Alibaba Scores Record Growth And Beats Estimates As Mobile Revenue Soars, Topping Desktop For The First Time

Alibaba recently unveiled its Q2 2016 results, with the marketplace showing tremendous growth as revenue from its mobile users surpassed that of desktop users.

The e-commerce vendor’s revenue rose to RMB 32.2 billion ($4.8 billion), placing it 59 percent higher than last year. The growth itself is formidable, being the highest since Alibaba initiated the largest U.S. IPO in history when it started public trading in September 2014.

The blooming business model is even more commendable as China’s economy contracted during the last year.

Alibaba’s marketplaces in China managed to secure a full RMB 23.4 billion ($3.5 billion), scoring an increase of almost 50 percent year over year. Noteworthy is the fact that three-fourths of the sum came via mobile devices. This means that the sum gained from mobile users, RMB 17.5 billion ($2.6 billion), went up by 119 percent compared with last year’s numbers.

Earnings based on the mobile ecosystem trumped the ones from the desktop side of Alibaba, and it looks like the whole business is catering more to the mobile area. Before the IPO, investors were concerned that Alibaba would have trouble creating a functional and appealing mobile environment for its clients, but the end result exceeded expectations.

Despite the fact that the company’s revenue exploded, the net income for Alibaba plunged as much as 76 percent year on year to only RMB 7,142 million ($1.1 billion). During the same time frame, Alibaba noted a 71 percent surge in operating profit and a non-GAAP net income boom of 28 percent.

Alibaba invested massively in cloud computing over the last 12 months, and results are starting to show. The Alicloud business reported twice as much year-on-year revenue to a total of RMB 1.2 billion ($181 million). It also counts 577,000 paying customers, a boost of 156 percent compared with last year’s 263,000.

In May, the e-commerce vendor got in hot water as a result of not being transparent enough with its financial data. The SEC investigation aimed to unveil Alibaba’s connections with names from the industry, such as online-to-offline platform Koubei, logistics firm Cainao, Ant Financial and video platform Youku Tudou.

To clarify its situation, Alibaba disclosed, for the first time ever, detailed data on its enterprise arms, including digital media, food delivery and cloud computing. For now, these affiliates of Alibaba seem to pull the company down, but the executives of the largest e-commerce vendor in China are optimistic about the future.

As the company faces the prospect of a saturated online retail market in its own country, it started looking elsewhere for growth potential.

Earlier this year, Alibaba invested $1 billion to snatch a majority of Lazada, a Rocket internet-backed e-commerce site in Southeast Asia that supports the mobile wallet-commerce company Paytm in India.

Joe Tsai, vice president at Alibaba, said that the 500 million local consumers in Southeast Asia could turn out to be “a very important potential market for us.”

“We’ve decided to place some very strategic assets in India,” Tsai notes.

He went on to say that mobile and payments will be key to increasing the revenue in the area as soon as more strategic action is deployed.

 

[Source: Techtimnes]

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