JD earnings call for the period ending March 31, 2024.

JD.com (JD 2.92%)

Q1 2024 Earnings Call
May 16, 2024, 8:00 a.m. ET

Contents:
Prepared Remarks
Questions and Answers
Call Participants

Prepared Remarks:
Operator

Hello, and thank you for standing by for JD.com's first quarter 2024
earnings conference call. At this time, all participants are in listen-only
mode. After management's prepared remarks there will be a question-
and-answer session. Today's conference is being recorded.

If you have any objections, you may disconnect at this time. I would
now like to turn the meeting over to your host for today's conference,
Sean Zhang, director of investor relations. Please go ahead.

Sean Zhang -- Director of Investor Relations

Thank you. Good day, everyone. Welcome to JD.com first quarter 2024
earnings conference call. For today's call, CEO of JD.com, Ms.

Sandy Xu, will share her opening remarks. And our CFO, Mr. Ian Shan,
will discuss the financial results. Then, we will 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 the IR
website, which applies to this call. We will 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?

Sandy Xu -- Chief Executive Officer

Thanks, Sean. Hello, everyone, and thanks for joining us today to

discuss our Q1 2024 results. We kicked off the year with encouraging
momentum in Q1. Our top-line growth accelerated and market share
expanded.
While our bottom line trended healthily in the quarter, more importantly,
our users showed strong enthusiasm for our further improved shopping
experience and differentiated services. And our net promoter score, the
NPS, notably improved year on year. This is a result driven by our strong
execution against evolving industry dynamics. Our team stayed focused
on our own strengths, strategies, and the pace of development, and
continued to drive steady progress across all our strategic initiatives in
improving user experience, press competitiveness, and platform
ecosystem.

Our strong execution is reflected in our improved category performance

in Q1. To start with, our general merchandise had a great quarter as our
supermarket category returned to healthy growth, while fashion and
home goods maintained robust momentum. Particularly, the bounce back
of our supermarket category is a great example of how we are able to
drive strong business performance by focusing on the key aspects of user
experience namely product quality and selection, price competitiveness,
and service quality. After spending the past year on strengthening
procurement capabilities and upgrading fulfillment networks and
operating efficiency, our supermarket category recorded double-digit
GMV and revenue growth in Q1 with increased order volume and
shopping frequency.

We expect supermarket's momentum to continue throughout the rest of

the year and it to remain an important growth driver in the long run with
massive time. Our electronics and home appliances category remains
resilient in Q1. We are confident in our market-leading position and
proven supply chain capabilities in this category. And we will continue
to focus on our own strategies to scale the business and profits with
differentiated value-add services, such as one-stop trade-in services, new
product launches, more competitive price offerings, and a more dynamic
platform ecosystem.

Now, let me share some operating highlights we achieved in Q1 in

executing on our strategies. First, user engagement. We are excited to see
a series of positive signs in both our user base and user behavior in Q1.
Our quarterly active customers delivered another robust growth year on
year during the quarter, driven by growth across all user groups,
including new users, existing users, as well as our PLUS members.
As to user behavior, shopping frequency on our platform delivered a
substantial double-digit year-on-year growth in Q1, more than offsetting
the decrease in average order value as a result of our low price offerings.
This led to a relatively stable ARPU in Q1 compared to the same period
last year. In addition, driven by our expanding user base and shopping
frequency, our order volume continued to increase at a double-digit rate
year on year in Q1, a pace we have seen for three consecutive quarters.
This robust momentum with users makes us confident to say that our
relentless focus in user experience are paying off.

We rolled out a number of user experience initiatives, and the team made
solid progress in executing them. As such, our NPS continued to rise in
Q1 on both 1P and 3P. We believe this is an important driver of our
sustainable growth along the way. We are leveraging our core
capabilities in supply chain to differentiate user experience on our
platform.

For example, the integrated trade-in services we provide in our

electronics and home appliances category are at an industry-leading
level, and we are further working on this to provide users hassle-free
services, including coordinated delivery, installation of new devices, and
dismantling of used devices. In addition, our supermarket category also
made full use of its supply chain to roll out differentiated services,
including direct shipment from suppliers to end users [Foreign language]
and 24-hour fresh milk delivered to users since production. Among
others, our service offerings are catching up on the 3P side as well. For
example, our 59 RMB threshold for free shipping now also covers
almost all of the 3P products on our platform.

