Alibaba Quarterly Profit Sinks Despite Rise in Sales — Update
By Tracy Qu and Ben Otto
Alibaba Group's profit sank in the latest quarter, even as revenue growth picked up due to higher sales in its key e-commerce, cloud and logistics businesses.
The Chinese company said Tuesday that net income in its fiscal fourth quarter ended March fell 86% from a year earlier to 3.27 billion yuan ($452.1 million), well short of expectations for CNY15.27 billion in a FactSet poll of analysts. Alibaba said the bottom line was hurt by a net loss in investments during the quarter due to mark-to-market changes.
Adjusted net profit, which excludes the effects of share-based compensation expenses, investment gains and losses, some impairments and other items, fell 11% to CNY24.42 billion, missing analysts' expectations of CNY25.47 billion.
Quarterly revenue rose 6.6% to CNY221.87 billion, slightly beating analysts' estimates of CNY220.62 billion. That was faster than the 5.1% expansion in the preceding quarter.
Sales at Alibaba's core domestic e-commerce business, Taobao and Tmall Group, rose 3.7% from a year earlier to CNY93.22 billion. Its cloud-computing unit, which has trimmed prices domestically and overseas in recent months, posted a 3.4% increase in sales to CNY25.595 billion, while logistics sales rose 30% to CNY24.56 billion. The company's fast-expanding overseas e-commerce unit reported a 45% rise in revenue to CNY27.45 billion, a tick higher than the 44% growth in the preceding quarter.
Chief Executive Eddie Wu said in a conference call that the group expects Alibaba Cloud's revenue, excluding internal customers, to return to double-digit growth in its fiscal second half. The company also expects Taobao and Tmall's gross merchandise value to return to healthy growth in the new fiscal year, he said.
Alibaba said its board approved a $4.0 billion dividend for the 2024 fiscal year. It expects to finish upgrading to a primary listing in Hong Kong by the end of August from a secondary listing status currently.
The higher sales were in line with the 6% rise in quarterly revenue posted by another Chinese tech giant, Tencent, on Tuesday. The social-media and gaming company, which said solid ad sales offset gaming weakness, reported a 62% rise in profit on rapid growth in its high-margin business.
Once a darling of Wall Street, Alibaba has been grappling with sluggish growth as it faces a cooling Chinese economy and rising competition from the likes of PDD's Pinduoduo e-commerce platform and ByteDance's short-video app Douyin. Revenue from cloud services, considered one of Alibaba's most promising businesses, has also slowed over the past two years.
Hong Kong-listed shares of the company, which is also listed in the U.S., are up 9.3% this year, underperforming the benchmark Hang Seng Index's 12% gain.
Alibaba co-founder Jack Ma last month praised the company's top leadership and continuing restructuring efforts in a rare memo to employees, The Wall Street Journal reported. In the letter, he said this year's core focus wasn't to chase performance indicators but to "know ourselves and go back to the track focusing on consumers."
Alibaba announced a restructuring last year that resulted in independent management for each of its six major business groups. It subsequently abandoned plans to list logistics arm Cainiao and shelved a cloud-computing spinoff. It has also delayed plans to list its Freshippo grocery unit, citing weak market conditions.
Write to Tracy Qu at tracy.qu@wsj.com and Ben Otto at ben.otto@wsj.com
(END) Dow Jones Newswires
May 14, 2024 08:22 ET (12:22 GMT)
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