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For Q3 2022, JD.com is predicting a decline in the revenue. But it is too early now to say how it will go, as the company’s performance will partially depend on the economic situation in China.
China’s largest online retailer JD.com has announced its financial results for Q2 2022. The company has exceeded analysts’ expectations, beating the estimates. However, with a boost in profitability, JD.com also reported the slowest year-on-year revenue growth ever, which is a result of the current Covid outbreak in China.
Speaking of the Q2 2022 performance in terms of numbers, JD.com has posted a revenue of as much as 267.6 billion Chinese yuan (about $40 billion), a 5.4% year-on-year rise. Meanwhile, the Zacks Consensus Estimate was 262.3 billion yuan ($39.3 billion).
Further, the income from operations for the period considered was 3.8 billion yuan ($0.6 billion), compared to 0.3 billion yuan for the same period last year. Non-GAAP income from operations totaled 5.8 billion yuan ($0.9 billion), as compared to 2.5 billion for the second quarter of 2021.
The net profit attributable to ordinary shareholders made 4.4 billion Chinese yuan, while 1.36 billion yuan profit was expected.
The annual active customer accounts have increased by 9.2% to as much as 580.8 million in the twelve months ended June 30, 2022 from 531.9 million in the twelve months ended June 30, 2021.
It is also worth highlighting that the retail unit of the tech giant has shown great performance, with a revenue of 241.5 billion yuan.
Notably, with attractive Q2 figures, the annual revenue growth has been the slowest on JD.com record, which resulted from the general economic slowdown in China caused by Covid spread. Currently, China is struggling to control the biggest virus outbreak in the country since the one that triggered the disruptive Shanghai lockdown earlier this year. On Sunday, China reported as many as 1,824 new Covid-19 cases, the highest level in around three months.
JD.com Shifting Focus to Cutting Costs
As a result of the economic downturn in China, many companies suffered losses. For example, Tencent recently posted its Q2 2022 earnings report featuring the Chinese tech giant’s first-ever revenue decline. As a result of the downturn, many companies had to reduce spending and lay off a certain percentage of their employees. JD.com is not an exception.
The company has cut marketing and general and administrative expenses for the second quarter. In addition, the firm also narrowed losses in its new business segment and saw its logistics unit swing to an operating profit.
Sandy Xu, the chief financial officer of JD.com, said:
“We were pleased to post topline growth that outpaced the industry during a challenging period, as well as healthy profitability and cash flow. Our emphasis on financial discipline and operational efficiency has allowed us to return to shareholders in the form of share repurchases as well as a special cash dividend issued during the quarter. We will continue to focus on generating strong shareholder returns while maintaining our commitment to investing for the long term.”
For Q3 2022, JD.com is predicting a decline in revenue. But it is too early now to say how it will go, as the company’s performance will partially depend on the economic situation in China.