Dada Nexus Limited

Good morning, ladies and gentlemen, and thank you for standing by for DADA's second quarter 2022 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 will 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, Operator. Hello, everyone, and thank you for joining our second quarter 2022 Earnings Conference Call. On the call today from Data, we have Mr. Philip Kwai, Chairman and CEO, Ms. Jeff Wei-Jian He, incoming President, Mr. Back Chen, CFO, and Mr. Jun Yang, Co-Founder and CTO. Mr. Pai 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 full looking statements. Please refer to our latest safe harbor statement in the earnings pressure list on our website, which applies to this call. Also, during this call, we will discuss certain non-GAAP financial measures Please also refer to our earnings pressure list, which contains the 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. Pai. Philip, please go ahead.

Thank you, Caroline. And thank you all for joining us today. Today, with mixed emotions, I announce my resignation from Dada as chairman of the board and CEO. I would like to take this chance to thank everyone who joined our journey together. I'm inspired and proud of what we have achieved. I believe this transition will take Dada to the next chapter, and we are now more ready than ever before to turn the leaf. I'm extremely pleased to announce that Jeff Huijianhe, our Vice President and my trusted business partner, has been appointed as our President. Jeff has been instrumental in our tremendous growth in the past eight years and our deepened collaboration with JD. Such contribution speaks for itself. With demonstrated strategy execution and leadership capabilities, he has won the trust and support from the team and the board. Meanwhile, I'm also thrilled to welcome Mr. Xinli Jun to join us as the chairman of the board. Under leadership of Jeff, Jun, and Beck, and with the long-standing support from Li Jun and JD.com, data will be in good hands. I look forward to the continued strong partnership with JD to create more compelling value for our shareholders and the society. Now, let's discuss our second quarter results. We are pleased to announce another strong quarter in which Data Group maintained rapid revenue growth with continuously improving operating efficiency. During the second quarter of 2022, total net revenue increased by 55% and adjusted net loss margin narrowed by 20% points year-over-year. I'd like to highlight some general market developments before providing more updates on the two platforms. In action, we'll then go through our financial results in greater detail. Starting with the current industry and regulatory environment, Dada Group fully embraced the pro-employment, pro-consumption policies. Recently, we supported consumption recovery and employment stability through participation in major government-led promotional events, such as 2022 International Consumption Season in Shanghai, as well as the pilot program of work-related injury insurance for riders. Meanwhile, as China aims to promote the robust development of the platform economy, Dada Group firmly supports regulatory policies We will seize the opportunity of high-quality growth to develop our platform in fully compliance with regulations. We believe our innovative and solid business model can play a part in improving the efficiency of resource allocation and facilitating the progress of the domestic economy. On the anti-pandemic front, we actively cooperated with local governments in Shanghai, Beijing, and other cities affected by COVID-19 during the second quarter to maintain the local supply of daily necessities, leveraging our strengths as an on-demand retail and delivery platform to fully embrace our social responsibilities. In June, received an appreciation letter from the Shanghai Municipal Commission of Commerce. That group's significant contribution to the COVID-19 fight in Shanghai were highly valued by the local government. Next, I would like to provide some updates on our deepened cooperation with JD.com. During the second quarter, the GMV of ShopNow or Xiaoshi Go, the unified brand for all on-demand retail services within JD ecosystem, more than tripled year-over-year. For search results optimization, in the second quarter, we further expanded ShopNow's merchant base and product offerings to improve the availability of one-hour delivery options in each local grid. As a result, our search exposure rate in JD increased by 3% points compared with the previous quarter. For nearby, or Fujin tab, Fujin Pingdao, we further roll out this entry point to more cities. So far, nearby has covered all cities nationwide in which we have launched the ShopNow service. Driven by the improvement in exposure, click-through rates, and the conversion rate, the GMV from nearby tabs increased by more than 80% year-over-quarter. Now, let me walk you through the operational highlights of our two platforms, JDDJ and DataNow. Before going into business details, I would like to highlight the results of June 18's grant promotion. a major mid-year online shopping festival in China. Both JDDJ and DataNow made breakthroughs in this year's promotion. For JDDJ, GMV on the peak day surpassed RMB 600 million, and GMV during the promotional increase by more than 70% year-over-year. For DataNow, the number of daily orders delivered exceeded 10 million for two consecutive days. Now, let's spend more time on JDDJ, the leading local on-demand retail platform in China. As of the end of June 2022, the number of annual active users on JDDJ increased by 42% year-over-year to 72.8 million. Retailer empowerment, brand cooperation, and technology innovation continue to be the focus of JDDJ in the second quarter. I will elaborate on each of the three areas. Firstly, we have continued in our efforts to empower retailers. Beginning with the supermarket category, we have now established partnerships with 87 out of the top 100 supermarket chains in China. In addition to onboarding more top 100 supermarket chains, we are also signing up more local regional leaders. Moreover, supermarket category is gaining momentum in ShopNow. Thanks to the increase in online traffic and the conversion rate, as well as offline customer acquisition, GMV of supermarket merchants in ShopNow channel increased by multiple times year over year. Let's move on to the consumer electronics and home appliance category. Based on our consumer insights at the grid level, we continued to move the right product supplies online. During the second quarter, more than 10,000 consumer electronics and home appliance stores were newly launched on JD.DJ. In the smartphone subcategory, as the largest O2O sales platform for Xiaomi products, we established an official partnership with Xiaomi brands in the second quarter. As of now, there are more than 3,000 Xiaomi home stores listed on JD.DJ. GNV, generated by Mi Home, the Xiaomi Home stores increased by more than 10 times year-over-year in the second quarter. In the PC and accessories subcategory, we further expanded offerings and penetrated new segments. During the quarter, we