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Alibaba's latest financial results build momentum for a big IPO

BusinessAlibaba GroupInitial Public OfferingsFinancePayPal, Inc.U.S. Securities and Exchange Commission
Chinese e-commerce giant Alibaba Group Holding reports a surge in mobile growth and strong financial results
Alibaba's strong showing in its most recent quarter helps build excitement for its upcoming IPO
Alibaba's profit nearly tripled to $2 billion on revenue of $2.54 billion in the quarter that ended June 30

Alibaba Group Holding continued to build excitement for its upcoming initial public offering by reporting a surge in mobile growth and big financial gains in its most recent quarter.

For the three months that ended June 30, the Chinese e-commerce behemoth — which handles more sales than Amazon.com Inc. and EBay Inc. combined — said profit nearly tripled to $2 billion, or 84 cents a share, from a year earlier. Revenue rose 46% to $2.54 billion.

Active buyers increased to 279 million, Alibaba said, 51% higher than the year-earlier quarter and a 9% gain from the January-through-March quarter.

The quarterly figures came in an amended filing with the U.S. Securities and Exchange Commission on Wednesday.

After filing in May to sell shares in the U.S., Alibaba is expected to go public as early as next month after a two-week road show. IPO experts say the Hangzhou company could raise more than $20 billion in its IPO — more than Facebook Inc.'s $16-billion initial public offering two years ago — giving it a valuation of as much as $200 billion.

"It's a very hot company right now," said Kelland Willis, a Forrester Research analyst. "It has a loyal following in China across a large number of product categories."

Still, a lot is up in the air for Alibaba. It carries a complex corporate structure that critics say lacks transparency. It has yet to reveal how many shares it plans to sell, its price range or when it intends to go public. It has, however, decided to list on the New York Stock Exchange.

Alibaba has also been snatching up smaller companies in recent months as it prepares to go public, making it difficult for analysts and investors to tell how much of its financial improvement was the result of acquisitions as opposed to organic growth.

Alibaba is a "risky company," said Josef Schuster, founder of IPO research and investment house IPOX Schuster in Chicago.

"A lot of things are still unresolved," he said. "There's a much higher risk than with a U.S. domestic company; that's just a default."

But he noted that the "underlying dynamics are strong."

Alibaba is particularly strong in mobile. The company revealed that 32.8% of its gross merchandise volume was transacted via mobile devices, up from just 12% a year earlier. And it more than doubled its mobile revenue from the previous quarter.

The number of mobile users has also soared: Alibaba said it had 188 million mobile monthly active users in June, up from 163 million in March and 136 million in December.

Despite the unknowns, the prospect of a blockbuster Alibaba IPO has ignited the kind of frenzied investor interest that inflamed Facebook in 2012 and Twitter in 2013.

The IPO is seen as a coming out party of sorts for China's booming Internet sector, and investors have been excited to get a piece of the action.

Alibaba is often compared with EBay and PayPal, but its interests are much wider. They include banking, maps, cloud computing, an online music service, and TV and film production.

It operates Taobao, Alibaba's biggest website and China's largest consumer-to-consumer online shopping platform, and Tmall, China's largest third-party platform for brands and retailers. The company also has a stake in microblogging platform Weibo, which itself went public in the U.S. this year.

Alibaba was founded in 1999 by a group of 18 people, led by Jack Ma, a former English teacher from Hangzhou, a city near Shanghai. Yahoo Inc. was an early investor and still owns about a quarter of the company.

andrea.chang@latimes.com

Twitter: @byandreachang

Copyright © 2014, Los Angeles Times
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BusinessAlibaba GroupInitial Public OfferingsFinancePayPal, Inc.U.S. Securities and Exchange Commission
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