Does Alibaba Deserve More Out of Q1 From Its Segment Growth?

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Alibaba Group Holding Ltd. (NYSE: BABA) released its fiscal first-quarter financial results before the markets opened on Thursday. The company posted $1.22 in earnings per share (EPS) and $12.23 billion in revenue, compared with consensus estimates that called for $1.21 in EPS and revenue of $11.8 billion. The same period of last year reportedly had EPS of $1.15 and $7.29 billion in revenue.

During the latest quarter, annual active consumers on its China retail marketplace reached 576 million, an increase of 24 million from the 12-month period ended March 31, 2018. Mobile monthly active users on its China retail marketplaces reached 634 million in June 2018, an increase of 17 million over March 2018.

In terms of its segments, the company reported as follows:

  • Core Commerce revenues increased 61% year over year to $10.46 billion.
  • Cloud Computing increased 93% to $710 million.
  • Digital Media and Entertainment increased 46% to $903 million.
  • Innovation Initiatives increased 64% to $160 million.

There was no guidance released in the report. However, analysts are calling for $1.30 in EPS and $13.13 billion in revenue for the fiscal second quarter.

Daniel Zhang, CEO of Alibaba, commented:

Alibaba had another excellent quarter, with significant user expansion and even more robust engagement across our growing ecosystem. Our China retail marketplace business continues to gain share, with New Retail initiatives driving further revenue growth and enabling our retail partners to seamlessly serve customers. We are executing our plan of providing more value and choice to users along the consumption continuum, with digital entertainment and local service offerings that tap into big addressable markets beyond core commerce. We will continue to invest in strategic business opportunities and innovation to sustain our competitive advantage and for long-term growth.

Shares of Alibaba closed Wednesday at $177.85, with a consensus analyst price target of $237.64 and a 52-week trading range of $164.25 to $211.70.

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