SHANGHAI, China, Nov. 21, 2019 (GLOBE NEWSWIRE) -- Baozun Inc. (Nasdaq: BZUN) ("Baozun" or the "Company"), the leading brand e-commerce service partner that helps brands execute their e-commerce strategies in China, today announced its unaudited financial results for the third quarter ended September 30, 2019.
Third Quarter 2019 Financial Highlights
Third Quarter 2019 Operational Highlights
“GMV during the quarter continued to grow strongly, increasing 43% year-over-year despite the impact from terminating our service agreement with one electronics brand and a challenging macroeconomic environment,” commented Mr. Vincent Qiu, Chairman and Chief Executive Officer of Baozun. “As e-commerce in China continues to evolve and become more interactive and engaging, we are seeing brands choose to pursue quality-conscious customers by enhancing user engagement and offering a more refined and customized shopping experience. We believe our core value in being a strategic technology enabler for brand partners will continue to create significant growth opportunities for us and build upon our solid foundation for long-term sustainable growth.”
Mr. Robin Lu, Chief Financial Officer of Baozun commented, “We are glad to see incremental contribution to GMV from newly-acquired brands, and more encouragingly, we are capitalizing on a number of emerging opportunities that will drive growth going forward. We believe these solid results validate our strategic decision to both optimize our brand portfolio towards higher-quality growth and reinvest our profits to capture select emerging opportunities. With our strategy opening up capacity and expanding our addressable market, and strong results during Singles Day, we currently expect GMV to grow by 45% to 50% year-over-year for the fourth quarter of 2019. We look forward the eventual conversion of incremental GMV growth into revenue growth over the next few quarters as our service penetrates and new brand partners gradually ramp up operations.”
Third Quarter 2019 Financial Results
Total net revenues were RMB1,503.1 million (US$210.3 million), an increase of 35.3% from RMB1,110.8 million in the same quarter of last year.
Product sales revenue was RMB662.3 million (US$92.7 million), an increase of 31.3% from RMB504.5 million in the same quarter of last year. The increase was primarily attributable to the acquisition of new brand partners, the increased popularity of brand partners’ products, and Baozun’s increasingly effective marketing and promotional campaigns.
Services revenue was RMB840.8 million (US$117.6 million), an increase of 38.7% from RMB606.2 million in the same quarter of last year. The increase was primarily attributable to the rapid growth of the Company’s consignment model and service fee model, and in particular, strong growth in digital marketing services.
Total operating expenses were RMB1,447.0 million (US$202.4 million), compared with RMB1,071.5 million in the same quarter of last year.
Income from operations was RMB56.1 million (US$7.8 million), compared with RMB39.3 million in the same quarter of last year. Operating margin was 3.7%, compared with 3.5% in the same quarter of last year.
Non-GAAP income from operations was RMB75.9 million (US$10.6 million), compared with RMB61.2 million in the same quarter of last year. Non-GAAP operating margin was 5.1%, compared with 5.5% in the same quarter of last year.
Net income attributable to ordinary shareholders of Baozun Inc. was RMB39.4 million (US$5.5 million), an increase of 32.1% from the same quarter of last year. Basic and diluted net income attributable to ordinary shareholders of Baozun Inc. per ADS were RMB0.68 (US$0.10) and RMB0.66 (US$0.09), respectively, compared with RMB0.52 and RMB0.50, respectively, in the same period of 2018.
Non-GAAP net income attributable to ordinary shareholders of Baozun Inc. was RMB59.0 million (US$8.3 million), an increase of 14.6% from the same quarter of last year. Basic and diluted non-GAAP net income attributable to ordinary shareholders of Baozun Inc. per ADS were RMB1.01 (US$0.14) and RMB0.99 (US$0.14), respectively, compared with RMB0.90 and RMB0.86, respectively, in the same period of 2018.
As of September 30, 2019, the Company had RMB2,154.0 million (US$301.4 million) in cash, cash equivalents and short-term investment, an increase from RMB513.9 million as of December 31, 2018.
Business Outlook
The Company expects total net revenues to be between RMB2,700 million and RMB2,750 million for the fourth quarter of 2019, which represents a year-over-year growth rate of 23% to 25%. The Company anticipates that services revenue will grow in-line with total net revenue on a year-over-year basis.
Conference Call
The Company will host a conference call to discuss the earnings at 8:00 a.m. Eastern Time on Thursday, November 21, 2019 (9:00 p.m. Beijing time on the same day).
