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.

Thank you, Sandy. Hello, everyone, and thanks for joining the call today.

In Q4, our total revenues grew by 2% year-on-year, and non-GAAP net profit came in at RMB 1.1 billion. While we faced short-term headwinds in electronics and home appliances categories, our overall performance remained resilient. This stability was driven by our strategic focus on diversifying growth drivers and profit streams, alongside disciplined investment in our new business. On a full-year basis, we achieved meaningful progress across our core retail segment, new businesses, and user growth and engagement, reinforcing our long-term sustainable development As we drive business development, we remain firmly committed to delivering shareholder returns. Our board has approved a total annual cash dividend of approximately U.S. $1.4 billion for 2025, representing 0.5 U.S. cents per ordinary share, or one U.S. dollar per . Furthermore, we remained active in terms of share buybacks. In 2025, we repurchased about 6.3% of our outstanding shares for a total of US $3 billion. All of the repurchased shares have been canceled. This effort underscores our confidence in long-term development. Now, let's go through our Q4 and full-year 2025 financial performance. Total net revenues for Q4 increased by 2% year-on-year to RMB 352 billion. On the full year basis, total net revenues increased by 13% to RMB 1.3 trillion in 2025. Breaking down the mix, product revenues faced a 3% dip in Q4. mainly due to a high trading base, but grow by 10% for the full year. By category, revenues of electronics and home appliances was down 12% in Q4, but up 7% for the full year. We have navigated this high base challenge in close collaboration with our partners and are encouraged by the improved momentum year-to-date in 2026. On the other hand, general merchandise delivered robust results, with revenues up 12% in Q4 and 15% for the full year, led by sustained momentum in our supermarket, fashion, and healthcare categories throughout 2025. We believe this momentum will continue in 2026 as we further build our strength in this high-potential sector Service revenues grow by 20% year-on-year in Q4, and 24% for the full year. Notably, marketplace and marketing revenues were up 15% and 19% for the quarter and full year, respectively. A key driver of this was advertising revenues, which achieved double-digit growth across every quarter of 2025. We have enhanced advertising efficiency of our platform through leveraging technology, as well as our serving user traffic and engagement. Looking into 2026, we expect marketplace and marketing revenues to maintain solid growth momentum, contributing to both top line growth and profitability. Additionally, Logistics and other service revenues grow by 24% year-on-year in Q4, and 27% for the full year, mainly driven by the incremental delivery returns, revenues, from food delivery business. Now, let's turn to our segment performance. JD Retail revenues are 2% year-on-year in Q4, but up 11% for the full year of 2025. The quarterly decline was primarily due to the high trading base for electronics and home appliances, which was largely mitigated by growth in general merchandise and advertising revenues. It's important to note that JD Retail is no longer a single growth driver business. We have successfully built a diversified growth matrix that provides the business with multiple engines and the strong resilience across different market conditions. Notably, JD Retail's gross margin increased by 1.1 percentage points year-on-year in both Q4 and full-year 2025. This consistent improvement has sustained across multiple years despite changes in the competitive landscape reflecting our enhanced supply chain strength and a favorable mixed shift. JD Retail's non-GAAP operating income in Q4 was down 2% year-on-year, with operating margins holding steady at 3.2%. The temporary pause in margin expansion this quarter was a strategic choice. We deployed supplementary subsidies for electronics and home appliances to offer competitive price and maintain market leadership