Alibaba’s Q3 profit surges 56% on strong cloud business

The Chinese e-commerce giant earned a net profit of $11.9bn in three-month period

Alibaba's sales soared 37 per cent to $33.8 billion in the last quarter. EPA

Alibaba Group’s third quarter net profit surged 56 per cent annually to $11.9 billion, buoyed by growth in its cloud computing and retail businesses.

Revenue for the three months ending December 31 soared 37 per cent annually to $33.8bn.

"Thanks to the rapid recovery of China's economy, Alibaba had another very healthy quarter … China was the only major economy to achieve positive GDP [gross domestic product] growth last year," Daniel Zhang, chairman and chief executive of Alibaba, said.

“Our cloud computing business continues to expand market leadership and show strong growth, reflecting the massive potential of China’s nascent cloud computing market as well as our years of investment in technology.”

Annual active consumers on Alibaba’s China retail marketplaces reached 779 million, while the monthly active users reached 902 million in the last quarter.

“We delivered another solid quarter, with [an] adjusted EBITDA [earnings before interest, taxes, depreciation and amortisation] up 22 per cent year-over-year, while our strong free cash flow enabled us to further invest in strategic areas,” Maggie Wu, chief financial officer of Alibaba, said.

“We are pleased that our cloud business achieved positive adjusted EBITA during the quarter … these progresses reflect our long-term approach to organically incubate and expand businesses from launch to profitability,” she added.

Alibaba has announced bumper results despite “uncertainty” over the its financial affiliate Ant Group. It said it was "unable to complete a fair assessment" of the impact of Ant's stalled share market launch.

On November 3, Ant Group suspended its proposed dual listings and initial public offering on the Shanghai Stock Exchange Star board and the Hong Kong Stock Exchange just days before listings.

“Due to recent significant changes in the FinTech regulatory environment in China, Ant Group is in the process of developing its rectification plan, which will need to go through the relevant regulatory procedures,” Alibaba said.

“Therefore, Ant Group’s business prospects and IPO plans are subject to substantial uncertainties. Currently, we are unable to make a complete and fair assessment of the impact that these changes and uncertainties will have on Alibaba Group,” it added.

A formal update is yet to come from Ant Group but Bloomberg quoted sources on Wednesday to report that Ant Group and the Chinese regulators have agreed on a plan to transform the FinTech giant to a financial holding company that will put it at par with banks when it comes to capital requirements.