Good day, ladies and gentlemen. Thank you for standing by. Welcome to the JD Logistics 2025 Results Conference Call. At this time, our participants are in listen-only mode. After management's prepared remarks, there will be a question- and- answer session. Please note that this English simultaneous translation line will be in listen-only mode for the duration of the call, including the question- and- answer session. If you wish to listen to the management's official statement or ask a question during the question- and- answer session, you will need to be dialled into the Chinese language line. I will now turn the call over to Ms. Song Shuo, Head of the Investor Relations team at JD Logistics.
Thank you, operator. Good day, ladies and gentlemen. Welcome to our Second quarter 2025 results conference call. Joining us today are our Executive Director and CEO, Mr. Hu Wei, and CFO, Mr. Hao Wu. Before we start, we would like to remind you that today's discussion may contain forward-looking statements, which involve a number of risks and uncertainties. Actual results and outcomes may differ materially from those mentioned in today's announcement and discussion. The company does not undertake any obligation to update this forward-looking information, except as required by law. During today's call, management will also discuss certain non-IFRS financial measures for comparison purposes only. For definition of non-IFRS financial measures and reconciliation of IFRS to non-IFRS financial results, please refer to the announcement of the results of the three months and six months ended June 30, 2025, issued earlier today. For today's call, management will read the prepared remarks in Chinese and wll only be accepting questions in Chinese during the question- and- answer session. A third-party interpreter will provide simultaneous interpretation in English on the subject line for the duration of the call. Please note that English translation is for convenience purposes only. In the case of any discrepancy, management's statements in their original language will prevail. I will now turn the call over to Mr. Hu Wei. Please go ahead, sir.
Investors and analysts, welcome to JD Logistics second quarter 2025 earnings call. This is Hu Wei, CEO of JD Logistics. Thank you for joining us today. In the second quarter of 2025, amid China's sustained and positive economic recovery, the modern logistics industry continues to serve as a vital link in the economic circle, injecting new momentum into industrial upgrading. During the quarter, we consistently enhanced our capacities, increasing our competitiveness across products and services. These efforts elevated customer experience and satisfaction and drove accelerated revenue growth. In the second quarter of 2025, JD Logistics total revenue reached RMB 51.56 billion. The year-over-year growth rate accelerated further from the previous quarter, reaching 16.6%. Revenue from external customers reached RMB 33.8 billion, increasing 10.2% year-over-year, alongside accelerated revenue growth. We also effectively improved resource utilization efficiency through tech empowerment, net structure optimization, and refined operations, resulting in stable profitability.
Our non-IFRS profit was around RMB 2.59 billion, up 54% year-over-year, and our non-IFRS profit margin reached 5.0%, reflecting ongoing profitability resilience. Revenue from ISV customers reached RMB 26.91 billion in the second quarter, up 26.3% year-over-year. This included RMB 17.76 billion in revenue from JD Group, increasing 31.2% year-over-year, and RMB 9.15 billion in revenue from external ISV customers, maintaining a double-digit growth trajectory. This quarter, leveraging our omnichannel supply chain solutions, differentiated and high-standard service capacities, and ongoing supply chain product upgrades, we achieved growth in both the number of our external ISV customers and this segment's average revenue per customer. In the second quarter of 2025, the number of external ISV customers amounted to 65,848, up 13.8% year-over-year. While serving more customers, we also deepened and broadened our engagement with existing customers.
In the second quarter of 2025, our offer for external ISVs reached RMB 1,390,000, with a year-on-year growth rate turning positive to 3.5%. We provide industry-specific ISV solutions and service products for customers in fast-moving consumer goods, home appliances, home furniture, 3C, apparel, automotive, fresh products, and other industries. In the face of the constantly evolving business landscape and customer market, we remain focused on experience, cost, and efficiency. We continuously enhance our industry-specific service capacities, upgrade our supply chain offerings, and provide products and solutions tailored to the unique needs of customers across different industries based on their specific characteristics. In the home appliance industry, we continue to cultivate our industry-specific capacities to enhance end-to-end industry coverage of our ISV products and services.