We also made progress to expand coverage of our free doorstep picking

up for return service among 3P merchants. We are encouraged to see 3P
user experience on our platform continue to improve and our 3P NPS
score trended upward in the quarter. Moving on to our low price
offerings. Our price NPS continue to increase in Q1, both sequentially
and on a year-on-year basis, as our improved price competitiveness
increasingly resonates with users.

Meanwhile, growth of our user base in lower tier cities accelerated in

Q1, exceeding our growth rate in higher tier cities. Order volume and
shopping frequency generated by users. And lower-tier cities continued
to record double-digit year-on-year growth in the quarter. Faster than
that is our total users.

Moreover, growth of low ticket-sized order volume continued to

accelerate meaningfully in the quarter. All this reflects our increased
attractiveness to price-sensitive customers and our abilities to serve them
effectively. With our 1P supply chain capabilities and enriched offerings
of 3P, we are strongly positioned to pursue low price yet sustainable
way. This is the essence of retail, the core of JD business model, and a
key competence that helps us stay ahead of price competition.

Next, moving on to our platform ecosystem. We were encouraged to see

our active merchant base continue to rapidly expand on our platform in
Q1, driven by our effective supporting measures and optimized operating
tools. Both our 3P user base and 3P order volume continued to grow at a
faster pace in Q1 compared to previous quarters. Our marketplace and
marketing revenues returned to a positive growth in Q1 as we navigated
one of the impacts in the past quarter.

This was primarily driven by the growth in our advertising revenues,

while commissions remained soft due to our strategy to prioritize
ecosystem development over monetization at the current stage. I want to
point out that the low 3P monetization rate at the moment does not
reflect the true potential of our marketplace and marketing revenues.
And we anticipate more upside going forward. That said, we maintain
our strategic priority of building a vibrant and thriving platform
ecosystem, where both our 1P and 3P merchants are adequately
incentivized to better serve users.

On a separate note, 2024 marks the 10th anniversary of our listing on

Nasdaq. Looking back on the past decade, our revenues have scaled up
significantly by 16 times from 69 billion RMB in 2013 prior to our
listing, to over 1 trillion RMB last year. Our non-GAAP net income
attributable to ordinary shareholders has expanded by an even more
impressive 157 times from 224 million RMB to 35 billion RMB. The
total amount we returned to our shareholders through dividends and
share buybacks has surpassed the total capital raised over the course of
the past 10 years.
And we have created full-time jobs for over 500,000 employees with
social insurance and housing fund benefits as of the end of 2023, a 13
times increase compared to 10 years ago. We are proud of our
achievements in the past as we created tremendous values to our users,
employees, shareholders, and the society as a whole. We have a clear
vision to navigate the next decade with our ever improving user
experience, stronger price competitiveness, and thriving platform
ecosystem. To conclude, 2024 is marked with our consistent strategies
and continued execution.

And we are pleased to kick the year off with a quarter of accelerated
growth and healthy profitability. As we focus on executing our
strategies, we will further improve the user experience which leads to
stronger demand share and user growth, thus helping to reinforce our
market position and expand our market share. This will keep us on a
sustainable path of healthy profit and cash flow, allowing us to continue
to execute and deliver for the rest of the year and the years to come.
With that, I will turn it over to Ian for our financial highlights.

Thank you.

Ian Shan -- Chief Financial Officer

Thank you, Sandy, and hello, everyone. In Q1, we delivered a solid

[Inaudible] both top line and bottom line. We also took extra steps to
return capital to shareholders. Since the beginning of the year, we had
repurchased a total of $98.3 million class A ordinary shares, equivalent
of $49.2 million ADS, for a total of $1.6 U.S.

dollars, amounting to around $3.1 of our ordinary shares outstanding as

of December 31st, 2023. We have also completed our $1.2 billion U.S.
dollar annual cash dividend payment in April 2024. This move
demonstrates our commitment to creating value for our shareholders
through shareholder return and, more importantly, through our
sustainable business growth over the long term, as we've done since our
listing on Nasdaq in 2014.

