京東 (JD) 2022 Q1 法說會逐字稿

Hello, and thank you for standing by for JD.com's First Quarter 2022 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, Mr. Sean Zhang, Director of Investor Relations. Please go ahead.

您好，感謝您參加京東 2022 年第一季財報電話會議。 （操作員指示）今天的會議正在錄音。如果您有任何異議，此時您可以斷開連接。現在，我想將會議交給今天會議的主持人、投資者關係總監張曉剛先生。請繼續。

Thank you, Michelle. Good evening, and good morning, everyone. Welcome to our first quarter 2022 earnings conference call. Joining us on the call today are Mr. Lei Xu, our CEO; and Ms. Sandy Xu, our CFO. For today's call, they will kick off with opening remarks, and Sandy will discuss the financial highlights. After that, we'll open the call to questions from analysts.

謝謝你，米歇爾。大家晚上好，早安。歡迎參加我們的 2022 年第一季財報電話會議。今天參加電話會議的有我們的執行長徐雷先生；以及我們的財務長 Sandy Xu 女士。今天的電話會議將以開場白開始，然後桑迪將討論財務亮點。之後，我們將開始回答分析師的提問。

Before we continue, let me remind you, today's call 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. Also during this call, we'll discuss certain non-GAAP financial measures. Please also refer to our earnings press release, which contains a reconciliation of non-GAAP measures to the comparable GAAP measures. Finally, please note, unless otherwise stated, all figures mentioned in this call are in RMB.

在我們繼續之前，讓我提醒您，今天的電話會議將包括前瞻性陳述，請參閱我們 IR 網站上的收益新聞稿中適用於本次電話會議的最新安全港聲明。此外，在本次電話會議中，我們還將討論某些非公認會計準則財務指標。另請參閱我們的收益新聞稿，其中包含非 GAAP 指標與可比較 GAAP 指標的對帳。最後，請注意，除非另有說明，本次電話會議中提到的所有數字均為人民幣。

And now, I would like to turn the call over to Mr. Lei Xu, our CEO. (foreign language).

現在，我想將電話轉給我們的執行長徐雷先生。 （外語）。

[Interpreted] Hello, everyone. This is Xu Lei. Thank you for joining JD.com's 2022 first quarter earnings call.

[翻譯]大家好。我是徐磊。感謝您參加京東2022年第一季財報電話會議。

Since the start of 2022, we have seen many challenges arise in our external environment, including the COVID resurgence, supply chain disruptions, and soft consumer sentiment, among others. As a supply chain based technology and service provider, JD is strongly committed to social responsibility of its leadership. And thanks to the supply chain that we (inaudible), we are able to take concrete action to help ensure supplies of daily necessities and to mitigate the impact of the pandemic on society and economy.

自 2022 年初以來，我們看到外部環境出現許多挑戰，包括新冠疫情復發、供應鏈中斷、消費者信心疲軟等。作為一家基於供應鏈的技術和服務提供者，京東堅決履行領導層的社會責任。而且由於我們（聽不清楚）的供應鏈，我們能夠採取實際行動，幫助確保生活必需品的供應，並減輕疫情對社會和經濟的影響。

JD's solid business foundation positions us to navigate the current challenges, which we believe are short-term in nature.

京東堅實的業務基礎使我們能夠應對當前的挑戰，但我們認為這些挑戰本質上是短期的。

In the first quarter, we once again delivered high-quality results, thanks to our supply chain capabilities and resilient business model. Our total revenues saw a solid year-on-year growth of 18%. This reflects increasing trust we have gained from our consumers and business partners. It also demonstrates that we have better control across our entire business process and supply chain. Therefore, we projected greater visibility than the overall sector during times of change. Moreover, we also recorded steady profitability in this quarter, driven by better operating efficiency and more focused business strategies.

第一季度，由於我們的供應鏈能力和彈性業務模式，我們再次取得了高品質的業績。我們的總收入較去年同期穩定成長18%。這反映出我們從消費者和商業夥伴那裡獲得的信任日益增加。這也顯示我們對整個業務流程和供應鏈有了更好的控制。因此，我們預期在變革時期該產業的可見度將比整個產業更高。此外，由於更好的營運效率和更專注的業務策略，我們本季也實現了穩定的獲利。

In terms of COVID, JD has always walked at frontline and spared no efforts. Once coronavirus first broke out in January 2020, we mobilized quickly to establish a special line for COVID to ensure transport capacity, providing essentials to affected regions, donating protection and medical materials that were in urgent need, and launched a set of supportive measures for our merchants and suppliers.

在對抗疫情方面，京東始終走在前線，不遺餘力。 2020年1月新冠肺炎疫情發生後，我們迅速組織力量，建立新冠肺炎疫情專線，保證運力，向疫區提供生活必需品，捐贈急需的防護及醫療物資，並推出了一系列對商戶和供應商的支持措施。

This time, facing the more transmissible Omicron variant, JD once again fully leveraged our supply chain and mobilized all of the group's forces to fight the epidemic and ensure supply of daily necessities across China. Taking Shanghai as an example, JD Retail, Logistics, Health, Dada, and other business segments have sourced goods, allocated transport and logistics resources, and delivered tens of thousands of home supplies to Shanghai, including staple foods and baby care products and more. We have also recruited and deployed over 4,000 (inaudible) employees to fully support operations and deliveries in Shanghai.

這次面對傳染性更強的奧密克戎變種病毒，京東再次充分發揮供應鏈優勢，調動集團所有力量對抗疫情，保障全國生活必需品的供應。以上海為例，京東零售、物流、健康、達達等業務板塊已採購商品、調配運輸及物流資源，將數萬件家居用品配送至上海，包括主食、母嬰用品等。我們還招募並部署了 4,000 多名（聽不清楚）員工，以全力支持上海的營運和交付。

On behalf of JD, I'd like to express our most crucial gratitude and respect to our employees, especially those working on frontline, for their selfless devotion and dedication. In addition, as a new type of real economy enterprise, JD has also introduced a series of new and existent initiatives for merchants and SMBs that have suffered from the epidemic in order to lower their operating costs and help them gradually resume function.

