On Tuesday, JD.com (NASDAQ:JD) discussed first-quarter financial results during its earnings call. The full transcript is provided below.

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Summary

JD.com reported a 4.9% year-on-year increase in total revenues for the first quarter of 2026, with notable growth in general merchandise and marketing revenues.

The company's operating margin expanded to 5.6%, driven by efficiency improvements and a favorable revenue mix, including significant contributions from high-margin advertising and commission revenues.

JD.com maintained a robust user base expansion, with a 20% year-on-year increase in both quarterly and annual active customer bases, and a notable 37% rise in shopping frequency.

The company observed a sequential improvement in electronics and home appliances despite an 8.4% year-on-year revenue decline, expecting stronger performance in the second half of the year.

JD.com's new business segment showed progress with a significant reduction in losses, particularly in JD Food Delivery, which achieved its largest sequential loss reduction to date.

In terms of future outlook, JD.com remains confident in its long-term growth prospects, leveraging supply chain advantages and AI to enhance efficiency and user experience.

The company completed a share repurchase program and paid an annual cash dividend, demonstrating a commitment to shareholder returns.

Full Transcript

OPERATOR

Hello and thank you for standing by for JD.com's first quarter 2026 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question and answer session. 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, Head of Investor Relations. Please go ahead.

Sean Zhang (Head of Investor Relations)

Good day, everyone. Welcome to JD.com's first quarter 2026 earnings conference call. With us today are CEO of JD.com, Ms. Sandy Xu, and CFO Mr. Yan 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 for the comparable period of 2025. Before turning the call over to Sandy, let me quickly cover the Safe Harbor. Please be reminded 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 the IR website which applies to this call. We will discuss certain non-GAAP financial measures and also please refer to the reconciliation of non-GAAP measures to the comparable GAAP measures 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.

Sandy Xu (Chief Executive Officer)

