What happened

Shares of Baozun Inc. (ADR) (NASDAQ:BZUN) popped 31.1% on Tuesday after the Chinese e-commerce solutions provider announced stronger-than-expected fourth-quarter 2017 earnings.

More specifically, Baozun's quarterly revenue climbed 23% year over year to $240.6 million, and translated to adjusted net income of $24.7 million, or $0.42 per diluted share. 

Analysts, on average, were anticipating lower adjusted earnings of $0.31 per share on higher revenue of $245.2 million.

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So what

Baozun's top-line growth was led primarily by a 56% increase in services revenue, which accounted for almost exactly half of total sales, driven by the momentum of the company's consignment and service fee models. Meanwhile, product sales grew a more modest 1.5%, as increased popularity of brand partners' products and effective marketing initiatives were offset by a transition of one leading electronics brand partner's business from the distribution model to a consignment model.

"We continue to gain growth momentum and are increasingly benefiting from our competitive strengths and ability to rapidly develop and adapt our technology as the market environment changes," said CEO Vincent Qiu. "We plan to continue investing in technology to further strengthen our leadership position and expand the array of services we are able to offer in order to create greater value for our shareholders."

Now what

For the first quarter of 2018, Baozun expects revenue to be between $136.3 million and $141 million (given steady currency exchange rates), assuming a more than 50% increase in services revenue. By comparison, most investors predicted first-quarter sales of roughly $127.8 million

All told, this was a straightforward quarterly earnings beat followed by a strong forward outlook. It's no surprise to see the market so aggressively bidding up Baozun shares in response.

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