Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JD.com Inc achieved the highest single quarter non-GAAP net profit in its history.
- Strong momentum in the general merchandise category with revenues up 8.7% year on year.
- Supermarket revenue saw double-digit year-on-year growth for two consecutive quarters.
- Non-GAAP net margin in Q2 climbed to 5% for the first time, driven by gross margin expansion to a historical level of 15.8%.
- Robust user growth and engagement, with total quarterly active customers growing at a double-digit pace year on year for the third consecutive quarter.
Negative Points
- Revenues of electronics and home appliances were down 4.6% year on year due to last year's high base and disciplined strategy during promotions.
- Average order value declined year on year due to soft consumer spending and category mix shift.
- Revenue of new business was down 35% year on year, primarily due to adjustments in the Jingxi business.
- Non-GAAP operating loss of new business was RMB695 million in the quarter compared to a gain of RMB23 million a year ago.
- Service revenues grew by only 6% year on year, with marketplace and marketing revenues up 4% and logistics and other service revenues increasing by 8%.
Q & A Highlights
Q: Can you share insights on JD's low-price strategy and any changes in response to market shifts?
A: (Sandy Ran Xu, CEO) JD's commitment to a low-price strategy remains steadfast, focusing on lower costs, higher efficiency, and user experience. We enhance price competitiveness through scale and tech-driven innovations rather than short-term subsidies. Our efforts include reducing procurement costs, expanding low-priced product offerings, and launching initiatives like the Super 18 discount day to strengthen user mindshare and shopping experience.
Q: How does JD plan to accelerate 3P monetization and what is the timeline?
A: (Ian Su Shan, CFO) JD aims to build a thriving platform ecosystem benefiting both 1P and 3P businesses. We focus on expanding our merchant base, enriching product offerings, and fostering merchant growth. Positive developments include steady recovery in commission revenue and double-digit growth in advertising revenue. We expect 3P orders and GMV to surpass 1P business in the long term, driving healthy growth in commissions and advertising revenues.
Q: How is JD balancing growth and profitability, and what are the expectations for the second half of the year?
A: (Ian Su Shan, CFO) JD focuses on sustainable growth driven by exceptional user experience and operational efficiency. Despite a challenging comparison in Q2, we achieved a historic high net income and improved gross profit margins. In the second half, we will invest in user experience, new user acquisition, and market share expansion while maintaining profitability. We aim to outpace overall market retail sales growth and achieve high single-digit profit margins in the long term.
Q: What are JD's plans for cooperating with the government on the appliance trade-in initiative, and what impact is expected?
A: (Sandy Ran Xu, CEO) JD has been actively implementing trade-in initiatives and building partnerships with local governments and brands. We expect the central government's supportive policies to drive growth in the home appliance industry, providing incremental sales for JD. We are ready to implement relevant measures and maximize this opportunity through our online and offline channels.
Q: What is JD's outlook on earnings and margins over the next few years, and what are the plans for shareholder returns?
A: (Ian Su Shan, CFO) JD aims to achieve a high single-digit profit margin in the long term, driven by platform ecosystem growth, category mix optimization, and margin improvements. In Q2, we repurchased approximately USD2.1 billion worth of shares and completed a USD1.2 billion annual dividend payment. We will continue our repurchase plan and maintain dividend payments based on profits to ensure shareholder value creation.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
