Alibaba Reports 42 Percent Revenue Increase Bolstered By Online Retail Sales

Alibaba Group
A logo of Alibaba Group is seen at an exhibition during the World Intelligence Congress in Tianjin (Photo: Reuters / Jason Lee)

Despite the apparent strain on China's economy from the now year-long trade dispute with the United States, Chinese firm Alibaba Group Holding still managed to beat analysts' expectations for its second-quarter earnings.

The New York-listed conglomerate reported a massive 42 percent increase in revenue for its quarter ending in June.

On Thursday, Alibaba reported that it managed to rake in revenues of around $16.7 billion, a significant increase from the $11.49 billion it reported during the same period last year.

According to the company, the major contributor to its increased revenue was a dramatic uptick in its annual active users in China on its online retail platforms. The increase resulted in a net income jump of 145 percent to $3.1 billion for the quarter.

Alibaba's chief executive, Daniel Zhang Yong, revealed during the company's earnings call that the company's platforms were able to expand their user base to 674 million annual active customers. The increase was apparently a testament to the company's ability to provide superior users experience.

The executive elaborated the company's next steps and mentioned that with the consistent cash flow from its core commerce business, Alibaba will continue to pursue its investments into other advanced technologies. The investments are apparently geared towards further improving the company's digital capabilities to enhance its global business.

 Alibaba's financial reports are often seen as a proxy to gauge China's consumer spending. With its most recent report, it would likely be safe to say that the economic situation in China may be in better condition than initially expected given the current geopolitical climate.

Most of Alibaba's revenues are generated domestically, which means that it is not really affected by the wider disruptions in global trading.

According to China's National Bureau of Statistics, Alibaba's revenue has grown by 16.8 percent for the first half of the year, mainly fueled by its online retail sales. Online marketplaces, particular those owned by companies such as Alibaba and JD.com, account for more than 20 percent of the country's overall retail market.

Similar to Alibaba, its main rival JD.com was able to report stellar results earlier in the week with figures that beat initial analysts' estimates. The company's revenues were also bolstered by its strong online retail business.

Following the release of Alibaba's earnings results, the company's stocks rallied on Thursday. The company's shares have increased by almost 19 percent since the beginning of the year, with prices closing at $166.75 per piece on Thursday.

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