BEIJING (dpa-AFX) - Chinese e-commerce giant Alibaba Group Holding Ltd (BABA) on Thursday reported a 28 percent drop in third-quarter profit, hurt by stock-based compensation expense, goodwill impairment charges and financing-related fees. Meanwhile revenues surged 40 percent, driven by growth in China commerce retail business, though not at the rate analysts expected, even as its active user base ballooned.
Excluding items, Alibaba's adjusted earnings easily topped Wall Street estimates, but revenues fell short of expectations. Alibaba shares slid 9 percent in morning trade on the New York Stock Exchange following the announcement.
This is the first full-quarter Alibaba is reporting its financial results since its September IPO.
While Alibaba has been registering sustained growth, investors are worried as to its capacity to keep the revenue engine going full throttle. This comes at a time when the Chinese economy shows some signs of cooling, and Alibaba entangles itself in a spat with a national regulator over the alleged presence of illegal business on its platform.
All said, the company reported revenues of 26.18 billion remnibis, or $4.22 billion, up 40 percent from 18.75 billion remnibis in the prior year.
Twenty-seven analysts had a consensus revenue estimate of $4.45 billion for the quarter.
Revenue from the China commerce retail business increased 32 percent from a year ago, mainly driven by the growth in commission revenue and online marketing services revenue.
Mobile revenue from the China commerce retail business also surged, primarily due to a greater proportion of gross merchandise volume generated on mobile devices and an increase in the mobile monetization rate.
Alibaba's gross merchandise volume, or GMV, or the sum of all of the company's online commerce transactions, rose 49 percent to 787 billion remnibis, or $127 billion.
Mobile GMV more than tripled to 327 billion remnibis, or $53 billion, and accounted for 42 percent of total GMV.
Alibaba's results for the quarter were hurt by stock-based compensation expense of 4.3 billion remnibis, or $695 million; goodwill impairment charges of 1.03 billion remnibis, or $166 million; and a charge for financing-related fees of 830 million remnibis, or $134 million.
As a result, the company posted third-quarter net income to ordinary stockholders of 5.94 billion remnibis or $957 million, compared with 8.27 billion remnibis last year. On a per share basis, earnings were 2.29 remnibis, or $0.37, compared with 3.55 remnibis a year ago.
Excluding stock-based compensation expense and other items, adjusted earnings for the quarter were 5.05 remnibis per share, or $0.81 per share, compared with 4.45 remnibis per share last year.
On average, 26 analysts polled by Thomson Reuters expected earnings of $0.75 per share for the quarter. Analysts' estimates typically exclude special items.
At the end of the quarter, the company's China retail marketplaces had 334 million annual active buyers, up 45 percent from last year. The number of mobile monthly active users nearly doubled from a year ago to 265 million.
Alibaba completed an historic multi-billion dollar US initial public offering last September that raised a record $25 billion. Recently Jack Ma, the founder of Alibaba, said he is not worried about the slowing economic growth in China.
Recently, Yahoo said it would initiate a tax-free spin-off of its stake in Alibaba into a separate entity, keeping investors guessing if Alibaba could buyback the shares.
BABA is trading at $88.93, down $9.52 or 9.67%, on a volume of 42 million shares.
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