JD.com Announces 2021 Second Quarter and Interim Results

Net revenues for the second quarter of 2021 were RMB253.8 billion (US$¹39.3 billion), an increase of 26.2% from the second quarter of 2020. Net service revenues for the second quarter of 2021 were RMB34.1 billion (US$5.3 billion), an increase of 49.2% from the second quarter of 2020.

Income from operations for the second quarter of 2021 was RMB300.8 million (US$46.6 million), compared to RMB5.0 billion for the same period last year. Non-GAAP² income from operations for the second quarter of 2021 was RMB2.5 billion (US$0.4 billion), compared to RMB5.6 billion for the second quarter of 2020. Operating margin of JD Retail before unallocated items for the second quarter of 2021 was 2.6%, remained stable compared with the second quarter of 2020³.

Net income attributable to ordinary shareholders for the second quarter of 2021 was RMB794.3 million (US$123.0 million), compared to RMB16.4 billion for the same period last year. Non-GAAP net income attributable to ordinary shareholders for the second quarter of 2021 was RMB4.6 billion (US$0.7 billion), compared to RMB5.9 billion for the same period last year.

Diluted net income per ADS for the second quarter of 2021 was RMB0.50 (US$0.08), compared to RMB10.47 for the second quarter of 2020. Non-GAAP diluted net income per ADS for the second quarter of 2021 was RMB2.90 (US$0.45), compared to RMB3.51 for the same period last year.

Operating cash flow for the twelve months ended June 30, 2021 increased to RMB38.9 billion (US$6.0 billion) from RMB26.3 billion for the twelve months ended June 30, 2020. Free cash flow, which excludes the impact from JD Baitiao receivables included in the operating cash flow, for the twelve months ended June 30, 2021 increased to RMB31.9 billion (US$4.9 billion), compared to RMB22.7 billion for the twelve months ended June 30, 2020.

Annual active customer accounts⁴ increased by 27.4% to 531.9 million in the twelve months ended June 30, 2021 from 417.4 million in the twelve months ended June 30, 2020.

The U.S. dollar (US$) amounts disclosed in this press release, except for those transaction amounts that were actually settled in U.S. dollars, are presented solely for the convenience of the readers. The conversion of Renminbi (RMB) into US$ in this press release is based on the exchange rate set forth in the H.10 statistical release of the Board of Governors of the Federal Reserve System as of June 30, 2021, which was RMB6.4566 to US$1.00. The percentages stated in this press release are calculated based on the RMB amounts.

See the sections entitled “Non-GAAP Measures” and “Unaudited Reconciliation of GAAP and Non-GAAP Results” for more information about the non-GAAP measures referred to in this press release.

Operating margin of JD Retail before unallocated items for the second quarter of 2020 was retrospectively adjusted to conform to current period presentation of segment information.

Annual active customer accounts are customer accounts that made at least one purchase during the twelve months ended on the respective dates, whether through online retail or online marketplace.

In response to the severe flooding in the central China province of Henan, JD.com donated over 20 truckloads of rescue supplies and daily necessities dispatched from JD.com’s closest warehouse. Furthermore, JD Health opened a free 24-hour hotline for medical consultation and donated healthcare supplies for disinfection and epidemic prevention. The emergency efforts reflect the company’s longstanding policy of immediately donating goods to disaster areas from the nearest JD.com’s warehouse. JD Retail also assisted merchants in the affected regions through fee relief and additional insurance to accelerate the disaster recovery effort.

On June 18, JD.com published its Sustainability Report discussing the company’s achievements from 2018 to 2020 in creating a low-carbon enterprise through environmentally friendly logistics, procurement and facilities. Since 2017, JD.com has been gradually replacing traditional fuel-combustion trucks with new energy vehicles reducing carbon dioxide emissions by more than 120,000 tons each year.

In June, JD Logistics and P&G Beauty completed an environmentally friendly soccer field made from recycled plastic bottles at the Nanjing Foreign Language School, representing a milestone for JD.com’s Green Stream Initiative on its 4th anniversary. Last year, P&G Beauty joined JD Logistics’s bottle recycling program as a strategic partner to recycle plastic P&G brand products in Shanghai and Guangzhou. As of June 2021, over 20,000 families have participated in the program.

