Alibaba net profit soars 35% as Singles Day pays off
- Author: Kyle Peterson Feb 04, 2018,
Feb 04, 2018, 1:09
No cash is changing hands, but after the deal closes the companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5 per cent of its pre-tax profits to Alibaba.
The Chinese e-commerce giant will acquire new shares in the electronic payment service provider in exchange for certain intellectual property rights, Bloomberg reports, citing a statement from Alibaba.
As part of the deal, Zomato will also raise $150 million from Ant, previously known as Alipay Financial Services.
Revenue from core commerce increased 57% on-year to 73.24 billion yuan, while that from cloud computing surged 104% to 3.60 billion yuan.
Ant Financial is also looking to strengthen its foothold in South-East Asia, India and markets such as New Zealand and Australia.
However, when pressed for further details regarding Ant Financial's potential IPO during Alibaba's earnings results conference call on Thursday, Alibaba chief financial officer Maggie Wu said there were now no concrete plans.
Ant operates the world's largest mobile and online payment platform, Alipay that has 520 million Chinese users and over 200 financial institution partners in China. The move triggered controversies due to the objection of foreign shareholders Yahoo! The company is likely to continue its funding spree in India.
Alibaba on Thursday also reported one of its best quarterly results with 56% year-on-year revenue growth.
Revenues hit 83.03bn yuan ($13.2bn; £9.2bn), up from 53.2bn yuan a year earlier - beating forecasts. Alibaba Group founder and chairman Jack Ma coined the term New Retail in 2016 for a strategy that has been widely adopted by retailers and internet firms to use technology to transform the traditional retail sector.
"Given our strong performance and clear visibility as we approach the end of the fiscal year, we are taking up our 2018 fiscal year revenue guidance to 55 to 56 percent", said Maggie Wu, chief financial officer of Alibaba.