Alibaba is set to release its third-quarter fiscal 2022 results on Feb. 24 before the market open.
Analyst Opinion
Analysts surveyed by FactSet expect Alibaba to report sales of $38.8 billion, delivering earnings before interest, taxes, and amortization—the preferred adjusted measure of profits—just shy of $7.1 billion, or earnings per share (EPS) of $2.52.
The estimated sales figure would mark 13% growth from the December quarter of 2020.
Earnings on an adjusted basis are actually expected to fall 25% from a year ago, when Covid-19 pandemic-era e-commerce was on a tear, but be more than 60% higher than in the September quarter.
Factors to Consider
Alibaba’s strong efforts to add value to consumers and sellers through product enrichment efforts and platform innovations are expected to have driven growth in its e-commerce business in the to-be-reported quarter by driving its customer momentum.
New monetization formats and strengthening online physical goods GMV on China retail marketplaces are expected to have aided customer management revenues of the company in the quarter under review.
The growing momentum across paying members on 1688.com is expected to have been a tailwind for the China commerce wholesale business in the fiscal third quarter.
The infusion of advanced technologies along with increasing validation for Taobao and Tmall portals is expected to have been beneficial in the quarter to be reported. The application of Big Data and AI into the company’s e-commerce platform is anticipated to have continued helping it deliver enhanced customer experience.
Well-performing Lazada and Trendyol are likely to have aided the performance of Alibaba’s International commerce retail business in the quarter under review.
A solid momentum across members on the alibaba.com platform coupled with robust cross-border-related value-added services is expected to have contributed well to the International commerce wholesale business’s growth in the fiscal third quarter.
In addition to the e-commerce business strength, the company’s growing cloud segment is expected to have contributed well to the fiscal third-quarter performance of Alibaba.
However, we note that the company has been spending heavily in new areas of the core online retail business, including supermarkets, stores, new artificial intelligence, digital entertainment and cloud computing businesses. The impacts of the increased expenses are expected to get reflected in Alibaba’s fiscal third-quarter results.
4 Numbers to Watch
Gross merchandise volume (GMV) represents the total value of merchandise transacted on Alibaba’s platforms in the quarter. It should be a macro indicator of consumer behavior. Expectations are high: Analysts expect GMV to come in near $403 billion, its most ever and 10% more than the same quarter a year ago.
Customer management revenue (CMR) made up 36% of Alibaba’s total sales in its most recently-reported quarter. CMR comes from services like marketing on Alibaba’s platforms, and is expected to slow if merchants trim their budgets. The company reported $11.1 billion in CMR in the September quarter.
International commerce represents a growing segment for Alibaba, and one that analysts at Goldman Sachs and others are bullish on. Expectations are for $2.5 billion in revenue from international sales, up 6% from the September quarter and 16% higher than a year ago.
Cloud computing is another increasingly-important segment for Alibaba. When it last reported quarterly results, cloud revenues of $3.1 billion represented 33% annual growth; similar growth momentum in cloud would be a welcome bonus when Alibaba reports.