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JD.com's (JD) Q3 Earnings Beat Estimates, Revenues Miss

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JD.com, Inc. (JD - Free Report) reported third-quarter 2018 earnings of 12 cents per share, surpassing the Zacks Consensus Estimate by 4 cents.

The company continued to invest in order to expand its fulfillment capability and broaden product offerings for enhancing services offered to sellers on its marketplace platform to ensure long-term growth. As of Sep 30, 2018, the company operated 550 warehouses, covering an aggregate gross floor area of approximately 11.9 million square meters in China.

JD.com's shares have lost 50.8% on a year-to-date basis compared with its industry’s decline of 3.3%.

 

 

Revenues

JD.com reported revenues of RMB104.8 billion (US$15.26 billion), missing the Zacks Consensus Estimate of US$15.61 billion but increasing 25.1% year over year.

The year-over-year increase was driven by strong revenues from both product as well as services.

In the third quarter, net product revenues increased 22.8% from the prior-year quarter to RMB93.9 billion (US$13.7 billion), accounting for 90% of the total third-quarter sales. The increase was driven by demand for home appliances, food and beverage, cosmetics, home furnishing, as well as baby products.

Net services revenues, accounting for the remaining 10% of its third-quarter sales, also increased 49.4% year over year to RMB10.9 billion (US$1.6 billion). The upsurge was backed by improved brand engagement and better monetization of the company’s platform.

Key Metric

Annual Active Customer Accounts — Annual active customer accounts were 305.2 million in the 12-month period ended Sep 30, 2018, reflecting 14.6% year-over-year growth.

Operating Results

Fulfillment expenses came in at RMB7.8 billion (US$1.1 billion), up 21.8% year over year. Marketing expenses totaled RMB4.1 billion (US$0.6 billion), up 25.2% from the prior-year quarter. Technology and content expenses amounted to RMB3.4 billion (US$0.5 billion), up 96.4% year over year. General and administrative expenses were RMB1.4 billion (US$0.2 billion), up 33% from the year-ago quarter.

Non-GAAP operating margin from continuing operations was 0.6% versus 1.8% in the year-ago quarter.

Non-GAAP EBITDA from continuing operations in the third quarter was RMB1.7 billion versus RMB2.1 billion in the year-ago quarter.

Balance Sheet

JD.com exited the third quarter with cash, cash equivalents, restricted cash and short-term investments of approximately RMB42.9 billion (US$6.2 billion) compared with RMB52.8 billion (US$8.0 billion) in the second quarter.

Guidance

For the fourth quarter of 2018, management expects its net revenues in the range of RMB130-RMB135 billion, reflecting growth of 18-23% year over year.

JD.com, Inc. Price, Consensus and EPS Surprise

 

JD.com, Inc. Price, Consensus and EPS Surprise | JD.com, Inc. Quote

Zacks Rank and Stocks to Consider

Currently, JD.com has a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include boohoo group plc (BHOOY - Free Report) , QuinStreet, Inc. (QNST - Free Report) and AMETEK, Inc. (AME - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term earnings growth rate for boohoo group, QuinStreet and AMETEK is currently pegged at 25%, 25% and 11.18%, respectively.

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