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spk09: Hello, and thank you for standing by for JD.com's fourth quarter and full year 2023 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 Vang, Director of Investor Relations. Please go ahead.
spk12: Thank you. Good day, everyone.
spk02: Welcome to GD.com Q4 and Full Year 2023 Earnings Conference Call. For today's call, CEO of GD.com, Ms. Sandy Xu, will share her opening remarks, and our CFO, Mr. Ian Shen, will discuss the financial results. Then we'll make a call to questions from analysts. Before turning the call over to Sandy, let me quickly cover the safe harbor.
spk12: Please be reminded that during this call, our comments and responses to your questions reflect management's view as of today only, and we'll include forward-looking statements.
spk02: And please refer to our latest Safe Harbor statement in earnings press release on the IR website, which applies to this call.
spk12: We'll 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 in RMD, unless otherwise stated. Now, let me turn the call over to our CEO, Sandy.
spk07: Thanks, Sean. Hello, everyone, and thanks for joining us today to discuss our Q4 and full-year 2023 results. In Q4, we delivered healthy top-line and bottom-line growth and made solid progress on operations. finishing off a productive 2023. In the past year, we stayed focused on constantly improving user experience, lowering costs, and increasing efficiency amidst evolving opportunities and challenges. Guided by our business philosophy, we carried out a set of proactive moves to drive more sustainable growth for the long term mainly in the areas of user experience improvement, low-price offerings, and platform ecosystem strategy. Despite some short-term impact in 2023, our strategic refocus has successfully steered key operating metrics in a positive direction. 2024 will be a year of execution. Our team will take firm and steady steps to execute our existing strategies and push forward our two priorities for the new year, namely user experience improvement and market share expansion. We are encouraged by what we've seen and are confident that we are on the right path. Let me share some details. First, user engagement. In Q4, we saw the number of quarterly active customers accelerate at JD Group level. If looking at JD Retail alone, the growth was at an even faster pace in Q4, particularly in new users. We are excited to see our user momentum keep up in Q1. User behavior also changes better. For example, user shopping frequency on JD continued to rise both in Q4 and the full year. This increase was particularly driven by the growth of our loyal existing users and class members. This means if users stay longer with us, they tend to shop more frequently with us, a validation of our user focus on user experience and strengthening user mindshare. In addition, the size of growth also translated to a robust older volume growth, hitting double-digit young year in Q4, and accelerating for three consecutive quarters. In terms of JD+, we saw another quarter of robust growth of its member base, and GMV contributed by PLUS members grew faster than our total GMV in Q4. The promising progress in user engagement is a result of our stepped-up efforts in improving user experience, low price offerings, and implementing platform ecosystem strategies. Looking at our efforts in improving user experience, in addition to our previously launched popular initiatives, such as free shipping, instant refunds, and one-click for best price guaranteed. We also recently launched new customer services, such as free doorstep pickup for returns, cashback for delayed shipping. As a result, our net promoter score, the NPS, for both our 1T and 3T business have improved substantially in Q4. As we are generating great momentum with our users, it's important to continue to build on these initiatives, which we believe will help to propel growth in 2024. Also, as an important part of our holistic approach to improving our user experience, we will continue to step up efforts in building our price competitiveness and platform ecosystem. For low price offerings, from day one, we've been pushing forward our price competitiveness for branded products and a broader selection of value for many products. During the past year, we have further enhanced our ability to offer great value in branded products and expanded our selection for white label products Our price competitiveness has notably improved according to our customer survey and in-house price comparison. We are glad to see our price NPS increased both sequentially and year-on-year in Q4, a proof that user experience and mindshare for JD's low-price offerings is picking up. We also note other key metrics are trending well. The number of our users from lower-tier markets grew faster in Q4 compared to previous quarters, and growth of order volume and shopping frequency generated by lower-tier market users reached double digits year on year, outpacing that of our total users. We also note growth of low-ticket-sized orders further sped up and far exceeded the growth of our total order volume in 2004. I want to highlight again that our price competitiveness is not supported by subsidies. The bedrock for JD's business model is always the supply chain capabilities, which enable us to generate scale efficiency. and lower product costs, so that we can provide better value to users while maintaining healthy financial performance. Shifting to platform ecosystem strategy. The number of active GP merchants on our platform delivered another stellar growth both in Q4 and on a full year basis, as the team did a great job onboarding and supporting them. Meanwhile, 3P users and 3P order volume both saw accelerated growth year-on-year in Q4 and in the full year of 2023. That said, we are still at an early stage of building our platform ecosystem and we are not prioritizing monetization of our young and rapid growing ecosystem at this stage. Therefore, we are not taken by surprise when we see revenue generated from our 3P marketplace is lagging the growth of our 3P merchant base and orders in Q4, which was also partially driven by one-off factors. Ian will elaborate on this later. We believe this is only temporary. In fact, Q1 quarter to date, we've seen marketplace and marketing revenues bouncing back. to a stronger momentum. As shared before, our platform ecosystem encourages 1P and 3T to develop their complementary ways. Our 1P business also continues to make solid progress thanks to our core capabilities in supply chain. In particular, users responded well to our non-stop services during the Chinese New Year holiday. Our offering was being committed to for 12 consecutive years. Also, enabled by our supply chain strength, our home appliance and electronics category continued to gain market share throughout 2023, despite industry high winds. Moving forward, we will further leverage our supply chain capabilities to build up better service capabilities, penetrate into lower tier and offline markets, and strengthen our cooperation with suppliers, which we believe will lead to a continuous expansion in market share in 2024. Moreover, we saw our supermarket category trend to the right direction as it dedicated itself to optimizing the supply chain and building a better product mix and fulfillment network. We believe there will be more upside for supermarkets in 2024. Finally, I want to highlight our commitment to shareholder returns. As announced in our earnings press release, our board has approved our 2024 annual cash dividend payment their aggregate amount of $1.2 billion, a meaningful increase compared to 2023. The board has also approved a new share repurchase program of $3 billion over the next 36 months. We are committed to creating more value for our shareholders. To conclude, 2023 was a year of strategic refocus and organizational upgrades, which have set the foundation for JD. 2024 will be a year of execution along the strategic roadmap that is in place. We will continue to build upon the good foundation in user experience, low price offerings, and platform ecosystem strategy. and will further build up our core capabilities in supply chain. With market share and user experience at top of mind, we are confident in making steady progress this year. With that, I'll turn it over to Ian for our financial highlights. Thank you.
spk02: Thank you, Sandy, and hello, everyone. We recorded a set of healthy top and bottom line results in Q4. ahead of our expectations as we focus on user experience improvement, price competitiveness, and platform ecosystem in 2023. We are also committed to sharing our success with our shareholders. The board has approved our annual cash dividend of $1.2 billion for the fiscal year of 2023, representing 38 US cents per ordinary share. or 76 US cents per ADS. Our dividend per ADS increased by 23% compared to the annual dividend paid in 2023. In addition, we stepped up share repurchases in Q4 and bought back 15 million ordinary shares for a total of approximately 203 million US dollars. As the existing program will expire soon, The board has approved a new share repurchase program of $3 billion over the next 36 months. This demonstrated our dedication to returning value to our shareholders. Now, let me turn to our Q4 and full year 2023 financial performance. Our net revenues grew by 4% year-on-year to RMB $306 billion in Q4. and RMB 1.1 trillion for full year 2023 as we navigated a mix of macro recovery, seasonality factors, and our strategic refocus. Breaking down the revenue mix, product revenues were up 4% year-on-year in Q4 and 1% on a full year basis. By category, electronics and home appliances revenues were up 6% and 4% year-on-year in Q4 and full year respectively. once again, outpacing industry groups. We have seen solid market share expansion in this category across every quarter of 2023 and continue to feel confident in this momentum going into 2024. General merchandise revenues saw a turnaround to positive year-on-year growth in Q4, despite the impact of scaling back of Jingxi and international business. The high base in Q4 2022 due to stockpiling and the seasonality impact of Chinese New Year Shopping Festival. On a full year basis, such factors led to a 5% decline in general merchandise revenues. Taking a closer look, categories such as home goods and decoration, sports, and apparel recorded double-digit year-on-year growth in Q4. As we further enriched our product and service offerings, These categories also drop higher user traffic, conversion rate, and user stickiness in the quarter. As for our supermarket category, we believe it has bottomed out, and its growth trend will continue to strengthen in 2024, driven by its increasing order volume and user shopping frequency. Service revenues grew by 3% year-on-year in Q4, and 18% on a full-year basis. primarily driven by the group of logistics and other service revenues, which were up 8% and 30% year-on-year for the quarter and full year, respectively. Marketplace and marketing revenues were down 4% year-on-year in Q4 and up 3% on a full year basis. The soft performance in the quarter was primarily due to the decline in commission revenues as a result of our enhanced support for fast-growing new merchants. While advertising revenues also experienced one-off headwinds in Q4, mainly due to the seasonality impact of Chinese New Year Shopping Festival, we believe those were short-term fluctuations, and our platform is progressing well on our current strategies, with a fast expanding base of active 3P merchants and accelerated growth in both 3P users and 3P order volume. In the Q1 quarter to date, We saw that marketplace and marketing revenues have resumed growth. Now, let's turn to our segment performance. JD retail revenues increased by 3% young year in Q4 and 2% on a full year basis. Our retail segments gross margin continued to increase, both in Q4 and full year of 2023. This was driven by our improved supply chain capabilities. which enabled us to offer more value to our users while recording healthy margin extension due to increased operating efficiency. Our strategic refocus also brought Tailwind to growth margins throughout 2023. On a full year basis, retail's fulfilled growth margin was up 39 bits, though in Q4, retail's fulfilled growth margin was down slightly by seven bits year on year. due to extended free shipping offerings since late Q3. Retail segments' non-GAAP operating margin came in at 2.6% in Q4, softer than a year ago, but in line with our expectation as we invest in user experience and expanding user base. On a full year basis, retail's non-GAAP operating margin continued to improve to a record level of 3.8% beyond our expectation. We are confident that Our continued focus on user experience will lead to a better market position and expanded market share in 2024 and eventually present more headroom for profit expansion. JD Logistics recorded a 10% revenue growth year on year in Q4 and 21% on a full year basis. External revenues accounted for 70% of total revenues in both Q4 and full year. In terms of profitability, JDL's non-GAAP operating margin picked up meaningfully, with a 73-bit expansion year-on-year to 2.8% in Q4 and a 22-bit expansion to 0.6% on a full-year basis. Before moving on to the next section, please note that following DADA's announcement in January, we are reporting the aggregated results of DADA and New Business on the other segments this time. We've adjusted the results of this segment in Q4 to reflect DADA's impact. Revenues of the segment were down 9% and 11% year-on-year in Q4 and full year respectively, primarily due to DADA's impact and the scaling back of Jingxi and international business, excluding the disposal gain and the impairment loss of long-lived assets of JD property Non-GAAP operating loss of the segments was RMB 474 million in Q4 and RMB 1.5 billion in full year, both representing substantial narrow down on a year-on-year basis as a result of the scaling back of Jinxi and international business. Moving to the consolidated bottom line, in Q4, we recorded RMB 8.4 billion non-GAAP net income attributable to ordinary shareholders. with non-GAAP net margin expanding 16 bps to 2.7% on a full-year basis. Our non-GAAP net income attributable to ordinary shareholders was RMB 35.2 billion, and the non-GAAP net margin was up 55 bps year-on-year to an all-time record of 3.2%. We continue to generate healthy cash flow Our last 12-month free cash flow as of the end of Q4 was RMB 41 billion, an increase of 14% for a year ago. This was driven by our improved profitability and the further optimized cash conversion cycle. By the end of Q4, our cash and cash equivalents, restricted cash, and short-term investments added up to a total of RMB 198 billion. To conclude, we have taken proactive actions and delivered a set of solid financial and operating results in Q4 and full year of 2023 amid evolving external environment and our business refocus. Going into 2024, we are well set to continue to execute the strategies we have in place. We feel confident in making further progress toward our operating priorities of user experience improvement and market share expansion, and we're committed to sharing our success with our shareholders. With that, I will turn it over to Shawn. Thank you. Thank you, Sandy and Ian. For the Q&A session, you're welcome to ask questions in Chinese and English, and our management will answer your question in the language you ask. will provide English translation when necessary for convenience purpose only. In the case of any discrepancy, please refer to our management statement in the original language. Okay, operator, we can open the call for Q&A session.
