Q4 2023 Dada Nexus Ltd Earnings Call
Earnings Conference call.
At this time, all participants are in listen only mode.
After the managements prepared remarks, there will be a question and answer session.
As a reminder, today's conference call is being recorded.
I would now like to turn the meeting over to your host for today's call Ms. Caroline Dong head of Investor Relations for data. Please.
Please proceed.
Thank you operator, Hello, everyone and thank you for joining our fourth quarter and the physical year 2023 earnings conference call on the call today from data, we have Mr being flu interim President and let me say how aging mouse CFO.
Mr. Lu will talk about our operations and company highlights then Miss the mouth will discuss the financials.
They will both be available to answer your questions during the Q&A session. Please.
Please counseling know that Mr. Fool will give us his remarks and also cautions in Chinese and the contracted she is translation will be provided.
In case of any of these quaintance see between the original remarks ill translate in version eight months in the original remarks should prevail.
Before we begin I'd like to remind you that this conference call contains forward looking statements.
Please refer to our latest the safe Harbor statement in the earnings press release on our IR website, which applies to this call.
Also during this call we will discuss certain non-GAAP financial measures.
I'll also refer to our earnings press a list, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures.
Finally, please note that our lives otherwise stated all figures mentioned during this conference call are in RMB.
It is now my pleasure to introduce our interim president Mr. Zou Mr. Xu. Please go ahead.
Hello.
Yes, hi, Joel will be adequate.
Thank you Caroline and thank you all for joining us.
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Before we get into the highlights from the quarter.
I would like to address the recent independent review results released by the company on March 5th 2024.
Back in January we disclosed that.
During a routine and kind of who did the company identified potential overstatement in revenues and costs.
Related to online advertising and marketing services.
The first three quarters of 2023.
The company took this matter seriously and the audit committee of the board immediately initiated an independent review with the assistance of.
The third party independent professional advisers.
<unk>, a leading international law firm and forensic accounting experts from an international consulting firm, that's just not the company's auditor.
Upon the substantial substantial completion of the review, we announced their findings and remedial measures on March the fish.
Including correction of certain information and the relevance of past financial statements.
Necessary and appropriate.
And you may have noticed.
Correct at the line items in our financial statements for the first three quarters of 2023 are presented in our earnings release and its important to note that.
Neither net profit or loss no cash balance was impacted by the correction in the corresponding periods.
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As part of our dedication to reinforcing corporate governance.
We will enhance the companys internal policies systems and controls the recordkeeping and implement rigorous internal audits.
Enhanced monitoring and oversight mechanisms going forward.
To strengthen transparency accountability and integrity at all levels of the company.
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Now, let's go through our financial and business performance.
In the fourth quarter of 2023.
Faced with challenges.
The group made a steady progress in improving both top line and operating efficiency.
Our total net revenues increased by 3% and adjusted net margin improved by one percentage point year over year.
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Before I get into the operational highlights from our two platforms. The brief update on our cooperation with JD com.
With respect to J D D. J, we continue to reach more J D.
And optimize our user experience.
And the fourth quarter, the number of monthly average Amsterdam transacting users increased by 50% year on year.
The breakdown by an entry point.
Standalone Star Sudan tab, so it's more than double year on year, driven by increased click through rate on the daily homepage.
Meanwhile.
Order conversion rate, but then the how should not have increased by more than one percentage point.
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<unk> generated by users, who actively filter out non Josh without product among search results increased by 30% year on year in the fourth quarter, demonstrating growing on demand and mindshare mom J D users.
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Meanwhile, at on our cooperation with steady Dot com further strengthened.
In the fourth quarter I don't I'll continue to provide dedicated support to denny's on demand delivery needs.
Orders fulfilled nearly doubling year on year.
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Now, let's go through the detailed fourth quarter operational highlights.
J D D J.
In local on demand retail platform in China.
In the fourth quarter, we continued to deepen cooperation with large chains and empower more smes.
As of the end of 2023.
J D D. J had on boarded over 500, thousands of retail stores more than doubling from the end of 2022.
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And the supermarket category, we cooperated closely with over 90 out of the top 100 supermarket chain as long as the regional champions to provide our users with industry, leading high quality supply.
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At the same time, we deepen the cooperation with major convenience store chains.
Such as JD convenience store.
Offline store formats empowered by J D Dot com <unk>.
Yeah, the largest convenience store operator in China in terms of store comp and loosen the fifth largest by the same metric.
