JD.com Q3 conference call: The company's food delivery has entered a rational expansion period, planning to build a trillion-level smart ecosystem in three years

On the 13th, JD.com held a Q3 earnings conference call. The previously released financial report shows that JD.com's Q3 revenue increased by 15% year-on-year, adjusted EBITDA decreased by 83%, new business revenue grew more than twofold, and marketing expenses increased by 110%. During the call, management stated that delivery is a long-term strategy for JD.com. The company is still in the first phase of strategic layout, aiming to establish user perception and market share in the "quality delivery" sector. In the third quarter, delivery GMV achieved double-digit sequential growth, with the proportion of meal orders and average order value both increasing. Although the implementation of a commission-free policy for merchants has limited revenue, the unit economic model (UE) has significantly improved through enhanced operational efficiency, optimized subsidy strategies, and the introduction of supply chain innovation models such as "Seven Fresh Kitchen." Management emphasized that the company has maintained a "relatively rational" attitude in competition, with overall investment in the delivery business narrowing sequentially in the third quarter. Additionally, the delivery business is driving synergies in JD.com's core retail, with daily active users of the JD app growing faster than the industry, annual active users surpassing 700 million, and the conversion rate of new delivery users approaching 50%, significantly increasing shopping frequency in categories such as supermarkets and life services. JD.com’s management stated that the daily essentials category has achieved double-digit growth for four consecutive quarters, believing that there is still significant growth potential in supermarkets and fashion. National subsidy policies have greatly stimulated consumer demand compared to the same period last year, especially in the home appliance and computer categories, but the high base effect brought about by the tapering of subsidy policies has caused short-term industry fluctuations. During this period, JD.com strengthened its market share and supply chain capabilities, and the company will continue to consolidate its market position in home appliances and 3C categories through product innovation, price advantages, and service experiences. Management revealed that during the recently concluded "Double Eleven" shopping festival, the number of ordering users increased by over 40% year-on-year. In terms of AI strategy, JD.com has built a complete system covering infrastructure, models, platforms, and scenarios, "planning to continue investing in the next three years to drive various industries to jointly form a trillion-scale artificial intelligence ecosystem." Core products include self-developed models like Joy AI, digital humans, and AI agents, widely applied in retail, logistics, health, and industrial fields. Management stated that JD's online retail business Joybuy has begun trial operations in key markets such as the UK, France, and Germany. Management positions internationalization as "one of the most important long-term strategies," but also emphasizes that investment in overseas business will be "relatively controllable" and adhere to strict financial discipline to achieve healthy and sustainable growth. Below is the transcript of the conference call: CEO Xu Ran: Thank you all for joining our Q3 2025 earnings conference call. In the third quarter, we achieved solid results around the company's strategic priorities and further strengthened our core capabilities to create a better user experience, lower costs, and higher efficiency. Our total revenue grew by 15% year-on-year, continuing the trend of double-digit growth We are pleased to see that the growth rate of daily consumer goods and platform and marketing revenue continues to improve month-on-month, becoming an important growth engine for us. In this quarter, the non-GAAP net profit reached RMB 5.8 billion, and the profit margin of our core retail business also achieved a year-on-year continuous increase. Our instant retail business¹ has also maintained a healthy expansion trend, and thanks to our continuous optimization of operational efficiency and improvement of the per capita economic model², the losses in the third quarter narrowed compared to the previous quarter. Overall, our various businesses are steadily advancing along the company's established long-term strategic roadmap. At the same time, the new business layout will create deeper synergies, promote a healthier financial model, and further consolidate our entire business ecosystem. Among the many positive developments supporting our achievements, I would like to specifically share three main highlights from this quarter, which I believe are also the core messages of this conference call. First, our user scale and user engagement have maintained strong growth momentum. In the third quarter, our quarterly active user count increased by over 40% year-on-year, continuing the growth momentum of the previous quarters. This is attributed to the organic growth of JD Retail and the contributions from new businesses such as JD Daojia and Jingxi. The sustained growth has driven our annual active user count to surpass 700 million in October, marking a new