JD.com Q3 2023 Earnings Report

JD.com EPS Results

• Actual EPS: $6.70
• Consensus EPS: $5.87
• Beat/Miss: Beat by +$0.83
• One Year Ago EPS: $0.73

JD.com Revenue Results

• Actual Revenue: $247.70 billion
• Expected Revenue: $246.99 billion
• Beat/Miss: Beat by +$710.47 million
• YoY Revenue Growth: +1.70%

JD.com Announcement Details

• Quarter: Q3 2023
• Date: 11/15/2023
• Time: Before Market Opens
• Conference Call Date: Wednesday, November 15, 2023
• Conference Call Time: 7:00AM ET

JD.com (NASDAQ:JD) is a major Chinese e-commerce company that operates a comprehensive online retail platform selling a wide range of consumer goods, including electronics, appliances, apparel, groceries and everyday household items. The company combines direct retailing—purchasing inventory and selling products itself—with a marketplace for third-party merchants, offering consumers both self-operated and third-party choices. In addition to its core retail business, JD.com has expanded into adjacent services such as digital marketplaces for cross-border commerce, online pharmacy and healthcare services, and enterprise-facing cloud and technology solutions.

A distinctive feature of JD.com's business model is its integrated logistics and fulfillment network. The company operates an extensive logistics arm that provides warehousing, inventory management and last-mile delivery, with investments in automated distribution centers, cold-chain capabilities for perishable goods, and innovative delivery technologies such as drones and unmanned vehicles in selected areas. These logistics capabilities support fast delivery options, including same-day and next-day services in many Chinese cities, and are also offered as services to external merchants and partners.

Founded in 1998 by Richard Liu (Liu Qiangdong) as a physical retail business and relaunched online in the early 2000s, JD.com grew rapidly into one of China’s largest e-commerce firms and completed a public listing on the NASDAQ in 2014. The company is headquartered in Beijing and primarily serves consumers and businesses across Mainland China while maintaining cross-border and international e-commerce activities to reach overseas suppliers and buyers. Over time JD.com has pursued strategic partnerships and investments to broaden its ecosystem, while continuing to emphasize technology, logistics and customer service as core competitive strengths.

JD.com Q3 2023 Earnings Call Transcript

Key Takeaways

• JD.com reported a successful Singles Day promotion with double-digit order growth, lower free-shipping thresholds, popular category-manager live streams that attracted over 380 million viewers, and enhanced after-sales services driving higher engagement.
• In Q3, JD.com delivered stable top-line growth with revenues up 2% year-on-year to RMB 248 billion, service revenues rising 13%, a record non-GAAP net margin of 4.3%, free cash flow of RMB 39 billion (up 18% QoQ) and a net cash position of RMB 50 billion.
• The company’s platform ecosystem strategy强化1P/3P integration, leading to rapid growth in active 3P merchants and orders and double-digit expansion in 3P advertising revenue under a new performance scoring and traffic allocation system.
• JD.com is doubling down on an EDLP (everyday low price) model—lowering costs via supply-chain efficiencies and expanding low-price offerings without compromising quality—evidenced by strong order volume and ARPU growth in lower-tier markets.
• General merchandise revenues fell 2% year-on-year in Q3 as the supermarket category continues recovering from earlier headwinds, though order volume and shopping frequency showed early signs of improvement.

Presentation

[Operator]

Hello, and thank you for standing by for JD.com 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.

[Sean Zhang, Director of Investor Relations at JD.com]

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 the 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 RMB and as otherwise stated.

[Sean Zhang, Director of Investor Relations at JD.com]

Now, let me turn the call over to our CEO, Sandy.

[Sandy Xu, CEO at JD.com]

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 Singles' Day Grand 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.

[Sandy Xu, CEO at JD.com]

We lowered the minimum order value for free shipping services from RMB 99-RMB 59 for all users and offered JD PLUS members unlimited free shipping for 1P products. As always, JD.com customers will continue to enjoy our premium, so-called 211, [Foreign language] 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 Singles' 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.

[Sandy Xu, CEO at JD.com]

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 [Foreign language]..., 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.

[Sandy Xu, CEO at JD.com]

Namely, our strategies to build a differentiated platform ecosystem and improve everyday low price or EDLP 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 strategy. 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 customer 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.

[Sandy Xu, CEO at JD.com]

On the 1P 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. 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. 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.

[Sandy Xu, CEO at JD.com]

To do this, we are investing tremendous efforts to improve our platform ecosystem, including traffic allocation, algorithm, 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.

[Sandy Xu, CEO at JD.com]

Once they embed it, 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.

[Sandy Xu, CEO at JD.com]

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.

[Sandy Xu, CEO at JD.com]

Now, let me continue to elaborate on the thinking behind our efforts this year to improve our EDLP mindshare. First, 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 range - wider price range, in order to shore 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.

[Sandy Xu, CEO at JD.com]

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.

[Sandy Xu, CEO at JD.com]

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 Singles' Day promotion was a good example.

[Sandy Xu, CEO at JD.com]

Another example is that we continue to enrich the value for money selection of 3P products within our RMB 10-Billion Discount Program, and we saw 3P GMV contribution to the total of this program increased to over 50% in Q3. Lastly, how to track and measure our progress on low price or EDLP mindshare building? We track 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 price orders accelerated and outpaced the total order growth in Q3. All these are strong testaments to our early progress in EDLP mindshare building.

[Sandy Xu, CEO at JD.com]

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 to 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.

