Q2 2026 JD Logistics Inc Earnings Call
Speaker #4: There will be 20 sessions, followed by the CEO's closing remarks. Please note that the English simultaneous translation line will be in listen-only mode for the duration of the call.
Speaker #4: Including the question-and-answer session, if you wish to listen to the management's original statement or ask a question during the Q&A session, you will need to dial into the Chinese language line.
Speaker #4: Now, let's welcome Mr. Song Zhang, Head of the Investor Relations Team at JDL. Thank you. Good day, ladies and gentlemen. Welcome to our second quarter 2026 results conference call.
Speaker #4: Joining us today are our Executive Director and CEO, Mr. Wang Zhenghui, and CFO, Mr. Wu Hao. Before we start, we'd like to remind you that today's session will contain forward-looking statements, which involve a number of risks and uncertainties.
Speaker #4: Actual results and outcomes may differ materially from those mentioned in today's announcements and this discussion. The company does not undertake any obligations to update this forward-looking information, except as required by law.
Speaker #4: During today's call, management will also discuss certain non-IFRS financial measures for comparison purposes only for the definition of non-IFRS financial measures and a reconciliation of IFRS to non-IFRS financial results.
Speaker #4: Please refer to the announcement of the results for the three and six months ending June 30, 2026, issued earlier today. For today's call, management will read the prepared remarks in Chinese and will only be accepting questions in Chinese during the question-and-answer session.
Speaker #4: A third-party interpreter will provide simultaneous interpretation in English on a separate line for the duration of the call. Please note that the English translation is for convenience purposes only.
Speaker #4: In case of any discrepancy, management’s statements in the original language will prevail. I’d also like to remind you that you should always refer to the original language of the management statements.
Speaker #4: Now I'd like to hand the call over to Mr. Wu Hao, our CFO. Please go ahead, sir.
Speaker #5: Good afternoon, investors and analysts. I'm Wu Hao, CFO of JDL. Welcome to JDL's 2026 second quarter earnings conference call. In the second quarter of 2026, JDL demonstrated solid operational resilience despite facing numerous external uncertainties.
Speaker #5: We still achieved high-quality revenue growth and a significant improvement in operating profit. This was underpinned by our steadfast commitment to our mission to drive superior efficiency and sustainability for the global supply chain through technology. As we continue to consolidate our core integrated supply chain business, we firmly promoted experience improvement and capacity building, further deepened our overseas strategic layout, and accelerated the scaled application of AI and automation.
Speaker #5: For this quarter, our total revenue reached RMB 64.10 billion, increasing by 24.3% year-on-year, of which revenue from external customers reached RMB 44.23 billion, increasing by 30.8% year over year.
Speaker #5: Non-IFRS net profit reached RMB 2.64 billion, with a net profit margin of 4.1%. Non-IFRS operating profit for the quarter reached RMB 2.34 billion, increasing by 11.6% year over year.
Speaker #5: And operating profit for the first half of the year reached RMB 3.59 billion, representing an aggregate increase of 39.9% year over year, reflecting the continued enhancement of our operating capability amid a complex environment.
Speaker #5: Next, I will elaborate on our revenue and profit performance. In terms of the integrated supply chain business, our integrated supply chain customer revenue for the quarter reached RMB 30.17 billion, increasing by 12.1% year over year. Of this, integrated supply chain revenue from JD Group reached RMB 19.88 billion, increasing by 11.9% year over year.
Speaker #5: This healthy growth was primarily driven by the fulfillment services we provided for Joy by JD's retail business in Europe, as well as our expanded fulfillment services to support JD Group's growth of the Jinxi business with efficient penetration into lower-tier markets.
Speaker #5: Integrated supply chain revenue from external customers reached RMB 10.29 billion, an increase of 12.5% year over year, with both the number of customers and average revenue per customer improving.
Speaker #5: Underlying this growth was the continued deepening of our integrated supply chain capabilities. First, we continued to expand across diverse platforms and business scenarios, while providing customers with an omnichannel integrated supply chain solution.
Speaker #5: We also proactively captured new development opportunities in the instant retail market, leveraging our rich, integrated supply chain customer base. We provide multi-industry customers with short-haul storage, transportation, and instant replenishment services, creating cross-selling opportunities.
Speaker #5: Second, we accelerated the extension of our supply chain capabilities into the B-channel, building a channel supply chain system that covers more operational stages. At the same time, it is worth noting that, as an important strategic direction for us, under the internationalization front, we replicated our mature domestic supply chain model in overseas markets, unlocking broad growth potential and driving rapid growth for our international business.
