JD.com (JD -1.95%) showed strong first-quarter performance in the earnings release it delivered on May 16. The Chinese e-commerce giant reported revenue of 260.0 billion yuan ($36.0 billion), exceeding analysts' consensus estimate of 250.04 billion yuan ($35.7 billion). Non-GAAP earnings were 5.65 yuan ($0.78) per share, above the expected 4.69 yuan ($0.65) per share. However, its operational costs, particularly in fulfillment and marketing, increased.
| Metric | Q1 2024 | Q1 2024 Analyst Estimate | Q1 2023 | % Change |
|---|---|---|---|---|
| Revenue | 260.0 billion yuan | 250.04 billion yuan | 243.0 billion yuan | 7% |
| Non-GAAP earnings per share | 5.65 yuan | 4.69 yuan | 4.76 yuan | 18.7% |
| Fulfillment expenses | 16.8 billion yuan | N/A | 15.4 billion yuan | 9.3% |
| Marketing expenses | 9.3 billion yuan | N/A | 8.0 billion yuan | 15.6% |
| Free cash flow | (15.5 billion yuan) | N/A | (25.4 billion yuan) | Improved |
Source: Company data from company. Analyst estimates for the quarter provided by FactSet.
JD.com's business overview
JD.com, a leading e-commerce platform in China, offers a comprehensive range of products -- including electronics and home appliances -- as well as services for third-party sellers including online marketplace services and omnichannel solutions. Recently, management has been focused on enhancing its logistics network, integrating technological innovations, and expanding its footprint in online healthcare services.
The company's success hinges on its diversified portfolio, efficient logistics management, technological investments, and strong market position. These elements have enabled JD.com to capture a significant share of the e-commerce market in China.
Quarterly highlights
In the first quarter, JD.com achieved notable revenue growth across several categories. Electronics and home appliance revenues reached 123.2 billion yuan, a 5.3% year-over-year increase. General merchandise revenues climbed 8.6% to 85.3 billion yuan. Net product revenues grew 6.6% to 208.5 billion yuan.
Service revenues also showed growth, with marketplace and marketing revenues up 1.2% to 19.3 billion yuan and logistics and other service revenues rising by a strong 13.8% to 32.3 billion yuan.
JD Logistics supported brands like Miniso in global expansion efforts and improved market penetration in nations such as Australia and Malaysia.
The company also debuted new and specialty drugs online in partnership with pharmaceutical giants including Pfizer and Sanofi, bolstering its position in the rapidly growing online healthcare market.
JD.com noted that in the decade or so since its Nasdaq listing, it has achieved a 16-fold increase in total revenues.
However, the company's rising fulfillment and marketing expenses warrant attention. Fulfillment costs increased by 9.3% year over year to 16.8 billion yuan, accounting for 6.5% of net revenues, up slightly from 6.3%. Marketing costs rose by 15.6% to 9.3 billion yuan, constituting 3.6% of net revenues, due to heightened promotional activities. The company's negative free cash flow of 15.5 billion yuan, though a smaller outflow than it experienced in the prior-year period, remains a challenge to its liquidity and financial health.
Looking ahead
Management did not provide guidance for the current quarter or the full year, but executives' commentary in the press release suggests that the company will remain on its current course, and keep its focus on the areas it has been on.
CEO Sandy Xu particularly emphasized the importance of user experience: "Our focus on user experience helped to drive strong growth in the number of active users as well as user engagement." He continued, "We are confident that we will further build on our momentum in the months ahead."
