HONG KONG • Alibaba Group Holding Ltd posted sales and earnings that topped estimates as the Chinese e-commerce giant overhauled shopping recommendations to defy a slowing economy.
Revenue rose to 93.5 billion yuan (RM56.81 billion) in the three months ended in March, about 1.8% above estimates as adjusted earnings-per share of 8.57 yuan topped projections for 6.5 yuan. Alibaba expects sales in the current year to jump at least 33% to more than 500 billion yuan.
As Alibaba pushes deeper into businesses like cloud computing, it’s getting better at understanding e-commerce customers and making money from recommendations based on their preferences.
The move is driving more sales than traditional search and boosting its ability to sell targeted advertising to merchants on its main Taobao platform. That is bolstering revenue growth even as escalating US-Chinese tensions threaten to further dampen the world’s No 2 economy.
“The results were really good, especially given how the macro economy hasn’t been that great,” said Steven Zhu, an analyst with Pacific Epoch in Shanghai. “It’s a great sign that core e-commerce was growing strong.”
Alibaba’s revenue rose 51% to 376.8 billion yuan in the year ended March, toward the bottom of its forecast range of 375 billion yuan to 383 billion yuan.
The core commerce business posted revenue of 78.9 billion yuan, a jump of 54%. Alibaba’s customer management revenue, which includes advertising and fees charged to merchants, grew by 31%. That’s a sign that the recommendation-based ad business is luring
more merchants to spend, said Zhu. As the US and China continue to argue about trade, Alibaba is pressing ahead with its expansion and expects
the local market to open up more. “As part of the trade negotiations, China will be importing a lot more,” vice chairman Joseph Tsai told an earnings call. “We are floating into the direction of the tide, rather than going against it.”
Revenue from Alibaba’s cloud unit surged 76% to 7.7 billion yuan in the quarter as the business becomes a key pillar of growth, with more than half the market in China.
“Our cloud and data technology and tremendous traction in new retail have enabled us to continuously transform the way businesses operate in China and other emerging markets, which will contribute to our long-term growth,” CEO Daniel Zhang said in the statement.
Ant Financial Services Group, the finance affiliate controlled by Alibaba chairman Jack Ma, generated pretax profit about 1.38 billion yuan in the quarter, according to Bloomberg calculations from Alibaba’s earnings report yesterday. — Bloomberg