Operator: Hello, and thank you for standing by for JD.com’s second quarter 2026 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 Zhang, Head of Investor Relations. Please go ahead.

Sean Zhang, Head of Investor Relations, JD.com: Thank you, operator. 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.

Sandy Xu, CEO, JD.com: 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 Ian.

Ian Su Shan, CFO, JD.com: Thank you, Sandy. Hello, everyone. Thanks for joining the call today. In the second quarter, we delivered a high-quality financial performance anchored by robust bottom-line expansion, while electronics and home appliances performance was temporarily tempered by high comparison base, leading total revenues to decrease slightly by 2.9% year-on-year. Our core secular group drivers, including general merchandise categories and marketplace and marketing revenues, maintained healthy momentum. Meanwhile, facing external challenges, we sharpened our focus on supply chain capabilities and operational efficiency, and this move paid off clearly on our bottom line. Our non-GAAP net income rose 20.8% year-on-year to RMB 8.9 billion in Q2, with net margin expanding by 0.5 percentage point to 2.6%, backed by robust profitability of JD Retail and the ongoing financial optimization of JD Food Delivery.

As we headed into the second half of the year, we are confident to return to positive growth on the top line while unlocking further profitability through our supply chain strength and robust execution. Alongside our resilient financial performance, we remained committed to shareholder return. During the first half of the year, we repurchased a total of approximately 69.9 million Class A ordinary shares, equivalent to 34.9 million ADS, for a total of $1 billion U.S. This represents around 2.5% of our ordinary shares outstanding as of December 31st, 2025. Now, let’s go through our Q2 financial performance. Total revenues were RMB 346 billion in Q2, reflecting a 2.9% year-on-year decline as we navigated near-term category dynamics. Breaking down the mix, our product revenues reflected divergent performance across categories. Electronics and home appliances managed through the combined headwind of a high trading base and upstream component price increase.

General merchandise remained a resilient growth anchor, led by JD Supermarket category, which sustained rapid near double-digit revenue growth for the quarter. This performance highlights the strength of our multi-engine growth model across different market cycles. Looking into second half, we expect growth momentum to accelerate across categories as we continue to elevate user experience through our superior product selection, price competitiveness, and service quality. Service revenues grew by 6.8% year-on-year in Q2. Within this line, marketplace and marketing revenues were up 8.3%, primarily driven by higher growth in advertising revenues. Although growth moderated relatively to previous quarters against a high user traffic base, marketplace and marketing revenues consistently outpaced product sales. We expect this structural diversion to continue serving as an important driver for our margin expansion over time. Logistics and other service revenues increased by 5.9% year-on-year in the quarter.

The pace normalized as our JD Food Delivery business left its initial launch and entered a full comparable year-on-year period starting this quarter. Now, let’s turn to our segment performance. JD Retail revenues came in at RMB 295 billion in Q2, down 4.7% year-on-year in the second quarter, in line with expectations as we navigated category specific base effects and market dynamics. Notably, as our continuous efforts in supply chain and user experience gain traction, momentum picked up in June. We expect this recovery trajectory to build further into Q3, making a pivot back to positive revenue growth for JD Retail. In terms of profitability, JD Retail delivered exceptional results in the second quarter. Gross margin expanded by 1.3 percentage points year-on-year to 18.5%. This marks JD Retail’s 17th consecutive quarter of year-on-year gross margin expansion, a strong testament to our ability to consistently unlock profit potential across market cycles.

In addition, JD Retail’s non-GAAP operating profit reached RMB 13.5 billion in Q2, with operating margin up 7 basis points to 4.6%, a record high for promotional seasons. We achieved this milestone amid increased investments in R&D capabilities. Thanks to gross margin expansion and improved marketing efficiency, which provided us great financial flexibility to steadily reinvest for long-term growth. In particular, JD Retail’s marketing expense ratio dropped year-on-year for the fourth consecutive quarter. Overall, this set of results is a clear proof of our business model resilience. Our deepening supply chain capabilities and favorable revenue mix can effectively cushion short-term top-line fluctuations, driving better profitability through operational quality rather than simple scale expansion. Moving on to JD Logistics. Its revenues grew by 24.3% year-on-year to RMB 68.1 billion in Q2, primarily driven by incremental contribution from on-demand delivery service.

JD Logistics’ non-GAAP operating income reached RMB 2.3 billion, up 15.6% year-on-year, representing an operating margin of 3.5%. JD Logistics’ near-term margin fluctuations were mainly attributable to Deppon Logistics, while the rest of JD Logistics business maintained a healthy profitability trajectory. Turning to our new business. Revenues came in at RMB 7.3 billion in Q2. The year-on-year decline was driven by the shifting of recognition of on-demand delivery revenues from new business to JD Logistics, which took effect in Q1 2026. Profitability in this segment improved notably, with operating loss narrowing significantly year-on-year to RMB 9.9 billion. This was primarily driven by a more than 50% loss reduction in JD Food Delivery, highlighting our strong execution in optimizing its UE through streamlined operations, revenue diversification and strict ROI discipline as market competition normalized.

