JD.com - Earnings Call - Q2 2025

Transcript

Speaker 4

Hello, and thank you for standing by for JD.com's second quarter and interim 2025 earnings conference call. At this time, all participants are in 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 turn the meeting over to your host for today's conference, Sean Shibiao Zhang, Director of Investor Relations. Please go ahead.

Speaker 0

Thank you, Operator. Good day, everyone. Welcome to JD.com's second quarter and interim 2025 earnings conference call. With us today are CEO of JD.com, Ms. Sandy Ran Xu, and our CFO, Ms. Ian Su Shan. Sandy will kick off the call with her open remarks, and Ian will discuss the financial results. After that, we'll open the call to questions from analysts. Before turning the call over to Sandy, let me quickly cover the stakeholder statement. Please be reminded that during this call, our comments and responses to your questions reflect management's view as of today only, and will include forward-looking statements. Please refer to our latest stakeholder statement in the earnings press release on our website, which applies to this call. We'll discuss certain non-GAAP financial measures. Please also refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release.

Please also note all figures mentioned today in this call are in RMB, unless otherwise stated. With that, let me turn the call over to our CEO, Sandy.

Speaker 5

Thank you, Sean. Hello, everyone. Thank you for joining our second quarter 2025 earnings conference call. In the second quarter, we stayed focused on providing the best user experience, lowering costs, and improving efficiency to drive healthy, sustainable growth. At the same time, we took some early exciting steps to further advance our long-term development. Looking at the overall performance, we are pleased to report a solid top-line growth of 22% year-on-year in the second quarter, with total revenues reaching ¥357 billion in the quarter. This strong momentum was driven by encouraging acceleration across most of our business lines, including electronics and home appliances, general merchandise categories, as well as service revenues.

Our non-GAAP net income attributable to ordinary shareholders in the quarter was ¥7.4 billion, compared to ¥14.5 billion in the same period last year, as a result of the investment and rapid growth in our new businesses, including our food delivery business. That said, our core business, JD Retail, continued to see healthy profitability improvement. JD Retail's non-GAAP operating profit increased by 38% year-on-year to ¥13.9 billion in the second quarter, with an operating margin of 4.5%, up from 3.9% in the same period last year. Overall, we are confident in our core retail business, while our new businesses, including JD Food Delivery, are progressing well as planned, aligning seamlessly with our strategic roadmap to drive long-term sustainable growth. Behind these results, I'm particularly encouraged by the high morale and collaborative spirit across all the business teams at JD.com.

Their collective effort forms a solid foundation that will continue to propel our upward momentum and the effective execution of our strategic goals. I want to highlight three key progress we achieved that underpinned our strong performance in the quarter and will sustain our healthy growth going forward. First, user growth and engagement stand out as a key achievement for us in Q2, as we continue to center on users and spare no effort in delivering the best possible user experience. Growth of our quarterly active customers, or the QAC, accelerated notably to over 40% year-on-year in Q2, and total QAC base reached a new milestone. The strong user momentum in the quarter was driven by both the accelerated growth of JD Retail's organic user base, as well as incremental contributions from JD Food Delivery and Jingxi Business. In addition to user growth, we also see stronger user engagement.

In particular, user shopping frequency on JD.com's platform rose by over 40% year-on-year in the second quarter, a notable improvement from previous quarters. For JD Plus members, their shopping frequency grew by an even faster pace of over 50% year-on-year in Q2. This is clear proof that our food delivery offerings resonate strongly with our highest quality user groups. We also achieved record-breaking results on the user fronts during the June 18th grand promotion this year, with the total number of purchasing users more than doubled year-on-year, and total order volume surpassed 2.2 billion orders. The positive momentum in user growth and shopping behavior stands as a powerful testament to the synergies between our new business initiatives and core retail business.

We will continue to deepen the synergies and unlock the greater value, which we expect will strengthen overall user stickiness to our platform and drive higher lifetime value across the JD ecosystem. Secondly, our core business, JD Retail, continued to gain steady traction on the back of our further strengthened supply chain capabilities. In Q2, JD Retail achieved robust momentum on both top and bottom lines. By category, electronics and home appliances maintained a strong momentum in the quarter, with revenues up 23% year-on-year. This reflects our ever-evolving supply chain strength, which enables us to further enhance procurement capabilities and offer users extensive product selections, competitive price, and superior services. These strengths have positioned us as a leader in the industry, both during periods of trade-in programs and throughout the day-to-day development. Our general merchandise business also delivered strong performance in the second quarter, with revenues up 16% year-on-year.

