Minnie Wang
Aug 11, 2023

Alibaba's Q1 revenue surges 14%, beats forecasts

Five of the six business units show more vigorous growth in the first quarter of this financial year as the group starts reorganisation.

Alibaba's Q1 revenue surges 14%, beats forecasts

Alibaba Group Holding has announced its first quarterly financial results after splitting into six business units ending June 2023. The Chinese tech giant reported a 14% revenue growth year-on-year of RMB234,156 million (US$32,292 million), beating analysts’ estimates of 224.92 billion yuan (Refinitiv data) since consumer sentiment bounced back from the same period last year.   

Alibaba's share price in Hong Kong rose over 2% on Friday morning, reflecting the changes in revenue and earnings. 

“Alibaba delivered a solid quarter as we continue to execute our Reorganisation, which is beginning to unleash new energy across our businesses,” said Daniel Zhang, chairman and CEO of Alibaba Group, in a press release. “Through this self-driven transformation, we aim to catalyse innovation, promote vitality in our organisation and enable businesses to focus on long-term growth.”

“Revenue and adjusted EBITA increased 14% and 32% year-on-year, respectively, due to improvements across all business segments,” Toby Xu, CFO of Alibaba Group, highlighted the more robust financial results and share repurchases. “We repurchased US$3.1 billion worth of ADSs this quarter, which is supported by our continuous generation of strong free cash flow.”

Five of its six business units achieved strong double-digit growth, including Taobao and Tmall Group, Alibaba International Digital Commerce Group and Local Services Group, Cainiao Smart Logistics Network Limited and Digital Media and Entertainment Group. 

Taobao and Tmall Group maintain strong growth momentum, increasing 12% in revenue. Alibaba International Digital Commerce Group, Local Services Group, Cainiao Smart Logistics Network Limited and Digital Media and Entertainment Group are leading the growth, rising 41%, 30%, 34% and 36%, respectively, in revenue. 

For Taobao and Tmall, Alibaba’s financial report mentioned as of  June 30, 2023, the Taobao app grew average daily active users (DAU) by 6.5% year-over-year, and purchasing demands from a broader range of consumers, including Tmall 88VIP members, increased during the 6.18 Shopping Festival. 

AliExpress, Lazada and Trendyol from Alibaba International Digital Commerce Group delivered strong order growth, as Lazada recorded double-digit order growth year-over-year in the quarter. 

Local Services Group revenue growth was driven by solid revenue growth in both Ele.me and Amap businesses and continued to narrow its losses. 

Cloud Intelligence Group, which includes Alibaba Cloud, DingTalk and other businesses, is the only sector that witnesses a single-digit growth (4%) in quarterly revenue. 

In late June, Alibaba announced its new chairman and CEO. As Joseph C. Tsai, Eddie Yongming Wu will replace Daniel Zhang in September this year, Zhang will lead Cloud Intelligence Group, given the rising importance of core technologies in cloud computing, big data and AI. 

Last week, Alibaba Cloud rolled out two open-sourced AI models, including the pre-trained 7-billion-parameter model, Qwen-7B, and its conversationally fine-tuned version, Qwen-7B-Chat to compete with Meta's open-sourced model Llama 2. 

Its cloud business unveiled a generative AI model called Tongyi Qianwen (通义千问) in April 2023 and launched its generative AI text-to-image model Tongyi Wanxiang (通义万相) in July amid the springing-up more AI tools from Chinese and overseas competitors

Highlights from Alibaba’s earnings report

  • Revenue: RMB234,156 million (US$32,292 million), up 14% YoY
  • Income from operations: RMB42,490 million (US$5,860 million), up 70% YoY
  • Adjusted EBITA(non-GAAP) RMB45,371 million (US$6,257 million), up 32% YoY 
  • Net income attributable to ordinary shareholders: RMB34,332 million (US$4,735 million), up 51% YoY
  • Net income: RMB33,000 million (US$4,551 million), up 63% YoY
  • Non-GAAP net income: RMB44,922 million (US$6,195 million), up 48% YoY
  • Diluted earnings per ADS: RMB13.30 (US$1.83)
  • Diluted earnings per share: RMB1.66 (US$0.23 or HK$1.80)
  • Non-GAAP diluted earnings per ADS: RMB17.37 (US$2.40), up 48% YoY 
  • Non-GAAP diluted earnings per share: RMB2.17 (US$0.30 or HK$2.35), up 48% YoY
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