May 11, 2023| Financial
JD.com Announces First Quarter 2023 Results
On May 11, JD.com, Inc. (NASDAQ: JD and HKEX: 9618), a leading supply chain-based technology and service provider, today announced its unaudited financial results for the quarter ended March 31, 2023. Below is an infographic with the key highlights. The full release can be found here.
May 12, 2023| Financial
JD.com Announces 2023 Q1 Earnings: Embracing Opportunities in the Post-Covid Era
by Vivian Yang
JD.com released its 2023 Q1 financial report on May 11, which highlights the company’s commitment to agile management, everyday low prices, an open ecosystem, and objectives for the upcoming JD 618 Grand Promotion.
- Robust Revenue Growth: JD.com achieved a 1.4% year-on-year increase in net revenues amounting to RMB 243 billion (US$35.4 billion) amid proactive organizational restructuring and other operational reforms.
- Strengthened Service Revenues: Net service revenues increased 34.5% year-on-year, totaling RMB 47.4 billion (US$6.9 billion), constituting 19.4% of overall revenues. Notably, logistics and other service income accounted for nearly 60% of this segment.
- Exceeded Profit Expectations: The non-GAAP net income attributable to ordinary shareholders reached RMB 7.6 billion (US$1.1 billion), resulting in 88.3% year-on-year growth. This performance surpassed market expectations, resulting in a net profit margin of 3.1%, marking the highest profitability level among Q1 performances.
- JD Logistics Thrives: JD Logistics’ external customer income increased by 59.8% year-on-year, accounting for nearly 70% of its total income.
- User Growth and Engagement: Users’ shopping frequency, average revenue per user (ARPU), and daily active users (DAU) all experienced high-quality growth. The number of JD PLUS members reached 35 million, with their annual consumption on the platform surpassing that of non-PLUS members by 8.4 times.
- Dominant Market Shares: JD.com continued outperforming the industry average in various competitive categories, including household appliances, home goods, 3C, electronics, and more.
- Rapid Growth of JD Shop Now: The gross merchandise value (GMV) of JD Shop Now, the on-demand retail program, grew by 60% year-on-year. This program has successfully collaborated with over 300,000 brick-and-mortar stores across China, providing a diverse range of products to more than 2,000 counties.
- Flourishing Merchant Base: The number of new merchants surged by 240% year-on-year, driven by multiple merchant supportive measures such as the “Spring Dawn Initiative.”
- Efficient Inventory Management: JD.com achieved a world-leading inventory turnover speed with 32.4 inventory turnover days, all while managing over 10 million self-operated SKUs.
- Reduced Fulfillment Expenses: Fulfillment expenses accounted for 6.3% of net revenues, the lowest percentage compared to the same period in previous years.
- Expanding Warehousing Capacity: JD Logistics now operates more than 1,500 warehouses, with an overall gross floor area (GFA) exceeding 31 million square meters. Additionally, its self-operated warehouses in the United States have surpassed 120,000 square meters in GFA.
During the earnings call, Lei Xu, CEO of JD.com, highlighted that 2023 is an opportune time for JD.com’s proactive adjustments, considering the fluid external environment and the emergence of new opportunities in the post-Covid era. These adjustments include streamlining JD Retail to a three-level reporting structure, optimizing product categories and channels, and fostering a level playing field for first-party businesses and third-party merchants.
Sandy Xu, CFO of JD.com, emphasized the company’s open ecosystem strategy as a crucial element for JD Retail’s supply-side reform. This strategy aims to provide consumers with a wider selection of price ranges, product categories, and an enhanced shopping experience. She further emphasized that JD.com leverages its supply chain advantages to achieve economies of scale and pass on the benefits to consumers. The company’s ability to offer “Everyday Low Prices” is rooted in its unwavering focus on “Everyday Low Costs.”
Looking ahead, Xu commented on the preparations for the upcoming JD 618 Grand Promotion. In light of insufficient consumption demand and the operational and inventory pressures faced by many merchants, the event will serve as a vital opportunity to restore confidence and accelerate growth. It is expected that third-party merchants on JD.com will experience accelerated growth during this year’s 618 event.
For more detailed financial information and a comprehensive overview of JD.com’s performance in the first quarter of 2023, please refer to the official financial report available on our website.
Mar 10, 2023| Financial
Highlights of JD.com Q4 and Full Year 2022 Earnings Call: Cautious Opitmism
by Yuchuan Wang
JD.com released the fourth quarter and full year earnings results for 2022 on March 9. For the first time, the company’s annual revenues surpassed RMB 1 trillion yuan (US$151.7 billion), while achieving profitable growth and strong cash flow. (Click to access to the earnings report)
In the fourth quarter of 2022, JD.com recorded double-digit DAU (daily active user) growth year-on-year and has seen an upward trend for both user structure and user quality, driving up user shopping frequency and ARPU (average revenue per user). The number of the company’s paid membership JD PLUS also reached 34 million in the quarter. According to analysis, JD PLUS members spend 8 times the average annual amount of non-members.
The three-year pandemic has seen consumers’ lifestyles and preferences change notably. Amidst ever-evolving opportunities and challenges, JD.com stays focused on lowering costs, increasing efficiency and constantly improving user experience to satisfy the diversified consumption demands. Mr. Lei Xu, CEO of JD.com reiterates this company’s business philosophy in the earnings call, and based on which the company is committed to providing better products, price and services.
“In terms of prices, our goal is to be known by consumers for providing the most consistent “everyday low prices,” said Xu. Price is keen to user experience, Xu explains that in the past, all e-commerce players focused on grand promotion, which created a phenomenon of “no promotions, no buying; no promotions, no sales.” JD hopes to transform marketing strategy from focusing on big sales to creating an environment of everyday low price, contributing to the healthy development of the whole industry, benefiting consumers, supply chain, brands and merchants.
The recent “RMB 10 billion yuan discount program” is one of JD’s efforts for “everyday low price” policy, in addition to “compensation for higher prices”, “free shipping above 9.9 yuan”, “price guarantee” and more. The genuine and tangible benefits to consumers will be collectively invested together with brands and merchants on the platform. “Not all the discounts we directly hit our gross margin or marketing expenses,” said Sandy Xu, CFO of JD.com. “Our target is to smooth out the operation pressure from the two major promotion seasons (618 and Singles’ Day) to improve operating efficiency for the entire supply chain and also to attract new users or recap our existing users.”
JD is also improving its marketplace ecosystem to power up from the supply side, including rolling out the “Spring Dawn” initiative that provides greater support to different types of merchants on the platform, including individual owners, self-employed businesses and enterprises. The initiative includes 12 supportive measures that aim to lower costs and increase sales for merchants, such as further streamlining store-launch process to 10 minutes for individual owners, zero-cost trial operations, and RMB 2,100 yuan worth of gift packages for newly opened stores, among others.
Mr. Xu also shares his thoughts on China’s reopening in wake of Covid. “We see the recovery of consumption is underway,” said Xu. “We continue to keep our cautious optimism on the recovery. And we believe that in the second half of the year, the recovery will be faster.”
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