• JD.com Announces Second Quarter and Interim 2023 Results

    Источник: Nasdaq GlobeNewswire / 16 авг 2023 05:10:19   America/Chicago

    BEIJING, Aug. 16, 2023 (GLOBE NEWSWIRE) -- JD.com, Inc. (NASDAQ: JD and HKEX: 9618 (HKD counter) and 89618 (RMB counter)), a leading supply chain-based technology and service provider, today announced its unaudited financial results for the three and six months ended June 30, 2023.

    Second Quarter 2023 Highlights

    • Net revenues for the second quarter of 2023 were RMB287.9 billion (US$139.7 billion), an increase of 7.6% from the second quarter of 2022. Net service revenues for the second quarter of 2023 were RMB54.1 billion (US$7.5 billion), an increase of 30.1% from the second quarter of 2022.
    • Income from operations for the second quarter of 2023 was RMB8.3 billion (US$1.1 billion), compared to RMB3.8 billion for the same period last year. Non-GAAP2 income from operations was RMB8.7 billion (US$1.2 billion) for the second quarter of 2023, as compared to RMB5.8 billion for the second quarter of 2022. Operating margin of JD Retail before unallocated items for the second quarter of 2023 was 3.2%, compared to 3.4% for the second quarter of 2022.
    • Net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB6.6 billion (US$0.9 billion), compared to RMB4.4 billion for the same period last year. Non-GAAP net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB8.6 billion (US$1.2 billion), as compared to RMB6.5 billion for the same period last year.
    • Diluted net income per ADS for the second quarter of 2023 was RMB4.15 (US$0.57), compared to RMB2.74 for the second quarter of 2022. Non-GAAP diluted net income per ADS for the second quarter of 2023 was RMB5.39 (US$0.74), compared to RMB4.06 for the same period last year.
    • Operating cash flow for the twelve months ended June 30, 2023 was RMB52.5 billion (US$7.2 billion), compared to RMB51.1 billion for the twelve months ended June 30, 2022. Free cash flow, which excludes the impact from JD Baitiao receivables included in the operating cash flow, for the twelve months ended June 30, 2023 was RMB33.5 billion (US$4.6 billion), compared to RMB27.7 billion for the twelve months ended June 30, 2022.

    “We reported a solid performance for the second quarter both financially and operationally, thanks to JD.com's enhanced business structure and leading supply chain capabilities,” said Sandy Xu, Chief Executive Officer of JD.com. “We are also encouraged to see the number of our marketplace merchants more than doubled and reached a new record during the quarter, reflecting our efforts to build a superior marketplace ecosystem, one of our priorities to provide customers with enriched supplies at better prices. I am confident that JD.com's commitment to providing the utmost in selection, speed, quality and value will continue to resonate with customers and set a strong foundation for our long-term success.”

    “JD.com delivered both revenues and profitability ahead of our expectation in the second quarter, an encouraging trend we are happy to see amidst our business adjustment and a highly competitive market environment,” said Ian Su Shan, Chief Financial Officer of JD.com. “In JD Retail, we continued to gain market share in core categories of home appliances and 3C, propelled by our supply chain advantages and service quality, while supermarket category made steady progress as expected to build a healthier business model. We are encouraged by such solid results, and we will continue to further optimize JD’s business model and invest in JD’s long term sustainable growth.”

    Business Highlights

    Environment, Social and Governance

    • In June, JD.com released its 2022 Environmental, Social, and Governance (“ESG”) Report, covering the company’s progress in 2022 across corporate governance, business ethics, green operations, green logistics, consumer services and sustainable supply chain, among others. The report highlights JD.com’s commitment to aligning its business development strategy with the value proposition of building a “responsible supply chain” and to continually enhancing its ESG practices.
    • In April, JD Logistics launched the Supply Chain Emission Management Platform (“SCEMP”), a validated carbon footprint management platform incorporating over 140 types of carbon emission factors in road transportation in China. The platform calculates carbon emissions with higher granularity based on the actual routes of transportation vehicles. The SCEMP aims to drive more enterprises to reduce carbon emissions with enhanced efficiency and lower cost, ultimately steering towards achieving the net-zero emission target.

    JD Retail

    • During the JD 618 Grand Promotion, the company further upgraded its trade-in services for home appliance and home goods, providing customers attractive discounts, complimentary on-site disassembly and moving, and integrated services covering delivery, installation, disassembly and cleaning. These efforts not only improve JD.com’s user experience, but also elevate the industry service standard for home appliance and home goods.
    • During the JD 618 Grand Promotion, the company opened two JD MALLs in Dongguan and Kunming alongside thirteen city-level flagship home appliance and electronics stores in eleven cities such as Chengdu, Tangshan, Suzhou and Nanjing, as well as 724 JD home appliance stores in lower-tier markets. The expansion strives to improve customers’ shopping experience, while further enriching the traditional retail ecosystem.
    • In the second quarter, Italian luxury fashion brands Bottega Veneta and Missoni both joined hands with JD.com and launched their official flagship stores on the JD platform. Meanwhile, beauty brands including Sisley, a French luxury skincare brand, and SkinCeuticals, a science-based skincare brand of the L'Oreal Group, launched their official flagship stores on JD.com. Others joining JD.com in the quarter included Maison Margiela Fragrances, Byredo, Farmacy, and Aesop, among others, further enriching the platform’s product offerings to fully address customers’ diverse skincare needs.

    JD Health

    • In the second quarter, JD Health expanded its collaborations with global pharmaceutical companies, including Novartis and Novo Nordisk. By further enhancing its cold chain and offline Direct to Patient (“DTP”) omni-channel fulfillment capabilities, JD Health continues to build up its industry-leading online retail channel for new specialized medicines, which provides better accessibility to patients in need.
    • In April, JD Health officially launched one of the first online medical centers specializing in dermatology in China. The platform features online clinics with over 40 leading experts in the dermatology field, in addition to over 3,000 registered dermatologists from China’s top-tier AAA hospitals. The platform has also assembled a team of full-time dermatologists to provide around-the-clock support for users’ inquiries related to skin issues.
    • As a strategic service offering of JD Health, JD Family Doctor completed its products upgrade in June and launched a “year-round caring for elderly” service. The service pairs an exclusive health caregiver with each of the elderly users to monitor and manage their health conditions throughout the year, and also provides customized health management solutions to serve the elderly users in the long term. Since 2023, the overall user satisfaction rate of JD Family Doctor service has reached 99%.

