JD.com conference call: The Chinese takeaway market "can fully accommodate multiple platforms," currently focusing more on user experience

In the first quarter, JD.com presented an impressive performance report: both revenue and net profit exceeded expectations, and the profitability of its core retail business strengthened, including a significant increase in revenue from new businesses such as the food delivery service.

Investors are closely monitoring the development of JD.com’s food delivery service. According to the earnings conference call held on Tuesday night, JD.com’s food delivery business is growing rapidly, with daily orders approaching 20 million. JD.com CEO Xu Ran emphasized during the call that the food delivery market is vast and “can fully accommodate multiple platforms,” and there remains a significant unmet demand in the market. She also stated that the food delivery strategy is deeply embedded in JD.com’s ecosystem, seeking long-term synergies after short-term investments, with a current focus on user experience.

Additionally, JD.com’s retail business achieved comprehensive growth, with daily sales in hundreds of categories maintaining double-digit growth momentum; AI technology is being fully integrated into JD.com’s business scenarios, enhancing operational efficiency. JD.com reiterated its long-term goal of achieving a high single-digit net profit margin.

The Chinese food delivery market “can fully accommodate multiple platforms,” with a current focus on user experience

JD.com revealed eye-catching data during the conference call: the food delivery business reached nearly 20 million daily orders within just a few months, with over a million merchants onboard. This explosive growth clearly indicates that JD.com has become an important player in the food delivery market. Management emphasized:

Our team has been looking at the data ourselves, and even if we cannot exceed 20 million orders today, this milestone can be broken very quickly. This is also a very important milestone for our business.

In the latest earnings call, JD.com CEO Xu Ran stated that JD.com’s instant retail and food delivery businesses are not isolated independent operations but are strategically extended from the core retail business.

From our perspective, instant retail and food delivery businesses are strategically derived from our core retail business, and they naturally extend to instant retail, as the goal is to meet the evident shopping needs of users.

Xu Ran pointed out that the Chinese food delivery market is vast, “can fully accommodate multiple platforms,” and there remains a significant unmet demand in the market, including “user demand for food safety and quality delivery, merchant demand for reasonable commissions, and delivery personnel demand for better protections.”

When asked about the mid-term goals for the food delivery business, Xu Ran did not provide specific numbers but mentioned the prioritization:

Regarding specific business goals and plans, at this stage, we are more focused on the experience of users and merchants. Of course, we also pay attention to business scale and the ROI of investments.

Xu Ran admitted that there is still “a very large room for improvement” in the system and operations, as they entered the industry later than competitors. However, she emphasized that the food delivery business can generate “huge synergistic value” with the existing core business, and the medium to long-term goal is to “further enhance the synergistic effects and operational capabilities of JD.com’s overall ecosystem, providing momentum for long-term healthy growth.”

Daily Necessities and Apparel Categories Continue Strong Growth

Apart from the takeaway business, JD.com's retail business also maintains a strong growth momentum. Management stated that in the first quarter, the daily necessities category sustained double-digit revenue growth, with both the supermarket and fashion categories achieving double-digit year-on-year growth, further accelerating quarter-on-quarter.

The supermarket team has achieved double-digit revenue growth for five consecutive quarters. Management pointed out:

The market size of China's supermarket industry is enormous, and JD Supermarket can continuously leverage its efficient self-operated model and supply chain advantages, further developing and releasing the synergies brought by takeaway and instant retail.

In terms of user growth, the number of purchasing users has maintained double-digit growth for six consecutive quarters, with Q1 growth accelerating to over 20%, becoming an effective driver of JD's revenue growth.

Comprehensive Application of AI Technology: From Advertising Algorithms to Supply Chain Optimization

JD.com is actively embracing the enormous opportunities brought by AI technology and is currently widely experimenting and applying AI technology throughout the retail and supply chain.

JD's management revealed during the conference call that the JD advertising team has begun utilizing AI large models to enhance advertising algorithms and recommendation effectiveness, driving an increase in conversion rates and subsequently accelerating growth in advertising revenue. At the same time, the company is exploring and implementing AI agents in the advertising field, allowing merchants to execute complex advertising operations through simple commands, significantly improving advertising efficiency and effectiveness.

