Alibaba Group Holding Ltd, the Chinese e-commerce giant, has announced lower-than-expected quarterly revenue due to a decline in consumer spending caused by COVID-19 restrictions and a worsening economic outlook. The company’s revenue grew by only 3%, reaching 207.18 billion yuan ($28.96 billion) in the three months ended Sept. 30, slightly below the Refinitiv consensus estimate of 208.62 billion yuan.
One of the main factors contributing to the slowdown in revenue was a 7% annual decline in customer management revenue, which tracks the amount of money merchants spend on Alibaba. This is the biggest decline ever recorded for this segment, which typically accounts for 30% of the company’s total revenue. Alibaba’s CEO, Daniel Zhang, attributed this decline to weak consumption demand and the impact of COVID-19 on logistics services.
The resurgence of COVID-19 has led to frequent lockdowns and disrupted economic activity in China. As a result, approximately 50% of locations in the country experienced abnormal logistics and delivery services during Alibaba’s “Singles Day” shopping festival. The unusually warm weather also affected apparel purchases. Despite these challenges, Alibaba’s net loss attributable to shareholders for the quarter was 20.56 billion yuan.
However, there was some positive news for Alibaba. Excluding one-off items, the company earned 12.92 yuan per American Depository Share, beating estimates of 11.62 yuan per share profit. Additionally, Alibaba’s financial affiliate, Ant Group, reported a profit of 7.72 billion yuan for the quarter, despite a 63.2% year-on-year decline.
Looking ahead, Alibaba’s plans for its primary conversion of shares to the Hong Kong Stock Exchange by the end of 2022 have been delayed. The company stated that it will not be able to complete the conversion as originally announced in August. This news comes as Ant Group is still undergoing a government-mandated revamp and has not yet revived plans for its public market debut after its dual listing attempt was derailed in late 2020.
Alibaba’s quarterly revenue miss reflects the challenges faced by the company in a difficult economic environment. The impact of COVID-19 restrictions on consumer spending and logistics services have taken a toll on Alibaba’s performance. However, the company’s ability to beat profit estimates and the performance of its financial affiliate, Ant Group, provide some optimism for the future. As Alibaba continues to adapt to the changing landscape, it will be interesting to see how it navigates these challenges and drives growth in the coming quarters.
Helpful Links:
– For more information on Alibaba’s quarterly revenue and performance, you can visit the official Alibaba Group Holding Ltd website: https://www.alibabagroup.com/en/global/home
– To stay updated on the latest news and developments in the e-commerce industry, you can visit a reputable news source like CNBC’s e-commerce section: https://www.cnbc.com/e-commerce/
