Earnings Call Transcript - JD Q4 2025

Sean Shibiao Zhang, Head of Investor Relations

Hello, and thank you for standing by for JD.com's Fourth Quarter and Full Year 2025 Earnings Conference Call. 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.

Xu Ran, CEO

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 total addressable market 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 three highlights from Q4 and full year 2025 as well as our thoughts for 2026. First, our user base expanded in both scale and depth. 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 growth surpassing previous records 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 basis points 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 benefit 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, average revenue per user 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 rollout 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 manner 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 active customers 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 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 improve operating efficiency. We are well-positioned to capture the opportunities arising from AI to unlock new growth frontiers 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 a 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 2026. In the meantime, we have continued to strengthen our competitive 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.

Ian Su Shan, CFO

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 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 were 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 prices and maintain market leadership while increasing operating expenses 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 basis points 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 JD Logistics' 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 basis points year-on-year to 15.6% in Q4 and rose 18 basis points 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 two 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.

Sean Shibiao Zhang, Head of Investor Relations

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 purposes 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, Operator

Your first question comes from Ronald Keung with Goldman Sachs.

Ronald Keung, Analyst

First, regarding JD Retail's growth in 2026, as electronic appliances stabilize from the second half of the year, general merchandise continues to perform well. How should we assess the growth rate for JD Retail in both the first and second halves of 2026, considering the differences in the baseline? Second, on demand and food delivery, how can we evaluate the potential for enhancing unit economics further? In comparison to larger competitors, what distinguishes us in terms of our supply chain and supply chain-driven business models? Additionally, how do we view our commitment to this business? Lastly, with the ongoing regulations and investigations within the food delivery sector, will this have a positive impact on the improvement of unit economics?

Xu Ran, CEO

How should we think of the path to further unit economics improvement in on-demand and food delivery? Compared with the larger competitors, how are we differentiating ourselves through our supply chain and supply chain-driven business models? What can you tell us about your determination and commitment to this business? Additionally, with the regulations and investigations in the food delivery industry, will that contribute to improvement in unit economics?

Sean Shibiao Zhang, Head of Investor Relations

Thank you, Ronald. To address your first question, our general merchandise category is experiencing strong and robust growth. Reflecting on 2025, this category has shown faster growth, even when considering the effects of the trade-in program on other categories. It has been a key driver for JD Retail. Subcategories such as supermarket, fashion, and health care have all delivered impressive results. Looking ahead to 2026, we are optimistic about maintaining this positive momentum. The supermarket category presents considerable untapped potential for user penetration and subcategory expansion. In the fashion category, we completed significant infrastructure developments, including merchant recruitment last year, which will help us maintain growth momentum on this solid foundation. The health care category is expected to uphold its leading industry position and strong user recognition. The electronics and home appliance category, however, faces challenges due to a high comparison base in the short term. In 2026, the government trade-in program will continue, but it's important to note that the government-backed cash subsidy was utilized more quickly in the first half of 2025 than in the latter half. This will affect our electronics and home appliance category, including home appliances, cell phones, computers, and digital products, particularly in the first half of this year. Nonetheless, we expect sequential growth improvement compared to the last quarter of 2025, with stronger recovery anticipated in the latter half of 2026, and our market share remains stable. Additionally, rising memory chip costs are expected to push prices of mobile phones and digital products upward, which may hinder consumption and impact sales volumes. However, an increase in average order value will help mitigate some of the effects of lower sales. We will continue to enhance user recognition and drive sales by bolstering our supply chain capabilities, expanding our offline presence, and improving the overall service experience. At the same time, advancements in AI and emerging technologies are opening up new avenues for innovation and product development, further showcasing our supply chain strengths. Although initial contributions from AI-related products are modest relative to our overall scale, we see substantial opportunities and shifts. We will collaborate closely with brand owners and suppliers to respond swiftly, develop new products, and adapt to changing consumer needs through the efficient use of new technology. Looking forward to 2026, our growth drivers are becoming more varied. The general merchandise category continues its healthy growth, and service revenue, including advertising, is expected to maintain rapid growth momentum. We anticipate that the electronics and home appliance categories will remain under pressure from a high comparison base in the first half of the year, before accelerating growth in the second half. Overall, we intend to retain our market share and user recognition while consistently leveraging technological innovation to contribute to industry advancement. Moreover, with the ongoing improvement in JD's traffic, user base, and shopping frequency, we are confident in achieving robust and high-quality growth for the entire year of 2026.