    JD Logistics

    • In April, JD Airlines launched a new all-cargo route between Beijing Daxing and Shenzhen. With the new all-cargo flights operations between the two destinations, JD Airlines is positioned to provide reliable next-morning delivery services in key cities in the Beijing-Tianjin-Hebei region and the Pearl River Delta region.
    • In June, phase II of JD Logistics Kunshan Asia No.1 smart industrial park (“Kunshan Asia No.1”) officially commenced operation. During the JD 618 Grand Promotion this year, Kunshan Asia No.1's sorting capacity ramped up to an average of over 4.5 million parcels per day, representing the world’s leading level.
    • As of June 30, 2023, JD Logistics operated over 1,600 warehouses. Including warehouse space managed through the Open Warehouse Platform, JD Logistics’s warehouse network had an aggregate gross floor area of over 32 million square meters.3

    Dada

    • In April, JDDJ emerged as one of the first on-demand retail service providers to support the launch of Xiaomi 13 Ultra smartphones. JDDJ brought customers a convenient shopping experience with one-hour delivery for in-stock products.
    • During the JD 618 Grand Promotion, JDDJ saw an 80% year-over-year increase in the number of collaborated offline stores, along with triple-digit year-over-year GMV growth in categories including home appliance, computers, cosmetics, sports and outdoors, and liquor, further diversifying the platform’s supplies and ecosystem. Additionally, the provision of JDDJ’s “Shop Now” services reached customers in over 2,000 counties, districts, and cities during the promotion.

    Second Quarter 2023 Financial Results

    Net Revenues.   For the second quarter of 2023, JD.com reported net revenues of RMB287.9 billion (US$39.7 billion), representing a 7.6% increase from the same period of 2022. Net product revenues increased by 3.5%, while net service revenues increased by 30.1% for the second quarter of 2023, as compared to the same period of 2022.

    Cost of Revenues. Cost of revenues increased by 6.4% to RMB246.5 billion (US$34.0 billion) for the second quarter of 2023 from RMB231.7 billion for the second quarter of 2022.

    Fulfillment Expenses. Fulfillment expenses, which primarily include procurement, warehousing, delivery, customer service and payment processing expenses, increased by 2.3% to RMB16.7 billion (US$2.3 billion) for the second quarter of 2023 from RMB16.3 billion for the second quarter of 2022. Fulfillment expenses as a percentage of net revenues was 5.8% for the second quarter of 2023, compared to 6.1% for the same period last year.

    Marketing Expenses. Marketing expenses increased by 16.7% to RMB11.1 billion (US$1.5 billion) for the second quarter of 2023 from RMB9.5 billion for the second quarter of 2022, marketing expenses as a percentage of net revenues was 3.8% for the second quarter of 2023, compared to 3.5% for the same period last year, mainly due to the increased spending in promotion activities.

    Research and Development Expenses. Research and development expenses increased by 1.1% to RMB4.1 billion (US$0.6 billion) for the second quarter of 2023 from RMB4.0 billion for the second quarter of 2022. Research and development expenses as a percentage of net revenues was 1.4% for the second quarter of 2023, compared to 1.5% for the same period last year.

    General and Administrative Expenses.   General and administrative expenses increased by 1.5% to RMB2.4 billion (US$0.3 billion) for the second quarter of 2023 from RMB2.3 billion for the second quarter of 2022. General and administrative expenses as a percentage of net revenues was 0.8% for the second quarter of 2023, compared to 0.9% for the same period last year.

    Income from Operations and Non-GAAP Income from Operations.   Income from operations for the second quarter of 2023 was RMB8.3 billion (US$1.1 billion), compared to RMB3.8 billion for the same period last year. Non-GAAP income from operations was RMB8.7 billion (US$1.2 billion) for the second quarter of 2023, as compared to RMB5.8 billion for the second quarter of 2022. Operating margin of JD Retail before unallocated items for the second quarter of 2023 was 3.2%, compared to 3.4% for the second quarter of 2022.

    Non-GAAP EBITDA. Non-GAAP EBITDA increased by 45.0% to RMB10.4 billion (US$1.4 billion) for the second quarter of 2023 from RMB7.2 billion for the second quarter of 2022.

    Share of Results of Equity Investees.   Share of results of equity investees was an income of RMB0.9 billion (US$0.1 billion) for the second quarter of 2023, as compared to a loss of RMB1.6 billion for the second quarter of 2022, primarily due to the increase in share of profit and the decrease in impairment of equity method investees.

    Others, net. Other non-operating income was RMB1.2 billion (US$0.2 billion) for the second quarter of 2023, as compared to RMB3.6 billion for the second quarter of 2022. The decrease was primarily due to net losses arising from fair value changes of investment securities, compared to net gains in the same quarter last year, and the increase in impairment of investments.

    Net Income Attributable to the Company's Ordinary Shareholders and Non-GAAP Net Income Attributable to the Company's Ordinary Shareholders. Net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB6.6 billion (US$0.9 billion), compared to RMB4.4 billion for the same period last year. Non-GAAP net income attributable to the company's ordinary shareholders for the second quarter of 2023 was RMB8.6 billion (US$1.2 billion), as compared to RMB6.5 billion for the same period last year.

    Diluted EPS and Non-GAAP Diluted EPS. Diluted net income per ADS for the second quarter of 2023 was RMB4.15 (US$0.57), compared to RMB2.74 for the second quarter of 2022. Non-GAAP diluted net income per ADS for the second quarter of 2023 was RMB5.39 (US$0.74), compared to RMB4.06 for the second quarter of 2022.

    Cash Flow and Working Capital

    As of June 30, 2023, the company’s cash and cash equivalents, restricted cash and short-term investments totaled RMB243.3 billion (US$33.5 billion), compared to RMB226.2 billion as of December 31, 2022. For the second quarter of 2023, free cash flow of the company was as follows:

      For the three months ended
      June 30,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$
      (In millions)
       
    Net cash provided by operating activities 33,667 46,511 6,414 
    Add: Impact from JD Baitiao receivables included in the operating cash flow 1,802 1,586 219 
    Less: Capital expenditures, net of related sales proceeds    
    Capital expenditures for development properties (4,947)(2,363)(326)
    Other capital expenditures* (513)(1,244)(172)
    Free cash flow 30,009 44,490 6,135 
         

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

    Net cash used in investing activities was RMB28.1 billion (US$3.9 billion) for the second quarter of 2023, consisting primarily of the increase in short-term investments and time deposits, and cash paid for capital expenditures.