In particular, driven by our supply chain strengths, our supermarket category further extended its streak of double-digit revenue growth to six consecutive quarters. Meanwhile, our fashion business continued to maintain double-digit year-on-year growth in revenues in Q2. The strong top-line growth of JD Retail was coupled with an even stronger operating profit growth and margin expansion in the quarter, progressing well toward its long-term target. The continued improvement in JD Retail's profitability is primarily driven by our stronger supply chain capabilities, which ultimately translate to better user experience, lower cost, and greater operating efficiency. Thirdly, we are also encouraged by the healthy development of our new business initiatives. JD Food Delivery business has experienced rapid growth since its launch, with daily order volume increasing exponentially in Q2 and several key milestones successfully achieved.

We've made significant progress in onboarding high-quality merchants, and the number of full-time delivery riders has increased rapidly. More importantly, JD Food Delivery has started to generate clear synergies with our core retail business. Beyond the user-related insights I just shared, we are also proactively capitalizing on the cross-selling opportunities brought by the food delivery business. We are pleased to see the progress so far, particularly the increasing cross-sale ratio of new users brought in by food delivery. Supermarket categories, lifestyle services, and electronics accessories have benefited the most from this trend. Additionally, as our food delivery business scales, we believe it will further enrich our local supply of merchants and drive user traffic and engagement to all of our 3P merchants, helping establish a more dynamic and comprehensive 3P ecosystem on our platform.

For JD, the current priority for our food delivery business is to enhance core system capabilities, from optimizing order dispatching algorithms to refining route planning technologies, all to strengthen JD Food Delivery's ability to better serve users and drive traffic and user growth to merchants on our platform. Driven by these efforts, we are encouraged to see that despite industry dynamics, JD Food Delivery has maintained a healthy order volume growth, especially for new orders in Q3 quarter to date. I want to reiterate that we do not view our food delivery as a standalone business, as it's deeply integrated with JD's broader ecosystem. We aim to further unlock synergies, not only between JD Food Delivery and JD Retail, but also with JD Logistics and other businesses across our ecosystem. This is where our strategic focus lies.

Going forward, we will stay focused on our strategic priorities and invest with high efficiency at a proper rate pace amid the evolving dynamics in the food delivery market. In addition to our robust operations and rising market position in the domestic market, we've also been proactively looking at opportunities to grow globally and taking some early exciting steps. Going global is a long-term vision and holds strategic value for JD.com, as we aim to leverage JD.com's unique advantages of supply chain, know-how, and technology. In recent years, JD Retail, JD Logistics, and JD Property all have taken steps to test and build out overseas retail formats, warehouse networks, transportation infrastructure, and local operational capabilities, especially in Europe and the Middle East. We will share more color of our international development as we progress. To conclude, Q2 was a very productive quarter.

We delivered both short-term results and strengthened our long-term strategic positioning. Our core retail business achieved accelerated top-line growth alongside solid profit expansion, underscoring the resilience of our supply chain-based retail business model. Q2 also marked an important milestone in our long-term development, as some of the key initiatives, both domestically and globally, steadily moved forward and started to show early tangible results. None of this happened overnight. These are the results of years of dedicated effort to strengthen our core supply chain capabilities, combined with extensive preparation to support our strategic expansion. We always have a clear vision. Everything we do is centered on supply chain, with our commitment to putting users first and elevating user experience. This will continue to drive every step of our long-term development and value creation for our users, business partners, and shareholders today and tomorrow in China and across the globe.

With that, now let me turn the call over to our CFO, Ian Su Shan.

Speaker 2

Thank you, Sandy, and hello, everyone. In Q2, we delivered strong top-line growth and robust margin improvement in core retail business. Our total revenues growth for the second quarter was 22%, further accelerating from last quarter and significantly outpacing the growth of China's total retail sales. We saw double-digit growth across our major business lines, including electronics and home appliances, general merchandise, and service revenues, all showing accelerated momentum compared to previous quarters. Regarding profitability, our gross margin reached 15.9% in Q2, marking the 13th consecutive quarter of gross margin expansion on a year-on-year basis, primarily driven by our core retail business. Our non-GAAP net profit margin was down to 2.1%, mainly due to our investments in food delivery. Although near-term profitability is impacted by strategic investments, we remain confident that those efforts will position the company for sustained growth and long-term value creation.

Now, let's go through our financial results in Q2. Our top-line growth maintained a strong momentum in the quarter. Total net revenues increased by 22% year-on-year to RMB 357 billion in Q2. Breaking down the mix, product revenues were up 21%, with electronics and home appliances revenue up 23% year-on-year, and general merchandise revenues increasing by 16% year-on-year in the second quarter, both showing further acceleration compared to previous quarters. For electronics and home appliances, with government's ongoing stimulus policy and the revitalization of domestic consumption, JD.com is well-positioned to fulfill the demands of consumers and provide best-in-class user experience, as JD.com has core competitive advantages in those categories, including strong user mindshare, robust product supply capabilities, as well as superior execution capabilities to effectively support local government trading programs. For general merchandise, major categories such as supermarket, fashion, home goods, and health all achieved double-digit revenue growth in Q2.

