Alibaba misses revenue estimates as sales drop
Alibaba Group Holdings firstquarter revenue missed market expectations on Thursday.
Chinese consumer caution in a faltering economy hit its domestic e-commerce sales.
The price of its US-listed shares fell about 4% in pre-market trading. Halting economic recovery in China with its weak property market and high job insecurity levels sapped consumer confidence and spending power in the second-biggest economy, hitting global companies worldwide.
Alibaba is also grappling with stiff competition from rivals including JD.com and discountfocused retail platforms such as PDD Holdings’ Pinduoduo and ByteDance-owned Douyin.
Alibaba posted revenue of ¥243.24bn (about $33.98bn) for the June quarter compared with analysts’ average estimate of ¥249.05bn, according to LSEG data. Revenue at the company’s domestic e-commerce arm fell 1% even as the number of buyers and their purchase frequency increased order growth more than 10%.
Chinese e-commerce giants have resorted to heavy discounting and promotions to attract shoppers, a move that is pressuring margins across the retail sector. In June, sales at China’s midyear e-commerce sales festival fell for the first time, according to third-party estimates, despite major platforms’ efforts to dole out offers for an extended period to woo consumers.
Alibaba executives have in recent quarters maintained that increased purchasing and the introduction of new tools for merchants will increase advertising and customer management revenue to the platform.
In March 2023, Alibaba announced the biggest shake-up in its history, splitting into six units and sharpening its focus on its core businesses, including domestic e-commerce.
Helped by the company’s investments to expand its global presence and rising demand around the world for lowerpriced goods from China, Alibaba’s international e-commerce unit had a 32% rise in revenue to ¥29.3bn.
Revenue from Alibaba’s cloud segment rose 6% to ¥26.55bn, accelerating from the 3% growth seen in the prior quarter, thanks to an uptick in public cloud adoption and strong demand for AI-related products.
The company moved to reduce low-margin projectbased contracts, and said a scale-up in its cloud infrastructure was helping it cut its cloud products prices. Net income attributable to ordinary shareholders in the quarter was ¥24.27bn, down from ¥34.33bn a year earlier.