JD.com Announces Second Quarter and Interim 2023 Results

BEIJING, Aug. 16, 2023 (GLOBE NEWSWIRE) -- JD.com, Inc. ( JD and HKEX: 9618 (HKD counter) and 89618 (RMB counter)), a leading supply chain-based technology and service provider, today announced its unaudited financial results for the three and six months ended June 30, 2023.

Second Quarter 2023 Highlights

• Net revenues for the second quarter of 2023 were RMB287.9 billion (US$¹39.7 billion), an increase of 7.6% from the second quarter of 2022. Net service revenues for the second quarter of 2023 were RMB54.1 billion (US$7.5 billion), an increase of 30.1% from the second quarter of 2022.
• Income from operations for the second quarter of 2023 was RMB8.3 billion (US$1.1 billion), compared to RMB3.8 billion for the same period last year. Non-GAAP² income from operations was RMB8.7 billion (US$1.2 billion) for the second quarter of 2023, as compared to RMB5.8 billion for the second quarter of 2022. Operating margin of JD Retail before unallocated items for the second quarter of 2023 was 3.2%, compared to 3.4% for the second quarter of 2022.
• Net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB6.6 billion (US$0.9 billion), compared to RMB4.4 billion for the same period last year. Non-GAAP net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB8.6 billion (US$1.2 billion), as compared to RMB6.5 billion for the same period last year.
• Diluted net income per ADS for the second quarter of 2023 was RMB4.15 (US$0.57), compared to RMB2.74 for the second quarter of 2022. Non-GAAP diluted net income per ADS for the second quarter of 2023 was RMB5.39 (US$0.74), compared to RMB4.06 for the same period last year.
• Operating cash flow for the twelve months ended June 30, 2023 was RMB52.5 billion (US$7.2 billion), compared to RMB51.1 billion for the twelve months ended June 30, 2022. Free cash flow, which excludes the impact from JD Baitiao receivables included in the operating cash flow, for the twelve months ended June 30, 2023 was RMB33.5 billion (US$4.6 billion), compared to RMB27.7 billion for the twelve months ended June 30, 2022.
  

“We reported a solid performance for the second quarter both financially and operationally, thanks to JD.com's enhanced business structure and leading supply chain capabilities,” said Sandy Xu, Chief Executive Officer of JD.com. “We are also encouraged to see the number of our marketplace merchants more than doubled and reached a new record during the quarter, reflecting our efforts to build a superior marketplace ecosystem, one of our priorities to provide customers with enriched supplies at better prices. I am confident that JD.com's commitment to providing the utmost in selection, speed, quality and value will continue to resonate with customers and set a strong foundation for our long-term success.”

“JD.com delivered both revenues and profitability ahead of our expectation in the second quarter, an encouraging trend we are happy to see amidst our business adjustment and a highly competitive market environment,” said Ian Su Shan, Chief Financial Officer of JD.com. “In JD Retail, we continued to gain market share in core categories of home appliances and 3C, propelled by our supply chain advantages and service quality, while supermarket category made steady progress as expected to build a healthier business model. We are encouraged by such solid results, and we will continue to further optimize JD’s business model and invest in JD’s long term sustainable growth.”

Business Highlights

Environment, Social and Governance

• In June, JD.com released its 2022 Environmental, Social, and Governance (“ESG”) Report, covering the company’s progress in 2022 across corporate governance, business ethics, green operations, green logistics, consumer services and sustainable supply chain, among others. The report highlights JD.com’s commitment to aligning its business development strategy with the value proposition of building a “responsible supply chain” and to continually enhancing its ESG practices.
• In April, JD Logistics launched the Supply Chain Emission Management Platform (“SCEMP”), a validated carbon footprint management platform incorporating over 140 types of carbon emission factors in road transportation in China. The platform calculates carbon emissions with higher granularity based on the actual routes of transportation vehicles. The SCEMP aims to drive more enterprises to reduce carbon emissions with enhanced efficiency and lower cost, ultimately steering towards achieving the net-zero emission target.

JD Retail

• During the JD 618 Grand Promotion, the company further upgraded its trade-in services for home appliance and home goods, providing customers attractive discounts, complimentary on-site disassembly and moving, and integrated services covering delivery, installation, disassembly and cleaning. These efforts not only improve JD.com’s user experience, but also elevate the industry service standard for home appliance and home goods.
• During the JD 618 Grand Promotion, the company opened two JD MALLs in Dongguan and Kunming alongside thirteen city-level flagship home appliance and electronics stores in eleven cities such as Chengdu, Tangshan, Suzhou and Nanjing, as well as 724 JD home appliance stores in lower-tier markets. The expansion strives to improve customers’ shopping experience, while further enriching the traditional retail ecosystem.

