Baozun Inc (NASDAQ: BZUN) is having an overwhelmingly strong start to the trading session this morning, and for good reason. The company released its financial results for the third quarter, showing strong year over year growth and exciting investors in the process. Today, we’ll talk about the financial results, what we’re seeing from BZUN stock as a results, and what we’ll be watching for ahead.
BZUN Announces Financial Results
As mentioned above, Baozun is having an incredibly strong start to the trading session this morning after the company announced its financial results for the third quarter. Here are the highlights from the release:
- Revenue – In terms of revenue, BZUN did overwhelmingly well. During the quarter, the company generated revenue in teh amount of RMB1,110.8 million. That works out to a year over year increase of 24%. Much of this increase was the result of services revenue growth, which saw a growth rate of 45.1% year over year.
- Income From Operations – Income from operations came in at RMB61.2 million, a climb of 48.6% on a year over year basis.
- Non-GAAP Data – When it comes to Non-GAAP income from operations, the company reported RMB61.2 million, a 48.6% year over year increase. Non-GAAP operating margin came in at 5.5%, up nearly a full percentage point from the 4.6% reported in the same quarter last year. Finally, Non-GAAP net income attributable to ordinary shareholders came in at RMB51.4 RMB0.90 per share on a basic basis and RMB0.86 per share on a dilluted basis.
From an operational perspective, BZUN provided more to be excited about. Gross merchandise volume was up 55% year over year, distribution MGV7 was up 6.4% year over year and non-distribution GMV8 came in with a 62.4% year over year increase. For me, the most important thing the company did was increase brand partners. All in all, brand partners increased from 146 to 172 year over year with GMV brand partners increasing from 141 to 166 year over year.
In a statement, Mr. Vincent Qiu, Chairman and CEO at BZUN, had the following to offer:
We are pleased to report another quarter of solid growth across the board, driven primarily by growth from our existing online stores and improving operational efficiency as we invest further in developing new and innovative products and tools… I am proud of the experience and capabilities we have accumulated from participating in the Singles Day shopping festival over the past decade. This year total order value settled through payment gateways on all of our e-commerce channels reached a new record high of RMB6.55 billion on Singles Day 2018, an increase of approximately 31% compared to last year. Investing in R&D plays a critical role in our strategy which we strongly believe will lay a solid foundation for our long-term sustainable growth. We will continue to refine, update, commercialize, and expand the omni-channel matrix of solutions we are able to offer brand partners to drive future growth and strengthen our leading position in China’s brand e-commerce market.
The above statement was followed up by Mr. Beck Chen, CFO at BZUN. Here’s what he had to say:
We had another strong quarter, with total GMV increasing 55.0% year-over-year and non-distribution GMV growing even faster at 62.4% year-over-year. We invested RMB20.1 million in technological innovation and productization during the quarter, which will strengthen our position as the leading brand e-commerce business partner and technology solutions services provider. Our daily sales momentum during the fourth quarter of 2018 continues to remain strong and outpace the growth on Singles Day this year. As such, we expect our GMV for the fourth quarter of 2018 to grow 40-45% on a year-over-year basis while our services revenue during the fourth quarter of 2018 will grow faster than the GMV growth.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of Baozun, the news proved to be overwhelmingly positive. The company is seeing impressive growth on a year over year basis, and that’s exactly what investors are looking for. So, it comes as no surprise that excited investors are pushing the stock on a run for the top. As is normally the case, our partners at Trade Ideas were the first to alert us to the gains. Currently (7:56), BZUN is trading at $33.10 per share after a gain of $2.97 per share or 9.86% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on BZUN. In particulr, we’re interested in following the company’s continued growth as it seems to be doing exactly what it set out to do after reading today’s update. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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