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Vipshop Reports Unaudited First Quarter 2018 Financial Results
First Quarter 2018 Highlights
- Total net revenue for the first quarter of 2018 increased by 24.6% year over year to
RMB19.9 billion (US$3.2 billion ) fromRMB16.0 billion in the prior year period. - The number of active customers[1] for the trailing twelve months ended
March 31, 2018 was 56.6 million, as compared with 55.5 million in the prior year period. - Total orders[2] for the first quarter of 2018 increased by 25% year over year to 90.2 million from 72.1 million in the prior year period.
- Gross profit for the first quarter of 2018 increased by 8.5% year over year to
RMB4.0 billion (US$639.2 million ) fromRMB3.7 billion in the prior year period. - Net income attributable to
Vipshop's shareholders for the first quarter of 2018 wasRMB529.7 million (US$84.5 million ), as compared withRMB551.9 million in the prior year period. - Non-GAAP net income attributable to
Vipshop's shareholders[3] for the first quarter of 2018 wasRMB727.7 million (US$116.0 million ), as compared withRMB799.4 million in the prior year period.
Mr.
Mr.
Recent Business Highlights
Vipshop launched its JD flagship store onMarch 3, 2018 and opened up its entry on the homepage of JD's app to all customers onMarch 14, 2018 .Vipshop's JD flagship store attracted approximately half a million followers within the first two months of launching. The majority of customers from the JD channel are new customers, and male apparel is the strongest category. The Company opened access of its WeChat wallet entry to all traffic onApril 8, 2018 and conducted a round of promotions with red dots prompting users to click intoVipshop's WeChat mini-program in mid-April, 2018. Comparing to the Company's app users, customers from its mini-program are younger and more male-concentrated.- In the first quarter of 2018,
Vipshop's average revenue per customer increased by approximately 25% year over year, driven by the robust 25% year-over-year increase in average number of orders per customer. During this quarter, 86% of customers were repeat customers, up from 77% in the prior year period, and approximately 96% of orders were placed by repeat customers, up from 92% in the prior year period. Vipshop's Board of Directors appointed Mr.Martin Lau , President and Executive Director ofTencent Holdings Limited (SEHK: 0700), as a Director of the Company's Board, effectiveDecember 29, 2017 . In addition, Mr. Bin Wu resigned from the Company's Board of Directors, effectiveJanuary 30, 2018 .- On
May 8, 2018 , L'OréalParis launched its official WeChat mini-program, which was developed and operated by Vipshop.Vipshop is actively exploring more opportunities within the WeChat ecosystem with its brand partners, empowering brands to grow their business leveraging the robust traffic within WeChat. - In the first quarter of 2018,
Vipshop added an overseas warehouse inFrankfurt, Germany , bringing the Company's total international warehousing capacity to approximately 59,000 square meters.Vipshop currently has overseas warehouses in nine locations, includingHong Kong ,New York ,Paris ,Milan ,London ,Seoul ,Tokyo ,Sydney , andFrankfurt . As ofMarch 31, 2018 , the Company has approximately 2.8 million square meters of total warehousing space, of which around 1.8 million square meters is owned byVipshop . - During the first quarter of 2018,
Vipshop delivered approximately 99% of its orders through its in-house last mile delivery network, up from 93% in the prior year period. More than 81% of customer returns were handled directly byVipshop's in-house last mile delivery network, up from 67% in the prior year period. - As of
March 31, 2018 , close to 1.5 million customers enrolled inVipshop's Super VIP Paid Membership Program, representing a 54% increase sequentially. Vipshop's cross-border business was particularly strong during this year's 4.19 promotional event, with sales increasing by 43% year over year.Vipshop recently added a number of popular domestic and international brands to its platform, includingFurla ,Stella McCartney , and Dodo.