• In the second quarter, Italian luxury fashion brands Bottega Veneta and Missoni both joined hands with JD.com and launched their official flagship stores on the JD platform. Meanwhile, beauty brands including Sisley, a French luxury skincare brand, and SkinCeuticals, a science-based skincare brand of the L'Oreal Group, launched their official flagship stores on JD.com. Others joining JD.com in the quarter included Maison Margiela Fragrances, Byredo, Farmacy, and Aesop, among others, further enriching the platform’s product offerings to fully address customers’ diverse skincare needs.
  

JD Health

• In the second quarter, JD Health expanded its collaborations with global pharmaceutical companies, including Novartis and Novo Nordisk. By further enhancing its cold chain and offline Direct to Patient (“DTP”) omni-channel fulfillment capabilities, JD Health continues to build up its industry-leading online retail channel for new specialized medicines, which provides better accessibility to patients in need.
• In April, JD Health officially launched one of the first online medical centers specializing in dermatology in China. The platform features online clinics with over 40 leading experts in the dermatology field, in addition to over 3,000 registered dermatologists from China’s top-tier AAA hospitals. The platform has also assembled a team of full-time dermatologists to provide around-the-clock support for users’ inquiries related to skin issues.
• As a strategic service offering of JD Health, JD Family Doctor completed its products upgrade in June and launched a “year-round caring for elderly” service. The service pairs an exclusive health caregiver with each of the elderly users to monitor and manage their health conditions throughout the year, and also provides customized health management solutions to serve the elderly users in the long term. Since 2023, the overall user satisfaction rate of JD Family Doctor service has reached 99%.
  

JD Logistics

• In April, JD Airlines launched a new all-cargo route between Beijing Daxing and Shenzhen. With the new all-cargo flights operations between the two destinations, JD Airlines is positioned to provide reliable next-morning delivery services in key cities in the Beijing-Tianjin-Hebei region and the Pearl River Delta region.
• In June, phase II of JD Logistics Kunshan Asia No.1 smart industrial park (“Kunshan Asia No.1”) officially commenced operation. During the JD 618 Grand Promotion this year, Kunshan Asia No.1's sorting capacity ramped up to an average of over 4.5 million parcels per day, representing the world’s leading level.

• As of June 30, 2023, JD Logistics operated over 1,600 warehouses. Including warehouse space managed through the Open Warehouse Platform, JD Logistics’s warehouse network had an aggregate gross floor area of over 32 million square meters.³
  

Dada

• In April, JDDJ emerged as one of the first on-demand retail service providers to support the launch of Xiaomi 13 Ultra smartphones. JDDJ brought customers a convenient shopping experience with one-hour delivery for in-stock products.
• During the JD 618 Grand Promotion, JDDJ saw an 80% year-over-year increase in the number of collaborated offline stores, along with triple-digit year-over-year GMV growth in categories including home appliance, computers, cosmetics, sports and outdoors, and liquor, further diversifying the platform’s supplies and ecosystem. Additionally, the provision of JDDJ’s “Shop Now” services reached customers in over 2,000 counties, districts, and cities during the promotion.
  

Second Quarter 2023 Financial Results

Net Revenues. For the second quarter of 2023, JD.com reported net revenues of RMB287.9 billion (US$39.7 billion), representing a 7.6% increase from the same period of 2022. Net product revenues increased by 3.5%, while net service revenues increased by 30.1% for the second quarter of 2023, as compared to the same period of 2022.

Cost of Revenues. Cost of revenues increased by 6.4% to RMB246.5 billion (US$34.0 billion) for the second quarter of 2023 from RMB231.7 billion for the second quarter of 2022.

Fulfillment Expenses. Fulfillment expenses, which primarily include procurement, warehousing, delivery, customer service and payment processing expenses, increased by 2.3% to RMB16.7 billion (US$2.3 billion) for the second quarter of 2023 from RMB16.3 billion for the second quarter of 2022. Fulfillment expenses as a percentage of net revenues was 5.8% for the second quarter of 2023, compared to 6.1% for the same period last year.

Marketing Expenses. Marketing expenses increased by 16.7% to RMB11.1 billion (US$1.5 billion) for the second quarter of 2023 from RMB9.5 billion for the second quarter of 2022, marketing expenses as a percentage of net revenues was 3.8% for the second quarter of 2023, compared to 3.5% for the same period last year, mainly due to the increased spending in promotion activities.

