JD - Earnings call transcript Q1 2022

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Operator

Hello, and thank you for standing by for JD.com's First Quarter 2022 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded.

If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Mr. Sean Zhang, Director of Investor Relations. ahead. go Please

Sean Zhang

Good our Michelle. good everyone. morning, Thank quarter evening, XXXX to first earnings Welcome you, and conference call.

the Ms. CFO. Joining our on call Mr. are us Lei CEO; and Sandy our Xu, today Xu,

and For today's kick to we'll discuss will call, questions that, from financial After the Sandy opening highlights. off the open will with they remarks, call analysts.

in release to you, forward-looking statements, Before our include our safe which we to will latest continue, applies press today's let call this the of harbor IR this press call, to certain the discuss website, release, Please statement me we'll measures. measures on please earnings refer non-GAAP measures. also earnings remind call. Also GAAP our reconciliation during non-GAAP comparable financial a to which and contains refer

mentioned our unless call like to note, otherwise this RMB. now, to figures over CEO. Xu, call all stated, Mr. I in And please Lei turn would in are Finally, the

Lei Xu

joining Xu seen XXXX Hello, many is have chain environment, everyone. in Since quarter challenges we consumer earnings including JD.com's first arise This soft resurgence, among our sentiment, Lei. start XXXX, disruptions, supply COVID call. others. external you the of the Thank and for

capabilities mitigate we business based pandemic delivered resilient navigate help nature. believe to ensure supply chain results, the in once on supplies economy. of leadership. to are solid to we quarter, technology provider, a supply necessities model. strongly to [indiscernible], service the the our high-quality of the impact we to which committed we that us chain and As again thanks first to chain is take thanks In to social foundation action challenges, concrete and JD JD's business its society current positions short-term of supply responsibility and And the are and able daily

and entire recorded year-on-year of overall better consumers saw business projected reflects visibility revenues of also focused our efficiency solid we control also driven business greater total gained the have supply our we profitability partners. more than and a during from this increasing steady operating sector quarter, demonstrates chain. we we that and across trust better XX%. have strategies. business times process This Moreover, in Therefore, It change. growth Our by

goods, transport Logistics, Retail, need, all has for variant, home JD In of quickly Health, frontline transport first Shanghai, COVID Once at our supply Dada, ensure facing of foods JD out the JD and COVID, Omicron example, capacity, have mobilized segments XXXX, epidemic Taking providing once to more. affected essentials ensure donating our and sourced including and Shanghai supply mobilized logistics and a establish that no and always other China. fully transmissible in protection to as of leveraged measures fight merchants to supplies set the an resources, of forces tens medical urgent allocated and to daily of and and walked a delivered terms chain more were time, and coronavirus This spared suppliers. regions, January line special materials for the to supportive broke business care across products in launched necessities we thousands efforts. and baby staple again of group's and

respect deliveries working and in operations especially on our to over their support [indiscernible] to recruited most for like of fully employees, deployed express dedication. frontline, and JD, also X,XXX crucial those to our selfless have devotion We On employees and I'd Shanghai. and behalf gratitude

them by leveraging costs function. works solution. with and series and provide together and lower type JDDJ hands difficulties tackle resume their timely We manner of and for to real to with gradually challenges new the In together the all also in contribute Shanghai enterprise, hope delivery stabilize existent our also to in SMBs JD to Dada addition, these of suffered to resume have economy to operations partners [indiscernible] the online to [indiscernible] has a people's as help help introduced and economy. a epidemic new that merchants a and join manpower businesses and operating of initiatives from JD Supermarket order

million. our as In we of before to such our regions is diversity the shift user to entering investment expand operations as In efficiency annual omnichannel reached terms and user we our creating core we efforts the focused macro Beijing strategy. optimizing steady user improve on digital of growth, sales always channels, quality. recognition in the move looks QX, to increasing continue based as made needle. landscape. in businesses solutions This a and [indiscernible] user of the QX, that to user still users JD and reflects both increasing purchasing harness well With more in have for highs. scale optimize China's XXX meet Certainly, new a or growth experience, and increasingly regions placing as having well improving of experienced the chains record top challenges, mature better been were going the focus supply have improving development our trust also bear ARPU active expansion to that our Internet our as The and saw [indiscernible] scale, importantly, users adjustments And [indiscernible] and accelerating ecosystem synergies JD's stage In frequency merely user are our have begun business. local industrial high proactive where near the we in and value. pace of advantages and we user user more with long-term industry We're In fruit. our on to which expand and adjusting proactively forward our at and JD. users analysis

