Alibaba Group (HKEX:9988) announced its financial results for the quarter ended September 30, 2024.
“This quarter we continued to invest in the user experience and strengthen product offerings to serve our consumers. We entered into long-term collaborations with industry peers to broaden payment and logistics services on Taobao and Tmall platforms, which we expect will accelerate our overall growth. Growth in our Cloud business accelerated from prior quarters, with revenues from public cloud products growing in double digits and AI-related product revenue delivering triple-digit growth. We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth. Our other businesses continued to improve their operating efficiency, with most of them continuing to increase their profitability or reduce losses,”
– Eddie Wu, Chief Executive Officer of Alibaba Group.
Alibaba is opening up payment services to its competitors to make payments on Taobao and Tmall platforms. Alibaba is giving merchants the option to use services provided by JD Logistics. Customers can choose JD as their preferred courier for delivery or return, and track their packages directly on Taobao and Tmall. Both rivals had been at odds for years, blocking each other’s services in their ecosystems. Regulatory pressure and a slowing domestic economy have forced China’s tech giants to reconsider their approaches to choose collaboration instead of competition.
Financial numbers for the quarter ended September 2024:
– Revenue was RMB236,503 million which was an increase of 5% year-over-year
– Net income attributable to ordinary shareholders was RMB 43,874 million which was an increase of 63% year-over-year, this is due to changes in equity prices. However, this mark-to-market will fluctuate in the next quarter. We focus on the increase in income from operations.
– Net cash provided by operating activities was RMB 31,438 million which is a decrease of 36% compared to RMB49,231 million in the same quarter of 2023. Free cash flow was RMB 13,735 million a decrease of 70% compared to RMB 45,220 million in the same quarter of 2023. The drop in free cash flow was due to investment in Alibaba Cloud infrastructure, refund to Tmall merchants after the cancellation of the annual service fee, and other working capital changes to refocus its core business.
Taobao and Tmall Group Business Update
Revenue grew 1% year-on-year to RMB 98,994 million.
Apart from an open approach to payment and logistics services, the business implemented service fee based on GMV of completed transactions on platform. The annual service fee for Tmall merchants is cancelled and software service fee rebates are provided to certain small and medium-sized merchants. Its AI-powered platform-wide marketing tool is increasing its adoption across its merchants.
The number of 88VIP members increased by double-digits year-over-year, reaching 46 million during the quarter.
Cloud Intelligence Group
Revenue from Cloud Intelligence Group was RMB29,610 million which saw an increase of 7% year-over-year. AI-related product revenue grew at triple-digits year-over-year for the fifth consecutive quarter. Alibaba Cloud is the best-in-class public cloud and AI platform in China.
Alibaba International Digital Commerce Group
Revenue grew 29% year-over-year to RMB 31,672 million. The strong performance continued to be driven by the growth of cross-border business, in particular AliExpress’ Choice business. The adjusted EBITA was a loss of RMB 2,905 million in the quarter ended September 2024 compared to a loss of RMB 384 million in the same quarter ended September 2023. This is due to an increase in investments in AliEpxress and Trendyol’s cross-border businesses, partly offset by Lazada’s reduction in operating loss.
Share Repurchases
Alibaba repurchased a total of 414 million ordinary shares for a total of US$4.1 billion. As of 30th September 2024, 18,620 million ordinary shares are outstanding, which is a net decrease of 405 million ordinary shares compared to 30th June 2024 which is a 2.1% reduction in outstanding shares. The remaining amount of Board authorization for the share repurchase program is effective through March 2027 was US$22 billion as of September 2024.
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