Dial-in numbers for the live conference call are as follows:
| International | +65-6713-5090 |
| U.S. Toll Free | +1-845-675-0437 |
| Mainland China Toll Free | 400-620-8038 or 800-819-0121 |
| Hong Kong | +852-3018-6771 |
| Passcode: | 9857438# |
| A telephone replay of the call will be available after the conclusion of the conference call through 08:59 p.m. Beijing Time, November 28, 2019. | |
| Dial-in numbers for the replay are as follows: | |
| International Dial-in | +61-2-8199-0299 |
| U.S. Toll Free | +1-855-452-5696 |
| Passcode: | 9857438# |
A live and archived webcast of the conference call will be available on the Investor Relations section of Baozun’s website at http://ir.baozun.com/.
Use of Non-GAAP Financial Measures
The Company also uses certain non-GAAP financial measures in evaluating its business. For example, the Company uses non-GAAP income/(loss) from operations, non-GAAP operating margin, non-GAAP net income/(loss), non-GAAP net margin, non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. and non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. per ADS, as supplemental measures to review and assess its financial and 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 U.S. GAAP. Non-GAAP income/(loss) from operations is income/(loss) from operations excluding the impact of share-based compensation expenses and amortization of intangible assets resulting from business acquisition. Non-GAAP operating margin is non-GAAP income from operations as a percentage of total net revenues. Non-GAAP net income/(loss) is net income/(loss) excluding the impact of share-based compensation expenses and amortization of intangible assets resulting from business acquisition. Non-GAAP net margin is non-GAAP net income as a percentage of total net revenues. Non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. is net income (loss) attributable to ordinary shareholders of Baozun Inc. excluding the impact of share-based compensation expenses and amortization of intangible assets resulting from business acquisition. Non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. per ADS is non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. divided by weighted average number of shares used in calculating net income (loss) per ordinary share multiplied by three.
The Company presents the non-GAAP financial measures because they are used by the Company’s management to evaluate the Company’s financial and operating performance and formulate business plans. Non-GAAP income/(loss) from operations and non-GAAP net income/(loss) enable the Company’s management to assess the Company’s financial and operating results without considering the impact of share-based compensation expenses and amortization of intangible assets resulting from business acquisition. The Company also believes that the use of the non-GAAP measures facilitates investors’ assessment of the Company’s financial and operating performance.
The non-GAAP financial measures are not defined under U.S. GAAP and are not presented in accordance with U.S. GAAP. The non-GAAP financial measures have limitations as analytical tools. One of the key limitations of using non-GAAP income/(loss) from operations, non-GAAP net income/(loss), non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc., and non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. per ADS is that they do not reflect all items of income and expense that affect the Company’s operations. Share-based compensation expenses and amortization of intangible assets resulting from business acquisition have been and may continue to be incurred in the Company’s business and is not reflected in the presentation of non-GAAP income/(loss) from operations and non-GAAP net income/(loss). Further, the non-GAAP measures may differ from the non-GAAP measures used by other companies, including peer companies, potentially limiting the comparability of their financial results to the Company’s. In light of the foregoing limitations, the non-GAAP income/(loss) from operations, non-GAAP operating margin, non-GAAP net income/(loss), non-GAAP net margin, non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. and non-GAAP net income (loss) attributable to ordinary shareholders of Baozun Inc. per ADS for the period should not be considered in isolation from or as an alternative to income/(loss) from operations, operating margin, net income/(loss), net margin, net income (loss) attributable to ordinary shareholders of Baozun Inc. and net income (loss) attributable to ordinary shareholders of Baozun Inc. per ADS, or other financial measures prepared in accordance with U.S. GAAP.
The Company compensates for these limitations by reconciling the non-GAAP financial measures to the nearest U.S. GAAP performance measures, which should be considered when evaluating the Company’s performance. For reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures, please see the section of the accompanying tables titled, “Reconciliations of GAAP and Non-GAAP Results.”
Safe Harbor Statements
This news release contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in 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," "target," "going forward," "outlook" and similar statements. For example, the Company’s statement about its expectations for Company performance in the fourth quarter of 2019 is a forward-looking statement and is inherently uncertain. Such statements are based upon management's current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, such as the Company’s expected growth of the online retail industry in China, the Company’s expectations regarding demand for and market acceptance of its products and services, the Company’s expectations regarding its relationships with its brand partners and e-commerce channels, and the level of consumer economic activity in China, all of which are difficult to predict and many of which are beyond the Company's control, which may cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company's filings with the U.S. Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under applicable law.
