Jingdong's 2021 Q4 financial report collapsed the entire Chinese stock, as of 36 minutes in the morning of March 11, the US stock JD plunged by about 15%, Pinduoduo fell by about 18%, and Ali and Vipshop fell by about 10%.
Putting all the blame on JD.com's earnings report is obviously unfair.
Recently, the Chinese stock capital has been extremely depressed, market confidence has fallen to the bottom, superimposed on the Fed interest rate hike expectations, the US inflation data is high, the Situation of the Russian-Ukrainian War is turbulent, the funds are moving closer to the large performing stocks of the US stock market, not to mention the Chinese stocks, that is, the small and medium-sized growth stocks in the United States, which also fell to the point that their parents did not recognize, such as Roblox, SEA, Shopify, Virgin Galaxy, PayPal and other star stocks, the decline is more than 60%, not to mention the Chinese stocks facing dual policy risks at home and abroad.
However, JD.com's financial report itself does show some worrying points.
Let's start with the surprise part.
In 2021, JD.com's GMV grew by 26.2% to 3,297 billion yuan, the highest growth rate in the past three years. As a reference, the overall scale growth rate of China's e-commerce industry in 2019-2021 is 21.4%, 14.5%, 10.7%, and the growth rate of Jingdong GMV in the past 3 years has bucked the trend with the industry, rising year by year, and opening up a growing gap with the growth rate of the broader market.
Some people may say that GMV is not a very rigorous data, the statistical caliber of all parties is not the same, and the reference value may not be so large, I basically agree. However, due to the high certainty of compliance during the epidemic period, and benefiting from the end of the industry's "two-choice one" policy, JD.com's GMV growth against the trend is also reasonable.
More importantly, the revenue data will not lie, Jingdong's revenue growth rate has also accelerated for 3 consecutive years, which can generally prove that its GMV growth rate is trustworthy. This shows that in the case of the industry being generally affected by live e-commerce and macroeconomic weakness, JD.com's development is quite stable and the impact is very small.
Overall, JD.com's revenue growth rate is slightly higher than the growth rate of GMV, reaching 951.6 billion yuan in 2021, an increase of 27.6% year-on-year. Behind the high growth, in addition to the rapid growth of third-party platform service revenue, a very important reason is that logistics services penetrate into third-party platform merchants and even off-site, driving the rapid growth of service revenue.
As we all know, JD.com's revenue composition is relatively simple: self-operated commodity income + service income.
The income from self-operated goods can be divided into live 3C home appliance commodity income and non-electric daily necessity goods income; service income can be divided into third-party platform business advertising and commission income, as well as logistics service income.
Overall, commodity revenue has always been the bulk of JD.com's revenue. From 2016 to 2021, commodity revenue increased from 237.7 billion yuan to 815.7 billion yuan, an increase of 2.43 times, and the 5-year CAGR was 28%. Even in 2021, commodity revenue will still maintain a high growth rate of 25.1%.
Although the proportion of service revenue is lower than that of commodity revenue, it grows faster and is the source of profits. From 2016 to 2021, JD.com's service revenue increased from 22.5 billion to 135.9 billion, an increase of 5.04 times, and the 5-year CAGR was 43.5%. For the full year of 2021, service revenue maintained a high growth rate of 44.7%.
Further splitting the revenue of JD.com's self-operated commodity business, the 3C home appliance business increased from 236.3 billion yuan in 2017 to 492.6 billion yuan in 2021, an increase of 108.5% in 4 years; the daily necessities business increased from 95.6 billion yuan in 2017 to 323.1 billion yuan in 2021, an increase of 238% in 4 years, and the growth rate far exceeded that of the 3C home appliance business. In the past few years, the two-wheel drive commodity business of daily necessities and 3C home appliances has grown, but daily necessities are clearly the core driver of growth.
From 2017 to 2021, the platform advertising and commission business increased from 25.4 billion yuan to 72.1 billion yuan, an increase of 184% in 4 years, cagr 29.5%; logistics services grew from 5.1 billion yuan to 63.8 billion, an increase of 11.5 times in 4 years, and CAGR was 88%.
Similarly, the rapid growth of the service business in the past four years has come from the two-wheel drive of platform business and logistics, but the more core driving force is logistics services.
Looking at the platform business separately, this piece includes advertising and commissions, which can directly benchmark the customer management income of Ali's core e-commerce and the core e-commerce income of Pinduoduo.
In contrast, the commission + advertising revenue of Ali's core e-commerce company will be 246 billion, 287.9 billion and 316.4 billion in 2019-2021, respectively, and the growth rates in 2020 and 2021 will be 17% and 9.9%, respectively. The growth rate of Jingdong is 25.3% and 34.8%, respectively, which has obvious advantages.
