Alibaba Group today beat expectations with a 61% rise in revenues and higher underlying profits for the April – June 2018 quarter even though it pumped billions of dollars into logistics and delivery investments, and played down the impact of higher US trade tariffs.
The Chinese e-commerce giant increased total revenues by 61% to RMB80,920 million (US$12,229 million) in the first quarter of its 2018/19 fiscal year, with rapid growth in its e-commerce and other businesses.
Reported operating profits dropped by 54% to RMB8,020 million (US$1,212 million) due to higher share-based compensation expenses following a revaluation of financial arm Ant Financial but would have risen by 9% excluding this one-time effect. Adjusted EBITA increased 13% year-over-year to RMB26,502 million (US$4,005 million).
Core commerce revenues also increased by 61% to RMB69,188 million (US$10,456 million) while adjusted EBITA grew by 22% to RMB32,797 million (US$4,956 million), representing a margin of 47%.
In China, annual active consumers on the Taobao retail marketplace grew by 24 million, mostly from smaller cities, to 576 million as June 30, 2018. Tmall increased its B2C market leadership as physical goods GMV grew 34% year-over-year driven by continued increases in conversion rates and average consumer spending with strong performance from FMCG, consumer electronics, apparel and home goods categories, and with more international brands launching stores on the marketplace. The ‘New Retail’ physical store network expanded to 45 Hema store in 13 cities.
Alibaba Group continued to invest heavily in logistics and delivery operations during the April – June 2018 quarter, finalising the full takeover of food delivery company Ele.me. The business will be combined with ‘local services’ delivery firm Koubei into a holding company, with $3 billion investment pledged by Alibaba and Japan’s Softbank.