Business

Alibaba beats estimates as pandemic fuels e-commerce and cloud computing

Sales from Alibaba's core commerce business, which include the AliExpress platform, jumped 34% to $19.27 billion in the quarter ended June;

building of chinese company alibaba
Alibaba's building in Beijing.
  • Total revenue rose about 34% to 153.75 billion yuan in the, slower than the 42% growth in the same quarter last year;
  • The biggest revenue gain in the digital entertainment segment came from online games and membership subscriptions, including in streaming video business Youku;
  • The results come as U.S.-listed Chinese companies face renewed heat and U.S. President Donald Trump.

China’s Alibaba Group Holding beat quarterly revenue and profit estimates on Thursday, as its core commerce and cloud computing businesses benefited from the coronavirus-led shift to online shopping and working from home.

The company’s U.S.-listed shares inched up, adding to their 23% gain this year.

READ ALSO: AliExpress’ strategy to take e-commerce live streaming phenomenon to the world

The results come as U.S.-listed Chinese companies face renewed heat and U.S. President Donald Trump has said he could exert pressure on more Chinese companies after he moved to ban TikTok, owned by China’s ByteDance.

The White House has been piling pressure ahead of the presidential election in November and financial markets are watching for signs of whether it will lead to further tit-for-tat moves that could hit a global recovery.

READ ALSO: What is missing for debit card use to soar in e-commerce in Brazil

Sales from Alibaba’s core commerce business, which include the AliExpress platform, jumped 34% to 133.32 billion yuan ($19.27 billion) in the first quarter ended June.

Our domestic core commerce business has fully recovered to pre-COVID-19 levels across the board, while cloud computing revenue grew 59% year-over-year

Maggie Wu, CHIEF FINANCIAL OFFICER at alibaba

“Our strong profit growth and cash flow enable us to continue to strengthen our core business and invest for long term growth.” said group CEO Daniel Zhang. Alibaba’s net income attributable to ordinary shareholders rose to 47.59 billion yuan from 21.25 billion yuan ($3.1 billion).

Alibaba said that its streaming video business Youku increased daily average subscriber numbers by 60% year-on-year. The biggest revenue gain in the digital entertainment segment came from online games and membership subscriptions, “partly offset by the decrease in revenue from customer management.”

According to Variety, the group’s entertainment businesses continue to lose money, but a slower rate. Its digital and media sector, which stretches from operating browsers for mobile devices to cinema ticket selling, saw revenues grow a modest 9% to 6.99 billion yuan ($990 million). 

Excluding items, the company earned 14.82 yuan ($2.14) per American depository share (ADS). Analysts had expected 13.78 yuan ($1.99) per ADS, according to IBES data from Refinitiv.

READ ALSO: Alibaba will invest $28 billion in cloud computing over the next 3 years

Total revenue rose about 34% to 153.75 billion yuan ($22.22 billion) in the, slower than the 42% growth in the same quarter last year. Analysts had expected revenue of 147.77 billion yuan ($21.36 billion).