Alibaba reported a strong increase in profits and 42 percent growth in revenues in the company's fiscal first quarter to June, showing little impact from the slowing Chinese economy. Sales rose 42 percent year-on-year to CNY 114.9 billion (USD 16.7 billion), adjusted EBITDA increased 34 percent to CNY 39.2 billion, and net profit jumped to CNY 21.3 billion from CNY 8.7 billion a year ago.
Its core e-commerce business grew revenues 44 percent to CNY 99.5 billion. Its China retail marketplaces had 755 million mobile monthly active users, representing a quarterly net increase of 34 million. Annual active consumers on the Chinese sites reached 674 million, up from by 20 million from the 12 months to March. The e-commerce business also benefited from continued expansion abroad, such as the takeover of Trendyol in Turkey and Lazada's expansion in southeast Asia, as well as Tmall's annual shopping event in early June.
The strongest sales growth was at the cloud computing business, up 66 percent to CNY 4.7 billion, primarily driven by an increase in average revenue per customer, Alibaba said. Alibaba Cloud launched over 300 new products and features in the quarter and also announced plans to develop further its SaaS ecosystem. The aim is to reduce its reliance on commodity products and develop more value-added services.
Revenue from its digital media and entertainment business rose 6 percent to CNY 6.3 billion, with growth muted by increased regulatory scrutiny of online services in China. During the quarter, Youku’s average daily subscribers increased 40 percent year-over-year, helped by continued investment in original content. Alibaba said it was focusing more on ensuring a return on the content investment and managing costs, helping to reduce losses at the division in Q1.
Alibaba's free cash flow was little changed in the quarter, at CNY 26.4 billion. The company said it reduced spending on copyrights and other intangibles and also paid out USD 250 million to settle a class-action suit in the US. It also received lower royalties from Ant Financial in the quarter.
The company also confirmed that Altaba has started selling down its stake in Alibaba. Altaba has sold 261 million shares so far since starting the sale in May and still holds around 22 million ADS in Alibaba.
