JD.com, Inc.

Hello, and thank you for standing by for JD.com's fourth quarter and full year 2025 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Sean Zolp, Head of Investor Relations. Please go ahead.

Thank you. Good day, everyone. Welcome to JD.com fourth quarter and full year 2025 earnings conference call. With us today are CEO of JD.com, Ms. Sandy Xu, and CFO, Mr. Ian Shen. Sandy will kick off the call with her opening remarks, and Ian will discuss the financial results. Then we open the call to questions from analysts. Please note, unless otherwise stated or comparison In this call, we'll be against our results from the comparable period of 2024. 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, and we'll 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'll discuss certain non-GAAP financial measures, Please refer to the reconciliation of non-GAAP measures to the comparable GAAP measure in the earnings press release. Please also note all figures mentioned in this call are in R&B, unless otherwise stated. Now, let me turn the call over to our CEO, Sandy.

Thank you, Sean. Hello, everyone. Thank you for joining our fourth quarter and full year 2025 earnings conference call. We closed Q4 with results in line with expectations. as we navigated short-term challenges while delivering a solid overall full-year performance for 2025. During Q4, despite a high year-on-year comparison base in electronics and home appliances, our top line remained resilient. Thanks to the continued strong momentum in both our general merchandise categories and marketplace and marketing revenues, Our profitability, our core business, JT Retail, achieved a notable growth margin expansion in Q4 as we further leveraged our supply chain advantages. We strategically invested some of these gains into our price competitiveness, particularly in electronics and home appliances categories, as well as in R&D capabilities. and talents to secure a long-term edge. This slightly tempered retail's margin expansion in the quarter, but the impact was well absorbed by our increasingly diversified profit streams, including high-margin marketplace and marketing services, and margin improvement in categories such as supermarket and healthcare. Beyond core retail, our new businesses continued to report steady efficiency gains and a sequential decline in total investments. Beyond the quarterly fluctuation, 2025 remained a year of solid execution where we delivered on our full-year expectations. We have made encouraging strides across our key long-term growth drivers, user base and engagement gained significant momentum, and our core retail segment accelerated back to double-digit top-line growth. We achieved this while expanding JD Retail operating margin for the sixth consecutive year, despite a highly competitive landscape. And we are expanding our time with several promising new business initiatives, This solid progress is rooted in our deepening supply chain capabilities, which remain the engine for delivering superior user experience, optimized product, and enhanced operating efficiency. This is the backbone of our business model, not only supporting our core retail business, but also fueling our expansion into the new market. our strategic initiatives. We are confident that these strategic pillars provision us for more sustainable and profitable growth. Moving into our operational highlights, I'd like to share three highlights from Q4 and full year 2025, as well as our thoughts for 2026. our user base expanded in both scale and depth. Our active customers grew by 30% year-on-year in Q4, capping a year where we exceeded 700 million annual active customers. This growth was powered by the organic user growth of our core retail business and further accelerated by new strategic initiatives including JD food delivery and . High-value users also hit a new milestone. Our active JD plan database sustained double-digit surpassing on year end. What's even more encouraging is the quality of user growth. User shopping search by over 40% year-on-year for the full year. with broad-based gains across all user groups, including new and existing users, as well as plus members. In addition to user acquisition, JD Food Delivery also played an important role in this frequency lift. We view the expansion of user base and engagement as a long-term strategic driver for our business, and expect it will further amplify in 2026 and beyond. Second, our core retail business demonstrated remarkable resiliency in Q4, maintaining stable margins in the quarter despite short-term top-line headwinds. On a full-year basis, JD Retail delivered strong double-digit growth in both revenue and operations. with operating margins pending by 52 bps to 4.6%, viewed through a long-term lens. This consistent trajectory of daily retail growth and market expansion over multiple years stands as a powerful testament to the resilience of our supply chain-driven model. While Q4 revenue edged down to 1.7% year-on-year due to softness electronics, and home appliance categories. We have proactively strengthened our supply chain capabilities and deepened user man-share. These efforts are already paying off with improved year-to-date in 2026. Furthermore, we expect to be benefiting from the resumed trade-in program this year. which will provide a constructive backdrop for industry growth. Turning to general merchandise, its performance remains strong with revenue up 12.1% year-on-year in Q4 and 15.3% for the full year. Supermarket revenue maintained double-digit growth in Q4. For the full year, supermarket growth reached 18%. accompanied by steady growth and operating margin expansion. Our expansion categories also achieved significant gains in both top-line and user-managed expansion throughout 2025, with healthy growth across user base, shocking frequency, R pool, and TK size. These results were driven entirely by the team's execution rather than external tailwinds. We are confident in sustaining the general merchant bank's momentum as our category mix continues to evolve toward