Ronald Keung - Goldman Sachs:

Alicia Yap - Citigroup:

Kenneth Fong - UBS:

Thomas Chong - Jefferies:

Jialong Shi - Nomura:

Operator: Hello and thank you for standing by for JD.com's Third Quarter 2024 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. [Operator Instructions] I would now like to turn the meeting over to your host for today's conference, Sean Zhang, Director, Investor Relations. Please go ahead.

Sean Zhang : Thank you. Good day, everyone. Welcome to JD.com's third quarter 2024 earnings conference call. For today's call, CEO of JD.com, Ms. Sandy Xu will kick off with her opening remarks. And our CFO, Mr. Ian Shan, will discuss the financial results. And then we'll open the call to questions from analysts. Before turning the call over to Sandy, 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. And please refer to our latest safe harbor statement in the earnings press release on our 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, unless otherwise stated. Now, let me turn the call over to our CEO, Sandy.

Sandy Xu : Thank you, Sean. Hello, everyone. Thanks for joining us today to discuss our Q3 2024 results. We had a solid Q3 with improved operating and financial results. Our top-line growth accelerated sequentially. Our active user base and shopping frequency expanded with stronger momentum. And our bottom line achieved another substantial uplift. At the heart of this achievement is our relentless focus on building supply chain capabilities and logistics infrastructure, which enable us to continuously unleash strength in delivering lower cost, higher efficiency, and best-in-class user experience. This is the key competitive strength that we are focused on as we face an ever-changing macro and competitive landscape. JD has been dedicated to establishing core supply chain capabilities since day one, along with putting significant efforts into building out retail and logistics infrastructures around the country to better serve consumers and contribute to the real economy of local areas nationwide. This enables us to play a key role in contributing in the trading program, both online and offline. JD is best positioned to support this program, not only with our strong user man-share in home appliance and 3C categories, but more importantly, with our supply chain capabilities and our fulfillment infrastructure. Consumers are attracted to JD's platform for the wealth of product selections. Our integrated service covering every step from dismantling, shipment to installation of the heavy, bulky appliances, and smooth checkout process using trading subsidies. The trading program has proven to be very effective in unlocking consumption potential and driving the technological upgrade of the entire industry chain. And we expect to continue to play our role in this effort to better serve customers and suppliers, stimulate consumption and promote healthy industry development. Next, turning to general merchandise category. In Q3, its revenues increased by 8% year-on-year, a healthy momentum that has been sustained for three consecutive quarters this year. It was primarily attributable to our supermarket category, which delivered another double-digit revenue growth year-on-year in the quarter. As a key growth driver for us, the supermarket category continued to enrich its product portfolio in the quarter to cover different price tiers. It has also launched many initiatives, such as direct shipment from suppliers to customers that gained strong traction among our users. As such, with improving user experience, we saw healthy increase in both user base and user engagement in supermarket, particularly with a robust 20% increase in shopping frequency during the quarter. Also, notably, within our fashion category, apparel and sports and outdoors both recorded double-digit revenue growth year-on-year during the quarter. Thanks to our efforts to enrich product selection, enhance user experience, and drive user mindshare of shopping for clothing on JD. It's clear that our supply chain strength is at the core of our progress in operations and financials. In addition to that, going forward, we will continue to focus on a few key areas to drive our high-quality, sustainable growth in the long run. First, user growth and engagement. We've seen a set of encouraging results resulting from our efforts and investments in users. The number of our quarterly active customers has been growing at double-digit rates year-on-year for the last four quarters in a row, with Q3 being the