while increasing OPEX through targeted investment in R&D and employees' compensation to fuel future growth. On a full-year basis, GE retails non-GAAP operating income in 2025, grow by 25% year-on-year, with operating margin improved by 52 bps. to 4.6%. Taking a long-term view, JD Retail's margin trajectory remains very healthy, climbing consistently from 2.7% in 2019 when we initiated this segment reporting to 4.6% in 2025. As we continue to emphasize hard advertising business and realized efficiency gains in categories such as supermarket, we remain on a steady and successful path toward our long-term margin targets. Moving to JD Logistics, its revenues grow by 22% year-on-year in Q4 and 19% for the full year. With incremental contributions from food delivery, On the profitability front, JD Logistics' non-GAAP operating income was down 17% year-on-year in 2025, but up 3% in Q4. JD Logistics remains committed to investing in elevating customer experience, expanding service capabilities in both domestic and overseas markets, and advancing AI and robotic technologies. We view this as essential investments that pave the way for GDL's long-term sustainable growth in both top and bottom lines. New business revenues surged by 201% year-on-year in Q4 and 157% for the full year, driven by the rapid scaling of food delivery, jingxi, and international business. The segment non-GAAP operating loss narrowed to RMB 14.8 billion in Q4. This sequential improvement was primarily driven by the narrowing loss at GD food delivery, which achieved a notable reduction of about 20% in loss compared to the previous quarter. Continuing its consistent trend, of improvement since launch. As we enter 2026, our priority for food delivery remains to drive healthy order volume while deepening synergies with our core retail business. We believe investment in food delivery has peaked in 2025 and will trend downward this year. If market competition trends towards becoming more rational. Beyond food delivery, we will continue to explore promising opportunities in Jingxi and international business with financial discipline to ensure long-term value creation. Moving to our consolidated profit performance, group average gross margin expanded by 32 bps year-on-year to 15.6% in Q4. and dropped 18 bps to 16 percent for the full year. This improvement was primarily driven by the consistent growth margin extension of JD Retail. Consolidated non-GAAP net income attributable to ordinary shareholders was RMB 1.1 billion in Q4 and RMB 27 billion for the full year, representing a non-GAAP net margin of 0.3 percent and 2.1% respectively. Our near-term profitability mainly reflects our strategic investments in new business. We believe this initiative will broaden the group's growth potential, driving both sustainable growth and margin improvement over the long term. Our three cash flows for the full year of 2025 was RMB 6 billion. compared to RMB $44 billion last year. This primarily reflects cash outflows associated with the trading program alongside fluctuations in operating income. Our accounts receivable also recorded a sequential decline for two consecutive quarters, primarily due to the healthy recovery of the trading-related receivables. We conclude the year with a robust liquidity position with cash and cash equivalents, restricted cash, and short-term investments, totaling R&D $225 billion as of year end. In summary, 2025 was a year of solid strategic progress. We achieved strong growth in our user base accelerated core retail top line with margin extension, built by increasingly diversified drivers. Furthermore, our new business are now on a healthy, promising operating track. We have built a more resilient ecosystem where our business segments operated with increasing synergies. Our focus remains clear. We will continue to focus on enhancing user experience, lowering costs, and improving operating efficiency to deliver a strong performance across our retail business top line and profitability while advancing our new business initiatives with a long-term perspective. With that, I will take it back to Sean. Thank you.

