Both exceeded expectations. On May 16th, JD Group (HK09618, stock price of HKD 132.4, market value of HKD 405.2 billion) released its Q1 2024 performance report. The financial report shows that JD's revenue in the first quarter was 260 billion yuan, an increase of 7% compared to the same period last year; The net profit attributable to common shareholders of listed companies under non US GAAP accounting standards was 8.9 billion yuan, a year-on-year increase of 17.2%.
It is worth mentioning that the daily necessities category, which has seen a relative slowdown in growth for several consecutive quarters, saw a year-on-year growth rate of 8.6% in revenue this quarter, higher than the industry average. The recovery of the vitality of the supermarket category is partly due to JD's strategic accumulation in low prices, live streaming, and other aspects over the past year.
In terms of user indicators, Xu Ran, CEO of JD Group, pointed out in the financial report that JD's quarterly active users have maintained a double-digit year-on-year growth rate for two consecutive quarters, and the shopping frequency, NPS (Net Recommended Value), and number of users in low-end cities are also increasing.
In Xu Ran's view, "2024 is a year of implementation.". Previously, she positioned 2023 as a "year of adjustment".
In a few days, JD.com will celebrate its tenth anniversary of listing on NASDAQ. In terms of revenue scale, JD.com has grown from 69.3 billion yuan before going public in 2013 to 1.1 trillion yuan in 2023. The return to a healthy performance growth range in the first quarter of 2024 is of great significance to the elephant in the process of turning around. Because bottoming out, rebounding, and running aground often only occur in a moment of thought.
Da Shang Chao's Revitalization and Daily Necessities Category Revenue Growth by 8.6% YoY
In terms of revenue by business sector, JD's commodity revenue in the first quarter of 2024 increased by 6.6% compared to the first quarter of 2023, reaching 208.5 billion yuan; The service revenue was 51.5 billion yuan, a year-on-year increase of 8.8%.
The highlight of the first quarter's revenue lies in the revenue from daily necessities. In the first quarter, JD's revenue from daily necessities category was 85.3 billion yuan, a year-on-year increase of 8.6%. Xu Ran pointed out during the financial report conference call that in the past few quarters, JD.com has been very concerned about the operational capabilities of the supermarket category, including deepening operations in segmented industries, improving product richness, and reducing procurement costs.
More importantly, since JD's billion yuan subsidy was launched more than a year ago, after experiencing category expansion and improved price comparison mechanisms, the low price strategy has begun to be effective in the daily necessities category that focuses more on price power.
Xu Ran believes that the main driving force for the growth of supermarket categories is still the return to the essence of retail with cost, efficiency, and experience as the core.
"From the perspective of the whole year, although the competition in the supermarket category is still very fierce, we are full of confidence in the growth of the supermarket category, and the supermarket category will once again become an important driving force for JD's growth." In her opinion, in addition to the supermarket, there is still a lot of room for improvement in online penetration rate in categories such as home decoration, automobiles, sports and outdoor, which are also JD's fastest-growing categories at present.
In addition, in the first quarter, JD's service revenue reached 51.5 billion yuan, a year-on-year increase of 8.8%, of which logistics and other service revenue increased by 13.8% year-on-year.
The Daily Economic News reporter noticed that JD Logistics (HK02618, stock price of HKD 9.8, market value of HKD 64.868 billion) had a total revenue of HKD 42.14 billion in the first quarter, a year-on-year increase of 14.7%, of which external customer revenue reached HKD 29.25 billion, accounting for about 70%.
In terms of net profit, in the first quarter of 2024, JD Logistics had a net profit of 238 million yuan, a loss of 989 million yuan in the same period last year, and an adjusted net profit of 660 million yuan. The core profit indicators reached the best level in the first quarter since its listing.
However, this has been accompanied by an increase in fulfillment expenses (mainly including procurement, warehousing, distribution, customer service, and payment processing expenses). JD's financial report shows that JD's fulfillment expenses in the first quarter were 16.8 billion yuan, an increase of 9.3% from 15.4 billion yuan in the first quarter of 2023.
In addition, the percentage of fulfillment expenses to revenue was 6.5% in the first quarter of 2024 and 6.3% in the first quarter of 2023. JD.com explained in its financial report that the increase is related to adopting a lower threshold for free shipping services.
