Last quarter earnings per share beat analysts’ expectations even as earnings missed estimates, with the Chinese e-commerce giant announcing Tuesday it would increase its share buyback program from $10 billion to $15 billion .
But that failed to convince investors: the stock fell 0.8% in US premarket trading, then
Hong Kong-listed shares rose 0.83% before earnings were announced. Like US Amazon, the Chinese e-commerce giant’s revenues show that revenue growth is beginning to slow – from 64% year-over-year growth in the first three months of 2021 to 34% in the final quarter.
Alibaba achieved revenue of 205.7 billion Chinese yuan ($31.8 billion) in the three months to the end of June, which the company reports as its first fiscal quarter of 2021. Revenue figures lagged analysts’ estimates closer to RMB 251 billion, according to the FactSet consensus.
It was a better picture for the bottom line as Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Ebitda) was RMB 48.6 billion, down 5% year on year, but higher than expected RMB 46.7 billion by Wall Street. Profit margins were another highlight for the e-commerce giant, with an adjusted EBITDA margin of 24% beating estimates.
“For the June quarter, global annual active consumers in the Alibaba ecosystem reached 1.18 billion, up 45 million from the March quarter, which includes 912 million consumers in China,” said Daniel Zhang, chairman and CEO of Alibaba.
“We believe in the growth of the Chinese economy and the long-term value creation of Alibaba,” Zhang added. “We will continue to strengthen our technology advantage by improving the consumer experience and helping our enterprise customers achieve successful digital transformations.”
Aliaba also announced it would increase the size of its share repurchase program by 50%, the largest in its company history, from $10 billion to $15 billion.
Earnings growth kept pace with Alibaba’s closely watched cloud computing segment, a stream of sales that offers an alternative to its core e-commerce offerings and positions it as a rival to companies like
Cloud division revenue grew 29% year-over-year as adjusted Ebitda came in at RMB 340 million, with a profit margin of 2%, a strong improvement from a loss of RMB 1.1 billion in the period of 2020. the last quarter adjusted Ebitda in cloud computing was RMB 308 million with a margin of 2%.
Growth in cloud computing was primarily driven by robust growth in revenue from customers in the Internet, financial services and retail sectors, Alibaba said.
The company’s earnings come at a difficult time for the Chinese tech giants. The sector has been the subject of a regulatory crackdown that has intensified in recent weeks, leading to the biggest monthly decline for US-listed Chinese tech companies since the 2008-09 financial crisis.
Write to Jack Denton at email@example.com.