JD.com, Inc. (NASDAQ:JD) Q3 2025 Earnings Call Transcript

JD.com, Inc. (NASDAQ:JD) Q3 2025 Earnings Call Transcript November 13, 2025

JD.com, Inc. beats earnings expectations. Reported EPS is $0.525, expectations were $0.46.

Operator: Hello, and thank you for standing by for JD.com’s Third Quarter 2025 Earnings Conference Call. [Operator Instructions] 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.

Sean Shibiao Zhang: Thank you. Good day, everyone. Welcome to JD.com’s Third Quarter 2025 Earnings Conference Call. With us today are CEO of JD.com, Ms. Sandy Xu; and CFO, Mr. Ian Shan. Sandy will kick off the call with her opening remarks, and Ian will discuss the financial results. Then we’ll open the call to questions from analysts. 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 will include forward-looking statements. Please refer to our latest safe harbor statement in earnings press release on our IR website, which applies to this call. We will discuss certain non-GAAP financial measures.

Please refer to the reconciliation of non-GAAP measures to the comparable GAAP measures in the earnings press release. Please also note all figures mentioned in this call today are in RMB, unless otherwise stated. Now let me turn the call over to our CEO, Sandy. Sandy, please?

Xu Ran: Thank you, Sean. Hello, everyone. Thank you for joining our third quarter 2025 earnings conference call. We achieved a set of solid results across our strategic priorities during the third quarter and further enhanced our capabilities to drive better user experience, lower cost and higher efficiency. Our total revenues were up 15% year-on-year, sustaining our double-digit growth momentum. We are delighted to see growth of our general merchandise categories and marketplace and marketing revenue continue to accelerate sequentially. Both are becoming our important growth drivers. Non-GAAP net profit came in at RMB 5.8 billion in the quarter with the core retail business margin continued to expand year-on-year. Our food delivery business also sustained healthy expansion while its loss narrowed in Q3 from the prior quarter as we continue to optimize operating efficiencies and improve unit economics.

Overall, our business are making good progress along our long-term strategic road map. We are confident that our core retail business will steadily expand market share with healthy margin improvement and new initiatives will create deeper synergies and drive healthier financial models, further strengthening our entire business ecosystem. Among all the encouraging developments that underpin these results, I would like to point 3 most notable highlights for this quarter, which I believe should be the key takeaways from today’s call. First, strong momentum in our user base and engagement. Our quarterly active customer number was up over 40% year-on-year in Q3, sustaining the momentum built in the previous quarters, thanks to both organic growth of JD Retail as well as contributions from our new businesses such as JD Food Delivery and Jingxi.

The consistent growth has led to our annual active customers exceeding 700 million in October, making a new milestone in our user expansion. In particular, the number of JD Plus members, our highest quality user group also recorded healthy growth in the quarter. In addition to user scale, user shopping frequency on our platform also increased by over 40% year-on-year in Q3, a pace we’ve sustained for 2 consecutive quarters. Notably, we saw meaningful shopping frequency increase across all user groups, including new users, existing users and JD Plus members. This user momentum is clear proof that we have stayed very focused on providing a better user experience amid evolving user demand. In return, our expanding and more active user pool further improves our engagement with users, deepens our user insights and enables us to better address their demand.

This virtual cycle ultimately supports our sustainable growth in the long run. Second, our core retail business remained strong in Q3. Retail revenues increased by 11% year-on-year in the quarter to RMB 251 billion. There were a mix of contributors to this. While the high base effect for electronics and home appliances category started to kick in, sales of general merchandise as well as marketplace and the marketing revenues continue to accelerate growth this quarter. Profit wise, both JD Retail’s gross margin and operating margin further expanded at a solid pace, demonstrating the continued scale benefits and operating efficiency gains of the business. Looking at the main categories, the electronics and home appliances category has been faced with a high base since the second half of Q3, which has been weighing on its growth momentum.

