New | Alibaba posts record 2016 revenue of US$22.96 billion, even as profit slips

Alibaba Group’s 2016 revenue soared to a record, spurred by the increasing penchant by Chinese consumers to buy everything online, from clothing to food and electronics. Net profit missed analysts’ estimates due to a larger tax bill and investments in cloud computing.

Revenue jumped 56 per cent to 158.27 billion yuan (US$22.96 billion) for the year ended March 31, even as net income fell 42 per cent to 41.23 billion yuan. Fourth-quarter sales rose for the seventh consecutive quarter to 38.58 billion yuan, while net income jumped 85 per cent to 9.85 billion yuan during the three months.

Alibaba’s shares plunged as much as 5.6 per cent in New York trading after results were announced, before recovering to close the day 0.5 per cent higher at US$121.27.

“The core metrics that we care about in terms of segment results show very good momentum across the board,” said MKM Partners’ analyst Rob Sanderson in Connecticut, who has a “buy” recommendation on the stock. “Some non-operating lines pinched the earnings and that’s likely what the stock’s reacting to, but there’s lots of variability and lack of predictability that [make it difficult] for analysts to understand what contributions and other income might come from ads.”

China’s embrace of the smartphone in the past decade – as well as economic activities related to the internet – has turned Alibaba, Tencent Holdings and other Chinese technology companies into some of the largest enterprises in the industry. Tencent, operator of China’s biggest social network, reported a 55 per cent jump in first-quarter sales on Wednesday.

“We reported another excellent quarter, with revenue growth accelerating to 60 per cent, the highest growth rate we’ve achieved since our IPO,” Alibaba’s chief financial officer Maggie Wu said in a phone conference announcing the Hangzhou-based company’s results.