我謹代表京東向我們的員工，特別是奮戰在一線的員工，表示最誠摯的感謝和敬意，感謝他們的無私奉獻和敬業精神。此外，作為新型實體經濟企業，京東也針對受疫情影響較大的商家和小微型企業推出了一系列新的和現有的舉措，降低他們的經營成本，幫助他們逐步恢復正常運作。

JD Supermarket also works together with JDDJ to help (inaudible) to Shanghai to resume online operations and provide delivery manpower in a timely manner by leveraging Dada (inaudible) solution.

京東超市也與京東到家合作，利用達達（聽不清楚）解決方案，幫助（聽不清楚）上海恢復線上運營，並及時提供配送人力。

We hope to join hands with all of our partners to tackle these challenges and difficulties and together contribute to stabilize the people's businesses and the economy.

我們希望與所有合作夥伴攜手應對這些挑戰和困難，共同為穩定民營企業和經濟做出貢獻。

In terms of challenges, JD always looks to harness our advantages and (inaudible) solutions that move the needle. Certainly, we have made proactive adjustments to our user strategy. With a steady expansion of our user scale, we have been increasingly focused on improving user quality. In Q1, our annual active users reached 580 million. And more importantly, user purchasing frequency and ARPU still accelerating growth, both of which were at or near record highs. This merely reflects the increasing recognition and trust that users are placing in JD.

面對挑戰，京東始終致力於利用我們的優勢和（聽不清楚）解決方案來推動發展。當然，我們對使用者策略做出了主動的調整。隨著用戶規模的穩定擴大，我們更加重視用戶品質的提升。第一季度，我們的年度活躍用戶達到5.8億。更重要的是，用戶購買頻率和ARPU仍在加速成長，都達到或接近歷史最高水準。這恰恰體現了用戶對京東越來越認可和信任。

The increasing user (inaudible) in having experienced high user growth for the top (inaudible) and China's Internet industry is entering a more mature development stage going forward as we optimize and expand our omnichannel ecosystem and we continue to expand and meet the diversity of our users creating long-term user value.

隨著我們優化和擴展全通路生態系統，並不斷擴展和滿足用戶的多樣性，創造長期用戶價值，中國互聯網產業正進入更成熟的發展階段。

We're also proactively optimizing and adjusting the investment pace in our new businesses based on our analysis of the macro and industrial landscape. In Q1, before the shift in focus to regions where we saw improving scale and efficiency as well as better synergies with our core Beijing business. In such regions JD's efforts to improve user experience, sales channels, local supply chains as well as digital operations have begun to bear fruit.

我們也根據宏觀和產業情勢的分析，積極優化和調整新業務的投入節奏。在第一季度，在將重點轉移到其他地區之前，我們看到規模和效率不斷提高，並且與我們的核心北京業務的協同作用更好。在這些地區，京東在改善用戶體驗、銷售管道、本地供應鏈以及數位化營運方面的努力已開始取得成效。

We are proud that JD's supply chain capabilities and the business model have proven themselves valuable in the fight against the epidemic. For example, this Beijing's COVID resurgence starting at the end of April (inaudible) our community group purchase business has seen average daily GMV and new users nearly doubled, with better operating efficiency and UE. In the future, we will continue to optimize overall operating efficiency and drive a sustainable high-quality growth with healthy cash flow and profitability.

我們很自豪，京東的供應鏈能力和商業模式在對抗疫情中證明了自己的價值。例如，今年北京從4月底開始的疫情反彈（聽不清楚），我們的社區團購業務日均GMV和新增用戶成長了近一倍，營運效率和UE也得到了更好的提升。未來我們將繼續優化整體營運效率，以健康的現金流和獲利能力推動可持續的高品質成長。

The current challenges also provided JD with upside opportunities. Firstly, our efforts and commitment to social responsibility during COVID enabled us to fulfill society's trust and resulted in stronger reputation and appreciation among our users and business partners. This is highly significant for our long-term development.

目前的挑戰也為京東提供了上行機會。首先，疫情期間，我們的努力和對社會責任的承諾，使我們不負社會的重托，在用戶和商業夥伴中贏得了更高的聲譽和讚賞。這對我們的長遠發展有著十分重要的意義。

Secondly, JD's supply chain as well as our organizing and coordinating capabilities have withstood the pressure of the epidemic and become stronger.

其次，京東的供應鏈和組織協調能力經歷了疫情的壓力，變得更強大了。

Thirdly, despite increasing uncertainties, we have persistently executed on our long-term strategies and built up four competencies such as our supply chain middle platform, marketplace ecosystem and omnichannel and infrastructure capabilities.

第三，儘管不確定性因素增多，我們仍堅持執行長期策略，打造了供應鏈中台、商城生態、全通路和基礎建設能力等四大能力。

In pursuit of more disciplined investment (inaudible) and higher efficiency, JD also helps business partners to generate higher efficiency and more profitability without external disruption. As such, we have gained recognition from our business partners during the epidemic.

為了追求更有紀律的投資（聽不清楚）和更高的效率，京東也幫助商業夥伴在不受外界幹擾的情況下提高效率、提高獲利能力。因此，我們在疫情期間獲得了合作夥伴的認可。

We are encouraged to see that merchant participation and engagement has reached a higher level than previous years in the preparation for the upcoming 618 Grand Promotion.

我們很欣慰地看到，在為即將到來的618大促做準備時，商家的參與度和投入程度比往年達到了更高的水平。

Fourth, the complex epidemic situation and macro economy have caused companies to reexamine their sales and supply chain and procurement systems. Many of them have realized the irreplaceable value of integrated supply chain logistics services. This helped to drive the growth of JD Logistics' revenues from external customers, which accounted for a record high revenue percent of total revenue in Q1, further optimizing JDL's revenue structure.

