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Alibaba (BABA) Beats on Q1 Earnings, Revenues Increase Y/Y
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Alibaba Group Holding Limited (BABA - Free Report) reported first-quarter fiscal 2018 (ended Jun 30, 2017) earnings of 94 cents per share, surpassing the Zacks Consensus Estimate by 21 cents. The adjusted figure excludes one-time items but includes stock-based compensation expense.
Earnings were driven by solid growth in the company’s core e-commerce business, strong growth in metrics and growing cloud-computing services.
Following the strong fiscal first-quarter results, share price increased 2.77%. Also, the company's shares have gained 86.7% year to date, outperforming the industry’s gain of 46.6%.
Revenues
Alibaba reported revenues of RMB50.18 billion (US$7.40 billion), up 30.1% sequentially and 56.1% year over year. Also, revenues were above the Zacks Consensus Estimate of US$7.02 billion.
The increase was driven by continued revenue growth in the China and International commerce retail business and strong growth in Alibaba’s cloud business.
Revenue by Segments
Starting first-quarter fiscal 2017, Alibaba commenced segment reporting. It has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives. The details of these segments are discussed below.
Core Commerce – This segment comprises marketplaces operating in retail and wholesale commerce in China, and international commerce. Revenues in the quarter were RMB43.03 billion (US$6.3 billion), increasing 58% year over year.
· China commerce retail business (73% of total revenue)– This business vertical’s revenues in the quarter were RMB36.7 billion (US$5.4 billion), reflecting an increase of 57% year over year. The increase was driven by robust growth in online marketing service revenues.
· China commerce wholesale business(3% of total revenue)– This business generated revenues of RMB1.64 billion (US$242 million), reflecting an increase of 30% year over year. The increase was due to an increase in the average revenue from paying members.
· International commerce retail business(6% of total revenue)– Revenues in the quarter were RMB2.64 billion (US$389 million), increasing 136% year over year. The increase was driven by growth in revenue generated from Lazada and AliExpress.
· International commerce wholesale business(3% of total revenue)– This business generated revenues of RMB1.61 billion (US$237 million), increasing 12% year over year. The increase was backed by growth in revenues generated from import/export related value-added services.
· Others business(1% of total revenue)– This business generated revenues of RMB0.43 billion (US$0.64 million), reflecting an increase of 790% year over year.
Cloud Computing – This segment comprises Alibaba Cloud, offering a complete suite of cloud services. Revenues in the quarter were RMB2.43 billion (US$359 million), up 96% year over year, driven by an increase in the number of paying customers and higher-than-usual spending by them, reflecting increased usage of services.
Digital Media and Entertainment– The segment operates businesses through media properties, including UCWeb, Youku Tudou, OTT TV service, Alibaba Music and Alibaba Sports. Revenues were RMB4.08 billion (US$602 million), up 30% year over year. The growth was driven from an increase in revenues from mobile value-added services provided by UCWeb, such as mobile search, news feeds and game publishing.
Innovation Initiatives and Others– This segment includes businesses such as the YunOS operating system, AutoNavi, DingTalk enterprise messaging and others. Revenues in the quarter were RMB645 million (US$95 million), up 21% year over year, driven by an increase in revenue from AutoNavi.
Key Metrics
Mobile Monthly Active Users – Mobile MAUs were 529 million, improving 24% year over year and 4% sequentially. This was because adoption of mobile devices by consumers increased as the primary method of accessing Alibaba’s platforms.
Annual Active Buyers– China retail marketplaces had 466 million annual active buyers in the 12-month period ended Jun 30, 2017, representing 7% year-over-year growth.
Paying Customers– The number of paying customers of the cloud-computing business was 1,011,000, increasing 75% year over year and 16% sequentially.
Operating Results
Pro forma gross margin was 65.2%, up 536 basis points (bps) sequentially and 173 bps year over year.
Alibaba’s adjusted operating expenses of RMB13.2 billion increased 27.8% year over year.
On a GAAP basis, Alibabagenerated net income of RMB14.7 billion(US$2.2 million) compared with RMB7.6 billionin the year-ago period.
Alibaba generated adjusted net earnings of 94 cents compared with 52 cents in first-quarter fiscal 2017. Pro forma earnings exclude charges related to the amortization of intangible assets, gain/loss on disposals/deemed disposals/revaluation of investments, and amortization of excess value receivable from the restructuring of commercial arrangements with Ant Financial, but includes stock-based compensation expense.
Balance Sheet
Alibaba exited fiscal first quarter with cash and cash equivalents and short-term investments of approximately RMB148.2 (US$21.9 million) billion against RMB146.7 (US$21.3 million) in the prior quarter.
Cash Flow/Share Repurchase
Cash flow from operations was RMB25.3 billion (US$3.73 billion) compared with RMB10.75 billion (US$1.56 billion) in the prior quarter. Free cash flow was RMB22.1 billion (US$3.27 billion) compared with RMB7.98 billion (US$1.16 billion) in year-ago quarter.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Lam Research delivered a positive earnings surprise of 4.44%, on average, in the trailing four quarters.
Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.
Fortive Corporation delivered a positive earnings surprise of 5.80%, on average, in the trailing four quarters.
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Alibaba (BABA) Beats on Q1 Earnings, Revenues Increase Y/Y
Alibaba Group Holding Limited (BABA - Free Report) reported first-quarter fiscal 2018 (ended Jun 30, 2017) earnings of 94 cents per share, surpassing the Zacks Consensus Estimate by 21 cents. The adjusted figure excludes one-time items but includes stock-based compensation expense.
Earnings were driven by solid growth in the company’s core e-commerce business, strong growth in metrics and growing cloud-computing services.
