JD.com (JD) is set to soar on the back of two key pieces of news. First, Singles Day sales were strong. Second, the company crushed earnings expectations. Let us discuss:

Singles Day

Singles Day has quickly become a major sales holiday in China.

JD.com’s sales for Singles’ Day reached 127.1B yuan ($19.1B), up 50% from a year ago.

The only difference vs. its rival, sales included 11 days of transactions, unlike Alibaba (NYSE:BABA), which reported on Saturday that its one-day sales totaled 168.3B yuan ($25.4B).

JD started its sales event on Nov. 1, to reduce delivery bottlenecks and give users more time to make their purchasing decisions.

The strong sales are a testament to the hard work of the company

Earnings highlights

Net revenues for the third quarter of 2017 were RMB83.7 billion (US$12.6 billion), an increase of 39.2% from the third quarter of 2016.

Gross profit for the third quarter of 2017 was RMB13.0 billion (US$2.0 billion), an increase of 50.3% from the third quarter of 2016. Non-GAAP gross profit was RMB12.8 billion (US$1.9 billion), an increase of 51.9% from the same quarter last year.

Net income from continuing operations attributable to ordinary shareholders for the third quarter of 2017 was RMB1.0 billion (US$0.2 billion), compared to a net loss from continuing operations attributable to ordinary shareholders of RMB0.5 billion for the same period last year. Non-GAAP net income from continuing operations attributable to ordinary shareholders for the third quarter of 2017 was RMB2.2 billion (US$0.3 billion), an increase of 359% from the third quarter of 2016.

 

Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS from continuing operations for the third quarter of 2017 was RMB0.69 (US$0.10), compared to diluted net loss per ADS from continuing operations of RMB0.32 for the third quarter of 2016. Non-GAAP diluted net income per ADS from continuing operations for the third quarter of 2017 was RMB1.52 (US$0.23), as compared to RMB0.33 in the third quarter of 2016.

Operating cash flow from continuing operations for the twelve months ended September 30, 2017 increased to RMB19.9 billion (US$3.0 billion) from RMB11.4 billion for the twelve months ended September 30, 2016. Free cash flow from continuing operations, which excludes the impact from JD Finance related credit products included in the operating cash flow, for the twelve months ended September 30, 2017 was RMB14.6 billion (US$2.2 billion), compared to RMB15.0 billion for the twelve months ended September 30, 2016, as several accretive capital investments took place during the third quarter of 2017.

Annual active customer accounts increased by 34% to 266.3 million in the twelve months ended September 30, 2017 from 198.7 million in the twelve months ended September 30, 2016.

“We are achieving our mission of bringing China’s consumers the widest selection of top brands and, by far, the highest quality e-commerce experience,” said Richard Liu, Chairman and CEO of JD.com (JD). “We are also building robust product content and enhancing user engagement, as our innovative tools enable brands to execute highly targeted online marketing programs. We look forward to helping more and more merchants and partners leverage JD’s leading open infrastructure to drive efficiency and grow sales.”

“We are very encouraged to see another quarter of solid top line growth with record profitability,” said Sidney Huang, JD.com’s Chief Financial Officer. “The scale economies of our model are becoming clearer with every quarter. Looking ahead, we will continue to prioritize investments in technology and leading R&D talent as we execute on our vision to revolutionize China’s retail industry.”

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