First Quarter 2018 Financial Results
REVENUE
Total net revenue for the first quarter of 2018 increased by 24.6% year over year to
GROSS PROFIT
Gross profit for the first quarter of 2018 increased by 8.5% to
OPERATING INCOME AND EXPENSES
Total operating expenses for the first quarter of 2018 were
- Fulfillment expenses for the first quarter of 2018 were
RMB1.7 billion (US$276.4 million ), as compared withRMB1.4 billion in the prior year period, primarily reflecting an increase in sales volume and number of orders fulfilled. As a percentage of total net revenue, fulfillment expenses for the first quarter of 2018 decreased to 8.7% from 9.0% in the prior year period. - Marketing expenses for the first quarter of 2018 were
RMB645.3 million (US$102.9 million ), as compared withRMB729.5 million in the prior year period. As a percentage of total net revenue, marketing expenses for the first quarter of 2018 decreased to 3.2% from 4.6% in the prior year period. - Technology and content expenses for the first quarter of 2018 were
RMB466.4 million (US$74.3 million ), as compared withRMB419.5 million in the prior year period. As a percentage of total net revenue, technology and content expenses for the first quarter of 2018 decreased to 2.3% from 2.6% in the prior year period. - General and administrative expenses for the first quarter of 2018 were
RMB613.6 million (US$97.8 million ), as compared withRMB542.2 million in the prior year period. As a percentage of total net revenue, general and administrative expenses for the first quarter of 2018 decreased to 3.1% from 3.4% in the prior year period.
Income from operations for the first quarter of 2018 was
Non-GAAP income from operations[4], which excludes share-based compensation expenses and amortization of intangible assets resulting from business acquisitions, was
NET INCOME
Net income attributable to
Non-GAAP net income attributable to
For the quarter ended
BALANCE SHEET AND CASH FLOW
As of
For the quarter ended
For the three months ended |
||||
Mar 31, 2017
RMB'000 |
Mar 31, 2018
RMB'000 |
Mar 31, 2018
US$'000 |
||
Net cash from operating activities |
736,744 |
171,245 |
27,300 |
|
Add: Impact from Internet financing activities[10] |
277,524 |
(718,952) |
(114,618) |
|
Less: Capital expenditures |
(585,462) |
(816,167) |
(130,116) |
|
Free cash flow in/(out) |
428,806 |
(1,363,874) |
(217,434) |
For the trailing twelve months ended
Mar 31, 2017
RMB'000 |
Mar 31, 2018
RMB'000 |
Mar 31, 2018
US$'000 |
||
Net cash from operating activities |
3,414,946 |
415,752 |
66,281 |
|
Add: Impact from Internet financing activities[10] |
2,557,169 |
2,304,275 |
367,356 |
|
Less: Capital expenditures |
(2,715,495) |
(2,705,155) |
(431,265) |
|
Free cash flow in |
3,256,620 |
14,872 |
2,372 |
Accounting Pronouncements Adopted During the Quarter Ended
In
The Company offers customers with an unconditional right of return for a period of 7 days upon receipt of products on sales from its platforms. Under the previous revenue standard, revenue was deferred until the 7 days return period expired. However, under the new revenue standard, revenue is recognized at the point of time when the control of goods has been passed to the customers upon the receipt of goods by the customers. The Company makes accrual on the expected sales returns in relation to the 7 day unconditional return policy.
Business Outlook
For the second quarter of 2018, the Company expects its total net revenue to be between
Exchange Rate
The Company's business is primarily conducted in
Conference Call Information
The Company will hold a conference call on
United States: |
+1-845-675-0438 |
International Toll Free: |
+1-855-500-8701 |
China Domestic: |
400-1200-654 |
Hong Kong: |
+852-3018-6776 |
Conference ID: |
#1856707 |
The replay will be accessible through
United States Toll Free: |
+1-855-452-5696 |
International: |
+61-2-9003-4211 |
Conference ID: |
#1856707 |
A live and archived webcast of the conference call will also be available at the Company's investor relations website at http://ir.vip.com.
About
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as "will," "expects," "anticipates," "future," "intends," "plans," "believes," "estimates" and similar statements. Among other things, the business outlook and quotations from management in this announcement, as well as
Use of Non-GAAP Financial Measures
The condensed consolidated financial information is derived from the Company's unaudited interim condensed consolidated financial statements prepared in conformity with accounting principles generally accepted in
The presentation of these non-GAAP financial measures is not intended to be considered in isolation from, or as a substitute for, the financial information prepared and presented in accordance with U.S. GAAP. For more information on these non-GAAP financial measures, please see the table captioned "Vipshop Holdings Limited Reconciliations of GAAP and Non-GAAP Results" at the end of this release.