We are confident that our JD Food Delivery business will continue to see meaningful year-on-year loss reduction throughout the rest of the year. Meanwhile, investments in Joybuy and Jingxi progress in line with our strategic roadmap. Notably, Joybuy delivered encouraging sequential revenue growth in Q2 as our overseas supply chain strength and differentiated service offerings continue to gain traction among European consumers. While absolute operating loss expanded as Joybuy enters a rapid scaling phase, its loss margin narrowed sequentially, demonstrating our disciplined approach to business expansion and continuous operational refinement. Turning to our consolidated profit performance. Group level gross margin expanded meaningfully by 1.2 percentage points year-on-year to 17.1% in Q2, reaching a near all-time high. This expansion was primarily driven by JD Retail’s remarkable margin performance.

On operating expense, total operating expense decreased by 4.4% year-on-year in the quarter, with the expense ratio decreasing by 0.3 percentage point. This operating leverage was largely driven by optimized marketing spend, which was partially offset by stepped up R&D investments, particularly scalable AI applications. This leaner OPEX structure reflects our strategic focus on operational efficiency and bottom-line quality over low ROI volume expansion. As a result, our consolidated non-GAAP net income attributable to ordinary shareholders expanded by 20.8% year-on-year to RMB 8.9 billion in Q2, lifting non-GAAP net margin by 0.5 percentage point to 2.6%. Q2 marks a definitive turning point for our consolidated profitability, and we are confident in sustaining this expanding profit trajectory as we move forward. Turning to our liquidity.

Last 12 months free cash flow as of the end of Q2 reached RMB 31 billion, representing a significant improvement compared to RMB 10 billion in the prior year period. This was primarily driven by disciplined working capital management, specifically a healthy acceleration in account receivable collections and normalized cash outflows associated with the trading program. By the end of Q2, our cash and cash equivalents, restricted cash, and short-term investments totaled RMB 235 billion. In summary, the second quarter once again demonstrated the fundamental resilience of our business and the discipline of our strategic execution. Despite top-line headwinds, we unlocked further margin upside in JD Retail while maintaining disciplined ROI-driven investments in new business. Looking ahead to the second half of 2026, we believe we have reached a clear inflection point.

Top-line growth is re-accelerating, profitability continues on an upward trajectory, and deep AI integration is actively redefining both user experience and enterprise efficiency. With solid operational momentum and a strong balance sheet, we remain fully committed to delivering sustainable long-term value to our shareholders through high-quality growth, expanding profitability, a disciplined approach to capital allocation, and consistent shareholder returns. With that, I will turn it back to Sean. Thank you.

Sean Zhang, Head of Investor Relations, JD.com: Thank you, Sandy and Ian. For the Q&A session, you are welcome to ask questions in Chinese or English, and our management will answer your question in Chinese and will provide English translation for convenience purpose only. In case of any discrepancy, please refer to our management statement in original language. Operator, we are opening the call for Q&A session now.

Operator: 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 request to join the question queue again after your first two questions have been addressed. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Kenneth Fong with UBS. Please go ahead.

Kenneth Fong, Analyst, UBS: Hey [Foreign language]

Translator: Thanks management for taking my questions. Despite the high base in second quarter, JD Retail still achieved an outperforming performance, given the macro uncertainties, the front loaded demand for 3C electronics and home appliances categories, and continued price hike. Could management share the outlook for this category for the growth trend in the second half of the year?

My second question is about general merchandise growth rate, which has experienced slowdown in the second quarter. What were the core factors driving this? Can management share your view for the growth trend for these general merchandise categories over the upcoming quarter, please? Thank you.