    Net cash used in financing activities was RMB1.8 billion (US$0.3 billion) for the second quarter of 2023, consisting primarily of cash paid for dividends, partially offset by the net proceeds from bank loans.

    For the twelve months ended June 30, 2023, free cash flow of the company was as follows:

      For the twelve months ended
      June 30,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$
      (In millions)
       
    Net cash provided by operating activities 51,102 52,541 7,246 
    (Less)/Add: Impact from JD Baitiao receivables included in the operating cash flow (1,956)692 95 
    Less: Capital expenditures, net of related sales proceeds  　　
    Capital expenditures for development properties (16,637)(14,390)(1,985)
    Other capital expenditures (4,849)(5,372)(741)
    Free cash flow 27,660 33,471 4,615 
            

    Supplemental Information

    The company reports four segments, JD Retail, JD Logistics, Dada and New businesses. JD Retail, including JD Health and JD Industrials, among other components, mainly engage in online retail, online marketplace and marketing services in China. JD Logistics includes both internal and external logistics businesses. Dada is a local on-demand delivery and retail platform in China. New businesses mainly include JD Property, Jingxi and overseas businesses.

    The table below sets forth the segment operating results:

     For the three months ended For the six months ended
     June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
     RMBRMBUS$ RMBRMBUS$
     (In millions, except percentage data)
    Net revenues:       
    JD Retail241,557 253,280 34,929  459,081 465,638 64,214 
    JD Logistics31,272 41,033 5,659  58,623 77,761 10,724 
    Dada2,281 2,811 388  2,969 5,387 743 
    New businesses6,265 4,316 595  12,020 7,766 1,071 
    Inter-segment eliminations *(13,775)(13,509)(1,863) (25,438)(25,665)(3,539)
    Total consolidated net revenues267,600 287,931 39,708  507,255 530,887 73,213 
            
    Operating income/(loss):       
    JD Retail8,173 8,143 1,123  16,064 17,987 2,481 
    JD Logistics36 510 70  (625)(613)(85)
    Dada(424)(29)(4) (616)(246)(34)
    New businesses(2,032)1,061 145  (4,418)904 123 
          Including: gain on sale of development properties — 1,009  139   — 1,481  204  
    Total segment operating income5,753 9,685 1,334  10,405 18,032 2,485 
    Unallocated items**(1,995)(1,415)(194) (4,239)(3,335)(459)
    Total consolidated operating income3,758 8,270 1,140  6,166 14,697 2,026 
            
    Operating margin:       
    JD Retail3.4%3.2%3.2% 3.5%3.9%3.9%
    JD Logistics0.1%1.2%1.2% (1.1)%(0.8)%(0.8)%
    Dada(18.6)%(1.0)%(1.0)% (20.7)%(4.6)%(4.6)%
    New businesses(32.4)%24.6%24.6% (36.8)%11.6%11.6%
                  

    * The inter-segment eliminations mainly consist of revenues from supply chain solutions and logistics services provided by JD Logistics to JD Retail, on-demand delivery and retail services provided by Dada to JD Retail and JD Logistics, 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.


    The table below sets forth the revenue information:

     For the three months ended For the six months ended
     June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
     RMBRMBUS$ RMBRMBUS$
     (In millions) (In millions)
    Electronics and home appliances revenues136,618152,13120,980 254,986269,13037,115
    General merchandise revenues89,40281,72411,270 175,450160,28922,105
    Net product revenues226,020233,85532,250 430,436429,41959,220
     　    　　
    Marketplace and marketing revenues20,74222,5093,104 38,41841,5715,733
    Logistics and other service revenues20,83831,5674,354 38,40159,8978,260
    Net service revenues41,58054,0767,458 76,819101,46813,993
     　    　　
    Total net revenues267,600287,93139,708 507,255530,88773,213
            

    Conference Call

    JD.com’s management will hold a conference call at 8:00 am, Eastern Time on August 16, 2023, (8:00 pm, Beijing/Hong Kong Time on August 16, 2023) to discuss its financial results for the three months and six months ended June 30, 2023.

    Please register in advance of the conference using the link provided below and dial in 15 minutes prior to the call, using participant dial-in numbers, the Passcode and unique access PIN which would be provided upon registering. You will be automatically linked to the live call after completion of this process, unless required to provide the conference ID below due to regional restrictions.

    PRE-REGISTER LINK: https://s1.c-conf.com/diamondpass/10032645-3wu7ql.html

    CONFERENCE ID: 10032645

    A telephone replay will be available for one week until August 23, 2023. The dial-in details are as follows:

    US:+1-855-883-1031
    International:+61-7-3107-6325
    Hong Kong:800-930-639
    Mainland China:400-120-9216
    Passcode:10032645
      

    Additionally, a live and archived webcast of the conference call will also be available on the JD.com’s investor relations website at http://ir.jd.com.

    About JD.com

    JD.com is a leading supply chain-based technology and service provider. The company’s cutting-edge retail infrastructure seeks to enable consumers to buy whatever they want, whenever and wherever they want it. The company has opened its technology and infrastructure to partners, brands and other sectors, as part of its Retail as a Service offering to help drive productivity and innovation across a range of industries.

