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Alibaba Q4 Revenue Rises 40 Percent, Missing Estimates

Alibaba reported fourth quarter revenue that missed analyst estimates, sending the stock plunging by more than 10 percent this morning.

Revenue at the e-commerce giant, whose mission is to “make it easy to do business anywhere,” increased by 40 percent to $4.22 billion in the three months ended December 31 from the prior year period, compared to analyst estimates of $4.45 billion.

Revenue from China retail commerce, the biggest segment of its business at 82 percent of total revenue, rose by 32 percent to $3.4 billion, driven mainly by increases in commission and online marketing service revenues. Mobile revenue surged by 448 percent to $1 billion as a greater proportion of sales was generated on mobile devices. Retail commerce from outside of China more than doubled from the prior year period, to $89 million.

“We delivered a strong quarter with significant growth across our key operating metrics,” said Alibaba Group CEO Jonathan Lu. “Gross merchandise volume across our China retail marketplaces grew 49% year on year, and our annual active buyers increased to 334 million in 2014, an increase of 45% year on year. Our business continues to perform well, and our results reflect the strength of our ecosystem and the strong foundation we have for sustainable growth.”

Income from operations rose by 6 percent to $1.5 billion due to an increase in share-based compensation expense.

Net income fell 28 percent to $964 million, hurt by: an increase in share-based compensation, which totaled $241 million; a one-time $134 million in financing fees for an early replaying of $8 billion in bank borrowings; and an increase in income-tax expense from the expiration of an exemption period for one of the major subsidiaries.

CFO Maggie Wu commented “We continue to execute our focused growth strategy, and the fundamental strength of our business gives us the confidence to invest in new initiatives to add new users, improve engagement and customer experience, expand our products and services and drive long-term shareholder value.”

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The company reported that the number of mobile app users increased by 48 million to 265 million in December, making the company’s app the number one ecommerce app in China.

Alibaba’s major businesses include online shopping site Taobao Marketplace (www.taobao.com), third-party e-commerce plaform Tmall.com (www.tmall.com), group buying marketplaces Juhuasuan (www.juhuasuan.com) and AliExpress (www.aliexpress.com), Alibaba.com (www.alibaba.com), China’s largest global online wholesale platform for small businesses, and Alibaba Cloud Computing (www.aliyun.com), a provider of cloud computing services to businesses and entrepreneurs. The company has 34,000 employees.