So totally in lead generation by convenience stores in the fourth quarter increased by more than four times year on year.
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Moving on to consumer electronics.
In the smartphone category.
The GMB of Opel and Samsung mobile phones more than doubled year on year in Q4.
In the computer and accessories a category.
It is all products maintained a rapid GMB growth of more than 50% year on year and we also made significant progress in essential accessories such as charges.
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Turning to the home appliance and home furnishing category.
During the quarter, we established new partnerships with major appliance brands, such as Panasonic and a roll down.
All that one of China's top kitchen appliance brand.
While we work more closely with leading smart locks manufacturers such as cadence Paddy you should.
Collectively we newly on boarded over 10000 home appliance and home furnishing stores onto our platform.
As a result in the fourth quarter.
<unk> home appliance margin increased by more than 50% year on year, well, Jim me Hum, finishing margins nearly doubled year on year.
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In the liquor category Dnb in the fourth quarter increased by more than three times year on year, driven by regional store expansion.
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In the apparel category <unk> surged more than three 4% driven by our continued expansion into sports and outdoor segments and differentiation of product offerings.
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Technological empowerment.
And an important focus and our partnerships with retailers.
Hi ball, our Omnichannel Otero operating system has been deployed in more than 13000 stores as of year end 2023.
An increase of over 40% from the end of 2022.
And finally 73 high both customer retention rate remained at around 90%.
As a significantly enlarged customer base.
This underscores the recognition among margins of high both ability to enhance our operational efficiency.
We continue to add more features to high ball and improve its existing functionality.
Much and attract the pain points and improve operations.
For example, in the fourth quarter <unk> added a new feature to intelligently identify fraudulent orders and provides a real time monitoring and a lot.
That's enhancing merchant risk control capabilities and operational security.
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Let's move on to I don't know, leading local on demand delivery platform in China.
As of the end of 2023.
Our interested he delivery and last mile businesses.
How about 2500 and over 2600 cities and countries respectively.
And then shifting into more lower tier cities.
In 2023, we had more than one 2 million annual active riders.
Got on our platform and.
An increase of more than 20% year on year.
Pending flexible employment opportunities for a wide range of workloads.
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In the fourth quarter, Hey business delivered high quality growth with orders fulfilled increasing by more than 20% year on year average.
Average gross profit colder continuously improving year on year.
Fulfillment rate at above 95%.
The quality and cost effectiveness of our fulfillment services.
The main well recognized by much.
Notably all of the top 50 revenue contributor among our clients in 2022 continued to rely on our services.
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In the beverage category.
<unk> increased by more than 60% year on year in the fourth quarter.
In October we received the best strategic partner Award.
Look looking coffee the largest coffee chain in China I still come.
In addition, we also received a recognition chai tea.
A popular new style P chain in China, having fulfilled a rapidly growing volume of orders with high quality service since the establishment of a strategic partnership in early 2023.
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Moving on to our SME and <unk> business.
The number of SME and efficiency orders fulfilled in the fourth quarter increased by more than 20%.
Yeah from the high base in the prior year period.
Driven by pricing optimization and expansion into new verticals and increase the penetration into lower tier cities.
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This concludes the overview of our business performance.
To wrap up it was a robust close to the year and heading into 2024, we will continue to place healthy growth at the heart of our overall strategy for creating shareholder value.
I will now pass the call over to Henry to go through our financials for the fourth quarter and fiscal year 2023. Thank you.
Thank you Mr <unk>.
I'm pleased to be on my first earnings call as CFO of Tata Group.
To discuss our financial performance with our valued analyst and investors.
Just a few housekeeping items before we go over the numbers.
We believe year over year comparisons are the most useful way to evaluate our performance.
Therefore, all percentage changes I'm going to give will be on year over year basis.
And all figures are in RMB, unless otherwise noted.
In addition figures for full year 2023 have reflected the traction of our financial statements.
Details of which are laid out an annex to our earning.
These risks.
Total net revenues in the fourth quarter increased by 3% to $2 75 period.
Yeah.
Net revenues from JD, DJ reached 155 billion and in due to the decrease in the online advertising and marketing services revenue.
Net revenues from that allow increased by 36% to $1 2 billion.
Mainly driven by the increases in order volume of interested or delivery services.
<unk> merchants.
Moving over to a cost exercise.
Operations and support costs were $1 9 billion.
The increase was primarily due to an increase in writer costs as a result of increase in order volume for interested in delivery services provided to various chambers.
Selling and marketing expenses decreased to one period.
