JD.com beats Q4 revenue estimates

JD.com Inc. (NASDAQ: JD) beat revenue expectations for the fourth quarter of 2019, allowing shares to gain over 7% in premarket hours on Monday.

Revenues

Net revenues grew 26.6% year-over-year to RMB170.7 billion, or $24.5 billion, beating estimates of $23.7 billion, helped by strong customer growth, especially in lower-tier cities. Net product revenues rose by 24.5% while net service revenues increased by 43.6%.

Earnings

Net income attributable to ordinary shareholders was RMB3.6 billion, or $0.5 billion, compared to a net loss of RMB4.8 billion last year. Adjusted net income was RMB810.7 million, or $116.5 million.

Diluted net income per ADS was RMB2.44, or $0.35, compared to a net loss per ADS of RMB3.32 last year. Adjusted net income per ADS was RMB0.54, or $0.08. The results surpassed analysts’ expectations of $0.06.   

User Metrics

Annual active customer accounts increased by 18.6% to 362 million in 2019 compared to 2018. Mobile monthly active users in December 2019 rose by 41% versus December 2018.

Outlook

Net revenues for the first quarter of 2020 are expected to grow at least 10% versus the first quarter of 2019.

Also read: JD.com Q4 2019 Earnings Preview

Initiatives

During the quarter, JD.com benefited significantly from its Consumer to Manufacturer initiative, which uses data and consumer insights to help brands provide customized products to customers. As part of its omnichannel strategy, the company launched JD E-SPACE, a 50,000 square meter super store in Chongqing.

JD.com has established mega warehouses in 17 cities across China as of the end of 2019, forming the largest smart warehouse cluster in Asia. The company also opened two ultra-large sorting centers in Chengdu and Wuhan, both of which are capable of handling 1 million orders daily. This has massively increased JD Logistics’ ability to serve customers in southwest and central China.

Last month, reports emerged about JD.com planning to spin off its logistics arm through an IPO in the second half of the year that would value the company at around $30 billion. It is believed that as a stand-alone entity, JD Logistics would perform better, and that separating the capital-intensive business unit might improve the company’s overall cash position and enhance shareholder value.

CFO Change

In a separate press release, JD.com announced that its CFO Sidney Huang will retire in September 2020. He will be succeeded by Sandy Xu, who is currently Senior Vice President of JD.com and CFO of JD Retail. Ms. Xu will report to CEO Richard Liu.

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