JD.com, Inc. (JD) Earnings

Management highlights

- Overall Business & Profitability * Q2 2026 marked a definitive turning point for JD.com's consolidated profitability trajectory, with non-GAAP net income attributable to ordinary shareholders surging 20.8% year-on-year to 8.9 billion RMB, and non-GAAP net margin expanding 0.5 percentage point to 2.6%. * Total consolidated revenue decreased 2.9% year-on-year to 346 billion RMB, primarily dragged by temporary headwinds in the electronics and home appliances category. * Free cash flow for the 12 months ending Q2 2026 reached 31 billion RMB, a significant improvement from 10 billion RMB in the year-ago period, driven by disciplined working capital management. Total cash and cash equivalents, restricted cash, and short-term investments totaled 235 billion RMB as of Q2 end. * In H1 2026, JD.com repurchased 69.9 million Class A ordinary shares (equivalent to 34.9 million ADS) for a total of 1 billion USD, representing ~2.5% of outstanding ordinary shares as of end-2025. - User Growth & Operational Efficiency * Sustained double-digit year-on-year growth across key user metrics, including MAU, quarterly active customers, and JD Plus members; the Q2 2026 June 18 promotional event set a new record for purchasing users. * Achieved user growth while streamlining group-level marketing expenses, with JD Retail's marketing expense ratio dropping year-on-year for the fourth consecutive quarter. * Shifted strategic focus from rapid user acquisition to elevating user quality and lifetime value; diversified lifestyle services (healthcare, home services, auto aftermarket) drove deeper user engagement and stickiness. As of Q2, JD Auto Service offline stores covered over 1,000 districts and counties across China, and home services revenues grew exponentially year-on-year. - Core Retail Performance * Electronics and home appliances revenue was moderated by a high year-ago comparison base and upstream component price increases in Q2, but market position and user mindshare remained intact, with market share for home appliances growing steadily; offline business grew faster than industry average. * General merchandise remained a resilient growth anchor, with the leading supermarket category delivering near double-digit year-on-year revenue growth; healthcare and industrial products also delivered solid double-digit growth. JD Retail's 3P GMV growth outpaced 1P for three consecutive quarters, with 3P's share of total GMV continuing to increase quarter-over-quarter. - New Business Development * JD Food Delivery maintained healthy order volume growth in Q2, narrowed total losses by over 50% year-on-year, and achieved dramatic unit economics improvement within one year of launch, driven by a focus on operational efficiency and revenue diversification. * JoyBuy (international business in Europe) doubled its revenue within two quarters, driven by differentiated localized services (integrated delivery and installation for home appliances, same-day/next-day delivery across major European cities) that improved user retention. It still operates in the early scaling phase, with investments growing sequentially but loss margin improving. * Jingxi deepened penetration in lower-tier markets, with quarterly active customers growing over 40% year-on-year and contributing 40% of new active customers in Q2, unlocking incremental user pools for JD's ecosystem. - AI & Automation Integration * Accelerated integration of AI and physical automation across the core value chain, including demand forecasting, product sourcing, intelligent customer service, and logistics automation. * Upgraded search, recommendation, and ad targeting engines, plus proprietary AI shopping agents, which improved user engagement, conversion, and advertising ROI for brand partners. * Internally integrated generative AI to optimize cost structure and operating efficiency; expanded deployment of proprietary automation solutions across more warehouses, scaled thousands of autonomous delivery vehicles across more than 20 provinces, and launched the first 24/7 overnight autonomous delivery routes in Shenzhen.

Guidance

- JD Retail is expected to pivot back to positive year-on-year revenue growth in Q3 2026, with overall top-line growth accelerating quarter-by-quarter in H2 2026, as the high year-ago comparison base for electronics and home appliances gradually eases. * Electronics and home appliances category growth is expected to reaccelerate meaningfully in H2 2026 as base effects normalize. * General merchandise category is expected to maintain healthy growth in H2 2026, driven by operational excellence, sustained user momentum, and an improving platform ecosystem. - JD.com expects consolidated top-line growth to reaccelerate in H2 2026, and group-level profit growth to accelerate, continuing the upward profitability trajectory that began in Q2 2026. - Service revenues, particularly high-margin marketplace and marketing revenues, are expected to continue outpacing product revenue growth, driving structural margin expansion over time. Advertising revenue is expected to accelerate meaningfully in H2 2026, driven by recovering overall sales, AI-driven efficiency gains, category mix optimization, and incremental traffic from new businesses. - JD Food Delivery is expected to continue delivering meaningful year-on-year loss reduction throughout the remainder of 2026, with further unit economics improvements. - Long-term, JD Retail remains confident in achieving a high single-digit operating margin target, driven by supply chain scale benefits, category profitability upside, and ongoing structural mix shifts toward high-margin service revenues. - New business investments will remain disciplined, scalable, and strictly within management expectations, with all new investments focused on ROI efficiency.

