TMTPost -- Hong Kong-traded shares of JD.com rose more than 6% at the morning trading Friday after American depositary receipts (ADRs) settled about 4.3% higher Thursday. Shares rallied on stronger-than-expected top and bottom line of the Chinese leading e-commerce group.
Credit：JD.com
JD.com posted revenue of RMB291.4 billion for the three months ended June 30, versus Wall Street expectation of RMB290.51 billion. With a 1.2% year-over-year (YoY) increase, JD revenue slowed from a 7% rise in the preceding quarter. On non-GAAP basis, the adjusted net income attributable to ordinary shareholders,which excludes share-based compensation and fair-value changes of long-term investments, among other items, also beat estimates and soared nearly 69% YoY to RMB14.46 billion following a 13.9% YoY increase in the first quarter of this year.
Adjusted EBITDA, or earnings before interest, taxes, depreciation, and amortization, climbed 30% YoY to RMB13.53 billion, exceeding analysts』 projected RMB11.69 billion, and adjusted EBITDA margin was 4.6%, 1.0 percentage points more than a year ago. In comparison, the adjusted EBITDA gained 14% with a margin of 4.1% in the quarter ended March. Non-GAAP diluted net income per American depositary share (ADS) in the June quarter jumped 73.7% YoY to RMB9.36, much better than analysts expected RMB6.21. The earnings per ADS recorded a 18.7% YoY increase in the previous quarter.
JD Retails brought RMB257.07 billion with a 1.5% YoY increase, compared with a gain of 6.8% in the March quarter. Operating income of the core business stood at RMB10.11 billion and resumed positive growth with a 24.2% YoY increase following a fall of 5.1% three months earlier. In the second quarter, JD entered into strategic partnership agreements with multiple brands, including Xiaomi, Lenovo and OPPO, to further deepen cooperation with a focus on smart devices, intelligent supply chain, and artificial intelligence (AI) technology integration. JD and these brands have established three-year sales targets and will work closely to maximize their respective strengths and identify new markets for growth. That quarter saw JD onboarded the luxury fashion brand MONCLER and American luxury lifestyle brand Alexander Wang. JD that quarter also established a strategic partnership with Inditex, one of the world's largest fashion retailers, with Massimo Dutti as the first of Inditex's brands launching a flagship store on JD.com.
Revenue from JD Logistics gained 7.7% YoY to RMB44.21 billion following a 14.7% increase in the first quarter. Operating income for the June quarter surged 327.5% YoY to RMB2.18 billion. The unit just recorded RMB224 million of operating income from January to March, turning around from a loss of RMB1.12 billion a year earlier. JD said the logistics unit in the second quarter continued to optimize its network layout, algorithm-based vehicle scheduling capabilities and product structure to achieve cost reduction and efficiency gains, resulting in a significant improvement in profitability.
Revenue from New Businesses, which includes Dada, JD Property,Jingxi and overseas businesses, dropped 35% YoY to RMB4.64 billion. the revenue fell deeper than a 19.1% YoY decrease in the beginning quarter of this year. New Businesses swung to a loss of RMB695 million in the second quarter, whereas it recorded operating income of RMB1.03 billion the same period last year. The segment widened operating loss 42% YoY to RMB670 million in the March quarter.
JD posted more stellar growth of e-commerce than its longtime rival Alibaba Group in the June quarter when the annual 618 shopping festival fell on. Alibaba said Thursday its Taobao and Tmall Group including two major online marketplaces generated RMB113.37 billion a 1% YoY fall that missed analysts』 expectation. The outrun showcased JD』s low-price strategy still paid out. JD CEO Sandy Xu said the company remained committed to the strategy following the second quarter earnings . "Low price is a result of our core capabilities," Xu said. "This will continue to distinguish us in the e-commerce industry."
In the second quarter, JD navigated a high base in our electronics and home appliances category from last year, while growth of its general merchandise category, particularly supermarket, remained robust, said Ian Su Shan, Chief Financial Officer (CFO) of JD. 「We continued to enhance price competitiveness during the promotional season through our supply chain and disciplined approach, as opposed to reliance on subsidies. As such, our gross margin substantially increased by 137bps year-on-year to 15.8%, contributing to our record-high operating and net profit on a non-GAAP basis in the quarter,」 Shan said.
