Dada Nexus Limited

Good morning, ladies and gentlemen, and thank you for standing by for DADA first quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After the management prepare remarks, there will be a question and answer session. As a reminder, today's conference call is being recorded. I'll now turn the meeting over to your host for today's call, Ms. Caroline Dong, Head of Investor Relations for DADA. Please proceed, Caroline.

Thank you, operators. Hello, everyone, and thank you for joining our first quarter 2022 earnings conference call. On the call today from DADA, we have Mr. Philip Kwai, Chairman and CEO, Mr. Back Chen, CFO, and Mr. Jun Yang, Co-Founder and CTO. Mr. Kwai will talk about our operations and company highlights. Then Mr. Chen 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 follow-up statements. Please refer to our latest specific proper statement in the earnings price list on our IR website. Also, during this call, we will discuss certain non-GAAP financial measures. Please also refer to our earnings price list, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures. Finally, please note that, unless otherwise stated, all figures mentioned during this conference call are in RMB. It's now my pleasure to introduce our chairman and CEO, Mr. Kwai. Philip, please go ahead.

Thank you, Caroline, and thank you all very much for joining us today. We're pleased to announce another strong quarter and an excellent start to the year. During the first quarter of 2022, Data Group delivered revenue growth of 74% year-over-year on a comparable net basis, fully demonstrating our resilient business model despite pressures from the current macro environment. So as usual, I will first go through some key observations and highlights of our recent progress before moving on to updates on our two platforms. Back-end will then go through our financial results in greater details. In terms of the regulatory environment, The Political Bureau of the CPC Central Committee has recently held a meeting to analyze the current economic situation, where leadership emphasized the necessity to promote the healthy development of the platform economy, including completing the special rectification, implementing regular supervision, and introducing specific measures to support the robust development of the platform economy in compliance with laws and regulations. So under the overall guidance of the CPC and the government, Data Group adheres to compliance operations while driving sustainable business growth. We have been growing our business rapidly while actively fulfilling our responsibility as a platform, making every effort to elevate the platform economy to a new level. Since the beginning of the year, the COVID-19 outbreak in some cities, including Shenzhen, Shanghai and Beijing, have led to the initiation of containment measures, including temporary close-off or lockdown. As an approved enterprise by local governments to maintain the supply of daily necessities, Dada Group has been involved in anti-pandemic support initiatives. For merchants, we strive to provide delivery capabilities to support their online operations. For consumers, we ensure price stability of products on our platforms. For riders, we help eligible riders obtain COVID travel passes and provide special subsidies. For local governments, we donate personal protection equipment, help government agencies with the distribution of supply packages to residents, and engage in public welfare activities for pandemic control. Now I would like to provide updates on our deepened cooperation with JD.com. Since JD.com's increased investment in data group has been completed at the end of February, our omnichannel business cooperation with JD.com has further strengthened. In the first quarter, the GMV of ShopNow or Xiaozhi Gold The unified brand for all on-demand retail services within the JD ecosystem increased by more than three times year-over-year. During the first quarter, we further expanded the geographic coverage of the nearby, or 附近频道, which is one of the major entry points of ShopNow. As a result, nearby gained more exposure among JD users. In addition, we continue to improve the click-through rates and conversion rates by upgrading app design and operations. Now, let's spend some time on JDDJ, the leading local on-demand retail platform in China. Since March, China's consumption growth has been under pressure due to the pandemic resurgence. However, the national policy directive towards building a large national unified market and unlocking the full potential of internal circulation is very clear, and the overall trend towards domestic consumption recovery will not change. The promotion of the deep integration of online-offline consumption to encourage the development of new consumption formats is one of the most important drivers of continuous recovery and also the growth of consumption. JDDJ has always been committed to meeting the diverse needs of consumers through innovative models. April 15th marks the 7th anniversary of JDDJ. This year, for the first time, we launched the April 15th Intracity Shopping Festival together with JD.com on both JDDJ and ShopNow. During the festival, the average daily GNV of categories such as FMCG and fresh food exceeded that of last year's W11 shopping festival, while the GNV of consumer electronics, home appliance, and many other categories more than doubled year-over-year. At the end of March 2022, the number of annual active users on JDDJ increased by 47% year-over-year to 67.9 million. During the first quarter, JDDJ continued to expand category and merchant coverage, deepen strategic cooperation with brands, and innovate in digital solutions, so as to empower our partners and better serve more and more users. Firstly, we continued to expand category and merchant coverage. I will start with our supermarket category. So far, we have established partnerships with 86 out of the top 100 supermarket chains in China. During the quarter, we also established new partnerships with regional winners such as Pangdong Line in Henan Province. Driven by the Chinese New Year shopping festival and the March 8th campaign, as well as enhanced user mindshare, the year-over-year GMV growth of supermarkets on JDDJ accelerated in the first quarter. In addition, the GMV of leading regional supermarket chains such as Zhongbai Warehousing and Rainbow Tianhong more than doubled on a sequential basis during the quarter. Let's move on to the consumer electronics and home appliance category. In the smartphone subcategory, we newly launched smartphone trading program, which enhanced our capability