Sandy Xu, CEO, JD.com: 谢谢Kenny的问题。那就如你所说，在二季度我们的确京东零售也再次展现了我们业务很强的经营韧性。带电品类的销售情况也是符合我们之前的预判的。尽管受到去年的高基数的效应以及原材料成本上涨引发的电子品类涨价等多重影响，那么带电品类在二季度有短期承压。但是凭借京东深厚的供应链能力和我们在这个品类坚实的用户心智，那我们看到就京东的带电品类也继续巩固了我们的市场地位，尤其是家电各个品类的市占率都在实现稳步提升。同时，我们也看到我们全渠道布局的效果显现，线下的业务也保持更快的增长，所以整体表现相对行业更加稳健。那大家也看到，我们其实在香港和上海也都陆续新开了我们的JD Mall的店，也欢迎投资人、分析师有机会可以去看一看。那然后下半年呢，虽然电子产品涨价的问题仍然会继续，那在一定程度上会抑制消费的需求，但是我们也有信心看到带电品类的增速会明显改善。那么一个呢，是基数会逐步回归正常，那从三季度开始起，国补高基数的影响将逐步被消化，那么我们也预期带电品类在基数回归常态化，它的增速会回升。那另外第二个呢，就是供应链的能力也会在一定程度上缓解涨价的压力，那这也是京东比较擅长的，我们也在不断加强我们自己的供应链能力，能够通过前瞻性的布局和相对灵活的备货调整，能够更有效地去应对和缓冲电子品类的价格上涨，那在保持经营韧性的同时，持续为用户提供有价格竞争力的商品。那第三点呢，来自于产品创新。那AI技术的快速发展，其实也带来了产品和品类的创新机遇，那我们也和很多品牌一起在快速地反应，开发新的商品，通过快速地应用新的技术来满足用户不断变化的需求，甚至创造新的需求。那目前呢，我们的Joy Inside也已经与将近200家品牌达成了合作，为家居、家电、机器人等硬件提供了智能交互能力，用京东的AI能力为用户打造更智慧和便捷的体验。那长期来看，我们对带电品类的市场地位非常有信心。虽然在短期销售出现了波动，但越是在不确定性的周期，那么京东对品牌的价值就会越发凸显。我们也将继续发挥我们自营供应链的效率优势，为消费者提供更有竞争力的价格和服务，为品牌提供更具确定性的销售渠道。那关于第二个。

Translator: Let me translate the first answer to the first question. Thank you. Hi Kenny, thank you for your question. As you said, in the second quarter, JD Retail once again showed strong operating resilience. The performance of our electronic home appliance revenue was in line with our previous expectation. Despite the category faced some short term pressure in the quarter, mainly due to last year’s high base and the price hike in electronics driven by the higher raw material cost. Even so, backed by our strong supply chain capabilities and solid user mind share, we continued to strengthen our market position. Notably, our market share across all major home appliance categories grew steadily in the second quarter, especially our omnichannel effort also paid off with our offline business growing at a much faster pace.

As a result, our overall performance remained more resilient in home appliance and electronic category than the industry. As you already know, we open JD Mall in Shanghai and Hong Kong, and we welcome analysts and investors to pay a visit. Looking into the second half, while the ongoing rising consumer electronic price may continue to weigh on consumer demand, we remain confident that this category growth will improve meaningfully in the second half for three reasons. Number one, the base effects start to gradually normalize.

Starting from Q3, the drag from last year high trading base will gradually ease. Growth in electronics and home appliance is expected to re-accelerate as comparison base normalize. Second, we are using our supply chain capability to mitigate the price pressures.

We continue to strengthen our supply chain capabilities, which is our strong competitive advantage. Through proactively planning an agile inventory management, we can effectively cushion the impact of rising consumer electronics prices. This helps us maintain robust operating resilience while delivering competitive price to our users. Third is our product innovation. Rapid AI growth is unlocking opportunities for our product and category innovation. We work closely with brands to co-develop new product using these new technologies. Our Joy Inside has partnered with nearly 200 brands, leveraging JD’s AI capability to enable smarter interaction across home appliance and robot, delivering a smarter and more convenient user experience. Over the long term, we remain highly confident in our leadership in the electronics and home appliance category. While sales may fluctuate in the short term, JD’s unique value to brands become even clearer in uncertain times. We will continue to leverage our one-tier supply chain efficiency to deliver more competitive prices and service to our customer, while providing brands with a highly predictable and efficient sales channel.

Sandy Xu, CEO, JD.com: 那我来接下来回答第二个问题，关于日百品类，同样也在一定程度上受到了去年二季度高基数的影响。那一方面当时的国补直接拉动了家居、家装等品类的销售。另外，国补还和外卖业务也一起拉动了平台的流量和一部分的交叉购买。那么今年二季度日百增速虽然有所回落，但我们在日百各品类的市场份额也都在稳步提升。那细分来看，日百中体量最大的商超品类表现更加稳健，接近双位数增长，而健康和工业品类继续保持双位数以上的增长。

Translator: To your second question. Yes, our general merchandise category was also impacted by the high base in last Q3. At the same time, not only did the trading program directly boosted sales of home goods, it also joined force with our JD Food Delivery business to drive notable traffic to our platform and drive cross sell to certain extent. While general merchandise growth moderated somewhat in Q2 this year, in fact we continue to steadily gain market share across all general merchandise subcategories. Notably JD Supermarket, our largest category within general merchandise, deliver a near double-digit resilient performance, while healthcare and industrial products maintain solid double-digit growth.

