Alibaba Q3 2020 results: revenue up +37%YoY

Date : 04 February 2021

Jiong-Jiong Yu

Senior Retail Analyst

Alibaba has announced its Q3 results for the three months ending 31 December 2020. Revenue increased by +37%YoY to CNY221.1 bn (US$33.9 bn), beating estimates.

Growth driven by commerce retail and cloud computing

"Thanks to the rapid recovery of China's economy, Alibaba had another very healthy quarter," said Daniel Zhang, chairman and CEO of Alibaba, in a press release.

The highlights of Q3 performance are:

  • Revenue up to CNY221.1 bn (US$33.9 bn), an increase of 37% YoY
  • Core commerce revenue up by 38%YoY, reaching CNY195.5 bn (US$30.0 bn)
  • Profit growth with adjusted EBITDA up 22% YoY
  • Cloud computing revenue up 50% YoY to CNY16.1 bn (US$2.5 bn)

It is the first time that Alibaba’s cloud computing division has become profitable. It is an important milestone in Alibaba’s continued push to diversify its business beyond ecommerce. Daniel Zhang expects cloud computing would be Alibaba’s “main business” in the future.

Q3's core commerce performance includes Singles Day sale, the world's biggest online shopping event, with GMV of CNY498.2 bn (US$74.1 bn) this year, up 26%YoY.

Core commerce has also benefitted from the pandemic. "Our domestic core commerce business continued to grow steadily during the post-COVID-19 environment in China through higher purchase frequency and consumer spending," said Alibaba CFO Maggie Wu in a statement.

Committed to investing in four core areas

When addressing the investors at the Q3 conference call, Daniel Zhang said the company is committed to investing in the following four core areas, investing for innovation, for value creation and for long term growth.

  1. China retail marketplaces: continue user acquisition, especially in less-developed areas:
    1. Build on Taobao Deals’ 100 million mobile MAU base and further invest in the expansion of the user base and product supplies targeting less-developed markets
    2. In community group buying, developing a model based on consumer value proposition as opposed to subsidization to ensure good user experience and business sustainability
  2. Local services: continue to strengthen and Alipay partnership to expand location-based on-demand delivery services:
    1. Expand beyond meals to groceries and pharmaceuticals
    2. Non-meal categories are fast growing on, showing significant market potential
  3. Cloud computing: continues to grow at a rapid rate:
    1. Revenue up by +50%YoY in Q3
    2. The market is still at its early stage, but with massive growth potential
  4. Globalization: Southeast Asia a core market for Alibaba’s international commerce business:
    1. Lazada is seeing rapid growth in both user base and transaction volume
    2. Alibaba is now well-positioned to capitalize on the Southeast Asia market to increase market share, after years of upgrading Lazada’s technology infrastructure, business model and operating efficiency. The company has also made further investment into long-term opportunities

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