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Alibaba's long period of growth was finally broken after the Chinese e-commerce giant reported disappointing financial results for its Q2 2019 quarter. (A bit confusing, but Alibaba's neighborhoods are a bit ahead of the current schedule.)
The company did not meet market expectations as it achieved a turnover of 85.15 billion RMB ($ 12.4 billion) in the second quarter of 2019, slightly less than RMB 86.58 billion estimated by Bloomberg. The company has also reduced its expected annual sales target of 4 to 6 percent, in the range of 375 billion to 383 billion RMB, although it has not provided any explanation for this adjustment. Possible reasons include the slowdown in the Chinese economy, the negative sentiment generated by the American trade war, and so on.
The company may see its earnings rebound as it explores new ways to get more advertising – although it does not happen any time soon. In its report, Alibaba said that she "had decided not to monetize, in the short term, the additional inventory generated by the growth in the number of users and the commitment to our markets retail in China ".
TechCrunch has come to understand that the titan of e-commerce is testing a new AI-based advertising system that could create more "inventory", that is to say, the "e-commerce" system. advertising space, but it delays the monetization, while its main traders undergo an economic slowdown. .
But it's far from catastrophic – and Alibaba has proudly proclaimed its results as "industry leader", in case you're wondering.
The e-commerce giant's business figure continues to grow at a decent rate of 54% from one year to the next, but this quarter marks the first time its growth has fallen below 55% since its third quarter 2017 – about seven quarters ago in January 2017
The company posted a net profit of 18.2 billion RMB ($ 2.66 billion) for the period, up five percent from the previous year.
The business activities of Alibaba, its most lucrative division, grew by 56 percent over the previous year, reaching RMB 72.48 billion (US $ 10.55 billion) in revenue, down from the previous year. 61% growth in the previous quarter, but the factors that influenced this quarter are also present elsewhere.
According to Alibaba, one of the main reasons for this financial result is that it has invested heavily in the areas of logistics, entertainment, international expansion and local services. In August, it officially consolidated its local service platform Koubei with Ele.me, the food distribution network it acquired as part of an operation that also allowed Alibaba and SoftBank to realize a investment of $ 3 billion.
Some other notable figures: Mobile monthly active users grew by 32 million in three months to reach 666 million, while active annual consumers (a figure that shows how many people have bought on Alibaba in the last year) have increased 25 million to reach 601 million.
The fast growing segments of the cloud and international e-commerce continue to grow at a rapid pace, growing at 90% and 55% per year, although both figures were down slightly from the previous quarter's growth.
The shares of the e-commerce giant are trading up five percent in the pre-commercial market. The company is gearing up for Singles Day, an annual event that has become the biggest shopping frenzy in the world since its inception 10 years ago.
This year, Alibaba will continue to grow offline with a plan to roll out retail solutions in 200,000 stores in China, while further focusing on expanding the festival into its international markets. In particular, it is probably India, where it invests in Paytm; Southeast Asia, where she owns and operates Lazada; and Russia, where it recently launched a joint venture focusing on e-commerce, gaming and social services.
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