Just handed over the 2023 full year transcript, JD. US (JD. US, $24.91 per share, total market value $39.2 billion) saw its US stock price rise by over 11% from pre market, nearly 20% during trading, and finally closed up 16.18%. The capital market seems to have temporarily breathed a sigh of relief for JD.
On the evening of March 6th, JD Group's latest quarterly and annual performance for 2023 showed that in the fourth quarter of 2023, JD Group's revenue was 306.1 billion yuan (RMB, the same below), a year-on-year increase of 3.6%, and the annual revenue was 1084.7 billion yuan, a year-on-year increase of 3.7%. The Daily Economic News reporter noticed that in 2023, the annual commodity revenue was 871.2 billion yuan, a year-on-year increase of 0.7%, while service revenue increased by 17.8% year-on-year to 213.4 billion yuan.
JD's Q4 and Full Year 2023 Performance JD Financial Report
In terms of net profit, in the fourth quarter of 2023, JD's net profit attributable to the parent company was 3.4 billion yuan, an increase of 11.8% compared to the same period of 3 billion yuan in 2022; The net profit attributable to shareholders for the whole year was 24.2 billion yuan, an increase of 133% from 10.4 billion yuan in 2022.
The annual profit growth is partly due to the continuous cost reduction, and on the other hand, it is the rare profit space brought by the growth of JD's 3P (third-party) business. The financial report shows that in 2023, the number of third-party merchants on JD.com increased by 188% year-on-year, and the number of new merchants added within a year increased by 4.3 times year-on-year.
Good profit performance, relatively stable revenue growth, and a return to positive growth in revenue for the fourth quarter of the 100 categories per day... Compared to the slightly confused year of 2022, 2023 is a year of war and constant adjustment for JD.com. The strong return of billions of subsidies and low price strategy has been running through JD's entire business in 2023, with high-profile attacks across the entire line. JD's helmsman Liu Qiangdong has spoken out at multiple key nodes, and JD's frequent salary increases in procurement and sales have become a hot topic.
Now, JD.com, which submitted its 2023 exam, may be able to breathe a little sigh of relief; But early this morning, Liu Qiangdong still has to face the new challenges of 2024, which are full of difficulties, dangers, and suspense.
As of March 7th, according to press releases, JD Group W (HK 09618) rose 7.29% during trading, with a stock price of HKD 95.70 and a market value of HKD 304.295 billion.
Maintain stable commodity income and continuously expand the 3P business ecosystem
"With the improvement of revenue and profitability in the fourth quarter, we are pleased to conclude 2023 with a strong momentum," said Xu Ran, CEO of JD.com, at the beginning of the financial report conference call.
Looking at the revenue sector, in 2023, JD's commodity revenue increased by 0.7% year-on-year to 871.2 billion yuan, and its service revenue increased by 17.8% year-on-year to 213.4 billion yuan.
Especially in the fourth quarter, JD's revenue from two major product categories showed a significant increase compared to the third quarter. Among them, the revenue of daily 100 products stopped the trend of declining for three consecutive quarters, with a year-on-year increase of 0.2% in the fourth quarter, and the revenue of 3C home appliance products increased by 6.1% year-on-year.
Xu Ran explained that from a category perspective, the electrified category will maintain a faster growth rate than the overall market in 2023. Although it still faces significant challenges overall, there is confidence in maintaining a faster growth rate than the industry in 2024.
"The supermarket category has been undergoing adjustments in the past year, including focusing on the core track and improving performance efficiency through warehouse network reforms. Currently, it is still in a good recovery trend," Xu Ran added.
In terms of service revenue, JD Logistics still contributes significantly to growth. According to the financial report, in 2023, the revenue of external customers of JD Logistics services increased by 30.8% year-on-year, with the average revenue of single customers in the integrated supply chain increasing by 15.2% year-on-year.