We continue to see substantial untapped potential in our supermarket categories, and we're confident in our ability to provide greater user experience with the best combination of product, price, and service in this category while maintaining healthy growth momentum. Service revenues saw a significant acceleration, rising 29% year-on-year in the second quarter. Notably, the growth rate of marketplace and marketing revenues was 22%, which has accelerated for six consecutive quarters. Both commission and advertising revenues maintained double-digit growth momentum in the second quarter. Key operating metrics of our platform ecosystem also showed meaningful progress in terms of both merchant base and user engagement. Logistics and other service revenues were up 34%. The growth rate of logistics and other service marked an eight-quarter high in Q2, primarily driven by our expanding food delivery business, which generated additional delivery revenue. Now, let's turn to our segment performance.

JD Retail revenues were up 21% year-on-year in Q2, driven by solid performance across many of our key categories. In addition, JD Retail continued to achieve year-on-year gross margin expansion, a trend sustained for 13 consecutive quarters. It also marked the highest level for any comparable quarter since inception. This strong track record has been primarily driven by the continued improvement of our supply chain capabilities. In terms of operating income, in the second quarter, JD Retail's non-GAAP operating income was up 38% year-on-year to RMB 13.9 billion, and the operating margin was up 56 bps to 4.5%, maintaining a steady upward trend. We remain confident to further consolidate our market-leading position and drive steady profit improvement moving forward. Moving to JD Logistics, JD Logistics' revenues were up 17% year-on-year for Q2, with both internal and external revenues sustaining double-digit growth momentum.

As JD Logistics continued to invest in user experience, its non-GAAP operating income in the quarter declined by 10.3% to RMB 2 billion. That said, JD Logistics is prioritizing capacity-building initiatives in last-mile pickup and delivery, as well as route optimization. These targeted investments are expected to lay the foundation for efficiency gains and margin expansion in the long term. Turning to new businesses, in Q2, new business revenues tripled year-on-year, at the same time its non-GAAP operating loss widened to RMB 14.8 billion, primarily driven by the rapid expansion of food delivery and Jingxi businesses. Despite near-term financial impact, the food delivery business has driven meaningful traffic and user growth and significantly boosted user shopping frequency. We have also observed a visible uplift in conversion and cross-selling with our core retail businesses.

Moving forward, we will continue to focus on merchant supply, delivery efficiency, and user experience for food delivery business. Additionally, our Jingxi business also saw significant growth in the second quarter, as we further penetrated into lower-tier markets with expanded offerings of value-for-money products. For our consolidated profit performance in the second quarter, our gross profit was up 23% year-on-year to RMB 56.6 billion. We have delivered 13 straight quarters of gross margin expansion year-on-year, reaching 15.9% in the second quarter. It was primarily driven by JD Retail's gross margin improvement, highlighting the high-quality development of our core business. Non-GAAP net income attributable to ordinary shareholders was RMB 7.4 billion in Q2, down 49% year-on-year, and the non-GAAP net margin declined to 2.1%. This near-term margin headwind mainly reflects our strategic investment in food delivery.

Our last 12-month free cash flow as of the end of the second quarter was RMB 10 billion, compared to RMB 56 billion in the same period last year. This was primarily due to cash outflows associated with the trading program and the decline in operating income. By the end of Q2, our cash and cash equivalents, restricted cash, and short-term investments totaled RMB 223 billion. In summary, our second quarter performance was highlighted by robust top-line growth and healthy margin expansion of our core retail segment, reflecting our strong execution capabilities and improving operational efficiency in a dynamic market environment. Looking ahead, we're excited about our new business initiatives and expect it will further accelerate growth in users and shopping frequency while creating great potential for generating synergies. With the continued momentum in our core business and well-executed new initiatives, we're confident in our long-term healthy growth.

With that, I will turn it back to Sean. Thank you.

Speaker 0

Thank you, Ian, for the Q&A session. You're welcome to ask questions in Chinese or English, and you are in our management. We'll answer your question in the language you ask. We'll provide English translation for convenience purposes only. In the case of any discrepancy, please refer to the management statement in the original language. Operator, we can open the call for a Q&A session.

Speaker 4

Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take two questions at a time from each caller. If you have more than two questions, please join the question queue again after your questions have been addressed. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question today comes from Ronald Kung with Goldman Sachs. Please go ahead.

