On May 12, JD.com released its unaudited financial results for the first quarter. The standout figures were revenue and adjusted net profit, both exceeding market expectations; however, concerns were equally evident, with net profit attributable to ordinary shareholders nearly halving year-over-year. Against the backdrop of pressure on electronics categories and ongoing cash consumption from new ventures like food delivery, this earnings report reflects the complex situation of an e-commerce giant during a critical strategic transition period. The financial report shows that JD.com recorded total revenue of 315.7 billion yuan for the quarter, a year-over-year increase of 4.9%, surpassing the Bloomberg consensus estimate of 311.4 billion yuan. Under non-GAAP measures, net profit attributable to ordinary shareholders was 7.4 billion yuan, a decrease of approximately 42% from 12.8 billion yuan in the same period last year, yet still significantly exceeding the range of 5.2 to 6.1 billion yuan forecast by 17 brokerages. The parallel existence of "exceeding expectations" in data and "significant contraction" in profit is precisely the key to understanding JD.com's current situation. 01 Revenue Steady with Growth, Profit Halved A breakdown of JD.com's first-quarter income statement clearly reveals a dual-track pattern: "retail generates cash, new ventures consume it." Net profit attributable to ordinary shareholders for the quarter was 5.1 billion yuan, a decline of 53.1% from 10.9 billion yuan in the same period last year. This marks the third time in the last four quarters that JD.com has seen its net profit attributable to ordinary shareholders roughly halve year-over-year. The direct causes for the significant profit decline are primarily two-fold. First, the operating loss from new ventures reached a substantial 10.4 billion yuan, becoming the largest drag on profit. This segment generated only 6.3 billion yuan in revenue for the quarter but required approximately 12.2 billion yuan in expenses to drive, meaning nearly 2 yuan was spent for every 1 yuan earned. However, compared to the 14.8 billion yuan loss in the fourth quarter of 2025, the first-quarter loss has narrowed significantly sequentially. CFO Shan Su described this in the earnings call as "a further significant sequential narrowing." Second, the quarter included a fine of approximately 635 million yuan from the State Administration for Market Regulation. Excluding this non-recurring factor would improve the profit performance, but it still cannot reverse the overall downward trend. A more fundamental reason is the comprehensive rise in expenses. Fulfillment expenses increased by 18.5% year-over-year, marketing expenses surged by 45.8%, R&D spending rose by 48.6%, and general and administrative expenses grew by 48.7%. The growth rates for all expense items far exceeded the 4.9% revenue increase. The sharp rise in marketing expenses points to continued subsidy investments in new ventures like food delivery, while the increase in R&D spending is closely related to strategic investments in the AI field. Together, they constitute JD.com's investment logic of "trading profit for future growth." On the positive side, the core retail business demonstrated considerable profit resilience. JD Retail achieved an operating profit of 15.0 billion yuan in the first quarter, a year-over-year increase of approximately 17%. Its operating profit margin improved from 4.9% in the same period last year to 5.6%, reaching a historical high. Shan Su attributed the margin improvement to "improvements in gross margin" and "enhancements in marketing efficiency," specifically noting that the retail business's market expense ratio has seen year-over-year optimization for three consecutive quarters. However, the sustainability of this profit quality warrants prudent external assessment. JD.com's free cash flow for the first quarter was negative 6.5 billion yuan. Although the company still holds approximately 215.7 billion yuan in cash and cash equivalents, negative free cash flow indicates that cash generated from operating activities is insufficient to cover capital expenditures and investment needs. Considering that losses from new ventures are difficult to fully bridge in the short term, coupled with ongoing share repurchases, cash flow management will be a key metric to monitor closely throughout the year. 02 Diverging Performance Across Three Segments The performance of JD.com's three major business segments showed significant divergence this quarter: core retail steady with progress, logistics continuing to expand, and new ventures deeply mired in losses. The "temperature difference" among the three reflects JD.com's shifting strategic focus and the growing pains of transition. The retail segment's first-quarter revenue was 268.6 billion yuan, a modest increase of only 1.8% year-over-year, but its profit growth reached 17%, showcasing efficiency improvement characterized by "slight revenue growth, fast profit run." More noteworthy is the profound change in revenue structure: Electronics and home appliance revenue was 132.2 billion yuan, down 8.4% year-over-year; General merchandise revenue was 112.6 billion yuan, up 14.9% year-over-year, approaching the scale of electronics category revenue. The proportion of general merchandise in product revenue increased to 46%, a record high. This shift signifies that JD.com is transforming from a retailer overwhelmingly dominated by 3C and home appliances into a platform driven by the dual engines of "electronics + general merchandise." CEO Xu Ran pointed out in the earnings call that the supermarket category has achieved double-digit growth for nine consecutive quarters, with the growth rate for general merchandise further accelerating to 15%. The decline in electronics categories is closely related to the high base effect from national subsidies and industry-wide price increases for mobile phones and computers starting in March. Xu Ran candidly admitted that electronics category sales in the second quarter are "expected to face periodic pressure," but expressed "more confidence in a recovery of growth rate" entering the second half of the year. The strong growth in service revenue is another highlight. Platform and advertising service revenue grew 18.8% year-over-year, while logistics and other service revenue increased by 21.7%. Combined service revenue reached 70.9 billion yuan, further increasing its share of total revenue to 22.4%. The rapid growth in advertising business benefits from the prosperity of the third-party merchant ecosystem and AI-driven advertising conversion optimization. Management revealed in the call that synergies with the food delivery business have contributed approximately a 3% incremental gain to advertising revenue. The logistics segment's first-quarter revenue was 60.6 billion