    Non-GAAP Measures

    In evaluating the business, the company considers and uses non-GAAP measures, such as non-GAAP income/(loss) from operations, non-GAAP operating margin, non-GAAP net income/(loss) attributable to the company's ordinary shareholders, non-GAAP net margin to the company’s ordinary shareholders, free cash flow, non-GAAP EBITDA, non-GAAP EBITDA margin, non-GAAP net income/(loss) per share and non-GAAP net income/(loss) per ADS, as supplemental measures to review and assess operating performance. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The company defines non-GAAP income/(loss) from operations as income/(loss) from operations excluding share-based compensation, amortization of intangible assets resulting from assets and business acquisitions, effects of business cooperation arrangements, gain on sale of development properties and impairment of goodwill and intangible assets. The company defines non-GAAP net income/(loss) attributable to the company's ordinary shareholders as net income/(loss) attributable to the company's ordinary shareholders excluding share-based compensation, amortization of intangible assets resulting from assets and business acquisitions, effects of business cooperation arrangements and non-compete agreements, gain/(loss) on disposals/deemed disposals of investments and others, reconciling items on the share of equity method investments, loss/(gain) from fair value change of long-term investments, impairment of goodwill, intangible assets and investments, gain in relation to sale of development properties and tax effects on non-GAAP adjustments. The company defines free cash flow as operating cash flow adjusting the impact from JD Baitiao receivables included in the operating cash flow and capital expenditures, net of the proceeds from sale of development properties. Capital expenditures include purchase of property, equipment and software, cash paid for construction in progress, purchase of intangible assets and land use rights. The company defines non-GAAP EBITDA as non-GAAP income/(loss) from operations plus depreciation and amortization excluding amortization of intangible assets resulting from assets and business acquisitions. Non-GAAP basic net income/(loss) per share is calculated by dividing non-GAAP net income/(loss) attributable to the company's ordinary shareholders by the weighted average number of ordinary shares outstanding during the periods. Non-GAAP diluted net income/(loss) per share is calculated by dividing non-GAAP net income/(loss) attributable to the company's ordinary shareholders by the weighted average number of ordinary shares and dilutive potential ordinary shares outstanding during the periods, including the dilutive effect of share-based awards as determined under the treasury stock method. Non-GAAP net income/(loss) per ADS is equal to non-GAAP net income/(loss) per share multiplied by two.

    The company presents these non-GAAP financial measures because they are used by management to evaluate operating performance and formulate business plans. Non-GAAP income/(loss) from operations, non-GAAP net income/(loss) attributable to the company's ordinary shareholders and non-GAAP EBITDA reflect the company’s ongoing business operations in a manner that allows more meaningful period-to-period comparisons. Free cash flow enables management to assess liquidity and cash flow while taking into account the impact from JD Baitiao receivables included in the operating cash flow and the demands that the expansion of fulfillment infrastructure and technology platform has placed on financial resources. The company believes that the use of the non-GAAP financial measures facilitates investors to understand and evaluate the company’s current operating performance and future prospects in the same manner as management does, if they so choose. The company also believes that the non-GAAP financial measures provide useful information to both management and investors by excluding certain expenses, gain/loss and other items that are not expected to result in future cash payments or that are non-recurring in nature or may not be indicative of the company’s core operating results and business outlook.

    The non-GAAP financial measures have limitations as analytical tools. The company’s non-GAAP financial measures do not reflect all items of income and expense that affect the company’s operations or not represent the residual cash flow available for discretionary expenditures. Further, these non-GAAP measures may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited. The company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measure, all of which should be considered when evaluating performance. The company encourages you to review the company’s financial information in its entirety and not rely on a single financial measure.

    CONTACTS:

    Investor Relations
    Sean Zhang
    +86 (10) 8912-6804
    IR@JD.com

    Media Relations
    +86 (10) 8911-6155
    Press@JD.com

    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,” “confident” and similar statements. Among other things, the quotations from management in this announcement, as well as JD.com’s strategic and operational plans, contain forward-looking statements. JD.com may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in announcements made on the website of the Hong Kong Stock Exchange, in its annual report to shareholders, in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Statements that are not historical facts, including statements about JD.com’s beliefs and expectations, are forward-looking statements. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: JD.com’s growth strategies; its future business development, results of operations and financial condition; its ability to attract and retain new customers and to increase revenues generated from repeat customers; its expectations regarding demand for and market acceptance of its products and services; trends and competition in China’s e-commerce market; changes in its revenues and certain cost or expense items; the expected growth of the Chinese e-commerce market; laws, regulations and governmental policies relating to the industries in which JD.com or its business partners operate; potential changes in laws, regulations and governmental policies or changes in the interpretation and implementation of laws, regulations and governmental policies that could adversely affect the industries in which JD.com or its business partners operate, including, among others, initiatives to enhance supervision of companies listed on an overseas exchange and tighten scrutiny over data privacy and data security; risks associated with JD.com’s acquisitions, investments and alliances, including fluctuation in the market value of JD.com’s investment portfolio; impact of the COVID-19 pandemic; natural disasters and geopolitical events; change in tax rates and financial risks; intensity of competition; and general market and economic conditions in China and globally. Further information regarding these and other risks is included in JD.com’s filings with the SEC and the announcements on the website of the Hong Kong Stock Exchange. All information provided herein is as of the date of this announcement, and JD.com undertakes no obligation to update any forward-looking statement, except as required under applicable law.


    JD.com, Inc.
    Unaudited Interim Condensed Consolidated Balance Sheets
    (In millions, except otherwise noted)
       
      As of
      December 31,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$
    ASSETS    
    Current assets    
    Cash and cash equivalents 78,86191,02012,552
    Restricted cash 6,2548,1291,121
    Short-term investments 141,095144,10119,872
    Accounts receivable, net (including JD    
    Baitiao of RMB3.1 billion and
    RMB4.1 billion as of December 31,
    2022 and June 30, 2023,
    respectively)(1)    		 20,57620,0032,759
    Advance to suppliers 3,8382,584356
    Inventories, net 77,94963,5628,766
    Prepayments and other current assets 15,15615,4102,125
    Amount due from related parties 6,1424,375603
    Assets held for sale 1,203——
    Total current assets 351,074 349,184 48,154
    Non-current assets    
    Property, equipment and software, net 55,08059,862      8,255
    Construction in progress 11,1619,8571,359
    Intangible assets, net 9,1398,4411,164
    Land use rights, net 33,848        37,7525,206
    Operating lease right-of-use assets 22,26722,3963,089
    Goodwill 23,12323,1233,189
    Investment in equity investees 57,64158,3878,052
    Investment securities 11,6116,260863
    Deferred tax assets 1,5361,506208
    Other non-current assets 18,77027,1563,745
    Total non-current assets 244,176254,74035,130
    Total assets 595,250603,92483,284
         



    JD.com, Inc.
    Unaudited Interim Condensed Consolidated Balance Sheets
    (In millions, except otherwise noted)
       