[Ian Shan, CFO at JD.com]

Thank you, Sandy, and hello, everyone. In the third quarter, we delivered a stable top line performance, facing a mix of gradual macro recovery, seasonality, and a high base, while we continued our proactive strategic refocus. Our bottom line maintained healthy momentum, with non-GAAP net margin hitting all-time high, which enabled us to invest in user experience in a sustainable way. As Sandy mentioned, we saw improvement across many of our operating metrics, and we are on the right path to strengthen our core capabilities, enhance price competitiveness, and build a platform that allows both 1P and 3P to better serve our users, even though these efforts may not be fully reflected in the short-term financial results. With that, let me turn to our Q3 financial performance. Our net revenues grew by 2% year-on-year to RMB 248 billion in Q3.

[Ian Shan, CFO at JD.com]

Breaking down the revenue mix, product revenues were down by 0.9% year-on-year. By category, electronics and home appliances revenue was flat year-on-year, primarily due to seasonality and a high base from last year. That said, this category continued to outpace the industry in Q3 and in the first nine months this year. Once again, it shows our strong user mindshare and robust supply chain with industry-leading service capabilities. General merchandise revenues were down 2% year-on-year in Q3, as the supermarket category is still recovering. The decline continued to narrow compared to the first two quarters this year, and we started to see positive signs from supermarket and fashion-related categories... such as increased order volume, higher user shopping frequency, and healthier product mix. Service revenue grew by 13% year-on-year in Q3, accounted for 21% of JD's total revenues.

[Ian Shan, CFO at JD.com]

Within service revenues, marketplace and marketing revenues were up 3%. In particular, 3P advertising revenues once again recorded double-digit growth for the quarter, which was partially offset by the decline of 3P commission revenues. This is an expected short-term outcome, and is in line with our platform strategy, under which we have rolled out a number of cost reduction measures and operating tools to support 3P merchants onboarding and operation. This strategy has produced early results, as we have seen a substantial expansion of active 3P merchant base in the quarter. At the same time, we are also deploying a more effective traffic allocation mechanism for both 1P and 3P, to ensure better user experience and the healthy development of our platform. Turning back to our service revenues, logistics and other service revenues grew by 19% year-on-year in Q3.

[Ian Shan, CFO at JD.com]

Now, let me turn to our segment performance. JD Retail revenues increased by 0.1% year-on-year in the quarter, as we continue to see headwinds on our short-term financial results from our strategic refocus. We know that our core business growth has maintained a healthy momentum, as evidenced by the continued expansion of JD Retail's profitability. Both gross margin and fulfilled gross margin increased to record highs in Q3, despite our investment in low prices and user experience, such as expanded free shipping service. This shows that our low price offerings are enabled by our supply chain capabilities and healthy development of our platform, instead of only by subsidies. JD Retail's non-GAAP operating margin came in at 5.2%, largely flat year-on-year, as we continue to invest in improving user experience to encourage stronger user engagement, and this will help our long-term sustainable growth.

[Ian Shan, CFO at JD.com]

We also saw encouraging trends in user shopping behavior in the quarter. JD PLUS members maintained a double-digit growth, and the group continued to show high loyalty and strong spending power. Their annual ARPU was 8x of that of non-PLUS members in Q3. JD Logistics saw a 16% revenue growth year-on-year in Q3, driven by the acceleration of both internal and external revenues. External revenues accounted for 72% of revenues in Q3. In terms of profitability, JDL's non-GAAP operating margin was 0.7% in the quarter, same as last year. Dada reported revenues of RMB 2.9 billion, up 20% year-on-year, and a non-GAAP operating loss of RMB 52 million for the quarter, a substantial narrow down of 83% compared to last year. This was driven by better operating efficiency and economies of scale.

[Ian Shan, CFO at JD.com]

The on-demand retail is still an important pillar for JD. In the quarter, the number of offline stores that cooperate with Dada and Shop Now expanded from around 300,000 to over 400,000, providing more than 2,000 cities and counties with on-demand retail services, covering a wide range of categories. Lastly, revenues from new business were RMB 3.8 billion in Q3, down 24% year-on-year, due to the scale back of our international business. New business operating loss was RMB 139 million in the quarter, a notable narrow down of 85% from a operating loss of RMB 953 million a year ago, excluding the gain on disposals of JD Properties assets in Q3 last year.

[Ian Shan, CFO at JD.com]

Moving to the consolidated bottom line, we recorded RMB 10.6 billion non-GAAP net income attributable to ordinary shareholders in Q3, up 6%, even off a high base in the same quarter last year. Non-GAAP net margin increased by 17 basis points year-over-year to a new record of 4.3%. Finally, our LTM free cash flow as of end of September was RMB 39 billion, an increase of 18% from RMB 33 billion at the end of June, and 52% from RMB 26 billion at the end of September last year. This was driven by our improved profitability and further optimized cash conversion cycle. By the end of Q3, our total cash balance, including cash and cash equivalents, restricted cash, and short-term investments, added up to a total of RMB 250 billion.

[Ian Shan, CFO at JD.com]

...excluding interest bearing debt and accounts payable, our net cash balance was RMB 50 billion by the quarter end. To conclude, we have seen a set of encouraging trends during the quarter, and we will continue to firmly execute our strategies on low prices and platform ecosystem to provide better user experience. This will position us for long-term, sustainable growth. With that, I will turn it over to Sean. Thank you.

[Sean Zhang, Director of Investor Relations at JD.com]

Thank you, Ian. For the Q&A session, you are welcome to ask questions in Chinese or English, and our management will answer your question in the language you ask. We will provide English translation when necessary for confirmation 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 session.

[Operator]

Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask a question, we will take one question at a time from each caller. If you have more than one question, please request to join the queue again after your first question has been addressed. If you wish to ask a question, please press star, then one on your telephone and wait for your name to be announced. If you are on a speakerphone, please pick up the handset to ask your question. The first question today comes from Thomas Chong with Jefferies. Please go ahead.

