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Two Positive Signs From Alibaba Group Holding Limited (BABA)’s Second-Quarter Earnings Report

Alibaba’s (NYSE: BABA) stock was downed for 23% since November 18 after the Chinese technology giant released its second-quarter earnings report. In the quarter ended September 30, 2021, revenue was RMB200,690 million (US$31,147 million), an increase of 29% year-over-year. However, net income was RMB3,377 million (US$524 million). , a decrease of 87% year-over-year. Diluted earnings per ADS was RMB1.97 (US$0.31) and diluted earnings per share was RMB0.25 (US$0.04 or HK$0.30), both decrease of 81% year-over-year. The result looks terrify, but two positive signs still can be found from the earnings report.

Annual active consumers

According to the earnings report, annual active consumers of the Alibaba Ecosystem across the world reached
approximately 1.24 billion for the twelve months ended September 30, 2021, an increase of
approximately 62 million from the twelve months ended June 30, 2021. This includes 953 million
consumers in China and 285 million consumers overseas, representing a quarterly net increase of 41
million and 20 million, respectively. This represent quarterly user growth 4.49% in China and 7.54% in overseas.

Cloud Computing

According to the earnings report, cloud computing revenue grew 33% year-over-year to RMB20,007 million
(US$3,105 million), primarily driven by strong growth in revenue from customers in the Internet, financial
services and retail industries.

Cloud computing segment adjusted EBITA was a profit of RMB396 million (US$61 million) in the
quarter ended September 30, 2021, compared to a loss of RMB567 million in the same quarter of 2020.

Currently, Cloud computing segment represent 10% of total revenue of Alibaba Group and this segment is expected to continuous growth in future.

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