During this quarter, we deepened our collaboration with a well-known home appliance brand, expanding our service capacities from inbound to warehouse transportation, warehousing, delivery, and replenishment, forecasting to also include integrated delivery and installment models. This further enriched the business scenarios covered by our ISV service offering, helping our customers effectively improve operational efficiency and optimize customer experience. This partnership contributed to significant improvements across the brand's key operational metrics, driving a substantial reduction in the brand's damage rates and customer complaint rates. Notably, the customer's on-time delivery rate and inventory turnover rate improved by 20%. Our omnichannel model has become industrial benchmarking for addressing key pain points in the home appliance delivery and installation. Moving forward, we will scale this model to more home appliance brand customers, empowering the industry to develop a more efficient fulfillment system.
In the apparel industry, upgrades to our warehousing and distribution services have supported our ISV business expansion. In the second quarter, we enhanced our base logistics services for warehousing and distribution with the official launch of a new service model featuring three core services: 211 warehousing distribution, express warehousing distribution, and the economy warehousing distribution, deeply integrated within our industry-specific supply capacities. This model offers high timeliness with great hassle-free service, helping merchants reduce costs, improving efficiency, and enhancing customer experience. Recently, we deepened our cooperation with a well-known international sportswear brand, extending our partnership from express delivery to ISV services. Our warehousing and delivery services under 211 timeliness models significantly shortened the order fulfillment time for the customer. For example, customers in Guangdong who place orders by 10:00 A.M. can receive same-day delivery, while late-night orders enjoy next-day delivery.
Overall, regional order fulfillment timelines have improved by over 30%, compared with the customer's previous setup. Our upgrade to their logistics services not only helped the customer address industry challenges such as high return rates and slow inventory turnover on the e-commerce platforms, but also attracted more traffic for our customer by improving customer store ratings, supporting a new business growth trajectory. In the auto industry, we extended our presence along the supply chain, quite expanding from self-related supply chains to production-related supply chains, while also upgrading our supply chain products and service planning capacities. In the second quarter of 2025, we partnered with a leading new energy vehicle customer to jointly develop a pre-production inbound logistics solution under just-in-sequence mode, covering the entire production supply chain from line transportation, warehousing, material sequencing, and shop delivery to empty container retrieval and recycling packaging.
This solution helped the customer save space, improve storage density, and reduce capacity expenditure. Moreover, it strengthened our full process ISV capacities for the auto industry, laying a solid foundation for future expansion into pre-production logistics for manufacturing-related supply chains. While steadily strengthening our leadership in China's ISV market, we're also actively expanding our overseas footprint. In June 2025, we launched Joy Express, our self-operated express delivery brand in Saudi Arabia, rolling out multiple high-timeliness services for local customers, such as same-day and next-day delivery, cash-on delivery, and to-door delivery. Joy Express local delivery operations are supported by a dedicated local customer service team, enhancing our last-mile fulfillment capacities in the Middle Eastern region. Leveraging our existing overseas warehousing services, we have now established comprehensive logistics with Saudi Arabia, encompassing warehousing, sorting, and last-mile delivery, further upgrading our localized operational capacities in the overseas markets.
This enables us to provide a full suite of diversified end-to-end logistics services and solutions, including our ISV and express delivery services for various countries and customers. As part of our overseas warehouse expansion, we accelerated our global smart supply chain network plan, backed by our globally leading expertise in warehouse operations and logistics technology. We have established a comprehensive global supply chain logistics network with overseas warehousing capacities at its core, providing efficient and convenient ISV logistics service to more Chinese brands and overseas customers. In the second quarter of 2025, our newly opened overseas warehouse expanded further in multiple countries, including the United States, France, South Korea, Vietnam, and Saudi Arabia. In the second quarter of 2025, our revenue from other customers' primary, including express and freight delivery services, reached RMB 24.66 billion, with a year-over-year growth rate of 7.6%.
In our express delivery business, we continue to enhance our delivery timeliness capacities and product competitiveness, with a focus on funding of high-timeliness services. For example, during the leisure season in the second quarter, we addressed the key pain points in the fresh product industry, namely short shelf life and low delivery timeliness, with an upgraded end-to-end logistics solution featuring pre-cooling at the production zone, temperature controls through the entire process, and multimodal transportation. By combining all cargo airplanes, bedding capacity, high-speed rail, and short-haul cold chain vehicles, all under high-precision temperature control, we achieved next-morning delivery from production zones to major cities nationwide, comprehensively improving our fresh product delivery service, customer experience, and order fulfillment capacities. Meanwhile, we continued to invest in pickup and marketing operations, consistently deepening category penetration and expanding customer coverage, driving sustained growth momentum for our high-timeliness fulfillment products.
