JD.Com Inc

HKEX:9618

Hello, and thank you for standing by for JD.com's Fourth Quarter and Full Year 2024 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Sean Zhang, Director of Investor Relations. Please go ahead.

Thank you. Good day, everyone. Welcome to JD.com's Q4 and Full Year 2024 Earnings Conference Call. With us today is our CEO of JD.com, Ms. Sandy Xu. She will kick off the call 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 during this call, our comments and responses to your questions reflect management's view as of today's only will include forward-looking statements.

Please refer to our latest safe harbor statement in the earnings press release on our IR website, which apply 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. Please also note all figures mentioned in this call are in RMB, unless otherwise stated. Now let me turn the call over to our CEO, Sandy.

Thank you, Sean. Hello, everyone. Thank you for joining us today to discuss our Q4 and full year 2024 results. In Q4, we delivered a strong set of operational and financial results with top line growth accelerating back to double digits year-on-year and healthy bottom line expansion, ending 2024 on a very strong note. On a full year basis, our total revenues were up 7% year-on-year, outpacing the growth of both total retail sales and online physical goods as reported by the MDS.

As our market share expanded, we remained committed to our operating philosophy of lowering costs, increasing efficiency and investing in user experience with a continued financial discipline. Full year and non-GAAP net profit for 2024 also expanded steadily with non-GAAP net margin hitting 4.1%. We continued to invest proactively from long-term growth, while making solid progress towards our long-term profitability target.

We saw strong double-digit growth momentum across most of our categories and revenue streams in Q4. Starting with our electronics and home appliances category, which saw a notable upswing with revenues growing by a remarkable 16% year-on-year. Our unique advantages in supply chain, service capabilities and user mind share continue to set us ahead in these categories. Heading into 2025, with the government's stimulus policies adding to the tailwind, we are well positioned to benefit from this rebound in consumption.

Besides the strong momentum in electronics and home appliances, I'm excited about another bright spot in our business. Our general merchandise continued its strong performance in Q4 with revenue growth accelerating to 11% year-on-year. With the intensive efforts, we've invested in building the operating expertise and the massive market opportunities in both supermarket and fashion categories. We believe our general merchandise is set to further expand user mind share and renew the impetus for our long-term growth when we look beyond the momentum in electronics and home appliances.

Within general merchandise, our supermarket business revenues in Q4 were up double digit year-on-year for 4 consecutive quarters in a row. This was partially due to the early start of the Chinese New Year promotion, but more importantly, driven by the de facto improvement in our supply chain capabilities in the supermarket category, ranging from selecting the right product mix, lowering procurement costs to improving promotional and fulfillment efficiency.

The supermarket category holds massive potentials for JD in the long run for both B2C e-commerce and on-demand retail, and we've just started to unlock it. Our fashion category is also generating better momentum, thanks to our persistent efforts to improve operations and consumer mind share. For example, consumers are more excited about our offerings, showing higher shopping frequency and the merchants enthusiasm towards the JD platform has also increased significantly.

We will continue to invest in the area, as it holds strategic importance for us, especially for further improving our user engagement and the marketplace ecosystem. Throughout the past year, our team stayed very focused on improving user growth and engagement, price competitiveness and our platform ecosystem. The strong full year results were consistent with the strategic focus that we have set out and are a reflection of our effective execution.

Let me provide some updates on these key areas. First, on user growth and engagement, Q4 last year marked the fifth consecutive quarter of our quarterly active customers seeing double-digit year-on-year growth, with growth accelerating further in the quarter. User behavior also trended up. We saw user shopping frequency growing at double digit year-on-year for 4 quarters in a row.

The strong user metrics, even after the impact of the lower free shipping limit had fully lapsed, were a result of our increased low-price offerings and mix shift towards high-frequency SKUs in the supermarket and fashion categories. The healthy user momentum is keeping up so far in 2025, and we see a lot of user conversion and cross-sell opportunities.

In terms of JD Plus, shopping frequency of Plus members grew even faster than that of our total users in Q4. Our focus on enhancing our service capabilities and value proposition for our Plus members remains unchanged. In January, we announced further upgrades to Plus members benefits, including a lifestyle service package that allows members to redeem credits for housekeeping services, and a 180-day replacement over repair policy for our 1P electronics and home appliance products in case of positive effects.