highest. The growth was distributed across market tiers and user groups, including new and existing users. In addition, in Q3, user shopping frequency maintained double-digit year-on-year growth, primarily driven by our increased price competitiveness, category makeshift, and wider coverage of free shipping service. Our JD PLUS program is on the right track. As we saw, a set of metrics, including active class number and shopping frequency, continue to improve. All this progress in user growth and engagement really speaks to the fact that we've been providing best-in-class experience to users of different income spectrums and demands with the right products, price, and service offerings. On such robust momentum, we will continue to invest with discipline in user growth and user experience. In addition to users, let me share some progress we made on price competitiveness and platform ecosystem. We further improved our price competitiveness as we continue to leverage on the strength of our 1P supply chain capabilities as well as our enriched 3P product offerings and white label goods. As a result, we are better able to serve both our existing users and new users. And our NPS for price competitiveness increased in a year for another quarter. Particularly, we saw a steeper trajectory of user-based expansion and order volume growth in lower-tier markets compared to that of higher-tier markets on our platform. Low price is the very essence of retail, and our commitment to that will never change. To reinforce our everyday low-price user mindshare, we have launched a series of campaigns, such as the monthly Super 18 sales that offers a selection of discounted products on the 18th of every month, the weekly Black Friday offering deals that mainly cover supermarket category, the daily late-night flash sales, offering discounts for limited time and limited supply, as well as the half-price clothing promotion. These offerings are highly welcomed by our users. Last but not least, we also continue to make progress on our platform ecosystem. We onboarded more 3P merchants during the quarter, particularly SMEs and those from industry belts, to expand our product offerings at different price tiers. As such, our active merchant base maintained a very healthy year-on-year growth. More importantly, we also made solid progress in the quarter in user engagement, which led to accelerated year-on-year growth in 3P order volume and the number of users who purchased 3P products on our platform, both of which reached record high growth levels in Q3. Our NPS for 3P offerings rose year-on-year as well. As to monetization, commission revenues returned to a positive growth in Q3, in line with our expectations as the impact of discounted commission fees fully lapsed. Advertising revenues in our retail business grew by double digits year-on-year, thanks to the healthy growth of our ecosystem and improving traffic allocation efficiency for both 1P and 3P merchants. That said, we are still at the very beginning of exploring the potential of our platform ecosystem to drive our business scale and profitability. We will continue to prioritize further optimizing our tools and infrastructure to better empower merchants, hence further improving user experience on our platform. That's the wrap-up for our Q3. Moving into Q4, we've just concluded single-stake grant promotion. With this year's theme of cheaper and better, our supply chain strengths were brought into full display. Our team did a great job expanding product assortment for both our 1P and 3P offerings, providing competitive prices and serving users with best-in-class experience. We saw users respond well with user number and order volume, both recording double-digit growth during the promotion. Finally, we are very encouraged by a more supportive policy environment that aims to realize the huge potential of consumption in China and, at the same time, drive industry upgrades, create employment, and lift household income, which will further build consumption confidence. While we see consumer sentiment start to improve, we understand it takes time for the benefits of the policies to feed through. We will continue to focus on executing our strategies in place, building up supply chain capabilities, and fully tapping into our potentials to drive lower-cost, higher-efficiency, and best-in-class user experience. We believe this will lead us to further expand our market share and profits. With that, I will turn it over to Ian for our financial highlights. Thank you.

