$JD.com(JD)$ BEIJING , Nov. 19, 2018 (GLOBE NEWSWIRE) -- JD.com, Inc. (NASDAQ: JD), China’s leading technology driven e-commerce company and retail infrastructure service provider, today announced its unaudited financial results for the quarter ended September 30, 2018 .
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BEIJING, Nov. 19, 2018 (GLOBE NEWSWIRE) -- JD.com, Inc. (NASDAQ: JD), China’s leading technology driven e-commerce company and retail infrastructure service provider, today announced its unaudited financial results for the quarter ended September 30, 2018.
Third Quarter 2018 Highlights
Net revenues1for the third quarter of 2018 were RMB104.8 billion (US$215.3 billion), an increase of 25.1% from the third quarter of 2017. Net service revenues for the third quarter of 2018 were RMB10.9 billion (US$1.6 billion), an increase of 49.4% from the third quarter of 2017.
Operating margin of JD Mallbefore unallocated items3 for the third quarter of 2018 was 2.2%, as compared to 2.3% for the same period last year.
Net income from continuing operationsattributable to ordinary shareholders for the third quarter of 2018 was RMB3.0 billion (US$0.4 billion), compared to RMB1.0 billion for the same period last year. Non-GAAP net income from continuing operationsattributable to ordinary shareholders4 for the third quarter of 2018 was RMB1.2 billion (US$0.2 billion), compared to RMB2.2 billion for the same period last year.
Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS from continuing operations for the third quarter of 2018 was RMB2.03(US$0.30), compared to RMB0.69 for the third quarter of 2017. Non-GAAP diluted net income per ADS from continuing operations for the third quarter of 2018 was RMB0.80(US$0.12), compared to RMB1.52 for the same quarter last year.
Annual active customer accounts increased to 305.2 million in the twelve months ended September 30, 2018 from 266.3 million in the twelve months ended September 30, 2017.
“We are pleased to report solid results for the third quarter, with our core JD Mall business driving consistent growth under its highly experienced management team,” said Richard Liu, Chairman and CEO of JD.com. “JD’s commitment to convenient, reliable service and high-quality, authentic products continues to translate into an increasingly loyal user base. Our ‘Retail as a Service’ strategy is also gaining traction as we provide a wide range of partners with innovative retail infrastructure solutions.”
“JD’s strategic focus on improving customer experience helped drive strong performance across the business,” said Sidney Huang, Chief Financial Officer of JD.com. “We will continue our disciplined strategy of investing in key technologies as we focus on optimizing operations and driving economies of scale over the coming quarters.”
Recent Business Developments
In September, JD.com’s premium membership program JD Plus surpassed 10 million users. Since launching the program in 2016, JD has continued to introduce new benefits to JD Plus members, including free shipping coupons, VIP customer service, exclusive discounts on selected product offerings and access to premium online content provided by our partners such as iQIYI, among others.
In the third quarter, JD.com continued to attract major international brands, enhancing its reputation as the most reliable online channel for accessing the Chinese market. Cosmetics brands including L’Occitane de Provence, HOUSE 99 and Hera, and fashion brands including Salvatore Ferragamo and Furla, opened flagship stores on the JD.com platform. JD’s dedicated luxury platform TOPLIFE also welcomed John Galliano, Buccellati, Shang Xia and other major international brands.
In the third quarter, JD.com entered into strategic agreements with textile and fashion giant Ruyi to provide premium technology and infrastructure solutions covering smart logistics, inventory management and marketing. Four international menswear brands under Ruyi-owned Trinity Group, including Gieves & Hawkes, Kent & Curwen, Cerruti 1881 and D'Urban opened flagship stores on JD.com.
In September, JD.com launched its “Zu Chongzhi” platform, leveraging its comprehensive big data and supply chain capabilities to enable offline retailers to conduct real-time store performance analysis, marketing campaigns, merchandise selection, site selection and public opinion monitoring and management. As part of JD’s “Retail as a Service” initiative, the Zu Chongzhi platform helps offline retailers improve the efficiency and precision of their operations through digitalization, data mining and visualization capabilities.
In October, JD Logistics opened up its leading logistics network to consumers, offering parcel delivery service to users, beginning in Beijing, Shanghai and Guangzhou. Leveraging JD’s extensive delivery network, users in these areas can conveniently send items intra-city and throughout most of mainland China with JD’s same fast and reliable delivery service.
In the third quarter, JD Logistics launched an initiative allowing consumers to receive reward points by choosing recycled packaging for their orders. The service was trial launched in Beijing, Shanghai and Guangzhou and is expected to expand to dozens of cities in the near **re. JD Logistics also joined hands with corporate partners to promote recycled packaging across the entire supply chain.
In August, JD.com’s joint venture, Dada-JD Daojia, announced the completion of a new US$500 million financing round with investments from Walmart and JD. The financing marks a new stage in the companies’ partnership to explore innovative “Boundaryless Retail” solutions. Leveraging Dada’s crowd-sourcing delivery network, Dada-JD Daojia has partnered with Walmart, Yonghui, Carrefour, CR Vanguard, Family Mart, LAWSON, and numerous other supermarkets and grocery stores covering 63 cities, to provide a premium online fresh grocery shopping experience with one-hour home delivery service. Dada-JD Daojia is China’s leading on-demand logistics and omnichannel e-commerce platform.
