JD

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.

Thank you. 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 Shan. Sandy will kick off the call with her opening remarks, and Ian will discuss the financial results. We'll open the call to questions from analysts. Please note, unless otherwise stated, all comparison in this call will be against our results 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. 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 RMB, unless 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 continued 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 mix shift. Our new businesses segment also delivered a meaningful sequential loss reduction in the quarter, led by improved efficiency at JD Food Delivery, while Jingxi 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 Jingxi.

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 dual 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 revenues growth in line with expectations while driving operation margin toward historical peaks, despite notable near-term headwinds, including the high trade-in 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 supermarket, 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 mindshare, we are well-positioned to capture the significant market opportunities ahead. JD Retail'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-over-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 Retail throughout 2026, fueled by the following factors: Our supply chain strengths, expanding user base, enhanced 3P ecosystem and traffic allocation efficiency, optimized AI-powered advertising conversion, and deepening synergies across our businesses. 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 profits surged by 16.5% year-on-year to RMB 15 billion, reaching a record high for quarterly profits and driving operating margin to 5.6% against the challenging external complexities we outlined earlier.

This is fundamentally anchored in our supply chain strengths, which continue to yield expanding economies of scale and optimized procurement efficiencies. This is strengths fueled a broad-based gross margin expansion across our categories, lifting Retail's gross margin to a remarkable 18.6% in the quarter, up 1.8 percentage point year-over-year. This margin uplift was further amplified by a favorable revenue mix shift, particularly the increased contribution from high-margin streams such as advertising and commission.

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 businesses 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, JD 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 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, both initiatives advanced steadily in line with their strategic roadmap, while adhering to prudent investment discipline. Jingxi continued to deepen its penetration in lower-tier markets, particularly Tier 6 and rural townships, successfully tapping into new user growth opportunities for our platform. Joybuy has seen solid momentum since its official launch in March, with 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 headwinds in logistics automation. In Q1, JD Logistics launched its next-generation Longzu Tech Packer 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 the 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 agility necessary to proactively navigate Q2 fluctuations, including a high trade-in base and rising product prices for electronics while 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.

Thank you, Sandy. Hello, everyone, and thanks for joining the call today. In the first quarter, our strategic execution remained firmly on track as we delivered a resilient overall financial performance. Total revenues grew by 5% year-on-year, while non-GAAP net profit attributable to ordinary shareholders came in at RMB 7.4 billion, reflecting a strengthened sequential momentum across both our top and bottom lines. Notably, our core retail segment returned to growth this quarter, while delivering healthy year-on-year profit expansion.

We also recorded a significant sequential loss narrowing in our new business segment, led by consecutive loss reductions in food delivery. Alongside our resilient financial results, we remain fully committed to shareholder return. During the first quarter, we repurchased a total of approximately 44.5 million Class A ordinary shares, equivalent to 22.3 million ADSs, for a total of $631 million. This represents around 1.6% of our total ordinary shares outstanding as of December 31st, 2025.

In addition, we completed our annual cash dividend payment in April, totaling approximately $1.4 billion, or $1 per ADS. Our continuous execution of our shareholder return plan underscores our strong conviction in JD's long-term value creation. Now, let's go through our Q1 financial performance. Our total net revenues were up 5% year-over-year to RMB 316 billion in Q1. Breaking down the mix, product revenues were up 1% year-on-year, driven by a 15% surge in general merchandise, which effectively cushioned the temporary decline in electronics and home appliances against a high trading base.

Both categories saw sequential growth acceleration. Notably, general merchandise has extended its double-digit growth streak to six consecutive quarters. Within this, JD Supermarket outperformed by sustaining its double-digit growth momentum, which further accelerated in Q1 compared to the previous quarter. As we move ahead, we expect the impact of the high trading base and rising product price for electronics to persist in Q2, which will temper the growth trajectory of electronics and home appliances.

We remain confident in a stronger performance in the second half of the year. Service revenues grow by 21% year-on-year in Q1. Within this, marketplace and marketing revenues rose 19%. Advertising revenues remained a key driver, posting its sixth consecutive quarter of double-digit growth. By optimizing traffic allocation and conversion, we have effectively translated robust user engagement into superior ROI for our brands and merchants, a trend we expect to sustain throughout the year. Logistics and other service revenues were up 22% year-on-year.

This growth was driven by both incremental delivery revenues from our food delivery business and the robust performance across JD Logistics' diverse service offerings. Now, let's turn to our segment performance. JD Retail revenues were up 2% year-on-year in Q1. While we continue to navigate near-term headwinds in electronics and home appliances, we remain confident in a second half rebound in those categories. Meanwhile, our emerging growth drivers, including general merchandise and marketplace and marketing services, are expected to sustain their robust momentum.