against proud are We themselves epidemic. chain JD's model that valuable business capabilities and the the proven fight supply in the have

operating sustainable doubled, at and healthy cash Beijing's April starting business users optimize with UE. efficiency example, efficiency drive better we daily of flow In the continue a The profitability. our growth JD with and provided will challenges also new the to future, group and [indiscernible] with current purchase average high-quality opportunities. overall upside operating For has this and end community COVID resurgence seen GMV nearly

Firstly, our COVID appreciation trust This for and during efforts fulfill and significant long-term our us reputation business enabled commitment is resulted to highly society's development. users to partners. our social among in and responsibility stronger and

JD's chain as organizing Secondly, capabilities the have withstood supply well as and of our stronger. pressure and the become coordinating epidemic

generate middle and efficiency, we competencies JD omnichannel external ecosystem uncertainties, increasing four executed pursuit strategies without despite and marketplace also supply long-term profitability [indiscernible] disciplined and to efficiency infrastructure helps more and business platform, and of disruption. up capabilities. Thirdly, higher have as on our persistently such chain investment our In built higher more partners

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

in preparation We to sales merchant improved for further revenue to level Many XXX for them Moreover, systems. external has and this chain percent see upcoming engagement a JDL's that structure. irreplaceable its reexamine Fourth, and have the the are Promotion. floor year-on-year, better high Grand profitability thanks of JDL's This encouraged under progress made QX, revenues total Logistics' and optimizing meters their which the area a revenue higher drive X,XXX economy approximately record operations from also building in epidemic to optimized revenue warehouses JDL of over previous participation operated in of years situation chain have the gross JD complex the quarter, macro total than supply to XX and supply caused logistics value procurement customers, steady and its of integrated growth helped services. companies structure. realized reached it the By with capacity. million management. up end a QX, square in accounted customer logistics of

solid foundation short-term brought clear. this while a and priorities, experienced many is It XXXX in that to strategic supply JDL JD these challenges the the development. opportunity uncertainties. All over [indiscernible] for total have years, flexibility I further first has evident half the on expand long the term. maintaining and one constitute has over of chain Today, dynamics. logic each market to industry-leading companies for at our very share advantages is believe position important unwavering for taken of remain it At company's an the mindset, time, to but core the XX the to challenges is past has business many as adapt long-term a

model highly and continues Our evolve. been core to differentiated, competency our proven has and times the many business of resilience is

that more solid a ever based is on type brand. always is new and of enterprise serves an JD today As economy, the real

my Looking ahead, healthy, strength. achieve we build continue remarks. upon long-term high-quality, all concludes We for our to you determined and and will This remain trust. to Thank your support development. confident

to Now I'd floor to give Sandy. the like

Sandy Xu

Thank you, everyone. in the China across outbreak several for Lei. been Omicron latest several has regions everyone. challenging past in months The Hello,

the base from representing In quarter, focusing have our especially thanks net XXX supplies critical RMB customers the to last high value. users reached increasingly what Lei we So with increased and the echo lifetime against clients efforts our in providing our well solid various on heroic In year. serving face I and been uncertainties, revenues year-on-year for like during of to first has workers, this serving their colleagues, user frontline add would and billion, this time. essential my XX% said growth

continued annual in GMV XX Our per base last average months the active user user XXX.X to of reached total million, a increase. while

other are see metrics. also We user glad in quality improvements to

customers. For new example, for healthy repeat average both order a recorded and per user increase

growth Gala, saw were JD [indiscernible] Not we reflecting deepening to DAU spike see in and did we XX% and trending the been increase year-on-year, nationwide, we Festival effectively also COVID inspired DAU AU our Our a quarterly resurgence live the a up users' notable during while April. brand Spring up during average in has over engagement. promoting to growing in March user only

