Alibaba net rises 34pc as it adds members
Alibaba.com, the world's largest business-to-business e-commerce service provider, is facing rosier prospects this year, as a rise in paying users and brisk online trade resulted in strong first-quarter gains.
The Hangzhou-based company, the flagship unit of internet conglomerate Alibaba Group, reported yesterday a net profit of 330.1 million yuan (HK$375.65 million) in the first three months, up 33.8 per cent from 246.68 million yuan a year earlier, as it added 43,489 new paying members.
Despite the typically weak Lunar New Year holiday period, revenue climbed 49.3 per cent to 1.22 billion yuan from 817.37 million the previous year.
First-quarter turnover was 5 per cent above analyst consensus estimates of 1.17 billion yuan, according to a report by Deutsche Bank.
Alibaba.com's business model takes cash upfront from members through annual fees. Its total deferred revenue and customer advances last quarter reached 3.57 billion yuan, an increase of 43.6 per cent from 2.49 billion yuan in 2008.
Chief executive David Wei Zhe, commenting on the company's best results in a year, said: 'We made steady progress on all fronts.'
Its new milestones as of March this year included 50.25 million total registered users worldwide, 7.3 million online storefronts and 658,701 paying members.
Wei estimated mainland subscriber numbers in the second quarter would surpass those of the first after adding 1.52 million 'China marketplace' members, including 40,361 paying entry-level TrustPass users and 4,584 premium China Gold Suppliers.
Alibaba.com, which has a market capitalisation of US$9.75 billion, connects small and medium-sized firms that have little or no marketing budgets with domestic and international buyers in giant online trading websites. 'These achievements showcased the strong execution by our team and confirmed Alibaba.com's value to our small business customers,' Wei said.
When the global economy faltered and mainland exports dropped nearly 20 per cent in the first quarter of last year, Alibaba.com encouraged small businesses to adopt e-commerce to survive and grow.
Wei said the latest economic data suggested the export recovery was progressing largely as the market forecast. He said Alibaba.com's mainland suppliers were 'enjoying good orders from Europe', which showed no adverse impact from the Greek debt crisis.
Alibaba.com expects members to adopt more of its value-added services, including the recently launched AliExpress platform, which provides smaller-quantity orders, instant online transactions and an escrow service to protect small mainland suppliers and their customers.