Thank you, Sandy, Ian, and Sean. 那我有两个提问, 第一是想问一下我们这个宇宙换星, 那在618期间呢, 我们看到有一些省份就暂停了, 短暂的暂停了国补。那看着明年也有一些国补的一些不确定性, 还有这个其他平台也竞争也加剧了。但我们也看到这个二季度我们这个表现非常非常亮丽的。那想请请问管理层对这个今年下半年和明年这个代电品类的这个策略和觉得怎么提升这个市场份额。第二个就想问关于外卖的, 那其实现在这个三家还有更多的这个公司参与这个竞争的话, 那其实要拼的是什么, 耐力、执行力还有差异化。那考虑到第一, 现在第一名的其实规模最大, 那第二名呢就有非常雄厚的资金背景。那在我们来讲, 我们应该怎么思考京东的这个投入和长期的决心呢? 那作为目前第三名的话, 我们这个未来应该要持续投入一段时间, 也可能产生亏损。那我们应该怎么评估这个作为流量入口的一个获客和cross-sell交叉的这个销售, 还有这个怎么改善这个UE。那让我翻译一下。 Thank you, management, for taking my questions. The first is on the trading program, that we're seeing some temporary suspension of the trading program during June 18th, and given some uncertainty about the magnitude or kind of extension of the program next year and some increased competition with other platforms as well, I just want to hear what is our electronics and appliance strategy for the second half, given the very very strong first half growth and next year's strategy of growth and market share targets. The second is on food delivery. This is an intense competition of three players or more. These contests are a contest between kind of persistence, execution, and differentiation.

How should we think about JD.com's long-term commitment on this and, particularly competing with number one, which has the largest scale, and number two with very deep pockets? Being a third player at this point could mean some foreseeable loss for a foreseeable period. How do we assess the customer acquisition, cross-sell, and the eventual path to improving economics? Thank you.

谢谢张老的问题。首先第一个问题，在这个国补政策的落地的期间里呢，其实京东不论是响应能力还是我们自己的表现都是稳定和扎实的。今年以来，这个以旧换新的国补政策也可以看到在促进消费、推进产业升级取得了很好的进展。国家也重申以旧换新的国补政策将持续，中央的资金也将分批的下达。在这个过程中呢，京东也是持续响应国家的政策，在推动政策高效落地和这个以旧换新项目中发挥了积极的作用。这背后的驱动力包括第一个就是我们本身都有很强的供应链能力，可以保证稳定充足的货源以及很好的履约交付的能力。另外第二个呢，就是系统的能力和线下的运营能力也使得京东能够快速的跟政府去做对接，来助力各地快速的落地以旧换新的政策。同时呢，我们的确也看到在京东的平台上消费者很旺盛的需求。Q2大家也看到我们代电品类的收入增速整体超过20%。

Speaker 0

Thank you for your question, Ronald. For your first question, during the implementation period of the trading program, JD.com has demonstrated a consistently solid performance and responsiveness. During this period, the trading program itself has made significant progress in boosting consumption and driving industry upgrade this year. The government has also reiterated that the trading subsidy will be continued, with central funding being distributed in batches. During this period, JD.com has consistently taken a proactive approach to the national policies, actively supporting the trading program and contributing to the effective implementation. Our capabilities that enable us to achieve this include, number one, our robust supply chain capability, which ensures a stable supply of products along with reliable fulfillment and delivery services. Number two, our system and offline operational capabilities, which enable us to quickly coordinate with the local government and facilitate the rapid implementation of the trading initiative across regions.

Meanwhile, we have observed robust consumer demand on the JD.com platform. In Q2, the revenue growth of our electronics and home appliances categories surpassed 20% year-on-year.

recycling for trade-in. In the industry, we also provide the most ultimate service experience for trade-in.

Secondly, I want to highlight that the trading policy itself is an opportunity, not a competitive advantage of JD.com, but we have a clear strategy to strengthen our market share. We focus on product price and service and leverage our supply chain capabilities, scale, and omnichannel expertise. We have sustained market share expansion throughout Q2 and Q3 to date. First, in terms of product structure optimization, leveraging the national subsidy, JD.com partners up with brands to accelerate product development, innovation, to launch new products such as smart home appliances and customized products. These efforts have helped better satisfy users' demand and quality replacement and advances industry upgrades. In terms of price advantage, we continue to expand our price advantage by leveraging our expertise in bulk purchasing, product customization, and we always strive to reduce procurement costs and lower the price for our users.

In terms of service capability enhancement, we continue to advance our integrated delivery and installation services, offering the industry-best trading experience.

最后长期来看呢，JD.com的代电品类会持续发挥我们的供应链优势，积极推动行业升级，进一步加强用户的心智。我们也非常有信心可以持续保持增速，好于行业，继续夯实和获得市场份额。

Lastly, in the long term, JD.com will leverage its supply chain advantages in electronics and home appliances to actively drive industry upgrade and strengthen our user mindshare. We are confident in sustaining growth that is outpacing the industry, thereby solidifying and expanding our market share.

user needs through our quality food delivery model.

