Alibaba‘s stock gains after revenue, adjusted profit rise, yet still come up shy

Shares of Alibaba Group Holding Ltd. surged 2.9% in premarket trade Thursday, after the China-based e-commerce giant reported a 61% jump in fiscal first-quarter revenue and a 1% increase in adjusted profit, although both came in below expectations. Net income fell to 7.65 billion renminbi (RMB), the equivalent of $1.16 billion, or RMB3.30 a share, from RMB14.03 billion, or RMB7.95 a share, in the same period a year ago. Excluding non-recurring items, such as a one-time increase in share-based compensation expense related to Ant Financial‘s awards to employees, adjusted earnings per share rose to RMB8.04 from RMB7.95, but was below the FactSet consensus for RMB8.28. Revenue rose to RMB80.92 billion from RMB50.18 billion, but missed the FactSet consensus of RMB81.37 billion. Core commerce revenue rose to RMB69.19 billion from RMB43.03 billion, cloud computing revenue grew to RMB4.70 billion from RMB2.43 billion and digital media and entertainment revenue increased to RMB5.98 billion from RMB4.08 billion. Mobile monthly active users (MAUs) on China retail marketplaces rose to 634 million in June 2018, from 617 million in March 2018 and from 529 million in June 2017. "The exceptional growth across our major segments of core commerce, cloud computing and digital media and entertainment validates our strategy of investing in customer experience, product, technology and infrastructure for the future," said Chief Financial Officer Maggie Wu. The stock had tumbled 9.6% over the past three months, while the S&P 500 had gained 4.7%.

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