Xu Ran, CEO

We expect the compliance categories to continue to be influenced by a high baseline in the first half of this year, with growth in the second half likely to be stronger than in the first. Overall, we plan to sustain our market and user presence. Additionally, we will consistently utilize technological advancements to promote industry growth. Furthermore, with the ongoing enhancement of JD's traffic, user base, and shopping frequency, we are optimistic about attaining healthy and high-quality growth for the full year 2026.

Sean Shibiao Zhang, Head of Investor Relations

Regarding your second question, while our food delivery business is still in its early stages in 2025, we are actively investing in both operations and research and development. In 2026, we plan to enhance our capabilities, onboard more quality merchants and products, and improve user experience. Additionally, we will start generating revenue by offering merchant services, ensuring a thoughtful and rational approach to monetization. Our aim is to maintain healthy growth of this business while consistently improving operational efficiency. We anticipate a decrease in total investment in food delivery for 2026 compared to 2025, though this will depend on market competition dynamics. We plan to achieve this by leveraging JD Food Delivery's unique advantages. These include our commitment to high-quality food delivery, superior service quality provided by full-time riders, and the synergetic integration within the JD ecosystem that utilizes our robust supply chain advantage. To enhance user experience, we have identified clear drivers: more diverse revenue streams, ongoing optimization of subsidy efficiency tailored to various users and regions, and increased delivery efficiency driven by the scale that comes with healthy order volume growth. Additionally, our Seven Fresh Kitchen is progressing well, benefiting from our supply chain capabilities and integrating effectively with our on-demand retail business. By the end of February, we expanded the operational footprint of Seven Fresh Kitchen to over 50 locations, and we invite analysts and investors to experience it firsthand. Regarding our long-term strategy, food delivery and on-demand retail will remain a priority for JD. This approach will support our strategic progress from a long-term standpoint, continually improving operational efficiency to enhance profitability. We will also keep unlocking synergies between food delivery and our core retail business, which will contribute to the company's sustainable growth. In 2025, our food delivery service demonstrated its role as a strategic driver for user growth by attracting new users and significantly increasing purchase frequency on our platform. For 2026, we foresee further synergies from strong cross-selling and increased advertising revenue growth. Finally, concerning food delivery regulation, we support and welcome regulatory oversight that ensures a fair and competitive market, as it promotes healthy industry development. We firmly oppose any unhealthy competition within the sector. Our commitment remains in driving a high-quality evolution of food delivery through continuous innovation in our supply chain model.

Operator, Operator

Your next question comes from Kenneth Fong with UBS.

Kenneth Fong, Analyst

My first question is about profitability and investment in new business. Given the macro uncertainties and the increased investment in overseas and Jingxi business, how should management balance growth with profitability? What level of investment should we anticipate for 2026 regarding this new business? Additionally, how might this impact the group's earnings? My second question concerns the overseas business. Can management provide an update on the timeline for the CECONOMY acquisition progress and its financial implications after consolidation? From a strategic perspective, how will Joybuy position itself? What benefits or synergies should we expect at the group level, particularly concerning retail, logistics, and the entire supply chain?

