京東 (JD) 2023 Q1 法說會逐字稿

Hello and thank you for standing by for JD.com's First Quarter 2023 Earnings Conference Call. (Operator Instructions) 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.

您好，感謝您支持京東 2023 年第一季度財報電話會議。 （操作員說明）正在錄製今天的會議。如果您有異議，此時您可以斷開連接。我現在想將會議轉交給今天會議的主持人，投資者關係總監 Sean Zhang。請繼續。

Thank you. Good evening and good day, everyone. Welcome to JD.com First Quarter 2023 Earnings Conference Call. For today's call, CEO of JD.com; Mr. Lei Xu, will kick off with opening remarks. Our CFO, Ms. Sandy Xu, will discuss the financial results. After that, we'll open the call to questions from analysts.

謝謝。大家晚上好，美好的一天。歡迎來到京東 2023 年第一季度財報電話會議。對於今天的電話會議，京東 CEO；徐雷先生將致開幕詞。我們的首席財務官 Sandy Xu 女士將討論財務結果。之後，我們將打開分析師提問的電話。

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, will include forward-looking statements and please refer to our latest safe harbor statement in the earnings press release on our IR website, which applies to this call.

讓我快速覆蓋避風港。請注意，在本次電話會議期間，我們對您問題的評論和答复僅反映了管理層截至今天的觀點，將包括前瞻性陳述，請參閱我們 IR 網站上收益新聞稿中的最新安全港聲明，該聲明適用到這個電話。

We will discuss certain non-GAAP financial measures. Please also refer to the reconciliations of non-GAAP measure to the comparable GAAP measure in the earnings press release. Also, please note, all figures mentioned in this call are in RMB, unless otherwise stated.

我們將討論某些非 GAAP 財務措施。另請參閱收益新聞稿中非 GAAP 指標與可比 GAAP 指標的調節。另外請注意，除非另有說明，否則本次電話會議中提到的所有數字均以人民幣為單位。

Now let me turn the call over to Mr. Xu, our CEO.(inaudible), please.

現在讓我把電話轉給我們的首席執行官徐先生。（聽不清），請。

[Interpreted] Hello, everyone. This is Xu Lei. Thank you for joining JD.com's First Quarter 2023 Earnings Call. In the face of profound changes in external environment of the industry, together with our own proactive adjustments to our business, JD achieved a high-quality performance in Q1.

【解讀】大家好。這是徐磊。感謝您參加京東 2023 年第一季度財報電話會議。面對行業外部環境的深刻變化，加上我們自身業務的積極調整，京東一季度取得了高質量的業績。

As many of you know, during the past 3 years of COVID, JD spared no efforts to maximize our business model and supply chain capabilities and allocated tremendous resources and energies to ensure daily supplies and provide reliable services to our customers and up and downstream business partners. JD was able to play an important role in the economy and people's livelihoods throughout that challenging period.

眾所周知，在過去的 3 年 COVID 中，JD 不遺餘力地最大化我們的商業模式和供應鏈能力，並投入大量資源和精力來確保日常供應，並為我們的客戶和上下游業務合作夥伴提供可靠的服務.在那個充滿挑戰的時期，京東能夠在經濟和民生方面發揮重要作用。

In 2023, we've covered in the past, the macroeconomy and consumption have started to pick up but the organic forces driving consumption demand are not yet sufficient. We've seen different paces of recovery for different categories as well as changes in the demographic structure and people's lifestyles and spending patterns.

2023年，我們過去講過，宏觀經濟和消費開始回暖，但拉動消費需求的內生動力還不夠。我們看到了不同類別的不同復甦步伐，以及人口結構、人們的生活方式和消費模式的變化。

JD has taken initiative to embrace the new external environment and industry dynamics in the post-COVID era. 2023 is a year of proactive adjustment for JD and a year that will set a solid foundation for JD's long-term development. Here, I will go through our major adjustments in 3 areas and some of the progress we've achieved so far.

京東主動擁抱後疫情時代新的外部環境和行業動態。 2023年是京東積極調整的一年，也是為京東長遠發展奠定堅實基礎的一年。在這裡，我將介紹我們在三個方面的重大調整以及目前取得的一些進展。

First, we are refocusing on our core business. Since last year, we have carried out a set of adjustments on the supply side, with the goal of long-term healthy and sustainable growth. This includes optimizing our product mix and sales channels in order to further improve our operating efficiency and quality.

首先，我們正在重新關注我們的核心業務。去年以來，我們在供給側進行了一系列調整，目標是長期健康可持續發展。這包括優化我們的產品組合和銷售渠道，以進一步提高我們的運營效率和質量。

Also, I shared last time, we have always encouraged innovative business initiatives while we need to regularly review these new initiatives within each business sector and focus our resources on those businesses that can create long-term value. Therefore, we scaled back on some of our new businesses. As we have been building a healthier business model, we've seen stronger profitability in both JD as a whole and in our core business, with this reporting quarter setting a new record among all quarter 1 in our history.

另外，我上次分享過，我們一直鼓勵創新的業務舉措，同時我們需要定期審查每個業務部門的這些新舉措，並將我們的資源集中在那些可以創造長期價值的業務上。因此，我們縮減了一些新業務。由於我們一直在建立更健康的商業模式，我們看到京東整體和核心業務的盈利能力都更強，本報告季度創下了我們歷史上所有第一季度的新紀錄。

This again demonstrates we have a lot of upside in terms of long-term profitable growth while improving the overall health of our businesses, our core categories, such as home appliance and home goods, 3C and electronics as well as categories such as liquor and baby and mom products that are seeing industry-wide challenges have all been maintaining and even expanding their leadership positions and market share. This trend has continued to strengthen so far in Q2 as we see consumption progressively recovering.

