JD.com's net profit in the fourth quarter was 7.7 billion yuan, a year-on-year increase of 134%

Tencent Technology News News on March 9, JD.com released the company's unaudited financial results for the fourth quarter and full year ended December 31, 2022 before market on Thursday. According to the financial report, JD.com's net revenue in the fourth quarter was 295.4 billion yuan (about 42.8 billion US dollars), a year-on-year increase of 7.1%; Net income attributable to JD.com's common shareholders was 3 billion yuan (approximately US$400 million), compared with a net loss of 5.2 billion yuan in the same period last year; Non-GAAP net income attributable to JD.com's common shareholders was $7.7 billion (US$1.1 billion), up 114% from $3.6 billion in the year-ago quarter.

Focus:

• 1JD.com's fourth-quarter net revenue was 295.4 billion yuan (about $42.8 billion), up 7.1% year-on-year. Among them, net service revenue was 57.8 billion yuan (approximately US$8.4 billion), an increase of 40.3% year-on-year.
• 2JD.com's fourth-quarter operating profit was 4.8 billion yuan (about $700 million), compared with an operating loss of 400 million yuan in the same period last year; On a non-GAAP basis, JD.com's fourth-quarter operating profit was 7.3 billion yuan ($1.1 billion), compared with 2.8 billion yuan in the year-ago quarter.
• 3 Net income attributable to common shareholders was $3.0 billion (approximately US$400 million), compared to a net loss of $5.2 billion in the same period last year; Non-GAAP net income attributable to common shareholders was $7.7 billion ($1.1 billion), compared to $3.6 billion in the year-ago quarter.
• 4JD.com's full-year operating cash flow in 2022 was 57.8 billion yuan (approximately US$8.4 billion), compared to 42.3 billion yuan in 2021; Free cash flow was $35.6 billion (US$5.2 billion), compared to $26.2 billion in 2021.

First, revenue and profit are less than expected

1. Revenue is less than expected

JD.com's fourth-quarter net revenue was 295.4 billion yuan ($42.8 billion), up 7.1% from 275.8 billion yuan in the same period last year. Among them, net service revenue was 57.8 billion yuan (approximately US$8.4 billion), an increase of 40.3% from 41.2 billion yuan in the same period last year. Net product revenue was $237.6 billion ($34.4 billion), up 1% from $234.7 billion in the year-ago quarter.

JD.com's fourth-quarter net revenue fell short of Wall Street expectations. Data provided by Tencent's self-selected stocks showed that market analysts had expected JD.com's net revenue in the fourth quarter to be 296.4 billion yuan on average.

2. Profits are less than expected

Net income attributable to JD.com's common shareholders in the fourth quarter was 3 billion yuan (about US$400 million), compared with a net loss of 5.2 billion yuan in the same period last year. Non-GAAP net income attributable to common shareholders was $7.7 billion ($1.1 billion), compared to $3.6 billion in the year-ago quarter.

JD.com's diluted earnings per ADS in the fourth quarter were 1.91 yuan (about $0.28), compared with a diluted loss of 3.33 yuan per ADS in the same period last year. Non-GAAP diluted earnings per ADS were $4.81 (approximately $0.70) for the fourth quarter, compared to $2.21 per ADS in the year-ago quarter. JD.com's fourth-quarter net profit fell short of Wall Street expectations. Data provided by Tencent's self-selected shares showed that market analysts had expected, on average, to be 3.57 yuan per ADS diluted per ADSs in the fourth quarter on a non-GAAP basis.

3. Growth of cash reserves

As of December 31, 2022, JD.com's holdings of cash, cash equivalents, restricted cash and short-term investments totaled RMB226.2 billion (US$32.8 billion), up RMB33.1 billion from a year ago. As of December 31, 2021, JD.com's holdings totaled RMB191.3 billion (US$30 billion) in cash, cash equivalents, restricted cash and short-term investments.