In the logistics sector, in addition to applying AI technology, JD is also implementing unmanned technology, which will drive improvements in warehouse operational efficiency and reductions in operating costs in the long term.

JD's 618 Shopping Festival Gearing Up

With the 618 shopping festival approaching, JD has launched the "Exciting Shopping Season" at 8 PM tonight to meet consumers' demand for early consumption. The official 618 shopping festival will begin at 8 PM on May 31, continuing the core concept of "good quality at low prices."

Management stated that this year's JD 618 will feature richer shopping scenarios and promotional activities, especially with trade-in offers, national subsidies, and JD's takeaway making its debut at 618, bringing users "additional benefits on top of existing ones."

Management is optimistic about this year's 618 shopping festival and the user growth and sales performance in the second quarter, believing that a series of government policies to boost consumption have continuously improved the overall consumption situation.

In the categories of mobile phones, home appliances, and other electronic products, the company expects to continue a healthy sales growth trend in the second quarter and will continue to enhance supply chain capabilities and service capabilities to meet user demands and increase market share.

The following is the full transcript of the conference call:

JD.com Q1 2025 Earnings Call

At the beginning of the meeting, the host stated that he would now hand over the meeting to today's host, JD.com's CEO Sandy Xu. Sandy Xu will start the meeting and give an opening speech, followed by Chief Financial Officer Ian Shan discussing the financial results. After that, the meeting will be open for analyst questions. It should be noted that all amounts mentioned in the meeting are in RMB unless otherwise stated.

CEO Sandy Xu:

Thank you all for participating in today's earnings call, where we introduced the business performance for the last quarter of 2024 and the first quarter of 2025. In the last quarter of 2024, the company's business maintained a strong growth momentum, and the performance in the first quarter of 2025 was even stronger, with total revenue increasing by 16% year-on-year, further accelerating compared to the previous quarter, and achieving healthy growth across all sectors. In the same quarter, JD.com significantly outperformed retail sales and online physical goods sales, continued to enhance supply chain capabilities, consolidated its market leadership in the electronics and home appliances categories, while further tapping into the vast potential of the comprehensive goods market and enhancing brand recognition among users.

The company continued to achieve healthy profit growth in the first quarter. Non-GAAP net profit increased by 43% year-on-year, reaching RMB 12.8 billion, and the net profit margin improved from 3.2% to 4.2%. This growth was mainly due to the improvement in gross margin, a trend maintained by the company for 12 consecutive quarters, indicating that the company team has always focused on enhancing the best user experience, reducing costs, and improving efficiency.

Performance across major categories:

In the first quarter, the demand for electronics and home appliances continued to remain strong, driving the company's revenue growth of 17% year-on-year. The strong demand in this category demonstrates the potential of domestic consumption and JD.com's leadership in this field. The company's business model enables it to seize structural opportunities in the industry, benefiting from government consumption stimulus policies, technological innovation, and the launch of new products. The company is confident in the long-term growth of the electronics and home appliances sector, which is expected to bring more vitality and resilience.

In the first quarter, revenue growth for comprehensive goods accelerated to 15% year-on-year, with supermarket category revenue achieving double-digit growth for the fifth consecutive quarter. Particularly during the Spring Festival promotion season, supermarket sales and user growth performed strongly. This growth momentum is expected to continue into 2025. This performance is attributed to the company's continuous optimization of the retail supply chain at all stages, from improved procurement capabilities and increased efficiency to enhanced user experience and brand recognition.

In the first quarter, revenue growth in the fashion category further accelerated, benefiting from the continuous enrichment of brands and merchants, as well as increased user recognition. The company plans to expand its fashion business and enhance user recognition through a differentiated strategic approach.

The company expects to continue driving long-term growth trajectories in supermarkets, fashion, and other high-growth categories with significant potential. The potential of these categories is being gradually tapped.

In the first quarter, the number of quarterly active users achieved double-digit year-on-year growth, with significant increases in average shopping frequency and ARPU (average revenue per user). JD Plus achieved double-digit year-on-year growth in both shopping frequency and ARPU, indicating very strong user transactions and interactions, reflecting the robust momentum of the core retail business and the continuously improving user experience.

