On August 28, 2024, the Alibaba office building is located in Nanjing, Jiangsu Province, China.
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Alibaba Accelerated sales in cloud computing units and the continued revival of the e-commerce business have posted better revenue than expected in the June quarter.
Still, the Chinese giant’s revenues were under analysts’ predictions. Alibaba’s shares rose 10% in the US after initially soaking.
Here’s how Alibaba did in the first quarter that ended in June:
Revenue: 2476.5 billion yuan ($34.6 billion), and 25.29 billion yuan is projected. Net revenue: 28.5 billion yuan compared to 4.311 billion yuan.
Revenues increased 2% year-on-year, but the company’s net profit increased 78%. Alibaba attributed the increase in profits to several profits in its stock investments and the disposal of Turkish e-commerce company Trendyol. This was offset by a decline in revenue from operations.
However, excluding investment profits, Alibaba’s net profits were down 18% year-on-year as they continue to invest in China’s corrupt instant commerce space.
Alibaba has carried out delicate balance between investment sectors such as artificial intelligence models and new e-commerce models, indicating that it can continue to grow in China’s competitive market. So far, investors have paid Alibaba this year at a 40% rally of US listed stocks.
This is grateful for the continued accelerated growth in key cloud computing sectors and for improvements in both China and international e-commerce businesses.
The cloud accelerates
Cloud computing was one of the bright spots.
Alibaba said the department’s revenue totaled 33.4 billion yuan, an increase of 26% from the previous year. This was faster than the 18% growth seen in the last quarter. Alibaba’s cloud units are considered keys to companies monetizing artificial intelligence, such as Microsoft and Google.
“Powered by robust AI demand, Cloud Intelligence Group accelerated revenue growth, and AI-related product revenue has become a significant portion of revenue from external customers,” Alibaba CEO Eddie Wu said in a statement.
Investors are focused on Alibaba’s investment in artificial intelligence, where they have become a major global player. The company actively launches a variety of AI models and sells services through its cloud computing division.
Alibaba focuses on open source AI, but models mean they can be used freely and built by developers, but they sell AI services through cloud units.
Alibaba said its AI-related product revenues “maintained triple-digit growth year-over-year for the eighth consecutive quarter.”
Adjusted revenue before interest, taxes and amortization (EBITA) is a measure of profitability, up 26% year-on-year in the Cloud Unit.
Alibaba Management said Friday that its purpose is to surpass the market average, rather than increase the total margin in the short term.
“Quick Commerce” War
Alibaba’s core e-commerce business, which accounts for more than 50% of revenue, has had mixed results.
Overall, revenues increased 10% year-on-year to 19.6 billion yuan. Customer-managed revenues that Alibaba excluded from selling marketing and other services to merchants on the platform increased by 10%. CMRs make up a large portion of e-commerce revenue.
However, the department’s adjusted revenues fell 21% in the annual quarter. That’s because Alibaba has invested heavily in what is called a rapid or immediate commercial. This is a feature feature featured in Taobao, one of Alibaba’s main Chinese e-commerce apps.
There is fierce competition in China, with rivals like food delivery giants Meituan and JD.com all involved. And rivalries have already hit some of these companies, with Meituan posting a 89% plunge in adjusted net profit for the second quarter.
Alibaba’s own Quick Commerce division brought revenues of 14.8 billion yuan, or more than $2 billion, up 12% year-on-year. In a revenue call on Friday, Alibaba executives said instant commerce will add 1 trillion yuan to their annual incremental gross product value (GMV) within the next three years. GMV is the amount of money traded between Alibaba’s platforms, but does not lead to direct revenue.
Still, as the cloud computing business continues to grow, investors look ok with Alibaba’s instant commerce investment, but international online shopping units, including Aliexpress, earned 19% on quarterly revenues as losses narrowed.