COVID segments our we to As impact different in diversify, varying saw of revenue QX. continued the also base on

solid Net diversifying business, revenues, product XX% by year-on-year, revenue chain grow remarkable revenues our XP our net which demonstrating faster service XX% consist at proprietary at mainly further year-on-year, supply infrastructure. grew of a underpinned continued resilience, retail base. to our Our

in year-on-year, and marketplace advertising grew of revenues grew our XX% nearly our XX% at year-on-year, at services. still the line revenues ROI with advertising improving marketing While

Retail Year. QX showed other with resonating optimize New who in creation this XX% base struggling gain with more I year-on-year offered in to over traction XX% value are a continued the merchants by more third-party as JDL time revenues continued and more that later. Chinese of services support to This will the chain year-on-year third-party about JD continued external JD uncertainty. grew ecosystem marketplace Logistics during Our and grow discuss supply merchant are to and by services as in its uninterrupted QX. from by customers

performance. resilient quarter. year-on-year. JD XX% The categories. let's in customers Since the Now reached performance grew COVID growing outperforming at and segment amidst developments. revenue Retail's year-on-year growth merchandise our year-on-year the the nonessential XX% General appliance to from QX, to RMB COVID to JD growth to the in of electronics revenues QX, deliver a purchases XX% XXX began the their our appear billion Retail products turn of continued line outbreak, impact latest home shifted latest essential across notably category in top items.

saw demand volume in buyers first-time category in the with QX among most the Our its categories. supermarket QX stronger of Retail outgrowing order and all attracted and first number half of JD

needs. in quickly nationwide warehouse supermarket, Once and JD mobilize Growth critical QX Although upholding chain respond was Retail omnichannel warehouse dispatch service. omnichannel enables in unique We our source our time our as provided in that unexpected philosophy and with [indiscernible] staples our proprietary quickly traditional to together even model demonstrated this by customer BXC supply model and timely for accelerated grocery supply changes customers went us and disrupted delivery customer certain business networks. in to Logistics and window. household and this regions, they our beyond essential products again, worked customer-first JD our to operating semi-fresh, address to our fulfillment of including our heavily chain utilizing rising and capabilities

both XX and due Moving lesser mix line or maintained revenues Its healthy the a X.X% year margin external relation with from margin this profitability. year-on-year expenses mix JDL, Spring fulfilled costs product in XX% JD growth with in improvement. RMB momentum, year-on-year gross an compared to QX customers That shift Gala and margin impact revenue by due Logistics, top different improved the maintained and the Revenues grew a on achieved primarily Retail's marketing continued billion. number record COVID to the X% term. Operating partners driven extent, customers in sponsorship, affected to of and expect categories effort uneven of as COVID-related JD the support essential ARPU to revenue contribution see quickly margin high ensure expenses, business in to the by the and well our and outbreak. of to JDL our to quarter continued to as external was ago, product customers and performance a Festival softer XX%. particularly short once caused a products spared acted during fulfillment, we areas. fulfillment additional again of to no growth said, the

As regions where costs areas. in to due stations operational a and result, incurred different disruptions, lockdown resources additional our affected delivery expenses particularly the across were warehouses under and workforce certain the mobilized asset difficulties some it and restrictions and of

some JDL's logistics to advantages the business required and XX% able continuous was non-GAAP and the certain operating the additional to to absorb total its efficiency services JDL its improved situation. network technology, consolidated the the JDL once and operating of and conversion approvals silver costs end from improvement reporting ago. a extent all found continued March chain has the we awareness market by the thanks supply well received narrowed growth for investment of in efficiency, This segment external from starting Since the unique driven financial than a of And improve year. nationwide to additional of still margin we we in more in customer year this in However, increased, chain regulatory challenging results Dada The linings. has expansion. QX. Dada design and by integrated meaningfully our boding February, future this again addressable of market customer supply loss completed in by of Group

