What to expect from Alibaba’s Earnings

Alibaba Group Holding Limited (NYSE: BABA) is scheduled to report fiscal third quarter financial results before market open on Tuesday.

Analyst Estimate

The consensus estimates from Zacks are calling for earnings of $0.85 per share on revenue of $7.48 Billion. These represent a 40 percent year over year growth on revenue and a 16 percent year over year growth in earnings. So far in 2017, Alibaba shares has rose 10.7%, outperforming the market benchmarks like S&P 500 and Nasdaq Composite. S&P 500 only gained 1% in 2017 while Nasdaq rose 2.8%.

Alibaba operates in four major business segments: core commerce, cloud computing, digital media and entertainment and innovation initiatives. Core commerce contributed most of the revenue, accounting for 83% of its total revenue.

It is very important to watch whether the Chinese e-commerce giant can maintain its rapid growth. The company reported 59% and 55% year-over-year growth in revenue respectively in the previous two quarters, driven by its core commerce and cloud computing business.

Strong mobile MAU continues to drive robust growth in its core commerce segment. The company announced amazing numbers on its 2016 11.11 Global Shopping Festival. It posted a record $17.73 billion worth of sales on Singles’ Day festival, an increase of 32 percent compared to 2015. While sales on mobile accounted for approximately 82 percent of total sales, compared to 69 percent last year.

Cloud computing segment may or may not see a breakeven in the current quarter. Alibaba announced it will expand its cloud service offerings with four new data centers in the Middle East, Europe, Australia and Japan. It also singed deal with Olympic Games organizers to provide cloud computing services and data analytics to Olympic games.

Leave a Comment