這再次表明我們在長期盈利增長方面有很大的上升空間，同時改善我們業務的整體健康狀況，我們的核心品類，如家電和家居用品、3C 和電子產品，以及酒和嬰兒等品類而面臨全行業挑戰的媽媽產品，都在保持甚至擴大其領先地位和市場份額。到目前為止，隨著我們看到消費逐步復甦，這一趨勢在第二季度繼續加強。

Second, we are improving efficiency of management and operations. We've recently rolled out an organizational readjustment for core segments such as JD Retail and JD Logistics with the purpose of further streamlining company hierarchy, building a more flat, nimble and efficient management structure and further empowering frontline business team. After the adjustment, JD Retail, which has tens of thousands of employees, will have just 3 levels in the reporting line from an entry-level procurement employee to CEO, which will be the flattest managerial structure among all similar sized industry players.

二是提升管理運營效率。近期，我們對京東零售、京東物流等核心板塊進行了組織調整，進一步理順公司層級，構建更加扁平、靈活、高效的管理架構，進一步賦能一線業務團隊。調整後，擁有數万員工的京東零售從採購基層到CEO只有3層級，這將是同類規模企業中管理架構最扁平的。

The reorganization will bring greater decision-making power to the execution teams closest to the market and users, incentivize each business unit and to give young talent more growth opportunities. This type of organizational structure is an essential driving force for us as we embrace the post-COVID era and pursue a new chapter of growth.

重組將賦予最貼近市場和用戶的執行團隊更大的決策權，激勵每個業務單元，並為年輕人才提供更多的成長機會。這種組織架構是我們迎接後疫情時代、開啟新的發展篇章的重要推動力。

Third, we are further in-housing our marketplace ecosystem and user experience. User focus has been built into JD's DNA. On top of our continuous efforts to optimize costs and efficiency, we are committed to providing users with best-in-class product offerings, prices and shopping experiences, addressing user demand on all fronts, including superior selection, speed, quality and value, both 1P and 3P models are means to serve users.

第三，我們正在進一步內部安置我們的市場生態系統和用戶體驗。以用戶為中心已融入京東的 DNA。在不斷優化成本和效率的基礎上，我們致力於為用戶提供一流的產品供應、價格和購物體驗，全方位滿足用戶需求，包括卓越的選擇、速度、質量和價值，無論是1P和3P模式是服務用戶的手段。

JD's goal this year is to build a robust ecosystem that attracts more third-party merchants, particularly the tremendous number of high-quality SMEs that accounts for a relatively small proportion of sellers on our platform. In terms of progress on the merchant side, since the launch of our (inaudible) program that includes a number of supporting measures for SMEs, we have accelerated the expansion of our merchant base.

京東今年的目標是建立一個強大的生態系統，吸引更多的第三方商家，特別是在我們平台上佔賣家比例相對較小的大量優質中小企業。在商戶方面的進展方面，自從推出包括多項中小企業支持措施的（聽不清）計劃以來，我們加快了商戶基礎的擴張。

In particular, the number of third-party merchants with recorded transaction saw 20% sequential growth in Q1, among which merchants in the fashion, home goods and the supermarket categories increased rapidly. Merchants remain motivated to allocate resources to our platform, thanks to our advantages in providing them with lower cost and better efficiency of operations.

其中，Q1有交易記錄的第三方商戶數環比增長20%，其中時尚、家居、商超類商戶增長較快。由於我們為他們提供更低的成本和更高的運營效率的優勢，商家仍然有動力將資源分配給我們的平台。

On the user side, our main JD app maintained healthy traffic growth in this quarter, with DAU growing double digits year-on-year in March. Moreover, as we continue to focus on user quality in Q1, the number of repurchasing users and paid users of JD Retail experienced a rapid year-on-year growth of nearly 20% and 30% respectively. And their proportion of our total users continue to rise, leading to a higher shopping frequency and ARPU in the quarter.

在用戶端，我們主要的京東應用在本季度保持了健康的流量增長，3 月份的 DAU 同比增長了兩位數。此外，由於我們在Q1繼續關注用戶質量，京東零售的複購用戶和付費用戶同比分別增長了近20%和30%。他們在我們總用戶中的比例繼續上升，導致本季度的購物頻率和 ARPU 更高。

In particular, the number of JD Plus members reached 35 million by the end of Q1 and Plus members spent 8.4x of the average annual amount of non-Plus members, sustaining their high shopping frequency and spending power. What's also worth highlighting is that lower-tier market users who have stayed with JD for over a year, saw healthy growth momentum in both user scale and ARPU in Q1 and April as well.

其中，京東Plus會員一季度末達到3500萬，Plus會員年均消費額是非Plus會員的8.4倍，保持了較高的購物頻率和消費能力。另外值得強調的是，在京東停留一年多的低端市場用戶，在第一季度和四月份的用戶規模和ARPU方面也呈現出良好的增長勢頭。

In addition, as we continue to push forward our everyday low price strategy, we're happy to see that NPS score of our main JD app increase on a sequential basis. This makes us more confident that as we continue to build up the supply side and enhance our user service and user operation we are able to ensure best-in-class experience for our core users, while at the same time, addressing diverse demands of new users. We still have a lot of upside in user acquisition.

此外，隨著我們繼續推進日常低價策略，我們很高興看到京東主要應用的 NPS 得分環比上升。這讓我們更有信心，在持續加強供給側建設，加強用戶服務和用戶運營的同時，我們能夠確保核心用戶的最佳體驗，同時滿足新用戶的多樣化需求。用戶。我們在用戶獲取方面仍有很多優勢。

I hope my sharing today has made it clear that 2023 is the best timing for JD's proactive adjustment as we undergo a fluid external environment and embrace new opportunities in the post-COVID era. While such adjustments will impact us for now but will provide a necessary foundation for us to seize the long-term strategic opportunities.

希望今天的分享讓大家明白，2023年是京東主動調整的最佳時機，外部環境變化多端，後疫情時代迎來新機遇。這些調整雖然暫時對我們有影響，但為我們把握長遠的戰略機遇提供了必要的基礎。

The progress we've achieved so far is strong evidence that our adjustment is moving forward steadily and in the right direction. From a long-term perspective, we believe JD is still on a healthy and sustainable track of high-quality growth as our long-term strategies remain unchanged and our core competitiveness and driving forces are constantly improving. We will remain committed to creating lasting value for our users, business partners and shareholders.

