Chinese e-commerce and retail technology specialist JD.com (NASDAQ:JD) reported third-quarter results last week. The company beat expectations across the board, helped by healthy retail sales and booming growth in shipping and logistics services.

JD.com's third-quarter results by the numbers

Metric

Q3 2019

Q3 2018

Change

Revenue

$18.9 billion

$15.3 billion

24%

GAAP net income

$86 million

$438 million

(80%)

Adjusted earnings per diluted American depositary receipt (ADR)

$0.29

$0.12

142%

Data source: JD.com. GAAP = generally accepted accounting principles.

Your average Wall Street analyst had been looking for earnings near $0.17 per ADR on revenues of roughly $18.1 billion. JD crushed the earnings target and exceeded the revenue forecast by a smaller margin.

JD reported 334 million active customer accounts over the trailing four quarters. That's a 4% increase from the year-ago period, but that growth rate stood at 15% in the third quarter of 2018. Over 250,000 merchants were using JD's e-commerce platforms at the end of the third quarter, a 25% year-over-year increase.

Sales of electronics and home appliances remained the bread and butter of JD's operations, accounting for 56% of total sales in the third quarter. It was also the slowest-growing reportable product category in this report, trailing the pack at a 22% year-over-year growth rate. Advertising services notched a 29% revenue increase, general merchandise delivered 36% higher sales, and the logistics division nearly doubled its sales with a 92% increase.

A smiling young Chinese woman with her smartphone in one hand and a credit card in the other.

Image source: Getty Images.

Logistics services everywhere

A big part of the improvement in JD's logistics operations came from the company's push into so-called lower-tier cities. These are smaller metro areas with just a few million people but often experiencing rapid growth, not like the fully formed and slower-growing megacities of Tier 1. The shipping infrastructures in smaller towns like Weihai and Luzhou can't hold a candle to the efficiencies found in Beijing and Shanghai, which leaves lots of room for an infrastructure expert like JD to bring efficiency improvements and reap top-line growth in these markets.

JD says it can deliver 90% of its direct sales orders within 24 hours in China as a whole. That's quick progress from a year ago when the logistics network had just opened up services to the public in a handful of Tier 1 cities.

What's next for JD?

Looking ahead, JD's management pointed fourth-quarter revenues to approximately $23.2 billion, assuming stable dollar-to-yuan exchange rates compared to the third quarter. That would be roughly 23% above the year-ago period's result as measured in constant currencies, or in the neighborhood of 18% in dollar-denominated figures.

On the earnings call, CEO Richard Liu promised "even better results" across the board in 2020 and beyond.

"Technology is our key driving force," Liu said. "Only through technology will we bring long-term core competitiveness. Technology will always help us to bring up our users' experience, lower the costs and improve our operating efficiency."

JD's stock has gained 36% over the last 52 weeks, driven by a steady drumbeat of earnings surprises and at least in-line top-line results. It's one of the largest retail operations in the world, yet growing like a hungry little upstart. We're looking at a five-star stock in our Motley Fool CAPS system (out of 5) and a current recommendation in six of our newsletter services. If you're not interested in JD yet, I don't know what to tell you. This is both an exciting growth stock and a pretty direct play on the growing Chinese economy.