--- title: "JD: Earnings Power Intact as state subsidies fade" type: "Topics" locale: "en" url: "https://longbridge.com/en/topics/40768119.md" description: "$JD.com(JD.US) released its Q1 2026 results on May 12. Takeaway: growth has bottomed and is recovering, with profits ahead of expectations. Total revenue was RMB 315.7bn (+~5% YoY), improving from +1.5% in the prior quarter and slightly above market expectations.This confirms a gradual rebound in the e-comm biz. Group Adj. OP was RMB 5.6bn, still roughly halved YoY but the highest quarterly profit since the food-delivery price war kicked off in Q2, and well above Bloomberg consensus of RMB 2.6bn..." datetime: "2026-05-14T10:36:43.000Z" locales: - [en](https://longbridge.com/en/topics/40768119.md) - [zh-CN](https://longbridge.com/zh-CN/topics/40768119.md) - [zh-HK](https://longbridge.com/zh-HK/topics/40768119.md) author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # JD: Earnings Power Intact as state subsidies fade $JD.com(JD.US) released its Q1 2026 results on May 12. Here is our take. **1) Growth troughing, profits beat:** Overall revenue was approx. RMB 315.7bn (+~5% YoY), improving from +1.5% last quarter and slightly ahead of Street expectations. This confirms a nascent recovery in e-commerce growth. **Adj. OP came in at RMB 5.6bn,** still about half YoY but the highest quarterly profit since the food-delivery push kicked off in Q2 last year, and **well above Bloomberg consensus of RMB 2.6bn.** **2) State-subsidy fade manageable:** The main drag — **appliances/3C sales — fell 8.4% YoY,** with a narrower decline. By contrast, **general merchandise revenue rose nearly 15%,** accelerating, and management disclosed its GMV share is now over half. This mix shift lifted self-operated merchandise revenue growth from -3% last quarter to +1%. The recovery was mainly driven by general merchandise. In addition, **3P merchant services and marketing revenue growth accelerated from 15% last quarter to nearly 19%.** With the **3P ecosystem maturing and mix rising,** this revenue line has maintained double-digit growth for over a year, outpacing the group. Logistics and other revenue remained buoyed by food delivery, with growth at 22%. However, as food-delivery investment and orders tapered, growth eased by ~2ppt QoQ. Overall, while **appliances/3C remained in negative territory due to fading state subsidies,** e-commerce growth improved versus last quarter. Supported by general merchandise and other businesses, JD's total revenue growth re-accelerated. **3) JD Logistics took over on-demand delivery:** By segment, core Retail (Mall) revenue growth improved from -1.7% to +1.8%, in line with the above trends. Notably, at end-Oct 2025, **JD Logistics acquired the on-demand (即时配) delivery biz previously booked under 'Others',** driving JD Logistics revenue growth to 29% this quarter, while 'New Businesses' revenue fell by ~RMB 8bn QoQ. This is essentially an internal reallocation and has limited impact on JD Group shareholders. **4) Food-delivery loss cut as guided; Mall profit far ahead of expectations:** As noted, **group profit beat was driven chiefly by the Mall segment.** With reduced food-delivery investments, 'Others' narrowed losses as expected, but the magnitude was not a positive surprise. Specifically, **Mall segment OP reached ~RMB 15bn.** With only modest revenue growth, **segment profit jumped 16.5% YoY,** **well above the Street at ~RMB 12.6bn.** Per management, upside drivers included **strong growth and mix uplift in higher-margin 3P services,** **margin improvement in general merchandise** (traditionally high GP but low net margin), and **better procurement efficiency** (we read this as procurement price pressure on suppliers). 'Others', which includes food delivery, **posted a loss of ~RMB 10.4bn, down ~RMB 4.4bn QoQ,** mainly as JD exited the core battleground of the food-delivery war, cutting spend with a QoQ dip in order volume. Initiatives like Jingxi and overseas JoyBuy remain in investment mode, partially offsetting food-delivery loss cuts. **5) Cost and expense lens:** For the key Mall segment, the profit beat **was primarily from a ~180bps GPM expansion YoY,** while the expense ratio also rose ~100bps YoY. In other words, the beat stemmed from gross margin and mix, not expense cuts. **At the group level, GPM improved from 15.9% to 16.8% YoY.** **Total opex rose nearly 32% YoY,** slower than prior quarters but still above revenue and GP growth. Profit beat aside, JD remains in an investment/expansion phase. By line item, **R&D, marketing, and G&A grew ~45–50% YoY,** with only fulfillment — closely tied to order volume — growing more slowly. **6) Shareholder returns remain solid:** In Q1, JD spent a total of US$631mn on buybacks, retiring ~1.6% of end-2025 shares outstanding. Annualized, the buyback alone implies a ~6.4% return. Buyback intensity did not drop vs. last year. Among U.S.-listed China ADR peers, JD still ranks top-tier in shareholder returns. **Dolphin Research view:** 1) For the quarter, JD delivered a solid print. While a rebound in e-commerce and loss cuts in food delivery were anticipated, delivering on both is still a positive. The standout is the Mall profit beat, which shows JD can extract value upstream in the supply chain. It also suggests less reliance on appliances/3C as **general merchandise and 3P** scale, helping cushion the impact from fading state subsidies. **2) Outlook** On trajectory, as we have noted, e-commerce growth improved QoQ in Q1 on holiday consumption. But since Mar, social retail sales — including online — have weakened again, so we stay cautious on full-year 2026 e-commerce growth. 