milestone in our user growth. It is particularly noteworthy that the number of our highest quality user group—JD PLUS members—also achieved healthy growth in this quarter. In addition to user scale, the shopping frequency of users also increased by over 40% year-on-year in the third quarter, maintaining this growth rate for two consecutive quarters. It is worth noting that all user groups, whether new users, existing users, or PLUS members, have shown significant increases in shopping frequency. This strong user growth momentum powerfully demonstrates that, in response to changing user demands, we remain focused on providing a higher quality user experience. In turn, this continuously expanding and more active user base further enhances our interaction with users, deepens our insights into them, and enables us to better meet their needs. This virtuous cycle will ultimately support our long-term sustainable growth. Second, our core retail business remained strong in the third quarter. Retail revenue in this quarter grew by 11% year-on-year, reaching RMB 251 billion. This growth is driven by multiple factors: on one hand, the high base effect of electronic products and home appliances began to emerge; on the other hand, the sales of daily consumer goods and platform and advertising revenue accelerated in this quarter. In terms of profitability, JD Retail's gross margin and operating margin both achieved robust increases, reflecting the continuous scale effects and improvements in operational efficiency. From the perspective of major categories, starting from the second half of the third quarter, the electronic products and home appliances categories began to face high base challenges, which put some pressure on their growth momentum. This is a challenge faced by the entire industry, and we are closely collaborating with brands and manufacturers to address it together. We leverage our supply chain capabilities to help brand owners reduce costs and secure the best prices for customers Despite the expected continuation of the high base effect in the short term, it is clear that our business model and market position advantages in these categories remain solid. We are confident that we can further unleash the growth potential of this market based on these advantages. In the third quarter, the revenue of daily necessities increased by 19% year-on-year, with a significant acceleration compared to the previous quarter. Among them, the revenue from supermarkets, fashion, and health categories maintained double-digit year-on-year growth this quarter. This strong momentum is expected to continue into the fourth quarter. This is the result of our efforts in optimizing the product mix, enhancing price competitiveness, and improving service quality, which ultimately translate into better user experience and stronger user perception. As we continue to tap into the vast market potential, we believe that the daily necessities category will play a more important role in supporting JD.com's long-term growth. In addition to a healthier category mix, another highlight of our third-quarter performance is the revenue from platforms and advertising, which grew by 24% year-on-year at the group level this quarter, maintaining double-digit growth for four consecutive quarters. Notably, our advertising revenue growth has accelerated quarter-on-quarter this year, achieving over 20% year-on-year growth in the third quarter. This strong momentum is mainly driven by the accelerated growth of advertising revenue generated from our core JD retail business, the continuous improvement of the ecosystem we have built for self-operated and third-party merchants, more advanced artificial intelligence advertising tools, and improved traffic allocation efficiency, all contributing to this strong trend. Entering the fourth quarter, we expect platform and advertising revenue to continue to grow healthily. Our platform ecosystem is developing well and receiving positive feedback from various suppliers and merchants of all sizes. The third highlight I want to share is the new business within the segments. JD's instant retail business continued to make healthy progress in the third quarter. Its GMV achieved double-digit quarter-on-quarter growth this quarter, thanks to the increase in order volume and a healthier order structure, with high-value orders contributing the majority. While expanding the scale of the business, the operating loss of the instant retail business also narrowed quarter-on-quarter in the third quarter, thanks to the improvement in UE (unit economic efficiency). This encouraging progress has been achieved through our rich product supply, enhanced operational efficiency, prudent investments in a competitive market, and efforts to expand revenue sources for the instant retail business. More importantly, the instant retail business continues to generate strong synergies with our retail business. In addition to user growth and increased engagement, the cumulative cross-selling rate of user groups has also been on the rise. Our categories such as supermarkets, 3C digital, accessories, and Jingxi remain the biggest beneficiaries of this trend. Looking ahead, we will focus on further developing the instant retail business, optimizing UE (unit economic efficiency) under scale, and releasing stronger synergies with retail, logistics, and other businesses in our ecosystem. Other