Alibaba Group Holding Ltd.’s quarterly revenue beat analysts’ estimates after the Chinese internet giant wrung more money from newer businesses and better-targeted online ads.
Revenue at China’s biggest e-commerce company rose 61 per cent to 61.9 billion yuan (US$9.7 billion) in the three months ended in March. That compares with the 59 billion-yuan average of estimates compiled by Bloomberg. It reported adjusted earnings per share of 5.73 yuan versus the 5.5 yuan average estimate. Alibaba said sales in the current fiscal year will rise more than 60 per cent, topping analyst projections for 42 per cent growth.
Alibaba’s been improving on advertising formats for merchants who sell on its platform, investing in cloud computing, buying and revamping grocers and shopping malls and expanding overseas. The company recently said it would take full control of food delivery platform Ele.me and southeast Asia e-commerce site Lazada Group SA. That’s bolstering revenue growth even as its core business matures.
“Alibaba is offering more value to merchants through effective and efficient ads that leverage all the user data it collects,” UBS Group AG analysts led by Jerry Liu wrote in a research note ahead of the earnings. “The core China e-commerce business remains strong.”
Shares of Alibaba rose 0.6 per cent in New York on Thursday. They’ve gained 5.8 per cent this year compared with a 3.3 per cent decline for the NYSE Composite Index.
The company’s deals are part of billionaire Chairman Jack Ma’s ambition to revamp a US$4 trillion retail sector, a vision echoed by Amazon.com Inc.’s Jeff Bezos via the acquisition of Whole Foods Market Inc. Arch-foe Tencent Holdings Ltd. has also invested in a slew of supermarkets and retailers in recent months.
Alibaba said in April it would seek full control of Ele.me, conferring a value of US$9.5 billion on a company now at the forefront of a battle with Tencent-backed Meituan Dianping. Both are expanding into local and neighborhood services and heavily subsidizing restaurant deliveries.
Sales from core commerce rose 62 per cent to 51.3 billion yuan while cloud unit revenue more than doubled to 4.4 billion yuan, the company said. The digital media and entertainment unit boosted sales 34 per cent to 5.3 billion yuan.
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