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JD Q2 2021 Earnings Call Highlights

JD.com reported second quarter earnings on August 23.

During a call to discuss the results and a range of other topics, JD Retail CEO Lei Xu said that JD.com is a new type of enterprise based on the real economy with digital technologies and abilities, which inherently differentiates JD from the platform economy model.

JD creates value in multiple links along the industrial chain, from providing transaction technologies, delivery and more, he noted. For example, JD can help brands and merchants to grow healthily, and create more stable and high-quality jobs, forming a virtuous circle between business and social values, Xu noted.

This is aligned with JD’s long-term priorities: putting consumers’ needs at the core, treating employees with respect, and opening up the company’s technology and capabilities to partners for win-win cooperation—all key factors in JD’s continued growth.

Among the other achievements highlighted in the call were net revenues of RMB 253.8 billion, an increase of 26.2% from the second quarter of 2020; and net service revenues of RMB34.1 billion, an increase of 49.2% from the second quarter of 2020, due to the company’s ongoing strategy to open up its resources to merchants as well as parties beyond the JD ecosystem.

Further, in Q2 JD Retail sustained high-quality growth, with the company’s profit margin maintaining steady increases under comparable statistics, thanks to improvements in supply chain and operating efficiency.  Despite facing fierce competition, JD saw a GMV growth of 27.7% YOY during its 618 Grand Promotion shopping festival, an achievement that can be interpreted as proof of the company’s rising recognition and mindshare among consumers, suppliers and brands, Xu said.

Additionally, the company maintained high-quality growth in active users. After passing the milestone of 500 million active users on April 1, 2021, JD saw an increase of 36 million active users during Q2, setting a new record of net increment in a single quarter. Among the new users, JD saw an uptick on the aspects of retention rate, shopping frequency and more, indicating that both JD’s user base and their lifetime value on JD have grown.

JD’s 3P marketplace business model has also increased, with growth in that area exceeding that of its 1P direct sales business during this year’s 618 Grand Promotion, a development that played a key role in Q2 business growth, Xu revealed. While many analysts and customers assume that JD’s strength in the electronics category hinges on its 1P business, the cellphone growth rate of 3P models hit 100% on JD during 618 this year. “This shows that JD Retail’s platform ecosystem ability has been promoted,” Xu said.

During Q2, JD expanded innovative partnerships with brands under luxury giant LVMH, including BVLGARI, Guerlain, Givenchy Beauty and more.

These partnerships are also prime examples of JD’s increasing focus on omni-channel, a strategy that Xu believes will help “break the glass ceiling for JD’s long-term growth,” he said.

“I’d like to reiterate that only JD’s business model has the ability to truly land the omni-channel plan. This is because the strategy is founded on JD’s supply chain capabilities, which we have built and honed over the past 18 years,” he said.

“With our supply chain, digital operation and integrated marketing capabilities in various shopping scenarios, both online and offline, we can synergize with suppliers and partners to effectively meet the customers’ needs that cannot be met by a pure online platform or B2C model,” Xu said.

Strong supply chain also ensures that JD can meet its goals of placing customers first, said Chief Financial Officer of JD.com Sandy Xu. “I want to emphasize that we believe that cost efficiency and customer experience are always the key to the long-term success of the retail industry, which translates into the supply chain and logistics capability,” she said.

Even as JD expanded its business, the company has not neglected its social responsibilities, Xu noted. In response to the severe flooding in the central China province of Henan this summer, JD donated over 20 truckloads of rescue supplies and daily necessities; and opened a free 24-hour hotline for medical consultation, and more.

During the second quarter, JD also published its Sustainability Report discussing the company’s achievements from 2018 to 2020 in creating a low-carbon enterprise, including gradually replacing traditional fuel-combustion trucks with new energy vehicles, reducing carbon dioxide emissions by more than 120,000 tons each year.

Speaking of recent regulatory changes, Xu said, “We believe these policies are not intended to restrict or suppress the internet and relevant industries, but rather to create a fair and orderly business environment and to promote long-term and sustainable development of these industries.” Further, these goals do not contradict either JD’s business goals or the company’s business philosophy of “doing business the right way.”

While global circumstances have at times felt precarious in the past year, JD is traveling a steady path. “I’d like to reiterate that JD is committed to delivering certainty and high-quality growth in a time of uncertainties, and living up to everyone’s support and faith in us,” Xu said.

 

 

 

 

 

 

by Yuchuan Wang

On August 23, JD Logistics (2618.HK) reported its 2021 interim results. The company’s revenue increased by 53.7% from RMB31.5 billion for the six months ended June 30, 2020 to RMB48.5 billion for the six months ended June 30, 2021. Revenue from external customers of JD Logistics for the first half of 2021 was RMB26.5 billion, accounting for 54.7% of JD Logistics’ total revenue, showing the increasing trust and stickiness from the market, and that more and more partners are leveraging JD Logistics’ infrastructure to improve their operational efficiency.

In the first half of 2021, JD Logistics (JDL) kept investing in the infrastructure construction, supply chain technology R&D, and further expanded the width and depth of its supply chain solutions and services.

As of June 30, 2021, JDL operated approximately 1,200 warehouses, which covered an aggregate gross floor area of approximately 23 million square meters.  Four hundred and fifty additional warehouses were added in the past year to JD Logistics’ network, which is equivalent to the total increase in warehouses in the 10 years from 2007 to 2017.

JDL also introduced its premium delivery services to more customers in remote areas and lower-tier cities in China. During JD.com’s 618 Grand Promotion this year, JDL provided delivery service within minutes in over 200 cities and same- or next-day delivery service covering 92% of districts and counties and 84% of townships in China.

Technology is a key driver for JDL’s development. In the first half of 2021, the R&D expenses were RMB1.4 billion, representing 2.8% of the total revenue. The company opened its first highly automated Asia No. 1 logistics park in Shanghai in 2014, and it ran 38 such logistics parks in 28 cities in China as of June 30, 2021.

Revenue from integrated supply chain customers grew 29.6% year-over-year in the first half of 2021 to RMB33.6 billion. As of June 30, 2021, the number of external integrated supply chain customers reached over 59,000, including industry leaders such as Xiaomi Youpin, CHEERS, Volvo, Midea, Tsingtao Beer and more.

“Our quality service is inseparable from our 260,000 front-line employees. Their enthusiastic, professional and high-quality service is the key for us to gain users’ trust,” said Yui Yu, CEO of JD Logistics. “We always believe that if the enterprise does good to its employees, the employees can better serve our users. For a long time, we have insisted on providing our employees with competitive salaries and benefits. We’ve been paying social insurance and housing funds for our employees for more than a decade. We hope that every employee can work and live with dignity and confidence.”

According to JDL’s earnings, salary and benefit expenses for employees involved in warehouse management, sorting, picking, packaging, shipping, delivery and customer services were RMB17.2 billion for the six months ended June 30, 2021.

JDL also plays an important role in leading sustainable supply chain in China. In 2019 it was the first Chinese logistics company to join the Science Based Targets initiative (SBTi). Through its Green Stream Initiative, JDL is making significant efforts with its up and downstream partners to counter global climate change.

 

Note: For all material above, please refer to the full release here.

 

(yuchuan.wang@jd.com)

On August 23, JD.com announced 2021 second quarter and interim results. Below is an infographic with the key highlights. The full release can be found here.

 

(press@jd.com)