Investor Relations Contact
Tel: +86 (20) 2233-0732
Email: IR@vipshop.com
[1] "Active customers" are defined as registered members who have purchased from the Company or the Company's online marketplace platforms at least once during the relevant period. |
[2] "Total orders" are defined as the total number of orders placed during the relevant period, including the orders for products and services sold in the Company's online sales business and on the Company's online marketplace platforms, net of orders returned. |
[3] Non-GAAP net income attributable to Vipshop's shareholders is a non-GAAP financial measure, which is defined as net income attributable to Vipshop's shareholders excluding share-based compensation expenses, impairment loss of investments, and amortization of intangible assets resulting from business acquisitions and equity method investments. |
[4] Non-GAAP income from operations is a non-GAAP financial measure, which is defined as income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisitions. |
[5] Non-GAAP operating income margin is a non-GAAP financial measure, which is defined as non-GAAP income from operations as a percentage of total net revenues. |
[6] "ADS" means American depositary share, each of which represents 0.2 Class A ordinary share. |
[7] Non-GAAP net margin attributable to Vipshop's shareholders is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to Vipshop's shareholders, as a percentage of total net revenues. |
[8] Non-GAAP net income attributable to Vipshop's shareholders per diluted ADS is a non-GAAP financial measure, which is defined as non-GAAP net income attributable to Vipshop's shareholders |
[9] Free cash flow is a non-GAAP financial measure, which means the operating cash flow adding back the impact from Internet financing activities and less capital expenditures, which include purchase of property and equipment, purchase and deposits of land use rights, and purchase of other assets. |
[10] Impact from Internet financing activities added back to (deducted from) free cash flow contains changes in the balances of financial products, which are primarily consumer financing, supplier financing and cooperative lending that the Company provides to customers, suppliers and individuals respectively. |
Vipshop Holdings Limited |
|||
Unaudited Condensed Consolidated Statements of Income and Comprehensive Income |
|||
(In thousands, except per share data) |
|||
Three Months Ended |
|||
March 31,2017 |
March 31,2018 |
March 31,2018 |
|
RMB'000 |
RMB'000 |
USD'000 |
|
Product revenues |
15,606,804 |
19,367,515 |
3,087,637 |
Other revenues (1) |
346,141 |
503,113 |
80,208 |
Total net revenues |
15,952,945 |
19,870,628 |
3,167,845 |
Cost of revenues |
(12,258,473) |
(15,861,214) |
(2,528,651) |
Gross profit |
3,694,472 |
4,009,414 |
639,194 |
Operating expenses: |
|||
Fulfillment expenses (2) |
(1,436,200) |
(1,733,697) |
(276,392) |
Marketing expenses |
(729,549) |
(645,342) |
(102,883) |
Technology and content expenses |
(419,533) |
(466,354) |
(74,348) |
General and administrative expenses (3) |
(542,172) |
(613,602) |
(97,823) |
Total operating expenses |
(3,127,454) |
(3,458,995) |
(551,446) |
Other operating income |
169,578 |
112,273 |
17,899 |
Income from operations |
736,596 |
662,692 |
105,647 |
Interest expenses |
(25,113) |
(28,945) |
(4,615) |
Interest income |
25,860 |
60,334 |
9,619 |
Exchange loss |
(10,437) |
(63,738) |
(10,161) |
Income before income taxes and share of result of affiliates |
726,906 |
630,343 |
100,490 |
Income tax expenses (4) |
(165,911) |
(106,481) |
(16,975) |
Share of (loss) gain of affiliates |
(17,686) |
737 |
118 |
Net income |
543,309 |
524,599 |
83,633 |
Net loss attributable to noncontrolling interests |
8,608 |
5,129 |
818 |