Thank you, Sean. Hello, everyone. Thank you for joining our first quarter 2026 earnings conference call. We kicked off 2026 on firm ground in Q1. Our total revenues grew by 4.9% year-on-year, marking a sequentially accelerated pace as key growth drivers stayed firmly on track. We saw a sequential rebound in electronics and home appliances categories while our general merchandise, marketplace and marketing revenues maintained double digit growth trajectory in the quarter. Moreover, our profitability continued to see steady growth. JD Retail's operating margin expanded by 0.7 percentage points year on year to 5.6% in the quarter, nearing historical highs. This expansion, achieved against a high comparison base for margin underscores our operational resilience and healthy mix shift. Our new businesses segment also delivered a meaningful sequential loss reduction in the quarter led by improved efficiency at JD Food Delivery, while TMSEA and International Business maintained prudent investment discipline. Overall, we are pleased with this strong start to the year with our emerging growth drivers taking solid shape while our profitability across all segments steadily trending upward. Moving to our operational highlights, I would like to share three areas of robust progress we made during the first quarter. First, we maintained robust momentum in both user base expansion and engagement in Q1. Both our quarterly active customer and annual active customer base grew by over 20% year on year with AAC hitting a new record. This growth was powered by both healthy organic yield growth in core JD Retail and strategic contributions from our new businesses including food delivery and JD Plus members. Our most loyal and high value user group delivered another quarter of double digit year on year growth in membership scale. The quality of our user engagement is reaching new heights. Our quarterly customer shopping frequency rose by a notable 37% year on year in Q1, a powerful testament to the synergies we are successfully unlocking across our core retail engine and new businesses initiatives. This dual momentum in both scale and frequency provides a solid foundation for us to further optimize the overall value of our user ecosystem. As our user base continues its rapid growth over multiple consecutive quarters, our strategic focus is clear. Fostering deeper loyalty and driving the upward migration of user quality are the key next steps towards advancing our long term growth. Second, our core retail business demonstrated strong resilience in Q1. We delivered revenues growth in line with expectations while driving operation margin toward historical peaks. Despite notable near term headwinds including the high trading base and rising product prices for electronics, this performance underscores the enduring strength of our supply chain driven model which consistently enables us to navigate market cycles while delivering steady upward changing performance. Q1 JD Retail's revenues grew by 1.8% year on year with broad based sequential acceleration across all revenue streams. Looking at category performance in Q1, while revenues of electronics and home appliances were down 8.4% year on year, this still represents a sequential improvement. Moving ahead while we navigate ongoing external headwinds in Q2, we remain confident in stronger performance in electronics and home appliances in the second half of the year. Our confidence is rooted in our continuous efforts to strengthen our supply chain capabilities, prioritize superior user experience and drive systemic cost optimization and efficiency gains. Our general merchandise category remains a standout with revenue growth accelerating sequentially to 14.9% year-on-year in Q1, led by supermarket, health care, home goods, apparel among others. Following six consecutive quarters of strong double digit growth, general merchandise has contributed over half of our total GMV, solidifying its position as an increasingly important growth driver. We maintain a positive outlook for this momentum to continue throughout 2026 as we leverage our supply chain advantages and increasing scale benefits to continue to provide our users with diversified reliable product offerings, competitive pricing and premium services. With a vast total addressable market and deepening user mindshare, we are well positioned to capture the significant market opportunities ahead. JD Retail's advertising and commission revenues have become a powerful engine for high quality growth. We are pleased to report another quarter of strong double digit growth in retail advertising and commission revenues for Q1. This performance served as a primary catalyst for the 18.8% year on year growth in our total marketplace and marketing revenues at the group level. As a high margin business, advertising and commission continues to structurally optimize our revenue mix, providing a resilient foundation for margin expansion. We expect advertising and commission revenues to remain an important growth driver for JD Retail throughout 2026 fueled by the following factors: our supply chain strengths, expanding