Alibaba said it is developing a competitor to ChatGPT, the AI-powered chatbot that has sparked excitement around the world. Alibaba said its own product is currently undergoing internal testing.
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- Revenue: 221.9 billion Chinese yuan ($30.7 billion) versus 219.66 billion yuan expected.
Net income attributable to ordinary shareholders was 3.3 billion yuan, down 86% year-on-year.
Alibaba shares fell about 5% in pre-market trading in the United States
Alibaba had a tough year in 2023, when it implemented the biggest overhaul of its corporate structure ever. It also separately implemented several high-level management changes, with company veteran Eddie Wu taking over as CEO in September.
In an attempt to signal confidence to shareholders, the Chinese technology giant said earlier this year that it had increased its share buyback program by $25 billion until the end of March 2027.
Alibaba has been struggling with cautious consumer spending in China, but saw signs of a slight recovery in its core e-commerce business in the March quarter.
The Hangzhou-headquartered company has been ramping up its overseas efforts amid a domestic slowdown, as Alibaba faces increasing competition from low-cost players such as PDD.
Revenues from the Taobao and Tmall division, which includes Alibaba’s e-commerce business in China, rose 4% year-on-year to 93.2 billion yuan. That was faster than the 2% growth in the previous quarter.
Customer management revenue — sales from services such as marketing that Alibaba sells to merchants on e-commerce platforms Taobao and Tmall — rose 5% year-on-year, after being flat in the previous quarter. Alibaba’s international trade business also recorded a 45% year-on-year increase in revenue to 27.4 billion yuan.
Earlier this year, CEO Wu pledged to “revive” growth at the e-commerce company through further investments. There appear to be early signs of this happening in the March quarter.
“This quarter’s results show that our strategies are working and that we are returning to growth,” Wu said in the earnings release.
The decline in profits casts a long shadow on profits. Alibaba said the reason for the decline was “primarily due to the net loss from our investments in publicly traded companies during this quarter, compared to the net profit in the same quarter last year, due to changes in the market.”
Investors are laser-focused on Alibaba’s cloud computing division, which is struggling to reignite growth. The company was planning to spin off the cloud unit, but canceled plans for an initial public offering last year.
Alibaba said its cloud computing unit generated revenues of 25.6 billion yuan, up just 3% year-on-year, representing the same growth rate as the previous quarter.
The Chinese giant said it is reducing “low-margin project-based” contracts in its cloud division, and expects AI-related and public cloud products, which relate to enterprise customers, to “offset the impact of the rollout.” of project-based revenues.”
During the March quarter, AI-related revenue saw “triple-digit growth year over year.”
“AI-related revenues were generated from various sectors including enterprise model companies, Internet companies, as well as clients from industries such as financial services and automotive,” Alibaba said.
