On May 17, JD group (NASDAQ: JD, 09618. HK) released the performance report for the first quarter of 2022. According to the financial report, in the first quarter of 2022, the net income of JD group was 239.65 billion yuan, a year-on-year increase of 18.0%; The net service income was 35.24 billion yuan. In the first quarter, the net loss attributable to ordinary shareholders was 3 billion yuan, and the net profit in the same period of last year was 3.6 billion yuan; Based on non US GAAP, the net profit attributable to common shareholders was 4 billion yuan, and the net profit in the same period of last year was 4 billion yuan.
For the reason for the net loss attributable to common shareholders in the first quarter, JD explained that it was due to the continuous investment in employee infrastructure, technology research and development, salary and welfare, as well as the full support of anti epidemic insurance in Shanghai and other places, and the transfer of benefits to partners and consumers under the epidemic.
This year’s epidemic has also had a great impact on Jingdong. The reporter of China business daily noted that, Xu Lei, CEO of JD group, said on the earnings conference call: “JD’s warehousing risk control in the core area this year has led to difficulties in the overall logistics performance. The warehousing and outbound of goods have been greatly affected, and the overall performance cycle has become longer. Due to the longer performance cycle, the order cancellation rate increased significantly in April, and the situation improved in May, but the order cancellation rate is still higher than last year.”
At the same time, the epidemic has also led to insufficient consumer confidence in income, and the overall consumption situation of the market is relatively low. Xu Lei revealed that after communicating with most brands, jd.com found that after predicting the economic situation this year, the brands have lowered their annual budgets one after another, and the business theme of many brands this year is “ensuring profits”. In addition to its efforts in reducing costs and increasing efficiency, JD hopes to make good use of the sales nodes in mid-618 and improve the operating performance in the second quarter as much as possible on the premise of the improvement of the epidemic situation.
net income increased by 18% year on year
In the first quarter of 2022, JD realized a net income of 239.66 billion yuan, an increase of 18.0% year-on-year compared with 20.34 billion yuan in the same period of last year.
By category, JD’s commodity revenue in the first quarter was 204.42 billion yuan, a year-on-year increase of 16.6%. Among them, the income from electronic products and household appliances was 118.37 billion yuan, a year-on-year increase of 13.8%; The revenue of daily necessities was 86.05 billion yuan, a year-on-year increase of 20.7%.
In addition, the revenue from logistics and other services in the first quarter was 35.24 billion yuan, a year-on-year increase of 26.3%. Among them, the revenue from platforms and advertising services was 17.68 billion yuan, a year-on-year increase of 25.2%; The revenue from logistics and other services was 17.56 billion yuan, a year-on-year increase of 27.5%.
In terms of business lines, JD’s retail revenue in the first quarter was 217.52 billion yuan, up 17.1% year-on-year from 185.8 billion yuan in the same period last year; The operating profit was 7.89 billion yuan, a year-on-year increase of 7.5%; JD retail mainly includes proprietary business, platform business and advertising services in China.
The revenue of JD logistics was 27.35 billion yuan, up 22% year-on-year from 22.41 billion yuan last year. Among them, the revenue of external customers is 16 billion yuan, accounting for 58.4%, and the revenue of customers from integrated supply chain is 17.9 billion yuan; The loss was 1.39 billion yuan, compared with 11 billion yuan in the same period last year; After adjustment, the net loss of non IFRS of JD logistics was 797 million yuan, compared with 1.365 billion yuan in the same period last year.
Jingdong’s new business revenue was 5.76 billion yuan, compared with 5.15 billion yuan in the same period last year, a year-on-year increase of 11.7%. The new business mainly includes Jingdong industrial development, Jingxi, overseas business and technological innovation.
Dada group began to consolidate JD group in the first quarter. In the first quarter of 2022, dada group realized a revenue of 690 million yuan; The operating loss was 190 million yuan.
As of March 31, 2022, the number of active purchase users of JD group in the past 12 months has reached 580.5 million. While the scale of users has expanded steadily, the average shopping frequency of users in the first quarter of this year has reached a new high, and the average contribution income value (ARPU) of users is close to the highest in three years.
