Q2 2023 JD.com Inc Earnings Call
Hello, and thank you for standing by for JD, Dotcoms second quarter, and interim 24 Q3 earnings conference call. At this time all participants are in listen only mode. After management's prepared remarks.
There will be a question and answer session.
Today's conference is being recorded.
If you have any objections you may disconnect at this time.
I would now like to turn the meeting over to your host for today's conference Sean Zhang Director of Investor Relations. Please go ahead.
Thank you.
Good day, everyone welcome to TD Dot Com second quarter, and interim 2023 earnings conference call for todays call.
J D power.
She will keep up with opening remarks.
Therefore, Mr. Yang will discuss the financial results after that we'll open the call to questions. Paul Analyst, Let me quickly cover the safe Harbor. Please be reminded that during this call our comments and responses to questions reflect managements view.
Today, only and will include forward looking statements and.
And please refer to our latest <unk> Safe Harbor statement in earnings press release.
Our web site.
Which applies to this call.
We will discuss certain non-GAAP financial measures. Please also refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release also please note all figures mentioned in this call are RMB, otherwise unless otherwise stated now let me turn the call over to our CEO Mr issue.
Hello, everyone and thanks for joining us today to discuss our Q3 itself.
Q2 was a productive quarter for TD, we delivered a solid performance with both topline and bottom line results exceeding our expectations.
More importantly, during the quarter, we effectively executed our pencils on alkali seasonal development further improved our supply chain capabilities and achieved many operational and financial milestones, while navigating a challenging industry environment.
We are encouraged by the progress we are making on this priority.
And I want to share some of the details with you.
Let me start by reiterating TD is operating philosophy.
Section, which is to relentlessly Charles for lower cost higher efficiency and superior customer experience.
This is at the heart of everything we do.
It's primarily consists of two critical elements.
Mainly cosmetics, Kevin and supply chain capabilities.
Alright.
Tuchman, killing me.
I'll focus on providing best in class tenants.
And continuing to find ways to improve selection.
Quality and value in tiny store Harsha.
Particularly since the beginning of this year.
The extra mile to improve our selection on Baidu, well, all our colleagues and see continued to lead the industry.
All selection, we have taken solid steps to improve our platform ecosystem.
When she in J D K.
Uh huh.
Both our <unk> and third party marketplace.
Our platform ecosystem strategy is guided by our goal to continuously improve customer experience.
And both <unk> and me today.
Equally exciting quarter for our third party marketplace.
We feel that we are only at the early stage zero license based marketplace potential.
But we were encouraged to see the number of trips and much.
More than double year on year and set an all time record in Q2.
As we improve our tools and the test is a location like Cooper, who built a fire and effective all cookie environment.
With the improving operating environment.
I think he mentioned broad a broad selection of products to our customers.
Kevin Rippey marketplace lethal.
Our following over the last two cups of coffee.
Well Omar we have seen two consecutive quarters of double digit P. P revenue calls.
Mainly driven by robust growth of opera tightens up until.
Most of my time on Okay, I'll pass it to J D Hustle.
On volume.
Yeah.
Launched Hill initiative to enhance our reputation for providing value to users.
Sometimes I hear people make the argument that sticky pursuit of no crisis, well, obviously impact do you think.
And our profitability.
We know this argument is intact.
Although means providing both low class and upstream battle all services for the money Kosmos pain.
And not surprisingly TD supply chain capability is the key to delivering this.
With a lower cost and higher efficiency generated two O T. We are able to provide more value and trust service to our customers.
Hey call. It 10 billion discount program I think somehow.
We continue to engage it's value for money selection of therapy merchandisers.
Which is resonating with our customers.
Three P. T M D contribution with this program has gradually increased to over 50% in July .
Also with this program moving out had we were still able to maintain a healthy bottom line in Q2, which you will elaborate shortly.
This is a strong proof of how we leverage our supply chain and manage our business effectively to serve our users better.
Another proof that our core categories, including PC and home appliances.
<unk> to benefit from our robust <unk> capability.
Which enable us to provide studies supply at low prices and high quality services at the same time.
They felt we further gained market share in these core categories in the quarter.
During the quarter.
Our strong user engagement check, including higher purchase frequency and a pool on our app.
In particular, the number of repeat customers continues to grow by double digits.
Well the average G M D per user increased by high single digits.
The number of J D plus members continues to grow over 20% year over year and reached 36, maybe in Q2.
Oh these are strong Hoffman, that's on top of our speed and quality.
Use of destination of our improved selection of the value gets stronger.
Our supply chain capabilities continue to serve as the bedrock of all of the ceilings business performance.