      As of
      December 31,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$
    LIABILITIES    
    Current liabilities    
    Short-term debts 12,14617,9512,476
    Accounts payable 160,607152,01120,963
    Advance from customers 33,713        31,649        4,365
    Deferred revenues 3,3512,476           341
    Taxes payable 5,9267,5631,043
    Amount due to related parties 488180               25
    Accrued expenses and other current liabilities 42,57039,9235,504
    Operating lease liabilities 7,6887,9451,096
    Liabilities held for sale 72——
    Total current liabilities 266,561 259,69835,813
    Non-current liabilities    
    Deferred revenues 1,1071,081149
    Unsecured senior notes 10,22410,6141,464
    Deferred tax liabilities 6,511            7,213          995
    Long-term borrowings 20,00921,4502,958
    Operating lease liabilities 14,97814,9812,066
    Other non-current liabilities 1,7371,597           220
    Total non-current liabilities 54,56656,9367,852
    Total liabilities 321,127316,634 43,665
         
    MEZZANINE EQUITY 590 595 82
         
    SHAREHOLDERS’ EQUITY    
    Total JD.com, Inc. shareholders’ equity (US$0.00002 par value, 100,000 million shares authorized, 3,183 million shares issued and 3,146 million shares outstanding as of June 30, 2023) 213,366221,78630,586
    Non-controlling interests 60,16764,9098,951
    Total shareholders’ equity 273,533286,69539,537
    Total liabilities, mezzanine equity and shareholders’ equity 595,250603,92483,284
         
    (1) 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 securitization plans and derecognizes the related Baitiao receivables through sales type arrangements.


    JD.com, Inc.
    Unaudited Interim Condensed Consolidated Statements of Operations
    (In millions, except per share data)
     
     For the three months ended For the six months ended
     June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
     RMBRMBUS$ RMBRMBUS$
    Net revenues       
    Net product revenues226,020 233,855 32,250  430,436 429,419 59,220 
    Net service revenues41,580 54,076 7,458  76,819 101,468 13,993 
    Total net revenues267,600 287,931  39,708   507,255 530,887 73,213 
    Cost of revenues(231,706)(246,498)(33,994) (437,915)(453,436)(62,532)
    Fulfillment(16,308)(16,679)(2,300) (31,793)(32,050)(4,420)
    Marketing(9,477)(11,063)(1,526) (18,182)(19,068)(2,630)
    Research and development(4,027)(4,072)(562) (8,411)(8,258)(1,139)
    General and administrative(2,324)(2,358)(325) (4,788)(4,859)(670)
    Gain on sale of development properties— 1,009 139  — 1,481 204 
    Income from operation(2)(3)3,758 8,270 1,140   6,166 14,697 2,026 
    Other income/(expenses)       
    Share of results of equity investees(1,604)907 125  (2,685)86 12 
    Interest expense(484)(654)(90) (828)(1,244)(172)
    Others, net(4)3,586 1,211 167  (312)4,003 552 
    Income before tax5,256 9,734  1,342   2,341 17,542 2,418 
    Income tax expenses(1,227)(2,811)(388) (1,831)(4,420)(610)
    Net income4,029 6,923  954  510 13,122 1,808 
    Net income/(loss) attributable to non-controlling interests shareholders(350)342 47  (883)280 39 
    Net income attributable to mezzanine equity classified as non-controlling interests shareholders3 — —  8 — — 
    Net income attributable to the company's ordinary shareholders4,376 6,581  907  1,385 12,842 1,769 
            
    Net income per share:       
    Basic1.40 2.09 0.29  0.45 4.09 0.56 
    Diluted1.37 2.08 0.29  0.43 4.04 0.56 
    Net income per ADS:       
    Basic2.80 4.19 0.58  0.89 8.18 1.13 
    Diluted2.74 4.15 0.57  0.85 8.08 1.11 


    JD.com, Inc.
    Unaudited Interim Condensed Consolidated Statements of Operations
    (In millions, except per share data)
     
      For the three months ended For the six months ended
      June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$ RMBRMBUS$
    (2) Includes share-based compensation expenses as follows:
    Cost of revenues (28)(27)(4) (59)(64)(9)
    Fulfillment (200)(132)(18) (427)(331)(46)
    Marketing (149)(83)(11) (298)(218)(30)
    Research and development (325)(155)(21) (740)(487)(67)
    General and administrative (875)(580)(81) (1,904)(1,351)(186)
    Total (1,577)(977)(135) (3,428)(2,451)(338)
             
    (3) Includes amortization of business cooperation arrangement and intangible assets resulting from assets and business acquisitions as follows:
    Fulfillment (107)(103)(14) (180)(208)(28)
    Marketing (219)(220)(30) (436)(439)(60)
    Research and development (60)(83)(11) (98)(173)(24)
    General and administrative (32)(32)(4) (97)(64)(9)
    Total (418)(438)(59) (811)(884)(121)
             
    (4) Others, net 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, foreign exchange gains/(losses), interest income and gains/(losses) from fair value change of short-term investments.


    JD.com, Inc.
    Unaudited Non-GAAP Net Income Per Share and Per ADS
    (In millions, except per share data)
     
      For the three months ended For the six months ended
      June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$ RMBRMBUS$
             
    Non-GAAP net income attributable to the company's ordinary shareholders 6,4898,5571,180 10,52116,1482,225
             
    Weighted average number of shares:        
    Basic 3,1213,1433,143 3,1193,1413,141
    Diluted 3,1763,1663,166 3,1823,1733,173
             
    Non-GAAP net income per share:        
    Basic 2.082.720.38 3.375.140.71
    Diluted 2.032.700.37 3.295.080.70
             
    Non-GAAP net income per ADS:        
    Basic 4.165.440.75 6.7510.281.42
    Diluted 4.065.390.74 6.5810.161.40


    JD.com, Inc.
    Unaudited Interim Condensed Consolidated Statements of Cash Flows and Free Cash Flow
    (In millions)
     
      For the three months ended For the six months ended
      June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$ RMBRMBUS$
             
