Mobile: A Crucial Driver for Alibaba’s Positive 2Q16 Results



Phenomenal growth in mobile revenue

Alibaba (BABA) reported gross merchandise volume (or GMV) of $112 billion, which translates to a year-over-year growth of 28%. Out of the total GMV, mobile accounted for 62% of Alibaba’s GMV for fiscal 2Q16. In comparison, mobile GMV accounted for 36% of the total GMV in the same quarter last year.

This Chinese (MCHI) e-commerce giant reported mobile revenue of $1.7 billion, a growth of 183% on a year-over-year basis.

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Maggie Wu, Alibaba’s chief financial officer, commented during an analyst conference call, “This year-on-year increase in mobile revenue in both absolute terms and as a percentage of total revenue from the China commerce retail business was due to an increase in GMV generated on mobile devices and better monetization of mobile transactions and usage.”

The increase in mobile penetration came from the increase in the number of monthly active users on mobile devices. This number increased from 163 million in fiscal 4Q14 to 307 million in fiscal 1Q16. This increase in Alibaba’s mobile penetration is significant, considering eBay’s (EBAY) mobile payments transactions constituted only 30% of its overall payment transactions. Amazon (AMZN) doesn’t disclose this metric.

Increasing smartphone penetration aids mobile penetration

The increase in Alibaba’s mobile penetration is also driven by the growing smartphone penetration in China. Of the mobile phones sold in China, 90% are smartphones, according to a report from market research firm Counterpoint. This smartphone penetration in China is even greater than in the United States, where penetration is 87%, according to the Counterpoint report.

Apple (AAPL) has benefited the most from this smartphone growth in China. The company was surprised by the tremendous growth of the iPhone 6 in China.


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