We also expanded unlimited free shipping to cover on-demand shopping of 1P products for Plus members. Moving to price competitiveness. We've made substantial headway in 2024 by both improving price competitiveness for brand products and offering a broader selection of value for money products to address the needs of consumers across different income spectrums.

In particular, in Q4 and on a full year basis, we saw growth of order volume and user base in lower-tier markets, outpaced that of higher-tier markets on our platform. Shifting to our platform ecosystem, as we continue to bring in merchants and expand assortment of our supplies, both our 3P order volume and the number of our 3P users have maintained robust year-on-year increases over the past year with Q4 further picking up the pace compared to previous quarters.

NPS, the Net Promoter Score of our 3P offerings also continues to pick up in Q4, both year-on-year and on a sequential basis. As a result, our marketplace and marketing revenues were up 13% year-on-year in Q4, a substantial acceleration from previous quarters. To recap, we had a very productive year in 2024 with healthy expansion on both the top line and bottom line and effective execution of strategic priorities, bringing about tangible results.

On the back of our strong financial performance, we also delivered considerable returns to our shareholders through both buybacks and our annual dividend. Our total shareholder return rate for the year reached close to 10%. Ian will share more color on this. Our strong results reflect our commitment to drive lower cost, higher efficiency and best-in-class user experience.

And now we are racing to adopt new technologies, especially AI and industrial robotics to further automate many of our processes. For example, we already have AI applications in many of our work scenarios such as AI marketing, AI customer service, developing superior algorithms for search and recommendations to increase traffic allocation efficiency and AI-enabled streamlining of internal workflow, just to name a few.

In particular, we have launched an AI shopping assistant called, Jingyan, a chat box that helps users to get personalized search results and recommendations, find best deals and discounts and compare products. In addition, we always strive to improve our logistics automation level and have deployed proprietary industrial robotics in many key production segments in our fulfillment centers, which help to improve operational efficiency and safety of our employees and lower fulfillment costs for JD and the entire industry.

We are confident that JD's business ecosystem offers a huge amount of user cases for AI adoption, which in turn will lead to further cost optimization, operating efficiency improvements and ultimately give us more leeway to provide our users with a better experience. We remain confident in our business position and are increasingly optimistic heading into 2025.

We expect to see better consumption trends driven by the pickup in domestic demand and operating efficiency and user experience improvement powered by AI adoption. In addition, we see a compelling set of opportunities ahead of us, driven by the sustained momentum in user growth and engagement, the vast potential in general merchandise and our progress in platform ecosystem building.

Looking ahead, we remain committed to lowering costs, increasing efficiency and improving user experience to deliver a sustainable growth in the long term. With that, I will turn it over to Ian for our financial highlights. Thank you.

Thank you, Sandy, and hello, everyone. In light of the steady rebound in China's macro economy and consumption trends, we had a very solid Q4 and 2024 with both top and bottom lines recording strong momentum. Particularly in Q4, revenues of both our electronics and home appliances and general merchandise categories returned to double-digit growth year-over-year. Throughout 2024, we stay focused on enhancing our unique supply chain capabilities to lower cost and drive efficiency, while continuing to make investments in user experience and user growth.

We saw market share expansion across many of our categories and both our gross margin and non-GAAP net margin continue to expand year-on-year in Q4 and for the full year of 2024. We are well on track to further strengthen our market position and move firmly towards our long-term profit target. While driving business growth, we continue to return value to shareholders. Our Board has approved an annual cash dividend for 2024 of USD 0.5 per ordinary share or USD 1 per ADS, representing a 32% year-on-year increase on per share level.

The aggregate amount is expected to be about USD 1.5 billion, which is subject to minor adjustments based on our total issued and outstanding shares by the record date. In addition, we repurchased a total of 255 million Class A ordinary shares in 2024, equivalent to 128 million ADS, accounting for 8.1% of our shares outstanding as of the end of 2023. The increased annual dividend, combined with our ongoing USD 5 billion share repurchase program reflects our commitment to return value to shareholders, as we have strong conviction in JD's long-term success.

