Dada Nexus Limited

Good morning, ladies and gentlemen, and thank you for standing by for DADA's third quarter 2022 earnings conference call. All participants are in a listen-only mode. There will be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. 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 Data. Please proceed, Caroline.

Thank you, operators. Hello, everyone, and thank you for joining our third quarter 2022 earnings conference call. On the call today from Data, we have Mr. Jeff Huijianhe, President, Mr. Pat Chen, CFO, and Mr. Jun Yang, Co-Founder and CTO. Mr. He 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. Please kindly note that during the Q&A session, Jeff will answer questions in Chinese and the consecutive translation will be provided. In case of any discrepancy between the original remarks and the translated version, statements in the original remarks should prevail. Before we begin, I'd like to remind you that this conference call contains looking statements. Please refer to our latest State Harbor Statement in the Earnings Press List on our IO website, which applies to this call. Also, during this call, we will discuss certain non-GAAP financial measures. Please also refer to our Earnings Press List, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures. Finally, please note that, unlike otherwise stated, all figures mentioned during this conference call are in RMB. It is now my pleasure to introduce our president, Mr. He. Jeff, please go ahead.

Thank you, Karen. And thank you all for joining us. This is my first NS call as president of Data Group. And I am delighted to have the opportunity to announce strong quarter after we have just delivered. Now, on to our results. During the quarter of 2022, Dada Group maintained our rapid revenue growth and continuously improved operating efficiency. Our total net revenues increased by 41% and adjusted net loss margin by 15 percent points year-over-year. I will start with a brief discussion of the overall industrial environment before moving on to update on the two platforms. Then we will walk you through our financial results in detail. In terms of industrial and regulatory environment, Our key message from 20th CPC National Congress is that high-quality development is China's top priority in building a modern socialist country in all respects. China will pursue high-quality development by integrating the expansion of domestic demand with intensified supply-side structural reform as a leading digital platform. will fully leverage the advantages of digital technology to serve the real economy in which we are deeply embodied and empower the retail industry. We believe our businesses will be positioned to promote high-quality development and help strengthen the forces-driven domestic economy. We showcase our contributions to high-quality development at the 2022 China International Fair and Trade in Celsius, highlighting the progress we have made in promoting the transformation and the upgrade of offline retail with our digital empowerment and fulfillment capabilities. I'd like to provide some updates on our dependent cooperation with JD.com. During the quarter, GME of Shopify, or Xiaoshigou, the unified brand for all on-demand retail services within the JD ecosystem, increased by more than 160 year-over-year. driven by the robust performance of conversion through both search results and the nearby tab. For search result optimization, we upgrade our supply-demand tool to accurately match incremental material and product supplies with city-specific user demands at JD.com, leveraging the refined tool the exposure rate among search results at JTE.com in pilot test queries more than doubled. In the fourth quarter, we will continue to optimize the demand analysis down to grid level so as to further improve our search exposure rate. For the Nearby or Full Gene tab, it's now available to users who are not standing on real-time locations, which bring incremental exposure. Furthermore, during the quarter, we have fully rolled out the display lane upgrade at the nearby tap, replacing the original nearby with relevant city lanes, which further improved the click-through rate. In addition, we continued to enhance our user-operational capabilities within NearbyTab, resulting in higher conversion rates. These improvements led to the strong growth of GME generated from NearbyTab. Before discussing our quarterly performance for our two platforms, I would like to provide with over 200,000 stores participating. GME of JDJ on peak day reached a historic high. And for Dada Lao, number of average daily orders during the promotion period exceeded 10 million. Now, let me walk you through the operational highlights of our two platforms, JDDJ and DataLoud. I will talk first about JDDJ, the leading local on-demand retail platform in China. JDDJ maintains the level of GME growth that significantly outpaced the induction. mainly driven by improved subsidy efficiency. Our direct margin continued to improve after 10 positives during the second quarter, which is 1% in the third quarter. Let me take you through the three key focus of JDDJ. The retail employment. brand cooperation and technology innovation. Let's start off with our efforts in empowering retailers. To give you the supermarket category, we recently partnered with more top supermarket chains such as Wu Mei and now have established a partnership with 88 out of the top 100 supermarket chains in China. We also onboard more regional champions like . We also continued to make progress in the consumer electronics and the home appliance category. In the smartphone subcategory, JD-DJ became the only third-party platform. where pre-sale was available for newly launched Apple products in September. More than 2,600 Apple authorized stores on JTTJ offered the iPhone 14 series. On the first day of iPhone 14 series launch, the GME of fulfilled orders more than tripled compared with the iPhone In the mom and the baby category, JDDJ is capturing young consumer mid-shares. The GME of mom and the baby turns on JDDJ in third quarter of modern chip order year-over-year. In the apparel