Alibaba Group Holding (9988.HK) reported a revenue of 243.24 billion yuan ($33.98 billion) for the first quarter ended June 30, falling short of analysts’ forecast of 249.05 billion yuan, according to LSEG data. The shortfall comes as domestic e-commerce sales face significant challenges from a weakening Chinese economy and consumer spending.
China’s ongoing economic difficulties, including a faltering property market and elevated job insecurity, have dampened consumer confidence and spending power, impacting major global firms. Alibaba, grappling with intense competition from rivals like JD.com (9618.HK) and discount platforms such as Pinduoduo and ByteDance’s Douyin, has reported a 1% decline in revenue from its domestic e-commerce sector, despite increased purchaser numbers and order frequency.
The broader e-commerce landscape in China is under pressure, with the mid-year sales festival in June marking the first-ever decline in sales despite extensive promotional efforts. Analysts, including M Science’s Vinci Zhang, highlight a notable shift towards more cautious consumer behavior, which is expected to challenge Alibaba and other e-commerce giants like JD.com throughout the remainder of the year.
Despite these hurdles, Alibaba’s U.S.-listed shares saw a modest rise of about 2% early Thursday, following the company’s positive quarterly profit performance. Alibaba executives remain optimistic, pointing to new monetization tools and enhancements in user experience as key to driving future revenue growth.
The company’s international e-commerce segment performed well, with revenue increasing by 32% to 29.3 billion yuan, driven by expanding global demand for affordable Chinese goods. Additionally, Alibaba’s cloud segment saw a 6% revenue increase to 26.55 billion yuan, buoyed by rising public cloud adoption and strong AI-related product demand.
Overall, net income attributable to ordinary shareholders was 24.27 billion yuan, a decrease from 34.33 billion yuan reported in the previous year. Alibaba’s strategic reorganization in March 2023, which split the company into six units to focus on core businesses, is expected to play a critical role in its future growth trajectory.
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