Participants

Iris Liu; Investor Relations; Dada Nexus Ltd

Jun Mao; Chief Financial Officer; Dada Nexus Ltd

Thomas Chong; Analyst; Jefferies Hong Kong Limited

Alicia Yap; Analyst; Citi

Presentation

Operator

Good morning, ladies and gentlemen, and thank you for standing by for Dada’s third-quarter 2024 earnings conference call. (Operator Instructions) As a reminder, today’s conference call is being recorded.
I will now turn the meeting over to your host for today’s call, Ms. Iris Liu from Investor Relations for Dada. Please proceed, Iris.

Iris Liu

Thank you, operator. Hello, everyone, and thank you for joining our third-quarter 2024 earnings conference call. On the call today from Dada, we have Mr. Henry Jun Mao, CFO. Mr. Mao will talk about our operations, company highlights, and the financials. He will be available to answer questions during Q&A session.
Before we begin, I’d like to remind you that this conference call contains 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.
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 that, unless otherwise stated, all figures mentioned during this conference call are in RMB.
It is now my pleasure to introduce our CFO, Mr. Mao. Mr. Mao, please go ahead.

Jun Mao

Thank you, Iris, and thank you, all, for joining us. In the third quarter of 2024, our high-quality growth accelerated further.
For JD NOW, year-on-year growth in monthly transacting users and orders through the JD App continued strong momentum, increasing by over 100% this quarter. JD NOW continued to engage with more high-quality JD users and its penetration rate among JD users continued to increase sequentially quarter over quarter. For Dada NOW, net revenues registered 46% year-on-year growth for the first nine months of the year. We continued to optimize our overall operating efficiency, with non-GAAP loss margin, once again, narrowed on a sequential basis in the third quarter.
Dada Group's total net revenues in the third quarter were RMB2.4 billion. Net revenues from JD NOW were RMB930 million. Net revenues from Dada NOW increased by 39% year on year to RMB1.5 billion, as we consistently strengthened partnerships with our chain merchants and further enhanced delivery service quality. Non-GAAP net loss in the third quarter was RMB59 million. Non-GAAP net loss ratio was 2.4%, narrowing by 3.7 percentage points compared to the previous quarter, primarily due to sequentially improved cost efficiency as well as optimized consumer subsidy efficiency.
Now let’s turn to the operating highlights for our two platforms, JD NOW and Dada NOW. Starting with JD NOW platform, in the third quarter, we remained focused on driving the growth of JD NOW on the JD App, strengthening user mindshare and consistently enriching our offerings to better meet users’ diverse needs in on-demand retail. We continued to provide quality products and instant delivery to more and more JD users. And fueled by customer experience optimization, users’ repurchase rates also registered remarkable growth sequentially. It is worth noting that during the Double 11 shopping festival, JD NOW’s peak-day online order volume reached a new high.
On the demand side, following the launch of the new JD NOW section and the JD NOW tab on the JD App’s homepage in this May, we gradually expanded the service coverage of JD NOW to more cities nationwide, providing more users with the convenient JD NOW on-demand retail services with quality products and instant delivery right to their doorsteps.
With the enhancement of our location-based service capabilities, we have recently launched JD NOW brand flagship stores, joined hands with more than 100 renowned brands from categories including food and beverages, personal care, consumer electronics, and more. This initiative connects brands and retailers directly with the most relevant consumers, delivering authentic products to consumers’ doorstep in as fast as 9 minutes.
Leveraging JD’s superior technology-driven supply chain capabilities, JD NOW brand flagship stores emphasize brand value proposition and foster local user engagement to attract user traffic for online and offline retailers, boosting marketing effectiveness for brand owners. During the quarter, the number of cross-category visits by users in the JD NOW section on the JD App continued to increase sequentially, as our category expansion brought diversified choices to consumers, further accelerating the year-on-year growth rate of orders placed through the JD App channel.
In the meanwhile, we introduced exclusive benefits such as price discounts and coupons for JD PLUS members to attract them to experience JD NOW’s convenient on-demand retail service and capture their mindshare. The daily average transacting PLUS members for JD NOW continued its growth momentum in the third quarter, increasing notably by more than 50% quarter over quarter.
