Alibaba Cloud hits annual revenue run rate tops $4.4 billion

Alibaba Cloud continues to gain traction and enterprise customers as it now represents 7 percent of the Chinese e-commerce giant's revenue.
Written by Larry Dignan, Contributor

Alibaba's cloud computing revenue in its fiscal fourth quarter was $1.15 billion, up 76 percent from a year ago, as customers spent more on new services.

The results from the company highlight how it is gaining share in Asia. Alibaba said its cloud user it has more than half the A-share listed companies in China as customer.

For fiscal 2019, Alibaba Cloud delivered revenue of $3.68 billion, up 84 percent from a year ago. Cloud computing represents 7% of Alibaba's total revenue. Alibaba is the top cloud provider in Asia, but globally competes with the likes of Amazon Web Services, Google Cloud and Microsoft Azure. Alibaba is also forging a series of partnerships with enterprise software players. 

However, Alibaba's cloud division still loses money. Adjusted EBITA for fiscal 2019 was $172 million.

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Alibaba's total revenue for the fourth quarter was $13.9 billion, up 51 percent from a year ago. Annual active consumers Alibaba's retail marketplaces were 654 million with mobile monthly active users of 721 million for the quarter ending March 30.


The company delivered income from operations of $1.3 billion in the fourth quarter.

For fiscal 2019, Alibaba reported revenue of %56.15 billion, up 51 percent from a year ago, with income from operations of $8.5 billion.

On a conference call with analysts, Alibaba executives were upbeat about the company's prospects to sell cloud customers on value added services. Alibaba CFO Wei Wu said:

Our cloud computing business priority right now is to remain at expanding our market leadership and up-selling of higher value-added services. We're seeing significant traction and diversification of customers in revenue.

Yong Zhang, CEO of Alibaba, said digital transformation is driving cloud spending. Zhang said:

Alibaba Cloud continues to achieve substantial growth in the enterprise service sector. As China marched into the era of digital economy, all industry sectors have come to embrace digital technologies. Alibaba Cloud not only provides enterprise customers with cloud-based IT infrastructures, more importantly, enable them with advanced data processing and analytical strengths and artificial intelligence capabilities. Our cloud-based data technology capabilities, together with our expertise in commerce, financial services and logistics form the core of Alibaba business operating system. The system will empower the digital transformation of enterprises.

In addition, Zhang argued that this digital transformation will be sped up by the trade war with the U.S. Zhang noted:

Looking into the future, China will expedite its journey to transform from an export-driven economy to a consumption-driven economy. We believe consumption in the service sectors will become new benchmarks to bring new growth potential to China.

Zhang said consumption will drive Alibaba's e-commerce business. Meanwhile, Chinese companies will also have to respond to tariffs with more technology and digitization of businesses. That reality will drive Alibaba's platform of services such as retail, financial services, logistics and cloud.

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