JD.com (JD) Q2 2026 earnings call transcript

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 Shan. Sandy will kick off the call with her opening remarks, and Ian will discuss the financial results. Then we'll open the call to questions from analysts. Please note, unless otherwise stated, all comparisons 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 Sip Hopper 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 R&D, unless otherwise stated.

With that, let me turn the call over to our CEO Sandy. Sandy, please.

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 amid macro and industry headwinds. We are navigating a high trade in comparison base, upstream price pressure in consumer electronics, and evolved microdynamics. 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 8.9 billion RMB, 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. MCT 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 the drive sustained profit expansion.

Moving to our operational highlights, I would like to share three key developments for the quarter. First, we maintain 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 June 18th 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 stiffness. In healthcare, we provide users with a foot-side online and offline services, from consultation to pharmacy and on-site care. In home services, revenues increased exponentially year-on-year In Q2, and 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 lifecycle 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 man share remain 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 space, and our strong supply chain strength allow us to navigate consumer electronics price cycles more effectively.

General merchandise maintains 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 time, supported by our supply chain efficiency and strong user manshare, 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 the marketing revenues, particularly the rapid growth in advertising revenues.

JD Retail's operating margin increased by seven basis points to 4.6%, setting a new record for a peak promotional quarter. Beyond the growth margin expansion, this performance also reflects our eye-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, we are maintaining decent 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 Joy-Buy and Zinzi 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. CINC continues to deepen its penetration in lower-tier markets, with QAC increasing over 40% in a year and contributing 40% of new active customers in Q2. I'm not in valuable incremental user pools for our ecosystem. Well, 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, spending demand forecasting, product sourcing, intelligent customer services, and full-stack logistics automation. Next generation shopping and conversion, we are proactively upgrading our search, recommendations, and targeting engines 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 Lanzu tech goods to present solution across more warehouses and product categories. In autonomous delivery, JDL scaled thousands of airman 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 micro 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.

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 a high-comparation base, beating total revenues to decrease slightly by 2.9% year-on-year. I will call secular group drivers, including general merchandise category and marketplace and marketing revenues, maintain 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're 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 remain 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 US $1 billion. 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 R&B 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 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 Q2, 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 grow by 6 year on year in Q2 Within this line marketplace and marketing revenues were up 8 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 the 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 full 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 R&B 295 billion in Q2, down 4.7% 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 gained 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. In the second quarter, growth growth 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 growth 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 seven business points to 4.6%, a record high for promotional seasons. We achieved this milestone aimed at increased investment in research and development 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 revenue scrolled 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 Deppong, while the rest of JD Logistics business maintained a healthy profitability trajectory.

Turning to our new business, revenues came in at R&B 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 R&B 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 unique economics through streamlined operations. Revenue diversification and strict ROI discipline as market competition normalized. We are confident that our food delivery business will continue to see meaningful year-on-year loss reduction throughout the rest of the year. Meanwhile, investments in Joybuy and Jinxi 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 entered 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, host-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. Operating expense, total operating expense decreased by 4.4% year on year in the quarter, with the expense ratio decreasing by 0.3% 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 linear OPAC 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 R&B $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 collection, 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 R&D $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 accelerating. Processability 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, extending profitability, a disciplined approach to capital allocation, and consistent shareholder returns.

With that, I will turn it back to Sean.

Thank you. 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 our general language. Operator, we are opening the call for Q&A session now.

Thank you for your question. As you said, in the second季度, we have seen our business in a very strong business. The situation of the product and product sales is also符合 our previous view. That is, we have seen the production of the past year's production and the product of the product of the product. We also see the effect of the whole city of the company. The current business of the company will be more rapid. We also have seen that in Hong Kong and Shanghai have opened our JD. com. We can see the投資 and research team. In the past year, the current market is still going to continue. Thank you. We are also able to keep our customers in the future.

We can through the front-end-line and a relatively new way of bringing the stock market to the market. We are able to keep the business and market market. That is the third point of innovation. That AI technology's fast-forward and innovative technology also brings us to the products and products. We also have to connect with many products and products and develop new products. We also have to connect with new technologies to help users change the needs and create new needs. Now, our Jail Insight has already achieved over 200 companies. We will now turn the call over to management for a new company.

Let me translate 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 petitions. In the second quarter, the category phase, 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 mindshare, we continue to strengthen our market position. Notably, our market share across all major home appliance categories grew steadily in the second quarter. Especially our omni-channel effort also paid off with our offline business growing at a much faster pace.

As a result, our overall performance remains more resilient in home appliance and electronics category than the industry. As you already know, we opened 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 will grow So growth will improve meaningfully in the second half for three reasons. Number one, the base effect starts 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 reaccelerate as comparison base normalized.