[Thomas Chong, Regional Head of Internet and Media at Jefferies]

请介绍我的提问，我的第一个问题是关于我们3P的战略的，管理层可以分享一下我们在2024年在商家的数量，还有品类的扩展的一个战略吧。然后我们对未来的3P的展望，还有GMV的占比可以分享，跟大家分享一下吗？我另外，第二个问题是想问一下，就是今天看到公司的公告，徐雷将接任JD Retail，就是京东零售的CEO，这个可以跟大家分享一下，背后的原因吗？谢谢。

[Sandy Xu, CEO at JD.com]

好的，谢谢Thomas的问题。那我来回答，这个，这两个问题都由我来回答吧。那首先呢，正如我刚才讲到的，就是平台生态，其实一直都是我们这个无论集团层面也好，还是零售层面也好，重点投入的战略方向。那我们也在持续完善，我们京东特色的平台生态建设，让京东的价值主张落地，并且成为京东自营和3P商家都能够遵循的统一的经营理念。同时呢，我们也在不断完善我们平台的基礎设施和工具，让自营和这个3P的商家在平台上能够得到充分的资源，公平的竞争和共同的发展，最终呢，为京东的用户带来更优秀的体验。

[Translator]

Thanks, Thomas. I will address both of the questions. As I mentioned earlier, the platform ecosystem has always been one of JD's key strategic focus, both from the corporate level and also JD Retail level. We are continuously refining JD's distinct platform ecosystem. This aims to realize JD's value proposition and establish a unified business philosophy followed by both our 1P and 3P merchants. We consistently enhancing platform infrastructure and tools to ensure that both 1P and 3P merchants on JD have ample resources, and a fair competition, and a shared growth opportunity, ultimately delivering an enhanced user experience for all our customers.

[Sandy Xu, CEO at JD.com]

那今年以来呢，我们也是重点简化了商家入驻的流程，加大了对新商家，尤其是中小商家的扶持，制定了更加清晰的规则，也提供了更多的运营工具。那么这些呢，都带动了加入到京东平台上的这些商家数量和活跃商家数量，都在三季度达到了历史最高水平。那么我们也很高兴地看到，这个整体的这个total的商家数量呢，继续保持三位数的增速，尤其是在商超、时尚、居家等品类的泡泡商家数也在同比的大幅增长，而且活跃的商家数量也在加速增长。越来越多的商家在京东平台逐步找到了这个他们可以适应的有效的经营方式，也在不断地成长和壮大。

[Translator]

Throughout this year, we have streamlined the merchant onboarding processes, increased the support for the new merchants, especially small- and medium-sized sellers, and established clearer rules, provided more operational tools, and witnessed a historic high in both total and active merchants in JD. We are pleased to see that the number of total merchants maintaining a triple-digit growth rate, notably with significant growth increases in our 3P merchants in the categories of supermarket, fashion and home goods. Additionally, the number of active merchants is accelerating, with an increasing number of new merchants gradually finding effective operating strategies to operate on JD and empower their sales growth.

[Sandy Xu, CEO at JD.com]

对，刚刚我在前面也提到，就是尽管我们现在还在商家的扶持上，处于投入的阶段，目前呢，这个对第三方平台商家的变现也不是我们短期内的首要任务。但是我们也看到3P的广告收入其实继续在保持两位数的增长，那这也得益于，大量的商家，他们的参与度在不断地提高。

[Translator]

As I just mentioned in my script, while our ongoing investment in support does not prioritize short term 3P monetization, we have also observed a continued double digit growth in our 3P advertising revenue, thanks to our increasing engagement of new merchants.

[Sandy Xu, CEO at JD.com]

对，从用户的角度呢，我们也看到了积极的反馈，那么我们这个第三方商家成交的用户数的渗透率也在持续地同比提升，那么这个相应的订单量也取得了健康的同比增长。

[Translator]

From the user base performance, we've received the positive feedback and the penetration rate of users shopping from 3P merchants continue to increase year-on-year and 3P order volume also achieved healthy year-on-year growth.

[Sandy Xu, CEO at JD.com]

对，平台生态呢，是我们过去这两三年来的长期的投资方向。那么构建京东独特的平台生态，我们也将持续地这个长期地，深耕于这个方向吧。目前呢，我——在我看来，我们很多的工具，还有我们的这些整体的这个数据分析的工具也好，治理的规则也好，其实还有很大的提升空间。那么，这个接下来我们也会继续朝这个方向去，去工作，去努力，那么为商家呢，去创造清晰的成长路径和公平的经营生态，生态，去推动自营和泡泡这个生态的共同繁荣发展。

[Translator]

The platform ecosystem has in the past 2 years -3 years been our long-term investment direction and we are aspired to building a unique JD style ecosystem. This is an ongoing project, and still we are in an early stage on this goal, and there is plenty room for us to continue to improve our governance and the tools on our platform ecosystem. And we are also making our commitment to create a clearer growth path and a fair business environment for merchants, promoting the mutual prosperity and the development of both 1P and 3P business.

[Sandy Xu, CEO at JD.com]

那么最终呢，选择这个1P还是3P的，这个商家来成交，这个是用户自然选择的结果。那么它随着我们平台生态的逐步完善，长期看呢，我会预期3P的订单和GMV的这个长期看占比将会超过自营，当然这个还需要一个过程。

[Translator]

Regarding people want to shop for 1P or 3P, this will be a natural outcome of choices from our users. As we are see the gradual mature of our platform ecosystem, I think in the long run, the share of 3P orders and GMV will eventually surpass that of 1P. But of course, this will be an ongoing process.

