In 2023, Alibaba faced a challenging year marked by its largest-ever corporate restructuring and significant management changes, including the appointment of company veteran Eddie Wu as chief executive in September.
To reassure shareholders, the Chinese tech giant announced earlier this year an expansion of its share buyback program by $25 billion through March 2027.
Amid cautious consumer spending in China, Alibaba observed some recovery in its core e-commerce operations during the March quarter. The Hangzhou-based company has been intensifying its international expansion efforts amidst a domestic slowdown, compounded by rising competition from budget-conscious competitors like PDD.
Revenue from Alibaba’s Taobao and Tmall division, which encompasses its China e-commerce activities, increased by 4% year-on-year to 93.2 billion yuan, an acceleration from the previous quarter’s 2% growth. Customer management revenue, derived from services like marketing sold to merchants on its platforms, also rebounded with a 5% year-on-year increase following a flat performance in the preceding quarter. Alibaba’s international commerce segment additionally reported a robust revenue rise of 45% year-on-year to 27.4 billion yuan.
CEO Wu has pledged to reignite growth through strategic investments, and early indications in the March quarter suggest progress toward this goal.
In its earnings report, Alibaba attributed the sharp decline in profit to a net loss from investments in publicly traded companies during the quarter, contrasting with a net gain in the same period last year due to mark-to-market adjustments.
Alibaba’s cloud computing division remains a focal point for investors, though it struggled to achieve significant growth, recording a modest 3% year-on-year revenue increase of 25.6 billion yuan, consistent with the previous quarter. The company is actively reducing low-margin project-based contracts in its cloud segment while betting on artificial intelligence (AI) and public cloud services for enterprise customers to offset revenue declines.
During the March quarter, Alibaba reported triple-digit year-over-year growth in AI-related revenue, driven by diverse sectors including foundational model companies, internet firms, and industries like financial services and automotive.