Alibaba's Q3 Earnings Beat Estimates, Revenues Up Y/Y

Alibaba Group Holding Limited (BABA - Free Report) reported third-quarter fiscal 2019 earnings of $1.77 per share, surpassing the Zacks Consensus Estimate by 14 cents. Also, earnings increased 15% year over year.

The company reported revenues of RMB117.27 billion ($17.06 billion), up 41% from the year-ago quarter. The revenue increase was driven by strength in the company’s China commerce retail business, the consolidation of Ele.me and Cainiao Network, as well as strong revenue growth at Alibaba Cloud.

However, its revenues missed the Zacks Consensus Estimate of $17.26 billion.

Alibaba witnessed sluggish demand for white appliances due to China’s waning real estate market. Moreover, the demand for mobile phones declined too due to inadequate technological innovations.

Revenues by Segments

Alibaba has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives. The details of these segments are discussed below.

Core Commerce: This segment comprises marketplaces operating in retail and wholesale commerce in China, and international commerce. The segment’s revenues in the quarter were RMB102.84 billion ($14.96 billion), reflecting an increase of 40% on a year-over-year basis.

China commerce retail business(69% of total revenues) — The business vertical’s revenues in the quarter were RMB81.06 billion ($11.79 billion), reflecting an increase of 35% year over year. The increase was driven by robust growth in the company’s New Retail businesses, mainly Tmall Import, Hema fresh food grocery business, and other direct sale businesses.

China commerce wholesale business (2% of the total revenues) — This business generated revenues of RMB2.7 billion ($392 million), reflecting an increase of 40% from the year-ago quarter. The increase was due to a rise in average revenues from paying members.

International commerce retail business (5% of the total revenues) — Revenues in the quarter were RMB5.84 billion ($849 million), increasing 23% year over year. The increase was driven by the consolidation of Trendyol, Turkey’s leading e-commerce platform. However, Lazada’s growth lagged in the reported quarter due to a decline in revenues generated from Alibaba’s direct sales business.

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