Furthermore, we continue to optimize our service modes and enhance our capacities. In the second quarter of 2025, we began recruiting and managing full-time riders to support JD for delivery through deep integration with our existing express delivery and last-mile fulfillment. This initiative helped improve fulfillment efficiency across multiple scenarios and optimize resource scheduling, consistently enhancing the customer experience. Throughout our business development process, we have adhered to our core value: customer first. JD Logistics remains dedicated to offering premium services such as to-door delivery, on-demand pickup and delivery, and to-door return exchange, continuously enhancing the quality of our express delivery services. With such professional and reliable services, we have earned the trust and preference of our customers and consumers.
In the second quarter of 2025, according to a survey result published by the State Post Bureau of the People's Republic of China, our express delivery service has consistently maintained best-in-class customer satisfaction ratings. We secured leading positions among logistics service providers in multiple mainstream e-commerce platform service quality rankings. By providing high-quality and reliable logistics services, we help merchants improve store ratings and attract more traffic, driving business growth. In Hong Kong and Macau, we continue to broaden our layout, sustaining our rapid growth momentum in these regions. With the official commencement of operations at the JD Express Operations Center on Hong Kong Island in the first quarter of 2025, we significantly improved both sorting and delivery efficiency for our Hong Kong express delivery services. On the business development front, we actively extended our collaboration network, offering express delivery service to diverse e-commerce platforms and brand merchants.
In the second quarter of 2025, we supported a globally renowned consumer goods brand with an integrated Shenzhen-Hong Kong service model, covering full process operations from Shenzhen-bonded warehouse, customs clearance, transportation, and Hong Kong transit warehouse all the way to delivery. This model helped this brand ease operational pressure and improve fulfillment efficiency. We continue to strengthen our presence in Hong Kong and Macau markets, delivering high-quality, diversified logistics services to merchants and consumers through technological innovation and service upgrades. Regarding the freight delivery business, with the consolidation of Deppon Logistics and the Kuayue-Express Group, we ranked among the top tier in China in terms of cargo volume and revenue scale of freight delivery services. We have tailored our offerings to the unique characteristics and needs of various specialized markets, creating a diversified product portfolio that offers our customers stable, reliable, and flexible freight delivery solutions.
These products cater to various customers' needs, 24-hour business growth, expanding our market share across multiple specific industries to our network infrastructure, and continuously improving technology at the cornerstone, supporting our state development. Our network is considered for six logistics networks, including warehouse, line transportation, and last-mile delivery. As of the end of June 2025, our warehouse network covered nearly all countries and districts in China, consisting of over 1,600 self-operated warehouses and over 2,000 third-party warehouse owner-operated cloud warehouses under our open warehouse platform. Our warehouse network has an aggregated gross floor area of more than 34 million sq. M , including warehouse space managed through the open warehouse platform. We continued to expand and optimize our warehouse network in low-tier regions. In April, JD Logistics' Cascade warehouse officially commenced operations, significantly enhancing the local customer experience and efficiency.
As of June 30, 2025, JD Airlines has 10 self-operated all-cargo airplanes in regular operation. In the first half of 2025, JD Airlines launched the new Shenzhen, China, to Bangkok, Thailand, and Chengdu to Yangon, Myanmar, joining the Trip International Cargo Route, marking a further step in the deployment of JD Airlines' global logistics network. In addition, we covered more than 2,000 air cargo routes through cooperation with partners. We consistently prioritize technological innovation through ongoing investment in automation equipment, AI, and other advanced technologies. We have deeply integrated the digital and intelligent technologies into every stage of the logistics value chain, from planning and design to warehouse management, sorting, transportation scheduling, and last-mile delivery. We have implemented intelligent applications across all scenarios. This end-to-end smart integration is driving ongoing cost reductions and efficiency improvements through the entire logistics process.
