Alibaba’s cloud division grew 60 per cent in the quarter and now claims a bigger market share than enterprise stalwart IBM. But despite other strong financial results posted overnight, stock price of Chinese tech giant Alibaba fell as concerns about delays to the IPO of its finance arm, Ant Group, linger.
Alibaba Group reported third quarter earnings on Thursday showing strong revenue but a slowing sales growth rate, sending shares down 2 per cent.
It’s the second share price drop this week – although the price is up significantly this year – following Chinese regulators suspending the planned initial public offering of Ant Group, a Jack Ma founded fintech one third owned by Alibaba.
The IPO was suspended this week, less than two days before shares were due to begin trading, after regulators identified “major issues” that might cause it “not to meet the listing conditions or disclosure requirements”.
Alibaba Cloud revenue grew 60 per cent in the quarter, year on year, generating US$2.194 billion, primarily driven by customers in the internet, finance and retail industries, according to the company.
The revenue moves Alibaba clearly ahead of IBM (quarterly cloud revenue of US$1.6 billion) for fourth place in the market. Amazon (US$11.6 billion in cloud infrastructure revenue for its most recent quarter) still dominates the market, followed by Microsoft (US$5.9 billion) and Google (US$2.9 billion).
Alibaba may struggle to pass Google anytime soon, according to market analysis by Synergy Research, which has both companies as “high growth and gaining market share”.
Alibaba dominates the Chinese market and is popular across APAC. According to the company, it has made successful inroads with enterprise customers, claiming 60 per cent of A-share listed companies are customers of Alibaba Cloud, and their average spending grew 45 per cent year on year in September 2020.
Alibaba’s total revenue grew 30 per cent year on year, reaching US$22.8 billion in the quarter, showing the Chinese economy has bounced back from the coronavirus that emerged there late last year.
“Our domestic core commerce business continued to grow steadily during the post-COVID-19 environment in China through higher purchase frequency and consumer spending,” said Alibaba CFO Maggie Wu in a statement.
Alibaba Group added 15 million new active customers in the last 12 months, making 757 million annual active customers on its platforms.