Thank you, Sandy and Ian, for the Q&A session. Analysts are welcome to ask questions in Chinese or English. 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 the original language. Operator, we can open the call for a Q&A session now.

The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take two questions at a time from each caller. If you have more than two questions, please request to join the queue again after your first two questions have been addressed. Your first question comes from Ronald Kung with Goldman Sachs.

Thank you, Sandy and Sean.

I have two questions. The first is, in 2016, we were the first to sell gold. Uh, uh, uh, How do we understand the company's long-term determination for this business? And because of this, there is a lot of supervision and investigation. This kind of investigation will help us a lot. Let me translate it for you. Thank you, management, for taking my question. First is on J.D. Retail's 2026 growth as electronics appliances return to a more normalized base from the second half. The general merchandise remains very healthy, so how should we think of the growth rate for J.D. Retail in 2026 for the first half and second half and the differences given the base? Second is on the on-demand and food delivery. How should we think of the path to further unit economics improvement? Compared with the bigger competitors, how are we differentiating ourselves through supply chain-driven business models? And how should we think of your determination and commitment to this business? And with the regulations and investigations on the food delivery industry, will that also contribute to an economic improvement?

Thank you. Thank you, Donald. First of all, the trend of healthy growth of Japanese products will continue. In terms of products, the whole year, even under the premise of national stock, our Japanese products have also gained faster growth, which has also led to the growth of our retail market. As you can see, all kinds of products such as commercial, fashion and health products have gained good growth. In 2026, we will continue to maintain healthy growth of Japanese products. It is very promising. The commercial business has still a wide room for improvement in the penetration and segmentation of users. The fashion business has also completed the recruitment layout in 2015. More and more merchants and brands have joined the Jindong platform. In addition, this year will further release our potential for growth. The health category will continue to maintain the position and user mentality of the industry. In the short term, there is indeed a growth in the number of high-end materials and the cost of raw materials. In 2026, the government will continue the project of saving and replacing new materials. However, in 2025, due to the cost of saving and replacing new materials, the consumption in the first half of the year is relatively high, and in the second half of the year, the cost of saving and replacing new materials is relatively low. However, in 2026, the local governments will release Ah, do you know? but it will significantly improve compared to the 4th quarter of 2025. In the second half of the year, the increase will be further restored, and our market share will still be stable. In addition, as you may have seen, the cost of chip storage has been rising, so the price of mobile phone, digital and other electronic products will have a certain impact. The price will rise to a certain extent, and the consumption will continue to increase. We will continue to strengthen our supply chain capability, actively do offline layout, and further strengthen the service experience, and continue to strengthen our user mindset to start sales. At the same time, We also see that AI and new technologies actually bring a lot of new opportunities and new types of opportunities. This also reflects our supply chain capabilities. Although in the short term, these innovative products are not so obvious to our current retail scale, but we have seen a lot of opportunities and changes. We will also react quickly with brand and customer service companies. and develop new products to quickly apply new technologies to meet the consumer demand that users are constantly changing. Looking forward to the year 2026, our growth drive will be more diverse. Japanese products will also maintain a healthy growth. Advertising services will also maintain a fast and healthy growth. The second point is that it is expected that the first half of the year of these products will still be affected by high-tech. The increase in the second half of the year will be better than the first half of the year. Overall, while maintaining market share and new users, we will continue to apply technology innovation to promote the development of the industry. Okay, thank you, Ronald. So for your first question, first, our general question

Merchandise category continues a very healthy, robust growth trajectory. Looking back at 2025, the category achieved a growth faster, even factoring the impact of trading programs on the other category. So general merchant category served as a primary growth engine for JD Retail. Subcategories such as supermarket, fashion, and healthcare all achieved very strong results. Looking into 2026, we remain very confident in sustaining this healthy momentum. Supermarket categories still have significant and tap potential in terms of user penetration and expansion of the subcategory. Fashion category, we have completed many infrastructural work, such as merchant recruitment last year, and will further build growth momentum on this very strong foundation. Healthcare category, we expect to continue to maintain its industry-leading position and user mindshare. Regarding electronics and home appliance category, continue to face high base effect in the short term. In 2026, the government trading program will continue, but we have to bear in mind that the government-backed cash subsidies were consumed much faster and more in first half 2025 compared to the second half 2025. So for our electronic home appliance category, including home appliance, cell phone, computers, and digital products, will remain affected by a high base in the first half of this year. However, we anticipate a sequential improvement in growth compared to the fourth quarter of 2025, with more robust recovery expected in the second half of 2026. And our market share remains very resilient. Furthermore, we have to bear in mind that memory chip costs keep rising So prices of mobile phone digital products are expected to increase across the board. This may dampen consumption and affect cell volume. But at the same time, the rise of AOV will partially offset the impact of lower sales to a certain extent. We'll continue to strengthen our user mind share and drive sales by further reinforcing our supply chain capability, expanding our proactive offline presence, and enhancing overall service experience. Meanwhile, AI and emerging technologies are creating numerous opportunities for innovation and new product categories, further demonstrating our strength of supply chain. While initial data contributions from these new AI-related products remain modest relative to the current scale of this category, but we see significant opportunities and shifts. And we will work closely with brand owners and suppliers to respond rapidly and develop new products and meet evolving user needs through this swift application of new technology. Looking ahead to 2026, First, our growth drivers are becoming more diversified. General merchandise category maintains a healthy growth trend, while service revenue, including advertising, will also sustain rapid growth momentum. Second, we expect electronic home appliance category to remain impacted by a high base in the first half this year, and with growth in the second half to accelerate and better than the first half. Overall, we will maintain our market share and user mind share. At the same time, we'll continuously leverage technological innovation to drive industry progress. Third, supported by the steady improvement in JD's traffic, user base, and shopping frequency, we are confident in achieving healthy and high quality growth

