Alibaba raises guidance as strategy shift makes progress

Tue Jan 24, 2017 9:47am EST
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(Reuters) - Chinese online retail giant Alibaba Group Holding beat analyst estimates with a 54 percent rise in third-quarter revenue, benefiting from its sharpened focus on cloud and digital media ventures as well as gains in its core business.

Seeking new revenue streams with a series of data, cloud, artificial intelligence and logistics projects as China's e-commerce market begins to show signs of saturation, Alibaba said after Tuesday's results that it would raise 2017 full-year guidance for revenue growth to 54 percent from 48 percent.

In recent months, executives including Chairman Jack Ma have identified Alibaba as a data company, downplaying the role of online retail in its future.

It submitted a $2.6 billion bid this month to privatize Chinese department store operator Intime Retail Group, saying it intended to use data to digitize offline shopping.

In a conference call after Tuesday's earnings, Chief Executive Daniel Zhang said the company would leverage its data to explore new modes of retail, treating the Intime investment as a test.

Revenue from Alibaba's core e-commerce business accounted for 87 percent of total revenue in the three months to Dec. 31, down from 92 percent in the same period a year earlier.

Third-quarter revenue was 53.2 billion yuan ($7.76 billion), against a consensus forecast of 50.1 billion yuan from Thomson Reuters I/B/E/S, while net income attributable to the company's shareholders grew 43 percent to $2.57 billion, or $1 a share.

Revenue rose 273 percent to 4,063 million yuan in its digital and entertainment business, mainly driven by the consolidation of Youku Tudou, CFO Maggie Wu said.

The company's cloud business, meanwhile, increased revenue by 115 percent to 1,764 million yuan.   Continued...

A logo of Alibaba Group is pictured at its headquarters in Hangzhou, Zhejiang province, China, October 14, 2015. REUTERS/Stringer/File photo