Alibaba offices in Beijing
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Chinese e-commerce giant Alibaba The company's earnings on Friday beat expectations for the September quarter, but sales fell due to a slowdown in the world's second-largest economy that affected consumer spending.
Alibaba said net income rose 58% year-on-year to 43.9 billion Chinese yuan ($6.07 billion) in the company's quarter ended September 30, on the back of the performance of its equity investments. This compares to LSEG's forecast of RMB25.83 billion.
“The year-over-year increases were primarily due to changes in the market from our equity investments, reduced impairment of our investments and increased income from operations,” the company said of the year-over-year earnings jump in its earnings statement. .
Meanwhile, revenue was 236.5 billion yuan, up 5% year-on-year but below analysts' expectations of 238.9 billion yuan, according to LSEG data.
The company's shares, listed on the New York Stock Exchange, have gained approximately 17% this year so far. The stock rose 3% in pre-market trading at 12:24pm London time, following the release of quarterly earnings.
Sales morale
Investors are closely monitoring the performance of Alibaba's two main business units, Taobao and Tmall Group, which reported a 1% year-on-year increase in revenue to 98.99 billion yuan in the September quarter.
These results come at a difficult time for Chinese businesses, given the country's tepid retail environment. Chinese e-commerce group JD.com's revenue also fell short of revenue expectations on Thursday, according to Reuters.
Markets are now watching whether a series of recent stimulus measures from Beijing, including a five-year, 1.4 trillion yuan package announced last week, will help revive the country's growth and reduce a long-term slump in the property market.
The impact on the retail space so far looks promising, with sales up a better-than-expected 4.8% year-on-year in October, while China's recent Singles' Day shopping holiday – widely seen as a barometer of national consumer confidence – And it regained some of its luster.
Alibaba touted “strong growth” in gross merchandise volume — an industry measure of sales over time that is not equivalent to a company's revenue — for Taobao and Tmall Group during the festival, along with a “record number of active buyers.”
“Alibaba’s outlook remains closely aligned with the trajectory of the Chinese economy and evolving regulatory policies,” ING analysts said Thursday, noting that the company’s report on Friday will highlight the growth momentum of the Chinese economy.
Meanwhile, the e-commerce giant's online shopping businesses, such as Lazada and Aliexpress, recorded a 29% year-on-year increase in sales to 31.67 billion yuan.
The cloud business is accelerating
Alibaba's Cloud Intelligence Group reported year-on-year sales growth of 7% to 27.65 billion yuan in the September quarter, compared with a 6% annual increase in the three-month period ending in June. This slight acceleration comes amid the company's ongoing efforts to leverage its cloud infrastructure and reposition itself as a leader in the burgeoning field of artificial intelligence.
“Growth in our cloud business has accelerated compared to previous quarters, with public cloud product revenues growing by double digits and AI-related product revenues achieving triple-digit growth. We are more confident in our core business than ever and will continue to invest in supporting the growth,” said Eddie Wu, CEO of Ali. Alibaba, in a statement on Friday: “Long-term growth.”
Hampered by Beijing's sweeping 2022 crackdown on big internet and technology companies, Alibaba last year overhauled the division's leadership and shaped it as an engine for future growth, stepping up competition with rivals including Baidu And Huawei locally, and Microsoft and OpenAI in the United States
Alibaba, which rolled out its own ChatGPT-style product Tongyi Qianwen last year, this week unveiled its own AI-powered search tool for small businesses in Europe and the Americas, and struck a major five-year partnership to supply cloud services to Indonesian tech. Giant GoTo in September.
Speaking at the Apsara conference in September, Alibaba's Wu said the company's cloud unit was investing “with unprecedented intensity in AI technology R&D and building out its global infrastructure,” noting that the future of AI was “only just beginning.” “. “