new businesses, including Jingxi and international operations, are currently progressing smoothly as planned. Jingxi is further penetrating into lower-tier markets, expanding its merchant and user base. Our international retail business is gradually establishing capabilities in regions such as the UK, France, Germany, and Benelux, paving the way for our global expansion Both of these businesses are solidly executing their long-term strategies. Before I conclude my remarks, there is one more thing I would like to share. At the JD Discovery conference in September, we released our artificial intelligence (AI) roadmap. I want to share a few exciting developments here. First, we launched several new AI products, including an all-purpose digital human assistant, as well as AI agents for robots, toys, devices, and more. Secondly, we introduced industry-specific AI applications covering four areas: retail, healthcare, logistics, and industrial. Thirdly, we upgraded some retail technology infrastructure, such as our new digital human technology—"Yanxi Virtual Anchor." It provides solutions for e-commerce live streaming and short video production. So far, "Yanxi Virtual Anchor" has served over 40,000 brands, significantly reducing costs compared to human anchors while achieving better sales performance. In addition, we offer 24/7 uninterrupted AI customer service, handling over 4.2 billion user inquiries during the Double Eleven shopping festival. We are very excited about the potential of these AI applications, and we are working hard to build a comprehensive AI ecosystem that spans multiple industries. In summary, the third quarter was a productive quarter, and all our business lines are steadily progressing along the strategic path. Our platform's user growth momentum is strong. Our core retail business is developing steadily, with multiple complementary long-term growth drivers and significant potential for long-term margin improvement. Beyond the core retail business, new businesses, including instant retail, Jingxi, and international retail, have entered a healthy development track both financially and operationally. Overall, our various businesses are working in synergy, which enhances our confidence in the path ahead. Looking forward, we see tremendous opportunities to further unlock the synergistic value of our business ecosystem and lay a solid foundation for sustainable, high-quality growth. That concludes my sharing. CFO Dan Su: Hello everyone, thank you for joining the call today. In the third quarter, all our businesses achieved healthy performance. In terms of revenue composition, product revenue in the third quarter grew by 10% year-on-year. Among them, revenue from electronics and home appliances grew by 5%, with a slowdown in growth compared to the previous quarter, mainly due to the high base effect caused by the "trade-in" program in the same period last year. This is in line with our expectations. We are confident that by continuously leveraging our supply chain advantages and focusing on enhancing user experience, reducing costs, and improving efficiency, we will further consolidate our market leadership. In this quarter, revenue from daily necessities grew by 19% year-on-year, which is a significant highlight of our third-quarter performance. The daily necessities category has maintained double-digit growth for four consecutive quarters, with growth accelerating compared to the previous quarter. Within the daily necessities category, both the supermarket and fashion categories performed well in the third quarter. This achievement is mainly due to our ongoing efforts to enhance operational capabilities, create a better user experience, and the increased user mind share that comes with market share growth. This gives us confidence that as we continue to tap into the enormous potential of this market, the strong momentum in the daily necessities category will be sustained in the future In the third quarter, service revenue grew by 31% year-on-year, with a significant acceleration compared to previous quarters. Notably, platform and marketing revenue increased by 24% year-on-year, achieving sequential acceleration for seven consecutive quarters. Among them, advertising revenue continued to grow strongly, primarily due to a significant increase in user engagement in our core retail business, as well as the optimized advertising tools we provide to suppliers and merchants. This demonstrates our increasingly robust ecosystem and the strong growth in the number of platform merchants and users. We expect platform and marketing revenue to continue to maintain steady growth in the fourth quarter, contributing to our revenue growth and profit margin performance. Logistics and other service revenue grew by 35% year-on-year in the third quarter, mainly driven by incremental delivery revenue from the food delivery business. Next, let's take a look at the performance of each business segment. JD Retail's revenue in the third quarter grew by 11% year-on-year. Our core retail business has built multiple growth engines, and we believe that daily necessities and value-added services, including advertising, will become important pillars for the long-term growth of the retail business. JD Retail also made healthy progress in profit margin expansion this quarter. Its gross margin has achieved year-on-year growth for 14 consecutive quarters, with