Ian Shan : Thank you, Sandy, and hello, everyone. In Q3, our top-line group accelerated from last quarter and outpaced the group of domestic total retail sales, driven by strengths across our major business segments and categories. Our general merchandise category continued with strong momentum in the quarter, and more importantly, we saw a turnaround in revenue growth in our electronics and home appliances category, due to our comprehensive support for China's nationwide trading program. With our strong user mind-share, supply chain capabilities, and logistics services that we have built over the past two decades, we are able to provide superior customer experience and bring value to business partners and the society at large. We also achieved an increase in profitability during the quarter, as we continue to improve cost and efficiency, especially on the logistics side. Both gross margin and non-GAAP net margin expanded at a solid pace year-over-year in the quarter. Moreover, we continue to return value to shareholders. During the quarter, we completed our share repurchase program announced in March this year, and launched a new $5 billion share repurchase program for the next three years through the end of August 2027. In detail, we repurchased a total of 31 million Class A ordinary shares, equivalent to 15.5 million ADS, which accounted for 1.1% of our ordinary shares outstanding as of June 30, 2024. The total value of the shares repurchased in Q3 was approximately $390 million. During the nine months, ending September 30, 2024, the total value of the shares repurchased was $3.65 billion, which accounted for 8.1% of our ordinary shares outstanding as of the end of 2023. The progress reflects our commitment to creating value for shareholders. With that, let me turn to our Q3 financial performance. Our net revenues grew by 5% year-on-year to R&D $260 billion in Q3, of which product revenues were up 5%. By category, revenues of electronics and home appliances grew by 3% year-on-year, with growth improving sequentially in each of these three months. September was notably strong for home appliances and PCs due to our contribution to the trading program, which has been proven very effective in boosting overall consumption. And we've seen this update momentum sustain our platform in Q4 quarter to date, including doing a single-stake grant promotion. Of note is our unparalleled supply chain capability and team focus on user experience. That set us apart from peers in the industry. Revenues of general merchandise recorded another solid growth of 8% year-on-year in the quarter, of which revenues of supermarket category, apparel, and sports and all sorts of fashion category also saw a double-digit increase year-on-year. With massive time and our investment in building user experience and user mindshare in the general merchandise category, we believe there's significant room for us to drive further growth over time. Service revenues grew by 7% year-on-year in Q3, of which marketplace and marketing revenues up 6%, and logistics and other service revenues up 7%. For marketplace and marketing, commission revenues returned to positive growth in the quarter as the impact of our discounted fees to merchants fully lapsed. Advertising revenues maintained solid momentum, with advertising revenues from JD Retail recording another double-digit year-on-year growth in Q2. Key operating metrics of our platform ecosystem showed positive progress in user engagement, including a steady increase in 3P order volume and active users who purchased 3P products on our platform. Now, let's turn to our segment performance. JD Retail revenues were up 6% year-on-year in Q3. Thanks to the turnaround of electronics and home appliances and the robust growth of general merchandise. Moreover, JD Retail recorded another meaningful gross margin improvement in the quarter as we continue to drive better scale benefits of 1P, favorable mixed shifts towards higher margin categories and higher contribution of 3P. As a result, we are able to pass over the savings to our users and offer them an enriched portfolio of quality products of different price tiers. The achievement in gross margin offset the increase in our operating expense, especially in marketing expense as we devoted efforts to drive user groups and user engagement. As a result, JD Retail's non-GAAP operating income increased by 6% Young Year and operating margin stayed stable at 5.2% in Q3, compared to the same period last year. Now, looking to JD Logistics, JD Logistics revenues increased by 7% year-on-year in Q3. This was due to healthy momentum in both internal and external revenues, which increased by 8% and 6% year-on-year, respectively, as JD Logistics continued to unlock economies of scale and drive operating efficiency. It made offset improvement across profit lines during the quarter. In particular, its non-GAAP operating income increased by 624% year-on-year and operating margin came in at 4.7%, up 400 bps, compared to a year ago. Going forward, we expect JD Logistics' higher efficiency and superior service will continue to benefit JD Group as a critical component of our integrated supply chain. Turning to New Business, in the quarter, revenue of New Business was down 26% year-on-year, mostly due to the adjustment of the Jingxi business. Non-GAAP operating loss of New Business was RMB616 million in the quarter, compared to a loss of RMB192 million a year ago. The result was largely due to the increased loss in Jingxi. Moving on to our consolidated profit performance. In Q3, at the group level, gross profit grew by 16% year-on-year, and gross margin grew by 165 bps, to 17.3%. This is the 10th quarter in a row, with our gross margin extension on a year-on-year basis, a strong proof of our high-quality development path. Moreover, our non-GAAP operating income increased by 18% year-on-year, and operating margin came in at 5% in Q3, up 54 bps year-on-year. Non-GAAP net profit attributable to ordinary shareholders increased by 24% year-on-year, and net margin came in at 5.1%, up 76 bps year-on-year. We are well on track to achieve our long-term margin target, with some of the previous quarters already reaching it. For the full year of 2024, we are confident to achieve double-digit growth of our non-GAP net profit. Our last 12-month pre-cash flow as of the end of Q3 was RMB34 billion, compared to RMB39 billion in the same period last year. This decrease was the result of the timing difference of our working capital and the impact of the trading program, which was partially offset by our increased profit and moderated CapEx. By the end of Q3, our cash and cash equivalents, restricted cash, and short-term investments added up to a total of RMB197 billion. To conclude, we had a very solid Q3, with both top and bottom lines trending in the right direction. Looking ahead, we are more confident in the economic environment and returns of domestic consumption. We look forward to fully utilizing our core capabilities to play our role in the implementation of the government's stimulus measures. We will continue to execute our strategies in supply chain, price competitiveness, and platform ecosystems to create value for our users, business partners, and shareholders along the way. With that, I will turn it back to Sean. Thank you.