About Baozun Inc.
Baozun is the leading brand e-commerce service partner that helps brands execute their e-commerce strategies in China by selling their goods directly to customers online or by providing services to assist with their e-commerce operations. The Company's integrated end-to-end brand e-commerce capabilities encompass all aspects of the e-commerce value chain, covering IT solutions, store operations, digital marketing, customer services, warehousing and fulfillment.
For more information, please visit http://ir.baozun.com
For investor and media inquiries, please contact:
Baozun Inc.
Ms. Wendy Sun
Email: ir@baozun.com
Christensen
In China
Mr. Christian Arnell
Phone: +86-10-5900-1548
E-mail: carnell@christensenir.com
In U.S.
Ms. Linda Bergkamp
Phone: +1-480-614-3004
Email: lbergkamp@ChristensenIR.com
1 This announcement contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) at a specified rate solely for the convenience of the reader. Unless otherwise noted, the translation of RMB into US$ has been made at RMB7.1477 to US$1.00, the noon buying rate in effect on September 30, 2019 as set forth in the H.10 Statistical Release of the Federal Reserve Board.
2 Non-GAAP income from operations is a non-GAAP financial measure, which is defined as income from operations excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisition.
3 Non-GAAP net income attributable to ordinary shareholders of Baozun Inc. is a non-GAAP financial measure, which is defined as net income attributable to ordinary shareholders of Baozun Inc. excluding share-based compensation expenses and amortization of intangible assets resulting from business acquisition.
4 Each ADS represents three Class A ordinary shares.
5 Basic and diluted non-GAAP net income attributable to ordinary shareholders of Baozun Inc. per ADS are non-GAAP financial measures, which are defined as non-GAAP net income attributable to ordinary shareholders of Baozun Inc. divided by weighted average number of shares used in calculating basic and diluted net income per ordinary share multiplied by three, respectively.
6 GMV includes value added tax and excludes (i) shipping charges, (ii) surcharges and other taxes, (iii) value of the goods that are returned and (iv) deposits for purchases that have not been settled.
7 Distribution GMV refers to the GMV under the distribution business model.
8 Non-distribution GMV refers to the GMV under the service fee business model and the consignment business model.
| Baozun Inc. | ||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||
| (In thousands) | ||||||
| As of | ||||||
| December 31, 2018 |
September 30, 2019 |
September 30, 2019 |
||||
| RMB | RMB | US$ | ||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | 457,340 | 1,085,691 | 151,894 | |||
| Restricted cash | 56,074 | 198,326 | 27,747 | |||
| Short-term investment | 56,535 | 1,068,321 | 149,464 | |||
| Accounts receivable, net | 1,547,631 | 1,269,283 | 177,579 | |||
| Inventories | 650,348 | 853,805 | 119,452 | |||
| Advances to suppliers | 166,076 | 405,632 | 56,750 | |||
| Prepayments and other current assets | 286,149 | 264,935 | 37,066 | |||
| Amounts due from related parties | 32,270 | 19,522 | 2,731 | |||
| Total current assets | 3,252,423 | 5,165,515 | 722,683 | |||
| Non-current assets | |||||
| Restricted cash | 69,441 | - | - | ||
| Investments in equity investees | 33,974 | 40,119 | 5,613 | ||
| Property and equipment, net | 402,740 | 412,234 | 57,674 | ||
| Intangible assets, net | 132,393 | 147,980 | 20,703 | ||
| Land use right, net | 43,593 | 42,823 | 5,991 | ||
| Right-of-use assets1 | - | 455,182 | 63,682 | ||
| Goodwill | 13,158 | 13,158 | 1,841 | ||
| Other non-current assets | 30,021 | 31,014 | 4,339 | ||
| Deferred tax assets | 38,081 | 38,517 | 5,389 | ||
| Total non-current assets | 763,401 | 1,181,027 | 165,232 | ||
| Total assets | 4,015,824 | 6,346,542 | 887,915 | ||
1 In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), which requires lessees to recognize a right-of-use asset and lease liability on their balance sheet for all leases. The Company adopted this ASU on January 1, 2019 using the modified retrospective approach and will not restate comparative periods.
