Hello and thank you for standing by for JD.com Second Quarter 2017 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. If you have any objections, you may disconnect at this time. I would now like to hand the meeting over to your host for today's conference, Ruiyu Li.

Thank you, operator, and welcome to our second quarter 2017 earnings call. Joining me today on the call are Richard Liu, CEO; and Sidney Huang, our CFO. For today's agenda, Mr. Huang will discuss highlights for the second quarter 2017. Following the prepared remarks, Mr. Liu and Mr. Huang will answer your questions. Before we continue, I refer you to our Safe Harbor statement in the earnings press release which applies to this call, as we will make forward-looking statements. Also, this call is including discussions for certain non-GAAP financial measures. Please refer to our earnings release which contains a reconciliation of non-GAAP measures to the most directly comparable GAAP measures. Finally, please note that unlike otherwise stated, all the figures mentioned during this conference call are in RMB. Now, I would like to turn the call over to our CFO, Sidney.

Thank you, Ruiyu. Hello, everyone. Thank you for joining us today. We are reporting another quarter of strong top-line growth, solid profitability and a remarkable free cash flow. Before I get into the financial highlights, let me first give you a quick update on JD Finance. We are pleased to announce the deconsolidation of JD Finance as a result of the legal ownership transfer of the business on June 30, 2017. All of our financial metrics in the earnings release have been revised to exclude the P&L impact of JD Finance, which is now reflected in a single line item for the discontinued operations. The financial highlights that I'm about to discuss are results from continuing operations unless otherwise noted. As this is also the first quarter of the adjustments, I will also highlight a few metrics assuming JD Finance is still consolidated so you can have an apples-to-apples comparison. During the second quarter 2017, our net revenue from continuing operations grew 43.6%, well above the 33% to 37% company guidance excluding JD Finance. This represents an accelerated growth rate from both our Q1 and 2016 Q2 year over year growth rates. If we add back the impacts on JD Finance, our revenue would have grown 45%. This strong growth was achieved through a highly successful June 18 anniversary sales season supported by robust growth momentum across our full category retail platform. Our direct sales revenues grew nearly 43% in the second quarter, led by home appliance, food and beverage, cosmetics, home furnishing and baby products. Our revenues from services and others increased 52% year-over-year, the fastest growth rate in the past four quarters, supported by higher advertising and marketplace commission revenues. If we add back the revenues from JD Finance, our total revenues from services and others would have…

The question and answer session of this conference will start in a moment. [Operator Instructions] The first question comes from Eddie Leung of ‎Merrill Lynch. Please ask your question.

Hi, good evening. Thank you for taking my questions. I noticed that the GMV per order continuing to improve, so just wondering if you could share a little bit more on the underlying drivers of this trend and does the trend applies to both 1P business and 3P business as well as Tripo [ph] electronics and general merchandise? Thanks.

Sure, Eddie. Yes, you're right, that the average order size as well as average purchase size per customer has been steadily increasing. This is actually by no surprise, as we continue to grow our user base and at the same time more and more of our existing customers are buying more. So in a time of faster new user acquisition, the average or ARPU will remain relatively stable. But as we continue to grow with the new customer adds becoming a smaller portion of your over customer base than your average revenue per customer will naturally increase. And this increase applies to all categories and both for 1P and 3P.

Your next question comes from Alicia Yap of Citigroup. Please ask your question.

Hi, good evening. Richard and Sidney, thanks for taking my questions and congratulation on another solid quarter. My questions are related to your international partnership. For example on Walmart, with your expanded cooperation with Walmart, can you share with us what kind of likely GMV or revenue upside that we could see, for example, from the inventory integrations and also the availability of the Walmart SKU selections now on the JD platform? And then, separately on these, for Walmart, any potential conflicts between the JD Walmart versus the Walmart in the Daojia O2O offering? Thank you.

Sure. For Walmart, we conducted very successful August 8, joint promotion. We achieved remarkable sales results. I think it was more than 10 times of the average volume in the latest month. But more importantly, also the order size increased more than 100% on that day. Our Walmart's collaboration with Dada also increased more than 200% during that day. So we had a lot of great results coming out of the latest promotion, which is just one example of our intent to collaboration. Now, because the new Walmart flagship store was just launched during second quarter, so the actual contribution to our overall GMV or revenue is still very, very small. But the growth rate has been very, very encouraging. And also, your question on Dada, there is no conflict at all. In fact, we have seen very robust growth not only on the number of stores connected to our Jingdong Daojia mobile app, but also the average store sales through Dada has been growing at a really, really fast pace. So we are very, very pleased to see the development on both JD side and also Dada side.

