Alibaba Cloud Quarterly Revenue Jumps 90%

Alibaba has posted increased revenue for its second quarter, driven in part by the strong growth of Alibaba Cloud.

For the 12 months ended September 30, 2018, revenue from cloud computing increased 90 percent year over year to reach $825 million, driven by higher value-added services and robust paying customer growth, the company said.

Alibaba Cloud launched over 600 products and features during the quarter in the areas of big data analytics, security, and IoT services, among others.

For the quarter, Alibaba’s total revenue was at $12.4 billion, up 54 percent year on year, driven by cloud, as well as its China commerce retail business and its Cainiao logistics business.

Alibaba Cloud accounted for 7 percent of total Alibaba revenue, up from 5 percent for the quarter a year prior.

CFO Maggie Wu: “While the growth of our overall profitability this quarter has been tempered by significant investments in local services, logistics, entertainment, and international expansion, our core marketplace business continued to show strong profit and cash flow growth, which enables us to re-invest into strategic areas and our technology.”

In the other company segments, core commerce – which includes its Taobao and Tmall online marketplaces – contributed $10.6 billion, up 56 percent year on year.

Digital media and entertainment contributed $865 million, up 24 percent; while innovation initiatives, including its AliOS Linux distribution, clocked $155 million, up 20 percent.

“Alibaba had another strong quarter of rapid growth,” said CEO Daniel Zhang. “We generated synergies across our businesses, demonstrating the power of the Alibaba digital economy, which will be further showcased during our upcoming 11.11 Global Shopping Festival.

“Under our New Retail Strategy, we are realising our vision to enable renewed growth for traditional retailers through digitzing their store-based operations, powered by Alibaba’s technology and consumer insights.”

Annual active consumers increased by 25 million to reach 601 million in the quarter, Zhang added.

Global Economy in Turmoil: Ma

Departing executive chairman of Alibaba Jack Ma said in a letter to shareholders last week that by 2036, the company plans to serve 2 billion global consumers, empower 10 million profitable businesses, and create 100 million jobs.

Ma also said the global economy has found itself “in a state of turmoil”, in particular the US-China trade war.

“This is the third time in Alibaba’s 19-year history that we have encountered a setback in the global economy,” he said. But our past experience tells us there are huge opportunities behind the anxiety and friction. The only question is how we should pivot.

“Monumental challenges give rise to monumental opportunities, and Alibaba is well-positioned because we are adept at weathering adversity.”

Competition between US and Chinese cloud providers is intensifying as a result of the trade war, according to recent research by Canalys, with Alibaba Cloud gaining ground in the global market.

While US companies made up six of the top 10 cloud providers, Alibaba’s global share grew more than 80 percent over the third quarter of the year to account for 4 percent of the market, the firm said.

In the process, Alibaba Cloud became China’s highest ranked provider and the fourth-largest globally.