Sandy Xu, CEO, JD.com: 那么接下来我们有信心日百品类继续保持健康的增长，它的核心驱动力包括一个品类的经营能力会带来用户体验的不断改善。那我们在商超等日百品类的经营供应链能力还有提升空间，那团队也在持续地通过商品供给拓展和优化，价格力建设、服务水平的提升来不断地提升我们的用户体验，加强用户对京东日百品类的心智。那第二点是用户的持续增长。在用户对京东日百品类心智加强的同时，京东整体的用户规模也保持着健康的增长势头。那外卖、京喜这些新业务也带来了增量的流量和新用户。那接下来我们会加强用户的运营能力，提高转化和交叉购买。那这部分用户在日百品类还有释放的空间。那第三是平台生态的不断加强，我们继续引入优质商家，培养尖锐品牌，在各个环节帮助商家做好精细化运营，让商家和品牌在京东平台实现确定性的增长的同时，也为我们带来销售增量。那零售的3P的销售增速过去三个季度也超过了自己的品类，那么在二季度的占比也会环比提升，那这也是我们平台生态在持续优化的一个体现。那综合来看，我们预计京东零售下半年将逐渐加速增长，一方面代电品类的增长势头将逐步恢复，同时日百品类也在保持健康增长。那另一方面，随着广告转化效率的提升，我们的广告业务也有较大的增速提升空间。

Translator: Okay. Looking ahead, we are confident that general merchandise category will maintain healthy growth backed by several key drivers. Number one, category operational excellence is enhancing user experience. We are seeing further upside in our 1P supply chain capability for general merchant category, especially in JD Supermarket. By extending product selection, building price competitiveness and elevating service quality, we will enhance user experience and solidify JD’s user mindshare in general merchandise category. Second, we see sustained user growth momentum. As user mindshare for our general merchant category deepens, our user base continues to grow healthily. New business, including JD Food Delivery, are bringing notable incremental traffic and new users. Moving forward, we will enhance our user operation to boost conversion and drive cross-sell, and we see meaningful upside in general merchandise category sales. Third is our improving platform ecosystem.

We continue to onboard high quality merchants and incubate emerging brands, while helping them optimize end-to-end operations. This allows merchants and brands to achieve more certain growth on JD, while also bringing incremental sales to our platform at the same time. JD Retail 3P GMV growth has outpaced 1P for the past three consecutive quarters, with its contribution to total GMV expanding quarter-on-quarter in Q2. Overall, we expect JD Retail growth to accelerate quarter by quarter in the second half of the year. Our electronic and home appliance should steadily recover while general merchandise category maintains healthy growth. We also see as conversion efficiency improves, our advertising revenue has meaningful room to pick up speed. Thank you for your question, Kenny. We can go to the next analyst.

Operator: Thank you. Your next question comes from Ronald Keung with Goldman Sachs. Please go ahead.

Ronald Keung, Analyst, Goldman Sachs: 谢谢Sandy。那两个提问。第一想问，因为其他互联网巨头我们看到资本开支都超过了这个经营现金流，那在这个背景下呢，京东其实进入了一个更健康的这个自由现金流的周期。那基于这个优势的话，那我们也看到公司可能还有一些新的投资，那管理层会怎么考虑，会不会考虑设定一个更明确的一个年度利润比例用于股东回报呢？第二想问的是，就随着Joybuy这个快速增长，然后你们这个德国的零售商这个收购的推进，那京东打算如何在这个价格和用户体验或者物流体验方面进一步打造一个差异化的优势？然后公司在对于下半年和明年这个投资的预算应该是如何规划？可以分享一下吗？那让我翻译一下。

Translator: Thank you management. So two questions. One is on your free cash flow. We are seeing you entering into a much healthier free cash flow cycle in contrast to other mega caps in Internet, which are seeing CapEx exceeding operating cash flow for all of the mega caps. With this unique positioning of JD, yet I see some incremental investments, including some real estate. Will management consider setting a more official percentage of annual profits for shareholder returns? Second is on Joybuy. Seeing very fast growth there and a still pending acquisition of the German retailer. How do you differentiate or plan to differentiate your price, users experience or logistics experience further? What is your investment budget for the second half and next year? Thank you.

Ian Su Shan, CFO, JD.com: 好，Ronald，谢谢。那今年上半年，公司总共回购了大概约6990万的普通股，回购金额达到10亿美金，那相当于截止2025年12月31日流通股市的2.5%。那么此前宣布的三年50亿美金的回购计划，目前还剩10亿美金的额度，我们目前是按照计划在执行。那关于股东回报比例的设定，我们将继续坚定地为股东创造价值，持续地投入业务的运营和供应链能力，提升公司长期的竞争力和价值。通过业务健康可持续的发展，以及像分红、回购等多元化的方式持续地回馈股东，追求长期股东综合回报的最大化。那第三，也可以看一下股东回报的track record，相信大家也看到我们在过往回馈股东的力度和决心。自2023年以来，我们已经通过分红和回购回馈股东约130亿美金。那分红来说，我们已经做了持续的年度的派息，从2022年开始。即使在2025年利润出现波动的时候，也保持了每股分红的稳定，保证股东的现金的收益。那回购来说，自2023年以来，我们已经回购了约17%的流通股了。那未来我们会继续坚定地进行股东回报。

