Alibaba Group Holding Limited (NYSE:BABA) stock is trading lower Tuesday after the company reported its quarterly results.
The Jack Ma co-founded e-commerce giant reported fiscal fourth-quarter 2023 revenue growth of 7% year-on-year to $30.73 billion, beating the analyst consensus estimate of $30.40 billion. Adjusted earnings per ADS of $1.40 missed the analyst consensus estimate of $1.41.
Net income plunged 86% Y/Y to $453 million due to net loss from its investments in publicly traded companies during the quarter. Adjusted net income declined 11% Y/Y to $3.38 billion.
Segments: Taobao and Tmall Group revenue grew 4% year over year to $12.91 billion. Alibaba International Digital Commerce Group revenue increased by 45% year over year to $3.80 billion. Local Services Group revenue grew by 19% year over year to $2.03 billion, driven by Ele.me and Amap.
Cainiao Smart Logistics Network Limited’s revenue increased 30% year over year to $3.40 billion, primarily due to revenue from cross-border fulfillment services supporting AliExpress.
Cloud Intelligence Group revenue grew by 3% Y/Y to $3.55 billion. Digital Media and Entertainment Group decreased Y/Y by (1)% Y/Y to $685 million due to a modest decline in Youku’s revenue. All others revenue declined by (3)% Y/Y at $7.13 billion.
In the Taobao and Tmall Group, the customer management revenue grew 5% Y/Y, driven by robust revenue growth from search and recommendations.
Revenue from China’s commerce retail business grew by 3% year over year to $12.22 billion. Direct sales and other revenue declined by 2% year over year to $3.42 billion.
Revenue from our China commerce wholesale business grew by 20% Y/Y to $686 million.
Alibaba International Digital Commerce Group: International commerce retail business revenue grew by 45% year over year to $3.80 billion, driven by AIDC’s cross-border businesses, particularly the growth contributed by the Choice business on AliExpress.
During the quarter, AliExpress continued its robust Y/Y order growth, driven by Choice, Trendyol continued its robust double-digit order growth, and Lazada’s loss per order continued to narrow Y/Y.
Cloud Intelligence Group: During the quarter, Alibaba’s core public cloud offerings recorded double-digit Y/Y revenue growth. AI-related revenue experienced accelerated growth and continued to record triple-digit growth Y/Y.
Cainiao Smart Logistics Network Limited: In March, Cainiao withdrew its initial public offering on the Hong Kong Stock Exchange to work more closely with AliExpress to strengthen its comprehensive end-to-end cross-border delivery capabilities. During the quarter, Cainiao extended its premium delivery to four additional countries, bringing the total coverage to 14 countries.
Cainiao will continue to execute its strategy of building a global smart logistics network.
Digital Media and Entertainment Group: Alibaba Pictures’ movie business revenue grew, while revenue of its online ticketing platform for live events, Damai, grew rapidly Y/Y.
Dividend: The board approved a $4.0 billion dividend for fiscal year 2024. It approved a two-part dividend comprised of an annual regular cash dividend of $1.00 per ADS and a one-time extraordinary cash dividend of $0.66 per ADS.
Stock Buyback: During Q4, Alibaba repurchased 65 million ADS worth $4.8 billion in both the U.S. and Hong Kong markets under the share repurchase program.
Alibaba said it is preparing for its primary listing in Hong Kong and expects to complete this conversion by the end of August 2024.
BABA stock has lost over 4% in the last 12 months. Investors can gain exposure to the stock via the Invesco Golden Dragon China ETF (NASDAQ:PGJ) and the ProShares Online Retail ETF (NYSE:ONLN).
Price Action: BABA shares traded lower by 4.96% at $80.40 premarket at the last check Tuesday.
Alibaba Photo Via Shutterstock
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China’s internet giants from Alibaba Group Holding to Tencent Holdings slashed external investments last year amid an economic slowdown, regulatory headwinds and geopolitical tensions, according to data compiled by a Chinese consultancy.
Total investment deals made by Alibaba, Tencent and Baidu plunged by nearly 40 per cent to 102 in 2023, with Tencent – known for its expansive holdings in China’s internet sector – seeing the largest reduction in deals, data from ITJuzi showed.
The social media and video gaming titan struck 39 investment contracts with 37 companies last year, a sharp decline from the 95 and 299 deals it made in 2022 and 2021, respectively.
Web search and artificial intelligence (AI) firm Baidu participated in 24 investment deals last year, down from 52 in 2021. E-commerce giant Alibaba, which owns the South China Morning Post, took part in 39 deals, a fall from 91 in 2021, according to ITJuzi.
2021 was a watershed year for Chinese internet firms, as Beijing kicked off a campaign to rein in the “disorderly expansion of capital”. Amid a series of regulatory tightening moves, the country’s internet champions – whose market sizes were once on a par with their American counterparts – have virtually stopped expanding.
Tencent’s investments last year were mainly related to corporate services, healthcare and video games. Advanced manufacturing firms were Alibaba’s top picks, with eight related deals being struck by the Hangzhou-based company and its affiliates during the year.
Alibaba, which is grappling with anaemic consumer spending at home, made four investment deals in the e-commerce sector, three of them outside China.
AI was another investment favourite among Chinese tech giants last year, as they raced to build and promote their local rivals to OpenAI’s ChatGPT.
Tencent and Alibaba each backed seven and four AI start-ups developing large language models (LLMs), the technology which underpins chatbots like ChatGPT, which can understand complex questions and give humanlike responses.
Last year, Alibaba’s in-house research facility Damo Academy also launched a research laboratory to recruit more than a hundred postdoctoral candidates to work on cutting-edge areas, including AI and semiconductors.
Other major Chinese tech companies made even fewer investments.
TikTok owner ByteDance struck five external investment deals last year, while online shopping platform operator JD.com made just two.
Meanwhile, Chinese smartphone maker Xiaomi emerged as the top investor by number of investments, with 82 deals made during the year.
In that same month, Xiaomi invested in three start-ups in the vehicle and transport industry, according to ITJuzi.