Amid a trade war between China and the U.S., Alibaba Group Holding Ltd. reported headline numbers that topped the Street, with double-digit growth core commerce operations that accelerated from last quarter’s rate.
Digging down into the details, the data shows that revenues of 93.5 billion yuan ($13.6 billion in USD) beat the Street by about $600 million and were up 51 percent year on year, where that pace had been 43 percent in the last quarter of 2018. Adjusted earnings of $1.28 beat the Street by 33 cents. Adjusted for acquisitions, top-line growth was 39 percent.
In a conference call with analysts and in presentation materials detailing the quarter’s numbers, as has been seen before, total core commerce was the bulk of top line at 78.8 billion yuan, and GMV was 5.7 trillion yuan.
International commerce was at 4.9 billion yuan, though a small subset of revenues, at 5 percent, was up 25 percent year on year – and this comes despite a rockier geopolitical stage. On the conference call with analysts, Chief Financial Officer Maggie Wu said the U.S./China business is a small contributor to results and that minimal impact would be felt.
Some of that top-line growth, too, was spurred by customer acquisition in some smaller, less developed cities. Growth continues to be spurred by a consumption-driven economy – and, according to Executive Vice President Joseph Tsai, with China likely to import more, is shifting away from an economy driven by exports.
Management also pointed to a continuing embrace of digital commerce. Tsai said the lower-tier cities (below what would be termed tier 1) have hundreds of millions of citizens who would continue to boost spending to as much as $7 trillion through the next decade. As much as 70 percent of new active annual customers came from those cities.
Management added that the firm has been boosting the effectiveness of its algorithms used to recommend goods and services to customers, across Taobao, for example.
Along the way, in reference to digitization, sales in the cloud computing business were up 76 percent to 7.7 billion yuan. Total monthly active users were 721 million, up from 699 million users at the end of 2018 and up 104 million year on year. In terms of annual active customers, the tally of those active on retail marketplaces was 654 million.