The news: JD.com topped analysts’ expectations as government subsidies, lower prices, and increasingly diversified revenue streams drove consumers to spend despite a tough Chinese macro environment.

• The company had increases in both its user base and shopping frequency during Q3, thanks to organic growth in JD Retail and new businesses such as food delivery, CEO Sandy Ran Xu said during the earnings call.
• While the company’s diversification efforts lifted sales, they also weighed on its bottom line.

The numbers:

• Revenues were 299.1 billion yuan ($42.1 billion), up 14.9% YoY and ahead of the 294.4 billion yuan ($41.4 billion) analysts expected.
• Retail revenues rose 11.4% to 250.6 billion yuan ($35.2 billion), marking the fourth consecutive quarter of double-digit growth.
• Net income fell 55% to 5.3 billion yuan ($750 million) as the push to win market share in the competitive food-delivery space compressed margins.

The strategy: The company’s diversification efforts are gaining traction.

• Since entering the fast-growing food-delivery market earlier this year, JD has leaned heavily on subsidies to pull customers away from leading players Meituan and Ele.me. Earlier this month, for example, JD.com offered 10 million hot meals for just 0.01 yuan each, with many other dishes priced as low as 9.90 yuan ($1.39).
• The approach is working: JD delivered double-digit sales increases, driven by more orders and higher-value transactions.
• Food delivery is also helping JD’s retail business by bringing in more users it can cross-sell to. That approach is benefiting sales across groceries, electronics, and the low-cost goods on Jingxi, Xu said.
• Meanwhile, JD.com is extending its reach into Europe through Joybuy, its online retail business now being tested in the UK, France, Germany, and the Netherlands. It has also taken a stake in Germany’s Ceconomy AG, the continent’s largest consumer-electronics retailer.

Our take: At a time when China appears headed for its longest stretch of weak consumer spending in years, JD’s growth stands out—but it comes with caveats. Much of its momentum is being bought rather than earned, through heavy subsidies and sharp price cuts across its platforms.

JD’s push into adjacent businesses and its early European experiments broaden its footprint but also add sustained pressure to margins. For now, the strategy is helping JD outpace a slowing market, but it remains a question how much of that growth survives once the subsidy engine cools.