a year-on-year increase of 1 percentage point in the third quarter, reaching 19.3%. This is attributed to a favorable shift towards high-margin businesses and optimized procurement costs through economies of scale and supply chain advantages. Additionally, in the third quarter, JD Retail's Non-GAAP operating profit grew by 28% year-on-year to 14.8 billion yuan; the operating profit margin increased by 76 basis points year-on-year to 5.9%, both continuing a strong growth momentum. Now, looking at JD Logistics. In the third quarter, logistics revenue grew by 24% year-on-year, with steady growth in both internal and external revenue, while JD Logistics also benefited from incremental delivery service revenue brought by the food delivery business. In terms of profit, JD Logistics' Non-GAAP operating profit decreased by 39% year-on-year to 1.3 billion yuan this quarter, due to the company's ongoing investments in customer experience, service capabilities, and technology to enhance the efficiency of the entire logistics process. These investments aim to enhance JD Logistics' competitiveness in products and services and consolidate its market position, which will translate into sustainable profit margin expansion in the long run. Our new business segment achieved revenue of 15.6 billion yuan, showing stable growth compared to the previous quarter. This is mainly due to the continued expansion of our instant retail, Jingxi, and international businesses. The Non-GAAP operating loss of the new business slightly widened to 15.7 billion yuan quarter-on-quarter. Specifically, the investment in the instant retail business decreased quarter-on-quarter in the third quarter. While our instant retail business continues to scale, its financial model has also become healthier, reflected in the broadening of revenue sources, prudent user investment, and improved operational efficiency. As for other new businesses, investments in Jingxi and international businesses have increased compared to the previous quarter. They are in a rapid development phase and are important pillars of JD's long-term strategy Looking ahead, we will continue to scale our new businesses and further unleash synergies to lay the foundation for our future growth. At the same time, we are committed to improving unit economic performance (UE performance) and driving healthy, sustainable profit growth in the long term. From the overall profit performance of the company, our gross profit in the third quarter increased by 12% year-on-year to 50 billion yuan, with a gross margin of 17%, slightly down by 0.4 percentage points. This was mainly due to the profit margin dilution effect from the instant retail business and JD Logistics, which offset the robust gross margin expansion of JD Retail in this quarter. The Non-GAAP net profit attributable to ordinary shareholders in the third quarter was 5.8 billion yuan, with a Non-GAAP net profit margin of 1.9%, both of which decreased year-on-year. The short-term resistance encountered in profits mainly reflects our investment in the instant retail business. As of the end of the third quarter, our free cash flow over the past 12 months was 13 billion yuan, compared to 34 billion yuan in the same period last year. This was mainly due to cash outflows related to the "trade-in" project and a decline in operating profits. As of the end of the third quarter, our total cash and cash equivalents, restricted funds, and short-term investments amounted to 211 billion yuan. In summary, we are encouraged by the solid progress made in our core retail business and new businesses. The retail business has established a growth matrix composed of multiple drivers and has laid out a clear path to achieve long-term margin targets. The instant retail business is growing with a healthier financial model, while other new businesses, including those in lower-tier markets and international operations, have also made solid strides toward opening the next chapter. All our businesses are on track, and significant synergies are beginning to emerge among them, contributing to our long-term high-quality development. Thank you all, we will now enter the Q&A session, and we welcome your questions. Questioner: I have two questions. The first is about the impact of "national subsidies." As we enter the high base period of the national subsidy policy in the second half of the year, how does management view the growth of major appliance categories and JD.com overall in the second half? From a financial perspective, if the demand brought by national subsidies slows down, what impact will it have on JD Retail's profit margins? The second question is about overseas markets. We see that the company has started operations with Joybuy as overseas acquisitions progress. Could management elaborate on JD's strategy in overseas markets, as well as the pace and planning of investments? Thank you. Management's Response: Thank you for your questions. Indeed, as we have seen since last year, the national subsidy policy has significantly stimulated consumer demand, particularly for the sales of home appliances and computers. This has also led to the industry entering a high base period in the short term, which I believe the market is also anticipating. Although national subsidies have caused short-term fluctuations in industry demand, we believe that their more important and far-reaching