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The first numbers from Alibaba Group Holding Ltd. since it went public in September should keep investors satisfied for a while. And they might even get long-patient shareholders in Amazon.com Inc. to wondering whose model makes more sense.

The Chinese e-commerce giant posted a healthy profit on strong sales in its first quarter as a listed company. Amazon remains profit-challenged and its latest quarterly revenue growth was underwhelming.

True, Alibaba's earnings nosedived nearly 39 per cent to $494-million (U.S.) in the fiscal quarter ended Sept. 30. But it attributed much of that decline to one-time stock awards to executives and other employees in advance of its record $25-billion initial public offering. It also ramped up spending on marketing to take advantage of its higher profile stemming from the publicity surrounding the spectacular IPO.

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Adjusted quarterly profit came in at $1.1-billion, a increase of 15.5 per cent.

Meanwhile, Alibaba's top-line growth was impressive. Revenue soared 54 per cent to $2.74-billion and the number of active buyers on its various sites climbed to 307 million people. That's tens of millions more than Amazon or eBay attracts – and at a much lower cost.

While Amazon spends millions building vast warehouses to facilitate direct sales and gives up profit for the sake of increased market share in a wide range of retail categories, 15-year-old Alibaba resolutely remains a middleman with terrific margins. It connects hundreds of millions of shoppers with eager vendors of just about everything and makes its money through commissions, ad sales and search placements. Its critical role operating the leading digital marketplaces has given the company control over about 80 per cent of China's online retail transactions.

The jury is still out on whether Alibaba can achieve its ambition of becoming a major player in the U.S. and other key markets. Foreign sales account for less than 10 per cent of total revenue. And it faces growing competition on its home turf. But it has shown its mettle by dramatically boosting sales through its mobile e-commerce apps and financial services, where the online battles in China are fiercest.

"We're one of the very few companies in China that has generated substantial revenues from mobile and clearly disclosed it," executive vice-chairman Joseph Tsai crowed during an analysts' call. He also showed that he knows how to get Wall Street's attention by observing that the company added 29 million new mobile users, a number exceeding the entire population of Texas.

Alibaba leaves a lot to be desired when it comes to investor comfort, not least because of its opaque structure and less than rigorous adherence to strict corporate governance. After all, this is a company that listed on the New York Stock Exchange after failing to meet the standards laid out by Hong Kong market regulators, who objected to its dual-class share structure and other governance shortcomings.

These include handing the authority to nominate a majority of directors to founder Jack Ma and a group of 26 hand-picked executives known as the Alibaba Partnership, which is tightly controlled by Mr. Ma and a handful of senior members. Also, because of China's limits on foreign ownership, shareholders actually only hold stock in a Cayman Islands shell company with a claim on Alibaba's profits. If Mr. Ma runs afoul of his friends in high places, this shaky edifice could come tumbling down.

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But that doesn't seem likely in the near term. And in the meantime, its profitable model is likely to continue making serious headway in the race for online supremacy.

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