Alibaba’s Revenue Jumps 61 Percent | News & Analysis

HANGZHOU, China — Alibaba Group Holding Ltd. reported a 61 percent rise in quarterly sales as the e-commerce giant’s investment in cloud computing, entertainment and groceries spurred new avenues of income.

Revenue at China’s biggest e-commerce company climbed to 80.9 billion yuan ($11.8 billion) in the three months ended June, matching the average of estimates compiled by Bloomberg. It said net income slid 41 percent to 8.7 billion yuan, topping the 7.6 billion yuan projected after taking into account an increase in affiliate Ant Financial’s valuation. Adjusted earnings per share came in at 8.04 yuan, versus the 8.19 yuan estimate.

Heavy spending in new areas has helped spur growth at the expense of profit margins as Alibaba reduces its reliance on a core e-commerce business facing increased competition from JD.com Inc. and Pinduoduo Inc. Among its investments is the expansion of its Hema supermarket chain as well as acquisitions of food delivery network Ele.me and video streaming site Youku.

“We remain confident on the company’s revenue growth given its diversified product offerings,” 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.”

The company also said that its food delivery services arm, Ele.me, raised more than $3 billion in a financing round led by SoftBank Group Corp. That will give Alibaba more ammunition in the battle to dominate China’s $1.3 trillion food retail and services industry. Ele.me will also merge with Koubei, the unit of Alibaba’s connecting restaurants to the internet.

Shares of Alibaba were largely unchanged in New York on Wednesday, ahead of the results. The stock has gained 3 percent this year compared with a 1.4 percent gain for the NYSE Composite Index.

By Lulu Yilun Chen; Editors: Robert Fenner, Edwin Chan.

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