JD.com’s 618 Grand Promotion reported outstanding results. During the 18-day sale from June 1 to 18, over 236 brands achieved sales of over RMB100 million. Order requests from 92% of districts and counties and 84% of small towns were fulfilled on the same or next day. Omni-channel also played an integral part in the 618 Grand Promotion with over one thousand digital and computer stores supporting on-demand consumption and one-hour delivery service.

LVMH group expanded its innovative partnerships with JD.com in the second quarter. Leveraging the JD.com mini-app, LVMH’s BVLGARI brand provided customers with a new shopping experience featuring a full suite of products including selected jewelry and watches. This represents the first time BVLGARI has collaborated with a third-party online retailer in its history of 137 years. Berluti, the top luxury menswear fashion house under the LVMH group, also established its first official global flagship store on JD.com during the period.

Several internationally renowned beauty brands recently launched official flagship stores on JD.com including LVMH Group’s Guerlain in early August, as well as LVMH Group’s Givenchy Beauty and Benefit, Estee Lauder Companies’ Estee Lauder, Clinique and Origins, and L’Oreal’s Kiehl’s in July. The addition of these brands further enriches JD Beauty’s high-quality product suite and ensures a best-of-class shopping experience for customers with services provided by JD Logistics.

As an important platform for healthcare brands to expand online sales channels and accelerate digitalization, in the second quarter, JD Health closely cooperated with leading global pharmaceutical companies. JD Health deepened its cooperation with UCB China and became its strategic partner for the distribution of UCB China’s anti-allergic drug Zyrtec (cetirizine hydrochloride tablet and drops). JD Health facilitated the expansion and maintenance of multiple sales channels for Zyrtec including online, offline small and medium sized chain pharmacies as well as individual pharmacies. JD Health also officially launched the AstraZeneca direct sales flagship store, Sanofi direct sales flagship store and other brand stores in order to provide more convenient and professional online and offline integrated healthcare services to patients with chronic diseases.

In order to address the need for supply chains for certain special drugs, in the second quarter, JD Health partnered with JD Logistics to establish “cold chain” capabilities covering over 100 cities in 12 provincial-level administrative regions across China. With such capabilities, JD Pharmacy is able to expand its business into special drugs for rare diseases. A number of cold chain products from Eli Lilly and Company, Novartis, Sanofi and other brands became available through JD Pharmacy.

On May 28, JD Logistics successfully listed on the Main Board of the Hong Kong Stock Exchange under the stock code “2618”. Net proceeds from this offering, including the over-allotment options, amounted to approximately RMB23.0 billion. After listing in Hong Kong, JD Logistics will continue to focus on developing its integrated supply chain, including upgrading and expanding its six logistics networks, developing advanced technologies to be used in its supply chain solutions and logistics services, expanding the breadth and depth of integrated solutions, improving supply chain efficiency and user experience for customers, and reducing operating costs.

JD Logistics further strengthened its cross regional highway, railway and air cargo network to enhance its next-morning and next-day delivery service. As of June 30, 2021, JD Logistics had over 1,000 air cargo routes and the ability to utilize over 300 railway routes. During the 618 Grand Promotion, customers enjoyed delivery service within minutes of order placement in over 200 cities in China.

In June, JD Logistics and Xiaomi Youpin jointly launched a warehousing and distribution center in Tianjin, upgrading the supply chain cooperation between the two parties. The warehousing center will provide one-stop logistics services including collection, sorting, warehousing, packaging, and distribution, covering all categories of products for its customers.

As of June 30, 2021, JD Logistics operated approximately 1,200 warehouses, which covered an aggregate gross floor area of approximately 23 million square meters, including warehouse space of cloud warehouses managed under the JD Logistics Open Warehouse Platform.