With that, let me turn to our Q1 financial performance. Our net revenues
grow by 7% year on year to RMB 260 billion in Q1. Breaking down the
mix, product revenues were up 7%. Within product revenues, our
electronics and home appliances category was up 5% in the quarter,
thanks to the resilience of mobile phones and home appliances but were
offset by the softness of PC due to industry headwinds.

Our general merchandise category returned to a solid new growth year

on year as supermarket categories rebounded to achieve double-digit
revenue growth in the quarter. Other categories of general merchandise,
such as fashion and home goods, also maintained strong momentum in
the quarter. Service revenues grew by 9% year on year in Q1, primarily
driven by logistics and other service revenues, which were 14% year on
year in the quarter. Marketplace and marketing revenues returned to
positive growth in Q1 as we've caught more 3P merchants and nurtured
our platform ecosystem.

Our advertising revenues resumed healthy momentum in Q1 as we

include traffic allocation efficiency on both our platform for both 1P and
3P merchants. Commission revenues under marketplace and marketing
continue to decrease at this stage due to our supporting measures to
merchants to cultivate our platform ecosystem. Now, let me turn to our
segment performance. JD Retail revenues increased by 7% year on year
in Q1.

I would like to highlight that even as we dedicate ourselves to low price

offerings, JD Retail's cross-margin continue to increase in the quarter.
Higher 1P product sales growth margin across almost all categories.
This, again, demonstrates the beauty of JD's business model. With strong
supply chain capabilities at our call, we're able to continuously expand
our economies of scale and pass the benefits to our users.

In addition, we continue to improve our user experience, including

lowering the threshold for free shipping, improve user engagement
through initiatives -- like our sponsorship of Spring Festival Gala, as a
result of these efforts. We achieved higher user shopping frequency and
increased order volume. JD Retail non-GAAP operating profit decreased
by 5%, and operating margin was down 50 bps year on year to 4.1% in
Q1, in line with our [Inaudible] moving on to JD Logistics, revenues of
JD Logistics increased by 15% year on year in Q1, with strong
momentum for both of its internal and external revenues. However, JD
Logistics non-GAAP operating margin increased to 0.5% in the quarter,
a meaningful improvement compared to a loss margin of 3.1% a year
ago.

This is the result of JD Logistics to the optimized fulfillment network

and operating efficiency, increased scale benefits, as well as healthier
revenue growth. Turning to new business. Please note that from Q1
2024, we start to report Dada's results on the new business. Therefore,
this segment mainly includes JD profit, Dada, Jingxi, and overseas
business.

Revenues of new business were down 19% in Q1, primarily due to the
adjustment of Jingxi business. Excluding the impact of the [Inaudible] of
JD property, non-GAAP operating loss of new business was RMB 670
million in the quarter, narrowing from RMB 846 million in the same
quarter a year ago. Moving on to our consolidated bottom line. Our non-
GAAP net income attributable to shareholders at group level came in at
RMB 3.9 billion, a 17% increase year on year, with non-GAAP net
margin coming in at 3.4% at 30 bps year on year.

This was primarily driven by increased gross margin, effective

investments in JD [Inaudible] and JD Logistics improved bottom-line
performance. Non-GAAP diluted net income or ADS grew by 19% year
on year in the quarter to RMB 5.65 [Technical difficulty]

Questions & Answers:

Operator

Ladies and gentlemen, we've lost connection with the speaker line.
Please hold, and the conference will resume shortly. Please go ahead.

Ian Shan -- Chief Financial Officer

OK, we're back. Sorry. So, our last 12 months free cash flow as of the
end of Q1 was RMB 51 billion compared to RMB 19 billion in the same
period last year. The year-on-year increase of free cash flow was mainly
due to our further optimized cash conversion cycle, improved
profitability, moderated capex, as well as seasonality factor.
Notably, our last 12 months inventory reached a historical low level of
29 days in Q1 compared to 32 days in the same period last year, which
also contributed to our increase in free cash flow. By the end of Q1, our
cash and cash equivalents, restricted cash, and short-term investments,
added up to a total of RMB 179 billion. To conclude, we're encouraged
by our solid results in Q1. And we're confident to deliver our operating
targets while staying focused on executing our long-term strategies.

