Alibaba’s sales soar to four-year high on free-spending ways

Alibaba Group reported its fastest pace of growth in more than four years by wringing more revenue from newer arenas such as cloud computing and entertainment, avoiding the disappointments that hit rival tech giants.

Billionaire Chairman Jack Ma’s free-spending ways helped the e-commerce heavyweight side-step a Chinese economic slowdown and best its rivals this earnings season. Arch-foe Tencent posted its biggest profit drop in a decade after it ran afoul of regulatory tangles, while internet stalwarts from Facebook to Twitter grappled with fundamental issues such as waning user growth. Shares of Alibaba rose 3.4 per cent to $183.89 at 9:39 am in New York as investors cheered the result, plus more than $3 billion in new funding for its newly acquired food delivery arm as it does battle with Meituan Dianping.

Revenue at China’s biggest e-commerce company climbed 61 percent to 80.9 billion yuan ($11.8 billion) in the three months ended June, matching the average estimate. Alibaba’s mounting spending, such as on acquisitions and expanding its Hema supermarket chain, is hurting margins though. Adjusted earnings per share of 8.04 yuan fell short of the 8.19 yuan estimate.

Net income slid 41 per cent to 8.7 billion yuan, though that’s after taking into account an increase in the valuation of affiliate Ant Financial, which boosted the expense of shares awarded to employees. That topped the 7.6 billion yuan projected.