Alibaba’s investment in its mobile business is starting to bear fruit, but the e-commerce giant still reported disappointing results for the first fiscal quarter of 2015.
First-quarter revenue rose 28 percent to $3.26 billion, which not only fell below the $3.39 billion analysts polled by Thomson Reuters had forecast, but also represented its slowest quarterly revenue growth in three years.
Alibaba said if the effect of stopping online lottery sales (which Alibaba suspended in February after pressure from regulators) and the transfer of its SME loan business to Ant Financial is excluded, revenue would have increased 36 percent year-over-year.
The company’s net income was $1.5 billion, a 30 percent increase year-over-year.
Gross merchandise volume (GMV) grew to $109 billion, or 34 percent year-over-year, its slowest growth in three years.
On the upside, mobile GMV, an important indicator of how the company’s shopping apps are performing, climbed 125 percent year-over-year to $60 billion. Transactions made on mobile devices now account for 55 percent of total GMV on all of Alibaba’s marketplaces, while its mobile revenue of $1.3 billion made up more than half of its total China e-commerce retail revenue for the first time.
The health of Alibaba’s mobile business is being closely monitored because the company’s earnings took a hit last year as it plowed money into its apps.
Alibaba, which recently invested $1 billion into Aliyun, its cloud-computing unit, said it’s “beginning to see the positive impact of years of investment in proprietary technology.” Its first-quarter revenue from its cloud computing and Internet infrastructure business jumped 106 percent year-over-year to $78 million.
The company’s international business suffered a setback in June when it stopped operating 11 Main, a marketplace for the U.S., as a standalone business. Alibaba is still set on growing beyond China, however, with its cross-border businesses, which brings international brands to Chinese consumers.
In the company’s earnings call, chief executive officer Daniel Zhang said its priority is to expand its logistics network and improve its big data technology and collaborations with government agencies to catch counterfeit sellers, which is important to win the confidence of overseas brands.
The devaluation of the Chinese yuan, however, means Alibaba may face an uphill battle building its cross-border business next quarter because consumers will likely have to pay more for imported goods.
Alibaba also said during its earnings call that it has authorized a $4 billion stock buyback program.