The macroeconomic factors aside, Alibaba has surprised investors with staggering growth in the core retail as well as cloud computing services. Shareholders did receive a jolt during the prior quarter earnings when it reported a 41% decline in EPS. However, this was primarily due to one-off stock-compensation charges, besides a range of investments and acquisitions.
As Alibaba reports second-quarter results before the market opens on Friday, investors will be looking at whether Alibaba’s bottom line actually rebounds. Analysts, on an average, expect earnings to be $1.09 per share on a revenue of $12.69 billion, up 53% year-over-year. If it happens, it will be the ninth consecutive 50+% revenue growth achieved by the e-commerce giant.
As usual, the core commerce segment will be driven by Taobao and Tmall, while the cloud segment is projected to continue its above 90% growth rate. During the prior sequential quarter, Alibaba’s cloud segment grew 93%, faster than Microsoft’s Azure.
Also look out for the monthly active users as the company has previously stated that higher user engagement often translates to higher consumer spending. During the first quarter, monthly active users grew 17 million to touch 634 million.
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Also during the first quarter, margins were pretty squeezed by acquisitions and investments – Alibaba had purchased a 33% stake in Ant Financial and had also bought food delivery platform Ele.me for $9.5 billion. This is apart from a $2 billion investment in e-commerce platform Lazada.
While these investments may not be immediately accretive to earnings, it hints at the Chinese major’s long-term objectives.