Alibaba reports slowest quarterly sales growth since 2014 listing

Alibaba has reported its slowest quarterly sales growth since its 2014 public listing, as the Chinese ecommerce giant was hit by Beijing’s regulatory crackdown on technology groups and rising competition.

The group said on Thursday total revenue grew only 10 per cent to Rmb243bn ($38bn) in the final three months of last year, with the slowdown at its core ecommerce business deepening.

In its seven years as a public company, Alibaba had never previously reported year-on-year quarterly revenue growth below 20 per cent.

Alibaba chief executive Daniel Zhang blamed the poor results on China’s slowing economic growth and sliding retail sales because of Covid-19 as well as increasing competition from other tech groups.

The tougher competition comes from traditional ecommerce groups such as Pinduoduo and JD.com as well as newer upstarts such as ByteDance’s Douyin, TikTok’s sister app in China, which helps influencers hawk goods through livestreams and short video.

“The hit from Douyin and Kuaishou livestreaming ecommerce has been huge . . . Taobao livestreaming can’t compete,” said Li Chengdong, head of ecommerce think-tank Haitun.

“[Alibaba] hasn’t had many innovative products, their team has had a lot of internal problems and the external regulatory environment has gotten worse,” he said.

Alibaba’s operating income for the quarter plunged 86 per cent from a year earlier, when including a goodwill impairment charge. Excluding the charge, operating income was down 34 per cent year on year to Rmb32bn.

Alibaba’s shares fell 8 per cent in pre-market trading in New York on Thursday. Its stock is down about 65 per cent from November 2020, when Chinese authorities stepped in to halt sister company Ant Group’s IPO, sparking months of heightened regulatory scrutiny for the country’s tech giants that has yet to let up.

Revenue at Alibaba’s highly profitable Taobao and Tmall ecommerce businesses, reflected in the company’s customer management segment, declined 1 per cent on year. Executives said they would cut fees and add incentives to help attract and retain merchants.

Alibaba had last year already cut its sales forecast for 2022 blaming “softer market conditions”. 

Maggie Wu, chief financial officer at Alibaba, said the company had repurchased about $1.4bn worth of shares in the quarter, as the group’s share price plumbed to lows not seen in several years.

Zhang said Alibaba would continue buying back shares. “The market has not placed sufficient value on Alibaba’s business,” he said.

Profits from Jack Ma’s Ant Group continued to flatter Alibaba’s bottom line, with the fintech group contributing Rmb5.8bn in income for the quarter. But Alibaba said the increasing profits were mainly due to Ant’s investment gains.

Alibaba’s results come as Chinese authorities step up scrutiny of Ant. The company was implicated in a corruption scandal last month, while a state-owned asset manager also unexpectedly pulled out of a deal to invest in its lending arm, a setback to its government-led restructuring.

Chinese regulators have also been questioning private and state-owned companies about links to Ant, including demanding information from companies that have taken money from the group, according to two people briefed on the matter. Bloomberg News was first to report the checks.

Ant declined to comment.