On the supply side, we continued to work on five fronts to comprehensively enhance our supply capabilities. In terms of store coverage, we continued to enrich our product offerings in existing categories such as supermarkets, convenience stores, and consumer electronics. As of the end of September, the number of operating stores increased by over 70% year on year to more than 600,000 stores.
In the supermarket category, JD NOW deepened its collaboration with major supermarket chains with average daily delivery order volumes continuing to grow during the quarter. In the convenience store category, we launched over 1,000 stores of internationally renowned brand, Lawson, in July. We also deepened collaboration with other leading domestic convenience store brands in terms of store count.
The product offerings from convenience stores resonate well with our on-demand retail consumers. In the third quarter, the average daily delivery order volume in the convenience store category increased by more than 50% year on year.
In the consumer electronics category, we deepened our cooperation with existing brands and merchants. During the launch of new mobile phone models, we leveraged over 10,000 store coverage and provided users with instant delivery service for new phones in as fast as 9 minutes.
On the date of release of the Apple iPhone 16 series, sales increased by double digits compared with the same period last year when the iPhone 15 series were released. Xiaomi, Huawei, and other mobile phone brands also experienced remarkable year-on-year growth in the quarter. Additionally, we also made progress in our essential accessories category to better address users' immediate needs. Year to date, we have added thousands of stores of brands such as Pisen and Ugreen.
We further enhanced price competitiveness. As of the end of September, the proportion of highly priced competitive products increased by 3 percentage points as compared with June this year. We continued to optimize the [Top Brands for RMB1] section on the landing page of the JD NOW tab, offering consumers various value-for-money products priced as low as RMB1.
In terms of inventory, we continued to expand and explore offerings in the supermarket brand promotion section, carefully selecting the flagship SKUs of the top supermarkets with differentiated price advantages and providing users with a trusted and diverse selection of products.
On the content side, we further enriched product information and enhanced product attractiveness. In the third quarter, to further facilitate the purchase decision-making process, we enriched product information for merchants listed in the JD NOW tab, including product description as well as applicable discounts and coupons. As a result, our click-through rate increased by 2 percentage points, and our conversion rate increased by 5 percentage points sequentially, a clear sign that enriching product information improves customer experience and enhances product appeal.
Furthermore, we believe that providing more cost-effective services are key to winning more users and meeting the demand-driven nature of on-demand retail. As reported earlier, we lowered the delivery fee waiver threshold to RMB29 at the end of this February. This initiative effectively enhanced user experience and strengthened user mindshare, contributing to the continued growth momentum in JD NOW’s order volume through the JD App over the past few quarters.
Additionally, we endeavored to provide users with shorter and more accurate estimated delivery times on the payment page through optimized algorithms and further accelerated the fulfillment process. The average fulfillment time for JD NOW orders this quarter was shortened by more than 20% year over year.
As a result of the above-mentioned measures, the penetration of JD NOW among JD users continued to increase quarter over quarter, user mindshare was further enhanced, and the supply density and quality continued to improve, resulting in sequentially accelerated order volume growth in the third quarter.
In terms of user scale, as the user mindshare of on-demand retail through the JD App continued to increase, both our click-through rate and transaction conversion rate through the JD App increased in the third quarter, resulting in our overall user conversion rate more than doubling on a sequential basis. JD NOW continued its strong growth momentum in average monthly transacting users on the JD App, growing by more than 100% year over year, with high-frequency users growing even faster. The number of high-frequency users through the JD App more than doubled in the quarter.
