Alibaba Group reported another quarter of strong revenue growth, while profits were under pressure from investments and acquisitions. Revenues rose 61 percent year-on-year in the three months to June to CNY 80.92 billion (USD 12.23 billion). Adjusted EBITDA was up a slower 17 percent to CNY 29.36 billion, leading to a sharp fall in the margin to 36 percent, according Telecompaper. The company said the drop in operating profit was due to strategic investments in 'New Retail', where the company operates its own online sales and accounts for all inventory, as well as the consolidation of the delivery platforms Cainiao Network and Ele.me and investments in the southeast Asia platform Lazada. Net profit fell 45 percent to CNY 7.65 billion, mainly due to stock option costs at Ant Financial. Excluding these costs, net profit would have increased by 33 percent, the company said.
Among the company's growth initiatives, Alibaba said Tmall Genie, its AI-powered voice assistant, has achieved sales of 5 million units since its official launch a year ago. Tmall Genie connects customers with services offered by the Alibaba ecosystem in an interactive way, and the company is focusing on educational and entertainment content for families to widen the user base and increase engagement.
The online video platform Youku also had a strong quarter thanks to the rights to stream the World Cup. In total, 180 million unique devices connected to the football coverage in China. Alibaba integrated a number of promotions from its e-commerce platforms Taobao and Alipay as well as late night delivery services from Hema and Ele.me to increase engagement with the content. Peak concurrent viewers exceeding those of the most watched program during Chinese New Year. This led to daily average subscriber growth of 200 percentyear-over-year for Youku.
In July, the company also acquired a 6.62 percent stake in Focus Media for CNY 9.63 billion. Focus Media operates the largest advertising screens network in China, and Alibaba plans to work with the company on digital marketing initiatives to extend its New Retail strategy into offline sites.
Alibaba also confirmed that in June Ant Financial completed its Series C equity financing, raising USD 14 billion. This was a significant increase in Ant Financial’s valuation, the company said.