spk09: The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. Your first question comes from Ronald Kung with Goldman Sachs.
spk16: Thank you, Sandy, Ian, and Sean. Congratulations on this performance. It's a very stable and exciting performance. I would like to ask, we saw that Jindong and other e-commerce companies are focusing on growth and market share this year. 那在这个股东回报方面也看到我们有这个股息现在差不多有12亿美元的这个Regular Dividend Thank you, Sandy, Ian, and Sean. I have two questions. One is that JD and other e-commerce companies has focused on defending market share, reigniting growth as kind of key focuses in this increasingly zero-sum e-commerce market. So how will management strive the balance between growth and absolute profit or growing profits in the year ahead? And with that, with the profits and kind of cash flow generation, then we've seen the regular dividend of $1.2 billion in 2023. We've seen the free cash flow for the business was nearly close to $6 billion in 2023. So do we see room to further increase total shareholder return given the strong free cash flow of the business in the years ahead? Thank you.
spk07: Thank you, Ronald. Let me answer the first question, and then Ian will answer the second question about the return. First of all, the balance between growth and profit has always been a very good question. In 2023, you can see that we have taken a lot of action based on the continuous focus on the health of our business, including user experience, low-cost innovation, and the construction of brand ecology. For example, we have seen that in the past year, we have been constantly increasing the number of users in terms of customer experience and services, including the expansion and upgrade of the price protection range, and the free delivery of goods, which has gradually expanded from the private sector to our 3P business. There are also services such as payment without delivery, are improving users' shopping experience and service level, and continuously improving the shopping and service experience that we are differentiating. In the fourth quarter, we see that the number of shopping users is increasing, especially the growth of new users, and the growth trend continues to the first quarter. At the same time, we did not see I believe you can see that we have seen a significant decline in profits, although our service and experience are constantly increasing. This is what we are trying to achieve. At the same time, we are also optimizing our own purchasing costs and enriching our low-price goods. While emphasizing the value of low prices, on the one hand, we are strengthening the supply of low-price products, and we have also launched, for example, 100-year subsidies. such as the 9.9% free shipping channel and the reduction of free shipping thresholds. In fact, while the users felt that the low price quality was good, it also led to an increase in the shopping frequency of the users. We also believe that on the one hand, by continuously improving the user experience, it can allow us to gain more healthy user growth and increase the shopping frequency.
spk08: Thank you, Ronit. I will answer your first question and Ian's second question. So the question on the growth and versus profits has always been a good question. And in 2023, while firmly focusing on the health of our business, we made many efforts and took action to further enhance our user experience, low-price MyShare, and platform ecosystem. So, for example, last year, we stepped up our efforts on user shopping experience and services by introducing or expanding a series of differentiated shopping and customer services, such as our price guarantee service, a free doorstep pick-up service for returns and exchanges, the service expanding from our 1P to our 3P businesses, and also a refund without return services and more. We've seen an accelerated growth in quarterly shopping users in Q4, especially in the number of new users, and we expect the growth trend to continue in Q1. At the same time, we don't see any major drop of our profits, which is also reflect our efforts on maintaining a balance between growth and revenues and profits. And also, we continue to optimize procurement costs and expand our range of low-cost products. In addition, we have introduced a series of measures, including the 10 billion yuan discount program, the 99 yuan items with free shipping channels, and a lower order value threshold for free shipping Our goal is to provide high-quality products at affordable prices to increase user purchase frequency. We believe that continuous improvement of user experience will promote healthy user growth and purchase frequency, which in turn will help us to increase business scale and market share.
spk07: The number of active merchants entering the track is also increasing rapidly. It also brings us better and richer product supply, and it also drives the number of users and order volume of our CP business to increase rapidly. So in 2024, we will continue to pay attention to the user experience, continue to focus on price competitiveness and improve the several key directions of our brand eco-construction.
spk08: So from a platform ecosystem perspective, we have seen more and more new merchants are joining JD's marketplace, and the number of active merchants whose business growing on our platform is increasing at an accelerated rate. Their participation has greatly improved the diversity of product offerings on the platform, leading to accelerated growth in both the number of users and orders on our marketplace. So in 2024, we will prioritize improving user experience, price competitiveness, and the platform ecosystem. We will make unswerving efforts to execute on these key areas with confidence that we will continue to gain market share.
spk07: Yes, I would like to emphasize that our business model itself determines that the increase in business scale, the increase in technical level, will inevitably lead to an increase in efficiency. And these improvements can allow us to continue to invest them into user experience, thereby bringing better user connectivity, customer shopping frequency, and user growth. and continue to increase the scale of the business. This is a sustainable positive cycle, and it will not necessarily have a big impact on profits. In fact, this is also the logic of our business model that we have been communicating with the market for so many years. And this profit will naturally come from our continuous improvement in market share and value creation for users. So from the management level, we will also balance the pace of investment and growth.
spk08: So here I want to re-emphasize that our business model decides that business efficiency comes from enhancing business scale and technological development. So with these enhancements, we receive increased revenue that we can invest in enhancing user experience. This in turn leads to increased user engagement, shopping frequency, and user growth, ultimately resulting in business scale growth. So this creates a sustainable and virtuous cycle, although it may not have a significant impact on profits. So this is the point we constantly communicate with our developers, and this is the logic of our business model. So the profits are a natural result of our expanding market position and value creation for our users. So during this course and cycle, our management team will strive to maintain a balance and a good pace between investment and growth while creating good returns for our shareholders. Thank you.
spk02: Thank you, Ronald. Thank you for your concern for shareholder feedback. I will now take this opportunity to share our thoughts and actions. First of all, we are concerned about the long-term health development of our business, including the health expansion of our business, as well as the long-term stable growth of our profit and cash flow. Based on this, we value long-term shareholder feedback. This is Ian. Thank you, Rona, for asking about shareholder returns. So I'd like to take this opportunity to update investors on our current thoughts and moves.
spk08: Firstly, JD focuses on the long-term healthy development of our business, aiming for healthy scale, expansion, and stable growth in profits and cash flow. On top of this, we're committed to long-term shareholder return and will continue to give back to our shareholders in various ways. Our balance sheet is strong and we believe that maintaining a good return to shareholders and continuous investment in our business are not contradictory.
spk02: We just announced that this year we will distribute $1.2 billion in equity. The growth of the equity amount is due to the rapid growth of profits last year, which will create a real profit for our shareholders. Currently, we have accumulated $4.2 billion in equity for three consecutive years.
spk08: We have just announced an annual cash dividend of $1.2 billion. This is thanks to last year's rapid earnings growth, which yielded solid returns for our shareholders. Over the past three years, we have returned a total of $4.2 billion in dividends. and we plan to continue to pay annual dividends going forward, sharing the company's valuation with our shareholders.
spk02: At the same time, our board also approved a new return plan. The company plans to return $3 billion in the next three years. We will carry out a firm return and communicate with investors on a regular basis.
spk08: Also, our Board of Directors have approved a new repurchase program to buy back to US$3 billion worth of company shares over the next three years. We will firmly execute the buyback and communicate with investors regularly. We believe that investors will recognize the company's tangible efforts to share its value with shareholders. Thank you.
spk12: Okay, thank you. Thank you, Ronald.
spk09: Your next question comes from Kenneth Fong with UBS.
spk17: Hi, Sandy, Ian, Sean. Hello, everyone. Thank you for answering my question. I have two questions. The first one is about the platform ecosystem. Our company has invested in this VP business. From the number of new businesses and the number of active businesses, we have also achieved good results. Under what conditions or under what circumstances will the management team accelerate and speed up the VP business? And in 2021, what changes and updates will our VP strategy have? And my second question is about overseas strategies. Thank you, management, for taking my question. My first question is on the platform ecosystem. We have been investing to build our 3P ecosystem. Judging from the total and active merchants, we have received very solid results. Can management share with us under what circumstances we will start to accelerate the monetization of the 3P merchants, and also for 2024, any change and update for our 3P strategy. And my second question is for overseas. We see a lot of e-commerce platforms are investing overseas. Can management share with us your thoughts on our overseas expansion? Thank you.
