Alibaba marks cloud revenue milestone, pledges support for fight against coronavirus
Alibaba's cloud revenue exceeded 10 billion yuan for the first time in a single quarter, growing 62% to hit 10.72 billion yuan for its third quarter, but the coronavirus outbreak may present short-term challenges as the Chinese e-commerce giant pledges to continue providing support to combat the epidemic.
Alibaba Group has marked a new milestone for its cloud business, which crossed 10 billion yuan for the first time in a single quarter to hit around 10.7 billion yuan ($1.53 billion). Fuelled by demand in its public and hybrid cloud services, the Chinese tech giant's cloud business climbed 62% year on year for its third quarter, ended 31 December 2019.
Its robust cloud growth helped push the company's total revenue for the quarter to around 161.5 billion yuan ($23.1 billion), up 38% from the previous year, while its net income grew 58% to 52.3 billion yuan ($7.49 billion).
Cloud, though, accounted for just 7% of Alibaba's overall revenue, the bulk of which came from its commerce units, encompassing its retail and wholesale e-commerce as well as logistics businesses.
Contributing 88% of its total revenue, the core commerce segment clocked revenue growth of 38% for the quarter to hit 141.48 billion yuan ($20.25 billion). It added 18 million active consumers to its retail marketplaces over the previous quarter to hit 711 million, while mobile active users reached 824 million, up 39 million from the previous quarter.
Its chairman and CEO Daniel Zhang attributed the growth in active consumers to its investment in improving user engagement, particularly through social commerce content. He added that its 11.11 Global Shopping Festival, or Singles' Day, also saw another record sales last year, clocking 268.4 billion yuan ($38.4 billion) in gross merchandise volume.
According to Alibaba, transactions during last year's Singles' Day for the first time were hosted on the company's public cloud infrastructure, following the migration of the core systems that supported its e-commerce businesses to its public cloud. The platform helped process more than 544,000 orders per second during peak volume and 970 petabytes of data for the day's transactions.
The ongoing coronavirus epidemic, however, could present challenges in the short-term to the company's overall business development, Zhang said during his earnings call with analysts. The outbreak already was affecting China's economy and could spill over to the global economy, he said in a report by South China Morning Post.
He added that Alibaba was monitoring the challenge and identifying opportunities for the company's business, noting that on its e-commerce business, employees delayed in returning to work following the extended Lunar New Year break were limiting merchants and logistics services providers from resuming full operations.
Alibaba earlier this week said it was rolling out some 20 measures, including waiving some fees across its online platforms to help affected merchants ride through the epidemic. These included its e-commerce marketplace, Tmall, which would waive service fees over the first half of this year as well as provide services for free to eligible merchants based in the virus epicentre, Hubei.
Zhang said: "In response to the coronavirus, we mobilised Alibaba ecosystem of commerce and technology to fully support the fight against the outbreak, ensure supply of daily necessities for our communities, and introduced practical relief measures for our merchants. We will support our merchants to overcome this challenging time together."