Now let's go through our Q4 and full year 2024 financial performance. Our net revenues were up 13% year-on-year to RMB 347 billion in Q4 and up 7% year-on-year to RMB 1.2 trillion for the full year of 2024, of which product revenues were up 14% and 7% year-on-year for the quarter and full year, respectively. By category, electronics and home appliances revenues were up 16% year-on-year in Q4 and 5% for the full year.

As the government's stimulus policies continue to kick in, we are well positioned to fulfill the demands of consumers nationwide, both through online and offline channels. General merchandise revenues were up 11% year-on-year in Q4 and 9% for the full year of 2024, both representing a meaningful acceleration compared to respective previous periods. To break this down, supermarket revenues were up double digit year-on-year, both for Q4 and the full year of 2024, while the fashion category also gathered steam.

This was driven by our persistent efforts to enhance operations and user experience with enriched product supplies, better price and more appealing service offerings. Looking ahead to 2025 and the long term, general merchandise will remain an important growth driver with huge market potential and growing consumer mind share. Service revenues growth also accelerated to 11% year-on-year in Q4 and 8% for the full year of 2024.

Within service, marketplace and marketing were up 13% and 6% year-on-year, respectively, while logistics and other service were up 10% and 9% year-on-year for the quarter and the full year, respectively. It's worth noting that revenue growth of marketplace and marketing has sequentially accelerated every quarter in 2024, with both commission and advertising revenues recording double-digit growth year-on-year in Q4.

It's a clear sign that our ecosystem is gaining traction among both our suppliers and merchants. Now let's turn to our segment performance. JD Retail revenues were up 15% year-on-year in Q4 and 7% for the full year of 2024, led by solid performance across many of our key categories. JD Retail continued to see gross margin expansion year-on-year, a trajectory that has been sustained for the past 11 quarters in a row.

This strong track record has been primarily driven by the continued improvement of our supply chain capabilities and favorable mix shift towards higher-margin revenue streams. JD Retail's gross profit expansion well exceeded the mild increase in operating expenses, particularly in marketing expense, as we invested in user growth and mind share.

As a result, its non-GAAP operating income continued to increase year-on-year, both in Q4 and for the full year of 2024, with non-GAAP operating margin reaching 3.3% and 4%, up 68 bps and 24 bps, respectively. Moving on to JD Logistics. JD Logistics revenues were up 10% year-on-year for both Q4 and the full year of 2024. Both JD Logistics internal and external revenues saw double-digit year-on-year growth in Q4 and a similar growth pace for the full year 2024.

JD Logistics further optimized its logistics network, closely integrated smart technology and increased the automation level of its operations to reduce cost and drive better efficiency. This led to a year-on-year increase in its non-GAAP operating income for both Q4 and the full year of 2024. JD Logistics non-GAAP operating margin reached 3.5% for the quarter and on a full year basis as well.

In 2025, JD Logistics will further invest and enhance its capacity to handle increasing demand driven by the positive trends in both the macro conditions and consumer confidence. We believe this proactive effort will set JD Logistics on a stronger footing for long-term development. Turning to new business. Revenues of this segment saw a year-on-year decline of 31% in Q4 and 28% for the full year of 2024, largely due to Jingxi's business adjustment.

This widening non-GAAP operating loss was also attributable to Jingxi business, in line with our expectation as we further penetrated into lower-tier markets with expanded offering of value-for-money products. Lower-tier markets remains a priority for us in 2025. As we are becoming more confident in broadening our user base there, thanks to the progress we made in enhancing our product supplies and price competitiveness over the past year.

On our consolidated profit performance at the group level, gross margin increased to 15.3% in Q4 and 15.9% for the full year of 2024, up 110 bps and 114 bps, respectively. The increase was driven by both JD Retail and JD Logistics gross margin expansion. Non-GAAP net profit attributable to ordinary shareholders increased by 34% and 36% year-on-year in Q4 and for the full year of 2024 with non-GAAP net margin of 3.3% and 4.1%, respectively.

