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Baozun Q2 earnings, revenue exceed expectations

China-based e-commerce solutions provider Baozun (Nasdaq: BZUN) reported stronger than expected earnings and revenues for the second quarter of 2019. Though the company’s stock gained in premarket trading on Wednesday, soon after the announcement, it pared the gains as the regular session progressed.

Net income, adjusted for one-off items, climbed to RMB1.41 per ADS ($0.21 per ADS) from RMB0.96 per ADS in the second quarter of 2018. Analysts were looking for a slightly lower profit.

Baozun Q2 2019 gross merchandise volume up 60%

Net income attributable to shareholders, on a reported basis, was RMB67.1 million ($9.8 million) or RMB1.13 per ADS ($0.16 per ADS) in the June quarter, which represents an 82.5% annual increase.

Top-line Growth

Driving the bottom-line growth, revenues rose 47% annually to RMB1.70 billion ($242.2 million), with strong contributions from the services segment that benefitted from digital marketing services. Revenues also came in above the estimates.

During the quarter, product sales got a boost from the acquisition of new brand partners, strong demand for partners’ products and effective promotional campaigns.

212 Brand Partners

Total gross merchandise volume climbed 60% annually to RMB9.73 billion during the three-month period, with both distribution and non-distribution merchandise volumes growing in double digits. At the end of the quarter, the company had 212 brand partners, up 31% from the same period of last year.

“Driven by a robust June 18 sales campaign, our GMV continued to gain growth momentum during the quarter while total revenue grew at its fastest pace over the past three years. Our GMV growth rate during the quarter outpaced many e-commerce marketplaces demonstrating just how effective our stellar tools are and the unique value proposition we offer to both international and domestic brand partners,” said CEO Vincent Qiu.

Outlook

For the third quarter of 2019, the management forecasts net revenues between RMB1.50 billion and RMB1.55 billion, which represents a year-over-year increase of 35-40%. The rate of services revenue growth is expected to be in line with the growth rate for total revenue.

Related: Baozun Q1 2019 Earnings Conference Call Transcript

Gross merchandise volume is expected to grow between 40% and 45% year-over-year during the third quarter. In the whole of 2019, merchandise volume is seen rising 40-50%.

Baozun’s shares moved up 68% at the Nasdaq stock exchange since the beginning of 2019. In the past twelve months, they lost about 7%.

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