Alibaba's results affirm growth, but margins slide

Tue Nov 4, 2014 12:54pm EST
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By Paul Carsten

BEIJING (Reuters) - Alibaba Group Holding Ltd's e-commerce and mobile businesses surged in the September quarter, far outpacing its rivals' and glossing over weakening margins and decelerating earnings growth.

Its shares edged as much as 3 percent higher to a record high after the Chinese e-commerce company reported a brisk 49 percent rise in the gross value of merchandise sold.

Revenue rose 53.7 percent in the three months ending in September, dwarfing Inc's 20 percent growth over the same period.

Alibaba's first quarterly report since its record $25 billion U.S. initial public offering affirmed Wall Street's expectations of industry-leading growth. Investors have focused on its dominance in China, despite concerns about corporate governance and sliding margins.

The company indicated that its shopping spree, in which it has spent more than $6 billion since the beginning of the year, might not be ending yet as it aims to increase its user base.

Margins on earnings before interest, taxes, depreciation and amortization contracted to a slightly weaker-than-expected 50.5 percent, from 54.4 percent in the previous quarter.

But on Tuesday, investors focused on 52 percent growth in active users, to 307 million - roughly as many people as there are Americans - and an improvement in the mobile monetization rate to 1.87 percent versus 1.49 percent previously. That means the Chinese company is getting a larger percentage of every mobile transaction it handles.

Its shares rose to a high of $104.96, up more than 50 percent from its $68 debut price.   Continued...

Alibaba's logo is seen at its headquarters on the outskirts of Hangzhou, Zhejiang province April 23, 2014.   REUTERS/Chance Chan