Chinese e-commerce group Alibaba reported a slowdown in revenue growth and lower margins in the December quarter, suggesting it is also feeling the effects of the slowdown in the Chinese economy. Sales rose 41 percent year-on-year to CNY 117.28 billion (USD 17.06 billion), compared to growth 54 percent in the previous quarter and 61 percent the quarter before.
Revenue from its core commerce business increased 40 percent to CNY 102.84 billion, down from 56 percent annual growth in the previous quarter. The cloud computing business continued at a strong growth rate, up 84 percent to revenues of CNY 6.61 billion, while digital media and entertainment slowed slightly to a 20 percent annual increase to CNY 6.49 billion.
The slower revenue growth was accompanied by a drop in margins. Adjusted EBITDA strengthened 13 percent to CNY 40.71 billion, but the margin fell to 35 percent from 44 percent a year ago. The adjusted EBITA margin also declined, to 31 percent from 41 percent, and reduced in the core commerce business to 45 percent from 53 percent.
Alibaba said it was still a strong quarter, and the solid profitability and cash flow would allow it to continue to invest in growing new strategic business areas, technology and its ecosystem. Net profit jumped 37 percent to CNY 33.05 billion, and free cash flow rose 11 percent year-on-year to CNY 51.37 billion.
The company also announced that CTO Jeff Zhang has been put in charge of Alibaba Cloud, in addition to his existing duties. This is expected to help cloud customers benefit from the company's proprietary technology used in its other businesses.
In addition, Luyuan Fan, the Chairman and CEO of Alibaba Pictures, was confirmed as president of the digital media and entertainment business, in order to increase synergies between the companies. In December, Alibaba agreed to increase its stake in the Pictures company to 50.92 percent from 49 percent, by subscribing to HKD 1.25 billion in new shares.