The company remains focused on and committed to enhancing user experience, especially in the first quarter, where the team addressed several challenges, further simplified the after-sales service process, and continuously increased the application of AI technology to improve the efficiency and personalization of search and recommendations, as well as optimize shopping guides, consultations, delivery, and after-sales services

The company has made steady progress in implementing a low-price strategy and building an ecosystem. In the first quarter, the Net Promoter Score (NPS) improved year-on-year and quarter-on-quarter in terms of price competitiveness. Additionally, both order volume and the number of buyers experienced strong growth, which also drove the growth of the company's market platform and marketing revenue, increasing by 16% in the first quarter, a significant improvement compared to previous quarters.

Retail remains the cornerstone of JD.com and will continue to serve as the foundation for the company to pursue more growth opportunities. A notable recent opportunity is the company's rapidly growing food delivery business. JD.com started with core retail and is expanding into on-demand retail to meet users' diverse needs in different shopping and delivery scenarios. The food delivery business has the highest shopping frequency and contributes a large portion of orders in on-demand retail. Moreover, food delivery is a massive market with a significant amount of untapped demand and opportunities. JD.com possesses cultural advantages, a well-established logistics network, talent, and a business model that can effectively address these demands.

It is worth noting that JD.com does not view food delivery as a standalone business; it has been deeply integrated and closely tied to JD.com's strong retail infrastructure and ecosystem, which is a significant differentiating advantage for JD.com. In a short period, JD Food Delivery has made remarkable progress in terms of order volume, participating merchants, and benefits. In particular, JD Food Delivery's order volume is now approaching 20 million orders, a significant milestone that is expected to be surpassed soon. This demonstrates that JD's incentive strategies and strong execution have played a role at the right time. With the strong synergy between on-demand retail (including food delivery) and core retail and other businesses (such as JD Health), JD.com expects to drive overall growth and efficiency improvements in the coming years and enhance the vitality of the entire JD ecosystem.

In addition to food delivery, JD.com is also advancing several other exciting initiatives. For example, in April, it launched a RMB 200 billion "Export to Domestic Sales Program" in collaboration with export manufacturers to expand its domestic market share. This program will also enrich the product offerings on the JD platform, especially those that are of good quality and low price.

Furthermore, JD.com is promoting the application of AI and automation technologies throughout the ecosystem, particularly in demand, supply, and fulfillment processes. For instance, by better connecting user demand with product supply and delivery options, improving the efficiency of warehousing and fulfillment operations, and developing AI-based tools to help merchants provide more cost-effective services. As China's largest retailer, JD.com is optimistic about the transformative role of AI in the retail industry and sees numerous application scenarios.

The first quarter has been very productive and exciting. Our core retail business has made good progress, with strong performance in both revenue and profit. What excites us even more is that we are seizing a series of high-quality growth opportunities to expand the company's future goals beyond the solid core business

We believe it is very important for the company to maintain a long-term perspective and focus on executing its strategy while remaining flexible to adapt to the dynamic changes in the industry. We believe that JD has already established a solid footing today, and we are making the necessary investments to support the company's sustainable long-term growth and create greater value for society. My speech ends here, and now I will pass the microphone to Ian.

Chief Financial Officer Shan Su:

Thank you, Xu Ran, hello everyone. Against the backdrop of a steady recovery in China's macro economy and consumption, we have welcomed a strong start. In the first quarter, our total revenue growth accelerated to 16%. Year-on-year, our main revenue sources—electronics and home appliances, as well as comprehensive goods and services revenue (especially from the marketplace platform and marketing)—all achieved double-digit growth, with growth rates accelerating compared to the previous quarter. This performance strongly demonstrates our continuously improving supply chain capabilities and user experience.

In terms of profitability, our gross margin increased by 60 basis points year-on-year to 15.9%, maintaining a year-on-year improvement for 12 consecutive quarters. Non-GAAP net profit grew by 43% year-on-year to RMB 13 billion, and the non-GAAP net profit margin increased by 82 basis points year-on-year to 4.2%.

In addition to strong financial performance, we remain committed to creating returns for shareholders. In April, we completed our annual cash dividend, paying a total of $1.44 billion (or $1 per million shares). As of 2025, we have repurchased 80.7 million Class A ordinary shares, equivalent to 40.4 million American Depositary Shares (ADS), accounting for 2.8% of the total ordinary shares as of December 31, 2024. These developments demonstrate our commitment to creating value for shareholders and our strong confidence in JD's long-term growth and financial performance.