for the full year 2026. and improve user experience. At the same time, through providing services to the business owners, revenue will be generated continuously, and the business will be monetized continuously. Of course, we will also maintain a reasonable monetization rate. Our goal is to achieve continuous business efficiency improvement at the same time as maintaining healthy development. That is, an excellent improvement. It is expected that the total investment in take-out in 2026 will be reduced by 25 years. Of course, this will also depend on the market competition. First of all, regarding the differentiated advantages of Jingdong take-out, the first one is that we will insist on the positioning of quality take-out. The second is that we are fully aware of the quality of our service, which brings a better experience to the user. The third is the interoperability of the ecological system, which reflects the advantages of our entire Jingdong brand supply chain. There are clear advantages to the improvement of the UAE. The first is a more diverse source of income. The second is the continuous improvement of the supplementary efficiency, including the detailed supplementary for different users in the field. The third is that the performance efficiency will continue to improve as the unit size and health grow. What is worth paying attention to is our 7,000 small kitchen business. This is a very innovative and differentiated business model, because it will be deeply integrated with our Jindong supply chain. It also has a strong synergy with our real-time sales business. By the end of February, we have more than 50 7,000 small kitchen businesses. I also welcome investors and analysts to have a chance to experience it. From a long-term point of view, take-out and in-person sales are important long-term strategic directions in the capital. We will use long-term perspective to promote the health development of our business, continuously improve the efficiency of operation, and drive the improvement of profitability. At the same time, we will continue to release the co-operative potential of take-out and in-person sales business, and provide motivation for the long-term health growth of our company. In 2025, we have already seen take-out bring new users to the capital, and the current users are poor. I don't know. There was a question about take-out supervision. First of all, we support and welcome supervision to maintain the fair competition order in the market. This benefits the health development of the industry. Second, we will consistently resist the domestic roll-out of the industry. We will also innovate through the supply chain model to promote high-quality take-out development.

Regarding your second question, while our food delivery business remained in its early stage in 2025, we actively invested in both operations and R&D. Looking at this year, 2026, we'll continue to strengthen our capabilities and onboard more quality merchants and products. and enhance user experience. At the same time, we'll begin generating revenue through offering merchant services, achieving an orderly and rational monetization. So our goal is to sustain healthy scaling of this business while continuously improving operation efficiency. We expect total investment in food delivery to decrease in 2026 compared to 2025. Well, that also, of course, depends on the market competition dynamics. How we do this? First, JD Food Delivery's differentiating advantage includes our commitment to our positioning in high-quality food delivery. Second, the superior service quality driven by full-time riders. Third, the synergy that a synergy Synergetic integration across JD ecosystem leveraging on our strong supply chain advantage. In terms of improving UE, we have clear drivers. First, more diversified revenue streams. Second, continuous optimization of subsidy efficiency including targeted subsidy tailored to different users and regions. Third, enhanced delivery efficiency driven by economic scale that accompany healthy order volume growth. It's also worth noting that our 7th Fresh teaching, which is a highly innovative and differentiated business model, is progressing well, is deeply integrated with JD's supply chain capability, leverage strong synergy with our on-demand retail business. As of the end of February, 7Fresh Kitchen operational footprint has expanded to over 50 kitchen locations, and we welcome analysts and investors to try it out. Regarding the long-term positioning, food delivery and on-demand retail as a long-term strategy for JD will drive our strategic progress with a long-term perspective, continuously enhancing operations operational efficiency to drive profitability improvement. At the same time, we'll continue to unlock potential synergy between Food Delivery and our core retail business, fueling the company's long-term healthy growth. In 2025, Food Delivery proved to be a strategic engine for user growth, effectively acquiring new users and significantly boosting purchase frequency across our platform. In 2026, we expect to see a further unlocking of synergies driven by robust cross-selling and incremental growth in advertising revenue. Lastly, regarding the food delivery regulation, first, we support and welcome regulatory oversight that maintains a fair and competitive market environment as it fosters a healthy development of the industry. Second, we remain steadfast in our opposition in evolutionary competition within the sector. Third, we are committed to driving high quality evolution of quality food delivery, high quality food delivery through continuous innovation in our supply chain model. Thank you.