“With JD’s solid supply chain capability and technology driven operating efficiency, we achieved steady performance in this quarter. We continued to maintain healthy growth in a challenging external environment,” Xu Lei said
From the perspective of profit, the operating profit in the first quarter of 2022 was 2.4 billion yuan and that in the same period of 2021 was 1.7 billion yuan. JD’s operating profit margin in the first quarter of 2022 was 1%. The operating profit margin of JD retail excluding undistributed items was 3.6% in the first quarter of 2022 and 4.0% in the same period of 2021.
In the first quarter of 2022, the operating profit under non GAAP was 4.7 billion yuan, an increase of 32.8% over 3.5 billion yuan in the same period in 2021.
In the first quarter of 2022, the net loss attributable to ordinary shareholders was 3 billion yuan, and the net profit in the same period of last year was 3.6 billion yuan. The net profit attributable to ordinary shareholders under non GAAP in the first quarter was 4 billion yuan, compared with 4 billion yuan in the same period in 2021.
As of March 31, 2022, JD’s cash and cash equivalents, restricted funds and short-term investments totaled 186.1 billion yuan. As of December 31, 2021, JD’s cash and cash equivalents, restricted funds and short-term investments totaled 191.3 billion yuan.
expect 618 to boost second quarter results
According to the financial disclosure, in JD’s cost structure, the largest proportion in the first quarter of 2022 is still the performance fee. JD’s performance expenses include procurement, warehousing, distribution, customer service and payment processing expenses. In the first quarter of 2022, JD’s performance expenses were 15.5 billion yuan, an increase of 12.2% over 13.8 billion yuan in the same period last year. Performance expenditure as a percentage of revenue in the first quarter of 2022 was 6.5%, compared with 6.8% in the same period last year.
In the first quarter of 2022, Jingdong’s R & D expenditure increased slightly, while its revenue also decreased. Jingdong’s marketing expenses in the first quarter of 2022 were 8.7 billion yuan, an increase of 24.4% over 7 billion yuan in the same period last year; The R & D expenditure was 4.4 billion yuan, compared with 4.5 billion yuan in the same period last year; The management fee was 2.5 billion yuan, an increase of 11.2% over 2.2 billion yuan in the same period last year.
It can be seen from the financial report data that JD had a better cost control in the first quarter. Xu ran, CFO of JD group, said at the earnings conference call: “Since mid March, in the face of the challenging and complex external environment, jd.com has adopted the strategy of strictly controlling costs and expanding cost control. Jd.com has paid more attention to cash flow management, improving operational efficiency, adjusting investment plans and focusing on areas of concern. Based on the above measures, despite the increase in costs and expenses caused by the epidemic, especially the increase in the cost of performance, we will try our best to minimize the impact of the epidemic. In the future, we will continue to Implement the above cost control measures in the second quarter, and dynamically manage JD’s profitability and cash flow according to changes in the macro environment.
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However, Xu Lei also said that the epidemic in 2020 and 2021 had a positive impact on Internet e-commerce, but the epidemic in 2022 was a double kill for online and offline enterprises.
For JD, JD’s warehousing risk control in the core area has led to a longer overall performance cycle, resulting in a significant increase in the order cancellation rate. JD’s order cancellation rate increased significantly in April and improved in May, but the order cancellation rate is still higher than last year.
For brands, this year, in addition to the relatively high growth rate of big business super category and health category, the overall market of electrified category and clothing category has undergone great changes. For example, the communication category is subject to the rise of the average market price and chip problems, resulting in a significant extension of the overall replacement cycle of consumers; For clothing categories, due to the epidemic and consumption reasons, the inventory of spring clothes in some factories is still overstocked, so many factories directly choose not to produce summer clothes.
“The epidemic has led to consumers’ lack of confidence in income, and the overall consumption situation is relatively low. We observed that the consumption power of goods with high customer unit price is not strong. On JD platform, even if the traffic and users are growing, the customer unit price in April and may is decreasing year-on-year.” Xu Lei added.
Under the downturn of consumption, the upcoming “618” year will be greatly promoted, which is of great concern to both e-commerce platforms and brands, businesses and investors.
“Due to the epidemic and other reasons, brands and businesses have great sales pressure. Therefore, this year, brands and businesses will more actively participate in JD’s’ 618 ‘activities than in previous years.” Xu Lei said, “we also hope that on the premise of the improvement of the epidemic situation, JD can make good use of this Sales node and improve the operating performance in the second quarter as much as possible.”
According to Xu Lei, with the exception of Shanghai, the goods preparation of Jingdong “618” has been carried out in all regions in an orderly manner in accordance with the original plan.