| Baozun Inc. | |||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
| (In thousands, except for share and per share data) | |||||||
| As of | |||||||
| December 31, 2018 |
September 30, 2019 |
September 30, 2019 |
|||||
| RMB | RMB | US$ | |||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||
| Current liabilities | |||||||
| Short-term loan | 436,200 | 292,000 | 40,852 | ||||
| Accounts payable | 886,340 | 401,517 | 56,173 | ||||
| Notes payable | 26,770 | 503,190 | 70,399 | ||||
| Income tax payables | 62,764 | 33,499 | 4,687 | ||||
| Accrued expenses and other current liabilities | 322,668 | 336,569 | 47,088 | ||||
| Amounts due to related parties | 13,994 | 3,537 | 495 | ||||
| Operating lease liabilities1 | - | 139,565 | 19,526 | ||||
| Total current liabilities | 1,748,736 | 1,709,877 | 239,220 | ||||
| Long-term loan | 68,753 | 1,890,559 | 264,499 | ||||
| Deferred tax liability | 3,319 | 3,026 | 423 | ||||
| Operating lease liabilities1 | - | 322,801 | 45,162 | ||||
| Total non-current liabilities | 72,072 | 2,216,386 | 310,084 | ||||
| Total liabilities | 1,820,808 | 3,926,263 | 549,304 | ||||
| Baozun Inc. shareholders’ equity: | |||||||
| Class A ordinary shares (US$0.0001 par value; 470,000,000 shares authorized, 159,247,873 and 173,966,961 shares issued and outstanding as of December 31, 2018 and September 30, 2019, respectively) | 98 | 107 | 15 | ||||
| Class B ordinary shares (US$0.0001 par value; 30,000,000 shares authorized, 13,300,738 shares issued and outstanding as of December 31, 2018 and September 30, 2019, respectively) | 8 | 8 | 1 | ||||
| Additional paid-in capital | 1,903,503 | 1,993,940 | 278,962 | ||||
| Retained earnings | 244,712 | 385,135 | 53,884 | ||||
| Accumulated other comprehensive income | 29,222 | 19,947 | 2,791 | ||||
| Total Baozun Inc. shareholders' equity | 2,177,543 | 2,399,137 | 335,653 | ||||
| Noncontrolling interests | 17,473 | 21,142 | 2,958 | ||||
| Total equity | 2,195,016 | 2,420,279 | 338,611 | ||||
| Total liabilities and shareholders' equity | 4,015,824 | 6,346,542 | 887,915 | ||||
| Baozun Inc. | ||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||||||||||
| (In thousands, except for share and per share data and per ADS data) | ||||||||||||
| For the three months ended September 30, | ||||||||||||
| 2018 | 2019 | |||||||||||
| RMB | RMB | US$ | ||||||||||
| Net revenues | ||||||||||||
| Product sales | 504,534 | 662,334 | 92,664 | |||||||||
| Services | 606,227 | 840,760 | 117,627 | |||||||||
| Total net revenues | 1,110,761 | 1,503,094 | 210,291 | |||||||||
| Operating expenses (1) | ||||||||||||
| Cost of products | (401,222 | ) | (528,975 | ) | (74,006 | ) | ||||||
| Fulfillment | (262,014 | ) | (333,350 | ) | (46,637 | ) | ||||||
| Sales and marketing (2) | (301,082 | ) | (443,097 | ) | (61,992 | ) | ||||||
| Technology and content | (69,514 | ) | (94,101 | ) | (13,165 | ) | ||||||
| General and administrative | (41,034 | ) | (51,732 | ) | (7,238 | ) | ||||||
| Other operating income, net | 3,399 | 4,243 | 594 | |||||||||
| Total operating expenses | (1,071,467 | ) | (1,447,012 | ) | (202,444 | ) | ||||||
| Income from operations | 39,294 | 56,082 | 7,847 | |||||||||
| Other income (expenses) | ||||||||||||
| Interest income | 2,203 | 14,444 | 2,021 | |||||||||
| Interest expense | (1,733 | ) | (16,886 | ) | (2,362 | ) | ||||||
| Exchange loss | (2,133 | ) | (1,257 | ) | (176 | ) | ||||||
| Income before income tax and share of income (loss) in equity method investment | 37,631 | 52,383 | 7,330 | |||||||||
| Income tax expense (3) | (7,994 | ) | (13,561 | ) | (1,897 | ) | ||||||
| Share of income (loss) in equity method investment, net of tax of nil | (243 | ) | 146 | 20 | ||||||||
| Net income | 29,394 | 38,968 | 5,453 | |||||||||
