JD.com held its Q2 earnings call on the 14th, with management reaffirming their commitment to long-term investment and seeking synergistic growth with core businesses.

Financial results released the same day showed JD.com's Q2 revenue reached 356.7 billion yuan, up 22.4% year-over-year, though net profit declined significantly. New business segment revenue surged 198.8% YoY, primarily driven by JD's food delivery service. However, the segment's operating loss expanded dramatically from 700 million yuan in the same period last year to 14.8 billion yuan, with an operating profit margin of negative 106.7%.

In the highly competitive food delivery market, JD.com has clarified its long-term strategy. Management stated during the call that food delivery and instant retail are important strategic directions for the company, aiming to build a sustainable business model for five, ten, or even twenty years, rather than pursuing short-term gains. Their differentiation lies in the "quality food delivery" model. Management noted that some excessive competitive behaviors are "unsustainable" and have disrupted market order. JD.com currently focuses more on improving its platform systems and user experience rather than engaging in price wars. Management also revealed that food delivery users are showing cross-purchasing behavior in JD's supermarket and other categories, with conversion rates continuously improving.

Regarding new business investments, management stated that while new business development may impact group profit margins in the short term, these investments will expand greater growth opportunities in the long run and create synergies with core businesses, unlocking greater profit potential. The company emphasized maintaining investment discipline during the investment process, focusing on return on investment (ROI).

Despite new businesses capturing market attention, JD.com's core retail business continues to demonstrate strong resilience. The company's electronics and appliances revenue grew over 20% year-over-year in Q2. Management particularly noted that national trade-in policies and other consumption policies are positive driving factors, but JD.com's fundamental advantages lie in its strong supply chain capabilities, price competitiveness, and quality services including integrated delivery and installation.

Regarding instant retail, JD.com views it more as a beneficial "supplement" for urgent needs, while traditional core e-commerce business still holds greater advantages in product variety and value proposition. The company stated that supermarket categories will actively deploy instant retail to meet multi-scenario demands, but core e-commerce operational capabilities remain the cornerstone of long-term growth.

In international business, JD.com focuses on localization and supply chain synergy, currently advancing the acquisition of Ceconomy to deepen its European market presence. The company reaffirmed its commitment to shareholder returns, completing $1.5 billion in share buybacks in the first half of 2024, with annual dividends reaching $1.44 billion, and will continue sharing development benefits through dividends and buybacks.

**Earnings Call Transcript**

CEO Xu Ran: Good evening, everyone. Thank you for joining our Q2 2025 earnings call.

This quarter, we remained focused on providing the best user experience, reducing costs, and improving efficiency to drive healthy and sustainable growth for the company. Meanwhile, we've also taken positive and exciting steps forward on our long-term development path.

Overall, we're pleased to report that our total revenue in Q2 grew 22% year-over-year to 357 billion yuan. This strong momentum was primarily driven by accelerated growth across all business segments, including electronics and appliances, general merchandise, and service revenues.

This quarter's non-GAAP net income attributable to ordinary shareholders was 7.4 billion yuan, compared to 14.5 billion yuan in the same period last year. The profit decline was mainly due to investments in new businesses including food delivery and their rapid growth. However, it's worth noting that our core business - JD Retail - maintained healthy and continuously improving profitability. In Q2, JD Retail's non-GAAP operating profit grew 38% year-over-year to 13.9 billion yuan, with operating profit margin improving from 3.9% in the same period last year to 4.5%. We're confident in our core retail business, and new businesses like JD food delivery are developing well, fully aligning with our strategic planning for long-term sustainable growth.

These achievements are inseparable from the high morale and close cooperation of our business teams. These joint efforts have laid a solid foundation for our continued upward development and ensured efficient execution of strategic objectives.

I want to particularly highlight three key developments that not only supported this quarter's outstanding performance but will continue to drive our healthy growth.