In terms of user stickiness, our 30-day repeat purchase rate of users of the JD NOW section on the JD App experienced a significant increase from the previous quarter, with the repeat purchase rates of new and existing customers both growing. Additionally, we continued to improve user satisfaction in the quarter, demonstrated by a decrease in calls per order by over 10% year on year, also continually optimized sequentially.
On the supply side, we remain committed to expanding product categories and store coverage. We believe that our quality-focused supply enrichment strategy will lay a solid foundation for our mindshare gains in the long term. The daily average JD NOW orders through the JD App continued to grow by over 100% year on year, accelerating further from the previous quarter. This was mainly thanks to the growing user base, strengthened user mindshare, and continuous improvements in our service quality.
Next, I would now like to turn to Dada NOW, our local on-demand delivery platform. In the third quarter, Dada NOW continued to grow rapidly. Net revenues from Dada NOW increased by 39% year on year to RMB1.5 billion, driven by our strengthened partnerships with chain merchants and further enhanced delivery service quality. In the third quarter, driven by a significant growth in the number of new stores, our key accounts or chain merchants business saw overall revenue growth north of 30% year on year, with net revenues of restaurant and beverage KAs growing more than 100% year on year and over 40% quarter over quarter.
When we reported earnings for the second quarter this year, we disclosed the number of orders delivered and gross billings of our on-demand delivery business for the first time. In the third quarter, the number of orders delivered by Dada NOW increased by 36% year on year to 648 million, and the gross billings of Dada NOW grew by 33% year on year to RMB3.10 billion. Meanwhile, we continued to leverage technology to refine operations, optimize delivery routes and dynamically adjust subsidies to further strengthen our price competitiveness and expand market share.
This concludes our operational updates for the two platforms. In the third quarter, we continued to strengthen user stickiness by enhancing user mindshare, attracting more high-quality JD users to the JD NOW service. Both monthly transacting users and orders through the JD App maintained notable growth year on year, more than doubling in the quarter. Dada NOW also continued its rapid growth momentum, driven by the share gains in merchant business, especially restaurant KAs, and order volume growth.
Going forward, we will continue to focus and execute on our high-quality growth strategy, improve user experience across the board, enhance our efforts to increase the mindshare of our on-demand retail business and further leverage the synergies between our on-demand retail and on-demand delivery platforms to drive longer-term sustainable growth.
With that, I will now go over our financials for the quarter. Before we go over the numbers, just a few housekeeping items. We believe year-over-year comparisons are the most useful way to evaluate our performance, and as a result, all percentage change that I’m going to give will be on year-over-year basis. And all figures are in RMB, unless otherwise noted.
Total net revenues in the third quarter was RMB2.4 billion. Net revenues from JD NOW was RMB930 million, mainly due to a decrease in online advertising and marketing services revenues, and a decrease in fulfillment services and others revenues as a result of the full rollout of delivery fee waiver program for orders exceeding RMB29 since February 2024.
Net revenues from Dada NOW increased by 39% to RMB1.5 billion, mainly driven by an increase in order volume of intra-city delivery services provided to various chain merchants. For the first nine months of 2024, net revenues from Dada NOW increased by 46% to RMB4.1 billion. Specifically, revenues from intra-city delivery services and the revenues from last-mile delivery services increased by 45% and 76% in the first nine months of 2024, respectively.
Moving over to cost and expense side, operations and support costs in the third quarter were RMB1.7 billion. The increase was primarily due to an increase in rider cost as a result of the increasing order volume of intra-city delivery services provided to various chain merchants, offset by a decrease in online advertising and marketing services costs. Selling and marketing expenses decreased to RMB717 million, primarily due to a decrease in promotional activities initiated by us on the JD NOW platform.
General and administrative expenses were RMB108 million. The increase was primarily due to an increase in provision for credit loss and litigation-related expenses. Research and development expenses were RMB90 million.
Non-GAAP net loss was RMB59 million. Non-GAAP net loss margin was 2.4%, sequentially narrowing by 3.7 percentage points.
This concludes my prepared remarks. Operator, we are now ready to begin the Q&A session. Thank you.