Alibaba's Q1 2024 Earnings
Posted:![Alibaba's Q1 2024 Earnings](/media/v1qb5yd1/alibaba-s-q1-2024-earnings.png)
Alibaba's Cloud and International Segments Shine Amid Revenue Shortfalls
Alibaba for first quarter 2024 reported revenue of 243.24 billion yuan or $33.47 billion up by 4% year-on-year.
On a segmental basis, sales from Alibaba's China e-commerce business, represented by the Taobao and Tmall Group, decreased by 1% year-over-year to 113.37 billion yuan in the June quarter.
Alibaba reported achieving "double-digit" growth in gross merchandise value for its Taobao and Tmall businesses—a measure representing the total value of transactions on its platform. Despite overall revenue being weak, the company emphasized that shoppers continue to actively use its sites.
Cainiao Smart Logistics Network Limited's revenue grew by 16% year-over-year to $3.69 billion, mainly driven by income from cross-border fulfillment services.
Alibaba's International Digital Commerce Group reported revenue of 29.29 billion yuan, reflecting a 6.7% increase from the previous quarter.
Meanwhile, Alibaba’s overseas online shopping businesses, including Lazada and Aliexpress, remain a bright spot, with sales in the international e-commerce division increasing by 32% YoY.
Revenue from China's commerce retail business decreased by 2% year-over-year to $14.78 billion, while direct sales and other revenue fell by 9% to $3.76 billion. In contrast, revenue from China's commerce wholesale business increased by 16% year-over-year to $819 million.
Alibaba reported that quarterly revenue from its cloud group reached 26.5 billion yuan, a 6% YoY increase, marking the fastest growth rate since the June quarter of 2022.
Similar to its Chinese and U.S. counterparts, the Hangzhou-based firm has heavily invested in artificial intelligence, offering AI products through its cloud unit. The company noted, "AI-related product revenue continued to grow at triple-digits year-over-year."
Whereas, Net Income plunged 29% YoY to $3.34 billion. Alibaba attributed the decline in net income mainly to a reduction in operating income and an increase in impairment charges related to its investments.
Alibaba has been striving to reignite growth following a tumultuous 2023, which saw its largest-ever corporate structure overhaul and significant management changes, including Eddie Wu becoming CEO in September.
The e-commerce giant is contending with cautious Chinese consumers and heightened competition from rivals such as JD.com and Temu owner PDD.
Since assuming leadership, Wu has focused on stabilizing Alibaba’s core China e-commerce business. The company is in a transition phase, planning to emphasize third-party merchants on its Taobao and Tmall platforms while reducing reliance on its direct sales business. Wu has previously stated that Alibaba aims to introduce new monetization features for its e-commerce platforms, anticipating a return to growth for Taobao and Tmall by the latter half of 2025.
Investors are closely monitoring Alibaba’s cloud computing division, regarded as a potential future growth driver for the company.
Last year, Alibaba reorganized its cloud computing division’s management to focus on higher-margin contracts and improve operating efficiency. As a result, adjusted earnings before interest, taxes, and amortization (EBITA), a profitability measure, increased by 155% YoY in the cloud division for the June quarter.
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