yuan, a 29% year-over-year increase. Its operating profit margin jumped from 0.3% in the same period last year to 1.7%, indicating significant improvement in profitability. Revenue growth partly stems from the opening of instant delivery services to external merchants following the acquisition of the local instant delivery business in October 2025, driving rapid growth in external revenue. Profit attributable to company owners was 880 million yuan, a 95.2% year-over-year increase. The logistics company simultaneously announced its intention to repurchase up to $1.2 billion worth of shares in the open market. Within JD.com's overall strategic framework, logistics has long been positioned as a "heavy-asset infrastructure," characterized by thin margins and significant investment. Although the current 1.7% operating profit margin is still not high, it has steadily improved for several consecutive quarters, providing a certain buffer against the loss pressure from new ventures. The new ventures segment (including JD Food Delivery, Jingxi, JD Property, overseas operations, etc.) reported first-quarter revenue of 6.3 billion yuan and an operating loss of 10.4 billion yuan, compared to a loss of only 1.3 billion yuan in the same period of 2025. The sharp expansion of the loss is primarily due to the sustained large-scale investment in food delivery since 2025. A question of widespread market concern is: Is this money being burned worth it? Signals from management suggest that the loss per order for the food delivery business is improving. In the earnings call, Xu Ran emphasized that "the food delivery business will ultimately achieve profitability," noting that food delivery continuously drives overall traffic and user growth for JD.com. According to previous disclosures, the food delivery business has cumulatively received orders from over 240 million users, with market share exceeding 15%. In prior calls, management explicitly stated that the growth in food delivery order volume brings traffic synergy effects to the main e-commerce platform. However, an internet industry practitioner noted that while all players in the industry are subsidizing instant retail, JD.com's efforts are relatively smaller. Its market share has declined compared to its peak, consequently resulting in weaker traffic synergy for the main platform. The input-output ratio of new ventures still requires more quarterly data for validation. According to sources close to JD.com, the company pins its hopes for increasing food delivery market share on the expansion of 7Fresh Kitchen. At the beginning of this year, JD.com expressed its hope for JD Food Delivery to achieve a 30% market share by 2026. 03 The Efficiency Imperative and Long-term Game Through the financial figures in the earnings report, a consistent thread running through all business segments is visible: JD.com is swinging back from rapid expansion to a track prioritizing efficiency. This highly aligns with the overall trend of the e-commerce industry in 2026. Against the backdrop of regulatory authorities explicitly proposing to "deepen the rectification of 'involutionary' competition," platform economies are collectively moving away from crude subsidy races towards technology-driven and efficiency-focused cultivation. In the food delivery sector, constraints from both policy and capital markets on irrational subsidies are strengthening. J.P. Morgan has narrowed its 2026 loss forecast for JD.com's new ventures from 45 billion yuan to approximately 35 billion yuan. Xu Ran also stated in the call that if market competition remains stable, the total investment in the food delivery business for 2026 will decrease compared to 2025, with efficiency becoming the key battleground in the next phase. Regarding the layout of technologies like AI, JD.com's first-quarter R&D spending increased 48.6% year-over-year to 6.9 billion yuan. Management expects that "R&D expenses will maintain a sustained growth trend for some time to come." Specifically, JD.com open-sourced its foundational large model JoyAI-LLM Flash and image editing model JoyAI-Image-Edit for the first time. It also built the world's first full-link embodied intelligent data infrastructure, planning to accumulate 10 million hours of real-scenario video data within two years. The logic behind these investments lies in AI being deeply embedded in thousands of specific scenarios within JD.com, including retail customer service, logistics sorting, advertising recommendations, and supply chain forecasting. Its contribution to gross margin improvement and marketing efficiency enhancement is gradually materializing. However, the over 48% growth rate in R&D expenses far exceeds the 4.9% revenue growth, indicating that the financial return on AI is still in its early stages. Management revealed in the call that AI-driven advertising conversion optimization currently contributes only about a 3% incremental gain to advertising revenue, with scale effects yet to be further amplified. Regarding internationalization, JD.com launched its European retail brand Joybuy in the first quarter. Its "211" service now covers over 30 cities and more than 40 million people in Europe, with the logistics overseas brand JoyExpress also being launched simultaneously. This is viewed externally as a "new strategic direction" for JD.com, a direction frequently mentioned by founder Richard Liu, but its contribution to revenue and profit remains minimal in the short term, still requiring a longer cultivation period. A quarterly loss of 10.4 billion yuan from new ventures, R&D investment of 6.9 billion yuan and growing, $631 million in share repurchases for shareholder returns, and continued investment in overseas operations—all these are testing JD.com's cash management capabilities. Free cash flow for the quarter was negative 6.5 billion yuan, with a 12-month rolling value of 21.6 billion yuan. Management emphasized in the call that "relying on a solid financial foundation, JD.com will continue to fulfill its commitment to shareholder returns." However, if the progress in narrowing losses from food delivery and other new ventures falls short of expectations, the possibility of sustained pressure on free cash flow cannot be ignored. In summary, JD.com's first-quarter report presents a clearly structurally differentiated report card: core retail profitability hits a new high, logistics expansion accelerates, but the logic of trading high investment for growth still faces ongoing validation. As the e-commerce industry collectively shifts from "subsidies for growth" to an efficiency-first track, whether JD.com can deliver a more balanced performance on the three challenges of controlling food delivery losses, stabilizing electronics categories, and realizing the long-term value of AI and globalization will determine its trajectory for the full year.