and we have seen a positive trend on both sides.

Well this year with the final womens Ebola, finishing law total jongi shared blood and see some of your block.

<unk>.

But she's also many of our fleet up from license in La Quinta Zimbra.

Some adjustments and optimization of some new business that we have done.

Well Justin.

Business that are enabled to do.

As a result after a certain period of time.

Okay.

But a lot of other women younger how quick going changing.

Yo.

You know the two jobs at home how much.

Could you put us what's happening.

In the coming.

Any period of time, we'll continue to focus.

Perfect.

For businesses and for some other some more optimization.

Adjustments will.

It will be done.

While insurance with Aloha.

Janine.

Considering the trillion dollar balance would fit on <unk> either.

So that will do the college across Japan.

Sure.

Tricia will issue you Michele fashion Womens 23 other portals.

On the contrary.

What was the I'm going to go to Iowa, Thermodox literally own Thomasville whole woman she's really through next year.

The approval of them done.

For India.

But also our visual to judge 2200 <unk> not.

Sure John .

So even though.

Thank you Bruce.

And JD Omni channel strategy in the parts of your APAC delivered very fast growth.

Growth and in Q1 this business continue our higher than overall revenue growth rate and coffee.

How this situation will not affect our long term strategies in this aspect, but we will make adjustments on these estimates.

Given the macro environment situations and the Omnichannel business is composed of two parts with both.

Self operated and other collaboration with external partners for this.

No matter, if it's Paul Knight will not only help.

Offline thickness and the shop to solve the traffic that uses.

I think it's difficult just given the economy situation. It also helped to each and enrich all of our supply chain reliability to satisfy the needs of our customers.

Given the impact of the situation.

Self developed Omnichannel were affected but overall the volume is not speak.

Had limited impact so far.

Could you at all.

Let me go through the season.

Joel.

So <unk> you.

You guys were all women.

Good.

Two zero.

Some of it will come down I'm wondering a full dialogue from what you said.

Sure.

Yeah.

Sure.

Sure, John Oxford Amendment, yet you'll see like <unk>.

Right.

Got it.

And for our own demand and radio business as part of our Omnichannel business and achieved three digit growth in Q1, and so far all of our shop now with a one hour delivery service coverage over 1700 counties across the country providing various.

Product category and it has been connected with over 15000.

50000 offline stores and.

It has experienced a rapid growth during the colleagues.

Nation.

Sure.

Pat I'll, let you mentioned together.

I said that 2014.

We'll take them now.

Jack pilot are encouraging them to put on the shelf.

It had a quarter some of it was it would have been that actually holds one bundled <unk> shut down the deal was only castle with a hazard ratio.

The territorial changes almost the highest outlet.

So you know tables on the sort of exposure to the short Yale.

But let me check with the delay.

Couldnt quite costar, finishing coachella yoga for tier two sharpen our program.

Supported by diverse deliberate infrastructure, we are using the existing networks deliveries.

That to us.

To perform our on demand delivery.

And this is like celebrated changing offline business expansion and currently together, we thought that we are supporting the digital transformation of more and more friends and offline.

And together, we explore dividend of the omni channel development.

It's become more and more clear.

We didn't commit.

Committed to bring faster and quicker service based on user experience.

Key to our consumer.

Thank you.

This is sandy.

On the revenue and <unk> contribution for our Omnichannel business. So in terms of <unk> and revenue contribution there both at a level of around 10% of our retail business that includes our <unk> on demand sales, our southern fresh offline fresh.

The products business as well as our offline home appliance franchise store business.

Yes.

Our last question comes from Kenneth Fong with Credit Suisse. Your line is open.

Oh excuse me I'm wondering if it isn't what if you win your question Vishal.

<unk>.

When do you see when you're talking about.

Well, Mike how do you do to Cushing.

Hum.

Well the <unk> Io to assume that you would add.

Thank you chip.

Mr. Sam.

Yes.

Now, let's open the call to the phone Sudan.

Alright.

When you go to market.

Some will come to you to sue them.

Finally Asia.

Congratulations on another strong set of results and thank you management for taking my question.

Looking back we do very well in cost discipline and control cost.

<unk> new business.

With margin better than expected.

More than one of the way that we should expect.

For further cost reduction optimization over the next few quarter.

Thank you.

This is sandeep, let me take this question. So since since mid March we have been taking project costs and control our cost and expense control measures to stack up financial discipline.

Face of the challenging environment.

Focus more on cash flow management.

For new business is that year to show a trend of OUI turnaround as Susan just mentioned our operating efficiency improve.

We adjusted the pace further focused on fewer selected regions.

So as a result of all these measures.

Despite of additional it had cost expenses.

Specialty fulfillment.

So we expect overall our group level above the line, we will try to manage that to be less impacted by the COVID-19 situation compared to top line in <unk>.

So as I mentioned that our control measures are just started in mid March. So we will continue that in Q2, and we will manage our.

Profitability and cash flow dynamically based on the overall macros.

Environment.

Yeah.

We are now approaching the end of the conference call I will now turn the call over to <unk> Dot Com, Sean Zhang for closing remarks.

Thank you thank you for joining us.

On the call.

Do you have another question please.

And your interest in <unk> Com and we look forward to talking to you again next quarter. Thank you very much.

Okay.

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

Yeah.