Alibaba (BABA, Financial), the Chinese e-commerce giant, continued to shatter records as the company posted 61% revenue growth for the second quarter, beating analyst estimates at the top line as well as the bottom line. Strong momentum in the company’s International Commerce operations and Cloud Computing helped the company accelerate its revenue growth during the quarter.
Alibaba reported revenues of 55.12 billion yuan ($8.333 billion) while the market was expecting revenue of 52.2 billion yuan.
Data by GuruFocus.com
“This quarter we delivered excellent results, with overall revenue growth of 61% demonstrating the robust momentum in our core commerce business and across the Alibaba economy,” said Maggie Wu, chief financial officer of Alibaba Group. “We generated approximately $3.4 billion in non-GAAP free cash flow during the quarter, which enables us to invest in our future growth areas of core commerce, including logistics, cloud computing, digital entertainment and other innovation initiatives.”
Alibaba fired on all cylinders during the quarter as Core Commerce segment reported 63% growth, Cloud Computing grew by 99%, and Digital Media and Entertainment grew 33%. Alibaba reported revenue growth of 58% during the first quarter, and it shot up to 61% during the second quarter thanks to the company’s core retail segment –”‹ the largest revenue earner –”‹ growing at a much faster rate.
Alibaba remained locked in its home country for a very long time before opening up to investing internationally, but the move to step up its international presence is now paying off in spades. Alibaba’s International Commerce revenue grew from 1.338 billion yuan last year to 2.878 billion yuan this year.
For two quarters in a row, Alibaba has reported triple-digit growth from International Commerce, and the company said in its press release that the growth was due to strong performance from AliExpress, its international retail website, and Lazada, its Singapore-based retail unit that services Southeast Asian countries like Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam.
The strong performance in the first half of the year allowed Alibaba to revise its outlook for the year upward, and the company now expects revenue growth of 53% instead of the previously expected 49%. The accelerating revenue growth, coupled with improving margins, has allowed the stock price to more than double in the last 12 months.
Data by GuruFocus.com
The stock is already trading above 15 times sales, which is a bit more than Facebook (FB, Financial) and tells us very clearly how high the valuation remains. With Alibaba continuing to post robust growth numbers in the retail as well as non-retail segments, expect the stock’s valuation to continue to remain at these elevated levels.
Disclosure: I have no positions in the stock mentioned above and no intention to initiate a position in the next 72 hours.