Next question, please.

Your next question comes from Kenneth Fong with UBS.

Hi. Sandy, Ian, Sean, good evening. Thank you for accepting my question. I have two questions. The first is about the benefits of the group and the investment of new business. The current global environment is still uncertain. The group is also accelerating the development of overseas and domestic business. I would like to ask the management to balance the growth and benefit rate of the group. What is the estimated size of the investment of new business in 2026? Taiwan Taiwan Taiwan Taiwan Taiwan Thank you management for taking my question. My first question is about the profitability and investment in new business. Under the backdrop of macro uncertainties, and yet the accelerated investment in overseas and Jingxi business. How should management balance the growth as well as the profitability? What level of investment should we expect for 2026 for this new business? And how should it affect the group earnings? And my second question is about the overseas business. Can management share some updates on this economy acquisition progress timeline and the impact on financials post-consolidation? From the strategic angle, how would Joy Buy position and what kind of benefit or synergy should be expected from the group level, i.e. Jingdong Retail, Logistics, and the whole supply chain point of view? Thank you.

Thank you, Kenneth. Regarding investment and profits, from a long-term perspective, we are very confident in the progress of the Chinese market and our own business development. Based on our insight into the business opportunity, we insist on doing some long-term business layout, including international business, down-to-earth market, and continuous retail. We are also working hard on technical development to continuously improve our technical capabilities, expand the service boundary, and continue to open up new growth spaces, which will also improve the new growth momentum for the group. the long-term high profit margin of JD is not going to change. In the next six years, the long-term profit margin of JD can achieve healthy growth. The long-term profit margin of high profit margin is not going to change. This drive includes self-sufficiency to drive the increase in product profit margin, The higher revenue of advertising and other profits will maintain a strong growth, as well as the continuous improvement of the profits of commercial goods and other products. The scale of retail will continue to release, and the efficiency of management will be further improved with the application of technology. In terms of new business investment, the delivery business lost nearly 20% compared to the previous Q4 loss. We are also maintaining a healthy growth. As the efficiency improves and the income increases, the overall loss rate is also greatly decreasing. Looking forward to 2026, will continue to promote the growth of the scale of take-out, and at the same time release the same value as core retail. If the competition in the industry is rational, our investment in take-out this year is lower than that in 2025. The international business will gradually increase its investment according to the rhythm, and the scale is controllable. We will maintain a strict record of investment. Thank you.

Regarding our thoughts on investment and profitability, from a long-term perspective, we are confident in the prospects of the China market and our own business development. Based on our views of the market opportunities, we have made long-term strategic investments, including in our international business, lower-tier markets, and on-demand retail. At the same time, we have been committed to investing in R&D and the technologies. By enhancing our foundational capabilities and expanding our service scope, we believe we will continue to unlock new growth opportunities, which will also drive our long-term profitability. JD's high single-digit long-term market target remains unchanged. In terms of JD retail, we expect to see healthy growth of retail's profit in 2026, and our long-term target for JD Retail, which is high single-digit profit margin, also remains unchanged. Key growth drivers of this, including improvement in product sales growth margin brought by our enhancing supply chain capabilities, robust growth in high margin business, such as advertising, as well as continuous margin improvement in categories including supermarket. GD Retail's skill benefit will also continue to play out, and its operation efficiency will have further room to improve as we increasingly adopt AI technology. In terms of our investment in new businesses, for GD Food Delivery, its loss narrowed by nearly 20% quarter-on-quarter in Q4, we continue to maintain its healthy scale expansion while narrowing its loss ratio with improved operating efficiency and revenue growth during the quarter. Looking at 2026, we will continue to drive healthy scale growth of the food delivery business and further unlock its synergies with core GD retail. If the industry competition trends towards more rationality, we expect our investment in JD food delivery in 2026 to decline from the 2025 level. For international business, we will gradually increase our investment on a controlled scale. We will maintain a national discipline in the investment. For Jinxi, it has focused on lower-tier markets and the non-branded product supply. It has made meaningful penetration improvement, particularly in tier six and the lower cities. This has helped expand our user growth boundaries as it offers differentiated product offerings from our main app. We expect to increase our investment in Jinxi a little bit. but we believe SUE to continue to improve in 2026, delivering healthy and sustainable business growth.