user base, enhanced 3P ecosystem and traffic allocation efficiency, optimized AI powered advertising conversion and deepening synergies across our businesses. Notably, JD food delivery business is already proving its strategic value contributing an incremental 3% to advertising revenues in Q1. By effectively expanding our user touch points, food delivery is creating high frequency monetization opportunities that complement our core retail operations. In addition to top line resilience, another compelling highlight this quarter is the encouraging expansion of JD Retail's profitability. Operating profit surged by 16.5% year on year to 15 billion RMB, reaching a record high for quarterly profit and driving operating margin to 5.6% against the challenging external complexities we outlined earlier. This is fundamentally driven by our supply chain strengths which continue to yield expanding economies of scale and optimized procurement efficiencies. These strengths fueled a broad based gross margin expansion across our categories, lifting retail's gross margin to a remarkable 18.6% in the quarter, up 1.8 percentage point year on year. This margin uplift was further amplified by a favorable revenue mix shift, particularly the increased contribution from high margin streams such as advertising and commission. We believe JD Retail's margin profile is a clear reflection of our evolving structural efficiencies which we expect to provide further headroom for optimization going forward. Moving on to our new business segment, we are beginning to see the fruits of our efficiency oriented strategy marked by a significant sequential narrowing of losses and deepening synergies with our core retail businesses. In Q1, JD Food Delivery achieved the steepest sequential reduction in losses to date while sustaining healthy order volumes. Food delivery continues to improve its operating efficiency and diversify revenue streams resulting in material improvement in unit economics. This progress underscores our commitment to rational, healthy development of the business and reinforces our clear stance against evolution within the sector. We fully embrace the regulatory guidance and will continue to align our business strategy with full compliance, prioritizing operational efficiency and high quality growth as we move forward. For Jingsi and Joy Buy, both initiatives advanced steadily in line with their strategic roadmap. While adhering to prudent investment discipline, Jingsi continues to deepen its penetration in lower tier markets, particularly tier 6 and rural townships, successfully tapping into new user growth opportunities for our platform. Joybuy has seen solid momentum since its official launch in March, with order volume and user retention trending healthily. By the end of Q1, its same and next day delivery service spanned over 30 major European cities serving a population of over 40 million. Collectively, the total investment in our new businesses segment narrowed by over 30% sequentially. This was driven by our rational expansion strategy and an efficiency first operating philosophy. Building on this solid execution in Q1, we now have clearer visibility to further deliver on our efficiency oriented investment goals for the new business segment throughout the full year. We also continue to integrate AI across our entire value chain from demand identification and stimulation, 1P and 3P supply sourcing to autonomous logistics and premium customer services. In particular, we made further headways in logistics automation. In Q1, JD Logistics launched its next generation Longzoo Tech Packer robotic arm. This proprietary technology is optimized for handling packages of diverse sizes and shapes as well as automated cage loading. This milestone marks the successful transition of this technology from the lab to real world operation and enables us to significantly boost our sorting efficiency and competitive edge. Additionally, our AI powered digital human in live streaming has transitioned from a functional tool to an intelligent AI agent with a number of merchants and live streaming sessions that utilize this technology through surging tenfold year on year. In Q1, our goal is simple: to translate AI innovations into tangible retail experiences and sustainable value. We are well positioned to lead at the forefront of AI commerce and capture the vast opportunities ahead. In summary, Q1 has been defined by strong execution and strategic consistency. Our performance across all segments has validated our roadmap, contributing to both resilient top line growth and robust profitability. With this solid foundation, we are confident in our full year trajectory and long term prospects. We will maintain the operational activity necessary to proactively navigate Q2 fluctuations including a high trading base and rising product prices for electronics while fully leveraging our supply chain driven model. Our commitment remains unwavering to scale our business by delivering a premium user experience with continuous cost optimization and efficiency gains. With that, let me turn the call over to Ian.