While we continue to allocate resources to improve user experience and foster future growth drivers throughout 2024, we did a good job in unleashing operating efficiency, upholding our financial discipline and firmly moving towards our long-term profit target. Our free cash flow for the full year of 2024 was RMB 44 billion, compared to RMB 41 billion in 2023. This was driven by our enhanced profitability and moderated CapEx, partially offset by cash outflows to secure supplies of key categories such as electronics and home appliances to keep up with the increasing demand in recent quarters.

By the end of Q4, our cash and cash equivalents, restricted cash and short-term investments totaled RMB 241 billion. We are encouraged by our overall performance in 2024 with healthy expansions across both top and bottom lines. This set of results was driven by effective execution of our strategies, disciplined investments and adoption of technology, including AI and robotics. The improving macro environment and the solid groundwork we've built out give us confidence going into 2025, and we are optimistic for our healthy and sustainable growth over the long term. With that, I will turn it back to Sean. Thank you.

Thank you, Ian. Okay. Next for the Q&A session. You're welcome to ask questions in Chinese and English. Our management team will answer the question in the language you asked. We'll provide English translation when necessary for convenience purpose only. In the case of any discrepancy, please refer to our management statement in original language. Operator, we can open the call for a Q&A session.

[Operator Instructions] Your first question comes from Ronald Keung from Goldman Sachs.

[Foreign Language]

So I want to ask how should we think about the JD growth drivers over this year and next year, mainly beyond the near-term strength in electronics and appliances. And we mentioned our supermarkets. So what are our investment priorities this year for the supermarket category? And separately, on the government expanded appliance now, including electronic training programs.

So how has the electronics and appliances category grown trended so far in the first quarter. And in face of the higher base from the second half and maybe some of the diminishing demand elasticity from the program that started from September last year, how -- what are we doing to solidify this category leadership?

[Interpreted] Thank you, Ronald, for your question. You can see in 2024, we achieved solid double-digit growth across most of our major categories, including electronics and home appliance and general merchandise. Although the industry landscape vary across these categories, the underlying growth driver is always JD long-term investments centered around user experience, cost and efficiency, which continue to unleash significant growth potential and generate differentiated growth opportunity for JD in the future.

In 2025, the government aims to continue its effort to boost consumption. We are very committed to contributing to government's efforts by leveraging our own supply chain efficiency, superior customer service. At the same time, we are making proactive investment in general merchandise category, user experience and user growth and platform ecosystem, which have already yielded some positive progress. We believe this driver will continue to propel growth of retail -- of core retail business in 2025 and beyond.

So starting with general merchandise category. Over the past period, we continuously improve on our operating -- operational capabilities and category mind share, especially in supermarket and fashion categories. So going forward, we expect general merchandise category to maintain strong growth momentum. In terms of user growth, as our user experience continue to improve, both number of the QAC, the quarterly active user and shopping frequency have maintained double-digit growth in each quarter over the past year.

We'll continue to fine-tune our user traffic operation to drive healthy growth in both our user base and user engagement this year. In platform ecosystem, you can see besides our mind share of -- the user mind share in our 1P direct sales business model continue to get stronger. Our user recognition of JD 3P marketplace is also deepening.

In Q4, the number of 3P active users and 3P order volume continued to accelerate, both outpacing the overall JD Retail segment growth. The improved ecosystem engagement is building a good momentum for us in terms of our long-term sustainable growth.

I want to provide more color on supermarket category. So over the past few years, we have focused on improving the category operational capability and supply chain capabilities. And especially we will further enhance our procurement and sales capabilities and category operation. Our goal is to provide users with more value for the money product across a broader price range. So we have seen notable improvement in some key subcategory within supermarket.

Revenue growth have achieved -- have outpaced overall growth of supermarket category in double digit. Going forward, we'll continue to improve operational capability of this more subcategories. Also advancing fulfillment network planning and efficiency improvement is a key. We'll continue to work closely with JD Logistics to develop fulfillment network model tailored to supermarket category to lower the fulfillment cost and improve delivery efficiency.

So since the second half of last year, the government introduced a series of consumption stimulating policy, and we have seen that the policy have driven a steady recovery in consumer confidence. So since the beginning of this year, we see -- we saw mobile phone demand has rebounded and laptop PC sales remain very strong in JD, although home appliance sales early this year were temporarily affected as some of the sales were pulled forward to the end of 2024, but the sales of home appliance have shown a month-on-month acceleration in Q1.

