By Juro Osawa And Gillian Wong

Alibaba Group Holding Ltd.'s first earnings report as a listed company showed both the strong business growth investors have been hoping for and the many factors weighing on profit.

The Chinese e-commerce giant said Tuesday that its earnings for the quarter ended in September fell 39% from a year earlier to $494 million, largely because of stock awards to employees and executives. Those awards were handed out before Alibaba's record $25 billion initial public offering of stock in September, in an attempt to hold on to staff and reward them for good performance, the company said.

Outside of that one-time expense, Alibaba said its operations grew strongly. Revenue for the quarter rose 54% to $2.74 billion, as more business flowed through the company's online shopping sites.

Alibaba said it had more users than ever, that an increasing number were shopping over their smartphones, and that it was earning more money from mobile services.

"We're one of the very few companies in China that has generated substantial revenues from mobile and clearly disclosed it," Alibaba Executive Vice Chairman Joseph Tsai said during an analyst call after the earnings announcement. He added that during the past quarter, Alibaba added more mobile users--29 million--than the population of Texas.

Increased expenses aimed at getting and serving those mobile customers, as well as the cost of integrating two Chinese Internet firms, combined with the stock-award expenses to push down Alibaba's relatively high operating-profit margins to 25.8% in the quarter from 47.9% a year earlier.

The results are "lacking the wow factor for an upgrade," said Tony Chu, a portfolio manager based in Hong Kong for U.S. asset-management company RS Investments. Mr. Chu also said he was disappointed that Alibaba didn't provide an earnings outlook. RS Investments bought Alibaba shares in the September IPO.

Others were impressed by the results. "A lot more people bought a lot more stuff. These are the key metrics, and the rest are details," said Sanford Bernstein analyst Carlos Kirjner. "On balance, it was a very positive quarter."

Alibaba shares rose about 3.2% by midday in New York, and they touched a new all-time high of $104.96.

Investors are counting on Alibaba's robust growth in the coming years as China's e-commerce market expands into small cities and rural areas. Hangzhou-based Alibaba, which operates the Taobao and Tmall marketplaces, accounts for about 80% of China's online transactions, according to analysts.

Merchants on Taobao and Tmall did business totaling $90.5 billion in the latest quarter, up 49% from a year earlier, Alibaba said. Taobao, which hosts millions of small merchants, accounted for about two-thirds that total, while Tmall, where large global brands such as Apple Inc. and Nike Inc. set up shop, accounted for the rest.

The results also showed that more of Alibaba's e-commerce transactions are coming through smartphones and tablet computers. Mobile transactions accounted for 36% of overall transactions on Taobao and Tmall in the quarter, up from 15% a year earlier. The number of active users on Alibaba's mobile platforms increased to 217 million in September from 188 million in June.

The increase in mobile users and transactions shows Alibaba is quickly adapting to an environment in which more Chinese consumers access online services through smartphones.

Yet that shift to mobile commerce also has weighed on earnings. That is because the bulk of Alibaba's revenue--a little more than half during the business year ended in March--came from advertising and marketing services such as those it offers to merchants on Taobao. And Taobao vendors pay Alibaba less for mobile advertising than on personal computers, the company has said.

The latest quarterly results showed Alibaba's progress with its mobile traffic. In the three months through September, the company took in revenue equal to 1.9% of the business transacted through its mobile services, versus 1.5% the previous quarter. That still isn't as high as the 2.5% Alibaba gets from customers buying through computers.

"The Street is beginning to focus on mobile," said Vince Rivers, a senior portfolio manager at JO Hambro Capital Management. "The stock's strength today is warranted, because the company beat expectations for the number of mobile users and the mobile monetization rate. They're getting more dollars of revenue for dollars of transactions they generate."

Alibaba executives also stressed that the company's mobile e-commerce services are ahead of those of other Chinese rivals. Although the executives didn't name any company, chief among Alibaba's competitors is Tencent Holdings Ltd., which dominates online games and mobile messaging in China, and is expanding into e-commerce.

Mr. Tsai said Alibaba will continue working on its own smartphone operating system--dubbed Yun OS--despite a setback in 2012, when Google Inc. kept computer maker Acer Inc. from selling a new handset that used it.

Mr. Tsai said Alibaba's operating system is for smartphones as well as other devices, and is part of the company's long-term strategy in China, where many Google services are unavailable. Alibaba can put its services, such as e-commerce, on top of its operating system, he said.

"The dominant player today may not be dominant tomorrow. That's why we continue to invest in our OS," Mr. Tsai said.

Some investors shrugged off the increased spending on mobile commerce, even though it resulted in lower-than-hoped-for profit margins.

"The new strategic initiatives have yet to ramp up. So they're getting a pass [on margins] because revenue growth is still huge, and they're standing in front of what's seasonally their strongest quarter," said Jim O'Donnell, chief investment officer at Forward Management LLC, a $6 billion fund and Alibaba shareholder. He was referring in part to the coming Nov. 11 Singles Day holiday in China, which has historically been Alibaba's biggest sales day.

Excluding certain costs, such as those related to the IPO, Alibaba had earnings of 45 cents a share for the September quarter, in line with the average analyst estimate on Thomson Reuters. The company's revenue surpassed the average estimate of $2.61 billion.

Alibaba said that on its China retail marketplaces, gross merchandise volume for the quarter increased 49% and annual active buyers increased 52% year-over-year.

Telis Demos contributed to this article.

Write to Juro Osawa at juro.osawa@wsj.com and Gillian Wong at gillian.wong@wsj.com