BEIJING — Alibaba Group Holdings Ltd. posted another quarter of strong sales growth despite ongoing scrutiny from regulators in China and the U.S. over questionable business practices, including the alleged proliferation of fake products on Taobao.com, the e-commerce giant’s consumer-to-consumer online sales platform.
Alibaba’s net profit for the fiscal quarter ending March 31 declined 49 percent to $463 million. Alibaba releases its earnings in both dollars and renminbi.
Revenue for the period rose 45 percent to $2.81 billion. That figure outpaced the 40 percent growth posted in the previous quarter ending Dec. 31.
The company said annual active buyers increased to 350 million, an increase of 37 percent year-over-year.
Shares of Alibaba rose 7.5 percent Thursday to close at $86. Shares in the September initial public offering were sold at $68, raising a record $25 billion.
Alibaba also revealed that Daniel Zhang, currently chief operating officer, will become chief executive officer as of May 10. He succeeds Jonathan Lu, who will remain on the board as vice chairman. Joseph Tsai, Alibaba’s executive vice chairman, said on a conference call that Zhang is a “proven innovator” and has a “strong track record of proving results.”
Zhang said the “management transition is part of our progress to build an e-commerce infrastructure of the future.”
Zhang has been with the company for eight years, working in various positions. He joined Alibaba as chief financial officer of Taobao Marketplace in August 2007 and became chief operating officer in September 2013. The company described him as a “key architect” of Singles’ Day, considered the world’s largest online shopping event. It takes place on Nov. 11.
During the company’s earnings call, executives stressed the growing importance of mobile commerce. Mobile gross merchandise volume as a proportion of total GMV rose to 51 percent from 42 percent in the previous quarter and 36 percent in the quarter ending Sept. 30, Alibaba said.
Mobile revenues for the China commerce business increased by 352 percent to $846 million for the quarter ending March 31, Alibaba said. Mobile revenues in the current quarter make up 42 percent of China retail revenue compared with 12 percent for the same quarter last year.
Tsai said he believes Alibaba’s strength in mobile commerce is “unrivaled by peers in China and globally.”
“Looking ahead, we believe that the continued trend toward mobile provides a unique advantage to provide a better consumer experience as well as more value to merchants,” Tsai said. “Therefore, we believe the increasing use of our mobile e-commerce apps will continue to fuel significant future growth. Taken together, the results we are showing today show a strong foundation for future sustained growth.”
Zhang said key strategic accomplishments for fiscal 2015 were the “significant expansion” of Alibaba’s ecosystem, including more active buyers in rural areas, the upgrading of logistics infrastructure and the promotion of Alibaba’s mobile Taobao app and investment in data and cloud computing platforms.
Cross-border e-commerce initiatives, such as Tmall Global, a platform that allows retailers without business licenses to operate in China, fueled growth as well, he said. In November, Costco Wholesale Corp. unveiled an online store on Tmall Global to meet Chinese consumer demand for imported food products.
Executives said sales on Taobao slowed in the March quarter due to the Chinese New Year holiday, during which they said a number of the small businesses offering products on the consumer-to-consumer platform shutter their operations. They said Tmall had stronger sales due to special holiday promotions.
Executives did not address any sales impact related to scrutiny from regulators in China and the U.S. that has in recent months called on the e-commerce company to take greater measures to eradicate fake products from Taobao.
In January, a report by China’s State Administration for Industry & Commerce accused Alibaba of allowing merchants to operate without required business licenses, to run unauthorized stores that co-opt famous brands and to sell fake wine and handbags. In April, the American Apparel & Footwear Association filed two complaints with the U.S. government claiming counterfeiting is worsening on Taobao and calling for immediate action.
During the earnings call, Alibaba executives stressed the importance of Taobao for the cultivation of small-and medium-size businesses in China.
Maggie Wu, Alibaba’s chief financial officer, said a hiring freeze revealed at the end of April by Jack Ma, the e-commerce company’s billionaire founder, is not a new strategy. “In 2012, we enacted the same policy,” Wu said. “At that time, we enacted the policy to encourage innovation and efficiency. Our reasons this year are exactly the same.”
Executives said goals for the coming fiscal year include a continued focus on customer acquisition, particularly on mobile platforms and in rural areas, the expansion of services, such as cloud computing, retaining and developing talent and continued investments in strategic sectors, such as entertainment and health care.
Alibaba revealed at least $2.4 billion in investments over the past 12 months, including a Chinese soccer team and smartphone maker.