Next, let's take a look at the financial performance for the first quarter. Our net revenue grew by 16% year-on-year to RMB 301 billion. In terms of segments, product revenue increased by 16% year-on-year, with electronics and home appliances revenue growing by 17% and comprehensive goods revenue growing by 15%, both of which accelerated compared to the previous quarter. In the electronics and home appliances sector, we have seen sustained strong consumption in China, with the government continuing to implement stimulus policies. JD, leveraging its supply chain advantages, is able to meet consumer demand and provide a top-notch transaction experience, further enhancing its market position and user recognition.

In the comprehensive goods sector, our supermarket and fashion categories both achieved double-digit revenue growth in the first quarter, accelerating compared to the previous quarter. Comprehensive goods remain an important engine for our long-term sustainable growth, as they represent significant market potential, and we will continue to work hard to improve the operations and user experience in this category.

Service revenue also achieved a 14% year-on-year growth in the first quarter. In the services sector, marketplace platform and marketing revenue grew by 16%, while logistics and other service revenue grew by 13%. In the marketplace platform and marketing business, growth continued to accelerate, with both commission and advertising revenue maintaining double-digit growth momentum. This growth is driven by multiple improving trends on the platform, including increased user traffic and interaction, enhanced traffic distribution efficiency, and the expansion of the merchant base and product variety JD Retail achieved strong revenue and profit growth in the first quarter. Revenue increased by 16% year-on-year, mainly due to robust performance across various key categories. In addition, JD Retail's gross margin continued to improve for 12 consecutive quarters, thanks to the company's ongoing enhancement of procurement capabilities and the increase in high-margin revenue sources. In terms of operating income, JD Retail's non-GAAP operating income grew by 38% year-on-year, reaching RMB 13 billion, with an operating profit margin of 64.9%. The company is on the right track to continue driving healthy revenue and profit growth.

Next, JD Logistics saw an 11% year-on-year revenue increase in the first quarter, showing strong growth momentum in both internal and external revenues. In terms of non-GAAP operating income, JD Logistics' performance met expectations, and the company is actively investing to enhance fulfillment capabilities and improve user experience. Additionally, JD Logistics is committed to increasing automation levels, including in warehousing, sorting, delivery, and last-mile delivery. Through these measures, JD Logistics has not only improved the productivity and safety of frontline employees but also further optimized operational efficiency.

As for new businesses, revenue from new businesses grew by 18% year-on-year in the first quarter, marking a positive shift, although non-GAAP operating losses expanded to RMB 1.3 billion. This change was primarily driven by the rapid growth of the Jingxi business, which is a key initiative for JD's penetration into the lower-end market, better meeting user needs and expanding the user base by offering cost-effective products. Meanwhile, JD Food Delivery, as part of the new business, just began scaling up at the end of the first quarter.

The financial impact this quarter was not significant. We made rapid progress with consumers, merchants, and riders, gaining increasing support through our differentiated business philosophy and model. Particularly in the first quarter of acquisitions, we achieved a good return on investment (ROI).

In the second quarter, we expect to see more substantial results from JD Food Delivery, especially in terms of user traffic and retention, and we see tremendous potential for synergy with the retail business and the entire ecosystem.

Next, the overall financial performance of the company: in the first quarter, our total gross profit increased by 20% year-on-year, reaching RMB 4.8 billion, with a gross margin improvement of 65 basis points to 15.9%, primarily due to the improvement in JD Retail's gross margin, reflecting the high-quality development of our core business.

Non-GAAP net profit grew by 43% year-on-year, reaching RMB 13 billion, with a non-GAAP net profit margin increase of 82 basis points to 4.2%.

As for free cash flow, the free cash flow for the past 12 months as of the end of the first quarter was RMB 3.8 billion, a decrease from RMB 6.1 billion in the same period last year. This was mainly due to cash outflows related to transaction plans and our efforts to ensure product supply to meet strong consumer demand. Nevertheless, this impact was partially offset by profit growth. As of the end of the first quarter, our total cash and cash equivalents, restricted cash, and short-term investments amounted to RMB 203 billion

The strong performance in the first quarter once again validates the effectiveness of our long-term strategic roadmap and our strong execution capabilities. In particular, we are confident in the potential of JD Retail to enhance scale and operational efficiency. At the same time, we are actively advancing new businesses, building strong synergies within the JD ecosystem, and exploring long-term opportunities. Although this requires tremendous effort, it will ultimately create greater value for our customers, shareholders, and society.

