Business

Alibaba's Q2 results show an important bet on cloud computing and digital entertainment

The company reported better revenues and profits than expected by analysts, 114.92 billion yuan

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  • While analysts expected a revenue of 111.73 billion yuan, Alibaba reached 114.92 billion, a jump of 42% above last quarter;
  • Sales in Alibaba’s cloud computing unit soared 66%, up to 7.79 billion yuan, while those at its core commerce business rose 44% to 99.54 billion yuan.

The Chinese giant Alibaba reported better revenues and profits than expected by analysts in this second quarter of 2019. According to Reuters, the results were helped by growth in the company’s e-commerce and cloud computing businesses.

While analysts expected a revenue of 111.73 billion yuan, Alibaba reached 114.92 billion, a jump of 42% above last quarter.  The increase in the number of active mobile users of its Tmall and Taobao platforms in the quarter was one of the reasons for such a jump in revenue.

The company finished June with 755 million active users, an increase of 34 million from the March 2019 figure, according to Variety. Annually, Alibaba has a user base of 674 million people.

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For CNN, Alibaba’s earnings also show that Chinese consumers are still shopping despite the trade war. Reuters also informed that Alibaba is now targeting consumers in smaller cities in response to a saturated user-base in wealthier parts of the country and growing competition from the startup Pinduoduo.

In addition, sales in Alibaba’s cloud computing unit, which competes with Amazon (AWS) and Microsoft (Azure), soared 66% during the same period of 2018, up to 7.79 billion yuan, while those at its core commerce business rose 44% to 99.54 billion yuan.

Alongside cloud computing, the company is also betting on digital entertainment to diversify its businesses. According to Variety, its digital media conglomerate includes firms such as streaming platforms Youku and Tudou, Alibaba Pictures film company, Alibaba Music, and the Damai ticketing platform, accounted for 5% of Alibaba’s overall revenue in the second quarter. But the company says that this part of their businesses is only in the beginning.

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Alongside cloud computing, the company is also betting on digital entertainment to diversify its businesses. According to Variety, its digital media conglomerate includes firms such as streaming platforms Youku and Tudou, Alibaba Pictures film company, Alibaba Music, and the Damai ticketing platform, accounted for 5% of Alibaba’s overall revenue in the second quarter. But the company says that this part of their businesses is only in the beginning.

The consolidation of Alibaba Pictures, a firm that has its own share listings in Hong Kong and Singapore, is still on the way.

“While we continue to invest in original content production capabilities, which gives us better control over content quality, format and scheduling, we are also taking systematic analytical measures to ensure content cost efficiencies and return on investment,” the company said in a statement.