First, significant improvement in user growth and activity. This quarter, we continued to be user-centric, committed to creating the best user experience. Quarterly active customers (QAC) growth rate increased significantly by over 40% year-over-year, with total users reaching a new high. Strong user growth momentum came from both natural growth of JD Retail and incremental contributions from JD food delivery and Jingxi businesses. In terms of shopping frequency, Q2 platform user shopping frequency increased over 40% year-over-year, higher than previous quarters. JD PLUS members' shopping frequency grew even faster, over 50% year-over-year. This also demonstrates the strong appeal of our food delivery service to our highest quality user base. During this year's "6.18" promotion, the total number of purchasing users doubled year-over-year, with orders exceeding 2.2 billion. The strong momentum in user growth and shopping behavior demonstrates the synergistic effects between new businesses and core retail. We will continue to deepen this synergy to further enhance user stickiness and lifetime value.

Second, our core business - JD Retail - continued steady growth and achieved excellent performance based on further strengthened supply chain capabilities, realizing simultaneous growth in revenue and profit. By category, electronics and appliances revenue grew 23% year-over-year, demonstrating our increasingly strong supply chain advantages that enable us to continuously improve in product selection, pricing, and service. Additionally, general merchandise also performed strongly in Q2, with revenue growing 16% year-over-year. Leveraging supply chain capabilities, our supermarket business has achieved double-digit growth for six consecutive quarters, and the fashion segment also maintained double-digit growth. More importantly, retail business profit and profit margin growth exceeded revenue growth, steadily progressing toward long-term goals. This is mainly due to our strong supply chain, which translates into better user experience, lower costs, and higher efficiency.

Third, our new businesses are developing well, especially JD food delivery. Since launch, food delivery business orders achieved exponential growth in Q2 and reached multiple key milestones. We've now attracted a large number of quality merchants, and the number of full-time delivery riders is rapidly increasing. More importantly, the food delivery business is beginning to achieve clear synergies with core retail. Beyond user growth, we're actively expanding cross-selling opportunities from food delivery business. Currently, cross-selling rates for newly introduced users in categories like supermarkets, lifestyle services, and digital accessories continue to improve. As food delivery business scales up, we believe we can further enrich local merchant supply, increase traffic and user activity, helping to build a more vibrant and comprehensive JD ecosystem. The current core task of food delivery business is to strengthen system capabilities such as order dispatching and product planning to better serve users and increase merchant traffic and growth. Thanks to these efforts, despite complex industry dynamics, JD food delivery order volume has maintained healthy growth from Q3 to date, especially restaurant orders.

I want to emphasize again that we don't view food delivery business as an isolated business segment, but as deeply integrated into the JD ecosystem. In the future, we hope to achieve greater synergies through ecosystem businesses like JD Logistics. This is also the focus of our future strategic work - maintaining strategic focus in the dynamically changing food delivery market and investing efficiently and rhythmically.

Beyond solid domestic operations and continuously improving market position, we're also actively deploying in global markets, taking exciting exploratory steps. Internationalization is JD's long-term vision with important strategic significance. We hope to fully leverage JD's unique advantages in supply chain and technology. In recent years, JD Retail, Logistics, and Real Estate have already attempted to develop retail formats, warehouse networks, transportation systems, and local operational capabilities overseas, focusing on Europe and the Middle East. As progress advances, we will timely disclose more international business developments.

Overall, Q2 was an extremely productive quarter. We achieved short-term performance while further strengthening the company's long-term structural and strategic advantages. Core retail business not only accelerated growth but also continuously improved profitability, highlighting the resilience of our supply chain-centered retail model. This quarter also marks a key milestone in our long-term development, with both domestic and international key projects achieving initial significant results. This wasn't accidental but achieved through careful preparation and strategic expansion based on long-term accumulation of core supply chain capabilities. JD always has a clear vision - everything centered on supply chain and users, continuously improving user experience, which will continue to drive every step of our long-term development and value creation, creating greater value for users, partners, and shareholders.