Regarding the slight fluctuations in JD platform and advertising service revenue in the fourth quarter, JD Group CFO Dan Su explained that this was mainly due to JD's series of support measures in the past year, including free commission for new merchants and active commission reductions for certain categories, which led to a year-on-year decrease in commission revenue. Advertising revenue has also slowed down in the fourth quarter, mainly due to the staggered peak of the Chinese New Year holiday.
When it comes to the platform ecosystem, the reporter noticed that in the past year, the number of third-party merchants on JD.com has increased by 188% year-on-year, and the number of new merchants has increased by 4.3 times year-on-year. It is not difficult to see that JD's 3P business growth is still strong, and supporting infrastructure and ecology are continuously expanding.
Dan Su believes that optimizing the platform ecosystem is a long-term project, and JD is still in its early stages. The rapid monetization of the current 3P business is not JD's primary task in the short term. The focus of 2024 is still to attract more businesses, especially small and medium-sized businesses in the industrial belt, and enrich our product supply.
Regarding the growth of JD's fourth quarter and full year profits, e-commerce analyst Li Chengdong stated in an interview with the Daily Economic News that the main reason is the increase in the number of third-party merchants on JD, as well as the improvement of supporting infrastructure and ecology. Compared to self operated business, the profit performance of 3P business is definitely better, including commission, advertising and other income. Especially under the premise of domestic economic recovery, brand merchants are increasing their advertising investment to drive the growth of advertising revenue, and JD.com is one of the beneficiaries.
"Compared with new e-commerce forces such as Tiktok E-commerce and Pinduoduo, the growth rate of JD's single digit revenue is certainly slow. Of course, with the entry of more and more new competitors with strong growth, the market share of the original e-commerce has been squeezed, and JD's performance has also continued to be under pressure." Li Chengdong said of JD's latest performance.
The suspense of overseas business "small step pilot" real-time retail remains unresolved
It is not difficult to see the pressure on some of JD's business revenue that the old e-commerce market pattern is still being constantly squeezed, and new increments are not easy to find in the short term.
Therefore, during the financial report conference call, Xu Ran provided JD's subsequent layout ideas and clues regarding the hottest e-commerce platform's overseas business at present. Xu Ran said that JD.com has always been paying attention to internationalization opportunities and constantly laying out in a "small step pilot" manner.
"But our business model is different from other platforms, so in terms of international business layout, we still rely on the supply chain as the foundation, which is the fulcrum of JD International's business," Xu Ran continued to emphasize, "In cross-border business, we also introduce the product level. JD International has established three major brand centers globally, and its logic is to improve the efficiency of the links and the richness of the products through JD International's supply chain capabilities."
She also stated that in the existing Southeast Asian and European markets where JD.com is deeply rooted, JD.com serves not only international fast-moving consumer goods giants but also emerging Chinese overseas enterprises through overseas warehouses, bonded warehouses, etc. These B-end businesses may not be directly felt by everyone.
The reporter noticed that in late February, there were reports that JD.com had made a takeover offer to British electronics retailer Curries. Regarding this matter, JD.com did not respond to reporters at the time. But JD's international business layout and overseas strategic ambitions are both continuously expanding.
In addition to its overseas business, JD's real-time retail business has also been receiving attention from the outside world.
On March 6th, Dada Group issued a statement stating that the review results of certain suspicious businesses identified through internal audits had been clarified. The review results of an independent third-party organization showed that the company's management did not participate in the planning and was carried out by individual employees.
In another announcement released on the same day, Dada Group announced that former CEO and director He Huijian would resign after the independent review was largely completed. Fu Bing, who currently leads the Dada Express delivery business, will serve as the interim president of the company and supervise its business operations under the guidance of the board of directors, effective immediately. At the same time, the board of directors is actively evaluating the composition of the company's leadership in conjunction with the company's long-term development plan.
From the observation of the past year, although JD's real-time retail business has maintained a good growth rate, the overall strategic planning is not very clear compared to other business lines. And Dada suffered a heavy blow in the capital market due to this wave.