spk02: Thank you, Kenny. Let me answer the first question about platform ecology. And then if we talked to everyone before, the platform ecology of JD.JPY includes self-sufficiency and 3P, and then the two are complementary. And then this is all to provide better user experience for JD.JPY platform. NPS in Q4 is also improved in the same way. Platform ecology is also the strategic direction we have been focusing on all the time. In terms of 3P development, we still have a lot of places to improve. The first step is to increase recruitment and supply, and attract more users and merchants, to help them operate better on the JD platform, to provide more resources to our users, and to form a positive competition for the whole platform. In the past year, we have increased the strength of recruitment, and simplified the entry process of merchants, and increased the support and cost reduction for small and medium-sized merchants, which has led to a rapid increase in the size of merchants on the platform. Thank you, Kenny. To your first question about platform ecosystem,
spk08: As I have previously mentioned, JD's platform ecosystem includes both our self-operated and third-party models. The tools are complementary to each other and jointly contribute to create good user experience. Our net promoter score has improved substantially in Q4. For both 1P and 3P, we have been investing in platform ecosystem as a long-term strategic direction. so there is still a lot of room for improvement in our 3P business development. Our first step is to increase the number of merchants and their product offerings. We need to attract more merchants and help them succeed on the platform in order to enrich the platform's product offerings for our shoppers and foster positive business competition across the platform. Over the past year, We have increased our efforts to recruit merchants, simplified their onboarding processes, and provided more support and fee reductions for small and medium-sized merchants. To date, the number of effective merchants on our platform is close to one million, reaching the goals we set for ourselves at the beginning of last year. The number of active merchants have accelerated, More and more new merchants are finding effective ways to do business on our platform and continue to grow.
spk02: Then in the second step, we also see a positive response from the user end. Then we have more 3P trading users. The order volume of 3P is also constantly increasing. At the same time, the user experience of 3P is also continuously improving. 3P and the entire GNV are gradually entering the path of healthy growth.
spk08: At the same time, we've received positive feedback from users. The number of shopping users and order volume on 3P platform continues to grow, with users' NPS for 3P rising at the same time. Both our 3P and overall GMV have gradually entered a trajectory of healthy growth. 构建京东独克的平台生态是一项长期工程,然后我们还处于早期的阶段。
spk02: The current 3P rapid transformation is not our primary task in the short term. The focus of 2024 is to attract more business owners, especially small and medium-sized business owners of the industrial era, to enrich our product supply, and at the same time continuously optimize the business growth and management tools of platform ecology. Then continue to optimize the flow distribution mechanism, and create clear growth paths and fair business ecology for business owners. building JD's unique platform ecosystem is a long-term project.
spk08: We're still in the early stages. Our focus is not on a fast monetization of 3P in the short term. Instead, our priority in 2024 will be to attract more merchants especially the small and media-sized merchants in the industrial belt. To enrich our product offering, and at the same time, we will continue to foster merchants' growth, the platform's governance, and operating tools. We will also further optimize the traffic distribution mechanism to create a clear growth path and a fair business environment for merchants, and to provide better user experience on 3P platforms. in a prosperous growth of both our 1P and 3P businesses.
spk02: We believe that through a more prosperous platform ecosystem, a richer supply of high-quality products, and a more accurate user match, we will be able to meet the needs of more users, meet the needs of diversification of different users, and form a two-way circle to help the business grow, and the 3P transformation will naturally improve. This will also be one of the major driving forces of our long-term income and profit growth. In the short term, the overall business situation of the company is good, and the rate of change will not rise in a hurry, but the trend of long-term growth and steady growth will not change.
spk08: We believe that by making a platform that swaps the ecosystem, offering a wide range of high-quality goods, and improving user product matching accuracy, we can attract more users and meet diverse needs. This will create a virtuous cycle that helps merchants succeed, and as a natural result, repeat monetization will increase. Such virtuous cycle will form one of the key drivers of our long-term revenue and profit growth. We're at a good shape now and not in a rush to increase monetization in the short term, but the trend for steady improvement remains unchanged in the long run.
spk02: In addition, the Q4 platform and advertising service revenue has been fluctuating in the short term, mainly due to the large-scale development of the platform ecosystem in the last two or three years, and the platform has launched a series of support measures, including new business owners to be exempted, and some products and marketing factories to be actively exempted, which has led to a drop in the income of the mercantile. In addition, the increase in advertising revenue has also slowed down in Q4, mainly because of the bad weather of last year's New Year's Eve, plus the high-tech caused by the epidemic. Q1, accompanied by seasonal factors, will eliminate advertising revenue and return to healthy growth, accompanied by the improvement of users and traffic. I believe that our advertising revenue will accelerate gradually in 2024.
spk08: In addition, marketplace and marketing revenues experienced short-term fluctuations in Q4. This was primarily due to our efforts to develop the platform ecosystem. We launched a set of supporting initiatives, including commission free offerings for new merchants and proactive commission reductions in certain categories and programs. These initiatives resulted in a decline in commission revenues. Additionally, Advertising revenue growth slowed slightly in Q4 due to the late start of the Chinese New Year's and promotions compared with the previous year and a high base of the previous year driven by people's stockpiling behavior in December. With the ease of seasonality factors in Q1, we expect that advertising revenues will return to healthy growth. And overall, looking at 2024, as user and traffic improve, we expect growth of our ad revenues to gradually accelerate. Thank you.
spk07: Okay, let me talk about the second question about overseas business. First of all, we have always been very concerned about the opportunity of internationalization. We will also use this as a starting point to closely monitor the entire domestic business. But because our business model itself and our advantages are actually different from other platforms, so our international strategy is also different from other platforms. We will also use our own competitive advantage to do the layout of international business. JD's business model is based on the supply chain, and the user experience is the core business. This is also very clear to everyone. So let me share some thoughts regarding our overseas business strategies. So first of all, we are always on the outlook for overseas opportunities and take pilot steps to establish our presence.
spk08: Given that our business model and advantages are distinct from other platforms, our approach to global expansion will likewise be different. We aim to leverage our competitive strengths to establish our international presence. As you know very well, JD's business model is built on supply chain capabilities and centered around user experience. Supply chain is the cornerstone of our international business development, and we will continue to focus on this to expand our capabilities on the global market.
spk07: In terms of sales, we are focusing on pre-sale, which is to help Chinese companies expand their overseas market and promote more brands to the overseas market. Currently, we are in the early stages of optimizing our shopping experience To share some examples, for JD Retail,
spk08: Our outbound e-commerce platform is actively improving shopping experience by offering high-quality products and services to global users. In the meantime, it also assists Chinese companies in expanding their business and brands to overseas markets. We're still in the early stage for all these efforts. And at the same time, we're increasing our efforts in inbound cross-border business. JD Worldwide has established three direct procurement centers worldwide so far to improve cross-border supply chain efficiency, offering consumers in China a wider range of imported products at lower costs while ensuring product safety.
spk07: At present, Shenzhen logistics has nearly 90 storage warehouses, overseas warehouses and oil and gas warehouses in the world. The management area is nearly 900,000 square meters. It also serves a lot of overseas customers and Chinese overseas brands. As well as Shenzhen production, they have also expanded the European market in Shenzhen and Southeast Asia. At present, business has expanded to Vietnam, Indonesia, Singapore, the United Kingdom, the Netherlands and other overseas markets. So for GD Logistics, it has established a strong overseas supply chain, starting from warehouse and now expanding to overall supply chain services.
spk08: Currently, it operates nearly 90 bonded overseas and direct mail warehouses managing a floor area of almost 900,000 square meters. This enables JD Logistics to serve a large number of overseas customers as well as Chinese brands expanding abroad. Also, JD Property is expanding its business in Southeast Asia and Europe with a forecast on markets such as Vietnam, Indonesia, Singapore, UK, and the Netherlands. Its customers include international logistics and FMCG giants, as well as emerging Chinese companies going overseas. As I mentioned, both JD Logistics and JD Property, they are more enterprise service-facing. So for the two seaside customers, they don't have a very strong impression or experience so far.
spk07: In addition, in Europe, we have also launched the all-round retail brand Ochama. Thanks to our personalized logistics technology and global supply chain capabilities, we provide better shopping experience to consumers in 24 countries in Europe. Not only do we serve overseas local brand merchants, but we are also building a reliable path for Chinese brands and merchants to go out to sea, but we are still in the recovery stage.
spk08: So we also introduced an omnichannel retail platform in Europe called Ochama. This business leverages JD's advanced automated logistic technologies and global supply chain capabilities to provide high-quality shopping experience for customers across 24 European countries. Not only does Ochama serve European local brands and merchants, it also provides a dependable path for Chinese brands and merchants to expand their business abroad. But certainly, Ochama is still our project in the incubation stage. And next, we will continue to focus on these areas, the business layout that we are good at with the strength to expand our global capabilities.
spk02: Thank you, Candy. I have the next question.
spk09: Our next question comes from Alicia Yap with Citigroup.
spk05: Hi, thank you. And then the second question is whether JD is going to invest more actively to acquire some new users in low-end cities. This is mainly from some additional subsidies or through the supply of rich products. And then this year, is there a target or KPI set by a new user? I will translate it myself. In light of the shift of the consumption preference and also the rational spending behavior amid this soft macro sentiment, will JD need to or plan to adjust any specific strategy to fulfill the demand shift? If so, what could be the change and growth initiative? What is management expectation for China overall retail sales growth rate this year? How much higher can JD outperform the overall retail sales growth by. Will JD reinvest to aggressively growing new user in lower tier city? Will that mostly come from additional subsidy or through the improvement of product offering? Do you have a target KPI set for the numbers of new customer that you plan to acquire this year?