This is an industry-wide challenge and we are working closely with brands and manufacturers to navigate through it. For example, we’ve been leveraging our market and user insights to support brands and manufacturers in developing new and customized product models. Meanwhile, we continue to lower the cost for brands and strive to secure the best prices for our customers. Thanks to our supply chain capabilities. Although the high base effect is expected to linger the near term, it’s clear that the advantages of our business model and market position in these categories remain intact, and we are confident in building on these strengths, to unlock new growth potential in this market. General merchandise category recorded 19% year-on-year revenue growth in Q3, an impressive acceleration from a quarter ago.

Within this category, revenues from supermarket, fashion and health categories maintained double-digit year-on-year growth in the quarter. The strong tailwind is expected to sustain into Q4. This is a result of our efforts in enhancing our product portfolio, price competitiveness and service quality, which eventually translates to better user experience and stronger user main share. As we continue to tap into the huge market potential, we believe general merchandise will play a bigger role in supporting JD Retail’s long-term growth. In addition to healthier category mix, another bright spot in our Q3 performance was marketplace and marketing revenues which, at the group level, grew 24% year-on-year in the quarter. It has remained on a double-digit growth trajectory for 4 consecutive quarters.

In particular, growth of our advertising revenues has accelerated sequentially in every quarter this year and exceeded 20% year-on-year in Q3. This strong momentum mainly stems from the accelerated ad revenues generated by core JD Retail business. Our improved ecosystem for both 1P business and 3P merchants, fighter AI-powered ad tools and improved traffic allocation efficiency all have contributed to the strong trend. As we move into Q4, we expect marketplace and marketing revenues to continue the healthy growth. Our platform ecosystem is taking good shape and gaining positive traction with suppliers and merchants, large and small. The third highlight I want to share is our new businesses. Within the segment, JD Food Delivery continued to make healthy progress in Q3.

It’s GMV achieved double-digit quarter-on-quarter growth in the quarter driven by both order volume growth and a healthier order mix with high-value orders contributing a vast majority of total orders. While scaling up the food delivery business also narrowed operating loss sequentially in Q3, thanks to the improving UE performance. This encouraging progress is achieved through our enriched supplies, increased operating efficiency, disciplined investment made a competitive market and our efforts to expand food delivery revenue streams. More importantly, food delivery continued to generate strong synergies with our retail business. In addition to user growth and engagement, the cohort cumulative cross-selling rate has been on an upward trend.

Products from our supermarket electronic accessories and Jingxi categories remained the biggest beneficiaries of this trend. Going forward, we will focus on further growing the food delivery business scale, UE optimization and unlocking stronger synergies with retail, logistics and other businesses across our ecosystem. Other new businesses, including both Jingxi and international business are progressing well as planned. Jingxi further penetrated into the lower-tier markets and grew its merchant and user base. Our international retail business is gradually establishing capabilities in the U.K. from Germany and Benelux regions, paving the way for our global expansion, both are making solid steps in executing on their long-term strategies. One more thing before I wrap up.

We unveiled our AI road map during the 2025 JD Discovery Conference in September. I want to share a few exciting updates here. First, we launched a number of new AI products at the event, including TaTaTa, an all-purpose digital human assistant app and JoyInside, an AI agent for robots, toys, devices, among others. Second, we introduced the industry specific AI applications across 4 sectors of retail, health care, logistics and Industrial. Third, we also made upgrades to a few of our retail technology infrastructure, such as JD Streamer, our new digital human technology that provides e-commerce live streaming and short video production solutions. JoyStreamer has served over 40,000 brands so far with significantly lower cost and better sales performance compared to real human live streaming costs.

In addition, we provide 24/7 nonstop AI customer service which handled over 4.2 billion inquiries during our 11.11 Grand Promotion. We are excited about the potential of these AI applications as we foster a comprehensive AI ecosystem spanning across various industries. To conclude, Q3 was a productive quarter with all our business lines moving ahead steadily on our strategic road map. The user momentum on our platform was strong. Our core retail business is in solid shape with multiple complementary long-term growth drivers and great potential for long-term margin improvement. Beyond core retail new businesses, including food delivery, Jingxi and our international retail business are on track for healthy development, both financially and operationally.

