Alibaba shares were rising today after the Chinese tech giant reported better-than-expected results in its first-quarter earnings report, indicating that the company's extended slump caused by a government crackdown and a sluggish Chinese economy may be coming to a halt. As of midday of U.S. session, the stock was up by 5.7% shortly after the …
Alibaba shares were rising today after the Chinese tech giant reported better-than-expected results in its first-quarter earnings report, indicating that the company’s extended slump caused by a government crackdown and a sluggish Chinese economy may be coming to a halt. As of midday of U.S. session, the stock was up by 5.7% shortly after the announcement. In the quarter, revenue increased by 14% to $32.3 billion beating projections of $31.2 billion. This was the company’s strongest growth pace compared to previous quarters.
The company has restructured its corporate structure. The management claims that the move in dividing the corporation into six subgroups did show some results. Its Taobao and Tmall-focused e-commerce group saw sales rise 12% to $15.9 billion, while growth in international e-commerce, local services, logistics, and digital media was also strong, with each area increasing by 30% or more.
Profitability improved as the company narrowed losses in its smaller business units, and Cainiao Smart Logistics’ adjusted earnings before interest, taxes, and amortization (EBITA) increased from a loss a year ago to $12.1 million. The great bulk of Alibaba’s profits continue to come from Taobao and Tmall, and the business reported a 43% increase in adjusted operating profit to $952 million in the third quarter. Adjusted earnings per American Depositary Share (ADS) increased 48% to $2.40, exceeding the $2.02 consensus.
The CEO of the group also mentioned that: “Alibaba achieved a strong quarter as we continue to implement our reorganization, which is generating fresh energy throughout our businesses. We hope to catalyse creativity, encourage vitality in our organization, and enable firms to focus on long-term success through this self-driven transformation.
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