Alibaba-women-620xaAlibaba’s revenue grew 53.7 per cent to $2.7bn, and net profit rose by 15 per cent to $1.1bn. That beat an informal consensus of analysts who had forecast revenue growth of about 49 per cent.  EBITDA increased 30.6% to US$ 1.348 bn.

Alibaba’s shares hit a record high after it announced huge sales growth in its first earnings release since the Chinese ecommerce giant listed on the New York Stock Exchange in September.  The company defied a slump in retail sales in its home market to deliver better than expected revenues and profits for the quarter ending September 30.  Retail sellers on Alibaba’s China websites did Rmb556bn ($90.5bn) in business, pushing the gross merchandise value, a metric used by Alibaba as a proxy for sales, up 49 per cent from the third quarter in 2013.

The sharp increase in gross merchandise value transacted on Alibaba, which acts as a middleman between sellers and buyers, was notable because it took place against the backdrop of a struggling retail market. According to the China General Chamber of Commerce, an industry association, sales by the 100 largest retail enterprises in China grew just 0.1 per cent in the year to September – down from 10.1 per cent in the same period last year. Many of these retailers sell on Alibaba’s websites as well.

Alibaba said the rapid growth in sales was driven primarily by growth in the number of mobile phone users. They generated 35 per cent of the total GMV, compared with just 14 per cent a year previously.  It also credited the growth in users of Tmall, the business-to-consumer website catering to larger, branded sellers, which grew 77 per cent to Rmb175bn. Taobao, the consumer-to-consumer website similar to eBay which has been the engine of Alibaba’s growth for five years, grew 38 per cent to Rmb379bn in sales. Overall, the share of Tmall has been growing and analysts expect it to eclipse Taobao in 2017, as increasingly sophisticated Chinese consumers look for branded items.

Alibaba faces tough competition for mobile users from rival Tencent, which was the largest listed internet company in Asia until Alibaba’s initial public offering.

Focusing on the rising mobile sales during a conference call with analysts, Joe Tsai, Alibaba’s vice-chairman, obliquely sought to boost Taobao’s mobile app at the expense of Tencent’s popular chat apps WeChat and QQ, which are the two most popular mobile apps in China.

Source:  Financial Times