Taken together, our businesses are operating in synergy, bolstering our conviction in the path ahead, we see great opportunities to further unlock the collaborative value of our business ecosystem and to position us well for sustainable, high-quality growth. With that, now let me turn the call over to Ian.

Ian Su Shan: Thank you, Sandy. Hello, everyone, and thank you for joining the call today. In the third quarter, we recorded a set of healthy performance across our business lines. Our total revenues were up 15% year-on-year, outpacing the growth of MBS total retail sales. This was supported by double-digit revenue growth in our core retail business. Despite the high base for electronics and home appliances, general merchandise and service revenues both delivered stronger growth in Q3 and recorded their fastest pace since the second quarter 2023. In terms of profit, JD Retail achieved strong year-on-year expansion in both gross and operating margins in the quarter. And our food delivery business also saw a sequential reduction in investments scale.

Overall, our business are moving in the right direction, and we are at a stronger position to drive sustainable growth for the long term. Now let’s go through our financial results in the third quarter. Total net revenues increased by a solid 15% year-on-year to RMB 299 billion in Q3. Breaking down the mix. Product revenues were up 10% year-on-year in Q3. Revenues of electronics and home appliances were up 5% decelerating from last quarter due to the high base effect created by the trading program. This is in line with our expectations and we are confident that — we are positioned to further solidify our leading market position as we leverage our supply chain advantages and stay focused on enhancing user experience, reducing costs and improving efficiency.

Revenues of general merchandise were up 19% year-on-year in the quarter, a notable highlight of our Q3 performance. Growth in general merchandise has sustained double-digit growth for 4 consecutive quarters and further accelerated from the previous quarter. Within general merchandising, both supermarkets and fashion categories saw growth rate surpassing mid-teens in Q3. The results were mainly driven by our continuous efforts to enhance our operational capabilities, build up better user experience and mind share, alongside our growing market share. This gives us the confidence that the strong momentum in our general merchandise categories will continue going forward as we capture the huge potential in this market. Service revenues were up 31% year-on-year in Q3, a solid acceleration compared to previous quarters.

Notably, marketplace and marketing revenues increased 24% year-on-year, accelerating sequentially every quarter for 7 quarters in a row. Within this line, advertising revenues continue to see robust growth, mainly driven by the notable improvement of user engagement and better advertising tools that we provide for both suppliers and merchants at our core retail business. This demonstrates our more robust ecosystem and the strong growth in the number of merchants and users on our platform. We expect marketplace and marketing revenues to continue solid growth in Q4, contributing to both our top line growth and margin performance. Logistics and other service revenues grew 35% year-on-year in Q3, mainly driven by the incremental delivery revenues from food delivery business.

Now let’s turn to our segment performance. JD Retail revenues were up 11% year-on-year in Q3. Our core retail business has built multiple growth drivers and we believe growth of the general merchandise category and value-added services, including advertising will be important pillars in retail’s long-term growth. JD Retail also saw healthy progress in margin expansion in the quarter. This gross margin has sustained year-on-year expansion for 14 quarters in a row and was up 1.3 percentage points to 19.3% in Q3. This was driven by a favorable mix shift towards higher-margin business, along with optimized procurement costs by leveraging our scale effect and supply chain advantages. In addition, in Q3, JD Retail’s non-GAAP operating income was up 28% year-on-year to RMB 14.8 billion, and operating margin was up 76 bps to 5.9%, both continuing strong momentum.

Moving to JD Logistics. The logistics revenues were up 24% year-on-year in Q3. Both internal and external revenues grew at a steady pace. And JD Logistics also saw incremental delivery service revenues generated by food delivery business. In terms of profit, JD Logistics non-GAAP operating income was compressed 39% year-on-year to RMB 1.3 billion in the quarter as it continued to invest in customer experience, service capabilities and technology to enhance the efficiency of the entire logistics process. These efforts aim to boost JD Logistics competitiveness in products and services and strengthen its market position, which over time, will translate into sustainable margin expansion. Our net new business generated RMB 15.6 billion in revenues, a steady growth compared to last quarter.

