Alibaba’s Biggest Businesses Are on Fire
August 17, 2017
By Natalie Waters
Alibaba’s six core e-commerce businesses are on fire, accounting for the bulk of the company’s quarterly revenue.
Alibaba’s (BABA) six e-commerce businesses in China accounted for a stunning 85% of its total $7.4 billion revenue for the 2018 first quarter.
The remaining 15% of revenue came from Alibaba’s other arms, including its payments platform Alipay, its media and entertainment business, and its cloud platform, according to the company’s earnings report that came out before Thursday’s market open.
Revenue for Alibaba’s core e-commerce platforms grew a stunning 58% year-over-year to $6.3 billion, topping estimates by 5%. The striking increase is mainly due to new users on its platforms, increased traffic from users, and personalizing the content that shows up in users feeds, Alibaba CFO Maggie Wu explained in the earnings call.
Unlike Amazon’s (AMZN) shopping-only platform in the U.S., Alibaba has become a hub for content, allowing users to watch webisodes and live-streams of makeup and cooking tutorials, as well as share product knowledge and reviews. This longer users spend on its platforms, the more money they spend, Wu said. Mobile MAUs for its China retail marketplaces reached 529 million in June, up 22 million from the past quarter.
Alibaba’s overall revenue grew 56% to $7.4 billion, also blowing out estimates by 6%. The company also reiterated its guidance for revenue growth of 45% to 49% for the fiscal year. “The revenue growth is just absolutely incredible,” Lead Edge Capital managing partner Mitchell Green said. “This is a company that continues to under-promise and over-deliver.”
Wu attributed the impressive overall revenue growth to the 58% revenue growth in its online marketplaces in China, as well as the growth in its cloud business. Cloud revenue grew 96% year-over-year to $359 billion. More importantly, the number of paying customers on its cloud platform passed the 1 million mark, up from 874,000 in the past quarter.
Shares of Alibaba were up 3.85% to $165.64 in early morning trading on Thursday.