Dada Nexus Limited

Good morning, ladies and gentlemen, and thank you for standing by for DADA's first quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the management's prepared remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I'd now like to turn the call over to the host for today's call, Ms Caroline Dong. Head of Investor Relations for Dada. Please proceed, Caroline.

Thank you, operator. Hello, everyone, and thank you for joining us today. Our first quarter 2021 earnings release was distributed earlier today and is available on our IR website at ir.imdada.cn as well as on global newsware services. On the call today from Data, we have Mr. Philip Kwai, Chairman and the Chief Executive Officer, Mr. Beck Chen, Chief Financial Officer, and Mr. Jun Yang, Co-Founder and the Chief Technology Officer. Mr. Kwai will talk about our operations and company highlights, followed by Mr. Chen, who will discuss the financials and guidance. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I'd like to remind you that this conference call contains following statements as defining the Section 21E of the Securities Change Act of 1934 and the U.S. Private Security Investigation Reform Act of 1995. These following statements are based on the current management, current expectations, and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties, and other factors, all of which are difficult to predict and a matter of which are beyond the company's control. These risks may cause the company's actual results or performance to deform materially. For the information regarding these and other risks, uncertainties, or factors, as included in the company's filings with the U.S. SEC, the company does not undertake any obligation to update any forelooking statement as a result of new information, future events, or otherwise, except as required under applicable law. Please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Philip Kwai. Philip, please go ahead.