[Sandy Xu, CEO at JD.com]

我们的核心目标是通过丰富的供给来满足不同用户的多元化需求，不断提高我们的用户体验，这也将是我们长期收入和利润持续提升的重要驱动力之一。

[Translator]

So our core objective is to meet the diverse needs of different users through a rich product supply, continuously enhancing our user experience. This will be one of our essential drivers for the sustained growth of our long-term revenue, revenues and profits.

[Sandy Xu, CEO at JD.com]

对，然后回答您的第二个问题。那今天呢，我们的确发了公告，那辛总呢将离开零售CEO的职务，将在集团内有其他的任命。辛总从2021年9月份开始担任京东零售的CEO以来，那也是带着团队去面对外部环境和行业的各种挑战和不断的变化，那么也带着零售团队不断地引入合作伙伴，强化我们的用户，用户心智，积极推动了，京东零售的业务的健康发展。那我们也非常感谢辛总，在过去2年为京东零售业务发展所做出的贡献，那我也相信他将在公司的其他岗位上继续发挥重要的作用。

[Translator]

and then to answer the second part of your question, we've announced today that Mr. Xin Lijun will leave the role of CEO of JD Retail for another appointment by the company. Mr. Xin assumed the role of CEO of JD Retail in September 2021. In the face of development of external environment and industry, he has led the team to successfully expand collaborations with business partners and strengthen user mind share, making significant contribution to the business. We truly appreciate Mr. Xin's dedication and I believe he will continue to play a vital role at other positions at JD.com.

[Sandy Xu, CEO at JD.com]

对，零售业务呢，是我们京东最核心收入占比最高的业务，也是京东其他多元化业务的基矗。那么接下来呢，我也将继续努力推进零售以成本、效率、体验为核心的战略的落地，那么去推动零售与集团其他业务板块的协同。

[Translator]

JD Retail is obviously the very core business of JD, and contributes to the highest proportion of our total revenue. It is also the cornerstone for us when exploring a diverse businesses. At this role, I will continue to drive the execution of retail strategies and strengthen synergies across business units.

[Sandy Xu, CEO at JD.com]

对，零售的战略呢，以前也都是我们集团在ICC层面大家共同制定的。我平时其实也会参与重要的战略项目的推进和落地的工作，所以整体零售战略在方向上不会有大的变化。

[Translator]

... JD Retail strategies are set up by our strategy execution committee, the CES, SEC, and I personally involved in the discussions and implementation of these strategies, so there will be no change to JD Retail strategies.

[Thomas Chong, Regional Head of Internet and Media at Jefferies]

Thank you

[Sean Zhang, Director of Investor Relations at JD.com]

Thank you, Thomas. Operator, can we have the next question?

[Operator]

The next question comes from Ronald Keung with Goldman Sachs. Please go ahead.

[Ronald Keung, Head of Asia Internet Research and Equity Research Analyst covering China Internet & Logistics at Goldman Sachs]

谢谢 Sandy 和 Sean，那，也想请教管理层，在这个战略业务 KPI 和团队进行这些调整以后，能分享一下四季度以来这个 core GMV，就是可能 B2C 这块的 core GMV 的一些情况吗？增长情况和我们 3P 的这个销售情况，以及与我们对这个 2024 年，我们现在对宏观消费情况的一些基本假设，然后我们在这个假设的情况下，我们是，明年有什么策略，那在保持在我们战略品类里边的一个市占率，我们会怎么平衡这个回归增长和利润？谢谢。

[Sean Zhang, Director of Investor Relations at JD.com]

Okay, let me briefly translate the question. Ronald wants to ask, in terms of, you know, the strategy adjustment, KPI adjustment and, team restructuring. After this adjustment, what you have seen in terms of core GMV, growth trend, and how's your 3P, business been trending? And the second question was, what's your basic assumption for macro and consumption, for next year? And based on that, what is your strategy to maintain, your core business or categories, market share? And how do you balance between, growth and profitability?

[Ian Shan, CFO at JD.com]

多谢Ronald。core GMV在过去四个季度的增速都大幅高于社零，然后在Q3我们的core GMV同时都会高于社零和网上实物零售额，那达到了高个位数的增长。

[Translator]

Thanks, Ronald. Over the past four quarters, as the growth rate of our core GMV has been significantly higher than the total retail sales of consumer goods. In this quarter, our core GMV achieved a single digit, high single digit growth, which was higher than total retail sales and the online retail sales of physical goods.

[Ian Shan, CFO at JD.com]

那3P我们在上个季度分享了注册商家数的快速增长，然后这个季度注册商家数也是快速增长的。我们同时呢，在Q2和Q3也看到活跃商家数的增速，也是加速的。那同时呢，另外一个是购买POP的这个用户数，在过去两个季度也都是高于大盘的成交用户数。

[Translator]

So in the last quarter, we shared the rapid growth of the onboarded merchants, and we also witnessed accelerated expansion of active merchants in Q2 and Q3. At the same time, users shopping from 3P merchants grew faster than total users in the past two quarters.

[Ian Shan, CFO at JD.com]

我们认为，现在开放平台的进展是符合我们预期的。我们也看到更多的活跃商家和更多的POP的成交用户，但是，转化为3P订单以及3P GMV的高增速是需要时间的。

[Translator]

We believe the current progress of the platform ecosystem is in line with our expectations. We're seeing more active use, active merchants and more users. Meanwhile, it takes time to convert them to 3P orders and the GMV growth.

[Ian Shan, CFO at JD.com]

然后还是想重申一下，就是我们致力于通过POP提供给我们的用户更多的选择和更便宜的价格，我们追求的是，京东生态的持续健康发展，那1P和3P一起来给用户提供更好的用户体验。

[Translator]

So I still want to stress that we're committed to providing our users with more choices and cheaper prices through 3P. We are pursuing a sustainable and healthy ecosystem, allowing our 1P and 3P together to provide users with a better shopping experience.