in part loss of and period, Shop million. strategy. app, that of main reported we RMB retail During year-on-year been indispensable the is Now, XXX cities. rate of an expanding Dada on-demand users has brand over now triple-digit omnichannel growth QX and the an together on Dada at this made JD's XXX launched consolidation our available XXX RMB a in service revenues operating million to

to on-demand networks excited supply further with the Dada. fast-growing [indiscernible] are service chain our We expand in

our measures resulted segment, of of and supply year-on-year, fewer X in we Businesses selected a improve further measures took markets Finally, business. of local number These turning billion revenue in chain meaningful capabilities New proactive resources the to Jingxi operating improve in We QX. a where efficiency, focused our reduction model. in operating optimization to but particularly strengthen loss XX% to nearly sequentially the UE growth RMB to moderation in

JD controlling Property into a logistics approximately business business infrastructure. also financing CLP, successfully stake in or a stage. USD XXX China further has Logistics acquired in Our entered a with definitive in nonredeemable Property Series hyper-growth its remained million profitable Holdings, It has agreements enhancing B JDP the quarter.

not can navigating tell model unique based ensured JD's So allowed in quickly far, business that cycles, you supply and strategies chain better to our proactively economic adjust capabilities business also for sustainability. us different our only it

Total bottom by consolidated declined year-on-year. QX XX bps the to line. Moving ratios expense in

billion ordinary As shareholders margin a net attributable result, non-GAAP to X net QX RMB X.X%. was with of income non-GAAP

in or announced short-term at cash cash, cash RMB USD years. grew and per growth investments in for Our QX, contributed dividend the thanks balance restricted this businesses core was reflects also free ordinary X.XX By of RMB healthy XXX trajectory cash which flow end sheet. strong per billion, X.XX the to quarter of by a cash, Earlier UDS past JD's stable and confidence flow months ADS, cash XX.X the few our trailing special equivalents, XX we share our long-term this month, billion. to the

hot consider take the the we to to different and explore term. exciting constantly While back in to holistic appropriate our we give view a shareholders and continue opportunities, long as investment measures

our time. infrastructure. to years magnitude deeper certain, COVID during with for supply Omicron swiftly to supply stronger efforts the confident to many positioned lot our to among first will competencies and and help Looking fulfillment and uniquely partnerships, very adds disruption to chain chain thing one partners duration and our are our this building and any remains overall uncertainties of trusted we ahead, able market are consumer ties communities of be a The is share, present But that dynamic expanded and consumer impact will customers, after and tough and business. model, our behavior, XX business COVID communities the with in the subsides, more adjust variables situation fluid JD the of users. we core respond differentiated the to emerge and When situation

will long-term can these prepared we of and remarks, mid- prospects. growth now This our reinforce to All my to Q&A. the concludes move

Operator

Our Instructions] with [Operator first Goldman question from Keung Ronald Sachs. comes

Ronald Keung

than lot seen My X during question gained and we've of April would a faster on, ago, grew the of that the were COVID much outbreak. when be We've with industry weak. relatively we first compare the quarter some numbers in years for industry share

are how a and know half the see retail to some our differences X doing that result? years the quarter industry, compared as versus business second want second growth we and of the we how targets and I So see with in we ago,

Lei Xu

let This Lei, question. is Xu me answer your

month huge other and this as caused Shanghai affected the have as well We challenge JD.com. China's retail COVID outbreaks industry to regions that also a

the on share difference ago. Let outbreak and now some X with me observations between you the years

no Omicron time, impacted detect. So X.X, spreads proportion value variant of while this Delta, the a rapidly. the difficult of more is certain that highly is and days. track X.XX Also, Its making contagious have only to it's symptoms, RX it people its generation twice and time

were of brought past affected under much control for positive e-commerce there our in some XXXX. impact to time. X the remain that as chain affected than actually virus and are more sector and epidemic years, policies limited impact Internet supply the although only protection from and number there and bigger regions the In consumers effect COVID So unchanged, the of limited the cities is

both But been key certain and our enterprises this accelerated delivery order have are as And cancellation both remains have online the resulted the time businesses offline Fulfillment rate affected. rate around, pace. shipping the lockdown -- are in stations some from much led at heavily inbound better online challenges situation There regions and During offline warehouses outbound year-on-year. have has in warehouses April, but requires that the cancellation to level in May, time. fulfillment of of affected. and merchandising high been is time longer shifted getting period this and some increase an

big Guangzhou for year, Beijing, have first Shenzhen China's all affected. been and the cities, four tier this Shanghai, So the cities,

for for been cities Shenzhen retail the and proportion a time. of Guangzhou contribution contribution higher and Shanghai of period four of sales a time, only the were affected JD affected total longer China. account for a short While of Beijing period And the in city's have sales in than