spk07: Thank you. Thank you, Alicia. As you said, in the past year, we have seen that users have become more rational and pay more attention to the cost. Users pay more attention to the product and the quality of the product, and also pay more attention to the price. They are looking for more reasonable-priced products. They may pay more attention to the real-world value and experience. For us in Shenzhen, At the end of 2022, we also predicted the trend of consumption relatively early. In 2023 and the whole year, we are actually accelerating the development of our platform ecosystem to promote our low-cost new products. At the same time, we are also continuously increasing the shopping experience of our users and differentiating our service products. At the same time, we are actually analyzing the latest trends and movements in consumption Thank you, Alicia. As you said,
spk08: We've seen consumers have become more rational in spending. They pay attention to both the quality and the cost effectiveness of the product. They really value the good products with a reasonable price. At the same time, they do care about shopping experience. So last year, we took proactive steps in response to consumer trends. While striving to provide users with better shopping experience and differentiated services, we expanded our platform ecosystem and low-cost mindshare. We also studied the latest consumption trends and insights, and we worked closely with brands and merchants to jointly develop new products that better meet user demands. So overall, we see our performance so far has met our expectations. And in 2024, We will stick to our current strategies and firmly focus on execution and optimization without making major adjustments.
spk07: On the one hand, the user experience and service will continue to consolidate our core operations and continue to strengthen our fast and good user mentality. On the other hand, it is also more efficient to promote the ground strategy. continue to optimize the purchase cost and enrich the low-price goods, and then enhance the efficiency of low-price subsidies, so that users can feel better about saving. In addition, in this more aspect, it will also help the business to grow better by further expanding the scale of the business, enriching the supply of our platform, so that users can feel more product supply.
spk08: We will continuously improve user experience and services and strengthen our core competitiveness to further entertain users' mindshare towards our fast delivery and high-quality reputation. At the same time, we will also optimize procurement costs and enrich our low-priced product offerings and to let people to better feel our price competitiveness. And on the side of product diversity, We will continue to expand our merchant base and also improve the richness of the low-priced products on our platform.
spk07: Yes, I believe everyone has seen that in 2024, we will also have some policies to stimulate and promote consumption. including the increase in exchange rate, etc. We also expect that the expansion of consumer consumption will be further consolidated and strengthened. This is also good news for some of our products. We estimate that the total number of customers per year will still grow healthily, and we are also confident that we can maintain the market share of more than the total number of customers per year.
spk08: So in 2024, we've seen there will be a number of economic stimulus plans and consumption promotion policies coming into place, including the encouragement of the trading consumptions, et cetera. So we are seeing this is a healthy recovery trend of overall economy and consumption, and this will also help us to help some of our advantages, the categories. So overall, we are optimistic for this year's overall retail sales, and we're confident that we will maintain a faster growth rate than that and continue to gain market share. Thank you.
spk02: Hello Alicia, let me answer your second question. In terms of users, we will actively encourage user growth and user evaluation. Our main experience has always been focused on improving user experience. This is the way we believe to achieve high quality growth for users. We will continue to improve the richness of the end-of-the-range products, promote our low-cost strategy, and build a more suitable business pool for lower market and user consumption habits. and improve the efficiency and efficiency of storage. We are also improving services and continuously providing more in-house and post-sales services and shopping insurance, such as free delivery of goods and reducing the threshold of free delivery. At the same time, we believe that market marketing, including subsidies, is a tool for business users, and it can serve some special purposes in stages, and we will use it in a targeted and disciplined manner.
spk08: So for the second question on user growth, we will actively drive up user growth and their purchase frequency. Throughout the past year and this year, we have prioritized improving user experience to achieve high-quality growth. We will continue to improve the diversity of product offerings and promote low-price strategy and expand product pool for users from lower-tier markets to better meet their shopping preferences. So this helped us to enhance user product matching efficiency and user retention rate. Additionally, we continuously enhance services safeguarding users' shopping experience during and after sales, like the free doorstep pickup services for returns and a lower threshold order value for free shipping, et cetera. We believe that subsidizing and other marketing activities are all tools for user operation. These measures can serve some special purposes in certain periods of time and should only be used in a targeted and disciplined way.
spk02: In the previous Q4, the number of new users increased significantly. The number of new users increased significantly. The number of old users remained stable. The number of new users increased significantly. We saw healthy growth in the number of users in Q4, including new users experienced strong growth, while existing users maintained steady growth. Users from lower-tier markets also achieved an accelerated growth,
spk08: User purchase frequency showed a healthy growth, particularly among existing users. Furthermore, user satisfaction rate has improved, with NPS of both self-operated and marketplace achieving an increase year-on-year.
spk02: Currently, the growth of QE users has maintained this trend. This year, we, as a unique interactive platform of CCTV Spring Festival, have also reached out to more new users.
spk08: And so far in Q1, we've seen user growth has maintained such momentum. This year, JD was selected to be the exclusive interactive partner for China Media Group's Spring Festival Gala. During the show, we offered a variety of gifts to viewers home and abroad, reaching a wide range of new users. From the outlook of the whole year, we're confident in user growth.
spk02: Okay, thank you, Alicia. Let's have the last question.
spk09: Thomas Chong with Jefferies.
spk10: Thank you, management, for taking my question. My first question is about the consumer sentiment in 2024 and how should we think about the trend for different product categories. And my second question is related to our thoughts about the competitive landscape in 2024. Thank you.
spk07: Okay, thank you, Thomas. Let me answer this question. First of all, in 2023, as our society fully recovers and opens up, the consumer market is in a state of continuous recovery from the beginning of the year to the end of the year. But indeed, the consumer ability and consumer confidence of our users are still improving. In 2024, from the first two months of the year, consumption is steadily improving. Thank you, Thomas, for your question. So by 2023, we have seen the society and economy have returned to normal.
spk08: Although the consumption market showed a recovery trend, people's spending ability and confidence still needed a boost. As we enter 2024, in the current two months, as we can observe, the country's national economy is on track for recovery. With the expected effects of the micro-stimulus plans and consumption promotion policies, we believe the momentum of consumption recovery and expansion will be further consolidated or strengthened.
spk07: relatively stable. We are also confident that we will be able to gain faster growth in 2020 than the entire market. In the long term, we believe that the goal of the large number of users pursuing a good life has not changed. In the future, we will provide users with better services, higher cost-effectiveness, and the business model will naturally have our unique advantages, which can meet the needs of different types of users in different scenarios.
spk08: From JD's perspective in 2024, we maintain a confidence to outperform the overall of the broader market and taking a longer-term view. We believe that most people's desire for a better life remains unchanged. Our business model aims to provide better services and quality products with greater value for money, which has made us unique. advantages to satisfy diverse users' needs in various shopping scenarios.
spk07: From the overall perspective of the industry, we can see that in the past few years, the sales volume of food online has been gradually increasing. Some industries have achieved a relatively high penetration rate, but there are also many industries, including supermarkets, sports, home appliances,
spk08: So from the industry perspective, as we have seen that the proportion of online retail sales of physical goods continue to for some industries, they have enjoyed a high penetration rate, whereas for other industries, such as supermarkets, furniture and home, automotive, and other industries, their online sales penetration rate still has plenty room to improve.
spk07: From a product category point of view, our product category in 2023 will continue to maintain a fast-growing trend, although the entire industry is still facing a challenging situation. In 2024, we are confident that these products will continue to maintain a fast-growing trend. And for the category perspective in 2023, we continue to be the market leader in electronics categories and deliver the faster growth rate than the overall market in this area, even though this industry is facing
spk08: challenges last year. So overall, we're confident to maintain faster than industry growth rate in these categories, especially as you see the government is promoting the treating of consumer goods and stimulate the consumption of electronics and other products. So we're confident to maintain a strong growth in this category.
spk07: It will still be very intense. Of course, the strategy of different platforms and different retailers is not the same. Our shopping business has undergone a year of adjustment in the past year, including focusing on the core track, and then improving our supply chain capability through network changes, improving our booking efficiency, etc. So far, we have seen a relatively good recovery trend.
spk08: And the competition in the supermarket category is expected to intensify in this year with various players adopting different strategies. JD's supermarket business has undergone some adjustments in the past year. These include a focus on core businesses, improvements in supply chain capabilities, and enhanced fulfillment efficiency through warehouse network reforms. And these strategies are gradually coming to fruition, and there's been a positive trend of growth recovery for the supermarket category.
spk07: In the fashion and home industry, these two categories will depend more on our third-party business. Because JD is a unique business model, the challenges we face when we do open-end ecology and the way we do it may be different from other platforms. And on the fashion and home segment, this is more heavily dependent on the development of our third-party merchants.
spk08: And due to our unique business models, the way we foster these two categories will be with a different approach. So, so far we have seen our open ecosystem strategy has yielded some initial results, and users are becoming more and more aware of JD Fashion and JD Home. We're confident that we will continue to experience healthy growth for these categories, these two categories in 2024.
spk07: On the issue of competition, this is also an eternal problem. We think that China's retail consumer market is still very large. There will also be different brands and business models. We see ourselves more as a retailer. If you look at it from the perspective of Chinese retailers, it is actually more distributed. In the face of these competitive patterns that continue to change, we still think about how to establish it to satisfy users. the ability to coexist with our partners and the more efficient business model. In 2023, we indeed made some strategic adjustments, and the performance was also affected by some short-term effects. However, we ourselves see that in many categories, we are still continuing to gain market share and users' interest. The team has also made a lot of technological innovations to improve our transformation efficiency and reduce our operating costs. So for Jindong, we think that in 2020, we will gradually be able to see the previous series of adjustments and release the results that he used. So we will continue to move forward in the same strategic direction. We also believe that Jindong's basic business model is to go through different stages of growth and sustainable growth.
spk08: So for the question about industrial competition, which is the internal question here, so we believe that China's retail consumer market is vast and various platforms and business models will coexist. And as we see ourselves, JD.JD, it's a retailer and then this market is quite dispersed. We think the key for a long-term success here is to satisfy users' experience and create a win-win collaboration with all kinds of our partners. So in that part, we will stick to our strategies and continue to gain market shares. And we're optimistic that all the changes we made in the past year will gradually come to show some effects and variations. And also, last year, our different JDS teams have came up with innovative tactics and techniques to improve conversion rates and reduce operating costs. Therefore, we think by firmly executing our established strategies, so we are on the right track to deliver results this year. And at Citi.com, we position ourselves as a supply chain-based company. So we have these strengths and capabilities to withstand and navigate through different economic cycles and to deliver good results this year. Thank you.
spk09: We are now approaching the end of the conference call. I will now turn the call over to J.D.' 's Sean Zeng for closing remarks.
