Alibaba's revenue soars as profit takes a nosedive
The company's revenue was up 40 percent and its mobile revenue was up a whopping 448 percent. Alibaba's profit, however, dipped 28 percent to $964 million.
China-based e-commerce giant Alibaba had a strong fourth quarter on sales, but the company's profit took a massive hit at the end of 2014. The company blames the decline on higher income taxes and an increase in financing-related fees.
Alibaba's revenue hit $4.2 billion during the fourth quarter, up 40 percent compared to the same period in 2013, the company announced on Thursday. Alibaba's mobile revenue was up a staggering 448 percent year-over-year to $1 billion. Despite these big jumps in revenue, Alibaba watched its profit fall by 28 percent to $964 million.
Alibaba is a major e-commerce force both in China and around the world. The company operates a wide range of e-commerce sites, including Taobao and Tmall. Alibaba also has a digital-payment arm, called Alipay, that allows users to place transactions online.
Alibaba, which finds itself in an increasingly competitive e-marketplace, is making strides to expand its presence in the US. Earlier this month, the company announced that it's working with US retailers to provide them access to Chinese customers. Rather than set up an e-commerce site in the US similar to that of Amazon, Alibaba, in partnership with its subsidiary Alipay, is providing an apparatus through retailer sites that facilitates transactions with Chinese consumers.
The program, called Alipay ePass, is integrated into existing US online marketplaces. Chinese customers pick the products they want to buy and purchase through their Alipay accounts. The currency is exchanged for dollars and deposited into the US company's account. All logistics are handled by Alibaba, removing costly issues like customs clearance and international shipping costs previously incurred by US companies.
A handful of vendors, including luxury retailers Neiman Marcus and Saks Fifth Avenue, are testing Alipay ePass.
While Alibaba expressed happiness with its fourth quarter results, the company missed analyst expectations. According to Reuters, analyst consensus on revenue was $4.45 billion -- $200 million-plus more than Alibaba posted during the fourth quarter. Investors also seemed concerned that shares were down nearly 10 percent to $89 on Thursday in early trading.
Despite that, the company touted other data points. The company noted that $127 billion worth of merchandise was sold on its China-based retail marketplaces, increasing 49 percent year-over-year. In addition, Alibaba now has 334 million annual active buyers and 265 million monthly active users on mobile. Alibaba added 48 million mobile users to its e-commerce platform in the last quarter.
Alibaba declined to comment on this story.