JD.com (JD - Get Report) posted stronger-than-expected first quarter earnings Friday as the China-focused online retailer backed by Walmart (WMT - Get Report) and Alphabet (GOOGL - Get Report) renewed an agreement with Tencent Holdings (TCEHY) and booked solid e-commerce sales growth.
JD said revenues for the three months ending in March rose 20.9% from the same period last year to 121.1 billion Chinese yuan ($18 billion), topping the consensus forecast of 120.1 billion yuan compiled by Refinitiv. The gains brought earnings to 4.96 yuan per share, or 33 cents per U.S. listed share, the company said, well ahead of the Street consensus forecast of 12 cents per share.
JD.com also said it has renewed a strategic tie-up with Tencent that will give it high-level access to its Weixin platform, which, along with WeChat, attracted nearly 1.1 billion users each month over the first quarter and grew 11% from the same period last year. JD.com will pay Tencent around $800 million for the three year deal, and the online giant will also take an $250 million in JD.com's class A shares.
"JD.com's focus on delivering the best and most trusted online retail experience to customers throughout China drove another strong performance for the first quarter," said CEO Richard Liu. "We will continue to invest in key technologies and top industry talent as we work to reach an even broader customer base through cutting edge innovation. With our growing scale and increasingly efficient operations, JD.com remains well positioned to deliver strong shareholder value for the long term."
JD.com's U.S.-listed shares were marked 52% higher at the start of trading following the earnings release to change hands at $28.93 each, a move that would extend the stock's year-to-date gain to nearly 45%.
JD said active customer accounts grew 15% from last year to 310.5 million, helping product revenue grow 19% to $16.2 billion. Costs increased by 20% to $15.3 billion, the company said, but non-GAAP operating margins still improved by 80 basis points to 1.6%.