Alibaba’s revenue grows 55% in fiscal Q2

 BY FRANK TONG Senior editor, China

China’s e-commerce leader says revenue was $5.14 billion for the quarter ended Sept. 30. Alibaba also says it will disclose the value of goods sold on its online marketplaces on an annual basis, not quarterly.

Despite concerns about an economic slowdown in China, Alibaba Group Holding Ltd., that country’s dominant e-commerce company, today reported another robust quarter of growth led by its focus on its retail business, cloud computing and entertainment units.

Alibaba’s revenue grew 55% to 34.29 billion yuan (US$5.14 billion) in the fiscal second quarter ended Sept. 30. However, the quarter marked the first time Alibaba did not break out sales generated by consumer purchases on its marketplaces, or gross merchandise volume. Alibaba said it will disclose its marketplace GMV on an annual basis, not quarterly.

Income from operations increased 41.4% to 9.05 billion yuan (US$1.36 billion) in this quarter from 6.40 billion yuan a year ago, although its net income decreased 69% to 7.08 billion yuan ($1.06 billion) due to a non-recurring revaluation gain of 18.60 billion yuan reported in the same period of 2015. 

To put it into context, Amazon.com Inc.’s net income is much lower—$252 million in Q3 ended Sept. 30—or about 24% of that of Alibaba. Amazon is No. 1 in the Internet Retailer 2016 Top 500 Guide.

Alibaba’s main businesses remain operating China’s two dominant online marketplaces, the free online bazaar Taobao for small sellers and the Tmall marketplace for brands and retailers. Taobao has become a more social shopping platform where more than 6 million Taobao app users in September shared their shopping experiences with friends on a daily basis, according to Alibaba.

Alibaba says overseas brands, especially in two major categories—consumer electronics and fast-moving consumer goods (FMCG)—continue to enter China’s e-commerce market and strengthen their business ties with Alibaba’s Tmall.com. For example, Apple Inc. (No. 2 in the Top 500), selected Tmall.com as a selling channel to launch its iPhone 7 in China.   

Alibaba said its annual active buyers reached 439 million in fiscal Q2, up 1.2% from 434 million in the previous quarter ended June 30, while monthly active mobile users in September reached 450 million, up 5.4% from 427 million in June.

Alibaba’s cloud computing continued to be a growth driver in this quarter, hosting 35% of websites in China and providing computer capacity and data storage to 651,000 client companies. Revenue from this business unit grew 130% in Q2 over the prior-year quarter to 1.493 billion yuan ($224 million).

Entertainment became the fastest growth division for the internet giant. For example, Alibaba-backed video site Youku Tudou generated billions of video views by producing a 30-episode romantic comedy during the quarter.

For its fiscal second quarter of 2017 ended Sept. 30, Alibaba reported:

• Total revenue grew 54.7% to 34.29 billion yuan ($5.14 billion) from 22.17 billion yuan in the same quarter of 2015.
• Revenue from core businesses increased 40.8% year over year to 28.49 billion yuan ($4.27 billion) from 20.23 billion yuan.
• Revenue for China retail business of 24.11 billion yuan ($3.62 billion), a 39.6% increase from 17.27 billion yuan.
• Revenue for international retail business of 1.34 billion yuan ($201 million), up 178.6% from 481 million yuan.
• Net income decreased 68.8% to 7.08 billion yuan ($1.06 billion) from 22.70 billion yuan due to a non-recurring revaluation gain of 18.60 million yuan a year ago. 

For the first six months of fiscal 2017, Alibaba reported:

• Revenue grew 56.6% to 66.45 billion yuan ($9.84 billion) from 42.42 billion yuan billion yuan a year ago.
• Net income decreased 73.4% to 14.22 billion ($2.1 billion) from 53.52 billion yuan.