Alibaba profit nearly triples on 40% revenue rise

The ongoing trade tensions between China and the US have not hurt the People’s Republic’s biggest ecommerce company. Quite the opposite: Alibaba reported a 40% jump in revenue and nearly tripled profit in its last quarter, as it heads into its 20th anniversary with a star-studded stadium party headlined by Taylor Swift.

The internet giant posted revenue of RMB119 billion (US$16.7 billion) in the quarter ended September 30, an increase of 40% year-over-year, while its net income was RMB70.5 billion (US$10 billion), primarily due to a significant one-time gain related to its 33% equity interest in Ant Financial.

Its core commerce business, which includes Taobao and Tmall in China, continued to perform well. In September 2019, its China retail marketplaces had 785 million mobile monthly active users (MAUs), representing a quarterly net increase of 30 million.

Internationally, its Southeast Asian e-commerce platform Lazada achieved over 100% year-over-year order growth for the fourth consecutive quarter, while mobile DAUs continued to double year-over year. The company said there was strong demand in the FMCG and apparel & accessories categories.

Meanwhile, for the 12 months ended September 30, AliExpress served over 80 million annual active consumers from over 200 countries and regions.

Strong performance from Lazada and AliExpress contributed to a 35% year-on-year increase in revenue to RMB6 billion (US$840 million) from its international commerce retail business in the quarter.

Alibaba expects that this year Singles Day will attract a record 500 million shoppers.

It was the group’s first earnings report since co-founder Jack Ma stepped down as executive chairman, with Daniel Zhang taking over as chairman and chief executive. Zhang said by 2024 the company will serve a billion consumers and help its merchants achieve RMB10 trillion in gross merchandise value.

Cloud

Cloud computing revenue grew 64% year-over-year to RMB9.291 billion (US$1.3 billion) during the September 2019 quarter, which Alibaba said was primarily driven by an increase in average revenue per customer.

Alibaba Cloud has a stronghold in China, where 59% of listed companies are its customers. Accordingly, it is the top infrastructure as a service (IaaS) platform in Asia-Pacific, ahead of Amazon and Microsoft, according to its April research based on Gartner data.

Cloud services delivered 7% of Alibaba’s total revenues in the quarter. By comparison, AWS represented 13% of Amazon’s total revenue in Q3 this year, while Microsoft’s ‘Intelligent Cloud’ division, which includes Azure, brought in 33% of its revenue in the three months ended 30 September.

Youku

Alibaba’s streaming service Youku saw average daily subscribers increase 47% year-over-year in the quarter, which the company said was due to “synergies” between its commerce and entertainment businesses.

Youku decreased content spend in the quarter, but the company said it is investing in original content production capability while ensuring cost efficiencies and return on investment, resulting in narrowing EBITA losses during the quarter.

Revenue from its digital media and entertainment business in the quarter was RMB7.3 billion (US$1 billion), an increase of 23%, which it said was mainly due to the consolidation of Alibaba Pictures starting in March 2019.