to serve the full lifecycle needs of smartphone buyers and improves conversion rates. In the PC and digital products subcategory, we further expanded offerings and established new partnerships with leading brands, including iFlytech, Kodak, Shunfei, and Nintendo. In the home appliance subcategory, total GMV maintained rapid growth on a sequential basis, driven by our one city, one flagship local home appliance chain strategy and enrichment of both major and small home appliance supplies. In the mom and baby category, we have deepened our cooperation with leading chains such as KidsWant, HaiZiWang, Le You and Baby Room , and strengthen the synergy with ShopNow. As a result, the GMV of mom and baby chains on JDDJ increased by more than eight times year-over-year in the first quarter. Secondly, we further deepen the strategic cooperation with brands. In the first quarter, the year-over-year revenue growth of our online marketing service was around 180%. During the quarter, we have signed several new partnerships with packaged food brands such as CP Food , Three to Curl , and Good Farmer . At the same time, as more and more brands from new categories generate meaningful sales on GDDJ, The categories of brands that we directly partner with also keep expanding. For example, in addition to the brands mentioned above, we have recently established cooperation with household product brands, including ASD, Aishda. The innovation is at the core of our partnership with brands. In this quarter, we launched a new marketing campaign named Deliver the Best to Your Home, or Haowu Daojia. which features a monthly selection of products based on the prevailing consumption trends and help brands promote trendy bestsellers. In March, the theme of our Haowu Daojia series is organic foods. During the campaign, the sales of milk, milk powder, and other products from brands including Yili Immunio Waste and Jinlebao more than doubled on a year-on-year basis. Thirdly, we continue to innovate in digital solutions to empower retailers and brands. Excuse me. So for who is not speaking, could you please just mute yourself, please? Thank you. So thirdly, we continue to innovate in digital solutions to empower retailers and brands. Haibo, our omnichannel operating systems for retailers, continue to empower more merchants to carry out O2O operations across multiple channels efficiently. As of the end of March, the Hibo system has been deployed in more than 6,700 retail chain stores, including about 3,000 stores of around 50 top 100 supermarket chains in China. To help improve our brand partners' sales efficiency, we have recently launched the Earth Grid System, or Kun Ce system, which visualizes brands' online inventory down to a 3 x 3 km grid level, helping brands to optimize point-of-sales coverage and gain regional sales share. As of now, More than 30 brands in food and beverage, grain and oil, mom and baby care products, and other categories have adopted the Quinto system. The effectiveness of Quinto system to help brands identify sales opportunities and grow sales has been tested. Since Kimberly Clark's adoption of Quinto system, the point of sales coverage of code text, One of its core products sold in CR Vanguard supermarkets increased by more than 20% points during the March 8th campaign, and the sales increased by more than 20 times on a sequential basis. Regarding our digitized in-store picking service, Datapicking, it has been fully rolled out to all of the Walmart stores nationwide by the end of March. In addition, we have established partnerships with Care4 and helped it increase picking fulfillment rate by 20% points. Data picking's empowerment in helping address labor shortage and digitize the picking process is highly valued by retailers. As a result, order volume maintains strong growth momentum. In the first quarter, the number of orders fulfilled by data picking increased by more than three times year-over-year. Moving on to DataNow, the leading local on-demand delivery platform in China. Recently, the CPC Central Committee and the State Council proposed in the opinions on accelerating the construction of a national unified market to promote innovation of technology and business model in the third-party logistics industry, so as to improve logistics efficiency for the entire society. As you know, technology-driven intra-city on-demand delivery plays a key role in the third-party logistics industry. It also serves as an important infrastructure to support new consumption formats. improve consumer convenience, and improve overall logistic efficiency. Leveraging our technology advantages and on-demand delivery network coverage, DataNow serves a wide range of customers, including chain merchants, SME merchants, individual users, express delivery companies, and on-demand delivery agencies. providing them with diversified and high-quality intra-city on-demand delivery services. In terms of business progress, I will start with our KA or key merchant chains business. Based on the expansion of cooperating merchants and stores, the increase in the average delivery order per store, revenue of our on-demand delivery service to KA merchants maintained rapid growth, increasing by about 50% year-over-year after hypergrowth for multiple quarters in the past. In restaurant KA category, we continued to sign up new restaurant chains such as Daikos, Dekoshi, and revenue generated from tea beverage KAs increased by more than 100% year-over-year. In addition, pharmaceutical KAs maintained impressive performance with revenue increasing by more than 100% year-over-year. So moving on to the SME and the C2C business, orders for food increased by more than 40% year-over-year, while unit economies keep improving significantly. For last mile service, during the recent pandemic outbreak in Shanghai, we quickly recruited and activated last mile delivery riders, leveraging our flexible cross-sourcing network. These riders played a key supplementary role in restoring JD Logistics' delivery capability while it faced shortage of in-house delivery personnel. Our efforts also helped serve the bottlenecks of the last 100-meter delivery within communities, which ensured door-to-door delivery even during the pandemic while staying compliant with the containment measures. So to wrap up, despite pressures from the broader macroenvironment and ongoing pandemic, we have continued to make encouraging progress and deliver strong results. We will continue to execute our strategy to drive substantive returns for shareholders. With that, I will now pass the call over to Baek Chen to go over our financials for the quarter. Thank you.