Key Highlights
- Alibaba’s adjusted EBITA tumbled 84% from the prior year to 5.1 billion yuan ($750.9M) during the quarter ending March
- Total revenue reached 243.4 billion yuan, falling slightly short of the 247.1 billion yuan Wall Street forecast
- Cloud Intelligence Group revenue soared 38% to 41.6 billion yuan, with AI product revenue reaching 8.97 billion yuan
- Rapid delivery services saw 57% revenue growth, though aggressive spending pressured domestic e-commerce margins by 40%
- BABA shares declined up to 4% in early trading before moderating to approximately 1.3%-2% losses
Alibaba (BABA) shares tumbled as much as 4% during Wednesday’s premarket session following the Chinese tech giant’s disclosure of an 84% collapse in operating profitability for its fiscal first quarter, despite robust performance from its cloud computing and artificial intelligence divisions.
The company’s adjusted EBITA registered 5.1 billion yuan ($750.9 million), marking a dramatic decline from the same period last year. This measurement excludes extraordinary items and provides insight into underlying business performance.
Quarterly revenue through March 31 totaled 243.4 billion yuan — representing a 3% year-over-year increase but missing the Street’s 247.1 billion yuan projection. When accounting for divested retail operations Sun Art and Intime, comparable revenue growth stood at 11%.
Alibaba Group Holding Limited, BABA
The stock experienced initial premarket gains before reversing direction and stabilizing with losses between 1.3% and 2%.
Massive capital deployment tells the primary story. The e-commerce behemoth has been channeling substantial resources into chip development, data center expansion, its Qwen suite of AI models, and instant delivery infrastructure — a logistics service promising delivery within one hour.
Cloud Computing and AI Shine
The cloud division emerged as the quarter’s highlight performer. The Cloud Intelligence Group generated revenue of 41.6 billion yuan, representing 38% year-over-year expansion and surpassing analyst projections of 41.27 billion yuan. The segment’s adjusted EBITA increased 57%.
Revenue from AI-powered products hit 8.97 billion yuan. This achievement extends a remarkable streak of triple-digit percentage growth to eleven straight quarters. Chief Financial Officer Toby Xu attributed the performance to deliberate capital allocation decisions.
“Cloud Intelligence Group’s revenue continued to accelerate, with AI-related product revenue achieving triple-digit growth for the eleventh consecutive quarter,” Xu said.
Alibaba’s Qwen artificial intelligence models rank among the world’s most competitive. Earlier this week, the company announced plans to integrate a Qwen-driven shopping assistant into Taobao, its primary retail platform.
Domestic Retail Faces Headwinds
The Chinese e-commerce narrative presents greater complexity. The domestic online retail segment delivered 122.22 billion yuan in revenue, exceeding analyst expectations of 119.85 billion yuan. Customer management revenue — representing the segment’s largest component — posted 1% growth.
However, segment profitability suffered significantly. Adjusted EBITA contracted 40% year-over-year as investment expenses accelerated.
Instant delivery services provided a silver lining amid broader pressure. This category’s revenue expanded 57% from the prior year, demonstrating strong consumer adoption. The service has emerged as a critical competitive arena among Chinese online retailers.
Government-sponsored incentive programs encouraging electronics trade-ins provided additional support for China’s e-commerce industry during the quarter.
Alibaba’s board of directors authorized an annual cash dividend of $0.13125 per ordinary share, equivalent to $1.05 per American depositary share, distributed to shareholders recorded as of June 11.
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