Following the strong fiscal first-quarter results, share price increased 2.77%. Also, the company's shares have gained 86.7% year to date, outperforming the industry’s gain of 46.6%.
Revenues
Alibaba reported revenues of RMB50.18 billion (US$7.40 billion), up 30.1% sequentially and 56.1% year over year. Also, revenues were above the Zacks Consensus Estimate of US$7.02 billion.
The increase was driven by continued revenue growth in the China and International commerce retail business and strong growth in Alibaba’s cloud business.
Revenue by Segments
Starting first-quarter fiscal 2017, Alibaba commenced segment reporting. It has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives. The details of these segments are discussed below.
Core Commerce – This segment comprises marketplaces operating in retail and wholesale commerce in China, and international commerce. Revenues in the quarter were RMB43.03 billion (US$6.3 billion), increasing 58% year over year.
· China commerce retail business (73% of total revenue)– This business vertical’s revenues in the quarter were RMB36.7 billion (US$5.4 billion), reflecting an increase of 57% year over year. The increase was driven by robust growth in online marketing service revenues.
· China commerce wholesale business(3% of total revenue)– This business generated revenues of RMB1.64 billion (US$242 million), reflecting an increase of 30% year over year. The increase was due to an increase in the average revenue from paying members.
· International commerce retail business(6% of total revenue)– Revenues in the quarter were RMB2.64 billion (US$389 million), increasing 136% year over year. The increase was driven by growth in revenue generated from Lazada and AliExpress.
· International commerce wholesale business(3% of total revenue)– This business generated revenues of RMB1.61 billion (US$237 million), increasing 12% year over year. The increase was backed by growth in revenues generated from import/export related value-added services.
· Others business(1% of total revenue)– This business generated revenues of RMB0.43 billion (US$0.64 million), reflecting an increase of 790% year over year.
Cloud Computing – This segment comprises Alibaba Cloud, offering a complete suite of cloud services. Revenues in the quarter were RMB2.43 billion (US$359 million), up 96% year over year, driven by an increase in the number of paying customers and higher-than-usual spending by them, reflecting increased usage of services.
Digital Media and Entertainment– The segment operates businesses through media properties, including UCWeb, Youku Tudou, OTT TV service, Alibaba Music and Alibaba Sports. Revenues were RMB4.08 billion (US$602 million), up 30% year over year. The growth was driven from an increase in revenues from mobile value-added services provided by UCWeb, such as mobile search, news feeds and game publishing.
Innovation Initiatives and Others– This segment includes businesses such as the YunOS operating system, AutoNavi, DingTalk enterprise messaging and others. Revenues in the quarter were RMB645 million (US$95 million), up 21% year over year, driven by an increase in revenue from AutoNavi.
Key Metrics
Mobile Monthly Active Users – Mobile MAUs were 529 million, improving 24% year over year and 4% sequentially. This was because adoption of mobile devices by consumers increased as the primary method of accessing Alibaba’s platforms.
Annual Active Buyers– China retail marketplaces had 466 million annual active buyers in the 12-month period ended Jun 30, 2017, representing 7% year-over-year growth.
Paying Customers– The number of paying customers of the cloud-computing business was 1,011,000, increasing 75% year over year and 16% sequentially.
Operating Results
Pro forma gross margin was 65.2%, up 536 basis points (bps) sequentially and 173 bps year over year.
Alibaba’s adjusted operating expenses of RMB13.2 billion increased 27.8% year over year.
On a GAAP basis, Alibabagenerated net income of RMB14.7 billion(US$2.2 million) compared with RMB7.6 billionin the year-ago period.
Alibaba generated adjusted net earnings of 94 cents compared with 52 cents in first-quarter fiscal 2017. Pro forma earnings exclude charges related to the amortization of intangible assets, gain/loss on disposals/deemed disposals/revaluation of investments, and amortization of excess value receivable from the restructuring of commercial arrangements with Ant Financial, but includes stock-based compensation expense.
Balance Sheet
Alibaba exited fiscal first quarter with cash and cash equivalents and short-term investments of approximately RMB148.2 (US$21.9 million) billion against RMB146.7 (US$21.3 million) in the prior quarter.
Cash Flow/Share Repurchase
Cash flow from operations was RMB25.3 billion (US$3.73 billion) compared with RMB10.75 billion (US$1.56 billion) in the prior quarter. Free cash flow was RMB22.1 billion (US$3.27 billion) compared with RMB7.98 billion (US$1.16 billion) in year-ago quarter.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba Group Holding Limited Price, Consensus and EPS Surprise | Alibaba Group Holding Limited Quote
Zacks Rank and Stocks to Consider
Currently, Alibaba Group has a Zacks Rank #3 (Hold). A few better-ranked stocks in the same space are Lam Research Corporation (LRCX - Free Report) , carrying a Zacks Rank #1 (Strong Buy), and Applied Materials (AMAT - Free Report) and Fortive Corporation (FTV - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Lam Research delivered a positive earnings surprise of 4.44%, on average, in the trailing four quarters.
Applied Materials delivered a positive earnings surprise of 3.35%, on average, in the trailing four quarters.
Fortive Corporation delivered a positive earnings surprise of 5.80%, on average, in the trailing four quarters.
4 Surprising Tech Stocks to Keep an Eye on
Tech stocks have been a major force behind the market’s record highs, but picking the best ones to buy can be tough. There’s a simple way to invest in the success of the entire sector. Zacks has just released a Special Report revealing one thing tech companies literally cannot function without. More importantly, it reveals 4 top stocks set to skyrocket on increasing demand for these devices. I encourage you to get the report now – before the next wave of innovations really take off.
See Stocks Now>>