Alibaba Group Holding Ltd. continues to expand at breakneck speed in the e-commerce and cloud markets, but the company’s overall growth has dropped from previous quarters.

China’s most valuable tech firm today posted revenues of 85.1 billion yuan, or $12.4 billion, in the quarter ended Sept. 30, which represents a 54 percent jump from last year. But analysts polled by Bloomberg were on average expecting 86.6 billion yuan. The slowdown marks the first time that Alibaba’s revenue growth has dipped below the 55 percent mark since January 2017, and it may not be a one-off event.

Alongside the quarterly sales figures, the company published a revised guidance projecting full-year revenues 4 to 6 percent lower than the previous forecast. Investor concern over Alibaba’s momentum has caused its stock price to drop more than 2.7 percent today, despite the fact that profits easily beat estimates. Earnings per share grew 13 percent year-over-year to 9.60 yuan, or $1.40, easily surpassing the consensus analyst estimates aggregated by Bloomberg and Zacks.

The mixed results are the consequence of several factors. Most notably, sales growth in the company’s core commerce business dropped from 61 percent last quarter to 56 percent, while “customer management” revenue gained 25 percent year-over-year compared with 26 percent three months earlier.

The latter category is seen as strategically important because it includes the advertising services that Alibaba provides to merchants operating on its e-commerce platforms. Those merchants, in turn, are a cornerstone of its business.

Alibaba’s focus on merchant marketing is paying off: The company’s e-commerce marketplaces closed the quarter with 601 million annual active shoppers, up 25 percent from the 12-month period ended June 30. But Chief Financial Officer Maggie Wu said in the earnings call that “we recently decided not to monetize, in the near term, incremental inventory generated from growing users and engagement.”

Wu attributed the decision to “fluid macroeconomic conditions,” the same volatility that lies behind behind the slowdown in the rest of Alibaba’s business. The company faces growing competition from domestic rivals in China and has been feeling the impact of the trade spat between Washington and Beijing, 

Alibaba’s secondary businesses helped offset some of the lost momentum in its e-commerce operation this quarter. The star performer was once again the company’s cloud computing division, which saw revenues surge over 90 percent from a year ago, to 5.7 billion yuan, or $825 million. This growth is fueled in part by an aggressive feature development roadmap that saw the group add over 600 new cloud products and features during the three-month period.

Photo: Alibaba