Alibaba Sees Cloud Business Finally Turning Profitable This Year

Maggie Wu – the Chief Financial Officer of Alibaba Group Holdings Inc BABA — believes that the company’s cloud business may turn profitable in the current fiscal year ending on March 2021, according to CNBC.

What Happened: Zhang said cloud computing is overall in a "nascent stage" but the technology is a "growth engine". 

A report published by Synergy Research earlier this month shows that Alibaba is the leading cloud service provider in China and ranks second - behind Amazon Inc AMZN, in the overall Asia Pacific region.

In the first-quarter 2021 earnings release, Alibaba reported $1.7 billion in revenues from its Cloud business, a 59% growth year over year. The cloud business accounted for about 8% of the total revenue. Whereas the EBITDA margin improved to minus 3% from minus 5% for the same period last year.

Currently, Alibaba's cloud business provides services like elastic computing, network virtualization services, database and storage, large scale computing, security, a machine learning platform, and IoT services. It also disclosed plans to enhance the Platform as a Service offering with upgrades in data analytics and database management.

Why Does It Matter: In April, the Chinese tech giant announced that over the next three years it would invest around $28 billion in its cloud business. Two months since the announcement, Alibaba disclosed plans to hire 5,000 additional employees worldwide in its cloud division, before the end of the financial year.

Price Action: Alibaba shares gained over 2.30% in the Pre-market hours and was last seen quoting $283.30.

Photo courtesy: Hinglish Notes via Flickr