BEIJING -- Chinese e-commerce conglomerate Alibaba Group Holding again reported better-than-expected quarterly results on Tuesday, supported by a stellar performance on so-called Singles' Day. With revenue continuing to grow, company executives pledged further investments in the cloud and entertainment sectors.
Revenue for the October-December quarter rose 54% to 53.2 billion yuan ($7.7 billion), beating the average analyst estimate of 50.1 billion yuan compiled by Thomson Reuters. New York-listed Alibaba shares surged almost 5% to open trading Tuesday at $103.15, breaking above $100 for the first time since early November.
The commerce sector continued to be the company's major revenue source, coming in at 46.5 billion yuan, up 45% from a year earlier. The big push came from China's biggest online shopping day -- Nov. 11, which is better known as Singles' Day in the country. Alibaba broke its own sales record, saying that it sold 120 billion yuan worth of goods on that day alone.
The event "showcased an extraordinary competitive advantage of our platform model," said CEO Daniel Zhang Yong, during a conference call held shortly after the results were released.
Meanwhile, net income rose 38% to 17.1 billion yuan, also beating analyst estimates. The company lifted its revenue guidance for the full year to March to 53% year-on-year growth, from 48% previously.
Revenue in its cloud business sector -- which it is trying to nurture as a new revenue stream -- surged by 115% on the year to 1.7 billion yuan, with paying customers increasing by 114,000 from last quarter to 765,000.
The triple-digit growth came despite price cuts for the service at the beginning of the quarter. Chief Financial Officer Maggie Wu admitted to downward pressure on revenue brought on by the price cut during the telephone conference, saying that it "had an impact on top-line growth." However, she said that, "overall, the top line still grew strongly," adding that the company is committed to passing the benefits of price cuts and technologies on to customers.
Nomura analyst Jialong Shi sees big growth potential for the business sector in China as it is still at an early stage. Yet, this also means that there is "both vast room for growth of market leaders like AliCloud, but also opportunities for latecomers," as Shi noted in a recent report, naming Alibaba rivals Tencent Holdings and Baidu.
On the cloud and entertainment businesses, Alibaba executives have repeatedly said profitability is not their priority at the moment. Instead, they have said the focus is on investment in order to build up cloud computing capacity.
However, CLSA analyst Elinor Leung said the market "sets high expectations on growth even though the group is already large." She added that Alibaba's aggressive investments in the future could be something "investors might not share the same vision with on certain deals."