Next question comes from Alan Hellawell of Deutsche Bank. Please ask your question.

Great. Thank you very much. Just with regard to the gross margin, we're obviously internalizing the reclassification of fulfillment, expenses and then understanding the JD Finance deconsolidation. I think we flagged that 1P gross margins due to potentially particularly intensive promotions and rebating in the second quarter may not continuously trend upward. And that however linked with what is very - indeed very encouraging lift in net margin guidance just leads me to wonder how should we think about gross margins as we kind of get - move our way through these reclassifications as we move into the third and fourth quarters of the year? Thank you.

Sure, Alan, as we mentioned on the last earnings call and also previous earnings calls that we do expect our overall core operating margin continue to improve on an annual basis from now on, so you will see meaningful improvement on the annual basis for sure. So this is why we are raising our guidance this quarter. Coming back to Q2, you mentioned about first party gross margin. What we had mentioned also in the previous quarter is that Q1 overall margin was exceeded - has exceeded our expectations and we had full intention to reinvest that access return or access margin back to our consumers through more promotions and return value to our customers. So we did exactly that in the second quarter and you saw some results that our top-line growth was very robust and that is exactly what we had hoped. So with our preset of internal budget for our bottom-line improvement we will reinvest access to maximize on growth. That has been our strategy and that has not changed.

Next question comes from Eric Sheridan of UBS. Please ask your question.

Thanks for taking the question. Would love to get a little more detail about the partnership with Baidu artificial intelligence, what you think might do for the platform, medium to long-term with respect to the deployment of big data and how that might inform the shopping experience. Thanks, Sidney.

[Interpreted] Yeah, so he was saying that after we had the partnership with Tencent called the JingTen [ph] plan, we had partnered with Toutiao, which has tremendous traffic on mobile Internet as we announced before. And we also just partnered with Baidu. And we, in fact, expecting another major collaboration in the near future. So with the four strategic collaborations with probably the foremost - the highest the traffic entry points and our mobile internet. We expect 100% penetration to Chinese consumers or 100% reach to all the consumers in China. Now having said that, these collaborations are still especially Baidu and Toutiao are still in early stage. We do have a lot to work with - together with our partners. So in the near-term, we may not see very meaningful GMV contribution, but we are very confident with the border reach to the Chinese consumers, we will have very meaningful results. So every quarter, for example, even with Tencent, we have continued to improve the quality of our data collaboration through both a lot of closer partnership, and also artificial intelligence technologies, in that process improve the ROI, the quality of advertising results. So we are also expecting to launch our JD-Tencent 2.0 program, part of the Jingdong Chihua [ph]. So we can expect even better results for both data analytics and advertising results for both our brands and also for our companies to achieve better ROI.

Next question comes from Grace Chen of Morgan Stanley. Please ask your question.

Hello, hi, thank you for taking my questions. My first question is about the Q3 guidance, we know this that on a year-over-year basis, the Q3 sales guidance still represent very strong growth. But on a sequential basis, the mid-point - well, the sequential basis Q3 sales guidance implies it's down probably around 10% to 12% Q-o-Q. This compared with 4% to 6% sequential decline in the past two quarters. I'm wondering whether this represented new normal in the future given the more aggressive promotion in the second quarter. Also my second question is about the marketing dollars that we still - that the marketing expenses as a percentage of revenue increase a bit, and can you tell us what are the key category - product categories that are focusing on - that we are focusing on in the past quarter? Thank you.

Sure, yes. On Q3 sequential is actually the flip side of the Q2 sequential growth. So I did mentioned on the earnings call on my remarks earlier that we have observed increased seasonality patterns over the past couple of years, where Q2 and Q4 growth faster on top of very strong previous sales season. And then, as a result the sequential movement will also see a slightly larger kind of holdback. So this is all - it is becoming a new normal, for sure. On the marketing dollars, I mentioned that, even though it's higher 0.7% higher than previous Q2, in fact, it - if we use the same intensity, we'll probably have been GAAP profitable. But it is however consistent with our Q4 last year's intensity of promotion that marketing dollar is mostly actually spend incentives to our customers, mainly for the marketplace business, because there is not direct sales revenue against the marketplace sales volume. So any promotion incentives will go into the marketing dollars, and obviously other marketing activities during the sales season. So it's actually quite consistent, we see a lot of similarities with the fourth quarter last year both in terms of gross margin, operating margin and also our expense lines, if you take a closer look.

