Chinese tech giant Alibaba Group Holdings had reported its second-quarter earnings above expectations.

In Thursday’s earnings release, Alibaba posted a 30% year-over-year revenue growth to $22.8 billion, with the core commerce segment representing 84% of the total revenue share, and the cloud computing business accounting for a 9.6% revenue share.

Reported diluted Earnings Per ADS of $1.54 fell 62% year-over-year, and diluted earnings per share were HK$ 1.31 (approximately US$0.19). Each ADS is equivalent to eight ordinary shares of the company.

What Happened: Alibaba’s cloud segment posted $2.19 billion in quarterly revenues, growing at 60% year-over-year, spurred by a rise in retail, finance, and internet businesses.

According to CNBC, the growth rate is much higher compared to cloud market leaders Amazon’s AWS and Microsoft’s Azure. AWS had grown by 29%, and Azure grew by 48% year-over-year in their last quarter.

Why Does It Matter: Many of Alibaba’s cloud services customers increased their spend up to 45% this quarter.

At the end of Q2, its cloud portfolio serviced around 60% of A-listed companies. The company reported a Q2 operating loss of roughly $570 million from the cloud segment.

Alibaba CFO Maggie Wu expects the cloud segment to cross over the break-even threshold and achieve profitability in the upcoming two quarters, CNBC reported. Wu pointed to EBITDA as the profitability indicator.

Alibaba’s cloud segment reported a -1% EBITDA margin in the current quarter, improving from -6% in the last year, as it benefited from economies of scale.

BABA ADR shares fell 2.69% to close at $287.75 on Thursday.

This story originally appeared on Benzinga.

© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

Hong Wu/Getty Images

, , ,

Leave a Reply

Your email address will not be published. Required fields are marked *