So of growth lowered brands at this focused majority from the a situation. budgets more support a beginning merchants does year's the business year high They and perspective. supply on profitability. Therefore, the not also economic the environment considering of

terms appliances categories, the dramatically. which categories in category, high market and electronics enjoy of continue home supermarket and So to the for changing health-related market been has the the some growth, apparel of and besides

devices. IT overall electronic the for expanded. X the [indiscernible] for price supply strong years, due this is and JD's this shortage price with In phone rise take supply and the down. we've to So year, going example. their And chain past the or telecommunications, faced due eliminate category, and consumers well. mobile relatively the performed and chip global to been is categories, category has shortage, cycle capabilities the And level the replace the The to the

reported is consumption, And has the have the depressed, for collections. ticket and user and the due inventory situation, especially we category, confidence. epidemic sized summer we seen sales some has see a have epidemic can and here The May. level April, and above-mentioned the high aspects April this size to consumption affected is doing. of The in year-on-year are income In April from as considering to ticket as and spring many dropping skip there the apparel traffic factories consumers' is plan statistics, in items, collection. even result, large the been response two are production overall backlog you affected of the the sluggish for As of

and ensure majority essential sales relationship government been have our expertise first, and and our of pandemic, the innovative improved leverage And capabilities range warehouses and of situation, we getting and COVID this situation the the Grand is impact on chain between XXX more supply of And preparation some supply and chain, will all well the this the infrastructure hope importance very have environment, is our and a a JD And performance more refer participating led them proactively to and And continue accumulated local normal extreme have of professional merchants key positive communications XXX operations with know-how, wide Promotion of tangible government we a brands. under event, been also cannot our is it about, they second, First, and industry to vehicles, active enterprises of and modernized only procurement. have years, can as our we getting clear regions is and collaboration with is points key that the situation. reach logistics the supply the solutions when about year. the little are the know-how talks supply just other their more new of the achieved than for high year. Promotion, for the previous not brands the some getting we logistic Under the recognition that in and those things cash does COVID combination certainty. stability the we capabilities, given the chain facilities, to supply of in chain And on these some been and of subsidies with JD has QX know and pressure people fulfillment this our signal. a now. the as that expertise, warehouses, this or the over this the or Therefore, thirdly, circumstances industry all immediately synergy share also the the excessive with of better. seen to the conducting the of want be JD support the Grand bit our with to current I And tools, capabilities the And to difficult it through finally, a And macro about it situation epidemic. algorithm coupled the boost have very brands. and our provided has of on

far, we recognition so have And performance delivered gained users partners our among and far. so satisfying and some

Operator

comes Our from Chong Jefferies. next with question Thomas

Thomas Chong

My spending. strategies should about In is June is my how the our as previous management investment years management about marketing think the as campaign. Can new we situation, adjust first the KPI? in question right situation comment Would and doing finally, And now? user relating the well business. upcoming long-term particular, how as strategies on revenue And we dynamic our to the should XX contribution question well that we to the logistics our on acquisitions investment about given as omnichannel. expect? Can and differently are comment second compared the we it consumer our regarding sentiment

Lei Xu

just And from few Xu words more the on Lei XXX.