During the third quarter, JD expanded its leadership position in fulfillment capabilities among China’s e-commerce companies. As of September 30, 2018, JD.com operated over 550 warehouses covering an aggregate gross floor area of approximately 11.9 million square meters in China.
JD.com had approximately 200,000 merchants on its online marketplace, and a total of 175,366 full-time employees as of September 30, 2018.
Third Quarter 2018 Financial Results
Net Revenues. For the third quarter of 2018, JD.com reported net revenues of RMB104.8 billion (US$15.3 billion), representing a 25.1% increase from the same period in 2017. Net product revenues increased by 22.8%, while net service revenues increased by 49.4% in the third quarter of 2018, from the third quarter of 2017.
Cost of Revenues. Cost of revenues increased by 25.3% to RMB88.7 billion (US$12.9 billion) in the third quarter of 2018 from RMB70.8 billion in the third quarter of 2017. This increase was primarily due to the growth of the company’s direct sales business, and 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 21.8% to RMB7.8 billion (US$1.1 billion) in the third quarter of 2018 from RMB6.4 billion in the third quarter of 2017. Fulfillment expenses as a percentage of net revenues were 7.4%, compared to 7.6% in the same period last year.
Marketing Expenses. Marketing expenses increased by 25.2% to RMB4.1 billion (US$0.6 billion) in the third quarter of 2018 from RMB3.3 billion in the third quarter of 2017.
Technology and Content Expenses. Technology and content expenses increased by 96.4% to RMB3.4 billion (US$0.5 billion) in the third quarter of 2018 from RMB1.8 billion in the third quarter of 2017, as a result of the company’s continued investment in top R&D talent and technology infrastructure.
General and Administrative Expenses. General and administrative expenses increased by 33.0% to RMB1.4 billion (US$0.2 billion) in the third quarter of 2018 from RMB1.1 billion in the third quarter of 2017.
Income/(loss) from operations and Non-GAAP income from operations5. Operating loss from continuing operations for the third quarter of 2018 was RMB650.7 million (US$94.7 million), compared to operating income from continuing operations of RMB502.4 million for the same period last year. Non-GAAP operating income from continuing operations for the third quarter of 2018 was RMB638.3 million (US$92.9 million), as compared to RMB1,472.1 million in the third quarter of 2017. Operating margin of JD Mall before unallocated items for the third quarter of 2018 was 2.2%, as compared to 2.3% for the same period last year.
Non-GAAP EBITDA6 from continuing operations for the third quarter of 2018 was RMB1.7 billion (US$0.2 billion), as compared to RMB2.1 billion for the third quarter of 2017.
Others, net. Others, net from continuing operations for the third quarter of 2018 was an income of RMB3.4 billion (US$0.5 billion), compared with an income of RMB0.5 billion in the third quarter of 2017. The substantial increase was primarily attributable to gain from fair value change of long-term investments of RMB3.6 billion (US$0.5 billion), which mainly resulted from the fair value change of Farfetch in connection with its initial public offering.
Net income 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 2018 was RMB3.0 billion (US$0.4 billion), compared to RMB1.0 billion for the same period last year. Non-GAAP net income from continuing operations attributable to ordinary shareholders for the third quarter of 2018 was RMB1.2 billion (US$0.2 billion), compared to RMB2.2 billion for the same period last year.
Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS from continuing operations for the third quarter of 2018 was RMB2.03(US$0.30), compared to RMB0.69 for the third quarter of 2017. Non-GAAP diluted net income per ADS from continuing operations for the third quarter of 2018 was RMB0.80(US$0.12), as compared to RMB1.52 for the third quarter of 2017.
Cash Flow and Working Capital
As of September 30, 2018, the company’s cash and cash equivalents, restricted cash and short-term investments totaled RMB42.9 billion (US$6.2 billion), compared to RMB38.4 billion as of December 31, 2017. For the third quarter of 2018, free cash flow from continuing operations of the company was as follows:
For the three months ended
September 30,
2017 September 30,
2018 September 30,
2018
RMB RMB US$
(In thousands)
Net cash provided by operating activities from continuing operations 352,289 2,212,661 322,170
Add: Impact from JD Finance related credit products included in the operating cash flow (1,559,382) (1,775,639) (258,538)
Less: Capital expenditures
Land use rights and construction in progress (5,384,486) (3,563,886) (518,912)
Other CAPEX (1,812,924) (5,060,015) (736,752)
Free cash flow (8,404,503) (8,186,879) (1,192,032)
Net cash used in investing activities from continuing operations was RMB2.6 billion (US$0.4 billion) for the third quarter of 2018, consisting primarily of cash paid for capital expenditures of RMB8.6 billion, and increases in investments in equity investees and investment securities of RMB7.6 billion, offset by decreases in short-term investments of RMB7.6 billion and decreases in loans to JD Finance of RMB6.3 billion.
Net cash used in financing activities from continuing operations was RMB3.0 billion (US$0.4 billion) for the third quarter of 2018, consisting primarily of repayment of nonrecourse securitization debt of RMB3.7 billion, partially offset by proceeds from short-term borrowings of RMB1.1 billion.
For working capital turnover days, see table under “Supplemental Financial Information and Business Metrics.”
Fourth Quarter 2018 Guidance
Net revenues for the fourth quarter of 2018 are expected to be between RMB130 billion and RMB135 billion, representing a growth rate between 18% and 23% compared with the fourth quarter of 2017. This forecast reflects JD.com’s current and preliminary expectation, which is subject to change.
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