Alibaba Group Holding Limited (BABA) stock took a dip on Thursday following the release of the company’s fiscal first-quarter earnings report. The Chinese e-commerce giant is navigating a challenging landscape, facing fierce competition within a slowing domestic economy.
Despite reporting a 4% year-over-year revenue growth to $33.47 billion, Alibaba missed analyst expectations of $34.81 billion. While adjusted earnings per ADS came in at $2.26, exceeding the consensus estimate of $2.13, net income plummeted by 29% year-over-year to $3.34 billion. Adjusted net income also declined by 9% year-over-year to $5.6 billion.
Alibaba’s performance was a mixed bag across its various segments. The Taobao and Tmall Group, Alibaba’s core domestic e-commerce platforms, experienced a 1% decline in revenue year-over-year to $15.60 billion. However, the company saw positive growth in its international and cloud businesses.
Alibaba International Digital Commerce Group, which includes platforms like AliExpress, saw a 32% year-over-year revenue increase to $4.03 billion. The Local Services Group, which includes services like food delivery and maps, recorded a 12% year-over-year revenue growth to $2.23 billion. Cainiao Smart Logistics Network Limited, Alibaba’s logistics arm, reported a 16% year-over-year revenue increase to $3.69 billion, driven by growth in cross-border fulfillment services.
Cloud Intelligence Group, Alibaba’s cloud computing division, witnessed a 6% year-over-year revenue growth to $3.65 billion. The Digital Media and Entertainment Group, which includes Alibaba’s online ticketing platform, experienced a 4% year-over-year increase to $768 million.
Despite these positive developments, Alibaba’s core domestic business faced challenges. Revenue from China’s commerce retail business declined by 2% year-over-year to $14.78 billion, and direct sales and other revenue decreased by 9% year-over-year to $3.76 billion. However, revenue from China’s commerce wholesale business grew by 16% year-over-year to $819 million.
Alibaba International Digital Commerce Group also saw robust growth in its international business. International commerce retail business revenue increased by 38% year-over-year to $3.26 billion, driven by order growth from AliExpress’ Choice program. International commerce wholesale business revenue grew by 12% year-over-year to $771 million.
Alibaba’s Cloud Intelligence Group continued its growth trajectory, with overall revenue excluding Alibaba-consolidated subsidiaries increasing by 6% year-over-year. This growth was primarily driven by double-digit revenue growth of public cloud products, including AI-related products.
“Our focus on enhancing user experience by offering quality products at attractive prices with great service led to stabilizing market share of Taobao and Tmall Group as we returned the business on the growth trajectory. The cloud business achieved positive revenue growth momentum, driven by public cloud and AI-related product adoption as we continue to invest to maintain our market leadership,” stated Eddie Wu, Chief Executive Officer of Alibaba Group.
Following the earnings report, BABA shares traded lower by 2.99% at $77.10 in premarket trading on Thursday.
