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.

Thanks, Jeff. Before we go over the numbers, just a few housekeeping items in advance. We believe year-over-year comparisons are the most useful ways to judge our performance. Therefore, all percentage changes I'm going to give will be on that basis. And all figures are in renminbi unless otherwise noted. Total net revenues in the third quarter increased by 41% to $2.4 billion. Net revenues from data now increased by 36% to $836 million, mainly driven by the increase in all the volume of intra-city delivery service to chain merchants. Net revenues from JDDJ increased by 44% to $1.5 billion, mainly due to the increase in GMV, which was driven by increases in the number of active consumers and the average order size. The increase in online marketing services revenue as a result of the increasing promotional activities also contributed to the revenue growth of JDDJ. Moving over to the expenses side, Operating and supporting costs were $1.5 billion. The increase was primarily due to an increase in rider costs as a result of increasing all the volume for intercity delivery services provided to various chain merchants on the DataNow platform and the retailers on the JDTJ platform. The selling and marketing expenses were $1.1 billion. The increase was primarily due to the growing absolute dollar amount of incentives to JDTJ consumers. An increase in advertising and marketing expenses to attract new consumers to JDDJ platform and the amortization of the business cooperation agreement arising from shared subscription transaction with JD.com in February this year. GNA expenses slightly rose to $107 million, mainly attributable to increases in professional services fees. OND expenses rose to 181 million, mainly attributable to the increase in research and development personal cost as the company continues to strengthen its technology capabilities. Non-GAAP net loss attributable to ordinary shareholders of data was 270 million. Non-GAAP net loss margin was 11.4%, improving by more than 15 percentage points year-over-year and 6 percentage points quarter-over-quarter. As of September 30, 2022, the company had $5.2 billion in cash equivalents, restricted cash, and short-term investments. As well as our $70 million share repurchase program announced in March 2022, as of September we had repurchased approximately $57 million of ADSs under this repurchase program. In terms of outlook, for the fourth quarter of 2022, we expect the total revenue to be between $2.65 billion and $2.75 billion, representing a year-over-year growth rate of 30% to 35%. In addition, We expect net loss margin in the fourth quarter of 2022 to continue to significantly narrow year over year and achieve sequential improvement for the seventh consecutive quarter. This concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session. Thanks.

Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be entered. If you wish to cancel your request, please press star 2. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Ronald Kung with Goldman Sachs. Please go ahead.

谢谢Jeff Beck,金总。 那想问两条问题。 First of all, I want to know if the pandemic has had any impact on us, especially recently in Guangzhou, Shenzhen and Zhengzhou. We see that the pandemic has had an impact on our orders, or because of the pandemic, it will also lead to some travel issues. uh revenue guidance Thank you, management. First, we want to hear about the COVID impact to your business. Recently, across Guangzhou, Zhejiang, and Zhengzhou, a few cities have significant cases. Has that impacted our business or has it actually boosted demand? And how should we think about the outlook for next year, assuming a further reopening trend? Second is about the JDDJ side with the revenue guidance. How are we thinking on the GMB growth? in the December quarter and any time expectations for unit economics or even turnaround for the business. Thank you.

谢谢龙大,我先回答一下关于疫情的问题, 然后戴克可以回答一下关于Q4的guidance的事情。 我们现在看到大部分的疫情防控城市, 虽然能源的流动受到比较大的限制, 但是大部分的商户都是可以线上营业的, And then, basically, it's also a normal delivery. So the direct impact of the epidemic on a business is not great. Let's translate it together after I finish. But the current epidemic prevention and control will cause, at least in the past year or so, will cause our consumers' income to decline. Then, or consumers will become more dependent on the future. The whole consumer's confidence is insufficient. So this is still a bit of an impact on us. Of course, it will be relatively small for us. Because our platform is still based on the demand of supermarkets. Compared to other platforms, you can see that we are still maintaining relatively high ratings.

Thank you for your question. I will answer the question about the pandemic, and then Beck will take the question about Q4 guidance. So in most cities where pandemic control measures are imposed, so mobility is restricted, most retailers can still do business online. And riders are available for delivery. Therefore, the direct impact on our business is limited. That said, over the past year or so, some consumers have to cope with pay cuts or have a more conservative outlook due to the pandemic. So the overall consumer confidence has weakened, which poses challenges to our business. However, the impact on our platform is not as significant as on other platforms since our largest category is supermarkets, which sells consumer staples, so we can maintain faster growth than other platforms.

