JD.com, Inc.

Hello, and thank you for standing by for JD.com's third quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Sean Zhang, Director of Investor Relations. Please go ahead.

Thank you, operator. Good day, everyone. Welcome to JD.com third quarter 2023 earnings conference call. For today's call, CEO of JD.com, Ms. Sandy Xu, will start with her opening remarks, and our CFO, Ms. Ian Shan, will discuss the financial results. After that, we'll open the call to questions from analysts. Let me quickly cover the safe harbor. Please be reminded that during this call, Our comments and responses to your questions reflect management's view as of today only and will include forward-looking statements. Please refer to our latest safe harbor statement in earnings press release on our IR website, which applies to this call. We'll discuss certain non-GAAP financial measures. Please also refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. Also, please note, all figures mentioned in this call are in R&B. And as otherwise stated, now let me turn the call over to our CEO, Sandy.

Thanks, Sean. Hello, everyone, and thanks for joining us today to discuss our Q3 results. We continue to see this development across many of our operating and financial metrics, and we saw a robust performance for our single-day grant promotion with double-digit order growth and many innovations. The successful promotion further amplified our efforts to bring lower cost, higher efficiency, and superior customer experience to our customers and business partners. This is JD's operating philosophy, which we have been committed to since day one. User experience is at the center of our operating philosophy, and we have gone extra mile to further improve our user experience. Let me share some recent highlights. In Q3, we expanded free shipping coverage for our users by leveraging our improved logistics capabilities. We lowered the minimum order value for free shipping services from 99 RMB to 59 RMB for all users and offered JDplus members unlimited free shipping for 1P products. As always, JD.com customers will continue to enjoy our premium so-called 211, R11, same and next day delivery services. JD's live streaming sessions hosted by our own category managers proved very popular with users and brands during our single day promotion. What's unique about JD's live streaming is that not only are the category managers the experts for the products they bring to the shows. They are also empowered by JD's supply chain capabilities. And they don't charge any additional commission fees. This means that they can bring a great selection of products to our users at excellent prices. Customers and brands have embraced this new live streaming format as they benefit from the streamlined cost structure and superior value. As a result, our live streaming sessions hosted by category managers attracted over 380 million viewers in total during the promotion period. We also stepped up our after-sale customer service by increasing the coverage of our industry-leading instant refund and one-click for best price guaranteed services. both of which are increasingly resonating with our users. All these efforts to improve our customer service quality and user experience have been reflected in higher user engagement, as we saw an accelerated growth of user order frequency in Q3 compared to the past six quarters. Beyond the recent efforts, to improve user experience. We are very focused this year on investing in long-term key capabilities to drive sustainable growth, namely our strategies to build a differentiated platform ecosystem and improve everyday low price, or ETLP mindshare. I would like to spend some time to share with you our thinking on why this is the right direction for JD and on the progress we have made. Let me start with our platform ecosystem. Providing the best-in-class user experience is at the heart of everything we do. Our platform ecosystem allows our 1P and third-party business to grow in a complementary and sustainable manner and together serve our customers better. By ensuring both 1P and 3P sellers follow the same operating philosophy, and can compete and thrive in a comprehensive platform ecosystem, JD is best able to provide consumers with a superior user experience. As such, we never drive one business model at the cost of the other. On the warranty side, JD's leading supply chain capabilities and scale advantages provide users high-quality products at competitive prices and greater customer experience. This will always be a key offering and differentiator for JD. And our 3P marketplace gives us the flexibility to expand into new product categories where it is difficult to achieve the same level of efficiencies we have under our 1P model. So in the face of consumers rapidly evolving demand, and increased price sensitivity, our 3P marketplace allows us to efficiently serve customers with a diverse selection. What is our approach? The essence of what we are doing to build our platform ecosystem can be summarized in the following key steps. In addition to our 1P suppliers, it's equally important to encourage our 3P merchants to embrace and adhere to the same operating philosophy that we have been committed to over the last 20 years. To do this, we are investing tremendous efforts to improve our platform ecosystem, including traffic allocation, algorithms, operating tools, and infrastructure to encourage and empower the 3P merchants. While setting clear rules and stepping up our platform governance efforts, to enhance risk management. On top of this, we are working to ensure that positive behaviors of 3P merchants are rewarded. The main goal is to incentivize 3P merchants to follow our operating philosophy and align