JD Q2 Earnings Beat Estimates on Margin Gains, Revenue Miss

JD Retail Holds Up Despite Revenue Pressure

JD Retail generated RMB295.4 billion in revenues, down 4.7% year over year. Electronics and home appliances revenues declined 11.8% to RMB157.9 billion, reflecting the high comparison base from the prior year’s trade-in program and higher upstream component prices.

General merchandise provided an important offset, with revenues increasing 5.6% to RMB109.2 billion. Supermarket revenues posted near-double-digit growth, while healthcare and industrial products delivered solid double-digit growth, according to management.

JD Expands Retail Profitability

JD Retail’s gross margin increased 130 basis points year over year to 18.5%, primarily driven by deeper supply-chain scale benefits and a favorable revenue mix, particularly the strong growth in marketplace and advertising revenues. Its operating margin rose 10 basis points to 4.6% from 4.5% a year ago, marking a record high for a peak promotional quarter. 

The improvement reflected gross margin expansion and better marketing efficiency, which provided JD with greater flexibility to increase investments in research and development while maintaining healthy profitability.

JD Services Remain a Growth Engine

Net service revenues increased 6.8% year over year to RMB79.3 billion. Marketplace and marketing revenues rose 8.3% to RMB30.9 billion, supported primarily by advertising growth. Logistics and other service revenues increased 5.9% to RMB48.4 billion.

The service mix remains important for profitability because marketplace and marketing revenues continued to grow faster than product sales. Management expects advertising revenues to gain further momentum as conversion efficiency improves.

JD.com Logistics Gains From Delivery Growth

JD Logistics generated RMB64.1 billion in revenues, up 24.3% year over year. Growth was driven primarily by incremental contributions from on-demand delivery services. Non-GAAP operating income increased 15.6% to RMB2.3 billion, with an operating margin of 3.5%.

The company also continued investing in automation. JD Logistics had deployed thousands of unmanned vehicles across more than 20 provinces by the end of the second quarter and launched its first overnight autonomous delivery routes in Shenzhen.

JD Narrows Losses in New Businesses

New Businesses revenues declined 47.6% to RMB7.3 billion, largely because on-demand delivery revenue recognition shifted to JD Logistics beginning the first quarter of 2026. The segment’s operating loss narrowed to RMB9.9 billion from RMB14.8 billion a year earlier.

JD Food Delivery was the main source of improvement, with losses falling more than 50% year over year. Management said the gains reflected better operational efficiency, revenue diversification and stricter return-on-investment discipline. Joybuy and Jingxi continued to receive measured strategic investment.

JD.com Strengthens Cash Flow and Capital Returns

JD generated RMB31.8 billion of free cash flow in the reported quarter compared with RMB22 billion a year earlier. Last-12-month free cash flow reached RMB31.4 billion, up from RMB10.1 billion in the comparable period, supported by disciplined working capital management and normalized cash outflows associated with the trade-in program.

As of June 30, 2026, JD.com’s cash, cash equivalents, restricted cash and short-term investments totaled RMB235.1 billion ($34.6 billion), up 9% sequentially from RMB215.7 billion ($31.3 billion) as of March 31, 2026. The company had 2.688 billion ordinary shares outstanding at the end of the second quarter compared with 2.701 billion at the end of the first quarter, reflecting the impact of its ongoing share repurchases.

Zacks Rank & Stocks to Consider

JD.com currently carries a Zacks Rank #3 (Hold).

Target TGT, Dollar Tree DLTR and Five Below FIVE are some better-ranked stocks that investors can consider in the broader Zacks Retail-Wholesale sector. 

Target, Dollar Tree and Five Below each carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Target Dollar have surged 59.1% in the year-to-date period. Target Dollar is slated to report second-quarter of fiscal 2027 results on Aug. 19.

Shares of Dollar Tree have surged 5.3% in the year-to-date period. Dollar Tree is slated to report second-quarter of fiscal 2027 results on Aug. 27.

Shares of Five Below have surged 28.4% in the year-to-date period. Five Below is slated to report second-quarter of fiscal 2027 results on Aug. 26.

7 Best Stocks for the Next 30 Days

Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."

Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research