On your second question regarding food delivery, which is a heated topic that attracts a lot of attention lately, we have shared recently some of our thoughts. Here, I just want to highlight, share some of the highlights. Food delivery and on-demand retail is the key long-term strategic direction for JD.com with our commitment to improve on user experience, cost, and efficiency. We continue to establish and enhance the operational and system capability related to the on-demand retail business and optimize user experience. As I shared before, we have identified and met needs across the industry among merchants, riders, and users, and we are effectively addressing these needs through our quality food delivery models.

从二季度具体的进展来看呢, 那在骑手端, 我们在二季度末JD外卖的全市骑手规模已经突破了150,000人, 那这些的确也让全职骑手的工作更加有尊严有保障, 增加了他们的幸福感, 同时也保障了我们的给用户的配送体验以及订单准时率和服务的体验。那么在供给端方面呢, 我们更加专注品质外卖, 那这个是一个比较差异化的点。那么在二季度末, 我们入驻的品质商家已经超过了1,500,000家, 而且品质正餐的订单占比在持续的上升, 那我们也在帮助这些做好品质的餐厅获得更多的销量。那当然我们也不断的在供应链的源头上在做创新。那么最近我们也推出了七仙小厨的新模式, 来帮助消费者能够这个吃到有品质又便宜的菜品。那么在系统能力上面呢, 我们的外卖研发和运营团队也在快速迭代我们的系统能力, 那包括派单系统的效率算法提升、补贴效率、广告系统能力等等, 这样希望能够为用户、商家和骑手提供更好的体验。

Looking at some of the specific progress we made in Q2, on the rider side, at the end of Q2, the number of full-time food delivery riders on JD.com have exceeded 150,000. JD.com's full-time employment system ensures that riders can work with dignity and security, which in turn also enhances our delivery experience. Both our order punctuality and service quality are steadily improving. On the supply side, we focus on quality food delivery, which is an important differentiation of JD Food Delivery. We onboarded over 1.5 million high-quality restaurants in the second quarter. Moreover, the proportion of orders from meals continues to rise, and we are helping quality restaurants achieve higher sales. We are also constantly innovating at the source of supply chain, launching a new innovative business model called Seven Fresh Kitchen Model to help consumers enjoy quality and affordable meals.

In terms of system capabilities, our food delivery R&D and operation teams are rapidly iterating to enhance system functionality, including order dispatching efficiency, algorithm improvement, subsidy efficiency, and the advertising system to provide a better experience for users, merchants, and riders.

expenses. Our team will comprehensively weigh the ROI of different channels to improve our overall marketing efficiency.

Okay, in terms of synergy, I want to emphasize that JD Food Delivery is deeply integrated into JD overall ecosystem. After more than a quarter of operation, JD Food Delivery starts to generate synergistic value with our core business. This is within our initial expectation. First, JD Food Delivery is driving notable traffic and user growth in Q2. DAU of JD app and QAC, as well as user engagement, all have improved significantly, as well as shopping frequency. The conversion rate of food delivery user purchasing B2C e-commerce products is steadily increasing. This includes new food delivery user cross-buying e-commerce products and the improvement in shopping frequency among existing users. We have observed strong cross-selling that is taking place. We aim to enhance this synergy as we develop several capacities in Q2, which will be launched in the third quarter.

Furthermore, there is also synergy potential between food delivery and the retail business in terms of marketing spending. Our team will evaluate the ROI across different marketing channels and boost overall marketing efficiency.

between food delivery and our core retail business to provide momentum for the long-term healthy growth of the entire group.

Regarding the long-term unit economic improvement, we have noticed the competition starts to intensify since July, but we are currently focusing on improving the platform system and enhancing the experience of users, merchants, and riders. The UE of food delivery of JD Food Delivery is gradually improving. Moving forward, we don't believe the low-quality competition creates any value to the industry. We are focusing on a more refined subsidy strategy tailored to different regions and user groups to improve the fulfillment efficiency fueled by economic scale, enhanced system capability, collectively to improve the profitability of our food delivery business. In the long term, we view this business as a long-term business initiative on JD.com. This is a 5, 10, even 20-year initiative. This is not a one-month, one-quarter, or two-quarter kind of business model.

The food delivery business will gradually leverage economic scale to boost efficiency, and we will continue to unlock the huge synergetic potential between food delivery and the core retail business to support the company's long-term healthy growth. Thank you, Ronald. We can take the next question.

Speaker 4

Thank you. Your next question comes from Kenneth Fong with UBS. Please go ahead.

maintained very strong growth for several consecutive quarters. Can management also share the core drivers behind this and its sustainability going forward? Thank you, I will translate now. Thank you, management, for asking my question. My first question is about the investment in new business. Management mentioned that we have a series of new business initiatives to invest in. Can management share the direction and strategy for this new business investment? From a financial perspective, how would this affect the revenue growth and our profit targets? How should we think about the impact, if any, to the shareholder return policy, including dividends and then a share repurchase? My second question is about the strong growth behind the general merchandise categories. We noticed that these categories have shown a few consecutive quarters of very robust growth. Can management share the drivers behind and its sustainability going forward? Thank you.