spk02: Thank you. Thank you everyone for joining us today on the call and for your questions. If you have further questions, please contact me at IRT. We appreciate your interest in JD.com and look forward to talking with you again next quarter. Thank you.
spk09: Thank you for your participation in today's conference. That concludes the presentation. You may now disconnect. you Thank you. Thank you. Thank you. Thank you. Thank you.
spk13: Thank you. you you
spk09: Hello, and thank you for standing by for JD.com's fourth quarter and full year 2023 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 Vang, Director of Investor Relations. Please go ahead.
spk02: Thank you. Good day, everyone. Welcome to GD.com Q4 and full year 2023 earnings conference call. For today's call, CEO of GD.com, Ms. Sandy Xu, will share her opening remarks. And our CFO, Mr. Ian Shen, will discuss the financial results. Then we'll make a call to questions from analysts. Before turning the call over to Sandy, let me quickly cover the safe harbor.
spk12: Please be reminded that during this call, our comments and responses to your questions reflect management's view as of today only, and we'll include forward-looking statements.
spk02: And please refer to our latest Safe Harbor Statement in Earnings Press Release on the IR website, which applies to this call.
spk12: We'll 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 in RMD, unless otherwise stated. Now, let me turn the call over to our CEO, Sandy.
spk07: Thanks, Sean. Hello, everyone, and thanks for joining us today to discuss our Q4 and full-year 2023 results. In Q4, we delivered healthy top-line and bottom-line growth and made solid progress on operations. finishing off a productive 2023. In the past year, we stayed focused on constantly improving user experience, lowering costs, and increasing efficiency amidst evolving opportunities and challenges. Guided by our business philosophy, we carried out a set of proactive moves to drive more sustainable growth for the long term mainly in the areas of user experience improvement, low-price solving, and platform ecosystem strategy. Despite some short-term impact in 2023, our strategic refocus has successfully steered key operating metrics in a positive direction. 2024 will be a year of execution. Our team will take firm and steady steps to execute our existing strategies and push forward our two priorities for the new year, namely user experience improvement and market share expansion. We are encouraged by what we've seen and are confident that we are on the right path. Let me share some details. First, user engagement. In Q4, we saw the number of costly active customers accelerate at JD Group level. If looking at JD Retail alone, the growth was at an even faster pace in Q4, particularly in new users. We are excited to see our user momentum keep up in Q1. User behavior also changes better. For example, user shopping frequency on JD continued to rise, both in Q4 and the full year. This increase was particularly driven by the growth of our loyal existing users and class members. This means if users stay longer with us, they tend to shop more frequently with us, a validation of our user focus on user experience and strengthening user mindshare. In addition, the size of growth also translated to a robust order volume growth, hitting double-digit young year in Q4 and accelerating for three consecutive quarters. In terms of JD Plus, we saw another quarter of robust growth of its member base, and G&V contributed by Plus members grew faster than our total G&V in Q4. The promising progress in user engagement is the result of our stepped-up efforts in improving user experience, low-price offerings, and implementing platform ecosystem strategies. Looking at our efforts in improving user experience, in addition to our previously launched popular initiatives, such as free shipping, instant refunds, and one-click for best price guaranteed. We also recently launched new customer services such as free doorstep pickup for returns, cashback for delayed shipping. As a result, our net promoter score, the NPS, for both our 1T and 3T business have improved substantially in Q4. As we are generating great momentum with our users, it's important to continue to build on these initiatives, which we believe will help to propel growth in 2024. Also, as an important part of our holistic approach to improving our user experience, we will continue to step up efforts in building our price competitiveness and platform ecosystem for low price offerings from day one we've been pushing forward our price competitiveness for branded products and a broader selection of value for many products during the past year we have further enhanced our ability to offer great value in branded products and expanded our selection for white label products Our price competitiveness has notably improved according to our customer survey and in-house price comparison. We are glad to see our price NPS increased both sequentially and year-on-year in Q4, a proof that user experience and mindshare for JD's low-price offerings is picking up. We also note other key metrics are trending well. The number of our users from lower-tier markets grew faster in Q4 compared to previous quarters, and growth of order volume and shopping frequency generated by lower-tier market users reached double digits year on year, outpacing that of our total users. We also note growth of low ticket size orders further sped up and far exceeded the growth of our total order volume in 2004. I want to highlight again that our price compactness is not supported by subsidies. The bedrock for JD's business model is always the supply chain capabilities, which enable us to generate scale efficiency. and lower product costs so that they can provide better value to users while maintaining healthy financial performance. Shifting to platform ecosystem strategy. The number of active CP merchants on our platform delivered another stellar growth both in Q4 and on a full year basis. As the team did a great job onboarding and supporting them. Meanwhile, 3P users and 3P order volume both saw accelerated growth year-on-year in Q4 and in the full year of 2023. That said, we are still at an early stage of building our platform ecosystem and we are not prioritizing monetization of our young and rapid growing ecosystem at this stage. Therefore, we are not taken by surprise when we see revenue generated from our 3P marketplace is lagging the growth of our 3P merchant base and orders in Q4, which was also partially driven by one-off factors. Yin will elaborate on this later. We believe this is only temporary. In fact, Q1 quarter to date, we've seen marketplace and marketing revenues bouncing back. to a stronger momentum. As shared before, our platform ecosystem encourages 1T and 3T to develop in a complementary way. Our 1T business also continues to make solid progress thanks to our core capabilities in supply chain. In particular, users responded well to our non-stop services during the Chinese New Year holiday. Our offering was being committed to for 12 consecutive years. Also, enabled by our supply chain strengths, our home appliance and electronics category continued to gain market share throughout 2023, despite industry high winds. Moving forward, we will further leverage our supply chain capabilities to build up better service capabilities, penetrate into lower tier and offline markets, and strengthen our cooperation with suppliers, which we believe will lead to a continuous expansion in market share in 2024. Moreover, we saw our supermarket category trend to the right direction as it dedicated itself to optimizing the supply chain and building a better product mix and fulfillment network. We believe there will be more upside for supermarkets in 2024. Finally, I want to highlight our commitment to shareholder returns. As announced in our earnings press release, our board has approved our 2024 annual cash dividend payment their aggregate amount of $1.2 billion, a meaningful increase compared to 2023. The Board has also approved a new share repurchase program of $3 billion over the next 36 months. We are committed to creating more value for our shareholders. To conclude, 2023 was a year of strategic refocus and organizational upgrades, which have set the foundation for JD. 2024 will be a year of execution along the strategic roadmap that is in place. We will continue to build upon the good foundation in user experience, low price offerings, and platform ecosystem strategy. and will further build up our core capabilities in supply chain. With market share and user experience at top of mind, we are confident in making steady progress this year. With that, I'll turn it over to Ian for our financial highlights. Thank you.
spk02: Thank you, Sandy, and hello, everyone. We recorded a set of healthy top and bottom line results in Q4. ahead of our expectations as we focus on user experience improvement, price competitiveness, and platform ecosystem in 2023. We are also committed to sharing our success with our shareholders. The board has approved our annual cash dividend of $1.2 billion for the fiscal year of 2023, representing 38 US cents per ordinary share. or 76 US cents per ADS. Our dividend per ADS increased by 23% compared to the annual dividend paid in 2023. In addition, we stepped up share repurchases in Q4 and bought back 15 million ordinary shares for a total of approximately 203 million US dollars. As the existing program will expire soon, The board has approved a new share reprisal program of $3 billion over the next 36 months. This demonstrated our dedication to returning value to our shareholders. Now, let me turn to our Q4 and full year 2023 financial performance. Our net revenues grew by 4% year-on-year to RMB $306 billion in Q4. and RMB 1.1 trillion for full year 2023 as we navigated a mix of macro recovery, seasonality factors, and our strategic refocus. Breaking down the revenue mix, product revenues were up 4% year-on-year in Q4 and 1% on a full year basis. By category, electronics and home appliances revenues were up 6% and 4% year-on-year in Q4 and full year respectively. Once again, outpacing industry group. We have seen solid market share expansion in this category across every quarter of 2023 and continue to feel confident in this momentum going into 2024. General merchandise revenues saw a turnaround to positive year-on-year growth in Q4, despite the impact of scaling back of CINCI and international business. The high base in Q4 2022, due to stockpiling, and the seasonality impact of Chinese New Year Shopping Festival. On a full year basis, such factors led to a 5% decline in general merchandise revenues. Taking a closer look, categories such as home goods and decoration, sports, and apparel recorded double-digit year-on-year growth in Q4. As we further enriched our product and service offerings, These categories also draw higher user traffic, conversion rate, and user stickiness in the quarter. As for our supermarket category, we believe it has bottomed out, and its growth trend will continue to strengthen in 2024, driven by its increasing order volume and user shopping frequency. Service revenues grew by 3% year-on-year in Q4, and 18% on a full-year basis. primarily driven by the growth of logistics and other service revenues, which were up 8% and 30% year-on-year for the quarter and full year, respectively. Marketplace and marketing revenues were down 4% year-on-year in Q4 and up 3% on a full year basis. The soft performance in the quarter was primarily due to the decline in commission revenues as a result of our enhanced support for fast-growing new merchants. While advertising revenues also experienced one-off headwinds in Q4, mainly due to the seasonality impact of Chinese New Year Shopping Festival, we believe those were short-term fluctuations, and our platform is progressing well under our current strategies, with a fast expanding base of active 3P merchants and accelerated growth in both 3P users and 3P order volume. In the Q1 quarter to date, We saw that marketplace and marketing revenues have resumed growth. Now, let's turn to our segment performance. JD retail revenues increased by 3% young year in Q4 and 2% on a full year basis. Our retail segments gross margin continued to increase, both in Q4 and full year of 2023. This was driven by our improved supply chain capabilities. which enable us to offer more value to our users while recording healthy margin extension due to increased operating efficiency. Our strategic refocus also brought tailwind to growth margins throughout 2023. On a full year basis, retail's fulfilled growth margin was up 39 bits, though in Q4, retail's fulfilled growth margin was down slightly by 7 bits year on year. due to extended free shipping offerings since late Q3. Retail segments non-GAAP operating margin came in at 2.6% in Q4, softer than a year ago, but in line with our expectation as we invest in user experience and expanding user base. On a full year basis, retail's non-GAAP operating margin continued to improve to a record level of 3.8% beyond our expectation. We are confident that Our continued focus on user experience will lead to a better market position and expanded market share in 2024 and eventually present more headroom for profit expansion. JD Logistics recorded a 10% revenue growth year on year in Q4 and 21% on a full year basis. External revenues accounted for 70% of total revenues in both Q4 and full year. In terms of profitability, JDL's non-GAAP operating margin picked up meaningfully, with a 73-bit expansion year-on-year to 2.8% in Q4 and a 22-bit expansion to 0.6% on a full-year basis. Before moving on to the next section, please note that following DADA's announcement in January, we are reporting the aggregated results of DADA and New Business on the other segments this time. We've adjusted the results of this segment in Q4 to reflect Dada's impact. Revenues of the segment were down 9% and 11% year-on-year in Q4 and full year respectively, primarily due to Dada's impact and the scaling back of Jingxi and international business. Excluding the disposal gain and the impairment loss of long-lived assets of JD property, Non-GAAP operating loss of the segments was RMB 474 million in Q4 and RMB 1.5 billion in full year, both representing substantial narrow down on a year-on-year basis as a result of the scaling back of Jinxi and international business. Moving to the consolidated bottom line, in Q4, we recorded RMB 8.4 billion non-GAAP net income attributable to ordinary shareholders. with non-GAAP net margin expanding 16 bps to 2.7% on a full-year basis. Our non-GAAP net income attributable to ordinary shareholders was RMB 35.2 billion, and the non-GAAP net margin was up 55 bps year-on-year to an all-time record of 3.2%. We continue to generate healthy cash flow Our last 12-month free cash flow as of the end of Q4 was RMB 41 billion, an increase of 14% for a year ago. This was driven by our improved profitability and the further optimized cash conversion cycle. By the end of Q4, our cash and cash equivalents, restricted cash, and short-term investments added up to a total of RMB 198 billion. To conclude, we have taken proactive actions and delivered a set of solid financial and operating results in Q4 and full year of 2023 amid evolving external environment and our business refocus. Going into 2024, we are well set to continue to execute the strategies we have in place. We feel confident in making further progress toward our operating priorities of user experience improvement and market share expansion, and we're committed to sharing our success with our shareholders. With that, I will turn it over to Shawn. Thank you. Thank you, Sandy and Ian. For the Q&A session, you're welcome to ask questions in Chinese and English, and our management will answer your question in the language you ask. will provide English translation when necessary for convenience purpose only. In the case of any discrepancy, please refer to our management statement in the original language. Okay, operator, we can open the call for Q&A session.
