Caixin
Aug 21, 2020 05:29 AM
BUSINESS & TECH

Alibaba Quarterly Sales Soar as Concerns Linger Over U.S. Pressure

Attendees stand in front of an Alibaba Group Holding Ltd. display wall at the World Artificial Intelligence Conference (WAIC) in Shanghai
Attendees stand in front of an Alibaba Group Holding Ltd. display wall at the World Artificial Intelligence Conference (WAIC) in Shanghai

Chinese e-commerce giant Alibaba Group Holding Ltd. reported better-than-expected quarterly results as sales rebounded to the pre-pandemic level. But rising policy uncertainties from the U.S. still cast a shadow over its outlook.

Alibaba posted 34% year-on-year growth in sales for the quarter ended in June to 153.8 billion yuan ($22.2 billion), beating Wall Street estimates. Net income totaled 47.6 billion yuan, surging 124% from the same period last year. The company said its number of annual active consumers in China rose by 16 million during the June quarter to 742 million.

“Our domestic core commerce business has fully recovered to pre-Covid-19 levels across the board,” said Maggie Wu, chief financial officer of Alibaba. The company will continue to strengthen its core business and invest for long-term growth, she said.

Alibaba captured growth from the ongoing digital transformation, which has been accelerated by the pandemic, in both consumption and enterprise operations, said Daniel Zhang, company chairman and CEO.

Revenues from the core commerce business rose 34% while those from cloud computing increased 59%, according to the company.

Ant Group, which is 33% owned by Alibaba, contributed 3 billion yuan of earnings to the parent company in the three months to March, Alibaba’s financial report showed, offering a glimpse into the fintech giant’s profitability. Based on Alibaba’s equity share, that translated to about 9.2 billion yuan of profit for Ant, which is preparing for a mega dual listing in Hong Kong and Shanghai that could raise around $30 billion.

Alibaba still faces uncertainties from the pandemic and increasing tensions between the U.S. and China, Zhang said on a conference call.

“As the world’s largest e-commerce platform, Alibaba’s primary commercial focus in the U.S. is to support American brands, retailers, small businesses and farmers to sell to consumers and trade partners in China as well as other key markets around the world,” Zhang said.

The Trump administration earlier this month unveiled restrictive policies targeting Chinese-owned social media platform TikTok and messaging app WeChat. President Donald Trump threatened to expand the action to more Chinese companies.

Meanwhile, U.S. lawmakers are pushing forward legislation that could ban Chinese stocks from trading on U.S. bourses.

“We are assessing the situation and any potential impact carefully and thoroughly, and will take necessary actions to comply with any new regulations,” Zhang said.

Alibaba’s stock closed 0.16% lower Thursday in New York.

Contact reporter Han Wei (weihan@caixin.com) and editor Bob Simison (bobsimison@caixin.com).

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