Ian

Thank you, Sandy. Hello everyone and thanks for joining the call today. In the first quarter, our strategic execution remained firmly on track as we delivered a resilient overall financial performance. Total revenues grew by 5% year on year while non-GAAP net profit attributable to ordinary shareholders came in at RMB 7.4 billion, reflecting a strengthened sequential momentum across both our top and bottom lines. Notably, our core retail segment returned to growth this quarter while delivering healthy year on year profit expansion. We also recorded a significant sequential loss narrowing in our new business segment led by consecutive loss reductions in food delivery. Alongside our resilient financial results, we remain fully committed to shareholder return. During the first quarter we repurchased a total of approximately 44.5 million Class A ordinary shares equivalent to 22.3 million ADS, for a total of US$631 million. This represents around 1.6% of our total ordinary shares outstanding as of December 31, 2025. In addition, we complete our annual cash dividend payment in April totaling approximately 1.4 billion of $1 per ADF. Our continuous execution of our shareholder return plan underscores our strong conviction in JD's long term value creation. Now let's go through our Q1 financial performance. Our total net revenues were up 5% year on year to RMB 316 billion in Q1. Breaking down the mix, product revenues were up 1% year on year driven by a 15% surge in general Merchandise, which effectively cushioned the temporary decline in electronics and home appliances. Against a high trading base. Both categories saw sequential growth acceleration. Notably, General Merchandise has extended its double digit growth streak to six consecutive quarters within this supermarket outperformed by sustaining its double digit growth momentum which further accelerated in Q1 compared to the previous quarter. As we move ahead, we expect the impact of the high trading base and the rising product price for electronics to persist in Q2, which will temper the growth trajectory of electronics and home appliances. But we remain confident in a stronger performance in the second half of the year. Service revenues grew by 21% year on year in Q1 within this marketplace and marketing revenues rose 19%. Advertising revenues remained a key driver, posting its sixth consecutive quarter of double digit growth. By optimizing traffic allocation and conversion, we have effectively translated robust user engagement into superior ROI for our brands and merchants, a trend we expect to sustain throughout the year. Logistics and other service revenues were up 22% year on year. This growth was driven by both incremental delivery revenues from our food delivery business and the robust performance across JD Logistics diverse service offerings. Now let's turn to our segment performance. JD retail revenues were up 2% year on year in Q1. While we continue to navigate near term headwinds in electronics and home appliances, we remain confident in a second half rebound in those categories. Meanwhile, our emerging growth drivers including general merchandise and marketplace and marketing services are expected to sustain their robust momentum. JD Retail's gross margin expanded by 1.8 percentage points year on year to an impressive 18.6% in the quarter. This expansion was attributable to our enhanced supply chain capabilities which led to gross margin appreciation across all major categories. In addition, it also reflected a favorable mix shift as our high margin general merchandise and marketplace and marketing revenues outpaced the overall growth consequent. JD retails non-GAAP operating income increased by 16% year on year to RMB15 billion in Q1, reaching the highest quarterly level for JD retail with operating margin rising 70bps to 5.6%. This was achieved through a strategic balance of gross margin expansion, marketing efficiency and increasing investment in R and D for long term growth. Notably, JD Retail's marketing expense ratio has declined year on year for three consecutive quarters, a strong testament to the deepening synergies with our new business initiatives. Moving to JD Logistics, its revenues grow by 29% year on year in Q1 driven by incremental contribution from food delivery. On the profitability front, JDLogistics GAAP operating income surged by 600% year on year in Q1. This exponential growth was driven by technological leverage from our AI and robotics initiatives alongside broader operational optimization. In our new business, revenues came in at RMB 6.3 billion reflecting a moderated pace due to the resegmentation of our on demand delivery revenues from new business to JD Logistics non-GAAP operating loss in new business narrowed significantly on a sequential basis to RMB 10.4 billion led by JD Food Delivery while Jingsi and International Business remained disciplined in their investments. In particular, JD Food Delivery delivered its most significant sequential loss reduction since inception driven by its improved unique economics as we continue to boost operating efficiency and diversify revenue streams combined with a disciplined rational response to market dynamics. Turning to our consolidated profit performance group level, Gross margin expanded by 90bps year on year to 16.8% in Q1. This expansion was primarily driven by the strong performance of JD Retail serving as a clear validation of the structural progress as we have made in broadening and strengthening our margin drivers. In terms of OPEX total operating expense as a percentage of revenues increased year on year in the quarter, primarily reflecting increased marketing spending in JD food delivery and higher R and D investment to fuel our long term growth and efficiency improvement. Consolidated non-GAAP net income attributable to ordinary shareholders was RMB 7.4 billion in Q1 representing a non-GAAP net margin of 2.3%. Regarding our liquidity last 12 months, free cash flow as of the end of Q1 stood at RMB 22 billion compared to RMB 38 billion in the prior year. This primarily reflects cash outflows associated with the trading program alongside fluctuations in operating income. By the end of Q1, our cash and cash equivalents, restricted cash and short term investments totaled RMB216 billion. In summary, Q1 was another quarter that underscored the resilience and adaptability of our supply chain driven model. We achieved a sequential acceleration in top line growth while successfully navigating a complex external environment. Both JD retail and new business delivered robust profitability improvements and steadily moved along the strategic roadmaps. Our scalable AI applications are increasingly transforming our core assets into a distinct competitive mode in the era of AI commerce. With this solid foundation, we are firmly committed to unlocking long term value for our shareholders. This commitment is underpinned by our proven track record of growth, a clear trend of margin expansion and our solid shareholder return. With that, I will turn it back to Sean. Thank you.

Sean Zhang (Head of Investor Relations)

Thank you Sandy Xu and Ian for the Q&A session. You are welcome to ask questions in English or Chinese. Our management will answer the question in Chinese and we will provide English translation for convenience purpose only. In any case of discrepancy, please refer to our management statement in the original language. Operator, we can open the call for Q&A now.

OPERATOR

Thank you. The question and answer session of this conference call will start in a moment. In order to be fair to all callers who wish to ask questions, we will take two questions at a time from each caller. If you have more than two questions, please request to join the question queue again after your first two questions have been addressed. Your first question today comes from Kenneth Fong with UBS. Please go ahead.