目前取得的進展有力地證明，我們的調整正朝著正確的方向穩步推進。從長期來看，我們認為京東的長期戰略沒有改變，核心競爭力和驅動力不斷提升，仍處於健康可持續的高質量增長軌道。我們將繼續致力於為我們的用戶、商業夥伴和股東創造持久的價值。

Finally, I've submitted my retirement request to the Board to spend more time with my family and the Board has approved it. Over the years, it's been a great honor working at and growing together with JD, creating value for our users, business partners and the society and working side by side with Richard and our passionate, hardworking and dedicated management team. I'm very grateful to the trust and support from Richard and the Board of Directors.

最後，我向董事會提交了退休申請，希望能花更多時間陪伴家人，董事會已批准。多年來，很榮幸能在京東工作並與京東一起成長，為我們的用戶、商業夥伴和社會創造價值，並與理查德和我們熱情、勤奮和敬業的管理團隊並肩工作。非常感謝理查德和董事會的信任和支持。

It's also been a fortune to have worked closely with Sandy over the past years, with her profound insight and vision for our businesses, outstanding professional achievements and strong dedication. Sandy is the perfect candidate of the next CEO. I will also work together with her and do my best to ensure a seamless transition in the coming months.

在過去的幾年裡，能夠與 Sandy 密切合作也是一種幸運，她對我們的業務有著深刻的洞察力和遠見，出色的專業成就和強烈的敬業精神。 Sandy 是下一任 CEO 的最佳人選。我也將與她一起努力，盡我所能確保在未來幾個月內順利過渡。

With that, I'll hand over to Sandy.

有了這個，我會交給桑迪。

Thank you, (inaudible) and hello, everyone. It's a great honor to become the third CEO of JD.com. And I truly appreciate the trust from Richard, (inaudible) and the Board. Richard and (inaudible) have set a strong foundation for our future endeavors and they will continue to guide our long-term strategic developments.

謝謝，（聽不清）大家好。非常榮幸成為京東第三任CEO。我非常感謝理查德（聽不清）和董事會的信任。理查德和（聽不清）為我們未來的努力奠定了堅實的基礎，他們將繼續指導我們的長期戰略發展。

I look forward to further driving the high quality and sustainable growth of the company and bringing more value to our customers, business partners and the society. Now let's turn to our financial performance. In the first quarter of 2023, we continued to build on our progress in business and organizational adjustments and began to see encouraging trends, including improved user engagement, as (inaudible) just shared, rejuvenated greenfield marketplace performance, improving NPS score and resilient profitability, among others.

期待進一步推動公司高質量、可持續發展，為我們的客戶、商業夥伴和社會帶來更多價值。現在讓我們談談我們的財務業績。在 2023 年第一季度，我們繼續在業務和組織調整方面取得進展，並開始看到令人鼓舞的趨勢，包括用戶參與度的提高，正如（聽不清）剛剛分享的那樣，重新煥發活力的綠地市場表現，提高 NPS 得分和彈性盈利能力，除其他外。

Also, as elaborated by (inaudible), our ongoing business adjustment as well as the reorganization announced in April could result in moderated growth, especially as measured by revenues in the short term. And yet, with the encouraging trends we've seen and our focus on building a team that can thrive in a very evolving business environment with adaptability, strategic agility and results, we are more confident than ever in our ability to deliver healthy, sustainable growth for the long run.

此外，正如（聽不清）所闡述的那樣，我們正在進行的業務調整以及 4 月份宣布的重組可能會導致適度增長，尤其是在短期內以收入衡量。然而，憑藉我們所看到的令人鼓舞的趨勢，以及我們專注於打造一支能夠在瞬息萬變的商業環境中以適應性、戰略敏捷性和成果茁壯成長的團隊，我們比以往任何時候都更有信心實現健康、可持續的增長從長遠來看。

Now let me walk you through our financial results in Q1. Our net revenues grew by 1.4% year-on-year to RMB 243 billion in Q1 as we continued to focus on user quality and building deeper user engagement. We are encouraged to see that, during the quarter, JD Retail LTM average GMV per user and shopping frequency continued to increase year-on-year for 6 quarters in a row, mainly driven by the expansion of our core user base.

現在讓我向您介紹我們第一季度的財務業績。我們在第一季度的淨收入同比增長 1.4% 至人民幣 2,430 億元，因為我們繼續關注用戶質量並建立更深層次的用戶參與度。我們欣喜地看到，在本季度，京東零售 LTM 平均每用戶 GMV 和購物頻率連續 6 個季度同比增長，這主要是由於我們核心用戶群的擴大。

Breaking down the revenue mix. Product revenues were down 4% year-on-year in Q1. I'll discuss category performance shortly. Service revenues grew by 34% year-on-year in Q1 among which marketplace and the marketing revenues grew by 8% year-on-year. We are encouraged to see that 3P revenues delivered robust momentum in the quarter reaching the highest growth rate in the last 4 quarters.

打破收入結構。第一季度產品收入同比下降 4%。我將很快討論類別性能。一季度服務收入同比增長34%，其中市場和營銷收入同比增長8%。我們很高興看到 3P 收入在本季度實現了強勁勢頭，達到了過去 4 個季度的最高增長率。

Notably, growth of 3P advertising revenues meaningfully outpaced that of 1P in the quarter which is primarily driven by our continuous efforts to support merchants, particularly SMEs, leading to a substantial merchant base expansion in the quarter. We believe this is an important step forward in our business adjustment to build a vibrant marketplace ecosystem and further enrich product supplies and user experience on our platform. Logistics and other services revenues grew by 61% year-on-year in Q1.