From 2019 to 2020, the commission + advertising business revenue of Pinduoduo's core e-commerce was 30.1 billion and 53.7 billion, compared with 59.6 billion in the first three quarters of 2021, and the annual commission + advertising business revenue is estimated at about 87.5 billion.
Pinduoduo is still ahead of JD.com in terms of growth rate, but by the fourth quarter, the growth rate of the two sides in a single quarter is estimated to be relatively close.
Let's take a look at the areas to worry about.
If you look at it on a quarterly basis, almost all businesses began to decline quarter by quarter in Q2 2021, of course, this is also related to the base of the previous low and high caused by the epidemic in 2020.
In fact, in the fourth quarter, in addition to the logistics business, the growth rate of all businesses has fallen to more than 20%, and the real resilience is the self-operated 3C home appliance business, and the growth rate of daily necessities has quickly slipped to almost cross with 3C home appliances.
To some extent, JD.com's own logistics advantages may be disintegrated in the field of daily necessities.
Because new consumption habits are rising, such as community group buying, the same city flash purchase, these near-field e-commerce in the field of daily necessities have more advantages, the daily hundred goods themselves are low unit price, the frequency is high, the cost structure of Jingdong self-operated logistics in this field has limited space, such as buying shampoo, dish soap, paper towels, cooking oil and other FMCG products, the unit price is not high, the community group purchase can be achieved next day, the distribution cost is much lower than that of Jingdong Logistics, and the timeliness is similar. If there is a higher pursuit of timeliness, users can choose a faster flash sale in the same city.
If the expensive infrastructure of JD Logistics can only play an advantage in the field of high-value 3C digital home appliances, it is difficult for JD to bear this consequence.
The second worrying point revealed by JD.com's quarterly report is the sharp decline in the growth rate of new users.
Q4 is the traditional peak season of e-commerce, but also the peak season for e-commerce platforms to expand new users, the quarter of Jingdong new users only 18 million, which is the lowest record in the past 9 quarters, the next Q1 is the traditional off-season, not surprisingly new users will continue to hit a new low.
This may indicate that JD.com's process of expanding new users has encountered great resistance.
At present, JD.com still has only 570 million, far behind Ali and Pinduoduo's nearly 900 million years of active buyers, at this time, if the growth of new users slides, it is inevitable to worry about its penetration ability in the low-line market, revealing signs of "aging before aging".
According to the non-public accounting standard EBITDA data, the profit situation after excluding equity incentives, JD.com's EBITDA in 2021 also declined, and the profit margin fell from 2.8% in 2020 to 2%, which is also lower than the 2.4% in 2019.
From a quarterly point of view, in the past 8 quarters, JD.com's non-public accounting standard EBITDA is in a downward channel as a whole, that is to say, it is in a state of increasing production and not increasing revenue.
So where does the money earned go?
In 2021, JD.com's free cash flow dropped from 34.9 billion yuan in the previous year to 26.2 billion. Marketing spending increased by 42.2%, from 27.2 billion to 38.7 billion, the problem is that new users have fallen sharply for two consecutive quarters, and are likely to decline again, which also raises concerns that JD.com will not once again fall into the dilemma of spending money to attract new users.
We review the following, Jingdong's advertising + commission business has a scale of 72.1 billion yuan, according to the general situation of the industry, this is an ultra-high gross profit business, gross profit margin of up to 80%, ideally the net interest rate can reach more than 40%, which means that the profit of the platform advertising + commission business should be about 20 billion yuan, which also means that the current self-operated commodity business and logistics are still in the stage of not making money or even losing money.
Leaving aside the additional expenditure on equity incentives in 2021, JD.com's expenditure on general administrative management is extremely restrained, and in the case of a substantial increase in manpower scale, general administrative expenditure has maintained a growth of less than 20% for many years; while research and development expenditure has basically not increased since 2018, which is quite unusual among many Internet companies.
As a retail company, JD.com is truly outstanding in terms of saving money.
However, as an Internet company with the slogan of "technology + retail", it is also inevitable to worry about where JD.com's technology comes from and where it goes.
Finally, I must say that in fact, JD.com's financial report as a whole is still good, and it is not easy to hand over such a financial report in the case of such a sluggish industry and economic market, of course, it is certainly far from being as good as the company itself said.
The irrational reaction of the market is more caused by fragile confidence, and Jingdong has shown a strong resistance to falling in the past year, and it is not excluded that some funds use the special period of financial reporting to short, triggering the market's sentiment to make up for it.