Shanghai, glad back so that, China, the normal level. to operation overall seen in have We coming except a is fulfillment

that right overall, So due situation, to a preparation, the the But on select every in there maintain a are And situations still continue for track. overall, few COVID fulfilled. are Shanghai, operations. the day, to but be there some normal we it's good orders

are everything going think because situation track. uncertainties is and participating in I of this the the brands engagement right outside very on expectations the the [indiscernible]. COVID As you and for Promotion, is thinking they're of active are year's and and and terms KPI, of Grand facing we still merchants to our the target, sales And this the of

number So share. we clear don't have a to very

we on is to experience, However, festival. the continue fulfillment most safeguard and efficiency important the thing our focus shopping user's we improving will

trend And there our certain our also strategies, sustainable users continue on investment. seen the on the priorities, for the And the adjustments sides. but for users that of we time development, those we existing new the certain of and users, some the of after business focus growth a focus development. pressures, we both will we of of on positive series have are And results operations to optimization unable quality on around have will to businesses of efficiency on businesses, and some new growth, adjustments are deliver new and focus so and and period done a

to big situation, of traffic it we pass the satisfy needs format, with those offline user difficulties to chain the the COVID not our JD impact macro so availability situation. And overall to in this the COVID helps volume and strategies continue optimization to adjustments year, of strategy, shops growth make done. even will self-developed the our investment situation enrich of but we of and also higher on JD's rate. this growth. past impact very revenue in affect the our it traffic, [indiscernible] more overall, certainly four our optimize than limited the this business, our of So businesses fast coming product on-demand period in supply and adjustment far. businesses QX. help we'll time, has in as external business partners. X-digit has the omnichannel only and retail not some QX, continued customers. business omnichannel work be our given And the delivered the And a situation, and parts both given were is the omnichannel for composed affected. on in with business, But in it not it self-operated achieved part long-term And our will aspect, And will two the environment And omnichannel growth COVID and some is in collaboration this

Shop have growth with over providing stores supported during various XX,XXX program so the categories, service far, connected COVID covered Dada's our infrastructure. over country X,XXX Now rapid delivery And a offline product and X-hour experienced with The Shop ] it the has the has and delivery Now [ across situation. is counties and by been we

the existing on-demand And offline digital more delivery And of dividend Dada, deliveries and our offline we and transformation more Dada explore networks has this of brands business with the services supporting using accelerated perform JD's and together, to the and are We omnichannel development. retailers. are of we the expansion. currently, together

As experience faster and clear, and to the and with quicker services our to more committed more trends bring is more user certainty JD become consumers.

Sandy Xu

I'll bit little on GMV's is revenue the This omnichannel for Sandy. our contribution business. add and on a

of appliance XFresh includes as So both as retail of terms XX% offline GMV around store level in and business. business. of our sales, they on-demand well revenue our our contribution, home offline at product fresh are business, That our OXO franchise a

Operator

Our question Fong Credit Suisse. from with comes last Kenneth

Kenneth Fong

Congratulations results. of another on set strong

business and X ways How than back, we what well over did more, for or new should up cost Core quarters? and are much Looking with better discipline control. very that expected. GDR and we cost optimization reduction expect in both next further margins the

Sandy Xu

is This Sandy.

me this take Let question.

since So to cost external on and the have cash measures management. environment. We control face of been financial challenging more taking discipline flow we mid-March, expense up in strict focus step

Businesses, New turnaround. trend to a that's For of show yet UE

operating further mentioned, pace and investment just Xu Lei As our focused selected on the improved. efficiency fewer regions. We adjusted

So additional procurement. as a of and result COVID-related despite costs measures, these all expenses, especially

situation we to top impacted will line So COVID by or expect to group to less that manage try the overall, compared line, bottom our level be GMV. we

mentioned, I started measures in So the just control as mid-March.

flow cash overall QX, will that and So based dynamically in manage we macro our we will and profitability on environment. the continue

Operator

remarks. the of turn end the approaching the closing JD.com's Sean Zhang now will now I over conference call are We for to call.

Sean Zhang

questions. for you your on today for call Thank the joining us and

next to quarter. in If Thank you very team. we have to you and me JD.com look appreciate much. your contact and forward any our We again you further questions, please interest talking

Operator

This your the presentation. today's you conference. participation concludes Thank for in

You Good now day. disconnect. may

JD.com (JD) 17 May 222022 Q1 Earnings call transcript