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How JD.com’s Revenue Is Trending

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Annual revenue growth trend

In this series, we’ll analyze JD.com’s (JD) annual net revenue growth and the segments driving the net revenue growth. JD.com’s net revenue grew at a three-year CAGR (compound annual growth rate) of 47% in 2017. The 43% net revenue growth to 258.3 billion renminbi in 2016 compares to 40% growth to 362.3 billion renminbi in 2017. JD.com’s active customer accounts drove the revenue growth. Active customer accounts grew from 155 million in 2015 to 227 million and 293 million in 2016 and 2017, respectively.

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Primary segments

The net revenue growth was mainly driven by the JD Mall, which constitutes 98% of the company’s revenue and represents the company’s core e-commerce business. New Business is the other operating segment whose growth rate jumped from 40% in 2016 to 83% in 2017. The segment includes its O2O (online to offline) business, insurance, technology initiatives, overseas business, and logistics services provided to third parties.

The O2O business has been deconsolidated from the company following a merger with Dada Nexus Limited in April 2016. JD owns a 49.3% interest in Dada, which is a crowdsourcing delivery company.

Revenue growth from online direct sales

Net revenues from online direct sales (or net product revenue) grew by 40%. This segment contributes 92% of the company’s net revenue. The revenue contribution from online direct sales of electronics and home appliances products decreased from 74.3% in 2015 to 69.6% in 2016 and 65.2% in 2017. Revenue contribution from online direct sales of general merchandise products grew from 18.5% in 2015 to 22.5% in 2016 and 26.4% in 2017.

Net service revenue grew 50% in 2017 compared to 66% in 2016. This revenue stream accounts for 8% of the company’s total revenue and comprises of commissions from its online marketplace sales and service fees for value-added services.

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A look into the revenue of other online retailers

Online retailers Amazon (AMZN), eBay (EBAY), and Walmart (WMT) have generated revenues of $177.9 billion, $9.6 billion, and $500.3 billion, respectively, in 2017. Alibaba Group Holding Limited (BABA) had revenue of 250.3 billion renminbi in 2017.

Consensus revenue estimates for 2018 and 2019

JD.com has met every consensus annual revenue estimate since 2014. Analysts expect the company to post revenue of 473.1 billion and 595.7 billion renminbi for 2018 and 2019, respectively.

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