Primarily due to a decrease in promotional activities conducted on J D D J platform and a decrease in advertising and marketing expenses.
General and administrative expenses.
Secret to 89 million.
As a result of decreased amortization of intangibles related with the acquisition of J D. D. J in 2016, and a reduced share based compensation expenses.
Research and development expenses decreased to $91 million, mainly due to lower R&D personnel costs.
Yeah.
Impairment loss of goodwill was $958 million for the fourth quarter of 2023.
non-GAAP net loss was 159 million improvement compared with a loss of $179 million in the fourth quarter of 2022.
Okay.
non-GAAP net loss margin was five 8% improving by one percentage point year over year.
Okay.
As of December 31, 590, <unk> III, we had $4 billion in cash cash equivalents restricted cash and short term investments.
I will now quickly run through a few key full year 2023 financial results further details can be found in our earnings release.
Total net revenues in 2023 increased by 12% to 10 five period.
With revenue from JD DJ growing by 5% to $6 5 billion in revenue from that are now growing by 27% to four.
Operations and support costs were $6 five period, compared with $5 7 billion in 2019.
Selling and marketing expenses of $4 5 billion compared with $4 7 billion last year.
General and administrative expenses were $253 million compared with $409 million in 2022.
Research and development development expenses were $460 million compared with $631 million declined 22.
Okay.
Our non-GAAP net loss.
Was $342 million compared with $1 3 billion entitled to.
non-GAAP net loss margin was three 3%.
Improving by 11 percentage points year over year.
In addition, we have announced that the board of directors have authorized a share repurchase program of up to USD $40 million of American depositary shares funded by our existing cash balance for two year period through March 26.
Our decision to repurchase shares as part of our broader strategy to create long term value for our shareholders.
We will stay committed to prioritizing shareholder interest and enhancing shareholder returns.
This concludes our prepared remarks, operator, we're now ready to begin the Q&A session. Thank you.
Thank you.
To ask a question. Please press star one on your telephone and wait for your name to be announced.
If you wish to cancel your request please press star two.
If you're on a speakerphone, please pick up the handset task a question.
Your first question comes from Li Zhang with Bank of America. Please go ahead.
Oh, Hi, Glen its sounds like so hard to say it took all of that to you what are the ones in our vehicle classes Allen Dong Zhong Guangdong, what my son, he yelled in.
So don't see any Austin Young a go go go go go call champion makes it somewhat column unquote on some key one that either you could attempt that being so yeah. It goes through some things outside of Guangxi 10 Bucks All Army Austin, Yeah. In there you said that the cool yeah that sounds Oh geez.
A woman dogs singled out a yellow dog could go yeah, how easier to go to laugh at me and I'll get back with a six month run towards he came out craftsman two questions. Here first off can you share more color with us all in terms of the macro on the consumption downgrades the impact to our business.
It seems like a wound or we all your overall turnkey 10, tasteful outlook, including all the subsidy plan, all well J D D. J B's night. Thank you.
I was sharing the Olympia will jump with IGT Eagle Lindsay.
Thank you.
<unk> I will answer your first one.
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Shelby issues, how much of a shortfall.
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Shelby.
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In 2023.
That's their call.
As the economy and society normalized.
Consumption market gradually recover.
Nonetheless, there was still room for consumer spending power and confidence to improve.
Heading into 2020 for let's say economy poised to for the rebound and improve as long as the introduction of a series of macro stimulus and coke consumption policies and recovery and expansion of consumption.
Further strengthened.
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Last year.
Consumption, such as Patriot tourism and entertainment boom.
Too many times.
Offline consumption scenarios.
As well as the unleashing of pent up demand.
Which took off some steam from the recovery of physical goods consumption.
Okay.
And sometimes data for the first two months of the year indicates continued its strength and solid consumption such as catering and tourism.
And a stable recovery in physical goods consumption.
Looking ahead.
A more balanced wallet share of services.
But the physical goods this year.
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The on demand retail sector.
Still in the early days of development.
Given the edge of on demand retail embellish convenience and product selection, we remain confident that its penetration among retail sales and further kind of in the long run.
Thank you Lee and I will take your second question.
So regarding the overall strategy I think 24.
With respect to J D. J I think definitely we will continue to enrich the supply to meet the rising consumer demand for the online demand shopping.
Enhancing our user experience and mindshare.
Meanwhile, I think we will focus on the health of.
JD JV business and improve the operating efficiency in.
