JD.com, China’s largest e-commerce company by revenues, dropped back into negative profits despite rapid growth in sales in the second quarter of this year.
The Nasdaq-listed tech giant reported a net loss of Rmb287m ($42.3m) over the three months ending June 30.
However, net revenues soared 44 per cent from the previous year to Rmb93.2bn as a growing Chinese middle class continued to take to online shopping and mobile payments. Annual active accounts increased by 37 per cent to 258m in the year to June 30.
The company had its first profitable quarter in the first three months of this year. Its market capitalisation has since soared to $66bn, at one point almost overtaking China’s third-largest listed tech group, Baidu, and causing analysts to speculate whether JD would soon join China’s “tech trinity” of Baidu, Alibaba and Tencent.
“We are very pleased to see another quarter of robust top line growth and exceptional free cash flow,” said Sidney Huang, JD.com’s chief financial officer, in an announcement before markets opened in New York on Monday morning.
JD.com has sunk money into growing its online direct sales business — similar to Amazon’s — and building up its own logistics network. This year several spats have broken out between China’s e-commerce players and their logistics suppliers.
The company has also invested in partnerships with luxury retailers to earn itself trust in a country where fake goods proliferate, most recently investing $397m in UK designer-label retailer Farfetch.
“In the quarters ahead, we will continue to prioritise investment in our technology-focused initiatives, which are already redefining China’s retail landscape,” added Mr Huang.
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