JD.com, Inc. Q3 FY2024 earnings call

• Q3 had solid operating and financial results with top-line growth accelerating, active user base and shopping frequency expanding, and bottom line uplifted. • Focus on supply chain capabilities and logistics infrastructure to drive lower cost, higher efficiency, and better user experience. • General merchandise category revenues up 8% YOY, with supermarket category driving double-digit growth, enriching product portfolio. • User growth and engagement: quarterly active customers growing double-digit for four quarters, shopping frequency up, JD PLUS program progressing. • Price competitiveness: improved through 1P supply chain and 3P offerings, NPS for price competitiveness increased. Launched campaigns like Super 18 sales, Black Friday, etc. • Platform ecosystem: onboarded more 3P merchants, 3P order volume and active users purchasing 3P products reached record highs. Commission revenues positive, advertising revenues double-digit growth. • Q4: concluded single-stake grant promotion with user number and order volume double-digit growth, supportive policy environment expected to build consumption confidence.

JD Retail revenues were up 6% year-on-year in Q3, with the turnaround of electronics and home appliances and robust growth of general merchandise. JD Retail recorded gross margin improvement due to scale benefits, higher margin categories, and 3P contribution. Non-GAAP operating income increased by 6% YOY and operating margin was 5.2%. JD Logistics revenues increased by 7% YOY, driven by internal and external revenues growth. Non-GAAP operating income increased by 624% YOY and operating margin was 4.7%. New Business revenue was down 26% YOY, with non-GAAP operating loss of RMB616 million in Q3.

• Confident of achieving double-digit growth of non-GAAP net profit for full year 2024. • Completed share repurchase program in March 2024 and launched new $5 billion share repurchase program through end of August 2027. • Continue to focus on supply chain capabilities, user growth, and platform ecosystem to drive growth and profitability.

• Potential for limited consumer awareness of trading policies initially. • High consumer demand for subsidized products may not be fully matched in short term due to limited production capacity. • New Business still facing challenges with revenue decline and operating loss.

Q: Quantify appliance trading programs in Q3 and Q4, and sustainability into next year, and strategies for other categories to sustain growth above retail industry growth.

A: Sandy Xu mentioned government trading policies showing positive progress, JD positioned well with supply chain, trading program drove sales growth in home appliances and computers in Q3, with potential for expansion in 2025. Strategies include enhancing price competitiveness, optimizing supermarket, general merchandise, 3P, etc. to sustain growth.

Q: Management view on industry competition, investment impact on margin, and expansion in apparel and cosmetic categories.

A: Sandy Xu stated China retail market promising, JD will focus on user experience, supply chain, and targeted investments. In apparel and cosmetic, investing to expand product selections, use 3P mostly, with promotions and partnerships, expecting growth in user engagement and order values.

Q: Macro policy impact on consumer sentiment and capital return update.

A: Sandy Xu said current macro policies positively impact consumption sentiment, with policies expected to improve economic fundamentals. Share repurchase program: repurchased $3.65 billion worth of shares in first three quarters, announced new $5 billion program, and plans steady dividend payments.

Q: JD supermarket size, margin, rationale for exiting Yonghui Supermarket, and 3P potential.

A: JD supermarket is a core growth driver, achieved double-digit growth in 2024. Exited Yonghui due to focusing on core business. For 3P, aims to enhance user experience through 3P expansion, with room for improvement in operations and profit contribution, continuing to invest in platform infrastructure to unleash 3P potential