JD.com delivered a better-than-expected second quarter, with profit comfortably ahead of consensus despite softer revenue. The key positive was a clear improvement in earnings quality, helped by solid profitability in the core retail business and continued narrowing of losses in food delivery.
Key results:
- Revenue of RMB346.4 billion, down 2.9% year-on-year but around 2% ahead of the RMB339.9–340 billion expected.
- Adjusted net income of RMB8.9 billion, around 14% ahead of the RMB7.8 billion expected.
- Adjusted operating income of RMB5.5 billion.
- Adjusted net income increased 21% year-on-year.
JD’s aggressive push into food delivery weighed heavily on earnings through 2025, but management is now showing meaningful progress in reducing those losses. Combined with continued profitability in JD Retail, that drove a much stronger bottom-line outcome despite ongoing revenue pressure.
The stock traded lower overnight (-7%) with the main issue remaining the Chinese consumer. Domestic demand is still soft, while the recent 618 shopping festival pointed to more subdued industry growth than in prior years. JD’s second-quarter revenue decline reflects that backdrop, even though the result still exceeded market expectations.
MM’s view: This was a better-quality result than the revenue line alone suggests. The core retail business remains profitable, while narrowing food-delivery losses are beginning to unlock a meaningful recovery in group earnings. The weak consumer environment remains a headwind, but if JD can continue improving monetisation and cost discipline without reigniting heavy promotional spending, the earnings trajectory has scope to improve further. After a strong run since late June, some consolidation would not surprise, but the direction of travel is encouraging.
MM remains long & bullish JD
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