Instant retail is a battlefield that all giants attach great importance to in the new stage of e-commerce competition, and it is also the most capable and unbeatable battle that JD.com is capable of undertaking and supporting at this stage. With the arrival of new management and organizational structure, there may also be new paths and plans. Especially in early 2024, it was exposed that Liu Qiangdong had been poaching talent from Meituan for 7 years, and Guo Qing served as an advisor to Xu Ran, CEO of JD.com Group and CEO of JD.com Retail. Guo Qing's business projects included JD Instant Retail, which left some suspense and imagination for the outside world.
JD's Future Growth: "Defending Everything That Can Be Defended"
Even though the growth has maintained a stable range, for a retail giant with annual revenue exceeding one trillion yuan, the outside world is still more concerned about its future growth points.
"JD's business performance is relatively solid. At the same time, JD has a good size in many business segments, and will not be affected by Pinduoduo and Tiktok e-commerce in a short time. First, the enterprise procurement business, second, the layout of offline retail market, and third, JD industrial products and other B2B businesses." Li Chengdong explained.
Regarding JD's future growth points, Li Chengdong told reporters that on the one hand, JD still needs to maintain its online e-commerce business, including continuing to do live streaming e-commerce, deepening its services, and continuing to implement a low price strategy; On the other hand, it is the incremental part, including: continuous layout of store chain, seizing market share in offline retail, and continuing to focus on B2B businesses such as JD Industrial Products and JD Cloud.
Indeed, over the past year, JD.com has made multiple attempts to upgrade its services, including adjusting the shipping threshold and improving logistics efficiency. Xu Ran also stated that actively driving user growth and frequency, the main focus is still on the experience.
"In the past Q4, the number of shopping users on JD.com grew healthily, with new users experiencing a significant increase and old users maintaining a relatively stable growth rate. The frequency of user shopping was also growing healthily, especially with a significant increase in the frequency of old users' shopping," Xu Ran emphasized.
As for the low-priced strategy, she believes it will still be the operational focus for 2024, including continuing to optimize procurement costs and enrich low-priced commodity inventories, and improving the efficiency of low-priced subsidies.
In addition, during the same period as the financial report was released, JD Group also announced that the company's board of directors had approved annual cash dividends, with a total dividend amount of approximately $1.2 billion, exceeding the $1 billion in 2023. The board of directors of JD Group has also approved a new share repurchase plan, which, upon the expiration and effectiveness of the existing share repurchase plan, can repurchase shares worth no more than $3 billion within the next 36 months up to March 2027.
At the beginning of 2024, JD.com was constantly experiencing explosive growth.
Firstly, it was officially announced that JD Cloud Yanxi Digital People had a GMV of over 40 million yuan in live e-commerce sales during the Spring Festival, with a daily cost of less than 100 yuan. Subsequently, after Alibaba Cloud officially announced the "largest price reduction in history", it quickly responded and launched a "whole network price comparison, breaking through low prices, lowering it by another 10%, and losing out on expensive purchases.". This is the new increment of B-end business that JD has high hopes for, and it is also the "other leg" that JD urgently needs to grow and thrive.
At the end of last year, JD.com announced a salary increase for frontline employees such as JD's procurement and sales team. After the Spring Festival, the year-end bonus for JD's retail boss unit was received, with a year-on-year increase of 72% in bonus size, and some people receiving over a million yuan. It can be seen that frontline employees such as procurement and sales, customer service, etc. are seen as strategic reserves for JD to return to high-speed growth.
After lowering the threshold for free shipping, offering only refunds, and offering free door-to-door returns, on March 4th, JD.com once again announced that, on the basis of 90% of third-party products currently available for free shipping, the remaining nearly 10% of third-party products will receive a maximum of 59 free shipping by the end of March. Service is JD's ace, and currently it is a powerful tool to stimulate the growth of new users and the return of old users.
At the end of the financial report conference call, Xu Ran said, "Competition is eternal competition." In the new year, JD.com is ready.
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