Alibaba Group Holding Limited (NYSE: BABA; HKEX: 9988 (HKD Counter); 89988 (RMB Counter)) today shared its financial results for the quarter ending September 30, 2024.
“This quarter, we focused on enhancing the user experience and expanding our product offerings to better serve our customers. We formed long-term partnerships with industry peers to enhance payment and logistics services across Taobao and Tmall, which we believe will drive our overall growth. Our Cloud business saw accelerated growth, with public cloud revenues growing in double digits and AI-related product revenues seeing triple-digit increases. We remain confident in our core businesses and will continue investing to fuel long-term growth. Other business areas have also improved operational efficiency, with many becoming more profitable or reducing losses,” said Eddie Wu, CEO of Alibaba Group.
“Our revenue growth this quarter was driven by stronger monetization of Taobao and Tmall, including service fees based on GMV and increased merchant adoption of our marketing tool Quanzhantui. As part of our strategy, we continue to invest in core businesses while focusing on operational efficiency. During the quarter, we repurchased US$4.1 billion in shares, reducing our total shares outstanding by 2.1% since the end of June, thereby increasing earnings for our shareholders,” said Toby Xu, CFO of Alibaba Group.
Financial Highlights for Q3 2024:
- Revenue: RMB 236,503 million (US$33,701 million), up 5% year-over-year.
- Income from Operations: RMB 35,246 million (US$5,023 million), up 5% year-over-year, primarily driven by reduced non-cash share-based compensation expenses, partially offset by lower adjusted EBITA.
- Adjusted EBITA: RMB 40,561 million (US$5,780 million), down 5% year-over-year, due to higher investments in e-commerce businesses, although partially offset by revenue growth and improved efficiency.
- Net Income: RMB 43,874 million (US$6,252 million), an increase of 63% year-over-year, driven by mark-to-market changes in equity investments, reduced impairment on investments, and higher income from operations.
- Non-GAAP Net Income: RMB 36,518 million (US$5,204 million), a decrease of 9% from the same quarter in 2023.
- Diluted Earnings Per ADS: RMB 18.17 (US$2.59); diluted earnings per share was RMB 2.27 (US$0.32 or HK$2.52).
- Non-GAAP Diluted Earnings Per ADS: RMB 15.06 (US$2.15), down 4% year-over-year.
- Net Cash Provided by Operating Activities: RMB 31,438 million (US$4,480 million), a decrease of 36% compared to Q3 2023.
- Free Cash Flow: RMB 13,735 million (US$1,957 million), a decline of 70% year-over-year, mainly due to investments in Alibaba Cloud infrastructure and refunds to Tmall merchants following the cancellation of annual service fees.
Business and Strategic Updates
Taobao and Tmall Group
During the quarter, Alibaba increased investments in strategic initiatives like competitive pricing, customer service improvements, membership programs, and technological advancements to enhance user experience. These efforts led to higher purchase frequency and better overall feedback from shoppers.
The company adopted a more open approach for payment and logistics services, expanding its offerings to make shopping easier for consumers and improve merchant efficiency. Early results showed strong momentum in attracting new buyers, with a focus on user growth and retention expected to drive future growth across platforms.
From September 1, a new GMV-based software service fee was introduced, aligning with industry practices. At the same time, Alibaba removed the annual service fee for Tmall merchants and offered rebates to smaller merchants. Quanzhantui, an AI-powered marketing tool, saw an increase in merchant adoption, which is expected to boost marketing efficiency and drive higher marketing spend on the platform.
Online GMV growth was fueled by a double-digit increase in orders, mainly due to higher purchase frequency, though average order value declined. The 11.11 Global Shopping Festival in October and November saw strong GMV growth and a record number of buyers on Taobao and Tmall.
The number of 88VIP members, Alibaba’s highest-spending consumer group, grew by double digits year-over-year, reaching 46 million. These loyal customers continue to drive GMV growth and higher purchase frequency. Alibaba plans to invest further in the 88VIP membership to enhance benefits and services, aiming for continued growth in this high-value consumer segment.