Alibaba (BABA) Q3 2023 earnings report for December quarter


Alibaba is operating in Suqian City, Jiangsu Province, China, on December 29, 2023.

Costfoto | Nurphoto | Getty Images

Shares of Alibaba fell Wednesday, as the company missed market expectations for revenue in the December quarter, even as it announced it is increasing the size of its share buyback program by $25 billion.

U.S.-listed shares in the Chinese e-commerce giant were are one point more than 5% higher in premarket trade, but reversed course and closed down more than 5%.

Alibaba said the $25 billion increase is added to its share repurchase program through the end of March 2027, bringing the total available under the plan to $35.3 billion.

The company said in a statement that the increased buyback shows the “confidence in the outlook of our business and cash flow.”

The announcement comes after a tumultuous year for Alibaba in 2023, when the company carried out its largest-ever corporate structure overhaul. It also separately implemented several high-profile management changes, with company veteran Eddie Wu taking over the reins as chief executive in September.

Alibaba on Wednesday released financial results for its December quarter.

Here’s how Alibaba did in its fiscal third quarter, compared with estimates from LSEG, formerly known as Refinitiv:

  • Revenue: 260.35 billion Chinese yuan ($36.6 billion) versus 262.07 billion yuan expected.

Revenue missed expectations, growing just 5% year over year, logging a slowdown from the previous quarters as growth in the company’s China e-commerce business and cloud computing division remained slow.

Meanwhile, Alibaba’s net income in the December quarter fell 69% year on year to 14.4 billon yuan. The company said this was “primarily attributable to mark-to-market changes” to its equity investments and to a decrease in income from operations due to impairments related to its video streaming service Youku and supermarket chain Sun Art.

China e-commerce, cloud business slow

Alibaba has been grappling with a difficult macroeconomic environment in China, where the consumer has remained weak, even after Beijing removed its Covid-era restrictions. Amid economic uncertainties, local shoppers have flocked to discounting platforms such as Alibaba rival Pinduoduo.

The Taobao and Tmall business, Alibaba’s China e-commerce platforms, brought in revenue of 129.1 billion Chinese yuan in the December quarter, up just 2% year on year.

Alibaba’s cloud computing business, which investors have seen as critical to the tech giant’s future growth, had sales of 28.1 billion yuan, a 3% year on year rise.

In a statement, recently appointed Alibaba CEO Wu said the company’s focus is on growth in e-commerce and cloud.

“Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing. We will step up investment to improve users’ core experiences to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year.”

Earnings before interest, taxes and amortization, a measure of profitability, rose 1% at the Taobao and Tmall business for the fiscal third quarter.

For the cloud computing business, EBITA rose 86% year on year as Alibaba focuses on profitability.

One bright spot in Alibaba’s numbers was the international commerce business, which includes platforms like AliExpress and Lazada, which posted revenue of 28.5 billion yuan, up 44% year on year.

Alibaba’s reorganization

Alibaba has gone through some major changes over the past year.

Daniel Zhang, the previous CEO of Alibaba Group who became acting head of the cloud business in December 2022, was supposed to stay on to lead the business unit, but unexpectedly quit in September of last year.

When Alibaba carried out its corporate restructuring last year, it created six separate business groups and announced some of these units will be able to go public and also raise outside financing. Among those being touted for initial public offerings were Alibaba’s cloud unit, logistics arm Cainiao and Freshippo grocery arm.

Alibaba scrapped the hotly anticipated spinoff of its cloud computing business last year.

Joe Tsai, chairman of Alibaba, said on the earnings call Wednesday that any business spinoff or outside financing will be “subject to market conditions.

“Market conditions currently are just not in a state where we believe we can really truly reflect the true intrinsic values of these businesses,” Tsai said.

He added that “generating synergies” within the companies under Alibaba is the “best way to reflect the value of the entire group.”

While Alibaba will “continue to explore separate financing for its business,” according to Tsai, the company is “not in a hurry on the timing of these transactions.

CNBC’s Evelyn Cheng contributed to this report.

Correction: Freshippo is a grocery unit of Alibaba. An earlier version misstated its name.



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