Alibaba’s 40 Pct. Rev Boost Driven By eCommerce, Cloud Computing

With formidable growth in its eCommerce and cloud computing businesses, Alibaba Group Holding Ltd. noted a larger-than-expected 40 percent increase in second-quarter revenue. Sales from the firm’s eCommerce business grew approximately 40 percent to 101.22 billion yuan, and its cloud computing business notched a 64 percent rise in revenue to 9.29 billion yuan, Reuters reported.

Alibaba earns income mainly from selling promotional services as well as advertising to third-party merchants that list items on the Tmall and Taobao eCommerce sites. Its total revenue increased to $16.91 billion or 119.02 billion yuan in Q2, which ended on Sept. 30, from 85.15 billion yuan a year prior. According to Refinitiv IBES data, analysts were forecasting revenue of 116.8 billion yuan.

The company’s net income attributable to ordinary shareholders grew from 20.03 billion yuan a year prior to 72.54 billion yuan because of a one-time gain related to its Ant Financial stake. At the same time, Alibaba and competitor JD.com Inc. have been seeking to diversify as eCommerce sales slow with saturated markets in the largest cities of China, and consumer confidence becomes impacted by the trade war between the U.S. and China. 

Alibaba’s earnings results occurred as the firm prepares for its Singles Day shopping event. Last year, Alibaba set a Singles Day record, bringing in over $30.8 billion over the course of the 24-hour shopping event. Gross merchandise value (GMV) totaled 213.5 billion yuan, coming out ahead of the prior-year figure of 168.2 billion yuan — a nearly 27 percent year-on-year rise. It was, however, less than the 39 percent year-on-year growth in 2017.

Last year marked the 10th annual Singles Day event, which was also called the Double 11 shopping festival because it falls on Nov. 11. The Chinese eCommerce retailer had promoted that year’s occasion as “the largest-ever in terms of scale and reach.” In a press release last October, Alibaba Group CEO Daniel Zhang noted that “the Festival’s astounding growth over the past decade has powered the steady growth of quality consumption sought by Chinese shoppers.”