In the last two quarters of this year well have been hooked on executing our strategic priorities.
Couldn't our platform ecosystem and enhancing our cosmos pairing with the superior selection.
Speed quality and value.
As we have talked a lot about our business development today.
Now I'd like to share some color on the progress of our organizational restructuring.
We launched this initiative in Q2, you'll reach with full close to to fly to our management structure and validates Green type decision, making power to the occupational illness.
That are closer to users.
Our goal is to improve organizational efficiency.
Incentivized entrepreneurship, even out to the phone line level.
So far the reception is progressing as expected.
We have completed the assigning responsibility and insights and kpis for each of the operational units and are now in the process of checking and assessing execution as well as streamlining the no accretion in each of the 18 hour business.
Coating systems.
The restructuring evolved a lot of effort and it takes time to bring its effecting into full play.
We've seen that entered the new structure, our operational illness amo in centralized.
And showcased enhance the professionalism and executive capabilities.
It's really encouraging to see our decisions and efforts.
<unk> to pay off and the yield early positive results.
That's D D continues to execute these tragedies.
From a long term perspective.
We are more confident that that ever in our ability to deliver healthy and sustainable growth and continuing to see new opportunities to innovate and to drive our business going forward.
As our 20th anniversary. This June 18th we introduced our ambitious 35711 vision.
The Vichy includes also in the next 20 years.
Stop issuing three enterprises with over one 2 million RMB in the afternoon.
<unk> 7 billion RMB in that's possible.
Having five J D subsidiaries rank on the Fortune global one.
Okay.
Seven publicly listed companies with over 100 billion RMB market cap now.
<unk> contributed 100, leading RMB impacted and created over 1 million jobs ethical.
This is a vision that a lot of wholesale path for sustained growth for the next 20 years and our commitment to positive social impact.
It also highlights our unshakable confidence.
And commitment to China's long term economic development.
We looked at had to the second half of year and to the future. We are focused on the healthy growth of our business and investing in exciting new opportunities.
Even by our unchanged longtime strategy, that's centered around cost efficiency and top of my parents.
And a deeper sense of mission.
We believe we are well positioned to create long term value for our users.
Business partners shareholders and the society at large.
With that I'll turn it over to Ian for all of our financial highlights. Thank you.
Thank you Sandy and Hello, everyone.
Well happy to report that J D delivered both revenues and profitability ahead of our expectations.
We continue to execute our proactive business development.
And made solid progress.
Cross several of our priorities.
Including.
Building, a robust marketplace ecosystem enhancing user mindshare.
New propositions of selection speed quality and value and delivering healthy profitability.
Such results validates our strategic focus.
And we're confident in the underlying strength of our opinions momentum.
With that now.
Let's turn to our financial results in Q2.
Our net revenues grew by 8% year on year to RMB 288 billion in Q2.
Breaking down the revenue mix.
Revenues were up 3% year on year in Q2.
By category Electronics, and home appliances revenues grew by a remarkable 11% year on year in Q2.
Mainly driven by the strong pool of home appliances and mobile phones.
Both of which have outpaced the industry cool during the quarter.
Our further reinforce our market leadership in these categories showed our strong user mindshare roadmap.
The robust supply chain capabilities and industry, leading service quality.
Which are all key differentiators for JD general merchandise revenues were down 9% year on year in Q2.
Primarily due to the soft performance of our supermarket category.
Which was partially impacted by the relatively high base in the same period last year due to COVID-19.
I would like to reiterate our confidence in supermarkets future performance.
It's operating efficiency has improved significantly.
Healthier product mix.
Service revenues grew by 30% year on year in Q2 of which market place and marketing revenues were up 9% year on year.
I would like to highlight that revenues generated by third party merchants school sponsors on one P in the quarter.
Driven by a three peat advertising revenues.
As we roll out to multiple people matters for merchants with a notable acceleration emotion based exchange rate in the quarter.
It is also encouraging to see that our traffic conversion rates had a meaningful improvement that indicates our traffic allocation algorithm is driving co development of about one P. M. So if you've been it effectively.
Turning back to our service revenues logistics and other service revenues grew by.
52% year on year in Q2.
Excluding the impact from <unk> consolidation organic growth of logistics and other service revenue was 12% year on year.
Now, let's turn to our segment performance.
JD retail revenues grew 5%, yeah, Oh, yeah in the quarter as we continue to fine tune our operations that focus on improving efficiency and building core capabilities since Q4 of last year.
[noise] regarding JD retail profitability gross margin continued to expand year on year in Q2.
