Alibaba beats forecast with 56pc jump in sales, helped by growth in e-commerce, cloud computing

Alibaba beats forecast with 56pc jump in sales, helped by growth in e-commerce, cloud computing

Alibaba Group Holding beat analysts’ forecasts and posted a 56 per cent jump in its first-quarter revenue, helped by sales growth in cloud computing and its business operating the largest online shopping platforms on the planet.


Sales rose to 50.2 billion yuan (US$7.5 billion) in its first quarter ended June, surpassing the 47.9 billion yuan consensus estimate in a Bloomberg survey. Net profit jumped 96 per cent to 14 billion yuan during the period.


The bulk of the Hangzhou-based company’s revenue came from its core e-commerce business, including the online shopping platforms Taobao, Tmall, and its international business units like AliExpress and Lazada in Southeast Asia, where sales rose 58 per cent to 43 billion yuan from last year.


image“Revenue acceleration in our China retail marketplaces continues to benefit from robust growth in average spending per merchant and the number of paying merchants, which reached a historical high during the quarter,” according to a statement by Alibaba, which owns the South China Morning Post.


Alibaba earns revenue from e-commerce by offering paying merchants consumer insights and advertising options to better target and engage customers.


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As many as 529 million people use the Taobao shopping app on their smartphones every month, an increase of 4.3 per cent from March this year, Alibaba said. The company turned its focus to the offline market since 2015, investing more than US$8 billion in brick-and-mortar retailers such as in the Chinese electronics chain Suning, department store chain Intime Retail Group and supermarket chains Lianhua and Sanjiang.


It launched 13 Hema Supermarkets since 2015, which offer what Alibaba calls a “new retail experience” by combining both online and offline shopping features. Users can shop from the comfort of their homes with direct delivery, by linking their Hema mobile app to Alipay, the electronic payment system operated by an Alibaba affiliate.


Read: AliCloud’s revenue to hit US$8.72 billion by 2020, says Morgan Stanley


The company, whose stock has been listed in New York since 2014, also operates one of Asia’s largest cloud computing business. Revenue from cloud computing grew 96 per cent to 2.4 billion yuan during the quarter from last year, with more than 1 million customers.


Revenue in Alibaba’s digital media and entertainment businesses grew 30 per cent to 4 billion yuan, a slower pace compared with the 234 per cent surge in the previous quarter. Contributions came from valued-added services such as news feeds and mobile search contributed by its browser service UCWeb. Still, the segment continued to be unprofitable, losing 3.4 billion yuan in the quarter as Alibaba continued to invest in content on video platform Youku Tudou to spur growth in users and subscriptions.


Internationally, the company is also expanding into Southeast Asia, investing another US$1 billion into Singapore-based e-commerce retailer Lazada in June, taking its total investment in the retailer to US$2 billion. It now has a stake of about 83 per cent in Lazada, which is valued at about US$3.15 billion.


Alibaba’s shares rose 1.1 per cent on Wednesday in New York trading before earnings were announced, rising to a record US$159.50, giving the company US$408.5 billion in market capitalisation as Asia’s most valuable company.