关于海外业务,那Seconomy的交易目前还在监管的审批过程当中, 我们会及时和大家同步最新的交易进展。 Joy-Buy is a full-scale retail platform in Europe. It will be launched in March. The construction of the overall supply chain overseas is a long process. It still needs time and investment. From our perspective, Joy-Buy's user experience is very good, especially in New York. The logistics experience will be an important differentiating advantage of Joy-Buy. . . . . . We hope that many high-quality European brands will directly enter the Chinese market and further improve our global supply chain capabilities. In logistics, we will further improve the co-operative capabilities of logistics and overseas businesses in Europe, which will accompany Joybuy in the European industry. Joybuy's competitiveness will be even more prominent. In technology, Jindong will accumulate in the technology system for a long time and can further replenish our overseas business.

As to your question about this economy deal, at the current stage, it is under regulatory review. We will update the market in due course. Stroybuy is our full category online retail platform in Europe. It is scheduled to officially launch in March. Building overseas supply chain capabilities is a long-term initiative that takes time and continued efforts. Based on its trial operations, JoyBuy has received very positive user feedback, especially on the fulfillment side. The J6 experience will be a key differentiator for JoyBuy. We are building our own delivery network in Europe, and JoyExpress has been launched recently. It provides same- and next-day delivery in major cities across the UK, Germany, France, and the Netherlands. along with services such as door-to-door delivery. We welcome all analysts and investors to try out our services. As for synergies, first, on supply chain capabilities, while helping Chinese brands expand globally, we also aim to bring more high-quality grouping brands into the Chinese market, further strengthening our global supply chain capabilities. Second, on logistics, As JoyBuy expands in Europe, the synergy between retail and logistics in our overseas business will be further strengthened, reinforcing JoyBuy's competitive edge. Third, on the technology front, JD's longstanding expertise and robust infrastructure will continue to empower our international business.

Next question, please, operator.

Your next question comes from Alicia Yap with Citigroup.

Hello. Thank you. Good evening. 管理层晚上好。 谢谢接受我的提问。 有两个问题。 第一个问题是关于这个零售的。 就考虑到今年其实零售的增长前景可能会放缓。 然后请问管理层对京东这个日白品类的GMV How will the growth of revenue be expected? And in the context of the slow consumption of competitive furniture, how will JDG achieve a faster growth in this category? And what specific X1 advantages can support the continuous growth of this category of sales? The second question is, please, Manager Chen, can you share how JDG will plan and locate In light of the potential slower retail sales growth outlook this year, what is the growth rate management have in mind for your general merchandise GMB and revenue growth? How can JD continue to grow faster in this category? amid the competitions and also slower consumption? And what are the specific differentiated areas are JD able to drive sales in this segment? And second question is that can management share your thoughts on how JD might prepare and position to embrace the upcoming threats and opportunity from the agenda commerce?

首先是关于日白品类的问题。 As I mentioned earlier, we still expect Japanese products to maintain a healthy growth in 2026. Looking back, Japanese products have maintained double-digit growth for five consecutive seasons. This shows that the industry is doing well. This is also due to our continuous construction of supply chain capabilities. Thank you. We have a large scale, so we also have a lot of room for growth. The second point is the growth of users. We have brought new traffic, users, and shopping malls in take-out and shopping malls. At the same time, we are also accelerating the internal coordination. Especially in the shopping malls, you can see the good cross-purchase purchase with take-out users. The third one is to continue to strengthen the supply chain capability and user mentality. From the point of view of the category, the commercial category can have a better user experience and a stronger competitive price with our unique business model. As for the fashion category, in 2025, we are also... The advantage of differentiating is the core barrier of the Jingdong self-driving mode. Uh,