Okay, so, yeah, Ronald, let me address your second question about the Q4 in the next year's guidance or the forecast. So basically, in Q4, Based on the revenue guidance we have given, we expect our GME could be grown by 30 to 40% on a year-over-year basis, in which we will continue to improve our subsidy efficiency and operation efficiency. So in Q4, we will continue to see the overall operation efficiency enhancement and for the bottom line, as we have guided in the prepared remarks, that it will continue to improve as percentage points improve both on year-over-year basis or Q-on-Q basis. For next year, generally, we will still aim at break-even for the first half of next year. Based on that, we would like to grow still very fast and healthier on a year-over-year basis for both platforms. Everything is still on track, and we keep up with the rhythm. We have previously set up.

Thank you. That's very useful. Thank you.

Thank you. Your next question comes from Li Xiang with Bank of America Securities. Please go ahead.

Hi, Director Guan. Thank you for accepting my question. My first question is, can you share with us about the recent Thank you for taking my question. My first question is regarding our cooperation with JD. Can you give us some updates? And how should we see the trend in the future? Second delay, can you give us some updates on JD DJ's GMOA category mix and the growth trend? Thank you.

Thank you for your question.

With Mr. Xing joining us as our chairman, our collaboration with JD.com has become even closer, and I'll go over that in more detail. In terms of the business results, during the quarter, we further deepened our collaboration with JD.com, and GMV of shop now increased by more than 160% year-over-year.

So when it comes to search and fusion type, the two main channels of sales contribution, we are still continuing to develop with Jindong, and we are still using the search tool to increase the compatibility of the entire search, to increase the exposure rate. Yes, please. In terms of progress of the two major entry points of ShopNow on the search front,

We upgraded our supply development tool to accurately match the incremental merchant and product supplies with city-specific user demand at JD.com. With the refined tool, ShopNow's exposure rate among search results at JD.com in pilot categories more than doubled. And in the fourth quarter, we will continue to optimize the granularity of demand analysis down to the grid level so as to further improve our search exposure rate.

OK. We can use the user's default address to show the content of the nearby channel to enhance the exposure. The second is that we made a big change, which is to upgrade the tab name of the nearby channel to display the city name, and this entire click-through rate has been further improved. The third is that we have improved the ability of user operations in the nearby channel. This directly leads to an increase in the conversion rate of more than 1%. With the help of the increase in the click rate and conversion rate caused by these three measures, Q3 nearby channel GMA has continued to grow. As a result, the contribution of GMA to the entire small market has also exceeded 10%.

In terms of the nearby or tab, we also made significant progress. First, on the technology front, we made an upgrade to make it available to users who are not turning on the real-time locations, which brings incremental exposure. Second, we have fully rolled out the display name upgrade of the nearby tab, replacing the original nearby with relevant city names, which further improved the click-through rate. In addition, we continued to enhance our user operation capability within the nearby tab, resulting in a sequential improvement in conversion rate of more than one percentage point. Now, these three measures all led to the strong growth of GMV generated from the nearby tab,

OK, so regarding the quality of the products, on the one hand, we are maximizing the quality of the products. In the case of the quality of the products, the quality of the products is still very good. On the other hand, due to the release of the new iPhone, the quality of the products is relatively fast. And in terms of the category performance, while we maintained our UE improvement, the supermarket

category maintained solid growth during the quarter and boosted by the launch of new iPhones. The consumer electronics categories also performed well during the quarter. In addition, we made further progress in new categories such as apparel and recorded triple-digit growth in GMB.

In terms of the category mix, in the third quarter, supermarkets accounted for 55% of JDDJ's GMV, while non-supermarket categories contributed 45%.

And specifically, GMV from the electronics or 3C category was about 35% of the total.

Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.

Good morning, thank you for accepting my question. My first question is about the competitive situation of the industry. Can you share with us how we will see the development of the entire industry next year? Secondly, about our advertising revenue, it is growing very fast. Then I would like to ask, in terms of our U1, how should we look at the contribution of online advertising to our U1 improvement, except for the reduction of subsidies? The third question is actually about the first and second questions. It is also about if there is a Thank you, Mr. Chen. I will answer the first and third questions, and then I will add the second question. Regarding the industry, we have already talked about a big

I mean, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah. So, thank you so much. So, I will take the first and third question, and Beth will help answer the second question. So, about the industry.

