Chinese e-commerce giant Alibaba posted a robust 38% annual growth in revenue for the quarter ended Dec. 31 but issued a warning about the near-term impact of the Covid-19 crisis for the current reporting period.

Why it matters: Alibaba’s December quarter was an eventful one during which it debuted a $13 billion secondary listing on the Hong Kong stock exchange and closed another record-breaking Singles’ Day shopping extravaganza, followed by notching a historical high for share prices in January.

  • However, concerns over the the Covid-19 outbreak clouded prospects for the company as well as the broader e-commerce industry in China for the current quarter and beyond.

“In response to the coronavirus, we mobilized Alibaba ecosystem’s powerful forces of commerce and technology to fully support the fight against the outbreak, ensure supply of daily necessities for our communities and introduced practical relief measures for our merchants.”

—Alibaba chairman and CEO Daniel Zhang said in a statement

Details: Alibaba recorded strong top-line growth with revenue rising 38% year-on-year to RMB 161 billion ($23.2 billion) in the December quarter, beating an average analyst consensus of $22.46 billion compiled by Yahoo Finance. However, share prices weakened nearly 2% by market close on Thursday on Covid-19 concerns.

  • Chief Financial Officer Maggie Wu warned during the earnings call that the company’s overall revenue growth rate will be “negatively impacted” for the March quarter as a result of the business disruptions. She did not disclose a financial outlook for the quarter that is nearly halfway over.
  • Management also alluded to a silver lining brought by the Covid-19 outbreak, potentially prompting long-term behavioral changes from Chinese consumers and businesses similar to the effect that the SARS (Severe Acute Respiratory Syndrom) epidemic had on China’s e-commerce sector.
  • Zhang said that the Covid-19 crisis has spurred higher average basket size for grocery unit Freshippo, also known as Hema, and “explosive” user growth to enterprise software Dingtalk. However, labor shortages for package deliveries were crimping near-term benefits.
  • The company’s core retail business and cloud computing continued to drive growth. Revenue from core commerce rose 38% year on year to RMB 141.5 billion during the reporting period. Annual active consumers on China retail marketplaces reached 711 million, an additional 18 million buyers from the same year-ago period.
  • Revenue from Alibaba’s cloud computing business jumped 62% year on year in the quarter ended Dec. 31 to RMB 10.7 million from RMB 6.6 billion in the same quarter of 2018, primarily driven by increased revenue contribution from both public cloud and hybrid cloud businesses.
  • Net income attributable to ordinary shareholders during the quarter increased 58% to RMB 52 billion.
  • Cost of revenue in the reporting quarter as a percentage of revenue remained flat to the same quarter a year ago at 52% or RMB 84.3 billion compared with RMB 60.8 billion, or 52% of revenue, in the same quarter of 2018.

Context: Along with a number of other Chinese tech companies, Alibaba has launched a series of efforts to support those hardest hit during the outbreak, including establishing a RMB 1 billion public health fund, extending support to merchants, among others.

Emma Lee is Shanghai-based tech writer, covering startups and tech happenings in China and Asia in general. We are looking for stories related to tech and China. Reach her at lixin@technode.com.

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