Please ensure Javascript is enabled for purposes of website accessibility

JD.com Quadruped Earnings in the First Quarter

By Anders Bylund - Updated May 13, 2019 at 6:18PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Don't expect the massive gains to last, as management promised to reinvest surplus funds into growth engines in the second quarter and beyond.

Chinese e-commerce giant JD.com (JD 3.09%) reported earnings on May 10, describing the results of the first quarter in fiscal year 2019. The company sailed past management's revenue guidance and pointed to a further acceleration of sales in the next reporting period. Here's a closer look.

JD's first-quarter results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year Growth

Revenue

$18.0 billion

$16.0 billion

12.5%

Net income

$1.08 billion

$243 million

344%

GAAP earnings per American depositary share (diluted)

$0.74

$0.17

335%

Data source: JD.com.

What happened with JD this quarter

  • Currency exchange effects made a significant difference to JD's reported results. Counted in Chinese yuan, JD's first-quarter sales rose 21% year over year, while earnings per American depositary share jumped 377%. The top-line result beat management's guidance of approximately $17.5 billion from three months ago.
  • 311 million active customers represented a 1.7% increase from the fourth quarter and a 2.9% jump versus the year-ago period. JD typically reports this metric as a trailing figure, comparing its customer activity on a rolling four-quarter basis. On a strict comparison of the first quarters in 2018 and 2019, the number of active accounts rose 15% to an undisclosed final tally. Again, JD prefers to talk about its longer-term trends.
  • Management noted that profits were "a little bit high" in this quarter, and investors shouldn't expect them to stay there. JD will continue to funnel rising operating profits into stronger research and development and marketing budgets, fueling the company's growth.
A delivery drone, emblazoned with JD logos, preparing to carry off a large cardboard box.

JD's delivery drones have been busy lately. Image source: JD.com.

What management had to say

In the earnings call, CEO Richard Liu told investors and analysts that JD actually follows a modern version of the classic playbook for large-scale retail businesses.

"I just also want to just come back to the basics, what you mentioned on the various decentralized retail formats, you can also draw comparison to the various innovative boutique shops in the offline world," Liu said. "At different times, you always have different new innovative retail formats, but in the end, the retail economies of scale driven by large procurement and also operating efficiency will remain intact."

Essentially, Liu argued, JD carries the traditional retail torch based on a next-generation digital workflow to create a unique business advantage.

"When you do such a scale, it is actually very difficult to be disrupted," he insisted.

Looking ahead

Based on healthy sales trends in April and early May, JD's management guided to approximately 21% year-over-year revenue growth in the second quarter -- measured in yuan, of course. The company is also boosting its promotion activities in this period, underscoring the fleeting nature of these large first-quarter profits.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

JD.com, Inc. Stock Quote
JD.com, Inc.
JD
$52.78 (3.09%) $1.58

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
327%
 
S&P 500 Returns
116%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.