We think a big change next year will be on the pandemic front. In the long run, we remain very confident and optimistic about the future of on-demand retail. The penetration rate is still low at only single digit now, and the pandemic will help educate our consumers and boost consumer demand for on-demand shopping.

About the competition in the industry, we think that whether it is including the so-called short videos, Douyin, Kuaishou, these are entering this industry, including our previous business acquisition and so on. Our overall judgment is that everyone in the current economic situation will be relatively more cautious in this field.

In terms of the competitive landscape, we have not observed aggressive investment in subsidies in the current macro environment. I think everyone is being cautious about subsidies, whether it's on the part of new entrants in the business, for example, short-form video platforms or on the part of our existing peers such as . So the competitive environment is not very intense on consumer incentive side.

I'll answer the second question from Thomas. The short answer is yes. The advertising and marketing revenues is very important for us to further grow our direct margin. Just like Jeff mentioned in the prepared remarks, our overall Direct margin of JDG platform is growing from 0.4% last quarter to 1% this quarter. So definitely the marketing dollars and the pay credit increase contribute to the growth of the director margin and we expect that for the fourth quarter and also for the next year and the overall marketing revenue still will be growing faster and will contribute to the director margin and the bottom line improvement a lot. And also about the third question you mentioned, so generally right now actually our data now, you know, the logistics arm of our platform is starting to cooperate with those leading short-form video platforms, which is also good because we are not a food delivery platform and we are very happy to fulfill all those orders from those short form video platforms orders. Thank you.

Thank you.

Thank you. Your next question comes from Alicia Yap with Citigroup. Please go ahead.

Hello, thank you. whether they are attracted by the frequency of the supermarket or the non-market frequency. Whether there is a higher frequency of purchase or there is no difference in the frequency of purchase. Then, in terms of the flow rate and consumption mode of the user, In this large environment, I don't know if the management has noticed that the flow rate of users is lower than before. Consumers are also more sensitive to this price or return. If we reduce subsidies, So my question is related to the new user profile, purchasing behavior, and also the retention rate. So specifically for those newly acquired users through the JD Shop Now, is it the supermarket category that attracted them to join data.jddj or is the non-supermarket category to attract them for the first time? And then what are the purchase frequency that come from this user? Are they having a higher purchase frequency or is about the similar? And then on user retention and consumption pattern under these current challenging macro environment, have you noticed the retention rate is actually lower and consumer are more sensitive to price discount and rebate. So when you scale back the subsidy, have you seen higher churn rate or the user purchasing frequency actually cut down? Thank you.

Because most of our Thank you for your question. So about the first question, the user

The customers we acquired through the JD ShopNow channel, they're mainly the buyers of the same category that are used to shopping on JD.com. For example, the users who buy supermarket categories in ShopNow are existing JD supermarket shoppers. consumers who buy consumer electronics products on ShopNow, they are existing shoppers of JD's consumer electronics products. And that's because most of our traffic from JD ShopNow is from the search result entry point. So as you all know, that search is a highly intention-based shopping channel. So we are seeing that users are continuing their pre-existing shopping preference in category in the JD Shop Now channel.

But the good thing is that we see that the loss of this part of the user is actually a history of high subsidy users. That is to say, this part of the user needs to be subsidized to be able to flow. But after we reduce the subsidy, we don't think this part of the loss is a bad thing. At the same time, we see that our whole frequency

And then about the second question, so as we scale back our subsidies, there is naturally some customer churn. But the good thing is the customer that have left our platform are actually those very price sensitive. So it's not bad. And in terms of the shopping frequency, we do have observed an increase in shopping frequency.

另外就是关于京东用户的频次的问题。 我们看到的京东APP上用户的频次是列低于京东到家的。 这是一个正常的现象。 In JD.js, it only has small SCO, and in JD.js, it has more services. The frequency of JD.js is the lowest in JD.js. But for JD.js, we see another good thing is that the frequency of users who have used small SCO is better in JD.js.

For ShopNow consumers, their shopping frequency is a bit lower than those who shop on our JD DJ independent app, which is not cool because there are other services on the JD app. So the consumers of JD ShopNow can shop for other categories and services on the JD app. And the good thing we are observing now is that for the users who have tried the ShopNow service on JD, we're seeing an increase in their shopping frequency. Thank you.

