BEIJING (BLOOMBERG) - Alibaba Group Holding's quarterly revenue and profit beat analysts' estimates as cloud computing services surged and its core e-commerce business held up despite a slowing Chinese economy.
Revenue at China's biggest e-commerce company rose 59 per cent to 32.15 billion yuan (S$6.43 billion) in the three months ended June, the company said Thursday. That compares with the 30.2 billion-yuan average of estimates compiled by Bloomberg. Shares of Alibaba were up about 4 per cent in pre-market trade, on pace for their highest in more than a year.
Investments in computing and media are starting to bear fruit and lessen dependence on e-commerce as economic growth at home exhibits signs of further deterioration.
As with Amazon.com, Alibaba is positioning cloud computing as one of its faster-growing businesses, eyeing top share in Japan in two years and beefing up its presence in the Middle East and US. Its other standout division was media and entertainment, which saw revenue almost quadrupled as services like Youku Tudou drew more users.
"This quarter's performance lifts investors doubt about its ability to maintain growth in its core e-commerce business," said Li Muzhi, a Hong Kong-based analyst at Arete Research Services. "The business diversification in digital entertainment and cloud is icing on the cake."
Alibaba, which reached a 3 trillion yuan milestone of goods sold for the year ended March, is also venturing abroad. It made its largest overseas acquisition with a US$1 billion deal for control of Lazada Group, gaining access to six Southeast Asian markets. Alibaba incorporated Lazada for the first time.
Net income was 7.1 billion yuan, also beating estimates. The company's annual active buyers increased 18 percent to 434 million. Adjusted earnings per share were 4.90 yuan, beating estimates for 4.20 yuan.
The core commerce business posted revenue of 27.2 billion yuan, a jump of 47 per cent on the year earlier. The division posted adjusted earnings before interest, tax and amortization of 16.6 billion yuan.
Apart from media and entertainment, which Alibaba reported individually for the first time, the cloud unit also turned in a strong performance. Its paying customers grew to 577,000, driving a 156 percent leap in revenue.
"Our results show the scale and leverage of our ecosystem, as we strengthen our competitive positions in core commerce, cloud computing and digital media and entertainment," Chief Executive Officer Daniel Zhang said.