JD Retail's gross margin expanded by 1.8 percentage points year-over-year to an impressive 18.6% in the quarter. This expansion was attributable to our enhanced supply chain capabilities, which led to gross margin appreciation across all major categories. In addition, it also reflected a favorable mix shift as our higher-margin general merchandise and marketplace and marketing revenues outpaced the overall growth.

Consequently, JD Retail's non-GAAP operating income increased by 16% year-over-year to RMB 15 billion in Q1, reaching the highest quarterly level for JD Retail, with operating margin rising 70 basis points to 5.6%. This was achieved through a strategic balance of gross margin expansion, marketing efficiency, and increasing investment in R&D for long-term growth. Notably, JD Retail's marketing expense ratio has declined year-on-year for three consecutive quarters, a strong testament to the deepening synergies with our new business initiatives.

Moving to JD Logistics, its revenues grow by 29% year-on-year in Q1, driven by incremental contribution from JD Food Delivery. On the profitability front, JD Logistics' non-GAAP operating income surged by 600% year-on-year in Q1. This exponential growth was driven by technological leverage from our AI and robotics initiatives, alongside broader operational optimization. In our new business, revenues came in at RMB 6.3 billion, reflecting a moderated pace due to the re-segmentation of our on-demand deliver revenues from new business to JD Logistics.

Non-GAAP operating loss in new business narrowed significantly on a sequential basis to RMB 10.4 billion, led by JD Food Delivery, while Jingxi and international business remained disciplined in their investments. In particular, JD Food Delivery delivered its most significant sequential loss reduction since inception, driven by its improved unit economics as we continue to boost operating efficiency and diversify revenue streams combined with a disciplined, rational response to market dynamics.

Turning to our consolidated profit performance. Group level gross margin expanded by 90 basis points year-on-year to 16.8% in Q1. This expansion was primarily driven by the strong performance of JD Retail, serving as a clear validation of the structural progress as we have made in broadening and strengthening our margin drivers. In terms of OPEX, total operating expense as a percentage of revenues increased year-on-year in the quarter, primarily reflecting increased marketing spending in JD Food Delivery and higher R&D investment to fuel our long-term growth and efficiency improvement.

Consolidated non-GAAP net income attributable to ordinary shareholders was RMB 7.4 billion in Q1, representing a non-GAAP net margin of 2.3%. Regarding our liquidity, last 12 months free cash flow as of the end of Q1 stood at RMB 22 billion compared to RMB 38 billion in the prior year. This primarily reflects cash outflows associated with the trading program alongside fluctuations in operating income. By the end of Q1, our cash and cash equivalents, restricted cash and short-term investments totaled RMB 216 billion. In summary, Q1 was another quarter that underscored the resilience and adaptability of our supply chain driven model.

We achieved a sequential acceleration in top-line growth while successfully navigating a complex external environment. Both JD Retail and new business delivered robust profitability improvements and steadily moved along the strategic roadmaps. Our scalable AI applications are increasingly transforming our core assets into a distinct competitive mode in the era of AI commerce. With this solid foundation, we are firmly committed to unlocking long-term value for our shareholders.

This commitment is underpinned by our proven track record of growth, a clear trend of margin expansion, and our solid shareholder returns. With that, I'll turn it back to Sean. Thank you.

Thank you, Sandy and Ian. For the Q&A session, you are welcome to ask questions in English or Chinese. Our management will answer the question in Chinese, and we will provide English translation for convenience purpose only. In any case of discrepancy, please refer to our management statement in the original language. Operator, we can open the call for Q&A now.

Thank you. 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 question queue again after your first two questions have been addressed. Your first question today comes from Kenneth Fong with UBS. Please go ahead.

Hey, Sandy Xu, Ian, Sean. [Non-English content] Thank you management for taking my questions and congrats on the strong quarter. My first question is on the growth. Despite facing a high base in the first quarter, JD Retail still deliver better than expected growth and maintain solid performance even as overall market decelerate in March. Has management observed any shifts in consumer behavior, particularly in the context of price increase in electronic categories? How should we think about the growth trend over the next few quarters? My second question is about the margin.

Against the backdrop of macro uncertainty, intensify industry competition and increased platform subsidies alongside with a rising ASP in electronic products, how should we assess JDR margin trajectory going forward? Thank you.

