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JD.com, Inc. JD reported second-quarter 2018 earnings of 5 cents per share, missing the Zacks Consensus Estimate by 7 cents.
The company continued to invest in order to expand its fulfillment capability and broaden product offerings for enhancing services offered to sellers on its marketplace platform to ensure long-term growth. As of Jun 30, 2018, the company operated 521 warehouses covering an aggregate gross floor area of approximately 11.6 million square meters in China.
The company's shares have lost 21.9% in a year’s time against its industry’s rally of 42%.
Revenues
JD.com reported revenues of RMB122.3 billion (US$18.5 billion), missing the Zacks Consensus Estimate of US$19.21 billion but increasing 31.2% year over year.
The year-over-year increase was driven by strong revenues from both product as well as services.
In the second quarter, net product revenues increased 29.4% from the prior-year quarter to RMB110.5 billion (US$16.7 billion), accounting for 91% of the total second-quarter sales. The increase was driven by demand for home appliances, food and beverage, cosmetics, home furnishing and baby products.
On the other hand, net services revenues increased 51% year over year to RMB11.8 billion (US$1.8 billion). The upsurge was enhanced by improved brand engagement and better monetization of the company’s platform. It accounted for the remaining 9% of its second-quarter sales.
Key Metric
Annual Active Customer Accounts — Annual active customer accounts were 313.8 million in the 12-month period ended Jun 30, 2018, reflecting 21.5% year-over-year growth.
Operating Results
Non-GAAP gross margin in the second quarter was 13.3% versus 13.4% in the year-ago quarter.
Fulfillment expenses increased to RMB8.2 billion (US$1.2 billion), up 28.7% year over year. Marketing expenses rose to RMB5.3 billion (US$0.8 billion), up 29.1% from the prior-year quarter. Technology and content expenses increased to RMB2.8 billion (US$0.42 billion), up 79.8% year over year. General and administrative expenses rose to RMB1.3 billion (US$0.2 billion), up 23.1% from the year-ago quarter.
Non-GAAP operating margin from continuing operations was 1.1% versus 0.8% in the year-ago quarter.
Non-GAAP EBITDA from continuing operations in the second quarter was RMB9.2 billion (US$139.4 million) versus RMB1.1 billion in the year-ago quarter.
Balance Sheet
JD.com exited the second quarter with cash, cash equivalents, restricted cash and short-term investments of approximately RMB52.8 billion (US$8.0 billion) compared with RMB37.9 billion (US$6 billion) in the last reported quarter.