How to enhance our market share. So as you just mentioned, since the second half of last year, government consumption supporting policy have effectively boosted home appliance sales, which potentially creates a high base for the industry. However, we see more long-term benefits of home appliance industry upgrade and positive structural change in the industry as well as the vast potential demand unleashed by the trade-in program of home appliance.

It's worth noting that the unit -- the volume sold compared to the total industry market size is still very limited. So we are very confident to continue consolidating and expanding our market share and market position. So on one hand, we'll enhance our trade-in service capabilities and provide consumers with better trading experience. We'll continue to stimulate potential demand for all the consumer goods upgrading.

Additionally, we'll leverage our supply chain advantage to reach out to more users in lower-tier markets through more channels, meeting their demand for trading services. Last but not least, we'll continue to leverage our deep user insight to drive innovation in the industry and stimulate consumer sentiment.

Your next question comes from Kenneth Fong from UBS.

[Foreign Language]

Congrats on the very strong set of results. Over 2024, JD has been very prudent and ROI focused on investment that allow us to deliver a very robust over 30% year-on-year earnings growth. We noticed that JD has been stepping up investment in some areas like fashion, instant retail. So can management share with us the strategy and scale of this investment of this new initiative?

How would management balance the growth and profitability for these investments? A follow-up question is on food delivery. I noticed that recently, we have been onboarding new and high-quality catering merchants with 0 commission. So can management share with us the strategy, positioning and scale of investment for instant retail? And how would the food delivery initiative affect our margin and profitability?

[Interpreted] Thank you, Kenny, for your question. In 2024, we achieved healthy business growth and continued to invest in user experience and our core competitiveness. We saw stronger business fundamentals and market positions of our different segments.

Our JD's business model is built on supply chain capabilities and centered around the user experience. Our investments will also focus on these 2 areas. This approach will further scale up our business, improve operating efficiency and lead to profit expansion, which will enable us to invest in our long-term development, creating a virtuous cycle. At the same time, we have been continuously optimizing our fulfillment network by streamlining our transportation routes and layout of warehouses and continuously investing in robotics technologies.

We aim to reduce the fulfillment cost of the entire industry. This is particularly important for improving the profitability of our supermarket business. Currently, our businesses and segments are at different stage of development. Therefore, our priorities are different. For more established categories such as electronics and home appliances, we will further optimize our supply chain efficiency and unleash scale benefits to drive steady profit improvement.

Within the general merchandise category, for supermarket, we are committed to driving robust growth momentum, while at the same time, continuing to improve its profitability. As just noted, fulfillment network optimization is important for supermarket profit improvement. For the apparel category, we will continue to work on user mind share and supply chain capabilities in order to gain awareness and preference among more users.

In terms of our exploration in new businesses, on-demand retail is a natural extension of JD's core retail business. It is at an early stage now, and our focus is to explore differentiated business model and enrich our high-quality supplies.

Long-term sustainable growth and proactive investments complement and support each other. In 2025, we will continue to leverage scale effects and supply chain efficiency in our core businesses and categories to drive profit improvement. Meanwhile, our track record has proved many times that our investments are ROI focused and follow stringent financial discipline. This approach will not change. We are confident to steadily progress towards our long-term margin targets.

[Interpreted]

This is Sandy. I'll answer your second question on food delivery and on-demand retail. So first and foremost, our strategic focus of retail business has never changed. I recommend you to that on-demand retail or food delivery should not be considered as a stand-alone business. Instead, this should be viewed within the broader context of JD overall retail capability and service experience.

So our attempt in the on-demand retail, including food delivery has a -- should have a positive impact on enriching our consumption use case, establishing capabilities, meeting our users' diverse demand and enhancing our user experience. In terms of consumption use case, on-demand retail is a natural extension of our core retail business, and food delivery is one of the high-frequency services within the on-demand retail business.

It can enrich our service -- user service touch point, provide higher quality offerings. So therefore, enhance user stickiness and engagement on our platform, so in long term, can increase our user value.