Thank you, Caroline, and thank you all very much for joining us today. We are pleased to deliver a strong quarter to kick off 2021. Our total net revenue for the first quarter reached $1.7 billion, which is beyond the high end of our guidance. The year-over-year growth rate was 52%, despite the high base from Q1 of 2020. The two-year compound average growth rate was 78% when calculated from Q1 of 2019. Revenue generated from JDDJ reached $778 million with a two-year trigger of 97%. I'm going to talk you through our deepened strategic cooperation with JD Group, some highlights of the April 15th anniversary promotion, and some recent progress of our two platforms. Then I will hand the call over to Beck to talk about our financial results. On March 22nd, We announced that JD.com will increase its stake in EARTH to 51% by investing a total of $800 million in newly issued ordinary shares. The increased investment marks a deepened cooperation between JD.com and DADA under the Omni-Channel strategy. Leveragent JD's devoted strategic support will better fulfill demand for local on-demand retail and its delivery on JD, covering various scenarios and categories, and expand our omnichannel cooperation with JD. Together with JD, we will continue to provide consumers with superior shopping experience, empower retailers and brand partners, and achieve a win-win cooperation for all. So with aligned interests and strategic goals, we have started to seamlessly collaborate with JD Retail to explore more synergy opportunities. So we are working together to meet the consumers' needs of on-demand service on JD.com across all categories, including supermarkets, consumer electronics, beauty and health, apparel, et cetera. Effectively, we are optimizing access points and exposures fine-tuning product offerings, and innovating marketing activities to improve consumer experience and operational efficiencies of the on-demand service on JD. So over the past six years, our JDDJ platform has obviously grown very fast, and our anniversary promotion has become one of the most important promotional events across categories in the on-demand retail industry. This year, sales on our platform during the events were 1.7 times greater than last year. And total sales generated by brands that we partner with rose by two times year-over-year. Sales during the promotional events in lower tier cities that we have entered for over a year experienced a more than 100% year-over-year growth rate. This significant growth momentum demonstrate our potential in existing lower-tier cities and the competitive advantages in effectively meeting consumers' needs. Now I will provide some of the updates on our two platforms, starting with JDDJ. First, we have been constantly expanding our geographic coverage, especially in lower-tier cities. and further diversified category coverage to provide our consumers with more product offerings in more categories on demand. At the end of the first quarter, our JDDJ platform has covered over 1,500 cities and counties, which has more than doubled compared to the same period last year. While our flagship supermarket category remains on the fast-growth past, we have made significant progress across many other categories. For consumer electronics, we have now nearly 9,000 stores listed on our platform. In the first quarter, we successfully facilitated sales from smartphone brands such as Realme and OnePlus. During the anniversary promotions, sales of mobile phones from brands such as Apple, Vivo, Xiaomi, and OPPO, all increased by more than seven times year-over-year. We also deepened the strategic collaboration with Lenovo's LACO brand to bring all of the LACO's 1,000 offline stores online to provide consumers with access to Lenovo's PC and other products on demand. For cosmetics, we continue to improve our product line to enrich product offerings and improve consumer experience. For example, we have newly partnered with leading cosmetic retailers such as Sephora, World Color, and Colorist. And we're also progressively bringing their offline stores onto our platform. For apparel, We attracted a number of new brands and distributors to the platform, such as Skechers, Crocs, and a few leading Chinese sports brands. We will continuously focus on expanding brand partnerships, especially in the men's clothing and sportswear segments, to strengthen our presence in the apparel category. For the mom and baby category, we deepened our cooperation with Kisswant, a leading player in the category, and have brought almost all 400 of their stores across the country onto our platform. For home appliance, we're now cooperating with Five Star Appliance and Shun Dian to provide one-hour delivery for consumers who buy small home appliances on our platform. And second, we are continuously strengthening our relationships and deepening our collaboration with our various retailer and brand partners. We newly established partnership with about 30 leading supermarket chains on our platform. As of today, we have partnered with 75 of the top 100 supermarket chains in China. In the fresh product category, we collaborate with Miss Fresh to officially launch their front-end warehouses on both JD.DJ and JD.com. This partnership allows us to offer more consumers on-demand delivery of fresh products and further demonstrate our advantage as an open platform. Our cross-source and digitized picking service for retailers, Adapicking, also saw increased adoption. So data picking is a great solution for retailers who struggle to meet the fluctuated demands and bring down labor costs. The picking order volume in Q1 increased by 230% from the fourth quarter of last year. In the time it took the riders to to fetch goods declined by 23%. We are now in the process of expanding to packaging and replenishing service to provide a comprehensive set of solutions for improving retailers' operational efficiency. Moving on, I would like to talk about the online marketing service for brand partners. During the first quarter, online marketing revenue from brand partners remained strong, increasing by over 130% year-over-year. We continue to deepen our strategic partnerships with a great number of international brands, especially for omnichannel and targeted marketing services that help them effectively engage with consumers. For example, we jointly launched a new promotional campaign called Omnichannel Super Brand Day with JD.com and the dairy brand Wolf China on May 20th. So the event effectively integrates online L2O, online B2C, and offline marketing to allow brands to precisely target consumers and digitize the entire marketing process. So on May 20th, WorthChina's sales on JDDJ platform increased by 3.7 times year-over-year, and JDDJ became the biggest O2O channel for WorthChina. And third, I would like to talk about our innovative technology to empower our retailer and brand partners. So our Hybo system, the omnichannel online retail operating system, continues to be welcomed and popular among retailers because it's an open, neutral, flexible system. As of the end of April, the system has been adopted in more than 3,300 retailer stores, a significant increase from the 2,200 stores as of the end of February. So in addition to supermarket chains, with minimum additional development, we successfully expand the Hygo Systems deployment scenarios to convenience stores and consumer electronics categories. So this demonstrates the feasibility of implementing the system as a standardized solution across multiple verticals. The great thing about the Hypo system is that it's evolving with our merchants' demands. We help merchants to enhance operational and cost efficiencies by constantly iterating and upgrading the system to address their pain points across their omni-channel O2 operations, which also leads to a higher consumer satisfaction. For example, during the first quarter, we added a new automatic replacement feature which digitized the replacement process when an SKU is out of stock. This feature alone has helped cut down the average cost and our managing product shortage by 80%. We also upgrade the dashboard of the system so that the stores can break down the online subsidies, delivery fees, and commissions into each SKU. So this enables merchants to have better insights on SKU profitability, operational performance across channels, and identify issues in a timely fashion. I would like to provide a specific case study, the deployment of our hybrid system at a leading supermarket chain in Jiangxi province, which has been acknowledged by CCFA which is a China chain store and a franchise association for the impressive digital transformation. So this merchant has hoped to boost sales through O2O channels, but we're struggling with losses caused by a lack of detailed operational data and subsidy efficiencies. By adopting Hypo system, they were able to automate financial reconciliation process for omnichannel business. And HYBO's visualized dashboards enable them to analyze operational data across dimensions, including sales channel, stores, product categories, and SKUs. So after adopting the HYBO system, the merchants' omnichannel O2O sales increased by over 50% from previously. the profit margin of their auto business improved by 3.5 times. Moving forward, we will promote this value-added service to more of our existing retail partners. Moving on to DataNow. In the first quarter, our intra-city delivery service to chain merchants continued to grow significantly, with revenue increasing by more than 130% year-over-year. As more chain merchants choose our service and the store penetration for each merchant continues to rise, we expect the business to maintain its fast growth in Q2. Revenue from catering chains increased by over 400% year-over-year as we keep expanding our customer base and increasing store penetration in existing partners. we're pleased to see that our high-quality delivery service are increasingly recognized by restaurants. In the pharmaceutical category, we were able to increase the revenue from the pharmaceutical chain merchants by more than 600% year-over-year as we continue to enhance our service offerings for pharmaceutical chains. Specifically, we upgraded our operational tools to provide better support for long-distance and late-night orders. In the supermarket category, based on our strategic partnership with CR Vanguard, we have already fully integrated our dedicated delivery service to the omnichannel orders of around 1,300 CR Vanguard stores starting from April. In addition to chain merchant business, our delivery service provided to small and medium-sized merchants also experienced very fast growth. In Q1, the number of small and medium-sized merchants that complete orders on DataNow platform more than doubled year-over-year. I would like to talk about the last-mile delivery. At the end of Q1, we provided support to logistics companies in over 2,700 cities and counties. We continue to deepen our cooperation with JD Logistics. During April, we successfully changed to a more asset-light model as we told in the last earning call. With that, I will now pass the call to Back-Chan to go over our financials for the quarter. Thank you.