第四，複雜的疫情情勢和宏觀經濟使得企業重新檢視銷售和供應鏈、採購體系。其中許多企業已經意識到綜合供應鏈物流服務的不可取代的價值。這帶動了京東物流外部客戶收入的成長，第一季外部客戶收入佔比創歷史新高，進一步優化了JDL的收入結構。

Moreover, in this quarter, JDL's profitability improved year-on-year, thanks to its optimized operations and better customer structure. JDL also made steady progress in building up its logistics capacity. By the end of Q1, it operated approximately 1,400 warehouses with a total gross floor area over 25 million square meters under management. All of these advantages constitute a solid foundation for JDL to further expand in the industry-leading position and market share over the long term.

此外，本季度，得益於公司營運的優化和客戶結構的改善，JDL的盈利能力同比有所改善。 JDL在物流能力建構方面也取得了穩步進展。截至第一季末，該公司營運約 1,400 個倉庫，管理的總建築面積超過 2,500 萬平方公尺。這些優勢為JDL長期進一步擴大行業領先地位和市場份額構成了堅實的基礎。

It is evident that the first half of 2022 has brought many challenges and uncertainties. At this time, I believe it is important for companies to have a long-term mindset, remain unwavering on strategic priorities, while maintaining flexibility to adapt to short-term dynamics. JD has experienced many challenges over the past 19 years, but has taken each one as an opportunity for the company's total development.

顯然，2022年上半年帶來了許多挑戰和不確定性。此時，我認為，企業必須有長遠的眼光，堅定不移地堅持策略重點，同時保持靈活性以適應短期動態。京東19年來經歷了許多挑戰，但我們都將每一次挑戰視為公司全面發展的機會。

Today, our business logic (inaudible) the supply chain at the core is very clear. Our core competency is highly differentiated, and the resilience of our business model has been proven many times and continues to evolve. As a new type of enterprise that is based on and always serves the real economy, JD today is an ever more solid brand.

今天，我們的業務邏輯（聽不清楚）核心的供應鏈非常清楚。我們的核心競爭力是高度差異化的，我們商業模式的彈性已經被多次證明並且不斷發展。作為一家立足實體經濟、始終服務實體經濟的新型企業，現今的京東品牌更加堅實。

Looking ahead, we will continue to build upon our strength. We remain confident and determined to achieve healthy, high-quality, long-term development. Thank you all for your support and trust.

展望未來，我們將持續增強實力。我們有信心、有決心實現公司長期健康、高品質發展。感謝大家的支持與信任。

This concludes my remarks. Now I'd like to give the floor to Sandy.

我的發言到此結束。現在我想請桑迪發言。

Thank you, Lei. Hello, everyone. The latest Omicron outbreak across several regions in China in the past several months has been challenging for everyone. So I would like to echo what Lei said and add my thanks to our colleagues, especially the frontline workers, for their heroic efforts in serving our customers and providing clients with essential supplies during this critical time.

謝謝你，雷。大家好。過去幾個月在中國多個地區爆發的奧密克戎疫情對每個人來說都是一個挑戰。因此，我要重複雷先生所說的話，並向我們的同事，特別是前線工作人員表示感謝，感謝他們在這段關鍵時期為客戶服務並為客戶提供必需品所做出的英勇努力。

In the first quarter, net revenues reached RMB 240 billion, representing solid 18% year-on-year growth against the high base from last year. In face of various uncertainties, we have been increasingly focusing on serving our users well and this has increased user lifetime value. Our annual active user base reached a total of 580.5 million, while average GMV per user in the last 12 months continued to increase.

一季度，淨營收達2,400億元，在去年同期高基數的基礎上，年增18%，業績表現穩健。面對各種不確定性，我們越來越注重為使用者提供更好的服務，這提高了用戶生命週期價值。我們的年度活躍用戶群總計達到5.805億，而過去12個月的每位用戶平均GMV持續增加。

We are also glad to see improvements in other user quality metrics. For example, average order per user recorded a healthy increase for both new and repeat customers. Our quarterly average DAU has been trending up and growing over 20% year-on-year, reflecting deepening user engagement. Not only did we see a spike in the AU growth during the Spring Festival Gala, effectively promoting JD brand nationwide, we were also inspired to live up to our users' (inaudible) while we saw a notable increase in DAU during COVID resurgence in March and April.

我們也很高興看到其他用戶品質指標的改善。例如，新客戶和回頭客的每位用戶平均訂單量均呈現健康成長。我們的季度平均 DAU 一直呈上升趨勢，年成長超過 20%，反映出用戶參與度不斷加深。我們不僅在春晚期間看到了 AU 成長的激增，有效地在全國範圍內推廣了京東品牌，我們還受到啟發，不辜負用戶的期望（聽不清），同時我們看到在 3 月和 4 月 COVID 復發期間 DAU 顯著增加。

As our revenue base continued to diversify, we also saw the varying impact of COVID on different segments in Q1. Our net product revenues, which mainly consist of our 1P retail business, grew at a solid 17% year-on-year, demonstrating remarkable resilience, underpinned by our proprietary supply chain infrastructure. Net service revenues continued to grow faster at 26% year-on-year, further diversifying our revenue base. While marketplace and marketing revenues grew at 25% year-on-year, our advertising revenues still grew at nearly 30% year-on-year, in line with the improving ROI of our advertising services.

隨著我們的收入基礎不斷多樣化，我們也看到 COVID 對第一季不同部門的不同影響。我們的淨產品收入（主要包括我們的 1P 零售業務）較去年穩定成長 17%，表現出顯著的韌性，這得益於我們專有的供應鏈基礎設施。淨服務收入持續較快成長，年增26%，進一步豐富了我們的收入來源。在市場和行銷收入年增25％的同時，我們的廣告收入仍同比增長近30％，與我們廣告服務投資回報率的提高保持一致。

Our marketplace ecosystem continued to optimize as JD Retail continued to grow third-party merchant base by over 20% year-on-year in Q1. This showed that the support and value creation offered by JD are resonating with more and more third-party merchants who are struggling in a time of uncertainty.

隨著京東零售第一季第三方商家數量年增超過 20%，我們的市場生態系統持續優化。這表明京東提供的支持和價值創造正在引起越來越多在不確定時期苦苦掙扎的第三方商家的共鳴。

Logistics and other services revenues grew by 28% year-on-year in Q1 as JDL continued to gain traction from external customers with its uninterrupted supply chain services during the Chinese New Year. I will discuss more about this later.

