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Alibaba's Fiscal 3Q18 Earnings: The Rundown

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Alibaba's Fiscal 3Q18 Earnings: The Rundown PART 1 OF 15

What Alibaba’s Fiscal 3Q18 Results Tell Us

Quarter boosted by Single’s Day sales

Alibaba (BABA) reported fiscal 3Q18 (December quarter) earnings results that blew away the consensus estimates, driven by strong gains in November, which has the company’s biggest annual shopping event, Single’s Day.

Alibaba’s 2017 Single’s Day gross sales reached $25.4 billion, up nearly 40% YoY (year-over-year). Alibaba’s fierce domestic rival JD.com (JD) recorded $19 billion in Single’s Day sales in 2017, which was about 50% higher YoY.

What Alibaba’s Fiscal 3Q18 Results Tell Us

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Revenues rose 56%

In fiscal 3Q18, Alibaba recorded a 56% YoY rise in revenues to 83 billion yuan ($12.8 billion). These top-line results exceeded the Wall Street expectation for revenues of 79.8 billion yuan in the December quarter.

Alibaba’s core commerce business recorded a rise of 57.3%. The company posted growth across all its operating segments, which span cloud computing and digital entertainment.

Alibaba’s top-line gains led the company to a net profit of 23.3 billion yuan ($3.6 billion), which was 36% higher YoY. Wall Street was expecting a net profit of 21.5 billion yuan for the quarter. From a net profit of 23.3 billion yuan, Alibaba squeezed out an adjusted EPS (earnings per share) of 10.61 yuan ($1.63), which was 18% higher YoY.

By comparison, Amazon.com’s (AMZN) EPS came in at $3.75 for the December quarter, while eBay’s (EBAY) EPS for the same period came to $0.59. Many US multinationals including Amazon and Facebook (FB) recorded profit hits in the December quarter due to the new US tax law.

Alibaba’s cash holding is swelling

While Alibaba’s December EPS may not be comparable with that of its US counterparts because of the tax impact, its swelling cash holdings are noteworthy because these provide financial flexibility for the company to continue disrupting the market.

Alibaba’s holdings jumped to 224.1 billion yuan in fiscal 3Q18, up from 165 billion yuan in the prior quarter and 141.8 billion yuan in fiscal 3Q17.

In this series, we’ll do a thorough assessment of Alibaba’s fiscal 3Q18 results, including the outlook going forward. Continue to the next part of this series (below) for a closer look at Alibaba’s equity stake in Ant Financial.

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