On June 18, AiHuiShou, a secondhand electronics transactions and services platform, was officially listed on the New York Stock Exchange under the stock ticker “RERE”. JD.com’s ownership ratio was approximately 33.4% after listing. According to the partnership agreement signed between JD.com and AiHuiShou, the two companies will cooperate in the areas of user traffic, marketing, R&D, sales and channel commissions, supply chain and logistics, customer service and after-sales service.

As of June 30, 2021, JD.com had over 320,000 employees, excluding part-time and interns.

Net cash provided by operating activities

Add: Impact from JD Baitiao receivables included in the operating cash flow

(Less)/Add: Capital expenditures, net of related sales proceeds

Capital expenditures for development properties

Other capital expenditures*

Free cash flow

Including capital expenditures related to the company’s headquarters in Beijing and all other CAPEX.

Net cash provided by operating activities

Add: Impact from JD Baitiao receivables included in the operating cash flow

Less: Capital expenditures, net of related sales proceeds

Capital expenditures for development properties

Other capital expenditures

Free cash flow

Net revenues:

JD Retail

JD Logistics

New businesses

Inter-segment*

Total segment net revenues

Unallocated items**

Total consolidated net revenues

Operating income/(loss):

JD Retail

JD Logistics

New businesses

Including: gain on sale of development properties

Total segment operating income

Unallocated items**

Total consolidated operating income

The inter-segment eliminations mainly consist of revenues from supply chain solutions and logistics services provided by JD Logistics to JD Retail, and property leasing services provided by JD Property to JD Logistics.

Unallocated items include share-based compensation, amortization of intangible assets resulting from assets and business acquisitions, effects of business cooperation arrangements, and impairment of goodwill and intangible assets, which are not allocated to segments.

Electronics and home appliances revenues

General merchandise revenues

Net product revenues

Marketplace and marketing revenues

Logistics and other service revenues

Net service revenues

Total net revenues

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ASSETS

Current assets

Cash and cash equivalents

Restricted cash

Short-term investments

Accounts receivable, net (including JD Baitiao of RMB0.8 billion and RMB5.6 billion as of December 31, 2020 and June 30, 2021, respectively)⁽¹⁾

Advance to suppliers

Inventories, net

Prepayments and other current assets

Amount due from related parties

Assets held for sale⁽²⁾

Total current assets

Non-current assets

Property, equipment and software, net

Construction in progress

Intangible assets, net

Land use rights, net

Operating lease right-of-use assets

Goodwill

Investment in equity investees

Investment securities

Deferred tax assets

Other non-current assets

Amount due from related parties

Assets held for sale⁽²⁾

Total non-current assets

Total assets

LIABILITIES

Current liabilities

Short-term debts

Accounts payable

Advances from customers

Deferred revenues

Taxes payable

Amount due to related parties

Unsecured senior notes

Accrued expenses and other current liabilities

Operating lease liabilities

Liabilities held for sale⁽²⁾

Total current liabilities

Non-current liabilities

Deferred revenues

Unsecured senior notes

Deferred tax liabilities

Long-term borrowings

Operating lease liabilities

Other non-current liabilities

Total non-current liabilities

Total liabilities

JD Technology performs credit risk assessment services for JD Baitiao business and absorbs the credit risk of the underlying Baitiao receivables. Facilitated by JD Technology, the company periodically securitizes Baitiao receivables through the transfer of those assets to asset-backed securitization plans and derecognizes the related Baitiao receivables through sales type arrangements.

The company entered into definitive agreements to transfer certain logistic facilities and real estate properties to third parties through the infrastructure asset management and integrated service platform of JD Property. As of June 30, 2021, the company classified the related undisposed assets and liabilities as assets and liabilities held for sale under ASC 360.