4. Executive reviews

"In 2022, JD.com and many domestic industries have experienced many challenges, but we still achieved solid operating performance, and the group's annual revenue exceeded the RMB 1 trillion mark for the first time," said Xu Lei, CEO of JD.com. "During the epidemic, we are responsible for our social responsibility, and JD.com has become a more trustworthy enterprise. In the future, in the face of changing opportunities and challenges, JD.com will continue to focus on reducing costs, improving efficiency and improving user experience. I believe JD.com will play a more important role in China's economic growth and create long-term value for shareholders." ”

"In the fourth quarter and the full year of 2022, we not only achieved quality growth, but also strong cash flow," said Xu Ran, chief financial officer of JD.com. "We will continue to explore new growth opportunities, while valuing financial discipline and technology-driven operational efficiencies, to lay a solid foundation for JD.com's future high-quality growth." We are also pleased to continue to return to shareholders in the form of cash dividends, which reflect our healthy profitability and balance sheet, as well as our confidence in creating long-term value for our shareholders." ”

2. Financial Summary

1. The revenue of each business has grown steadily

In addition to new businesses, JD.com's revenue in the fourth quarter achieved stable growth. Among them, JD Retail's revenue in the fourth quarter was 258.9 billion yuan (about 37.5 billion US dollars), compared with 249.9 billion yuan in the same period last year; JD.com's revenue was RMB43 billion (US$6.2 billion), compared to RMB30.5 billion in the year-ago quarter; Dada's revenue was RMB2.68 billion (US$389 million) and new business revenue was RMB4.76 billion (US$690 million), down from RMB8.2 billion in the year-ago quarter.

2. Profit year-on-year turnaround

JD.com's fourth-quarter operating profit was 4.8 billion yuan (about $700 million), compared with an operating loss of 400 million yuan in the same period last year; On a non-GAAP basis, JD.com's fourth-quarter operating profit was 7.3 billion yuan ($1.1 billion), compared with 2.8 billion yuan in the year-ago quarter.

Net income attributable to common shareholders was $3.0 billion (approximately US$400 million), compared to a net loss of $5.2 billion in the year-ago quarter. Non-GAAP net income attributable to common shareholders was $7.7 billion ($1.1 billion), compared to $3.6 billion in the year-ago quarter.

JD.com's diluted earnings per ADS in the fourth quarter were 1.91 yuan (about $0.28), compared with a diluted loss of 3.33 yuan per ADS in the same period last year. Non-GAAP diluted earnings per ADS were $4.81 (approximately $0.70) for the fourth quarter, compared to $2.21 per ADS in the year-ago quarter.

3. Operating expenses decreased year-over-year

JD.com's cost of revenue in the fourth quarter was 253.9 billion yuan ($36.8 billion), up 6.3% from 238.8 billion yuan in the same period last year.

JD.com's fulfillment expenses mainly include procurement, warehousing, express delivery, customer service and payment processing fees. Compliance expenses for the fourth quarter were $16.9 billion ($2.4 billion), up 3.3% from $16.3 billion in the year-ago quarter. Performance expenses as a percentage of net revenue decreased to 5.7% from 5.9% in the year-ago quarter.

Marketing expenses were $12 billion ($1.7 billion) in the fourth quarter, down 10.3% from $13.4 billion in the year-ago quarter.

R&D expenditure was $4.4 billion (approximately $600 million) in the fourth quarter, up 6.4% from $4.1 billion in the year-ago quarter.

General and administrative expenses were $3.6 billion (approximately US$500 million) in the fourth quarter, down 2.5% from $3.7 billion in the year-ago quarter.

3. 2022 financial summary

JD.com's net revenue in 2022 was 1.046 trillion yuan (about $151.7 billion), an increase of 9.9% over the same period last year. Among them, net revenue from products increased by 6.1% year-on-year, and net revenue from services increased by 33.3% year-on-year.

By business, JD.com's retail revenue was 929.9 billion yuan (about 134.8 billion US dollars), compared with 866.3 billion yuan in the same period last year; JD.com Logistics' revenue was 137.4 billion yuan (about 19.9 billion US dollars), compared with 104.7 billion yuan in the same period last year; Dada's revenue was 8.03 billion yuan (about 1.16 billion US dollars) and new business revenue was 21.8 billion yuan (about 3.158 billion US dollars), compared to 26.06 billion yuan in the same period last year.