Translator: Thank you, Ronald. In the first half of this year, we purchased around 69.9 million ordinary shares for a total amount of $1 billion. This represented 2.5% of our ordinary shares outstanding as of December 31st, 2025. Under the previously announced three-year $5 billion share repurchase program, the remaining amount is around $1 billion. We are executing the program as planned. On shareholder return ratio, we remain firmly committed to creating value for our shareholders. We will continue to invest in business operations and supply chain capabilities to enhance JD’s long-term competitiveness and value. We will return value to shareholders through multiple forms, including healthy and sustainable business development, dividends and share repurchases. Our goal is to maximize long-term total shareholder returns. Third, our track record also shows our strong commitment to shareholder returns.

Since 2023, we have returned around $13 billion to shareholders through dividends and share repurchases. On dividends, we have maintained annual dividend payments since 2022 and kept dividend per share stable even when profits fluctuated in 2025, providing shareholders with steady cash returns. On buybacks, we have repurchased around 17% of our outstanding shares since 2023. Going forward, we will remain committed to shareholder returns.

Sandy Xu, CEO, JD.com: 那我来回答第二个问题。Joybuy的核心竞争力在于将京东多年深耕的供应链能力复制出海，落地欧洲。尤其是在我们具有优势的家电品类上，我们通过高效的自营零售和物流履约的能力，打造了极具差异化的用户体验，包括自行配送和上门安装这些服务。这也为我们Joybuy在欧洲逐渐赢得用户口碑，不仅带动了用户留存率的稳定提升，更加推动了业务两个季度内实现了收入翻番。

Translator: Hi Ronald, let me answer your second question. JOYBUY core strength lies in taking JD’s long standing supply chain capabilities overseas and localizing them in Europe, particularly in home appliance and electronics, where we have a clear edge. Driven by our efficient 1P retail and logistics fulfillment capabilities, we offer a highly differentiated user experience, including integrated delivery and installation services. This has helped JOYBUY gradually win stronger user recognition and mindshare across Europe, increasing user retention and doubling JOYBUY’s revenue within two quarters.

Sandy Xu, CEO, JD.com: 首先，Joybuy在提升体验和留存用户已经初步建立了差异化的优势。依托我们在欧洲自建的仓储物流网络，Joybuy已经在欧洲的主要城市实现当日达和次日达。有超过4000万的消费者可以享受上午下单、下午收货的极速配送服务。

Translator: First, JOYBUY is starting to establish a clear edge in user experience and retention. Powered by our own warehouse network in Europe, JOYBUY now offers same day and next day delivery across major European cities. Place order in the morning, receive in the afternoon. Hyper fast delivery services to over 40 million customers in Europe.

Sandy Xu, CEO, JD.com: 那和一些其他的电商平台不一样，我们凭借京东的供应链能力，是坚持做本地电商的模式，那也会继续强化商品的供给建设，积极拓展与优质的品牌和供应商合作，为当地的用户提供更有竞争力的品质商品。那我们也看到，在六月刚过去的夏季黑五的活动时间，211限时达与送装一体的服务带动了家电与科技产品的热销。那尤其是欧洲的高温也推动了空调销量的激增，而我们送装一体的服务也为欧洲当地消费者提供了极具差异化的用户体验，提升了Joybuy在欧洲市场的口碑和用户满意度。

Translator: You can see, unlike other traditional, so-called traditional cross-border e-commerce platforms, JD leverages our supply chain to build a localized e-commerce model. We are strengthening our product offering, proactively partnering up with top tier brands and suppliers, and delivering high quality products to our local customers in Europe. During Joybuy’s recent Summer Black Friday sale in June, our 211 same day delivery and one-stop delivery and installation service drove strong electronic home appliance sales. Notably, during the heatwave in Europe, we saw strong sales of air conditions where our one-stop delivery and installation service truly deliver a differentiated experience, further boosting Joybuy’s brand reputation and customer satisfaction in Europe.

Sandy Xu, CEO, JD.com: 当然，Joybuy目前还处在能力建设的初期，那么二季度Joybuy的投入环比小幅上涨，亏损率是环比改善的。那接下来几个季度，伴随着单量的快速增长，物流履约的完善，还有服务范围的扩展，在Joybuy的投入预计会随之加大，但我们的投入也是有纪律性的，规模是可控整体。而且Joybuy的商业模式和京东一致，都是以供应链为核心，那随着我们业务的拓展，自然会带动规模效应的逐步显现，那单纯的损益或者说财务模型也会持续改善。

Translator: Of course, Joybuy still in very early stage of capability building. As we fortify our core supply chain strength across product selection and logistics fulfillment, in Q2, our investment Joybuy grew modestly quarter-on-quarter, but its loss or loss margin improved sequentially. Over the coming quarters, as the order volume of Joybuy continues to grow quickly, and logistics fulfillment efficiency improves and service coverage expands, investment in Joybuy is expected to increase accordingly. However, our investment will remain very disciplined and manageable. In addition, Joybuy’s business model is consistent with JD’s core model, with supply chain at the center. As Joybuy scale expands, economic scale will kick in and drive a continuous improvement in Joybuy’s unit economics. Thank you. We can take the next question.

