JD.com (9618.HK, JD.US) released its second quarter and interim results for 2026 on August 13, revealing a performance pattern of "revenue under pressure, profits improving." In the first half of 2026, the company achieved total revenue of 662.095 billion yuan, a year-on-year increase of 0.66%, with the growth rate dropping 18.62 percentage points compared to the same period last year, primarily due to a 2.9% decline in second-quarter revenue. This was largely attributed to the high base effect from last year's national subsidy programs that boosted JD's core electronics and home appliance categories, resulting in sluggish growth this year.

The first half saw operating profit of 8.354 billion yuan, down 13.64% year-on-year, while net profit attributable to ordinary shareholders under Non-GAAP stood at 16.309 billion yuan, a decline of 19.07%, with a profit margin of approximately 2.46%. However, despite the overall weaker profitability in the first half, second-quarter profit performance showed a significant improvement. Under Non-GAAP standards, net profit attributable to ordinary shareholders jumped 21% year-on-year to 8.9 billion yuan. CEO Sandy Xu stated that this "marks a clear inflection point in the company's profit trajectory." During the post-earnings conference call, she attributed this to healthier margin expansion in JD Retail and reduced losses from JD's food delivery business, with both the gross margin and operating margin of JD Retail reaching record highs during the peak promotional season in the second quarter.

Looking back at the same period last year, JD was deeply engaged in a phase of heavy investment in new businesses like food delivery. In the first half of 2025, JD formally launched its food delivery service, entering the fiercely competitive market. To attract users and capture market share, the company invested tens of billions of yuan in subsidies during the early stages of the business, directly eroding its profit figures for the first half of 2025. By 2026, under ongoing regulatory oversight, the aggressive subsidy model across various platforms has become more rational, with JD significantly reducing its investment in new businesses like food delivery compared to last year. Xu noted that losses from the food delivery business in the second quarter narrowed by more than 50% year-on-year. On the day of the earnings release (August 13, Eastern Time), JD's U.S.-listed shares fell sharply in pre-market trading, closing at $29.30, down 7.31%, with a total market capitalization of $39.38 billion.

Goods Revenue Declines 2.4%, Service Revenue Grows 12.9%

A detailed look at JD's business segment performance shows that the significant slowdown in first-half revenue growth was primarily due to a decline in the electronics and home appliances category. The financial report revealed that first-half revenue from electronics and home appliances was 290.1 billion yuan, down 10.3% year-on-year, with second-quarter revenue alone at 157.9 billion yuan, a drop of 11.8%. In a conference call, Xu responded that this was mainly due to the high base effect from last year's national subsidy policy. 2025 was the year when the national subsidy program for trade-ins of home appliances and digital products was fully rolled out. According to the Ministry of Commerce, the trade-in policy drove related product sales to exceed 2.6 trillion yuan for the full year of 2025. The second quarter of 2025 coincided with the 618 shopping festival peak and the height of the subsidy program, leading to robust growth in JD's electronics and home appliances category, with revenue reaching 178.982 billion yuan, creating a high comparative base. At the end of 2025, the National Development and Reform Commission and the Ministry of Finance issued a notice stating that in 2026, ultra-long-term special treasury bonds would continue to fund subsidies, focusing on six categories of home appliances (refrigerators, washing machines, televisions, air conditioners, water heaters, and computers) as well as digital products like mobile phones and tablets. Although the subsidy program continued, the subsidy rate was reduced from 20% to 15%, and the single-item subsidy cap was adjusted from 2,000 yuan to 1,500 yuan. Additionally, as the initial wave of replacement demand has largely been exhausted, the incremental contribution from the subsidies is diminishing. The weakness in the electronics and home appliances category reflects a broader market trend. Data from All View Cloud (AVC) shows that retail sales in the home appliance market for the first half of 2026 totaled 425 billion yuan, down 9.9% year-on-year. During the conference call, Xu expressed a more optimistic outlook for JD's core electronics and home appliances category, stating that the base effect would gradually normalize starting from the third quarter, and that JD's supply chain capabilities could help buffer the pressure from rising upstream component prices for consumer electronics. Furthermore, AI-driven product innovation is opening new avenues for JD. Currently, the company has partnered with nearly 200 brands to leverage AI capabilities for more intelligent interactions between home appliances and robots. However, the contribution of AI to JD's growth has not yet been reflected in the financial statements. She also revealed that JD's market share in all major home appliance categories steadily increased in the second quarter, with offline business growth significantly outpacing online, and JD shopping centers in Shanghai and Hong Kong have commenced operations.