MEZZANINE EQUITY

Convertible redeemable non-controlling interests

SHAREHOLDERS’ EQUITY

Total JD.com, Inc. shareholders’ equity (US$0.00002 par value, 100,000,000 shares authorized, 3,131,709 shares issued and 3,104,312 shares outstanding as of June 30, 2021)

Non-controlling interests

Total shareholders’ equity

Total liabilities, mezzanine equity and shareholders’ equity

Net revenues

Net product revenues

Net service revenues

Total net revenues

Cost of revenues

Fulfillment

Marketing

Research and development

General and administrative

Gain on sale of development properties

Income from operations⁽³⁾⁽⁴⁾

Other income/(expenses)

Share of results of equity investees

Interest expense

Others, net⁽⁵⁾

Income before tax

Income tax expenses

Net income

Net loss attributable to non-controlling interests shareholders

Net income attributable to mezzanine equity classified as non-controlling interests shareholders

Net income attributable to ordinary shareholders

Net income per share:

Basic

Diluted

Net income per ADS:

Basic

Diluted

(3)   Includes share-based compensation expenses as follows:

Cost of revenues

Fulfillment

Marketing

Research and development

General and administrative

(4)   Includes amortization of business cooperation arrangement and intangible assets resulting from assets and business acquisitions as follows:

Fulfillment

Marketing

Research and development

General and administrative

Others are other non-operating income/(loss), primarily consist of gains/(losses) from fair value change of long-term investments, gains/(losses) from business and investment disposals, impairment of investments, government incentives, interest income and foreign exchange gains/(losses).

Non-GAAP net income attributable to ordinary shareholders

Weighted average number of shares:

Basic

Diluted

Non-GAAP net income per share:

Basic

Diluted

Non-GAAP net income per ADS:

Basic

Diluted

Net cash provided by operating activities

Net cash used in investing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash at beginning of period⁽⁶⁾

Cash, cash equivalents and restricted cash at end of period⁽⁶⁾

Net cash provided by operating activities

Add: Impact from JD Baitiao receivables included in the operating cash flow

(Less)/Add: Capital expenditures, net of related sales proceeds

Capital expenditures for development properties

Other capital expenditures

Free cash flow

Including cash, cash equivalents and restricted cash classified as assets held for sale of RMB176.5 million, RMB115.9 million and RMB133.6 million as of June 30, 2020, December 31, 2020 and June 30, 2021, respectively.

Free cash flow (in RMB billions) – trailing twelve months (“TTM”)

Inventory turnover days⁽⁷⁾ – TTM

Accounts payable turnover days⁽⁸⁾ – TTM

Accounts receivable turnover days⁽⁹⁾ – TTM

Annual active customer accounts (in millions)

TTM inventory turnover days are the quotient of average inventory over the immediately preceding five quarters, up to and including the last quarter of the period, to cost of revenues of retail business for the last twelve months, and then multiplied by 360 days.

TTM accounts payable turnover days are the quotient of average accounts payable for retail business over the immediately preceding five quarters, up to and including the last quarter of the period, to cost of revenues of retail business for the last twelve months, and then multiplied by 360 days.

TTM accounts receivable turnover days are the quotient of average accounts receivable over the immediately preceding five quarters, up to and including the last quarter of the period, to total net revenues for the last twelve months and then multiplied by 360 days. Presented are the accounts receivable turnover days excluding the impact from JD Baitiao.

Income from operations

Add: Share-based compensation

Add: Amortization of intangible assets resulting from assets and business acquisitions

Reversal of: Effects of business cooperation arrangements

Reversal of: Gain on sale of development properties

Non-GAAP income from operations

Add: Depreciation and other amortization

Non-GAAP EBITDA

Total net revenues

Non-GAAP operating margin

Non-GAAP EBITDA margin

Net income attributable to ordinary shareholders

Add: Share-based compensation

Add: Amortization of intangible assets resulting from assets and business acquisitions

Add/(Reversal of): Reconciling items on the share of equity method investments⁽¹⁰⁾

Add: Impairment of goodwill, intangible assets, and investments

(Reversal of)/Add: (Gain)/Loss from fair value change of long-term investments

Reversal of: Gain and foreign exchange impact in relation to sale of development properties

Reversal of: Gain on disposals/deemed disposals of investments

Reversal of: Effects of business cooperation arrangements and non-compete agreements

Add: Tax effects on non-GAAP adjustments

Non-GAAP net income attributable to ordinary shareholders