JD.com posts 92% increase in profits on AI-powered cost savings

By Louis Goss

JD.com's New York listed shares jumped in Thursday's pre-market session after the Chinese e-commerce giant posted a sharp increase in its profits on the back of a push to boost its efficiency using artificial intelligence.

The Beijing headquartered company reported a 92% increase in net income attributable to shareholders, to 12.65 billion yuan ($1.77 billion), as it successfully boosted its profit margins on the back of a relatively minor 1.2% increase in its revenue, to 291.4 billion yuan.

Shares in JD.com (JD), listed on the Nasdaq, increased 4% in Thursday's pre-market session having lost 25% of their value over the past 12 months. JD.com's (HK:9618) Hong Kong listed shares fell 1% in the Thursday's session before the results were published, having fallen 28% over the past year.

The e-commerce giant said its increased margins were the result of the company successfully leveraging "economies of scale and procurement efficiencies," including by integrating AI technologies into its supply chains.

The increase in JD.com's profits saw the company outstrip expectations in generating earnings worth 9.36 yuan per share versus the 6.08 yuan expected by 18 analysts polled by Zacks.

The online retailer said a 6% increase in its services sales - which includes sales from its technology consulting division - helped grow its firm-wide revenue in the face of flat sales from its products segment.

The firm said it had made an effort to keep its prices low in order to remain competitive amid stiff competition in the Chinese e-commerce market from rivals Alibaba (BABA) (HK:9988) and PDD (PDD), which owns online retailers Pinduoduo and Temu.

JD.com, which is currently China's largest online retailer by revenue, was first formed in the late 1990s before pivoting into e-commerce in the early 2000s and later becoming the first Chinese online retailer to list on the Nasdaq in 2014.

The company, which was founded by Jiangsu born entrepreneur Liu Qiangdong, has seen its share price slump over the previous year as a result of the downturn in China's economy that was sparked by the crisis in the country's property sector.

Qiangdong has remained one of JD.com's top shareholders with a 0.82% stake in the company alongside U.S. retail giant Walmart (WMT), which owns a 10.35% position in the Chinese firm, according to figures from FactSet.

-Louis Goss

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08-15-24 0811ET

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