significance lies in driving the upgrade of the entire home appliance industry, promoting product innovation, intelligence, and greening, and injecting momentum into the industry's high-quality growth JD.com actively supports policy implementation during the national subsidy period, and the market share and supply chain capabilities of home appliances and 3C categories have also been further enhanced, especially in our self-operated model. The continuous strengthening of these core advantages is the foundation of JD.com's differentiated competitiveness and long-term business development. We will continue to leverage our advantages in products, prices, and services, with the long-term goal of continuously strengthening user perception and consistently consolidating and enhancing market share. Specifically, we focus on the following areas: Product Innovation: We will collaborate with brand partners to launch more customized products to drive product upgrades and innovation. Pricing: We will optimize costs and prices through scale advantages and supply chain capabilities, providing users with more competitive prices. Service: We will create an omnichannel shopping experience both online and offline. For example, we will continue to improve the offline layout of home appliances and 3C categories, focusing on large store formats such as JD MALL, super experience stores, and urban flagship stores in high-tier cities; in lower-tier markets, we will concentrate on our home appliance specialty stores. In addition, we also provide differentiated services such as integrated delivery and installation to offer users a better experience and more efficient models, thereby continuously consolidating our market share. As of the third quarter, we have over 20 JD MALLs operating nationwide, and the number of JD Electrical urban flagship stores has exceeded 100. Regarding profit margins, we will continue to provide users with the most cost-effective products to ensure user experience and strengthen user perception. At the same time, whether during the national subsidy period or in the future as we enter a normalized development phase, our team will continue to leverage supply chain capabilities, strengthen co-construction with brands, and promote industrial efficiency improvements through customization and exclusive sales. This will not only enhance industry profits but also bring us long-term profit margin improvements. Overall, we are very confident in continuously increasing market share in the home appliance and 3C categories. JD.com will also continue to strengthen its capabilities and strategic layout, closely cooperate with brand merchants, jointly address short-term industry challenges, and support the industry in achieving long-term healthy development. Meanwhile, our growth drivers are becoming more diversified. Categories such as supermarkets, health, fashion, and daily necessities, as well as service revenues like advertising, are maintaining a sustained acceleration in growth, becoming new drivers of JD.com's overall growth. Moreover, as we just shared, the number of users and the frequency of user purchases are both maintaining strong growth momentum. During the recently concluded "Double Eleven," the number of users placing orders increased by over 40% year-on-year. All of these provide strong support for JD.com's healthy revenue growth next year, giving us more confidence in long-term growth. Regarding your second question about JD.com's international business. First, from a strategic perspective, I have previously shared that internationalization is one of JD.com's most important long-term strategies. As the largest retailer in China by revenue, we hope to gradually build a more efficient retail network covering the globe, bringing JD.com's ultimate shopping experience to consumers worldwide. We see that the international market is large enough; for example, Europe is the second-largest consumer electronics market in the world, second only to China, and there is still significant room for improvement in the current user experience. We also hope to seize the opportunity of Chinese supply chains going global, leveraging our supply chain advantages to better assist many Chinese brands in their overseas expansion In terms of model, unlike traditional cross-border e-commerce, we will rely more on supply chain capabilities to develop local e-commerce, adopting localized strategies and collaborating with global quality brands and suppliers for mutual benefit. From the progress perspective, our online retail business Joybuy has begun trial operations in countries such as the UK, France, Germany, and the Netherlands, marking an important step in our internationalization strategy. We will continue to improve user experience and build on key areas and capabilities, specifically including: Continuously enriching product supply and establishing partnerships with more global quality brands. In logistics, continuously enhancing warehousing and delivery efficiency and stability. In R&D, there is still room for optimization in the functionality of the product platform and shopping experience. We also welcome investors and analysts in Europe to experience our products and provide us with suggestions. Regarding the Ceconomy project, it is still in the approval process, and we will communicate any further updates as they arise. In terms of investment, this is an