由於JDL在農曆新年期間憑藉不間斷的供應鏈服務持續獲得外部客戶的青睞，第一季物流和其他服務收入較去年同期成長28%。我稍後將進一步討論這個問題。

Now let's turn to our segment performance. JD Retail continued to deliver a resilient top line growth amidst the latest COVID developments. JD Retail's revenue reached RMB 218 billion in Q1, growing at 17% year-on-year in the quarter. The COVID impact began to appear across the performance of our categories. General merchandise revenues grew 21% year-on-year in Q1, outperforming the electronics and home appliance category growth of 14% year-on-year.

現在讓我們來談談我們的分部表現。在最新的疫情發展中，京東零售持續實現強勁的營收成長。京東零售第一季營收達2,180億元，較去年同期成長17%。新冠疫情的影響開始在我們各個品類的表現中顯現。第一季度，百貨商品營收年增 21%，超過電子及家電類別 14% 的年增率。

Since the latest outbreak, customers notably shifted their purchases from nonessential products to essential items. Our supermarket category saw stronger demand with its order volume outgrowing JD Retail in Q1 and in the first half of Q2 and attracted the most number of first-time buyers among all categories.

自疫情爆發以來，消費者的購買行為明顯從非必需品轉向必需品。我們的超市品類需求更為強勁，其訂單量在第一季和第二季上半段都超過京東零售，並且在所有品類中吸引了最多的首次購買者。

Although our supply chain was heavily disrupted in certain regions, JD Retail and JD Logistics quickly worked together to source and dispatch essential products by utilizing our nationwide warehouse and delivery networks. Once again, this demonstrated our customer-first operating philosophy and our unique business model that enables us to quickly respond to unexpected changes and mobilize our proprietary supply chain capabilities in upholding customer service.

儘管我們的供應鏈在某些地區受到嚴重中斷，但京東零售和京東物流利用我們全國的倉庫和配送網絡，迅速展開合作，採購和調度必需品。這再次體現了我們以客戶為先的經營理念和獨特的商業模式，使我們能夠快速應對意外變化，並調動我們專有的供應鏈能力來維護客戶服務。

We even went beyond our traditional B2C (inaudible) warehouse model to address rising customer needs. Growth of our omnichannel supermarket, including semi-fresh, accelerated in Q1 and as they provided our customers with timely omnichannel fulfillment for grocery and household staples in this critical time window.

我們甚至超越了傳統的 B2C（聽不清楚）倉庫模式來滿足日益增長的客戶需求。我們的全通路超市（包括半生鮮超市）的成長在第一季加速，因為他們在這個關鍵的時間窗口為我們的客戶及時提供了雜貨和家庭主食的全通路配送。

Moving on to JD Retail's profitability. Operating margin was 3.6% this quarter compared with 4% a year ago, primarily due to the marketing expenses in relation to the Spring Festival Gala sponsorship, and to a lesser extent, the softer fulfilled gross margin during the outbreak. That said, we expect to see additional COVID-related costs and expenses, particularly in fulfillment, as well as margin impact caused by product mix shift due to the uneven performance of our different product categories in the short term.

繼續討論京東零售的獲利能力。本季營業利潤率為 3.6%，而去年同期為 4%，這主要是由於與春晚贊助相關的行銷費用，以及疫情期間履行毛利率下降（在較小程度上）。儘管如此，我們預計會看到與 COVID 相關的額外成本和費用，尤其是在履行方面，以及由於短期內不同產品類別表現不均衡導致的產品組合變化對利潤率造成的影響。

JD Logistics, or JDL, maintained a healthy top line growth with an improved revenue mix and continued year-on-year margin improvement. Its Q1 revenues grew 22% year-on-year to RMB 27 billion. Revenues from external customers maintained growth momentum, driven by both the number and ARPU of external customers and once again achieved a record high revenue contribution of 58%.

京東物流（JDL）維持了健康的營收成長，收入結構有所改善，利潤率持續年增。第一季營收270億元，年增22%。外部客戶營收持續維持成長動能，外部客戶數量及ARPU值雙重成長驅動，營收貢獻度再創58%新高。

JDL acted quickly and spared no effort to ensure continued fulfillment of essential products to customers and support our business partners in the COVID affected areas. As a result, it incurred additional costs and expenses due to the operational difficulties and disruptions, particularly asset mobilized workforce and resources across different regions where some of our warehouses and the delivery stations were under lockdown restrictions in certain affected areas.

JDL 迅速採取行動，不遺餘力地確保持續向客戶提供必需產品，並為受 COVID 影響地區的業務合作夥伴提供支援。因此，由於營運困難和中斷，特別是跨地區調動勞動力和資源，我們產生了額外的成本和費用，我們的一些倉庫和配送站在某些受影響地區受到封鎖限制。

However, we still found some silver linings. The customer awareness of the unique advantages of JDL's integrated supply chain logistics services has meaningfully increased, boding well for the future customer conversion and total addressable market expansion. And thanks to the growth of external business and continuous improvement in operating efficiency, driven by technology, JDL was able to absorb the additional costs to a certain extent and continued to improve its margin in Q1. This non-GAAP operating loss narrowed by more than 55% from a year ago. JDL has once again improved the design and efficiency of its nationwide supply chain network in this challenging market situation.

然而，我們仍然發現了一些一線希望。客戶對JDL綜合供應鏈物流服務獨特優勢的認知度顯著提升，對未來客戶轉換和整體市場擴張具有重要意義。由於外部業務的成長和技術推動下營運效率的不斷提升，JDL在一定程度上吸收了額外的成本，並在第一季持續提高利潤率。這項非公認會計準則經營虧損較去年同期縮小了 55% 以上。在充滿挑戰的市場情勢下，JDL再次提升了其全國供應鏈網路的設計和效率。

Since we received all required regulatory approvals and completed the additional investment in Dada Group by the end of February, we consolidated the financial results of Dada in our segment reporting starting from March this year. During the consolidation period, Dada reported revenues of RMB 688 million and an operating loss of RMB 191 million.

