Benchmark has revised its price target for JD.com (JD, Financial) from $58 to $53 while maintaining a Buy rating on the stock. The adjustment follows JD.com's impressive performance in the first quarter, where the company outperformed both revenue and net profit forecasts. Building on this performance, JD.com has updated its 2025 financial guidance for JD Retail, now anticipating double-digit growth in revenue and net profit.
Additionally, JD.com's strategic entry into the food delivery market is gaining considerable momentum, enhancing its positioning within the broader on-demand retail space. Despite the promising growth, this new venture brings some uncertainty regarding profit margins for the rest of the year and potentially beyond. Investors are advised to consider these factors as they evaluate JD's long-term investment potential.
JD Key Business Developments
Release Date: May 13, 2025
- Total Revenue Growth: Up 16% year on year to RMB301 billion in Q1 2025.
- Non-GAAP Net Profit: Increased by 43% year on year to RMB13 billion.
- Net Margin: Expanded by 82 basis points to 4.2%.
- Gross Margin: Improved by 60 basis points to 15.9%.
- Electronics and Home Appliances Revenue Growth: Up 17% year on year.
- General Merchandise Revenue Growth: Up 15% year on year.
- Service Revenues Growth: Accelerated to 14% year on year.
- Marketplace and Marketing Revenues: Increased by 16% year on year.
- JD Retail Non-GAAP Operating Income: Up 38% year on year to RMB13 billion.
- JD Logistics Revenue Growth: Up 11% year on year.
- New Business Revenue Growth: Positive growth of 18% year on year.
- Free Cash Flow: RMB38 billion as of the end of Q1 2025.
- Cash and Cash Equivalents: Totaled RMB203 billion at the end of Q1 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- JD.com Inc (JD, Financial) reported a 16% year-on-year increase in total revenues for Q1 2025, showcasing robust growth across all major categories.
- The company achieved a 43% year-on-year increase in non-GAAP net profit, with net margin expanding to 4.2%, driven by improvements in gross margin.
- JD.com Inc (JD) saw double-digit growth in its quarterly active customer numbers, with increased shopping frequency and notable acceleration.
- The company's food delivery business is rapidly growing, with daily order volumes nearing 20 million, indicating strong market demand and potential synergies with JD's core retail operations.
- JD.com Inc (JD) is actively leveraging AI and automation technologies to enhance operational efficiency, improve user experience, and drive long-term growth across its ecosystem.
Negative Points
- Despite the positive growth, JD.com Inc (JD) faces challenges in maintaining its momentum in the highly competitive food delivery market, which requires significant investment and operational enhancements.
- The company's new business segment reported a widened non-GAAP operating loss of RMB1.3 billion, primarily due to investments in expanding its presence in lower-tier markets.
- JD.com Inc (JD) is still in the early stages of optimizing its food delivery operations, with ongoing system enhancements needed to improve user experience and operational efficiency.
- The company's free cash flow decreased to RMB38 billion from RMB61 billion in the same period last year, primarily due to cash outflows associated with the trading program and efforts to secure product supplies.
- JD.com Inc (JD) faces pressure to balance short-term financial targets with long-term strategic investments, particularly in its food delivery and AI initiatives.
