Dada Nexus Limited

Good morning, ladies and gentlemen, and thank you for standing by for DADA's fourth 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 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, operators. Hello, everyone, and thank you for joining our Fourth Quarter 2022 Earnings Conference Call. On the call today from Dada, we have Mr. Jeff Huijianhe, President, and Mr. Bak 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, 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 follow-up statements Please refer to our latest State Harbor Statement in the Earnings Press List on our IR 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 consolidation of our non-GAAP measures to the comparable GAAP measures. Finally, please note that, unlike otherwise stated, all figures mentioned during this conference call are in R&B. It is now my pleasure to introduce our President, Mr. He. Jeff, please go ahead.

Okay. Thank you, Karen. And thank you all for joining us. During the first quarter of 2022, Dada Group once again achieved a strong level growth with significant improvement of operation efficiency. Our total net revenues increased by 32 and just the net margin improved by 17 percentage points year-over-year. In addition, we achieved positive free cash flow in the second half of 2022. I will first provide an update on our dependent cooperation with JD.com. After which, I will take you through the operational highlights from our two platforms. Back, we will then discuss the financial results in detail. We continued to work closely with JD.com on multiple fronts. During the first quarter, GME of Shocknow or Xiaoshigou, the unified brand for all on-demand retail services within GED ecosystem, increased by more than 80 year-over-year. In particular, GME brand nearby of Fujintab increased by more than 300 year-over-year. Thanks to the significant increase in exposure of its entry point, as well as the improved click-through rate driven by the upgrade of its display lane to city lanes, and the freeze-tap function that keeps the tap wizard when users scroll down the home page. On top of the search result exposure and the nearby tap, we continued to roll out our LBS features with more touchpoints within the JD app. During this quarter, we newly implemented the LBS feature among recommendation feeds on JD homepage, which has led to incremental traffic for soft cloud. Turning now to the operation highlights for our two platforms. Starting with JDDJ, the leading local on-demand retail platform in China. In the first quarter, JDDJ maintained robust GM growth and subscription office industry. We remain committed to leading the development of the on-demand retail industry where retailers and the brand are empowerment and the technology innovation in digital transformation. Let's start with our efforts in empowering retailers. In 2022, there were more than 220,000 active retailer stores on JDTJ, up more than 50 year-over-year. This machine partner forms the essential part of JDDJ's ecosystem. And in time, JDDJ provides them with dedicated support to grow online sales. In the first quarter, JDDJ continued to expand and deepen cooperation with the tailors across multiple categories, including including supermarkets, consumer electronics, and home appliances, mom and baby, nickel and others. In the supermarket category, we recently partnered with more top supermarket chains such as Hotmax, Hotermax, and now have established a partnership with 90 out of the top 100 supermarket chains in China. We also onboarded more regional campaigns like Yichuan Xinhua Baihuo to further enrich our local offerings. From the end of December to the end of January, JDTJ launched the Chinese New Year Shopping Festival to boost the sales for supermarket chains. Thanks to our SKU strategy of spotlighting holiday goods such as cherries, liquor, and gift boxes, GME of supermarkets increased by more than 50 year-on-year during the three-week period leading to Chinese New Year events. In addition to large supermarket chains, we have also continued to enrich the chain variety and increase store density through cooperation with convenience store chains. Recently, we signed up Bien Nih Fung and other leading convenience stores. Moving to the fresh product category, We recently launched a dedicated entry point of JD Grocery to further improve consumers' mass share for fresh products on JD DJ. In the first quarter, not only did the penetration rate of fresh products in supermarkets, others increased remarkably But GME of fresh product stores also see significant growth. For example, GME of online operators for fruit and vegetable markets like and increased by several times year on year. We also made further progress progress in the consumer electronics and home appliance category. In the first quarter, the smartphone subcategory maintained rapid growth driven by the 2011 Shopping Festival, while the home appliance subcategory also made further breakthroughs. As we further depend depend on cooperation with partners such as Xiaomi Home Appliance. GME or Home Price in the first quarter increased by more than 400 year-on-year. In the mom and baby category, we continued to work closely with top-chain retailers and engaged with stores to jointly serve their private domain users. GME of mom and baby stores saw accelerated growth of more than 300 year-on-year in the first quarter. In the labor category, we depend on partnerships with leading labor distributors such as Jusheng Wang and initiate new cooperation with region distributors such as We cooperated with merchants to further optimize the supply of key SKUs such as multi-products. As a result, GME in the first quarter more than tripled year-on-year. Turning to JDG's efforts to empower brands, in 2022, More than 280 brands partnered with JDTJ in online marketing and the increase of more than 30 OEF or leading position in on-demand retail and our pioneering capability in auto digital market make us the most trusted auto platform for brands. In the first quarter, the year-on-year long growth of our online marketing services exceeded 70, driven by further broad and dependent brand partnerships. We continued to work closely with EDF MCG brands, and we have recently signed our new such as flu brand Jawa, dye brand Yuluo, and liquor brand Jiangxiaobai. Together with our brand partners, we keep innovating new market campaigns to attract and convert consumers. During the Dabo 11 Shopping Festival in 2022, JD.DJ and JD.com co-launched the first intercity marketing theme on JD's drop-down page. The target is Generation 3, whose main share of intercity retail we intend to boast. Ten brands, including Unideliver, Proto, and Gamble, participated in the event. And the total GME of participating brands on the campaign day increased by 170 all year. Next, I will touch on our technology innovation in driving the digital transformation for both the telos and the