Kenneth Fong (Equity Analyst)

Thank you management for taking my questions and congrats on the strong quarter. My first question is on the growth. Despite facing a high base in the first quarter GT Retail still delivered better than expected growth and maintained solid performance even as overall market decelerate in March. Has management observed any shift in consumer behavior particularly in the context of price increase in electronic categories? How should we think about the growth trend over the next few quarters? And my Second question is about the margin. Against a backdrop of macro uncertainty, intensified industry competition and increased platform subsidies alongside with a rising ESP in electronic products, how should we assess JDL margin trajectory going forward? Thank you.

Sandy Xu (Chief Executive Officer)

Thank you Kenny Let me answer your first question, Kenny regarding growth in Q1, JD Retail delivered a solid performance with revenue growth accelerating. Q on Q for Electronics and Home appliance While our growth was impacted by the high base from trading subsidies last year, we leveraged our supply chain capabilities and strong user mindshare to win even greater trust from user which helped us further consolidate our market leadership. For general merchandise category, revenue growth maintained a double digit pace and further accelerated to 15% year on year. Notably, our supermarket category reported double digit growth for the ninth consecutive quarter. This clearly shows that our growing user mindshare in the general merchandise category. Regarding the impact of price hikes in the consumer electronics and home appliance industries. So yes, due to the rising memory cost, we have seen industry wide price hikes for smartphones and PCs since March. This round of price increases is sharp and widespread, so in short term it indeed dampens consumer demand to some extent. At the same time we are seeing consumer purchase are shifting toward high mid to high end models and top tier brands. But in a challenging time, JD's unique proposition becomes even more clear. We will leverage our efficiency of our supply chain to bring user a better experience in both price and service at the same time will help brands achieve more efficient sales with greater certainty. Our unique competitive edge is even more pronounced for the high end mid to high end models and top tier brands. So overall as a result we believe our market position will further solidify. Looking at the full year the rest of the year. In the second quarter, sales of electronic home appliance are expected to continue to face temporary pressure. This is due to the even higher base from trading program last year combined with the impact of price hikes on smartphones and PCs impacting consumer sentiment. We will continue to strengthen our mindshare while helping brands achieve more certain sales. Moving into the second half this year, we have stronger confidence in growth acceleration especially for home appliance category. As the comparison base returns to normal and the continuous expansion of our omnichannel sales network further create greater sales potential for home appliance category. At the same time, we are confident in the healthy growth for both general merchandise and advertising and commission revenues. JD's growth engines are becoming more diversified. This gives us confidence to deliver healthy growth for the full year even in a volatile year. In the first quarter, JD Retail achieved double-digit growth in operating profit. Its operating margin also expanded steadily to 5.6%. This was primarily driven by first growth margin expansion for both our mature electronics and home appliances and fast growing general merchandise categories. We have leveraged our supply chain capabilities to drive industry efficiency while creating value for brands. We have also enhanced our own profitability, achieving year-on-year expansion in gross margins across categories. In the meantime marketing efficiency improvement JD Retail's marketing expense and expense ratio have seen year on year optimization for three consecutive quarters. As new businesses including JD Food Delivery and Jingsi effectively drive traffic growth for our platform, we are allocating marketing resources with greater precision and efficiency, thereby enhancing the overall return on our marketing expenses. Lastly, while improving our gross margin and marketing efficiency, we remain deeply committed to R and D development, particularly in AI. In Q1, our R& D expense continued to meaningfully increase and is expected to maintain an upward trend for some time ahead. We believe such investment will gradually translate to operational benefits, driving AI powered efficiency gains and further optimizing our overall cost structure. Looking ahead, our Q1 performance already further validates JD Retail's ability to deliver steady margin expansion over time. So we remain firmly committed to our long term high single digit margin target. The key drivers of this include first, our 1P capabilities will continue to enhance our 1P supply chain strength and leverage scale benefits to drive consistent product sales Gross Margin Expansion JD Retail's gross margin has delivered year on year improvement for 16 consecutive quarters and we believe there is still upside potential second category improvement we see meaningful margin upside in categories including supermarket. Additionally, as we continue to optimize the product mix within our electronics and home appliances categories, we expect further margin expansion over the long term. Third Platform Ecosystem we will be driving the healthy development of our platform ecosystem. This will support our high margin service revenues such as commission and and advertising to grow at a robust pace contributing to our overall margin expansion. That said, we are still at a lower tickery level compared to the industry and we believe there is substantial potential for improvement for us in the long term. As China's largest retailer with supply chain at its core, JD has the industry's most size diverse application scenarios for AI and automation. This presents significant potential for us to continuously enhance user experience, reduce cost and drive greater efficiencies. Okay, thank you Kenny. We can go to the next analyst.