their performance with our commitment to improving user experience. For example, we have established a scoring system based on the key elements underpinning our operating philosophy, including price competitiveness, product and service quality, as well as store rating. The score system applies to both our 1P and 3P merchants in a fair and transparent way, and merchants are able to review and track their scores across different aspects. Once they're embedded We then embed these scores in our traffic distribution algorithm to create a virtuous cycle. We continue to strengthen our 1P business model in the areas where it generates higher efficiency and delivers better user experience. At the end of the day, it is the choice of our users to pick either 1P or 3P. I want to reiterate that we will not drive 3P development at the cost of our 1P business. What we do is to create a platform ecosystem that enables both 1P and 3P to compete on a fairer ground and better serve our customers. Looking to how we track and measure our progress, To evaluate the long-term success of our platform ecosystem, we look at a set of key operating metrics. We were encouraged by the continued rapid growth of active 3P merchants and growth of 3P orders and active users who purchased from our 3P merchants in Q3. Even though 3P monetization is not our priority in the near term, we have been delighted to see continuous double digit growth in 3P advertising revenue, especially driven by the improving engagement of new merchants on JD's platform. On 1P side, we were happy to see improved user experience as evidenced by increased users NPS. Building JD's unique platform ecosystem is a long-term commitment. and we are still at the early stage of realizing its potential. We believe the set of operating metrics are moving in the right direction. We are determined to continue our efforts to strengthen our capabilities and build our unique platform ecosystem. Now let me continue to elaborate on the thinking behind our efforts this year to improve our EDLP mindshare. What does low price mean in JD's case? At JD, low price means improving our price competitiveness across different product categories, particularly the branded products and expanding selection for white label products to cover a wider price range in order to show up what we lacked in the past. I want to clarify some of the market misunderstanding here JD is now shifting our focus away from our core competency in branded products or serving the top-tier market. On the contrary, we are further enhancing this strength by improving our price competitiveness. Also, we'll never allow any bad quality or counterfeit product on JD's platform while we provide low price. Our low price commitment does not mean to pursue absolute low prices at the expense of other aspects of user experience, such as product quality and service. Why we need to improve our price competitiveness? Price competitiveness is the most important value proposition for retail business, and one of the most important pillars of JD's customer-centric philosophy. Our focus on price competitiveness drives us to continually strengthen our 1P supply chain capabilities, improve efficiency, and sharpen our abilities to foster a prosperous platform ecosystem where healthy competition among merchants and suppliers are encouraged. All these drive better user experience, which is key to our long-term success. Both our 1P and 3P marketplace play a critical role in this. In our 1P retail business, we are relentlessly driving down costs, improving operating efficiency along our supply chain through technology and scale, and passing on the efficiency gains to our customers. This is a sustainable way to ensure price competitiveness and enable us to fulfill our commitment of offering EDLP for our great products and service. A key part of our low-price strategy is focused on 1P retail business, especially on branded products. To supplement this, on the 3P side, we aim to onboard merchants that offer diverse product selections covering a wider price range. Merchants are rewarded for offering low prices, great selections, and good services to our customers based on the positive traffic feedback mechanism that we are building. Since the beginning of this year, we have launched a series of new initiatives to enhance our value creation for customers. Our category manager-led live streaming during the single-state promotion was a good example. Another example is that we continue to enrich the value-for-money selection of 3P products within our 10 billion discount program, and we saw 3P GMV contribution to the total of this program increased to over 50% in 2020. And lastly, how to track and measure our progress on low-price or EDLP man-share buildings. We tracked the trend of key customer metrics including customer NPS and engagement. While the structural change in NPS may take longer time to shape, we are seeing strong early progress in user engagement as evidenced by the double-digit growth of order volume and a pool of users from lower-tier markets. We also note that growth of low-key size orders accelerated an outpace the total order growth in Q3. All these are strong testments to our early progress in EDLP Man Shared Building. We look forward to sharing more with you on the progress of our key initiatives in coming quarters and we look ahead to the future. We will continue adhere to our operating philosophy and execute our strategy to provide the best customer experience. We believe it will guide us to achieve a high-quality, sustainable growth and win-win value creation for our users, business partners, shareholders, and the society at large. With that, I'll turn it over to Ian for our financial highlights. Thank you.