Alibaba's Profit, Revenue Miss Expectations Despite Growth Drive — Update

By Tracy Qu

Alibaba Group reported weaker-than-expected profit and revenue in the latest quarter despite the e-commerce titan's efforts to get growth back on track amid fierce domestic competition, a weakened Chinese economy and changing consumer behaviors.

The Chinese company said Thursday that net profit for the three months ended June fell 29% from a year earlier to 24.27 billion yuan, equivalent to $3.40 billion. The result missed expectations of 28.175 billion yuan in a FactSet poll of analysts.

The bottom line was hurt by higher expenses for marketing, product development and general and administrative costs, as well as a jump in taxes. Alibaba said the higher marketing expenses were mainly due to increased investments in its e-commerce businesses.

First-quarter revenue rose 3.9% to 243.24 billion yuan but undershot analysts' estimates of 246.36 billion yuan. Revenue growth also slowed from the 6.6% expansion in the preceding quarter.

"Our focus on enhancing user experience by offering quality products at attractive prices with great service led to stabilizing market share of [domestic e-commerce unit] Taobao and Tmall Group as we returned the business on the growth trajectory," Chief Executive Eddie Wu said.

The Hangzhou-based company has been grappling with sluggish growth as it faces a cooling Chinese economy and rising competition from the likes of PDD's Pinduoduo e-commerce platform and ByteDance's short-video app Douyin. It has shifted its strategy to prioritize long-term growth over substantial near-term profits to regain its past market dominance.

Adjusted net profit, which excludes the effects of share-based compensation expenses, investment gains and losses, some impairments and other items, fell 9.4% to 40.69 billion yuan, topping analysts' expectations of 37.88 billion yuan.

Sales at Alibaba's core domestic e-commerce business, Taobao and Tmall Group, fell 0.9% from a year earlier to 113.37 billion yuan. Alibaba said it achieved high-single-digit online gross merchandise value growth, driven by a rise in customer numbers and purchase frequency.

Its cloud-computing unit posted a 5.9% increase in sales to 26.55 billion yuan. The company's fast-expanding overseas e-commerce unit reported a 32% rise in revenue to 29.29 billion yuan, slower than the 45% growth in the preceding quarter.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

August 15, 2024 07:59 ET (11:59 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.