JD delivers Q1 loss ahead of its IPO

An advertisement for e-commerce retailer JD.com Inc in Shanghai. In an update to its IPO prospectus on Monday, the second-largest business-to-customer site in China reported a net loss of 3.795 billion yuan ($608.4 million) from January to March, in contrast to a year-earlier profit of 13 million yuan. Yan Daming / For China Daily

E-commerce retailer JD.com Inc reported a first-quarter loss ahead of its imminent initial public offering in the United States, suggesting the vendor's profit outlook may be weaker than meets the eye.

In an update to its IPO prospectus on Monday, China's second-largest business-to-customer site reported a net loss of 3.795 billion yuan ($608.4 million) from January to March, in contrast to a year-earlier profit of 13 million yuan.

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The company attributed the lion's share of the losses to a share incentive plan for its founder Richard Liu.

JD is among a string of high-flying Chinese technology companies poised to float in the US. Its longtime competitor, Alibaba Group Holding Ltd, began preparations in March for a US offering.

JD's financial results are a far cry from those of Alibaba, which has achieved robust profitability for years. JD posted an operating loss of $96 million in 2013 on revenues of $11.5 billion.

Operating in the shadow of Alibaba, which dominates the Chinese digital shopping landscape, JD has appealed to investors by emphasizing its flexible business model, its mobile strength and its liquidity.

JD sells goods directly to customers and runs an independent logistics network of couriers and warehouses, a situation it claims will ensure smooth delivery, said Li Zhi, principal analyst of research firm Analysys International.

In comparison, Alibaba, which operates a market similar to that of US-based eBay Inc, depends on participating merchants for logistics.