Thank you, Alicia. For your first question on the general merchandise category, we shared in the opening remark that the category is maintaining healthy momentum. So looking back at our track record, the general merchandise category has maintained double-digit growth for the past five consecutive quarters, and notably outperforming the industry. This is driven by our evolving supply chain capability and a remarkable improvement in operation efficiency expertise. This lays a solid foundation for continued growth in this category. So we remain very confident in the healthy momentum of general medicine category in 2026. The sustained growth driver includes first huge market potential with ample room for growth in categories such as supermarket, fashion, and health care. Second, user growth. So new business, including food delivery, Jingxi, have brought growth in traffic, user, and shopping frequency on JD platform. So we are also accelerating internal synergy. And we have observed healthy cross-selling trend in category like supermarkets. Third, continuously strengthen supply chain capability and user mind share. So from a category perspective, our supermarket category leverages JD's unique 1P model to deliver an excellent user experience and, at the same time, competitive pricing. Meanwhile, our fashion category has seen notable improvement in building underlying capability, including search and recommendation in 2025. as well as attracting more high-quality brands to deepen their collaboration with us. We are also applying AI to achieve more precise and personalized matching in search and recommendation. In Q425, we recorded double-digit growth, year-on-year growth in both sports and outdoor apparel revenues. In terms of our differentiated advantage in this category, First and foremost, the core mode of JD1P model is the key. This includes more diverse product selection, more competitive pricing, and more rigorous quality control. Second, leveraging on the core capability of JD Logistics, we offer high-quality fulfillment experience of faster, more accurate, and door-to-door delivery service. Third, from the brand standpoint, JD is the most consistent daily sales platform. JD is the premier destination for brand building and the platform that offers the highest returns throughout a product's entire lifecycle. So we provide brands with stable and efficient sales performance.

Next, regarding the question of authentic commerce, we believe that the chance of AI and this new technology to bring us a change is far greater than the challenge. First of all, authentic commerce mainly has an impact on the entry of front-end traffic. It is still in its early stages. We believe that no matter how the front-end traffic changes, the core of retail business is still the user experience, cost, and efficiency. So we continue to focus on improving the product price and service of retail businesses. As a result, the advantages of Jingdong and retail businesses with supply chain as the core will be magnified, and the balance will be deeper. At the same time, we are also investing in increasing the technology. While promoting large model applications, the open attitude and a large number of leading large model manufacturers are cooperating and testing. Then the third point is that we are gradually building a leading AI commerce company from the supply chain to the consumer and from the consumer to the consumer. Because we have our own business, we also have logistics and contracts. So Jingdong is actually the company with the most applications of AI technology and the latest robotic technology applications. uh um um In the opening remarks, I talked about a part of it, so I will briefly mention it again. On the demand side, there is an AI-driven search and recommendation, which can rebuild the chain of shopping. On the supply side, we can also use AI to help our sales in terms of employee pricing and warehouse management. to continue to educate, and to replace a lot of people's work. And then in the application of the physical world, for example, the automation of contracts, in fact, there is more room for imagination. Of course, it also needs a little longer time to be widely applied. Then in the post-sales service, such as customer service, AI technology has also been widely applied. Finally, through the continuous power of operation, This can push out more innovative products. For example, during the Double 11, we brought in sound products from Zhaoyi Insight, including AI toys, robots, hardware and other products. Its sales increased more than 20 times during the 618 period. For the second question, we see AI and energetic commerce as a greater opportunity for JDEvolution than a challenge.