    Net cash provided by operating activities 33,667 46,511 6,414  30,182 24,904 3,434 
    Net cash used in investing activities (30,926)(28,127)(3,879) (26,364)(11,435)(1,577)
    Net cash provided by/(used in) financing activities (11,309)(1,832)(253) 1,386 (577)(80)
    Effect of exchange rate changes on cash, cash equivalents and restricted cash 3,126 1,827 252  2,668 1,101 152 
    Net increase/(decrease) in cash, cash equivalents and restricted cash (5,442)18,379 2,534  7,872 13,993 1,929 
    Cash, cash equivalents and restricted cash at beginning of period, including cash and cash equivalents classified within assets held for sale 90,006 80,770 11,139  76,692 85,156 11,744 
    Less: cash, cash equivalents, and restricted cash classified within assets held for sale at beginning of period — — —  — (41)(6)
    Cash, cash equivalents, and restricted cash at beginning of period 90,006 80,770 11,139  76,692 85,115 11,738 
    Cash, cash equivalents and restricted cash at end of period 84,564 99,149 13,673  84,564 99,149 13,673 
             
    Net cash provided by operating activities 33,667 46,511 6,414  30,182 24,904 3,434 
    Add: Impact from JD Baitiao receivables included in the operating cash flow 1,802 1,586 219  68 1,004 138 
    Less: Capital expenditures, net of related sales proceeds        
    Capital expenditures for development properties (4,947)(2,363)(326) (7,623)(4,508)(622)
    Other capital expenditures (513)(1,244)(172) (1,415)(2,312)(319)
    Free cash flow 30,009 44,490 6,135  21,212 19,088 2,631 


    JD.com, Inc.
    Supplemental Financial Information and Business Metrics
    (In RMB billions, except turnover days data)
     
      Q2 2022Q3 2022Q4 2022Q1 2023Q2 2023
    Cash flow and turnover days      
    Operating cash flow – trailing twelve months (“TTM”) 51.145.857.839.752.5
    Free cash flow – TTM 27.725.835.619.033.5
    Inventory turnover days(5) – TTM 31.531.733.232.431.7
    Accounts payable turnover days(6) – TTM 49.450.452.551.352.8
    Accounts receivable turnover days(7) – TTM 3.64.04.54.85.0
     


    (5) 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.

    (6) 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.

    (7) 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.


    JD.com, Inc.
    Unaudited Reconciliation of GAAP and Non-GAAP Results
    (In millions, except percentage data)
     
     
      For the three months ended For the six months ended
      June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$ RMBRMBUS$
             
    Income from operations 3,758 8,270 1,140  6,166 14,697 2,026 
    Add: Share-based compensation 1,577 977 135  3,428 2,451 338 
    Add: Amortization of intangible assets resulting from assets and business acquisitions 291 327 44  549 663 91 
    Add: Effects of business cooperation arrangements 127 111 15  262 221 30 
    Reversal of: Gain on sale of development properties — (1,009)(139) — (1,481)(204)
    Non-GAAP income from operations 5,753 8,676  1,195   10,405 16,551 2,281 
    Add: Depreciation and other amortization 1,422 1,727 239  2,836 3,351 462 
    Non-GAAP EBITDA 7,175 10,403 1,434  13,241 19,902 2,743 
             
    Total net revenues 267,600 287,931 39,708  507,255 530,887 73,213 
             
    Non-GAAP operating margin 2.1%3.0%3.0% 2.1%3.1%3.1%
             
    Non-GAAP EBITDA margin 2.7%3.6%3.6% 2.6%3.7%3.7%


    JD.com, Inc.
    Unaudited Reconciliation of GAAP and Non-GAAP Results
    (In millions, except percentage data)
     
      For the three months ended For the six months ended
      June 30,
    2022    		June 30,
    2023    		June 30,
    2023    		 June 30,
    2022    		June 30,
    2023    		June 30,
    2023
      RMBRMBUS$ RMBRMBUS$
             
    Net income attributable to the company's ordinary shareholders 4,376 6,581 907  1,385 12,842 1,769 
    Add: Share-based compensation 1,314 739 102  2,907 1,995 275 
    Add: Amortization of intangible assets resulting from assets and business acquisitions 201 159 22  399 381 53 
    Add/(Reversal of): Reconciling items on the share of equity method investments(8) 441 (139)(19) 830 701 97 
    Add: Impairment of goodwill, intangible assets, and investments 1,257 1,362 188  1,257 1,388 191 
    (Reversal of)/Add: (Gain)/Loss from fair value change of long-term investments (1,069)488 67  165 (388)(54)
    Reversal of: Gain on sale of development properties — (756)(104) — (1,120)(154)
    (Reversal of) /Add: Net (gain)/loss on disposals/deemed disposals of investments and others (31)(29)(4) 3,518 (50)(7)
    Add: Effects of business cooperation arrangements and non-compete agreements 127 111 15  250 221 30 
    (Reversal of)/Add: Tax effects on non-GAAP adjustments (127)41 6  (190)178 25 
    Non-GAAP net income attributable to the company's ordinary shareholders 6,489 8,557 1,180  10,521 16,148 2,225 
             
    Total net revenues 267,600 287,931 39,708  507,255 530,887 73,213 
             
    Non-GAAP net margin to the company’s ordinary shareholders 2.4%3.0%3.0% 2.1%3.0%3.0%


    (8) To exclude the GAAP to non-GAAP reconciling items on the share of equity method investments, and share of amortization of intangibles not on their books.
     

    Reconciliation between U.S. GAAP and International Financial Reporting Standards

    Deloitte Touche Tohmatsu was engaged by the company to conduct limited assurance engagement in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) "Assurance Engagements Other Than Audits or Reviews of Historical Financial Information" ("HKSAE 3000 (Revised)") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA") on the reconciliation of the condensed consolidated statement of operations for the six months ended June 30, 2023 and the condensed consolidated balance sheet as at June 30, 2023 of the company and its subsidiaries (collectively referred to as the "Group") between the accounting policies adopted by the Group of the relevant period in accordance with the accounting principles generally accepted in the United States of America (the "U.S. GAAP") and the International Financial Reporting Standards (the "IFRSs") issued by the International Accounting Standards Board (together, the "Reconciliation").

    The limited assurance engagement undertaken in accordance with HKSAE 3000 (Revised) involves performing procedures to obtain sufficient appropriate evidence about whether:

    • the related adjustments and reclassifications give appropriate effect to those criteria; and
    • the Reconciliation reflects the proper application of the adjustments and reclassifications to the differences between the Group's accounting policies in accordance with the U.S. GAAP and the IFRSs.

