JD.com Q1 Net Income Beat Estimates with 14% Growth as Logistics Unit Reports Turnaround

JD Logistics reported its best ever net income in the first quarter of RMB238 billion, reversing loss of RMB1.12 billion the same period of 2023.

TMTPost --  JD.com, China’s second largest Business-to-consumer (B2C) e-commerce marketplace, accelerates growth both top and bottom line, highlighting its commitment to further price competitiveness is paying off.

Credit:JD

Credit:JD

JD posted net revenue of RMB260.0 billion (US$36.0 billion) in the quarter ended March 31, 2024, beating Wall Street estimated RMB258.35 billion. The revenue rose 7% year-over-year (YoY), almost doubling a 3.6% growth in the previous quarter. On non-GAAP basis, the net income attributable to ordinary shareholders surged a stronger-than-expected 13.9% YoY to RMB7.1 billion, and EBITDA,or earnings before interest, taxes, depreciation, and amortization, gained 14% to RMB10.79 billion, topping analysts’ projection of RMB9.5 billion. In comparison, the adjusted net income and EBITDA in the last quarter of 2023 climbed 8.6% and 9.1%, respectively. Non-GAAP diluted net income per American depositary share (ADS) in the March quarter increased 18.7% YoY to US$5.65, much better than analysts expected RMB4.67. Non-GAAP EBITDA margin climbed to 4.1% that quarter, versus margin of 3.9% a year earlier.

One of highlights in the first quarter is JD Logistics’ turnaround. With strong momentum for both of its internal and external revenues, the logistics division earned RMB42.14 billion with a 14.7% YoY increase, compared with analysts’ forecast of RMB40.42 billion. It reported its best ever net income in the first quarter of RMB238 billion, reversing loss of RMB1.12 billion the same period of 2023. The non-GAAP operating margin increased to 0.5% in the quarter, a meaningful improvement compared to a loss margin of 3.1% a year ago. JD attributed results of the Logistics unit to the optimized fulfillment network and operating efficiency, increased scale benefits, as well as healthier revenue growth. 

Revenue from JD Retails gained 6.8% YoY to RMB226.84 billion, whereas opearting income of the core business dropped 5.2% YoY to RMB9.33 billion. JD saw general merchandise category returned to a solid YoY growth in the first quarter, thanks to the robust recovery of supermarket category with a double-digit revenue growth, which reflects JD’s ability to deliver the best product quality and selection, price competitiveness and customer service, the Chief Financial Officer (CFO) Ian Su Shan said. Other categories of general merchandise, such as fashion and home goods, also maintained strong momentum in the quarter.

JD CEO Sandy Xu said at an earnings conference that shopping frequency on JD platform delivered a substantial double-digit YoY growth in the first quarter, more than offsetting the decrease in average order value as a result of its low price offerings. This led to a relatively stable average revenue per user (ARPU) that quarter on YoY basis. Driven by its expanding user base and shopping frequency, JD continued to deliver a double-digit YoY growth of order volume, a pace maintaining for three consecutive quarters.

Service revenues grew 9% YoY in the March quarter, primarily driven by logistics and other service revenues, which were 14% YoY in the quarter. Marketplace and marketing revenues returned to positive growth as JD has caught more third party merchants and nurtured its platform ecosystem. Revenues of new business were down 19% in the first quarter, primarily due to the adjustment of Jingxi business. Excluding the impact of JD property, non-GAAP operating loss of new business was RMB 670 million in the quarter, narrowing from RMB 846 million in the same quarter a year ago.

Xu shared the plan of the upcoming JD 618 grand promotion that will kick off on May 31 this year. He said this year’s promotions theme is quality affordability. As JD continues to implement its low-price strategy, the focus for this year's shopping festival is to highlight JD's ability to offer differentiated, good products at inexpensive price with excellent service. Unlike previous years, all arrangements about promotions this year will be centered on enhancing user experience.

Replying to a question about how to balance the growth and profitability target as more player reinvest for growth, CFO Shan said business growth and profitability is more reinforcing than contradictory in JD’s view, since its business model is based on supply chain with user experience at the core. He said the management feels confident that its full year growth will outpace China's total retail sales of consumer goods, and will deliver stable profit for both the group and the retail business.

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