JD.com revenue jumps 47 per cent in the first quarter

JD.com, China’s second-largest online retail services provider by sales, plans to ramp up the number of alliances with major brands this year after posting solid revenue in the seasonally slow first quarter.

In a statement released ahead of the Monday opening of the Nasdaq stock market in the United States, chief executive Richard Liu Qiangdong said that opportunities lay ahead as “more top brands discover the value of partnering with JD.com”.

The Beijing-based company saw its revenue for the three months ended March 31 rise 47 per cent to 53.97 billion yuan (HK$64.43 billion), up from 36.64 billion yuan in the same period last year, on the back of a sharp increase in annual active e-commerce customer accounts.

Its total user base jumped 73 per cent to 169 million in the 12 months to March, compared with 98 million a year earlier.

That helped JD.com’s gross merchandise volume -- the total value of goods sold on its domestic e-commerce platforms -- grow 55 per cent to 129.3 billion yuan in the first quarter from 83.6 billion yuan a year ago.

“Our core JD Mall business showed continued top-line growth momentum,” chief financial officer Sidney Huang said.

JD.com directly sells products from its own inventory, like Amazon, and operates online marketplaces where major brands and retailers sell their merchandise.

In March, its JD Finance unit joined China Everbright Bank to launch a co-branded Visa credit card targeting young adults and Chinese travellers abroad.

JD.com, however, saw its net loss in the first quarter widen to 909.8 million yuan, from 710.2 million yuan the previous year, due to higher operating expenses.

Fulfilment expenses -- including procurement, warehousing, delivery and customer service costs -- climbed 68 per cent to 4.5 billion yuan in the first quarter of 2016 from 2.7 billion yuan in the same period last year. Marketing costs increased 48 per cent to 2.1 billion yuan in the first quarter from 1.4 billion yuan a year ago.

“We expect operating expenses to remain at a relatively high level this year, mostly due to investment needs [of new businesses],” Daiwa Capital Markets analyst John Choi said in a report.

JD.com, in which Tencent Holdings bought a 15 per cent stake in 2014, estimated its second-quarter revenue to be between 64.2 billion yuan and 66.2 billion yuan, representing a year on year growth rate of between 40 per cent and 44 per cent.

“The company intends to manage capital spending at a prudent level within the operating cash inflows of its e-commerce business this year,” Jefferies analyst Cynthia Meng said in a report.

Meng added that investments in its fulfilment and logistic networks would continue. As of March 31, JD.com ran 209 warehouses, and a total of 5,987 delivery and pick-up stations across the mainland.