Ian Su Shan, CFO

Regarding our thoughts on investment and profitability, we are confident in the long-term prospects of the China market and our business development. We have made long-term strategic investments based on our views of market opportunities, which includes our international operations, lower-tier markets, and on-demand retail. We are also committed to investing in research and development and technology. By enhancing our foundational capabilities and expanding our service offerings, we believe we will continue to create new growth opportunities that will drive our long-term profitability. JD's long-term margin target remains high single-digit and unchanged. For JD Retail, we anticipate healthy profit growth in 2026, and our long-term profit margin target for JD Retail also remains high single-digit. Key contributors to this growth will be improvements in product sales, enhanced gross margins from our supply chain capabilities, robust growth in high-margin businesses like advertising, and ongoing margin improvements across categories, including supermarkets. The flow benefit from JD Retail will continue to manifest, and we see opportunities for further operating efficiency improvements as we adopt AI technology more widely. Regarding our investments in new businesses, JD Food Delivery had a loss reduction of nearly 20% quarter-on-quarter in Q4. We are maintaining healthy expansion while improving operating efficiency and revenue growth during the quarter. Looking towards 2026, we will continue promoting growth in the food delivery sector and unlock further synergies with our core JD Retail. If the industry competition becomes more rational, we expect our investment in JD Food Delivery to decrease in 2026 compared to 2025. In our international business, we plan to gradually scale our investments while maintaining financial discipline. For Jingxi, we are focusing on lower-tier markets and offering nonbranded products, which has led to significant penetration improvements in Tier 6 and lower cities. This strategy has helped expand our user growth boundaries by providing differentiated offerings from our main apps. We expect to slightly increase our investment in Jingxi, and we believe its user experience will continue to improve in 2026, resulting in healthy and sustainable growth. As it relates to the CECONOMY deal, it is currently under regulatory review, and we will provide updates as necessary. Joybuy, our full-category online retail platform in Europe, is scheduled to launch officially in March. Building overseas supply chain capabilities is a long-term initiative that requires time and ongoing effort. Early trial operations of Joybuy have yielded positive user feedback, particularly regarding performance. Logistics will be a key differentiator for Joybuy, as we are establishing our delivery network in Europe, recently launching JoyExpress to provide same and next-day delivery in major cities across the U.K., Germany, France, and the Netherlands alongside door-to-door services. We invite analysts and investors to test our services. In terms of synergies, first, regarding supply chain capabilities, we aim to help Chinese brands expand globally while also introducing more high-quality European brands to the Chinese market, thereby enhancing our global supply chain. Second, as Joybuy expands in Europe, the synergy between our retail operations and logistics will be reinforced, further bolstering Joybuy's competitive advantage. Lastly, JD's extensive expertise and strong infrastructure in technology will continue to support our international business.

Sean Shibiao Zhang, Head of Investor Relations

Next question, please, operator.

Operator, Operator

Your next question comes from Alicia Yap with Citigroup.

Alicia Yap, Analyst

In light of the potentially slower retail sales growth outlook this year, what growth rate does management anticipate for general merchandise GMV and revenue growth? How can JD maintain faster growth in this category despite competition and slower consumption? What specific areas can JD focus on to drive sales in this segment? Additionally, can management share thoughts on how JD plans to prepare for and leverage upcoming threats and opportunities from agentic commerce?

Xu Ran, CEO

What is the growth rate management is anticipating for general merchandise GMV and revenue growth this year? How can JD continue to achieve faster growth in this category despite competition and slower consumption? What specific areas is JD focusing on to drive sales in this segment? Additionally, could management share their thoughts on how JD plans to prepare for and respond to upcoming threats and opportunities from agentic commerce?

Sean Shibiao Zhang, Head of Investor Relations

Thank you, Alicia. Regarding your first question about the general merchandise category, we mentioned in our opening remarks that this category is experiencing strong growth. Historically, the general merchandise category has achieved double-digit growth for the last five consecutive quarters and has outperformed the industry. This success is attributed to our improved supply chain capabilities and enhanced operational efficiency. We believe this provides a solid foundation for continued growth in this category, and we are optimistic about its momentum heading into 2026. Key growth factors include significant market opportunities in areas like supermarkets, fashion, and healthcare. Additionally, new ventures such as food delivery and Jingxi have increased traffic, users, and shopping frequency on the JD platform, which is driving user growth. We are also enhancing internal synergies and have noted positive cross-selling trends in supermarkets. Furthermore, we are focused on strengthening our supply chain capabilities and increasing brand recognition. For instance, our supermarket category utilizes JD's unique 1P model to ensure a superior user experience and competitive pricing, while our fashion category has made great strides in improving search and recommendation capabilities, as well as attracting high-quality brands to collaborate with us more closely. We are implementing AI to achieve more precise and personalized matching in our search and recommendation processes. In Q4 2025, we reported double-digit year-on-year growth in revenues from sports and outdoor apparel. Our competitive advantages in this category include the unique JD 1P model, which offers diverse product selections, competitive pricing, and stringent quality control. Additionally, leveraging JD Logistics allows us to provide a high-quality fulfillment experience characterized by fast, accurate, and convenient delivery services. From the brand perspective, JD serves as the most reliable daily sales platform and is the premier destination for brand development, ensuring the highest returns throughout our products' life cycles.