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Thank you, Kenny. Let me answer your first question regarding growth. In Q1, JD Retail deliver a solid performance with revenue growth accelerating Q-on-Q for electronics and home appliance, while our growth was impacted by the high base from trading subsidies last year. We leverage our supply chain capabilities and strong user mindshare to win even greater trust from user, which helped us further consolidate our market leadership. For general merchandise category, revenue growth maintained a double-digit pace and further accelerated to 15% year-over-year.

Notably, our supermarket category reported double-digit growth for the 9th consecutive quarter. This clearly shows that our growing user mindshare in the general merchandise category.

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Regarding the impact of price hikes in the 3C and home appliance industries. Yes, due to the rising memory cost, we have seen industry wide price hikes for smartphones and PCs since March. This round of price increases is sharp and widespread. In short term, it indeed dampens consumer demand to some extent. At the same time, we are seeing consumer purchase are shifting toward mid to high-end models and top tier brands. But in a challenging time, JD's unique proposition becomes even more clear.

We will leverage our efficiency of our supply chain to bring user a better experience in both price and service. At the same time, we'll help brands achieve more efficient sales with greater certainty. Our unique competitive edge is even more pronounced for the high-end, mid to high-end models and top tier brands. Overall, as a result, we believe our market position will further solidify.

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Looking at the full year, the rest of the year, in the second quarter, sales of electronic and home appliance are expected to continue to face temporary pressure. This is due to the even higher base from trading program last year, combined with the impact of price hikes on smartphones and PCs, impacting consumer sentiment. We will continue to strengthen our mindshare while helping brands achieve more certain sales.

Moving into the second half this year, we have stronger confidence in growth acceleration, especially for home appliance category as the comparison base returns to normal, and the continuous expansion of our omni-channel sales network further create greater sales potential for home appliance category. At the same time, we are confident in the healthy growth for both general merchandise and advertising and commission revenues. JD's growth engines are becoming more diversified. This gives us confidence to deliver healthy growth for the full year, even in a volatile year.

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In the first quarter, JD Retail achieved double-digit growth in operating profit. Its operating margin also expanded steadily to 5.6%. This was primarily driven by first gross margin expansion for both our mature electronics and home appliances and fast-growing general merchandise categories. We have leveraged our supply chain capabilities to drive industry efficiency while creating value for brands. We have also enhanced our own profitability, achieving year-on-year expansion in gross margins across categories. In the meantime, marketing efficiency improvement.

JD Retail's marketing expense and expense ratio have seen year-on-year optimization for three consecutive quarters. As new businesses including JD Food Delivery and Jingxi effectively drive traffic growth for our platform, we are allocating marketing resources with greater precision and efficiency, thereby enhancing the overall return on our marketing expenses. Lastly, while improving our gross margin and marketing efficiency, we remain deeply committed to R&D development, particularly in AI.

In Q1, our R&D expense continued to meaningfully increase, and is expected to maintain an upward trend for some time ahead. We believe such investment will gradually translate to operational benefits, driving AI-powered efficiency gains and further optimizing our overall cost structure.

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Looking ahead, our Q1 performance already further validates JD Retail's ability to deliver steady margin expansion over time. We remain firmly committed to our long term high single digits margin target. The key drivers of this include, first, our 1P capabilities will continue to enhance our 1P supply chain strength and leverage scale benefits to drive consistent product sales gross margin expansion. JD Retail's gross margin has delivered year-on-year improvement for 16 consecutive quarters, and we believe there is still upside potential. Second, category improvement.

We see meaningful margin upside in categories including JD Supermarket. Additionally, as we continue to optimize the product mix within our electronics and home appliances categories, we expect further margin expansion over the long term. Third, platform ecosystem. We will be driving the healthy development of our platform ecosystem.

This will support our high margin service revenues such as commission and advertising to grow at a robust pace, contributing to our overall margin expansion. That said, we are still at a lower category level compared to the industry, and we believe there is substantial potential for improvement for us. In the long term, as China's largest retailer with supply chain at its core, JD has the industry's most diverse application scenarios for AI and automation. This presents significant potential for us to continuously enhance user experience, reduce costs, and drive greater efficiencies.

Okay. Thank you, Kenny. We can go to the next analyst.

Your next question comes from Ronald Keung with Goldman Sachs. Please go ahead.

Hey. Thank you, Sandy Xu and Ian Shan. [Non-English content] Thank you management for taking my question. First is about international. Since you've launched Joybuy across six countries in Europe, how should we frame the near term investment intensity to drive a critical order volume scale? How do you think about the longer term impact on a kind of next few year basis on new business loss and the ROI from this investment? Second is on AI agents, which are increasingly driving consumer search and purchasing. How will JD leverage the unique moats as China's largest retailer in this term?

What are your defensive or offensive strategies in light of agent to agent interactions and on partnerships? Thank you.

