JD.com, Inc. 2026 Q2 Earnings Call

Good day, everyone. Welcome to JD.com's second quarter 2026 earnings conference call. With us today are CEO of JD.com, Ms. Sandy Xu, and CFO, Mr. Ian Su Shan. Sandy will kick off the call with her opening remarks, and Ian will discuss the financial results. Then we will open the call to questions from analysts. Please note, unless otherwise stated, all comparison in this call will be against our results from the comparable period of 2025. 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. We will include forward-looking statements. 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 refer to the reconciliation of non-GAAP measures to the comparable GAAP measures, also in the earnings press release. Please also note that all figures mentioned in this call are in RMB, unless otherwise stated. With that, let me turn the call over to our CEO, Sandy.

Sandy, please. Thank you, Sean.

Hello, everyone. Thank you for joining our second quarter 2026 earnings conference call. We closed the second quarter with steady performance in line with our expectations, maintaining strong operational resilience amidst macro and industry headwinds. We are navigating a high trading comparison base, upstream price pressure in consumer electronics, and evolved macro dynamics. Our commitment to high-quality development translated to robust profitability. Most notably, Q2 marked a definitive turning point for our profitability trajectory. Our non-GAAP net income attributable to ordinary shareholders surged by 21% year-on-year to RMB 8.9 billion, driven by both JD Retail's healthy margin expansion and JD Food Delivery's loss reduction. In particular, both JD Retail gross margin and operating margin hit historic highs for peak promotional seasons, and JD Food Delivery narrowed its losses by over 50% year-on-year in the quarter.

This performance underscores the unique strength of our business model. Even in a complex external environment, it continuously enables us to deepen our supply chain capabilities, unlock operational efficiencies across our business ecosystem, and drive sustained profit expansion. Moving to our operational highlights, I would like to share three key developments for the quarter. First, we maintained healthy user momentum while dramatically improving marketing efficiency in the quarter. Across key metrics, including MAU, quarterly active customers, and plus members, we sustained double-digit year-on-year growth. Our 618 Grand Promotion also set a new record for purchasing users. Crucially, we achieved this user expansion while streamlining group-level marketing expenses, supported by enhanced operational efficiency and marketing optimization across JD Food Delivery and JD Retail. We maintained high-quality user momentum in Q2, primarily driven by deeper engagement among existing users.

Notably, our efforts to provide diversified services catering to our users' life needs, such as healthcare, home services, and auto or aftermarket services, resonated strongly with our users, contributing to deeper user engagement and stickiness. In healthcare, we provide users with a full stack online and offline services from consultation to pharmacy and on-site care. In home services, revenues increased exponentially year-on-year in Q2. In auto aftermarket services, our JD Auto Service offline stores have covered over 1,000 districts and counties across China as of Q2. Overall, this reflects our strategic shift from rapid user acquisition toward elevating user quality and lifetime value. Through disciplined life cycle management, we are successfully converting new users into highly sticky, loyal customers. Second, core JD Retail delivered a resilient top-line performance in Q2, while continuing to unlock profitability upside.

Heading into Q3, we expect JD Retail to hit a turning point, re-accelerating into positive top-line expansion while sustaining healthy bottom line. Looking at category performance, while revenues from electronics and home appliances were moderated by a high comparison base and upstream price increase in Q2, as momentum picked up in June, our market position and user mindshare remained firmly intact amid these market dynamics. Looking into the second half of the year, we expect top-line growth for this category to accelerate from the first half as the high comparison base from the trading program fades, and our strong supply chain strengths allow us to navigate consumer electronics price cycles more effectively. General merchandise maintained healthy growth in the second quarter. In particular, our supermarket category remained a key standout, delivering near double-digit year-on-year revenue growth.

