Alibaba Group’s chief financial officer said during its earnings call today that the e-commerce giant’s focus on mobile will result in some “near-term growing pains” but ensure profitability in the future. The company’s revenue for the quarter ending in December rose 40 percent to $4.22 billion, but still missed the $4.45 billion analysts polled by Thomson Reuters had expected.
Alibaba’s net income was $964 million, a 28 percent decrease year-over-year. Alibaba attributed the decline to compensation expenses, a one-time charge for financing-related fees, and an increase in income tax expenses during the quarter.
On the upside, the monthly active mobile users grew 95 percent year-over-year to 265 million from 136 million a year earlier, which is significant because investors have been watching to see if Alibaba’s focus on its mobile apps will pay off. Gross merchandise volume (GMV) on Alibaba’s China sites grew 49 percent quarter-over-quarter to $127 billion.
Mobile GMV now accounts for 42 percent of that total (or $53 billion), an increase of 213 percent year-over-year.
The company said that not only are more people using Alibaba’s mobile shopping apps, but they are also spending more money, with mobile revenue growing 448 percent to $1.035 billion year-over-year. Mobile e-commerce is important to Alibaba’s future because it allows the company to reach more consumers who in turn shop more frequently and can be served more targeted search results than on its websites.
Chief financial officer Maggie Wu, however, acknowledged investor’s concerns about Alibaba’s heavy investment in its mobile business, stating “the rapid growth of mobile GMV may give us some near-term growing pains but bodes well for the health of our ecosystem” as its mobile monetization rate (or the revenue Alibaba makes from each mobile transaction) gradually improves.
Alibaba’s mobile monetization rate inched up during the December quarter to 1.96 percent, though that was a relatively small increase over the 1.87 percent rate Alibaba reported in the September quarter.
During the earnings call, vice chairman Joe Tsai also addressed a report released by China’s State Administration For Industry And Commerce that accused Alibaba Group of not doing enough to prevent the sale of counterfeit goods on its site.
Tsai said the report was “based on arbitrary methodology” and added that the company “believed the flawed approach and tactic of releasing a so-called ‘white paper’ specifically targeting us was so unfair that we have taken the extraordinary step of filing a formal complaint with the SAIC.”
Tsai says the first time Alibaba Group saw the report was when it was posted on SAIC’s site earlier this week and that it was “inaccurate and unfair” because Alibaba has taken several measures toward preventing the selling of counterfeit goods, including using data technology to identify hot spots for counterfeit production.