While China economy struggles, Alibaba almost doubles its profits

5 May 2016

E-commerce giant Alibaba continues to make its investors and shareholders happy, with its Q4 earnings revealing its profits have almost doubled since last year, despite the sluggishness of the Chinese economy.

Not long after its affiliate Ant Financial Services raised the largest private funding ever at $4.5bn, and it established its dominance in the south-east Asia e-commerce market with a $1bn takeover of Lazada, Alibaba has now posted its earnings report for Q4, and everything appears rosy for Jack Ma’s company.

According to its report, its net profit this quarter has risen by 86pc to 5.37bn yuan (€730m), compared with 2.89bn yuan (€390m) this time last year.

When looking at its overall revenues for the quarter, this too showed a healthy percentage growth of 39pc to a total of 24.18bn yuan, up from 17.43bn the year before, which, according to the Wall Street Journal, has surpassed market analysts’ predictions, with analysts having expected the company to make 23.2bn yuan this quarter.

By some distance, the company’s biggest earner in terms of platforms has been mobile, with this report showing that, in this quarter, mobile revenue managed to clock in at 13.1m yuan, marking an increase of 149pc year-over-year.

Competition increases

Elsewhere, its cloud computing and internet infrastructure also saw a significant increase, with the division’s revenue increasing 175pc year-over-year to 1.07m yuan.

This, the company said, represents an acceleration of the 126pc year-over-year growth rate achieved in Q3.

However, the company now faces the task of taking on its compatriots like JD, Tencent and Baidu, which are all looking to squeeze in on a company whose profits from e-commerce almost eclipse Amazon in the US.

JD, in particular, has been the one to offer the largest threat, with its revenue growth having exceeded Alibaba across the last six financial quarters.

Speaking of Alibaba’s results, the company’s CFO, Maggie Wu, said: “With several consecutive quarters of increases in revenue per active buyer and revenue per mobile MAU, we showcase the resiliency and growing clout of Chinese consumers.

“This bodes well for our business as our annual active buyers on our China retail marketplaces increased to 423m.”

Alibaba on phone image via Shutterstock

Colm Gorey was a senior journalist with Silicon Republic