May 24 not only marks the 10th anniversary of our listing on Nasdaq, it's
also a start of a new chapter for JD to serve more users and provide them
some parallel user experience by developing an ecosystem that fosters
the prosperity of both 1P and 3P. With that, I will turn it over to Sean.
Thank you.

Sean Zhang -- Director of Investor Relations

Sure. Thank you, Ian. We apologize for the breaking up for today's call.
So, for the Q&A session, you're welcome to ask questions in Chinese or
English.

And our management will answer your question in the language you ask.
We'll provide English translation when necessary for convenient purpose
only. In case of any discrepancy, please refer to management statement
in the original language. OK, Operator, we will open the call for Q&A.

Thank you.

Operator

[Operator instructions] Your first question comes from Ronald Keung

with Goldman Sachs. Please go ahead.

Ronald Keung -- Goldman Sachs -- Analyst

Thank you. Thank you, Sandy, Ian and Sean. I have a question on our
growth and then how do we balance growth and profitability. Let me ask
first in Chinese and then I'll translate my question.

[Foreign language] Thank you, management. I have a question on our

growth, and then how do we balance that with profitability. We've seen
many players this year, even our incumbents, I call them, each aiming to
grow faster than total retail and aiming to sustain market share. So, in
this overall industry, where everyone wants to grow faster than industry,
how do we see the key drivers for JD this year? Sustaining, regaining
market share across categories, electronic, whether it was a high base
last year, how do we see this growth? FMCG and general merchandise
just talked about the supermarket growth that Sandy mentioned.

How do we keep drivers to grow faster at an industry and from user and
frequency perspective, existing to new users? And how do we balance
this growth and profitability our targets for margins as more players
reinvest for growth? Thank you.

Sandy Xu -- Chief Executive Officer

[Foreign language] Thank you for that -- for your question. So, first of
all, I'd like to point out that China has a vast consumption market, and
this market continue healthy growth. And in the meantime, [Inaudible]
with over 300 cities in China boasting population of over 1 million
people. So, in 2023, we see that China's penetration of online physical
goods sales stood at around 30%.

So, this is a figure expected to rise as the e-commerce platforms and we

enhance our efficiency and evolve our business models. [Foreign
language] And category-wise, we see certain categories, such as
computers and home appliances, have a higher than expected potential to
further penetrate online despite that we think these categories already
have a relatively high online consumption rate. [Foreign language] And
moreover, significant room for online penetration exists in some other
categories like we can see, supermarkets, home goods, automotive,
garden and outdoors, and services, these categories have a large potential
to continue online penetration. And these are also among the fastest
growing categories of our platform.

So, with that, I want to say that we believe we are still facing a massive
total addressable market. [Foreign language] So, in terms of JD's core
competitiveness, for JD, we are China's largest retailer leveraging our
one-day business. We are able to leverage our offline chain capabilities
to provide users with a premium and differentiated user experience and
to excel in cost and efficiency management. It also paves way for us to
develop our platform ecosystem.
[Foreign language] So, as discussed in the last quarter, over the past
year, we centered around user experience, low price offerings, and
platform ecosystems. And we've taken a set of proactive moves with a
focus on business health, including enhancing our [Inaudible] reducing
procurement costs, and introducing various customer service upgrade,
such as lowering thresholds for free shipping, upgrading monthly price
guarantee service, offering free doorstep pickup for returns, and
implementing employee policies among others. [Foreign language] So,
all our efforts improving user experience has come up with some
positive changes in our user growth and engagement. So, in this Q1, both
JD Group's and JD Retail's quarterly numbers experienced double-digit
growth, continuing the trend of high-growth rate from Q4 last year.

So, at the same time, we've also observed a clear uptake in users'
shopping frequency as they engage more actively on our platform.
[Foreign language] Furthermore, our NPS has shown consistent
improvement. So, in Q1, our NPS saw meaningful improvement on both
1P and 3P sides on a year-on-year basis, as well as a sequential basis.
While the influx of new members of our platform as we pushed forward
our platform ecosystem last year led to some fluctuations in our NPS.

