Alibaba’s cloud made another loss in the company’s second quarter for 2021, but it was just $23m and the company says it will turn a profit before the financial year is done.
The company turned in another strong quarter overall. Revenue reached $22.84 billion, a jump of 30 percent year-over-year. Net income hit $3.9bn, a year-on-year decrease of 60 percent that worried nobody as last year’s number included a once-off payment from the sale of a chunk of financial services spinout Ant Group.
757 million Chinese residents actively used an Alibaba retail marketplace at least once in the year to September 30th, 2020, and 881milion users touched its mobile sites during September alone. Users are also spending more, and more often.
Cloud revenue hit $2.194bn for the quarter, up 60 percent year-over-year. The company told investors that customers spent 45 percent more apiece compared to the same quarter in 2019. That still made for a loss, but it was a mere one percent at 156M RMB or $23m.
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“We expect AliCloud to turn profitable in the second half of this fiscal year,” CFO Maggie Wu said on the company’s earnings call. In response to a financial analyst’s questions about future trends, Wu added that the company expects Alibaba Cloud to reach the same margins as other hyperscalers.
“Before that, we’re going to continue to focus on expanding our cloud computing market leadership and also grow our profit,” she said.
The company flagged future investments to make that happen and has an inkling of what it needs to do: current customers are overwhelmingly based in China most come from the Internet, finance, and retail industries. Overseas expansion wasn’t mentioned but is surely needed. Alibaba is the leading IaaS player in South-East Asia, measured by revenue. Yet this week it saw a huge local player – Indonesian e-commerce unicorn Bukalapak – become an Azure user and Microsoft investee .
On the upside, analyst firm Canalys last week rated Alibaba as the world’s fourth-most-prolific winner of cloud infrastructure services revenue, ahead of IBM and Oracle but behind AWS, Microsoft and Google. And if Alibaba keeps growing at 60 percent year-on-year it be a chance of overtaking Google, which recently reported $3.4bn of quarterly cloud revenue and 43 percent growth.
We’re going to continue to focus on expanding our cloud computing market leadership and also grow our profit
The earnings call also touched on float of financial services arm Ant Group, which was hoped to haul in $34bn this week but was instead postponed as Beijing ordered it to sort out its plans to comply with new laws regulating small loans.
“Alibaba is actively evaluating the impact on our business in response to the recent proposed change in the fintech regulatory environment and will take appropriate measures accordingly,” investors were told.
Equities analysts on the company’s earnings call chose not to ask for any further information on the matter. ®