Alibaba’s mobile strength can’t hide slowing growth

Alibaba’s mobile strength can’t hide slowing growth

30 JAN 2015

Chinese e-commerce giant Alibaba’s mobile revenue once again increased sharply in the last quarter, expanding fourfold from a year ago to more than $1 billion (CNY6.42 billion) and now accounting for almost a quarter of total revenue.

But overall revenue growth for its fiscal Q3 ending 31 December slowed to 40 per cent from 54 per cent in Q2, hitting CNY26.17 billion ($4.22 billion). The number disappointed analysts, who had estimated revenue of about $4.45 billion. Its share price dropped almost 10 per cent yesterday.

This is the company’s second quarterly report since its record-breaking $25 billion IPO in the US in September.

Alibaba’s (non-GAAP) EBITDA for fiscal Q3 increased 34 per cent to CNY15.1 billion ($2.43 billion), which was higher than analysts’ expectation of 24 per cent growth. Heavy investments, however, caused its EBITDA margin to drop to 58 per cent from 60 per cent a year ago.

The company’s net income fell 28 per cent to CNY5.98 billion due mainly to an increase in share-based compensation, a one-time charge for financing-related fees and an increase in income tax expenses in the quarter.

Mobile gross merchandise volume (GMV) — the sum of all online commerce transaction — increased 213 per cent to CNY327 billion and accounted for 42 per cent of total GMV transacted on its China retail marketplaces, compared with 36 per cent the previous quarter. It added 48 million monthly active users on mobile and now has 265 million mobile MAUs (up from 136 million a year ago).

The company said the growth was driven by an increase in the monthly active users accessing its platforms via mobile devices and an increase in the level of spending.

Alibaba CEO Jonathan Lu said the company added 48 million active users during the quarter. Its annual active buyers increased 45 per cent to 334 million.

GMV across its China retail marketplaces expanded 49 per cent to CNY787 billion. The Taobao Marketplace represented 63 per cent of the transaction activity. Taobao’s GMV rose 43 per cent in the quarter. GMV at Tmall, which accounted for 37 per cent of the company’s total, grew 60 per cent.

The company attributed the growth to the jump in active buyers as well as the addition of auction transactions. Its Singles Day promotion last November generated GMV settled through Alipay of CNY57 billion on its China and international retail marketplaces within a 24-hour period, up 58 per cent from 2013.

Alibaba, China’s largest e-commerce company, has been in the spotlight this week after one of China’s regulators claimed its online shopping platform has sold counterfeit goods and allowed merchants without business licences to operate and run unauthorised stores. The agency has said a high percentage of its goods are not up to standard.

Alibaba Group vice chairman Joe Tsai, in a war of words with the State Administration for Industry and Commerce (SAIC), said the allegations are flawed and questioned its methodology for measuring quality. The company has filed a formal complaint.

SAIC in return has called Alibaba “arrogant” in a report.


Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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