[Sandy Xu, CEO at JD.com]

好的，那我来回答Ronald的第二个问题吧。那首先呢，在我们看来，目前中国经济的增长还是呈现持续回升向好的态势的。虽然可能这个情况会比年初预期的稍微差一点，那随着现在各项政策持续，显出效果，那包括支持和恢复，扩大我们的消费，稳定就业，促进民营经济发展壮大，以及，各种支持房地产市场平稳运行，这些政策落地之后呢，我们也看到整个经济增长的动能是在逐步增强的，所以我们预计明年整体的消费还是会保持稳步回升的态势，并且呢，成为推动，整个中国经济增长的主要驱动力之一。

[Translator]

... And for the second part of the question, with the recovery of China's economic growth, though, the speed is slower than we anticipate at the beginning of the year, and also at the same time, driven by those a series of effective policies supporting consumption, employment, private enterprises, and the property sector. We anticipate that consumer spending will continue to steadily recover next year, and consumption will continue to become a major driver of economic growth.

[Sandy Xu, CEO at JD.com]

对，然后具体在品类维度呢，那首先在我们这个市场地位相对比较好的家电品类上，或者说市场份额相对大一点的家电品类上，那么得益于我们这些年积累下来的供应链的优势，还有我们这个持续加强的用户的心智，整个线上这个电商的渗透率的提升。那么今年前三个季度呢，我们还是保持了这个快于行业的增速，持续获取市场份额，所以基本盘是非常稳固的。那么与此同时呢，今年我们也在聚焦核心能力上的投入建设，那这些也让我们充满信心，在明年可以继续地去获取市场份额。

[Translator]

So, from the perspectives of categories, for some categories that JD has advantage or have a bigger market share, such as home appliances and electronics category, our supply chain strength and enhanced user mindshare have enabled us to maintain growth rates surpassing the industry level in the first three quarters of the year. And we continuously gain on these categories, we continue to gain market share. At the same time, our focused investment in our core capabilities this year are giving us the confidence in continuing to acquire market share next year.

[Sandy Xu, CEO at JD.com]

具体来说，在手机和3C数码的品类，那我们也会持续地发挥供应链的优势，不断地去优化成本效率。那同时呢，就一方面为用户提供更多元化的产品，更有优势的价格，更丰富的服务，那同时也会和品牌厂商一起去加强新品和趋势品类的打造，来促进消费，引领3C数码行业的趋势。

[Translator]

In the mobile phone and the 3C, and electronics categories, we leverage our supply chain advantages to continuously optimize cost efficiency and providing users with diverse range of products and competitive prices and the better services. So we also lead the trend of these categories industries by strengthening our offerings of new and trendy products.

[Sandy Xu, CEO at JD.com]

然后在家电品类呢，我们也会进一步地去完善我们线上线下的零售和服务能力，因为这是一个非常重服务的品类。一方面，我们会在不同价格带的商品上，继续去提升我们的供应链能力，提升京东家电的高性价比的心智。另外一方面，在服务上呢，我们也会在以旧换新，拆送装一体化，这些服务能力上进一步突破，去提升用户体验，来撬动额外的消费需求。

[Translator]

In the home appliances categories, which is the category, heavily rely on, services, so we will further enhance our retail and service capabilities, both online and offline. While we are promoting higher end and emerging products, we are also enhancing users' mindshare of high cost effectiveness of this category. Additionally, we are also making breakthroughs in our service capabilities in the home appliances category, such as trade-ins and, one-stop assembly, delivery, and installation services, all aiming to further elevate the users' experience and stimulate, consumer demand.

[Sandy Xu, CEO at JD.com]

对，然后我们的京东的商超品类呢，今年的确经历了一些相对大的业务调整，这些包括我们整个的品类规划，仓网变革，精细化运营，对一些渠道的调整，这些策略呢，都在逐步落地。目前我们已经看到商超品类的增速比上半年是有所改善的。那么明年呢，将回到更加健康的增长势头上。长期来看，我们坚信商超品类仍然是京东最重要的增长动力。那么此外呢，的确我还要补充一句，就是我们商超品类的确在去年这个疫情管控下，是受益比较大的一个品类，所以它相对是有一个比较高的基数。

[Translator]

So for our supermarket category, after our proactive efforts this year and initiatives, we have a series of initiatives, including the category of planning, warehouse network transformation, and refined operations, et cetera. And all these initiatives has been making steady progress, and this category has we have seen a better momentum compared to the first half of the year. And we believe for the supermarket category, it will return to a healthier growth trajectory next year. So this will also reaffirm our belief that the supermarket category will remain to be JD's most important growth driver in the long term. And on this category, I would also want to remind you that it has benefited from last year's pandemic period, which gave it a very high base a year ahead.

[Sandy Xu, CEO at JD.com]

So, yeah. 对，然后2024年展望来看呢，那我们会预计，就是一个是我们今年业务这个主动优化调整的影响会减弱。那么同时呢，随着经济和消费的逐步恢复，啊，以及今年我们一系列在这个策略上的，呃，调整，和我们的这些算法和系统的优化，那么我们整个以供应链为基础的核心优势将不断地这个发挥出来，而且今年的这些调整的正面的影响也会不断地释放出来，而且这个包括我们的低价精智啊，平台生态的战略等等。所以我们预计，呃，明年是可以实现高质量的业务增长。

[Translator]

So for 2024, we expect the impact of our proactive business optimizations and adjustments will become less.

[Translator]

So with the gradual recovery of the economy and the consumption and also the release of all these effects of JD's algorithms and all the other measures based on our supply chain will continue to play out. As the low price mindshare and also our platform ecosystem strategy will also gradually take root. We anticipate achieving a higher high quality business growth next year.