a more diversified structure. Another exciting emerging growth driver for daily retail is advertising revenue, which boosted our marketplace and marketing revenues to grow 15% in Q4 and 18.9% year-on-year for the full year. The robust growth was fueled by our optimized traffic allocation, enhanced conversion efficiency, and the rollout of our AI-powered algorithms and agents for our suppliers and merchants. We are also seeing a strategic shift where advertisers are reallocating budgets. toward platforms like JD, as we are regarded as the most consistent daily sales platform, the premier destination for brand building, and the platform that offers the highest return throughout a product's entire lifecycle. Notably, the synergy with JD Food Delivery is starting to bear fruit. contributing an incremental 2-3% to ad revenue in Q4. We remain confident in sustaining our advertising revenue momentum in 2026. The third highlight is the solid progress of our new businesses. Within the segment, steady food delivery continued to drive healthy progress in Q4. We maintained steady order momentum while further optimizing our investment, further reducing the total investment scale by nearly 20% year-on-quarter. Since its inception, JD Food Delivery has sustained sequential loss reduction every single quarter, a direct result of our relentless focus on improving operating efficiency and an ROI-driven investment framework. In Q4, city food delivery loss rate over GMV narrowed significantly compared to a quarter ago while maintaining the scale momentum. More importantly, the strategic synergies with our core retail business are deepening. Beyond the strong user momentum mentioned earlier, both cohort, cumulative, cross-selling rate and shopping frequency trended upward in Q4. Additionally, total active merchants have increased by over 270%, which was also partially contributed by the high-quality restaurants that onboarded our platform. Looking ahead, JD Food Delivery will continue to prioritize healthy volume growth while improving its unit economics at a greater level. We expect investment efficiency in food delivery to improve further this year compared to 2025's level. Regarding our other new business initiatives, both Jinxi and international business are progressing on track. Jinxi continues to successfully penetrate lower-tier markets expanding both our user base and user man-share. Furthermore, we are excited to announce that Joinbuy, our online retail business in Europe, will officially launch this month. We are committed to redefining the local shopping experience by providing same-day and next-day delivery services, a move that opens up greater growth horizons for JD. we will continue to invest in these high potential segments in a prudent and controlled manner to fuel our long-term sustained development. While executing our core strategies, we are equally inspired by the transformative potential of AI. By leveraging our deep supply chain capabilities, we are embedding AI across our entire value chain, identifying and stimulating demand, sourcing 1P and 3P supplies, and pioneering autonomous logistics. Let me share a few examples of our AI initiatives. First, proprietary intelligence. Our large language model, JoyAI, now supports over 1,000 real-world applications across customer experience, procurement, merchant services, and operations. In 2025, Xiaomi AI's total token invocations surged nearly 100-fold from 2024, fueling faster, smarter decision-making throughout the company. Second, demand cultivation. We are reaping the shopping journey and enhancing user experience through AI-driven search and recommendations. Xin Yan, our AI agent, surpassed 150 million annual AAC in 2025 with over 20% user penetration, driven feelings in GMV. We expect to double this user base in 2026. Third, logistics automation. Parallel to the digital intelligence is our leadership in autonomous logistics. In 2025, JD Logistics continued to redefine logistics efficiency. As of the year end, it deployed over 20 flagship Lanzhou tech warehouses across China. We also launched this capacity internationally, launching our first Lanzhou tech facility in the UK to efficiently support a premium 2-1-1 same-day and next-day fulfillment experience locally. Furthermore, services and innovation. Our multi-modal AI customer service handled over 4.2 billion user inquiries during the W11 promotion, achieving higher satisfaction with lower human intervention. Beyond operations, we are unlocking new consumption potential through Jolly Insights, our AI agent for hardware, which has partnered with multi-hardware brands to introduce a range of AI products. Sales of Joy Insight integrated products surged 20-fold during the 11th compared to the June 18th promotion. By harnessing AI to redefine our competitive edge, we are further equipped to enhance our user experience lower costs, and improving operating efficiency. We are well-positioned to capture the opportunities arising from AI to unlock new growth frontiers for 2026 and beyond, ultimately placing us at the forefront of AI commerce. In summary, 2025 was a year of constructive progress and strategic Despite navigating short-term macro environment and high base comparison, we remain steadfast in sharpening our supply chain edge and fortifying our foundation for the future. As we enter 2026, we are already seeing a consistent upward trend. Our user momentum remains robust. And the growth trajectory of our general merchandise and the marketplace and marketing services has carried over seamlessly into the new year. In the meantime, we have continued to strengthen our competitiveness advantages across product supply, price competitiveness, and fulfillment experience. This operational strength, combined with our technological advances, has disciplined ROI-focused approach to new businesses. It gives us great confidence in our 2026 outlook. We remain fully committed to driving sustainable, profitable growth and creating long-term value for our shareholders. With this, I'll turn the call over to Ian.