Alibaba has grown at a breakneck pace since it was founded 20 years ago, establishing itself as the largest e-commerce company not just in China, but in the world. Its latest results, though, reflect the cooling economy in its home country, which earlier this month reported GDP growth of 6.6 percent in 2018, the slowest pace since 1990.
To be sure, Alibaba’s revenues are still eye-popping by most standards: revenue for the quarter ended Dec. 31, 2018 was 117.28 billion yuan (US$17.06 billion), an increase of 41 percent over the same period in 2018. Its core commerce revenues rose 40 percent 102.84 billion yuan ($14.95 billion). Still, this was the slowest growth it has seen since early 2016, stoking concerns about the potential impact of the U.S.-China trade war and more cautious spending overall.
The company reassured investors, though, beating expectations on adjusted earnings per share, which grew 15 percent year-over-year to 12.19 yuan ($1.77), and net income, which rose 33 percent to 30.96 billion yuan ($4.81 billion). Alibaba’s stock was up more than 6 percent at market close on Wednesday.
On a call with investors and analysts, Alibaba CEO Daniel Zhang acknowledged the external pressures of the economic climate. “The slowdown of macro might cause concerns in the market; however, what we see from Alibaba’s platforms is Chinese consumption growth is still strong,” he said.
The quarter included Alibaba’s tenth annual Singles’ Day shopping event, which this year brought in $30 billion in gross merchandise value within 24 hours. The company also added 35 million annual active customers on its retail marketplaces between Sept. 30 and the end of the year, for a total of 636 million.
In its earnings report, it highlighted the importance of new users from outside major cities, a big growth opportunity in China. “Over 70 percent of the increase in annual active consumers was from third- and lower-tier cities, demonstrating the success of our initiatives to cater to a broader base of users through simpler interfaces for first-time or less frequent users,” it said.
China Set to Overtake U.S. as the World’s Biggest Retail Market This Year, Despite Slowdown
Alibaba Helps Brands Get a Piece of the $20 Billion Resale Market