Cost of revenue was $899.2 billion (US$130.4 billion), up 9.3% from $822.5 billion in the year-ago quarter.

JD.com's fulfillment expenses mainly include procurement, warehousing, express delivery, customer service and payment processing fees. Compliance expenses were $63.0 billion (US$9.1 billion), up 6.7% from $59.1 billion in the same period last year. Performance expenses as a percentage of net revenue declined to 6.0% from 6.2% in the year-ago quarter.

Marketing expenses were $37.8 billion (US$5.5 billion), compared to $38.7 billion in the year-ago quarter.

R&D expenditure was $16.9 billion (US$2.4 billion), compared to $16.3 billion in the year-ago quarter.

General and administrative expenses were $11.1 billion (US$1.6 billion), down 4.4% from $11.6 billion in the same period last year.

JD.com's operating profit in 2022 was 19.7 billion yuan (about $2.9 billion), compared to 4.1 billion yuan in the same period last year. Non-GAAP, JD.com's operating profit in 2022 was 27.6 billion yuan (about US$4 billion), compared with 13.4 billion yuan in the same period last year; On a non-GAAP basis, JD.com's operating margin was 3.7% in 2022, compared to 3.1% in the same period last year.

Non-GAAP adjusted EBITDA (net income before interest, taxes, depreciation and amortization) was $33.6 billion ($4.9 billion), up 79.6% from $18.7 billion in the year-ago quarter.

Net profit attributable to JD.com's common stock in 2022 was 10.4 billion yuan (about US$1.5 billion), compared with a net loss of 3.6 billion yuan in the same period last year. Non-GAAP net income attributable to JD.com's common stock in 2022 was 28.2 billion yuan (approximately US$4.1 billion), compared to a net profit of 17.2 billion yuan in the same period last year.

JD.com's diluted earnings per ADS share in 2022 were 6.42 yuan (about $0.93), compared to a diluted loss of 2.29 yuan per ADS in the same period last year. On a non-GAAP basis, JD.com's diluted earnings per ADS in 2022 were $17.73 (approximately $2.57), compared to $10.75 per ADS in the same period last year.

As of December 31, 2022, JD.com's holdings of cash, cash equivalents, restricted cash and short-term investments totaled RMB226.2 billion (US$32.8 billion), up RMB33.1 billion from a year ago.

For the full year 2022, JD.com's net cash for investment activities was RMB54 billion (US$7.8 billion), primarily consisting of cash payments for capital expenditures, an increase in short-term investments, and net cash payments from the acquisitions of China Logistics Assets Holdings Limited ("China Logistics Assets") and Deppon.

For the full year 2022, net cash flow from financing activities was RMB1.2 billion (US$200 million), mainly consisting of net proceeds from bank loans, the Series B non-redeemable preferred share financing of JD.com and the placement of shares of JD.com Logistics, partially offset by cash payments from dividend payments.

4. Dividends

JD.com announced that the company's board of directors has approved a cash dividend of approximately $1 billion at $0.31 per common share, or $0.62 per American depositary receipt. The equity record date for this dividend is April 6, 2023; The arrival date for Hong Kong shareholders is April 27, 2023, and the arrival date for American depositary receipt shareholders is May 4, 2023.

In addition, JD.com plans to implement an annual dividend policy, and the Company may choose to declare and distribute cash dividends annually starting in 2023, based on the Company's financial performance in the previous fiscal year and other factors. The Board will determine, at its discretion, dividend distributions for any given year based on the Company's operating results, cash flows, financial position, capital requirements and other factors deemed relevant by the Board.

5. Stock price performance

JD.com shares closed at $46.98 on Wednesday, up $0.41, or 0.88 percent, from the previous session. At press time, JD.com shares edged up $0.05, or 0.11%, to $47.03 in premarket trading on the Nasdaq stock market. Over the past 52 weeks, JD.com's lowest share price was $33.17 and its highest was $68.29. Based on Wednesday's closing price, JD.com's market value is about $73.5 billion. (Mowgli)