The world should watch Alibaba closely.
While the Chinese eCommerce giant’s international presence to date is relatively small, that fact looks to change in just a few short years. To start, Alibaba just released its fourth-quarter earnings report, which showed core and other revenues to be strong.
Earnings, however, was another story.
For the quarter that ended March 31, Alibaba reported total revenue up 60 percent year-on-year to 38.58 billion yuan ($5.6 billion), well above analysts’ forecast of 36 billion yuan. This rate of growth, noted CEO Daniel Zhang, is the highest the company has achieved since its IPO.
Revenue from the company’s core eCommerce business was up 47 percent to 31.57 billion yuan ($4.58 billion). In fact, revenue was well up across all of Alibaba’s segments — cloud computing brought in $314 million, up 103 percent, and digital media and entertainment raked in $571 million, up a full 234 percent. Innovation initiatives and other revenue hit $133 million for the quarter, up 88 percent.
While cloud computing and digital entertainment division revenues have surged, they’ve yet to turn a profit.
“Our core commerce segment continued its significant growth and strong cash flow at large scale, enabling our aggressive investment in cloud computing, digital media and entertainment to drive the digital transformation of the economy and high-quality consumption across China,” Zhang said.
Alibaba also saw user numbers up for the quarter, with annual active buyers across Alibaba’s Chinese retail marketplaces hitting 454 million. Mobile monthly active users hit over 507 million.
Where Alibaba missed was in earnings, reporting EPS of $0.63, below expectations of $0.66. It’s this miss that brought Alibaba (BABA) shares down the morning of the release. Pre-market trading saw value tending toward a loss of 3 percent. Upon Thursday’s opening bell, Alibaba opened down 3.02 percent, trading at $117.07 — though prices recovered later in the day.
For the full year, Alibaba reported significant growth in users and usage in the realm of mobile. The company reported that monetization of mobile commerce platforms outpace that of desktop. Mobile gross merchandise volume (GMV) accounted for 79 percent of the total for the full year. Mobile revenue from core Chinese eCommerce retail business was 80 percent of total annual revenue.
While data for digital payment platform company Alipay, run by Alibaba payment affiliate Ant Financial, wasn’t included in Alibaba’s earnings release, it’s known that Alipay has a hold on nearly 70 percent of all online buying in China, as well as a growing number of offline merchants via QR codes.
No doubt Alibaba has a strong hold on the national market in China. But it’s also beginning to show signs of growth in international markets — laying the foundation for long-term growth plans via strategic investments and acquisitions.
Alibaba reported growth in international consumer and cross-border businesses. Its international consumer platforms AliExpress and Lazada saw a combined 83 million annual active buyers for the fiscal year ending March 2017.
AliExpress currently operates sixteen local language sites, including sites in Russian, Spanish and French.
Today, some 5 percent of Alibaba’s business is outside China. Founder and executive chairman Jack Ma told Fortune that he expects international business to grow to 40 percent in the next decade.
The growth area which looks especially bright for Alibaba is in Southeast Asia — a region projected to be the next global region to see an eCommerce boom. The region’s internet economy is projected to become a $278 billion market by 2025.
In the fourth quarter, the company launched a hub for trade clearance and logistics in Malaysia under its Electronic World Trade Platform (eWTP) — an initiative to facilitate cross-border trade between China and Southeast Asia.
Alibaba also brought its Taobao online marketplace to Singapore, a strategic point of entry to the broader Southeast Asian market. Alibaba and Lazada launched a website for Singapore that links directly to Alibaba’s shopping platform—the first major move since Alibaba’s $1 billion purchase of controlling stake in Lazada last year.
Alibaba also has its eyes (and cash) on India’s fast-growing digital marketplace — another major region of interest for Alibaba and affiliate Ant Financial, especially in the realm of digital payments, the subject of which PYMNTS’ Karen Webster recently covered at length.
Then, of course, there’s the acquisition of U.S.-based, global money transfer company MoneyGram by Ant Financial — a key growth strategy as Ant gears up for its own IPO. MoneyGram shareholders just recently approved the $1.2 billion acquisition.
It’s all starting to come together in the realm of global payments and eCommerce for Alibaba and its affiliates. So while this quarter’s earnings weren’t anything to write home about, Alibaba is setting itself up for success, and on a global scale at that, in the long run.