Alibaba: Q2 earnings

Summary of Alibaba's earnings for its second quarter.

 

Revenue

Earnings per share

Expected

$2.62 billion $0.45

Actual

$2.75 billion $0.45

 

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The first set of earnings from this stock-market newcomer came through in line with expectations. The headline earnings figure was 45 cents-per-share, although once items like stock-based compensation were included the figure fell to 20 cents-a-share, down 38.6% from a year earlier. Revenue for the quarter was $2.74 billion, ahead of the $2.64 billion forecast.

The most encouraging sign was the growth in customers. Expectations are for the company to count as much as 50% of China’s 1.3 billion population as customers over the next decade, up from the current 25%. Such a growth rate would provide a real rationale to back the company, and might at least account for the heady valuations on which it currently trades. The lack of forward guidance on future earnings is going to prove to be disappointing for some, but the growth in smartphone transactions will compensate for this. Facebook’s warning about rising costs should be a stark example for Alibaba investors of a potential pitfall, but this will only become a problem in future quarters. 

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