Source: Visual China

JD said net revenue for the quarter ended March 31 rose 1.4% year-over-year to RMB243.0 billion (US$35.4 billion). The revenue was better than analysts’ projection of RMB240.49 billion, though representing the lowest ever yearly growth for the company. Non-GAAP diluted net income per American Depositary share (ADS) was RMB4.76 (US$0.69), beating the expected RMB3.59, and diluted net income per ADS was RMB3.93, compared with a net loss of RMB1.92 for the same period last year.

The net income per ADS, excluding items, surged 88% from RMB2.53 a year ago, which was partially driven by investment gains of RMB2.8 billion. The increase in other non-operating income of RMB2.8 billion, compared with the loss of RMB3.9 billion for the first quarter last year, was primarily due to a loss of RMB3.6 billion recognized resulting from the change of Dada’s share price prior to the closing of the acquisition of Dada in the first quarter of 2022, and the fair value change of investment securities.

JD management highlighted service as a key to improve profitability even the China’s No.2 online commerce firm showed the slowest pace in sales. “During the first quarter, we were pleased to see service revenues grow to account for 20% of our total revenues, helping deliver strong margins and reflecting our success in attracting a record number of third-party merchants to the JD.com platform,” said the Chief Financial Officer (CFO) Xu Ran. JD CEO Xu Lei said the strong growth in profitability was witnessed “as we continued to streamline our operations, optimize our product portfolio and expand our service offerings”.

JD also announced a management shuffle on Thursday. Xu Lei will retire from positions as CEO and executive director of the firm due to personal reasons, succeeded by Xu Ran, or Sandy Ran Xu, the current CFO. Xu Ran has been appointed as an executive director to take Xu Lei’s role and to become the first female to hold the position. Ian Su Shan, the current CFO of JD Logistics, has been appointed as CFO of its parent JD.com. Xu Lei will begin the process of CEO transition before his retirement in June and serve as the first chairman of the advisory council of the company. He stressed to continue to support the company at an earnings call.

Working at JD for over a decade, Xu Lei worked as CEO for just a year as he was promoted in April, 2022. Wall Street analysts believed the management change suggested JD to shift its focus to profitability. Calling the management shuffle surprising, Citi expected JD could focus on a more disciplined balance between growth and profit. Bloomberg Intelligence noted Xu’s retirement came as JD reported its first quarterly retail sales decline since 2019, which raises uncertainty about its retail margin gains.   

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