In the second quarter of 2025, we expanded our self-developed JD Logistics' two-lane goods-to-person automated warehousing solutions beyond our in-house operations to several external customers. With the official launch of the phase III of our apparel warehouse in Xingtang, Guangzhou, we further strengthened our technological layout in the apparel production zone. As JD's largest self-operated and automated warehouse in the Xingtang production zone, our Xingtang phase III facility features an integrated forward and reverse logistics service design, encompassing forward outbound logistics return, reverse return processing, product restoration capacities, and full-scenario warehousing services. This setup helps customers improve efficiency and reduce costs in the field of unmanned vehicle applications. We focus on high-value scenarios, including last-mile delivery and short-hold transportation. Through iterative technology upgrades, pilot program expansion, and operation safety operation, we reduce the cost and enhance efficiency across diverse processes, such as transportation and pickup delivery.
As of June 30, we have deployed hundreds of unmanned vehicles across more than 10 provinces in China, including Jiangsu, Guangdong, and Sichuan, and put them into regular operation between delivery stations and delivery zones, using them for last-mile transportation. We reduced the transfer frequency per courier by two to three trips a day and extended the current courier's active pickup and delivery hours within their delivery zones by three to four hours. This has directly improved the work-house, pickup, delivery productivity, pickup timeliness, and successful delivery rates, providing strong support for our high-timeliness services and notably reducing last-mile service out-of-base operation costs. Moving forward, we'll continue to scale up unmanned vehicle deployment, targeting the southern unit level.
At the same time, we plan to broaden pilot coverage and further explore the value they bring to diverse scenarios, injecting fresh momentum into our cost reduction, efficiency improvement, and business model innovation efforts. Moving ahead, we remain dedicated to optimizing customer experience, cost, and efficiency. While adhering to our customer-first approach, guided by our mission of believing in development-driven, we will further reinforce our foundational supply chain capacities and product competitiveness, continuously creating value for our customers with a firm commitment to undertaking substantive, valuable, and long-term actions. We will actively fulfill our social responsibilities, contributing to reducing overall cost and improving the sustainable hybrid growth. Now, I'm going to welcome Mr. Hao Wu to discuss with you financial performance.
I'm Hao Wu. Hello, everyone. I'm so happy to present JD Logistics' financial performance for the second quarter of 2025. In the second quarter of 2025, China's bank recovery maintained stable with continued improvement. Supported by our ever-strengthening service and product capacities, JD Logistics achieved accelerated revenue growth while maintaining a healthy level of profitability. In the second quarter, our revenue reached RMB 15.56 billion, with a year-over-year growth of 16.6%, marking a further acceleration compared to the previous quarter. The average profit was RMB 2.35 billion, increasing 4.6% year-over-year, and average profit margin was 4.6%. Non-IFRS profit was RMB 2.59 billion, with a year-over-year increase of 5.4%, non-IFRS 5.0%. Let's look at the segmented basis lines of revenue from ISV customers totaled RMB 26.91 billion. In the second quarter, year-over-year increase of 26.4% among non-IFRS revenue from JD Group amounted to RMB 17.76 billion, up 31.2% year-over-year, benefiting from accelerated growth in the main categories of JD Retail.
Meanwhile, our revenue from external customers reached RMB 9.15 billion, up 17.8% year-over-year, with the growth rate improving by 6.2% compared to the first quarter of 2025. Leveraging our warehouse network advantages and warehousing operation capacities, we have deepened our collaboration with the leading customers in the apparel and fast-moving consumer goods, upgrading our ISV products and services to provide omnichannel IC solutions and differentiated high-standard services that help customers reduce costs and enhance efficiency. In the second quarter, our average revenue per external ISV customer reached RMB 109,000, representing a year-over-year growth of 3.5%. Furthermore, we continue to expand our high-potential customer base by targeting scenarios with strong ISV synergy. The number of external ISV customers amounted to 65,854 in the second quarter, up 13.8% year-over-year, extending its multi-quarter growth trend.
In the second quarter of 2025, our revenue from other customers, primarily including express and freight delivery services, maintained healthy growth, reaching RMB 24.66 billion, up 7.6% year-over-year. For express delivery services, we focused on high-value markets and invested in areas such as air freight resources, land transportation routes, and delivery personnel. This effort enabled us to enhance our service quality and delivery timeliness, driving rapid growth across multiple business scenarios. In the freight sector, we rank among the top tier in China in terms of cargo volume and revenue scale. Our flexible and diverse freight delivery services meet customers' varying needs across timeliness and service dimensions, supporting our deepening market penetration across different freight delivery segments. Moving on to cost and profitability, in the second quarter of 2025, our gross profit margin was 10.6%.
