Alibaba Group Holding Limited BABA reported second-quarter fiscal 2021 earnings of $2.65 per ADS, which surpassed the Zacks Consensus Estimate of $2.06. Also, the bottom line increased 37% year over year.
It reported revenues of RMB155.1 billion (US$22.8 billion), up 30% from the prior-year quarter. The year-over-year revenue increase was driven by strength in the company’s China commerce retail business, cloud computing and Cainiao logistics services businesses.
However, revenues missed the Zacks Consensus Estimate of US$22.9 billion.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba Group Holding Limited price-consensus-eps-surprise-chart | Alibaba Group Holding Limited Quote
Revenues by Segments
Alibaba has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives. The details of these segments are discussed below.
Core Commerce: This segment comprises marketplaces operating in retail and wholesale commerce in China, as well as international commerce. The segment’s revenues for the quarter totaled RMB130.9 billion (US$19.3 billion), reflecting an increase of 29% on a year-over-year basis.
China commerce retail business (accounting for 62% of total revenues) — The business vertical’s revenues for the quarter were RMB95.5 billion (US$14.1 billion), reflecting an increase of 26% year over year.
China commerce wholesale business (2% of total revenues) — This business generated revenues of RMB3.6 billion (US$536 million), reflecting an 11% increase from the year-ago quarter. The increase in average revenues from paying members on 1688.com aided revenue growth.
International commerce retail business (5% of total revenues) — Revenues for the quarter were RMB7.8 billion (US$1.1 billion), increasing 30% year over year. The increase was driven by revenue growth from Lazada and Trendyol, partially offset by decrease in revenues from AliExpress.
International commerce wholesale business (2% of total revenues) — This business generated revenues of RMB3.5 billion (US$517 million), which increased 44% from the prior-year quarter. The growth was due to an increase in the number of paying members on the alibaba.com platform and revenues generated by cross-border related value added services.
Cainiao logistics services (5% of total revenues) — This business generated revenues of RMB8.2 billion (US$1.2 billion), up 73% year over year. The segment represents revenues from growing cross-border and international commerce retail businesses.
Local consumer services (6% of total revenues) — This business generated revenues of RMB8.8 billion (US$1.3 billion), which increased 29% year over year.
Others business (2% of total revenues) — The business generated revenues of RMB3.5 billion (US$508 million), reflecting a 63% year-over-year increase.
Cloud Computing: This segment comprises Alibaba Cloud that offers a complete suite of cloud services. The top line for the quarter was RMB14.9 billion (US$2.19 billion), up 60% from the year-ago quarter, driven by growth in revenues from customers in Internet, finance and retail industries.
Digital Media and Entertainment: The segment operates businesses through media properties that include UCWeb, Youku Tudou, OTT TV service, Alibaba Music and Alibaba Sports. Revenues from the segment were RMB8.1 billion (US$1.2 billion), reflecting an increase of 8% on a year-over-year basis.
Innovation Initiatives and Others: This segment includes businesses such as the YunOS operating system, AutoNavi, DingTalk enterprise messaging and others. Revenues for the quarter were RMB1.2 billion (US$173 million), up 10% year over year.
Mobile Monthly Active Users (MAUs) — Mobile MAUs were 881 million, improving 12.2% from the prior-year quarter and 0.8% sequentially.
Annual Active Consumers — China retail marketplaces had 757 million annual active buyers, reflecting 9.2% year-over-year growth and 2% sequential improvement.
Alibaba’s operating expenses (product development + sales and marketing + general and administrative) of RMB48.6 billion increased 64.5% from a year ago.
Operating income was RMB13.6 billion versus RMB20.4 billion in the year-ago quarter.
Adjusted EBITDA increased 28% year over year to RMB47.5 billion (US$7 billion).
Cash Flow/Share Repurchase
Net cash flow from operations was RMB54.3 billion (US$8 billion) and free cash flow was RMB40.5 billion (US$6 billion) for the fiscal second quarter.
Zacks Rank & Key Picks
Alibaba currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Marchex, Inc. MCHX, Overstock.com, Inc. OSTK and Revolve Group, Inc. RVLV, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth for Marchex, Overstock.com, and Revolve Group is currently projected at 15%, 20% and 17.3%, respectively.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
Today, See These 5 Potential Home Runs >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
Overstock.com, Inc. (OSTK) : Free Stock Analysis Report
Marchex, Inc. (MCHX) : Free Stock Analysis Report
Revolve Group, Inc. (RVLV) : Free Stock Analysis Report
To read this article on Zacks.com click here.