Next is the Q&A session:

Question:

Regarding the takeaway business, with the company's high investment in the next one or two quarters, what do you think the mid-term goals for the takeaway business are? What are your expectations for the landscape of this industry? What plans and outlook does the company have for the mid-term development of the takeaway industry?

Regarding JD Retail, in terms of the growth of JD Retail, especially the accelerated growth of various categories and the improvement of gross margins that you mentioned, what strategic adjustments has the company made to promote growth in the clothing and general merchandise sectors? Besides the old-for-new strategy, what other strategies does the company have to maintain healthy growth momentum in the second half of the year?

Xu Ran:

I will answer the questions regarding instant retail and takeaway business. Everyone is very concerned about this topic. In fact, I have briefly shared the latest developments in our instant retail and takeaway business in my opening remarks, and I will elaborate further.

First of all, from a strategic perspective, the instant retail and takeaway business naturally extends from JD's core retail business. Our goal is to provide users with a more diverse shopping experience and scenarios, and the takeaway business is one of the highest volume and frequency businesses in instant retail. Therefore, we believe that JD's takeaway business is deeply rooted in our overall business ecosystem, rather than being an independent business. We believe that instant retail (including takeaway) will generate significant synergies with our existing businesses in terms of users, supply chain, and fulfillment.

Furthermore, China's takeaway market is vast and can fully accommodate the development of multiple platforms. Secondly, we see that there are still many unmet needs from users, merchants, and delivery riders, including users' demands for food safety and quality, merchants' needs for reasonable commissions, and riders' demands for better protections. We believe these needs align very well with JD's existing capabilities, culture, and the business advantages we have accumulated over the years. In particular, our high-quality and cost-effective brand image, along with our adherence to the "three Mao five" theory (i.e., reasonable profit levels), combined with our strong capabilities in logistics operations and management, enable us to meet these demands.

Regarding the "good and cheap" brand image, JD has established a deep brand recognition among nearly 600 million active users, which will help JD's takeaway business quickly gain users' trust while meeting their demands for food safety and quality takeaway. JD has also pioneered the industry's strictest merchant entry review standards and management systems, further solidifying users' trust in JD's takeaway service.

Next, regarding the "three Mao five" theory, this is a business philosophy proposed by JD's founder in the early stages of entrepreneurship. Its core is to maintain a stable and reasonable profit level while providing reasonable profit growth space for partners and offering good benefits to employees In terms of the takeaway business, JD.com will continue to provide better commission policies and traffic support for quality merchants, allowing them to focus more on product quality, ultimately forming a positive cycle. For example, JD.com has stipulated that merchants who join the JD takeaway platform before May 25 of this year will enjoy a year-long commission exemption policy.

Regarding logistics operation and management capabilities, JD.com's existing instant retail delivery network and system have been established for many years, and we have accumulated rich experience in B2C e-commerce logistics operation and management. We can directly apply this experience to the takeaway business. Specifically, we provide full-time riders with five social insurances and one housing fund, and offer accident insurance and health insurance for part-time riders to improve rider stability and satisfaction, ultimately providing better services to users and achieving a better user experience.

As for the specific goals and plans for the takeaway business, we are currently more focused on the experience of users and merchants, while also paying attention to business scale and return on investment (ROI). We believe that the takeaway business can generate significant synergies with our existing core business. Our medium to long-term goal is to further enhance the synergy and operational capabilities of JD.com's overall ecosystem, providing momentum for long-term healthy growth.

Dan Su:

First of all, there is still a lot of room for improvement in JD.com's takeaway business system and operational capabilities, as we have entered this industry relatively recently. Therefore, our main focus is still on improving the system and enhancing the experience of users and merchants. In the long run, this will bring us more growth opportunities.

Regarding the second question (about JD retail business), in the first quarter, we achieved comprehensive growth, and the overall product categories maintained double-digit revenue growth, with both the supermarket and fashion categories achieving double-digit growth and accelerating quarter-on-quarter. Over the past two years, our team has been enhancing operational capabilities and optimizing user experience, and these efforts have begun to yield tangible results, helping us unlock the growth potential of overall product categories.