Speaker #5: In terms of other businesses, revenue from other customers—which includes express delivery, freight delivery, and on-demand delivery—reached RMB 33.93 billion for the quarter, increasing by 37.6% year over year. Leveraging service reputation and our brand image through our integrated supply chain business, we empowered our express delivery, freight delivery, and other products.
Speaker #5: For this quarter, both revenue and volume of our express delivery business grew at a pace that significantly outpaced the industry average. Through refined resource allocation, we continuously strengthened our timeliness, capabilities, and competitive edge, effectively driving the rapid growth of multi-high-value business scenarios such as fresh food delivery and certificate and document delivery. The growth of the high-value business in turn drove the sustained improvement in the profitability of our express delivery business.
Speaker #5: I will walk you through our cost structure and profitability in terms of the gross profit. Our gross profit for the quarter was 9.7%, down 0.9 percentage points year over year.
Speaker #5: This was primarily due to the fact that the point was still in the business adjustment stage in the first half of the year, which had a certain impact on the overall gross profit margin.
Speaker #5: It's worth noting that the gross profit margin of our original core business showed a steady upward trend. This demonstrates that, in the face of cost fluctuations such as energy costs triggered by the external environment, we relied on our operational resilience and technology-driven efficiency gains to continuously optimize the profitability of our core business.
Speaker #5: The following is an overview of our core operating costs. First, employee benefits expenses for the quarter amounted to RMB 21.94 billion, increasing by 20.6% year over year. Employee benefit expenses accounted for 34.2% of total revenue, down 1.0 percentage point year over year.
Speaker #5: This was primarily attributed to our consistent technology enablement and refined management, which effectively improved productivity. As of June 30, 2026, the total number of operational employees was approximately 311,000, including full-time food delivery riders.
Speaker #5: Second, outsourcing cost. For the quarter, the amount was RMB 23.7 billion, increasing by 40.5% year over year. Outsourcing cost accounted for 37% of total revenue, up 4.3 percentage points year over year. The change was reasonably due to the increasing outsourcing cost brought about by the consolidation of the crowd resource on-demand delivery business.
Speaker #5: Third, vehicle cost. For the quarter, the amount was RMB 2.326 billion, increasing by 18.8% year over year, and the vehicle cost accounted for 5.1% of total revenue, down 0.2 percentage point year over year.
Speaker #5: The improvement in the change of vehicle cost demonstrated that, despite a failed price fluctuation, we still achieved improved operating efficiency and effective cost control in the transportation stage through AI-enabled, data-driven, precise capacity dispatching and optimization of our capacity resource structure.
Speaker #5: Fourth, rental cost. For the quarter, the amount was RMB 3.39 billion, increasing by 3.6% year over year, and the rental cost accounted for 5.3% of total revenue, down 1.1 percentage points year over year. Through network structure optimization and site consolidation, we continuously improved site utilization efficiency, and through proactive negotiation initiatives in the market, we achieved further optimization of rental cost.
Speaker #5: Aside from the core cost items mentioned above, as our business scale expanded and our refined management level improved through technology enablement, depreciation and amortization, and other costs as a percentage of total revenue declined by 0.1 percentage point and 0.9 percentage point year over year, respectively.
Speaker #5: In terms of operating expenses, our total expenses for the quarter were RMB 4.09 billion, increasing by 14.9% year over year and accounting for 6.4% of total revenue, down 0.5 percentage point year over year.
Speaker #5: This reflected our continuously improving, refined management capabilities and expense control. Among them, selling and marketing expenses were RMB 1.69 billion, increasing by 7.5 percentage points year-over-year and accounting for 2.6% of total revenue, down 0.4 percentage points year-over-year.
Speaker #5: As a percentage of external revenue, it was 3.8%, down 0.8 percentage points year over year, as we appropriately invested in resources such as selling and marketing personnel to promote business growth.
Speaker #5: The R&D expense was RMB 1.21 billion, increasing by 12.2% year over year, and accounting for 1.9% of total revenue. We continued to increase our R&D investment, focusing on the self-development of core technologies for logistics scenarios, and continuously consolidating our technology foundation to provide sustained momentum for the long-term improvement of operating efficiency.
Speaker #5: General administrative expenses were RMB 1.11 billion, increasing by 19.9 percentage points year over year, accounting for 1.7% of total revenue, down 1.1 percentage points year over year.
Speaker #5: In terms of net profit, overall non-IFRS profit for the quarter was RMB 2.64 billion, increasing 2.2% year over year, with a net profit margin of 4.1%.
Speaker #5: We also continued to monitor our capital position and cash flow to maintain a healthy and adequate financial position to support our core business development and operating needs.