Whereas our ongoing improvement in platform governance and risk

control have driven an upward trend in user satisfaction. [Foreign
language] So, in summary, our efforts have yielded some promising
outcomes as we see users might share resumed momentum toward JD's
ability to provide more diverse, affordable, and high-quality products at
faster speed. It also gives us the confidence to achieve long-term growth,
trajectory, and market expansion. [Foreign language]

Ian Shan -- Chief Financial Officer

[Foreign language] This is Ian to address the second part of your

question. To follow up on what Sandy just said, we're confident that our
'24 full year growth will outpace China's total retail sales of consumer
goods. And we will deliver stable profit for both JV Group and JV
Retail. And on top of that, we will remain committed to disciplined
investments aimed at enhancing user experience and expanding our
money share.
So, in JD's view, business growth and profitability is more reinforcing
than contradictory. JD's business model is based on supply chain with
user experience at the core. [Inaudible] both supply chain efficiency
capabilities and user experience. So, we firmly believe that our long-
term sustainable profit will stem from our strong market position and
exceptional user experience.

[Foreign language] So, for JD.com, from our perspective, we believe

that by constantly dedicating energy and resources to enhancing product,
price, and service, we can deliver superior user experience. And this, in
turn, drives up GMV growth and expands our market share. And as our
business size expands and the market position gets enhanced, our
advantage in supply chain and efficiency is further strengthened, which
leads to healthy profit growth. And this enables us to continue to invest
in product, price, and service to constantly improve user experience.

This forms a virtuous cycle among business growth, user experience

enhancement, and long-term profit growth. [Foreign language] So last
year, much of our efforts was directed toward internal enhancements,
including boosting operational efficiency, streamlining workflows, and
enhancing long-term cost competitiveness. And through this process, we
identified significant opportunities to further improve our operating
abilities, and we believe that strengthening these capabilities is crucial
for our success in housing profits and long-term competitiveness.
[Foreign language] So, in terms of business focus and investment, since
last year, we've been working on several key initiatives.

We've lowered the threshold for merchants to onboard our marketplace

while we help to enhance the support measures for SME merchants. In
addition, we've provided them with a range of effective tools to operate
our platform. Therefore, we're able to increase the variety of product
choices available to our customers. And regarding user experience
enhancement, we've implemented a series of gradual updates of various
customer services.

These include lowering the threshold for free shipping services for 1P,
improving the functionality of our one-click price guarantee feature,
introducing free doorstep pickup for return services for both 1P and 3P,
and implementing refund only policies, and more. And these industry-
leading service innovations have resulted in a notable increase in user
satisfaction as evidenced by our rising MPS. [Foreign language] So, to
conclude, from the long-term perspective, we will consistently leverage
the advantage we have in our 1P and continue to promote our platform
ecosystem to strengthen the virtuous cycle between our business scale
and profit growth. And we're confident to achieve that objective in the
long term.

Thank you. Next question, please.

Operator

The next question comes from Alicia Yap with Citigroup. Please go
ahead.

Alicia Yap -- Citi -- Analyst

Hi, thank you. [Foreign language] Good evening, management. Thanks

for taking our question on the solid results. First question is, if the
appliance trade in policy were implemented, amid the cautious
consumption spend remain, will the policy effective enough to boost
consumer to really spend? And what could be the incremental growth JD
expect to be able to enjoy from the trade-in policy? The second question
is management previously knows that that FMCG will be an important
category to support growth for JD this year.

Other than low base and easier comp, do you think consumer will really
spend more income on FMCG category? If consumer demand remains
last year, will FMCG still be the key growth driver this year? Do you
anticipate JD to take more share in this category? Thank you.

Sandy Xu -- Chief Executive Officer

[Foreign language] Thank you, Alicia, for your question. First on the
trading service. So, as you know, it has been about a decade since China
last introduced nationwide trading initiatives. So, for many Chinese
households, it's now time to replace their home appliances and other
durable goods.

