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What Alibaba and Yahoo really have to fear

What's hurting Alibaba's revenue growth?

Alibaba appears to have hit a slump just months before it plans an initial public offering. Will it find its rhythm again before coming to market?

The Chinese e-commerce giant, which hasn't begun formally marketing its IPO, issued an updated filing Monday that included partial results for the March quarter. One obvious disappointment was revenue growth, which slipped to 39 percent from an incredible 62 percent in the December quarter.

The number appeared to spook investors, with shares of Yahoo falling about 5 percent in afternoon trading. Yahoo owns about 22.5 percent of Alibaba, and investors say that investment reflects the vast majority of the U.S. company's valuation.

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The results came just as Alibaba has begun early-stage marketing meetings in the U.S. ahead of its planned New York listing. Investors familiar with the company said Alibaba management is spending time on the East Coast this week for informal meetings, though they won't give formal presentations until the roadshow begins in several weeks. A spokesman for Alibaba declined to comment.

What went wrong in the first quarter? One likely explanation is the success of Alibaba's "Singles Day" promotion that has generated a swelling amount of sales around Nov. 11 of each year.

The success of the promotion, which is only a few years old, may have pulled demand into the December quarter at the expense of both the September quarter and the March quarter. After revenue rose 59 percent in the June quarter last year, it decelerated to 47 percent in the September quarter before picking up in the December quarter and then slowing down once again in early 2014.

A more important question for Alibaba may be how well it can manage the shift from desktop to mobile. At the moment, Alibaba makes much more money per desktop transaction than per mobile transaction. On desktop during the March quarter, Alibaba collected revenues equivalent to about 2.6 percent of so-called gross market value (GMV), or the value of transactions on its marketplaces. But for mobile transactions, it earned revenues worth only 0.98 percent of the GMV.

That difference is problematic because Alibaba is conducting more and more transactions on mobile, meaning revenue growth may lag even if transactions grow apace.

Alibaba updates IPO filing

Indeed, GMV rose a healthy 46 percent in the March quarter, down modestly from 53 percent in the previous quarter. Revenue growth fell to 39 percent in part because the percentage of GMV from mobile devices rose to 27.4 percent in the March quarter from 19.7 percent in the December quarter.

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Alibaba is well aware that mobile transactions aren't as profitable. In the latest filing the company said it is focused on expanding its user base in mobile "rather than prioritizing monetization of user traffic on our mobile platform." In theory, Alibaba could start selling more advertising or marketing services on mobile as soon as it feels the time is right.

Unfortunately, that transition won't be simple. Other rivals, notably, are also pursuing share of mobile commerce in China. In the first quarter, had 44.1 billion Chinese yuan in GMV, up from 24 billion a year earlier. While JD's GMV was far smaller than Alibaba's 430 billion yuan, it is growing into a legitimate threat.

The good news for Alibaba is that it is already very profitable, with an operating margin of 45 percent in the March quarter. But if the company wants to secure a valuation worthy of a true growth company, it will need to convince investors that its mobile strategy is a home run.

—By CNBC's John Jannarone