CNA – Chinese e-commerce giant Alibaba Group Holding Ltd reported on Thursday its slowest quarterly revenue growth since going public in 2014, hit by a drop in sales at its core business segment and intensifying competition.
The slowing Chinese economy has also taken a toll on the company as consumers cut back discretionary spending.
Alibaba said group revenue rose about 10 per cent in October-December 2021 to CNY242.6 billion (USD38.37 billion), marking the first time quarterly sales growth has fallen below 20 per cent.
Analysts on average had expected revenue of CNY246.37 billion, according to Refinitiv data.
Customer management revenue, a key metric which tracks how much money merchants spend on ads and promotions on Alibaba’s sites, fell one per cent year-on-year.
That marks the first time revenue for the segment, which made up 41 per cent of Alibaba’s total revenue, has decreased since the company’s IPO. Speaking on an investor call, Deputy CFO Toby Xu said the drop was caused in part by lowering merchant fees amid the slowing economy.
During China’s annual Singles’ Day promotional event last November, the company recorded gross merchandise value growth of 8.5 per cent, a record low.
Alibaba’s shares were down about three per cent in New York before the opening bell. They fell about seven per cent after the results were announced, tracking losses in global shares after Russia launched an all-out invasion of Ukraine.
Alibaba is also facing intensifying pressure from rivals like ByteDance-owned Douyin and Kuaishou, which have capitalised on the booming trend of livestreaming e-commerce.
“Merchants now have to allocate their advertising dollars to different platforms,” said Vincy Zhang, who tracks China’s e-commerce sector at research firm Pacific Epoch.
“In the past, if you were an apparel merchant, maybe you would allocate 100 per cent to Alibaba, but now a percentage of that goes to the short video players.”
Ant Group, Alibaba’s fintech affiliate, reported a profit of about CNY17.6 billion for the quarter ended September, according to Alibaba’s filings on Thursday, compared with CNY15 billion a year ago.
Alibaba reports its profit from Ant one quarter in arrears.
Ant has been subjected to a sweeping restructuring by China, which derailed its USD37 billion initial public offering in late 2020.
For the nine months ending in December, the company purchased roughly USD7.7 billion worth of shares.
Fiscal third quarter revenue for the company’s cloud business grew 20 per cent year-on-year to hit CNY19.5 billion (USD3.08 billion), but adjusted core earnings (EBITDA) for the unit declined 66 per cent sequentially from the previous quarter.