In a continued drive to diversify its business outside e-commerce as it faces regulatory scrutiny in China, Alibaba announced profitability for its cloud computing business for the first time.
“In a press release, Alibaba CEO Daniel Zhang said, “Our cloud computing company continues to extend market leadership and show strong growth, reflecting the vast potential of China’s nascent cloud computing market as well as our years of technology investment.
For its cloud company in the December quarter, the Chinese tech giant announced an adjusted EBITA (earnings before interest, taxes, and amortization) of 24 million yuan ($3 million). One measure of profitability is modified EBITA. In the same period in 2019, that compares to a loss of 356 million yuan.
Alibaba has previously said that in its current fiscal year, which started in April and ends on March 31, 2021, it expects its cloud business to become profitable.
Investors who have placed great emphasis on cloud computing to drive the future growth of Alibaba will welcome the milestone. In a 2018 interview, current chairman and CEO Daniel Zhang told CNBC that cloud computing will be the “main business” of Alibaba in the future.
For Alibaba’s fiscal third quarter, cloud computing revenue came in at 16.11 billion yuan, a 50 percent year-on-year increase. According to a StreetAccount consensus estimate, that is below the 16.69 billion yuan anticipated.