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Alibaba Q2 Results Beat Expectations; Revenue Jumps 32%

Alibaba Q2 Results Beat Expectations; Revenue Jumps 32%
Oct 28, 2015 By Simon Herrmann Tags: NYSE:BABA

Chinese e-commerce giant Alibaba Group Holdings (NYSE:BABA) reported quarterly results that beat estimates as revenue increased 32% to 22.2 billion yuan (~US$3.5bn)

Many analysts consider gross merchandise volume (GMV) as an important metric as it measure the total value of goods transacted across all of its platforms. GMV increased 28% to 713 billion yuan which is approximately US$112bn.

Mobile GMV rose 183% and accounts now for 62% of total GMV transacted on the Chinese marketplace. Growth in its mobile segment was one of the main drivers for Alibaba this quarter as the company takes advantage of an ongoing shift in consumer behaviour. Cloud computing and Internet infrastructure revenue accelerated as well rising 125% year-on-year to 649m yuan or US$102m.

“This was a great quarter for Alibaba Group, with strong growth across the board and particular outperformance in mobile. We continued our efforts to drive healthy GMV growth, deliver an unparalleled consumer experience and help quality merchants do business on our platform,” said Daniel Zhang, Chief Executive Officer of Alibaba Group.“

Alibaba’s results at a glance:

  • GMV increased 28% to 713 billion yuan (US$112 billion)
  • Revenue rose 32% to 22.2bn yuan (US$3.5 billion)
  • Free cashflow of 13.6bn yuan (US$2.1 billion)
  • Income from operations was 29% of total revenue. Total income 6.4bn yuan (US$1 bn)
  • The company has cash and cash equivalents of 15.1m yuan (US$2.4bn)
  • Earnings per share were 8.87 yuan or US$1.40

Alibaba’s stock has underperformed since its IPO listing as investors fear that an economic slowdown in the world’s second largest economy would harm consumer confidence and therefore Alibaba’s sales. Whilst retail sales have slowed, the slowdown was not as significant as in other sectors such as industrial or manufacturing. Alibaba’s stock has recovered more than 30% in the past few weeks trading near its IPO offer price.

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Simon Herrmann Author: Simon Herrmann Oct 28, 2015

Simon is a financial analyst at independent research firm Wise-owl specialised in small-mid cap growth opportunities and ethical investment opportunities. Simon's aim is to disrupt the cliché approach to investment decision making as he believes that socially and environmentally responsible behaviour is a necessity to long-term wealth creation. Simon has a deep fundamental understanding of the global financial landscape and has compiled 300+ research reports, valuations and corporate appraisals. Simon is commonly featured in major media outlets and his research is published weekly in The Australian.

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