JD.com Q2 Profit Rises 21% to RMB 8.9 Billion as Food Delivery Losses Halve, While Retail Revenue Falls 4.7% and Management Bets on a Q3 Turn
Second-quarter 2026 earnings call, August 13, 2026
JD.com reported a quarter in which profit and revenue moved in opposite directions. Total revenue fell 2.9% year-on-year to RMB 346 billion, but non-GAAP net income attributable to ordinary shareholders rose 20.8% to RMB 8.9 billion, lifting net margin by 0.5 percentage points to 2.6%. Management called the quarter a "definitive turning point" for profitability. The driver was not top-line strength. It came from record retail margins and a sharp reduction in food delivery losses, and the second half now depends on management delivering the revenue reacceleration it has promised.
Food delivery losses halve in a year, but the new-business loss remains large
The most consequential change in the quarter was in food delivery. Management said the business narrowed its losses by more than 50% year-on-year, "within just 1 year of execution," as competition normalized. It attributed the gain to lower subsidy per order, better delivery efficiency at scale and growing commission and advertising income. Order volume was described as growing at a healthy pace, though no figures were given. Executives said they expect "meaningful year-on-year loss reduction throughout the rest of the year."
The absolute numbers show how much remains to be fixed. The New Businesses segment still posted an operating loss of RMB 9.9 billion on revenue of only RMB 7.3 billion. The revenue decline in that segment reflects an accounting reclassification: on-demand delivery revenue moved to JD Logistics at the start of 2026. That is also why JD Logistics revenue grew 24.3% to RMB 64.1 billion, with the CFO's prepared remarks stating RMB 68.1 billion and then correcting to RMB 64.1 billion. Logistics non-GAAP operating income rose 15.6% to RMB 2.3 billion, a 3.5% margin. Management blamed near-term margin pressure on Deppon, saying the rest of the logistics business is on a healthy path.
JD Retail: record margins on a shrinking top line
JD Retail revenue fell 4.7% to RMB 295 billion, which management said was in line with expectations. Electronics and home appliances absorbed a high trade-in comparison base and upstream component price increases. Profitability held up. Gross margin expanded 1.3 percentage points to 18.5%, the 17th consecutive quarter of year-on-year improvement. Non-GAAP operating profit reached RMB 13.5 billion, and operating margin edged up only 7 basis points to 4.6%, which the company noted is a record for a peak promotional quarter.
The small operating margin gain compared with the large gross margin gain matters. Most of the gross margin benefit was reinvested, mainly in AI-related R&D, which management said "increased notably." Marketing expense ratio fell year-on-year for the fourth straight quarter. Management said R&D would keep growing in the near term, so investors should not assume that all of the gross margin expansion will reach the operating line in the second half.
The long-term target is unchanged at a high single-digit operating margin for JD Retail, against 4.6% today. Management named three levers: 1P scale benefits, margin upside in supermarket and a better electronics mix, and faster growth in high-margin commission and advertising revenue. The company did not give a timeline.
The second-half reacceleration is the claim to watch
Management said JD Retail will return to positive top-line growth in the third quarter, with growth improving sequentially through the second half. It cited June momentum as the early evidence. The case rests on three points: the trade-in base effect fades from Q3, supply chain planning can cushion rising electronics prices, and AI-linked product innovation, including co-development work with nearly 200 brands under the Joy Inside initiative.
The company was open about the pressure. It acknowledged that "the ongoing rising consumer electronic price may continue to weigh on consumer demand." The reacceleration depends partly on easier comparisons and on June holding up. Management said its market share rose in all major home appliance categories, and that offline stores grew much faster than online. Analysts should treat these as management claims, since no category growth rates were provided for electronics.
General merchandise also slowed. In response to UBS, management said the category was hit by a high base from last year's third quarter and by the loss of cross-sell lift from trade-in and food delivery. Supermarket, the largest general merchandise category, grew near double digits, and healthcare and industrial products grew at solid double-digit rates. JD Retail's 3P GMV has outpaced 1P for three consecutive quarters, which supports the high-margin revenue mix.
Advertising slows but should pick up
Marketplace and marketing revenue rose 8.3%, faster than product sales but slower than in prior quarters against a high traffic base. Total service revenue grew 6.8%. Asked by Citigroup how this line can keep growing amid competition and soft consumption, management pointed to AI-driven ad targeting, a mix shift toward general merchandise categories that monetize better, and extra traffic and ad inventory from food delivery. It expects advertising growth to accelerate as sales recover, which makes the ad line a derivative of the retail turn rather than a separate driver.
Joybuy doubles revenue, but spending will rise
Joybuy, the European business, doubled revenue within two quarters, according to management. It offers same-day and next-day delivery in major European cities, serving more than 40 million customers with its own warehouse network, and bundles delivery with installation for home appliances. Management said it saw strong air conditioner sales during a European heat wave. The company explicitly distinguished the model from "traditional cross-border e-commerce platforms."
The financial picture is less settled. Absolute operating loss widened as the business scaled, though loss margin narrowed sequentially. Management said that "investment in Joybuy is expected to increase accordingly" as volumes grow, while insisting that spending will be "very disciplined and manageable" and kept "steady and within our control." Goldman Sachs asked about the investment budget for the second half and next year, and management did not give a figure. It also did not comment on the pending German retailer acquisition that the analyst raised. Jingxi, the lower-tier market business, grew quarterly active customers over 40% and contributed 40% of new active customers in Q2, and both businesses saw a sequential step-up in strategic investment.
Cash flow improves sharply, but no formal payout framework
Last-twelve-month free cash flow reached RMB 31 billion, up from RMB 10 billion a year earlier, helped by faster receivable collections and normalized trade-in cash outflows. Cash, restricted cash and short-term investments totaled RMB 235 billion. Goldman Sachs noted that JD stands out among large internet companies, where capex exceeds operating cash flow, and asked whether management would set a formal percentage of profits for shareholder returns.
Management declined to commit to a ratio. It said it will return value through dividends and buybacks and aims to "maximize long-term total shareholder returns." In the first half, JD repurchased 69.9 million shares, or 34.9 million ADS, for USD 1 billion, about 2.5% of shares outstanding at the end of 2025. Roughly USD 1 billion remains under the 3-year USD 5 billion program, so the authorization is now largely used and a new one is a logical next step. Since 2023 the company has returned about USD 13 billion through dividends and buybacks and has retired about 17% of its shares.
AI and automation: efficiency, not revenue, so far
Management described AI as improving search, recommendation and ad targeting, and as automating customer service and internal workflows. In logistics, JD deployed thousands of unmanned ground vehicles across more than 20 provinces and plans its first 24/7 overnight autonomous delivery routes in Shenzhen. It also expanded its Goods-to-Person warehouse system. The company offered no quantified savings. The only visible financial effect so far is higher R&D expense, which the company expects to continue.