CFO Shan Su: Good evening, everyone. In Q2, we achieved strong revenue growth and steady profit margin improvement in our core retail business. Overall revenue grew 22% year-over-year, further accelerating and significantly exceeding China's total retail sales growth rate.

Our major core business segments, including electronics and appliances, general merchandise, and service revenues, all achieved double-digit growth, with growth rates improving compared to previous quarters. In terms of profitability, our gross margin reached 15.9% in Q2, achieving year-over-year gross margin improvement for 13 consecutive quarters, mainly driven by core retail business. Non-GAAP net profit margin declined to 2.1%, mainly due to our investment in food delivery business. Although short-term profitability is affected by strategic investments, we firmly believe these efforts will bring more sustainable growth and long-term value to the company.

Below, I'll detail Q2 financial performance.

This quarter's performance maintained strong growth momentum, with total net revenue growing 22% year-over-year to 357 billion yuan. By business, product revenue grew 21% year-over-year, with electronics and appliances revenue growing 23% year-over-year and general merchandise revenue growing 16% year-over-year. Compared to previous quarters, both segments' growth rates further accelerated. For electronics and appliances business, driven by government stimulus policies and consumption recovery, JD leveraged its core competitive advantages in these categories (including consumer recognition, strong supply chain capabilities, and excellent execution) to effectively meet consumer demand, provide first-class user experience, and support local government trade-in programs.

Under general merchandise, major categories including supermarket, fashion, home, and health all achieved double-digit revenue growth. We continue to see enormous potential in supermarket business and are confident in maintaining good growth momentum through optimal combinations of products, prices, and services while continuously improving user experience.

Service revenue achieved significant acceleration, growing 29% year-over-year in Q2. Platform and marketing revenue grew 22% year-over-year, with growth rates improving for six consecutive quarters, while commission and advertising revenues both maintained double-digit growth this quarter. Meanwhile, multiple key operational indicators of the platform ecosystem, including merchant scale and user engagement, achieved significant progress. Logistics and other services revenue grew 34% year-over-year, reaching the highest growth rate in eight quarters, mainly driven by rapid expansion of food delivery business.

Brief overview of each segment:

JD Retail: In Q2, JD Retail revenue grew 21% year-over-year, with multiple core categories performing steadily. Meanwhile, JD Retail gross margin continued year-over-year improvement, a trend lasting 13 quarters and reaching a historic high for comparable quarters, mainly driven by continued optimization of supply chain capabilities. In Q2, JD Retail non-GAAP operating profit grew 38% year-over-year to 13.9 billion yuan, with operating profit margin improving 56 basis points year-over-year to 4.5%, showing steady growth. We're confident in continuing to consolidate our market-leading position and achieve stable profit improvement.

JD Logistics: Q2 revenue grew 17% year-over-year, with both internal and external revenues maintaining double-digit growth. Affected by continued investment in improving user experience, JD Logistics' non-GAAP operating profit declined 10.3% year-over-year to 2 billion yuan this quarter. However, JD Logistics is prioritizing infrastructure development including last-mile delivery, pickup capabilities, and route optimization, investments that should lay a solid foundation for long-term efficiency improvement and profit margin expansion.

New businesses: Q2 new business revenue grew threefold year-over-year. Affected by rapid expansion of food delivery and Jingxi businesses, non-GAAP operating loss expanded to 14.8 billion yuan. Despite short-term performance pressure, food delivery business brought considerable traffic and user growth, significantly improved user shopping frequency, and notably drove conversion and cross-selling in core retail business. We will continue investing in food delivery supply, fulfillment efficiency, and user experience. Additionally, Jingxi business achieved significant growth in Q2, further penetrating and covering more lower-tier markets while enriching high-value product supply.

