Alibaba records 61% rise in Q2 revenue

E-COMMERCE GIANT IS RAMPING UP SPENDING IN NEW ARENAS

Alibaba Group Holding Ltd reported its fastest pace of growth in more than four years, as the e-commerce giant’s investments in arenas — from cloud computing to entertainment — carved out new avenues of income.

Revenue at China’s biggest e-commerce company climbed 61 per cent to 80.9 billion yuan (Dh43.35 billion) in the three months ended June, matching the average of analysts’ estimates. Net income slid 41 per cent to 8.7 billion yuan, topping the 7.6 billion yuan projected after taking into account an increase in the valuation of affiliate Ant Financial, which boosted the expense of shares awarded to employees.

Alibaba’s ramping up spending in new arenas as it reduces its reliance on an online retail business facing increased competition from JD.com Inc and Pinduoduo Inc as well as a broader economic slowdown. It’s been busy expanding its Hema supermarket chain, acquiring food delivery network Ele.me and video streaming site Youku. But that spending is hurting margins: adjusted earnings per share came in at 8.04 yuan, short of the 8.19 yuan estimate.

Much of Alibaba’s cash is flowing into China’s $1.3 trillion food retail and services industry, where it’s trying to hold its own against delivery giant and super-app Meituan Dianping. Alibaba said yesterday that Ele. me has raised more than $3 billion in a new financing round led by SoftBank Group Corp. Alibaba now intends to merge Ele.me with Koubei, another unit focused on connecting restaurants to the internet.

“We remain confident on the company’s revenue growth given its diversified product offerings,” said Mae Huang, an analyst at SWS Research Co said in a report. “Despite the short-term costs incurred by the company, we believe Alibaba is building a stronger ecosystem.”