Sean Zhang : Thank you, Ian. For the Q&A session, you are welcome to ask questions in Chinese or English, and our management will answer your questions in the language you ask. We'll provide English translation when necessary for convenient purposes only. In case of any discrepancy, please refer to our management statement in the original language. Okay. Now, 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. [Operator Instructions] Your first question comes from Ronald Keung from Goldman Sachs. Please go ahead.

Ronald Keung : Thank you management for taking the question. I have a question on our growth. And we've seen the trade-in -- appliance trading programs. Could you help us just quantify to third quarter and potentially into the fourth quarter? And how is the sustainability of this heading into next year for the policy wide boost to appliance? And then excluding appliance, what our strategies in supermarket, general merchandise, 3P and price competitiveness to sustain the strategy for next year if we want to keep the target of growing above retail industry growth? Thank you.

Sandy Xu : Thank you, Ronald. To take your first question. So in recent months, the government has been rolling out a series of stimulus measures, including the trading policy nationwide to support economic growth and consumption, and these efforts have shown positive progress. And under the comprehensive planning of the government bodies, JD has swiftly responded by increasing inventory and enhancing service efficiency to support the program, leveraging our expenses and the experience in supply chain management, we are well positioned to offer quality products and convenience services at competitive prices to a broad base of Chinese consumers. So here, what I want to emphasize is that our swift response to response to the trading program is due to our years of experience in proactively providing trading services, which has made us technologically prepared and systematically comparable for such initiatives. Additionally, JD's unique supply chain capabilities including our self-operated sales model, logistics and fulfillment capabilities and large items in services. And combined with our strong user mind share in the home appliances category have made us the preferred partner and preferred supplier for our customers in the trading program. So on the effects of the trading program, we've seen promising outcomes so far. The National Bureau of Statistics reported that September sales of household appliances and consumer electronics grew significantly compared to July and August. So this trend is also mirrored on JD.com, where the trading program has driven our increased demand of sales for home appliances and computer in September. Our sales of these categories increased sequentially in each of the three months in Q3. So at the same time, it is also noteworthy that the full potential of the trading policy has yet to be fully realized in Q3. But parts, it's because some of the consumers hasn't been fully aware of this policy. It takes some time for them to be educated and to take advantage of this trading policy. And on the other hand, due to some limited production capacity, the high consumer demand for some subsidized products may not be fully matched in the short term and for the brands and manufacturers, they may require time to ramp up production. Additionally, at the recent National People's Congress meeting, the government just unveiled to introduce more forceful fiscal stimulus plan based on next year's economic and social development objective and expanding the trading program in greater scale and categories of consumer goods is a measure included in this supportive flat. We believe expanding the trading policy would further support consumer spending. We believe the government's trading program is not solely aimed at boosting short-term consumption, but also bolstering the healthy development of key industries, creating jobs and increasing household income and restore consumer confidence and strengthened consumer confidence benefits the entire retail and all source of manufacturing sector, and we hope the policy will continue and expand to other categories to sustain this meaningful momentum. Frankly, this program remains attractive to consumers as reflected during JD's single statement promotion, where our home appliances and computer sales continue to grow steadily. And moreover, the trading program has increased the traffic and visits on JD's platform. We're committed to in enhancing our supply chain across all categories, electronics, supermarket and specialty, et cetera, focusing on cost efficiency and user experience to deliver cheaper and better shopping experiences to our customers. Regarding your second question on our growth strategies. This year, we have steadily advanced our strategic plan, focusing on enhancing user experience, optimizing cost and boosting efficiency. So enhancing price competitiveness, our ongoing strategies include our continuous lowering our 1P procurement costs by scaling our supply chain and increasing efficiency that allow us to offer products at a more competitive price. At the same time to increase the supplies of non-brand product, we are introducing more white label sellers and affordable products through our channels like 3P and Jingxi business model to cater to the diverse shopping needs across user groups. At same time, we strive to strengthen the everyday low price use in mind share by building our promotional metrics, as I mentioned in my remarks, such as the monthly Super 18 sales, the weekly Black Friday day on supermarket categories and the daily late-night flash sale event. So on the general merchandise category in Q3, it also maintained healthy growth and continue to outperform the market. And specifically, on the supermarket category, we focused our reform of the warehouse network of great transition and this approach led to double-digit revenue growth in Q3 along with improved profitability. And on the fashion category since September, we have increased the investments on user side, mainly focusing on reinforcing users' mind share of shopping for closing on JD, and this focus contributed to double-digit year-on-year growth in closing categories and other sub categories in Q3. And thirdly, on the strengthening of our platform ecosystem on the 3P part, I've already mentioned on repeat, there's a lot of healthy growth has been achieved across different metrics, whereas we see there's still plenty to improve in many aspects. So overall, we are confident in our ability to sustain a faster than market growth rate and continue expanding our market share. Thank you.