Our proactive efforts have clearly driven higher operating efficiency of our supply chain.
JD Retail's non-GAAP operating margin came in at 3.2%.
The likely decline compared to Q2 last year.
We made proactive effort to invest in user experience.
Which has already started to show in the improvement of our user engagement.
The slides yeah, Yeah operating margin decline was also partially due to abnormally high margin in Q2 last year on the Covid impact.
Why don't we aggressively cut back operating expenses, including marketing spending.
We maintain our goal to drive sustainable growth and improve profitability of our core retail business in the long term.
In terms of users as we continue to expand supplies and address the value our platform JD retail sorry year on year increase in user shopping frequency and retention in Q2.
Which led to a higher average P M b per user in the quarter.
It was also partially contributed by the expansion of our core user base overall, we're happy with strong user quality metrics, which is a result of our focus on the quality and user experience.
JD logistics saw a 31% revenue growth year on year in Q2, excluding the impact of consolidation of the deaths on the growth rate was 5%.
Thanks to the resilient group from external customers in Q2.
Revenues from external customers reached 16, 9% of JD logistics revenue.
In terms of profitability.
non-GAAP operating margin was one 2% in the quarter.
Ill jump off of 100 and a 13th.
From a year ago.
Similarly to them, but it's optimized business structure and customer mix.
And better economies of scale and business expansion.
By that I reported revenue of RMB, two 8 billion and non-GAAP operating loss of RMB 29 million for the quarter.
A substantial improvement compared to a year ago.
Primarily driven by better operating efficiency and economies of scale intrastate T demand retail business remains an important pillar in our strategic positioning.
And we're encouraged to see that bounce out and shop now have extended it to cooperate with 300000 offline stores.
And Ah providing on demand retail services being more than 2000 countries.
District and cities.
Revenue from new business come down to RMB four points 3 billion in Q2 and with further scaled back since you're on the international business on a year on year basis, while J D property maintained its adult basket growth momentum.
New business of Terra.
Our profitability and recorded an operating profit of RMB, one 1 billion.
Primarily due to the gang from the start up cost on closing of J D. P. In Q2, as well as the narrowing of losses from <unk> and international opinions.
Aqua, which were minimal for the quarter.
Yes.
Moving to the consolidated bottom line, we recorded RMB 8.6 billion non-GAAP net income attributable to ordinary shareholders in Q2 up 32% year over year.
non-GAAP net margin reached.
3% at 55 bps from a year ago, which set a new record for our German promotional quarter.
Finally, our last 12 months' free cash flow as of June 30 was RMB 33 billion.
Increased by 21% a year on year basis.
This was mainly driven by our improved profitability, which led to a higher operating cash flow as well as further optimize cash conversion cycle.
To conclude my remarks, as we continue to improve our operations, we saw multiple encouraging trends in Q2.
We're confident that we'll emerge stronger with a healthy and sustainable payment structure.
And enhanced call capabilities to unlock our potential.
With that I will turn it over to Sean Thank you.
Ian Brody.
For the Q&A session. You are welcome to ask questions in English or Chinese and or management will answer. Your question in the language you asked will provide English translation when necessary for convenience purpose only in the case of any discrepancy. Please refer to our management's statements in the Orange No language operator, we can open up.
For Q&A. Thank you.
In order to be fair to all callers, who wish to ask a question. We will take one question at a time from each caller. If you wish to ask a question. Please press Star then one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press Star then two.
<unk>.
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If you have more than one question. Please request to join the question queue again. After your first question has been addressed.
The first question comes from Ronald Keung with Goldman Sachs.
Yeah kind of woman Chico I need to do that.
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Hello, Joe.
The old Saltman do you don't go shop on yesterday do you gentlemen.
Oh Wow.
Yeah, well, we don't get a Beijing Shanghai, she can't find it.
Congratulations on the second quarter our growth performance.
Management own expectations with the electronics appliance.
Sean and faster three P growth versus one Pete I just wanted to hear managements view on the performance by categories in the second quarter and the outlook for these with your business restructuring any kpis that you're tracking and the outlook just for overall growth into the second half.
And to be a kind of a macro and business restructuring.
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I think the one thing I should say that's just an element that is often true cover on some type of assembly propulsion that you talked about that on Tuesday.
So you'll have that don't do a so since you're talking about some European pop Yahtzee and del Taco elements. If you teach where they need to know my thoughts I'm here to do something to Toronto and your thoughts about what could come out just as a woman who was talking in more cities.
Joseph Tung.
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John Let's you say like what about on a woman.
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So you should take that to tell you what my top he told me that Hum local since your longtime about chocolate off the door.