    The procedures performed by Deloitte Touche Tohmatsu were based on their professional judgment, having regard to their understanding of the management’s process on preparing the Reconciliation, nature, business performance and financial position of the Group. Given the circumstances of the engagement, the procedures performed included:

    (i) Comparing the "Amounts as recorded under U.S. GAAP" for the six months ended June 30, 2023 in the Reconciliation as set out in the Appendix with the Interim 2023 Results prepared in accordance with the U.S. GAAP;
    (ii) Evaluating the assessment made by the board of directors in identifying the differences between the accounting policies in accordance with the U.S. GAAP and the IFRSs, and the evidence supporting the adjustments and reclassifications made in the Reconciliation in arriving at the "Amounts as recorded under IFRSs" in the Reconciliation as set out in the Appendix; and
    (iii) Checking the arithmetic accuracy of the computation of the Reconciliation as set out in the Appendix.

    The procedures performed by Deloitte Touche Tohmatsu in this limited assurance engagement vary in nature and timing from, and are less in extent than for, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed. Accordingly, Deloitte Touche Tohmatsu do not express a reasonable assurance opinion.

    Based on the procedures performed and evidence obtained, Deloitte Touche Tohmatsu have concluded that nothing has come to their attention that causes them to believe that:

    (i) The "Amounts as recorded under U.S. GAAP" for the six months ended June 30, 2023 in the Reconciliation as set out in the Appendix is not in agreement with the Interim 2023 Results prepared in accordance with the U.S. GAAP;
    (ii) The adjustments and reclassifications made in the Reconciliation in arriving at the "Amounts as recorded under IFRSs" in the Reconciliation as set out in the Appendix, do not reflect, in all material respects, the different accounting treatments according to the Group's accounting policies in accordance with the U.S. GAAP and the IFRSs of the relevant period; and
    (iii) The computation of the Reconciliation as set out in the Appendix is not arithmetically accurate.

    Appendix

      
     For six months ended June 30, 2022
      IFRSs adjustments 
     Amounts as recorded under U.S. GAAP  Preferred shares  Investments measured
    at fair value    		  Share-based compensation Lease  Amounts as recorded under IFRSs 
     (RMB in millions)
      Note iNote iiNote iii Note iv 
    Fulfillment(31,793) -  -  - 597  (31,196)
    Marketing(18,182) -  -  - 2  (18,180)
    Research and development(8,411) -  -  - 3  (8,408)
    General and administrative(4,788) -  -  - 4  (4,784)
    Income from operations6,166  -  -  - 606  6,772 
    Share of results of equity investees(2,685) -  279  - -  (2,406)
    Interest expense(828) -  -  - (487) (1,315)
    Others, net(312) -  (2,380) - -  (2,692)
    Fair value changes of preferred shares-  (1,074) -  - -  (1,074)
    Income/(loss) before tax2,341  (1,074) (2,101) - 119  (715)
    Income tax expenses(1,831) -  1  3 -  (1,827)
    Net income/(loss)510  (1,074) (2,100) 3 119  (2,542)
    Net loss attributable to non-controlling interests shareholders(883) (185) 45  - (29) (1,052)
    Net income attributable to mezzanine equity
    classified as non-controlling interests shareholders    		8  (8) -  - -  - 
    Net income/(loss) attributable to the company’s ordinary shareholders1,385  (881) (2,145) 3 148  (1,490)
                     

    The condensed consolidated financial statements are prepared in accordance with U.S. GAAP, which differ in certain respects from IFRSs. The effects of material differences between the condensed consolidated financial statements of the Group prepared under U.S. GAAP and IFRSs are as follows:

     For six months ended June 30, 2023
      IFRSs adjustments
    		  
     Amounts as recorded under U.S. GAAPPreferred shares  Investments
    measured at fair
    value    		  Share-based compensation  Lease   Redeemable equity securities  Amounts as recorded under IFRSs 
     (RMB in millions)
      Note iNote iiNote iiiNote ivNote v 
    Fulfillment(32,050) -  -  -  845  -  (31,205)
    Marketing(19,068) -  -  -  2  -  (19,066)
    Research and development(8,258) -  -  -  3  -  (8,255)
    General and administrative(4,859) -  -  -  4  -  (4,855)
    Gain on sale of development properties1,481  -  -  -  (250) -  1,231 
    Income from operations 14,697    -    -    -    604    -    15,301  
    Share of results of equity investees86  -  (391) -  -  -  (305)
    Interest expense(1,244) -  -  -  (517) (7) (1,768)
    Others, net4,003  -  374  -  -  -  4,377 
    Fair value changes of preferred shares-  (818) -  -  -  -  (818)
    Income before tax 17,542    (818)  (17 )  -    87    (7)  16,787  
    Income tax expenses(4,420) -  (30) (265) -  -  (4,715)
    Net income 13,122    (818)              (47 )            (265)  87    (7)  12,072  
    Net income attributable to non-controlling interests shareholders280  (207) (2) -  (28) -  43 
    Net income attributable to the company’s ordinary shareholders 12,842    (611)                                        (45)                                  (265)  115    (7)  12,029  


     As of December 31, 2022
      IFRSs adjustments
    		  
     Amounts as recorded under U.S. GAAP Preferred shares
    		 Investments measured at fair value
    		 Share-based compensation Lease   Redeemable equity securities  Amounts as recorded under IFRSs
     (RMB in millions)
       Note iNote iiNote iii Note ivNote v 
    Operating lease right-of-use assets22,267 -  -  - (1,883) -                    20,384
    Investment in equity investees57,641 -  (35,851) - -  -                   21,790
    Investment securities11,611 -  (11,611) - -  -                           -
    Financial assets at fair value through profit or loss- -  48,893    - -  -     48,893
    Financial assets at fair value through other comprehensive income- -  834  - -  -                         834
    Deferred tax assets1,536 -  38  50 -  -                      1,624
    Total assets 595,250   -    2,303    50   (1,883)  -        595,720
    Deferred tax liabilities6,511 -  487  - -  -  6,998
    Other non-current liabilities1,737 -  -  - -  547                     2,284
    Preferred shares  16,084  -  - -  -                    16,084
    Total liabilities 321,127   16,084    487    -   -    547                  338,245
    Mezzanine Equity 590   -    -    -   -    (590)                          -
    Total JD.com, Inc. shareholders’ equity213,366 (6,408) 1,751  46 (1,794) (440)      206,521
    Non-controlling interests60,167 (9,676) 65  4 (89) 483                   50,954
    Total shareholders’ equity 273,533   (16,084
    		)  1,816
    		   50   (1,883)  43    257,475