On one hand, we continue to optimize the cost through technology-driven network structure, upgrades, innovations in the operation models, and refined cost management. On the other hand, we increased our investments in enhancing our service experience and improving timeliness, while maintaining broadly stable profitability to drive JD Logistics' long-term, high-quality business growth. Now, let's turn to the major parts of the cost of revenue. First, employee benefit expenses were RMB 18.19 billion in the second quarter, up 20.1% year-over-year. This was mainly attributable to a year-over-year increase in the number of frontline operation employees in delivery and warehousing operations from approximately 430,000 at the end of the second quarter of last year to approximately 615,000 at the end of the second quarter of this year, including full-time food delivery riders.
The increase was attributable to the addition of our own employees to key operation processes, such as the last-mile delivery and warehousing, aiming at upgrading our products and services, elevating customer experience. In the second quarter, JD Logistics maintained the leading positions among logistics service providers in multiple mainstream e-commerce platforms. Satisfaction rate rankings for express delivery employee benefit expenses accounted for 35.3% of total revenue, up 1.0% year-over-year. Second, our outsourcing cost was RMB 16.86 billion in the second quarter, up 20.5% year-over-year. It accounted for 32.7% of total revenue for the quarter, up 1.1% year-over-year. The increase in outsourcing cost and outsourcing cost as a percentage of total revenue was primarily driven by changes in Deppon Logistics business structure. Third, our total rental cost was RMB 3.27 billion in the second quarter, down 0.7% year-over-year.
As we continue to promote site integration and optimize network structure, we continued utilization efficiency. Our site's total rental cost accounted for 3.3% of total revenue in the second quarter, with a year-over-year decrease of 1.1%. Apart from the major costs mentioned above, our ongoing business expansion has resulted in improved economies of scale, driving down our depreciation and amortization cost as a percentage of total revenue by 0.2% year-over-year. Meanwhile, due to the growth of services such as installation and maintenance, other costs as a percentage of total revenue increased by 0.4% year-over-year. In terms of expenses, our operating expenses in the second quarter of 2025 were RMB 3.51 billion, up 15.4% year-over-year, accounting for 6.8% of total revenue, with a year-over-year decrease of 0.1%. Among them, sales and marketing expenses increased by 15.3% year-over-year to RMB 1.58 billion, accounting for 3.1% of total revenue, down 0.04% year-over-year.
Sales and marketing expenses accounted for 4.7% of the revenue for external customers, up 0.2% year-over-year. We maintained moderate investments in sales and marketing personnel to drive business growth. In the second quarter of 2025, our R&D expenses were RMB 1.01 billion, up 14.2% year-over-year, accounting for 2% of total revenue. We have allocated our R&D resources to strengthen our end-to-end automation, digital and intelligent capacities, including ongoing formation of our cutting-edge science applications, AI algorithms, and online technologies in diverse logistics scenarios. For example, we are constantly building up the regular operation of online delivery vehicles to drive further cost savings and efficiency improvements in warehousing, planning, transportation, delivery, customer service, and other areas. Our general and administrative expenses were RMB 930 million, up 17.1% year-over-year, accounting for 1.8% of total revenue, representing a year-over-year increase of 0.01%.
In terms of profit, please also consider our non-IFRS measures, which we believe may better reflect our corporation's both non-IFRS profit and non-IFRS EBITDA and include items that we believe are not indicative of our core operating performance to help investors and other users of the financial information better understand and evaluate our corporate results. This is how we are going to help investors and other users of financial information to understand, better understand, or evaluate our core operating results. In the second quarter of 2025, our non-IFRS profit was RMB 2.59 billion, up 4.4% year-over-year. Non-IFRS profit margin was 5%. Non-IFRS EBITDA for the second quarter was RMB 5.72 billion, up 1.5% year-over-year, with a non-IFRS EBITDA margin of 11.1%. We also continue to monitor our cash reserves and cash flow to maintain a healthy balance sheet and sufficient capital to support business development and meet our operational needs.