Operator: Thank you. Your next question comes from Alicia Yap with Citigroup. Please go ahead.

Alicia Yap, Analyst, Citigroup: 管理层晚上好，谢谢接受我的提问。两个问题，第一个问题是关于外卖的竞争格局，现状已经趋于稳定。然后京东在外卖业务上的市场份额、用户增长，还有交叉销售协同方面，还有哪些规划和目标接下来？然后第二个问题是针对佣金和广告收入，在行业竞争加剧，然后消费整体走弱的这个背景下，京东如何维持更高增速，然后管理层如何看待这方面的收入在下半年的增速预期？我自己翻译一下。

Translator: For questions, first is related to JD Food Delivery. With the landscape stabilizing, what is JD’s latest plan for your market share, user growth and also the cross-sell synergy target? Second question is for marketplace and also marketing revenues. How can JD sustain faster growth rates amid the competitions and also the slower consumption? What is your view on the growth expectation for this line item into the second half? Thank you.

Sandy Xu, CEO, JD.com: 谢谢Alicia，我来回答第一个问题。首先，JD Food Delivery业务目前取得了不错的进展，在二季度外卖业务的单量规模保持了健康上涨的态势，同时总投入也实现了同比减亏超50%的显著改善。外卖业务在上线一年以来，单均损益的UE取得了明显的优化，这也主要得益于精细化业务的运营和补贴效率的提升，单均补贴在明显下降。此外，配送效率随着规模的增长也会持续地提升，以及我们初步产生的佣金广告多元化的收入贡献。

Translator: Thank you, Alicia. Let me answer the first question regarding JD Food Delivery. JD Food Delivery has made solid progress. In the second quarter, order volume maintained healthy growth while narrowing total loss by over 50% year-on-year. Within just one year of execution, the unit economics improved meaningfully for this business, driven by refined operations and higher subsidy efficiency. We saw subsidy per order notably decreased year-on-year, enhanced delivery efficiency at scale, and growing contribution from commissions and advertising revenues.

Sandy Xu, CEO, JD.com: 在业务的协同方面，外卖作为深植于京东整体生态的业务，它所带来的协同价值也在逐步地释放和体现。这其中包括与核心零售业务在用户和跨品类购物的协同。我们的季度活跃用户数也持续保持着同比双位数的增长。此外在本地化的商品供给和商家生态也进一步的丰富。以及第三个方面就是外卖的履约和物流的配送的底层协同也正在打通，那预计也可以提升我们集团整体的即时配送的能力与效率。

Translator: In terms of synergy with our core business as a deeply embedded business within JD ecosystem, JD Food Delivery is delivering clear synergies. First, it creates strong synergy with our core retail business across user acquisition and cross-sell. Our quarterly active customer maintained solid double-digit year-on-year growth in the quarter. Second, it enriches our location-based supplies and merchant ecosystem. Third, we are integrating the underlying procurement capabilities between food delivery and logistics, which we believe will boost our on-demand delivery capabilities and efficiency.

Sandy Xu, CEO, JD.com: 那从长期目标来看，我们在保持外卖业务规模健康增长的同时，会不断提升我们的运营效率，逐渐地去改善外卖的优益。那更重要的是，我们将加快外卖与核心业务的深度协同，不断地挖掘在京东生态中更多的协同价值，带动京东整体用户和收入的健康增长以及效率的提升。

Translator: In terms of the long term goal, we aim to maintain healthy scale growth in food delivery and continue to boost operating efficiency and unit economics. More importantly, we will deepen integration between food delivery and our core business to further unlock ecosystem synergies to drive sustainable user and revenue growth while lifting overall efficiency and profitability.

Ian Su Shan, CFO, JD.com: 那关于广告佣金，我们始终致力于追求更好的用户体验。那我们会在保证用户体验的前提下，通过效率的提升，逐步推动商业化的变现。那二季度我们的佣金和广告的收入继续保持快于大盘的增长势头，尤其是广告收入的增速更快。

Translator: For your second question, Alicia, JD remains committed to enhancing user experience. Without compromising this focus, we will gradually drive monetization to improve the efficiency. In the second quarter, our marketplace and marketing revenues sustained growth that outpaced our total revenues, while advertising revenue showing faster momentum.

