Signage at the Alibaba Group Holding Ltd. headquarters in Hangzhou, China, on Friday, Aug. 2, 2024.
Qilai Shen | Bloomberg | Getty Images
Alibaba missed top- and bottom-line expectations for the June quarter of 2024 as it continues to face headwinds in its core e-commerce business amid rising competition and a cautious Chinese consumer.
Here’s how Alibaba did in the June quarter versus LSEG estimates:
- Revenue: 243.24 billion Chinese yuan ($34.01 billion) versus 249.05 billion yuan expected.
- Net income: 24.27 billion yuan versus 26.91 billion yuan expected.
The company’s shares were up about 2% in morning trading.
Revenue was up 4% year on year, while net income dropped 29%. Alibaba said the net income fall was “primarily due to a decrease in income from operations” and “increase in impairment” from its investments.
Alibaba has been looking to reignite growth after a tumultuous 2023, when it carried out its largest-ever corporate structure overhaul. This was followed by high-profile management changes, with Eddie Wu taking over the reins as chief executive in September.
The e-commerce giant has been grappling with a cautious Chinese consumer, along with increased competition from rivals such as JD.com and Temu owner PDD.
Since taking over the reins, Wu has been trying to get Alibaba’s core China e-commerce business back on a stable footing. It’s currently going through a transition phase where the company is planning to put more focus on third-party merchants selling via its platforms — Taobao and Tmall — in China, while reducing reliance on its direct sales business.
Wu has previously said the company intends to release new monetization features for its e-commerce platforms that should return the Taobao and Tmall business back to growth toward the latter half of the firm’s fiscal year 2025.
In the June quarter, sales from the Taobao and Tmall Group, which represents Alibaba’s China e-commerce business, fell 1% year on year to 113.37 billion yuan.
Alibaba said that it achieved “double-digit” growth of gross merchandise value in its Taobao and Tmall business — a figure that represents the value of transactions across its platform. Alibaba has been keen to highlight that, even as overall revenue remains weak, shoppers are using its sites.
Meanwhile, Alibaba’s overseas online shopping businesses, such as Lazada and Aliexpress, continue to be a bright spot, with sales in the international e-commerce division up 32% year on year.
Cloud accelerates
Investors are keeping a close eye on Alibaba’s cloud computing division, which is seen as a future growth driver for the company.
Alibaba said quarterly revenue from the cloud group hit 26.5 billion yuan, up 6% year on year in the fastest growth rate since the June quarter of 2022.
Much like its Chinese and U.S. peers, the Hangzhou, China-headquartered firm has been investing heavily in artificial intelligence and sells AI products via its cloud unit. Alibaba said, “AI-related product revenue continued to grow at triple-digits year-over-year.”
The company shook up its cloud computing division management last year and has been trying to focus on higher-margin contracts, as well as on improving operating efficiency. Adjusted earnings before interest, taxes, and amortization — or EBITA, a measure of profitability — rose 155% year on year in the cloud division in the June quarter, according to the firm.
Correction: This article has been updated to accurately reflect the timeline of Wu’s forecast for the return to growth of the Taobao and Tmall business, which is set to take place in the latter half of the firm’s fiscal year 2025.
