Alibaba earnings beat estimates as core e-commerce business drives revenue growth

Alibaba earnings

Alibaba Group Holdings (NYSE: BABA) on Thursday reported quarterly earnings and revenue that surpassed analysts’ estimates as its core e-commerce business helped drive sales.

The Chinese retail giant also saw sustained consumer spending and user engagement across its platforms, according to Maggie Wu, Alibaba’s chief financial officer. Alibaba said mobile monthly active users on its domestic retail marketplaces jumped from 721 million in March to 755 million in June.

Shares of the company climbed 2.3% to $165.73 in pre-market trade following the upbeat results. The stock has gained more than 21% so far this year, despite investor concerns about global economic slowdown as a result of the ongoing U.S.-China trade war.

BABA Earnings & Outlook

Alibaba posted net income of RMB21.25 billion ($3.10 billion), compared with net income of RMB8.69 billion ($1.27 billion) in the same period last year. On per-share basis, the company earned RMB8.06 ($1.17) versus earnings of RMB3.30 in the earlier-year quarter.

Adjusted for on-time items, per-share earnings came to RMB12.55 ($1.83) compared with RMB8.04 in the first-quarter of the previous year. Analysts surveyed by Refinitiv had expected Alibaba to report adjusted earnings of RMB10.25.

Revenue came to RMB114.92 billion ($16.74 billion), representing a 42% increase from a year-ago. Wall Street had been calling for revenue of RMB111.73 billion, according to data compiled by Refinitiv.

Revenue in Alibaba’s cloud segment stood at RMB7.8 billion during the quarter, up 66% year-over-year. The company attributed the growth to increased spending by each customer. Its core commerce unit brought in revenue of 99.54 billion yuan, representing a 44% increase from last year.

Alibaba CEO Comments

“Alibaba had a great quarter, expanding our user base to 674 million annual active consumers, demonstrating our superior user experience,” said Daniel Zhang, Chief Executive Officer of Alibaba Group.

“We will continue to expand our customer base, increase operating efficiency and deliver robust growth. With strong cash flow from our core commerce business, we will continue to invest in technology and bring digital transformation to millions of businesses globally,” Zhang added.

Alibaba Group Holdings Profile

Alibaba is the world’s largest online and mobile commerce company, measured by GMV (CNY 5.7 trillion/$846 billion for the fiscal year ended March 2019). It operates China’s most-visited online marketplaces, including Taobao (consumer-to-consumer) and Tmall (business-to-consumer).

Alibaba’s China marketplaces accounted for 68% of revenue in fiscal 2019, with Taobao generating revenue through advertising and other merchant data services and Tmall deriving revenue from commissions.

Additional revenue sources include international retail/wholesale marketplaces (7%), cloud computing (7%), digital media and entertainment platforms (6%), Cainiao logistics services (4%), and innovation initiatives/other (1%). Mobile GMV accounted for roughly 85% of consolidated GMV in fiscal 2018. – Warrior Trading News