Alibaba Group posted strong results due to boost in e-commerce and cloud-computing

E-commerce and cloud-computing sales generated greater revenue for Alibaba Group Holding Ltd. in the most recent quarter, as the firm reported a profit after a regulatory fine drained its bottom line in the previous quarter.

The Chinese tech giant's revenue increased to 205.74 Chinese yuan, or around $31.9 billion. Alibaba's revenue in the June-ending quarter of 2020 was 153.75 billion yuan a year ago.

Chinese e-commerce sales increased 34% year on year, according to Alibaba, as the firm acquired 14 million monthly active mobile users. Revenue from cloud computing increased by 29% due to increased demand from the technology, financial services, and retail industries.

“We delivered strong revenue growth of 34% year-over-year. As we said in last quarter's results announcement, we are investing our excess profits and additional capital to support our merchants and invest in strategic areas to better serve customers and penetrate new addressable markets,” said Maggie Wu, Chief Financial Officer of Alibaba Group, in a statement.

As the company is optimistic in long-term growth prospects, it is expanding the share repurchase program from US$10 billion to US$15 billion, making it the largest in the Company's history. Moreover, the company has repurchased roughly US$3.7 billion of the ADSs, Wu said.

In its main e-commerce sector, Alibaba is experiencing growing competition from new companies such as Pinduoduo Inc., Bytedance Ltd.'s short-video platform Douyin, and Tencent Holdings Ltd.'s social media tool WeChat, which have sought more interactive methods to engage customers.

Earlier this year, the e-commerce behemoth announced its first quarterly loss as a public company, owing to an antitrust penalty. Alibaba was one of the first big Chinese IT companies to be scrutinized by Chinese officials in what has since become a year-long regulatory campaign.

As the criticism over anticompetitive conduct has increased, Alibaba is beginning to reconsider how it governs its ecosystem.

According to the Wall Street Journal, Alibaba and Tencent, two of China's top internet giants and fierce competitors, are working on opening up their platforms to each other. The merging of those platforms, which have traditionally been walled off to protect themselves from competitors, might increase competition.

Source: WSJ