Specifically, in the fashion category (including clothing), we have firmly invested in building user mindset over the past year, attracting more users to choose JD clothing as their shopping preference. This year, we will further enhance the diversity of brands and merchants, leverage our supply chain advantages, and focus on creating differentiated competitiveness in core categories in terms of quality and price ratio, professionalism, etc. At the same time, we will provide users with more new and hot-selling products, helping brands and merchants achieve higher quality growth on the platform.

First of all, the supermarket team has continuously improved its operational capabilities over the past two years and has achieved double-digit revenue growth for five consecutive quarters, with the growth momentum continuously strengthening. The market size of China's supermarket industry is enormous, and JD Supermarket can continue to leverage its efficient self-operated model and supply chain advantages, while further utilizing the synergies brought by takeaway and instant retail to meet users' diverse needs in different shopping scenarios.

While continuing to drive growth in the daily necessities category, JD.com will focus on enhancing user growth, user experience, and improving platform ecosystem construction to drive healthy revenue growth this year and in the future

In terms of user growth and experience, JD.com has maintained double-digit growth in quarterly purchasing users for six consecutive quarters, with the growth rate in the first quarter further accelerating to over 20%, becoming an important driver of revenue growth. Next, JD.com will further enhance user refined operations, providing users with high-quality shopping experiences across multiple scenarios such as core retail, instant retail, and food delivery, to promote sustained healthy growth in user numbers and activity this year.

In terms of the platform ecosystem, as user experience continues to improve, we see rapid growth in user numbers and order volume, with this growth rate outpacing the overall retail business growth. With the gradual improvement of the platform ecosystem and the increasing recognition and brand awareness of JD.com's business among users, we expect that in the medium to long term, the business will gradually release its growth potential.

Question:

Regarding the food delivery business, JD.com has achieved excellent results, with an average daily order volume close to 20 million orders. Can management share some key user retention data, cross-selling opportunities with the retail business, and the unit economic model for the short, medium, and long term? In terms of improving user activity, JD.com has made significant progress. How should we view this financial investment and corresponding strategy?

Regarding AI, different e-commerce platforms are using AI to improve advertising efficiency. As JD.com's 3P ecosystem gradually improves, can management share how AI helps enhance JD.com's advertising system and algorithms? Besides advertising, what other applications and impacts does AI have in JD.com's other business areas?

Xu Ran:

Regarding the food delivery business, JD.com's average daily order volume is rapidly growing. The team is confident about reaching the milestone of 20 million orders and expects to break this number soon, which is an important milestone for the food delivery business, and the team is excited about it.

In the past three months of rapid development, JD.com's food delivery business has seen significant user growth and positive results. The food delivery business not only drives platform traffic and new user acquisition but also enhances overall traffic conversion rates. Currently, the repurchase rate of food delivery users is very healthy. Additionally, due to the integration of the food delivery business with the JD.com app, we have also begun to see some cross-category purchasing behaviors, mainly reflected in supermarket and life service products.

On the merchant side, the supply of food delivery merchants has also achieved a transformation from zero to one in a short period, with the number of registered stores exceeding one million. The demand for merchant registration remains very strong, although this has also put significant pressure on the merchant registration review process. As the number of merchants continues to increase, we can quickly expand geographically based product supply.

On the rider side, we are also seeing the same growth momentum. Rider feedback is very positive, with many riders showing a strong willingness to join. Currently, our platform's rider resources are still in severe shortage, and we are accelerating recruitment, which also reflects the enormous potential of the entire industry. Furthermore, strong demand comes from users, merchants, and riders, which also proves our precise understanding of user needs and our team's strong execution capability

However, our business has just begun. Although the development speed is rapid, we are still in the stage of establishing foundational capabilities. Many of our operational initiatives and system capabilities are still being optimized, including some cross-category collaborative functions. Over time, we will share more data with everyone, including information on user experience (UE). At this stage, our focus remains on enhancing user experience, improving operational capabilities, and creating a healthier ecosystem for merchants and delivery riders. Our investments will also revolve around meeting the needs of these three partner groups.

