Alibaba Group Misses EPS Expectations by $0.02 in Q1 2024
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Alibaba Group Misses EPS Expectations by $0.02 in Q1 2024

Alibaba Group's Q1 2024 performance exhibited moderate revenue growth driven by its China and international commerce businesses.
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Alibaba Group Holding Limited (NYSE: BABA), a leading e-commerce and technology conglomerate, reported its financial results for the quarter ended March 31, 2024.

The company demonstrated moderate growth with revenue reaching RMB 221,874 million ($30,729 million), marking a 7% increase year-over-year. This growth was driven by the company’s China and international commerce businesses, which saw double-digit year-over-year GMV growth, and the accelerated growth of cloud computing revenues related to AI products.

Despite the revenue growth, Alibaba’s income from operations decreased by 3% year-over-year to RMB 14,765 million ($2,045 million). The company attributed this decrease to increased investments in its e-commerce businesses and retention incentives for Cainiao employees. Adjusted EBITA also saw a 5% decline, totaling RMB 23,969 million ($3,320 million).

Net income attributable to ordinary shareholders was RMB 3,270 million ($453 million), a significant drop from the previous year, largely due to a net loss from investments in publicly-traded companies.

Alibaba Group Misses EPS Expectations in Q1 with $1.40 EPS

Alibaba’s performance in the March quarter of 2024 was a mixed bag when compared to market expectations. Analysts had projected earnings per share (EPS) of RMB 10.27 and revenue of RMB 220.32 billion. The actual revenue of RMB 221,874 million slightly exceeded expectations, showcasing the company’s ability to maintain growth in a competitive market. However, the company’s non-GAAP diluted earnings per ADS came in at RMB 10.14 ($1.40), falling short of the expected EPS.

The discrepancy in earnings was primarily due to the company’s increased investments and the significant net loss from its equity investments, which impacted the bottom line.

Net income for the quarter plummeted by 96% year-over-year to RMB 919 million ($127 million), highlighting the volatility in Alibaba’s investment portfolio. This stark decline overshadowed the revenue growth, raising concerns among investors about the sustainability of the company’s profitability in the short term.

Alibaba Group Repurchased $12.5 Billion of Shares During the Fiscal Year, Approved $4 Billion Dividend

Alibaba remains optimistic about its strategic priorities and future growth opportunities. CEO Eddie Wu emphasized the company’s commitment to enhancing customer experience and capturing growth in AI and cloud computing. The company expects strong revenue growth in public cloud and AI-related products to offset the decline in low-margin project-based revenues. This strategic shift is aimed at improving the overall profitability of

Alibaba’s cloud business saw a 3% year-over-year revenue growth in the quarter. Additionally, Alibaba’s board of directors approved a $4 billion dividend for fiscal year 2024, reflecting the company’s commitment to returning value to shareholders.

The company also repurchased $12.5 billion of shares during the fiscal year, indicating strong confidence in its long-term prospects. These measures will likely bolster investor sentiment and cushion against short-term market fluctuations.

Strategic and Operational Updates

Regarding business segments, Alibaba’s Taobao and Tmall Group reported a 4% year-over-year revenue growth to RMB 93,216 million ($12,910 million). The company achieved double-digit online GMV and order growth, driven by an increase in the number of purchasers and purchase frequency. The Cloud Intelligence Group recorded RMB 25,595 million ($3,545 million), with a strategic focus on high-quality revenues from public cloud adoption and AI products.

The Alibaba International Digital Commerce Group saw a robust 45% year-over-year revenue growth to RMB 27,448 million ($3,802 million), driven by its cross-border e-commerce initiatives. Cainiao Smart Logistics Network Limited also reported a 30% increase in revenue to RMB 24,557 million ($3,401 million), primarily due to cross-border fulfillment services. These segments underscore Alibaba’s diversified growth strategy and its efforts to enhance operational efficiency across various business units.

In conclusion, while Alibaba’s Q1 2024 performance showcased moderate revenue growth, the significant drop in net income and earnings per share highlighted the challenges posed by increased investments and volatile equity markets. However, the company’s strategic focus on AI, cloud computing, and international expansion, coupled with shareholder-friendly measures, positions it well for future growth and profitability.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.