The Alibaba Group cut its guidance for its full financial year after revenues and earnings came in below expectations in its second quarter ended Sept. 30, amid a slowdown in economic growth in China and an ongoing regulatory crackdown on tech companies in the country.
Alibaba now expects revenues to grow by between 20 and 23 percent for the year ending March 31, 2022. It had previously forecast a top line of about RMB 930 billion (€128.3bn-$145.6bn), corresponding to a growth of about 29.5 percent.
In the second quarter, revenues rose by 29 percent to RMB 200.7 billion (€27.7bn-$31.1bn), below analysts expectations of about RMB 205 billion (€28.3bn-$32.1bn). Excluding the Chinese supermarket chain owned by the group, Sun Art, revenues were up by 16 percent to RMB 180.4 billion (€24.9bn-$28.0bn).
Alibaba said its core Chinese commerce business had been affected by “slowing market conditions” and an increasingly crowded field of players in the online retail market. Compared with the year earlier, the business posted single-digit growth in the gross merchandise value (GMV) of physical products, with slower growth in the accessories and apparel category and continued “resilience” in home furnishings and consumer electronics.
Missing the financial analysts’ consensus, Alibaba’s reported net attributable income slumped by 81 percent to RMB 5.4 billion (€741m-$833m), while adjusted net profit fell by 39 percent to RMB 28.5 billion (€3.9bn- $4.4bn).
The group attributed the decline in earnings primarily to net losses from changes in market prices of its equity investments in its publicly-traded companies, versus net gains a year earlier, as well as increased strategic investments and support to merchants.
Globally, the number of active consumers in the Alibaba ecosystem reached a level of 1.24 billion in the quarter, up by about 62 million on the previous quarter. Daniel Zhang, the company’s CEO, said Alibaba is on track to reach its longer-term goal of 2 billion active consumers.
Free cash flow in the quarter decreased by 34 percent to RMB 22.2 billion (€3.1bn-$3.5bn).
