Alibaba, Hit by Covid in China, Posts Slowest Revenue Growth Since IPO
Chinese e-commerce giant
Alibaba
BABA -0.19%
Group Holding Ltd. posted its slowest quarterly revenue growth since it went public in 2014, as China’s Covid-19 restrictions and an economic slowdown added to the financial toll of a regulatory crackdown.
For the quarter that ended in March, the Hangzhou-based company’s revenue rose 9% from the same period a year earlier to 204.1 billion yuan, or $32.2 billion, based on an exchange rate of 6.34 yuan to a dollar that Alibaba used. It posted a net loss of 16.2 billion yuan for the fiscal fourth quarter, compared with a 5.5 billion yuan net loss a year earlier. Alibaba cited price drops in its equity investments in publicly traded companies.
For the fiscal year that ended in March, Alibaba posted 853.1 billion yuan in revenue, up 19% from a year earlier. Unlike in recent years, it didn’t give a forecast for the current fiscal year, which ends in March 2023.
“Since mid-March 2022, our domestic businesses have been significantly affected by the Covid-19 resurgence in China, particularly in Shanghai,” Alibaba said. “Considering the risks and uncertainties arising from Covid-19, which we are not able to control and are difficult for us to predict, we believe it is prudent at this time not to give financial guidance.”
Growth at China’s biggest tech companies has slowed significantly as the industry grapples with mounting domestic economic headwinds on top of a regulatory crackdown that started in late 2020. Last week,
Tencent Holdings Ltd.
, a videogame and social-media behemoth, said its January-March quarterly revenue was essentially flat. Search-engine giant
Baidu Inc.
on Thursday reported a 1% increase in its first-quarter revenue from a year ago.
Some of Alibaba’s U.S. peers have also experienced slowing growth.
Amazon.com Inc.’s
January-March revenue rose by about 7%, the slowest pace in about two decades due to a slump in online shopping, higher costs from inflation and supply-chain woes. Google parent
Alphabet Inc.’s
sales rose 23%, the lowest rate for the company since late 2020, as global economic turmoil disrupted digital advertising spending.
In China, the impact of Covid-19 restrictions—including lockdowns at industrial hubs such as Shanghai—has rippled through the economy, disrupting supply chains and logistics as well as dampening consumption. China’s April retail sales, a proxy for consumption, were down 11% from a year earlier, the second-straight monthly decline and the biggest contraction since March 2020.
Alibaba has also been hit by Chinese regulatory actions. In late 2020, Chinese authorities forced Alibaba’s financial-technology affiliate Ant Group Co. to halt its initial public offering. Last April, Alibaba was slapped with a record antitrust fine of $2.8 billion.
Jack Ma,
its billionaire founder, has largely retreated from the public eye.
As China’s economic outlook rapidly deteriorates, Beijing has signaled a pause in its regulatory campaign aimed at tech giants. Last week, senior Chinese politicians stated support for a stronger digital economy at a meeting with some tech executives.
Over the past few years, companies like ByteDance Ltd., Meituan and
Pinduoduo Inc.
have eaten into Alibaba’s market share in its core domestic e-commerce business. As a response, Alibaba invested heavily in Taobao Deals, a bargain platform, and Taocaicai, a marketplace that delivers daily necessities and groceries to local neighborhoods.
Alibaba’s American depositary receipts have fallen around 60% over the past year. Alibaba’s stock rose 5% in premarket trading Thursday after the results were released.
Ant recorded an estimated net profit of 22 billion yuan in the quarter ended Dec. 31, up slightly from the same period a year before, according to The Wall Street Journal’s calculations based on Alibaba’s earnings disclosures. Alibaba owns a third of Ant and reports the online-payment giant’s share of profits one quarter in arrears.
—Rebecca Feng contributed to this article.
Write to Yoko Kubota at [email protected] and Shen Lu at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
Chinese e-commerce giant
Alibaba
BABA -0.19%
Group Holding Ltd. posted its slowest quarterly revenue growth since it went public in 2014, as China’s Covid-19 restrictions and an economic slowdown added to the financial toll of a regulatory crackdown.
For the quarter that ended in March, the Hangzhou-based company’s revenue rose 9% from the same period a year earlier to 204.1 billion yuan, or $32.2 billion, based on an exchange rate of 6.34 yuan to a dollar that Alibaba used. It posted a net loss of 16.2 billion yuan for the fiscal fourth quarter, compared with a 5.5 billion yuan net loss a year earlier. Alibaba cited price drops in its equity investments in publicly traded companies.
For the fiscal year that ended in March, Alibaba posted 853.1 billion yuan in revenue, up 19% from a year earlier. Unlike in recent years, it didn’t give a forecast for the current fiscal year, which ends in March 2023.
“Since mid-March 2022, our domestic businesses have been significantly affected by the Covid-19 resurgence in China, particularly in Shanghai,” Alibaba said. “Considering the risks and uncertainties arising from Covid-19, which we are not able to control and are difficult for us to predict, we believe it is prudent at this time not to give financial guidance.”
Growth at China’s biggest tech companies has slowed significantly as the industry grapples with mounting domestic economic headwinds on top of a regulatory crackdown that started in late 2020. Last week,
Tencent Holdings Ltd.
, a videogame and social-media behemoth, said its January-March quarterly revenue was essentially flat. Search-engine giant
Baidu Inc.
on Thursday reported a 1% increase in its first-quarter revenue from a year ago.
Some of Alibaba’s U.S. peers have also experienced slowing growth.
Amazon.com Inc.’s
January-March revenue rose by about 7%, the slowest pace in about two decades due to a slump in online shopping, higher costs from inflation and supply-chain woes. Google parent
Alphabet Inc.’s
sales rose 23%, the lowest rate for the company since late 2020, as global economic turmoil disrupted digital advertising spending.
In China, the impact of Covid-19 restrictions—including lockdowns at industrial hubs such as Shanghai—has rippled through the economy, disrupting supply chains and logistics as well as dampening consumption. China’s April retail sales, a proxy for consumption, were down 11% from a year earlier, the second-straight monthly decline and the biggest contraction since March 2020.
Alibaba has also been hit by Chinese regulatory actions. In late 2020, Chinese authorities forced Alibaba’s financial-technology affiliate Ant Group Co. to halt its initial public offering. Last April, Alibaba was slapped with a record antitrust fine of $2.8 billion.
Jack Ma,
its billionaire founder, has largely retreated from the public eye.
As China’s economic outlook rapidly deteriorates, Beijing has signaled a pause in its regulatory campaign aimed at tech giants. Last week, senior Chinese politicians stated support for a stronger digital economy at a meeting with some tech executives.
Over the past few years, companies like ByteDance Ltd., Meituan and
Pinduoduo Inc.
have eaten into Alibaba’s market share in its core domestic e-commerce business. As a response, Alibaba invested heavily in Taobao Deals, a bargain platform, and Taocaicai, a marketplace that delivers daily necessities and groceries to local neighborhoods.
Alibaba’s American depositary receipts have fallen around 60% over the past year. Alibaba’s stock rose 5% in premarket trading Thursday after the results were released.
Ant recorded an estimated net profit of 22 billion yuan in the quarter ended Dec. 31, up slightly from the same period a year before, according to The Wall Street Journal’s calculations based on Alibaba’s earnings disclosures. Alibaba owns a third of Ant and reports the online-payment giant’s share of profits one quarter in arrears.
—Rebecca Feng contributed to this article.
Write to Yoko Kubota at [email protected] and Shen Lu at [email protected]
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8
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