Chinese e-commerce giant Alibaba records flat growth despite exceeding first-quarter results

Alibaba Group Holding Limited, also known as "Alibaba" or the "Alibaba Group," released its fiscal results for the three months ending June 30, 2022, on Thursday.

The company’s stock rose in American premarket trading after the company its disclosed earnings reports exceeded expectations.

Before the company released the earnings report, its Hong Kong shares increased by over 4%. Before reducing gains, Alibaba's U.S.-listed shares were up as much as 7%.

Compared to Refinitiv consensus forecasts, here is how Alibaba performed in its first fiscal quarter:

·        Revenue remained stable year over year at 205.55 billion Chinese yuan (approx. $30.68 billion) compared to the predicted 203.19 billion yuan.

·        Earnings per American depositary share (ADS) came in at 11.73 yuan as opposed to the anticipated 10.39 yuan, a decrease of 29% on a yearly basis.

·        Net income was 22.73 billion yuan versus expectation of 18.72 billion yuan.

“During the past quarter, we actively adapted to changes in the macro environment and remained focused on our long-term strategy by continuing to strengthen our capability for customer value creation,” said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. “Following a relatively slow April and May, we saw signs of recovery across our businesses in June. We are confident in our growth opportunities in the long term given our high-quality consumer base and the resilience of our diversified business model catering to different demands of our customers.”

Alibaba exceeded expectations, yet this was the first time in its history that it had flat growth, according to CNBC.

The China commerce arm of Alibaba, which features its well-known marketplace Taobao, had a 1% year-over-year fall in revenue to 141.93 billion yuan. This was mostly brought on by a 10% decline in customer management revenue (CMR), which is the earnings that Alibaba receives from the sale of goods and services to retailers on its Taobao and Tmall marketplaces.

The Chinese e-commerce giant claimed that CMR fell due to constraints which caused disruptions in the supply chain and logistics in April and May. There were also higher order cancellations due to the effect of the pandemic's resurgence, and a "mid-single-digit year-over-year" drop in total goods sales online marketplaces -Taobao and Tmall.   

“Despite the challenges posed by the COVID-19 resurgence, we delivered stable revenue performance year-over-year. We have narrowed losses in key strategic businesses given ongoing improvements in operating efficiency and increasing focus on cost optimization,” said Toby Xu, Chief Financial Officer of Alibaba Group. “We recently shared our plan to add Hong Kong as another primary listing venue. By becoming primary listed on both Hong Kong and New York stock exchanges, we aim to further expand and diversify our investor base.”

The company said it observed recovering gross merchandise volume (GMV) in late May as logistics volume returned to normal. This recovery was fueled by a successful 6.18 Shopping Festival which was enthusiastically embraced by Alibaba merchants and devoted customers. The 6.18 Shopping Festival experienced positive year-over-year paid GMV increase, and its 88VIP members in particular showed a lot of interest in making purchases.