OPERATOR

Your next question comes from Ronald Kang with Goldman Sachs. Please go ahead.

Ronald Kang (Equity Analyst)

Thank you management for taking my question first is about international since that you've launched Joy Buy across six countries in Europe how should we frame the near term investment intensity to drive a critical order volume scale and how do you think about the longer term impact on a kind of exterior basis on new business loss and the ROI from this investment? Second is on agents which are increasingly driving consumer search and purchasing. So how will JD leverage the unique moat as China's largest retailer in this and what are your defensive or offensive strategies in light of agent to agent interactions and on partnerships? Thank you.

Sandy Xu (Chief Executive Officer)

Thank you Ronald for your question. First on Joybuy. Joybuy was officially launched on March 16th so it leveraged JD's supply chain capabilities and localized operation. Now Joybuy partners with top global brands to offer European user a full category of products at competitive price. At the same time, backed by our self built logistic network in Europe, Joybuy is bringing JD signature same and next day delivery speed that we offer in China to European consumers. Currently Joybuy maintains an encouragingly high user rating on trustpilot, a leading consumer review platform. Our high quality products and excellent delivery experience are helping us winning trust of local customers. In terms of investment in Q1 investment of our international business remains stable Q on Q as we keep improving operating efficiency over the next few quarters where we will execute our established strategy. As our business grows healthily, the overall investment may gradually increase as well. That said, as order volume grows, the economy of scale will kick in and continuously improve our uni economics. So overall we believe our international business investment is highly manageable and remains in line with our initial expectation. Looking ahead, international expansion is a long term strategy for jd. We will steadily expand our footprint and build our capabilities. In the meantime, we will strictly maintain our financial discipline and focus on ROI to drive drive healthy sustainable growth. In terms of capability building, we'll focus our investment on key supply chain areas including product fulfillment, technology, systems, et cetera. This will allow us to bring a more competitive product offering to European user, improve delivery experience and further differentiate the joy by experience. Over the long run this investment will translate into better user retention, unlock economic scale and drive long term ROI. We are confident that JD's core supply chain mode, especially our highly efficient 1Pmodel combined with strong logistic capabilities give us the potential to redefine industry efficiency and user experience on a global scale. Regarding the second question on AI, we believe no matter how technology evolves, whether AI, assisted shopping or the essence of retail remains unchanged. It has always centered on delivering better user experience, lower cost and higher efficiency to meet users continuous pursuit of better product price and service. This is also the core mode of the that we have been building over the past two decades of deep investment in supply chain. Today we are leveraging new technologies including AI and robotics to further enhance the user experience while reducing cost and improving efficiency. Let me walk you through a few examples. On the demand side, we are making a comprehensive upgrade with our self developed AI agent called Jin Yan to help us more precisely identify, stimulate and match consumer demands. Jinyan has provided a more efficient and convenient shopping experience within the JD app. In Q1 we have seen Jinyan demonstrate strong growth momentum with its quarterly active user growing by over 200% year on year, while the growth of user engagement was even more robust, increasing by over 300% year on year. On Internal workflow Our procurement and sales agents can analyze front end market demand to uncover new business opportunities and then source more suitable merchants and products. Our procurement and sales agent can also automate routine operations, operational tasks such as merchant and product management, inventory management and marketing activities, enabling our procurement team to operate and make decisions with greater efficiency. At the same time, we have developed a suite of AI tools to help merchants enhance their operational efficiency including marketing, content generation, Joy Streamer, our digital human livestreaming solution and AI powered customer service. And on the fulfillment side, we are broadly deploying AI and robotic technology to continuously drive up our automation and robotics coverage. Currently, JD's Longzhu Tech Series of robots is able to cover the entire logistics chain and has been deployed at a scale at a global scale, gradually delivering cost reduction and efficiency gains agency. So therefore you can see by deploying this agent we are connecting and upgrading individual process into a seamless end to end workflow which essentially building an agent to agent framework. By replacing inefficient intermediary layers, we are positioned to realize step change in the overall efficiency. Thank you Ronald. We can go to the next analyst.