With a proven multi-year track record, JD Supermarket has established itself as the most trusted platform for both users and suppliers. This success is a powerful example demonstrating how our core philosophy, the relentless pursuit of superior user experience, cost optimization, and operational efficiency, translates into sustainable market leadership. Other general merchandise categories, such as healthcare and industrial products, also delivered solid double-digit growth in the quarter. As we further tap into massive TAM, supported by our supply chain efficiency and strong user mindshare, we remain confident in our execution for the remainder of the year and beyond. In addition to delivering resilient top-line performance, JD Retail achieved further profitability improvement in the second quarter.

Its growth margin expanded by 1.3 percentage points year-on-year to 18.5%, mainly attributable to two drivers: deepening supply chain scale benefits and a favorable revenue mix supported by high-margin marketplace and marketing revenues, particularly the rapid growth in advertising revenues. JD Retail's operating margin increased by 7 basis points to 4.6%, setting a new record for a peak promotional quarter. Beyond the growth margin expansion, this performance also reflects our ROI-driven marketing spend. This allowed us to direct more resources toward R&D capabilities, which is fully aligned with our long-term business strategies. Moving on to new businesses. Through our focus on operational efficiency, we substantially reduced losses in new businesses, particularly in JD Food Delivery, while maintaining disciplined execution against our strategic roadmap. During the second quarter, JD Food Delivery maintained healthy order volume momentum while narrowing total losses by over 50% year-on-year.

Within just one year of execution, JD Food Delivery has achieved a dramatic, fast-paced improvement in unit economics, driven by our relentless focus to drive operational efficiency and revenue diversification. Moving forward, we see substantial runway for further UE optimization in our food delivery business while we continue to unlock its cross-segment synergies with our core retail business. Operations at our Joybuy and Jingxi businesses advanced steadily along their strategic paths with strict ROI discipline. During the quarter, Joybuy sharpened its competitive edge in Europe through its fast, reliable fulfillment and premium localized services such as integrated delivery and installation service for home appliances. By directly addressing local consumers' pain points, Joybuy is building increasing user retention and has doubled its revenues within two quarters.

Jingxi continued to deepen its penetration in lower-tier markets, with QAC increasing over 40% year-on-year and contributing 40% of new active customers in Q2, unlocking valuable incremental user pools for our ecosystem. While both businesses saw a sequential step-up in strategic investment, all spend was executed with rigorous discipline and strictly within our expectations. Beyond operational execution, we accelerated the integration of AI and physical automation deeper into our core value chain in the second quarter, spanning demand forecasting, product sourcing, intelligent customer services, and full-stack logistics automation. Next-generation shopping and conversion, we are proactively upgrading our search recommendation, ad targeting engine, along with our proprietary AI shopping agents by leveraging AI to sharpen precision in user intent, matching, and traffic allocation. We have driven tangible improvements in user engagement, conversion, and ROI for our brand partners.

On enterprise productivity and efficiency, internally, we are seamlessly integrating generative AI into automated customer service and cross-departmental workflows. This deep integration is delivering measurable progress, enhancing customer satisfaction, while structurally refining our cost structure and driving long-term operational efficiency. On the logistics automation, our progress in physical logistics automation gives us substantial headroom to further optimize our cost structure and operating efficiency. In warehousing and sorting, JD, through JD Logistics, expanded deployment of our proprietary Longwu Tech goods-to-persons solution across more warehouses and product categories. In autonomous delivery, JDL scaled thousands of air and ground vehicles across more than 20 provinces as of Q2. We are launching our first 24/7 overnight autonomous delivery routes in Shenzhen. Powering this automation is our Jingdong Logistics MetaBrain LLM, which drives real-time intelligent decision-making within our exclusive automated operating framework.

In summary, our teams executed with strategic consistency and resilience throughout the second quarter. Looking ahead to the second half of 2026, we remain fully committed to our strategic priorities while responding with agility to evolving macro trends. Our core JD Retail business will continue to drive efficiency gains across every link along the supply chain, and new businesses will unlock strategic potential while maintaining strict financial discipline. Combined with our integrated AI capabilities, we are confident in building a resilient business that delivers high-quality, sustainable development through all market cycles. With that, let me turn the call over to Yan.