Core eCommerce Strong, Alibaba Mobile Users Up 20 Pct YoY

A sigh of relief or a shrug of the shoulders?

Alibaba managed to post revenues that topped expectations for the period that ended June 30, perhaps alleviating concerns that had bedeviled rivals such as Tencent. The core eCommerce business showed robust growth, while the company still seeks diversification away from that line, which includes online retail sites Tmall and Taobao.

In terms of the fiscal first quarter (2019) tallies of the top and bottom lines: The company posted sales of 80.9 billion RMB, which slightly bested the consensus. In terms of net income, that came in at 8.7 billion RMB, which ties into funding for Ant Financial, the financial services arm of the company, and where net income was down 41 percent as a result of that activity.

As had been reported, during the period, the company exercised an option to acquire roughly a third of Ant, which has seemingly pulled away from listing on the public markets. Though not explicitly broken out in filings by Alibaba, The Wall Street Journal estimated that pre-tax profit at the unit slumped to 2.4 billion yuan from 5.3 billion yuan last year.

Yet despite the various impacts to items below the revenue line, net income per share, at 8.04 yuan, was better than consensus of lower than 8.15 yuan expected, per CNBC.

Drilling down a bit, the company’s core eCommerce business remained the key driver, with 61 percent growth, measured year over year, to 69.2 billion RMB. Within that segment, in supplemental materials offered by the company in tandem with earnings, Alibaba said within China retail commerce activity, the customer management line item gained 26 percent to 33 billon RMB. Commissions grew faster than that segment, logging a 55 percent growth rate, to 13.7 billion RMB.

And while a relatively small piece of the earnings pie, it should be noted that in the period, international spending remained robust: Retail international commerce was up 64 percent to 4.3 billion RMB.

Digital Puts Up Strong Digits

The cloud computing unit showed sales of 4.7 billion RMB, a growth rate that remains impressive at 93 percent. Also, while there have been rumblings about government restrictions on gaming, the digital media and entertainment unit rose 46 percent to 5.9 billion RMB.

All in, the numbers stand in a bit of contrast to those of rivals such as Tencent, which earlier this month had posted a surprise loss on the heels of games being pulled from release.

If one theme emerged from the Alibaba numbers, it might be that mobile is moving … up and to the right, so to speak (we mean growth). In terms of total customer base, active customers stood at 576 million, up 24 million quarter to quarter, and up 100 million through the past year. That is the number of annual active customers that had been on the China retail marketplaces through the 12-month period that ended in June.

In terms of mobile monthly active users, the tally was 634 million, up 20 percent year on year and, as The WSJ noted, 3 percent sequentially.

Moving Beyond eCommerce

The company continues to make efforts to move beyond its core eCommerce bastion. On Thursday (Aug. 23), as the financial media noted, Alibaba said it has combined the Koubei local commerce platform with the Ele.me business, which in turn focuses on food delivery. The combined unit has grabbed $3 billion in financing from a consortium that includes Alibaba and SoftBank. In addition, as noted by Bloomberg, margins also got a bit of pressure from continued expansion tied to its Hema supermarket chain, with a few dozen in operation.