Alibaba Cloud revenue reaches USD 5.2 bn, but still makes a loss

Company says it uses its scale to stay cost-competitive, curbing prices in the areas of content delivery network, security, database and network infrastructure

Eleanor Dickinson May 17th 2019 A-A+

Alibaba’s cloud computing year-to-year revenue skyrocketed by 76 per cent to $1.6 billion (US$1.1 billion) in the fourth quarter of 2019.

For the full fiscal year ending 31 March 2019, Alibaba Cloud’s revenue was $5.2 billion (US$3.68 billion), a rise of 84 per cent from 2017, meaning the division now accounts for seven per cent of the company’s total revenue of US$56.15 billion.

However, the division’s operating costs outstripped its revenue, leaving Alibaba Cloud with a total EBITDA loss of US$168 million, an annual increase of 44 per cent.

Alibaba was nevertheless buoyed by its cloud results, claiming it is now the largest cloud computing service provider in Asia Pacific.

According to the company, the revenue growth stemmed largely from a spending increase by its customers, saying it was seeing significant traction and diversification of customers and revenue.

However, the company noted that it “continue[d] to use our scale to lower the pricing of products and services in the areas of content delivery network, security, database and network infrastructure” in order to remain cost-competitive for customers.

“In fiscal year 2019, Alibaba Cloud served more than half of the A-share listed companies in China,” the company added. “We will continue to invest to further expand our market share by developing value-added products and features.”

Alibaba Cloud has been expanding its presence in Australia since 2016 when it opened a data centre and a headquarters in Sydney.

Speaking to ARN, Alibaba Cloud general manager Raymond Ma said the company remained “committed to Australia”, particularly for customers within finance, retail and logistics who are looking to expand globally.

“We believe that there is a big potential for Australia to expand its economy to local markets, from a commercial side and a start-up perspective. There is a focus on expanding to the US, Europe, China and South East Asia, and we can help them do that.”

According to Gartner, Alibaba is set to become the fourth biggest public cloud provider globally, behind AWS, Azure and Google Cloud respectively.

“Alibaba still have an issue in terms of geography,” Gartner senior director Alan Waite told a recent conference in Sydney.“They’re still very much China-based and only just starting to get English-language documentation. But they’re offering attractive pricing and some good capabilities.”