Alibaba misses revenue target as Chinese economy slows

Alibaba missed expectations for its second-quarter revenues as the e-commerce giant felt the effect of a slowdown in the Chinese economy.
The group reported revenue increased by 5 per cent to 236.50 billion yuan ($32.72 billion) for the three months ended September 30, falling short of analysts’ expectations of revenue of 240.17 billion yuan.
The online marketplace has been struggling against a cutback in spending from Chinese consumers as well as the rise of discount rivals such as PDD Holdings’ PDD.O Pinduoduo and the ByteDance-owned Douyin.
The group managed to beat expectations for net income, which was up by 58 per cent to 43.9 billion yuan for the quarter, driven by strong performance of its equity investments. Analysts had forecast net income of 25.83 billion yuan. Alibaba’s US-listed shares were down by $2.71, or 2.98 per cent, to $87.87 in New York.
Alibaba’s cloud intelligence division proved to be a bright spot for the business, as its revenues rose by 7 per cent to 29.61 billion yuan, and the company’s international e-commerce division saw revenues increase by 29 per cent to 31.67 billion yuan.
The Chinese economy has been struggling to regain the growth levels it was achieving before the pandemic owing to a crisis in its real estate sectors, and a high level of job insecurity for its young people.
Recent data on output showed Chinese GDP rose by 4.6 per cent in the three months to the end of September, which fell short of the government’s target of 5 per cent, and weaker than levels seen before 2020, when the economy would regularly achieve growth of more than 6 per cent.
Eddie Wu, chief executive of Alibaba, said: “This quarter we continued to invest in the user experience and strengthen product offerings to serve our consumers.
“Growth in our cloud business accelerates from prior quarters, with revenues from public cloud products growing in double digits, and AI-related product revenue delivering triple-digit growth.
“We are more confident in our core businesses than ever and will continue to invest in supporting long-term growth. Our other businesses continued to improve their operating efficiency, with most of them continuing to increase their profitability or reduce losses.”