Alibaba posts outstanding quarterly results

Date : 03 November 2017

Alibaba Group has released their Q2 results for the three months ending in September. Sales rose 61% to CNY55.1 bn (US$8.3 bn) for the same period last year.

Lead-up to Singles' day

Alibaba's Q2 results have somewhat been subdued in previous years. With strong focus on their 11.11 festival, one could perceive their second quarterly results more or less a formality. Certainly this year, however, it is clear that investment has played an important role in supporting Alibaba's overall growth. They invested, for example, CNY25.7 bn in the quarter versus CNY5.7 bn in the same quarter last year.

Alibaba's New Retail concept the heart

Alibaba is continuing to expand its physical store presence to support their overall ecosystem. Their marketplaces, investment in artificial intelligence and cloud-based businesses are just a few areas where the retailer is blending its operations as part of their New Retail strategy.

In Q2, Alibaba's ecommerce businesses such as Tmall and Taobao platforms showed strong performance, with revenue reaching CNY46.5 bn, a 63 percent rise versus the same quarter last year. Revenue from their cloud computing business was up 99 percent to CNY3 bn, but subdued from a 130 percent rise a year earlier.

What to expect in 2018

Strong results in Q2, along with their recent consolidation of Cainiao, has raised Alibaba's forecasted revenue growth up 4 percentage points to a growth range between 49% to 53% in 2018.

Daniel Zhang, CEO of Alibaba Group, said 'We had an outstanding quarter. Our consumer insights and technology innovation were the key drivers behind our customer value proposition across the Alibaba economy, [...] we are seeing the early results from our efforts to integrate online and offline with our New Retail strategy, and consumers have benefited from access to high quality products, improved customer experience and the tremendous convenience of shopping anytime, anywhere.'

Our View

We believe that Alibaba will continue to blend their businesses further, whilst expanding their physical presence with smaller format stores next year. See our report on Alibaba’s move to physical retail through Hema Fresh, as part of their New Retail strategy here.