In the second quarter, excluding the lease-related payments, we recorded a free cash flow of RMB 2.49 billion, an increase of RMB 0.8 billion year-over-year. Our capital expenditure was RMB 1.09 billion for the second quarter, primarily for investments in the equipment aimed at improving operational efficiency going forward. While maintaining stable profitability, we will continue to make prudent and effective investments in areas such as automation equipment, self-owned vehicles based on our business development pace and needs, laying the foundation for high-quality and sustainable growth. Before we wrap up, I would like to express my heartfelt thanks to our shareholders for their enduring support and trust in JD Logistics. Looking ahead, we will remain committed to balanced improvements with stable profitability and high-quality growth. We'll continue to enrich our ISV solutions, further enhance delivery timeliness and customer experience, and strengthen industry barriers to promote healthy and sustainable business growth.
Meanwhile, we will sustain our investments in technology to improve the efficiency of the entire logistics process by combining operational model innovation with refined management. We aim to achieve long-term structural cost reductions and create greater value for our shareholders. Thank you. That concludes my prepared remarks. We can now begin the Q&A session.
Thank you, Mr. Hao . This concludes our prepared remarks. We would like to now open the call to your questions. Operator, please start the Q&A session when ready. Thank you.
As a reminder, we only accept questions in Chinese language. If you'd like to ask a question, please dial in to the Chinese line and then press one on your telephone's touch-tone keypad. Thank you. As a reminder, please dial into your Chinese line and then press one on your telephone's touch-tone keypad. Again, please press one on your telephone's touch-tone keypad. Now, we are going to have a Roland now from Goldman Sachs to offer us a question.
Thank you, Mr. Hu. Mr. Wu. I'm so happy to have the question. Now, we are seeing the fast growth in the company, and we're also having the contribution from the riders. I want to ask a question about the growth momentum, the growth triggers, the growth areas, and your next half year's expectations. You're also mentioning some top collaborators in the second half of this year. Do you have any specific plan on the collaboration with some stakeholders as well as the profitability expectations?
Thank you, Roland, for the question. We are seeing a faster growth momentum due to the retail as well as the contribution from the JD Group. They are making right strategic decisions, and we are also having new breakthroughs.
That's why we are growing strongly, not due to a single reason, but due to different reasons. We are seeing the faster growth from last year. We are seeing the positive outcome from our collaborators, and we are also seeing the growth driven by the riders. This is a great improvement. This is not relying upon a single category. In the second half of 2025, if we are not considering the rider's contribution and business orders, considering the retail side, we can see the good trend for the food delivery services and the rider's contribution. We don't have specific data for reference because we're still seeing the food delivery system. The food delivery business is still beginning and expanding. We will continue to watch and provide you data if there's any. You also asked a question about the national business. Investment into the international business is heading in two directions.
The international overseas supply chain will continue to expand. There's some news, and we gradually will implement the business in Asia-Pacific, Europe, and the Middle East. They are expanding. The supply chain is in the process of completing the infrastructure. The revenue growth will be seen, and we are seeing the good expectations and outcomes aligned. We are also creating a network of overseas food delivery and riders' network in Saudi Arabia. We have the Joy Express. It is a great breakthrough. From day one to the present, we are seeing the good growth momentum in line with our targets in the future. In the short future, Saudi Arabia will remain as our key market in giving good customer satisfaction and growth potential.
At the end of Q3 and Q4, in some of the European markets, we will also have a similar deployment, irrespective that we will also offer better user experience to the European customers. The supply chain customers in Europe have been growing for some time. We have some collaborators. They are helping us to prepare everything, and customers are very happy to see that we have our plan in Europe as well. They want to use our full chain.
Thank you for the question. I want to say a few words to add up. Through years of preparation and overseas deployment, the overseas warehousing is growing, and we're also collecting more customers and team experiences. We're also providing them better services. This is our strategy. We have been very consistent and committed by far in terms of the growth momentum, the growth rate, the business capacities, and customer satisfaction.
Yes, we are seeing everything is fully effective as we planned before. We will continue to work this journey, and we will continue our strategies. In this year, the overseas warehouse floor area will be doubled, further improving our capacities and operational efficiency, serving our customers. We're so happy to see that over the last few years, our team is well-trained. They are broadening their horizons. They are very much adaptive, and we have very good management. A lot of improvement. That is how and why we could have a good harvest in the international market.
Thank you. Thank you for the answer.
Next question from the CITIC Bank . Brian, please go ahead.