Group overall profitability: Q2 gross profit grew 23% year-over-year to 56.6 billion yuan. The company has achieved year-over-year gross margin improvement for 13 consecutive quarters, reaching 15.9% this quarter, mainly benefiting from continued improvement in JD Retail gross margin, demonstrating high-quality development of core business. In Q2, non-GAAP net income attributable to ordinary shareholders was 7.4 billion yuan, down 49% year-over-year, with non-GAAP net margin declining to 2.1%, mainly due to short-term profit pressure from strategic investments including food delivery. Free cash flow over the past twelve months was 10 billion yuan, down from 56 billion yuan in the same period last year, mainly due to cash outflows from trade-in programs and declining operating profit. As of Q2 end, cash and equivalents, restricted funds, and short-term investments totaled 223 billion yuan.

Overall, in Q2, we achieved strong revenue growth and healthy profit margin expansion in core retail business, reflecting the company's excellent execution and continuously improving operational efficiency. In a volatile market environment, we're confident in new businesses and expect them to drive further improvement in users and shopping frequency, creating greater synergistic potential for future development. With continued growth in core business and execution of new businesses, we're confident in achieving long-term healthy, sustainable development.

Thank you all. We now move to the Q&A session. Questions are welcome.

**Goldman Sachs Analyst:** I have two questions for management. The first is about trade-in policies. We noticed that during the 618 period, national subsidy policies in some provinces were temporarily suspended. Considering uncertainties in national subsidy policies next year and intensifying competition from other platforms, we also saw the company perform very well in this area in Q2. Could management share JD's strategy for the home appliance category in the second half of this year and next year? How will the company improve its market share in this market?

The second question is about food delivery business. There are now three companies, or even more, competing in this field. Ultimately, it comes down to endurance, execution, and differentiation. Considering the largest company has the biggest scale and the second-place company has very strong financial resources, as currently third place, how should JD think about its determination in investment and long-term operations? If we need to continue investing in food delivery for a considerable period, which may also generate losses, how should we evaluate traffic portal user acquisition costs, cross-selling opportunities, and user experience improvement potential? Please provide your insights.

**Management Response:** Regarding your first question, during the implementation of trade-in and other consumption policies, JD has consistently demonstrated steady performance and high responsiveness. This year, this program has achieved significant progress in promoting consumption and driving industry upgrades. The government has also reaffirmed that this policy and subsidies will continue, with central financial funds being distributed in batches. During this period, JD has actively responded to national policies and proactively participated in related programs, helping policies land efficiently.

We achieved these results mainly through several capabilities: First, a strong supply chain system ensuring stable product supply and reliable fulfillment and delivery services; Second, online-offline operational synergy capabilities enabling us to quickly coordinate with local governments and rapidly implement local projects. Meanwhile, we noticed very strong consumer demand on JD's platform. In Q2, our electronics and appliances revenue grew over 20% year-over-year.

I'd like to add a second point: national subsidies are policy opportunities, but they've never been JD's differentiated competitive advantage. We've always formulated clear market share improvement strategies for all electronics categories, leveraging our capabilities and advantages in supply chain, scale, and omnichannel around products, prices, and services. In Q2 this year and Q3 to date, our market share in this field continues to improve.

In product structure optimization, JD has collaborated with brands to develop multiple smart home appliance and furniture products, promoting product upgrades and customization to better meet users' quality upgrade needs while helping industrial upgrades.

In pricing, we leverage scale procurement, customization, and supply chain professional capabilities to continuously reduce procurement costs, committed to bringing users lower prices and higher value products.

In service capabilities, we continue advancing integrated delivery and installation services, even achieving integrated trade-in recycling, providing users with ultimate trade-in service experience in the industry.

Overall, JD's electronics categories will continue leveraging supply chain advantages, actively promoting industry upgrades, and further strengthening user mindshare. We're confident in maintaining higher-than-industry growth.