Operator: Thank you. Your next question comes from Alicia Yap from Citigroup. Please go ahead.

Alicia Yap : Thank you for taking my questions. There are two questions. First is that it's good that JD has been benefiting from the appliance trading stimulus. Also with the stabilizations of the real estate sector, which likely have attracted the demand for a pilot in the end of 3Q and also into the 4Q. But investors lately have a new concern about the growth driver into next year, especially for the second half of next year, and worry that there might be a high base for appliance sales and also JD growth might slow down. We would try to argue that if real estate actually stabilize, further stabilize, which could actually drive more sustainable demand for appliance and it may not necessarily see a rollover of the growth for JD. So what is management view for these? I appreciate if we can address all the various JD growth driver into the next year. Second question is one of the bigger boost of better-than-expected profit the last quarter that we deliver are likely to have driven by JD Logistics margin improvement and also JD Retail cost optimization and also the efficiency improvement. JD also has delivered very good profit improvement already this year. As we head into next year 2025, can management provide any preliminary thoughts in terms of the investment, the spending that you might want to invest? And how would overall margins and profit growth outlook heading into next year? Thank you.

Sandy Xu : And thank you, Alicia, for the question. I will address the first part on the growth. So as I just mentioned, our belief is that for the trading policies the government introduced is playing a little leverage. It is not only aimed at like short-term consumption increase for the home appliances categories, more play a role to boost the construction with the job grade and increased household income to restore consumption confidence. So in my opinion, the confidence -- consumption confidence restoring is more meaningful to help JD's growth in terms of the specific categories and our targeted groups. So for the next year, we remain cautiously optimistic for the overall economic and consumption growth trajectory. And in terms of our company's growth drivers, and we will continue to carry out our long-term strategic plans, mainly focused on first, to continue to foster our users' experience and user growth and continue to invest on those categories that have high growth potential and expand our product offering center with a wider range of prices that cater to the needs of the lower-tier markets and introduce more products from the industrial guys, et cetera, we are making steady efforts to invest in these businesses. And thirdly, we continue to invest in our platform ecosystem to provide a thriving environment and we want to. So regarding the prospects on profit, I’d like to share our thoughts. So first, our long-term profit margin improvement will be driven by three key factors. So JD's strength in supply and scale and efficiency will continue to drive margin growth. As you can see in our Q3 earnings, we saw a continuous increase in our net margin, which is mainly due to the gross profit margin improvement in product supply chain and JD Logistics profit growth driven by cost management and the efficiency improvement. And the second driver is the category mix. There is still significant potential for margin improvement in many categories, such as the supermarket category. Additionally, favorable category mix shift itself can also lead to higher margins. And the third driver is our 1P versus 3P mix. That's the ratio of 3P business grows over time on our platform, it will also positively impact our merchant growth. So in line with JD's long-term strategies and in response to the macroeconomic and market changes, we will continue investing in areas that enhance user experience, strengthen our core supply chain capabilities and bring user mind share in specific categories and maintaining strategic focus and long-term planning is crucial for our business success. Over the long run, our profit margin will continue to improve over a long alongside healthy business growth and increased operating efficiency and JD's long-term profit margin goal will reach a high single digit. As for specific growth and profit guidance, we will share at appropriate time. Thank you.

Operator: Thank you. Your next question comes from Kenneth Fong from UBS. Please go ahead.

Kenneth Fong : My first question is about competition and investments. During Double 11 e-commerce has been investing aggressively on both users and merchants. So can management share your view on the current industry competitive landscape? Also for area forging into investment and for this investment, how should we think about the impact on margin? My second question is on the expansion in the apparel and cosmetic category. Because in the news, we saw that we are investing RMB3 billion and RMB1 billion, respectively, on cosmetic and apparel category. So can management share more about that? Would it be 1P or 3P in terms of operation? And any results that we can share? And then more medium to longer term, what is JD's competitive advantage versus peers category? Thank you.

