Alibaba misses revenue estimates as e-commerce growth sluggish
Khevna.P.Shah, INN/Bangalore
@Shahkhevna1, @Infodeaofficial
China’s Alibaba Group Holding Ltd, missed analyst estimates for first-quarter revenue on Tuesday, as its e-commerce business was damaged by the increasing competition from smaller companies such as JD.Com Inc and Pinduoduo Inc.
Alibaba’s results mirror those of e-commerce giant Amazon.com Inc in the United States, as the easing of pandemic-related restrictions has led to more consumers visiting physical stores rather than ordering online.
The major differences between China’s Alibaba and US’s Amazon are the target audience, membership fees and revenue resources. Amazon is more customer friendly because of the easy payment method and accessible store. More importantly Alibaba’s business model is business-business and Amazon’s business model is business-consumer.
Core commerce revenue for Alibaba inflated about 35% to 180.24 billion yuan in the quarter, compared with estimates of 184.23 billion yuan. And in the fourth quarter, the unit’s revenue surged more than 70%.
Overall, revenue rose about 34% to 205.74 billion yuan ($31.83 billion) in the first quarter ended June 30, below estimates for 209.39 billion yuan, according to IBES data from Refinitiv.
Net income attributable to shareholders fell to 45.14 billion yuan, compared with 47.59 billion yuan a year earlier.
On an adjusted basis, the company earned 16.60 yuan per share, above estimates for 14.43 yuan.
Ant Group, the fintech affiliate of Alibaba Group, recorded a profit of about 13.48 billion yuan in the quarter ended March, according to the Chinese e-commerce giant’s filing.
Alibaba, which holds about a third of Ant, posted a profit of 4.49 billion yuan for the quarter ended June 30 from its investments in the financial conglomerate.
Revenue in Alibaba’s cloud computing division grew 29% year-on-year, reaching 16.05 billion yuan ($2.49 billion)
The results come amid an ongoing Chinese regulatory crackdown on the industry, during which Alibaba has become one of the main targets.
Late last year, regulators halted a planned $37 billion IPO of Ant Group in Shanghai and subsequently called for a restructuring of the financial unit.
In April, China’s anti-monopoly regulator fined Alibaba $2.75 billion for engaging in anti-competitive practices.
Alibaba has grown steadily and widely. Although Jack Ma stepped down as the chairman, he had built a very solid foundation, with Alibaba’s current market value at more than a quarter-trillion USD.
During an earnings call with investors, Alibaba CEO Daniel Zhang said the company would continue to monitor the impact of ongoing regulatory changes on the company’s business.
He cited a recent regulatory crackdown on community marketplace platforms letting sellers offer items below market price as one example of a sector the company is monitoring, in addition to the Data Security Law and an investigation from the Ministry of Industry and Information Technology into open links between rival platforms.
“We are in the process of studying the regulatory requirements, evaluating the potential impacts on our relevant businesses and we will respond positively with actions,” Daniel Zhang said.
