Chinese e-commerce giant Alibaba Wednesday reported non-GAAP net income of $1.53 billion for April to June, the first quarter of its 2015-16 financial year. That was up 30% and in line with analysts’ forecasts, but revenue was on the low side of investors’ expectations and up by only 28% at $3.27 billion.
Alibaba said that revenue would have been up by 36% but for two exceptional factors: the transfer of its loans business to Ant Financial; and the ending of online sales of state lottery tickets earlier this year.
The company said that it will buy back up to $4 billion of its shares, a move to support the share price given the apparent disappointment.
Consensus forecasts by analysts had been for earnings per share of US$0.57 in the quarter, with expectations running as high as $0.62 per share. Alibaba declared earnings of $0.59 per share.
The numbers were particularly closely watched as they came only a day after the Chinese government decided to let the currency depreciate by nearly 2% in a move to boost the softening economy. Alibaba is seen by many analysts as a bellwether for the state of consumer confidence in China. Analysts’ revenue expectations had been for US$3.37 billion.
The company’s other headline number, gross merchant value, or the value of all transactions across its platforms was US$109 billion, up 39%.
The numbers also follow closely on a number of other key announcements by Alibaba, all of which indicate an ongoing transformation of the giant group. Earlier this week it announced that it would pay $4.86 billion (RMB28 billion) — by far Alibaba’s biggest acquisition since floating the company in New York last September — for a major stake in electronics retail chain Suning.
In the past three weeks Alibaba also announced further investment of $1 billion in its Aliyun cloud computing venture, a strategic tie-up with consumer goods giant Unilever, and the appointment of former Goldman Sachs investment banker Michael Evans to head its international operations.
Alibaba shares first traded in September last year at $93.89 and rose as high as $120 by November, but in 2015 are down 24%. and have been below the first trade price all year. Prior to the release of the quarterly figures they stood at $80.49.