谢谢看你的提问啊，我先来回答关于新业务的问题。我们内部在讨论创新业务的时候，其实它有两类，一类是商业模式的创新，另外一类创新是利用新的或者说创新的技术来改善现有的业务模式。所以，目前我们的投入比较大的新业务模式其实就是大家看到的外卖业务，还有惊喜国际业务等等。这些是新的业务模式。第二种就是在我们现有业务中去应用所有的新技术，其实现在也是一个非常重要的时代和机遇。我们这一类型的创新在集团内部是非常非常多的，几乎在每一个业务板块里面都有数不清的创新的项目在推进。这也包括比如说我们AI技术在我们零售业务当中的应用，物流的自动化的无人设备仓库自动化程度的进一步的提升等等。从集团的角度我们也鼓励每一个岗位的同事都要有创新精神，必须要去拥抱创新。另外第二个就是我们的内部创新整体都是围绕着供应链来展开的，这些新业务的探索也都是通过我们的差异化的供应链优势和能力，以提升用户体验为核心，其实都是我们核心业务的自然延伸。当然，除了国内的市场之外，国际化也一直都是JD.com的重要战略，我在开头也讲过，我们也希望能够构建起覆盖全球的更高效的零售与物流履约网络，来为全球的消费者带来极致的购物体验，成为全球领先的零售商，当然这是一个长期的目标。我们相信所有这些无论是新业务也好，新业务模式也好，还是新的技术应用的探索和投入，都会进一步加强JD.com的供应链优势和提升用户的体验，实现长期的健康增长。过往我们的Track Record其实已经证明过很多次，我们也会关注投入效率和可持续的增长，所以对于一些新的业务模式，我们也会本着小步快跑的模式去探索和去驱动创新业务的发展。

Speaker 0

Thank you for your question. Can you let me first address your question regarding the strategy, JD.com strategy for new business initiatives? Within JD.com, we look at new business in terms of innovation of business model and adoption of new technology. As you have observed, JD.com continues to explore and innovate in new directions with synergetic potential with our current core business. In terms of new business model, I can name JD Food Delivery, JD International, International Business, and Jingxi Business as the innovation of business model. At the same time, we are boosting innovation by new technology increasing in various business scenarios, such as, for example, the adoption of AI across various business scenarios. The example is end-man logistic equipment and warehouse automation. We believe we are in the great era of technological development, so JD.com must fully embrace innovation.

We have numerous internal innovation projects, and we are encouraging every team of JD.com to embody a spirit of innovation. JD.com's internal innovation is also centered around supply chain. Leveraging our unique supply chain advantage and capability to enhance user experience is always our core focus. These explorations are a natural extension of JD.com's core business, both domestically and internationally. We are committed to deepen our presence in the retail market by continuously enhancing our existing business capability while exploring on-demand retail and expanding into low-tier markets. At the same time, as China's largest retailer, international expansion has always been a key strategy for JD.com, and we aim to build a more efficient global retail network to provide an exceptional shopping experience for consumers worldwide and become a leading global retailer. This is a long-term goal.

We believe that this new business exploration and investment will further strengthen JD.com's supply chain advantage and enhance user experience, driving continued growth in our user base and user engagement. This gives us the confidence in achieving a sustainable positive cycle of scale growth, efficiency improvement, and profit increase, steadily progressing towards our long-term profitability goals. JD.com's track record has repeatedly demonstrated our commitment to investment efficiencies, and this will remain unchanged. We always adopt a small step, quick progress kind of approach to explore and drive the development of innovative business.

revenue and profit, and continue to share the success of JD.com's business development with shareholders.

Okay, while we actively explore new business opportunities, we will continue to create value and return to our shareholders. First, in the first half of this year, our total share repurchase valued at about $1.5 billion. Under our current $5 billion share repurchase program, the remaining amount was $3.5 billion as of the date of this announcement. Secondly, we have paid out cash dividends to our shareholders for four consecutive years. This April, we completed the payment of about $1.44 billion annual cash dividend for the year of 2024, and we will continue to do so going forward. We will return to our shareholders through growth, dividends, and share buybacks going forward. Lastly, we will also strengthen our execution of core businesses and proactively take on new growth opportunities.

We aim to build a successful business model for the long term, driving steady, sustainable growth in revenues and profits along the way, and sharing our business success with our shareholders. 那关于第二个问题是日百品类, 那大家也看到我们日百品类已经收入已经连续四个季度在稳健加速, 那其中贡献最大的商超品类已经连续六个季度实现了双位数增长。那这里面主要的呃驱动因素还是我们采销团队啊这两年在不断强化自己的经营能力, 而我们也坚信这将持续推动我们商超品类的稳健增长。

Regarding your second question about our general merchandise category, as you have noticed, in Q2, the general merchandise revenue growth has recorded four consecutive quarters of steady acceleration. The major category, supermarket category, which is the largest contributor to the general merchandise revenue, has maintained a double-digit growth for six consecutive quarters. This is primarily due to our team's continuous effort to enhance operational capability over the past two years. We believe this will continue to drive the steady growth of our supermarket business.

impact of government subsidies. The core reason is still the improvement of our team's business capabilities, which will become our long-term growth driver.

