Alibaba posted a better-than-expected 40% year-on-year rise in revenue for the e-commerce giant’s second fiscal quarter ended September 2019, thanks to robust expansion in its core e-commerce and cloud businesses.
Why it matters: The Chinese e-commerce behemoth hit the headlines just one day before the earnings call as market speculation swirled again over a possible Hong Kong IPO as early as this November. The timing of this latest report could influence any pricing of a potential listing.
“Our digital economy continues to thrive and prosper. We aim to serve over one billion annual active consumers and help our merchants achieve over RMB 10 trillion in annual gross merchandise volume by the end of fiscal 2024. We will continue to invest in the user experience and innovative technology to create new value for consumers, as well as the millions of enterprises undergoing digital transformation in the new digital economy.”
—Daniel Zhang, executive chairman and CEO of Alibaba Group
Details: The company’s revenue jumped 40% to RMB 119 billion ($16.7 billion) in the September quarter, beating an average market estimate of $16.5 billion.
- Net profit attributable to ordinary shareholders soared nearly quadrupled annually to RMB 72.5 billion.
- Monthly mobile active users on its e-commerce sites increased 30% to 785 million in September, compared with June.
- Operations income was RMB 20.4 billion during the period, an increase of 51% year on year.
- Cloud computing revenue grew 64% to RMB 9.3 billion during the September quarter, primarily driven by an increase in average revenue per customer.
- The company witnessed growing momentum in its international commerce business. Orders from its Southeast Asian unit Lazada more than doubled, reflecting strong consumer demand for apparel, accessories and FMCG categories.
Context: Together with a spate of local rivals, Alibaba is gearing up for the annual shopping extravaganza known as Single’s Day on Nov. 11.
- The company kicked off the promotional efforts for the event on Oct. 21 with special focus on lower-tier cities and overseas markets.
- Alibaba Group acquired NetEase’s cross-border e-commerce unit Kaola for approximately $2 billion in September.
- The earnings report also provided updates on details on the takeover, saying there’s relatively low consumer overlap between Kaola and its Tmall Global.
- The firm plans to run Kaola independently while integrating technology, consumer insights and middle office functions to achieve synergies.