First, agentic commerce is still in early stage and mainly affects the front end user traffic. Our view is that no matter how traffic patterns change, the core retail business remains as user experience, cost, and efficiency. So as we stay focused on optimizing product price and service, JD supply chain strength will yield even greater synergy further widening our competitive mode in the agentic era. At the same time, we are accelerating our technology investment while driving the adoption of our in-house large language model. We remain committed to an open ecosystem, actively collaborating with industry-leading external AI LLM providers. We are evolving into a leading ecosystem technology commerce company, spanning entire spectrum from supply chain to customer. As JD run a 1P business model with in-house fulfillment logistics service capability, the technology and AI application scenario is abundant. So this really differentiate us from platform business model. I'll briefly give some example. On the demand side, we are reshaping the shopping journey and enhancing user experience through AI-driven search and recommendation. On the supply side, we leverage AI to continuously enhance operational efficiency in areas such as sourcing, pricing, inventory management, replacing manual labor, We are also expanding our application in the physical world in terms of fulfillment automation and after-sales services. Beyond operation, we are unlocking new consumption potential as well through applying AI, such as Joy Insight, our AI agent for hardware. As I mentioned before, the sales of Joy Insight integrated product search 24 during W11 compared to the June 18 promotion. So you can see we are very proactively leveraging AI to reshape our competitive advantage and continue to optimize our user experience, at the same time drive cost efficiency. Looking ahead, we are very confident and believe we are well-positioned to capture the strategic AI opportunity to solidify our leadership in AI-driven e-commerce. Next question, please.

Your next question comes from Thomas Chong with Jefferies.

晚上好,謝謝管理層介紹我的提問。 我有兩個問題,第一個問題是, 管理層可以分享一下我們回歸股東最新的情況。 第二個問題是,想請教管理層, 關於互聯網平台公司的監管環境是否出現變化, 然後我們應該怎麼去解讀。 Good evening. Thanks, management, for taking my question. I have two questions. First, can management share about the latest developments on shareholders' return? And second, can management talk about any changes to the regulatory environment for Internet platform companies and how should we think about it? Thank you.

尽管去年集团做了重要且积极的长期战略投入, We are determined to maintain the net net worth of US$1.4 billion in net net worth of US$1.4 billion. The total net net worth is about US$1.4 billion. This shows us that based on our long-term profit and cash flow capabilities, we have a long-term commitment to provide a stable cash return for shareholders. At the same time, our total cash return in 2025 is $3 billion, which is equivalent to $6.3 billion in December 2021, and we have already canceled all of these shares. We will continue to firmly develop the company's health through the company's business, Thank you, Thomas.

Despite the long-term strategic investment we made in 2025, we remain committed to shareholder returns for both dividends and share buybacks. we declared the 2025 annual cash dividend of $1 per EDS stable compared to last year. The total dividend amount is $1.4 billion. This underscores our commitment to delivering consistent cash returns to shareholders based on our sustainable profitability and cash flow in the long term. In addition, we repurchased $3 billion worth of shares in 2025 representing 6.3% of total outstanding shares as of the end of 2024. All the repurchase shares have been canceled. We remain firmly committed to shareholder returns through healthy business development, dividends, and share buybacks. At the same time, we will remain focused on the healthy growth of our business scale, profitability, and cash flow and make strategic investments for the long term, reaching value and sharing JD's long-term success with our shareholders.

Let me answer this question.

First of all, I would like to answer this question. First of all, I would like to answer this question. The attitude of the government to support the development of the business is still the same. Strict supervision is not an obligation, but it is an opportunity to promote the high-quality development of the industry. Jindong has always put the premise of the business as a company, whether it is anti-contradictory, business regulations, or avoiding industry internalization. These are all highly in line with our long-term business concept. I'll take the last question.

Regulators continuously promote the healthy development of the platform economy ensuring sectors' long-term sustainability. So we welcome regulatory guidance. The government's commitment is to support compliant corporate development rather than remain unchanged. We believe rigorous oversight is not a constraint, but rather a catalyst for driving healthy, high-quality industry growth. So JD has always prioritized compliant operation as the cornerstone of our business, whether it is anti-monopoly measures, tax standardization, or preservation of involutionary competition. Prevention of involutionary competition, this effort aligns perfectly with JD's longstanding philosophy of compliance. So under a normalized regulatory environment, fair growth opportunity are created as we prevent bad money drives our good. So as a result, over the long term, the advantage of JDE complying a sustainable business model will become increasingly prominent. Thank you.

We are now approaching the end of the conference call. I will turn the call over to JDE.com's Sean Zong for closing remarks.

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

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