And these old products are often low in functionality, high in energy
consumption, and may pose risks to health and safety. However, due to
the high cost of replacement, many families continue using them for the
moment. [Foreign language] This trend, the introduction of a new
trading policy, offers incentives to address this long-standing demand. It
will encourage Chinese families to trade in their old items for new ones
at a lower cost, thereby, enhancing the overall quality of life for many
people.

[Foreign language] So, currently we've seen that governments at all

levels are actively promoting the implementation of trading policies. So,
we see the Ministry of Commerce has released the action plan to
promote trade-ins for consumer goods, while local governments are also
conducting research and making arrangements. And we're also
coordinating with different levels of governments, and we look forward
to the introduction of additional trade-in subsidizing measures that will
directly benefit Chinese consumers. [Foreign language] Meanwhile, at
JD, we have collaborated with over 100 brands, including the top brands
like Haier Media, Gree, and so on, to launch a trading alliance for
household appliances and home goods.

And this alliance has so far launched a trade-in subsidizing promotions

in 20 cities and regions across China, with the goal of offering more cost
saving-and hassle-free trade-in services to consumers nationwide.
[Foreign language] At JD.com, we've also been building and refining our
trading service capabilities and leveraging our strengths in supply chain,
logistics, and services. We continuously elevate the trading service
experience to new heights. So, we introduced integrated one-stop trading
service, which includes free doorstep pickup, dismantling, handling of
the old goods, and free delivery and installation of new goods, etc.

And moreover, there are no restrictions on the treating items, original

purchase channel, brand, age, or condition. So, with these offerings, JD
has shortened the treating process no more than two times of user home
visits. So, this is a very unique strength we can provide our services to
our users because we're not only having retail services, but also logistic
services. And on the back end, we have also done a lot of work over the
years to provide the systematic support.

So, all of these infrastructures and abilities enable us to provide such a

seamless treating services to our consumers today. [Foreign language]
So since 2023, more than 16 million users have chosen JD to trade in
their old appliances for new ones. And the first time users of our trading
service has also recorded a 200% year-on-year increase [Foreign
language] So, in 2023, a trading program accounted for mid to high
single-digit percentage of JD's home appliances sales. And with the
government actively promoting this initiative this year, we anticipate
more incremental sales to our home appliances category.

And this trading-driven sales are expected to comprise a higher

percentage of our overall sales in this category. [Foreign language] At
FMCG question, so, first of all, I want to share from the consumption
trend standpoint, the overall FMCG sector maintains positive growth
momentum. According to the Q1 MBS data, FMCG categories,
particularly basic living goods, have shown robust growth. And FMCG
and fresh produce are the two sectors that enjoy a rapid increase that
enjoy rising sales, whereas they have relatively low online penetration.

So, we've seen a lot of online platform and e-commerce players. We are
steadily capturing market share from traditional offline markets.
[Foreign language]And in light of JD's Q1 data, the anticipated swift
rebound of FMCG played a significant role in driving the overall growth
of our general merchandise sales and revenues, leading to our general
merchandise growth rate outperforming the corresponding industry
growth released by MBS. [Foreign language] And in terms of our
strategies for the supermarket categories, we've seen significant
enhancements in this category as we delve in deeper into each
subcategory to enrich product offerings and reduce procurement costs
and passing on the benefits to our consumers.

And additionally, to address user demand and consumption pain points,

we are exploring various measures such as the open sourcing of
products, customize the development of new products to provide
consumers with high-quality products, competitive prices, and excellent
services. [Foreign language] So at the same time, our logistic fulfillment
network reform has also empowered us to lower the threshold for free
shipping and tailored to the characteristics of different product
categories. We are undertaking fulfillment network reforms. As JD's
business scale and category mix have evolved significantly over the past
years, we've adjusted the algorithm and design of fulfillment network
every few years.
So, for instance, our unique city-based warehouse model offers a
superior shopping experience compared to the industrywide, sending
nationwide from one place model. However, our city-based warehouse
model requires us to improve scale efficiency, to reduce parcel moving
times from one place to another, and reduce the delivery distances
through algorithm upgrades, and thereby continuously reducing overall
fulfillment costs. [Foreign language] So, all in all, we believe the
essence to continue to promote the growth of the supermarket category is
to return to the essence of retail, which is to focus on the better cost
efficiency and users experience. So, looking ahead, so despite, fierce
competition in the supermarket categories and the industry players
adopting various strategies, we remain confident in the growth potential
of this category and to view the supermarket category as the crucial
driver of our overall growth.