ongoing process. We will adhere to prudent financial discipline, focus on input-output, and make dynamic adjustments to achieve healthy and sustainable business growth. Overall, the investment in international business is relatively controllable, and we will manage the pace and scale of investment well. Questioner: I have two questions. First, regarding the strategy and unit economic model (UE) of the takeaway business. Given the current loss situation, how long does JD plan to invest in the takeaway business? Additionally, how will the company improve the unit economic model in the future? I would like to understand the improvement plans regarding commissions, Qixian Xiaochu, and other different business models. Second, regarding daily necessities. We see that the growth rate of daily necessities and 3C categories is very healthy. How does the company plan to further strengthen its competitive advantages in key categories such as supermarkets, health, and clothing? Especially in terms of product selection, experience, and pricing. Thank you. Management's Response: Thank you for your questions. First, regarding the takeaway business. Whether it is takeaway or instant retail, it is a long-term strategy for us. Our goal is to promote healthy business development and maintain sustainable growth. Therefore, in the past few months, we have been focusing on continuously optimizing internal operational efficiency and improving the level of the unit economic model (UE). In the recently concluded third quarter, despite fierce competition in the industry, we maintained relative rationality. Currently, the takeaway business is still in the first phase of strategic layout. Our goal in this phase is to establish a good user mindset and market share in the quality takeaway sector. We will strive to serve existing high-quality users well while actively attracting more new users. Moreover, our strength lies in the supply chain, so we will continue to delve into the supply chain, such as through the innovative "Qixian Xiaochu" model, to fundamentally address users' concerns about food safety and provide differentiated experiences and services. In the third quarter, JD's takeaway business also maintained a healthy growth trend. First, the GMV (Gross Merchandise Volume) of takeaway achieved double-digit growth month-on-month. While the order volume increased, the order structure also became healthier, with the proportion of meal orders continuously rising, currently accounting for the vast majority of our total orders At the same time, even in a fiercely competitive environment, our average transaction value has increased compared to the second quarter. While expanding our scale, our overall investment in the takeaway business in the third quarter has narrowed on a quarter-on-quarter basis, mainly due to the gradual improvement of our unit economic model (UE). Due to our commission-free policy for merchants this year, revenue has been relatively low, with limited commission income and advertising revenue generated from new businesses. Nevertheless, our business team has made solid progress in improving operational efficiency, including: continuously increasing the number of high-quality dining merchants in the third quarter through enriched supply; gradually enhancing subsidy efficiency by formulating more refined operational and subsidy strategies tailored to different regions, user groups, and order types. In addition, we are further upgrading the capabilities of our underlying systems to optimize the overall experience and efficiency. In July, we launched a new model called "Seven Fresh Kitchen," which addresses food safety pain points through supply chain innovation. Our goal is to ensure that consumers can eat with peace of mind while also helping high-quality restaurants improve profitability. Since its launch, "Seven Fresh Kitchen" has gained recognition from consumers, with a rapid increase in order volume, effectively driving up the order volume of other quality restaurants within a 3-kilometer radius. By the end of this year, more Seven Fresh Kitchens will be seen in Beijing. In the future, we will continue to promote strategic planning from a long-term perspective, of course, considering long-term input-output. Our goal remains to create a sustainable business model, pursuing growth in order volume on one hand while gradually releasing the scale effect of the takeaway business to enhance our unit economic model (UE) on the other. Ultimately, we hope that the takeaway business can become a self-sustaining operation. More importantly, JD.com's takeaway business will be deeply embedded in the entire JD ecosystem, integrating deeply with our existing businesses on the user side, supply side, and fulfillment side, creating space for synergistic value. These businesses are not simply additive or subtractive. In the long run, our customer acquisition costs will decrease, and the group will pursue sustainable growth while maintaining profitability and sufficient cash flow. Regarding daily necessities, this category has achieved double-digit growth for four consecutive quarters. We clearly see that there is still huge growth potential in the daily necessities category, including supermarkets and fashion, and many needs of JD users remain unmet. To this end, we have developed clear growth strategies for each category. Strengthening user mindset and