JD.com, Inc. (NASDAQ:JD) Q3 2019 Earnings Conference Call - Final Transcript

Nov 15, 2019 • 07:00 am ET

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JD.com, Inc. (NASDAQ:JD) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Sidney Huang

particular, achieved a record segment operating margin of 3.3%, and it was achieved in a quarter of heavy reinvestment. I hope solid performance can begin [Indecipherable] on our path to our committed high single-digit long-term profit margin for the JD Retail business.

Our free cash flow also increased significantly year-over-year during the quarter, driven by lower CapEx and the proceeds from the phase one closing of the GIC logistics core fund. In our free cash flow table, as I mentioned in recent quarters [Technical Issues] JD Logistics [Technical Issues] JD Property Management Group was formed to [Technical Issues] financial returns as [Technical Issues] managed business. We have broken out related CapEx into a separate line specifying the available for sale nature, which has been reported net of related proceeds on the sales. This is the second time when we recorded a net cash inflow [Technical Issues] following the first time in Q1 this year. We hope to see more cash inflows from [Technical Issues] in the future.

For the trailing 12 months our free cash flow was RMB15.6 [Phonetic] billion, 50% higher than our non-GAAP net income in the same period, which was another bright spot in our business.

Now let's discuss our fourth quarter financial outlook. We expect net revenues to grow between 21% and 25% on a year-over-year basis in light of a highly successful Singles' Day promotion season, while taking into account the potentially slowing national retail sales growth based on the NBS report published yesterday. On the bright side, our October growth remained resilient and we are clearly gaining market share. Finally, given the better than expected earnings in the third quarter, we are raising the full year non-GAAP net income guidance to be between RMB9.8 billion and RMB10.5 billion, reflecting Q4 seasonality and the continued reinvestment of the first half one-time gains discussed earlier. At the midpoint of this guidance we would grow our 2019 non-GAAP net income by over 200% from the 2018 level and grow at CAGAR of 43% from the 2017 level.

More importantly, this robust earnings growth is on top of our ongoing reinvestment in our core business, which positions JD.com to enter 2020 with tremendous growth momentum.

This concludes my prepared remarks, and I will now turn the call to Richard for a few quick remarks.

Executive
Richard Liu

[Foreign Speech]

Thank you, Sidney. Hello, everyone.

I would like to take this opportunity to give you a brief introduction on our strategy plan in 2020. And for this year, as you have seen that we have achieved promising results in terms of our revenues and nice margin as well as cash flow. And for the next year, based on the achievement of the previous three factors, we will continue to work on increasing our GMV and consumption -- customer base as well as technology services. And we believe that only by improving every aspect of the four elements we'll achieve [Indecipherable] quality growth of the whole Company.

[Foreign Speech]

And in the past