Alibaba profit up 37% but revenue growth eases

by Ben Pena February 1, 2019, 1:50
Alibaba profit up 37% but revenue growth eases

Internet giant Alibaba saw its revenue growth slow in the final three months of a year ago, in quarterly results likely to stir up concerns over the weaker China market, recently signalled to by U.S. tech giants. The company generated 117.3 billion Chinese yuan ($17.1 billion) in revenue, while analysts were expecting 119.4 billion Chinese yuan.

Alibaba's quarterly revenue was driven by the growth in its core commerce and cloud computing. Its net profit increased 37% year-on-year to 33.05 billion yuan.

According to the New York Times, "Its revenue was slightly below analysts' expectations, growing 41 percent, its slowest pace since early 2016, reflecting both the sheer size of the company and widening troubles in the Chinese economy, the world's second largest".

To be sure, Alibaba's revenues are still eye-popping by most standards: revenue for the quarter ended December 31, 2018 was 117.28 billion yuan (US$17.06 billion), an increase of 41 percent over the same period in 2018. Alibaba's stock was up more than 6 percent at market close on Wednesday.

Alibaba did not issue any guidance for the fiscal fourth quarter.

"Our resilient operating and financial performance is a direct reflection of our persistent focus on better serving our growing base of almost 700 million consumers across retail, digital entertainment and local consumer services", said CEO Daniel Zhang in a press release.

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Anticipating the headwind, Alibaba previously lowered its revenue outlook for its financial year ending March even before the top sales season.

Alibaba's earnings were in the spotlight particularly after sales in its 24-hour "Singles Day" shopping extravaganza in November grew 27 percent, down from a 39 percent increase the previous year, in what was seen as a symptom of China's economic slowdown.

In 2018, even though Alibaba netted a record $30 billion from the Singles' Day, annual growth dropped to the weakest rate in the event's 10-year history as a slowing Chinese economy and trade tensions chilled sentiment.

Growth is expected to ease further this year.

The company continued to invest heavily in cloud computing, artificial intelligence, and online entertainment in the December quarter.

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