Your next question comes from Ronald Keung of Goldman Sachs. Please ask your question.

Thanks. Hi, Richard, Sidney and Ruiyu. Just I want to ask about your apparel strategies, could you share some of the initial targets - some targets that you've set with Farfetch through your investment? And whether you would focus more on growing the apparel segment through organic or could open - or is open to any acquisitions to grow the apparel segment further? Thank you.

[Interpreted] So investment in Farfetch is really a part of our effort to fulfill the demand of Chinese consumers for luxury products, in fact, we are also preparing for our own luxury platform to be launched later this year. Yes, so you may wonder, we have two platforms would they be competitive or have any conflict? We believe there won't be, because Farfetch - the specialty for Farfetch is they have collected a huge number of boutique stores along the world, and the part of selections in - on the Farfetch merchants are quite unique. And we have observed that vast majority of those selections not available in China. And for JD, our own planned luxury platform will be focused on luxury products available through the official channels in China of those basically the Chinese subsidiaries of the global luxury brands. We believe, we will acquire both approaches, both needs of - both types of selections to meet the rising demand of consumer - Chinese consumers for luxury brand. So if we see more similar opportunities high quality platforms like Farfetch, we clearly don't rule out the possibility of other investments. Yeah, so obviously we will continue to pay more attention to our own apparel and footwear business. This is one area, as we mentioned previously, we were trying to make some adjustments since last year to eliminate the brushing activities. This happened to be the area - the category where production activities are more prevalent throughout China. So we continue to enhance our technologies to detect this kind of activities. And at the same time our focus this year is to key accounts as I mentioned earlier and make sure that they are successful in JD's platform. And using those key accounts to bring better and better - to facilitate growth for medium and smaller merchants on a platform. If we don't focus on the key accounts we are - we think the current traffic may not support the entire merchant base, especially for this particular category. So this is our strategy, but we have seen very, very positive results out of key accounts growth rate and which in turn is bringing more traffic to us for the mid-sized merchants as well. Right and the one side benefit of anti-brushing effort is actually benefiting the key accounts and the major brands. So because major brands do not conduct those activities, so as the last - the smaller merchants traffic and activities reduce the major accounts, will actually benefit from enhanced exposure. So in some - on apparel category, it's now reached a very healthy state, which is what we had hoped and worked, so worked for, so we are expecting a very healthy growth trajectory from now on.

The next question comes from Chi Tsang of HSBC. Please ask your question.

Hi, this is Chi Tsang. Thank you very much for taking my question. I was wondering if you could comment on what type of data you might share with your 3P merchants to enable them to driver higher conversion on your marketplace. In particular, what type of customer segmentation and targeting can you offer? Thank you.

Yeah, so we mentioned before that we have been improving the data analytic tools for our merchants. So in this area, because we are relatively younger in the marketplace business, but over the years we have collected and developed many, many very useful tools for our merchants. And this year you will see more and more of those products being introduced to our merchants, especially key accounts. And so we are making very good progress.

Next question comes from Jin Yoon of Mizuho Securities. Please ask your question.

Evening, guys. Sidney, did I hear you correctly the JD Finance impact was about 200 basis points of gross margin would have been over 15% if it was included. So should that be the same impact on the second half for the year or is there certain seasonality regarding the impact of JD Finance? Thanks, guys.

Yeah, no problem. The impact is from two elements there. One is JD Finance and the other is the reclassification of third party logistic service cost, which was grouped in fulfillment expenses. And for that line item is roughly 1% as we actually previously always mentioned, so this time we actually did a lot of detailed work to allocated in a more methodic way, so that we can re-class them back into the cost. So that has a roughly more or less one percentage point impact and then the remaining from JD Finance, which should be around 60, 70 basis points.

Next question is from Zoe Zhao of Credit Suisse. Please ask your question.

Thanks management for taking my question. We see very strong cash flow this quarter. But then since we still carry like Baitiao receivables and the related nonrecourse securitization debt on your balance sheet. Could you elaborate the cash flow impact in this quarter from the deconsolidation from JD Finance? Thanks.