JD.com believes that the takeaway business is a long-term sustainable business. Although there will be certain investments in the short term, as the business scales, the takeaway business will gradually release its economies of scale and improve efficiency. More importantly, as previously mentioned, the takeaway business is deeply embedded in JD.com's overall ecosystem and will generate significant synergies with JD Retail, core e-commerce retail business, and even logistics in the future. These synergies can not only bring incremental contributions in terms of traffic growth, increased shopping frequency, and cross-category shopping, but also enhance efficiency and reduce costs in areas such as delivery capability, technology, and data.

Therefore, JD.com's strategic decision to enter the takeaway business focuses on building a long-term sustainable business rather than merely pursuing short-term goals for a particular quarter or year. We believe that as the takeaway business develops, it will gradually achieve improvements in economic scale and operational efficiency. More importantly, the takeaway business is deeply integrated into JD.com's overall ecosystem and will form strong synergies with instant retail and core retail business in the future, enhancing user traffic, purchase frequency, and cross-category sales while further improving efficiency and reducing costs through optimized delivery networks and data-driven technological enhancements.

Regarding AI applications in advertising, JD.com is actively embracing the tremendous opportunities brought by AI and automation. We firmly believe that these technologies will profoundly change the retail industry, not only by improving operational efficiency and reducing costs but also by significantly enhancing user experience and innovating business models. Currently, we are widely applying AI technology across multiple scenarios in retail and the entire supply chain.

Specifically, on the demand side, we are using AI technology to better identify and stimulate user demand, thereby enhancing the precise matching of demand and supply. For example, we are optimizing the search recommendation system through AI while actively exploring more AI applications, including more efficient AI shopping guides.

On the supply side, we are continuously upgrading a series of AI-based tools to help merchants reduce costs and improve efficiency. At the same time, we will enhance the effectiveness of self-operated procurement and sales through AI technology, especially in sourcing, product selection, and pricing. Leveraging JD.com's unique supply chain advantages and years of accumulated experience, we are developing AI agents to enhance the productivity of procurement and sales personnel.

In terms of logistics fulfillment, not only AI but also innovative technologies such as unmanned technology have vast potential. In the long run, these technologies will certainly drive improvements in warehouse operational efficiency and reductions in operational costs. Currently, JD.com is applying automation technologies, such as robotics, in standardized warehousing processes to enhance operational efficiency at each stage, reduce employee workload, boost productivity, and lower operational costs

Next, regarding the application of AI in advertising, the advertising team is currently enhancing advertising algorithms through AI large models to improve recommendation effectiveness and conversion rates, ultimately driving growth in advertising revenue. At the same time, JD.com is actively exploring and implementing AI agents for advertising placement, allowing merchants to execute complex advertising operations with simple commands. In particular, over the past two years, more than 1 million new merchants have joined the JD.com platform, and we believe that AI agents can significantly enhance the efficiency and effectiveness of advertising placements for these merchants, reducing their operational costs and difficulties.

Currently, JD.com's advertising revenue has achieved double-digit growth, and the growth momentum is accelerating. Management believes that there is still significant potential for advertising monetization, especially through AI large models to improve efficiency and drive long-term sustainable growth.

The generation of advertising and marketing materials is already a fundamental application of AI. With the popularization and application of video large models, JD.com believes that AI will bring more significant effects in this field, and there will be more promising results in the future.

Overall, JD.com has many advantages in supply chain scenarios, providing a very suitable environment for the widespread application of AI in retail and supply chains. These advantages also offer JD.com unique opportunities to integrate AI into every aspect of its business, helping to drive long-term revenue and profit growth.

Question:

Regarding JD.com's overall strategy for the 618 shopping festival, what is the overall strategy for this year's 618 event, and what are the company's expectations for 618 sales?

Regarding long-term investment and company growth, JD.com is currently making some long-term investments. Are these investments capable of sustaining the company's growth momentum? Additionally, will the company change its long-term target of a high single-digit net profit margin?

Xu Ran:

Regarding the 618 event, this year's overall strategy for 618 still revolves around the concept of "good quality at a low price," consistent with previous years' strategies. The event will start at 8 PM on May 31, which is the traditional start time for JD.com's 618. Prior to this, to meet consumers' early shopping needs, JD.com will launch a "Heartfelt Shopping Season," bringing continuous shopping surprises to consumers.

