2022-08-26 11:00Financial Data and Key Metrics Changes - Total revenue increased by 16.4% year-over-year to RMB 50.9 billion, driven by steady growth in core local commerce and new initiatives segments [11][12] - Annual transaction usage for the platform rose by 8.9% year-over-year to $684.7 million, with annual active merchants increasing to 9.2 million [1][2] - Adjusted EBITDA and adjusted net profit were RMB 3.8 billion and RMB 2.1 billion for the quarter, marking a transition from losses to profits year-over-year and quarter-over-quarter [12][16] Business Line Data and Key Metrics Changes - Local commerce segment revenue grew by 9.2% year-over-year to RMB 36.8 billion, with operating profit increasing by 39.7% year-over-year to RMB 8.3 billion [12][19] - Food delivery business achieved 4.8% year-over-year growth in order volume, with revenue growth outpacing order volume due to a shift towards premium restaurants and long-distance orders [12][19] - New initiatives segment revenue increased by 40.7% year-over-year to RMB 14.2 billion, primarily driven by the goods retail business [15][16] Market Data and Key Metrics Changes - The hotel and travel business experienced a 35% year-over-year decrease in domestic hotel room nights in Q2, but began to recover in June as pandemic control measures relaxed [8][9] - In-stock services saw a strong recovery, with in-stock QTB experiencing 15% year-over-year growth in July [23] - Average daily order volume in June recovered to levels seen at the end of the previous year, indicating a gradual recovery in higher-tier markets [22] Company Strategy and Development Direction - The company adjusted its business segmentation to better reflect its strategies, dividing operations into local commerce and new initiatives, aligning with resource allocation [2][18] - The focus remains on high-quality growth and operational efficiency, with plans to enhance supply chain capabilities and diversify product offerings [10][19] - The company aims to leverage its on-demand delivery network to support both food delivery and in-store shopping, establishing itself as a leader in local commerce [19][24] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery of core local commerce as pandemic control measures ease, with expectations for normalized growth [17][22] - The company is committed to supporting merchants and consumers during challenging times, emphasizing social responsibility and community support [10][17] - Future strategies will include optimizing marketing incentives and enhancing consumer engagement to drive recovery and growth [21][22] Other Important Information - The cost of revenue ratio increased to 69.4%, primarily due to improved gross margins in food delivery and retail [11][12] - The company maintained a strong net cash position of RMB 107.5 billion as of June 2022, with improved operating cash flow [16][17] Q&A Session Summary Question: Reason behind new segment disclosures and profitability of local commerce segment - Management explained that the new segmentation reflects business strategies and development stages, with local commerce contributing over 70% of total revenue and being the main source of operating profit [17][18] Question: Operating margin expectations for the second half of the year - Management indicated that while operating margins may decline quarter-over-quarter due to increased subsidies and lower order volumes from small restaurants, year-over-year margins are expected to improve [20][21] Question: Recovery trends for food delivery and hotel travel businesses - Management noted steady recovery in June, with food delivery order volume growth continuing into July and August, while hotel travel is expected to recover further if no widespread COVID resurgence occurs [22][23]