Alibaba’s net income jumps more than 100% in the first quarter

Written by: Wajeeh Khan
August 20, 2020
  • Alibaba’s net income jumps more than 100% in the first quarter.
  • The e-commerce giant tops analysts' estimates for EPS and revenue.
  • Its retail marketplaces in China have 742 million active customers.

Alibaba Group Holding Ltd. (NYSE: BABA) published its quarterly financial report on Thursday that came in stronger than what the analysts had anticipated. Earlier this year, Alibaba and its peer, JD.com, had made an unprecedented £110 billion of sales in China’s annual shopping festival, 618.

Alibaba reported £5.25 billion of net income in the fiscal first quarter that translates to £1.91 per share. In the same quarter last year, its net income was capped at a sharply lower £2.34 billion or 89 pence a share. Alibaba’s net income jumped more than 100% on a year over year basis in the recent quarter. U.S. President Donald Trump’s next phase of action against Chinese companies is likely to include Alibaba.

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Alibaba’s Q1 financial results versus analysts’ estimates

On an adjusted basis, the e-commerce giant earned £1.63 per American depositary share (ADS) versus £1.38 per ADS last year. According to FactSet, experts had forecast the company to print a lower £1.52 of adjusted earnings per ADS in Q1.

In terms of revenue, the Chinese multinational posted £16.96 billion in the quarter that concluded in June that topped FactSet consensus of £16.32 billion. In the comparable quarter of 2019, its revenue was recorded at £12.67 billion.

Its retail marketplaces in China, the technology company added on Thursday, had 742 million active customers as of the end of the fiscal first quarter. In comparison, it had 16 million active customers at the end of Q4 in March.

Alibaba accentuated on Thursday that its Tmall marketplace saw a 27% growth in gross merchandise volume in the recent quarter for online physical goods. The Hangzhou-based company expressed confidence in Tmall that it said was benefitting from a consistent increase in new customers and higher order frequency.

CEO Daniel Zhang’s comments on Alibaba’s earnings report

CEO Daniel Zhang of Alibaba commented on the company’s report on Thursday and said:

“We were well-positioned to capture growth from the ongoing digital transformation, which has been accelerated by the pandemic, in both consumption and enterprise operations.”

Including a 0.5% gain in premarket trading on Thursday, Alibaba is now exchanging hands at £199 per share that represents a just under 50% recovery in the past five months after hitting a year to date low of £135 per share in March. Shares of the company had started the year at £168 per share.

At the time of writing, Alibaba Group has a market cap of £620 billion and a price to earnings ratio of 32.23.