Thank you very much for the presentation of two questions. The first question is about your food delivery services. Can you share with us more details about the food delivery business, any synergies between the food delivery and other sectors, other industries? The next is about ISV, the logistics. In the second half, your expectation on the growth trajectory due to some other reasons, are we going to improve the numbers of the external ISV customers?
I will take this question. The first is about the at the end of Q2, we are recruiting a lot of resources. Generally speaking, we have new riders being recruited, and we also have our existing riders. We are having experiences in managing the frontline employees for over 10 years. We are good at managing the riders. When we are recruiting new ones, we have lots of channels because they're very much similar to like we are recruiting the couriers. Now, we have a lot of daily practice, daily routines.
We offer them good breaks. We have good stations for them to take a break. I believe it is a great testament of our infrastructure and management skills. I believe that we are running the food delivery business very naturally. We see a lot of good opportunities, such as the courier and the riders could communicate. They could supplement each other, improving their efficiency. The riders doing less orders, they could deliver the courier's services. At the same time, for the courier, they could supplement each other, improving their efficiency. They could also improve their personal income at different peak seasons or at different, according to the days and weeks or even the months. We will see the supplementation between two sort of employees. This is the first time for us to do the trial, but it's very natural for us to complement their skills.
Now, we are trying and we are making steps one after another. We're still exploring. We have to optimize our algorithm. We have to provide better incentives to those employees. We have to safeguard their welfare and their well-being. I believe it is a task with lots of hopes, but we have to try. We will take baby steps, and we will address all the challenges ahead if there is any. It's the first time for us to do this exchange of the personnel. I want to see if there's additional points. The next is about ISV supply chain. We shared with you some data. Mr. Hao Wu gave you a comprehensive analysis, and I want to share with you more about external ISVs. The increased volume, the upper part, we are seeing very good momentum. To be honest, we are offering cost-effective services.
The 211 warehousing, the before-schedule delivery, we are quite different from our competitors. We are giving more options to our customers. The next is we are also following different characteristics of industry, such as automotive. We have some cases we are having different warehouses for them. For the future growth momentum, we believe that as we are having better capacities of internal resource sharing, we are creating more momentum. I'm so confident for the future growth momentum. I believe the trend will be well maintained.
Jeffrey Thomas will join us soon.
Good evening. Thank you for having me here. I have a question about the external revenue in Q2. We are seeing the customer numbers and the OpEx. I see the year-over-year increase. It's been some time for us to see the increase year-over-year on the OpEx. How about the future trend on the OpEx and the future customer growth?
Can you share with us your expectations about these two dimensions? The next is about the gross margin. I want to ask you about your comments on the long-term gross margin. Thank you. Thank you, Jeffrey, for the two questions. We are checking the number of customers and OpEx. They are growing positively. OpEx has been growing during a good time point. We are speaking of continuous improvement of the product, and we are providing better services. We are receiving good feedback from the customers. They are giving us more tasks. We're also monitoring the proportion of the customers for long-term. We want to win the key accounts. Meanwhile, we are also beginning to improve the revenue from the 2B and 2C customers. Previously, we offered, we have obtained good revenue from the 2C side, from the small and the middle-scale households.
Now, we are having different services in offering them good warehousing. That's how we can have the growth business from the same customer. That is why we are increasing the number of customers as well as the OpEx. The long-term OpEx trend, you're asking a second question. Yes, in the long run, we have room to improve our gross margin because we will have better customer experiences as well as products. I believe that the long-term product gross margin will increase in the long run. As of now, as there are some good projects, we are realizing the increase of the revenue as well as profit at the same time. In the litchi product, we are seeing very good improvements on the profits and revenues. We are also seeing the resource investment on some strategic projects, such as self-investment on the employees, on the automation equipment, on the overseas warehousing.
In the short term, those projects may give pressure on the revenue improvement. I also hope that for some time of internal resource optimization and efficiency improvement, we could invest, we could use those, we could better use those resources and turn them into long-term profits. In the logistics as well as the duration, we could be the position, we could be the top supplier. Thank you.
Thank you.
For time's sake, we are going to close the Q&A session. We are going to welcome Madam Song to give us the closing remarks.
Thank you once again for joining us today. If you have any questions, please contact our IR team directly. Thank you.