JD.com, Inc. (JD) Earnings

Management highlights

- User Growth and Engagement: * Quarterly active customers and annual active customers (AAC) both grew over 20% year-on-year, with AAC hitting a new record. * JD Plus membership scale grew double-digit year-on-year; quarterly customer shopping frequency rose 37% year-on-year, driven by cross-business synergies. * Strategic focus has shifted to fostering deeper user loyalty and driving upward migration of user quality. - Core Retail Resilience: * Gross margin expanded across all categories, supported by supply chain scale economies and procurement efficiency, amplified by a mix shift to high-margin advertising and commission revenues. * General merchandise (led by supermarkets, healthcare, home goods, and apparel) has delivered six consecutive quarters of double-digit growth, now contributing over half of total GMV. * Retail advertising and commission revenues grew double-digit for six straight quarters, contributing to 18.8% year-on-year group-level marketplace and marketing revenue growth. JD Food Delivery contributed an incremental 3% to advertising revenues in Q1. - New Business Progress: * JD Food Delivery achieved the steepest sequential loss reduction to date, with improving unit economics while maintaining healthy order volumes, and complies with regulatory guidance prioritizing efficiency over market involution. * Jingxi deepened penetration in lower-tier and rural markets, capturing new user growth. Joybuy (international business) launched in March, with same/next-day delivery covering over 30 major European cities serving 40 million people, with healthy order volume and user retention. Total new business investment narrowed over 30% sequentially. - AI and Technological Innovation: * AI integration across the entire value chain, from demand forecasting to autonomous logistics. JD Logistics launched the proprietary next-generation Longzhu robotic arm, moving from lab to real-world operations to boost sorting efficiency. * AI-powered digital human JoyStreamer saw a 10x year-on-year surge in merchant adoption and live streaming sessions. The goal is to translate AI innovation into tangible retail experiences and sustainable value. - Shareholder Return: * Repurchased 44.5 million Class A ordinary shares (22.3 million ADS) for $631 million in Q1, representing ~1.6% of total outstanding shares as of end-2025. Completed the 2025 annual cash dividend of $1 per ADS in April 2026, totaling ~$1.4 billion.

Guidance

- Electronics and home appliances will face continued temporary headwinds from high year-earlier comparison bases and industry price increases in Q2, but management expects a strong growth rebound in the second half of 2026 as base effects normalize. - General merchandise and advertising/commission revenues are expected to maintain robust double-digit growth momentum through full-year 2026. - JD Retail is on track to hit its long-term target of high single-digit operating margin, with continued upside for margin expansion from 1P supply chain improvements, category mix optimization, and growth of high-margin platform services. - New business segment investment will remain efficiency-focused, with continued loss narrowing expected through full-year 2026. Joybuy international investment will grow gradually with scale, and remains financially disciplined and aligned with initial expectations. - R&D investment, particularly in AI, will continue to increase in the coming quarters, with expected long-term operational efficiency gains and cost structure optimization.

Segment performance

1. JD Retail: Revenues grew 2% year-on-year to 267.9 billion RMB. Non-GAAP operating income increased 16% year-on-year to 15 billion RMB, with an operating margin of 5.6% (up 0.7 percentage points year-on-year). Gross margin expanded 1.8 percentage points year-on-year to 18.6%. Electronics and home appliances revenues declined 8.4% year-on-year (sequential improvement), general merchandise revenues grew 14.9% year-on-year and contributed over 50% of total GMV, and marketplace and marketing revenues grew 18.8% year-on-year. 2. JD Logistics: Revenues grew 29% year-on-year. Non-GAAP operating income surged 600% year-on-year, driven by AI/robotic technology leverage and operational optimization. 3. New Business: Revenues came in at 6.3 billion RMB (moderated by resegmentation of on-demand delivery revenues to JD Logistics). Non-GAAP operating loss narrowed significantly sequentially to 10.4 billion RMB, led by JD Food Delivery's largest sequential loss reduction since inception. Jingxi and international business maintained disciplined investment.

