China-based e-commerce titan Alibaba Group (NYSE: BABA) announced financial results early Thursday morning. The report, which covered the third quarter of fiscal 2018, exceeded some analyst expectations but fell short elsewhere. Rattled by the mixed results, Alibaba investors took share prices 8% lower over the next two days.
Alibaba's third quarter by the numbers
| Metric | Q3 2018 | Q3 2017 | Year-Over-Year Change |
|---|---|---|---|
| Revenue | $12.8 billion | $7.7 billion | 66% |
| Net income | $3.59 billion | $2.47 billion | 45% |
| Adjusted earnings per diluted share | $1.63 | $1.30 | 25% |
Data source: Alibaba.
The provider of online sales infrastructure and tools saw sales surging 57% higher in its core commerce division. This segment accounted for 88% of Alibaba's total third-quarter revenues.
Though far smaller, the cloud computing division more than doubled its sales to $553 million. Alibaba's management plans to invest large chunks of the quarter's $7.1 billion in free cash flows into accelerating this vital business even further.
The company reached 580 million monthly active users in December, a 17% year-over-year gain. Annual active subscribers for calendar year 2017 landed at 515 million, a 16% increase from 2016's levels.
Image source: Alibaba.
Growth drivers
User engagement and customer loyalty continue to rest on the popular Taobao and Tmall platforms. Alibaba is building artificial intelligence features into Taobao's personalized shopping recommendations while Tmall is partnering up with global luxury brands to boost its consumer appeal.
Elsewhere, international retail revenues nearly doubled to $727 million. Under the hood of that explosive growth engine, you'll find the AliExpress mall that connects producers in China with buyers worldwide, as well as Southeast Asian shopping portal Lazada.
If you ever bought a fidget spinner or a cut-rate smartphone case through the micro-store networks on eBay (NASDAQ: EBAY) or Amazon.com (NASDAQ: AMZN), those products were very likely sourced directly from AliExpress and its sister sites. This makes Alibaba an important partner to eBay and Amazon -- but also a future rival looming just beyond the horizon.
The world is a much bigger place than Greater China, so Alibaba is throwing plenty of support behind these stores too.
In a separate Thursday announcement, Alibaba established a 33% equity interest in micro-financing specialist Ant Financial. The two companies already have a long history of collaboration, since Ant Financial runs Alibaba's popular online payments service, Alipay.