spk09: The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take one question at a time from each caller. If you have more than one question, please request to join the question queue again after your first question has been addressed. Your first question comes from Ronald Kung with Goldman Sachs.
spk16: Thank you, Sandy, Ian, and Sean. Congratulations on a stable 4G performance. I would like to ask, we see that Jindong and other e-commerce companies are focusing on growth and market share this year. uh uh Regulatory Dividend Thank you, Sandy, Ian, and Sean. I have two questions. One is that JD and other e-commerce companies has focused on defending market share, reigniting growth as kind of key focuses in this increasingly zero-sum e-commerce market. So how will management strive to balance between growth and absolute profit or growing profits in the year ahead? And with that, with the profits and kind of cash flow generation, then we've seen the regular dividend of $1.2 billion in 2023. We've seen the free cash flow for the business was nearly close to $6 billion in 2023. So do we see room to further increase total shareholder return given the strong free cash flow of the business in the years ahead? Thank you.
spk07: Thank you, Ronald. Let me answer the first question, and then Ian will answer the second question about the return. First of all, the balance between growth and profit has always been a very good question. In 2023, you can see that we have taken a lot of action on the basis of continuing to focus on the health of our business, including the user experience, the infrastructure, and the construction of the brand ecosystem. For example, we have seen that in the past year, we have been constantly increasing the number of users in terms of customer experience and services, including the expansion and upgrade of the price protection range, and the free delivery of goods, which has gradually expanded from the private sector to our CP business. There are also services such as payment without delivery, are improving users' shopping experience and service level, and continuously improving the shopping and service experience that we are differentiating. In the fourth quarter, we saw that the number of shopping users increased, especially the growth of new users, and this growth trend continued to the first quarter. At the same time, we did not see I believe you can see that we have seen a significant decline in our profits, even though our services and experiences are constantly increasing. This is what we are trying to achieve. At the same time, we are also optimizing our own purchasing costs and enriching our low-cost goods. While emphasizing the value of low prices, on the one hand, we are strengthening the supply of low-cost products, and we have also launched, for example, 100-year subsidies. such as the 9.9 retail channel and the series of measures to reduce the threshold of non-fuel consumption. In fact, while the users feel that the low price quality is good, it also drives the improvement of the shopping frequency of the users. We also believe that on the one hand, by continuously improving the user experience, it can allow us to gain more healthy user growth and increase the shopping frequency, Thank you, Ronit.
spk08: I will answer your first question and Ian will answer your second question. So the question on the growth and versus profits has always been a good question. And in 2023, while firmly focusing on the health of our business, we made many efforts and took action to further enhance our user experience, low-price MyShare, and platform ecosystem. So, for example, last year, we stepped up our efforts on user shopping experience and services by introducing or expanding a series of differentiated shopping and customer services, such as our price guarantee service, a free doorstep pickup service for returns and exchanges, the service expanding from our 1P to our 3P businesses, and also a refund without return services and more. We've seen an accelerated growth in quarterly shopping users in Q4, especially in the number of new users, and we expect the growth trend to continue in Q1. At the same time, we don't see any major drop of our profits, which is also reflects our efforts on maintaining a balance between growth and revenues and profits. And also, we continue to optimize procurement costs and expand our range of low-cost products. In addition, we have introduced a series of measures, including the 10-billion-yen discount program, the 99-yen items with free shipping channels, and a lower order value threshold for free shipping Our goal is to provide high-quality products at affordable prices to increase user purchase frequency. We believe that continuous improvement of user experience will promote healthy user growth and purchase frequency, which in turn will help us to increase business scale and market share.
spk07: The number of active merchants entering the track is also increasing rapidly. It also brings us better and richer product supply, and it also leads to a rapid increase in the number of users and orders of our CPV business. So in 2024, we will continue to pay attention to the user experience, continue to focus on price competitiveness and improve the several key directions of our brand eco-construction.
spk08: So from a platform ecosystem perspective, we have seen more and more new merchants are joining JD's marketplace, and the number of active merchants whose business growing on our platform is increasing at an accelerated rate. Their participation has greatly improved the diversity of product offerings on the platform, leading to accelerated growth in both the number of users and orders on our marketplace. So in 2024, we will prioritize improving user experience, price competitiveness, and platform ecosystem. We will make unswerving efforts to execute on these key areas with confidence that we will continue to gain market share.
spk07: Yes, I would like to emphasize that our business model itself determines that the increase in business scale, the increase in technical level, will inevitably lead to an increase in efficiency. And the benefits of these improvements can allow us to continue to invest them into user experience, thereby bringing better user consistency, user shopping frequency, and user growth, and continue to bring business scale growth. This is a sustainable positive cycle, and it will not necessarily have a big impact on profits. In fact, this is also the logic of our business model that we have been communicating with the market for so many years. And this profit will naturally come from our continued improvement in market share and value creation for users. So from a management point of view, we will also balance the pace of investment and growth, and we will pay attention to bring better returns to shareholders.
spk08: So here I want to re-emphasize that our business model decides that business efficiency comes from enhancing business scale and technological development. So with these enhancements, we receive increased revenue that we can invest in enhancing user experience. This in turn leads to increased user engagement, shopping frequency, and user growth, ultimately resulting in business scale growth. So this creates a sustainable and virtuous cycle, although it may not have a significant impact on profits. So this is the point we constantly communicate with our investors, and this is the logic of our business model. So the profits are a natural result of our expanding market position and value creation for our users. So during this course and cycle, our management team will strive to maintain a balance and a good pace between investment and growth while creating good returns for our shareholders. Thank you.
spk02: Thank you, Ronald. Thank you for your attention to the shareholder feedback. And I take this opportunity to report on our thoughts and actions. First of all, Jindong pays attention to the long-term health development of the business, including the health expansion of the business scale, as well as the long-term stable growth of profits and cash flows. Based on this, we pay attention to long-term shareholder returns and will return our shareholders in different ways. Our asset and debt performance is also very strong, and we think that maintaining good shareholder returns This is Ian.
spk08: Thank you, Rana, for asking about shareholder returns. So I'd like to take this opportunity to update investors on our current thoughts and moves. Firstly, JD focuses on the long-term healthy development of our business, aiming for healthy scale expansion and stable growth in profits and cash flow. On top of this, we're committed to long-term shareholder return and will continue to give back to our shareholders in various ways. Our balance sheet is strong, and we believe that maintaining a good return to shareholders and continuous investment in our business are not contradictory.
spk02: And we just announced that this year we will issue a 12-billion-dollar annual share. We have just announced an annual cash dividend of US$1.2 billion.
spk08: This is thanks to last year's rapid earnings growth, which yielded solid return for our shareholders. So over the past three years, we have returned a total of $4.2 billion in dividends, and we plan to continue to pay annual dividends going forward, sharing the company's valuation with our shareholders.
spk02: At the same time, our board also approved a new return plan Also, our board of directors have approved a new repurchase program to buy back to US$3 billion worth of company shares over the next three years.
spk08: We will firmly execute the buyback and communicate with investors regularly. We believe that investors will recognize the company's tangible efforts to share its value with shareholders. Thank you.
spk12: Thank you, Ronald.
spk09: Your next question comes from Kenneth Fong with UBS.
spk17: Hi, Sandy Yong, Ian, Sean, 大家好,谢谢接受我的提问。 我有两个问题,第一个是关于这个平台生态, 我们公司一起投入这个VP的商家, 从新增了商家数,活跃了商家数量, 也取得了不错的成效。 管理层在什么前提以下,或者什么情况以下, 我们会加速加快对VP商家的变现呢? Thank you, Manish, for taking my question. My first question is on the platform ecosystem. We have been investing to build our 3P ecosystem. Judging from the total and active merchants, we have received very solid results. Can management share with us under what circumstances we will start to accelerate the monetization of the 3P merchants? And also for 2024, any change and update for our 3P strategy? And my second question is for overseas. We see a lot of e-commerce platforms are investing overseas. Can management share with us your thoughts on our overseas expansion? Thank you.
