Alibaba Q3 profits fall short of market expectations
CHINESE e-commerce giant Alibaba has reported sales and earnings for the third quarter that missed forecasts and warned that results for the year will be below estimates as well, reports CNN Business.
The company reported sales growth of 29 per cent from a year ago, to US$31.1 billion. But Wall Street was expecting revenue of $32.1 billion.
The company also said that sales for its current fiscal year should rise between 20 per cent and 23 per cent from a year ago, short of analysts’ prediction of a growth of 28 per cent.
In its earnings release, Alibaba cited “regulations” and a “regulatory environment that affect Alibaba’s business operations” as well as “privacy and data protection regulations and concerns” as some of the uncertainties it was facing.
Alibaba’s giant cloud business continues to post impressive results though. Revenue rose 33 per cent from a year ago for that unit. Alibaba Cloud has helped the company expand beyond China as well, a key goal.
Alibaba chairman and CEO Daniel Zhang said in a statement: “Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalisation, and cloud computing to establish solid foundations for our long-term goal of sustainable growth in the future.”
Alibaba’s results come one week after the company wrapped up its annual Singles Day online shopping extravaganza. Chinese consumers continued to shop for bargains during the event, but sales growth for the platform was slower than last year.
Part of that is probably because of the regulatory environment, but Alibaba is also facing tougher competition as well as a slowdown in the Chinese economy.
During a conference call with analysts Mr Zhang said “economic headwinds, coupled by intensifying market competition also affected our core commerce business in China.”
He noted that there was a slowdown in apparel and general merchandise but that consumer electronics and furniture demand remained resilient.
Rival JD.com (JD) also reported earnings that show that sales and profits topped forecasts.
“Consumers and business partners increasingly trust and rely on JD, and we were able to outpace the industry growth in China in the third quarter,” JD.com president Lei Xu said in the earnings release.