Chinese e-commerce giant Alibaba Group Holding reported a massive surge in profits for its fiscal third-quarter ending December 31, bolstered mainly by its record sales during the world's largest shopping festival last year. Despite the better-than-expected results, the company isn't planning on being complacent as it does expect numbers to be marginally lower in the coming quarters.
Alibaba's executive chairman and CEO, Daniel Zhang Yong, stated that the current situation in China, particularly the ongoing epidemic could negatively impact the company's profits in the coming quarters The executive added during the company's earnings call on Thursday that the situation does present a "near-term challenge" for the company and its business.
The e-commerce giant reported an increase in profits of 58 percent to 52.3 billion yuan for its third fiscal quarter last year. The figure managed to beat analysts' expectations of 29.6 billion yuan. Alibaba's financial results are often seen by investors as a good proxy for China's overall consumer spending, making it a barometer for the country's overall economic health.
Alibaba's revenues for the quarter hit 161.5 billion, or roughly $23.2 billion, which represented a 38 percent increase from the same period a year earlier. Alibaba attributed the increase in its revenue to its steadily growing core commerce and cloud computing business.
The company's commerce revenue for the fiscal quarter hit 141.5 billion, a 38 percent year-on-year increase. Alibaba also reported a dramatic increase in the annual active users on its various retail platforms. For 2019, the company reported annual active consumers on its platform of about 711 million. Around 60 percent of its new annual active users came from lower-tier cities and rural areas, highlighting the results of the company's efforts to reach less-developed regions.
For the first time in a single quarter, the company's cloud computing business managed to generate revenues of more than 10 billion yuan. Alibaba's cloud computing revenue for the quarter hit 10.7 billion, a 62 percent increase when compared to the same quarter a year earlier. Alibaba attributed the growth from increase activity in its public cloud and hybrid cloud businesses.
Zhang noted during the company's earnings call that the ongoing epidemic in China could negatively affect its current quarter, which will end in March. The executive added that the company is closely monitoring all of the issues and identifying opportunities where possible. Alibaba's e-commerce business has mostly been affected by the current epidemic due to late deliveries, delayed orders, and issues with its travel and transport units.