This year's marketing activities will be more diverse, covering more shopping scenarios and promotional activities. New policies such as trade-in and national subsidies will be specially introduced this year, and JD.com’s delivery service will make its debut at 618, providing users with stacked subsidies for a comprehensive discount experience. In terms of merchant support, JD.com will offer various subsidies and incentive policies to merchants, focusing on content ecology and advertising placement, helping merchants achieve explosive sales and long-term growth, ensuring more predictable growth.

Since the beginning of this year, driven by a series of government policies to boost consumption, the overall consumption situation has continued to improve, promoting economic growth. JD.com has achieved healthy growth in user scale and sales performance through an exceptional user experience. With the continuous warming of the consumer market and thorough preparations for the 618 shopping festival, JD.com is confident in user growth and sales performance during the 618 event, expecting to provide consumers with a "good quality at a low price" shopping experience

Dan Su:

Regarding the company's long-term growth and net profit margin targets, first, JD.com's business model is built on the core foundation of supply chain capabilities and user experience. JD.com's long-term investments will focus on enhancing user experience, driving user growth, and strengthening the competitive advantages of self-operated and logistics services.

Specific investment directions include JD.com continuously enriching the supply of quality products on the platform and enhancing service capabilities to meet the diverse needs of users. For example, JD.com's investments in cleaning services, instant retail, and takeaway services have accelerated user growth. A large number of high-frequency orders have also supplemented user data within JD.com's ecosystem, creating opportunities for cross-category sales and new business synergies.

In terms of self-operated business, JD.com continues to strengthen its operational capabilities in areas such as electronics, supermarkets, and fashion categories. Specifically, JD.com is creating differentiated product supply advantages by enhancing procurement and category planning capabilities, as well as through customization and exclusive sales. At the same time, JD.com is continuously solidifying its industry-leading supply chain system, reducing procurement costs and improving efficiency through scale advantages.

In terms of logistics capability construction, JD.com will continue to upgrade and strengthen its existing last-mile delivery network and capabilities. Additionally, JD.com will apply automation and AI technologies to gradually achieve intelligence across all logistics processes, driving continuous cost reductions and efficiency improvements.

JD.com believes that these long-term investments will further strengthen its supply chain advantages and continuously enhance user experience and user perception, especially in terms of product, price, and service improvements. This will promote continuous increases in user scale and user activity, driving faster growth. In the long run, as business scale expands and operational efficiency improves, JD.com's profit margins will continue to rise. JD.com's long-term goal remains to achieve a high single-digit net profit margin.

Question:

Regarding the subsidy plan and the impact on electronic categories, I would like to understand the impact of the subsidy plan and government policies on electronic categories, especially the market trends for mobile phones and home appliances in the coming months.

Regarding shareholder returns, I hope the management can share the latest information on shareholder returns, especially related to stock repurchase plans.

Xu Ran:

Since last year, a series of stimulus policies introduced by the government have achieved positive results. For example, the trade-in program has not only promoted the sales of home appliances and mobile phones but also driven the industry towards high-end and intelligent development. JD.com sees the enormous potential of the Chinese consumer market.

JD.com expects that electronic categories such as mobile phones and home appliances will continue to maintain healthy sales growth in the second quarter.

JD.com will also continue to enhance supply chain and service capabilities to ensure that while sales grow, users are provided with better shopping and service experiences, converting potential user demand into actual sales, and continuously increasing market share in electronic categories.

Dan Su:

JD.com has updated the latest progress on shareholder returns. As of early 2025, the company has repurchased approximately 80.7 million shares of common stock, equivalent to 40.4 million ADS, with a total repurchase amount of approximately $1.5 billion, which accounts for about 2.8% of the total outstanding shares as of December 31, 2024 The average repurchase price was $37.18 per share. In addition, the annual cash dividend for 2024 is scheduled to be distributed in April, totaling $144 million, with $1 per share.

JD.com will continue to reward shareholders through dividends and repurchases, while also maintaining a focus on the long-term healthy growth of the company in terms of business scale, profits, and cash flow, ensuring that shareholders share in JD.com's success in various ways.

Thank you all for participating in the conference call today and for your questions. If there are any further questions, please feel free to reach out to me and our team. We appreciate your attention to JD.com and look forward to communicating with you next quarter