Alibaba's Outlook Tops Estimates as Spending Drives Growth

Alibaba's Outlook Tops Estimates as Spending Drives Growth
Alibaba

Alibaba predicted a surprise acceleration of sales as the Chinese e-commerce giant unleashes spending to sustain growth in cloud computing, logistics and supermarkets, according to Bloomberg.

The company expects revenue to surge 60 percent in the year ending March, boosted by its purchase of food delivery startup Ele.me and transport business Cainiao. Even without those acquisitions, Alibaba sees sales rising 50 percent, ahead of the 42 percent projected by analysts.

Billionaire founder Jack Ma’s deal spree is taking the Hangzhou-based company into more of the offline world, giving it a logistics business, a chain of supermarkets and a fleet of couriers bringing meals to the front doors of users. While that’s helped make Alibaba less reliant on the Chinese online marketplaces that generate most of its sales, it has come at a cost, with its operating margin shrinking 10 percentage points in the March quarter.

Alibaba also reported fourth-quarter sales and earnings that topped estimates. Revenue rose 61 percent to 61.9 billion yuan ($9.7 billion) in the three months ended March, compared with the 59 billion-yuan average estimate. Net income fell 29 percent as spending ballooned.

In the March quarter, sales from core commerce rose 62 percent to 51.3 billion yuan while cloud unit revenue more than doubled to 4.4 billion yuan. The digital media and entertainment unit boosted sales 34 percent to 5.3 billion yuan. It reported adjusted earnings per share of 5.73 yuan versus the 5.5 yuan average estimate.