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Thank you, Ronald, for your question. First on Joybuy. Joybuy was officially launched on March 16th. It leveraged JD's supply chain capabilities and localized operation. Now Joybuy partners with top global brands to offer European user a full category of products at competitive pricing. At the same time, backed by our self-built logistic network in Europe, Joybuy is bringing JD signature same and next day delivery speed that we offer in China to European consumers. Currently, Joybuy maintains an encouragingly high user rating on Trustpilot, a leading consumer review platform.

Our high quality products and excellent delivery experience are helping us winning trust of local customers. Thank you.

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In terms of investment, in Q1, investment of our international business remains stable Q-on-Q as we keep improving operating efficiency. Over the next few quarters, we will execute our established strategy. As our business grows healthily, the overall investment may gradually increase as well. That said, as order volume grows, the economy of scale will kick in and continuously improve our unit economics. Overall, we believe our international business investment is highly manageable and remains in line with our initial expectations.

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Looking ahead, international expansion is a long-term strategy for JD. We will steadily expand our footprint and build our capabilities. In the meantime, we will strictly maintain our financial discipline and focus on ROI to drive healthy sustainable growth. In terms of capability building, we'll focus our investment on key supply chain areas, including product fulfillment, technology systems, and etc. This will allow us to bring a more competitive price product offering to European user, improve delivery experience, and further differentiate the Joybuy experience.

Over the long run, this investment will translate into better user retention, unlock economic scale, and drive long term ROI. We are confident that JD's core supply chain mode, especially our highly efficient 1P model combined with strong logistic capabilities, give us the potential to redefine industry efficiency and user experience on a global scale.

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Regarding the second question on AI, we believe no matter how technology evolves, whether AI assisted shopping or the essence of retail remains unchanged. It has since always centered on delivering better user experience, lower cost, and higher efficiency to meet users continuous pursuit of better product, price, and service. This is also the core mode of JD that we have been building over the past two decades of deep investment in supply chain. Today, we are leveraging new technologies, including AI and robotics, to further enhance the user experience while reducing cost and improving efficiency. Let me walk you through a few examples.

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On the demand side, we are making a comprehensive upgrade with our self-developed AI agent called Jingyan to help us more precisely identify, stimulate, and match consumer demands. Jingyan has provide a more efficient and convenient shopping experience within the JD app.

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In Q1, we have seen Jingyan demonstrate strong growth momentum with its quarterly active user growing by over 200% year-on-year, while the growth of, in user engagement was even more robust, increasing by over 300% year-on-year.

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On internal workflow, our procurement and sales agent can analyze front-end market demand to uncover new business opportunities, and then source more suitable merchants and product. Our procurement and sales agent can also automate routine operational tasks such as merchant and product management, inventory management, and marketing activities, enabling our procurement team to operate and make decisions with greater efficiency.

At the same time, we have developed a suite of AI tools to help merchants enhance their operational efficiency, including marketing, content generation, JoyStreamer, our digital human livestreaming solution and AI powered customer service.

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On the fulfillment side, we are broadly deploying AI and robotic technology to continuously drive up our automation and robotics coverage. Currently, JD's Longzu Tech series of robot is able to cover the entire logistics chain and has been deployed at a scale, at a global scale, gradually delivering cost reduction and efficiency gain.

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Therefore you can see by deploying this agent, we are connecting and upgrading individual process into a seamless end to end workflow, which essentially, building an agent to agent framework. By replacing inefficient intermediary layers, we are positioned to realize, step change in the overall efficiency. Thank you Ronald, we can go to the next analyst.

Your next question comes from Alicia Yap with Citigroup. Please go ahead.

[Non-English content] As the food delivery landscape gradually improves, we understand that JD remains committed to investing in this area to drive new user acquisition and also cross selling. So can management share whether the goal is to operate the business profitably? Furthermore, does JD actually aim to break even at the same time as the competitors? Or does management view food delivery as a long term strategic investment that will continue to operate at a slight loss or maybe just near a break even point?

Then the second question is, what is management's view on the future FMCG and also the fresh category landscape? So what could be the share split between the large supermarket chain, the online, the on-demand, the quick commerce, what will be the preferred models that JD want and which model will be more profitable? And then any views and thoughts on the competition's landscape evolving? Thank you.

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First, in Q1, while keeping healthy order volume, JD Food Delivery achieved biggest sequential loss reduction to date with solid progress in UE improvement. On Food Delivery's revenues, as we continued to optimize operations and upgrade advertising system, total revenues of commission and advertising surged nearly 2x on a quarter-on-quarter basis in Q1. At the same time, we maintain a rational approach amidst industry wide subsidy competition.

