Alibaba Cloud, a cloud computing company and child tech firm of China’s e-commerce behemoth Alibaba, has disclosed that it turned profitable after 11 years.
This was disclosed in the company’s earnings report, where it stated that it turned a profit in December 2020.
Since launching the company in 2009, the company’s positive EBITA (earnings before interest, taxes, and amortization) was achieved during the quarter.
Management of the company described the success as a “realisation of economies of scale”.
Many tech companies have recorded impressive bottom lines during the pandemic, and the cloud computing business is not left out.
Alibaba stated positively that the demand for digitalisation post-COVID in the restaurant and service business will remain, especially in China.
READ ALSO: PlayStation 5 Boosts Sony’s Profit By 87%
Alibaba Cloud saw a revenue growth of $2.47 billion in December, which was attributed to “robust growth in revenue from customers in the internet and retail industries and the public sector.”
Parent company Alibaba said that 70 percent of its revenue is generated from its e-commerce arm, while its cloud arm infuses 7 percent.
The Vice-Chairman of Alibaba Joe Tsai predicted that the cloud market in China would grow to between $15 billion and $20 billion. He added that the US market is eight times more than in China.
Tsai said, “Based on the third-party studies that we’ve seen, the China cloud market is going to be somewhere in the $15 billion to $20 billion total size range, and the U.S. market is about eight times that. So the China market is still at a very early stage.”
Alibaba Cloud’s biggest rival is Tencent’s cloud arm that had, as of 2019, 2.8 percent of the global market, as stated by Gartner.
“We feel very good, very comfortable to be in the China market and just being an environment of faster digitization and faster growth of usage of cloud from enterprises because we’re growing from such a smaller base, about one-eighth the base of that of the U.S. market,” Tsai added.
Adding to the remark of Tsai, the CEO of Alibaba Daniel Zhang said, “We don’t want to just provide cloud in terms of infrastructure services.
“If we just do it as an infrastructure service, as SaaS services, then price competition is inevitable, and then all the cloud service is more like a commodity business. Today, Alibaba’s cloud is cloud plus intelligence services, and it’s about cloud plus the power of the data usage.”