This was driven by the continued expansion of our food delivery, Jingxy an international business. Non-GAAP operating loss of new business slightly widened sequentially to RMB 15.7 billion. To break this down, food delivery saw a sequential reduction in its investment in Q3. Our food delivery business continues to scale with a healthier financial model with expanded revenue streams, disciplined spending in users and increased operating efficiency. As to other new business, both Jingxy and international business increased investments compared to a quarter ago. They’re in a rapid development stage and are important pillars in JD’s long-term strategies. Going forward, we will continue to scale up the new business and further unlock synergies to set the stage for our future growth.

At the same time, we are committed to improving UE performance and aim to drive healthy and sustainable bottom line growth in the long run. For our consolidated profit performance in Q3, our gross profit was up 12% year-on-year to RMB 50 billion. And gross margin was 17%, slightly reduced by 0.4 percentage points. This was primarily due to margin dilution from the food delivery business and JD Logistics, which offset JD Retail’s solid gross margin expansion in the quarter. Consolidated non-GAAP net income attributable to ordinary shareholders was RMB 5.8 billion in Q3, and non-GAAP net margin was 1.9%, both down year-on-year. This near-term headwinds in profit mainly reflect our investments in food delivery. Our last 12 months free cash flow as of the end of Q3 was RMB 13 billion compared to RMB 34 billion in the same period last year.

This was primarily due to cash outflows associated with the trading program. and the decline in operating income. By the end of the third quarter, our cash and cash equivalents, restricted cash and short-term investments totaled RMB 211 billion. In summary, we’re encouraged by the solid progress in both core retail and new business. Retail has built a growth metric with multiple drivers and a clear path to our long-term margin target. Food delivery is growing with a healthier financial model and other new business, including lower tier market and international business are also making solid steps to the next chapter. All our businesses are on the right track, starting to generate notable synergies with 1 another and collectively contributing to our high-quality development in the long term.

With that, I will turn it back to Sean. Thank you.

Sean Shibiao Zhang: Thank you, Sandy and Ian. For the Q&A session, you’re welcome to ask questions in English or Chinese, and our management will answer the question in Chinese, 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’ll open the call for a Q&A session now.

Q&A Session

Operator: [Operator Instructions] Your first question comes from Kenneth Fong.

Kenneth Fong: [Foreign Language] [Interpreted] My first question is on the government trading subsidies. As the year-on-year comparison base is getting higher into the second — into the fourth quarter, can management share the growth outlook for the electronics and home appliances grow for JD Retail? And financially, as the trading subsidies fade and volume kind of slower in terms of growth year-on-year. How should we think about the margin impact on JD Retail. My second question is on the overseas development. Post the recent acquisition on some company overseas and JD Joy by commenced operation. Can management share about this overseas strategy, including the scale and the pace of investment?

Unknown Executive: [Foreign Language] [Interpreted] Thanks for your question, Kenny. Yes, since last year, the training program has stimulated consumer demand and contributed to the sales of home appliance and PCs, so this created an inevitable high base for the industry, which is within the market expectation. Although the trading program has caused short-term fluctuation in the consumer demand, its more substantial impact is driving industry upgrade and promoting products that are innovative, intelligent and green and ultimately, leading to high-quality growth of the industry.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] Since the treating program, JD has actively supported the implementation of the policy. As such, we have further enhanced our market share and supply chain capability in the related categories and especially on our 1P model, the continuous enhancement of our core advantage differentiate JD and build our long-term growth foundation we’ll continue to leverage our strength in product price and service with the goal to further strengthen user mind share and consolidate and expand our market share will focus on a few areas.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] So this area includes, first, on the product innovation, we’ll collaborate with brands to launch more customized products, driving product upgrades and innovation on price optimization will also leverage our scale advantage and supply chain capability to further optimize cost, offering user more competitive price. And on the service, so we’re offering omnichannel consumer service will build a seamless online and offline shopping experience for our customer. For example, we have been strengthening our off-line presence in home appliance and 3C categories, focusing on large stores like JD Mall, JD Home appliance, city flagship stores in the high-tier cities, and smaller ones such as JD Home appliance stores in the low-tier market.