1) Management guides that **Q2 will face a higher subsidy base last year and rising component costs (e.g., memory), pushing 3C prices higher and dampening demand. Appliance/3C sales YoY decline could widen to over -15% in Q2,** likely **dragging Mall revenue growth back into the red at around -5%.** That said, given JD's ability to smooth profit swings, **Mall OPM is guided to at least hold QoQ in Q2** (historically JD tends to outperform its conservative guide). 2) Another swing factor is **JD's stance on investment and losses in new businesses** while the core site faces growth pressure this year. Management expects **food-delivery losses to narrow further QoQ in Q2,** as the industry collectively repairs UE and JD's own food-delivery presence has faded. However, with the 'Jingxi' brand revived to pursue white-label and lower-tier markets, and **overseas JoyBuy ramping, new-business losses are still expected to approach RMB 10bn in Q2,** with limited narrowing. On current trends, full-year new-business losses should still be at least ~RMB 35bn. This remains a key watch item. 3) Valuation: management guides Q2 Mall revenue back into negative growth, with continued pressure on appliance/3C. That said, subsidy base effects ease in 2H, and 3P plus general merchandise should provide a floor. Assuming Mall revenue is roughly flat YoY in 2026, and lifting our Mall profit view from a slight decline to ~+10% after the beat, Mall OP would be ~RMB 56bn for 2026. New-business losses (food delivery plus Jingxi/overseas) are estimated at ~RMB 37bn in 2026, as food-delivery narrowing is offset by overseas spend. That implies group adj. OP of ~RMB 19bn (no additional tax adjustment). Versus ~RMB 310bn market cap, the group trades at ~16x OP, indicating the market is not fully penalizing new-business losses in valuation. On a core Mall OP basis, the multiple is ~5.5x, which screens inexpensive. Going forward, two factors should drive the stock: first, whether core e-commerce can keep Mall profit flat-to-up despite negative growth in appliances/3C via mix and procurement levers. Second, when the heavy-loss new businesses can materially narrow losses. If that happens, more conservative capital that values JD on group profit should converge toward Mall-based valuation; at ~6x, there is room for re-rating. **Detailed read-through of this quarter's results:** **I. Revenue performance** **1) Self-operated retail** **2) 3P and logistics revenue** **II. Segment performance** 1) Segment revenue 2) Segment profit **III. Expenses and gross margin** **Past Dolphin Research on \[JD\]:** **Earnings reviews** Nov 14, 2025 Review **‘**[**JD: Even as state subsidies fade, we still ‘go on the offensive’**](https://longportapp.cn/zh-CN/topics/36342026)**’** Nov 14, 2025 Trans ‘[**JD (Trans): Food delivery to break even; overseas will remain cautious long term**](https://longbridge.com/zh-CN/topics/36342172)’ Aug 14, 2025 Review **‘**[**JD: RMB 10bn profit wiped out in one click — how long can the food-delivery dream last?**](https://longportapp.cn/zh-CN/topics/32975037)**’** Aug 14, 2025 Trans ‘[**JD (Trans): Food delivery is a 10-year strategy; synergies emerging**](https://longbridge.com/zh-CN/topics/32976480)’ May 13, 2025 Review [**‘State subsidies’ spruce up the headline — can JD regain swagger?**](https://longportapp.cn/zh-CN/topics/29579583) May 13, 2025 Trans ‘[**JD (Trans): Food-delivery UE still hard to gauge; buyback avg. price $37**](https://longportapp.cn/zh-CN/topics/29589513)’ Mar 6, 2025 Review **‘**[**Propped up by state subsidies, JD finally ‘climbs out’**](https://longportapp.cn/zh-CN/topics/27871525)**’** Mar 6, 2025 Trans ‘[**JD (Trans): Appliances/3C growth front-loaded; general merchandise strong all year**](https://longportapp.cn/zh-CN/topics/27874568)’ Nov 14, 2024 Review ‘[JD: State subsidies likely to continue into next year (3Q24 call notes)](https://longportapp.cn/zh-CN/topics/25462914)’ Nov 14, 2024 Trans ‘[Back to life on ‘state subsidies’ — can JD ‘revive’?](https://longportapp.com/zh-CN/topics/25456468)’ **Deep dives** Jun 18, 2025 **‘**[**JD’s big bet on food delivery: desperate move or well-crafted plan?**](https://longportapp.cn/zh-CN/topics/30844352)**’** Jun 19, 2025 ‘[JD, Alibaba, and Meituan all in — is food delivery the endgame for e-commerce?](https://longportapp.cn/topics/30894949)’ Apr 14, 2023 ‘[Surgery on the table — is there still value in JD?](https://longportapp.com/en/topics/5109022)’ Apr 22, 2022 ‘[Why do Meituan and JD outperform in a zero-sum fight?](https://longbridgeapp.com/topics/2388210)’ **Risk disclosure and disclaimer:** [Dolphin Research disclaimer and general disclosure](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [JD.US](https://longbridge.com/en/quote/JD.US.md) - [89618.HK](https://longbridge.com/en/quote/89618.HK.md) - [09618.HK](https://longbridge.com/en/quote/09618.HK.md) - [HJDD.SG](https://longbridge.com/en/quote/HJDD.SG.md)