penetration: In the supermarket category, we focus on strengthening user mindset and penetration rates. Through daily marketing activities such as "Black Friday" and "Super 18," we continuously reinforce users' recognition of "JD Supermarket" and seize the trend of rapid growth in JD's overall user base, continuously improving cross-category penetration and conversion. Enhancing price competitiveness: We continuously optimize costs and improve operational efficiency through supply chain capabilities, bringing users more competitive prices. Currently, the cost-performance ratio of JD Supermarket's products continues to improve, demonstrating strong competitiveness compared to other online models and offline options, which is also a reflection of the scale effect of our self-operated model Refined Category Operations: We maintain co-creation with brands to enhance the refined operational capabilities of category brands, creating categories with JD.com’s mindset and growth potential. For example, categories such as beverages, maternal and infant products, and household cleaning have already established strong user mindsets, and other categories will gradually achieve breakthroughs. Overall, our strategy in the daily necessities category is very clear, and the operational capabilities of the team are continuously improving. We are confident in the future growth potential of the entire category. The daily necessities category is becoming an important part of JD.com’s diversified growth matrix and is also a key driver of our long-term stable growth. Questioner: Thank you, management. I have two questions: First, does the daily necessities category benefit from the synergy effects of the takeaway traffic? Are most of the users of JD.com’s takeaway service loyal users of JD.com? What is the retention rate of new users acquired through the takeaway channel? Can you quantify and share the conversion rate of new users acquired through takeaway into core retail users? Second, please introduce the latest progress of JD.com in terms of AI strategy and investment, and explain in detail how AI helps JD.com’s core business and its financial impact. Management Response: I will answer the first question. We see that while the takeaway business is developing healthily, the synergy effects with core retail are gradually becoming apparent. First, in terms of user growth and activity, the overall DAU of the JD.com app continued to maintain rapid growth in the third quarter, leading the industry in growth rate, with JD.com’s user count and shopping frequency both maintaining over 40% year-on-year growth. We better serve JD.com’s existing high-quality users through quality takeaway, and the repurchase rate of takeaway users remains at a high level, which also boosts the activity and shopping frequency of the overall user base while attracting more new users. JD.com’s annual active user count has crossed the milestone of 700 million, demonstrating our continuously expanding user base and increasingly enhanced user stickiness. At the same time, we are also accelerating the deployment and optimization of user conversion strategies and tools, accurately selecting products based on user preferences to improve the conversion of new takeaway users. We see that the conversion rate of new users brought in by takeaway is improving seasonally, with the conversion rate of the earliest batch of new takeaway users approaching 50%. Second, in terms of cross-category shopping, we see that the cross-category shopping behavior of takeaway users is strengthening, especially in categories such as supermarkets and life services. This not only brings in new users but also increases the shopping frequency of existing users. We believe that takeaway will inject new growth momentum into the daily necessities category. At the same time, the takeaway business has also led to the rapid development of JD.com’s instant delivery service, for which we have established a dedicated team to closely monitor the progress of the instant delivery business. In the future, we will continue to accelerate the synergy between the takeaway business and core retail in terms of users, cross-category shopping, and marketing, continuously exploring more synergistic value within JD.com’s overall business ecosystem, driving healthy growth in JD.com’s overall users and revenue, as well as improving efficiency. I will answer the second question regarding AI. We indeed see and firmly believe in the tremendous growth opportunities and the significant value of business model transformation brought by AI. Currently, JD.com has built a complete AI capability system at the infrastructure, model, platform, scenario, and product levels. **We also plan to continue investing in the next three years to drive various industries to jointly form a trillion-scale artificial intelligence ecosystem ** At the recently concluded JDD conference in September, we fully showcased JD.com's overall strategic layout in AI, which includes our models joy AI, digital humans, universal assistants, robots, AI agents, joyinsight, and other important AI products. In terms of application, our differentiated advantage lies in having numerous practical scenarios, including retail, logistics, health, and industry. Taking the retail scenario as an example, we provide merchants with AI assistants, advertising intelligent placement agents, and over 50 