In addition, we also provide differentiated service, including integrated delivery and installation, offering better user experience and more efficient service to our users. With these efforts will further consolidate our market share. As of Q3, we have built — we have over 20 JD Malls nationwide and the number of JD Appliance City flagship stores exceeded 100.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] In terms of profit margin, we’ll continue to offer users the best value for money product to ensure better user experience and mind share. Additionally, whether during the training program or in a normalized phase going forward, our team will leverage supply chain capabilities and enhance collaboration with brands.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] So overall, we are confident in our user mind share and market share in the home appliance and 3C categories, JD will continue to strengthen our capabilities and strategic positioning, working very closely with brands to address short-term challenges and support the long-term healthy development of the industry. Additionally, our growth drivers are now more diversified. We have seen sustained sales growth acceleration in categories such as supermarket, health, fashion and service revenue from advertising, which are emerging as new growth engines for JD. Furthermore, as I just have shared both our user base and shopping frequency have been on a stronger growth trend during JD 11.11 Grand promotion, the number of our shopping customer increased by 40% year-on-year. This set of momentum will support our healthy growth next year and give us more confidence in the long term.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] Regarding your second question on JD’s international business. So first, from the strategic perspective, international expansion has always been a key long-term strategy for JD, as the largest retailer in China, we aim to gradually establish a highly efficient global retail network so that we can deliver JD’s premium shopping experience to consumers worldwide. We recognize the international market is very big, for example, Europe is the second largest consumer electronics market in the world, only second to China, and there are still many great areas to improve user experience. We also aim to seize the opportunity of Chinese supply chain going global, leveraging our supply chain advantage to better support Chinese brands in their international expansion.

In terms of business model, unlike other cross-border e-commerce platforms, we leverage our supply chain capabilities, commit to a local e-commerce approach and localization strategy. We collaborate with high-quality brands and suppliers around the world to create mutually beneficial partnership.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] In terms of progress, currently Joybuy our European online retail business is in the test phase in countries, including the U.K., France, Germany and the Netherlands. This marks an important step in JD’s international strategy will continue to enhance user experience and build in key — build our key capabilities in areas including first expanding product offerings and collaboration with premium global brands; second, enhancing logistics capability to improve the efficiency and stability of warehousing and delivery third, investing in R&D to optimize the product functionality and enhancing shopping experience. We welcome investor analysts based in Europe to experience our Joybuy app and provide us your experience. Regarding CECONOMY, the transaction is still subject to the regulatory approval will provide you guys further updates when appropriate.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] So from the investment standpoint, this is a gradual process. We will continue to advance our international expansion strategy steadily while maintain a gradual and prudent financial discipline. We will prioritize investment efficiency and make dynamic adjustments to adhere healthy and sustainable — to achieve healthy and sustainable growth. Overall, the scale of the investment in our international business will not be substantial for JD.com and will carefully manage the investment pace and scale. Operator, we can take the next question.

Operator: Your next question comes from Ronald Keung with Goldman Sachs.

Ronald Keung: [Foreign Language] [Interpreted] The first is on food delivery. What is the duration that the JD will be committed to invest at this loss-making period as part of customer acquisition? And what’s the progress in improving economics and commissions and business models like the 7Fresh and even coffee across the 7Fresh brands? Second question is on general merchandise, seeing very healthy growth there in 3P. So how do we plan to further strengthen the competitive edge in the 3P categories, supermarket, health and apparel in terms of speed, selection, quality and price?

