Alibaba Group Holding Ltd (NYSE: BABA) reported better-than-anticipated fiscal 2023 first-quarter earnings and revenues. However, the revenues were almost flat compared with last year. More worrisomely, the e-commerce giant’s net income halved from the prior year’s comparable quarter. The stock ended Thursday’s trading at $97.43, up $1.71, or 1.79%, from its prior close.
Hangzhou, Zhejiang, China-based Alibaba reported first-quarter revenues of 205.56 billion yuan (or $30.69 billion), almost unaltered from 205.74 billion yuan in the similar quarter of fiscal 2022. Analysts surveyed by Refinitiv had anticipated Alibaba to report revenues of 203.19 billion yuan. Notably, despite the revenue beat, for the first time, the company has reported almost flat revenues.
The operations of China’s commerce division, affected by COVID-19-related lockdowns, led to the decline. This was negated by the impressive performance of the Cloud division.
For the first quarter, which ended June 30, 2022, the company posted a net income of 22.74 billion Chinese yuan (or $3.40 billion), compared with 45.14 billion yuan in the quarter ended June 30, 2021. The reported net income was better than the market’s expectation of 18.72 billion yuan. Earnings per American Depository Receipt (ADS) fell to 8.51 yuan (or $1.27) from 16.38 yuan last year.
Excluding charges, adjusted net income for 1Q 2023 was 30.25 billion yuan (or $4.52 billion), a sharp decline from 43.44 billion yuan in 1Q 2022. For the latest quarter, earnings per ADS on an adjusted basis were 11.73 yuan (or $1.75), down from 16.60 yuan in Q1 2022 but higher than the consensus estimate of 10.39 yuan.
The decline was led by the fall in revenues and a drop in the valuation of its investments in listed enterprises.
Segment wise,
- Chinese commerce division revenues were 141.94 billion yuan (or ~$21.19 billion), a decrease of 1% from last year.
- International commerce division revenues rose by 2% year-on-year to 15.45 billion yuan (or ~$2.31 billion).
Business-wise,
- Local consumer services revenues increased 5% y-o-y to 10.63 billion yuan (or $1.59 billion).
- Cloud revenues were 17.69 billion yuan (or $2.64 billion), an increase of 10% from the prior-year period.
- Cainiao’s revenues were 12.14 billion yuan (or $1.81 billion), up 5% on a y-o-y basis.
Alibaba has revealed that it has reduced losses in its main businesses with an emphasis on raising operational efficiency and boosting focus on expense optimization.
The quarterly earnings beat is expected to keep the stock range-bound with a slight bullish bias in the near term.
The historical price chart indicates that the stock of Alibaba has solid support at 90 levels. The next major resistance is anticipated near 125. Additionally, the stochastics indicator is rising towards the bullish zone. Therefore, we are anticipating the stock to remain in an uptrend in the days ahead.
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