Regarding the second food delivery question, this is indeed a topic of great recent attention, and we've shared quite a bit in different venues. Let me highlight a few key points. Food delivery and instant retail are important long-term strategic directions for JD. We will continue focusing on user experience, cost, and efficiency, continuously improving and perfecting operational and system capabilities related to instant retail (including food delivery), and continuously optimizing user experience.

We've previously shared that this industry has many pain points for merchants, riders, and users. We're addressing user needs better through our quality food delivery model.

From Q2 progress, on the rider front, by Q2 end, JD food delivery full-time riders exceeded 150,000, making riders' work more dignified and secure while improving their happiness and ensuring delivery experience, order punctuality, and service experience. On the supply side, we focus more on quality food delivery, which is our differentiation. By Q2 end, quality merchants exceeded 1.5 million, with quality restaurant orders' proportion continuously increasing.

We're also helping these quality restaurants improve sales while actively innovating at the supply chain source. We recently launched the "Seven Star Kitchen" new model, helping consumers enjoy high-quality yet affordable dishes.

In system capabilities, our food delivery R&D and operations teams are rapidly iterating and upgrading, including dispatch system efficiency, algorithm optimization, subsidy allocation, and advertising systems, aiming to bring better experiences for users, merchants, and riders.

Regarding synergistic effects, I want to emphasize that food delivery business is rooted in JD's overall business ecosystem. After more than a quarter of operations, food delivery is creating synergistic value with core e-commerce business, which was our initial expectation. First, food delivery has brought significant traffic and user growth to JD, with Q2 showing substantial improvements in user activity, user numbers, and shopping frequency. Second, food delivery users' conversion rates when purchasing our core e-commerce categories continue improving, especially in supermarket categories with substantial cross-purchasing. Our business teams are also vigorously promoting internal synergies, building cross-shopping capabilities in algorithms and systems in Q2, with related tools going online in Q3. Third, food delivery and retail businesses have great synergy potential in market placement and marketing expenses, with teams comprehensively weighing ROI across channels to improve overall marketing efficiency.

Regarding long-term profitability improvement, everyone has noticed intensified industry competition since July. From JD's perspective, we believe excessive competitive behaviors haven't brought model innovation or created incremental value for the industry, but have somewhat disrupted pricing systems and caused merchant confusion, making such behaviors unsustainable.

Currently, we focus more on improving platform systems and enhancing user, merchant, and rider experiences. Meanwhile, we're pleased to see food delivery business profitability gradually improving. In the future, we'll formulate more refined promotional strategies for different regions and user groups, improve fulfillment efficiency through scale effects, and continuously enhance system capabilities to drive food delivery business profitability improvement.

Long-term, as we've said before, food delivery business isn't about pursuing short-term results for one or two months. We hope to do this long-term - five years, ten years, even twenty years - with the goal always being a sustainable business model. Food delivery business will also gradually realize scale effects, improve overall efficiency, while continuously leveraging enormous synergistic potential between food delivery and core retail business, continuously providing momentum for the entire group's long-term healthy growth.

**UBS Analyst:** I have two questions. The first is about new business investment. Management mentioned future investments in a series of innovative businesses. Could you introduce the direction and strategy of new business investment? From a financial perspective, how does the group balance growth and profit targets? Will these investments affect the company's shareholder return targets, such as dividend and buyback plans?

The second question is about general merchandise business. Our general merchandise categories have maintained very strong growth for several consecutive quarters. Could management share the core driving factors behind this and the sustainability of this growth? Thank you!

**Management Response:** Thank you for the question. Let me first answer about new businesses. When we discuss innovative businesses internally, we usually divide them into two categories: one is business model innovation, the other is using new technologies or innovative technologies to improve existing business models. Currently, new business models we're investing heavily in mainly include food delivery business and Jingxi International that everyone sees - this is exploration of new business models.