值得注意的是，本季度 3P 廣告收入的增長顯著超過 1P，這主要是由於我們不斷努力支持商家，特別是中小企業，導致本季度商家基礎大幅擴張。我們認為，這是我們業務調整的重要一步，旨在構建充滿活力的市場生態系統，並進一步豐富我們平台上的產品供應和用戶體驗。第一季度物流及其他服務收入同比增長61%。

Now let's turn to our segment performance. JD Retail experienced a soft revenue performance in Q1 while continue to expand on both fulfilled gross margin and operating margin. As communicated before, the continuous improvement of our profitability and bottom line growth indicates that we are moving in the right direction towards building a healthy, sustainable business model.

現在讓我們來看看我們的細分市場表現。京東零售在第一季度的收入表現疲軟，同時繼續擴大已實現的毛利率和營業利潤率。如前所述，我們盈利能力和底線增長的持續改善表明我們正朝著建立健康、可持續商業模式的正確方向前進。

In terms of revenues, JD Retail reported a 2% year-on-year decline in Q1. By category, electronics and home appliance revenues were down slightly by 1% year-on-year during the quarter, mainly due to the lagging recovery of durable goods consumption compared to other discretionary categories. That said, we continue to notably outperform the industry in Q1, thus effectively defending our market share in this category.

營收方面，京東零售一季度同比下滑2%。按品類劃分，本季度電子和家電收入同比小幅下降1%，主要原因是耐用品消費的複蘇較其他可自由支配品類滯後。也就是說，我們在第一季度的表現繼續明顯優於行業，從而有效地捍衛了我們在該類別中的市場份額。

More importantly, our outperformance in electronics and home appliance industries becomes more pronounced heading into Q2. And we are confident to not only defend but also to further increase our market share in this category, thanks to our strong supply chain capabilities, user mind share and solid progress in both online and off-line channels.

更重要的是，進入第二季度，我們在電子和家電行業的表現更加明顯。憑藉我們強大的供應鏈能力、用戶心智份額以及線上線下渠道的穩步推進，我們有信心不僅捍衛而且進一步提高我們在這一類別的市場份額。

General merchandise revenues were down 9% year-on-year in Q1, a mixed result of our business adjustments and the high comp for supermarket category last year due to the stockpiling during COVID. Since we are on the topic of supermarket category, I'd like to share that it once again achieved an impressive margin improvement as our business adjustment aimed to build a healthier product mix is yielding results.

第一季度日用商品收入同比下降 9%，這是我們業務調整和去年因 COVID 期間囤貨導致超市類別高競爭的混合結果。由於我們的主題是超市類別，我想分享一下，由於我們旨在建立更健康的產品組合的業務調整正在取得成果，因此它再次實現了令人印象深刻的利潤率提升。

Our emerging categories such as health care products and services, apparels and accessories delivered double-digit top line growth in the quarter demonstrating our broad-based user mindshare across categories. I want to highlight JD Retail's profitability improvement. JD Retail's fulfilled gross margin was up an exceptional 95 basis points year-on-year to 8.9% in Q1, mainly driven by our efforts to optimize cost and efficiency and the improving economies of scale.

我們的新興類別，如醫療保健產品和服務、服裝和配飾，在本季度實現了兩位數的收入增長，表明我們在各個類別中擁有廣泛的用戶心智份額。我想強調 JD Retail 的盈利能力改善。京東第一季度實現的毛利率同比增長 95 個基點，達到 8.9%，這主要是由於我們努力優化成本和效率以及提高規模經濟。

This also boosted JD Retail's operating margin to 4.6%, up 101 basis points from a year ago, another impressive margin expansion in 4 consecutive quarters in a row. Our core retail business remains well on track of our long-term margin trajectory as we are making proactive adjustments to set JD in a stronger position for achieving sustainable growth. JD Logistics saw a 34% revenue growth year-on-year in Q1, excluding the impact of consolidation of Deppon, JD Logistics growth rate was 7%. This is mainly contributable to the resilient growth in revenues from external customers, the proportion of which reached 69% in Q1.

這也將京東零售的營業利潤率推高至 4.6%，比一年前上升 101 個基點，連續 4 個季度再次實現令人印象深刻的利潤率增長。我們的核心零售業務在我們的長期利潤率軌跡上保持良好，因為我們正在積極調整以使京東處於更有利的地位以實現可持續增長。京東物流一季度營收同比增長34%，剔除德邦整合影響，京東物流增速為7%。這主要得益於外部客戶收入的彈性增長，一季度佔比達到69%。

In terms of profitability, JDL's non-GAAP operating loss margin was 3.1% in the quarter, primarily due to the extra resources allocated in response to COVID in January and February. Dada reported revenues of RMB 2.6 billion in Q1 and non-GAAP operating loss of RMB 217 million in the quarter.

在盈利能力方面，JDL 本季度的非 GAAP 營業虧損率為 3.1%，這主要是由於 1 月和 2 月為應對 COVID 而分配的額外資源。達達報告第一季度收入為人民幣 26 億元，非美國通用會計準則營業虧損為人民幣 2.17 億元。

Intracity on-demand retail business remains as an important pillar for us. And we are glad to see that JDDJ and Shop Now have expanded to cooperate with over 300,000 offline stores and provided more than 2,000 cities and counties with on-demand retail services that cover a wide range of categories.

同城按需零售業務仍然是我們的重要支柱。而我們也欣喜地看到，京東到家和小舖已經拓展到超過30萬家線下門店合作，為超過2000個城市縣提供了品類廣泛的按需零售服務。

As a result, our intracity on-demand retail business Shop Now maintained its robust momentum with year-on-year GMV growth rate of 60% in Q1. Finally, revenues from new businesses scaled back to RMB 3.5 billion in Q1 as we continue to adjust the investment pace in both (inaudible) and international businesses, while JD Property maintained its robust growth momentum.