Sandy Xu : Hi, Kenneth. Thanks for your question. I will take the question on the industry competition and our investment. So first of all, I want to address that we hold -- we continue to hold the view that China is a highly promising retail market supported by favorable demographic structure and distribution along with the world's most advanced e-commerce infrastructure, including robust logistics, payment systems and social media integration, et cetera. So there is still significant room for e-commerce to expand its market penetration. And with the implementation of supportive measures to boost consumption, including the recent trading policy, we're seeing positive momentum that will inject fresh growth energy in e-commerce. So given this e-commerce development momentum, we will maintain focus on enhancing user experience and driving user growth, developing our differentiated supply chain capabilities based on cost efficiency and user experience, building our core capabilities edge, making targeted investments in self-operated supply chain and logistics service for sustainable long-term growth. At the same time, continuously strengthening and using mind share. Here are some specific updates and on user experience over the past year, we focused on enhancing user experience by increasing price competitiveness, lowering the free shipping threshold for our self-operated product and improving our free and home return services. And now we have extended many services from 1P to 3P products, such as free shipping for over 59 lens and the 3 home return services. Additionally, we've introduced innovative services like compensation for delayed shipping to constantly exceed user expectations. And alongside these improvements on user experience, we are actively working to attract new users. In Q3, we achieved a double-digit year-on-year user growth with accelerated momentum and we expect this growth to continue. And in terms of strengthening customer mind share in key categories and, JD has become the go-to destination for home appliances, computers, mobile phones and electronic categories as we support the government's trading policy, we also take the opportunity to further integrate our services to reinforce the trust on these categories. And in general merchandise categories like market, supermarket and special. We continue to build a stronger user mind share. Our promotional campaign on the payroll category launched in September is a prime example of enhancing user awareness and engagement in apparel category. So here, we are also pleased to share the single days brand promoter performance, which overall exceeded our expectation. With JD's rising user mind share, we've seen notable improvement in user traffic with our APP's unique visit witnessed significant increase during the shopping festival. And both the active users and orders during the shopping festival experienced faster growth. The number of active users achieved double-digit growth and the average daily active customers increased by over 20%. At the same time, our user shopping frequency maintained double-digit year-on-year. So all in all, we will continue to invest in reducing costs, improving efficiency and enhancing user experience focusing our unique strength in supply chain and user-centered experience. At the same time, we will closely monitor TMB profit, cash flow and other key metrics to achieve a balanced high-quality growth. And for the full year, we're confident that JD Group's profit will exceed double-digit growth. Kenny, thank you very much for recognizing our efforts in fashion and beauty categories. So we've seen -- we've been steadily increasing our investment in these categories with the key goal to enhance user experience as part of our long-term strategy. And to build user interest and engagement with JD's apparel offerings, we are expanding our product selections, especially the good quality and fashionable product selections and emphasizing premium services. We've been launching and will continue to plan promotions, including the 50% off campaign on apparel category to better appeal users and increase their recognition, specifically on the beauty product we are strengthening our partnerships with domestic and emerging beauty brands. We expressed a high expectation to work together on exploring its potential for common growth in these categories. And so far, our 10 billion discount program has expanded to cover the entire beauty category, gaining popularity among JD users. And on the apparel product, in September, we launched several initiatives to boost JD's presence in apparel category, such as the 50% off campaign in the London Fashion Show, showcasing our brand broad brand selection and competitive pricing and all these campaigns have attracted new users with high purchasing power, who showed greater order values and high repurchasing rate within a month, especially during the single-segment promotion. We see new active users in fashion and beauty and their shopping frequency both achieved to healthy growth. And in terms of the operating models and currently, most fashion products on our platform comes from 3P sellers. At the same time, we're also stepping up efforts on our 1P operational capabilities. But definitely, the users will have the final say to choose between 1P and 3P. And in terms of the investments, we will continue to focus on the product, price and the services. And we will continue to better our algorithm to introduce more human-made products to the relevant customers, and we will also act improve the price competitiveness and offer more affordable products on these categories and along with more differentiated services. And with that said, we welcome all the analysts and all our partners to use and experience our apparel and fashion categories. And if there are any suggestions, we are very happy to hear from you. Thank you.

