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Though newer businesses such as AliCloud and the company's online video operations often get more headlines these days, well over 100% of Alibaba's (BABA) - Get Alibaba Group Holding Ltd. Reportoperating profits still come from the company's e-commerce operations, the lion's share of which comes from its Chinese retail marketplaces.

Thanks to a mixture of strong execution and a still-booming Chinese e-commerce market, those marketplaces continue to do quite well, defying (for now) expectations of a sharp growth slowdown. That, in turn, appears to be leaving investors more comfortable with the losses Alibaba is absorbing as it grows out other businesses.

For the seasonally big December quarter (fiscal Q3), Alibaba reported revenue of RMB53.2 billion (equal to $7.67 billion and up 54% annually) and adjusted EPS of $1.30, handily beating consensus analyst estimates of $7.32 billion and $1.13. With revenue growth declining just modestly from the September quarter's 55%, Alibaba hiked its fiscal 2017 (ends March 2017) revenue growth forecast to 53% from 48%.

Shares rose 3.1% on Tuesday, and are up about 45% over the last 52 weeks. That's a big reason why shares of Yahoo (YHOO) , whose 384 million-share Alibaba stake currently has a pre-tax value of $39.1 billion, rose 3.5%. Yahoo's own earnings beat, together with a reiteration that the company expects the sale of its core business to Verizon (VZ) - Get Verizon Communications Inc. Reportto close (albeit belatedly), is also providing a bit of a lift. Top Alibaba rival (JD) - Get Inc. Report  rose 1.3%.

Alibaba's "core commerce" operations, which cover both its Chinese and international online marketplaces, saw revenue rise 45% annually to $6.7 billion. That's better fiscal Q2's 41% growth, and was fueled by a healthy 42% increase in China commerce retail revenue to $5.9 billion (better than Q2's 40%).

Rapid mobile ad spending growth among Taobao and Tmall merchants is responsible for much of this increase: Marketing (ad) revenue for these marketplaces rose 47%. Commission revenue (tied to Tmall) rose 32%, which is still far higher than the mere 9% growth Alibaba say in its annual active buyer base (to 443 million).

Altogether, mobile devices produced 80% of Alibaba's Chinese commerce retail revenue. Much like Facebook (FB) - Get Meta Platforms Inc. Class A Report, Alibaba now appears to be monetizing better on mobile than on PCs; the company's mobile ad targeting and payment tools are helping, as is the fact screen space is more limited on smartphones, giving merchants an incentive to buy ads to stand out.

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Editor's pick: This article was originally published on Jan. 24

And as the commission growth shows, China's e-commerce boom still has some legs to it, even if the growth is now driven more by spending increases from existing shoppers than overall shopper growth. Alibaba's healthy Singles Day performance gave a lift in Q3, and so might have the Chinese government's efforts to boost consumer spending via stimulus measures. Annual Chinese retail revenue per active buyer rose by $11 annually to $35.

Elsewhere in core commerce, Alibaba's international retail commerce revenue rose 288%, thanks in large part to its acquisition of top Southeast Asian e-commerce firm Lazada. But with revenue of $353 million, this business still pales in size relative to Taobao/Tmall. As do Alibaba's Chinese and international wholesale businesses, which respectively had revenue of $218 million (up 30%) and $224 million (up 9%).

Notably, while Alibaba reported a company-wide operating profit of nearly $3 billion, its core commerce operations had an operating profit of nearly $4 billion. Everything else -- cloud services, online media, the Koubei local services JV and so on -- collectively lost about a billion dollars.

These non-core businesses are undoubtedly seeing strong growth. Cloud computing revenue rose 115% to $254 million, and digital media and entertainment revenue, boosted by Alibaba's $4 billion 2016 purchase of top Chinese online video player Youku Tudou, rose 273% to $585 million. The "Innovation initiatives and other" segment, which covers things Alibaba's YunOS operating system and AutoNavi mapping unit, saw revenue rise 61% to $122 million. Koubei, which just raised $1.1 billion from several investors, saw payment volume rise 52% sequentially to $10.5 billion.

But as the operating losses show, this growth is coming at a steep price. In spite of the 54% revenue growth, Alibaba's gross margin fell to 34% from 38%. Youku's content costs played a role, as did spending on Lazada and the Tmall Supermarket grocery delivery business.

On the other hand, spending seems to be controlled at Alibaba's core e-commerce businesses. R&D, sales/marketing and G&A expenses fell, respectively, to 8%, 9% and 6% of revenue from 11%, 11% and 7% a year ago. Excluding stock compensation, the numbers were 5%, 8% and 4%.

Along with the revenue growth, this allowed Alibaba's free cash flow to rise 44% to $4.9 billion. That, in turn, left the company with about $20 billion in cash on its balance sheet at the end of December (partly offset by $13 billion in debt).

Just as markets are giving Amazon (AMZN) - Get, Inc. Report a pass for the losses it's absorbing in certain units (e.g. Prime Video, the company's Indian operations) as profits (and sales) grow within its North American e-commerce operations and at Amazon Web Services (AWS), swelling profits at Taobao and Tmall have investors giving Alibaba a pass for the losses recorded elsewhere. As long as rising mobile ad sales and Chinese e-commerce spending can keep those businesses booming, that's unlikely to change.

If there is a real slowdown, however, investors might start demanding that losses in those non-core businesses start to narrow.