Date
8 December 2016
Alibaba’s super high gross merchandise value growth on last year’s Singles Day prompted the SEC to launch an investigation into the firm’s accounting practices. Photo: Hangzhou Weekly
Alibaba’s super high gross merchandise value growth on last year’s Singles Day prompted the SEC to launch an investigation into the firm’s accounting practices. Photo: Hangzhou Weekly

Why is Alibaba’s GMV data missing from quarterly results?

Singles Day is always a big day for Chinese e-commerce giant Alibaba.

Last year, its gross merchandise value (GMV), the value of transactions carried out by third-party sellers on its platforms, hit a record high of 91.2 billion yuan (US$13.45 billion) on Nov. 11, up 60 percent from the year before.

GMV has been Alibaba’s favorite number in showcasing its strong growth.

But strangely, the company did not report it in the second quarter for the first time, prompting the market to speculate on the reason.

The company reported earnings and revenue that beat market expectations in the second quarter.

Revenue soared 55 percent to 34.29 billion yuan and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) jumped 43 percent to 14.59 billion yuan in the second quarter from the year before.

Both exceeded analysts’ estimate by at least 10 percent.

Also, the company’s shift to mobile platforms has paid off.

Alibaba’s mobile app had active monthly users of 450 million in the second quarter, up 104 million from the previous year and 23 million from the first quarter.

On average, an active user on the mobile platform spent 151 yuan in the second quarter compared with 87 yuan the year before.

The cloud computing revenue for the three months to Sept. 30 surged 130 percent to 1.49 billion yuan as the number of paying customers kept growing.

The cloud division will soon become the company’s second largest revenue and profit source and possibly the most important growth engine, according to analysts from Morgan Stanley.

Its revenue is expected to expand to 58 billion by 2020 with an annual compound rate of 89 percent, the investment bank estimates.

Despite all the new goods, Alibaba chose not to publish the all-important GMV data, on which its wide range of businesses, like cloud, advertising, online payment or retail banking are based.

One guess is that GMV growth has started to moderate or even contract, so Alibaba preferred not to disclose it and focused on other numbers to divert investor attention.

Alibaba’s GMV reached 837 billion yuan in the first quarter and the growth rate eased to 24 percent.

It won’t be surprising for growth to moderate further compared with the large base number.

Meanwhile, Alibaba’s 60 percent growth in GMV on last year’s Singles Day was just too good. The SEC launched an investigation into the company’s accounting practices.

That could be another reason Alibaba skipped the number this time.

This article appeared in the Hong Kong Economic Journal on Nov. 4

Translation by Julie Zhu

[Chinese version 中文版]

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RT/RA

Hong Kong Economic Journal columnist

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