Sure, yeah, the deconsolidation itself doesn't result in any operating cash flow for continuing operations nor any impact on free cash flow. So all the free cash we discussed are from continuing operations. The JD Baitiao balance remaining on balance sheet, we actually had a footnote underneath the balance sheet, explaining that there are really two very technical elements that prevented us from deconsolidating JD Baitiao. One is essentially the legal permit. Right now, we have the JD Mall has the permit and then two is there is some technical aspect for securitization, which actually could potentially be resolved in the future quarters. So in any event, as JD Finance is positioned as a finance technology company, so we expect future additional volume will more and more actually coming from the - our banking partners rather than from our own balance sheet. And also this is true - it has been true even before spin-off, all the economics basically all the rewards and the risks has been passed to JD Finance. So even though we continue to carry JD Baitiao and the securitization on our balance sheet, or the economic benefit and cost will no longer and has not been part of the JD P&L.

Next question comes from John Choi of Daiwa. Please ask your question.

Good evening, guys. Thanks for taking my question. I have a question in your free cash flow right now, because if you look at your free cash flow for the past trailing 12 months it's been very strong. But it seems to me as you've mentioned in your earlier that the CapEx should be more or less towards the second half this year, but at the same time I think you mentioned that your free cash flow should remain pretty strong. So can you elaborate a bit more about how should we be thinking about the CapEx and also the overall operating cash flow towards the second half this year? And also, just quickly on the key categories, I noticed that apparel and cosmetics have done extremely well in the past couple of quarters. What could the management do further in order to further enhance these categories? Do you have to invest more or do you have to also think about strategic investments in other companies? Thank you.

Sure, so on free cash flow, as I mentioned, it's also partly because we had our annual contract renewal in the second quarter, so much of the new payment terms became effective in the second quarter, which benefited our payment turnover days. And also our inventory turnover days was well under control. Again, in fact, with our increasing scale the average payment - even on the trailing four-quarter basis you saw a decline in inventory turnover days. If you look at it just one quarter at the - the improvement was even more notable. So it's really a very remarkable quarter. And when I said earlier about full 2017, as I commented before, when you look at the cash flow, you should look at on the trailing 12 months or trailing four quarter basis, because there will be volatilities between and among the quarters. So I was referring to the full-year 2017, obviously, which will benefit from our Q2 free cash flow. CapEx, as we mentioned before, we will see more spending in the second half, but once again when we actually incur those - we believe investors should be thankful, because normally we will get very, very good deals from the government, because we are creating jobs for this local municipality, when we acquire land in their jurisdiction. And so normally come with those land acquisition, we'll get a lot of benefit, not only very, very cheap land price, but also a lot of other government support locally. One example, for our logistics headquarters in Xi'an, the government actually gave us one office building. So it's just one example, when we actually start securing those local partnership, you will see a lot of benefits to our shareholders.

Next question is come from Alex Yao of JPMorgan. Please ask your question.

Hey, thank you, management, for taking my question and congrats on a strong quarter. I have two quick ones. One is that on the revenue side, you guys have been showing a lot of the strength in the past few quarters and the revenue accelerated in this quarter. Can you help us to understand what are the key drivers for this trend of the revenue growth, and how sustainable can we think us with the top line trend? Apparently, there are a number of things you guys are benefitting from such as the structural migration from offline transaction to online. The expansion of the whole category into FMCG, and low-base last year et cetera, et cetera. In terms of the importance to the top line, what are the key drivers among the underlying read? And then secondly, can you give us updated thoughts in terms of how are you approaching the offline opportunities? Apparently, you guys are doing a number of new initiatives this year, including building the convenience store network nationally. I think there are also a number of other things you guys are currently exploring. Can you give us updated thoughts in terms of how you approach this offline opportunities? Thank you.

Sure. So maybe on the first question, I think, growth - sales growth have always driven fundamentally by better customer experience. As we - over the years, we continue to improve that, and the growth is really an outcome, not - I think, in the end is all about continuously improving customer experience and part of that is benefitting from our scale economies, and as we mentioned in the past that with the scale economies. We can continue to be able to offer everyday low price and very, very attractive promotions and incentives to continue to attract new customers, and also reward our existing customers. So there is really no other metrics, because sales growth are coming from all categories. It's not about any particular category, not about any kind of unique events impacting any of the particular categories. So that's why we continue to be quite optimistic for our future growth. For the offline opportunities, I think, we talked about - we are, in fact, deepening our O2O initiative in China, starting from our Jingdong Daojia initiative by connecting offline supermarkets to a location based mobile app. So we have seen very, very encouraging growth, in fact, there has been - we start to see some deflection point in that business as volume continue to improve in a very dramatic way and the same-store sales for Walmart and Yonghui, for example, on Dada has been growing at a financial kind of way, so that's one - the first initiative and continue to gain traction. The other areas, as Richard actually mentioned on the last earnings call, we essentially leverage our existing capabilities, whether it's from our supply chain or from our user reach to create really more customer interface. We won - in addition to Jingdong Bang for example, we had in the past, we are introducing JD Home concept stores, which specialize in selling electronic products. And comparing to, for example, Apple store, which is a single brand concept store, and we actually obtain - we have the benefit of having multiple brands having their best products in those very, very chic showrooms. So we had - we see some very, very good initial success in those initiatives, but all of those initiatives are franchise based, they are asset light. It will not cost a lot of heavy investments.