But for now.
You know what I'm talking about Queensland got no real shift.
And thank you Ron for your question despite challenges in the macroeconomic and consumption Netscape. During Q2, we have remained dedicated to solidify in Houston might Sharon towards other price competitiveness fostering an open platform ecosystem.
It feels like with all the efforts to further optimize business structure.
Outcomes achieved thus far have surpassed our expectations Genies business model has shown remarkable resilience in the face of the ongoing consumption environment.
By constantly enhancing supply chain capabilities, we have ensured a more reliable product supply, that's lower cost and high quality services during the promotional season.
That's an important market share expansion.
One advantage is categories.
So for instance, if the retail estate market and demand of durable goods are still recovering.
Our home appliances market has faced pressure, however, jd's home appliances business meaningfully outperformed the industry.
Continue to gain market share we attributed this achievement to J D to strong user mindshare and match the shopping experience, we provide and the competent supply chain that we have been diligently built over the years.
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That's all he got some.
And Furthermore, almost three C category showcase the strong performance. This can be attributed to our robust the supply chain capabilities competitive pricing and a deep user mindshare exceptional shopping spirits, including convenience trade in services and our active development in the O to O market.
Notably our sales of mobile phones achieve double digit gross growth rate in Q2, they're passing the industry level.
So sometimes our opening remarks.
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T cell phone size out actually if I could Sheila let's see what you just said it sounds from phones that pushes me lifestyle, what mandate T cell phones that people are thinking about club people some people that shouldn't they shouldn't be something that could you just you don't know.
Now, let me see Peter revenues don't so that's the intent of a piece of what you see you know why do you want me to.
She's got a lot of Xiaomi east with executing that I just mentioned in my opening remark and it's worked out and I like to have we have made significant progress in the development of an open platform ecosystem. This year with both merchant base and product supply expanding at a faster pace.
Gross after three P. G. M. D has also accelerated over the past two quarters little over since the start of the year. The spot we have introduced a feel yourself supporting policies.
Such as lowering platform service fees and take rate.
All right.
Three P revenue growth rate continuing to outpace that of lumpy in the first two quarters. It may be a double digit range.
We've got one more child tissue to T cells.
I hear what Youre Tisha sounds hard that I think we're talking about 10000, a month or.
Some can take hold and how jobs.
You want me conditional house, how quickly you can fine tune young people, who can come to a cost issue.
She doesn't want me to touch on those.
That's a tough question I'll talk anything about pop songs out or something sure yeah, I get stuck with that fruitful well immediate Pennsylvania, Massachusetts, how Halloween themed alchemy and elite.
We got some thought didn't come back from a single shop, how do you like how long it somehow absolutely Josh if you don't take them about that.
Sure.
Certainly there are other categories that we play.
Our continued efforts and improvement for example, the supermarket category gross momentum is impacted by the category mix optimization and also the research and stuff to offline.
After the Covid and a high comparison base from the previous year.
We have witnessed a significant increase in the number of third party Americans and product offering and a general merchandise categories on our platform, including the supermarket category.
We're also continuing to strengthen our supply chain capabilities and optimize fulfillment.
Our strategic execution and organizational restructuring effort.
Gradually Yale didn't reach out providing momentum for healthier growth in the supermarket category for the second half of the year.
For a long term perspective, we firmly believe that our supermarket category, how much potential as a key driver for the growth of JD dotcom.
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You know, who they're going to close 10, Boston Uh-huh, So run outs to I'm sorry, Your second question.
Our primary forecast, it's hum our use of performance as we promote the strategy for price competitiveness in Q2, we saw improving user engagement trends, especially both Apple and the scale off of our core user base continued to grow these trends indicate that other efforts.
How's the user experience have been successful in earning greater recognition of mountain, that's well I'll stay with wallet share.
No.
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Khartoum later go thorough TD.
The title Porsche the C O Kirby issue D. P. You know who the seahawk.
You'll be thought about a lot of things loyal and take the 10 billion subsidy program. For example, the program has been effective in boosting shopping frequency and across categories purchase. They found the platform and also the platform I'm sorry also that program contributed meaningfully to attract them.
Service and activates low shopping frequency use us.
No. It's the R&R Cynthia it cuts off the same pad well known grandstanding Guangzhou Shanghai, So that if something does go to a whole new Ohio, some grabbing the salary.
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Gospels, Suzanne comedies, how about salaries with cingal.
Penguin homes without shutting down something on TD Moundsville, Brooklyn, Johan CTO, Jerry I should say Hal I want make sure it'd be wrenches, you teach and drilling out then don't you don't need.
