Alibaba (BABA) 2Q FY18 Results: Beats on Earnings and Highest Revenue Growth Since its IPO

Executive Summary

• Alibaba reported 2Q FY18 revenues of ¥55.1 billion, up 61% year over year, the highest growth since its IPO. It also beat the consensus estimate by 26%. The company attributed the strong results to the robust revenue growth from its core commerce segment, as well as the Alibaba cloud business. The company is seeing early results from efforts to integrate online and offline retail under its New Retail strategy.
• Core commerce revenues reached ¥46.5 billion, up 61% year over year. China retail and wholesale together contributed 75% of total revenues. International retail revenues were up 115% year over year, primarily driven by increasing revenues from AliExpress and Lazada.
• Cloud computing sales reached ¥3.0 billion, up 99% year over year, driven by robust growth in paying customers, as well as an improving revenue mix to higher valued-added services.
• Alibaba raised its FY18 revenue growth guidance range to 49%–53%, due to consolidation of Cainiao in the fiscal year. Excluding this, the company stated that it is well on track to delivering the prior guidance range of 45%–49% provided during the Investor Day.