From the capability building perspective, we focus on further leveraging and enhancing our existing fulfillment and delivery infrastructure. The faster and more flexible on-demand delivery capability serves as a strong complement to JD's efficient 211 fulfillment network and ability. Our goal is to improve the overall efficiency of the delivery network. Both our core e-commerce business and on-demand retail will benefit from this.

From a user perspective, we have observed the demand from our user for high-quality food delivery services. So meeting users' differentiated needs can further reinforce their trust in JD, complementing user mind share of our core e-commerce business.

So regarding the pace and impact of our attempt in on-demand retail, first, we'll prioritize serving JD existing user base through expanding consumption scenarios and supply diversity, therefore, increasing purchase frequency and user stickiness. We are -- we have also observed the demand for high-quality food delivery. So with a stronger emphasis on food safety, we target to enrich supply for high-quality chain restaurants by recruiting and supporting premium merchants, enhancing delivery riders' welfare.

This initiative will gradually establish a differentiated user mind share of high-quality food delivery. In terms of pace of the business, we will further develop differentiated capabilities and business models based on our existing e-commerce infrastructure. For food delivery, it's still in a very early exploration stage. We are making strategic and disciplined experiments and investments. So we'll retain flexibility to adjust our approach, as the business evolves, and we'll provide updates to investor and analysts in a timely manner. But we believe in the long term, our objective has always been enhancing shareholder value and the company profitability.

Your next question comes from Jialong Shi from Nomura.

[Foreign Language]

DeepSeek large language model has been widely deployed by many Chinese Internet companies. Just wondering what JD's strategy on AI? And has JD deployed or plan to deploy large language model to any of your business? What are the -- what impact should we expect from AI deployment in the near and the long term?

[Interpreted] Jialong, that's a very good question. So JD.com has always been active driving for business innovation, efficiency improvement and cost reduction through technology. We have widely adopted AI technology across various business scenarios, which is driven not only by the top-down initiative from the company, but also the bottom-up adoption and utilization by our employees.

So due to our differentiated business model, we have a deeper knowledge in supply chain. So our active AI adoption is leveraging this in-depth supply chain know-how and our operational data as well as more diverse retail and supply chain use case. So just to give you some example on the user front to enhance user experience, we have restructured search and recommendation system for JD Retail through AI, which resulted in increase in search result satisfaction and traffic distribution efficiency.

Additionally, we have launched AI shopping assistant called Jingyan, an AI avatar, to provide users with more comprehensive product information, professional recommendation, therefore, lower the cost of search and select product for them. So in terms of helping merchants and providing tools for merchants, we have provided 24/7 AI-powered operation agency service and AI system tools for merchants, covering the entire process from product launch, order management, after sales service, customer support to data analysis.

Our AI tools include sales forecasting, AI marketing campaigns, AIGC platform for marketing content, AI pricing, AI customer service and more. So these tools are helping our merchants enhance their operational efficiency and reduce costs. So in terms of our supply chain management fulfillment, our AI algorithm is improving the accuracy of matching demand and supply. And we also continue to increase the logistic automation level.

We have deployed proprietary industry robotics in many of the key production segments in our fulfillment center to improve operating efficiency and lower fulfillment cost for JD and the entire industry. Also at the same time, our team is extensively integrating -- proactively integrating AI into various daily workflow and processes to boost efficiency-induced cost.

For example, AI has significantly enhanced productivity in specific workflows such as short video content reviews, and employee reimbursement. Also, our developers are leveraging AI programming assistant to compel, read and optimize coding more efficiently. So this AI and technology innovation and applications -- we are just started with this AI and technology innovation applications. There are many more to come, and AI is playing an increasingly important role within JD's overall operation, consistently enhancing user experience, driving growth and improved efficiency over the long term.

Your next question comes from Alicia Yap from Citigroup.

[Foreign Language]

How should we think about the year-over-year growth rate for the electronics category versus the year-over-year growth rate for your general merchandise category for 2025? Second question is, can management update us on JD latest shareholder return progress and the thinking?

[Interpreted]

Thank you, Alicia, for your questions. First, over the years of development, JD has become a well-established e-commerce platform that covers all kinds of categories. We have built user mind share and a differentiated competitive edge for both electronics and home appliances and general merchandise categories. Different categories are also subject to different growth and development trends within their respective industries.

