Alibaba's Q4 cloud revenue up 84 percent from a year ago

December quarter summary financial results of Alibaba

Chinese e-commerce group Alibaba reported a slowdown in revenue growth and lower margins in the December quarter, suggesting it is also feeling the effects of the slowdown in the Chinese economy. Analysts polled by FactSet expected the company to post 119.03 billion yuan.

While its revenue rose 41% to ¥117.3 billion, it was the slowest pace in more than two years.

The revenue for its cloud business increased by 84 percent year-on-year to 6.6 billion yuan, while its entertainment and media business increased by 20 percent to 6.5 billion yuan.

To be sure, Alibaba's revenues are still eye-popping by most standards: revenue for the quarter ended December 31, 2018 was 117.28 billion yuan (US$17.06 billion), an increase of 41 percent over the same period in 2018.

Recent earnings reports of other companies, including Apple, reflect signs of weak sales in the Chinese market.

As of 12:48 p.m. on Wednesday, Alibaba shares traded in ADR form on the NYSE, were up $7.02, or 4.47% to $163.90 apiece.

Alibaba's earnings announcement made no mention of the country's economic slowdown, as Chief Executive Officer Daniel Zhang focused on the growing contribution of forward-looking segments like cloud computing and data.

Alibaba revenue by segment for the periods
Alibaba revenue by segment for the periods

The company said that Alibaba Cloud will leverage the overall company's technologies for infrastructure, data management and services to broaden its services for enterprises.

Income from operations rose 3% to RMB 26.8 billion, as adjusted EBITDA rose 13% year-over-year to RMB 40.7 billion, the company said.

Alibaba said that was primarily driven by increased spending from enterprise customers.

China's economic growth in 2018 slowed to its weakest in almost three decades, amid faltering domestic demand and bruising USA tariffs.

Anticipating headwinds from economic uncertainty, Alibaba had lowered its revenue outlook for its financial year ending March even before the top sales season by 4 to 6 percent to the range of between 375 billion yuan and 383 billion yuan ($54.4 billion to $55.6 billion).

The company continued to invest heavily in cloud computing, artificial intelligence, and online entertainment in the December quarter.

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