Baozun Inc. (NASDAQ: BZUN) reported a 32% jump in earnings for the third quarter of 2019 as growth in services and product sales drove the top line higher by 35%. The bottom line matched analysts’ expectations while the top line missed consensus estimates. Further, the China-based e-commerce solutions provider guided fourth-quarter revenue in-line with the Street’s view.
Net income attributable to ordinary shareholders soared by 32.1% year-over-year to $5.5 million or $0.09 per American Depository Share (ADS). Adjusted earnings climbed to RMB0.99 per ADS ($0.14 per ADS) from RMB0.86 per ADS in the third quarter of 2018. Total net revenues jumped by 35.3% to RMB1.5 billion ($210.3 million).
Services revenue climbed by 38.7% to RMB840.8 million ($117.6 million) on the rapid growth of the consignment model and service fee model, as well as strong growth in digital marketing services. Product sales increased by 31.3% to RMB662.3 million ($92.7 million) due to the acquisition of new brand partners, the increased popularity of brand partners’ products, and Baozun’s increasingly effective marketing and promotional campaigns.
The results were impacted by the termination of service agreement with one electronics brand and a challenging macroeconomic environment. However, the company benefited from the evolving e-commerce in China that becomes more interactive and engaging.
Total Gross Merchandise Volume (GMV) surged by 42.8% year-over-year to RMB9.08 billion. Distribution GMV jumped by 27.3% and non-distribution GMV climbed by 44.3%. The number of brand partners increased to 223 as of September 30, 2019, from 172 as of September 30, 2018. The number of GMV brand partners increased to 214 as of September 30, 2019, from 166 as of September 30, 2018.
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The company currently expects GMV to grow by 45% to 50% year-over-year for the fourth quarter of 2019. The company looks forward to the eventual conversion of incremental GMV growth into revenue growth over the next few quarters.
For the fourth quarter, Baozun expects total net revenues in the range of RMB2.7 billion to RMB2.75 billion, which represents year-over-year growth of 23% to 25%. The company anticipates that services revenue will grow in-line with total net revenue on a year-over-year basis.