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] Thank you, Ronald, for your question. Both food delivery and on-demand retail is a long-term strategy for JD. We aim to drive healthy and sustainable growth of the business. We have been optimizing operational efficiency and improving UE. So in Q3, we remain very rational amid the intensified competition in the industry our food delivery business is currently in its first stage of development. Our goal for this stage is to establish better user mind share and market share in the quality food delivery sector. We will be committed to providing high-quality food delivery service to our existing premium user while attracting new users. Additionally, as you guys know, we’ll be good at is supply chain. So we’ll continue to deepen our supply chain effort such as through our innovative 7Fresh teaching model to offer differentiated experience and service to our users.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] So in the third quarter, JD Food Delivery maintained healthy growth trend. JD Food Delivery GMV achieved double-digit growth quarter-on-quarter. Alongside order volume growth, we also delivered a healthier order mix with a proportion of mill or mail orders steadily rising and contributing `to a bus majority of our total order. At the same time, average price per order also increased quarter-on-quarter compared to Q2 meet intensified competition. So this is remarkable. While scaling up overall investment in food delivery in JD Food Delivery business in Q3, narrowed sequentially thanks to the UE improvement, the revenue contribution of food delivery is still limited as we are implementing a commission-free policy for merchants and only started to generate limited advertising revenues.

That said, our team has made solid progress in improving operational efficiency, including enriching supplies the number of high-quality restaurant merchants continue to grow in the quarter. And we also further improved our subsidy efficiency with refined operations and tailored subsidy strategy to different regions, user groups and order types. In addition, as we continue to upgrade our underlying system capability we have seen better operating efficiency. We also launched our new business, 7Fresh Kitchen model in July, which address full safety concerns through supply chain innovation. Our goal is to ensure that consumers can enjoy their meals with peace of mind and at the same time, help quality restaurant improve profitability. Since its launch, 7Fresh Kitchen has been welcomed by our customers with a rapid increase in its order volume.

It has also boosted sales and order growth of other quality restaurants within the 3-kilometer range. By the end of this year, people will see more semi-fresh kitchen in the region of Beijing.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] Looking ahead, we’ll drive our strategic progress with a long-term perspective and focus on long-term ROI. Our goal is to create a sustainable business that drives healthy order growth and at the same time, gradually and long scale effect and enhance operations with better UE. Ultimately, JD food delivery should be a self-sustaining business. Moreover, food delivery is deeply integrated into JD overall ecosystem. We believe there is significant potential for synergies in user momentum, supply and fulfillment within our ecosystem. The way of our business working together is not simply adding 1 and cutting another. JD user acquisition costs — in the long term JD-user acquisition cost will decrease. And at the group level, we are committed to driving sustainable growth while maintaining profitable and cash flow sufficient.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] Regarding your question about our general merchandise category, as I mentioned before, it has sustained a 4 quarter consecutive double-digit growth key categories, especially supermarket, health, fashion and home goods all delivered very strong growth. We see significant growth potential in general merchandise, including supermarket and fashion as our users have substantial unmet demand, we have clear growth strategy for each of these key categories. First, on supermarket categories, we focus on improving user mind share and user penetration through promotions such as — through our promotions such as Black Friday and Super 18 will build stronger user mind share of our supermarket offering. Supermarket category will also take the opportunity of our rapid user growth on the platform to drive healthy — higher penetration and conversion.

We have been optimizing costs and improving operational efficiencies through our supply chain capability, providing more competitive price to our user which validates the economic scale of our 1P model. Our supermarket category has made solid progress in this area and build strong competitive — competitiveness compared to other models online and offline. At the same time, we will collaborate with brands further refine our operations and build categories with strong JD mind share and growth potential such as liquor, baby and mom products and household cleaning categories or all have already established strong user mind share, we expect to make breakthroughs in other categories as well.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] Overall, our strategy for the general merchandise category is very clear. We are confident in the growth potential and market opportunity in the general merchandise sector as we enhance operation and user mind share. General merchandise is an important pillar of JD growth metrics and will support our long-term sustainable growth. We can take the next question, operator?

