Tuesday, November 17, 2015


JD.Com Inc (ADR) Reports 52% Increase In Revenue: Beats Expectations

By: Adam Matthews Published:
China Business News analyzes how Singles Day’s robust online sales improved the company’s revenue outlook
China’s leading online direct sales company JD.com Inc. (NASDAQ:JD) declared its third-quarter fiscal year 2015 (3QFY15) earnings today, stating that the company’s revenue rose by 52% year-over-year (YoY) and in-line with the consensus estimate.
JD.com is China’s second biggest e-commerce company after Alibaba Group Holdings Ltd. (NYSE:BABA). The results shows that the company has generated significant amount in revenue, and is ready to challenge Alibaba. Its Gross merchandise value (GMV) for 3QFY15 came in at $18.1 billion (115 billion yuan), increasing by 71% YoY. The tech firm's GMV excluding Paipai.com, its major e-commerce platform, rose 76% YoY to $17.5 billion (111 billion yuan). GMV from the company’s electronic and home appliances rose 59% YoY to 56.8 billion yuan. Moreover, its online business reported GMV of 49.7 billion yuan in 3QFY15.
In 2QFY15, the e-commerce giant reported net revenue of $6.9 billion (44.1 billion yuan), an increase of 52% YoY from the previously reported figure of $4.70 billion (29.01 billion yuan). The increase in sales is mainly attributed to recent Singles Day global shopping festival in the country, which has boosted the sales of the entire e-commerce sector in China. JD.com's service and other segment reported revenue of $0.5 billion (3.5 billion yuan), up 111% YoY.
Furthermore, the company reported earnings per share (EPS) of ($0.062) (0.390 yuan), missing the consensus estimate of 0.014 yuan. Additionally, the e-commerce company reported net loss of $83.5 million (530.8 million yuan). The company’s net loss increased more than three times YoY. In the same period last year, it reported net loss of ($26.6 million) (164.35 million yuan). According to JD’s representatives, cost of goods sold of company’s main business increased by 49%, which led to lower profits. Moreover, the persistent slowdown in China’s economy and shift in online consumer spending also negatively affected the company’s profitability level. Furthermore, its marketing expenses also increased by 89% to $0.3 billion (1.7 billion yuan). The increase was primarily driven by high traffic acquisition cost and increase in brand advertising expenditure of both its online and offline businesses.
However, there were several recent business developments involving JD.com in the current quarter. It broke its own record on 11.11 global shopping festival and online sales increased to 130% YoY. Its partnership with Tencent Holdings increased the number of customers.
JD.com CEO Richard Liu said in a press release “This was another quarter of strong growth, as JD.com increasingly becomes China’s source for fast, worry-free shopping online.” He further added that “Our partnership with Tencent’s dominant Weixin and Mobile QQ platforms puts JD.com at the fingertips of virtually every Chinese mobile online consumer, and continues to drive rapid user growth.”
The company’s CFO Sidney Huang also said that its 3QFY15 earnings results were healthy, with an increase user growth and excellent performance in all categories. He further commented that JD.com will continue to invest to achieve high growth as e-commerce direct sales business in China is gaining popularity. He believes that the industry wide shift has significantly benefited JD.com. There is intense competition in China's tech sector, which is mostly dominated by Alibaba. However, in the future, JD.com will have what it takes to dethrone China’s biggest e-commerce company.
The company believes that sales figure would lie between 1.0 billion yuan to 2.5 billion yuan in 4QFY15, and expects a growth rate of 47% to 51% in its GMV. Analysts also remain positive on the company’s future outlook.
JD.com stock was down 0.19% during pre-market hours at $26.70 as of 9:13 AM EST.