Next question comes from Natalie Wu of CICC. Please ask your question.

Hi, good evening, management. Thanks for taking my question. For the payment-related costs, given that JD Finance already deconsolidated, so just wondering, which line where the segment-related fee go costs or expenses. And if management could share with us gross profit margin for direct sales in second quarter of 2017 on an apple-to-apple basis that will be great. Thank you.

Yes. On the payment-related costs part of the fulfillment expenses, so they have always been in that line with the deconsolidation, you are right, so whatever we pay to JD Finance will be reflected in the fulfillment expenses, while historically that amount will be eliminated at a consolidation. For the gross margin, as I mentioned, we don't necessarily look at quarter-by-quarter, especially given that Q1 we well exceeded our internal budget. So we clearly - we had mentioned and we - in fact, we invested during the second quarter. So on - I think, it may be better to look at a trailing 12 month basis just like the cash flow going forward. We are committed to steadily improving all of our core margins on an annual basis or on a trailing 12 month basis.

Next question comes from Jialong Shi of Nomura. Please ask your question.

[Foreign Language] I would like to ask Richard for his colors on the private label e-commerce, like, what 1EAsian [ph] is doing? I just wonder, how Richard think of the outlook and the potential of this private label e-commerce service. Will JD have any plans to enter this niche market in the future? Thanks.

[Foreign Language]

Yes, so Richard said, the 1EAsian [ph] model is actually quite interesting and it's a good model. But for JD, because we are full category retailer supporting numerous brands, so our priority is continue to support our brand partners, and in the foreseeable future. However, we are experimenting in a smaller way in - for quite a few categories of our own private label products.

[Interpreted] Yes, so in comparison to a full category retailer like JD.com, despite how successful it could be for private label business, it will remain as a very small part of our overall business volume. Yes, but we will continue to explore private label initiatives. So over a long-term - longer term period, we expect it could become a somewhat meaningful part of our business. So for the strategic collaboration with Baidu, because, it's strategic and a comprehensive collaboration, so there will be many, many areas of collaboration with different types of collaboration models, so with those model, they will have different fees or revenue in terms of whether it's CPF or CPC. But in the end, we believe the collaboration can significantly improve the ROI and also enhance the CapEx, and our user base. Yes, so we believe it's a win-win partnership for both of us, where Baidu can expect increasing advertising revenue and we can expect much higher quality of advertising spending and ROI.

Next question comes from Eric Wen of Blue Lotus. Please ask your question.

Hi, thanks management for taking my questions, and congratulations on good quarter. Question on the logistics side, I noted that we had launched a few initiatives on the logistics area, and one of those initiatives is the collaboration with SF Express regarding the use of pickup cabinets Sintiquai [ph]. I just want to know how the reception of our customers towards picking up the delivery from the cabinets. And since I noticed that we also have our own pickup station Tutidia [ph] I want to ask, what is our view towards the pickup cabinets, and its future in the delivery industry? And lastly, if I can clarify, if JD Logistics reduced our margin by 1%, and the fulfillment costs reclassified is RMB2.6 billion. What is the revenue size of JD Logistics under this calculation? And is the loss mainly G&A or marketing? Thanks.

