Net income triples at Alibaba as revenue jumps 46pc

E-commerce giant is likely to get a valuation of US$200b or more by the time it goes public

PUBLISHED : Thursday, 28 August, 2014, 1:53pm
UPDATED : Friday, 29 August, 2014, 12:48am

Alibaba Group Holding's revenue growth accelerated in the second quarter on strong gains in its mobile business, providing investors with what may be the final glimpse of the firm's financials before its expected landmark market debut.

The e-commerce giant, whose initial public offering could be the largest by a technology company, said mobile revenue was roughly a third of its total transaction volume in the three months to June, up from 27.4 per cent in the first three months of the year.

Revenue in the second quarter rose 46 per cent year on year to US$2.54 billion, a faster pace than the 38.7 per cent growth posted in the first quarter.

Net income attributable to ordinary shareholders nearly tripled to US$1.99 billion, or 84 US cents per share, in the second quarter.

[It] seems the mobile monetisation is on an upward trajectory

"The main positive I take away is that [it] seems the mobile monetisation is on a very strong upward trajectory," Atlantic Equities analyst James Cordwell said. "The results are very positive overall for the forthcoming [flotation], and I think you can see valuations head north of U$200 billion as we go through the [flotation] process."

Alibaba accounts for about 80 per cent of all online retail sales on the mainland, where rising internet usage and an expanding middle class helped the company generate gross merchandise volume of US$296 billion in the 12 months to June.

With people increasingly accessing the internet from smartphones and tablets, online companies have been investing heavily to develop their mobile platforms.

"Our current focus is on increasing mobile [gross merchandise volume] and user engagement," Alibaba said in a United States regulatory filing on Wednesday.

The firm, expected by some to price its flotation as early as next week, will have a roadshow next month that is likely to attract interest from a wide range of funds, including those focused on emerging markets and technology.

Alibaba may garner a valuation of US$200 billion or more when it goes public, analysts say, which would make it one of the 20 biggest companies listed on US markets and more valuable than Amazon.com or eBay.

Though Alibaba's growth has slowed sharply over the past two years as the mainland leviathan accumulates scale, its revenue growth still outpaces Amazon's. The US online retailer reported a 23 per cent jump in third-quarter revenue to US$19.34 billion, half of Alibaba's pace of expansion.

"We've been waiting for this deal for so long that when it finally arrives, people will have been analysing it for a year. They're ready to buy," said Paul Meeks, a senior analyst and portfolio manager of the Sextant Growth Fund at Saturna Capital in Bellingham, Washington.

Alibaba had 279 million active buyers at the end of June, up 50 per cent from a year earlier. The company said the average active buyer placed 52 orders in the year to June, up from 45 in the previous year.

The firm said on Wednesday it had incurred "substantial indebtedness" after fully drawing down an US$8 billion credit facility. Alibaba has arranged another credit line of US$3 billion.