China’s Alibaba Group reported that its revenue had missed the forecasts for its Q4. The company is struggling to attract new users as the Chinese e-commerce market matures and new competitors chip away at market share.
Alibaba posted revenue of 208.2 billion yuan renminbi (€27.5bn) in the three months ended March 31, an increase of 2 percent year-over-year. Operating income was RMB 15.24 billion (€2.01bn), a decrease of 9 percent year-over-year. Adjusted EBITA, a non-GAAP measurement, increased by 60 percent or RMB 9.47 billion (€12.51bn) year-over-year to RMB 25.28 billion (€3.34bn), primarily due to an increase in China commerce adjusted EBITA, as well as narrowed adjusted EBITA losses of local consumer services and digital media and entertainment. Net income attributable to ordinary shareholders was RMB 23.52 billion (€3.11bn). Net income was RMB 21.99 billion (€2.91bn), compared to a net loss of RMB 18,357 million in the same quarter last year, primarily due to net gains arising from the increases in the market prices of Alibaba’s equity investments in publicly-traded companies, compared to net losses from these investments in the same quarter last year, partly offset by the decrease in share of profit of equity method investees, the increase in impairment of investments and the decrease in income from operations.
Full-year revenue climbed 2 percent to RMB 868.69 billion (€114.79bn), the slowest growth rate since the company went public in 2014. Operating income was RMB 100.35 billion (€13.26bn), an increase of 44 percent year-over-year. Adjusted EBITA increased 13 percent or RMB 17.51 billion (€2.31bn) year-over-year to RMB 147.91 billion (€19.55bn). Net profit attributable to common shareholders was RMB 23.52 billion (€3.11bn) in the quarter, up from a loss of RMB 16.24 billion (€2.15bn) a year earlier.
Earlier this year, Alibaba announced plans to restructure into six units following a two-year crackdown by regulators on China’s technology sector. The company expects all units except the China-based e-commerce division to seek external financing and go public. On Thursday, the company approved the full spinoff of Cloud Intelligence Group through a dividend payment to shareholders and is targeting an IPO within the next 12 months. Revenue from Alibaba’s cloud division totaled RMB 18.6 billion (€2.46bn) in the latest quarter, down 2 percent from a year earlier. Chief financial officer Toby Xu said Alibaba’s board also approved the process to raise external financing for Alibaba International Digital Commerce Business Group. Freshippo, the company’s food division, will initiate the IPO process, and the logistics unit Cainiao will explore an IPO in the next 12 to 18 months, Xu added.
