Alibaba beats quarterly revenue estimates as Covid curbs ease

ALIBABA Group Holding reported better-than-expected quarterly revenue on Thursday, as the Chinese e-commerce giant benefited from the country easing Covid-19 curbs.

The company has weathered a weak economy in China, which only last December lifted its zero-Covid policy after three years.

Revenue rose 2 per cent to 247.76 billion yuan (S$48.2 billion) for its fiscal third quarter to Dec 31, compared with a Refinitiv consensus estimate of 245.18 billion yuan drawn from 23 analysts.

US shares of Alibaba were indicated up 6.1 per cent in pre-market trade, while Pinduoduo and JD.com were both seen up about 3 per cent.

China’s total retail sales contracted 1.8 per cent in December, while its economy grew 3 per cent in the full year 2022, one of its worst growth rates in nearly half a century.

Net income attributable to ordinary shareholders rose 69 per cent to 46.82 billion yuan from 27.69 billion a year earlier.

Retail spending in China is expected to remain weak for the first part of the year, though analysts expect that stimulus policies and eventual release of consumer savings will occur around springtime.

Alibaba’s customer management revenue, which tracks payments from vendors and is the company’s largest sales segment, fell 9 per cent year on year.

The key metric, which makes up the bulk of Alibaba’s total revenue, has been stalling. On top of a sluggish economy, the company is also looking upward from a regulatory crackdown that began in late 2020.

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The company also reduced its workforce by about 19,000 employees last year as it adapted to a global economic chill and shifted focus to cost efficiency.

The Hangzhou-based online retailer laid off more than 4,000 workers in the final quarter of the year, according to data in its earnings report. The largest reductions this year came in the summer, when it reported its first ever contraction in revenue.

Founder Jack Ma, who has receded from the public spotlight since the start of the crackdown, has been spending much of his time outside China in places such as Japan and Australia, according to media reports.

In January, Ma relinquished control of Ant Group, the fintech affiliate of Alibaba and a key target for Beijing regulators.

Ant, which is 33 per cent owned by Alibaba, logged a profit of 3.05 billion yuan for the quarter ending in late September, down 82.7 per cent year on year. Alibaba reports its profit from Ant Group one quarter in arrears.

Chinese authorities, who have been seeking to restore private sector confidence and spur economic activity, have said that they will step up support for private firms and ease the crackdown.

Earlier this month Alibaba said it was developing a ChatGPT-like AI tool, which it was testing internally at the company, amid global enthusiasm for the OpenAi chatbot.

A bevy of other Chinese tech giants and research institutes, including Baidu and JD.com are also developing similar platforms. REUTERS