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JD.com's second-quarter results exceeded expectations.

On August 15, JD.com (Nasdaq: JD, 09618.HK) released its second quarter financial report, showing that JD.com's total revenue in the second quarter of this year was 291.4 billion yuan, a year-on-year increase of 1.2%. Net profit attributable to ordinary shareholders was 12.6 billion yuan, a year-on-year increase of 90.91%; adjusted net profit was 14.5 billion yuan, a year-on-year increase of 69%, and the net profit margin reached 5.0% for the first time.

In response to the outside world's concerns about the low-price war and e-commerce involution, JD.com executives responded in a conference call that they are attracting more third-party merchants to help enrich the supply of industrial belts and low-priced goods, and "JD.com's way of obtaining the lowest price will not be based on squeezing the interests of partners."

Talking about the low-price strategy: it will continue to be promoted this year

The financial report shows that JD Retail's revenue in the second quarter reached 257.07 billion yuan, a year-on-year increase of 1.5%. JD Logistics' revenue was 44.207 billion yuan, a year-on-year increase of 7.7%. In terms of new business, the revenue in the second quarter was 4.636 billion yuan, compared with 7.127 billion yuan in the same period last year, a year-on-year decline.

Previously, the "involution" and "price war" of e-commerce have attracted widespread attention from the outside world. In the past period of time, JD.com has been making continuous moves around "low prices", including reducing self-operated procurement costs, enriching low-priced goods, tens of billions of subsidies, and 9.9 free shipping channels. JD.com CEO Xu Ran said, "This year, JD.com will also firmly promote the low-price strategy. At present, users have given very positive feedback on JD.com's low-price strategy. We hope to further enhance the user experience of low prices by further strengthening the user mentality of JD.com 618 and everyday low prices."

Xu Ran believes that while JD.com is pursuing the ultimate user experience and price competitiveness, it also attaches great importance to the healthy and sustainable growth of its business. Healthy business development requires a comprehensive view of GMV, profit and cash flow performance, and at all times, these three indicators need to be balanced and none of them can be missing.

In response to the outstanding performance of net profit, JD.com executives responded in a conference call that the main reason for the increase in profit margin was the improvement in supply chain efficiency, which led to a significant improvement in gross profit margin. It is worth noting that JD.com's gross profit margin has improved year-on-year for nine consecutive quarters since the second quarter of 2022, which reflects JD.com's balance between growth and profit.

"JD.com will continue to dynamically balance growth and profits in the second half of the year." JD.com executives said that for the whole year, the goal is to have the annual growth rate exceed the growth rate of total retail sales. In the long run, there is a positive cycle between business growth and profits, and we are confident that we can achieve the goal of long-term high single-digit profit margin growth.

Talking about the competitive landscape of e-commerce: JD.com is confident in increasing its penetration rate

Talking about the competition in the e-commerce industry, Xu Ran said that China has the world's largest e-commerce market and a mature infrastructure suitable for the development of e-commerce. The scale of China's e-commerce market will continue to grow in the long term.

"The essence of e-commerce still lies in how to better improve user experience and how to achieve efficient win-win results with partners, which is what we have long insisted on, namely the continuous optimization of cost, efficiency and experience. JD's biggest differentiated advantage still comes from the advantages in cost, efficiency and experience brought by our self-operated retail and JD Logistics," said Xu Ran.

Xu Ran revealed that JD.com's user base maintained double-digit growth in the second quarter, with returning users and old users of more than two years driving overall growth. The shopping frequency also maintained double-digit growth, and he is full of confidence in the long-term development of the e-commerce industry.

In terms of platform ecology, JD.com said it will firmly promote the construction of platform ecology. "In the long run, as the platform ecology gradually improves, the order volume and GMV of third parties will exceed that of self-operated ones, and commissions and advertising revenues will naturally grow healthily."

Talking about shareholder returns: We will firmly implement the shareholder return plan

The financial report shows that in the second quarter of this year, JD.com repurchased a total of 137 million common shares (equivalent to 68.4 million ADSs) for a total of US$2.1 billion. In the first half of the year, JD.com repurchased a total of 224 million common shares (equivalent to 112 million ADSs) for a total of US$3.3 billion.

JD.com CFO Shan Su revealed in a conference call that the $1.2 billion annual dividend plan announced in the first quarter has been paid in the second quarter. In the first half of this year, JD.com paid a total of about $4.5 billion in dividends and repurchases. "We will firmly implement the shareholder return plan in the future. The repurchase goal is to reduce the total share capital in the long term. At the same time, we will continue to pay dividends based on profits to share the company's success with shareholders."

As of the close of the U.S. stock market on the 15th, JD.com rose 4.25% to close at US$27.