Alibaba finds pot of revenue
INTERNATIONAL - Alibaba Group Holdings posted quarterly revenue and earnings that topped analyst estimates as personalised recommendations drive consumer spending across its shopping sites.
Revenue at China's biggest e-commerce company rose 51percent to 93.5 billion yuan (R194bn) in the three months ended in March, the company said.
That compares with the 91.7billion yuan average of analysts’ estimates compiled by Bloomberg. Adjusted earnings per share was 8.57 yuan, topping projections for 6.5 yuan.
The Hangzhou-based company predicted revenue in the current financial year of more than 500 billion yuan. Recommendations to users based on their preferences are now driving more sales than traditional search, boosting Alibaba’s ability to provide targeted advertising for merchants on its main Taobao platform.
That’s helping the e-commerce operator generate more revenue at a time that escalating US-Chinese tensions threaten to dampen the world's No2 economy.
The “testing of new recommendation-based advertising indicates monetisation will kick in soon, supporting faster earnings recovery,” Binnie Wong, a Hong Kong-based analyst with HSBC, said in a report ahead of the results.
The new features could help improve the conversion rate for merchants, Wong wrote. Shares of Alibaba rose 2.8percent to $174.84 (R2496.79) in New York on Tuesday, before the earnings were announced. The stock has gained 28percent compared with an 11percent gain for the NYSE Composite Index.