spk02: Thank you, Kenny. Let me answer the first question about the platform ecosystem. If we talk about the platform ecosystem in JD.js, it includes 3P and self-sufficiency. Both are complementary. This is to provide a better user experience for JD.js platform. NPS is also improved in Q4. The platform ecosystem has always been our main strategic direction. With the development of 3P, we still have a lot of places to improve. The first step is to increase recruitment and supply, and attract more users and merchants to help them operate better on the JD platform and provide more resources to our users, and also form a positive competition for the whole platform. In the past year, we have increased the strength of recruitment and simplified the entry process of merchants.
spk08: Thank you, Kenny. To your first question about platform ecosystem, as I have previously mentioned, JD's platform ecosystem includes both our self-operated and third-party models. The tools are complementary to each other and jointly contribute to create good user experience. Our net promoter score has improved substantially in Q4 for both 1P and 3P, we have been investing in platform ecosystem as a long-term strategic direction. So there is still a lot of room for improvement in our 3P business development. Our first step is to increase the number of merchants and their product offerings. We need to attract more merchants and help them succeed on the platform in order to enrich the platform's product offerings for our shoppers. and foster positive business competition across the platform. Over the past year, we have increased our efforts to recruit merchants, simplified their onboarding processes, and provided more support and fee reductions for small and medium-sized merchants. To date, the number of effective merchants on our platform is close to one million, reaching the goals we set for ourselves at the beginning of last year. The number of active merchants have accelerated. More and more new merchants are finding effective ways to do business on our platform and continue to grow.
spk02: In the second step, we also see the positive feedback from users. We have more 3P trading users. The order volume of 3P is also constantly increasing. At the same time, the user experience of 3P is also continuously improving.
spk08: At the same time, we've received positive feedback from users. The number of shopping users and order volume on 3P platform continues to grow, with users' NPS for 3P rising at the same time. Both our 3P and overall GNV have gradually entered a trajectory of healthy growth.
spk02: Building Jindong's unique platform ecosystem is a long-term project, and we are still in the early stages. The current 3P's rapid transformation is not our primary task in the short term. The focus of 2024 is to attract more businessmen, especially small and medium-sized businessmen in the industrial era, to expand our commodity supply, and at the same time continuously optimize the business growth and management tools of platform ecosystems. Then, continue to optimize traffic distribution mechanism and create clear growth path and fair business environment for the business. Improve the experience of users in 3P business, and promote the common prosperity development of Zying and POP.
spk08: Building JD's unique platform ecosystem is a long-term project. We're still in the early stages. Our focus is not on a fast monetization of 3P in the short term, Instead, our priority in 2024 will be to attract more merchants, especially the small and media-sized merchants in the industrial belt, to enrich our product offering, and at the same time, we will continue to foster merchants' growth, the platform's governance, and operating tools. We will also further optimize the traffic distribution mechanism to create a clear growth path and a fair business environment for merchants. and to provide better user experience on 3P platforms, making a prosperous growth of both our 1P and 3P businesses.
spk02: We believe that through a more prosperous platform ecosystem, and a richer supply of high-quality products, and a more accurate user matching, we will attract more users, meet the needs of different users, and form a two-way circle to help business owners do their business better. We believe that the classic system offering a wide range of high-quality goods and improving
spk08: user product matching accuracy, we can attract more users and meet diverse needs. This will create a virtuous cycle that helps merchants succeed, and as a natural result, VP monetization will increase. Such virtuous cycle will form one of the key drivers of our long-term revenue and profit growth. We're at a good shape now and not in a rush to increase monetization in the short term. but the trend for steady improvement remains unchanged in the long run.
spk02: In addition, the Q4 platform and advertising service revenue has been fluctuating in the short term. This is mainly due to the large-scale development of the platform ecosystem in the last two or three years, and the platform has launched a series of support measures, including new business owners to be exempted, and some products and marketing centers to be actively exempted, which has led to a decline in the income of the mercantile. In addition, the increase in advertising revenue has also slowed down in Q4, mainly because of the bad weather of last year's New Year's Eve, plus the high-tech caused by the epidemic. Q1, accompanied by seasonal factors, will eliminate advertising revenue and return to healthy growth, accompanied by the improvement of users and traffic. I believe that our advertising revenue will accelerate gradually in 2024.
spk08: In addition, marketplace and marketing revenues experienced short-term fluctuations in Q4. This was primarily due to our efforts to develop the platform ecosystem. We launched a set of supporting initiatives, including commission free offerings for new merchants and proactive commission reductions in certain categories and programs. These initiatives resulted in a decline in commission revenues. Additionally, Advertising revenue growth slowed slightly in Q4 due to the late start of the Chinese New Year plan commotion compared with the previous year and a high base of the previous year driven by people's stockpiling behavior in December. With the ease of seasonality factors in Q1, we expect that advertising revenues will return to healthy growth And overall, looking at 2024, as user and traffic improve, we expect growth of our ad revenues to gradually accelerate.
spk07: Thank you. Okay, let me talk about the second question about overseas business. First of all, we have always been very concerned about the opportunity of internationalization. We will also use this as a starting point to focus on the entire domestic business. But because our business model itself and our advantages are actually different from other platforms, so our international strategy is also different from other platforms. We will also use our own competitive advantage to do the layout of the entire international business. JD's business model is based on supply chain. It is also very clear that it is based on user experience and private business. So, hi, Kenny. Let me share some thoughts regarding our overseas business strategies. So first of all, we are always on the outlook for overseas opportunities and take pilot steps to establish our presence.
spk08: Given that our business model and advantages are distinct from other platforms, our approach to global expansion will likewise be different. We aim to leverage our competitive strengths to establish our international presence. As you know very well, JD's business model is built on supply chain capabilities and centered around user experience. Supply chain is the cornerstone of our international business development, and we will continue to focus on this to expand our capabilities on the global market.
spk07: In terms of new sales, one is pre-sale, which is to help Chinese enterprises expand the overseas market and promote more brands to go out of the sea. Currently, we are in the early stages of optimizing our shopping experience To share some examples, for JD Retail,
spk08: Our outbound e-commerce platform is actively improving shopping experience by offering high-quality products and services to global users. In the meantime, it also assists Chinese companies in expanding their business and brands to overseas markets. We're still in the early stage for all these efforts. And at the same time, we're increasing our efforts in inbound cross-border business. JD Worldwide has established three direct procurement centers worldwide so far to improve cross-border supply chain efficiency, offering consumers in China a wider range of imported products at lower costs while ensuring product safety.
spk07: At present, Shenzhen logistics has nearly 90 storage warehouses, overseas warehouses and refueling warehouses in the world. The management area is nearly 900,000 square meters. It also serves a lot of overseas customers and Chinese overseas brands. As well as Shenzhen's production, they also set up European markets in Shenzhen and Southeast Asia. At present, the business has expanded to Vietnam, Indonesia, Singapore, the United Kingdom, the Netherlands and other overseas markets. So for GD Logistics, it has established a strong overseas supply chain, starting from warehouse and now expanding to overall supply chain services.
spk08: Currently, it operates nearly 90 bonded overseas and direct mail warehouses managing a floor area of almost 900,000 square meters. This enables JD Logistics to serve a large number of overseas customers as well as Chinese brands expanding abroad. Also, JD Property is expanding its business in Southeast Asia and Europe with a forecast on markets such as Vietnam, Indonesia, Singapore, UK, and the Netherlands. Its customers include international logistics and FMCG giants, as well as emerging Chinese companies going overseas. As I mentioned, both JG Logistics and JG Property, they are more enterprise service-facing. So for the two seaside customers, they don't have a very strong impression or experience so far.
spk07: In addition, in Europe, we have also launched O-Chama, an all-round retail platform. With our personalized logistics technology and comprehensive supply chain capabilities, we provide better shopping experience to consumers in 24 European countries. Not only does it serve the local brand business in Halei, but it is also building up a reliable path for Chinese brands and businessmen to go out to sea, but it is still in the recovery stage.
spk08: So we also introduced an omni-channel retail platform in Europe called Ochama. This business leverages JD's advanced automated logistic technologies and global supply chain capabilities to provide high-quality shopping experience for customers across 24 European countries. Not only does Ochama serve European local brands and merchants, it also provides a dependable path for Chinese brands and merchants to expand their business abroad. But certainly, Ochama is still our project in the incubation stage. And next, we will continue to focus on these areas, the business layout that we are good at with the strength to expand our global capabilities.
spk02: Thank you, Candy. I have the next question.
spk09: Our next question comes from Alicia Yap with Citigroup.
spk05: Hi, thank you. Then the second question is whether JD is going to invest more actively to acquire some new users in low-end cities. This is mainly from some additional subsidies or through the supply of rich products. Then this year, is there a new user number setting a target or KPI? I will translate it myself. In light of the shift of the consumption preference and also the rational spending behavior amid this soft macro sentiment, will JD need to or plan to adjust any specific strategy to fulfill the demand shift? If so, what could be the change and growth initiative? What is management expectation for China overall retail sales growth rate this year? How much higher can JD outperform the overall retail sales growth by. Will JD reinvest to aggressively growing new user in lower tier city? Will that mostly come from additional subsidy or through the improvement of product offering? Do you have a target KPI set for the numbers of new customer that you plan to acquire this year? Is it?