因此，我們的同城按需零售業務 Shop Now 保持強勁勢頭，第一季度 GMV 同比增長 60%。最後，隨著我們繼續調整（聽不清）和國際業務的投資步伐，第一季度新業務的收入縮減至人民幣 35 億元，而京東地產保持了強勁的增長勢頭。

In terms of profitability, operating loss of new businesses continued to narrow down substantially on both year-on-year and sequential basis. As shared previously, we will continue to explore new initiatives and encourage innovations that generate better synergies with our core businesses and capabilities. We are pulling off those that we don't see a clear path for meaningful returns in the foreseeable future.

在盈利能力方面，新業務的經營虧損同比和環比繼續大幅收窄。如前所述，我們將繼續探索新舉措並鼓勵創新，以與我們的核心業務和能力產生更好的協同效應。我們正在取消那些我們在可預見的未來看不到有意義回報的明確途徑的項目。

Moving to the consolidated bottom line. As we continue to focus on our core businesses to drive high-quality growth and further optimize operating efficiency, we recorded RMB 7.6 billion non-GAAP net income attributable to ordinary shareholders in Q1 and non-GAAP net margin [arrived] 3.1%, up 144 basis points compared to a year ago.

轉向綜合底線。隨著我們繼續專注於核心業務以推動高質量增長並進一步優化運營效率，我們在第一季度錄得人民幣 76 億元的歸屬於普通股股東的非美國通用會計準則淨利潤和非美國通用會計準則淨利潤率 [到達] 3.1%，同比增長與一年前相比下降了 144 個基點。

Finally, our LTM free cash flow as of Q1 was RMB 19 billion. This was mainly driven by the deferrable payment of accounts payable. The impact of which is exaggerated when sales growth rate moderates, a typical phenomenon for retailers. As we are working to drive healthy sustainable growth, we believe our free cash flow will go back to normal levels going forward.

最後，截至第一季度，我們的 LTM 自由現金流為 190 億元人民幣。這主要是由於應付賬款的延期支付所致。當銷售增長率放緩時，其影響會被放大，這是零售商的典型現象。由於我們正在努力推動健康的可持續增長，我們相信我們的自由現金流將在未來恢復到正常水平。

By the end of Q1, cash and cash equivalents, restricted cash and short-term investments added up to a total of RMB 203 billion. During the quarter, we also did share buyback of RMB 1.1 billion. The share buyback, coupled with our previously announced cash dividend demonstrated our confidence in JD's future prospects and commitment to returning shareholders despite the short-term volatility in the stock market as we go through our proactive adjustments.

一季度末，現金及現金等價物、限制性現金和短期投資合計2030億元。本季度，我們還回購了 11 億元人民幣的股票。股票回購，加上我們之前宣布的現金股息，表明我們對京東未來前景的信心和回報股東的承諾，儘管在我們進行積極調整的過程中股市出現短期波動。

To conclude my remarks, we ended Q1 with strong footing in improved operating efficiency and expanding profitability, boding well for our proactive business reorganization. We are working to build an adaptive and efficient business model, a more ownership-oriented team and ultimately, to achieve profitable expansion and the market share gain in the long run, the same narrative of JD's development over the past 20 years.

總而言之，我們在第一季度結束時在提高運營效率和擴大盈利方面奠定了堅實的基礎，這預示著我們積極的業務重組。我們正在努力建立一個適應性強且高效的商業模式，一個更加以所有權為導向的團隊，並最終實現盈利擴張和市場份額的長期增長，這與京東過去 20 年的發展歷程相同。

JD has gone through many cycles and always emerged stronger, thanks to our visionary moves and steadfast execution. We will continue to commit ourselves to the 3P sense of retail, user experience, cost and efficiency and through the right way to create long-term value for our customers, business partners and shareholders.

得益於我們富有遠見的舉措和堅定的執行力，京東經歷了很多周期，並且總是變得更強大。我們將繼續致力於零售、用戶體驗、成本和效率的3P意識，通過正確的方式為我們的客戶、商業夥伴和股東創造長期價值。

With that, let's open the call to the Q&A. Thank you.

有了這個，讓我們打開問答環節。謝謝。

Thank you, Sandy. For the Q&A session, analysts are welcome to ask questions in Chinese or English. And our management will answer your questions in the language you ask. We'll provide English translation when necessary and for convenient purpose only. In the case of any discrepancy, please refer to our management statement in the original language. Operator, we can open the call for Q&A.

謝謝你，桑迪。問答環節，歡迎分析師用中文或英文提問。我們的管理層將以您提出的語言回答您的問題。我們將在必要時提供英文翻譯，僅供方便之用。如有任何差異，請以原文的管理聲明為準。接線員，我們可以打開電話進行問答。

(Operator Instructions) The first question comes from Thomas Chong with Jefferies.

（操作員說明）第一個問題來自 Jefferies 的 Thomas Chong。

(foreign language) My first question is about recent organizational adjustment. Can management share about the rationale behind as well as the impact to JD? And my second question is about the subsidies program. It has been launched for about 2 months. Can management share about -- from the perspective of user growth, merchant participation and GMV growth?

（外語） 我的第一個問題是關於最近的組織調整。管理層能否分享背後的原因以及對京東的影響？我的第二個問題是關於補貼計劃。它已經推出了大約2個月。管理層能否從用戶增長、商家參與和 GMV 增長的角度分享一下？

(foreign language) Thank you for your question. This is Sandy. Let me answer the question about the organization restructuring. As you might noticed in the news we have undergone such changes for JD Retail and JD Logistics business. And I would take JD Retail's restructuring as an example, to give you more explanations on it.

（外語）謝謝你的提問。這是桑迪。我來回答有關組織架構調整的問題。正如您在新聞中註意到的那樣，我們對京東零售和京東物流業務進行了此類更改。我會以京東零售的重組為例，給大家做更多的解釋。

So the previous level of JD Retail's business group has been removed and replaced with business departments. Former leaders of business groups will now act as leaders of business departments. And the business departments that used to oversee various product categories will be further split into numerous operational units that focus on specific product categories and each of these units will have greater decision-making and management responsibilities and their KPIs will be tied closer to their operating results which will help to incentivize entrepreneurship at every level and better align team interests with those of investors.

