Alibaba Group, the Chinese e-commerce giant, this morning reported revenue of $2.74 billion for the September quarter, an increase of 54 percent in the company’s first earnings report since its record-setting initial public offering on the New York Stock Exchange.
Unlike its U.S. rival, Amazon, the company continued to post profits, although they were down more than 38 percent, to $494 million, for the quarter.
Amazon has come under intense criticism in recent quarters as it posts deep losses, with CEO Jeff Bezos reinvesting cash back into the business. Amazon by comparison posted net sales of more than $20.5 billion in the September quarter, and a $437 million loss.
Amazon’s market value is about $140 billion, compared with Alibaba’s market value of more than $250 billion. Alibaba’s shares are up slightly in early trading today.
Alibaba said its bottom line was impacted by costs including share-based compensation expense from issuing stock to company employees and executives in advance of the IPO. In addition, sales and marketing spending rose significantly, to $285 million, as Alibaba sought to capitalize on the attention being paid to the company in advance of the IPO.
“The increase was primarily due to an increase in tactical advertising and promotional spending mainly to promote our China retail marketplaces during this quarter when intense global interest in Alibaba enhanced the effectiveness of marketing campaigns,” explained Alibaba in its financial notes.
The biggest chunk of the Alibaba’s business is its China commerce retail business — including the Taobao Marketplace and Tmall — representing 75 percent of revenue, or more than $2 billion.
Revenue from the company’s China commerce wholesale business was $129 million, up 39 percent; and revenue from its international commerce wholesale business was $195 million, up 24 percent.
Alibaba’s international commerce retail business nearly doubled to $68 million, primarily because of a larger volume of business on AliExpress, the online marketplace for consumers to buy from China.
Cloud computing and infrastructure remains a small slice of Alibaba’s business, representing about $47 million in revenue for the quarter.
“Our business continues to perform well, and our results reflect both the strength of our ecosystem and the strong foundation we have for sustainable growth,” said Alibaba CEO Jonathan Lu in the company’s earnings release.
Alibaba Chairman Jack Ma was not on the company’s earnings call with analysts.
Alibaba recently opened an engineering office in downtown Seattle, its second in the United States, as it seeks to expand its base of software developers to help fuel new products and growth. The office is a short walk from the new Amazon complex being developed on the edge of downtown Seattle.
The company is now looking ahead to Singles Day on Nov. 11, a tradition in China similar to Valentines Day, which brought record sales last year.