由於我們已獲得所有必要的監管批准，並於2月底完成對達達集團的增資，因此自今年3月起，我們將達達的財務業績合併到我們的分部報告中。合併期間，達達實現營收6.88億元人民幣，營運虧損1.91億元。

Dada is an indispensable part of our omnichannel strategy. Shop Now, the on-demand retail brand that we launched together on JD's main app, has been expanding at a triple-digit growth rate year-on-year in Q1 and now made this service available to users in over 400 cities. We are excited to further expand our supply chain service networks in the fast-growing on-demand (inaudible) with Dada.

達達是我們全通路策略不可或缺的一部分。我們在京東主應用程式上共同推出的按需零售品牌Shop Now在第一季同比增長了三位數，目前這項服務已經覆蓋400多個城市的用戶。我們很高興能與達達一起進一步擴大我們在快速成長的按需（聽不清楚）領域的供應鏈服務網絡。

Finally, turning to our New Businesses segment, where we took proactive optimization measures to improve operating efficiency, particularly in Jingxi business. We further focused our resources in a fewer number of selected markets to strengthen local supply chain capabilities and improve the UE model. These measures resulted in the moderation of revenue growth to 12% year-on-year, but a meaningful reduction in operating loss of nearly RMB 1 billion sequentially in Q1.

最後，談到我們的新業務部門，我們採取了積極的優化措施來提高營運效率，特別是京西業務。我們進一步將資源集中在少數選定的市場，以加強本地供應鏈能力並改善 UE 模型。這些措施雖然使公司營收增幅較去年同期放緩至12%，但第一季經營虧損較上一季大幅減少近10億元。

Our JD Property business remained a profitable business in a hyper-growth stage. It has successfully acquired a controlling stake in China Logistics Property Holdings, or CLP, further enhancing its logistics infrastructure. JDP has also entered into definitive agreements with approximately USD 800 million nonredeemable Series B financing in the quarter.

我們的京東地產業務在高速成長階段依然保持獲利。該公司成功收購了中國物流資產控股公司（CLP）的控股權，進一步增強了其物流基礎設施。 JDP 也在本季簽署了約 8 億美元不可贖回的 B 輪融資最終協議。

So far, you can tell that JD's unique supply chain based business model not only ensured our capabilities in navigating different economic cycles, it also allowed us to proactively and quickly adjust our business strategies for better sustainability.

到目前為止，你可以看到京東獨特的基於供應鏈的商業模式不僅確保了我們能夠應對不同經濟週期的能力，還使我們能夠主動、快速地調整業務策略，實現更好的永續發展。

Moving to the consolidated bottom line. Total expense ratios in Q1 declined by 63 bps year-on-year. As a result, Q1 non-GAAP net income attributable to ordinary shareholders was RMB 4 billion with non-GAAP net margin of 1.7%. Our free cash flow for the trailing 12 months this quarter was healthy at RMB 27.2 billion. By the end of Q1, cash, cash equivalents, restricted cash, and short-term investments grew to RMB 186 billion, thanks to the stable cash flow contributed by our core businesses in the past few years. Earlier this month, we also announced a special cash dividend of USD 0.63 per ordinary share or UDS 1.26 per ADS, which reflects our confidence in JD's long-term growth trajectory and strong balance sheet.

轉向合併底線。第一季總費用率年減63個基點。因此，第一季歸屬於普通股股東的非公認會計準則淨利為人民幣40億元，非公認會計準則淨利率為1.7%。我們本季過去 12 個月的自由現金流保持健康，達到 272 億元。截至第一季末，現金、現金等價物、限制性現金及短期投資成長至1,860億元，得益於過去幾年核心業務貢獻的穩定現金流。本月初，我們也宣布派發每股普通股 0.63 美元或每股美國存託憑證 1.26 美元的特別現金股息，這反映了我們對京東長期成長軌跡和強勁資產負債表的信心。

While we continue to explore the hot and exciting investment opportunities, we constantly take a holistic view and consider different measures as appropriate to give back to our shareholders in the long term.

在我們繼續探索熱門及令人興奮的投資機會的同時，我們始終以整體視角考慮不同的適當措施，以長期回饋我們的股東。

Looking ahead, the Omicron situation remains very fluid and adds a lot of variables to our business. The magnitude and duration of the COVID impact will present many uncertainties to the overall consumer behavior, supply chain and our fulfillment infrastructure. But one thing is for certain, after 19 years of efforts in building our core supply chain competencies and differentiated business model, we are uniquely positioned to swiftly adjust and respond to any dynamic situation and able to be among the first to help our customers, partners and communities during this tough time.

展望未來，Omicron 的情況仍然非常不穩定，為我們的業務增加了許多變數。 COVID影響的程度和持續時間將為整體消費者行為、供應鏈和我們的履行基礎設施帶來許多不確定性。但有一件事是肯定的，經過19年的努力，我們打造了核心供應鏈能力和差異化的商業模式，我們擁有獨特的優勢，能夠迅速調整併應對任何動態情況，並能夠在這個困難時期率先幫助我們的客戶、合作夥伴和社區。

When the COVID disruption subsides, we are confident that JD will emerge stronger with expanded consumer market share, more trusted partnerships, and deeper ties with our communities and users. All of these will reinforce our mid- to long-term growth prospects.

當新冠疫情的影響消退後，我們相信，京東將變得更加強大，消費者市場份額將擴大，合作夥伴關係更加值得信賴，與社區和用戶的聯繫也將更加緊密。所有這些都將增強我們的中長期成長前景。

This concludes my prepared remarks, and we can now move to the Q&A.

我的準備好的發言到此結束，現在我們可以進入問答環節。

(Operator Instructions) Our first question comes from Ronald Keung with Goldman Sachs.

（操作員指示）我們的第一個問題來自高盛的 Ronald Keung。

(foreign language) My question would be on, when we compare with 2 years ago, that we've gained a lot of share and grew much faster than industry during the first quarter in the COVID outbreak. We've seen some of the industry numbers for April were relatively weak. So I want to know how are we doing in retail business compared with the industry, some of the differences that we see versus 2 years ago, and our targets and how we see the second quarter and second half growth as a result?

