Alibaba Reveals $6 Billion Share Buyback As Misses EPS Forecast

20 May, 2017, 09:15 | Author: Leticia Walters
  • Friday’s Vital Options Data Alibaba Group Holding Ltd., Nvidia Corporation, and Pandora Media Inc

The company said Thursday that net income attributable to ordinary shareholders for the fiscal fourth quarter ended March 31 was 10.65 billion yuan, or $1.55 billion, almost double the amount from the like quarter one year ago. The online retail sites added 31 million active users for the year to reach 454 million, while its English site AliExpress and Southeast Asian e-commerce operator Lazada had a combined annual active buyer base of 83 million.

Analysts said Alibaba's profit may have dropped due to the group's diversification that required investments in new business segments like media, entertainment and cloud computing. Similarly, global e-commerce revenues were boosted by the addition of Lazada to Alibaba's Southeast Asian operations.

Revenue from Alibaba's core e-commerce business grew by 47 percent to 31.6 billion yuan in the quarter, up from the previous quarter's growth rate of 45 percent.

China's embrace of the smartphone in the past decade - as well as economic activities related to the internet - has turned Alibaba, Tencent Holdings and other Chinese technology companies into some of the largest enterprises in the industry. We also reported very strong fiscal year revenue growth of 56% with annual non-GAAP free cash flow of approximately US$10 billion1.

Revenue at e-commerce giant Alibaba jumped 60% in the first three months of the year, powered by a growing customer base in China.

Alibaba's steadily-improving ability to monetize transactions on its massive Taobao and Tmall Chinese marketplaces via revenue streams such as ads, commissions and shipping fees remains a major growth driver. Additionally, the revenue per buyer (particularly for mobile users) has also surged on a year-over-year basis, as shown below.

Even so, the digital media unit posted a loss of 1.7 billion yuan ($246.7 million) in the fourth quarter. The company's China commerce retail revenue rose 41% annually to RMB25.8 billion ($3.75 billion, 67% of total revenue), almost matching the December quarter's 42% growth. This trend has been evident over the past few quarters, as evidenced in the full year table below.

A lower-than-expected earnings per share, which stood at $4.35, is because "Alibaba has done a lot of acquisitions this past year. and is spending a lot to drive growth in video and entertainment", said Ray Zhao, an analyst at brokerage Guotai Junan Securities.

As with Amazon, Alibaba's cloud computing operations continue to be a bulwark, with quarterly revenue rising 103% year-over-year to RMB 163 million (US $314 million).

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