Alibaba looks to the cloud as profits rise

Alibaba quarterly sales beat analysts’ estimates as growth in cloud computing services bolstered its core e-commerce business.

Revenue at China’s biggest operator of online shopping malls rose 55 per cent to 34.3 billion yuan ($5.1 billion), the company said on Wednesday.

That compares with the 33.9 billion-yuan average of estimates compiled by Bloomberg.

Adjusted earnings-per-share were 5.26 yuan, compared with the 4.69 yuan expected by analysts.

Alibaba is using its massive computing power to win cloud customers and add a new leg of growth as it tries to make itself less dependent on the e-commerce business that underpinned its rise.

Chairman Jack Ma is counting on data centres to deliver returns sooner than investments in online streaming and music as economic growth in China deteriorates.

Cloud will be "the next revenue driver", Evan Zhou, a Hong Kong-based analyst at Credit Suisse, wrote in a report.

“We see robust usage growth attributable to increasing paying users and a fast expansion in product offerings.”

The cloud unit’s revenue leapt 130 per cent to 1.5 billion yuan in the quarter, the company said.

Core commerce revenue rose 41 per cent to 28.5 billion yuan. Shares of Alibaba slipped 0.5 per cent to $101.15 in New York on Tuesday. The stock has gained 24 per cent this year compared with a near-3 per cent gain for the NYSE Composite Index.

- Bloomberg