Xu Ran, CEO

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.

Sean Shibiao Zhang, Head of Investor Relations

For the second question, we view AI and agentic commerce as a greater opportunity for JD's evolution rather than a challenge. Agentic commerce is still in its early stages and primarily affects front-end user traffic. We believe that regardless of changes in traffic patterns, the core retail business focuses on user experience, cost, and efficiency. By concentrating on optimizing product prices and services, JD's supply chain strength will create even more synergy, further expanding our competitive advantage in this new era. Additionally, we are increasing our technology investments while promoting the use of our in-house large language model; we remain dedicated to an open ecosystem and actively collaborate with top external AI LLM providers. We are transforming into a leading technology commerce company, covering everything from supply chain to customers. Since JD operates a 1P business model with in-house fulfillment logistics capabilities, there are ample opportunities for technology and AI applications, setting us apart from platform business models. For instance, on the demand side, we are transforming the shopping experience and improving user interactions through AI-driven search and recommendations. On the supply side, we utilize AI to enhance operational efficiency in sourcing, pricing, inventory management, and reducing reliance on manual labor. We are also extending our applications in the physical world regarding fulfillment, automation, and after-sale services. Beyond operations, we are exploring new consumption opportunities through AI, such as JoyInside, our AI agent for hardware. As previously mentioned, sales of JoyInside-integrated products skyrocketed 20-fold during the 11.11 event compared to the June 18 promotion. This illustrates our proactive approach in leveraging AI to redefine our competitive edge while continually improving user experiences and driving cost efficiency. Looking ahead, we are very optimistic and believe we are well-positioned to seize the strategic AI opportunity to reinforce our leadership in AI-driven e-commerce.

Operator, Operator

Your next question comes from Thomas Chong with Jefferies.

Thomas Chong, Analyst

I have two questions. First, can management share about the latest developments regarding shareholder returns? And second, can management discuss any changes to the regulatory environment for Internet platform companies and how we should interpret these changes?

Ian Su Shan, CFO

Thank you, Thomas. Despite our long-term strategic investment in 2025, we are dedicated to providing returns to our shareholders through dividends and share buybacks. We announced the annual cash dividend for 2025 at USD 1 per ADS, which is stable compared to last year. The total dividend amounts to USD 1.4 billion, reflecting our commitment to delivering consistent cash returns to our shareholders based on sustainable profitability and cash flow over the long term. Furthermore, we repurchased USD 3 billion of shares in 2025, which accounts for 6.3% of our total outstanding shares as of the end of 2024, and all repurchased shares have been canceled. Our commitment to shareholder returns remains strong through robust business development, dividends, and share buybacks. Simultaneously, we will concentrate on healthy growth in our business scale, profitability, and cash flow while making strategic investments for the long term to create value and share JD's success with our shareholders.

Xu Ran, CEO

We have repurchased shares amounting to 6.3% of total outstanding shares as of the end of 2024, which have all been canceled. We are dedicated to providing returns to shareholders through business development, dividends, and share buybacks. Additionally, we will focus on maintaining healthy growth in our business scale, profitability, and cash flow, while making strategic long-term investments to create value and share JD's ongoing success with our shareholders.

Sean Shibiao Zhang, Head of Investor Relations

I'll take the last question. Regulators continuously promote standardized and healthy development within the platform economy to ensure the sector's long-term sustainability. We welcome regulatory guidance. The government's commitment is to support compliance and corporate development rather than remain stagnant. We believe that regulatory oversight acts as a catalyst for driving healthy, high-quality industry growth instead of being a constraint. JD has always made compliant operation the cornerstone of our business. This includes adhering to antimonopoly measures, tax standardization, and preserving competitive evolution, which aligns perfectly with our philosophy of compliance. In a normalized regulatory environment, fair growth opportunities are created, allowing us to prevent bad money from driving out good. Consequently, over the long term, the advantages of JD's compliant and sustainable business model will become more pronounced. 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 the IR team. We appreciate your interest in JD.com and look forward to talking with you again next quarter. Thank you.

Operator, Operator

Thank you for your participation in today's conference. This concludes the presentation. You may now disconnect. Good day.