formed new partnerships with leading brands including Canon and Aurora. In the home appliance subcategory, in collaboration with merchants, we enhanced our service capability of integrated delivery, installation, and after-sales service for large home appliances. As a result, the GMV of home appliance subcategory more than doubled on a sequential basis. In the mom and baby category, we facilitated the cooperation between leading retailer chains and mom and baby brands, such as Waze and Ely. As a result, GMV of mom and baby trends on JDDJ more than tripled year-over-year. We also worked more closely with trends in the liquor category, such as JD Liquor Awards, and 1919, with GMV of liquor stores more than doubling year-over-year. In the home and the furniture category, We have further penetrated smart home products. For example, in the second quarter, JDDJ has established partnerships with more than 10 smart lock chains, including and brought 2,000 smart lock stores online. providing users with a convenient one-stop shopping experience, integrating delivery and installation. Secondly, we continue to push forward our cooperation with brands. During the quarter, we continue to solidify our leadership in the O2O space in terms of both the number of brands we work with and the depth of engagement with the brands. Our online marketing services recorded year-over-year growth exceeding over 80% in the quarter. In the second quarter, we further expanded our diversified brand partner base. We strike several new partnerships with food and beverage brands such as Yuanqi Sunling and Dongbei Daban, as well as beverage alcohol brands such as Diageo and Luzhou Laojiao. In addition, we sign up mom and baby brands such as Abbott and pharmaceutical brands such as Jiang Zhong. We also saw impressive results from our brand marketing campaigns. On June 1st, GDDJ teamed up with 11 mom and baby brands including Waze and Huggies to launch a joint marketing campaign aimed at creating a virtual mom and baby shop that offers extensive products in good price and available for one-hour delivery. Total GMV of participating brands increased nearly fourfold on a year-over-year basis. On June 17th, anchoring with JD's June 18th grand promotion that started at 8 p.m. We've partnered with 23 brands, including P&G, PepsiCo, and Ehai Carry to launch a live streaming campaign with the slogan, placing orders at 8 p.m. and get delivered to your doorstep by 9 p.m. On the day of the live streaming campaign, total GMV of these brands increased by more than three times year-over-year. Thirdly, we also continued our efforts to empower retailers and brands with innovative technologies. At the end of June, the Hybot system, our omnichannel operating system for retailers, had been deployed by more than 200 merchants in around 7,700 retailer stores. In addition, Hibor has successfully penetrated new categories, including pet stores and mom and baby stores, while serving more supermarkets and convenience stores. We continue to roll out new Hibor features to address what merchants need most and help them wherever they see challenges. One example is that we launched a new module enabling merchants to directly connect to JD's warehouse system through Hypo when they source supplies from JD. This helps retailers' procurement staff save significant labor hours. As a result, merchants adopting this module saw their procurement efficiency improve by three times. Our Earth Grid Systems, or Kunce, which helps brands boost sales by providing them with by-grid or by-store sales data, has been welcomed by a growing number of brands. In addition, as ShopNow becomes an increasingly important channel for brands' sales growth, we upgraded Kunce's SKU analysis feature to help brands simultaneously monitor the availability of their goods at both JDDJ and ShopNow so that brands can improve the product supply and sell. Our digitized in-store picking service, Datapicking, also made significant progress. Since the establishment of our partnership with Care4, we have helped them improve picking fulfillment rate customer experience and cost efficiency. For example, customer compliance rates related with picking were lowered by half three months after stores started to utilize data picking. As a result of the impressive results, we have continued to deepen our collaboration with Calford. Now, data picking covers all of the chain, the key O2O stores. Driven by expanded store coverage and increased penetration of data picking in partnering stores, the total number of orders fulfilled by data picking in the southern quarter increased by more than three times year over year. Now, let's move to DataNow, the leading local on-demand delivery platform in China. While total revenue maintained rapid growth, data analysis operating efficiency also improved significantly as we optimized pricing strategy and merchant portfolio. I will start with our KA or Chain Merchants business. Revenue of our on-demand delivery services to KA merchants increased by 45% year-over-year, while average gross profit per order turned positive. Our ability to provide integrated fulfillment services consisting of warehousing management, picking and delivery gives us unique advantages. Therefore, we continue to consolidate our leading position in the supermarket KA category. In the second quarter, revenue generated from supermarket KAs increased by over 50% year-over-year. In addition, we sign up new supermarket chains like Walmart, Ume. In the restaurant and beverage K category, revenue generated from beverage K is maintained rapid growth more than doubling year-over-year. Moving on to our SME and C2C business, orders for food increased by over 30% year-over-year, while we continue to optimize unit economies significantly year-over-year. Thanks to our further penetration into lower tier cities, orders for SME merchants increased by more than 40% year-over-year. Lastly, last mile services. For last mile delivery, we continue to leverage our flexible cross-sourcing network to ensure the fulfillment of JD Logistics orders, especially amid the pandemic and during peak promotional campaigns. For pickup service, Others maintain strong growth momentum mainly driven by our further penetration into virus picking scenarios. And to wrap up, I would like to say a few words on ESG. As sustainable development plays an increasingly important role in China's economic strategy, we are committed to creating value, integrating social responsibility with corporate strategy, empowering our partners, caring for our employees' development and satisfying consumer needs so that we can achieve results that bring benefits to the company or shareholders and the society at large. At the end of June, we released our first ESG report, providing stakeholders with a comprehensive overview of our efforts and progress on key ESG issues. Going forward, we will continue to integrate ESG initiatives into our long-term development strategy and actively shoulder our corporate social responsibilities. With that, I will now pass the call over to Baek Chen to go over our financials for the quarter. Thank you.