spk07: How is this here, Alicia? As you said, in the past year, we have seen that users have become more rational and pay more attention to the cost. Users pay more attention to the product and the quality of the product, and also pay more attention to the price to look for products with a more reasonable price. They may pay more attention to the real-world value and experience. For Jindong, In the end of 2022, we predicted the trend of consumption relatively early. In 2023 and the whole year, we are actually accelerating the promotion of our platform and the construction of the ecosystem to promote our low-cost new products. At the same time, we are also continuously increasing the shopping experience of our users and differentiating our service products. At the same time, we are actually analyzing the latest trends and movements in consumption Thank you, Alicia. As you said, seeing consumers have become more rational in spending,
spk08: They pay attention to both the quality and the cost-effectiveness of the product. They really value the good products with a reasonable price. At the same time, they do care about shopping experience. So last year, we took proactive steps in response to consumer trends. While striving to provide users with better shopping experience and differentiated services, we expanded our platform ecosystem and low-cost mindshare. We also studied the latest consumption trends and insights, and we worked closely with brands and merchants to jointly develop new products that better meet user demands. So overall, we see our performance so far has met our expectations. And in 2024, we will stick to our current strategies and firmly focus on execution and optimization without making major adjustments.
spk07: On the one hand, we just talked about the user experience and service will continue to consolidate our core focus to continue to strengthen our fast and good user mindset. On the other hand, it is also more efficient to promote the low price strategy to continue to optimize the purchase cost and enrich the low price of goods and products, and then enhance the efficiency of low price subsidies, so that users can better feel safe. In addition, We will continuously improve user experience and services and strengthen our core competitiveness to further entertain users' mindshare towards our fast delivery and high-quality reputation. At the same time,
spk08: We will also optimize procurement costs and enrich our low-priced product offerings and to let people to better feel our price competitiveness. And on the side of product diversity, we will continue to expand our merchant base and also improve the richness of the low-priced products of our platform.
spk07: Yes, I believe everyone has recently seen that in 2024, we also expect to have some policies to stimulate and promote consumption, including the increase in the strength of the exchange rate. We also expect that the expansion of consumption will be further consolidated and strengthened, which is also good news for some of our categories. We estimate that there will be a healthy growth of the total number of people in the whole year,
spk08: So in 2024, we've seen there will be a number of economic stimulus plans and consumption promotion policies come into play, including the encouragement of the trading consumptions, etc. So we are seeing this is a healthy recovery trend of overall economy and consumption, and this will also help us to help some of our advantages, the categories. So overall, we are optimistic for this year's overall retail sales, and we're confident that we will maintain a faster growth rate than that and continue to gain market share. Thank you.
spk02: Hello, Alicia. Let me answer your second question. In terms of users, we will actively encourage user growth and user evaluation. Our main experience has always been focused on improving user experience. This is how we think we can achieve high quality growth for users. We will continue to improve the abundance of high-end products, promote our low-cost strategy, and build a more suitable shopping mall and user consumption habits. and improve the efficiency and efficiency of storage. We are also improving services and continuously providing more in-house and post-sales services and shopping insurance, such as free delivery of goods and reducing the threshold of free delivery. At the same time, we believe that market marketing, including subsidies, is a tool for business users, and it can serve some special purposes in stages, and we will use it in a targeted and disciplined manner.
spk08: So for the second question on user growth, we will actively drive up user growth and their purchase frequency. Throughout the past year and this year, we have prioritized improving user experience to achieve high-quality growth. We will continue to improve the diversity of product offerings and promote low-price strategy and expand product pool for users from lower-tier markets to better meet their shopping preferences. So this helped us to enhance user product matching efficiency and user retention rate. Additionally, we continuously enhance services safeguarding users' shopping experience during and after sales, like the free doorstep pickup services for returns and a lower threshold order value for free shipping, et cetera. We believe that subsidizing and other marketing activities are all tools for user operation. These measures can serve some special purposes in certain periods of time and should only be used in a targeted and disciplined way.
spk02: In the previous Q4, the number of new users increased significantly. The number of old users also remained stable. The number of new users also increased significantly. We saw healthy growth in the number of users in Q4, including new users experienced strong growth, while existing users maintained steady growth. Users from lower-tier markets also achieved an accelerated growth,
spk08: User purchase frequency showed a healthy growth, particularly among existing users. Furthermore, user satisfaction rate has improved, with NPS of both self-operated and marketplace achieving an increase year-on-year.
spk02: Currently, the growth of QE users has maintained this trend. This year, as a unique interactive platform of CCTV Spring Festival, we have also reached out to more new users.
spk08: And so far in Q1, we've seen user growth has maintained such momentum. This year, JD was selected to be the exclusive interactive partner for China Media Group's Spring Festival Gala. During the show, we offered a variety of gifts to viewers home and abroad, reaching a wide range of new users. Our outlook of the whole year, we're confident in user growth.
spk02: Okay, thank you, Alicia. Let's have the last question.
spk09: Thomas Chong with Jefferies.
spk10: Thanks, management, for taking my question. My first question is about the consumer sentiment in 2024 and how should we think about the trend for different product categories. And my second question is related to our thoughts about the competitive landscape in 2024. Thank you.
spk07: Okay, thank you, Thomas. Let me answer this question. First of all, in 2023, as our society fully recovers and opens up, the consumer market from the beginning of the year to the end of the year is in a state of continuous recovery and recovery. But indeed, the consumer's ability and consumer confidence of everyone is still improving. So as of 2024, from the first two months of the year, consumption is steady and good. Thank you, Thomas, for your question. So by 2023, we have seen the society and economy have returned to normal.
spk08: Although the consumption market showed a recovery trend, people's spending ability and confidence still needed a boost. As we enter 2024, in the current two months, as we can observe, the country's national economy is on track for recovery. With the expected effects of the micro-stimulus plans and consumption promotion policies, we believe the momentum of consumption recovery and expansion will be further consolidated or strengthened.
spk07: From our point of view, in 2024, our strategic direction will remain relatively stable. We are confident that in 2024, we will be able to gain faster than the growth of the entire market. In detail, we believe that the goals of the large number of users pursuing a good life have not changed. In the future, we will provide users with better services, higher cost-effectiveness business models,
spk08: As from JD's perspective in 2024, we maintain a confidence to outperform the overall of the broader market and taking a longer term view. We believe that most people's desire for a better life remains unchanged. Our business model aims to provide better services and quality products with greater value for money, which has made us unique advantages to satisfy diverse users' needs in various shopping scenarios.
spk07: As you can see, in the past few years, the sales volume of food online has been gradually increasing. Some industries have achieved a relatively high penetration rate, but there are also many industries, including commercial, sports, home appliances, cars, and service industries. In fact, the penetration rate on the line has still increased.
spk08: So from the industry perspective, as we have seen that the proportion of online retail sales of physical goods continue to increase. For some industries, they have enjoyed a high penetration rate, whereas for other industries, such as supermarkets, sports, furniture and home, automotive, and other industries, their online sales penetration rate still has plenty of room to improve.
spk07: Yes, in terms of the category, our power generation category still maintains a fast pace in 2023, although the entire industry is still facing a relatively challenging situation at that time. Then in 2024, we are also confident that these categories can continue to maintain a fast pace in the industry, especially in this central encouragement and promotion of consumer-friendly exchange rate, encouragement to promote electronic goods and other general consumption.
spk08: And for the category perspective in 2023, we maintain, we continue to be the market leader in electronic categories and deliver the faster growth rate than the overall market in this area, even though this industry is facing challenges last year. So overall, we're confident to maintain faster than industry growth rate in these categories, especially as you see the government is promoting the treating of consumer goods and stimulate the consumption of electronics and other products. So we're confident to maintain a strong growth in these categories. 然后商超品类在2024年的进周还是会非常激烈。
spk07: The competition in the supermarket category is expected to intensify
spk08: in this year with various players adopting different strategies. JD's supermarket business has undergone some adjustments in the past year. These include a focus on core businesses, improvements in supply chain capabilities, and enhanced fulfillment efficiency through warehouse network reforms. And these strategies are gradually coming to fruition and there's been a positive trend of growth recovery for the supermarket category.
spk07: In terms of fashion and home appliances, these two categories will depend more on our third-party business. Because of the unique business model of Jindong, the challenges we face when we do open eco-systems and the way we do it may be different from other platforms. In 2023, we also saw that our open eco-system strategy achieved initial results. And on the fashion and home segment, this is more heavily dependent on the development of our third-party merchants. And due to our unique business models, the way we foster these two categories will be with a different approach.
spk08: So, so far we have seen our open ecosystem strategy has yielded some initial results and users are becoming more and more aware of JD Fashion and JD Home. We're confident that we will continue to experience healthy growth for these categories, these two categories in 2024.
spk07: This is also an eternal question. We believe that China's retail consumption market is still very large, and there will be different brands and business models. We see ourselves more as a retailer. If we look at the perspective of Chinese retailers, the distribution is actually relatively high. In the face of these competitive patterns that continue to change, we think it's still about how to establish users' satisfaction, the ability to coexist with our partners, and a more efficient business model. In 2023, we indeed made some strategic adjustments, and the performance was also affected by some short-term effects. However, we ourselves see that in many aspects, we are still continuing to gain market share and users' interest. The team has also made a lot of technological innovations to improve our transformation efficiency and reduce our operating costs. So for Jindong, we think that in 2020, we will gradually be able to see a series of adjustments in the previous year, and release the results that he used. So we will continue to move forward in the same strategic direction. We also believe that Jindong's basic business model is a business model that can continue to grow after passing different growth cycles.
spk08: So for the question about industrial competition, which is the internal question here, so we believe that China's retail consumer market is vast and various platforms and business models will coexist. And as we see ourselves today, it's a retailer and then this market is quite dispersed. We think the key for a long-term success here is to satisfy users' experience and create a win-win collaboration with all kinds of our partners. So in that part, we will stick to our strategies and continue to gain market shares. And we're optimistic that all the changes we made in the past year will gradually come to show some effects and variations. And also, last year, our different JDS teams have came up with innovative tactics and techniques to improve conversion rates and reduce operating costs. Therefore, we think by firmly executing our established strategies, so we are on the right track to deliver results this year. And at Citi.com, we position ourselves as a supply chain-based company, so we have these strengths and capabilities to withstand and navigate through different economic cycles and to deliver good results this year. Thank you.
spk09: We are now approaching the end of the conference call. I will now turn the call over to J.D.' 's Sean Zeng for closing remarks.
spk02: Thank you. Thank you everyone for joining us today on the call and for your questions. If you have further questions, please contact me at IRC. We appreciate your interest in JD.com and look forward to talking with you again next quarter. Thank you.
spk09: Thank you for your participation in today's conference. That concludes the presentation. You may now disconnect.
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