In a year filled with ups and downs for global tech giants, Alibaba Group has demonstrated both resilience and faced challenges. With significant investments in artificial intelligence and cloud computing, the company is charting a new course in an evolving digital landscape. “Alibaba is about the future,” said Chairman Joe Tsai in a letter to shareholders, reflecting the company’s forward-thinking ethos.
Alibaba’s financial performance in the fourth quarter ended March 31, 2024, and the entire fiscal year 2024, showcases a mixed picture. The company reported fourth-quarter revenue of RMB 221.87 billion (USD 30.7 billion), marking a 7% year-on-year increase and beating Bloomberg’s consensus estimate. However, adjusted earnings before interest, taxes, and amortization (EBITA) dipped 5% to RMB 23.97 billion (USD 3.3 billion) due to hefty investments in e-commerce and retention incentives for Cainiao employees. Non-GAAP net income took an 11% hit, dropping to RMB 24.42 billion (USD 3.3 billion).
Moreover, net income for the quarter was RMB 919 million (USD 127 million), a dramatic 96% decrease year-on-year, primarily due to a net loss from investments in publicly traded companies, compared to a net gain in the same quarter last year because of mark-to-market changes.
For fiscal year 2024, Alibaba’s revenue jumped 8% year-on-year to RMB 941.17 billion (USD 130.3 billion), with total net income reaching RMB 71.33 billion (USD 9.9 billion), a 9% rise. However, free cash flow slipped 9% to RMB 156.21 billion (USD 21.6 billion) due to increased capital expenditure on Alibaba Cloud’s infrastructure and e-commerce ventures. These numbers highlight both Alibaba’s commitment to its core operations and the financial strain from substantial investments.
Alibaba’s core businesses have shown strength, validating its strategy. The Taobao and Tmall Group (TTG) remains a cornerstone. In the fourth quarter, TTG’s revenue grew 4% year-on-year to RMB 93.22 billion (USD 12.9 billion), driven by double-digit growth in gross merchandise value (GMV) and a 5% uptick in customer management revenue. The 88VIP loyalty program saw a significant boost, with membership exceeding 35 million. Tmall also experienced a 60% increase in new merchants and a 150% rise in transaction volumes.
Alibaba Cloud continues to be a major growth driver. Its quarterly revenue climbed 3% to RMB 25.60 billion (USD 3.5 billion), with the public cloud business showing double-digit growth and AI-related revenue soaring by triple digits. Alibaba Cloud’s large language model (LLM), Qwen, has been adopted by over 90,000 enterprises, highlighting its role in Alibaba’s AI ambitions. However, it faces stiff competition from global players like Amazon Web Services (AWS) and Microsoft Azure, as well as local rival Tencent Cloud. Alibaba will need to continue investing in technology and competitive pricing to win and retain customers.
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Expansion through Alibaba International Digital Commerce (AIDC), its overseas online shopping business, and strategic partnerships are also showing promise. Significant revenue growth and increased orders in AIDC point to successful market penetration. AliExpress’s Choice service has been a standout, accounting for about 70% of the platform’s total orders, underscoring Alibaba’s effective cross-border e-commerce strategy.
In the face of market uncertainties and macroeconomic factors such as shifts in consumer spending and global economic conditions, Alibaba is showing both strengths and areas of concern. While the company is on a positive trajectory with strong financial performance and strategic investments, it also faces significant challenges. The dramatic drop in net income highlights the volatility associated with its current strategy. To maintain momentum, Alibaba must stay innovative, manage risks well, and be vigilant in handling competitive pressures while delivering long-term value to its stakeholders.