Sure. Yes, so for our collaboration on the Sintiquai [ph] self-pickup cabinets. We actually had our own small network as well, so this is nothing new. We actually call our customers before we put any of the packages into those self-pickup cabinets. And so, it's only at the permission of our customers that we will do that. Increasingly we see, especially for working professionals that they may not be at home during the working hours or they could be staying out fairly late. So there is a demand for consumers for those types of job of services. This is also very similar for our own self-pickup locations. So again, these are all based on consent from our customers before we will actually put their products, drop off their parcels in those locations. And we do think this is potentially one interesting last mile alternative. It also helps save cost, because it will clearly improve the efficiency of deliverymen. But, again, this will be based on the consent - prior consent for our customers on a case-by-case basis. For logistics revenue, we had mentioned in the past we have been running our third-party logistics services on a more or less breakeven basis. So, obviously, this is not 100% flat based on the cost. There will be potentially some volatility among different quarters. But altogether, it should be quite close to a breakeven basis.

Next question comes from Ella Ji of China Renaissance. Please ask your questions.

Sorry, I don't think we can hear you.

Hello.

Hello, yes. Yes, now we can hear you.

Can you hear me now?

Yes.

Okay. So my first - first, I have a quick follow-up regarding the sales and the marketing spending. So assuming you mentioned about the current quarter spending pattern similar to 4Q last quarter. However, that was comparing to 2Q last year, it was an acceleration. So I wonder looking forward, given that the current market competition is still strong, should we expect 4Q this year, the sales and marketing spending will likely be even higher than the 2Q level? Then my second question is overall this year in so far the online retail sales, the market has been very strong, and especially in certain categories, including home appliance. I wonder management can - if management can share your insights. What do you think are the drivers that help driving up the whole online market acceleration? Thank you.

Sure, so I think the first one - we invest and run our business based on our own business fundamentals. So if you look at when we continue to improve our underlying strength of the core business, we do have more and more resources to reinvest and give back to your consumers. So I mentioned Q4's - obviously Q4, we also had a very, very robust quarter of growth. And so the additional investment in sales and marketing provided very good ROI, and similarly, for Q2 as well. So I think we will also formulate our strategy in the second half, but this is not necessarily in reaction to any competition, I think first and foremost is to really follow our own business logic in running our business. On the overall acceleration of online sales, I think it does reflect. Again, I think it's similar to our earlier - to my earlier comments about retail business in the end is about customer experience. So I think overall, the online retail and e-commerce market or players has been obviously providing, very, very good value proposition to our consumers in China. I think this is fundamentally what's driving the accelerated growth. Obviously, the healthy economic environment is also helpful. Overall, retail consumption volume has also been quite stable driven by the fundamentals we have mentioned before about stable employment rate, raising salary and also the high savings rate in the consumer - among the consumers.

Your next question comes from Wendy Huang of Macquarie. Please ask your question.

Thank you. [Foreign Language] I have two questions. The first question is about your logistics business. Can you give us some update about the percentage of your third-party merchants you see in your warehouse and the fulfillment? And also with the reorganization of your logistics business, are you also opening it to any third party platforms merchants such as Taobao merchants. Second question is about your collaboration with three Internet companies: Tencent, Toutiao and Baidu. Given the high user-base of those companies and also the overlap of their user base, are you actually seeing any different in terms of the users or the shopping behaviors that you can actually acquire through their channels? Thank you.

[Interpreted] Right, so the reason we open up our logistic platform or capabilities is to really - as a result of seeing tremendous demand from the brands for logistic services. So JD happens to have built a very strong logistic network not only on the small, medium sized products, but also big large appliance products cold chain, logistics and also O2O outsourcing logistics. So we can - we are beast equipped to fulfill these needs. We have seen for example apparel brands requiring services to ship their products to various store locations and also their official stores requiring logistic services to serve their consumers and also O2O initiatives where consumers place orders and that their stores can help fulfill, so there will be a lot of demand in core channels for our services. Yeah, so in the past, the brands, because of these different requirements will have to contract very different types of logistic service providers. Because JD has all of these services available or capabilities available so we can offer a one-stop solution to these brands. So although we only open our services in two months, we have already seen a lot of big brands approaching us and - or using our services so we are pretty confident, even just for the first year we can probably achieve the $20 million of revenue. Yeah, and we will expect over 100% growth next year and also decent profitability for this business. But more importantly, we will - in addition to the traditional services where we can offer one-stop solution, but we can also utilize our big data to help these customers to enhance the efficiency of their supply chain. And when that objective is accomplished, there will be huge win-win opportunities for both of us. And this kind of big…

Thank you. We are now approaching the end of the conference call. I will now turn the call over to JD.com's Ruiyu Li for closing remarks.

Thank you, operator. Once again, thank you for joining us today. Please feel free to contact if you have any further questions. Thank you for your continued support and we're looking forward to talking with you in the coming months.

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