Risks & headwinds

- Short-term demand headwinds from industry-wide price increases for electronics (smartphones and PCs) driven by rising global memory costs, which have dampened near-term consumer sentiment. - Intense subsidy competition in the food delivery industry and competitive pressure in the fragmented Chinese supermarket/FMCG sector. - Macroeconomic uncertainty and ongoing industry competition that could pressure margin expansion or increase subsidy requirements. - Persistently high year-earlier comparison bases from 2025 trading programs through Q2 2026, which will temper near-term growth for electronics.

Analyst Q&A

• Q: Despite high base effects and electronics price increases, JD Retail delivered solid Q1 growth. Have you observed consumer behavior shifts, and what is the growth trajectory for coming quarters? What is the outlook for JD Retail margin going forward? /

  A: Management confirmed that industry-wide electronics price increases have moderately dampened short-term consumer demand, but are seeing a shift toward mid-to-high-end and top-tier brand products, where JD’s supply chain and brand reputation give it a strong competitive edge. Q2 will still face headwinds from high base effects, but growth will accelerate in H2 2026 for electronics, while general merchandise and advertising will maintain healthy growth. For margins, JD Retail has delivered 16 consecutive quarters of year-on-year gross margin improvement, driven by supply chain efficiency, three consecutive quarters of declining marketing expense ratios from new business-driven traffic growth, and ongoing growth of high-margin services. Management reaffirmed the long-term target of high single-digit operating margin, with clear upside from category expansion, mix optimization, and AI-driven efficiency gains.

• Q: What is your investment plan for the newly launched Joybuy international business, and how will it impact new business losses long-term? How will JD leverage its position as China’s largest retailer in the fast-growing AI agent space? /

  A: Joybuy maintains disciplined investment: Q1 investment was stable, and will rise gradually as scale grows, with scale economies improving unit economics over time, keeping overall investment highly manageable and aligned with initial projections. International expansion is a long-term strategy, with investment focused on supply chain, logistics, and technology to deliver a differentiated same/next-day delivery experience to European consumers, driving long-term ROI. For AI, the core of retail remains delivering strong experience, low cost, and high efficiency regardless of technology. JD is integrating AI across its entire workflow: AI demand agents improve user matching, internal procurement/operations agents automate routine tasks to boost efficiency, AI merchant tools enhance merchant operations, and AI robotics improve logistics automation, creating an end-to-end agent-to-agent framework that cuts inefficient intermediaries to drive step-change efficiency gains.

• Q: What is JD Food Delivery’s long-term profitability goal, and how do you see the future competitive landscape for China’s supermarket/FMCG sector? /

  A: JD Food Delivery will eventually achieve profitability, but it is not a standalone business: it has driven 20% year-on-year growth in JD’s DAU and quarterly active customers, boosted overall platform shopping frequency by 37%, increased cross-sales for core categories, enriched location-based supply, and unlocked logistics synergies, so it is a core long-term strategic investment. Management maintained rational investment amid industry subsidy competition, and achieved a nearly 2x quarter-on-quarter increase in commission and advertising revenue in Q1 alongside the largest ever sequential loss reduction. For the fragmented 10 trillion RMB supermarket sector, JD operates complementary 1P, 3P, and on-demand retail models to serve different consumer needs. JD Supermarket has delivered 9 consecutive quarters of double-digit growth, with ongoing margin improvement from scale and supply chain advantages, and will continue to be a key growth driver for JD long-term.

• Q: What is the latest update on JD’s 3P platform ecosystem strategy and outlook, and what is the status of shareholder return programs? /

  A: JD’s 3P active merchant base grew triple-digit year-on-year in Q1, with growth driven by onboarding high-quality brands, industrial belt merchants, and new restaurant merchants from food delivery. 3P user and order growth outpaced total platform growth, with 3P orders accounting for over 50% of total orders in Q1, and 3P GMV growing faster than 1P and total GMV. High-margin commission and advertising revenue from the platform has grown double-digit for six consecutive quarters, driving overall margin expansion. Long-term, 3P GMV contribution is expected to surpass 1P, becoming a core driver of revenue and profit growth. For shareholder returns, the remaining $1.4 billion under the current repurchase program (expiring August 2027) will be executed per the existing plan, the 2025 $1 per ADS dividend was paid in April 2026, and JD remains committed to continued shareholder returns via dividends and buybacks alongside long-term business growth.