AI tools such as Jingdiandian to help merchants reduce costs and increase efficiency in content generation, marketing placement, supply chain management, and customer service. At the same time, we are also exploring the e-commerce shopping experience in the AI era, launching intelligent search recommendation features that accurately understand user needs through natural language interaction, achieving a revolutionary efficiency breakthrough in traditional shopping methods, and providing users with a personalized shopping experience. In the logistics scenario, JD.com's logistics robots are deployed on a large scale in over 20 provinces across the country and in more than 10 countries worldwide, covering the entire logistics chain including warehousing, sorting, transportation, and delivery. In the future, the large-scale and intelligent application of logistics robots, unmanned vehicles, and drones will further assist in reducing logistics costs for society as a whole, providing cost-reducing and efficiency-enhancing technological solutions for our partners, while continuously optimizing the shopping experience for users. Question from the audience: Good evening, thank you to the management team. My question is about the development of the company's platform ecosystem, including the number and proportion of third-party merchants and expectations for the next few quarters. Additionally, please share the company's views on profitability and profit margins in the coming years. Management's response: Our platform ecosystem has made good progress, and various indicators are maintaining a rapid growth momentum. In the third quarter, the number of active merchants on JD.com increased by over 200% year-on-year. We have introduced more high-quality leading merchants and industry merchants, providing consumers with a richer supply of goods. At the same time, the takeaway business has also brought us a large number of quality dining merchants. We have also seen positive feedback from users, with our user base growing by over 50% year-on-year in the third quarter, outpacing the overall market. From a financial perspective, commission and advertising revenue continue to grow rapidly, with the growth rate accelerating to 24% in the third quarter, the fastest growth since the second quarter of 2022. Secondly, there is still significant room for development in our platform ecosystem business. Specifically, we will delve deeper into industry belts, continue to attract more merchants, and continuously recruit quality dining merchants to enrich the local supply of the ecosystem. We will also improve the platform's infrastructure, providing merchants with more technical tools to help them enhance operational efficiency; optimize merchant operating rules and traffic distribution to create clear growth paths and a fair operating ecosystem for merchants. We will also continuously strengthen user perception, especially in categories dominated by supermarkets, where we have already seen more and more consumers establish the mindset of "buying clothing on JD.com." Finally, we will firmly develop the platform ecosystem, achieve win-win cooperation with merchants, serve users well, and improve user experience. The platform ecosystem will also become one of our long-term drivers for increasing revenue and profit Regarding the second question about profitability and profit margins, in the third quarter, JD Retail's profits continued to show steady growth, further validating our confidence in the long-term steady improvement of profit margins in our core retail business. The main drivers of profit growth include: First, the healthy development of the platform ecosystem has led to rapid growth in service revenues such as commissions and advertising, thereby driving an increase in profit margins. Second, by strengthening our self-operated supply chain capabilities, leveraging the scale effects of our core business, and promoting cost reduction and efficiency improvement, we have maintained healthy profit performance, particularly as the gross profit margin in retail has steadily increased for 14 consecutive quarters. Third, changes in category structure can also affect our profit margin trends. Currently, the operational efficiency and profit margins of the vast majority of our categories and brands are continuously improving, especially in daily necessities and supermarket categories, where procurement and sales operational capabilities and differentiated product strengths are enhancing, leaving significant room for profit margin improvement. Additionally, for battery-powered categories, with the optimization of product structure, there is also potential for profit margin improvement in the long term. In terms of investment in new businesses, we have consistently focused on investing in supply chain capabilities, laying out in new businesses such as food delivery, international, and Jingxi, continuously improving our foundational capabilities in supply, fulfillment, and service, and expanding JD's service scope. By expanding categories, demographics, and regions, we aim to create greater growth opportunities. As these new businesses generate greater synergistic value with existing operations, we believe they will lead to overall efficiency improvements and profit enhancements. Finally, our long-term goal of achieving high single-digit profit margins remains unwavering