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Vipshop Reports Unaudited First Quarter 2016 Financial Results

GUANGZHOU, China, May 17, 2016 /PRNewswire/ -- Vipshop Holdings Limited VIPS, -1.13% a leading online discount retailer for brands in China ("Vipshop" or the "Company"), today announced its unaudited financial results for the first quarter ended March 31, 2016.

First Quarter 2016 Highlights

  • Total net revenue increased by 41% to RMB12.17 billion (US$1.89 billion), primarily attributable to a 52% year-over-year increase in the number of active customers[1] to 19.7 million and a 53% year-over-year increase in total orders[2] to 58.7 million.
  • Gross profit increased by 38% to RMB2.96 billion (US$458 million) from RMB2.14 billion in the prior year period.
  • Income from operations increased by 51% to RMB596 million (US$92 million) from RMB395 million in the prior year period. Operating margin increased to 4.9% from 4.6% in the prior year period.
  • Non-GAAP income from operations[3] increased by 48% to RMB765 million (US$119 million) from RMB517 million in the prior year period. Non-GAAP operating margin[4] increased to 6.3% from 6.0% in the prior year period.
  • Net income attributable to Vipshop's shareholders increased by 29% to RMB475 million (US$74 million) from RMB368 million in the prior year period.
  • Non-GAAP net income attributable to Vipshop's shareholder[5] increased by 28% to RMB623 million (US$97 million) from RMB487 million in the prior year period.

Mr. Eric Shen, chairman and chief executive officer of Vipshop, stated, "Our first quarter results demonstrate the continued power of our platform to attract and retain customers and suppliers alike. We will continue to focus on driving top-line growth and market share expansion by balancing both customer acquisition growth and profitability. After several quarters of fine-tuning our strategy of balancing revenue growth and marketing and promotion expenses, we now have improved control between these competing levers and aim to achieve more stabilized growth going forward. We believe that, by providing our nearly 20 million active customers with seamless end-to-end shopping experience and diverse and affordable products, our platform will continue to grow and generate significant value for our stakeholders going forward."

Mr. Donghao Yang, chief financial officer of Vipshop, commented, "During this quarter, we continued to deliver strong absolute growth in revenues, active customers and total orders. The strong operating leverage of our model allows us to reinvest profit in top-line and market share expansion while maintaining stable gross margins and expanding operating margins. Looking ahead, we will continue to diversify our product offering and further improve our logistics capabilities, in order to ensure an excellent end-to-end user experience and to deliver enduring value to our loyal shareholders."

First Quarter 2016 Financial Results

REVENUE

Total net revenue for the first quarter of 2016 increased by 41% to RMB12.17 billion (US$1.89 billion) from RMB8.61 billion in the prior year period, primarily driven by the growth in the numbers of total active customers, repeat customers, and total orders.

The number of active customers for the first quarter of 2016 increased by 52% to 19.7 million from 12.9 million in the prior year period. The number of total orders for the first quarter of 2016 increased by 53% to 58.7 million from 38.5 million in the prior year period.

GROSS PROFIT

Gross profit for the first quarter of 2016 increased by 38% to RMB2.96 billion (US$458 million) from RMB2.14 billion in the prior year period. Gross margin was 24.3%, as compared with 24.9% in the prior year period.

OPERATING INCOME AND EXPENSES

Total operating expenses for the first quarter of 2016 were RMB2.39 billion (US$371 million), as compared with RMB1.76 billion in the prior year period. As a percentage of total net revenue, total operating expenses decreased to 19.7% from 20.5% in the prior year period.