Thank you.

Sean Zhang -- Director of Investor Relations

Next question, please.

Operator

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

Kenneth Fong -- UBS -- Analyst

Hi, Sandy, Ian, Sean. [Foreign language] Thank you, management, for
taking my question. I have two questions. The first one on content.

J.D. has been trying different means on the e-commerce content that
have been very innovative and differentiating [Inaudible] like
merchandise, live streaming, and recently Richard's AI live streaming.
We see very positive results. Can management share with us the progress
and upcoming strategy for content investment into our core e-commerce
platform? And my second question is about shareholder return.

We have substantially stepped up shareholder return and repurchased 1.2

billion worth of shares last quarter. How should we think about the pay
scale and sustainability of the buyback going forward? Thank you.

Sandy Xu -- Chief Executive Officer

[Foreign language] So, thank you Kenny. Let me share some thoughts on
live streaming and content ecosystem. So, for JD Retail, we announced
our commitment to strengthen our content ecosystem at the beginning of
the year, aiming to offer users more diverse and comprehensive content
experience alongside our superior shopping experience because we
believe that by offering a premium content, we attract new traffic to our
JD's platform and reduce our users acquisition costs and benefit our
platform ecosystem. And we also believe that rich content also play a
crucial role in increasing user engagement and time spent on our
platform, and consequently enhancing our traffic distribution, efficiency,
and conversion rates.

[Foreign language] So, our attempt on live streaming as was mentioned

with the popular sessions led by our category managers during the
Singles Day Grand Promotion and our recent showcases featuring an AI
digital representative of our founder, Richard, exemplify our
commitment to content innovation, leveraging our JD's technological
capabilities. And notably, Richard's avatar live streaming, which marks
the industry's first live streaming hosted by an AI avatar of an
entrepreneur, drew over 20 million views within the first hour, which
also showcases our AI and other capabilities and these applications in
the e-commerce scenarios. So, moving forward, we will persist in
making technological investments centered on JD's core business,
including our large language model, etc. [Foreign language] So, we're
still at the early stage of our content ecosystem building.

And we hope to provide greater exposure and more traffic to high quality
and original content and its creators, so thereby adding value to our
consumers by helping them discover products and to make informed
shopping decisions.

Ian Shan -- Chief Financial Officer

[Foreign language] And so, thank you. To answer your question on the
shareholders returns, I would like to draw your attention, our three-year
plan for the $3 billion plan. And so far, we still have around $2.3 billion
we scheduled in the years ahead. And year to date, we repurchased a
total of 98.3 million class A shares -- ordinary shares equivalent to 49
million ADS for a total of 1.3 billion in open markets from both Nasdaq
and Hong Kong, accounting for approximately 3.1% of the total ordinary
shares outstanding at the end of 2023.

[Foreign language] So, in the long term, our returns will focus on our
sustainable, healthy business growth, profitability, and dividends, share
buybacks, etc. So, we will continue to reward our shareholders through
various means in sharing the success of JD's business.

Sean Zhang -- Director of Investor Relations

Next question, please.

Operator

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

Thomas Chong -- Jefferies -- Analyst

[Foreign language] Thanks, management, for taking my questions. My

first question is about industry and industry competition. How should we
think about [Inaudible] and also, how we should think about the industry
landscape. How is it different versus this year? My number two question
is about ecosystem strategy, the management comments about the
number of 3P merchants, as well as contribution in the coming quarters.

Thank you.

Sandy Xu -- Chief Executive Officer

[Foreign language] So, thank you, Thomas. Let me share some plans of
the upcoming JD 618 grand promotion. So, this year's grand promotions
theme is quality and affordability. We've noticed a trend in the market
where many low-priced products appear identical.