Operator: Your next question comes from Alicia Yap with Citigroup.

Alicis a Yap: [Foreign Language] [Interpreted] So can management share with us the synergies on general merchandise category that benefit from the food delivery traffic, most of your food delivery users come from loyal JD user — and what is the retention rate of the newly acquired user through the food delivery? Would you be able to quantify and share the cohort of new food delivery users who become active user of JD Core retail user. And second question is can management update us on your latest AI strategy and investment. Can you elaborate how AI has helped on JD’s Core business? And how do we think about the financial impact?

Ian Su Shan: [Foreign Language]

Unknown Executive: [Interpreted] Thank you, Alicia, for your questions. I will take the first one. So as JD Food Delivery drives healthy development, we also see it’s generating deeper synergies with JD Retail. First, on the user growth and user engagement side. In Q3, DAU of JD app maintained a rapid growth with growth rates leading the industry. Our quarterly active customers and user shopping frequency, both recorded over 40% year-on-year growth in the quarter. As we continue to provide quality food delivery, we have seen JD food deliveries user retention rate maintained at a relatively high level and at the same time, boost our overall user engagement and user shopping frequency, while serving our high-quality existing users, our food delivery business also attracts new users to our platform.

Our annual active customer number surpassed the milestone of 700 million in October, reflecting our expanding user base and increasing user stickiness. At the same time, we will be accelerating the deployment and further optimizing our user conversion strategies and tools based on the preferences of food delivery users — we have been providing retail product selection and recommendation in a more precise way, thus driving better user conversion. We have seen that the conversion rate of the new users acquired by JD Food Delivery has been trending up month by month. And for the earliest group of such users, their cohort conversion has reached close to 50% in Q3.

Alicis a Yap: [Foreign Language] [Interpreted] Second, on the cross-sell side, we will see a stronger trend of cross-category purchases of food delivery users, particularly of our general merchandise category including supermarket products and live services. We believe food delivery will create new growth momentum to our general merchandise category as it attracts new users and drives up shopping frequency of our existing users. In addition, 3D food delivery has also accelerated the development of our on-demand retail business. We will build a dedicated team that pays close attention to this area. Going forward, we will continue to accelerate the synergies between food delivery and core retail business, in terms of user momentum, cross-category purchases and marketing. In addition, we will tap into more synergies of our broader business ecosystem driving healthy progress in our user base expansion, revenue growth and efficiency improvement.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] I’ll answer the second question. So we are in the new era where we see a lot of new opportunities in AI and significant value of business model reform. JD has built a solid comprehensive AI capability framework that covers infrastructure models, platforms, application scenarios and products. Over the next 3 years, we will make a sustained investment to foster a trading RMB scale AI ecosystem across various industries. So at our JDB conference, in September, we have unveiled JD AI strategy road map and launch flagship AI product, including our JD AI TaTaTa and all-purpose digital human assistance and JoyInside an AI agents for robot toys, devices and among others.

Xu Ran: [Foreign Language]

Sean Shibiao Zhang: [Interpreted] In terms of application, JD’s differentiation is that we have extensive application scenarios, including retail, logistics, health care and industry — other industry sectors — so taking both retail and logistics, as example, in retail use case, we are providing merchants with over 50 AI tools, such as AI systems, AI agent for advertising allocation and [indiscernible] MDM to help them — help merchants enhance efficiency and lower cost in content generation marketing, supply chain management and customer service. We also redefined e-commerce experience in the AI era. We launched a smart search and recommendation function through natural language interaction, it can precisely understand user needs and delivering a huge breakthrough in shopping efficiency and truly personalized shopping experience.

In the logistics use case, while our logistic robots have been deployed across more than 20 provinces in China and over 10 countries globally, covering the entire logistics chain from warehousing, sorting to transportation and distribution. Looking ahead, the expanding deployment of logistic robots autonomous vehicles and drones will further reduce logistic costs in the society, increase our business partner efficiency and keep optimizing shopping experience for our consumers. Okay, operator, we can take the last question.