[Sandy Xu, CEO at JD.com]

对，那最后，在整个推进战略落地的过程中呢，我们也会平衡好增长和利润。那长期来看，我们利润的改善还是来自于供应链效率的提升和平台生态的逐步完善，那我们长期并且稳步提升利润率的目标并没有发生变化。

[Translator]

So, throughout the strategic implementation process, we will strike a balance between growth and profitability. In the long term, our profit improvement will come from the enhancement of our supply chain efficiency and the gradual improvement of the platform ecosystem. So our long term goal of steadily increasing profit margins remain unchanged. Thank you.

[Sean Zhang, Director of Investor Relations at JD.com]

Thank you. We are ready for the next, analyst.

[Operator]

The next question comes from Charlene Liu with HSBC. Please go ahead.

[Charlene Liu, Managing Director and Head of Internet and Gaming in Asia Pacific at HSBC]

Thank you [Foreign language] very much to the management for giving me this opportunity to ask a question, and also congratulate the company's profit exceeding expectations. I have two questions here. The first one is regarding competition and the profit margin. We see that the competition in 2023 is intensifying. What do you think the competition landscape in 2024 will be like in terms of changes? What impact will this have on JD's strategy? Will JD continue to focus on growing GMV and market share, or shift to focusing on profitability? The second question is, considering that most structural adjustments will be completed by the end of this year, then for 2024, on a clean base, what growth does management expect for the entire company retail and supermarket? What factors can drive the growth rate to be better or worse than expected? I might quickly do a translation myself.

[Charlene Liu, Managing Director and Head of Internet and Gaming in Asia Pacific at HSBC]

The first question is about competition. So competition intensified in 2023. Can you please kindly shed light on how you expect the competitive landscape to change in 2024, and how this would shape JD's strategy going forward? Will GMV and market share be the continued focus over profitability? Second part to my question is, given most structural adjustments are expected to complete by end 2023, on a clean base next year, how much growth can we expect for the overall company retail and more specifically for FMCG, in 2024? And what could drive the results to potentially surprise on the upward downside and why? Thank you. [Foreign language]

[Sandy Xu, CEO at JD.com]

谢谢。谢谢Charlene。那我来回答第一个问题。那首先呢，这个中国的电商市场，它其实是存在不同的平台和业务模式的，不同模式也有不同的特点，其实每一家都有各自的不一样的优势。

[Translator]

So, thanks, Charlene, on your first question. Currently, China's e-commerce market features various platforms and business models, and for each platform, it has its distinct characteristics.

[Sandy Xu, CEO at JD.com]

对，虽然我可能已经说过好多遍了，但我还是想再强调一下，那京东一直以来呢，我们都坚持是以供应链为基础，以用户体验为核心的业务模式，那我们一直都在围绕着供应链和用户体验去不断打造我们的核心能力，那么和我们的合作伙伴一起去打造，优质低价的商品供给，精准去匹配合适的用户，为用户提供极致的购物体验，那去赢得用户的信赖。所以我们认为这是一个，可以为消费者，商业合作伙伴以及社会创造长期价值，并且带来共赢的业务模式。而我们打造的也是一个最能穿越不同经济周期，最可持续增长的业务模式。

[Translator]

Though I might repeat myself many times, so here I still want to share that for JD.com, we constantly adhere to the supply chain based and consumer centric business model. Building core capabilities around the supply chain and user experience, we collaborate with our partners to create a supply of high quality and affordable goods, to precisely match suitable users and provide ultimate shopping experience and earn users trust. So this business model has create value and foster winning outcomes for consumers, business partners, and the society at large, and it's designed to be the most resilient and sustainable business model capable of navigating different economic cycles.

[Sandy Xu, CEO at JD.com]

对，然后关于竞争呢，其实，我会觉得就是我们这个行业，当然对很多行业来说，竞争永远始终都会存在的，不存在更激烈或者更不激烈的时候。那么这个，那可能今年呢，就是很多这个同行吧，大家都在重视提升用户体验的一些方面，那大家可能也都在讲低价，或者说重视自己的精细化运营和可持续发展策略，这个会让市场觉得竞争比较激烈。但实际上对于零售商来说，行业竞争永远存在，如果不存在，可能就需要出现反垄断的事情了。

[Translator]

So, in terms of the competition of the retail markets, competition in this industry has always been here. Actually, there's another saying about this like more fierce or less fierce, there's always the competition here. So for our retailers, we've observed that for this industry, for many players this year has been focused on enhancing users experience and also refining operational and sustainable development strategies. So, yes, always there's a competition, and this year you might feel this is intensified.

[Sandy Xu, CEO at JD.com]

但是我们其实并没有，大家也看到了，就是我们并没有，因为竞争而带来我们自身的利润率明显受到影响。那这个我觉得主要还是跟这个各家战略落地执行的方式以及商业模式相关。那对于京东来说，我们其实也不太看竞争对手在做什么，那我们认为，零售业务它的核心或者说它的，根本还是成本、效率和体验这三个要素。那我们的目标呢，就是，持续地通过技术和规模去提升我们的，供应链效率，来降低成本。然后呢，通过效率提升所带来的额外的利润空间，去和合作伙伴及用户分享，用于把这个多余的利润用于持续地提升用户体验。所以我们的用户体验的提升其实并不是建立在牺牲公司的合理利润率和股东利益的基础上。

[Translator]

So amid these competitions, you can see that these platforms' profit margins have not been significantly impacted. We believe this is mainly attributed to the way for each platform to implement their business strategy and business models. So, for JD.com, we don't stare at others. We continue to believe that our core strategy is to improve our supply chain efficiency through technology and the economies of scale. And we would like to use these capabilities to be able to share the extra profits brought by efficiency improvements to our partners and users, which includes improving user experience. So in other words, the user experience improvement is not built on sacrificing our reasonable profit margins and shareholder interests.