Ian Su Shan, CFO, JD.com: 展望下半年，随着大盘销售的逐步回升，我们有信心看到广告收入迎来快速增长。与此同时，技术效率提升、品类结构的优化、流量池的扩大，都在为广告的持续增长提供动力。在技术上，我们正全面地提升广告的分发效率，通过大模型融入广告的算法，优化推荐效果，带动广告转化率的提升，也推动广告收入的加速增长。在品类结构优化上，广告变现率更高的日百品类增速更快，占比也在持续提升，在结构上支撑广告的增长。流量池也在持续扩大，外卖等新业务为平台带来了更多的流量，整体广告投放的流量池在扩大。同时，外卖自身的广告业务也在不断完善，贡献了增量的广告收入。

Translator: Looking ahead to the second half of the year, as our overall sales recovers, we are confident in accelerating our advertising revenue growth. Meanwhile, we expect tech-driven efficiency gains, category mix optimization, and traffic pool expansion to help fuel sustained momentum in our advertising business. On tech-driven efficiency, we have been driving ad distribution efficiency by integrating AI into our algorithms. This optimizes recommendation accuracy, boosting conversion rates and accelerating ad revenue growth. On category mix optimization, general merchandise categories, which have higher ad monetization rates, are growing faster and taking a larger share of our total sales. This mix shift structurally supports our advertising growth. On traffic pool expansion, new businesses such as JD Food Delivery have brought incremental traffic to our platform, expanding our overall traffic pool for advertising. In addition to that, JD Food Delivery’s own advertising capabilities continue to mature, contributing incremental ad revenue.

Ian Su Shan, CFO, JD.com: 那长期来看，随着我们平台生态的完善与繁荣，以及技术能力持续驱动效率提升，我们的广告收入将保持稳健的增长势头，成为集团收入和利润增长的核心驱动力之一。

Translator: Over the long term, as our platform ecosystem continues to improve and grow, and as technology drives further efficiency gains, we expect our advertising revenue to maintain steady growth, serving as one of the core drivers of our revenue and profit growth. Operator, we can go to the next question.

Operator: Thank you. Your next question comes from Thomas Chong with Jefferies. Please go ahead.

Thomas Chong, Analyst, Jefferies: 晚上好，谢谢管理层接受我的提问。我有两个问题，第一个是管理层可以展望一下，就是JD零售下半年的利润率的一个趋势。另外的话，我们应该怎么去看新业务的一个投入？然后我们怎么去看待从集团层面来看，今年年的盈利，还有利润率。谢谢。我来翻译一下。

Translator: Good evening. Thanks management for taking my questions. My first question is, can management comment about second half JD Retail margin outlook? My second question is about how we should think about the investment in new business. On that point, how should we think about the group level profitability and net margin? Thank you.

Ian Su Shan, CFO, JD.com: Thomas，谢谢你的提问，那我来回答一下。那二季度京东零售经营利润率的稳步提升，主要得益于，第一是毛利率的持续改善，包括运营和供应链效率的提升，带动了商品毛利率的提升，以及高毛利的佣金和广告收入占比持续提升。那第二呢，是市场费用费率连续四个季度同比优化。那与此同时，我们也高度重视AI应用相关的研发投入，二季度的研发费用也有明显的上涨。

Translator: Thank you, Thomas. I’ll take your questions. In Q2, JD Retail’s operating margin improved steadily. This was mainly attributable to first, gross margin sustained improvement. This is supported by product sales growth margin expansion as a result of enhanced operational and supply chain efficiency, alongside an increasing contribution from high margin commission and advertising revenue. Second, JD Retail’s marketing expense and expense ratio have been improving year-over-year, a trend we have seen for four consecutive quarters. At the same time, we continued to place strong emphasis on R&D capabilities, especially related to AI applications. JD Retail’s R&D expenses increased notably in Q2.

Ian Su Shan, CFO, JD.com: 那展望下半年，我们预计京东零售的供应链效率将持续提升，拉动零售毛利率的提升。那同时我们也坚信，为了长期投入，尤其是在AI相关的研发投入，预计未来一段时间内研发费用将保持增长态势，但我们相信这些投入会逐步转化为运营的红利，带动长期零售效率的提升和整体费用结构的改善。

Translator: Looking into the second half of the year, we expect improved supply chain efficiency to continue to drive higher growth margin for JD Retail. At the same time, we remain committed to long term investments, particularly in R&D for AI applications. We expect R&D expenses to maintain a growth trajectory for the near term, but we believe these investments are gradually translating into operational benefits, lifting long term efficiency and optimizing the overall expense structure for JD Retail.