Segment performance

1. JD Retail: Q2 2026 revenue was 295 billion RMB, down 4.7% year-on-year, contributing 85.26% of total company revenue. It delivered gross margin expanded 1.3 percentage points year-on-year to 18.5% (17th consecutive quarter of year-on-year gross margin expansion), non-GAAP operating profit reached 13.5 billion RMB, with operating margin up 7 basis points to 4.6% (a record high for peak promotional seasons). 2. JD Logistics: Q2 2026 revenue grew 24.3% year-on-year to 68.1 billion RMB, contributing 19.68% of total company revenue. Non-GAAP operating income was 2.3 billion RMB, up 15.6% year-on-year, with an operating margin of 3.5%. 3. New Business: Q2 2026 revenue was 7.3 billion RMB, contributing 2.11% of total company revenue. Operating loss narrowed significantly year-on-year to 9.9 billion RMB, driven primarily by a more than 50% year-on-year loss reduction in JD Food Delivery. For JoyBuy (international business), which is in the scaling phase, absolute operating loss expanded but loss margin narrowed sequentially.

Risks & headwinds

- Near-term, ongoing upstream component price increases for consumer electronics may continue to weigh on consumer demand for the category. - The broader macroeconomic environment and industry headwinds create short-term top-line volatility for core retail categories. - All new businesses are at early stages of development, requiring continued incremental investment as they scale, which could pressure near-term consolidated profitability if unit economics do not improve as expected.

Analyst Q&A

• Q: Given the short-term headwinds facing electronics and home appliances and moderated general merchandise growth in Q2, what is the growth outlook for both categories in H2 2026, and what factors are driving the slowdown? /

  A: Electronics and home appliances was impacted by a high year-ago comparison base from 2025's promotion program and upstream raw material/price increases. Despite this, JD gained market share steadily in the category, with faster offline growth driving better resilience than the broader industry. Growth will reaccelerate in H2 as the high base effect fades, and JD's supply chain capabilities will mitigate price pressures, while AI-powered product innovation will drive new demand. For general merchandise, growth moderated due to the 2025 high base effect, but JD continues gaining market share across all sub-categories. Supermarkets delivered near double-digit growth, and healthcare/industrial products hold double-digit growth. Growth will accelerate in H2 driven by better user experience, incremental traffic/new users from food delivery and Jingxi, and a improving 3P platform ecosystem.

• Q: With JD now in a strong free cash flow position, will management set a formal annual profit percentage target for shareholder returns? And how will JoyBuy differentiate its offering in Europe, and what is the planned investment pace for the business? /

  A: JD has already returned ~13 billion USD to shareholders via dividends and buybacks since 2023, maintained stable annual dividends since 2022, and repurchased ~17% of outstanding shares since 2023. The 3.5 billion USD repurchase program has 1 billion USD remaining, and JD will continue returning value via multiple channels with a focus on maximizing long-term total shareholder returns while continuing to invest in long-term competitiveness. For JoyBuy, JD leverages its core supply chain strength to deliver a localized European model, offering differentiated services like integrated delivery/installation and same-day/next-day delivery that has won user trust and driven two quarters of doubling revenue. While investments will grow as the business scales, investment will remain disciplined, and the business model mirrors JD's core supply chain-focused model, so scale will drive improving unit economics over time.

• Q: With the food delivery market stabilizing, what are JD's plans for user growth, market share, and cross-synergy for JD Food Delivery? And what is the outlook for sustained growth of marketplace and marketing/advertising revenues in H2? /

  A: JD Food Delivery maintained healthy order growth in Q2, cut annual losses by over 50%, and improved unit economics dramatically via refined operations and lower per-order subsidy cuts. It delivers strong ecosystem synergy with core retail, driving incremental user acquisition and cross-sell, enriching JD's location-based merchant ecosystem, and integrating fulfillment capabilities with JD Logistics to boost overall on-demand efficiency. Long-term, JD will maintain healthy scale growth, continue improving unit economics, and deepen synergy with core retail to drive sustainable growth. For advertising revenue, growth will accelerate in H2 as overall sales recover. AI algorithm improvements are boosting ad conversion efficiency, faster growth of higher monetization general merchandise categories supports structural growth, and new businesses like food delivery bring incremental ad traffic, so advertising will maintain steady long-term growth as a core profit driver.

• Q: What is the margin outlook for JD Retail in H2, and how should investors think about new business investment and group-level profitability? /

  A: JD Retail's gross margin will continue improving driven by ongoing supply chain efficiency gains. R&D investment for AI will continue growing near-term, but these investments will deliver long-term operational efficiency gains. Long-term, JD remains confident in hitting a high single-digit operating margin target, driven by 1P supply chain scale, category profitability upside, and structural growth of high-margin service revenues. All new business investments are focused on extending JD's supply chain strengths, follow strict financial discipline and ROI focus, and will remain scale investment dynamically based on business stage. JD Food Delivery will continue cutting year-on-year loss narrowing in H2, new business investment will remain controllable, and Q2 marked an inflection point for group profit growth, with accelerated profit growth expected in H2 driven by core business health and investment discipline.