Thank you. Your next question comes from Ashley Zhu with Credit Suisse. Please go ahead.

我这边想了解一下就是咱们DataNow里面KA的这部分业务现在的策略是怎么样的,然后对未来增长还有UE的预期是怎么样的。 我翻译一下,Thanks management for taking my question. Just also want to check about the KA business under DataNow. What's our current strategy and what's the expectation of future growth and also UE? Thank you.

Thank you. In the past two years, we have experienced rapid growth in our QA business. At the same time, we have continuously improved our business quality, strengthened our market position, and gained the approval of our customers. Q3, our QA input share has exceeded 40%. We expect that Q4's QA input will still grow by about 50%.

Thank you for your question. Our K business saw very impressive growth and continuous improvement in service quality over the past two years. We have gained market share and high customer satisfaction. In Q3, our K revenue grew by over 40% year-over-year, and we expect growth to be around 50% in Q4.

On the profitability front, unit gross profit for KA orders continued to improve in Q3.

after turning profitable in Q2. We expect a sequentially stable unit growth profit for Q4 due to pandemic resurgence in multiple regions since early October, which led to a higher wider cost for Q4. Thank you.

Thank you. Your next question comes from Andre Chang with JP Morgan. Please go ahead.

Because the company has made a lot of changes in the past few years, including cooperation with Jindong, as well as the overall change of Hongguan, I don't know if we feel that the end point of this profit is higher or lower for a long time. In other words, in terms of this path, if we still follow the plan and turn it into profit by next year, then it will ramp up faster or slower. Because from our communication with Jindong, it looks like Jindong may spend more effort Let me quickly translate my question. My question is about the long-term possibility in the path toward that. With all these changes over the recent quarters, the cooperation with JD, weakening microenvironment, etc., Are we seeing our long-term probability target change toward higher or lower on change? Also, the trajectory toward that, is it going to be faster or slower, considering that JD, our parent group, are talking about more focus on the probability, so the margin may be faster than the original expected. Thanks.

Okay, so let me address this question. The short answer is we will still balance the The growth rate and the bottom line optimization or improvement so because the you know the intercity on demand Intercity on demand retail market is still a lower Penetrated and market so we believe that for the next few years at least the growth rate of this category is still very uh is still very high potential encouraging compared to the other sector of the e-commerce area so there is a huge potential for for the on-demand retail market so we will still target a you know higher growth rate of pipeline and compared to the other uh tier companies and in the same time And for the bottom line, we will also keep to optimize on a year-over-year basis. So we still, like we have talked before, we still have great confidence to further, first of all, further to increase our marketing revenues, because we have a few methods to improve our marketing dollars, just like we talked in the previous quarters. For example, like we are further monetized on the LBS line. Jingdong tone system within the Jingdong system to provide a lot of, you know, vouchers for our brands and retailers to those consumers nearby. So for next year, we believe this marketing tool will be a major marketing revenue-driven tool for us. And in the same time, for this year, we have dramatically increased our subsidy incentive efficiency. So we believe that for the next two or three years, we still have great room to further improve our incentives given to the consumers. And in the same time, while our overall on-demand delivery platform orders is growing very fast, For Q4 and also for the second half of this year, we expect the total on-demand delivery orders is growing very fast. And we expect for next year, we will keep to grow at a faster growth rate compared to our peer company. So overall, rider cost and delivery cost could be further optimized and improved as well. So this is the... Path that we grow our top line quickly while we continue to optimize either by you know some additional tools and Methods provided all by further efficiency optimization a way to improve our Ottoman next year. It's just it's not improved the bottom. It's just like grow of the bottom line profits. So on-demand retail platform is very typical, just like a localized JD Mall or localized T Mall. So we believe the overall long-term profitability in terms of the revenues should be very, very encouraging, just like other traditional e-commerce platform as well. Thank you.

Thank you. That's all the time we have for our question and answer session today. I'll now hand back to Caroline for closing remarks.

Thank you, Operator. In closing, on behalf of the Data Management Team, we'd like to thank you for your participation in today's call. If you require any further information, feel free to reach out to us directly. Thank you for joining us today. This concludes the call.

That does conclude our conference for today. Thank you for participating. You may now disconnect.