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How Alibaba Is Making Money – Motley Fool



Alibaba (NYSE: BABA) Last quarter ended with an increase in revenue of 10 quarters over 50%. However, China's e-commerce giant still managed to report about 41 percent

The company's leading line is a number of growing companies, including e-commerce platforms, physical stores and even a movie ticketing platform. However, only three of Alibaba's business segments are responsible for 99% of 17 billion.

  Alibaba CEO Daniel Zhang stands on Alibaba event

Alibaba's new CEO Daniel Zhang is pressured to maintain the company's revenue growth. Video source: Alibaba.

1
. Alibaba's core business

Not surprisingly, most of Alibaba's money comes from the main trading segment. In fact, its trading groups accounted for 88% of their income in the last period. Over the three months ending December, Revenue from Major Trade increased by 40% per year to almost $ 15 billion.

However, you may not be aware of the most successful e-commerce companies under Alibaba's main sales office. First, there is the consumer and consumer market in Taobao, which allows small businesses and individuals to sell goods and has become the largest online trading platform in China. Secondly, Alibaba manages Tmall.com's corporate and consumer site, which outperformed the industry last quarter, reporting 29 percent.

Alibaba's Chinese retail outlets hit a record 699 million. Mobile Monthly Active Users, ie 33 Million Due to the company's latest profits, Alibaba's new CEO Daniel Zhang said he believes this group of active customers is the most important asset of the company. He hopes that in the future Alibaba can create more ways to make money from them.

2. Alibaba's Cloud Business

Alibaba's cloud computing business, launched nine years ago, reported a quarterly revenue of $ 962 million. This may seem negligible next to the main trading segment of $ 17 billion. However, the cloud business is growing rapidly – revenue has grown at a staggering 84% in recent years. In addition, Alibaba Cloud's revenue amounted to 6% of the company's total revenue for the previous quarter, compared to 4% last year.

Alibaba's cloud platform now has more than 50% of China's market share. However, it says less than 5 percent The global cloud market, dominated by Microsoft and by Amazon.com . In order to help business grow, Alibaba said it wants to start providing cloud users with more access to the data and technologies they use to grow their business.

3. Alibaba's Media and Entertainment Business

Alibaba's media and entertainment business is slowly but surely growing. In the last quarter, its earnings have increased by 20% per year to 944 million. However, this segment accounted for only 5% of Alibaba's total revenue, compared with 7% for the same period last year.

The increase in revenue for media and entertainment was mainly due to mobile search and gaming publishing, as well as an increase in the number of Youku subscribers or its Netflix version. Last year, the average number of subscribers to Youku increased by 64% over the past year. However, it still lags behind the best competitors Tencent Video and iQiyi from Baidu .

This segment has become a major expense for Alibaba because it releases billions of licensing content as well as its original performances like Netflix. In the last quarter, the segment lost 878 million. US dollars compared to $ 340 million

In the last quarter, this segment has noticed that Alibaba has increased its shareholding in Alibaba Pictures from 49% to 51%, enabling it to control a television and film production company. Last year, Alibaba Pictures co-produced and funded Dying to Survive which became China's third largest film history film. Alibaba expects the studio to help create more content for Youku to circumvent Tencent Video and iQiyi.

Though it is nice to see Alibaba investing in other companies outside the trade, it's not much to worry about. China 1.4 billion The population is still adapting to online trading, and it is expected that by 2030 it will continue to grow. The country's middle class will grow to 850 million. In other words, its main trading companies should be more than enough to be able to maintain it in the near future.

John Mackey, CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the Board of The Motley Fool. Teresa Kersten, a Microsoft affiliate of LinkedIn, is a member of the Board of Directors of The Motley Fool. Natalie Walters has no position in any of these stocks. Motley Fool manages shares of Amazon, Baidu, Netflix and Tencent Holdings. Motley Fool manages Microsoft shares. Motley Fool has a Disclosure Policy


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