Secondly in terms of ecosystem, we placed significant emphasizes the diversity of merchants and product as well as merchants operating efficiency on our platform.
Since the start of the year, we have simplified the joining procedures from merchants and increased hours supporting matches for them such as lowering their operating costs, providing more operating tools and setting up a clear guidelines food merchants a central as a result, we haven't witnessed the rapid growth in the number of new markets.
Joining on the platform and that's the basic Iraqi and increase in merchant space in Q2.
Why do you need to have a pool of merchants and expanding our product offerings.
We're better able to meet the diverse shopping demand stuff on that you said this will serve as a key driver for our future revenue and profit growth.
No. If you found out or was that going in the leader T shirt shop, now I'd say generically Shanghai trading does that seem to come through on the highway Zalviso and so you're going to also to fool no trickle in notebooks and gaucher Ipsen alleged issues, though once you shut down some of those kind of inquiries.
Certainly we've been taking efforts to enhance our supply chain capabilities are direct reflection reflection is that they're able to continue to provide high quality services to our users while promoting the strategy for price comparison competitiveness. This is also demonstrated by all of us for the market share gain.
In our core categories at the same time, our supply chain capabilities also help us to deliver consistent growth in our fulfillment gross margin.
Not all of them and treat him a tug of war not woman senior and saw the strategy.
And to John's they join out of the P. P. I sure politically with all G&A Libra sends you can oh.
So I just want to add that that's the way you previously shared so far this year our focus the kpis.
Well, we focus on our G M D profitability and cash flow.
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No Sandy Chi Tung tallies, all things out in a little town home Guangdong, Hong you are finding us.
Since that telco up with trading scene sanction a woman comes out so the trend yeah, well does get home without a T shirt that homeaway attending excuse anymore in that country.
It seems you know on the door and yet with Berkshire It wasn't tender thingyan shuttle.
And your last question regarding the outlook on the second half of the year as the Sandy I shouldn't earlier, despite the uncertainties from the macroeconomic and industrial environment. Our business has continued to demonstrate healthy improvement.
We remain committed to our long term strategy and our confidence that our corn business growth. We have maintained robust momentum. Thank you.
Thank you Ronald next question please.
The next question comes from Thomas Chong with Jefferies. Please go ahead.
But somehow she says that in each of them in Sean I'll guess I'll walk you in what they've been issued pardon me woman C. P. That's on here that I.
Let me see if I understand you saw woman rely to a C. P. The dnb.
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And I know you've gotten high school, they've got challenges a little while ago, So I'm going to shove them into more kind momentum may close talking about you've got Jason Big update cause you some.
Finished management.
Taking my questions. My first question is about our three P strategies as well as the <unk> contribution in future.
And my second question is about our kind of do we expansion strategy can management share the latest update.
And we are seeing already are possible in the numbers mentioned thank you.
Yeah.
Okay.
[noise] okay.
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I suppose I wish that Oh.
Also a question on the user shall I recruitment. So there are several my measures. So first of all who will expand our efforts in attracting merchants and also like lower the barriers and making it more ashwin lines to won't come on our platform and streamline.
The processes and also a breakdown a fixed costs or the merchants, that's what emotions to operate on our platform.
Is that because I don't know, we'll know whether it's I don't think I have good Gucci the content Zynga no Jacob I'll call it three nuclear power.
Yeah bulk pool pump, Sean Doctor agenda, because I think that's the draw.
Out of Hydro mean until then tie the doctor cool down thing to that.
In Europe .
Our country it sounds sounds bad things he oversaw the skin trial I hope that all sounds bad that they don't seem to have the tendency there turned down the looting.
And secondly on the merchants operating site, we will foster a fair environment for everyone to compete on that platform. If competition is not only teaching although lumpy and Oh My therapy My kids, but also among other populations. So we will make very clear a growth path for the merchant.
To grow their business out of our platform, which is in line with all of our value proposition and to adequate publicity center promotions among other merchants.
They're going to find their way to see that Youll Quachaun got are going to Oh. She go gone one kind of food nutrition got hauling sounds that sounds adhesion to vote in the lead you got whole thing salary he can leap.
And also will provide sufficient tools to support our production.
Platform, including the data supports and wholesale.
And that's how do they sit itself I went there scales to operator onto this platform to improve their operating efficiency.
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Is that all the friendly's and she told that people talk or E. T. There. So.
Yeah as Judy shipments for this quarter I just mentioned earlier.
Earlier that Tom and the overall number off from offense.
In Q2 grew up by three digits, and especially we see an increasing number of merchants.
