JD released its 2022 Q2 earnings in August 2022. Here are the key points that you don't want to miss for JD from this earnings!
In 2022 Q2, JD’s overall growth slowed down amidst the economic slowdown (with China’s GDP growing by only 0.4% y/y). In the quarter, its customer accounts and revenue grew y/y by 9% and 5% respectively.
However, this growth was still better than its competitors, with Alibaba recording flat overall growth (or negative 1% for its China commerce segment), and Vipshop seeing a negative 17% growth.
Amidst the challenging economic environment, JD has become more strategic in its investments in marketing and new businesses to improve its profitability.
In this article, let’s look at JD’s key performances, followed by some comments on its capital allocation.
During the quarter:
Annual active customer accounts grew 9% y/y to 580.8m accounts, which was a very slight increase from the 580.5m accounts a quarter ago.
Net revenue grew 5% to RMB 268b, with net service revenues growing faster (at 22%, to RMB 42b) compared to net product revenues (only 3% growth to RMB 226b). The slow revenue growth was mainly due to a slowdown in the economy, with competitors recording similar low growth – Alibaba (flat overall, or -1% for China commerce), and Vipshop (-17%).
By business segment, JD Logistics grew revenue the fastest, by 20% (to RMB 31b), while achieving a minor operating profit (of RMB 0.04b) just like in 2021 Q4 (RMB 0.7b), instead of a loss (of ~RMB 0.4b-1.5b a quarter) in 2020 Q4 to 2021 Q3 and 2022 Q1. JD Retail grew only 4% (to RMB 242b). The new Dada segment contributed a minor RMB 2b revenue, while the new businesses saw a negative revenue growth of 10% (to RMB 6b).
By business segment, JD Logistics grew revenue the fastest, by 20% (to RMB 31b), while achieving a minor operating profit (of RMB 0.04b) just like in 2021 Q4 (RMB 0.7b), instead of a loss (of ~RMB 0.4b-1.5b a quarter) in 2020 Q4 to 2021 Q3 and 2022 Q1. JD Retail grew only 4% (to RMB 242b). The new Dada segment contributed a minor RMB 2b revenue, while the new businesses saw a negative revenue growth of 10% (to RMB 6b).
On profitability, gross profit margin increased from 12.5% a year ago to 13.4% (although quite lower compared to 14.0% a quarter ago). When we look at the fulfilled gross profit margin (FGPM), which is the more relevant measure to look at (as explained in our detailed research), that margin grew from 6.7% a year ago to 7.3%, which was only slightly lower than the 7.5% a quarter ago, amidst the operational complexity and increased fulfillment cost due to the Covid-19 resurgence in China.
To know more details about JD revenue growth slowdown's remaining points, check them out at our Multibagger Research Series (linked below).
For our free analysis of other high quality companies, check them out at our free Research Series (linked below).
For our summary analysis of the company, check out the video below.
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