JD.com, Inc. (NASDAQ: JD) reported its first quarter financial results before the market open on Friday. The Chinese tech giant reported better-than-expected results, which sent shares 6.1% higher.
For the first quarter, JD reported earnings of RMB 4.96 per share (USD 0.33) on revenue of RMB 121.1 Billion (USD 18 Billion). Refinitiv analysts expected earnings of USD 0.12 per share on revenue of USD 17.59 Billion.
JD’s stronger quarter was due to its growth in active customer accounts. During the quarter, the Company witnessed its active accounts grow by 15% year-over-year. Active accounts totaled 310.5 million at the end of Q1, slightly higher than 305.3 million the same period last year.
Despite JD’s account growth, the Company is seeing its customer base slowing down in growth. JD’s user growth peaked from 2014 to 2017 when the Company saw its active account base jump from 90.6 million in 2014 to 292.5 million in 2017.
Nonetheless, JD’s revenue was much stronger this quarter compared to last year. Revenue rose by 21% year-over-year. Gross merchandise volume increased from RMB 1.29 Trillion to RMB 1.67 Trillion at the end of the quarter.
JD said that its better-than-expected earnings was a result of increasing economies of scale from 1P business, mix-shift to higher gross margin 1P categories, fast growth from advertising service businesses, and improved gross margin of third-party logistics services. However, the Company’s heavier investment into tech slightly impacted its financials.
JD’s net product revenue deliver a total of RMB 108.7 Billion during the quarter. Electronics and home appliances revenue accounted for the majority of the revenue as usual, however, the Company is seeing a shift in the unit. General merchandise revenue rose from accounting 33% of the revenue last year to 35% this past quarter.
Net services revenue total RMB 12.4 Billion, primarily driven by JD’s marketplace and advertising services. However, the Company’s logistics and services segment grew by 91% year-over-year.
“JD.com’s focus on delivering the best and most trusted online retail experience to customers throughout China drove another strong performance for the first quarter,” said Chief Executive Officer Richard Liu. “We will continue to invest in key technologies and top industry talent as we work to reach an even broader customer base through cutting edge innovation. With our growing scale and increasingly efficient operations, JD.com remains well positioned to deliver strong shareholder value for the long term.”