Alibaba has announced the first profitable quarter for its cloud business after 12 years of operation.
The company’s cloud unit, known as Aliyun, achieved revenues of RMB 16.1 billion ($2.4 billion) for Q4 2020. Its adjusted EBITA for the quarter was RMB 24 million ($3 million), though it reports operating losses at RMB 2 billion ($309 million).
The company said revenue for the cloud unit grew 50 percent year-on-year, primarily driven by growth from customers in the Internet and retail industries, and the public sector. The company also said Alibaba Cloud achieved positive adjusted EBITA during the quarter for the first time “due to the realization of economies of scale.” Revenues for Q4 2019 were RMB 10.7 billion ($1.65 billion) with an operating loss of RMB 1.8 billion ($278 million) and an adjusted EBITA loss of RMB 356 million ($56.5 million).
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“Our cloud computing business continues to expand market leadership and show strong growth, reflecting the massive potential of China’s nascent cloud computing market as well as our years of investment in technology,” said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. “Looking ahead, we are confident that we will continue to create value for our customers, lead with innovation and make our contributions to society.”
Alibaba Cloud growing but still behind Azure and AWS
The company said it well-positioned to capitalize on the Southeast Asia market in the future, as well as retain its position as a leader in the Chinese market. Founded in 2009, it is the largest cloud provider in the Middle Kingdom and is the fourth largest by global market share according to Synergy Research.
With six percent of the global cloud services market, Alibaba has overtaken Google (on five percent), according to Synergy's latest figures.
The wider Alibaba company announced $33.9 billion of sales with a net income of $11.95 billion. The company’s cloud unit accounts for around seven percent of revenue.
“China was the only major economy to achieve positive GDP growth last year. Thanks to the rapid recovery of China’s economy, Alibaba had another very healthy quarter,” said Zhang.
Though its revenue was smaller than the large cloud players, not every firm is ahead of Alibaba in terms of profit. AWS announced revenues of $12.74 billion for the quarter and $3.56 billion, but Google Cloud posted $1.24 billion in losses against $3.8 billion in revenue. Microsoft Intelligent Cloud – which includes Azure – saw Q4 2020 revenues of $13.4 billion and growth of 47 percent in Azure revenue, but didn’t break out profits for the unit.