In contrast to the weakness in the electronics and home appliances category, JD's revenue structure is undergoing a profound transformation. While first-half goods revenue declined 2.4% year-on-year, service revenue achieved a growth rate of 12.9%. In JD's financial system, service revenue includes two parts: "platform and advertising service revenue" and "logistics and other service revenue." Both revenue segments achieved year-on-year growth of 12.9%. The proportion of high-margin service revenue in total revenue also increased from 20.2% in the same period last year to 22.7%.

Profit Inflection Point Emerging?

Xu and JD CFO Ian Su Shan repeatedly emphasized the resilience of JD's business model and the inflection point in profitability during the conference call. In the second quarter, JD Group's operating profit was 4.5 billion yuan, compared to an operating loss of 900 million yuan in the same period of 2025, with the operating margin recovering from -0.2% to 1.3%. At the group level, gross margin improved significantly by 1.2 percentage points year-on-year to 17.1%, approaching historical highs. By business segment, JD Retail was the core engine of profit margin improvement. The gross margin of JD Retail increased by 1.3 percentage points year-on-year to 18.5% in the second quarter, marking the 17th consecutive quarter of year-on-year gross margin growth for the segment. This was achieved despite a 4.7% year-on-year decline in revenue. Su Shan pointed out, "The high-margin platform and advertising revenue continues to grow at a faster pace, driving an improvement in the overall revenue structure." The new business segment, which includes food delivery, saw significant loss reduction. This segment primarily comprises JD's food delivery, Jingxi, JD Property, and international businesses, with food delivery being the main contributor to the loss reduction. It is important to note that starting from the first quarter of 2026, JD integrated revenue from its instant delivery business, including food delivery, into the JD Logistics segment, resulting in a substantial decrease in the new business segment's revenue. In the second quarter, new business revenue was 7.3 billion yuan. However, Su Shan mentioned that the operating loss from new businesses narrowed significantly year-on-year to 9.9 billion yuan, primarily driven by a reduction of over 50% in losses from the food delivery business. Xu attributed the reduction in food delivery losses to three factors: improved subsidy efficiency through refined operations, with per-order subsidies declining significantly year-on-year; enhanced delivery efficiency due to scale effects; and increased contributions from commissions and advertising revenue. Cost control was a direct source of profit improvement for the group. Second-quarter marketing expenses amounted to 20.3 billion yuan, a sharp decline of 24.8% year-on-year, with the ratio to revenue falling from 7.6% to 5.9%. Looking back at the full year of 2025, JD's marketing expenses soared to 84 billion yuan, a massive 75.1% increase year-on-year, reflecting the peak of the food delivery war. Affected by the food delivery business, JD's new business revenue in 2025 was 49.3 billion yuan, up 157% year-on-year, but the operating loss was a staggering 46.6 billion yuan, with an operating loss margin of 94.6%. This figure nearly wiped out the entire 51.4 billion yuan operating profit from JD Retail for the year. Now, the significant reduction in marketing expenses indicates that the pace of "burning cash for market share" in the food delivery business is gradually subsiding. Xu stated that the goal for JD's food delivery is to "maintain healthy scale growth," but more importantly, to "deepen the integration between food delivery and the core business, further releasing ecosystem synergies." She noted that food delivery has already generated synergies with the core retail business in terms of user acquisition and cross-selling, with JD's quarterly active customers maintaining double-digit year-on-year growth. This strategic shift is driven by both financial pressures and changes in the regulatory environment. Since the second half of 2025, the State Administration for Market Regulation has repeatedly summoned the three major platforms, requiring them to standardize promotional activities and steer the industry back towards rational competition. The platforms have collectively pledged to strictly adhere to laws and regulations, eliminate unfair competition, and resist malicious subsidies. In December 2025, the administration issued and implemented the recommended national standard "Basic Requirements for Food Delivery Platform Service Management," clarifying that platforms should not package merchant subsidies as their own to exaggerate subsidy amounts. Entering 2026, regulatory oversight has intensified. In January, the Anti-Monopoly and Anti-Unfair Competition Committee of the State Council initiated a survey and assessment of the competitive situation in the food delivery market. On June 17, the administration released the "Ten Provisions on Regulating Food Delivery Platform Subsidy Behavior (Draft for Comments)," which for the first time used a normative document to define the compliance boundaries for subsidy behavior, explicitly prohibiting the use of long-term, large-scale subsidies to exclude or restrict market competition.