Alibaba posted a better-than-expected bottom line in the June quarter fueled by accelerated sales at its cloud computing unit and a continued revival of its e-commerce business.
Still, the Chinese giant's revenues came in under analyst forecasts.
Alibaba's stock was up around 4% in premarket trade in the U.S. after initially dipping.
Here's how Alibaba did in its fiscal first quarter ended June, compared with LSEG estimates:
Revenue : 247.65 billion Chinese yuan ($34.6 billion), versus 252.9 billion yuan expected.
: 247.65 billion Chinese yuan ($34.6 billion), versus 252.9 billion yuan expected. Net income: 43.11 billion yuan, compared with 28.5 billion yuan expected.
Revenue rose 2% year-on-year, while the company's net income was up 78%. Alibaba attributed the increase in profit to gains in some of its equity investments and the disposal of Turkish e-commerce firm Trendyol. This was offset by a decrease in income from operations.
However, excluding investment gains, Alibaba's net income would have decreased 18% year-on-year as it continues to invest in the cut-throat instant commerce space in China.
Alibaba has a delicate balancing act between investing areas such as artificial intelligence and new e-commerce models, while showing that it can continue to grow in China's competitive market. So far, investors have rewarded Alibaba with a 40% rally in its U.S.-listed stock this year.
That's partly thanks a continued growth acceleration at its key cloud computing division as well as improvements at both its China and international e-commerce businesses.