所以京東零售事業群的上一級被撤掉，取而代之的是事業部。原事業群領導轉任事業部領導。而過去負責監管各種產品類別的業務部門將進一步拆分為多個專注於特定產品類別的運營單元，每個單元將承擔更大的決策和管理責任，其KPI將更接近於其經營業績這將有助於激勵各個層面的企業家精神，並更好地使團隊利益與投資者利益保持一致。

[Interpreted] This is Xu Lei. I would add a few words regarding my role change. So Sandy, she will be the third CEO of JD.com. She is no stranger to our investors and analysts. In the past nearly 5 years, Sandy and I have been working closely from JD Retail's business to the group level.

【解讀】我是徐磊。關於我的角色變化，我想補充幾句。那麼Sandy，她將是京東的第三任CEO。她對我們的投資者和分析師來說並不陌生。在過去將近5年的時間裡，我和Sandy一直在從京東零售的業務到集團層面密切合作。

And some of you might recall in 2018, it's only because of my close teamwork with Sandy that made it possible for us to ride through this so-called darkest moment. So Sandy has played a very important role. And without her, I don't think I can make it. And plus Sandy is a very young leader and still have a lot of energies and she has been widely recognized with her professionalism and dedication inside and outside the company.

你們中的一些人可能還記得，在 2018 年，正是因為我與桑迪的緊密合作，才讓我們得以度過這個所謂的至暗時刻。所以桑迪起到了非常重要的作用。沒有她，我認為我做不到。再加上Sandy是一位非常年輕的領導者，仍然充滿活力，她的專業精神和奉獻精神在公司內外得到了廣泛認可。

So everyone, including myself, members of the Board and [SEO] Committee, all believe that she is the capable leader to lead JD into the new phase of healthy and high-quality growth. And for myself, my JD story can be traced back to 16 years ago, when it first became the company's external adviser in 2007. And in the future, I will also continue to be -- to become the first Chairman of JD's Advisory Council. And my support to JD will be a lifetime commitment, just a change of perspectives and position but I will always support JD whenever the company needs and this is also a very meaningful and privilege thing for me. And thank you.

所以大家，包括我自己，董事會成員和[SEO]委員會成員，都認為她是帶領京東進入健康高質量發展新階段的有能力的領導者。而對於我自己，我的京東故事可以追溯到16年前，2007年首次成為公司的外部顧問。而未來，我也將繼續——成為京東顧問委員會首任主席。而我對京東的支持將是一生的承諾，只是一種觀點和立場的改變，但只要公司需要，我就會一直支持京東，這對我來說也是一件非常有意義和榮幸的事情。謝謝你。

[Interpreted] So thank you, Mr. Xu Lei. He has made a great achievements and contributions to the development of the company. And I would also take this opportunity to emphasize on our strategies which will remain unchanged in the long term and will continue to focus on our business philosophy, to focus on our cost efficiency and users' experience and to continue to create value for the customers, industries and the society.

[翻譯]所以謝謝你，徐磊先生。他為公司的發展做出了巨大的成就和貢獻。我也想藉此機會強調我們的戰略將長期保持不變，並將繼續專注於我們的經營理念，專注於我們的成本效率和用戶體驗，並繼續為客戶創造價值，行業和社會。

And our key growth drivers will continue to focus on our lower-tier markets to build a open ecosystem and on-demand omnichannel retail and by leveraging the economies of scale and of our operating efficiencies, we will continue to diversify our revenue structures to achieve healthy and sustainable growth in the long run.

我們的主要增長動力將繼續關注我們的低端市場，以建立一個開放的生態系統和按需全渠道零售，並通過利用規模經濟和我們的運營效率，我們將繼續多元化我們的收入結構以實現健康和長期可持續增長。

So let me answer questions about our discounts program. As we mentioned in our last quarter call, we had a series of programs offering competitive prices and services that consumers truly appreciate and enjoy, including the RMB 10 billion subsidy program, low cost and free shipping, flash sale and more formats. This is based on our continuous investment and accumulation in the supply chain which results in higher efficiency and lower costs.

那麼讓我回答有關我們的折扣計劃的問題。正如我們在上個季度的電話會議中提到的，我們有一系列計劃提供有競爭力的價格和消費者真正欣賞和享受的服務，包括人民幣 100 億元的補貼計劃、低價免費送貨、限時搶購和更多形式。這是基於我們在供應鏈上不斷的投入和積累，效率更高，成本更低。

On the supply side, we are constantly improving our open ecosystem to offer users a wider selection of price ranges, products categories, including brands and other white label products. We also leverage our supply chain advantages to realize economies of scale and pass on the benefits to consumers. Therefore, JD's ability to offer everyday low price is based on our focus on everyday low cost.

在供應方面，我們不斷完善我們的開放生態系統，為用戶提供更廣泛的價格範圍、產品類別選擇，包括品牌和其他白標產品。我們還利用我們的供應鏈優勢實現規模經濟並將利益傳遞給消費者。因此，京東能夠提供天天低價，是基於我們對天天低價的關注。

We will drive several user experience changes this year by making adjustments on marketing strategies, guiding users to embrace our everyday low-price concept instead of stocking up goods only at promotion. Thus, we will see the share of everyday sales increase this year, which is in line with our goal of everyday low price and returning to the essence of retail. This will also help stabilize the whole industry's supply chain operations that's enhancing the efficiency and value creation for our partners' brands and third-party merchants.

