Alibaba: 42% growth in Q2

Alibaba reported strong revenue growth of 42 percent in the second quarter to 114.9 billion yuan (US$16,741 billion) against previous estimate of US$12.3 billion as it grabbed more users, especially from lower-tier cities, with digital players still the most resilient of China economy.

Adjusted profit was up 34 percent to 39.2 billion yuan, which excludes higher share-based compensation expenses for Ant Financial employees in the year-earlier period.

Its core e-commerce business income jumped 44 percent to 99.5 billion yuan while grocery retail chain Freshippo has also seen same store growth while optimizing existing ones and introducing new formats to suit local market trends.

Overall performance of online players in the second quarter has seen an obvious improvement due to consumer enthusiasm in the mid-year campaign in early June which proved to be effective in bringing in new shoppers.

The gross merchandising volume of physical goods at Tmall, key metrics for online marketplaces, saw 34 percent year-over-year growth.

Among a total of 674 million active buyers on Alibaba’s online retail platform, 70 percent are from lower-tier cities.

“We will continue to expand our customer base and to invest in technology and bring digital transformation to millions of businesses globally,” Chief Executive Officer Daniel Zhang said in a statement yesterday.

Cloud computing saw 66 percent annual growth of revenue to 7.8 billion yuan.

It's also reinforcing the ecosystem which not only covers online and offline retail, but also digital entertainment, local lifestyle services and on-demand delivery to drive up purchase frequency and categories, therefore strengthening its leadership position.

Chief financial officer Maggie Wu said at the conference call with analysts that the company expects to further leverage steady profit growth in its e-commerce business to subsidize local consumer services units and other new business initiatives.