Alibaba Expects Huge Revenue Growth in FY2018

Alibaba Group Holding Ltd., China’s largest e-commerce, surged its market value by $42 billion after the company forecasted on Thursday at the investor conference that it is expecting a huge revenue growth for its current fiscal year to grow at a much higher rate than analysts had estimated. It mentioned expectations for growing sales volumes on its online marketplaces and, even more strongly, rolling demand by merchants for its digital ad space.
Alibaba Chief Financial officer, Maggie Wu, said that fiscal 2018 revenue is expected to rise 45% to 49% above past-year levels, eliciting cheers from the crowd of investors attending the company’s BABA Investor Day at its headquarters in Hangzhou, China. This target implies sales up to $34.3 billion. Analysts had actually been expecting revenues this year to come in $32.42 billion.

The guidance puts Alibaba, which in May recorded its biggest quarterly rise in revenues since its blockbuster initial public offering in 2014, on track for its biggest underlying rise so far, said Maggie Wu, addressing analysts.

Alibaba, which often described as an e-commerce firm, has expanded well beyond just online retail. Just as US-based analogue Amazon now offers a wide list of services, Alibaba is now involved in logistics management, digital payments, entertainment content and cloud data centers.

Alibaba’s chairman, Jack Ma, is now Asia’s richest person and 14th wealthiest in the world. His net worth has jumped $8.5 billion this year to $41.8 billion.
The company U.S. shares rose 13% to $142.34 on Thursday, continuing a run that has taken them to their highest level since the Chinese company raised $25 billion three years ago.

In its latest worldwide ad spending forecast, e-Marketer anticipated that Alibaba will account for 31.9% of digital ad revenues in China this year, more than any other company. By 2019, that share will grow to 34.3%, easily outperforming main rivals Baidu and Tencent. E-marketers projects that digital ad spending in China will total $50.3 billion this year, accounting for 59.6% of the country’s total media expenditures.

Last year, revenues increased by 56%, but that included Lazada, the South East Asian e-commerce group which was consolidated into Alibaba’s numbers from April. Removing that out, revenue would have carved last year’s growth of 56% back to 44-45%, said Ms. Wu.

Alibaba will start reporting “active consumers” as opposed to just buyers, to reflect an increasingly diverse customer base. It will begin to unveil “customer management revenue” instead of just online marketing, to reflect a broader base of advertising platforms.

Meanwhile, Alibaba is holding meetings with investors this week. Ma is scheduled to come on Frida to discuss the company’s initiatives.

By 4:10 AM GMT-4, Alibaba Group Holding Ltd traded 13.26%, or 16.67, to $142.34. It opened in $142.51, with a session high of $143.70, and a session low of 135.21. Its market capitalization was 355.02 billion, with P/E ratio of 56.95.

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Alibaba Expects Huge Revenue Growth in FY2018 Alibaba Expects Huge Revenue Growth in FY2018 Reviewed by Trade12 Reviews on 2:10 AM Rating: 5

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