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JD.com Announces Third Quarter 2017 Results

BEIJING, China, Nov. 13, 2017 (GLOBE NEWSWIRE) -- JD.com, Inc. (JD), China’s largest retailer, today announced its unaudited financial results for the quarter ended September 30, 2017.

Third Quarter 2017 Highlights for Continuing Operations

  • Net revenues1for the third quarter of 2017 were RMB83.7 billion (US$212.6 billion), an increase of 39.2% from the third quarter of 2016.

  • Gross profit3 for the third quarter of 2017 was RMB13.0 billion (US$2.0 billion), an increase of 50.3% from the third quarter of 2016. Non-GAAP gross profit4 was RMB12.8 billion (US$1.9 billion), an increase of 51.9% from the same quarter last year.

  • Net income from continuing operations attributable to ordinary shareholders for the third quarter of 2017 was RMB1.0 billion (US$0.2 billion), compared to a net loss from continuing operations attributable to ordinary shareholders of RMB0.5 billion for the same period last year. Non-GAAP net income from continuing operations attributable to ordinary shareholders5 for the third quarter of 2017 was RMB2.2 billion (US$0.3 billion), an increase of 359% from the third quarter of 2016.

  • Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS from continuing operations for the third quarter of 2017 was RMB0.69 (US$0.10), compared to diluted net loss per ADS from continuing operations of RMB0.32 for the third quarter of 2016. Non-GAAP diluted net income per ADS from continuing operations for the third quarter of 2017 was RMB1.52 (US$0.23), as compared to RMB0.33 in the third quarter of 2016.

  • Operating cash flow from continuing operations for the twelve months ended September 30, 2017 increased to RMB19.9 billion (US$3.0 billion) from RMB11.4 billion for the twelve months ended September 30, 2016. Free cash flow6 from continuing operations, which excludes the impact from JD Finance related credit products included in the operating cash flow, for the twelve months ended September 30, 2017 was RMB14.6 billion (US$2.2 billion), compared to RMB15.0 billion for the twelve months ended September 30, 2016, as several accretive capital investments took place during the third quarter of 2017.

  • Annual active customer accounts increased by 34% to 266.3 million in the twelve months ended September 30, 2017 from 198.7 million in the twelve months ended September 30, 2016.

“We are achieving our mission of bringing China’s consumers the widest selection of top brands and, by far, the highest quality e-commerce experience,” said Richard Liu, Chairman and CEO of JD.com. “We are also building robust product content and enhancing user engagement, as our innovative tools enable brands to execute highly targeted online marketing programs. We look forward to helping more and more merchants and partners leverage JD’s leading open infrastructure to drive efficiency and grow sales.”

“We are very encouraged to see another quarter of solid top line growth with record profitability,” said Sidney Huang, JD.com’s Chief Financial Officer. “The scale economies of our model are becoming clearer with every quarter. Looking ahead, we will continue to prioritize investments in technology and leading R&D talent as we execute on our vision to revolutionize China’s retail industry.”

Recent Business Developments

  • In October, JD and Tencent expanded their partnership with the launch of the JD-Tencent Retail Marketing Solution. The initiative integrates insights on consumer behavior from Tencent’s social media platforms with online and offline shopping data from JD and its brand partners to enable more precise target marketing and better understanding of consumer behavior for the brands on JD platform. Consumers will also benefit from this solution, enjoying expanded access to sales promotions and preferred discounts, regardless of whether they are shopping online or in-store. During the past three months, JD.com also formed strategic partnerships with Baidu, Qihoo 360, NetEase, Sogou and iQIYI, leveraging these companies’ powerful big data resources, massive user bases and AI algorithm technologies to strengthen collaboration in precision marketing, user access points and content marketing.

  • In the third quarter, JD continued to strengthen its position among top-tier international brands as the most trusted retail platform in China. JD expanded its ongoing partnership with Italian high fashion brand Armani with the opening of official online stores for two additional Armani product lines, Emporio Armani and Armani Exchange. JD Worldwide also worked with several international brands to launch flagship stores, including Spectrum Brands, Reckitt Benckiser and Tiger. Additionally, JD's newly established Toplife platform attracted marquee brands such as La Perla, Rimowa (LVMH), B&O Play, Trussardi and DYSON to meet strong consumer demand for high-end luxury products.

  • During the third quarter, JD Logistics test launched its first unmanned sortation center, the first of its kind in the logistics industry. JD also signed a series of agreements to lay the groundwork for the rollout of China’s largest and most advanced drone network. As the company expands the capabilities of JD Logistics, it will continue making its technology infrastructure and services available to businesses across a wide range of industries.

  • In September, JD Logistics expanded its environmentally friendly logistics and packaging campaign, working together with numerous international and domestic brands including P&G, Nestle, Unilever, LEGO, Kimberly-Clark, Watsons, Erie, Johnson & Johnson, Wrigley, Blue Moon and L’Oreal, among others. Working with these brands, JD seeks to minimize environmental impact by reducing the overall use of packaging materials. JD estimates that the campaign will save billions of cardboard boxes over the next three years.

