“Our results this quarter demonstrated our strategy at work. Our focus on enhancing user experience by offering quality products at attractive prices with great service led to stabilising market share of Taobao and Tmall Group, as we returned the business on the growth trajectory,” Alibaba CEO Eddie Wu Yongming said in a statement on Thursday. “The cloud business achieved positive revenue growth momentum, driven by public cloud and AI-related product adoption, as we continue to invest to maintain our market leadership.”
Wu, in the same call, voiced confidence that Alibaba Cloud’s overall revenue, excluding Alibaba-consolidated subsidiaries, will return to double-digit growth in the second half of the financial year, which ends next March. He said Alibaba will continue to improve profitability across businesses beyond e-commerce and cloud services.
“We expect most of these businesses to break even within one to two years and gradually contribute to profitability at scale,” Wu said.
The past quarter included China’s second-largest online shopping festival, which this year ran from May 20 to June 20. Amid flagging consumer spending, the festival was seen as a barometer for consumer confidence in the world’s second-largest economy.
Alibaba claimed in the latest earnings report that it delivered “strong online gross merchandise value [GMV] growth year over year” for the festival, but it did not reveal overall numbers.
Many brands have promoted trade-in campaigns instead of cutting prices directly, which may have a limited impact on driving consumer consumption, Kenneth Fong, head of China Internet Research at UBS Investment Research, said in a media briefing last week. “We have not seen any major or direct stimulus policies that could increase consumer confidence,” he said.
Wu, who took over as group chief executive last September, promised last year that the company will invest in revolutionary products, nurture new businesses and find new drivers of growth within a “three-year window”.
Shares of Alibaba closed down 2.4 per cent at HK$76.4 on Thursday in Hong Kong, ahead of the earnings release. Its shares are up over 3 per cent since the beginning of the year.
The company’s core e-commerce unit, Taobao and Tmall Group, saw revenue decline by 1 per cent to 113.4 billion yuan for the quarter. GMV and order volume saw high-single-digit and double-digit year-on-year growth, respectively, according to the company, which did not reveal the figures.
“I would say that most of or probably more than half of our cloud unit’s growth is driven by AI products,” Wu said, adding AI budgets continue to grow despite a weak economy.
In the post-earnings call, Jiang Fang, head of AIDC, highlighted the international unit’s growth in the international markets, driven in large part by ongoing business model and supply chain upgrades in the cross-border business.
“We effectively boosted [AliExpress] and Trendyol’s brand awareness,” Jiang said in the call. “Trendyol increased monetisation and profitability, solidifying its e-commerce leadership.”
The unit’s buoyant results come amid stiff competition in the global cross-border e-commerce segment, in which a number of Chinese players have been battling for a larger piece of the market.