The category of supermarket session homes et cetera.
There are three P revenue also grow at double.
Double digits rate, which are all higher than the one P revenue.
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Nah move down a high school sports you can draw the 10 Baltimore.
So for the outlook of our athletes it doesn't there's no other no one plus one two at rental rates that are those lumpy onto therapy, we're developing to be aligned with our consumer centric value proposition.
He already asked a question speed quality and value and with the ultimate goal.
To increase their market share.
Dot com.
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Some downtime she didn't genetic warm and sang P. J Jones same pathway that I always go back and drill Louis jammed H M D.
So we will drove her basket to strike a balance between cost efficiency and the consumer experience. So that's a lot to a lot of our users to choose between our lumpy offering and just that's a sleepy offerings based on the product price service. It doesn't seem to have a basket to cater to that.
I still find the needs of different users. So our long term objective Walmart three P is to have as a proportion of G. M. D accounts for about 60% off the old platform.
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We feel great about ship hanging in the Yorkshire.
Yeah.
And also I would like to share more about the cat on the category side as we see the economy recovery, it's still and the ongoing situations in fact take the mismatches I'll stop high temporary insurance and yet not that different time scheduling software cell phones et cetera. However, it has been.
We are confident in the development momentum and the improvement of the health of our business.
Yeah.
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No my toxicology based on talking to assist in that.
And as mentioned earlier all four are we expecting for them supermarket category to show an improving trend, it's better growth rate in the second half of the year compared with the first half.
With all of our dedicated focus on enhancing the operational quality of this category such as optimizing product category mix, improving sales channel structures and enhancing operational capabilities.
We are confident to see positive profitability trend just the supermarket category.
Long term speaking supermarket category remains one of the key drivers and stuff on that growth.
She Thompson and Stefan it sounds tissue T cell phone from some high hopes with junk back of horses, you'll call them enough to make that call kind of announcing saw a tempered teach anyone who's interested TD essential hygiene that don't show up it's also adopting a creature she council.
Fashion category, we remain committed to expanding brands and merchants reach and product offerings optimizing to kind of restructure and traffic allocation by focusing on these key areas. We aim to maintain an improving growth trajectory after fashion category.
Thank you, let's take the next question please.
The next question comes from Alicia Yap with Citigroup.
Please go ahead.
Hello, one shot, but any chance you could additional what she wants.
Well I shall just shook wanting to know who come on messenger or any chance you share woman rooftops, Yeah, I didn't don't take somebody new White box switch off why don't you say, Jason She shops Guy told fund mandates. It's how do I go by any chance do you think that she has for me and I thought about a two day you said you need cheap knockoffs.
And do you know how she out okay.
Sure.
Yeah, you said sugar that was food that you can tell it how long of a woman.
So let's see.
With the first half and there's 618 promotion E banks behind us and can management share with us how do you rate your own execution performance, so far year to date, which areas of your beliefs on JD has met your initial expectation.
Which areas are J D still need to improve or need to modify it and what's your strategy to achieve the performance that you want thank you.
I think that we shot tissue cause I, you talked about tissue I mentioned.
Somebody into our Credo and that's got some we'll talk about in terms of job alcohol Kate how she would have come down so you've got how should sit unassisted unsymmetrical T. My mom tissue with me a conductor harmony in Seattle.
Chocolate permit.
I mean, you see that sort of one of our team.
Yeah, So Peter you're laughing.
Okay, I've got cheap she doesn't sell for a shot and you see that.
Thanks, Sheila I think Oh, she's sent out to the south right because that comes with hungry. He teaches you pay it to Permian and tell me, where you want to use all their future I should be talking about that.
No.
I'll take them in casualty side. It is somewhat I mean, how should see all comes on the reorder trickled punish it into T cells to do that she didn't know who their future.
Okay. So he can.
So I just I mentioned that actually in this quarter, we have taken measures to promote our everyday low price and a two on a trip to foster all of our open platform strategies all have seen some positive progress.
So on the user side, we've been steadily implemented a series of actions to further optimize off price strategies any Huskies experience, which has now received by consumers.
Seeding our expectations, whereas it was a success for them the Grand promotion. It's also like intellectually proof that users still have a very strong mentality towards promotions, which also means that it takes a relatively long period of time for users to change their mindset and for our commitment.
Promoting the everyday low price daily sales model.
Time and dedication.
Okay.
Hi, Sean.
Sometimes there's some tradeoffs I don't tell me in appreciate some questions I had a family shall she teaches you laid out some of the announcements I teach you how quickly she ought to put that she calgon <unk>, San who can reach it jumps out of questions I'm going to tell us how it seems that now my T cell I wouldn't make that you've had to increase the dividend.
