Alibaba profits miss, despite record revenue

Andrew Cummings
May 19, 2017

The group's revenue was about 38.6 billion yuan (5.6 billion US dollars) in the quarter, beating market expectations, Alibaba said.

The company, which operates the Taobao and Tmall platforms, announced a US$6 billion share buyback programme over two years.

The Chinese e-commerce giant also reported strong fiscal year revenue growth of 56% with annual non-GAAP free cash flow of approximately U.S. $10 billion, according to Maggie Wu, Chief Financial Officer of Alibaba Group.

Net income attributable to shareholders rose to 10.65 billion yuan, or 60 U.S. cents per share, from 5.37 billion yuan in the year-earlier quarter. Revenue from e-commerce business rose 47 percent to 31.57 billion yuan in the first quarter.

The firm acquired the Singapore e-commerce site Lazada past year.

Internationally, Alibaba is laying ground for long-term growth.

While the company explores new revenue streams with projects related to data, cloud computing, artificial intelligence and logistics, e-commerce continues to generate the vast majority of Alibaba's revenue.

E-commerce is bucking a slowdown in China's wider economy by appealing to a growing middle class demanding premium products from Alaskan salmon to New Zealand milk. The company reported adjusted earnings of RMB 4.35 per share, missing the RMB 4.51 average analyst forecast from Bloomberg. Annual active buyers on the company's China retail marketplaces reached 454 million, an increase of 11 million from the 12-month period ending in December 2016, the company said.

Alibaba listed on the New York Stock Exchange in September 2014. Despite stiff competition, Alibaba sees rural investment as manageable due to its franchise model, "where it passes on all commissions to local partners, but incurs limited losses", Leung said.

Alibaba vice chairman Joseph Tsai told a conference call the company is seeking to capitalize on changes in the Chinese economy. Alibaba is "working with talent and directors on proprietary content, so over time the cost should come down".

Alibaba's cloud business continued its run of triple-digit growth, recording revenue of 2.2 billion yuan for the quarter, up 103 percent from a year earlier.

While cloud unit revenue doubled in the March quarter to 2.2 billion yuan, the business had an operating loss of 505 million yuan as it slashes prices to snatch market share from Inc. and Tencent.

Its digital media and entertainment business saw an increase in revenue of 234 percent to 3.9 billion yuan, reflecting the dividends from the consolidation of Youku Tudou, which Alibaba acquired for $3.5 billion in October. Losses in digital entertainment should narrow this year, Chief Financial Officer Maggie Wu said.

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