Shares of Alibaba Group Holding Ltd. fell Thursday, after the company posted better-than-expected results for its fiscal third quarter but discussed how the recent coronavirus outbreak in China was having a “negative impact” on the company’s commerce business in the current period as packages aren’t getting delivered on time.
Alibaba Earnings. Alibaba earnings rose 47% to $2.61 a share. Revenue climbed 36% to $23.2 billion. Wall Street expected Alibaba earnings of $2.28 on revenue of $22.8 billion, according to FactSet
Alibaba’s BABA, -1.76% revenue for the quarter increased to RMB161.5 billion, up from RMB117.3 billion a year earlier. The FactSet consensus was looking for RMB159.7 billion. The Chinese e-commerce giant’s cloud business topped RMB10 billion in quarterly revenue for the first time.
“Our overall revenue growth rate, we believe, will be negatively impacted for the March quarter,” Chief Financial Officer Maggie Wu said, based on what the company has seen since the start of February. She noted that business units like Alibaba’s China retail marketplace and local consumer services might see negative revenue growth as a result of the disruptions but that it was difficult to give a broad financial projection given that the March quarter is only halfway over.
Alibaba’s China retail marketplace business grew 36% in the latest quarter, before companies started to feel an impact from the coronavirus, while revenue from local services increased 47%.
“I think after all is done, I would expect that this is an inevitable trend that more and more businesses and more and more customers will have a digital life or digital working style,” Chief Executive Daniel Zhang said.
Alibaba “let the leverage from its commerce business flow through,” Neuberger Berman’s Srinivasan said. He had been expecting an increase in investment spending and was impressed that Alibaba’s investments seem to be paying off by allowing the company to benefit from scale in massive markets.
The company’s momentum in lower-tier Chinese cities as the company pointed out that more than 60% of new average annual customers came from less-developed regions in China. Annual active customers totalled 711 million as of the end of 2019.
Shares of the Chinese e-commerce giant have shed naerly 5% over the past month, though they’ve climbed 20% over the past three months.