We continue to refine our operations and marketing efficiency across different user groups and regions. Furthermore, through supply chain innovation, we are advancing the growth of this business. We also fully implement regulatory requirements and remain committed to compliant operations.

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Believe our food delivery business will eventually achieve profitability. However, JD Food Delivery is not a standalone business. We will be unlocking its synergetic value within our business ecosystem. On users front, first, user scale, JD Food Delivery has been driving healthy growth in traffic and user base for our platform. In Q1, both our DAU and quarterly active customers increased by over 20% year-on-year, and the number of our annual active customers reached a record high.

This also contributed to our advertising revenue growth. Second, user engagement as Food Delivery effectively fulfills the demands of our existing high quality users. It helped to drive a 37% year-on-year increase in user shopping frequency on our platform. Third, cross sales. We've also seen stronger cross category purchases among Food Delivery users, particularly in supermarket categories and our on-demand retail offerings.

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On the supply side, food delivery also enriches the location-based supply on our platform, spanning categories from dining and supermarket to general merchandise. This also enables us to deepen partnerships with merchants and brands. On the fulfillment side, we will be unlocking and testing synergies between food delivery and logistics fulfillment to develop a robust last-mile infrastructure. This not only enhances our on-demand delivery capacity, but accelerates the coordination and optimization of our overall logistics, operations and management.

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Food delivery and on-demand retail are long term strategies for JD. We will drive healthy development of the businesses through a long term perspective.

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Let me answer Alicia's second question on supermarket. First, China supermarket sector has a massive market size, nearing RMB 10 trillion in scale, yet it remains highly fragmented. This indicates significant room for potential cost optimization and efficiency gain, as well as for the growth in online penetration. Within the supermarket category, we operate multiple models, including one key model which focus on delivering a reliable consumer experience, 3P platform model which offers selection and diversity, and additionally, the on-demand retail model, which has been growing rapidly on JD in recent years.

These models are not simply replacing one another. Instead, they address diverse consumer demands across different shopping scenario by emphasizing distinct advantage in efficiency, timelessness, and selection.

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As a B2C retailer with deep supply chain expertise, JD Supermarket holds significant competitive advantage across product selections, supply chain and warehouse management, cost and price competitiveness and user experience. Despite intense market competition, as the largest supermarket in China, JD Supermarket has demonstrated remarkable growth resilience, achieving double-digit revenue growth for nine consecutive quarter.

On profitability, we continue to enhance the profitability of supermarket category by leveraging our scale advantage, and supply chain capabilities. Looking ahead, we still see substantial runway for improvement in both gross margin, our fulfillment expense ratio, allowing us to unleash results from our scale and sustain steady growth while gradually expanding our profitability. We believe that competition in supermarket sector will ultimately return to the focus on user experience, cost and efficiency.

By leveraging our continuously improving self-operated supply chain capability, JD Supermarket delivers better product at lower price to customer while helping brands achieve consistent and incremental sales. We are highly confident that in the long term, in the long term healthy growth of supermarket, which is becoming a key growth engine for us in the coming years.

Thank you, Alicia. Let's go to the next analyst, please.

Your next question comes from Thomas Chong with Jefferies. Please go ahead. Thomas Chong, your line is now live. Please proceed with your question.

[Non-English content] Hi, good evening. Thanks management for taking my questions. I have two questions. My first question is about the latest updates about our ecosystem strategies, including number of 3P merchants, contribution, as well as the outlook over the next few quarters. My second question is about our capital return. Can management share the latest updates about the return to shareholders? Thank you.

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Our platform ecosystem always centers on user experience, lower cost and enhanced efficiency. By leveraging different business models, we provide the best combination of products, price and services to meet diverse consumer needs. We have made solid progress in our platform ecosystem development. Let me share a few key indicators that maintain rapid growth in Q1. First, our active merchant base. It maintained a triple digit year-on-year growth rate in Q1. We've onboarded more high quality brands and industrial belt merchants, providing users with a more diverse product supply.

Meanwhile, our JD Food Delivery business has also brought in a large number of quality restaurant merchants, further expanding our service scope. Second, users. We have seen positive feedback from users. The number of users who shopped 3P offerings on our platform grow at a fast pace, outpacing the growth of our total users. This also supported the fast growth of 3P order volume, which accounted for over 50% of our total orders in Q1.

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From a financial perspective, in Q1, our 3P GMV grow faster than 1P and total GMV. More importantly, our marketplace and marketing revenues have delivered double-digit growth for six consecutive quarters. The increasing contribution from these high-margin revenue streams continues to drive our overall profitability. Over the long term, we believe 3P GMV contribution will surpass 1P. Our platform ecosystem will become a key driver for both our revenue growth and margin expansion.

