Alibaba Group Holding Limited (NYSE:BABA) disclosed its third-quarter fiscal 2024 non-GAAP earnings of $2.67 per ADS (RMB 18.97), slightly below the Zacks Consensus Estimate by 2.2%. This figure represents a 2% decrease compared to the same quarter last year in RMB.
Despite a 5% increase in revenues from the year-ago quarter, reaching RMB 260.35 billion ($36.7 billion), the top line failed to meet the Zacks Consensus Estimate of $37.2 billion.
The revenue growth was primarily fueled by robust performance in the international commerce retail sector. Additionally, the local services and Cainiao logistics services businesses showed significant contributions. The Digital Media and Entertainment Group segment also delivered a strong performance.
However, the sluggish growth in the China commerce business posed a notable concern.
Over the past year, Alibaba’s shares have declined by 30.8%, in contrast to the Zacks Retail-Wholesale sector’s return of 26.2%.
Revenue Breakdown by Segments
Taobao and Tmall Group: This segment, which includes Taobao, Tmall, Xianyu, 1688.com, and other businesses in China’s retail and wholesale markets, generated revenues of RMB 129.1 billion ($18.2 billion), a 2% increase from the previous year.
China Commerce Retail: Revenues from this vertical reached RMB 123.8 billion ($17.4 billion), up 1% from the same quarter last year, attributed to rising direct sales and other revenues. However, a decreasing take rate offset the benefits of growing online GMV on Taobao and Tmall.
China Commerce Wholesale: This segment generated revenues of RMB 5.31 billion ($747 million), marking a 23% increase year-over-year, driven by growing revenues from value-added services.
Alibaba International Digital Commerce Group: With revenues of RMB 28.52 billion ($4.02 billion), up 44% from the previous year, this segment, which comprises Lazada, AliExpress, Trendyol, Alibaba.com, and other businesses in international retail and wholesale markets, showcased robust growth.
International Commerce Retail: Revenues in this sector were RMB 23.3 billion ($3.3 billion), a 56% increase from the same fiscal quarter last year, primarily due to strong combined order growth in AIDC’s retail businesses and momentum in AliExpress’ Choice.
International Commerce Wholesale: Generating revenues of RMB 5.26 billion ($740 million), up 8% year-over-year, this segment benefited from the strength in cross-border-related value-added services.
Local Services Group: Revenues in this segment amounted to RMB 15.2 billion ($2.14 billion), up 13% from the previous year, driven by strong order growth in Ele.me and Amap businesses.
Cainiao Smart Logistics Network: Revenues totaled RMB 28.5 billion ($4.01 billion), a 24% increase from the previous year, attributed to solid momentum across cross-border fulfillment solutions.
Cloud Intelligence Group: With revenues of RMB 28.1 billion ($3.95 billion), up 3% from the previous year, this segment saw strength across Alibaba’s consolidated businesses.
Digital Media and Entertainment Group: Revenues reached RMB 5.04 billion ($710 million), an 18% increase from the previous year, driven by the strength in Alibaba Pictures’ offline entertainment businesses.
All Others: This segment’s revenues were RMB 47.02 billion ($6.6 billion), a 7% decline from the previous year, primarily due to declining revenues from Sun Art.
Operating Details
In the fiscal third quarter, sales and marketing expenses rose to RMB 33.8 billion ($4.8 billion), up 10.3% from the previous year, accounting for 13% of total revenues.
General and administrative expenses increased to RMB 11.3 billion ($1.6 billion), up 9% from the previous year, representing a slight expansion as a percentage of total revenues.
Product development expenses decreased slightly to RMB 13.5 billion ($1.9 billion), down 0.2% from the previous year, representing a contraction as a percentage of total revenues.
Operating income in the reported quarter was RMB 22.51 billion ($3.2 billion), down 36% year-over-year, with an operating margin of 9%, contracting 500 bps from the previous year.
Adjusted EBITDA increased by 1% from the previous year to RMB 59.6 billion ($8.4 billion).
Balance Sheet & Cash Flow
As of December 31, 2023, cash and cash equivalents stood at $35.9 billion (RMB 254.8 billion), up from $33.4 billion (RMB 243.7 billion) as of September 30, 2023.
Short-term investments totaled $42.3 billion (RMB 300.42 billion) at the end of the third quarter of fiscal 2024, up from $40.7 billion (RMB 296.8 billion) at the end of the second quarter.
Cash generated from operations in the reported quarter amounted to $9.1 billion (RMB 64.7 billion), up from $6.7 billion (RMB 49.2 billion) in the previous quarter.
The free cash flow for BABA was $7.96 billion (RMB 56.54 billion).
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