On the other hand, applying various new technologies in existing businesses is also a very important direction and era opportunity. Actually, this type of innovation is very rich within our group, with numerous innovation projects advancing in almost every business segment, including AI technology applications in retail business, logistics automation, unmanned equipment, and continuously improving warehouse automation levels. At the group level, we also encourage every employee to have an innovative spirit and actively embrace innovation.

Additionally, our internal innovation overall revolves around supply chain. New business exploration is all based on our differentiated supply chain advantages and capabilities, with improving user experience as the core - actually natural extensions of our core business. Of course, besides the domestic market, internationalization has always been an important JD strategy. As I mentioned earlier, we hope to build an efficient retail and logistics fulfillment network covering the globe in the future, providing ultimate shopping experiences for global consumers and becoming a globally leading retailer. Of course, this is also our long-term goal.

We believe that whether it's new businesses, new business models, or exploration and investment in new technology applications, all will further strengthen JD's supply chain advantages and user experience, achieving long-term healthy growth. Our past operating performance has repeatedly proven our results in investment efficiency and sustained growth. For new business models, we will also follow a "small steps, quick iterations" approach to explore and drive innovative business development.

While actively exploring new businesses, we will also continue creating value for shareholders and giving back to shareholders. First, in the first half of this year, our total buyback amount was approximately $1.5 billion, with $3.5 billion remaining from our $5 billion buyback plan. Second, JD has been paying dividends for four consecutive years. In April this year, we completed 2024 cash dividends, distributing approximately $1.44 billion. In the future, we will continue annual dividends and increase returns to shareholders through dividends and buybacks.

Finally, we will continue deepening core business, actively investing, developing new growth curves, building long-term sustainable business models, promoting steady, long-term growth in company revenue and profits, and continuously sharing JD's business development results with shareholders.

Regarding general merchandise, everyone can see that general merchandise category revenue has achieved steady accelerated growth for four consecutive quarters. Among these, the supermarket category contributing the most has achieved double-digit growth for six consecutive quarters. The main driving force is our merchandising team continuously strengthening operational capabilities over the past two years. We firmly believe this will continue driving steady growth in supermarket categories.

Our upcoming growth strategy is: First, we will continue strengthening self-operated operational capabilities. The self-operated model is JD's unique business model and our differentiated advantage. Through this model, we can continuously reduce procurement costs and improve supply chain efficiency, bringing users better quality products and more affordable prices.

Second, we will improve user conversion rates. Currently, we initially observe that food delivery users also have cross-category purchasing behavior in supermarket categories. Facing the substantial traffic brought by food delivery business, JD's supermarket categories will further optimize operations to better meet these users' diverse needs.

Here I'd also like to add our view on instant retail. We're very confident in JD supermarket categories' operational advantages and will seize opportunities brought by instant retail. We believe instant retail is a beneficial supplement to various consumption scenarios, meeting users' urgent product needs. But in terms of product variety and value proposition, JD's traditional core e-commerce business still has greater advantages. Therefore, in the entire retail segment, instant retail supplements core e-commerce.

JD's supermarket categories and teams will also actively deploy instant retail to further enrich users' multi-scenario demand experiences. Meanwhile, in core e-commerce business, we will continue improving operational capabilities. Long-term, we're confident in sustained growth of general merchandise and other categories. Especially this year, these categories achieved good performance without relying on national subsidies, with the core reason being improved team operational capabilities. This will also become an important driving force for JD's long-term growth.

**Bank of America Analyst:** Good evening. First, congratulations to the company for achieving continued accelerated growth this quarter, and thank you for the opportunity to ask questions. My first question is about user trends. Benefiting from our continuously improving service standards and related strategies including food delivery and national subsidies, this quarter we saw very impressive growth in JD platform active users and traffic. Could management share user growth trends, new user profiles, behavioral habits, and retention? Additionally, could you introduce the company's next user growth strategy and long-term goals?

The second question is, in discussions about company growth strategy, how does management view the company's profitability levels and profit margins in the coming years? How should we understand related expectations and long-term trends? Thank you!