In terms of the promotional activities and consumer incentives I think we will continue continuously invest in a targeted manner to drive the growth, while ensuring ensuring the health of the business by evaluating the ROI.
Across different channels.
Graphics and categories to optimize our subsidy efficiency and also.
With respect to that and now I think we all know that <unk> has is on adventurous nationwide or write a network. So.
I don't know we continuously focus on its core business.
With sustained efforts to enhance its services set of technologies.
Going forward I think that we will work more closely with existing customers while proactively.
Acquiring new clients to write on the boom of demand deliveries too.
This growth along with the efficiency gains.
I hope that answers your question.
Okay.
Yes.
Okay.
Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.
Good morning International wanted T want, which mainland Angolan T cell count equal infusion opinion, but I don't know what do you mean like we can't I think down promotion wasn't constitution should put me on but I can't go into you should no quaint element doing E. N J D. D. G. I know you were talking about.
No.
Thanks management for taking my question I have two questions first before that are now how do you see the key odor and the revenue momentum. This year and my second question is about J D. D. G. Could you. Please provide any kind of by J D. D. J outlook in 2020. Thank you.
Oh, no we're sharing with us at Eagle with cheap.
I'll take the first question.
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In the fourth quarter of 2023.
Okay business and deliver high quality growth.
The number of orders fulfilled increasing by more than 20% year on year as.
As well as rapid revenue growth year on year.
So housing momentum primarily resulted from a robust growth of <unk>.
Average change.
As well as our deepening cooperation with them.
We're pleased to see that these trends remain ongoing and we expect that to.
In 2024.
Okay.
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Cynthia truth or the formerly potential hot you shifted your coke with wise.
<unk> Oh, that's probably someone down there it depends on you should pay for on Chita Sushi and those are in the world.
So you have a sense.
We think these trends are likely to sustain thanks to not announce nationwide Triton excellent.
Stable and efficient fulfillment.
<unk> two peso Terry talk brands.
Need for customized services as.
That's all as to how our competitive edge and cost efficiency.
But confidence and attracting more merchant page and all of electricals and deepening partnerships with our existing customers.
In the long run we expect to further gain market share and that third party on demand delivery industry and maintain above industry growth.
Okay I'll take the second question.
As I mentioned earlier I think regarding J D D J.
So trying to trade it for we will be laser focused on the high quality growth of the business.
Mrs.
And having to the brokerage opportunities.
On demand and retail.
Together with the JD dot com to.
To further improve the shopping experience.
For the customers and to unleash more synergies with JD com and in the long run we are very confident in delivering sustainable healthy growth.
Given our commitment to the implementation of.
Our on demand retail strategy, along with our efforts to.
Enriched our product offerings and to enhance the user experience.
Yeah.
Thank you.
Thank you. Your next question comes from Michelle Lang with UBS. Please go ahead.
Thanks management for taking my question was hey, I'm going to Uh Huh. That's what's your plan in terms of something happening. It's no doubt guy yeah with no drawn debt. So if you go on the per share since you're shying away from one cell therapy car T shirt, Jean Tvnz's salary Shandong real hooking huh.
Could management share your strategic focus on J D. D. J developments I'll be more focusing on years of girls and frequency improvement or are they continue to do more cost efficiency improvement and improve unit economics being 24 could you give us more color around balancing the top line growth and profitability.
Thanks.
Thank you for your question.
Yes, we have discussed this a lot I think wahid.
We've always been focused on high quality user growth and high quality improvement in repeat purchase rate and a shopping frequency.
With users at the heart of our strategy.
We will continuously optimize our merchandise offering.
Interface design and business operations.
Also we will continue to <unk> synergies with JD com to efficiently serve consumers diversified argument shopping needs I think in doing so.
We aim to improve the overall user experience.
Yes.
User mindshare.
I think for this year J D. J I will focus on the health of it.
This business grow and adapt our more ROI driven approach to achieve high quality growth and operating efficiency improvement.
Our overall goal is to achieve high quality healthy and a sustainable business growth along with a steady improvement in profitability.
I mean in the long run we are very confident in delivering a sustainable high quality growth.
Yes.
Okay.
Okay.
Yeah.
Okay.
Thank you there are no further questions at this time I'll now hand back to Ms. Caroline Dong for closing remarks.
Thank you operator in closing on behalf product management team wed like to thank you for your participation in today's call. If you would.
Quiet anecdotal information, please feel free to reach out to us directly.
Joining us today this concludes the call.
Yeah.
That does conclude our conference for today. Thank you for participating you may now disconnect.