(外語) 我的問題是，與兩年前相比，在新冠疫情爆發的第一季度，我們的份額增加了很大，增長速度也遠遠快於行業。我們發現四月份的一些行業數據相對疲軟。所以我想知道與整個行業相比，我們的零售業務表現如何，與兩年前相比有哪些差異，我們的目標是什麼，以及我們如何看待第二季和下半年的成長？

[Interpreted] This is Xu Lei, let me answer your question. We have this month the COVID outbreaks that affected Shanghai and other regions also caused a huge challenge to China's retail industry as well as JD.com.

[譯]我是徐磊，我來回答您的問題。本月，上海等地區爆發的新冠肺炎疫情也為中國零售業和京東帶來了巨大挑戰。

Let me share with you some observations on the difference between the outbreak now and 2 years ago. So the Omicron variant this time, it's highly contagious and spreads rapidly. Its R0 value is 9.5, twice that of Delta, while its generation time is only 2.83 days. Also, a certain proportion of the impacted people have no symptoms, making it more difficult to track and detect. So although our virus protection and control policies remain unchanged, there are more cities and consumers affected from the epidemic and the supply chain is under much bigger impact than that in 2021.

讓我和大家分享一下我對當前疫情與兩年前疫情的差異的觀察。這次的奧密克戎變種傳染性極強，傳播速度很快。它的R0值為9.5，是Delta的兩倍，而其生成時間僅為2.83天。此外，一定比例的受影響人群沒有任何症狀，這使得追蹤和檢測更加困難。所以雖然我們的防治政策沒有改變，但受疫情影響的城市和消費者比2021年更多，供應鏈受到的衝擊也比2021年大得多。

In the past 2 years, the impact of COVID actually brought some positive effect to the Internet and e-commerce sector as there were only limited number of regions affected for limited time. During that time period some offline businesses have been shifted online at an accelerated pace. But this time around, both the online and offline enterprises are heavily affected.

在過去的兩年裡，新冠疫情的影響實際上為網路和電子商務產業帶來了一些正面影響，因為受影響的地區有限且時間有限。這段時期，一些線下業務加速向線上轉移。但這次，線上線下企業都受到了較大衝擊。

And the lockdown of our warehouses and delivery stations in certain key regions have led to fulfillment challenges as both inbound and outbound shipping of merchandising from warehouses are affected. Fulfillment requires much longer time. There have been -- this has resulted some order cancellation rate increase in April, and the situation is getting better in May, but the cancellation rate remains high level year-on-year.

而且，某些主要地區的倉庫和配送站被封鎖，導致配送面臨挑戰，因為倉庫商品的進出運輸都受到影響。實現需要更長的時間。這導致4月訂單取消率上升，5月情況有所好轉，但年比取消率仍處於高位。

So this year, for the China's four big cities, the first tier cities, Beijing, Shanghai, Guangzhou and Shenzhen have all been affected. While Guangzhou and Shenzhen were only affected for a short period of time, Beijing and Shanghai have been affected for a longer period of time. And the sales contribution of the four cities account for a higher proportion of JD than the city's contribution in total retail sales in China.

那麼今年對於中國的四大城市，一線城市，北京、上海、廣州、深圳都受到了影響。廣州和深圳受影響的時間較短，而北京和上海受影響的時間較長。而這四個城市對京東的銷售貢獻比該城市對中國社會消費品零售總額的貢獻還要高。

So a majority of brands and merchants lowered budgets at the beginning of the year considering this year's economic situation. They focused more on profitability. Therefore, the business environment also does not support a high growth from the supply perspective.

所以大部分品牌和商家考慮到今年的經濟狀況，在年初都降低了預算。他們更加重視獲利能力。因此，從供給角度來看，經營環境也不支援高成長。

So in terms of the categories besides the supermarket and health-related categories, which continue to enjoy some high growth, for the market of electronics and home appliances and apparel category, the market has been changing dramatically.

因此，除了超市和健康相關類別繼續享受較高的成長外，對於電子和家電市場以及服裝類別而言，市場一直在發生巨大變化。

So take the IT and electronic categories, for example. In the past 2 years, due to the global supply shortage and JD's strong supply chain capabilities we've performed relatively well. And this year, this category is faced with the overall (inaudible) and the price level is going down.

以 IT 和電子類為例。過去兩年，由於全球供應短缺，以及京東強大的供應鏈能力，我們的表現相對較好。而今年這個類別面臨的是整體的（聽不清楚），價格水準是下降的。

And for the telecommunications, or the mobile phone category, due to the price rise and the chip shortage, consumers eliminate to replace their devices. The cycle has been expanded.

而對於電信或手機類別而言，由於價格上漲和晶片短缺，消費者會選擇更換設備。週期已經擴大。

As for the apparel category, due to the epidemic and sluggish consumption, there is high level of inventory backlog of spring collections. And as a result, many factories are considering skip the production plan for the summer collection.

服裝類目方面，受疫情及消費低迷影響，春季系列庫存積壓較高。因此，許多工廠正在考慮取消夏季系列的生產計劃。

The epidemic has affected consumers' income and confidence. The overall consumption is depressed, as you can see from the April statistics, and this especially affected the sales of some large ticket sized items, and even user traffic has reported in April, we have seen the ticket size is dropping year-on-year in April and May.

疫情影響了消費者的收入和信心。整體消費是低迷的，從4月份的數據就可以看出來，特別是一些大宗商品的銷售受到了影響，甚至4月份的用戶流量報告也顯示，4月和5月的商品票面金額同比都有所下降。

In response to the above-mentioned situation, here are two aspects we have been doing. First, we have been conducting active communications with the local government and getting on a wide range of enterprises for essential supply of more regions and also to ensure the normal operations of our warehouses and fulfillment facilities, and the situation is getting improved now.