So, as we continue to implement our low-price strategy, our focus for

this year's shopping festival is to highlight JD's ability to offer
differentiated, good products at inexpensive price with excellent service.
[Foreign language] And this promotion approach and pace will have
some difference from the previous years, and all arrangements will be
centered on enhancing user experience. And the event will kick off at 8
p.m. on May 31st, with products readily available for immediate
purchase.

[Foreign language] And we will also remain committed to cultivating

strong partnerships with our brands and the suppliers to further
solidifying JD's market presence and users mindshare. And we will also
set efforts to support SME merchants and to support more than double
the number of merchants to achieving over 1 million sales and to support
more partners to achieve their growth objectives. [Foreign language] So,
overall, we are optimistic about the overall performance for this year's
618 promotion. And we believe that for different market players, we
have different strategies in the everyday sales and during the grand
promotions.

What makes JD stand out is still our advantages in supply chain and the
reliability we can offer to our users. [Foreign language] So, we firmly
believe that JD's business model, based on robust supply chain and user-
centric experience is resilient and sustainable across various economic
cycles, and we're confident in our ability to consistently gain market
share over the long term with this business model. Thank you.

Operator

We are now --

Sean Zhang -- Director of Investor Relations

Sorry, we haven't been to the second part of Thomas question.

Ian Shan -- Chief Financial Officer

[Foreign language] To address the question about the platform

ecosystem, so our initial focus is to expanding our ecosystem scale by
attracting merchants. We are actively working on onboarding more
merchants and support them in improving their business performance on
our platform by offering a diverse range of products on our platform to
our customers. And over the past year, we've successfully attracted a
significant number of new merchants by continuously streamlining our
onboarding processes, reducing their store operating costs, improving
operational efficiencies, and providing traffic support. So, in this quarter,
the number of active merchants on our platform exceeded 1 million, with
the number of active merchants experiencing accelerated growth for four
consecutive quarters.

And admittedly, our merchant count may not be as high as some other
platforms, and we remain committed to further enhancing our merchant
recruitment efforts and supporting their activities on our platform, and
we anticipate continued growth in the number of merchants in the
following quarters. [Foreign language] So, for the second phase of the
platform ecosystem building involves encouraging user participation.
Ultimately, we aim for it to become a natural process, a natural choice
for our users to purchase either self-operated or third-party products.
Thus far, we've observed the favorable interactions between our users
and third party offerings.

In Q1, we achieved accelerated growth in both 3P transaction users and

3P order volume. Meanwhile, NPS for 3P has continued to improve.
Since the second half of last year, we've been collaborating with our
merchants to pioneer service innovations. This has led to the
implementation of services like late delivery compensation, refund-only
policies, and free doorstep pickup for returns and more services, all of
which have constantly elevated our shopping experience for our top
users.

[Foreign language] And lastly, we also believe that we will witness an

increase in pop sales and revenues. And the prerequisites for this to
happen is that we can truly help our merchants to scale up their
businesses. From the rapid expansion of merchant members, to active
user participation, and to rapid growth of pop GMV, all of this will
require time and patience. With the gradual improvement of our platform
ecosystem in the long run, the proportion of our 3P orders and GMV will
eventually surpass that of our self-operated products.

And this will also be a natural choice by our users. [Foreign language]
Leveraging our 1P business and the collaboration with merchants from
our 3P marketplace, we are able to foster a thriving platform ecosystem
and providing richer supplies of high-quality goods and to increase the
engagement of our users on our platform so as to achieve a virtuous
cycle. And we believe this virtuous cycle will be an important driver for
the continued growth of our long-term revenues and profits. Thank you.

Sean Zhang -- Director of Investor Relations

Thank you, operator. So, thank you, everyone, for joining the call today,
and thanks for your question. If you have further question, please contact
me and our team. We 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. [Operator signoff]

Duration: 0 minutes

Call participants:
Sean Zhang -- Director of Investor Relations

Sandy Xu -- Chief Executive Officer

Ian Shan -- Chief Financial Officer

Ronald Keung -- Goldman Sachs -- Analyst

Alicia Yap -- Citi -- Analyst

Kenneth Fong -- UBS -- Analyst

Thomas Chong -- Jefferies -- Analyst

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