Alibaba's Earnings Exceed Expectations

On February 20, Alibaba announced its financial results for the third quarter of the fiscal year 2025, which concluded on December 31, 2024. These results revealed compelling growth in core business areas, alongside positive signals for its artificial intelligence (AI) initiatives.

Alibaba's CEO, Daniel Zhang, highlighted the significant progress the company has made under its "user-first, AI-driven" strategy, noting that its core business growth has acceleratedHe reported that revenue from the cloud business has returned to double-digit growth, with profits from AI-related products experiencing triple-digit increases for six consecutive quartersLooking ahead, he expressed confidence that revenue growth for the cloud intelligent group, driven by AI, would continue to riseThe company's strategic focus remains on e-commerce and cloud computing, with ongoing investments aimed at fostering long-term growth.

Following the earnings announcement, Alibaba's stock price saw a substantial pre-market surge of 10% in the US.

Digging deeper into the financial metrics, Alibaba's earnings surpassed expectations, showcasing a dramatic year-on-year net profit increase by threefold:

The company reported revenue of 280.15 billion RMB (approximately $39.6 billion), reflecting an 8% year-on-year growth, compared to the forecast of 277.37 billion RMBNet profit reached 46.434 billion RMB (around $6.36 billion), marking a staggering 333% increaseThe profit attributable to ordinary shareholders was 48.945 billion RMB (approximately $6.7 billion).

Furthermore, operating profit rose to 41.205 billion RMB, a remarkable 83% uptick from the previous yearAdjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) increased by 4% year-on-year to 54.853 billion RMB, primarily driven by revenue growth and operational efficiencies, although partly offset by increased investments in e-commerce.

For the diluted earnings per American Depositary Share (ADS), it amounted to 20.39 RMB (approximately $2.79), with the overall diluted earnings per share (EPS) estimated at 2.55 RMB (around $0.35). The non-GAAP diluted earnings per ADS stood at 21.39 RMB (approximately $2.93), reflecting a 13% increase year on year.

The focus across various business lines showed steady growth in its core e-commerce division, while Alibaba Cloud experienced a return to double-digit growth, bolstered by continued triple-digit growth in AI-related products for six consecutive quarters.

The Taobao and Tmall Group reported substantial revenue of 136.09 billion RMB, reflecting a 5% year-on-year increase.

This included customer management revenue of 100.79 billion RMB, which grew by 9%, driven primarily by increased online Gross Merchandise Volume (GMV) and elevated commission rates

Advertisements

The number of 88VIP members, representing the highest buying power demographic on Alibaba’s e-commerce platforms, soared to 49 million, witnessing double-digit growth.

In terms of cloud business revenue, it amounted to 31.742 billion RMB, achieving a commendable 13% year-on-year growth, nearly doubling the previous quarter's rate of 7%. Overall revenue, excluding contributions from consolidated entities, showcased an 11% year-on-year increase.

This growth was significantly attributed to the uptick in public cloud revenue driven by AI-related products, with Alibaba notably marking six quarters of triple-digit growth in AI revenuesRecently, Alibaba introduced its flagship model, Qwen2.5-Max, based on the MoE architecture, which achieved top global scores across multiple prestigious benchmark testsQwen2.5-Max has subsequently been made accessible to users and enterprises via QwenChat and the "Bailian" platformAs of January 31, 2025, the number of derivative models developed from the Qwen model family has surpassed 90,000 on Hugging Face, positioning it as one of the world’s largest AI model families.

Alibaba reiterated its commitment to investing in customer growth and technological innovation, particularly in AI infrastructure, to enhance cloud adoption in the AI sector and maintain its market leadership.

Within the International Digital Commerce Group, revenue reached 37.756 billion RMB, a robust 32% increase year-on-year, primarily driven by strong performance in cross-border business.

The Cainiao Intelligent Logistics sector reported revenue of 28.241 billion RMB, representing a slight decline of 1% due to restructuring in the e-commerce segment.

Meanwhile, the Local Services Group garnered revenue of 16.988 billion RMB, reflecting a 12% increase, fueled by growing orders from Amap and Ele.me.

In the Digital Media and Entertainment Group, revenue stood at 5.438 billion RMB, up 8% year-on-year, primarily benefitting from an increase in advertisement revenues on Youku.

Additionally, Alibaba significantly ramped up its capital expenditures to 31.775 billion RMB, marking an 80% quarter-on-quarter increase

Advertisements

Advertisements

Advertisements

Advertisements

Your email address will not be published.Required fields are marked *