Chinese e-commerce giant Alibaba on Thursday said revenue grew by 14% year on year in the quarter ended June 30. That's the biggest annual increase in sales since the September 2021 quarter, according to Refinitiv data.
The company's U.S.-traded shares rose by 4.5% in premarket trading.
Here's how Alibaba did in the June quarter versus Refinitiv consensus estimates:
- Revenue: 234.16 billion yuan ($32.29 billion) versus 224.92 billion yuan expected, up 14% year on year.
- Net income attributable to ordinary shareholders: 34.33 billion yuan versus 28.66 billion yuan expected, up 51% year on year.
Alibaba's main business, Taobao and Tmall Group, saw revenue rise 12% year on year to 114.95 billion yuan in the June quarter. The company noted that the Taobao app for online shopping saw daily active users rise in June by 6.5% from a year ago — and rose further to more than 7% in July.
The company's push into overseas markets also bore results, with revenue from international commerce retail surging by 60% year on year to 17.14 billion yuan in the June quarter.
That international demand also helped drive revenue for Alibaba's Cainiao logistics business up by 34% to 23.16 billion yuan during the same period.
Alibaba's cloud business reported revenue growth of 4% to 25.12 billion yuan. Those results were dragged down by a drop in revenue from top customers as well as reduced need for remote work, streaming and education services in the wake of the coronavirus pandemic, the company said.
Investing more in AI
However, Alibaba said it saw "strong demand" in its cloud business for training artificial intelligence models and related services.
"We believe the growth opportunity driven by AI services have just begun. We believe the technology revolution built by AI not a short term opportunity but the beginning of a new era," management said in a conference call with analysts Thursday.
They highlighted plans to invest further in AI development and business opportunities.
"The Taobao app has the greatest potential to become a one stop smart portal for life and consumption enabled by AI," management said on the earnings call.
Since the craze over OpenAI's ChatGPT in the last several months, many companies in China have rushed to announce their plans for similar products. ChatGPT isn't officially available in China. Amid regulatory uncertainty, most similar AI products in China have focused on working with business partners rather than offering public-facing chatbots.
In April, Alibaba launched its large language model (LLM) called Tongyi Qianwen. A LLM is an artificial intelligence model trained on huge amounts of data. It is also the basis for generative AI applications, such as ChatGPT — which generate human-like responses to user prompts.
Alibaba announced earlier this month it will be opening a version of that model to third-party developers.
Thursday's quarterly results compare with a year-ago period when China was still struggling with the Covid-19 pandemic and a two-month lockdown was imposed in Shanghai.
The Chinese economy has been a mixed bag since the country eased its strict pandemic controls in December; investors expected a strong rebound, but domestic consumer demand has remained sluggish. This year, second-quarter GDP came in slower than analysts expected.
China is set to release retail sales and other data for July on Tuesday.
Alibaba restructure
Hangzhou-headquartered Alibaba has been undergoing major changes in recent months. In March, the company said it would split into six business groups, with some having the ability to raise outside funding and go public. Alibaba has already said it plans to publicly list its cloud computing division.
Current CEO and Chairman Daniel Zhang will be stepping down in September, but remain head of Alibaba's cloud computing business, as it pushes toward a public listing. Alibaba veteran Eddie Wu will succeed him as CEO, and Joe Tsai will take over as chairman, the company said in June.
"Alibaba delivered a solid quarter as we continue to execute our Reorganization, which is beginning to unleash new energy across our businesses," Zhang said in a release Thursday.