Research and Development Expenses. Research and development expenses increased by 1.1% to RMB4.1 billion (US$0.6 billion) for the second quarter of 2023 from RMB4.0 billion for the second quarter of 2022. Research and development expenses as a percentage of net revenues was 1.4% for the second quarter of 2023, compared to 1.5% for the same period last year.

General and Administrative Expenses. General and administrative expenses increased by 1.5% to RMB2.4 billion (US$0.3 billion) for the second quarter of 2023 from RMB2.3 billion for the second quarter of 2022. General and administrative expenses as a percentage of net revenues was 0.8% for the second quarter of 2023, compared to 0.9% for the same period last year.

Income from Operations and Non-GAAP Income from Operations. Income from operations for the second quarter of 2023 was RMB8.3 billion (US$1.1 billion), compared to RMB3.8 billion for the same period last year. Non-GAAP income from operations was RMB8.7 billion (US$1.2 billion) for the second quarter of 2023, as compared to RMB5.8 billion for the second quarter of 2022. Operating margin of JD Retail before unallocated items for the second quarter of 2023 was 3.2%, compared to 3.4% for the second quarter of 2022.

Non-GAAP EBITDA. Non-GAAP EBITDA increased by 45.0% to RMB10.4 billion (US$1.4 billion) for the second quarter of 2023 from RMB7.2 billion for the second quarter of 2022.

Share of Results of Equity Investees. Share of results of equity investees was an income of RMB0.9 billion (US$0.1 billion) for the second quarter of 2023, as compared to a loss of RMB1.6 billion for the second quarter of 2022, primarily due to the increase in share of profit and the decrease in impairment of equity method investees.

Others, net. Other non-operating income was RMB1.2 billion (US$0.2 billion) for the second quarter of 2023, as compared to RMB3.6 billion for the second quarter of 2022. The decrease was primarily due to net losses arising from fair value changes of investment securities, compared to net gains in the same quarter last year, and the increase in impairment of investments.

Net Income Attributable to the Company's Ordinary Shareholders and Non-GAAP Net Income Attributable to the Company's Ordinary Shareholders. Net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB6.6 billion (US$0.9 billion), compared to RMB4.4 billion for the same period last year. Non-GAAP net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB8.6 billion (US$1.2 billion), as compared to RMB6.5 billion for the same period last year.

Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS for the second quarter of 2023 was RMB4.15 (US$0.57), compared to RMB2.74 for the second quarter of 2022. Non-GAAP diluted net income per ADS for the second quarter of 2023 was RMB5.39 (US$0.74), compared to RMB4.06 for the second quarter of 2022.

Cash Flow and Working Capital

As of June 30, 2023, the company’s cash and cash equivalents, restricted cash and short-term investments totaled RMB243.3 billion (US$33.5 billion), compared to RMB226.2 billion as of December 31, 2022. For the second quarter of 2023, free cash flow of the company was as follows:

* Including capital expenditures related to the company’s headquarters in Beijing and all other CAPEX.

Net cash used in investing activities was RMB28.1 billion (US$3.9 billion) for the second quarter of 2023, consisting primarily of the increase in short-term investments and time deposits, and cash paid for capital expenditures.

Net cash used in financing activities was RMB1.8 billion (US$0.3 billion) for the second quarter of 2023, consisting primarily of cash paid for dividends, partially offset by the net proceeds from bank loans.

For the twelve months ended June 30, 2023, free cash flow of the company was as follows:

Supplemental Information

The company reports four segments, JD Retail, JD Logistics, Dada and New businesses. JD Retail, including JD Health and JD Industrials, among other components, mainly engage in online retail, online marketplace and marketing services in China. JD Logistics includes both internal and external logistics businesses. Dada is a local on-demand delivery and retail platform in China. New businesses mainly include JD Property, Jingxi and overseas businesses.

The table below sets forth the segment operating results:

* The inter-segment eliminations mainly consist of revenues from supply chain solutions and logistics services provided by JD Logistics to JD Retail, on-demand delivery and retail services provided by Dada to JD Retail and JD Logistics, and property leasing services provided by JD Property to JD Logistics.

** Unallocated items include share-based compensation, amortization of intangible assets resulting from assets and business acquisitions, effects of business cooperation arrangements, and impairment of goodwill and intangible assets, which are not allocated to segments.

The table below sets forth the revenue information: