Alibaba Group Holding Limited (NYSE: BABA) reported its third quarter financial results on Thursday and topped earnings estimates, sending shares 4.3% higher midday.
For the third quarter, Alibaba reported revenue of USD 17.05 Billion, increasing 41% year-over-year, while earnings was USD 1.77 per share. Bloomberg analysts expected revenue of USD 17.77 Billion and earnings of USD 1.68 per share.
Alibaba’s quarterly revenue was driven by the growth in its core commerce and cloud computing. Core Commerce revenue increased by 40% year-over-year to USD 14.95 Billion, while Cloud Computing revenue rose by 84% to USD 962 Million.
The strong growth in Alibaba’s cloud computing was primarily driven by increased spending from enterprise users. In December, Alibaba Cloud launched 678 new products and features including core cloud offerings, data intelligence, AI applications, and security and enterprise solutions.
Digital media and entertainment revenue increased by 20% to USD 944 Million and revenue from Innovation initiatives and others rose by 73% to USD 193 Million.
Mobile active users in Alibaba’s China retail marketplaces reached 699 million users, increasing by 33 million sequentially.
“Alibaba had another strong quarter. Our resilient operating and financial performance is a direct reflection of our persistent focus on better serving our growing base of nearly 700 million consumers across retail, digital entertainment and local consumer services,” said Daniel Zhang, Chief Executive Officer of Alibaba Group. “Our growth is also driven by the power of Alibaba’s cloud and data technology that helps expedite the digital transformation of millions of enterprises.”
In November last year, Alibaba’s Single Day reported sales of USD 30.8 Billion in just 24 hours, increasing from USD 25.3 Billion compared to the year before. Despite the record-breaking sales, Alibaba’s gross merchandise volume annual growth fell from 39% to 27%.
Alibaba lowered its revenue outlook for its financial quarter ending in March before the top sales season due to economic uncertainties, according to Reuters. However, Alibaba’s Executive Vice Chairman Joe Tsai noted that sales ticked up in December, but demand for big-ticket items declined.
Tsai also shrugged off concerns over the ongoing trade war between the U.S. and China. He said that people are overly worried about the impact it’ll have on China’s economy. Tsai said that Chinese consumers’ consumption is still strong and is expecting it to grow over the next 5-10 years.