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China's Alibaba outstrips revenue estimates with online sales growth

  • Alibaba, China's largest e-commerce firm, reported first-quarter revenue above Wall Street estimates, helped by strength in the Chinese e-commerce market.
  • Alibabai is benefiting from more Chinese consumers buying an increasing proportion of everything from food to clothing to luxury items online.
Jack Ma
David A. Grogan | CNBC
Jack Ma

Alibaba, China's top e-commerce firm, beat analyst's estimates with a 56 percent rise in first-quarter revenue, driven by growth in online sales which make up most of its business.

Thursday's results show that Alibaba, one of Asia's most valuable companies, is benefiting from more and more Chinese buying an increasing proportion of everything from food to clothing to luxury items online.

Alibaba's stock is up by over 81 percent this year, lifted by steady increases in revenue for its commerce business and strong growth in its cloud computing and entertainment units, even as investments in offline stores are yet to pay off.

Alibaba's revenue rose to 50.1 billion yuan ($7.51 billion)for the three months ended June 30, compared with analysts' average estimate of 47.7 billion yuan, according to Thomson Reuters I/B/E/S.

"Our technology is driving significant growth across our business and strengthening our position beyond core commerce," chief executive Daniel Zhang said in a statement.

Revenue from Alibaba's core e-commerce business made up 86 percent of total revenue in the three months to June 30, up from 73 percent in the same period a year prior.

In the cloud business, revenue grew 96 percent in the quarter to 2.4 billion yuan, with total paying customers breaking the 1 million mark for the first time, up from 577,000 a year earlier.

Alibaba's cloud business boosted its total global data centers to 17 during the first quarter, with the addition of two centers in India and Indonesia.

Revenue in the entertainment business rose by 30 percent to 4 billion yuan.

Net income attributable to the company's shareholders nearly doubled to $2.17 billion, or 83 cents per share.

Shares of Chinese e-commerce firms, including Alibaba.com and JD.com, have outperformed the market in 2017, buoyed by positive revenue growth around June sales events and overseas expansion developments.

In June Alibaba raised its expectations for full year revenue growth to 45-49 percent.

It has accelerated the roll-out of its e-commerce infrastructure in Southeast Asia, with a further $1 billion investment in Singapore-based e-commerce platform Lazada Group, and targeted new merchants in Russia and the United States as part of a wider plan to boost revenues and attract new customers outside of China.

Alibaba, though, is yet to prove the value of several recent large-scale investments, including $2.6 billion in department store chain Intime Retail Group, among other brick-and-mortar investments.

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