Since I somehow teaching from yes, hi, Sheila.
And on the merchants acquisition part. It also takes time for the marketplace ecosystem to flourish and although we have made good progress in attracting merchants, there's still significant room for improvement in platform operations and traffic allocation mechanism that central.
Okay. Thank you Alicia and let's take the next question. Please.
The next question comes from Eddie Leung with Morgan Stanley . Please go ahead.
Sandy, yes sure Gotcha.
What's your bandwidth I wouldn't you shook when you transition year with 10.
<unk>.
Financial a woman kind of Wei Ping King.
So that's really cool cards at all which I'm glad that Jay Cushing you would've gently to believe was just found Starbucks social change I just took.
<unk> also got the actual realized shut off spot.
As you know Shonda, Jake Chunky I wish that they ship Oh, what did you find yourself. Thank you management for taking my question. My question is on the new business we have.
If you look at the second quarter.
Narrow loss after new business actually has been quite significant so just want to ask what's our focus off the new business in the next 12 to 18 months. Thank you.
I see I think the link no woman does system just didn't tell me I don't care, who they say you know were talking to each of those should be countries out there now what mix you don't do it yourself that no need at TD.
So a person has been showing a whole house you shouldn't even show what I'm about to say, Tom Hello Xiaomi.
Now that doesn't mean, we're not fishing and show you all quite consistent with your best how should I here shortly I would say I'm pretty soon so, yes, hi, Ctrip Alka cardio T G I F.
To show you what I'll call a consumer centric town. He says you know what that's a cool come Jordan I should quit on time in fact Indian Tennessee at home.
In tissue, that's a figure we.
Chantal household you shouldn't sit uncontrolled exercise, Pennsylvania.
Oh <expletive> peso what meant to tell you we're talking Canadians stay at home could each have shown goodbye C&I jita speak a function no.
Tissue. So you see a chicago shore to shift to the more ships that are yet to see shell you got Hershey Hershey. That's good to see that up we don't have turnkey that Tobey I should cocooned out yet between government opinion, leaving who they're trying to lead tissue that you Pat.
I think you added them our primary focus remains on enhancing our supply chain capabilities, establishing an open ecosystem and developing onto them onto retail and other long term capabilities and demand retail includes I've ever since we updated our shop now service, which is a key component of our new.
Retail strategy, our innovative video business integrates our pinching community group buying business.
Distributed warehousing and southern fresh.
Its main purpose is to create synergies within our supply chain operations.
Currently we are in the experimental phase testing different models to enhance synergies in supply chain and to generate a higher revenue to meet customer demand and improve their shopping experience.
Given one the business model and proof the viable in such a market, we still will take a step by step approach and to test H a city by city. So the overall environment is manageable and won't affect some of our expectations for the full year of profitability.
Yeah, I think that they should be actually generally highest in their genes that have a higher revenue also at scale, it's not our top priority for these new businesses at this stage.
Thank you sandy for that thank you.
Okay.
Uh huh.
Take the last question please.
Okay.
And that question comes from Kenneth Fong with Credit Suisse. Please go ahead.
Hi, She said, Jason what did she went away we don't go into your D. C. When you took a day, so hoping ty well kind of what I tried to get all your intuition would cause a teach out gunships in car T J.
Well do you kind of handle.
Yeah true coffee touch rupee, John you got you okay.
It wasn't you didn't tell me. She was there was a woman you don't sound like you can go to them or to shop Kingdom.
She talking to how you should how you quantity can toner, Ohio, touche, telling them what it shows you what sort of I don't know Tioga Winches will shoot well you kind of do well when she said she was on coal.
I will miss it seems that you've got you're doing some of the township Cleveland Chinese yards, a woman change I told it could it.
Could you changing sheets, Oh my God.
Or do you define your shelf.
Oh, Thank you management for taking my questions.
Well My first question is that we noticed that the ecommerce platforms are increasingly use low price strategy as a key focus and T. D shaped as a user are more sequence to compare prices among different platforms and pet forms are also becoming more commoditized and similar or how would you differentiate going forward and how should we think of that.
Out of development for the overall, China E Commerce industry going forward and my second question is we noticed that we are we entering the community group Treasury's can you share with us the strategy and how it was different from Ching sheath that we invest.
Invested before thank you.
Hi, guys, just a penny 70 of them.
When she does her she is cause I didn't anticipate doing something I think I told you have but he's out events a lot of content on a topic that I saw a woman. She says she don't go without a seatbelt that one and accordingly on our people. So that's how you thought that something you'll ship now with me yesterday that was of course.
