$JD.com(JD)$ (JD, BUY) - 3Q25: Solid Top-line; Profit Impacted by Strategic Investments; Maintain BUY but Decreasing PT to $40
JD.com delivered a mixed third quarter with revenue slightly above expectations but profit coming in softer, as the company continued to deploy capital into strategic growth areas including Food Delivery, Jingxi, and International expansion.
The Tiger Research team maintains a BUY rating but lowers the price target to $40 (from $45) to reflect near-term margin pressure associated with JD’s reinvestment cycle. Total revenue grew 14.9% year-on-year to RMB299.1 billion, supported by strong performance in general merchandise, logistics, and advertising, partially offset by modest growth in electronics and home appliances. Profitability declined as new business investments accelerated, with non-GAAP operating profit falling to RMB211 million, compared with RMB13.1 billion in the same period last year.
At the segment level, JD Retail continued to demonstrate resilient profitability.
Operating income rose 28% year-on-year to RMB14.8 billion, with operating margin improving to 5.9% from 5.2%, reflecting ongoing gains in gross margin and operational efficiency. In contrast, the new business segment — which includes Food Delivery, Jingxi, and international operations — recorded a RMB15.7 billion loss, driven primarily by higher fulfillment and marketing expenses as JD scaled on-demand retail and overseas initiatives.
Operationally, engagement trends remained robust. Annual active users surpassed 700 million in October, with both user growth and shopping frequency increasing at double-digit rates.
Management emphasized that investments in on-demand retail and food delivery are generating meaningful synergies with the core platform, contributing to higher traffic, stronger cross-category purchasing, and increased order frequency. Food Delivery delivered solid GMV and order growth, improving unit economics and narrowing sequential losses.
By business line, JD Retail revenue grew 11% year-on-year, supported by supply chain optimization and a mix shift toward higher-margin general merchandise and services.
JD Logistics posted 24% revenue growth, benefiting from external customer demand and overseas expansion, although operating margin softened slightly to 2.3%. New Businesses revenue tripled year-on-year to RMB15.6 billion, led by Food Delivery and international operations, but remained a drag on overall profitability — consistent with the early-phase investment profile.
Looking ahead, the electronics and home appliances category may face continued pressure in the fourth quarter given last year’s elevated base from the national trade-in program. Meanwhile, general merchandise and service revenue should maintain steady growth momentum.
Although margins may remain constrained near term as JD invests in strategic priorities, these initiatives are already showing tangible benefits in engagement, ecosystem synergies, and long-term platform expansion. The profitability trajectory of JD Retail remains constructive, and increased investment in Food Delivery, local services, and international markets may unlock new revenue pools and operating leverage over time.
🌟Overall, JD delivered a revenue beat but softer earnings, reflecting the deliberate reinvestment phase underway. The quarter reinforced strong engagement momentum, improving core retail margins, and early signs of progress in Food Delivery.
[Smile]The Tiger Research team views these strategic efforts as essential to positioning JD for long-term growth and a more diversified revenue base once near-term cost pressure normalizes. The team raises its 4Q revenue estimate by 2%, while lowering gross profit by 1% and reducing the non-GAAP operating income estimate by RMB 5.8 billion.
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