[Sandy Xu, CEO at JD.com]

对，在我们看来，它是一个正常的循环，就是当用户体验好的时候，那你会吸引更多的用户和更多的自然流量，那样的话就可以产生更多的销售，于是产生更多的毛利和利润，那我们可以把这些，这个新增的利润拿出一部分，再继续去提升我们的用户体验。

[Translator]

So we believe this should be a virtuous business cycle with a better user experience and drive more traffic. And with more traffic, there's more sales opportunities and generate more profit margins. And with the margins, we can further reinvest into improve our user experience.

[Sandy Xu, CEO at JD.com]

对，我们会继续坚持我们的长期战略，然后，对我们自身模式长期持续形成良性循环，获得市场份额是很自信的。

[Translator]

So, we will continue to adhere to our long-term strategy, and we have confidence in our business model to sustainably maintain a virtuous cycle and gain market share.

[Sandy Xu, CEO at JD.com]

对，从我们自己的KPI角度来看呢，那我们也是会形成一个比较好的平衡。那么其实对于不同的品类，不同的业务，可能我们在这个增长和利润以及现金流上，它的权重会有一些差异，但是长期看呢，我们是追求健康的可持续增长。

[Translator]

In terms of our KPIs, so we have different business segments exhibiting distinct characteristics and being at different stages of development in terms of the GMVs and the profits and the cash flows. So for the weighing of these three indicators might vary. In the long term, we believe in achieving a healthy balance across these three indicators.

[Ian Shan, CFO at JD.com]

OK，我来回答第二个问题。大的结构性调整的决策今年都已经被做出来，并且开始执行了，那包括调整业务的健康度，强化用户体验，然后低价以及平台生态。那业务健康度的影响会全部反映在今年的数据当中。

[Translator]

For the second part of the question. Our major structural adjustments have been made and implemented this year, including the business health, healthiness adjustments, enhancing user experience, low price and platform ecosystem strategies. The full impact of business adjustments will be reflected in this year's numbers.

[Ian Shan, CFO at JD.com]

我们对明年以及中长期的增长目标是没有改变的。我们预期京东整体的零售业务2024年将开始恢复正常的增速，那我们有信心取得快于社零的增速。那当然，因为京东已经有相当大的体量，我们的增长也和这个宏观和零售市场高度相关，那我们的目标是，比行业取得更高的增长，然后持续获得市场份额。

[Translator]

So our growth targets for next year and the longer term remain unchanged. We anticipate that JD's overall and retail business in 2024 will return to normal growth rates. We are confident in achieving growth faster than the national total retail sales of consumer goods. And given JD's substantial scale, our growth is highly correlated with the country's macroeconomic conditions and the retail market. We aspire to outperform industry growth and continue to gain market share.

[Ian Shan, CFO at JD.com]

整体来看，虽然今年商超面对业务调整、疫情结束后线下的消费恢复以及去年的高基数等挑战，那我们相信通过业务调整的效果会逐步体现，那商超正回到更健康的增长势头上。长期来看，我们坚信商超品类仍是京东最重要的增长动力之一。

[Translator]

So overall, despite for the supermarket categories, despite the challenges faced by this categories are due to our business adjustments and the post-pandemic recovery in the offline consumption and the high base from the previous year, we believe the effects of adjustments will gradually materialize and the categories returning to a healthier growth trajectory. In the long term, we remain confident that it will continue to be JD's most important growth driver. Starting from next year, we expect the supermarket category to gradually recover growth rates faster than the overall retail market.

[Sean Zhang, Director of Investor Relations at JD.com]

Okay, thank you. Operator, can we have the last questions, maybe?

[Operator]

The next question comes from Kenneth Fong with UBS. Please go ahead.

[Kenneth Fong, Head of China Internet Research at UBS]

嗨，谢谢管理层接受我的提问。我有两个问题，第一个是关于用户的，在这个整体的大环境不确定下，是否分享一下一些用户的行为的变化以及不同品类的表现，还有就是我们运营上面有什么策略上的改变吗？第二个问题是将来我们怎么想这个增长跟利润的平衡，因为策略上面，我们重视低价，还有提高这个用户补贴，然后大环境就是消费放缓，以及这个，竞争加剧，但我们在中期利润方面也是利润率也是比较稳定，可否分享一下，就是双十一以及将来这个投放的力度，后续我们应该怎么思考这个收入跟利润的平衡，我们对JD Retail的中期利润率的目标有转变吗？啊，我翻译一下。Thank you, management, for taking my question. My first question is about user and strategy. Under the current uncertain macro, can management share with us some of the behavioral change of our user?

[Kenneth Fong, Head of China Internet Research at UBS]

How is the performance split among different categories and any change in our operation strategy in light of the current macro challenges? Second is about how we balance the margin and growth. On one hand, we continue to emphasize on the low price strategy, user subsidies, while competition is also intensifying. That said, we have been very disciplined, able to maintain a stable margin. Can management share with us the investment during Double Eleven and beyond? How should we think about the balance between growth and investment? Any thoughts and update on the JD Retail long term margin target? Thank you very much.

[Sandy Xu, CEO at JD.com]

[Foreign language] Okay, thank you for Kenny's question, very good question. Then, first, this from our own platform's perspective, we see consumers' consumption decisions are more rational, their attention to price and quality will also be higher. So, at this time, it is us JD, we on one hand through improving our supply chain efficiency, to reduce our procurement and operating costs, then on the other hand, also in improving our entire platform ecosystem's richness, then this improving our products' price competitiveness and merchandise supply's richness, to satisfy users' needs, improve users' experience.