So you don't put together, we're trying to sell them.
You saw me on chip out Dolce, Yeah, Hillman Chan frequently pushing them in court decision to tighten up.
Sure. They can cool mediocrity calls go coach yeah, but then that shouldn't cause I you could assume that that tissue was not turned out to show off the table. She said helps with that I will show you told him. He got niche hasn't been showcasing two shifts they talk to each other.
So you see a summation of all of them back.
Come back Saudi until they are women.
Now she shines when single that's up to them and see how he does completely go okay that comex itself, perhaps integrity. Yeah. You know what meant institute that clearly didn't know Lee do you want me to go clean when he wishes.
So youll just for shifting titles with Cingal.
Thank you Kenny.
I Didnt dotcom, we have constantly focused on strengthening our differentiated components business. So our core advantages liking our supply chain base to business model by continuously developing our capabilities on supply chain on the user experience, we can guarantee high quality low price and.
A reliable product supply.
And also we can effectively matching products with our users, creating a superior shining spirits and further building user trust in TD Dot com and it will also want to reiterate that for not only e-commerce, but all the retailers from day, one I felt like systems in our core competitiveness in states where the accident.
And that business, it's been low prices. So that's why we have always anchor our business philosophy.
Efficiency and customer service.
So in fact actually we very welcome and we're looking forward to to welcome all of our users to compare prices across platforms before they make them placed the order decisions as we have every confidence in our supply chain capabilities and the low price and high quality services, we can provide them based on all of them.
Distinct one P a services, which benefits from our scale advantages.
Can you just don't want to put on some poorly don't talk a whole or something that you don't put teacher. He told me and my simple answer she sought counsel Jorge.
<expletive> tissue fall asleep into downtown women's had quite some units yeah I'm trying to ask how you could assume that nothing right in front of me on what immediately.
You want me to see that.
So totally if you come to a shutdown lasting for Shanghai, TCE Quincy courtyard, San Francisco to nine months. So we don't put up with Wuxi chalk.
So as I introduce them earlier that.
We continue to focus on strengthen users' mind share towards our superior selection speed quality and value offering. So now we are we want to elaborate you already established advantages in speed and quality while at the same time, we continuously working on expanding our platform ecosystem by attracting more.
Our merchants and in housing.
Diversity and richness this will enable us to cater to more verified demands of our users to work on more honest election and battled hard.
She said that of course, I'm, telling me until I can talk into a laptop junk that he shows up but yeah, not Boe core D laptop Sheehan goes up sometimes shows attitude or.
Sampson clammy.
The IP shown theme here would have been more telling you both of them.
She comes to utilize all the cool pool, she and he comes to Scream Duffel, Belgium chip out there don't seem to think it would be.
That would be something that I think some hygiene now since I found out hunting stuck our food outlets in Belgium.
So and at the same time, we have made significant efforts to ensure and improve the user experience, including first maintaining efficient management for merchants entry and product management and secondly can you to continuously enhancing the scale effects off I'm, a lumpy business to drive down procurement costs.
Pass on the benefits to use it in the meantime, raising the standards of a one P services to ensure the passenger experience and lofty emphasizing on our core criteria off product price and service in our platform operations.
Yeah.
No. Good initial Chicago here with them. Just so you should think about that going to punish you talked for a while.
And then thinking that you would turn to each of them is that Chilean youll touch on what you have seen a few hundreds of T cells I presume you're talking I think she tissue two times. So I think I can see that in Colombia more ships could be efficiency instantly Nomura.
Thanks, Johan tensions yeah, I see sometimes Tong T shows to the union, you'll meet him with him he or she says she didn't tissue cheap Puma <expletive> I came from Russia of course control jumps to that total should something cleanup. That's we got two P. M. P and we've mentioned previously our community group.
Buying business and his team have maintained its presence throughout.
All of our business optimization multiyear timken has shifted its focus to Beijing and the surrounding regions. The teammates now exploring the local shortchange supply chain model, especially on fresh products and refining its product offerings enhancing user experience optimizing business processes and improving.
It's you eat currently PV is conducting small scale pilots to test this model and the other investment it's manageable.
Hum.
Thank you.
Thank you Kenny.
We are now approaching the end of the conference call I will now turn the call over to J D Dotcoms, Sean Zhang for closing remarks.
Thank you for joining us on our call today and for your questions. If you have further questions. Please contact me and our team. We appreciate your interest in TD Dot Com and look forward to talking to you again next quarter. Thank you.
Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day good evening.
Okay.
[music].