JD.com, Inc.

Hello and thank you for standing by for JD.com's first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Sean Zhang, Head of Investor Relations. Please go ahead.

Good day, everyone. Welcome to JD.com's first quarter 2026 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'll open the call to questions from analysts. Please note, unless otherwise stated, all Comparison in this call will be against our resolve for the comparable period of 2025. Before turning the call over to Sandy, let me quickly cover the safe harbor. Please be reminded, during this call, our comments and responses to your questions reflect management's view as of today only, and will include forward-looking statements. Please refer to our latest safe harbor statement in the earnings press release on the IR website, which applies to this call. we'll discuss certain non-GAAP financial measures. And also please refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. Please also note all figures mentioned in this call are in R&D and less otherwise stated. Now let me turn the call over to our CEO, Sandy.

Thank you, Sean. Hello, everyone. Thank you for joining our first quarter 2026 earnings conference call. We kicked off 2026 on firm ground. In Q1, our total revenues grew by 4.9% year-on-year, marking a sequentially accelerated pace as key growth drivers stayed firmly on track. We saw a sequential rebound in electronics and home appliances categories. While our general merchandise, marketplace, and marketing revenues maintained double-digit growth trajectory in the quarter, Moreover, our profitability continues to see steady growth. JD Retail's operating margin expanded by 0.7 percentage point year-on-year to 5.6% in the quarter, nearing historical highs. This expansion, achieved against a high comparison base for margin, underscores our operational resilience and healthy makeshift. Our new business segment also delivered a meaningful sequential loss reduction in the quarter, led by improved efficiency at JD Food Delivery, while Jinxi and international business maintained prudent investment discipline. Overall, we are pleased with this strong start to the year, with our emerging growth drivers taking solid shape while our profitability across all segments steadily trending upward. Moving to our operational highlights, I would like to share three areas of robust progress we made during the first quarter. First, we maintained robust momentum in both user base expansion and engagement. In Q1, both our quarterly active customer and annual active customer base grew by over 20% year-on-year, with AAC hitting a new record. This growth was powered by both healthy organic user growth in core JD retail and strategic contributions from our new businesses, including food delivery and SIMC. Notably, JD Plus members, our most loyal and high-value user group, delivered another quarter of double-digit year-on-year growth in membership scale. Beyond scale, the quality of our user engagement is reaching new heights. Our quarterly customer shopping frequency rose by a notable 37% year-on-year in Q1, a powerful testament to the synergies we are successfully unlocking across our core retail engine and new businesses initiatives. This new momentum in both scale and frequency provides a solid foundation for us to further optimize the overall value of our user ecosystem. As our user base continues its rapid growth over multiple consecutive quarters, our strategic focus is clear, fostering deeper loyalty and driving the upward migration of user quality are the key next steps towards advancing our long-term growth roadmap. Second, our core retail business demonstrated strong resilience in Q1. We delivered revenue growth in line with expectations while driving operation margin toward historical peaks. Despite notable near-term headwinds, including the high trading base and rising product prices for electronics. This performance underscores the enduring strength of our supply chain-driven model, which consistently enables us to navigate market cycles while delivering a steady upward trending performance. Q1 JD Retail's revenues grew by 1.8% year-on-year, with broad-based sequential acceleration across all revenue streams. Looking at category performance in Q1, while revenues of electronics and home appliances were down 8.4% year-on-year, this still represents a sequential improvement. Moving ahead, while we navigate ongoing external headwinds in Q2, we remain confident in a stronger performance in electronics and home appliances in the second half of the year. Our confidence is rooted in our continuous efforts to strengthen our supply chain capabilities, prioritize superior user experience, and drive systemic cost optimization and efficiency gains. Our general merchandise category remains a standout with revenue growth accelerating sequentially to 14.9% year-on-year in Q1, led by supermarkets, healthcare, home goods, apparel, among others. Following six consecutive quarters of strong double-digit growth, general merchandise has contributed over half of our total GMV, solidifying its position as an increasingly important growth driver. we maintain a positive outlook for this momentum to continue throughout 2026 as we leverage our supply chain advantages and increasing scale benefits to continue to provide our users with diversified, reliable product offerings, competitive pricing, and premium services. With a vast total addressable market and deepening user man share, we are well-positioned to capture the significant market opportunities ahead. DigiRetail's advertising and commission revenues have become a powerful engine for high-quality growth. We are pleased to report