Alibaba reported lower-than-expected earnings for the June 2024 quarter, missing both top- and bottom-line expectations as it continues to struggle with challenges in its core e-commerce business. Despite ongoing efforts to stabilize its domestic operations, the company faces increased competition and cautious consumer spending in China.
For the June quarter, Alibaba’s revenue reached 243.24 billion yuan ($34.01 billion), falling short of the expected 249.05 billion yuan. Net income also missed expectations, coming in at 24.27 billion yuan versus the anticipated 26.91 billion yuan. While revenue saw a 4% year-on-year increase, net income dropped by 29%, a decline that Alibaba attributed to a decrease in income from operations and an increase in impairment from its investments. Despite these setbacks, the company’s shares rose by about 2% in morning trading.
Alibaba has been in a state of transition following its largest-ever corporate restructuring in 2023, coupled with significant management changes, including Eddie Wu assuming the role of CEO in September. Wu has been working to stabilize Alibaba’s China e-commerce segment, focusing on third-party merchants selling on its Taobao and Tmall platforms, while reducing dependence on its direct sales business. However, the June quarter saw a 1% decline in sales from the Taobao and Tmall Group, amounting to 113.37 billion yuan.
Although overall revenue from the China e-commerce business remained weak, Alibaba reported double-digit growth in gross merchandise value (GMV) on its Taobao and Tmall platforms, indicating continued shopper engagement. Meanwhile, Alibaba’s international e-commerce division, which includes Lazada and Aliexpress, posted a strong performance with a 32% year-on-year increase in sales.
In contrast to its domestic challenges, Alibaba’s cloud computing division showed promising growth, with revenue increasing by 6% year-on-year to 26.5 billion yuan, marking the fastest growth rate since the June quarter of 2022. The cloud division’s adjusted EBITA rose by 155% year-on-year, reflecting the company’s focus on higher-margin contracts and improved operating efficiency. Additionally, Alibaba noted that its AI-related product revenue in the cloud division continued to grow at triple-digit rates year-on-year, highlighting the potential of this segment as a future growth driver.