Operator: Your last question comes from Thomas Chong at Jefferies.

Thomas Chong: [Foreign Language] [Interpreted] My first question is about our ecosystem development, including the number of 3P merchants contribution as well as the expectation over the next few quarters. And my second question is about the outlook in terms of our profitability and margin in the next few years.

Ian Su Shan: [Foreign Language] My first question is above our ecosystem development

Xu Ran: [Interpreted] Thank you, Thomas. We’ve actually made solid progress in developing our platform ecosystem with a set of indicators growing at a very rapid pace. So in Q3, our active merchant number grew by over 200% year-on-year. We have onboarded more top-tier merchants as well as merchants from industrial belts, providing users further enriched product offering. Meanwhile, our food delivery business has also brought in a large number of quality restaurants to merchants. We have also seen positive feedback from users. In Q3, the number of users who shopped our 3P offerings grew at a fast pace of over 50% year-on-year, outpacing the growth of our total users reflected in the financial results our commission and advertising revenues have been on a very rapid growth trajectory with growth rates accelerating to 24% year-on-year in Q3, which is the highest pace since Q2 2022.

Thomas Chong: [Foreign Language]

Xu Ran: [Interpreted] We believe our platform ecosystem has a lot of potential. In particular, we will further explore industrial belts to onboard more merchants — we will also continue to expand our full delivery merchant base to enrich local supplies for our 3P ecosystem. In addition, we will continue to strengthen our platform infrastructure and provide more tech tools to merchants with the goal to help them enhance operating efficiency on our platform. We will also optimize merchant operation rules and traffic allocation efficiency to create a clear growth path and a fair ecosystem for our 3P merchants. In addition to that, we will continue to strengthen user mind share of our 3P offerings. We will see that for our 3P driven categories such as fashion category, users have built growing mind share of shopping for clothing on JD.com.

We are committed to developing our platform ecosystem, achieving win-win outcomes with our 3P merchants and better serving our users. Platform Ecosystem business will also be our long-term driver for both revenue growth and profitability expansion.

Thomas Chong: [Foreign Language]

Xu Ran: [Interpreted] For your second question, in Q3, JD Retail continued to see steady profit growth. This further validates our confidence in retail’s long-term margin trajectory. The main drivers for this include: first, the healthy development of our platform ecosystem will drive growth momentum in our commission and advertising revenues, which will be a contributor to our margin expansion. Second, as we continue to build up our supply chain advantages and the scale effect of our core retail business, we are confident to further lower cost and improve our operating efficiency, which will lead to better margin performance. To note, JD Retail’s gross margin has been expanding year-on-year for 14 consecutive quarters. Third, our category mix shift will also impact our margin performance.

Currently, the operating efficiency and margin performance of most of our categories and brands have been improving. In particular, our supermarket category has built stronger procurement capabilities and differentiated product offerings. We see meaningful potential to further increase supermarkets margins going forward. Meanwhile, as we continue to optimize the product mix for electronics and home appliances, we also see room to increase these categories margins in the long term. In terms of investments in our new businesses, we will be centered around supply chain capabilities to make investments such as in food delivery, international and Jingxi businesses. As we further enhance our supply, performance and services and broadened coverage in categories, customers and regions, we see more growth potential of our businesses.

As the new initiatives generate deeper synergies with our existing businesses, we expect to see improvements in operating efficiency and profitability of our broader business ecosystem. Finally, our high single-digit margin target for the long term remains unchanged.

Operator: We are now approaching the end of the conference call. I will turn the call over to JD.com’s Sean Zhang for closing remarks.

Sean Shibiao Zhang: Thank you for joining us on the call today, and thanks for your questions. If you have further questions, please do not hesitate to contact me and the IR team. We appreciate your interest in JD.com and look forward to talking with you again next quarter. Thank you. Have a good day.

Operator: Thank you for your participation in today’s conference call. This concludes the presentation. You may now disconnect. Good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]