Vipshop's financial report: Vipshop's net revenue in Q3 2012 reached US$155.9 million, compared with a net loss of US$17.5 million in the same period last year

On November 14, 2012 , Vipshop (code: VIPS) released its financial report today. The report shows that in the third quarter of 2012, Vipshop's net revenue increased by 197% year-on-year to US$155.9 million; the net loss attributable to common shareholders reached US$1.5 million, compared with a net loss of US$17.5 million in the same period last year.

Vipshop is still losing money, but its stock price has risen strangely in the past two months, from just $5 to more than $11, setting the largest increase in Chinese stocks this year. One view is that the rapid growth in performance is the key to Vipshop's stock price surge. Another view is that it cannot be ruled out that someone is taking advantage of the good news to speculate on the stock price, and we need to be wary of the risks of this stock. Because during the same period, the stock prices of e-commerce listed companies such as Dangdang fell sharply.

Vipshop's Q3 revenue was US$155.9 million, up 197% year-on-year

Vipshop's net revenue in the third quarter reached US$155.9 million, up 197% from US$52.5 million in the same period last year. The increase was mainly due to an increase in the number of active users and total orders.

Vipshop had 1.7 million active users in the third quarter, up 173.6% from 633,000 in the same period last year. Vipshop's total orders in the third quarter were 5.4 million, up 157.6% from 2.1 million in the same period last year.

The increase in the total number of orders of Vipshop was mainly due to the addition of some regional sub-sites in 2011, the continued measures to optimize product selection, increase the number of sales activities, and increase the number of available inventory units on the website. In addition, Vipshop's expansion of regional warehouses to Shanghai, Chengdu and Beijing also improved the company's ability to meet the needs of end consumers.

Vipshop's Q3 costs were US$121.1 million, up 185% year-on-year

Vipshop's costs in the third quarter were $121 million, up 15% from $105.7 million in the previous quarter and 185% from the same period last year. Costs accounted for nearly 80% of Vipshop's total revenue.

Vipshop's Q3 gross profit was US$34.8 million, with a gross profit margin of 22%.

Vipshop's gross profit in the third quarter reached US$34.8 million, an increase of 247.8% from US$10.8 million in the same period last year. The increase mainly reflects the significant increase in net revenue and the continued increase in gross profit margin. Vipshop's gross profit margin in the third quarter was 22.3%, higher than 19% in the same period last year and 21.8% in the first quarter of this year. These increases were mainly due to the company's increased scale, which led to its enhanced bargaining power with suppliers.

Vipshop's Q3 expenses were US$38 million, up 39% year-on-year

Vipshop's total operating expenses in the third quarter increased by 38.6% year-on-year to US$38 million, compared with US$27.4 million in the same period last year. Vipshop's total operating expenses in the third quarter accounted for 24.4% of its net revenue, down from 52.2% in the same period last year and 25.9% in the second quarter of this year.

Vipshop's fulfillment expenses in the third quarter were US$21.7 million, an increase of 89.8% from US$11.4 million in the same period last year. This increase mainly reflects the increase in sales volume and the number of fulfilled orders. Vipshop's fulfillment expenses accounted for 13.9% of net revenue in the third quarter, down from 21.8% in the same period last year and 15.2% in the second quarter of this year. This decline mainly reflects the company's ability to achieve economies of scale, as well as the company's shift to regional delivery services and the expansion of regional warehouse capacity.

Vipshop's marketing expenses in the third quarter increased to US$7.3 million from US$4.6 million in the same period last year; Vipshop's marketing expenses in the third quarter accounted for 4.7% of net revenue, compared with 8.7% in the same period last year and 4.9% in the second quarter of this year. This decline also reflects the company's ability to control marketing expenses and utilize word-of-mouth advertising.

Vipshop's technology and content expenses in the third quarter were $3.2 million, an increase that mainly reflects the company's continued investment in websites and IT systems to better support future business growth. Vipshop's general and administrative expenses in the third quarter were $6.3 million, down from $10.4 million in the same period last year, mainly due to a decrease in equity incentive expenses.

Vipshop's Q3 operating loss was US$3.3 million and its operating profit margin was -2.1%

Vipshop's operating loss in the third quarter reached $3.3 million, compared with $17.4 million in the same period last year. Vipshop's reduction in operating losses in the third quarter of this year mainly reflects the growth of the company's business scale, the increase in gross profit margin and the improvement of cost control efficiency. Vipshop's operating loss rate in the third quarter of this year was 2.1%, lower than 33.2% in the same period last year and 4.0% in the second quarter of this year.

Vipshop's Q3 net loss was US$1.5 million, and the loss was significantly reduced

Vipshop's net loss attributable to common shareholders in the third quarter reached $1.5 million, compared with a net loss of $17.5 million in the same period last year. Vipshop's net loss margin in the third quarter was 0.9%, compared with a net loss margin of 33.4% in the same period last year and a net loss margin of 4.3% in the second quarter of this year.

As of September 30, fiscal year 2012, Vipshop held cash and cash equivalents totaling $91.9 million. In the third quarter of 2012, Vipshop's net cash flow from operating activities reached $17 million.

Vipshop expects its net revenue for the fourth quarter of 2012 to be between US$235 million and US$240 million, representing a year-on-year increase of 123% to 128%; Vipshop expects its net revenue for the full year 2012 to be between US$627 million and US$632 million, representing a year-on-year increase of 176% to 178%.