NEW YORK/HONG KONG -- Chinese conglomerate Alibaba Group Holding on Thursday reported a better-than-expected quarter with a strong rebound from coronavirus impacts, easing anxieties about the mounting pressure it faces from both domestic rivals and Washington.
Alibaba, which is listed in New York and Hong Kong, reported a revenue of 153.6 billion yuan ($21.7 billion) for the April-June quarter -- a 34% jump on the year -- topping the consensus of 147.77 billion yuan as polled by Refinitiv. Net profit was 47.59 billion yuan, ahead of estimates of 36.04 billion yuan.
The group's strong quarter could help reassure investors at a time that Alibaba is caught up in rising geopolitical tensions on top of growing domestic competition. U.S. President Donald Trump has stepped up his anti-China rhetoric in the run up to the U.S. election, targeting the world's second-largest economy, especially its tech sector, with sanctions and threats.
"Our domestic core commerce business has fully recovered to pre-COVID-19 levels across the board," said Chief Financial Officer Maggie Wu in a statement accompanying the earnings result.
This month, Trump urged American companies to cut ties with Chinese cloud service providers including Alibaba, citing cybersecurity concerns. In a news conference on Saturday, when asked if he was considering a ban on Alibaba following his move against ByteDance's TikTok, he said, "We are looking at other things, yes."
The company is also under pressure from India, which blocked its UC Browser as well as 58 other Chinese apps on national security grounds in June.
Alibaba chairman and CEO Daniel Zhang in the group's earnings call Thursday sought to portray the tech behemoth as a facilitator of American economic growth rather than a threat.
"Today, we face... increasing tensions between the U.S. and China," Zhang said, "As the world's largest e-commerce platform, Alibaba's primary commercial focus in the U.S. is to support American brands, retailers, small businesses and farmers to sell consumers and trade partners, as well as other key markets round the world."
Alibaba's vision to "make it easy to do business anywhere" is "fully aligned with the interests of both China and the United States," he said, adding that stopping the UC Browser's India operations would not have much material impact on the company's financials.
Southeast Asia, however, remains the priority of the group's globalization strategy, Zhang said.
Domestically, challenges have come from longtime rival JD.com, e-commerce upstart Pinduoduo and even TikTok owner ByteDance.
JD.com exhibited an edge over Alibaba during the pandemic's peak, thanks to its own logistics network. Pinduoduo, which started out serving primarily rural areas and smaller cities, is also rapidly gaining ground in urban users with heavily discounted offers including on high-end products, such as Tesla's Model 3.
ByteDance, looking to convert eyeballs into profit, has also ventured into e-commerce, first directing traffic to online shopping sites including Alibaba's Taobao.com, and then launching its own marketplace within TikTok's Chinese sister app Douyin.
According to research reports, last year ByteDance, surging ahead of Baidu and Tencent Holdings, was second in digital advertising revenues in China, only behind Alibaba.
Alibaba's online marketplaces primarily generate revenues by charging vendors marketing and advertising fees to promote their products.
The increasingly heated competition and need to recover from the shock of the pandemic prompted Alibaba to spend more aggressively this year during its annual June 18 shopping festival: together with partners, Alibaba distributed billions of yuan in consumer coupons and subsidies.
Rivals JD.com also recorded a 34% revenue growth in earnings released Monday. Pinduoduo's quarterly report is scheduled for Friday.
"It's easy to be blase about Alibaba posting revenue growth of 34% in the pandemic, but it's important to remember that Alibaba sells goods each year equal to the value of the GDP of the Netherlands," said Martin Garner, chief operating officer of market analysis firm CCS Insight.
"Alibaba's results provide good clues for other countries that much of the new behavior we saw during the pandemic will stick as the world starts to return to normal, especially in the areas of shopping and cloud services," Garner said.
The company's strong revenue flows this past quarter were largely driven by its commerce sales, which generated 133.3 billion yuan, or 87% of total revenue in the second quarter. Logistics disruptions caused by the coronavirus pandemic had earlier dented its online sales, with revenue growing just 22% in the January-March quarter.
Revenues from cloud computing increased 59% during the April-June quarter to 12.3 billion yuan, though the segment remained loss-making.
The surge in net profit was fueled by recovering valuations on company investments. Alibaba opened 1.5% lower in New York Thursday.