OPERATOR

Your next question comes from Alicia Yap with Citigroup. Please go ahead. Hello. As the food delivery landscape gradually improves, we understand that JD remains committed to investing in this area to drive new user acquisition and also cross selling. So can management share whether the goal is to operate the business profitably or furthermore, does JD actually aim to break even at the same time as the competitors? Or does management view food delivery as a long term strategic investment that will continue to operate at a slight loss or maybe just near a break even point? And then second question is that what is management view on the future FMCG and also the fresh category landscape? So what could be the shares split between the large supermarket chain, the online, the on demand the quick commerce, what will be the preferred models that JD1 and which model will be more profitable and then any views and thoughts on the competition's landscape Evolving thank you.

Sandy Xu (Chief Executive Officer)

First, in Q1 while keeping healthy order volume, JD food delivery achieved biggest sequential loss reduction to date with solid progress in unit economics improvement on food deliveries revenues as we continued to optimize operating operations and upgrade advertising system, total revenues of commission and advertising surged nearly two times on a quarter on quarter basis in Q1. At the same time, we maintain a rational approach amidst industry wide subsidy competition, we continue to refine our operations and marketing efficiency across different user groups regions. Furthermore, through supply chain innovation we are advancing the growth of this business. We also fully implement regulatory requirements and remain committed to compliant operations. We believe our food delivery business will eventually achieve profitability. However, JD Food delivery is not a standalone business. We will be unlocking its synergistic value within our business ecosystem. On users front First User skill JD Food delivery has been driving healthy growth in traffic and user base for our platform. In Q1, both our daily active users (DAU) and quarterly active customers increased by over 20% year on year and the number of our annual active customers reached a record high. This also contributed to our advertising revenue growth.. Second User Engagement as food delivery effectively fulfills the demands of our existing high quality users, it helped to drive a 37% year on year increase in user shopping frequency on our platform. Third Cross Sales We've also seen stronger cross category purchases among food delivery users, particularly in supermarket categories and our on demand retail offering. On the supply side, food delivery also enriches the location based supplies on our platform spending categories from dining and supermarket to general merchandise. This also enables us to deepen partnerships with merchants and brands. On the fulfillment side, we will be unlocking and testing synergies between food delivery and logistics fulfillment to develop a robust last mile infrastructure. This not only enhances our on demand delivery capacity but accelerates the coordination and optimization of our overall logistics, operations and management. Food delivery and on demand retail are long term strategies for ged. We will drive healthy development of the businesses through a long term perspective. Let me answer Alicia's second question on supermarket so first, China's supermarket sector has a massive market size nearing 10 trillion RMB in scale, yet it remains highly fragmented. So this indicates significant room for potential cost optimization and efficiency gain as well as for the growth in online penetration. Within the supermarket category, we operate Multiple models including 1P model which focus on delivering a reliable consumer experience 3P platform model which offers selection and diversity and additionally the on demand retail model which has been growing rapidly on JD in recent years. So these models are not simply replacing one another. Instead, they address diverse consumer demands across different shopping scenario by emphasizing distinct advantages in efficiency, timelessness and selection. As a business-to-consumer (B2C) retailer with deep supply chain expertise, JD Supermarket holds significant competitive advantages across product selection, supply chain and warehouse management, cost and price competitiveness and user experience. Despite intense market competition as the largest supermarket in China, JD Supermarket has demonstrated remarkable growth resilience, achieving double digit revenue growth for nine consecutive quarter. On profitability we continue to enhance the profitability of supermarket category by leveraging our scale advantage and supply chain capabilities. Looking ahead, we still see substantial Runway for improvement in both gross margin, our fulfillment expense ratio allowing us to unleash results from our scale and sustain steady growth while gradually expanding our profitability. We believe that competition in supermarket sector will ultimately return to the focus on user experience, cost and efficiency. By leveraging our continuously improving self operated supply chain capability, JD Supermarket delivery delivers better product at lower price to customer while helping brands achieve consistent and incremental sales. We are highly confident that in the long term healthy growth in the long term healthy growth of supermarket which is becoming a key growth engine for us in the coming years. Thank you, Alicia. Let's go to the next analyst please.

