Alibaba raises 2017 revenue guidance as cloud/digital media shift pays off

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REUTERS – Chinese online retail giant Alibaba Group Holding beat analyst estimates with a 54% rise in third-quarter revenue, benefiting from its sharpened focus on cloud and digital media ventures as well as gains in its core business.

Seeking new revenue streams with a series of data, cloud, artificial intelligence and logistics projects as China’s e-commerce market begins to show signs of saturation, Alibaba said after Tuesday’s results that it would raise 2017 full-year guidance for revenue growth to 54% from 48%.

In recent months, executives including Chairman Jack Ma have identified Alibaba as a data company, downplaying the role of online retail in its future.

It submitted a $2.6 billion bid this month to privatize Chinese department store operator Intime Retail Group, saying it intended to use data to digitize offline shopping.

In a conference call after Tuesday’s earnings, Chief Executive Daniel Zhang said the company would leverage its data to explore new modes of retail, treating the Intime investment as a test.

Revenue from Alibaba’s core e-commerce business accounted for 87% of total revenue in the three months to Dec. 31, down from 92% in the same period a year earlier.

Third-quarter revenue was 53.2 billion yuan ($7.76 billion), against a consensus forecast of 50.1 billion yuan from Thomson Reuters I/B/E/S, while net income attributable to the company’s shareholders grew 43% to $2.57 billion, or $1 a share.

Revenue rose 273% to 4,063 million yuan in its digital and entertainment business, mainly driven by the consolidation of Youku Tudou, CFO Maggie Wu said.

The company’s cloud business, meanwhile, increased revenue by 115% to 1,764 million yuan.

Alibaba Chairman Ma met Donald Trump before his inauguration this month and promised to add a million small US businesses to the company’s platforms over five years, though there was no mention of that target in Tuesday’s earnings.

The company has also been looking to limit damage to its image after its Taobao shopping website was returned to a US blacklist of sites peddling counterfeit goods. US regulators, meanwhile, have been investigating Alibaba’s accounting practices.

($1 = 6.8560 Chinese yuan renminbi)

(Reporting by Supantha Mukherjee in Bengaluru and Catherine Cadell in Beijing; Editing by David Goodman)

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