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Alibaba’s Results for Q4 2020 Smashed the Estimates

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Today, Alibaba (NYSE:BABA) reported its results for the fourth quarter of fiscal 2020, which ended in March. Just like JD.com (NASDAQ:JD) before, Alibaba’s earnings report delivered strong numbers across its revenue and profit. The coronavirus outbreak boosted online shopping.

Here are the important takeaways from Alibaba’s earnings report

Alibaba’s Q4 earnings

Alibaba reported revenue of $16.1 billion, which rose 22% year-over-year and beat the consensus estimate at $15.3 billion. The company posted an adjusted EPS of $1.30, which rose from $1.28 a year ago. Moreover, the EPS smashed the consensus estimate at $0.87.

Alibaba’s earnings report showed that the company recorded growth across all of its major operations.

The core commerce division registered a 19% YoY revenue jump to $13.2 billion. Notably, core commerce is Alibaba’s biggest business. The division contributes more than 80% of the total revenue. Going into the quarter, the company warned that its commerce revenue could dip. The pandemic impacted product manufacturing and delivery. However, the commerce business benefited from a surge in online shopping. People had to stay home and physical retail stores closed to curb the spread of COVID-19.

Alibaba’s cloud revenue rose 58% YoY to $1.7 billion. Before Alibaba’s earnings report, studies showed that the company continues to dominate the cloud market in China. The company will invest $28 billion in the next three years to expand its cloud revenue.

Businesses recover as China’s economy reopens

In Alibaba’s earnings report, CFO Maggie Wu commented that business has started picking up again following the pandemic-driven slump. Wu noted a steady recovery since March. The CFO projects that the company’s revenue for fiscal 2021 will top $91 billion.

Although Alibaba had strong results, the coronavirus outbreak weighed on economic activity across China in the first quarter of the calendar year. However, China’s economy continues to reopen, which offers hope for investors in companies like Alibaba.

Alibaba wrapped up the March quarter with 726 million active shoppers across its platforms. The number increased from 711 million in the December quarter.

Alibaba’s massive war chest to ride out the pandemic

Alibaba’s earnings report shows that the company’s cash balance is $50.7 billion compared to $49 billion in the previous quarter. Amid the pandemic, companies have been scrambling to shore up their liquidity to survive the storm. Alibaba looks like it can brave the pandemic.

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