針對上述情況，我們做了兩方面的工作。第一，我們積極與地方政府溝通，廣泛聯繫企業，確保更多地區的必需品供應，同時也保證我們倉儲和配送中心的正常運轉，現在情況正在好轉。

And on the preparation of the 618 Grand Promotion, we have seen that majority of brands and merchants are under pressure this year. Therefore, they have been more proactively participating in JD 618 Grand Promotion than the previous year. And we hope that with this event, we can support them to boost their sales and the Q2 performance provided the COVID situation is getting better.

而在618大促的籌備過程中，我們看到今年大部分品牌和商家都面臨壓力。因此，他們比去年更積極參與京東618大促。我們希望透過這次活動，在疫情情況好轉的情況下，幫助他們提高銷售量和第二季的業績。

And finally, I just want to share a little bit more on the relationship between supply chain and the epidemic. And first, given the current macro environment, coupled with the impact of the pandemic, it has led the government and the industry have a very high recognition of the importance of the modernized supply chain, and this has been a very positive and clear signal.

最後，我想再分享一下供應鏈和疫情的關係。第一，在當前的宏觀環境下，加上疫情的影響，使得政府和業界對現代化供應鏈的重要性有了非常高的認識，這是一個非常積極、明確的訊號。

And second, when JD talks about our supply chain capabilities, it does not only refer to those tangible things people know about, about our logistics or logistic warehouses, vehicles, it is also our algorithm and the industry know-how that we have accumulated over the years, as well as our synergy capabilities with some key brands. And all of this is a combination of the tools, the expertise, the know-how, and our collaboration with other brands. And all of these cannot be immediately achieved through some excessive subsidies or cash procurement.

第二，京東講的供應鏈能力，不只是大家知道的那些有形的東西，比如我們的物流，物流倉，車輛，還包括我們多年積累的算法和行業經驗，以及和一些重點品牌的協同能力。所有這些都是工具、專業知識、技術訣竅以及與其他品牌的合作的結合。而這一切，都不可能透過一些過度的補貼或現金採購就立刻實現。

And thirdly, the key points for the supply chain is stability and certainty. Under the extreme circumstances of the COVID situation, JD will continue to leverage our professional expertise and our infrastructure capabilities to reach some innovative and new solutions in this difficult situation. And so far, we have gained recognition among our partners and users and delivered some satisfying performance so far.

第三，供應鏈的關鍵是穩定性和確定性。在疫情這種極端情況下，京東將繼續利用我們的專業知識和基礎設施能力，在這種困難的情況下找到一些創新的解決方案。目前為止，我們已經獲得了合作夥伴和用戶的認可，並取得了令人滿意的業績。

Our next question comes from Thomas Chong with Jefferies.

下一個問題來自 Jefferies 的 Thomas Chong。

(foreign language) My first question is relating to the upcoming June 18 marketing campaign. Can management comment about how we should think about the logistics situation, the consumer sentiment and how are we doing it differently compared to previous years and our KPI?

（外語）我的第一個問題與即將到來的 6 月 18 日行銷活動有關。管理階層能否評論我們應該如何看待物流狀況和消費者情緒，以及與前幾年和我們的 KPI 相比我們的做法有何不同？

And my second question is regarding our spending. In particular, on user acquisitions as well as the investment in the new business. Would we adjust our investment strategies given the dynamic situation right now?

我的第二個問題與我們的支出有關。特別是在用戶獲取以及新業務的投資方面。鑑於目前的動態情勢，我們會調整投資策略嗎？

And finally, on omnichannel. Can management comment about our long-term strategies as well as the revenue contribution that we should expect?

最後，全通路。管理階層能否評論一下我們的長期策略以及我們應該預期的收入貢獻？

[Interpreted] And just more few words from Xu Lei on the 618. We have seen so glad that, except Shanghai, overall in China, the fulfillment is coming back to a normal operation level. So every day, there are some select situations due to the COVID situation, but overall, we maintain a normal operations. And in Shanghai, there are still a few orders that continue to be fulfilled. But overall, for the good preparation, it's on the right track.

[口譯] 徐雷還想再談 618 的情況。我們很高興地看到，除上海外，整個中國的訂單履行情況正在恢復正常。因此，每天，都會因 COVID 疫情而出現一些特殊情況，但總體而言，我們仍保持正常運作。而在上海，還有少量訂單在繼續履行。但總體來說，由於準備充分，所以是朝著正確的方向發展的。

As for the participating and engagement of brands and merchants to this year's Grand Promotion, they're very active and this is outside our expectations and everything is going on the right track.

至於今年大促的品牌和商家的參與和投入，他們非常積極，這超出了我們的預期，一切都朝著正確的方向發展。

And in terms of the KPI, I think you are thinking of the sales target, because we are still facing uncertainties of the COVID situation and the (inaudible). So we don't have a very clear number to share. However, we continue to focus on improving user's experience, and our fulfillment efficiency is the most important thing we will safeguard the shopping festival.

就 KPI 而言，我認為您考慮的是銷售目標，因為我們仍然面臨著 COVID 情況和（聽不清楚）的不確定性。因此，我們沒有一個非常明確的數字可以分享。然而，我們將持續專注於提升使用者的體驗，我們的履行效率是我們保障購物節最重要的事。

And so for our new business development, we will focus on the priorities, our strategies, and focus on efficiency and sustainable development.

因此，對於我們的新業務發展，我們將專注於優先事項和策略，並專注於效率和永續發展。

And for the users growth, there are certain pressures, but we will continue to focus on the operations of the existing users and also the quality growth of the new users, and we have seen a positive trend on both sides.

對於用戶成長，確實存在一定的壓力，但我們將繼續專注於現有用戶的營運以及新用戶的品質成長，並且我們看到兩方面的正面趨勢。

And around some adjustments and optimization of some new businesses, we have done series of adjustments on those businesses that are unable to deliver results after a certain period of time of investment. So in the coming period of time, we'll continue to optimize our four businesses and some more optimization and adjustment work will be done.

而且圍繞著一些新的業務的一些調整和優化，我們對那些投入了一段時間之後無法產生效果的業務做了一系列的調整。所以在未來的一段時間裡，我們還會繼續優化我們的四大業務，也會做一些優化和調整的工作。

And on JD's omnichannel strategy, in the past year, it has delivered very fast growth. And in Q1, this business continued a higher than overall revenue growth rate. And this COVID situation will not affect our long-term strategies in this aspect, but we will make adjustments on the investment even in the macro environment situation.