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Regarding shareholder return, in the first quarter, we repurchased a total of around 44.5 million ordinary shares, equivalent to 22.3 million ADSs, for a total of $631 million, representing 1.6% of our total ordinary shares outstanding as of the end of 2025. The remaining amount of our ongoing repurchase program is $1.4 billion and the expire date will be August next year. We expect to continue to execute our share buyback at planned pace. In addition, we announced the annual cash dividend of $1 per ADS for the year of 2025 in March, and completed payment in April as planned.

Going forward, we remain committed to returning value to our shareholders through dividends and share buybacks. At the same time, we will maintain focus on achieving healthy long term growth in business scale, profitability and cash flows. We aim to share JD's success with our shareholders in multiple ways.

Thank you. That's all the question we can take today. Let me just wrap up since we are running over time. Thank you for joining us on the call today, and thanks for your question. If you have further question, 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. Good day

Hello, and thank you for standing by for JD.com's Fourth Quarter and Full Year 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.

Thank you. Good day, everyone. Welcome to JD.com's Fourth Quarter and Full Year 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. Please note, unless otherwise stated, all comparisons in this call will 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 will include forward-looking statements. Please refer to our latest safe harbor statement in the earnings press release on our 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 RMB, 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 on 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 remains resilient, thanks to the continued strong momentum in both our general merchandise categories and marketplace and marketing revenues. Our profitability, our core business, JD Retail achieved a notable gross 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 talent 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 health care. 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. Notably, we achieved this while expanding JD Retail operating margin for the sixth consecutive year, despite a highly competitive landscape, and we are expanding our TAM 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 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 markets, our strategic initiatives. We are confident that these strategic pillars position us for more sustainable and profitable growth. Moving into our operational highlights. I'd like to share 3 highlights from Q4 and full year 2025 as well as our thoughts for 2026. First, our user base expanded in both scale and depth [Technical Difficulty]. Our quarterly 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 Jingxi. High-value users also hit a new milestone. Our active JD Plus user base sustained double-digit [Audio Gap] surpassing [Audio Gap] by year-end. What is even more encouraging is the quality of user growth. User shopping frequency surged 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 margin 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 operating profit with operating margins expanding by 52 bps to 4.6%. Viewed through a long-term lens, this consistent trajectory of JD Retail's growth and margin 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 of electronics and home appliance categories, we have proactively strengthened our supply chain capabilities and deepened user mind share. These efforts are already paying off with improved momentum 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 remained 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 mid-teens, accompanied by steady growth and operating margin expansion. Our fashion categories also achieved significant gains in both top line and user mind share expansion throughout 2025, with healthy growth across user base, shopping frequency, ARPU and ticket size. These results were driven entirely by the team's execution rather than external tailwinds. We are confident in sustaining the general merchandise momentum as our category mix continues to evolve towards a more diversified structure. Another exciting emerging growth driver for JD 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 roll out of our AI-powered algorithms and agents for our suppliers and merchants. We are also seeing a strategic shift where advertisers are reallocating budgets towards platforms like JD as we are regarded as the most consistent daily sales platform, the premium designation for brand building and the platform that offers the highest return throughout a product's entire life cycle. Notably, the synergy with JD Food Delivery is starting to bear fruit, contributing an incremental 2% to 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, JD 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% quarter-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, JD 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 cohorts 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 levels. Regarding our other new business initiatives, both Jingxi and international business are progressing on track. Jingxi continues to successfully penetrate lower tier markets, expanding both our user base and user mind share. Furthermore, we are excited to announce that Joybuy, 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 higher potential segments in a prudent and controlled matter to build 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 supply and pioneering autonomous logistics. Let me share a few samples 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, JoyAI's total token invocations surged nearly 100-fold from 2024, fueling faster, smarter decision making throughout the company. Second, demand cultivation. We are reshaping the shopping journey and enhancing user experience through AI-driven search and recommendations. Jingyan, our AI agent, surpassed 150 million annual AAC in 2025 with over 20% user penetration driven billings 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 LangzuTech warehouses across China. We also launched this capacity internationally, launching our first LangzuTech facility in the U.K. to efficiently support a premium 211 same day and next day fulfillment experience locally. Furthermore, services and innovation. Our multimodal AI customer service handled over 4.2 billion user inquiries during the 11.11 promotion, achieving higher satisfaction with lower human intervention. Beyond operations, we are unlocking new consumption potential through JoyInside, our AI agent for hardware, which has partnered with 40 hardware brands to introduce a range of AI products. Sales of JoyInside-integrated products surged 20-fold during 11.11 compared to the June 18 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 frontier for 2026 and beyond, ultimately placing us at the forefront of AI commerce. In summary, 2025 was a year of constructive progress and strategic fortitude. Despite navigating short-term macro environment and high base comparison, we remained 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 [Audio Gap]. 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 and disciplined ROI-focused approach to new businesses 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 will 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 investments 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 USD 1.4 billion for 2025, representing USD 0.05 per ordinary share or USD 1 per ADS. Furthermore, we remained active in terms of share buybacks. In 2025, we repurchased about 6.3% of our outstanding shares for a total of USD 3 billion. All of the repurchased shares have been canceled. These efforts underscore 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 grew 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 health care categories throughout 2025. We believe this momentum will continue in 2026 as we further build our strength in these high-potential sectors. Service revenues grew 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 surging 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 grew by 24% year-on-year in Q4 and 27% for the full year, mainly driven by the incremental delivery returns revenues from our food delivery business. Now let's turn to our segment performance. JD Retail revenues down 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 metric that provides the business with multiple engines and 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 mix shift. JD Retail's non-GAAP operating income in Q4 was down 2% year-on-year with operating margin 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 investments in R&D and employee compensation to fuel future growth. On a full year basis, JD Retail's non-GAAP operating income in 2025 grew 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 high-margin advertising business and realize efficiency gains in categories such as supermarket, we remain on a steady and successful path towards our long-term margin targets. Moving to JD Logistics. Its revenues grew by 22% year-on-year in Q4 and 19% for the full year with incremental contribution 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 JDL's long-term sustainable growth in both top and bottom line. New businesses' revenue 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's non-GAAP operating loss narrowed to RMB 14.8 billion in Q4. This sequential improvement was primarily driven by the narrowing loss at JD 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 level gross margin expanded by 32 bps year-on-year to 15.6% in Q4 and rose 18 bps to 16% for the full year. This improvement was primarily driven by the consistent gross margin expansion 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% and 2.1%, respectively. Our near-term profitability mainly reflects our strategic investments in new businesses. We believe these initiatives will broaden the group's growth potential, driving both sustainable growth and margin improvement over the long term. Our free cash flow 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 trade-in program alongside fluctuations in operating income. Our accounts receivable also recorded a sequential decline for 2 consecutive quarters, primarily due to the healthy recovery of the trade-in related receivables. We conclude the year with a robust liquidity position with cash and cash equivalents, restricted cash and short-term investments totaling RMB 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 expansion fueled by increasingly diversified drivers. Furthermore, our new businesses are now on a healthy, promising operating track. We have built a more resilient ecosystem. While 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 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 turn 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 original language. Operator, we can open the call for Q&A session now.

