Alibaba revenue beats estimates, CEO Lu to step down

Chinese online retail giant Alibaba both shocked and pleased analysts Thursday. How so? Let’s start with a set of impressive quarterly gains, including some amazingly active user numbers, and then go on to news of a leadership change from next week.

Both sent Alibaba shares jumping 7.6% to $86.09 in premarket trading Thursday and then carried that through to market close. While the shares are still 26% above their September IPO price of $68, but they are now down 28% from their November high of $120.

Although the New York-listed company’s earnings fell 49% to $463m/18 cents per share, that was mainly due to employee stock awards. Excluding items such as the stock grants, per-share earnings rose 7% to 48 cents a share, beating the 42 cents analysts estimated.

Alibaba’s revenue jumped a better-than-expected 45% to $2.81bn in Q4 ended March 31, beating analysts’ estimate of $2.77bn.

There was also a jump in gross merchandise volume (GMV) as Chinese retail marketplaces rocketed 40% to $97bn. M-commerce GMV also continued to grow, accounting for 51% of total GMV, up from 42% in the December quarter.

The number of mobile monthly active users soared 77% to 289m and the number of overall annual active buyers increased 37% to 350m.

About two-thirds of Alibaba’s sales still come from its consumer-to-consumer marketplace Taobao, where it primarily earns revenue from advertising and marketing services and charges less for marketing on mobile devices than on computers.

Meanwhile, current CEO Jonathan Lu is set to step down, effective May 10, to be replaced by COO Daniel Zhang. Lu, who was appointed CEO two years ago, will work with Zhang during the transition and remain on the board as vice-chairman.

Zhang joined Alibaba as CFO of Taobao Marketplace in August 2007 and became COO in September 2013. Alibaba noted Zhang was a key architect of the November 11 Shopping Festival, helping it to become the world’s largest online shopping event.

One thing he’ll have to tackle is counterfeiting. Analysts have been concerned in recent months by possible regulatory pressure on Alibaba to tackle the sale of counterfeit goods on its platforms.

* In a letter to employees, Ma said the move to appoint a new CEO was part of a broader effort to bring younger leaders into the company. Others who are changing responsibilities beginning this Sunday include executives who oversee technology, risk, strategy and marketing. Referring to people born in the 1970s, Ma said: “This marks a future where the post-70 generation will command the troops at Alibaba Group!”

Know what’s next. Become a WGSN member today to benefit from our daily trend intelligence, retail analytics, consumer insights and bespoke consultancy services.