  • In the third quarter, JD enhanced its fresh product offerings to meet strong customer demand. In July, JD launched the Canadian Fresh Food Pavilion, the first country pavilion for fresh products on the JD.com platform. With JD’s advanced cold-chain logistics capabilities, live lobsters from Canada can be delivered to customers’ doorsteps in China in as little as 48 hours. During JD’s Super Canadian Day, 140,000 Canadian lobsters were sold within 24 hours.

  • In September, JD.com, JD Finance, Central Group and Provident Capital announced agreements to establish two joint ventures in Thailand covering e-commerce and fintech services with an aggregate investment of $500 million. Under the terms of the agreements, JD.com will provide its extensive expertise in technology, e-commerce and logistics to the joint ventures, while Central Group will leverage its immense retail store network, its wealth of brand and merchant relationships, and its retail behavior insights from its popular loyalty program across both businesses.

  • In October, JD and Sam’s Club launched a promotion offering customers discounted bundled memberships for Sam’s Club and JD Plus, JD.com’s membership program. With the introduction of JD Plus over two years ago, JD became the first Chinese e-commerce company to introduce an exclusive paid-for membership service.

  • As of October 31, 2017, JD.com’s joint venture, New Dada, had partnered with 146 Walmart stores and 301 Yonghui stores, among numerous other supermarkets and grocery stores, to provide consumers a premium online fresh grocery shopping experience with one-hour home delivery. New Dada is China’s largest crowdsourcing logistics provider and O2O grocery platform.

  • During the third quarter, JD expanded its leadership position in fulfillment capabilities among China’s e-commerce companies. As of September 30, 2017, JD.com operated 405 warehouses covering an aggregate gross floor area of approximately 9 million square meters in China. JD Logistics also provides scheduled delivery service in 250 Chinese cities, allowing customers to choose a convenient 2-hour delivery window in which to receive their goods.

  • JD.com had approximately 160,000 merchants on its online marketplace, and a total of 137,975 full-time employees as of September 30, 2017.

Third Quarter 2017 Financial Results

Net Revenues. For the third quarter of 2017, JD.com reported net revenues of RMB83.7 billion (US$12.6 billion), representing a 39.2% increase from the same period in 2016. Net revenues from online direct sales increased by 38.5%, while net revenues from services and others increased by 46.2% in the third quarter of 2017, as compared to the third quarter of 2016.

Cost of Revenues. Cost of revenues increased by 37.3% to RMB70.8 billion (US$10.6 billion) in the third quarter of 2017 from RMB51.5 billion in the third quarter of 2016. This increase was primarily due to the growth of the company’s online direct sales business, the traffic acquisition costs directly related to the online marketing services provided to merchants and suppliers, as well as the costs related to the logistics services provided to merchants and other partners.

Fulfillment Expenses. Fulfillment expenses, which primarily include procurement, warehousing, delivery, customer service and payment processing expenses, increased by 40% to RMB6.4 billion (US$1.0 billion) in the third quarter of 2017 from RMB4.5 billion in the third quarter of 2016. Fulfillment expenses as a percentage of net revenues was 7.6%, compared to 7.5% in the same period last year.

Marketing Expenses. Marketing expenses increased by 55% to RMB3.3 billion (US$0.5 billion) in the third quarter of 2017 from RMB2.1 billion in the third quarter of 2016.

Technology and Content Expenses. Technology and content expenses increased by 43% to RMB1.8 billion (US$0.3 billion) in the third quarter of 2017 from RMB1.2 billion in the third quarter of 2016.

General and Administrative Expenses. General and administrative expenses increased by 8% to RMB1.1 billion (US$0.2 billion) in the third quarter of 2017 from RMB1.0 billion in the third quarter of 2016.

Income/(loss) from operations and Non-GAAP income from operations7. Operating income from continuing operations for the third quarter of 2017 was RMB502.4 million (US$75.5 million), compared to operating loss from continuing operations of RMB234.4 million for the same period last year. Non-GAAP operating income from continuing operations for the third quarter of 2017 was RMB1,472.1 million (US$221.3 million) with a non-GAAP operating margin of 1.8%, as compared to RMB542.3 million in the third quarter of 2016 with a non-GAAP operating margin of 0.9%.

Non-GAAP EBITDA8 from continuing operations for the third quarter of 2017 totaled RMB2.1 billion (US$0.3 billion) with a non-GAAP EBITDA margin of 2.5%, as compared to RMB1.0 billion with a non-GAAP EBITDA margin of 1.7% for the third quarter of 2016.

Net income/(loss) attributable to ordinary shareholders and Non-GAAP Net income attributable to ordinary shareholders. Net income from continuing operations attributable to ordinary shareholders for the third quarter of 2017 was RMB1.0 billion (US$0.2 billion), compared to net loss from continuing operations attributable to ordinary shareholders of RMB0.5 billion for the same period last year. Non-GAAP net income from continuing operations attributable to ordinary shareholders for the third quarter of 2017 was RMB2.2 billion (US$0.3 billion), an increase of 359% from RMB0.5 billion in the third quarter of 2016.


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