Alibaba assumes that the cloud enterprise will develop profitably for the primary time within the subsequent few months


Exterior view of Alibaba Group Beijing headquarters on November 10, 2019 in Beijing, China.

VCG | Visual China Group | Getty Images

GUANGZHOU, China – Alibaba's cloud computing business is expected to be profitable for the first time this current fiscal year, Chief Financial Officer Maggie Wu said Wednesday.

The current fiscal year of the Chinese e-commerce giant started in April and ends on March 31, 2021.

This is a welcome announcement for investors who have viewed cloud computing as a very important component of the company's future growth. Current chairman and CEO Daniel Zhang told CNBC in a 2018 interview that cloud computing will be Alibaba's "main business" in the future.

In a speech on Wednesday, Zhang called the technology a "growth engine" but said the world is at the "dawn of the global cloud era."

Alibaba CEO said cloud computing was "the kind of opportunity that only comes once in a generation".

Alibaba's CFO Wu also said that Cainiao's logistics arm is expected to generate positive operating cash flow in the current fiscal year.

Cloud computing has been one of Alibaba's fastest growing companies in recent years as it expanded into Europe and Asia outside of China. In the June quarter, cloud computing revenue rose 58.5% to 12.35 billion yuan ($ 1.75 billion). However, it still only accounts for 8% of Alibaba's total revenue.

According to Synergy Research, Alibaba is the second largest cloud computing provider in the Asia-Pacific region after Amazon, but number one in China. Globally, it stands behind Amazon, Microsoft and Google from Alphabet.

In April, Alibaba announced that it would invest 200 billion yuan in its cloud computing business over the next three years.


Katherine Clark