京東的全通路策略在過去一年實現了非常快速的成長。而且第一季該業務持續維持高於整體營收的成長率。而這次疫情不會影響我們在這方面的長期策略，但即使是宏觀環境的變化，我們也會對投資做出調整。

And the omnichannel business is composed of two parts with both self-operated and our collaboration with external partners. (inaudible) in this format, we not only help those offline businesses and shops to pass the traffic, the user traffic difficulties given the COVID situation, it also helps JD to enrich our supply chain and product availability to satisfy the needs of our customers. And given the impact of the COVID situation, some self-developed omnichannel were affected. But overall, the volume is not big and certainly it has limited impact so far.

全通路業務由自營和外部合作夥伴兩部分組成。 (聽不清楚) 透過這種形式，我們不僅幫助那些線下商家和商店疏導流量，緩解疫情期間的用戶流量困難，還能幫助京東豐富我們的供應鍊和產品可用性，以滿足客戶的需求。而且受疫情影響，一些自主研發的全通路受到了影響。但整體來說，規模並不大，目前影響肯定有限。

And for our on-demand retail business, as part of our omnichannel business, it achieved 3-digit growth in Q1. And so far, our Shop Now with the 1-hour delivery service has covered over 1,700 [counties] across the country and providing various product categories, and it has been connected with over 15,000 offline stores and we have experienced a rapid growth during the COVID situation.

作為我們全通路業務的一部分，按需零售業務在第一季實現了三位數的成長。到目前為止，我們的Shop Now一小時送達服務已經涵蓋全國1700多個縣區，提供豐富的產品品類，並與15,000多家線下門市對接，在疫情期間實現了快速增長。

The Shop Now program is supported by Dada's delivery infrastructure. We are using the existing networks and delivery services of Dada to perform our on-demand deliveries and this has accelerated JD's offline business expansion. And currently, together with Dada, we are supporting the digital transformation of more and more brands and offline retailers. And together, we explore the dividend of the omnichannel development.

Shop Now 計劃由達達的配送基礎設施支援。我們利用達達現有的網路和配送服務進行按需配送，這加速了京東的線下業務擴張。目前，我們正在與達達一起支持越來越多品牌和線下零售商的數位轉型。並共同探索全通路發展的紅利。

As the trends become more and more clear, JD is committed to bring faster and quicker services and user experience with more certainty to our consumers.

隨著趨勢越來越清晰，京東致力於為消費者帶來更快、更快的服務和更確定的使用者體驗。

This is Sandy. I'll add on a little bit on the revenue and GMV's contribution for our omnichannel business. So in terms of GMV and revenue contribution, they are both at a level of around 10% of our retail business. That includes our O2O on-demand sales, our 7Fresh offline fresh product business, as well as our offline home appliance franchise store business.

這是桑迪。我將稍微補充我們全通路業務的收入和GMV貢獻。因此，就 GMV 和收入貢獻而言，它們都占我們零售業務的 10% 左右。其中包括我們的O2O按需銷售、我們的7Fresh線下生鮮產品業務以及我們的線下家電專營店業務。

Our last question comes from Kenneth Fong with Credit Suisse.

我們的最後一個問題來自瑞士信貸的 Kenneth Fong。

(foreign language) Congratulations on another strong set of results. Looking back, we did very well in cost discipline and control. Core GDR and new business up both with margins better than expected. How much more, and what are the ways that we should expect for further cost reduction or optimization over next 2 quarters?

（外語）祝賀您再次取得優異成績。回顧過去，我們在成本紀律和控制方面做得很好。核心 GDR 和新業務均實現成長，利潤率優於預期。還有多少？在接下來的兩個季度裡，我們應該透過哪些方式進一步降低或優化成本？

This is Sandy. Let me take this question. So since mid-March, we have been taking strict cost and expense control measures to step up financial discipline in face of the challenging external environment. We focus more on cash flow management.

這是桑迪。請讓我來回答這個問題。因此，自3月中旬以來，我們一直採取嚴格的成本和費用控制措施，以加強財務紀律，以應對充滿挑戰的外部環境。我們更重視現金流管理。

For New Businesses, that's yet to show a trend of UE turnaround. As Lei Xu just mentioned, our operating efficiency improved. We adjusted the investment pace and further focused on fewer selected regions. So as a result of all these measures, despite additional COVID-related costs and expenses, especially procurement. So we expect overall, our group level bottom line, we will try to manage that to be less impacted by the COVID situation compared to top line or GMV.

對於新業務而言，UE 尚未出現好轉的趨勢。正如徐雷剛才所提到的，我們的營運效率提高了。調整投資節奏，進一步聚焦少選擇區域。因此，儘管採取了所有這些措施，但與新冠肺炎相關的成本和費用（特別是採購費用）仍然增加了。因此，我們預計，總體而言，與營收或 GMV 相比，我們將盡力減少我們集團層面的底線收入受到 COVID 疫情的影響。

So as I mentioned, the control measures just started in mid-March. So we will continue that in Q2, and we will manage our profitability and cash flow dynamically based on the overall macro environment.

正如我所提到的，控制措施從三月中旬才剛開始。因此，我們將在第二季度繼續這樣做，並根據整體宏觀環境動態管理我們的獲利能力和現金流。

We are now approaching the end of the conference call. I will now turn the call over to JD.com's Sean Zhang for closing remarks.

我們現在即將結束電話會議。現在，我將把電話轉給京東的張曉剛做結束語。

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

感謝您今天參加我們的電話會議並提出您的問題。如果您還有任何其他問題，請聯絡我和我們的團隊。感謝您對京東的關注，我們期待下個季度再次與您溝通。非常感謝。

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

感謝您參加今天的會議。本次演講到此結束。您現在可以斷開連線。再會。

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

[本記錄中標記為[已翻譯]的部分由現場翻譯人員朗讀。 ]