another quarter of strong double-digit growth in retail advertising and commission revenues for Q1. This performance served as a primary catalyst for the 18.8% year-on-year growth in our total marketplace and marketing revenues at the group level. As a high-margin business, advertising and commission continues to structurally optimize our revenue mix, providing a resilient foundation for margin expansion. We expect advertising and commission revenues to remain an important growth driver for JD Radio throughout 2026, fueled by the following factors. Our supply chain strength, expanding user base, enhanced 3P ecosystem, and traffic allocation efficiency optimized AI-powered advertising conversion and deepening synergies across our . Notably, JD Food Delivery business is already proving its strategic value, contributing an incremental 3% to advertising revenues in Q1. By effectively expanding our user touchpoints, food delivery is creating high-frequency monetization opportunities that complement our core retail operations. In addition to top-line resilience, another compelling highlight this quarter is the encouraging expansion of JD Retail's profitability. Operating profit surged by 16.5% year-on-year to 15 billion RMB, reaching a record high for quarterly profit and driving operating margin to 5.6% against the challenging external complexities we outlined earlier. This is fundamentally answered in our supply chain strengths, which continue to yield expanding economies of scale and optimize the procurement efficiencies. These strengths field a broad-based gross margin expansion across our categories, listing retail's gross margin to a remarkable 18.6% in the quarter, up 1.8 percentage point year-on-year. This margin uplift was further amplified by a favorable revenue mix shift. Particularly, they increased the contribution from high margin streams, such as advertising and commissions. We believe JD Retail's margin profile is a clear reflection of our evolving structural efficiencies, which we expect to provide further headroom for optimization going forward. Moving on to our new business segment, we are beginning to see the fruits of our efficiency-oriented strategy marked by a significant sequential narrowing of losses and deepening synergies with our core retail businesses. In Q1, city food delivery achieved the steepest sequential reduction in loss to date. While sustaining healthy order volumes, food delivery continued to improve its operating efficiency and diversify revenue streams, resulting in material improvement in unit economics. This progress underscores our commitment to a rational, healthy development of the business and reinforces our clear stance against involution within the sector. We fully embrace the regulatory guidance and will continue to align our business strategy with full compliance, prioritizing operational efficiency and high-quality growth as we move forward. For Jingxi and Joybuy, All the initiatives advance steadily in line with their strategic roadmap, while adhering to prudent investment discipline continue to deepen its penetration in lower tier markets, particularly tier six and rural townships, successfully tapping into new user growth opportunities for our platform. JoinBuy has seen solid momentum since its official launch in March, with the order volume and user retention trending healthily. By the end of Q1, its same and next day delivery service spanned over 30 major European cities, serving a population of over 40 million. Collectively, the total investment in our new businesses segment narrowed by over 30% sequentially. This was driven by our rational expansion strategy and an efficiency-first operating philosophy. Building on this solid execution in Q1, we now have clearer visibility to further deliver on our efficiency-oriented investment goals for the new business segment throughout the full year. We also continue to integrate AI across our entire value chain, from demand identification and stimulation, 1P and 3P supply sourcing, to autonomous logistics and premium customer services. In particular, we made further headways in logistics automation. In Q1, JD Logistics launched its next-generation Longzhu hacker robotic arm This proprietary technology is optimized for handling packages of diverse sizes and shapes, as well as automated cage loading. This milestone marks the successful transition of this technology from the lab to real-world operations and enables us to significantly boost our sorting efficiency and competitive edge. Additionally, Our AI-powered digital human, JoyStreamer, has transitioned from a functional tool to an intelligent AI agent with a number of merchants and live streaming sessions that utilize this technology surging tenfold year on year in Q1. Our goal is simple, to translate AI innovations into tangible retail experiences and sustainable value. We are well positioned to lead at the forefront of AI commerce and capture the vast opportunities ahead. In summary, Q1 has been defined by strong execution and strategic consistency. Our performance across all segments has validated our roadmap, contributing to both resilient top-line growth and robust profitability. With this solid foundation, we are confident in our full-year trajectory and long-term prospects. We will maintain the operational activity necessary to proactively navigate Q2 fluctuations, including a high trading base and rising product prices for electronics. We are fully leveraging our supply chain-driven model Our commitment remains unwavering to scale our business by delivering a premium user experience with continuous cost optimization and efficiency gains. With that, let me turn the call over to Ian.