JD.com (JD) Tops Q1 EPS by 17c, Revenues Beat
JD.com (NASDAQ: JD) reported Q1 EPS of $0.28, $0.17 better than the analyst estimate of $0.11. Revenue for the quarter came in at $20.6 billion versus the consensus estimate of $19.29 billion.
First Quarter 2020 Highlights
- Net revenues for the first quarter of 2020 were RMB146.2 billion (US$120.6 billion), an increase of 20.7% from the first quarter of 2019. Net revenues from the sales of general merchandise products for the first quarter of 2020 were RMB52.5 billion (US$7.4 billion), an increase of 38.2% from the first quarter of 2019. Net service revenues for the first quarter of 2020 were RMB16.1 billion (US$2.3 billion), an increase of 29.6% from the first quarter of 2019.
- Income from operations for the first quarter of 2020 was RMB2.3 billion (US$0.3 billion), compared to RMB1.2 billion for the same period last year. Non-GAAP2 income from operations for the first quarter of 2020 was RMB3.3 billion (US$0.5 billion) with a non-GAAP operating margin of 2.2%, as compared to non-GAAP income from operations of RMB2.0 billion for the first quarter of 2019 with a non-GAAP operating margin of 1.6%.
- Net income attributable to ordinary shareholders for the first quarter of 2020 was RMB1.1 billion (US$0.2 billion), compared to RMB7.3 billion for the same period last year. Non-GAAP net income attributable to ordinary shareholders for the first quarter of 2020 was RMB3.0 billion (US$0.4 billion), compared to RMB3.3 billion for the same period last year.
- Diluted net income per ADS for the first quarter of 2020 was RMB0.72 (US$0.10), compared to RMB4.96 for the first quarter of 2019. Non-GAAP diluted net income per ADS for the first quarter of 2020 was RMB1.98 (US$0.28), compared to RMB2.23 for the same period last year.
- Annual active customer accounts3 increased by 24.8% to 387.4 million in the twelve months ended March 31, 2020 from 310.5 million in the twelve months ended March 31, 2019. Mobile daily active users4 in March 2020 increased by 46% as compared to March 2019.
First Quarter 2020 Financial Results
- Net Revenues. For the first quarter of 2020, JD.com reported net revenues of RMB146.2 billion (US$20.6 billion), representing a 20.7% increase from the same period in 2019. Net product revenues increased by 19.7%, while net service revenues increased by 29.6% for the first quarter of 2020, as compared to the same period of 2019.
- Cost of Revenues. Cost of revenues increased by 20.2% to RMB123.7 billion (US$17.5 billion) for the first quarter of 2020 from RMB102.9 billion for the first quarter of 2019. This increase was primarily due to the growth of the company’s online retail business and the logistics services provided to third parties.
- Fulfillment Expenses. Fulfillment expenses, which primarily include procurement, warehousing, delivery, customer service and payment processing expenses, increased by 29.0% to RMB10.4 billion (US$1.5 billion) for the first quarter of 2020 from RMB8.1 billion for the first quarter of 2019. Fulfillment expenses as a percentage of net revenues was 7.1% for the first quarter of 2020, compared to 6.7% in the same period last year, as the spread of COVID-19 caused a shift in product mix and incremental costs.
- Fulfilled Gross Margin5. Fulfilled gross margin for the first quarter of 2020 was 8.3%, as compared to 8.4% for the first quarter of 2019.
- Marketing Expenses. Marketing expenses increased by 13.4% to RMB4.5 billion (US$0.6 billion) for the first quarter of 2020 from RMB3.9 billion for the first quarter of 2019.
- Research and Development Expenses. Research and development expenses increased to RMB3.9 billion (US$0.6 billion) for the first quarter of 2020 from RMB3.7 billion for the first quarter of 2019.
- General and Administrative Expenses. General and administrative expenses kept relatively stable, amounting to RMB1.4 billion (US$0.2 billion) and RMB1.3 billion for the first quarter of 2020 and 2019, respectively.
- Income from Operations and Non-GAAP Income from Operations. Income from operations for the first quarter of 2020 was RMB2.3 billion (US$0.3 billion), compared to RMB1.2 billion for the same period last year. Non-GAAP income from operations for the first quarter of 2020 was RMB3.3 billion (US$0.5 billion) with a non-GAAP operating margin of 2.2%, as compared to non-GAAP income from operations of RMB2.0 billion for the first quarter of 2019 with a non-GAAP operating margin of 1.6%. Operating margin of JD Retail before unallocated items for the first quarter of 2020 was 3.2%, compared to 2.7% for the first quarter of 2019.
- Non-GAAP EBITDA for the first quarter of 2020 was RMB4.5 billion (US$0.6 billion) with a non-GAAP EBITDA margin of 3.1%, compared to RMB3.2 billion with a non-GAAP EBITDA margin of 2.6% for the first quarter of 2019.
- Others, net. Others are other non-operating income/(loss) including gains/(losses) from fair value change of long-term investments, gains from business and investment disposals, impairment of investments, government incentives, foreign exchange gains/(losses) and others. In the first quarter of 2020, other non-operating loss was RMB132.6 million (US$18.7 million), as compared to other non-operating income of RMB6,886.0 million for the first quarter of 2019. The substantial decrease was primarily due to the fair value change of investment securities, which had a loss of RMB669.7 million (US$94.6 million) for the first quarter of 2020, as compared to a gain of RMB5,750.5 million for the same period of last year.
- Net Income Attributable to Ordinary Shareholders and Non-GAAP Net Income Attributable to Ordinary Shareholders. Net income attributable to ordinary shareholders for the first quarter of 2020 was RMB1.1 billion (US$0.2 billion), compared to RMB7.3 billion for the same period last year. Non-GAAP net income attributable to ordinary shareholders for the first quarter of 2020 was RMB3.0 billion (US$0.4 billion), compared to RMB3.3 billion for the same period last year.
- Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS for the first quarter of 2020 was RMB0.72 (US$0.10), compared to RMB4.96 for the first quarter of 2019. Non-GAAP diluted net income per ADS for the first quarter of 2020 was RMB1.98 (US$0.28), compared to RMB2.23 for the first quarter of 2019.
- Cash Flow and Working Capital
- As of March 31, 2020, the company’s cash and cash equivalents, restricted cash and short-term investments totaled RMB75.1 billion (US$10.6 billion), compared to RMB64.5 billion as of December 31, 2019.
“We are proud that JD.com has been able to remain fully operational throughout the COVID-19 outbreak, and our employees are proud of the contributions JD continues to make towards building a more productive and sustainable society,” said Richard Liu, Chairman and Chief Executive Officer of JD.com. “Strong user growth during the first quarter reflects consumers’ increasing reliance on JD.com to support every aspect of their lives, and confidence in our commitment to providing a broad selection of quality products and best-in-class services.”
“JD’s resilient business model helped drive solid top and bottom-line results for the quarter that exceeded our expectations,” said Sidney Huang, Chief Financial Officer of JD.com. “We are also pleased to see an accelerating increase in user engagement, demonstrating our strengthened brand image and expanded consumer mindshare. Throughout the COVID-19 outbreak, JD has implemented disciplined financial control policies while providing undisrupted and timely services to consumers. We will continue to invest in technology and customer experience to support our future growth.”
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