Will engage in more disciplined "investment and acquisition"
In the past year, JD.com has made many major adjustments in its business, including lowering the threshold for free shipping, large-scale low-priced subsidies, and investing heavily in the content ecosystem. The impact of this short-term rapid investment on profits is still a concern for the outside world.
However, JD has maintained its profit growth in the first quarter. The financial report shows that non GAAP net profit attributable to shareholders increased by 17.2% from 7.6 billion yuan in the first quarter of 2023 to 8.9 billion yuan in the first quarter of this year.
JD CFO Shan Su pointed out in the financial report conference call that business growth and profit improvement are not contradictory. Targeted business investment is complementary to long-term sustainable profits. "The group will continue to invest more disciplined efforts in improving user experience and gaining market share while maintaining stable revenue and profit growth in the future," he added.
One of JD's largest investments this year is expected to jointly invest 6.5 billion yuan with brands to support a new round of equipment updates and consumer goods trade ins.
If the supermarket category is the driving force for JD's future growth, then the 3C home appliance category has always been the core engine of JD's giant ship. The new round of trade in is to stimulate the demand for stock exchange, and to adapt to the company's context is to accelerate the re realization of existing demand.
In the current era where incremental growth has peaked for a long time, JD.com attaches great importance to the exploration of this valuable and foreseeable stock.
Regarding the exchange of old for new, Xu Ran stated that many local governments are actively promoting the exchange of old for new work, and JD.com is also coordinating with many local governments. More subsidy plans will be implemented gradually in the future. "We do not restrict the purchasing channels of old machines, nor do we limit the brand, age, and product appearance," she added.
"2024 is the year of implementation"
Regarding the upcoming 618 Mid year Promotion, Xu Ran's expectations are still relatively optimistic. She believes that JD's biggest advantage in dealing with major promotions is still the scale and certainty advantage of its supply chain. 618 is also the most important rhythm in the year of execution in 2024.
At last month's 618 preheating event, JD.com announced that as of now, the number of effective stores for third-party merchants on the platform has exceeded one million. The first implementation behind 618 is still the construction of a large platform ecosystem.
"For several quarters, I have been sharing with everyone the ideas and progress of platform ecological construction. First, we will attract investment and expand the scale of the ecosystem, attract more merchants, and provide richer goods." Xu Ran replied.
Regarding ecological construction, over the past year, JD.com has simplified the process for merchants to settle in, reduced store opening costs, and provided traffic support to attract new merchants to join. In addition to the effective number of third-party merchants exceeding one million, the number of active third-party merchants on the JD platform has also maintained accelerated growth for four consecutive quarters.
"Of course, the total number of our third-party merchants is still relatively small compared to other platforms, but we will continue to attract and cultivate more active merchants in the future, and continue to see an increase in the number of third-party merchants," Xu Ran said.
Beyond the platform, low prices and live streaming will continue throughout the entire year of 2024. Not long ago, JD.com announced a 1 billion cash and 1 billion traffic support for content consumption scenarios. At the same time, we will also cultivate top talents. To a certain extent, this is based on the needs of the current e-commerce market competition, but more importantly, it is necessary to do a good job in the content ecosystem, enhance the platform's attention, and continue to balance JD's own self operation and third-party ecology.
However, it remains to be seen whether the effectiveness of content consumption scenarios can be verified in the year-end "roll up".
In terms of share repurchase plan, JD.com also announced that from January 1, 2024 to May 15, 2024, the company repurchased a total of approximately 98.3 million Class A common shares (equivalent to approximately 49.2 million American depositary shares), totaling $1.3 billion. According to the previous share repurchase plan (which expired on March 17, 2024), the company has repurchased a total of approximately $2.1 billion as of March 17, 2024.
According to the new share repurchase plan (valid until March 18, 2027), as of May 15, 2024, the total amount repurchased by the company is approximately $700 million. As of May 15, 2024, the remaining amount of the new share repurchase plan is 2.3 billion US dollars.
The Daily Economic News reporter noticed that JD's total return to shareholders through dividends and share repurchases exceeded the total amount of capital raised in the past decade. After the financial report was released, JD. com's US stock market rose by over 4% before trading.