**Management Response:** Thank you for the question. First, in the just-concluded Q2, our users achieved strong growth, with both quarterly purchasing users and user purchase frequency growing over 50% year-over-year. This was one of our strongest user growth quarters in recent years. Among these, retail business itself continued improving customer acquisition and retention efficiency, mainly benefiting from our continued investment in low-price perception and platform ecosystem over the past two years. These efforts brought richer supply and better user experience. Meanwhile, as conversion efficiency improved and content and interaction refined operations continuously improved, they also helped us better attract and retain users.

Additionally, JD food delivery has achieved rapid growth in less than six months since launch, bringing new growth momentum to JD's overall traffic, user volume, and shopping frequency. Food delivery business has brought us more young users, with particularly significant effects on PLUS member growth. Q2 PLUS member purchase frequency grew over 50% year-over-year. We will accelerate promoting food delivery cross-selling to instant retail and B2C e-commerce, including activation for existing users and e-commerce conversion for new users, driving rapid improvement in JD's overall shopping users and purchase frequency.

Long-term, JD is committed to providing better shopping experiences for 1 billion e-commerce users nationwide and achieving lower costs and higher efficiency through supply chain. Based on user scale, service scenario diversification, product and service category richness, and service capabilities, JD still has great room for improvement. Therefore, we're also continuously increasing related investments to promote long-term, sustainable growth in user scale and user value.

Regarding profitability, JD's short-term profit margins may fluctuate due to industry competition and our own business investment pace, but we always maintain the goal of long-term profit margins reaching high single digits, especially with very healthy profit margin trends in core retail business.

Continuous driving factors for core retail profitability improvement include: Supply chain efficiency improvement from self-operated business - we continuously reduce costs and increase efficiency for supply chain upstream and downstream, naturally promoting profit improvement, including product gross margin improvement and logistics cost reduction. Second, category structure optimization and changes. For example, supermarket and other categories still have great profit margin improvement potential, while relatively mature electronics categories also have small profit margin improvement potential. Meanwhile, as platform ecosystem business proportion in overall JD continues increasing, commission and advertising revenue will also continue rapid growth, further improving overall profit margins.

For new business investments, our core thinking is helping JD further break through growth bottlenecks and expand greater growth space. We believe these investments will bring long-term growth in user scale, GMV, and profits in the future. Although early new business deployment may impact group profit margins short-term, long-term, new businesses will gradually become new growth engines, forming greater synergies with core business, thus releasing greater profit potential. During investment, we will also continue focusing on investment strategies, maintaining investment discipline, focusing on ROI, and flexibly adjusting and balancing based on actual results.

**Jefferies Analyst:** Good evening, thank you management for taking my question. My question is about JD's overseas business expansion strategy for the coming years. Could management share the logic behind our Ceconomy acquisition?

**Management Response:** Thank you for the question, which I mentioned earlier. Internationalization has always been one of JD's important strategies. Our overseas expansion model differs from other cross-border e-commerce. JD's international business focuses more on supply chain efficiency expansion into overseas markets while providing high-value products for overseas users.

On the other hand, JD will also persist with localization strategy, building local retail and e-commerce business, establishing local teams, promoting local procurement and shipping. Meanwhile, we also establish long-term win-win relationships with local market participants, focusing more on brand and high-quality product operations.

Actually, JD has been deeply cultivating Europe for several years. Since 2022, we've been innovating and piloting innovative retail business in Europe locally. Later this year, we will upgrade related business to the JOYBUY brand, and we'll share more progress with everyone then.

Regarding the Ceconomy acquisition, we believe Ceconomy's brand power, supply chain capabilities, and market position established in European local markets have great value for JD. JD's own online e-commerce operations and technical capabilities can also form strong complementarity. Currently, this transaction is still awaiting regulatory approval. If there are further developments, we will communicate with everyone promptly.