Chinese e-commerce giant Alibaba posted a 59% leap in revenues in the first quarter.
The profits picture was more complicated. Alibaba reported a slump in net income from RMB30.8 billion in the comparable April to June quarter last year, down to just $1.08 billion (RMB7.14 billion.) Measured on non-GAAP accounting standards net profits rose by 28% from RMB9.50 billion to $1.83 billion (RMB122.2 billion.) Diluted earnings per share using the non-GAAP measure rose by a third to US$0.74 per American depositary share.
It described the results as “an outstanding quarter (showing) the strength and scale of our ecosystem.”
Revenues at its digital media and entertainment division were $467 million (RMB3.13 billion) with an EBITDA loss of $23.6 million (RMB158 million.) “Consolidating the strengths of the key media investments we have made, in the June quarter we combined Youku Tudou, UCWeb and OTT TV service into a Digital Media and Entertainment unit under a unified management structure. We believe the synergies derived from this combination will accelerate development and catalyze future growth,” it said in a statement.
Its UCWeb operation was singled out for particular attention. “ UCWeb has evolved from a mobile browser to a mobile media asset, offering mobile search and news feeds to over 420 million monthly active users in June. International expansion is robust. UCWeb browser is the No. 1 independent browser in India and Indonesia and is one of the world’s top three mobile browsers, according to StatCounter.”
While the group profits picture could be interpreted as bad news, notably it shows a weakening of profit margins, the company went some way to fending off skepticism about the quality of its accounting and financial disclosures.
The company’s shares stood at $87.3, near their 52-week high, at the close of trading on the NYSE on Wednesday. Pre-market trading after the results announcement on Thursday morning (Eastern time) suggested that the shares would open higher still at over $91, a gain of 4.5%.
The company has been probed by the U.S. Securities and Exchange Commission over how it treats the revenues of affiliate companies and data from special promotions. And the SEC objects to Alibaba’s use of ‘gross merchandize volume,” a measurement of total trading on its platforms, but which is not revenue that belongs to the company. It has some some similarities to a cinema exhibitor reporting theatrical box office or an advertising agency reporting gross billings.
Alibaba still reported its GMV, but tucked it away from the numbers that the SEC finds more acceptable. The company said gross sales rose by 24% to $126 billion (RMB837 billion,) with fully 75% of that conducted on mobile platforms.