Alibaba Announces September Quarter Revenue of 22.2 Billion Yuan

27 Oct 2015 | Author: | No comments yet »

Alibaba Beats Expectations As Revenue Increases 32% To $3.5B In Q2 2015.

Alibaba Group Holding Ltd. defied the slowdown in China’s economy with sales that climbed by almost a third as the online emporium captured more of the nation’s shift to mobile shopping. Alibaba’s latest Q2 2015 earnings have dropped and the company, which was expected to have a difficult quarter, has beaten expectations with an impressive $3.488 billion in revenue and earnings per share of $0.57.HONG KONG — After two consecutive quarters of poor results, China’s largest e-commerce company, Alibaba, finally had some good news on Tuesday for investors: Sales rose 32 percent compared with the same period last year. Despite concerns about China’s economy slowing down, the Internet giant said revenue increased to 22.2 billion renminbi, or $3.5 billion, compared with 16.8 billion renminbi in 2014, and better than the 21.2 billion renminbi expected by analysts.

The following key numbers from the latest results offer hints of what’s to come: Revenue exceeded analysts estimates at a time China’s economy is headed for its slowest pace of growth in a quarter century. Beyond revenue and EPS, GMV (gross merchant volume) is an important indicator for Alibaba as it gauges how business is carried out across its marketplace and other e-commerce services. Alibaba also said Tuesday that it bought back $2.74 billion worth of its shares in the latest quarter, after authorizing a $4 billion repurchase program in August. The company warned of a slow-down last month, but it logged a decent 28 percent year-on-year increase to reach $112 billion in GMV during the quarter.

Alibaba has been struggling with a weakening grip on China’s e-commerce market, a costly battle with rivals to capture more mobile users and China’s swooning currency. Mobile is a challenge for Alibaba, since it makes more money from desktop-based users, but the growth of smartphones means it continues to rise in importance. Mobile devices accounted for 62 percent of GMV on Alibaba’s China marketplaces — that’s around $1.65 billion in monetary terms — which is up 183 percent year-on-year.

The company named Michael Evans, a former Goldman Sachs Group Inc. partner, as president in August to spearhead a global expansion into regions such as Russia and Brazil. The company has participated in almost $15 billion of deals announced this year, about triple the number for all of 2014, according to data compiled by Bloomberg. Better ad tailoring and understanding users can help on mobile — and these are some of the reasons why Alibaba has offered to buy Youku Tudou, China’s largest video service, for $3.5 billion. Amid the share drop, Alibaba named a new chief executive, Daniel Zhang, and had to contend with a summer crisis in the Chinese stock and currency markets.

The company this month offered $4.6 billion for the rest of Youku Tudou Inc. to stream more video content to Chinese Internet users through control of the YouTube-like site. Highlighting the drag on the company’s share price was a line in Tuesday’s statement saying the company had spent more than $2.7 billion buying its own stock since August. The e-commerce giant is betting on Internet-based computing and big data to boost growth for the next decade thanks to demand for processing and storage from governments, finance and online gaming companies.

AliCloud could account for more than $1 billion of Alibaba’s revenue by 2018 and the public cloud presents a $120 billion global market opportunity, SunTrust Robinson Humphrey Inc. estimates. An important measure of the scale and growth of the company’s fundamental business, GMV rose 28 percent from a year ago, down from 34 percent during the previous quarter. Alibaba attributed growth to an increase in the number of paying customers and in their usage of complex offerings like Alibaba’s content delivery network and database services. That includes investing in Didi Kuaidi, China’s biggest taxi-hailing application, and backing the merger of group-buying platforms Meituan.com and Dianping.com. “Going forward investors will be looking at how Alibaba increases its growth in rural areas, a sector that the government has also been emphasizing,” said Li at RHB Research. It invested $1 billion into its Aliyun cloud business this summer, and during the last quarter it launched an artificial intelligence service, and opened an international HQ in Singapore and its second data center in the U.S..

Mobile revenue almost tripled to 10.5 billion yuan. “We are winning in mobile and remain focused on our top strategic priorities, including internationalization,” Chief Executive Officer Daniel Zhang said in the statement. While mobile platforms help capture the millions of consumers shopping on smartphones and tablet computers, the smaller screens typically generate less advertising revenue.

Alibaba’s GMV growth is expected to slow gradually as the Chinese economy decelerates and competition from JD.com Inc and Tencent Holdings Ltd. intensifies. Alibaba also faces renewed pressure about selling counterfeits on its websites, with the American Apparel and Footwear Association requesting that Taobao Marketplace be put back on a U.S. government “Notorious Market” list that shames intellectual property rights violators. Alibaba said the Securities and Exchange Commission has concluded a probe into the company and won’t be recommending an “enforcement action” against it.

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