Ian Su Shan, CFO, JD.com: 长期来看，我们对实现高个位数的利润率目标保持信心。核心驱动力还是包括自营能力。凭借1P供应链能力的强化和规模优势，商品毛利率将持续地、稳步地提升。品类的改变，像超市等品类的盈利能力仍然有较大的提升空间。同时随着商品结构的优化，带店品类长期来看也有利润率提升的空间。最后是平台生态，佣金和广告等高利润率的服务会保持快速增长，优化整体的收入结构，带动利润率的提升。

Translator: Over the long term, we remain confident in achieving our high single digit margin target. The key drivers include our first 1P capabilities. With stronger 1P supply chain capabilities and scale benefits, we expect product sales growth margin to improve steadily. Second, category upside. Categories such as JD Supermarket still have meaningful potential to improve its profitability. In addition, as we further refine product mix, electronics and home appliances categories also have room for margin expansion over time. Lastly, platform ecosystem. As high margin service revenues such as commissions and advertising grow at a rapid pace, we expect our revenue mix to further optimize, serving as a structural driver for margin expansion.

Ian Su Shan, CFO, JD.com: 那关于新业务的投入和集团的盈利。首先，我们在新业务的探索和投入，始终围绕着京东供应链的能力做长期的布局和能力的提升，包括国际化、下沉市场、即时零售等。那同时随着各项新业务逐步成熟，京东整体业务生态的协同效应会持续地释放，将拉动京东长期的健康的增长和贡献利润。

Translator: In terms of investment in new businesses and JD Group’s consolidated profitability. First, our efforts and investments in new businesses are long term initiatives with a focus on leveraging and enhancing our supply chain strength. These areas include international business, lower tier markets and on-demand retail, and so on. As these new businesses gradually mature, synergies across our business ecosystem will continue to unfold, supporting long term healthy growth and profit contribution.

Ian Su Shan, CFO, JD.com: 那目前各项新业务的发展阶段和投入周期各不相同，我们会遵守财务纪律，关注投入产出的效率，动态平衡不同新业务之间的资源投入。那总体上会确保集团整体利润的趋势保持健康增长。那具体来看，外卖二季度亏损同比减半，未来会持续优化UE，预计下半年继续保持投入的效率的改善和同比亏损的明显收窄。那国际现在处于业务的布局的早期，目前发展势头很快，也很健康，UE也在逐步改善。但是业务规模在快速扩张，所以投入有所逐步增长，未来我们会按照节奏投入，保持整体投入规模的稳健可控。京喜凭借差异化的供给，高效地渗透了下沉市场，给我们带来了大量的新用户，提升了用户活跃。预计京喜也会在单量的快速增长的同时，保持UE的改善。

Translator: At present, our new businesses are at different stages of development and investment cycles. We remain committed to strict financial discipline, focusing on ROI efficiency, and will dynamically balance resource allocation across the new initiatives. Overall, we will ensure our profitability trend at the group level remain healthy. Specifically, in Q2, JD Food Delivery narrowed its losses by 50% year-on-year. Looking ahead, we remain focused on optimizing its unit economics, and we expect further efficiency gains and a substantial narrowing of year-on-year losses in the second half of the year. For international business, while in its early stage, it is showing fast-paced and healthy momentum with unit economics gradually improving. Given its rapid development, our investment has scaled up accordingly. Going forward, we will invest at a measured pace and keep total investment for the business steady and within our control.

As for Jingxi, as it effectively penetrates lower-tier markets with differentiated supply, it has brought in a large amount of new users and enhanced user engagement for our platform. Moving forward, we expect Jingxi to drive rapid order growth while continuously improving its unit economics.

Ian Su Shan, CFO, JD.com: 关于集团整体的利润，二季度集团的净利润进入确定性的利润增长拐点，开始恢复同比健康增长。展望下半年，伴随着核心业务的健康发展和有纪律性的投入，我们有信心推动集团利润的加速增长。未来预计随着核心零售长期的盈利能力提升还有改善的空间，新业务也将继续优化投入产出效率，并释放协同价值，逐步成为集团新的增长引擎，共同推动集团盈利的长期的稳步的向上。

Translator: On JD Group’s profitability, Q2 marked a clear inflection in its trajectory, returning to healthy year-on-year expansion. Looking ahead to the second half of the year, supported by core business health and investment discipline, we are confident in driving accelerated profit growth at the group level. Over the long term, as our core retail business has further room to enhance profitability, and new businesses continue to optimize ROI efficiency, unlock synergies and gradually become new growth engines, we are well positioned to drive steady long-term profit expansion for the group.

Sean Zhang, Head of Investor Relations, JD.com: I think that is all the time we have for Q&A. Back to operator.

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

Sean Zhang, Head of Investor Relations, JD.com: Okay. Thank you. Thank you for joining us today on the call. Thank you for your questions. As always, if you have further questions, please feel free to contact me and our team. We appreciate your interest and support in JD.com and really looking forward to talking with you again next quarter. Thank you very much. Have a good day.

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