Alibaba’s Q4 Earnings Report: Profit Drops by 86%, Exceeds Revenue Expectations | Global News

Consumers in China have been cautious with their spending habits following the Covid-19 pandemic, amidst an economic slowdown and a property slump. This trend has been evident in the latest financial results of Alibaba Group Holding, which beat analysts’ estimates for fourth-quarter revenue.

The company’s focus on low-cost goods to cater to the careful consumer spending behavior in China has helped boost domestic e-commerce sales. Despite this positive revenue outcome, Alibaba’s U.S.-listed shares fell around 3% in premarket trading, as the company reported an 86% decline in profit for the fourth quarter.

Alibaba has undergone significant changes over the past year, including a major restructuring into six units and a renewed focus on core businesses like domestic e-commerce. The company’s domestic commerce arm, Taobao and Tmall Group, experienced a 4% year-over-year growth, with order volume increasing by double digits.

Analysts had high expectations for Alibaba’s international digital commerce arm, given its investments in global market share and the demand for low-cost goods from China. This segment delivered with a 45% growth in revenue, surpassing the expected 39% rise.

However, the company saw losses nearly double in this segment, as it heavily invested to remain price competitive and improve delivery times. Additionally, Alibaba’s cloud division announced price cuts of up to 59% for products powered by offshore data centers, amidst growing competition in the AI software development sector.

Overall, Alibaba reported revenue of 221.87 billion yuan in the three months ending March 31, slightly exceeding the consensus estimate. However, net income for the quarter was significantly lower compared to the previous year, standing at 3.27 billion yuan.