JD.com crushes the Street’s predictions for first quarter
Chinese ecommerce giant JD.com, the country’s second-largest online retailer after Alibaba, reported earnings last week that absolutely blew the Street’s expectations out of the water. With the backing of massive western partners Walmart and Alphabet, and a renewed agreement with Chinese tech titan Tencent (gaining access to the latter’s powerful social networking and messaging platforms Weixin and WeChat), JD.com is looking very well positioned for further growth.
JD.com’s share price has appreciated by 30% so far this year
Source: Yahoo Finance
Here are the numbers: for the three months ending in March, revenues climbed by 20.9%, year on year, to 121.1 billion yuan. That’s a small but significant beat of the Street’s estimates, which was for revenue of 120.1 billion yuan.
However, the company’s real outperformance came in the form of incredibly strong earnings. For the first quarter of the year, JD said that earnings came in at 33c per share. That’s an overshoot against consensus estimates of 12c per share by almost a factor of three!
Driving these strong financials was a 15% increase in active customer accounts year on year (now standing at 310.5 million) and a 19% increase in product revenue over the same period to $16.2 billion.
JD’s chairman and CEO, Richard Liu, made the following comment over the results: “JD.com’s focus on delivering the best and most trusted online retail experience to customers throughout China drove another strong performance for the first quarter. We will continue to invest in key technologies and top industry talent as we work to reach an even broader customer base through cutting edge innovation. With our growing scale and increasingly efficient operations, JD.com remains well positioned to deliver strong shareholder value for the long term.”
Sidney Huang, the company’s chief financial officer, added: “The first quarter saw solid top line growth with record breaking profitability, further demonstrating the superiority of JD.com’s business model as compared to traditional retail formats. JD’s commitment to providing the best value to consumers while increasing economies of scale over time was again reflected in the improving margins in our core JD Retail business. We will remain focused on customer experience and technology innovation to support our long-term profitable growth.”
Dominion holds JD.com in its Global Trends Ecommerce Fund.
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