For JD retail business, through each category's joint efforts to improve product offerings, price competitiveness and providing better service to users, the JD platform as a whole will have stronger user trust and mind share. Our Q4 results speak a lot about what I just said.

In the quarter, we saw double-digit growth across revenues of electronics and home appliances, also revenues of general merchandise and our quarterly active customers as well as our service revenues. In 2025, in terms of electronics and home appliance category, with our differentiated strength in supply chain and user mind share, we will be able to serve more users, improve user experience and continue to gain market share, while it's expected that this category will see certain high base impact in the second half of the year.

For general merchandise category, such as supermarkets, fashion products and home goods, we expect its robust growth momentum to sustain in 2025. General merchandise will be our important growth driver for this year and going forward. In addition, JD has multiple growth drivers. We see opportunities in our user base expansion, platform ecosystem development and our explorations in categories and new businesses.

These will help to fuel our long-term sustainable growth. In terms of shareholder return, in 2024, we were committed to returning value to our shareholders through both dividend and buybacks. This was mainly attributable to our healthy business progress and profit expansion. To recall, our annual dividend for the year of 2023 was USD 1.2 billion in aggregate amount.

And we just announced that the annual dividend for the year of 2024 would increase to around USD 1.5 billion, which translated to USD 1 per ADS, representing 32% year-on-year increase on per share level. In addition to that, we also accelerated share buybacks in 2024. We bought back 8.1% of our outstanding shares for a total amount of USD 3.6 billion. In 2025, we will remain committed to shareholder returns. For the buyback, our ongoing USD 5 billion share buyback program will be fully used in 3 years as planned. For dividend, we will continue to follow our annual cash dividend policy. This demonstrates our confidence in JD's long-term development.

Your next question comes from Thomas Chong from Jefferies.

[Foreign Language]

My first -- congratulations on a strong set of results. My first question is that we have been seeing a performance for trade-in program and subsidies for home appliance and smartphones is doing very well during the Chinese New Year. On the other hand, the retail sales data also missed expectations. Can management share your thoughts about the latest policies as well as the trend in consumer sentiment? My second question is about 2025 earnings outlook as well as the margin trend over the next few years.

[Interpreted]

Thomas, as you have noticed, the government have launched many supportive policy, and especially in yesterday's government work report, several economic goal was mentioned and with a heightened emphasis on boosting consumption, particularly emphasizing on continued consumer trade-in program. So also early this year, several indicators suggest that consumer market has continued to show steady growth.

So we have -- on JD, we have also seen very similar improved consumer demand momentum. So -- while in short term, we believe there are still challenges on the macro side. But in the long term, we remain very optimistic about consumer sentiment. As you know, China's consumption market is resilient with huge potential. The recent policies launched by the government will continue to take effect and ultimately reach out to consumer and gradually boosting their purchasing power and willingness to spend, which will provide us with significant growth opportunity.

[Interpreted] So in terms of our future profit performance, first of all, for 2025, we will continue to improve our supply chain efficiency in core categories to unlock our potential in profit expansion. At the same time, we will continue to invest in our long-term growth with financial discipline.

In terms of our long-term margin target, as we shared before, we believe it will reach a high single-digit level over time. Our steady profit expansion last year made us more confident in achieving this target. It also showed that we have great room to further improve our profit performance.

In the next few years, we will continue to focus on improving our supply chain efficiency to drive steady margin expansion. Specifically, our 1P business model will help to improve our supply chain efficiency. JD's gross margin has been going up for 11 quarters in a row. This is mainly attributable to the increase in our product sales gross margin and JD Logistics optimization in cost and efficiency.

We believe that as we continue to increase our supply chain efficiency, it will help to further reduce costs and enhance efficiency across the entire industry chain. This will not only enable us to better serve our business partners and users, but also lead to improvement in our profitability. In terms of better margin performance of different categories, we believe many of our categories, including supermarkets, still have a lot of room to further uplift their margins.

Even for more established categories such as electronics and home appliances, there is room for further improvement as well. Finally, in terms of mix of 3P versus 1P, as the proportion of our 3P business steadily goes up over time, it will also benefit our margin performance.

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

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

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

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