今年我們將通過調整營銷策略，引導用戶接受我們的日常低價理念，而不是只在促銷時囤貨，從而推動用戶體驗的幾項變革。因此，我們今年將看到日常銷售份額增加，這符合我們的日常低價和回歸零售本質的目標。這也將有助於穩定整個行業的供應鏈運營，從而提高合作夥伴品牌和第三方商家的效率和價值創造。

So the performance of this discount program since it was launched 2 months ago, has met our expectation with our joint investment in marketing resources with brands and merchants, we strive to provide consumers with tangible benefits. Only by truly passing on benefits to users, can we attract them, which in turn attracts brands and sellers. By serving users well, we can also serve the brands and merchants well. We have noticed improvements in user traffic, engagement and repeat purchases, as well as a significant increase in the number of active third-party merchants. So we're confident in our ability to control the overall cost -- overall impact of this program and this program has limited impact on our margins.

所以這個打折活動上線2個月以來的表現符合我們的預期，我們與品牌商和商家共同投入營銷資源，力求為消費者提供實實在在的實惠。只有真正把利益傳遞給用戶，才能吸引用戶，進而吸引品牌和賣家。服務好用戶，才能服務好品牌和商家。我們注意到用戶流量、參與度和重複購買量的改善，以及活躍第三方商家數量的顯著增加。因此，我們對控制總體成本的能力充滿信心——該計劃的總體影響以及該計劃對我們利潤率的影響有限。

The next question comes from Ronald Keung with Goldman Sachs.

下一個問題來自高盛的 Ronald Keung。

(foreign language)

（外語）

[Interpreted] JD's GMV growth rate in Q2 has been faster than Q1 and the growth rate of GMV is also faster than that of revenues. We've seen the number of third-party merchants with active sales continue to rise and their GMV growth is faster than 1P businesses. And also there's the factor that last year, this quarter, the 3Ps comps relatively lower.

【解讀】京東Q2的GMV增速已經快於Q1，GMV的增速也快於營收增速。我們看到活躍銷售的第三方商戶數量持續上升，GMV 增長快於 1P 業務。還有一個因素是去年本季度 3Ps 的表現相對較低。

In terms of organization structure change, we are gradually implementing the detailed plans, so the impact will be released over a certain period of time in the following quarters.

在組織架構變化方面，我們正在逐步落實細化方案，影響會在接下來幾個季度的一定時間內得到釋放。

So for JD's core retail business, we have always been centered on our customers. So any model that better satisfies consumers' diversified demand should be offered to them and it will also attract users to make purchases. And JD platform offers both 1P and 3P models to serve consumers and we should always keep the decision making right to the consumers. And one of our unique advantage is that these 2 models are actually complementary to each other.

所以對於京東的核心零售業務，我們一直以客戶為中心。所以只要是能更好地滿足消費者多樣化需求的車型，就應該提供給他們，同時也會吸引用戶購買。而京東平台同時提供1P和3P兩種模式來服務消費者，我們應該始終把決策權留給消費者。我們的獨特優勢之一是這兩種模式實際上是互補的。

So for several categories, JD's self-operated model is highly competitive. For example, high-ticket size products, products that require higher level of quality and service assurance for consumers and products that can generate lower cost and higher efficiency through economies of scale. At the same time, as JD's consumers and the purchasing demands become increasingly varied and differentiated, we need to enrich our supply side through the marketplace business model.

所以在幾個品類上，京東的自營模式都具有很強的競爭力。例如，高價位產品、對消費者有更高質量和服務保證要求的產品，以及通過規模經濟可以產生更低成本和更高效率的產品。同時，隨著京東的消費者和購買需求越來越多樣化和差異化，我們需要通過市場商業模式來豐富我們的供給側。

So our current adjustments, including the holistic management of 1P and 2P and the considerations on the KPIs tied to the performances to give better choices and more options to the users. So for the short-term, business adjustments can indeed affect revenue growth, especially for certain categories. However, we believe that through these adjustments, categories such as -- like our supermarket categories will remain JD's most important growth driver and return to a healthier growth trajectory in the long term.

所以我們現在的調整，包括1P和2P的統籌管理，以及與業績掛鉤的KPI的考量，給用戶更好的選擇，更多的選擇。所以從短期來看，業務調整確實會影響收入增長，尤其是某些品類。然而，我們相信，通過這些調整，我們的超市品類等品類仍將是京東最重要的增長動力，並在長期內回歸更健康的增長軌道。

The next question comes from Eddy Wang with Morgan Stanley.

下一個問題來自摩根士丹利的 Eddy Wang。

(foreign language)

（外語）

[Interpreted] Yes. I would like to share some insights on the categories of home appliances and home goods. So in Q1, the performance still affected by softer consumption demand in the real estate industry. So the recovery of durable goods consumption, such as household appliances and home furnishing lags behind that of catering, entertainment and other consumer goods. Whereas, the good news is that, through JD's years of building our multichannels and we have always delivered higher than industry performance. So with the economy recovery in the following quarters, we can see -- we expect that demand will come back on JD's platform.

[解釋]是的。我想分享一些關於家電和家居用品類別的見解。所以在一季度，業績仍然受到房地產行業消費需求疲軟的影響。因此，家用電器、家居等耐用品消費的回暖滯後於餐飲、娛樂等消費品。然而，好消息是，通過京東多年的多渠道建設，我們始終提供高於行業的業績。因此，隨著接下來幾個季度的經濟復甦，我們可以看到——我們預計京東平台上的需求將會恢復。

Yes. And for the 3C and electronics category, it also belongs to the durable and the large ticket categories. So JD has a very strong mentality among our consumers. And we have also done innovative measures on the channels, on the services and continue to lead the market share. And we're see -- seeing that the Q4 market is getting better. And admittedly, for these 2 categories, it still takes some time waiting for more recovery of the market and it also depends on the confidence restoration from the factories and the manufacturers. When the confidence is back, I believe the recovery rate will bounce back quickly.

