Photo Credit: Alibaba Group
Alibaba Group delivered solid September quarter earnings resulting from continued investments in its core businesses, and management expressed strong confidence in future growth.
Over the three months ended September 30, 2024, Alibaba’s quarterly revenue rose 5% year-over-year to RMB236.5 billion (US$33.7 billion).
Alibaba’s Chinese commerce platforms, Taobao and Tmall, delivered online gross merchandise value (GMV) growth supported by double-digit year-over-year order growth. Taobao and Tmall’s 88VIP members, China’s most coveted consumer cohort, reached 46 million, demonstrating the platforms’ strong growth momentum to attract and grow a high-spending and loyal consumer base.
“This quarter, we continued to invest in the user experience and strengthen product offerings to serve our consumers. We entered into long-term collaborations with industry peers to broaden payment and logistics services on Taobao and Tmall platforms, which we expect will accelerate our overall growth,” said Alibaba Group CEO Eddie Wu.
Alibaba Cloud’s growth accelerated, with revenue growing 7% year-over-year to RMB29.6 billion (US$4.2 billion) this quarter, mainly driven by the continued strategic focus on public cloud and AI development.
Meanwhile, Alibaba’s international commerce business continued to grow steadily in revenue by 29% year-over-year to RMB31.7 billion (US$4.5 billion) and showed improved efficiency of operations and investment.
Alibaba’s cash, cash equivalents, and investments continue to demonstrate the company’s strong financial position, despite decreases in net cash and free cash flow due to continued investment in Alibaba Cloud infrastructure and refund to Tmall merchants after the cancellation of the annual service fee during the quarter.
Wu expressed optimism about the future, adding, “We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth.”
During the September quarter, Alibaba also repurchased US$4.1 billion of shares as part of its commitment to return value to shareholders. The company is delivering earnings accretion to the shareholders through a net 2.1% reduction in total shares outstanding since the end of June.
Continuing Growth
Taobao and Tmall Group (TTG) saw customer management revenue (CMR) increase by 2% year-over-year to RMB70.4 billion (US$10.0 billion) on the back of online GMV growth, while the take rate remained stable year-over-year.
TTG introduced additional payment and logistics services on its platforms as part of the company’s investments in improving user experience and merchants’ operating efficiency. TTG has observed much stronger momentum in new buyers and believes the focus on user growth and retention will drive the overall growth of TTG’s platforms.
We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth
The company has also increased investments in strategic initiatives to support merchants. These initiatives include removing the annual service fee for Tmall merchants, offering software service fee rebates to certain small and medium-sized merchants, and increasing adoption of Quanzhantui, the platforms’ AI-powered marketing tool that supports higher sales growth and provides greater certainty of ROI to merchants.
As a sign of Alibaba’s investments at work amidst recovering consumer confidence in China, just this week, TTG successfully concluded its annual 11.11 Global Shopping Festival with robust growth in GMV and a record number of active buyers.
This 11.11, the company put its users first with attractive shopping incentives. Its expanding 88VIP membership base, China’s most valuable consumer cohort with the highest purchasing power, was a key growth engine for both brands and merchants. A new record was set as 589 brands surpassed RMB100 million in GMV during this 11.11, while 45 brands surpassed RMB1 billion in GMV, including Apple, Haier, Midea, Xiaomi, Nike, and Wuliangye.
AI Growth Reaches New Heights
Alibaba’s cloud business showed strong growth momentum in external client revenue contribution. Overall revenue, excluding Alibaba-consolidated subsidiaries, grew over 7% year-over-year, driven by double-digit growth in public cloud products and triple-digit growth in AI-related product revenue for the fifth consecutive quarter.
As a testament to its offerings, Alibaba Cloud has been recognized as the service provider of choice in China for public cloud and AI training and applications by third-party research institutions such as Forrester and Omdia.
During its annual cloud computing developer summit and exhibition, Apsara Conference 2024, Alibaba Cloud unveiled several exciting updates on its latest product development.
These updates included significant upgrades to the Qwen (通义千问) large model family and the release of the open-source Qwen 2.5 series as well as substantial cost-efficiency improvements to the Qwen series with reduced charge rate for API calls across all models, making advanced AI technologies more efficient and accessible.
In addition, Alibaba Cloud also unveiled comprehensive AI infrastructure improvements to enhance scalability and performance, including the recently launched GPU container services and upgraded AI server, as well as high-performance network products.
Steady Global Expansion
Alibaba International Digital Commerce Group (“Alibaba International”) also delivered strong performance as revenues increased by 29%, driven by the growth of cross-border businesses, such as AliExpress’ Choice, and continued operational and investment efficiency improvements.
AliExpress and Trendyol continued to invest strategically to increase brand recognition and mindshare in select markets across Europe and the Gulf region.
Its wholesale trading platform business Alibaba.com most recently announced the launch of Accio, an AI-powered search engine that helps small businesses easily find wholesale suppliers for their products globally. The new tool offers a conversational search engine experience that could ultimately reshape small businesses’ procurement process while improving the overall transaction efficiency on Alibaba International’s platform.
The synergies between AliExpress and Cainiao’s cross-border logistics operations continued to shine through as average delivery time has shortened significantly quarter-over-quarter, further strengthening the platform’s competitiveness overseas.
In collaboration with Cainiao, Taobao also started offering free shipping to Hong Kong for orders above RMB99 in a promotional campaign that will last until the end of this year.
During the September quarter, Cainiao revenues grew 8% year over year, driven by revenue from its cross-border fulfillment solutions. In October, Cainiao Express started providing logistics services on other e-commerce platforms, further expanding its market reach.
Other Business Highlights
Alibaba’s other businesses continued to improve their operating efficiency, with most continuing to increase their profitability or reduce losses.
Growth in Amap and Ele.me drove the Local Services Group’s revenue for the September quarter to RMB17.7 billion (US$2.5 billion), a 14% increase year-over-year. As another sign of Amap’s growing momentum, during the National Day holiday in October, Amap recorded a record-high of over 300 million peak daily active users.
Alibaba’s digital media and entertainment business saw losses narrow from the year before as Youku progressively reduced its operating loss during the quarter due to increased advertising revenue and improved content investment efficiency.
