JD.com reports robust sales growth with the expectation for more

“JD’s commitment to providing consumers with the best possible online shopping experience drove another strong quarter of growth. In particular, more and more consumers in China’s fast-growing lower-tier cities are turning to JD for our superior value and service. We will continue to invest in technology and innovation to meet the growing needs of Chinese consumers and businesses for fast and reliable e-commerce and supply chain solutions,” said JD.com’s chairman and CEO Richard Liu.

The company rolled out its social e-commerce platform, Jingxi, in September to attract customers in smaller and rural markets. By partnering with more than 100 of the country’s domestic manufacturers, the app allows JD to act as the distribution arm for these companies in local and remote markets.

Revenue at JD Logistics nearly doubled year-over-year with net revenue of RMB 6 billion. This segment continues to increase its 24-hour delivery service footprint to include more “lower-tier cities.” The unit is now delivering approximately 90% of its domestic direct sales within 24 hours. JD Logistics operates more than 650 warehouses with an aggregate of 16 million square meters in floor space and generates nearly 40% of its revenue from external third-party customers.

JD reported total operating income of RMB 5 billion compared to a loss of RMB 0.7 billion in the 2018 third quarter. In addition to the growth in net revenue, lower fulfillment expenses drove the year-over-year improvement in results. Fulfillment expenses as a percentage of net revenue declined 90 basis points (bps) to 6.5% in the quarter.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of RMB 4.2 billion, or U.S. $600 million, resulted in a 3.1% adjusted EBITDA margin, 150 bps higher year-over-year.

“JD saw excellent results for the third quarter marked by accelerating revenue growth and record operating profit margin. Looking forward, we will increasingly benefit from the economies of scale inherent in JD’s unique business model through our leading supply chain, technology and service capabilities,” said JD.com’s chief financial officer Sidney Huang.

The company issued net revenue guidance for fourth quarter 2019 calling for a 21% to 25% year-over-year increase.

JD.com is an ecommerce company and a retail infrastructure service provider. At the end of the third quarter 2019, the company had more than 250,000 merchants using its online marketplace and more than 200,000 employees.

Shares of JD are up 4% on the day.