brands. Firstly, on Hibor. our M-Li-Chan auto-operating system for retailers. As the end of December, our Haigou system has been deployed in more than 9,200 retailer chain stores. While we continue to penetrate the supermarkets and convenience stores, we also have recently successfully expanded high growth services to machines in mom and baby and pet caregivers. Driven by continuous expansion in machine base, GME Pro set by high growth system more than double on a year-on-year base in 2022. In the first quarter, We continue to upgrade HYBROS features to have the chance to improve auto-operating efficiency. For example, we newly introduced the intelligent auto-dispatching function in the model. This new function enables The chance to engage the multiple delivery services provides to reduce their delivery costs and enhance the time of all the pick-up by riders. The chance to have tested this upgraded module saw a 75% improvement in operating efficiency, enhancement in order taking time, and our 3% saving in deal cost. Moving on to our digitized use, store picking services for retailers. Data picking. We continue to provide steady support to leading supermarkets, including Walmart, Yuhui, and SunFlash. and the total number of orders fulfilled by data picking more than doubled year-on-year in the first quarter. Meanwhile, we have been further improving our digital capabilities. We aim to provide the machines with a comprehensive set of digital picking management tools spanning five functions, which include the picking staff recruitment, onboarding and management, picking process management, data aggregation and analysis, and services quality monitoring. We also made progress in providing digital insights and solutions to brands. Qunche, our S-Grid system, enables Brand to digitize channel inventories management. Well, Cloud Store project helps brands optimize customer value. Based on greater level sales data and process management tool, JDTJ launched the perfect store solution to help brands amplify online present and optimize O2O supply. Following our pilot program in the third quarter, we partnered with several leading food brands in December to roll out the perfect store solution nationwide. Our partner brands adopting the solution saw a more than five percentage point increase in the online availability data of the key SKUs, which translated into incremental sales of more than 10 percentage points. In addition, JDTJ launched the Cloud Store project to adjust brand standpoints in offline user operations. leverage in WeChat and our on-demand tech platform. The project enables brands to improve the conversion efficiency of offline promoters and maximize customer value. Pilot brand in the cloud store project, so the average number of orders facilitated by each promoter increased by and seven day customer retention rate increased by 150. Moving on to DataNow, the leading local on demand delivery platform in China. In 2022, the new active riders on DataNow platform reached one million. up more than 40 year-over-year. Thanks to increasing order warning and our flexible crowdsourcing network, we have provided a meaningful flexible empowerment opportunities for a wide range of workers. In the first quarter, Data loss, order volume, and revenue both maintained rapid growth, while pricing efficiency continued to improve. In terms of our K-Machines business in the first quarter, the revenue of our on-demand delivery services to K-Machines increased by more than 40% year-over-year. Meanwhile, we continued to improve delivery efficiency and customer experience through measures such as optimizing dispatching . In the supermarket category, we continued to consolidate our leading position, with revenue increasing by more than 40 year-over-year. During the quarter, while we worked closely with partners such as Walmart, Sam's Club, Yung Hui, and SunFresh, we also continued to deepen cooperation with other supermarket case such as CR and Metro. In the restaurant and beverage category, our revenue increased by more than 50 year-on-year. We set up new partnerships with restaurant cafes such as Burger King. We also changed our cooperation with beverage brands such as Knocking Coffee and Hattie. with revenue from balance accounts increased by more than 150 year-on-year during the quarter. In addition, in early December, we officially became one of the first on-demand delivery partners for Douyin Local Life Services, offering the level of fulfillment services to food delivery machines on Douyin platform. Currently, Douyin's food delivery services is being piloted in Beijing, Shanghai, and Chengdu. Leveraging data allows chance and nationwide coverage. Like dispatching flexibility and high fulfillment efficiency, we believe our care business will serve Douyin well. when its food delivery services scales up. In our SME and C2C business, we continue to expand our network to serve more SMEs, while our C2C business serves the searching and service needs of individual consumers during the pandemic. As a result, orders fulfilled by our SME and the C2C business increased by more than 40 year-on-year in the first quarter. Meanwhile, driven by optimization of pricing and the incentive mechanism, we saw an accelerated improvement in UEs. For last-mile services, we continue to leverage our flexible crowdsourcing network to provide steady support to JD Logistics by complementing its in-house delivery fleet, especially during the 2011 shopping festival and the period when COVID case spiked. Lastly, an update on DataLoud's autonomous delivery services. At the end of January, our autonomous delivery open platform had fulfilled more than 80,000 on-demand delivery orders for supermarkets through cooperation with autonomous vehicle manufacturers. This has made DataLoud the largest autonomous delivery platform for supermarkets in China. Moving on to ESG. With continuously improving ESG practice and disclosures, our ratings by leading third-party agencies have been notably improved. In November, MSCI upgraded our ESG rating from WB to BBB. On the strength of higher scores across all three dimensions of environment, social and governance, also in November, we improved our ESG score in S&P Corporate Substantivity Assessment, CSA, to 32, placing us among the top 11% in the global Italian sector. This is still significant for improvement and we will further integrate ESG philosophy into our daily operations to enhance our ESG practice. That covers our operational updates for the two platforms. To wrap up, we continue to explore the main macro-challenges in the past year. Looking ahead, as on demand penetration steadily progress in every single local retail category. We believe our chat record of enabling retailers and brands, as well as the synergy unleashed from our dependent cooperation with JD.com, will position us well to capture opportunities in the coming years. I will now pass the code back to our financiers. Thank you.