(REUTERS) - More customers spending more money and buying more merchandise off their phones... that propelled Alibaba's revenue 40 per cent higher in the latest quarter. Its annual one-day sales event in November called Single's Day alone pulled in more than US$9 billion (S$12.1 billion).

But that quarterly revenue fell shy of Wall Street's forecasts, and the growth rate was lower than in the previous quarter, signaling a slowdown in the Chinese online retailer. Net income at the world's largest e-commerce company slid amid an increase in expenses for compensation and income taxes.

Alibaba has been spending heavily on acquisitions, most recently taking a stake in an online payment firm in India. Such investments in new initiatives, mobile operating systems and digital entertainment caused its cash flow margin to shrink slightly.

This week, the Chinese government blasted the company. It accused Alibaba for not doing enough to deal with the fake products sold and illegal business conducted on its platforms like shopping sites Taobao and Tmall. Alibaba said the regulator's report was flawed and said it's preparing a formal complaint.

Alibaba's shares, which are up 45 per cent since its US$25 billion IPO last fall, dropped in early trading.