Alibaba Group’s revenue grew 61 per cent for the June Quarter, year-on-year, on the back of strong growth in cloud computing, digital media and innovation activities, according to financial results released today.
The revenue growth is better than expected but quarterly income fell short, plummeting more than 40 per cent year-on-year.
The Chinese giant added 24 million active users for the quarter and there are now over half a billion people using Alibaba’s retail platforms annually, according to the company.
But Alibaba Group reported a net income of US$1.156 billion representing a year-on-year decrease of 45 per cent.
Alibaba Group claims the decrease in income is “attributable to a one-time increase in share-based compensation expense of RMB11,180 million relating to Ant Financial’s awards to our employees”. Excluding that one time compensation would have resulted in net income increasing 33 per cent, according to the company.
Overall, net income was reported as 8.69 billion yuan, a 40.8 per cent drop from the 14.68 billion yuan reported in the first quarter of 2017.
The same Ant Financial caveat was used as a defence for the fall in income from operations, down 54 per cent compared to the same quarter last year. Alibaba Group contends that if the Ant Financial compensation was excluded, operating income would actually have grown by 9 per cent.
However, analysis from Bloomberg’s Tim Cuplan suggests even without the compensation, “operating margin would still have plummeted”.
According to CNBC, US-listed shares of Alibaba dropped more than 2 per cent following the results and the Alibaba stock “has been under pressure in recent months amid a broader sell-off in Chinese stocks over concerns about the impact of the US-China trade war”. The stock has risen one per cent so far in 2018.
Core Commerce and cloud drive revenue
Alibaba’s core ecommerce business, which mainly includes online shopping platforms Tmall and TaoBao, grew revenue 61 per cent ($US10.5 billion). Mobile MAUs on Alibaba’s China retail marketplaces reached 634 million in June 2018, an increase of 17 million over March 2018.
“Our China retail marketplace business continues to gain share, with new retail initiatives driving further revenue growth and enabling our retail partners to seamlessly serve customers,” said Daniel Zhang, Chief Executive Officer of Alibaba Group.
Some of the biggest revenue growth came in Alibaba’s cloud division. Cloud computing revenue grew 93 per cent year on year to RMB4,698 million (US$710 million). The company said its cloud innovation focus for the quarter had been on data analytics, AI security and IoT.
Year-on-year, revenue from digital media and entertainment increased 46 per cent and innovation initiatives grew revenue 64 per cent.