[Operator Instructions] Your first question comes from Ronald Keung with Goldman Sachs.

[Interpreted] First is on JD Retail 2026 growth, as electronic 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 JD 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, supply chain-driven business models? And how should we think about your determination and commitment to this business? And with the regulations and investigations on the food delivery industry, would that also contribute to the unit economics improvement?

[Foreign Language]

[Interpreted] Okay. Thank you, Ronald. So for your first question, first, our general merchandise category continues a very healthy, robust growth trajectory. Looking back at 2025, the category achieved growth faster, even factoring in the impact of trade-in program on the other category. So general merchant category served as a primary growth engine for JD Retail. Categories such as -- subcategories such as supermarket, fashion and health care all achieved very strong results. Looking into 2026, we remain very confident in sustaining this healthy momentum. Supermarket category still has significant untapped 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. Health care category, we expect to continue maintain its industry-leading position and user mind share. Regarding electronics and home appliance category, it continue to face high base effect in the short term. In 2026, the government trade-in program will continue, but we have to bear in mind that the government-backed cash subsidy were consumed much faster and more in first half 2025 compared to the second half 2025. So for our electronics, home appliance category, including home appliances, cell phones, computers and digital products, will remain affected by a high base in the first half this year. However, we anticipate a sequential improvement in growth compared to the last quarter, fourth quarter of 2025 with more robust recovery expected in the second half 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 phones, digital products are expected to increase across the board. This may dampen consumption and affect sales 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 off-line presence and enhancing overall service experience. Meanwhile, AI and emerging technologies are creating numerous opportunity for innovation and new product categories further demonstrating our strength of supply chain. While initial data contribution from this new AI-related products remain modest relative to our -- 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 the 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 electronics and 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 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 to achieving -- in achieving healthy and high-quality growth for the full year 2026.

