Vipshop's Active Customers Grow At Fastest Pace In The Past 5 Quarters

Vipshop Holdings Ltd – ADR VIPS reported better-than-expected 2Q16 results and provided guidance in-line with expectations. Goldman Sachs’ Piyush Mubayi mentioned five takeaways from the earnings report, while putting the rating, price target and estimates for Vipshop under review till there are further details of the company’s earnings.

Vipshop reported net revenue of Rmb13.4 billion, representing 49 percent y/y and 41 percent q/q growth. This was ahead of the GS estimate by 5.9 percent and above the consensus expectation by 6.3 percent. Non-GAAP diluted EPADS came in at Rmb1.12, higher than the GS and consensus expectations by 17.3 percent and 13.4 percent, respectively.

The company guided to net revenue for 3Q16 at Rmb11.9- 12.4 billion, representing 40 percent y/y growth at the midpoint. This came in 0.5 percent above the GS estimate and 2.3 percent higher than the consensus expectation.

Five Things To Note

Analyst Mubayi mentioned key takeaways for 2Q16 as:

1. Active customers grew by 62 percent y/y to 23 million. This represented the fastest in five straight quarters. Total orders increased by 54 percent y/y to 68.9 million.
2. Product revenues were up 49 percent y/y, ahead of the prior quarter’s 42 percent growth. Product revenues came in at Rmb13.2 billon. Other revenue, mainly comprising of commission and advertising, rose 53 percent y/y to Rmb287 million. Gross margin was at 24.1 percent, contracting by 0.8pp y/y, due to increased promotional activities.
3. Non-GAAP operating margin came in at 6.2 percent, contracting from 6.3 percent in 2Q15.
4. Cash flow impact from internet financing was at Rmb491 million, while operating cash flow excluding this impact was Rmb1.7 billion.
5. The company appears to be on track to adding around 500k sqm warehousing capacity by the end of 2016.

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