| Net loss attributable to noncontrolling interests | 393 | 384 | 54 | |||||||||
| Net income attributable to ordinary shareholders of Baozun Inc. | 29,787 | 39,352 | 5,507 | |||||||||
| Net income per share attributable to ordinary shareholders of Baozun Inc.: | ||||||||||||
| Basic | 0.17 | 0.23 | 0.03 | |||||||||
| Diluted | 0.17 | 0.22 | 0.03 | |||||||||
| Net income per ADS attributable to ordinary shareholders of Baozun Inc.: | ||||||||||||
| Basic | 0.52 | 0.68 | 0.10 | |||||||||
| Diluted | 0.50 | 0.66 | 0.09 | |||||||||
| Weighted average shares used in calculating net income per ordinary share | ||||||||||||
| Basic | 170,940,612 | 174,343,867 | 174,343,867 | |||||||||
| Diluted | 178,862,592 | 179,098,979 | 179,098,979 | |||||||||
| Net income | 29,394 | 38,968 | 5,453 | |||||||||
| Other comprehensive income, net of tax of nil: | ||||||||||||
| Foreign currency translation adjustment | 11,484 | (3,081 | ) | (431 | ) | |||||||
| Comprehensive income | 40,878 | 35,887 | 5,022 | |||||||||
(1) Share-based compensation expenses are allocated in operating expenses items as follows:
| For the three months ended September 30, | |||||
| 2018 | 2019 | ||||
| RMB | RMB | US$ | |||
| Fulfillment | 1,610 | 2,382 | 333 | ||
| Sales and marketing | 7,707 | 5,840 | 817 | ||
| Technology and content | 3,690 | 2,861 | 400 | ||
| General and administrative | 8,497 | 8,378 | 1,172 | ||
| 21,504 | 19,461 | 2,722 | |||
(2) Including amortization of intangible assets resulting from business acquisition, which amounted to RMB0.4 million for both the three months period ended September 30, 2018 and 2019.
(3) Including income tax benefits of RMB0.1 million related to the reversal of deferred tax liabilities, which was recognized on business acquisition for both the three months period ended September 30, 2018 and 2019.
| Baozun Inc. | ||||||||||||||
| Reconciliations of GAAP and Non-GAAP Results | ||||||||||||||
| (in thousands, except for share and per ADS data) | ||||||||||||||
| For the three months ended September 30, | ||||||||||||||
| 2018 | 2019 | |||||||||||||
| RMB | RMB | US$ | ||||||||||||
| Income from operations | 39,294 | 56,082 | 7,847 | |||||||||||
| Add: Share-based compensation expenses | 21,504 | 19,461 | 2,722 | |||||||||||
| Amortization of intangible assets resulting from business acquisition | 391 | 391 | 55 | |||||||||||
| Non-GAAP income from operations | 61,189 | 75,934 | 10,624 | |||||||||||
| Net Income | 29,394 | 38,968 | 5,453 | |||||||||||
| Add: Share-based compensation expenses | 21,504 | 19,461 | 2,722 | |||||||||||
| Amortization of intangible assets resulting from business acquisition | 391 | 391 | 55 | |||||||||||
| Less: Tax effect of amortization of intangible assets resulting from business acquisition | (98 | ) | (98 | ) | (14 | ) | ||||||||
| Non-GAAP net income | 51,191 | 58,722 | 8,216 | |||||||||||
| Net income attributable to ordinary shareholders of Baozun Inc. | 29,787 | 39,352 | 5,507 | |||||||||||
| Add: Share-based compensation expenses | 21,504 | 19,461 | 2,722 | |||||||||||
| Amortization of intangible assets resulting from business acquisition | 199 | 199 | 28 | |||||||||||
| Less: Tax effect of amortization of intangible assets resulting from business acquisition | (50 | ) | (50 | ) | (7 | ) | ||||||||
| Non-GAAP net income attributable to ordinary shareholders of Baozun Inc. | 51,440 | 58,962 | 8,250 | |||||||||||
| Non-GAAP net income attributable to ordinary shareholders of Baozun Inc. per ADS: | ||||||||||||||
| Basic | 0.90 | 1.01 | 0.14 | |||||||||||
| Diluted | 0.86 | 0.99 | 0.14 | |||||||||||
| Weighted average shares used in calculating net income per ordinary share | ||||||||||||||
| Basic | 170,940,612 | 174,343,867 | 174,343,867 | |||||||||||
| Diluted | 178,862,592 | 179,098,979 | 179,098,979 | |||||||||||