category, We expanded our offerings from sportswear to daily wear. During the quarter, we worked more closely with existing partners, such as Canon, and also formed new partnerships with Highland Home, Highland Zuja, and others. The GME or the pilot merchants on JDTJ increased by eight times year-over-year. turning to JDDJ's efforts to empower brands. In the third quarter, the year-on-year level growth of our online market services exceeded 70%. Demonstrating that JDDJ continues to gain market-topped budget share, our brand partners keep expanding. We continue to penetrate the FMCG category, and this quarter we established partnerships with emerging tea beverage brands such as Shi Cha and Maishen Cha. Meanwhile, we begin to penetrate the consumer electronics and home appliance category. sign-up brands such as Lenovo and Superb. Turning to our innovative brand marketing campaigns. In August, JDDJ teamed up with household product brand iStar and food brand Tyson to launch a joint marketing campaign. GME are the two brands on JDDJ during the event, more than three-fourths of the year over year. In September, we worked together with nine major brands including Yi Li, Yi Hai Jiali, and P&G to promote the Middle Autumn Festival gift sale. During the campaign, we had a plan multi-testing events to help brands distribute free samples. Total GME of participating brands grew more than 50 years over the year. Next, I will touch on three of our initiatives for empowering retailers and brands with technology innovation. Begin with the Haibo system, our omni-channel operating system for retailers. At the end of September, Haibo had been deployed in over 8,300 retailer chain stores. In addition, we funded Haibo services to merchants in apparel categories such as Decathlon. further demonstrating the system's functional scalability. We continued to upgrade Hyvo's features in the third quarter, including the introduction of product management functions for non-standard items. By creating specific labels, Hyvo enables retailers to more efficiently manage their pinpoint these products, which has to have tested this upgraded product management feature. So our 20% efficiency gains in bound and outbound warehouse operations. The inventory count on non-standard products. We also made progress in control. our S-grade system. For example, we introduced a new approach of working with brands, which entails more automations enable brands to manage China inventories down to the store level more efficiently. Since August, brands adopted the upgraded Quintil system. have significantly improved their products' availability in local greens, reaching a 60% increase in exposure and incremental sales of 17% points. Regarding our digitized in-store picking services, data picking, the origin of flexible label management model and digital picking process. We enable the stores to handle a high level of auto orders, which manages fulfillment costs and customer experience. In the third quarter, we worked together with to further improve the pricing model of data picking. With the pilot-tried price model, we reduced the unit picking cost by 12%, which meant maintaining a stable fulfillment rate. We also continued to expand the store coverage and increase penetration of data picking in partner stores. As a result, the total number of orders fulfilled by data picking increased by more than 160 year-over-year in the third quarter. And our number of monthly active pickers steadily grew to more than 10,000, the majority of whom are famous. In this way, we not only help retailers improve picking efficiency and fulfillment rates, but also provide meaningful flexible employment opportunities for a wide range of workers. Now, let's move on to DataNow, the leading local on-demand delivery platform in China. and the levels both maintained the left growth, while operating efficiency continued to improve. A steady growth and improved efficiency were underpinned by our technology. In September, we participated in 2020 Worldwide Artificial Intelligence Conference showcasing the progress we have made in using AI technology to improve order matching efficiency and location accuracy, as well as to enable autonomous delivery. That's a technology-driven company. We will continue to promote the robust and efficient development of our business through investment and innovations in technology. Now, let's turn to the performance highlights of Dada Law's three major business lines. In terms of key or chain machines business, in the third quarter, Revenue on demand delivery services to K machines increased by more than 40 year-over-year, while gross profit per order continued to improve sequentially. In the supermarket K category, we continued to consolidate our leading position with the increased by more than 40 year-over-year. In addition, revenue from T-Biology K continued to grow significantly, increased by more than 140 year-over-year. In our SME and C2C business, Orders for feed increased by more than 50 year-over-year, where we continued to greatly optimize unit economics. In particular, German Bauer continued penetration into low-tire city and expansion of light network. Our SME orders increased by more than 60 year-over-year. for last mile services. Orders were further increased by more than 60 year-over-year. The study increased our penetration rate in JD Logistics for last mile deliver. Meanwhile, we maintained rapid growth in picking up business with number of orders grew more than 200 year-over-year. Finally, DataLoss autonomous delivery open platform expanded the cooperation with more autonomous vehicle manufacturers and continued to explore more flexible ways to provide autonomous delivery services to retailers. As of the end of September, our platform has fulfilled dozens of thousands We are pleased with the performance of the business this quarter in what continues to be a challenging macro environment. Our new leadership team is committed to build on these results and executing our strategy to deliver. certainly depends for our shareholders. With that, I will pass the call to back to go financial results for this quarter. Thank you.