Biz / Tech

Alibaba's revenue jumps 61% but net profit falls in Q2

China's largest e-commerce group attributes the revenue jump to 80.9 billion yuan (US$11.8 billion) to its dominant position in the online retailing sector.
Reuters

The logo of Alibaba Group is seen at the company's headquarters in Hangzhou, Zhejiang province, China July 20, 2018.

Alibaba's revenue jumped 61 percent to 80.9 billion yuan (US$11.8 billion) but its net earnings fell 41 percent in the second quarter of the year, China's largest e-commerce group said today.

The online giant attributed the revenue surge to its dominant position in the online retailing sector. Net profit in the three months ended June 30 declined 41 percent to 8.7 billion yuan as it incurred one-off costs related to share-based compensation for its financial affiliate Ant Financial.

If this compensation were excluded, Alibaba's net income for the quarter would have increased by 33 percent annually.

Alibaba's core online commerce business of Tmall and Taobao still contributed the majority of its income, accounting for about 80 percent of total revenue.

The company cited the investment in new retail initiatives such as offline retail, logistics and cloud computing for the drop in profit margin in the second quarter to 15 percent from 25 percent in the same quarter last year.

One of the investments is its Hema Fresh Market — a combination of dining, grocery shopping and on-demand delivery — which has 45 stores in 13 domestic cities.

“We will continue to invest in strategic business opportunities and innovation to sustain our competitive advantage and for long-term growth," said CEO Daniel Zhang. 

Earlier this year, Alibaba stepped up its internationalization efforts by increasing its stake in Southeast Asian online retailer Lazada. It also acquired Shanghai-headquartered on-demand delivery platform Ele.me to drive online-to-offline business growth.

Alibaba is looking at combining Ele.me's operations with its lifestyle services affiliate Koubei to strengthen its foothold against its largest rival Meituan Dianping which is soon to list on the Hong Kong stock exchange.

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