     As of June 30, 2023
      IFRSs adjustments
    		  
     Amounts as recorded under U.S. GAAP Preferred shares
    		 Investments measured at fair value
    		 Share-based compensation
    		 Lease
    		 Redeemable equity securities
    		 Amounts as recorded under IFRSs
     (RMB in millions)
       Note iNote iiNote iiiNote ivNote v 
    Operating lease right-of-use assets22,396 -  -  -  (1,796) -  20,600
    Investment in equity investees58,387 -  (36,441) -  -  -  21,946
    Investment securities6,260 -  (6,260) -  -  -  -
    Financial assets at fair value through profit or loss- -  44,497  -  -  -  44,497
    Financial assets at fair value through other comprehensive income- -  448  -  -  -  448
    Deferred tax assets1,506 -  49  (438) -  -  1,117
    Total assets 603,924  -    2,293    (438)  (1,796) -  603,983
    Deferred tax liabilities7,213 -  519  -  -  -  7,732
    Other non-current liabilities1,597 -                                     -                                      -                                      -  554  2,151
    Preferred shares- 18,484  -  -  -  -  18,484
    Total liabilities 316,634   18,484    519    -    -    554   336,191
    Mezzanine Equity 595   -    -    -    -    (595)  -   
    Total JD.com, Inc. shareholders’ equity221,786 (6,576) 1,674  (442) (1,679) (447) 214,316
    Non-controlling interests64,909 (11,908) 100  4  (117) 488  53,476
    Total shareholders’ equity 286,695   (18,484)  1,774    (438)  (1,796)  41    267,792
                      

    Notes

    (i) Preferred shares

    Under U.S. GAAP, preferred shares of the Group are accounted for as mezzanine equity or non-controlling interests, depending on the redeemable features exist or not. The preferred shares with redeemable features are classified as mezzanine equity because they are redeemable contingently upon the occurrence of certain events outside of the Group’s control. This kind of preferred shares are recorded initially at fair value, net of issuance costs at the date of issuance. Accretion to the respective redemption value of the preferred shares over the period is recognized starting from issuance date to the earliest redemption date.

    Under IFRS, since the Group does not have an unconditional right to avoid delivering cash, the preferred shares represent liability. With certain embedded features, the Group designates the entire preferred shares as financial liabilities at fair value through profit or loss and are initially recognized at fair value, while the changes in the fair value are recognized in profit or loss. The issuance costs are recorded in profit or loss.

    (ii) Investments measured at fair value

    Under U.S. GAAP, the Group uses measurement alternative to record the investments without readily determinable fair values at cost, less impairment, adjusted for subsequent observable price changes on a nonrecurring basis, and reports changes in the carrying value of the equity investments in profit or loss. Changes in the carrying value of the equity investments are required to be made whenever there are observable price changes in orderly transactions for the identical or similar investment of the same issuer. Those investments include convertible redeemable preferred shares, ordinary shares with preferential rights issued by privately held companies and equity investments in unlisted entities, in the form of ordinary shares without significant influence. In addition, the Group accounts for certain investments in private equity funds over which the Group does not have the ability to exercise significant influence under the existing practical expedient, and estimates fair value using net asset value per share (or its equivalent) of the investment. The Group also applies the equity method of accounting to account for certain equity investments in private equity funds.

    Under IFRS, the aforementioned investments are classified as financial assets at fair value through profit or loss and measured at fair value, except for certain equity investments not held for trading but held for long-term strategic purposes, which are designated as financial assets at fair value through other comprehensive income. Fair value changes of these long-term investments are recognized in profit or loss or other comprehensive income, respectively.

    (iii) Share-based compensation

    Under U.S. GAAP, for awards that ordinarily give rise to a tax deduction under existing tax law, deferred taxes are computed on the basis of the compensation expense that is recognized for financial reporting purposes. In addition, tax benefits in excess of or less than the related deferred tax assets are recognized in profit or loss in the period in which the amount of the deduction is determined (typically when an award vests or, in the case of options, is exercised or expires).

    Under IFRS, for awards that will give rise to a tax deduction under the applicable tax law, deferred taxes are computed on the basis of the hypothetical tax deduction for the share-based payment that corresponds to the percentage earned to date (i.e., the intrinsic value of the award on the reporting date multiplied by the percentage vested). In addition, tax benefits less than or equal to the related deferred tax assets are recognized in profit or loss, otherwise are recognized in equity.

    (iv) Lease

    Lease classification and measurement

    Under U.S. GAAP, the amortization of the right-of-use assets and interest expense related to the lease liabilities are recorded together as lease expense to produce a straight-line recognition effect in profit or loss.

    Under IFRS, the amortization of the right-of-use assets is on a straight-line basis while the interest expense related to the lease liabilities are measured at amortized cost.

    Sale-and-leaseback arrangements

    Under U.S. GAAP, if the sale-and-leaseback transaction qualifies as a sale, the entire gain on the transaction would be recognized.

    Under IFRS, for sale-and-leaseback transactions that qualify as a sale, the gain would be limited to the amount related to the residual portion of the asset sold. The amount of the gain related to the underlying asset leased back to the lessee would be offset against the lessee’s right-of-use assets.

    (v) Redeemable equity securities

    Under U.S. GAAP, certain financial instruments of the Group in the form of shares with redemption features embedded are classified as redeemable non-controlling interests, when the realization of the redemption feature is subject to certain conditions that are not solely within the Group’s control.

    Under IFRS, these financial instruments are classified as liabilities irrespective of whether the obligation is unconditional or conditional.

    ______________

    1 The U.S. dollar (US$) amounts disclosed in this announcement, except for those transaction amounts that were actually settled in U.S. dollars, are presented solely for the convenience of the readers. The conversion of Renminbi (RMB) into US$ in this announcement 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, 2023, which was RMB7.2513 to US$1.00. The percentages stated in this announcement are calculated based on the RMB amounts.
    2 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 announcement.
    3 The numbers also include warehouses managed by Deppon Logistics Co., Ltd. (“Deppon”, Shanghai Stock Exchange code: 603056) and its subsidiaries (collectively, “Deppon Group”). In the third quarter of 2022, JD Logistics completed the acquisition of the controlling interest in Deppon and began to consolidate its financial results.


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