Moving forward, JD Supermarket will continue to enhance in the following areas. The first one is the 1P model, which represents our unique business model and distinctive capability. We can further reduce procurement costs, improve supply chain efficiency, and offer better products at a lower price to our users. Second, we aim to improve user conversion. We have observed initial cross-sell by food delivery users in the supermarket category. To embrace the massive traffic generated by food delivery, JD Supermarket team will implement a refined operational strategy, including optimized product recommendation and marketing campaigns to better meet these user needs. I also want to share some view to address the on-demand retail opportunity. We maintain strong confidence in JD Supermarket operational strength, and we will also aim to seize the opportunity of on-demand retail. We recognize on-demand retail serves as a complementary channel addressing specific urgent needs.

It currently has limitations in product variety and cost effectiveness compared to the traditional B2C e-commerce. In the broader retail market, instant retail remains a relatively small segment. JD Supermarket will strategically expand into on-demand retail to fulfill diverse consumption use cases, particularly for the time-sensitive categories, but will always focus on building the core e-commerce operational capabilities. We remain confident in the sustained robust growth of our general merchandise category. This year, the growth of this category has been achieved without the impact of trillion subsidy, and it's primarily driven by the enhanced capability of our team, positioning this category as a key growth driver for our business going forward. Okay, thank you. We can take the next question.

Speaker 4

Thank you. Your next question comes from Joyce Zhu with Bank of America. Please go ahead.

先给医院上晚上好, 祝贺公司本季度增长持续加速, 也感谢接受我的提问。我的第一个问题是关于用户趋势的, 受益于我们不断提升的服务, 然后包括外卖啊国补, 我们看到就是京东这平台这个季度的活跃用户和流量都取得了非常亮眼的成长呢。想麻烦管理层就用户增长趋势, 还有新用户的画像啊, 行为习惯, 包括留存啊, 给我们做一些分享啊, 以及公司下一步的用户增长策略和长期目标是什么样的啊。我的第二个问题呢, 是想了解一下在讨论增长战略的同时啊, 管理层是怎么看我们公司未来几年的盈利水平, 还有利润率的啊, 我们应该怎么样去理解这个预期, 然后包括长期趋势啊, 非常感谢。 I will translate my questions. My first question is on user and traffic trends. Company saw substantial user and traffic growth in the second quarter. Could management share more colors on user profiles, behaviors, and retentions, and also user growth strategies and targets down to the road? My second question is on bottom line outlook. How does management, budget investment for growth opportunities, and how should we expect margin and profit for the next couple of years, and even like in the company's profitability trend over the longer term? Thank you very much.

好, 谢谢。第一个, 那在刚过去的二季度, 我们的用户取得了强劲的增长, 那季度购买用户数和用户的购评的同比增速都超过50%。那这也是这些年我们用户最强劲的一个增长势头。一方面, 零售自身的获客和留存效率也在持续提升, 核心得益于过往我们两年在低价新制和平台生态的努力, 那带来更加丰富的供给和更好的体验。同时转化效率的提升, 持续完善的内容和互动等精细化运营, 也帮我们更好地吸引和留存用户。同时呢, JD Food Delivery上线不到半年的时间, 快速起量已经对JD.com整体的流量、用户还有频次带来新的增长的驱动力。外卖同时也给我们带来了更多的年轻用户, 并且对JD Plus的会员的拉动更加的明显, 二季度JD Plus会员的购评同比增长超过50%。我们会加快外卖向即时零售和B2C电商的交叉销售,

那包括针对老用户的促活和新用户的电商的转化, 那带动京东整体购物用户数和购评的快速增长。

Speaker 0

For your first question, in Q2, we saw strong user growth, with quarterly active customers and user shopping frequency both up over 40% year-on-year. This marks the most robust user momentum we've seen in recent years. On one hand, our core retail business has seen improvements in user acquisition and retention, primarily driven by our low-price strategy and the platform system development over the past two years. These efforts have enriched our product supplies and enhanced the user experience. Moreover, improvements in user conversion efficiency, coupled with our efforts to create more engaging content and other operational refinements, have further supported user attraction and retention.

