Alibaba CFO forecasts enormous turnover growth

Alibaba Group Holding Ltd. forecast sales growth that topped every analyst's estimate, defying expectations that growth must slow by dint of a decelerating economy and its own sheer scale.

Alibaba is the largest e-commerce company in China.

At the same investors day a year ago, the company predicted 48 percent revenue growth for 2017 which was subsequently revised up to 53 percent growth, and eventually posted 56 percent revenue growth.

On top of the previous fiscal year's enormous growth, Wu projected total sales growth of 45 to 49 percent for fiscal year 2018, topping analysts' forecasts by 10 percentage points.

Alibaba CEO Jack Ma boasts the title of China's richest man, and a year ago the U.S. Securities and Exchange Commission launched an investigation into how his company was accounting for its Cainiao Network logistics business and into previously unaudited gross merchandise volume numbers. The target implies sales of up to $34.3 billion.

Alibaba has been investing in new business areas such as artificial intelligence (AI), big data, and cloud computing-in part to thwart the increasing dominance of Tencent Holdings (HKG: 0700) in social media and entertainment through WeChat, a popular messaging app. "Online marketing revenue" has been renamed "customer management revenue" to reflect Alibaba's transformation into a business that is more than just a marketing platform. After adjusting for the consolidation, Alibaba's revenue growth would've been around 44% to 45%.

Other new business lines are also gaining traction, according to Zhang, with cloud computing transforming from an infrastructure provider to an application-enhanced service.

Alibaba 's annual investor day has Wall Street absolutely overjoyed. While those consumers once headed to Alibaba's marketplaces for basic household items and discounts, they're now turning to them for higher end goods and demonstrating a willingness to pay more for them. On Thursday, Wu said Alibaba will continue to sacrifice a small slice of profitability to help bankroll its forays. The shares ran up $16.07, or 12.7%, to $141.71 in morning trade. Shares have been on a tear so for this year and are up more than 40% year-to-date.

  • Zachary Reyes