JD Stock Rises 1% on Revenue Beat, JD Logistics Expansion

JD's stock inched higher on Friday morning on better-than-expected results in the fourth quarter.

Anthony Russo
    Nov 15, 2019 9:00 AM  PT
JD Stock Rises 1% on Revenue Beat, JD Logistics Expansion
author: Anthony Russo   

The stock in JD.com Inc. (Nasdaq: JD) rose 24 cents to $33.81 per American depositary share on Friday morning after posting results that beat Wall Street analysts' estimates.

The online retailer, based in Beijing, said in a statement today that in the three months through September its revenue was $18.9 billion, up 29% year-over-year. The sector in JD that grew at the fastest pace, at 47%, was its service revenue, which rose to $2.2 billion, the report said.

Net income in the third quarter was $77 million, or 6 cents per ADS, compared with $419 million, or 30 cents per ADS, a year ago.

Richard Liu, the chief executive officer of JD, said in a conference call with analysts today, "No matter at our JD Retail, Logistics and JD Digits, the technology is our key driving forces. Only through technology will bring us long-term core competitiveness. Technology will always help us to bring up our users' experience, lower the costs and improve our operating efficiency."

JD said its smart supply chain line, JD Logistics, "improved its efficiency" in the lower-tier cities in China by expanding its 24-hour delivery services. Now, JD Logistics, which generated nearly 40% of JD's revenue in the third quarter, can deliver 90% of its direct sales within 24 hours in China, according to the company's statement. 

In the third quarter, JD has launched an alliance to enhance the packaging standards together with Procter & Gamble, Johnson & Johnson, Mengniu, Unilever, Heinz, as well as packaging giant Amcor and the China Packaging Testing Center. The alliance aims to optimize the usage of packing materials and promote recycling, it said. As of September, JD Logistics operated over 650 warehouses, it said.


(Image: JD.com)

Over the past few years, the gap in the consumer retail industry between China and the United States has narrowed significantly, JD reported in its earnings presentation. According to the slides, the market size in China for 2012 was 21 trillion yuan, compared with 30 trillion yuan in the U.S. By 2018, the market in China grew to 38 trillion yuan, at a compound annual growth rate (CAGR) of 10.1%, while the U.S. reached 41 trillion yuan, according to JD.

 JD Slide 1.jpg

(Image: JD.com)

Earlier this week, JD posted a gross merchandise volume (GMV) of $29.2 billion for Singles' Day, which exceeded last year's results. Its top e-commerce rival, Alibaba Group Holding Ltd. (NYSE: BABA), has set its own record, with GMV reaching $38.4 billion. In contrast to Alibaba, which generates revenue from merchants selling goods on its platform, JD owns the products it sells. JD claims on its official website that it is China's largest retailer.

As of September, JD sold goods from more than 250,000 merchants on its digital platform, and employed more 200,000 staff, it reported. 

Going forward, the company said it expects to generate revenue in the range of $23.3 billion to $24 billion in the fourth quarter, representing year-over-year growth of between 21% and 25%.