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Alibaba Group’s fourth-quarter revenue grew 7% year-over-year to RMB221.87 billion ($30.73 billion), edging ahead of forecasts as it notched wins across its core e-commerce and cloud businesses.
Revenue for the three months ended March 31 outpaced Bloomberg’s consensus estimate of approximately RMB219.80 billion, while revenue for the 2024 fiscal year rose 8% year-over-year to RMB941.17 billion.
“We’ve seen early results from increased investment in our strategic business priorities and are confident in our business outlook,” said Toby Xu, Chief Financial Officer of Alibaba Group.
Alibaba’s adjusted earnings before interest, taxes, and amortization (EBITA) for the quarter decreased 5% year-over-year to RMB23.97 billion, primarily due to increased investment in its e-commerce businesses and one-time retention incentives for employees of logistics arm Cainiao. Quarterly non-GAAP net income declined 11% year-over-year to RMB24.42 billion.
Alibaba increased its capital expenditure on Alibaba Cloud infrastructure and its Chinese and cross-border e-commerce businesses, leading to double-digit growth across key metrics including gross merchandise value (GMV).
“This quarter’s results demonstrate that our strategies are working and we are returning to growth,” said Eddie Wu, Chief Executive Officer of Alibaba Group.
The company also announced a $4.0 billion dividend distribution to continuously enhance shareholder return.
Enhancing User Experience
Alibaba’s e-commerce businesses recorded an uptick in purchasing frequency and customer retention over the quarter, even as retail growth slowed in China.
Across the country, total retail sales of consumer goods in March grew 3.1% year-over-year, trailing the 5.5% and 7.4% growth recorded in the January-February and December periods, respectively, according to China’s National Bureau of Statistics.
Despite the broader slowdown, revenue during the latest quarter grew 4% year-on-year to RMB93.22 billion at Taobao and Tmall Group (TTG).
TTG’s adjusted EBITA shrank slightly to RMB38.5 billion compared to RMB39.04 billion in the same quarter of 2023, as the business increased strategic investment in areas including customer service, membership program benefits and technology.
“Our China and international commerce businesses realized double-digit year-over-year GMV growth through our focus on the customer experience,” said Wu, who stepped into the role of Taobao and Tmall Group CEO last year.
He has emphasized that 2024 would be a year of strategic upgrades and significant investment into the core businesses, and it has started to bear fruit.
Online gross merchandise value – excluding unpaid orders – and order growth expanded by double-digits year-over-year, fueling a 5% increase in customer management revenue.
Membership in TTG’s 88VIP loyalty program increased by double digits year-over-year in the quarter to top 35 million members, as consumers were enticed by improving service and more benefits.
Taobao has introduced more user-friendly measures including a simplified 6.18 sales structure and a website update. Likewise, Tmall announced plans to triple the scale of resources dedicated to new products.
Between January and March, the number of new merchants on Tmall rose 60% year-over-year, while the total transaction volume of new merchants over this time increased by 150% compared with last year.
Alibaba Cloud Propelled by AI Boom
Quarterly revenue from the company’s Cloud Intelligence Group rose 3% to RMB25.60 billion, driven by the double-digit growth of its public cloud business.
Alibaba Cloud’s public cloud offerings are available online for organizations and individuals alike, and include elastic compute, database and AI products and services. The company saw triple-digit growth in AI-related revenue in the fourth quarter.
To attract start-ups and small businesses that will support long-term growth, Alibaba recently slashed the price of over 100 core public cloud products in the Chinese market.
In April, the company also extended these cost reductions to international customers, with an average price reduction of 23%.
“We are excited by the accelerated growth of customers and cloud computing revenues related to our AI products. We will remain focused on our strategic priorities and capture future growth opportunities,” said Wu.
Over 90,000 enterprises have adopted Alibaba Cloud’s Qwen large language model (LLM) since it debuted a year ago, on top of more than 7 million downloads on open-source platforms like Github.
Alibaba Cloud recently launched a service to help companies customize and scale generative AI models, from consolidating multiple models to optimizing underlying infrastructure resources.
In addition, Alibaba Cloud’s AI-driven sustainability platform Energy Expert rolled out an open API service enabling developers to build customized sustainability applications.
Its AI computing platform for high-performance computing tasks, PAI-Lingjun Intelligent Computing Service, became available in Singapore for the first time this year.
International Commerce Engine Revs Up
Alibaba International Digital Commerce Group (AIDC) marketplaces notched a 20% increase in combined orders for the latest quarter as revenue grew 45% year-over-year to RMB27.45 billion for the quarter ended March 31, 2024.
Cross-border retail platform AliExpress provides price-competitive products and efficient fulfillment under its Choice service, which accounted for around 70% of AliExpress’s total orders in April 2024.
Increased synergies between AliExpress and Cainiao led five to ten-day delivery completion rates to double year-over-year for Choice orders over the quarter.
Cainiao, which withdrew its plan to make an initial public offering on Hong Kong’s stock exchange in March partly to focus on supporting cross-border fulfillment services within AIDC, has also gone from strength to strength.
For the three months ended March 31, 2024, revenue from Cainiao grew 30% year-over-year to RMB24.56 billion. Cainiao’s five to ten-day delivery service extended into four additional countries during the quarter, bringing the number of countries covered by the premium service to 14.
Investment in cross-border initiatives ramped up across the board in the fourth quarter.
Turkish online retailer Trendyol expanded into the Gulf region and has become one of the region’s most downloaded e-commerce apps. At the same time, AliExpress earmarked millions of euros for discounts and deals as part of an exclusive global sponsorship of the upcoming UEFA European Football Championship set for this summer.
As a result of increased investment in key markets to enhance customer experience and expand consumer base, AIDC posted a loss of RMB4.09 billion in the quarter for adjusted EBITA.
Returning Value to Shareholders
As part of management’s commitment to delivering value to shareholders, Alibaba has announced a two-part dividend worth an aggregate $4.0 billion.
The Alibaba board approved an annual regular cash dividend for the most recent fiscal year and an extraordinary cash dividend comprised of proceeds from the disposition of certain financial investments.
The one-time extraordinary dividend will come to $0.0825 per ordinary share or $0.66 per ADS and will be paid in U.S. dollars to holders of ordinary shares and ADSs as of the close of business on June 13, 2024, Hong Kong Time and New York Time, respectively.
“We are committed to continuing to return value to our shareholders,” said Alibaba’s Xu.
Earlier this year, the group said it would begin voluntary updates on its share repurchase program to increase transparency for investors.
For the fiscal year ended March 31, 2024, Alibaba repurchased 1.25 billion ordinary shares for a total of $12.5 billion, including 524 million ordinary shares repurchased in its fourth fiscal quarter.
Alibaba’s total shareholder yield, in the form of dividends and share repurchases, led its large-cap peers by reaching 6.5% during the 2023 calendar year.
The holding company, which made its 2014 stock market debut in New York and completed a secondary listing in Hong Kong in 2019, is also in the midst of preparations for a dual-primary listing on the two bourses slated for the end of August 2024.