是的。而對於3C和電子品類，也屬於耐用品和大票品類。所以京東在我們的消費者當中有非常強烈的心態。並且我們在渠道上、服務上也做了創新，市場份額繼續領先。我們看到 - 看到第四季度市場正在好轉。而誠然，對於這兩個品類，市場的進一步復甦還需要一段時間，也取決於工廠和製造商信心的恢復。當信心回來時，我相信復甦率會迅速反彈。

So I have a few words on our 20 -- 618 Grand Promotion. It is very critical and important event for us. And on one hand, we will use this opportunity to strengthen our collaborations with our brand partners. And for certain categories, they do face operating and inventory pressures. So we will leverage the 618 Grand Promotion to make more adjustments on the marketing and operations to conduct more innovations, to create a new high in terms of innovation and partnership.

所以我有幾句話關於我們的 20 -- 618 大促銷。這對我們來說是非常關鍵和重要的事件。一方面，我們將利用這個機會加強與品牌合作夥伴的合作。對於某些類別，他們確實面臨運營和庫存壓力。所以我們會藉助618大促，在營銷和運營上做更多的調整，進行更多的創新，在創新和合作上再創新高。

[Interpreted] So just and one more observation on the 3C and electronic categories. We're seeing the sales in Q4 is picking up. So for those categories that JD has some strength on the market, we are confident to continue to lead the market and have the performance -- have outperformed the industry average in April.

【解讀】所以就3C類和電子類再多觀察一次。我們看到第四季度的銷售額正在回升。因此，對於京東在市場上具有一定實力的那些類別，我們有信心繼續引領市場並取得業績——4 月份的表現優於行業平均水平。

The next question comes from Alicia Yap with Citigroup.

下一個問題來自花旗集團的 Alicia Yap。

I'm going to ask English. And also congratulations to Sandy on your new role as CEO and also best wishes to (inaudible). I have questions surrounding the categories core side and also competition. So while, I mean, I will - while I remain quite cautious, especially for the big ticket items like 3C but it's also things like the OEM and the hardware (inaudible) manufacturings are eager to destocking their existing models in preparation for the new models launch in the fall. So how will JD work with them to leverage the upcoming 618 promotion to stimulate the consumer purchasing sentiment? And do you anticipate competition in 3C and appliance to heat up or is JD seeing more competition headwind in the FMCG category? And lastly, can management elaborate on what is JD's next growth expansion story?

我要問英文也祝賀桑迪擔任 CEO 的新角色，並致以最良好的祝愿（聽不清）。我對類別核心方面以及競爭有疑問。因此，我的意思是，我會 - 雖然我仍然非常謹慎，特別是對於像 3C 這樣的大件商品，但它也像 OEM 和硬件（聽不清）製造商急於減少現有型號的庫存以為新型號做準備秋季推出。那麼京東將如何與他們合作，利用即將到來的618促銷來刺激消費者的購買情緒呢？您是否預計 3C 和家電領域的競爭會升溫，或者京東是否會在快速消費品類別中看到更多競爭逆風？最後，管理層能否詳細說明京東的下一個增長擴張故事是什麼？

Thanks, Alicia. Well, the overall consumption might remain cautious, especially for large ticket size products like 3Cs and home appliance. However, we heard from the brands that all the OEM manufacturers that they are quite willing to provide attractive rebate or discount to boost their sales and also to try to sell through their existing inventory in order to prepare for the new models releasing in the second half year.

謝謝，艾麗西亞。那麼整體消費還是會保持謹慎，尤其是3C、家電等大件商品。不過，我們從品牌商那裡得知，各代工廠商都非常願意提供誘人的回扣或折扣來提振銷量，並嘗試通過現有庫存來銷售，為下半年推出的新車型做準備。年。

So if this is true and then JD will be -- there will be a great opportunity for us, given our stronger relationships, our stronger supply chain capabilities with the brands. And so -- and also, we heard that, in particular, for the brands of home appliances, they are all expecting positive sales growth for the year. In terms of the supermarkets, right? Competition, I would say our competitive advantages are very different from the other competitors.

因此，如果這是真的，那麼京東將是——鑑於我們與品牌之間更牢固的關係、更強大的供應鏈能力，這對我們來說將是一個很好的機會。因此 - 而且，我們聽說，特別是對於家用電器品牌，他們都預計今年的銷售額將實現正增長。就超市而言，對嗎？競爭，我會說我們的競爭優勢與其他競爭對手有很大不同。

Again, we are a supply chain-driven platform instead of a traffic-driven platform. So even though we are facing some short-term challenges because of our proactive business adjustment or our proactive channel or product mix adjustment, that I can see that our -- for few gross margin -- for many product categories are still improving. That means we have -- we will continue to gain operating efficiency well and set a competitive pricing in front of the consumers.

同樣，我們是供應鏈驅動的平台，而不是流量驅動的平台。因此，儘管由於我們積極的業務調整或我們積極的渠道或產品組合調整，我們面臨一些短期挑戰，但我可以看到我們 - 對於很少的毛利率 - 對於許多產品類別仍在改善。這意味著我們已經 - 我們將繼續獲得良好的運營效率，並在消費者面前設定具有競爭力的價格。

So the healthy business is still growing. And I'm pretty comfortable that after all the business adjustments are completed or absorbed this year, we will go back to our normal growth trend.

因此，健康的業務仍在增長。我很高興在今年完成或吸收所有業務調整後，我們將回到正常的增長趨勢。

As we are now approaching the end of the conference call, I will turn the call over to JD.com's Sean Zhang for closing remarks. Please go ahead, sir.

由於我們現在接近電話會議的尾聲，我將把電話轉給京東的 Sean Zhang 作結束語。請繼續，先生。

Thank you. Thank you, everyone, for joining the call today and for your questions. If you have further questions, please contact me and our team. We appreciate your interest and support in JD.com and look forward to talking to you again next quarter. Thank you.

謝謝。感謝大家今天加入電話會議並提出問題。如果您還有其他問題，請聯繫我和我們的團隊。感謝您對京東的關注和支持，期待下個季度再次與您交流。謝謝。

Thank you. Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.

謝謝。感謝您參加今天的會議。介紹到此結束。您現在可以斷開連接。再會。

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]

[此記錄中標記為 [已翻譯] 的部分由現場通話中的口譯員說出。]