Alibaba outperforms expectations as strong commerce sales boost revenues

Strong commerce sales help offset big spending quarter for Alibaba

Alibaba revenues increased 61% to RMB 61.9bn (US$9.87bn) for the March quarter, as the e-commerce company’s strong core business continues to deliver growth.

Alibaba’s quarterly results beat out analyst expectations with the core businesses strong performances helping to offset Alibaba’s big spending on new initiatives and new market expansions.

Commerce revenues continued to grow, increasing 62% year-on-year to RMB 51.2bn (US$8.1bn) and cloud computing surged 103% to RMB 4.3bn (US$699m).

Alibaba’s digital media and entertainment business grew 34% year-on-year to RMB 5.2bn (US$840m) and online video platform Youku grew daily average subscribers by 160% year-on-year.

Alibaba’s annual active customers increased by 37 million year-on-year to reach 552 million while mobile MAUs reached 617 million in March.

Alibaba’s operating profit for the quarter was down on year-on-year at 15%, reflecting the e-commerce giant’s recent investments such as its increased stake in financial affiliate Ant Financial and local delivery service Ele.me. The e-commerce giant has also increased its investment in Southeast Asia retail brand Lazada, adding another $2bn in March.

It comes as Alibaba faces increased competition from rivals Tencent and JD.com, which continue to form partnerships in a bid to challenge Alibaba’s dominance in the e-commerce market.

Daniel Zhang, chief executive officer of Alibaba Group, said the company's "robust growth" was being driven by its long-term growth initiatives. “With the continuing roll-out of our New Retail strategy, our e-commerce platform is developing into the leading retail infrastructure of China. During the past year, we also doubled down on technology development, cloud computing, logistics, digital entertainment and local services so that we are in a position to capture consumption growth in China and other emerging markets.”

Maggie Wu, chief financial officer of Alibaba Group, said, “Looking ahead to fiscal 2019, we expect overall revenue growth above 60%, reflecting our confidence in our core business as well as positive momentum in new businesses. We expect our new growth initiatives will drive long-term, sustainable value for our customers and partners and increase our total addressable market.”

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