Alibaba Group Holding
on Thursday reported a 42% increase in sales and more than doubled its profits in the quarter ended June 30, beating estimates, showing that the Chinese e-commerce giant continues to flourish despite for a saturated market and economic weakening amid the US-China trade conflict.
The quarterly report, the last pre-billionaire founder
resigns as chairman next month, indicating that his successor, the current CEO
can continue the company's current strategy to focus on increasing sales in China's rural areas while also investing in relatively emerging businesses, such as cloud computing, and international expansion.
Alibaba also announced a share repurchase program of up to $ 6 billion over two years. The company's share increased by 3% in pre-market trading.
"This definitely marks a good ending to his role as chairman and also signals a very smooth transition," said Bernstein analyst
"This should give investors more confidence in an era after Ma Ma."
Alibaba sales grew to 114.9 billion yuan ($ 16.3 billion) in the quarter ended June 30, up 42% year-on-year. The vast majority of revenue came from the core e-commerce business, where sales rose to 99.5 billion yuan in the quarter, up 44% from the previous year.
Alibaba is China's dominant online retailer, with about two-thirds market share. After saturating the gigantic and relatively prosperous cities including Beijing and Shanghai, the company focuses on the growing middle class in less developed areas. It said that 70% of new customers in the quarter came from less developed areas.
Alibaba is also growing rapidly in China's emerging cloud industry, which operates with systems for other companies. Alibaba said sales of cloud computing in the quarter rose 66% year-on-year to 7.8 billion yuan.
The robust spending by both consumers and businesses suggests that the Chinese economy remains resilient even amid other signs of weakening, analysts say.  Alibaba's quarterly net profit more than doubled from the previous year to 21.2 billion yuan.
Write to Robert Barba at Robert.Barba@wsj.com
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