[Translator]

Thank you, it's very good question. So, for JD's platform, we've seen that consumers are making more rational purchasing decisions with rising focus on price and quality. So we continuously enhance our supply chain efficiency to lower procurement and operational costs ... and enrich the platform ecosystem and the price competitiveness and the diversity of product offerings to meet consumers' diversified demands and their shopping experience.

[Sandy Xu, CEO at JD.com]

对，从我们自己的数据看，刚刚应该也有分享，就是我们看到零售的用户购物频次，继续保持一个比较好的增长，而且这个增速呢是快于，ARPU的增长。

[Translator]

As we shared a certain statistics, the JD Retail users purchasing frequency continued to grow and with the growth rate surpassing that of ARPU.

[Sandy Xu, CEO at JD.com]

对，然后另外就是随着我们，这个越来越多第三方商家引入，然后提升了产品丰富度，然后另外在自营这边呢，也降低了免邮的门槛以后，我们的确也看到相对低客单价的订单的增长是在加速的，而且明显超过整体单量的增速。

[Translator]

So notably, as we increase product diversity from key merchants and lowered the free shipping threshold, we witnessed accelerated growth in the number of orders and with a low average order value. So, with the significant orders of low average order value, it significantly outpaced the overall order volume growth.

[Sandy Xu, CEO at JD.com]

对，同时在我们这个一线、一二线城市和新用户的消费力，依旧还是旺盛的。那我们也看到这些高质量的plus会员数也在保持双位数增长，而且plus用户的这个年消费金额依然是很强劲的。

[Translator]

So, the spending power of our users from the first and second tier cities remain robust and JD PLUS continue to experience double-digit growth in the number of users, which has show a very strong stickiness for this membership.

[Sandy Xu, CEO at JD.com]

对。另外就是我也想补充一个点，就是说我们看到，其实用户他对服务的要求并没有降低，虽然对价格敏感，就是消费者他需要的低价，绝对不是说只有商品的绝对价格低，就是消费者还是很需要要有品质和服务的支撑的。所以对此呢，这个我刚才也提到，就是我们其实今年还是就是通过首先优化我们自己身上的这个运营效率，然后呢，这个去优化采购成本和这个丰富商品选择来把价格做实。那同时我们也在把我们整个涉及到的服务的每一件事情都做好，包括这些安装，还有这个售后等等这些服务，来把用户体验做到极致。

[Translator]

So here, I also want to share a viewpoint that we observe that users does not really want to compromise all the services while pursuing low prices. They are seeking low price doesn't means that they will sacrifice the qualities of products and services. So for ourselves, this year, we have been continuously improving efficiency, optimizing our procurement costs and expanding product choices, and do everything we can to better or even making the ultimate efforts to improve our services, such as the installation services and after sale services, to ensure we are still offer our services at no compromise.

[Sandy Xu, CEO at JD.com]

对，长期来看，我们还是会坚定地去追求用户的极致体验，来维护京东的核心竞争优势。

[Translator]

For the long term, we'll continue to pursue the services as our core competitiveness on this market in the fierce competition.

[Sandy Xu, CEO at JD.com]

对，然后关于您的第二个问题，就是收入增长和利润的平衡问题啊。其实我觉得，就是，首先从长期来看，其实这个事儿是不需要平衡的，就是你有收入增长，自然而然就会有毛利的增长，对吧？自然而然也会有利润的增长。然后这个刚才我也讲了，是可以形成一个正向的循环。但的确，在比如说相对短的一段时间，可能是有需要去平衡一下，我是不是在marketing上，要稍微多投入一点，是不是要在用户这个获取上多投入一点。但我觉得短期还是一个战术上的选择。从长期来看，我们京东追求，这个长期稳定的，利润额和利润率的增长的这个目标是没有发生变化的。

[Translator]

To address your second question on the balance between the revenues and the margins and profitability, I think in the long run, it shouldn't be a problem or a question. It will eventually form a virtuous cycle, with growing revenues, there will be a growing profits. Whereas in the short term, I think it's more a tactical issue, that whether we should invest more on marketing, on the users acquisition, et cetera. So overall, in the long term, for JD.com, we continue to pursue a steady and sustainable growth and development. So our steady pursuit of profitability increase remain unchanged.

[Sandy Xu, CEO at JD.com]

对，我还再补充一个，就是京东呢，其实我们从来不追求过高的变现率或者利润率，其实我们追求的还是一个作为零售商合理的利润率。我再重复一下这个长期目标。

[Translator]

Finally, I would like to stress that for JD.com, we don't pursue the short term, very high monetization and profitability. As a retailer, we've always pursued a reasonable profit for our industry. This is our principle, as always. Thank you.

[Sean Zhang, Director of Investor Relations at JD.com]

Thank you very much. Thank you, Kenny, for the questions. I think operator, time is runs up. I think that's all for today's Q&A session.

[Operator]

I will now turn the call over to JD.com, Sean Zhang, for closing remarks.

[Sean Zhang, Director of Investor Relations at JD.com]

Yeah. Thank you for joining us today on the call and for your questions. If you have further questions, yes, as always, please contact me and our team. We appreciate your interest in JD.com. We're looking forward to talking to you again next quarter. Thank you.

[Operator]

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

Participants

Executives

• Ian Shan, CFO
• Sandy Xu, CEO
• Sean Zhang, Director of Investor Relations

Analysts

• Charlene Liu, Managing Director and Head of Internet and Gaming in Asia Pacific at HSBC
• Kenneth Fong, Head of China Internet Research at UBS
• Ronald Keung, Head of Asia Internet Research and Equity Research Analyst covering China Internet & Logistics at Goldman Sachs
• Thomas Chong, Regional Head of Internet and Media at Jefferies
• Translator