Alibaba released its financial results for the third quarter of fiscal 2024 ended December 31, 2023 on February 7. In the quarter, Alibaba achieved an operating income of 2,6034.8 billion yuan, a year-on-year increase of 5%; Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) 595RMB7.2 billion, up 1% year-on-year; Non-GAAP net income of 4795.1 billion yuan, down 4% year-on-year.
By segment, Alibaba Cloud focused on its "AI-driven, public cloud-first" strategy, with adjusted EBITDA (earnings before interest, taxes and amortization) increasing by 86% year-on-year and hitting a new high for the fiscal year. **Healthy growth of GMV on Tmall. Alibaba International Digital Business Group's revenue increased by 44% year-on-year. Cainiao Group's revenue increased by 24% year-on-year. Dawen Entertainment Group's revenue increased by 18% year-on-year.
Wu Yongming, CEO of Alibaba Group, said, "With our strategic focus, we delivered a solid quarter. The Group's top priority is to rekindle the growth momentum of its two core businesses, e-commerce and cloud computing. In the coming year, we will invest more in improving the core user experience to support Taotian Group to regain growth and consolidate its market leadership position. We will focus our resources on developing public cloud products and maintaining the strong growth momentum of our international commerce business. ”
Alibaba's board of directors has approved an increase of US$25 billion (about 179.9 billion yuan) in the share repurchase program, which means that the total buyback size has increased to US$65 billion.
After the release of the earnings report, Alibaba's U.S. stock rose more than 5% in pre-market trading. As of press time, Alibaba's U.S. stocks exceeded 2% pre-market.
Alibaba Cloud's profitability increased by 86%.
Focusing on the "AI-driven, public cloud-first" strategy, Alibaba Cloud Intelligence Group performed well in the third quarter of fiscal year 2024.
It is understood that Alibaba Cloud continued to improve the quality of revenue by reducing project-based contract revenue with low profit margins, and the healthy growth of public cloud products and services revenue in the quarter led to an increase in profitability, and the adjusted EBITA (earnings before interest, taxes and amortization) increased by 86% year-on-year, and hit a new high for the fiscal year.
Previously, Alibaba said that in view of various uncertainties, it will not promote the complete spin-off of the cloud intelligence group. Alibaba Cloud Intelligence Group will implement an AI-driven, public cloud-first strategy and increase technology investment in AI-related software and hardware fields.
Wu Yongming said at the last quarter's financial report** meeting that he would make trade-offs between all Alibaba Cloud products and business models, reduce project-based sales orders, and increase investment in public cloud core products. "Sticking to the public cloud first will allow us to reap the benefits of scale and technology in the future. ”
In terms of product technology, Alibaba Cloud has launched a number of products and services in terms of underlying computing power, AI platform, and model services. In January 2024, Alibaba Cloud announced the latest general-purpose computing instance, ECS G8i, which significantly improves overall performance and AI inference capabilities. In Gartner's 2023 Magic Quadrant for Cloud Database Management Systems, Alibaba Cloud has been named a leader for the fourth consecutive year.
At present, Alibaba Cloud has formed a complete AI infrastructure at the IaaS + PaaS layer, and at the same time, Alibaba Cloud, as the proposer of the MaaS concept, has taken the lead in building and operating ModelScope, the largest and most active AI model open source community in China.
The e-commerce sector grew steadily
Taotian Group focused on user experience improvement and strength strategy, and achieved initial results in the third quarter of fiscal year 2024. The data shows that the number of platform merchants continues to achieve double-digit year-on-year growth, and has maintained double-digit growth in the past four consecutive quarters.
After the success of "Double 11", the order volume of Tmall in the second half of the quarter increased by double digits year-on-year. At the same time, the platform effectively retained and expanded the high-end consumer group, and the number of 88VIP members exceeded 32 million in the quarter, continuing to achieve double-digit year-on-year growth.
Wu Yongming said that in 2024, Tmall will increase investment in the core experience of users, focusing on several aspects: first, increase investment in brand products and industrial belt goods, and strengthen the supply advantage of the platform; The second is to increase investment in product capacity building and optimize the business model relationship between merchants and platforms, so as to create a better cost performance on the best platform; the third is to invest in the improvement of the whole experience of consumer services; The fourth is to increase the frequency of user consumption, and the improvement of the platform's consumption experience and service quality can bring about an increase in the frequency of user consumption, and will also bring a significant improvement in the efficiency of user growth.
Overseas e-commerce is also showing a rapid growth trend. In the quarter, Alibaba International Digital Business Group's revenue increased by 44% year-on-year, and overall orders increased by 24% year-on-year. AliExpress achieved a year-on-year increase of more than 60% in quarterly orders. Trendyol achieved double-digit quarterly order growth. Cainiao continued to build a global intelligent logistics network, and its cross-border logistics fulfillment solution drove a 24% increase in revenue. The global order volume for 5-day premium logistics services increased by triple digits quarter-on-quarter.
According to market analysts, Alibaba is in a critical period of business adjustment, and the solid performance in the quarter is still in the adjustment, proving that its business strategy is effective. It is expected that in the coming quarters, as Alibaba's investment in core business increases, e-commerce GMV is expected to grow steadily and unlock AI and overseas growth space.
**Buyback program expanded by $25 billion
According to Alibaba's financial report for the third quarter of fiscal 2024, the company's board of directors has approved an increase of $25 billion in share buybacks, which means that the total buyback size has increased to $65 billion.
The financial report also shows that the validity period of the share repurchase plan after the increase in scale has been extended to the end of March 2027. There is also a $35.3 billion share buyback line over the next three fiscal years.
According to the data, in the quarter ended December 31, 2023, Alibaba repurchased 292.7 billion ordinary shares (equivalent to 36.6 million American Depositary Shares). In the 2023 calendar year, Alibaba repurchased a total of $897.9 billion shares of common stock (equivalent to 112.2 billion ADSs). In calendar year 2023, Alibaba's share repurchase program resulted in a net decrease of 33%。
Historically, Alibaba has increased the scale of buybacks several times in recent years.
In May 2019, Alibaba announced that it would buy back $6 billion**. In December 2020, Alibaba increased the total amount of its share repurchase program from US$6 billion to US$10 billion. In August 2021, the share repurchase program was raised from $10 billion to $15 billion. In March 2022, Alibaba announced that it would continue to expand its share buybacks, increasing the size of its share buyback program to $25 billion.
In November 2022, Alibaba announced that it would increase its share repurchase program by an additional $15 billion, bringing the total size of buybacks to $40 billion. This time, Alibaba announced an increase in buybacks by $25 billion, bringing the total buyback to $65 billion.
In addition, Alibaba Group founders Jack Ma and Joe Tsai have recently increased their holdings in Alibaba**.
In late January, a 13F filing from the U.S. Securities and Exchange Commission showed that the Tsai Chongxin family's Blue Pool increased its holdings by 1$500 million Alibaba**. Jack Ma also increased his holdings aggressively.
Editor-in-charge: Wan Jianyi.
Proofreading: Li**.
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