On the other hand, JD Food Delivery has achieved rapid growth within less than six months of its launch, providing new growth momentum for user traffic, active users, and user shopping frequency on JD.com's platform. The food delivery business has brought in an increasing number of young users and significantly boosted JD Plus members' shopping frequency by over 50% year-on-year in Q2. We will continue to accelerate cross-selling from food delivery to on-demand retail and B2C e-commerce, including efforts to enhance engagement with existing users and convert new users to our e-commerce offerings, thereby driving rapid growth in JD.com's overall user base and user shopping frequency.

Speaker 4

JD.com's user scale and user value.

Speaker 0

Looking at the long term, JD.com's goal is to serve the 1 billion e-commerce users in China. As we continue to focus on enhancing user experience, lowering costs, and driving greater efficiency, we see great potential for improvement in areas such as user skill, diversified service scenarios, a wider range of product and service offerings, and our ability to offer higher-quality services to our users. We have been making strategic investments in these areas to deliver long-term sustainable growth in our user base and user value.

Speaker 4

那关于盈利的问题，京东短期的利润率可能会随着行业竞争，以及自身业务的投入节奏出现波动，但我们的长期利润率达到高个位数的这个目标是坚定不变的，特别是核心零售业务的利润率趋势非常健康。

Speaker 0

For your question about profitability, JD.com's profit margin may fluctuate with industry dynamics and our investment pace in the short term. However, our long-term goal to achieve a high single-digit profit margin remains unchanged, especially as the profit margin of our core retail business has been on a very healthy trend.

Speaker 4

term, commission and advertising revenue will also maintain rapid growth, bringing continuous improvement in profit margin.

Speaker 0

The drivers of our core retail's profit expansion include, first, increased supply chain efficiency, which has been reducing cost and improving efficiency for both upstream and downstream players along the supply chain, and at the same time, driving improvements in our own profits, including higher gross margin over product sales, as well as logistics cost reductions and efficiency gains. Second, better profitability across categories. For example, our supermarket category still has a lot of room to improve its margin performance, and our well-established categories, such as electronics and home appliances, also have potential for margin improvement. Third, development of our 3P ecosystem. As the proportion of our 3P business goes up over time, marketplace and marketing revenue will also have rapid growth, which will benefit our margin performance.

Speaker 4

investment strategy, maintain investment discipline, pay attention to ROI, and dynamically balance based on results.

Speaker 0

Regarding our thoughts on new business investment, we aim to unlock greater growth potentials within new opportunities. We are confident this will drive long-term growth in users, GNV, and profits. The early-stage investment will impact JD Group's margin in the short term, but in the long term, the new businesses will gradually evolve into new growth drivers, creating greater synergies with our core business and ultimately enhancing our profitability. In the process, we will also focus on our strategies, invest with discipline, and focus on ROI. We will maintain flexibility to balance our efforts and inputs based on actual results.

Speaker 5

Thank you, Joyce. Let's take the last question, please.

Speaker 2

Thank you. Your last question comes from Thomas Chung with J.P. Morgan. Please go ahead.

Good evening, thank you management for taking my question. My question is about JD.com's overseas expansion. Can management share our thoughts about the next few years' strategies, as well as the recent deal with Seconomy? What's the logic behind? Thank you.

great value for JD.com. Our online e-commerce operation and technology capabilities can also complement their capabilities. The transaction still needs to go through approval. If there are further updates, we will communicate with everyone again.

Speaker 4

Thank you, Thomas, for your question. Yes, as I have mentioned, as the largest retailer in China, international expansion has always been a key strategy for JD.com. Our international expansion strategy differs notably from other cross-border e-commerce models. Our international business focuses on supply chain capability. On one hand, we aim to seize the opportunity of Chinese premium brands going global, helping them efficiently expand into international markets while providing overseas consumers with cost-effective products. On the other hand, JD.com is also committed to localization, meaning developing local retail and e-commerce businesses, establishing local teams and workforce, conducting local procurement and local fulfillment to build a long-term mutually beneficial relationship with participants in local markets. Moreover, JD.com will emphasize selling branded high-quality products. JD.com has been operating in Europe for three years, steadily building our retail e-commerce property and logistics warehouse infrastructure while accumulating extensive experience.

Since 2022, we have been piloting innovative retail models in Europe, and we plan to officially launch our retail e-commerce platform called JoyBuy later this year, and we will share more updates later on. Regarding the proposed acquisition of Seconomy, we believe the European market, as well as Seconomy's brand strength, supply chain capabilities, and market position in European markets, hold significant value for JD.com. Both parties can achieve similar logistic results, and JD.com can provide online operations expertise and technology know-how. The transaction is subject to regulatory approval. Currently, we will provide further updates as appropriate. Thank you. That's the last question.

Speaker 2

Thank you. We are now approaching the end of the conference call. I will now turn the call over to Sean Shibiao Zhang for closing remarks.

Speaker 5

Thank you. Thank you all for joining the call today. If you have further questions, please contact me and our team. We appreciate your interest in JD.com and look forward to talking with you again next quarter. Thank you.

Speaker 2

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