The head office of Alibaba Group Holdings Ltd. illuminated at night before the November 11 annual Singles Day online shopping event in Hangzhou, China, on Sunday, November 10, 2019.
Qilai Shen | Bloomberg | beautiful images
GUANGZHOU, China – Alibaba’s cloud business growth outstripped Amazon and Microsoft in the quarter ended September, and the Chinese tech giant reiterated its commitment to making it profitable. next March.
Alibaba reports cloud computing brought in 14.89 billion yuan ($ 2.24 billion) in revenue for the three months ending September 30th. That’s a 60% increase from the same period last year and is fastest growth rate since the 12th quarter of 2019.
That’s faster than Amazon Web Service’s 29% revenue growth over the same period last year and Microsoft Azure’s 48% growth in the September quarter.
It’s important to note that Alibaba’s cloud business is significantly smaller than these two market leaders.
By comparison, Amazon Web Services generated $ 11.6 billion in revenue while Microsoft’s smart cloud revenue, which includes other products as well as Azure, reached $ 13 billion in the September quarter.
Alibaba is the fourth-largest public cloud provider globally, according to Synergy Research Group.
Alibaba CEO Daniel Zhang said the public and financial services sectors contributed the highest growth to the company’s cloud division.
“We believe that the cloud is the fundamental infrastructure for the digital era, but it is still in the early stages of development,” Zhang said. We are committed to increasing investment in cloud computing even more ”.
In September, Alibaba chief financial officer Maggie Wu said the company’s cloud business was likely to become profitable for the first time in the current fiscal year. Alibaba’s fiscal year begins April 2020 and ends March 31, 2021.
Alibaba’s cloud-computing business loss of 3.79 billion yuan in the September quarter, much wider than the 1.92 billion yuan loss reported for the same period last year. However, Wu points to pre-interest income, taxes and amortization (EBITA), another measure of profitability.
EBITA’s loss narrowed from 521 million yuan to 156 million yuan in the same period last year. EBITA Margin is negative 1%.
On this basis, Wu said in the earnings call that Alibaba board “certainly expect to see a profit in the next two quarters.”
“As I said during Investor Day, we see no reason why the Alibaba cloud computing in the long run cannot reach the margin levels we see in other peer-to-peer companies. We will continue to focus on expanding our market leadership in cloud computing and also increasing our profits, “she said.