Alibaba rises on Q1 revenue beat, despite China concerns

E-commerce giant Alibaba Group (BABA) wrapped the June quarter with broad-based revenue growth, sending the company’s stock higher in premarket trading Thursday. While net profit was impacted by stock-based compensation expenses, adjusted earnings increased modestly.

Earnings, on an adjusted basis, were 8.04 yuan per share (US$1.22 per share), up from 7.95 yuan per share reported a year earlier. However, unadjusted profit dropped 41% to 8.69 billion yuan (US$1.31 billion) or 3.30 yuan per share (US$0.50 per share) in the first quarter. It was negatively impacted by higher share-based compensation expenses, owing to an increase in the valuation of Ant Financial, the company’s financial arm.

Revenue surged 61% annually to 80.92 billion yuan (US$12.23 billion), surpassing Wall Street estimates. The main growth drivers were Alibaba Cloud, China commerce retail business and the consolidation of Cainiao Network and Ele.me.

Reported net income was negatively impacted by a marked increase in share-based compensation expenses

Cloud Computing revenue nearly doubled in the June quarter, aided by a further expansion of customer base, and revenue mix towards higher value-added products and services. Revenues of Digital Media and Innovation Initiatives advanced 46% and 64% respectively.

Core Commerce revenue jumped 61% on the strength of the e-commerce platform and execution of the New Retail strategy that involves digitization of store-based operations with a focus on in-store technology, on-demand delivery and supply chain management.

RELATED: Kroger partners with Alibaba

The company had 576 million annual active consumers in the China retail marketplaces at the end of the quarter, up 24% from the same period last year. Mobile monthly active users rose 17% to 634 million.

“We are executing our plan of providing more value and choice to users along the consumption continuum, with digital entertainment and local service offerings that tap into big addressable markets beyond core commerce,” said CEO Daniel Zhang.

RELATED: Amazon Q2 profit at all-time high

Earnings of Alibaba’s arch-rival and American counterpart Amazon (AMZN) more than doubled in the most recent quarter, when the company registered a 39% growth in revenues supported by a marked uptick in the cloud and advertising businesses.

Alibaba’s shares, which closed the last trading session slightly lower, gained about 3% in premarket trading after the earnings report.

RELATED: Alibaba Q4 results beat estimates