Here Are 5 Things to Look for in Alibaba's Q3 Earnings Report

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Alibaba's (NYSE: BABA) stock has nearly doubled in the past year -- up roughly 16% just in January -- and the good times may not be over for investors. The company is set to report fiscal third-quarter earnings on Thursday and investors have high hopes.

Analysts surveyed by FactSet are expecting Alibaba to report quarterly revenue that grew 62% year-over-year to $12.4 billion on top of earnings of $1.66 per share, up from $1.30 per share in the same period a year ago.

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The December-ended quarter is of particular interest for investors because its revenue gets a boost from the annual Chinese sales holiday on Nov. 11 known as Singles Day. This year, Alibaba's Singles Day sales increased 39% year-over-year to an incredible $25.3 billion. Meanwhile, Amazon (NASDAQ: AMZN) sold an estimated $1 billion worth of goods this past summer on its Prime Day.

Alibaba is a big company and often misunderstood by U.S. investors. So what should you look for in its earnings report on Thursday? I'll take you through the five things I'm going to scan the report for when it first comes out.

1. Revenue growth

Alibaba's revenue growth has been front and center in its past few earnings reports.

Last summer, investors were delighted when the retail giant reported an incredible 56% year-over-year revenue growth to $7.4 billion for the 2018 first quarter. The next quarter, Alibaba proved this wasn't a fluke when it reported a 61% year-over-year increase in revenue to $8.3 billion.

Posting a jaw-dropping revenue growth figure is something that analysts and investors have come to expect from Alibaba. As mentioned above, Alibaba is expected to report a 62% increase in revenue for the quarter being reported.

If the company can hit that mark or go above it, then we can expect to see the stock react favorably as more investors realize that the company still has plenty of room to run.

Already, Alibaba has revised its 2018 full-year revenue growth guidance to between 49% and 53%, up from its previous prediction of 45% to 49% growth. Big leaps in revenue are essential if the company is to hit its goal of $1 trillion in gross merchandise value (GMV) for 2020.

2. New retail updates

Alibaba has been outspoken about what it calls its "new retail" strategy, which refers to using technology to transform brick-and-mortar stores into more efficient retail locations that can offer better customer experiences.

The retailer is expected to open its first mall in April. The five-story complex will be called "More Mall" and will house retailers, as well as one of Alibaba's high-tech Hema supermarkets. The mall is being built across from Alibaba's XiXi campus in Hangzhou. The XiXi campus has a number of employees that are focused on its brick-and-mortar strategy, which makes it a prime location for its first mall.

Investors should look for any updates on the mall and its opening date, as well as details about the performance of its Hema supermarkets. These grocery retail spaces are important because they're acting as prototypes for Alibaba to demonstrate how it can help other retailers transform their own physical stores.

In early January, Alibaba said it planned to add 30 Hema locations in Beijing by the end of 2018. Currently, Alibaba has 25 Hema locations in China.

3. Active users

Some U.S. investors may not understand how social Alibaba has become in China. The company's Taobao Marketplace platform in China allows users to share product reviews and watch webisodes or live-stream tutorials.

Mobile monthly active users (MAUs) for its China retail marketplaces reached 529 million in June, up 22 million from the past quarter. By September, that number had increased by an additional 20 million.

Alibaba has told its investors that the more time users spend on its app interacting with content, the more they spend on its platforms. Thus the number of mobile MAUs can act as another growth indicator.

4. Cloud growth

Investors are eagerly watching the cloud race between Alibaba, Amazon, Alphabet's Google and other top players. Alibaba has set a high bar for its cloud segment.

Alibaba Cloud launched in 2009 and boasts over 1 million paying customers. Revenue from its cloud segment grew an amazing 99% year-over-year to $47 million last quarter mainly due to an increase in paying customers. Investors will want to watch the latest number.

5. U.S. ambitions

This is sure to be brought up during the earnings call. Alibaba has long played it cool when asked about its ambitions in the U.S., claiming that it is mainly focused on Asia and developing markets.

However, there have been a number of signs that there is more at work below the surface. Last year, Alibaba promise to create 1 million jobs in the U.S. by 2022 by helping small and mid-sized U.S. businesses sell their goods on its China-based platforms.

Then we found out in early January that the U.S. government blocked a deal for Ant Financial Services Group, an affiliate of Alibaba, to buy U.S. money transfer firm MoneyGram.

Most recently, rumors have been swirling about Alibaba possibly partnering with U.S.-based grocer Kroger. People have had fun speculating what Alibaba's Hema supermarket tech could mean for Kroger and its fight against Amazon/Whole Foods. However, it would likely be tough to convince regulators to approve a deal between Alibaba and the third-largest U.S. retailer.

It seems clear that Alibaba is working on possible entry points into the U.S. Perhaps investors will get a clearer view during the conference call with analysts this week.

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