Alibaba Group Holding Ltd’s e-commerce and mobile businesses surged in the September quarter, far outpacing its rivals’ and glossing over weakening margins and decelerating earnings growth.<\/p>\n
Its shares edged as much as 3 percent higher to a record high after the Chinese e-commerce company reported a brisk 49 percent rise in the gross value of merchandise sold.<\/p>\n
Revenue rose 53.7 percent in the three months ending in September, dwarfing Amazon.com Inc’s 20 percent growth over the same period.<\/p>\n
Alibaba’s first quarterly report since its record $25 billion U.S. initial public offering affirmed Wall Street’s expectations of industry-leading growth. Investors have focused on its dominance in China, despite concerns about corporate governance and sliding margins.<\/p>\n
The company indicated that its shopping spree, in which it has spent more than $6 billion since the beginning of the year, might not be ending yet as it aims to increase its user base.<\/p>\n
Margins on earnings before interest, taxes, depreciation and amortization contracted to a slightly weaker-than-expected 50.5 percent, from 54.4 percent in the previous quarter.<\/p>\n
But on Tuesday, investors focused on 52 percent growth in active users, to 307 million – roughly as many people as there are Americans – and an improvement in the mobile monetization rate to 1.87 percent versus 1.49 percent previously. That means the Chinese company is getting a larger percentage of every mobile transaction it handles.<\/p>\n
Its shares rose to a high of $104.96, up more than 50 percent from its $68 debut price.<\/p>\n
“Results came in strong, particularly on the top line, with accelerating revenue growth, while the bottom lines were somewhat noisy,” said Cantor Fitzgerald’s Youssef Squali.<\/p>\n
Revenue totaled $2.74 billion, versus expected sales of $2.7 billion, its fastest growth in three quarters.<\/p>\n
The company’s investments are geared toward adding more customers and converting them into users of Alibaba’s core e-commerce businesses, as well as increasing the number of products and services Alibaba offers, said Joe Tsai, the company’s executive vice chair.<\/p>\n
Alibaba also said it would invest in new initiatives such as its mobile operating system, location-based services and digital entertainment, though those were long-term projects, he said.<\/p>\n
The e-commerce giant “will continue to make strategic investments to grow our revenue,” Chief Financial Officer Maggie Wu said on an earnings call with analysts.<\/p>\n
Mobile revenue was more than 10 times higher than in the same period last year and accounted for 22 percent of total revenues.<\/p>\n
Gross merchandise volume rose 48.7 percent to $90.5 billion. Mobile GMV accounted for 35.8 percent of that total, up from 14.7 percent in the same quarter of 2013.<\/p>\n
The non-GAAP net income of $1.11 billion for the July-September quarter – which excludes the share-based compensation expenses and amortization of intangible assets – compared with a consensus estimate of $1.17 billion based on a Thomson Reuters SmartEstimate poll of 21 analysts.<\/p>\n
Diluted earnings per share were $0.20, while non-GAAP diluted earnings per share were $0.45, up 9.4 percent year-on-year and in line with Wall Street estimates.<\/p>\n
But overall profit margins shrank to a two-year low of 18 percent, as extraordinary expenses the company chiefly attributed to share-based compensation charges of $490 million around the time of its initial public offering ate into profits.<\/p>\n
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