The Alibaba Group reported better-than expected revenues for its first fiscal quarter ended June 30, thanks to a strong performance in China. Its total sales increased by 56 percent over the year-ago quarter to 50,180 million yuan (€6.4bn-7.5bn). The Thomson Reuters' consensus was RMB 47,700 million (€6.1bn-$7.2bn).
The company's operating margin improved by 8 percentage points to 35 percent and the adjusted Ebitda margin gained 3 percentage points to 50 percent. The group's net income almost doubled in the quarter to RMB 14,031 (€1.8bn-$2,1bn).
The company said the strong results reflect the strength and diversity of its businesses, adding that its technology is driving significant expansion across its business and strengthening its position beyond core commerce.
Revenues from TMall and other e-commerce operations, which accounted for 85 percent of revenues, jumped by 58 percent as Alibaba's China retail marketplaces continue to benefit from robust growth in average spending per merchant and the number of paying merchants, which reached a historical high during the quarter. Many foreign sports brands work through TMall, directly or through distributors in China.
The management claims that the merchants are benefiting from the consumers' insights gathered from providing e-commerce and entertainment services to consumers within its ecosystem. It enables merchants to target, engage and manage their customer assets along the entire consumer journey, Alibaba says.
Meanwhile, revenues from cloud computing and digital media/entertainment increased by 96 percent and 30 percent respectively in the quarter. Sales from innovation initiatives and others rose by 21 percent.
Alibaba is reinvesting many of its profits on technology and new services. It is much more profitable than Amazon.
It is also trying to persuade more brands to work with it. Kering, the parent company fo Gucci and Puma, recently struck an agreement to cooperate in their efforts to protect intellectual property, exchanging information and taking joint enforcement actions online and offline against infringers. As part of the agreement, Kering has dropped a lawsuit lodged in New York against Alibaba and its Allpay service.