OPERATOR

Your next question comes from Thomas Chong with Jeffries. Please go ahead. Thomas Chong, your line is now live. Please proceed with your question.

Thomas Chong (Equity Analyst)

Hi, good evening. Thanks management for taking my questions. I have two questions. My first question is about the latest updates about our ecosystem strategies including number of 3Pmerchants contribution as well as the outlook over the next few quarters. And my second question is about capital return. Can management share the latest updates about the return to shareholders? Thank you.

Sandy Xu (Chief Executive Officer)

and chama put on the moshi gong champagne jaguar manzu doyan shijo woman. Our platform ecosystem always centers on user experience, lower cost and enhanced efficiency. By leveraging in different business models, we provide the best combination of products, price and services to meet diverse consumer needs. We've made solid progress in our platform ecosystem development. Let me share a few key indicators that maintain rapid growth in Q1. First, our active merchant base. It maintained a triple digit year on year growth rate in Q1. We've onboarded more high quality brands and industrial belch merchants providing users with a more diverse product supply. Meanwhile, our food delivery business has also brought in a large number of quality restaurant merchants, further expanding our service scope. Second, Users we have seen positive feedback from users. The number of users users who shopped 3P offerings on our platform grow at a fast pace, outpacing the growth of our total users. This also supported the fast growth of 3p order volume which accounted for over 50% of our total orders in Q1. From a financial perspective, in Q1 our three PGNV grow faster than 1p and the total GNV. More importantly, our marketplace and marketing revenues have delivered double digit growth for six consecutive quarters. The increasing contribution from these high margin revenue streams continues to drive our overall profit margin. Over the long term, we believe 3p GNV contribution will surpass 1p. Our platform ecosystem will become a key driver for both our revenue growth and margin expansion. Regarding shareholder return in the first quarter we repurchased a total of around 44.5 million ordinary shares equivalent to 22.3 million ADS, for a total of US dollars 631 million, representing 1.6% of our total ordinary shares outstanding as of the end of 2025. The remaining amount of our ongoing repurchase program is US$1.4 billion and the expired date will be in August next year. We expect to continue to execute our share buyback at planned pace. In addition, we announced the annual cash dividend of $1 per ADS for the year of 2025 in March and completed payment in April as planned. Going forward, we remain committed to returning value to our shareholders through dividends and share buybacks. At the same time, we will maintain focus on achieving healthy long term growth in business scale, profitability and cash flows. We aim to share JD.com's success with our shareholders in multiple ways.

Sean Zhang (Head of Investor Relations)

Thank you. That's all the question we can take today, so let me just wrap up since we are running over time. Thank you for joining us on the call today and thanks for your question. If you have further questions, please contact me and our team. We appreciate your interest in JD.com, and look forward to talking with you again next quarter.

OPERATOR

Thank you.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.