Second, supply chain capabilities mitigate. We are using our supply chain capabilities to mitigate the pressures. We continue to strengthen our supply chain capabilities, which is our strong competitive advantage. Through proactively planning and 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 products using these new technologies. Our joy insight has partnered with nearly 200 brands, leveraging JD's AI capability to enable smarter interaction across home appliance and robots, delivering a smarter and more convenient user experience.

So 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-piece supply chain efficiency to deliver more competitive prices and services to our customers, while providing brands with a highly predictable and efficient sales channel.

I will now answer the question The price of the market is also affected by the last year second year second year high sales On the other hand the company company just moved to the store of the store and the company company and the company company are also together This is a big issue and health and technology continue to maintain the highest growth of the number of customers. 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 joins force with our food delivery business to drive notable traffic to our platform and drive cross-sell to a certain extent.

So while general merchandise growth moderated somewhat in Q2 this year, we continue to steadily gain market share across all general merchandise subcategories. Notably, supermarket, our largest category within general merchandise, delivers a near double digit resilience performance, while healthcare and industrial products maintain solid double digit growth. Thank you. The second is the customer's growth. We continue to build a job for customers to grow. We encourage customers to grow, and build a successful growth plan. We will also help customers to grow. We also bring our sales sales to 3P sales. We have over 3 weeks of sales. We will also increase the growth rate by 2 weeks. That is also a quality of our platform. In general, we expect that the sales of the next year will increase the demand.

On the other hand, the market growth of the market will be gradually restored. The market growth of the market will also keep healthy. On the other hand, according to the marketing growth of the market, our marketing business will also increase the demand.

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 1T supply chain capability for general merchandise category, especially in supermarkets. By expanding product selection, building price competitiveness, and elevating service quality 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 merchandise category deepens, our user base continues to grow healthily. New business including Food Degree and Jingxi are bringing notable incremental traffic and new users. Moving forward, we will enhance our user operation to boost conversion and drive process. And we see meaningful upside in general merchandise category sales. Third is our improving platform ecosystem. We continue to onboard high-quality merchants and incubating 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 JD Retail 3P GND growth has outpaced 1P for the past three consecutive quarters with its contribution to total GND extending Q on Q in Q2.

So overall, we expect JD Retail growth to accelerate quarter by quarter in the second half of the year. Our electronic to 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.

We are still at 10 million dollars. We are currently in the plan. Regarding the payment of the customer return, we will continue to make the value of the customer, continue to invest in business and business, Good morning, and welcome to the Kodong. We have been through the fund and return for the fund and return for the fund. For the fund, we have been doing the ongoing process of the year-to-end, since the 2022 year-to-end, even though the revenue was increased in the 2025 years, we also keep the fund and return for the fund. It ensures the capital gains for the fund. For the fund, we have been returning for the year-to-end. In the first half of this year, we purchased around 69.9 million ordinary shares for a total amount of 1 billion USD.

This represented 2.5% of our ordinary shares outstanding as of December 31st, 2025. Under the previously announced three-year, five-billion USD share repurchase program, the remaining amount is around one billion USD. We are accepted on the program as planned. Our shareholder return ratio will 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 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. Our third, our track record also shows our strong commitment to shareholder returns. Since 2023, we have returned around the 13 billion USD 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 the 17% of our outstanding shares since 2023. So going forward, we will remain committed to shareholder returns.

I will answer the second question. Hi Ronald, let me answer your second question. So, joined by core strength lies in taking JD's long-standing supply chain capabilities overseas and localizing them in Europe, particularly in home appliance electronics, where we have a clear edge. Driven by our efficient 1P retail and logistic 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.

First, Joybuy is starting to establish a clear edge in user experience. and retention, powered by our own warehouse network in Europe, joined by now offers same day and next day delivery across major European cities, bring in place order in the morning, receive in the afternoon hyperfast delivery services to over 40 million customers in Europe. And with other other products, we will continue to change the market and market market. We also saw that at the 6th of the past year, the 211 of the U. S. and the U. S. and the U. S. and the technology and technology. Especially the high heat, we also moved into the air supply of the supply. Our U. S. and the U. S. also provided an extremely diverse experience for the European market.

This increased the price of the U. S. and the user's satisfaction in the U. S. market. 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-applying sales. Notably, during the heat wave 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.