Net income attributable to Vipshop's shareholders |
551,917 |
529,728 |
84,451 |
Shares used in calculating earnings per share (5): |
|||
Class A and Class B ordinary shares: |
|||
—Basic |
116,819,173 |
131,605,256 |
131,605,256 |
—Diluted |
125,067,816 |
140,490,311 |
140,490,311 |
Net earnings per Class A and Class B share |
|||
Net income attributable to Vipshop's shareholders--Basic |
4.72 |
4.03 |
0.64 |
Net income attributable to Vipshop's shareholders--Diluted |
4.59 |
3.86 |
0.62 |
Net earnings per ADS (1 ordinary share equals to 5 ADSs) |
|||
Net income attributable to Vipshop's shareholders--Basic |
0.94 |
0.81 |
0.13 |
Net income attributable to Vipshop's shareholders--Diluted |
0.92 |
0.77 |
0.12 |
(1) Other revenues primarily consist of revenues from third-party logistics services, product |
|||
(2) Fulfillment expenses include shipping and handling expenses, which amounted RMB 771 |
|||
(3) General and administrative expenses include amortization of intangible assets resulting from |
|||
(4) Income tax expenses include income tax benefits of RMB 22 million and RMB 11 million related |
|||
(5) Authorized share capital is re-classified and re-designated into Class A ordinary shares and |
|||
Net income |
543,309 |
524,599 |
83,633 |
Other comprehensive income, net of tax: |
|||
Foreign currency translation adjustments |
25,243 |
(20,868) |
(3,327) |
Unrealized gain from available-for-sale investments |
22,451 |
0 |
0 |
Comprehensive income |
591,003 |
503,731 |
80,306 |
Less: Comprehensive loss attributable to noncontrolling interests |
(8,608) |
(5,129) |
(818) |
Comprehensive income attributable to Vipshop's shareholders |
599,611 |
508,860 |
81,124 |
Three Months Ended |
|||
March 31,2017 |
March 31,2018 |
March 31,2018 |
|
RMB'000 |
RMB'000 |
USD'000 |
|
Share-based compensation expenses included are as follows |
|||
Fulfillment expenses |
18,096 |
19,130 |
3,050 |
Marketing expenses |
10,298 |
10,834 |
1,727 |
Technology and content expenses |
51,832 |
54,233 |
8,646 |
General and administrative expenses |
100,147 |
87,117 |
13,888 |
Total |
180,373 |
171,314 |
27,311 |
Vipshop Holdings Limited |
|||
Unaudited Condensed Consolidated Balance Sheets |
|||
(In thousands, except per share data) |
|||
December 31,2017 |
March 31,2018 |
March 31,2018 |
|
RMB'000 |
RMB'000 |
USD'000 |
|
ASSETS |
|||
CURRENT ASSETS |
|||
Cash and cash equivalents |
9,973,891 |
7,008,102 |
1,117,256 |
Restricted cash |
248,101 |
348,476 |
55,555 |
Short term investments |
245,981 |
1,806,977 |
288,075 |
Accounts receivable, net |
4,803,527 |
4,520,362 |
720,652 |
Amounts due from related parties |
10,191 |
9,641 |
1,537 |
Other receivables and prepayments,net |
3,674,196 |
3,468,664 |
552,987 |
Loan Receivables,net |
0 |
164,458 |
26,218 |
Inventories |
6,960,251 |
5,081,878 |
810,171 |
Total current assets |
25,916,138 |
22,408,558 |
3,572,451 |
NON-CURRENT ASSETS |
|||
Property and equipment, net |
6,660,825 |
6,701,593 |
1,068,392 |
Deposits for property and equipment |
307,859 |
441,270 |
70,349 |
Land use rights, net |
3,077,770 |
3,309,546 |
527,620 |
Intangible assets, net |
400,994 |
355,776 |
56,719 |
Investment in affiliates |
66,334 |
65,634 |
10,464 |
Other investments |
387,640 |
376,613 |
60,041 |
Available-for-sale investments |
146,282 |
142,571 |
22,729 |
Other long-term assets |
366,760 |
415,464 |
66,235 |
Goodwill |
367,106 |
367,106 |
58,525 |
Deferred tax assets |
285,112 |
355,739 |
56,713 |
Total non-current assets |
12,066,682 |
12,531,312 |
1,997,787 |
TOTAL ASSETS |
37,982,820 |
34,939,870 |
5,570,238 |
LIABILTIES AND EQUITY |
|||
CURRENT LIABILITIES |
|||
Short term loans (Including short term loans of the VIE without recourse to |
907,310 |
751,000 |
119,727 |
