Alibaba Earnings Restructure IPO Alibaba Cloud

Alibaba reports lower-than-expected Q1 earnings, confirms cloud business IPO plan

Rebbeca Ren

posted on May 18, 2023 11:57 pm

Alibaba on Thursday reported earnings for the quarter ended March 31, 2023, with revenue of 208.2 billion yuan ($29.6 billion), up 2% from a year earlier but well below expectations for 210.2 billion yuan.

Earnings per share stood at 1.34 yuan, up 35% year-on-year, compared with expectations of 2.08 yuan.

Its China commerce business revenue was 132.06 billion yuan, down 3% from 135.67 billion yuan in the same period in 2022.

The international commerce retail business, which includes Lazada, AliExpress, Trendyol and Daraz, recorded a 29% year-over-year growth to 18.54 billion yuan. Combined order volumes for these businesses grew 15% year-over-year, and in Southeast Asia, Lazada recorded double-digit year-over-year order growth.

Revenue from logistics unit Cainiao rose 18% year-on-year to 13.62 billion yuan, with external customers contributing 72% of Cainiao's total revenue.

The cloud intelligence group, consisting of Alibaba Cloud and DingTalk, posted revenue of 18.58 billion yuan, down 2% year-over-year.  

Local consumer services recorded a year-over-year increase of 17%, hitting 12.55 billion yuan.

Sales of digital media and entertainment unit came in at 8.27 billion yuan, up 3% year-over-year.

This is the first report published after Alibaba's announcement in March about its decision to restructure into 6 individual divisions. Since then, speculation has grown that these new entities may soon be gearing up for an initial public offering (IPO).

In a press release on the earnings, Alibaba Chairman and CEO Daniel Zhang confirmed the plan for an IPO for the cloud computing unit.

“We are pleased to announce that our board has approved a full spinoff of the Cloud Intelligence Group via a stock dividend distribution to shareholders, with the intention for it to become an independent publicly listed company,” said the CEO.

Alibaba also said it intends to launch IPOs for its logistics unit and Freshippo, which are expected to be done in the next 12 to 18 months and the next 6 to 12 months, respectively.

The company also announced plans to raise funds from outside investors for its international digital commerce group.

In an earnings call with analysts, company management said that Alibaba has seen a lot of demand for its self-developed ChatGPT-like product Tongyi Qianwen, with 2,000 enterprise customers applying for trial access.