  • Fulfillment expenses for the first quarter of 2016 were RMB1.08 billion (US$167 million), as compared with RMB806 million in the prior year period, primarily reflecting the increase in sales volume and number of orders fulfilled. As a percentage of total net revenue, fulfillment expenses decreased to 8.9% from 9.4% in the prior year period, primarily reflecting the scale effect associated with the growth in total net revenue.
  • Marketing expenses for the first quarter of 2016 were RMB604 million (US$94 million), as compared with RMB403 million in the prior year period, reflecting the Company's strategy to drive long-term growth through increasing investments to strengthen its brand awareness, attract new users and expand market share. As a percentage of total net revenue, marketing expenses were 5.0%, as compared with 4.7% in the prior year period.
  • Technology and content expenses for the first quarter of 2016 were RMB327 million (US$51 million), as compared with RMB256 million in the prior year period, reflecting the Company's continued efforts to invest in human capital and advanced technologies such as data analytics, which can help improve the ability to predict consumer behavior and further enhance user experience. As a percentage of total net revenue, technology and content expenses decreased to 2.7% from 3.0% in the prior year period, primarily reflecting the scale effect associated with the growth in total net revenue.
  • General and administrative expenses for the first quarter of 2016 were RMB382 million (US$59 million), as compared with RMB297 million in the prior year period. As a percentage of total net revenue, general and administrative expenses decreased to 3.1% from 3.4% in the prior year period, primarily reflecting the scale effect associated with the growth in total net revenue.

Income from operations for the first quarter of 2016 increased by 51% to RMB596 million (US$92 million) from RMB395 million in the prior year period due to the growing scale of the Company's operations and decrease in fulfillment, technology and content and general and administrative expenses as a percentage of total net revenue. Operating margin increased to 4.9% from 4.6% in the prior year period.

Non-GAAP income from operations, which excludes share-based compensation expenses and amortization of intangible assets resulting from a business acquisition, increased by 48% to RMB765 million (US$119 million) from RMB517 million in the prior year period. Non-GAAP operating income margin increased to 6.3% from 6.0% in the prior year period.

NET INCOME

Net income attributable to Vipshop's shareholders increased by 29% to RMB475 million (US$74 million) from RMB368 million in the prior year period. Net margin attributable to Vipshop's shareholders was 3.9%, as compared with 4.3% in the prior year period. Net income attributable to Vipshop's shareholders per diluted ADS[6] increased to RMB0.80(US$0.12) from RMB0.61 in the prior year period.

Non-GAAP net income attributable to Vipshop's shareholders, which excludes share-based compensation expenses, impairment loss of investments, and amortization of intangible assets resulting from a business acquisition and equity method investments, increased by 28% to RMB623 million (US$97 million) from RMB487 million in the prior year period. Non-GAAP net margin attributable to Vipshop's shareholders was 5.1%, as compared with 5.7% in the prior year period. Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS increased to RMB1.04(US$0.16) from RMB0.81 in the prior year period.

For the quarter ended March 31, 2016, the Company's weighted average number of ADSs used in computing diluted income per ADS was 621,386,550.

BALANCE SHEET AND CASH FLOW

As of March 31, 2016, the Company had cash and cash equivalents of RMB3.57 billion (US$554 million) and held-to-maturity securities of RMB704 million (US$109 million).

For the quarter ended March 31, 2016, operating cash was RMB153 million, and free cash flow[7], a non-GAAP measurement of liquidity, was as follows:


For the three months ended


March 31, 2015

RMB'000

March 31, 2016

RMB'000

March 31,2016

US$'000

Net cash from operating activities

493,289

153,211

23,761

Add: Impact from Internet financing activities[8]

64,281

309,209

47,954

Less: Capital expenditures

(456,872)

(660,594)

(102,449)

Free cash flow in/(out)

100,698

(198,174)

(30,734)






Business Outlook

For the second quarter of 2016, the Company expects its total net revenue to be between RMB12.3 billion and RMB12.8 billion, representing a year-over-year growth rate of approximately 37% to 42%. These forecasts reflect the Company's current and preliminary view on the market and operational conditions, which is subject to change.

Exchange Rate

This announcement contains currency conversions of certain Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader. Unless otherwise noted, all translations from Renminbi to U.S. dollars are made at a rate of RMB6.4480 to US$1.00, the effective noon buying rate for March 31, 2016 as set forth in the H.10 statistical release of the Federal Reserve Board.

Conference Call Information

The Company will hold a conference call on Wednesday, May 18, 2016 at 8:00 am Eastern...


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