The Of course, Joy-Buy is still in the very early stage of capability building. So as we fortify our core supply chain strength across product selection and logistic fulfillment, in Q2, our investment in Joy-Buy grew modestly Q-on-Q, but its loss or loss margin improved sequentially. Over the coming quarters, we expect as the older volume of Joy-by continues to grow quickly and logistic fulfillment efficiency improves and service coverage expands, investment in Joy-by is expected to increase accordingly. However, our investment will remain very disciplined and manageable. In addition, Joy-Buy's business model is consistent with JD's core model with supply chain at the center.

So as Joy-Buy's scale expands, economic scale will kick in and drive a continuous improvement in Joy-Buy's uni economics. Thank you.

The customer Thank you Alicia Let me answer the first question regarding GD food delivery GD food delivery has made solid progress In the second quarter order volume maintained healthy growth while narrowing the supply chain Total loss by over 50% year on year. So within just one year of execution, the union 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. On the business. The business as the business as the whole business of Kintung's business, its core value is also reflected in the business of Kintung's business. This includes the business of Kintung's business and customers' business.

Our business of Kintung's business is still keeping the same growth. 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 maintains solid double-digit young-year growth in the quarter. Second, it enriches our location-based supply and merchant ecosystem. And third, we are integrating the underlying fulfillment capabilities between food delivery and logistics, which we believe will boost our on-demand delivery capabilities and efficiency. In terms of the long-term goal, we aim to maintain healthy status. scale growth in food delivery and continue to boost operating efficiency and unit economics. More importantly, we'll deepen integration between food delivery and our core business to further unlock ecosystem synergy to drive sustainable user and revenue growth while lifting overall efficiency and profitability. Thank you.

For your second question, Alicia, JD remains committed to enhancing user experience without compromising this focus. We will gradually drive monetization through improved efficiency. In the second quarter, our marketplace and marketing revenues sustain the growth that outpaced our total revenues, while advertising revenue showing faster momentum. Thank you. Thank you.

Looking ahead to the second half of the year, as our overall sales recover, 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 In our advertising business, on tech-driven efficiency, we've been driving ad distribution efficiency by integrating AI into our algorithm. 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 The next step is taking a larger share of our total sales. This makeshift structurally supports our advertising growth. Our traffic pool expansion, new businesses such as food delivery have brought incremental traffic to our platform, expanding our overall traffic pool for advertising.

In addition to that, food delivery's own advertising capabilities continue to mature, contributing incremental advertising. revenue. Over the long term, as our platform ecosystem continues to improve and grow, and as technology drives further efficiency gains, we expect our We are advertising revenue to maintain steady growth, serving as one of the core drivers of our revenue and profit growth.

Thomas, thank you for your question. I'll answer it. The second half is the market for the market. I'm also going to talk to you about the two-year-old AI technology.

Thank you, Thomas. I'll take your questions. In Q2, JD Retail's operating margin improved steadily. This was mainly attributable to first growth margin, so sustained improvement. This is supported by product sales growth margin expansion as a result of enhanced operation. The second one, JD Retail's marketing expense and expense ratio have been improving year on year, a trend we have seen for four consecutive quarters. While at the same time, we continue to place strong emphasis on R&D capabilities, especially related to AI applications. JD Retail's R&D expenses increased the notably in Q2.

Looking into the second half of the year, we expect improved supply chain efficiency to continue to drive higher growth margins for daily 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. 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,凭借自营供应链能力的强化和规模优势,商品毛利率将持续稳步的提升,品类的改变,商超等品类的盈利能力仍然有较大的提升空间, Over the long term, we remain confident in achieving our high single digit margin target. The key drivers include, first, 1P capabilities. With stronger 1P supply chain capabilities and skill benefits, we expect product sales growth margin to improve steadily.

Second, category upside. Categories such as 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.

Thank you. In terms of investment in new businesses and JD Groups 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. Thank you. We will continue to keep the investment effect of the market and the risk of the market. The international market is now in the early beginning of the business. The development of the market is very fast and healthy. The company is also in a further improvement.

But the market market is in a faster pace, so the investment will be further increasing. In the future, we will be able to keep the investment of the investment. At present, our new businesses are at different stages of development and investment cycles. We remain committed to strict financial discipline, focusing on our own business. We will improve ROI efficiency and will dynamically balance resource allocation across the new initiatives. Overall, we will ensure our profitability trend at the group level remains 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's 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 Jinxi, as it effectively penetrates lower-tier markets with differentiated supplies, it has brought in a large amount of new users and enhanced user engagement for our platform. Moving forward, we expect Jinxi to drive rapid older growth while continuously improving its unique economics.

Now, we are now looking at the market for the market market. The new business will continue to improve the market market and increase the value of the market market. It will become a new growth engine that will be the same as the market market. 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.

So, I think that's all the time we have for Q&A. Back to operator.

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