Accounts payable (Including accounts payable of the VIE without recourse |
11,445,109 |
9,569,787 |
1,525,649 |
Advance from customers (Including advance from customers of the VIE |
2,339,914 |
1,157,942 |
184,603 |
Accrued expenses and other current liabilities (Including accrued expenses |
3,537,151 |
3,284,473 |
523,622 |
Amounts due to related parties (Including amounts due to related parties of |
65,022 |
46,799 |
7,461 |
Deferred income (Including deferred income of the VIE without recourse to |
203,179 |
237,003 |
37,784 |
Securitization debt (Including securitization debt of the VIE without recourse to |
760,000 |
475,000 |
75,726 |
Convertible senior notes |
0 |
3,947,818 |
629,375 |
Total current liabilities |
19,257,685 |
19,469,822 |
3,103,947 |
NON-CURRENT LIABILITIES |
|||
Deferred tax liability (Including deferred tax of the VIE without recourse to the |
17,007 |
6,329 |
1,009 |
Deferred income-non current (Including deferred income-non current of the |
362,649 |
360,872 |
57,532 |
Convertible senior notes |
4,094,903 |
0 |
0 |
Total non-current liabilities |
4,474,559 |
367,201 |
58,541 |
Total liabilities |
23,732,244 |
19,837,023 |
3,162,488 |
EQUITY: |
|||
Class A ordinary shares (US$0.0001 par value, 483,489,642 shares |
74 |
75 |
12 |
Class B ordinary shares (US$0.0001 par value, 16,510,358 shares |
11 |
11 |
2 |
Additional paid-in capital |
8,715,995 |
8,887,813 |
1,416,927 |
Retained earnings |
5,602,681 |
6,309,130 |
1,005,824 |
Accumulated other comprehensive loss |
(24,242) |
(45,109) |
(7,192) |
Noncontrolling interests |
(43,943) |
(49,073) |
(7,823) |
Total shareholders' equity |
14,250,576 |
15,102,847 |
2,407,750 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
37,982,820 |
34,939,870 |
5,570,238 |
Vipshop Holdings Limited |
|||
Reconciliations of GAAP and Non-GAAP Results |
|||
Three Months Ended |
|||
March 31,2017 |
March 31,2018 |
March 31,2018 |
|
RMB'000 |
RMB'000 |
USD'000 |
|
Income from operations |
736,596 |
662,692 |
105,647 |
Share-based compensation expenses |
180,373 |
171,314 |
27,311 |
Amortization of intangible assets resulting from business acquisitions |
87,186 |
44,055 |
7,023 |
Non-GAAP income from operations |
1,004,155 |
878,061 |
139,981 |
Net income |
543,309 |
524,599 |
83,633 |
Share-based compensation expenses |
180,373 |
171,314 |
27,311 |
Amortization of intangible assets resulting from business acquisitions |
101,615 |
44,055 |
7,023 |
Tax effect of amortization of intangible assets resulting from business |
(21,797) |
(11,014) |
(1,756) |
Non-GAAP net income |
803,500 |
728,954 |
116,211 |
Net income attributable to Vipshop's shareholders |
551,917 |
529,728 |
84,451 |
Share-based compensation expenses |
180,373 |
171,314 |
27,311 |
Amortization of intangible assets resulting from business acquisitions and |
84,721 |
35,573 |
5,671 |
Tax effect of amortization of intangible assets resulting from business |
(17,573) |
(8,893) |
(1,418) |
Non-GAAP net income attributable to Vipshop's shareholders |
799,438 |
727,722 |
116,015 |
Shares used in calculating earnings per share: |
|||
Basic ordinary shares: |
|||
Class A and Class B ordinary shares: |
|||
--Basic |
116,819,173 |
131,605,256 |
131,605,256 |
--Diluted |
125,067,816 |
140,490,311 |
140,490,311 |
Non-GAAP net income per Class A and Class B share |
|||
Non-GAAP net income attributable to Vipshop's shareholders--Basic |
6.84 |
5.53 |
0.88 |
Non-GAAP net income attributable to Vipshop's shareholders--Diluted |
6.57 |
5.27 |
0.84 |
Non-GAAP net income per ADS (1 ordinary share equal to 5 ADSs) |
|||
Non-GAAP net income attributable to Vipshop's shareholders--Basic |
1.37 |
1.11 |
0.18 |
Non-GAAP net income attributable to Vipshop's shareholders--Diluted |
1.31 |
1.05 |
0.17 |
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