PDD - JD Rights Its Shopping Cart With First-Quarter Turnaround | Benzinga
Key Takeaways:
- JD.com reported a profit of 7.1 billion yuan for the first quarter, up nearly 13% year-on-year
- Many investment banks upwardly revised their price targets and ratings for the stock after the release of the latest report
By Lau Chi Hang
On her one-year anniversary running the show at e-commerce giant JD.com Inc (NASDAQ: JD), CEO Xu Ran gave investors a honeymoon gift in the form of strong first-quarter results, led by a 7% revenue rise to 260 billion yuan ($35.95 billion). She delivered even stronger profit growth of nearly 13% to 7.1 billion yuan, and non-GAAP profit growth of 17% to 8.9 billion yuan.
When Xu took over the CEO reins last May from former chief executive Xu Lei, no relation, observers expected to see some cost slashing. That’s because they presumed that Xu Ran, as JD.com’s former CFO, would try to work some of her financial management wizardry to improve the company’s profit profile. That expectation was born out by the company’s 2023 results, with its profit leaping 1.3 times to 24.4 billion yuan, even as its revenue grew by a much slower 3.7% year-on-year to 1.08 trillion yuan.
Crediting Cost-Cutting
As we attempt to dissect the impressive results, at least some think the credit should fall mainly to drastic cost-cutting in the face of lackluster revenue growth. Under Xu Ran’s leadership, R&D and administrative spending as a percent of total revenue both fell, while fulfillment expenses were unchanged. The company’s interest income rose and its equity investment losses narrowed, all of which combined to help bring about the big profit jump.
The first-quarter results also surprised to the upside by showing stronger-than-expected revenue growth for JD.com’s various operations on top of more prudent spending. JD Retail’s revenue grew 6.8% year-on-year to 226.8 billion yuan and JD Logistics’(2618.HK) revenue rose by 14.6% to 42.14 billion yuan. The logistics business, in particular, moved from a loss of 1.12 billion yuan last year to an operating profit of 224 million yuan, one of the major contributors to the first-quarter profit.
Aggregate revenue ...