Alibaba Increases Profit by US$2.7 Billion

April Davis By April Davis | 07 May 2018

Alibaba has released its financial results for the quarter ended 31 March 2018 and its full 2018 fiscal year results, reporting a $2.7 billion increase in profits.

The e-commerce giant reportedly increased its core revenue from sales by 62 percent year-on-year, while revenue from cloud computing software jumped up 103 percent, and digital media and entertainment by 34 percent.

“Alibaba Group had an excellent quarter and fiscal year, driven by robust growth in our core commerce business and investments we have made over the past several years in longer-term growth initiatives,” said Daniel Zhang, Chief Executive Officer of Alibaba Group.

“With the continuing roll-out of our New Retail strategy, our e-commerce platform is developing into the leading retail infrastructure of China. During the past year, we also doubled down on technology development, cloud computing, logistics, digital entertainment and local services so that we are in a position to capture consumption growth in China and other emerging markets.”

Alibaba also reported an increase in annual active consumers by 37 million, bringing the total number of users on its China-based retail marketplace to 522 million, while mobile MAUs reached 617 million by the end of the quarter – also an increase of 37 million from the period ending December 2017.

The company wielded similarly strong results for the fiscal year ended 31 March 2018, with a 58 percent increase in revenue year-on-year, resulting in closing figures of US$39,898 million.

Revenue for core commerce increased 60 percent to US$34,120 million, while funds generated through cloud computing rose by 101 percent to US$2,135 million. Digital media and entertainment also saw a boost of 33 percent, while innovation initiatives brought in an extra 10 percent of revenue when compared to 2017’s results.

“Fiscal 2018 culminated with a quarter we are very proud of. Full year revenue grew 58 percent, core commerce revenue grew 60 percent, with profit growth of over 40 percent and annual free cash flow of US$15.8 billion,” said Maggie Wu, Chief Financial Officer of Alibaba Group.

“Looking ahead to fiscal 2019, we expect overall revenue growth above 60%, reflecting our confidence in our core business as well as positive momentum in new businesses. We expect our new growth initiatives will drive long-term, sustainable value for our customers and partners and increase our total addressable market,” she said.

In its end of quarter report, the e-commerce giant attributed its success over the last three months and fiscal year 2018 to its innovative approach to commerce. The personalisation of its Chinese marketplace through investments in content, technology and expansions to its global and cross-border retail marketplaces, both organically and as a result of acquisitions was highly praised.

“During fiscal year 2018, our China retail marketplaces recorded total GMV of RMB4,820 billion (US$768 billion), up 28 percent year-over-year. This robust growth was driven by Tmall physical goods GMV, which increased 45 percent year-over-year, demonstrating Tmall’s ability to capture incremental B2C market share while operating at scale,” the report said.

Alibaba’s ‘New Retail’ initiative also merited a special mention, as the company attributed the incubation of new concepts, technologies, and strategic alliances to how the brand is beginning to shape consumer behaviours by offering a seamless integration between online and offline shopping experiences.

Moving forward, Alibaba expects it will be able to transform the retail industry, digitising operations by focussing on in-store technology, digitised inventory and supply chain systems, consumer insights and mobile payments.

This is something Alibaba is introducing to Australia, with the recent ‘New Retail’ pop-ups in Melbourne and Sydney, where the brand worked to introduce new shopping technology to retailers working within the Australian marketplace.

Similar initiatives are starting to take off in marketplaces across the globe, as Alibaba reported its cross-border and international retail business grew by 94 percent year-on-year in fiscal 2018, with further growth expected over the next 12-months.

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