JD.com, Inc. Q2 FY2025 earnings call

Management Statement and Operational Highlights

• User Growth and Engagement: Quarterly active customers (QAC) accelerated over 40% YOY in Q2, total QAC base reached a new milestone. User shopping frequency on JD's platform rose over 40% YOY, with JD Plus members' shopping frequency up over 50% YOY. June 18 promotion had over doubled purchasing users and over 2.2 billion orders.
• JD Retail Performance: Strengthened supply chain capabilities drove top and bottom line growth. Electronics and home appliances maintained 23% YOY revenue growth, general merchandise 16% YOY, with supermarket category having 6 consecutive quarters of double-digit growth. Fashion also saw double-digit YOY revenue growth. JD Retail's profitability improved due to stronger supply chain capabilities.
• New Business Initiatives: JD Food Delivery experienced rapid growth, with daily order volume exponential, onboarding over 1.5 million high-quality merchants, and full-time delivery drivers increasing. Synergies with core retail were observed, with cross-selling opportunities in supermarket, lifestyle services, and electronic accessories. Focus on enhancing core system capabilities for JD Food Delivery.

Segment Performance

• JD Retail: Revenues were up 21% year-on-year in Q2. Non-GAAP operating income was RMB 13.9 billion, up 38% year-on-year, with an operating margin of 4.5%. Electronics and home appliances revenues grew 23% YOY, general merchandise 16% YOY, supermarket category had 6 consecutive quarters of double-digit revenue growth, and fashion maintained double-digit YOY growth.
• JD Logistics: Revenues were up 17% year-on-year in Q2. Non-GAAP operating income declined 10.3% to RMB 2 billion, with investments in capacity building for last mile pickup/delivery.
• New Business: Revenues tripled year-on-year in Q2, but non-GAAP operating loss widened to RMB 14.8 billion, driven by rapid expansion of food delivery and Jingxi. JD Food Delivery saw exponential daily order volume growth, onboarding high-quality merchants, and generated synergies with core retail.

Guidance

• Core retail business expected to continue healthy growth and margin expansion.
• New business initiatives, particularly JD Food Delivery, expected to drive user growth and synergies with core retail, with focus on enhancing core system capabilities.
• International expansion strategy focused on supply chain capability, planning to launch Joybuy platform in Europe later this year, and strategic acquisition of CECONOMY to enhance presence in European market.

Risks

• Intense competition in the food delivery market, which may lead to near-term financial impact due to strategic investments.
• Regulatory risks associated with international expansion and compliance with local regulations in overseas markets.

Q: On trade-in program and electronics/appliance strategy for the second half.

A: Ran Xu discussed the trade-in program's contribution to boosting consumption and industry upgrade, JD's supply chain capabilities enabling stable product supply and fulfillment, focus on product structure optimization, price advantage through bulk purchasing and cost reduction, and service capability enhancement for better trade-in experience.

Q: On food delivery competition and unit economics.

A: Ran Xu highlighted JD's long-term commitment to food delivery, progress in rider and merchant onboarding (over 150,000 full-time delivery riders and over 1.5 million high-quality restaurants onboarded in Q2), synergies with core retail in traffic, user growth, and cross-selling, and focus on improving unit economics through refined subsidy strategies and system capabilities optimization.

Q: On user and traffic trends and bottom line outlook.

A: Ran Xu shared that user growth was driven by core retail's user acquisition/retention and JD Food Delivery's rapid growth, with focus on user profile, behavior, and retention strategies. On profitability, core retail's profit expansion driven by supply chain efficiency, category profitability improvement, and 3P ecosystem development; new business investments expected to impact short-term margin but drive long-term synergies and growth.

Q: On overseas expansion strategy.

A: Ran Xu stated that international expansion focuses on supply chain capability, helping Chinese premium brands go global and providing overseas consumers with cost-effective products, plans to launch Joybuy platform in Europe, and the logic behind the acquisition of CECONOMY for leveraging brand strength, supply chain capabilities, and market position in European market.