Not for the first time this earnings season, tonight's trading is being driven in large part by quarterly corporate results. And once again, the entities publishing those results are mostly tech stocks.
The techies weren't the only ones reporting, though -- we also got the latest digits for a prominent consumer goods company. Meanwhile, across the Pacific, there's late-breaking news of a sizable acquisition in the Asian e-commerce space.
Alibaba's big deal
The chunky tech sector buy that's buzzing around the market tonight is Alibaba's (BABA +0.75%) purchase of NetEase's (NTES +1.11%) Kaola e-commerce unit. The price is roughly $2 billion, according to a NetEase press release on the purchase. The press release didn't provide particulars about the arrangement, including whether it will be paid in cash, stock, or a mix of both.
Kaola is a cross-border sales platform that allows consumers in mainland China to buy Western products online. In the press release, NetEase wrote that Alibaba intends for the brand to continue to operate independently, albeit under a new CEO, Alvin Liu.
That wasn't the only arrangement made by the two Chinese tech companies. Alibaba, in collaboration with that country's Yunfeng Capital, has also agreed to invest around $700 million in NetEase Cloud Music service. NetEase said it will continue to be the controlling shareholder in the service, although it did not provide details of what Alibaba's equity participation might be. It also did not specify by which means it would be paid.
Alibaba hasn't yet made a public statement on either deal. In the press release, the seller said that as far as it's concerned, "The completion of this strategic transaction will allow NetEase to focus on its growth strategy, investing in markets that allow us to best leverage our competitive advantages."
Alibaba, already a 300-pound gorilla on the Asian e-commerce scene, will grow even larger with Kaola, and with the other deal, it's deepening involvement in a high-potential market for online music.
In spite of the big move, the stocks of both Alibaba and NetEase are essentially trading flat this evening.
Image source: Lululemon Athletica.
Lululemon notches comfortable Q2 beats
lululemon athletica (LULU 0.26%) is a post-market star thanks to better-than-expected Q2 of fiscal 2019 results, which the athleisurewear specialist delivered after the closing bell.
Revenue for the quarter was just over $883 million, a 22% improvement on a year-over-year basis. That was on the back of comparable store and direct-to-consumer sales that rose 15% combined. Net profit saw a higher increase, rising 31% to almost $125 million ($0.96 per share).
Lululemon saw particularly good growth in men's clothing, a category it hasn't necessarily been associated with over the years. What also helped was the significantly higher number of stores in which customers could pick up goods they ordered online.
Those headline fundamentals convincingly beat analyst estimates. On average, these were for slightly under $847 million in revenue and $0.89 in per-share net profit.
On top of that, Lululemon raised guidance for the entirety of its fiscal 2019. The company now believes its revenue for the year will total $3.80 billion to $3.84 billion, with per-share earnings landing at $4.63 to $4.70. Its previous top-line estimate was $3.73 billion to $3.77 billion, and its EPS forecast was $4.51 to $4.58.
Lululemon, already a well performing stock of late, is one of the most actively traded issues tonight. It's currently up by nearly 4%.
DocuSign's Q2 mixed, but revenue guidance strong
Getting back to the tech sector, DocuSign's (DOCU +1.21%) Q2 of fiscal 2020 saw a top-line beat and guidance that pleased investors.
The e-signature specialist posted revenue of almost $236 million during the quarter, for a year-over-year pop of 41%. This derived from billings of $252 million -- 47% higher than in the same period a year ago. Non-GAAP (adjusted) net income, however, fell to just under $2.0 million, or $0.01 per share, from the Q2 2019 result of $5.2 million ($0.03).
That revenue figure easily topped the $221 million expected by analysts, but those prognosticators were modeling a higher per-share adjusted net profit of $0.04.
Making up for that, DocuSign proffered quite strong Q3 and full-year guidance. For the latter period, it's anticipating total revenue of $947 million to $951 million, billings of $1.06 to $1.08 billion, and adjusted gross margin of 78% to 80%. It did not provide a range for net profit, adjusted or otherwise. That revenue range indicates a year-over-year revenue increase of at least 35%.
The market likes that kind of revenue growth, and it's hungry for stocks active in the online security space. DocuSign shares are up a robust 22% in after-hours trading.