[Foreign Language]

[Interpreted] Regarding your second question. So while food delivery business -- our food delivery business remains 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 operational 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, superior service quality driven by full-time riders. Third, the 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 Seven Fresh Kitchen, which is a highly innovative and differentiated business model, is progressing well. It's deeply integrated with JD supply chain capability, leverage strong synergy with our on-demand retail business. As of the end of February, Seven Fresh 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 is a long-term strategy for JD, will drive our strategic progress with a long-term perspective, continuously enhancing 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, our food delivery provided -- 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 they foster 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.

[Interpreted] 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 update on the CECONOMY acquisition progress time line and the impact on financials post consolidation? From the strategic angle, how would Joybuy position? And what kind of benefit or synergy should we expect from the group level, i.e., retail, logistics and the whole supply chain point of view?

[Interpreted] 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 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 margin 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, gross margin brought by our enhancing supply chain capabilities, robust growth in high-margin business, such as advertising, as well as continued margin improvement in categories, including supermarket. JD Retail's flow benefit will also continue to play out and its operating efficiency will have further room to improve as we increasingly adopt AI technology. In terms of our investments in new businesses. For JD Food Delivery, its loss narrowed by nearly 20% quarter-on-quarter in Q4. We continued 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 JD 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 financial discipline in the investment. For Jingxi, it has focused on lower-tier markets and a nonbranded product supply. It has made a meaningful penetration improvement, particularly in Tier 6 and lower cities. This has helped expand our user growth boundaries as it offers differentiated product offerings from our main apps. We expect to increase our investment in Jingxi a little bit, but we believe its UE to continue to improve in 2026, delivering healthy and sustainable business growth. As to your question about the CECONOMY deal, at the current stage, it is under regulatory review. We will update the market in due course. Joybuy 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 a very positive user feedback, especially on the performance side. Logistics experience will be a key differentiator for Joybuy. We are building our own delivery network in Europe, and the JoyExpress has been launched recently. It provides same and next-day delivery in major cities across the U.K., 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 European 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 the logistics in our overseas business will be further strengthened, reinforcing Joybuy's competitive edge. Third, on the technology front, JD's long-standing expertise and robust infrastructure will continue to empower our international business.

Next question, please, operator.

Your next question comes from Alicia Yap with Citigroup.

[Interpreted] So 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 GMV 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 JD is 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 agentic commerce?

[Foreign Language]

[Interpreted] Thank you, Alicia. For your first question on the general merchandise category, we shared in the opening remarks that the category is maintaining healthy momentum. So looking back at our track record, the general merchandise category have maintained double-digit growth for the past 5 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 lay a solid foundation for continued growth in this category. So we are -- we remain very confident in the healthy momentum of general merchant 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 trends 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 Q4 '25, 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 moat of JD 1P 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 our product's entire life cycle. So we provide brands with stable and efficient sales performance.

[Foreign Language]

[Interpreted] For the second question, we see AI and agentic commerce as a greater opportunity for JD evolution than a challenge. First, agenetic commerce is still in early stage and mainly affect 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 moat 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 technology commerce company, spending entire spectrum from supply chain to customers. 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 differentiates us from platform business model. I'll briefly give some examples. 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 AI 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-sale services. Beyond operation, we are unlocking new consumption potential as well through applying AI, such as JoyInside, our AI agent for hardware. As I mentioned before, the sales of JoyInside-integrated products surged 20-fold during 11.11 compared to the June 18 promotion. So you can see we are leveraging -- 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.

[Interpreted] I have 2 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?

[Interpreted] Thank you, Thomas. Despite the long-term strategic investment we made in 2025, we remain committed to shareholder returns through both dividends and share buybacks. We declared the 2025 annual cash dividend of USD 1 per ADS, stable compared to last year. The total dividend amount is USD 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 USD 3 billion worth of shares in 2025, representing 6.3% of total outstanding shares as of the end of 2024. All the repurchased 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 while creating value and sharing JD's long-term success with our shareholders.

[Foreign Language]

[Interpreted] I'll take the last question. Regulators continuously promote the standardized development or the healthy development of the platform economy, ensuring sector's long-term sustainability. So we welcome regulatory guidance. The government's commitment is to support compliance, corporate development rather than -- remain unchanged. We believe regulatory 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 antimonopoly measures, tax standardization or preservation of evolutionary competition -- prevention of evolutionary competition, this effort aligns perfectly with JD long-standing philosophy of compliance. So under a normalized regulatory environment, fair growth opportunity are created as we prevent bad money drives out good. So as a result, over the long term, the advantage of JD compliant and 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 JD.com's Sean Zhang 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 IR 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. Good day. [Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]