Operator: Thank you. Your next question comes from Thomas Chong from Jefferies. Please go ahead.

Thomas Chong : Good evening. Thanks management for taking my questions. My first question is about the macro. Can management comment about the recent macro policy measures have any positive impact to consumer sentiment? My second question is about capital return. Can management comment about the latest update on shareholders' returns related to the buyback and dividends?

Sandy Xu : Thank you, Thomas, for the question. So my short answer is, yes, current macro policies have been taking a positive effect on the overall consumption sentiment. And we expect as these policies continues to take effect, this will help improve the economic fundamentals and to help recover and improve household income, which will all provide more energy and vitalization to the consumption potential. And regarding the shareholder return, we have constantly executed our shareholder return plan over the first three quarters of the year, and we remain committed to delivering returns to multiple channels based on sustained business growth. And on our share repurchase progress, over the first three quarters, we repurchased $3.65 billion worth of shares totaling proximately 255.3 million ordinary shares or 127.6 million ADS, representing 8.1% of total shares outstanding as of December 31, 2023. And in Q3 alone, we repurchased approximately $319 million worth of shares, and we have fully utilized the repurchase amount authorized under the $3 billion share repurchase program. And we announced a new three -year repurchase program totaling $5 billion, which we'll execute with the aim of reducing total number of shares in the long run. And on the dividend progress, we completed a $1.2 billion dividend distribution for 2024 in the first half of the year and plan to continue with a steady annual dividend payment based on profitability. So for the long term, we are dedicated to renewable shareholders through share repurchase, dividends and strong operational performance, sharing the value created by our business success. Thank you.

Sean Zhang : Thank you, Thomas. Let's take the last question, please.

Operator: Thank you. Your next question comes from Jialong Shi from Nomura. Please go ahead.

Jialong Shi : So I have two questions. The first question is about JD supermarket. Just wondering what is the size and the margin of JD supermarket business? And what was the rationale to have decided to exit our previous investment in Yonghui Supermarket? The second question is about JD 3P. So just wondering what does JD think of this potential in 3P? And what are your strategies to further unleash the potential of 3P?

Sandy Xu : Thank you, Jialong, for your questions. The supermarket category has always been a core part of our business and one of the most important driver for our future growth. It represents the largest segment among our general merchandise categories, and the sales volume surpasses any supermarket chain store in China. While at the same time, it's also always noting that China supermarket sector is fast and highly decentralized compared with other developed countries. In September, JD Super marked its 10th anniversary and emphasized during the celebration to the media that the supermarket business is one of the key battlefield that will shape JD's future in the coming decade. Admittedly, given its current scale and profitability, JD Super still have a way to go to meet our long-term expectations. However, we see significant potential in this category and remain confident in its healthy growth trajectory. And for this year, JD Super has achieved a double-digit year-on-year growth driven by our enhanced operational capabilities. So we will continue to strengthen our core capabilities in our anti management in terms of the scales of our refined operations and reform in warehouse network, et cetera, to drive up the profitability and continue to center in on the product offerings, price competitiveness and our differentiated services to improve user experience and user mind share in the supermarket category. And our strategic investment in Yonghui match the initial objects we set at the beginning of the collaboration. The recent shareholding change reflects our proactive decision to sharpen our focus on JD's core business areas. And regarding the question on the 3P development, our platform ecosystem development goal is centered around enhancing user experience. We aim to offer the best product, price and services through a mix of sales models with 3P playing a key role in expanding our selection of products and brands. So eventually, this will be our users' natural choice. And building a robust platform ecosystem, there remains substantial room for improvement in 3P operations, business scale and profit contribution to the platform. And for quite a period of time, we have been investing in platforms, infrastructure and providing all sorts of merchant tools. Of course, there's still a way to go to better our supplies to our merchants and to help them to better -- to do the traffic allocation and the user acquisition, et cetera, to create a winning situation. So over time, the platform's ecosystem, we aim to have it to become a long-term growth driver generating increased revenue and profitability. Thank you.

Operator: Thank you. 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.

Sean Zhang : Thank you for joining us today on the call, and thank you for all the great questions. That's a wrap. If you have further questions, please contact me and our team. We really appreciate your interest in JD.com and look 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. Good day.