Chinese e-commerce giant Alibaba reported its third-quarter earnings today, with sales rising 3% to 207.17 billion yuan ($29.12 billion), slightly below the FactSet estimate of $29.44 billion.
This result is an improvement over the previous quarter. The revenue for the preceding quarter came in at 205.555 billion yuan, remaining the flat as that of the same period last year.
For the quarter ended September 30, 2022, physical merchandise sales (excluding unpaid orders) generated on Taobao and Tmall decreased by single digits year-over-year, mainly due to weak consumer demand, resurgence of COVID-19 and restrictive measures caused by constant competition, the company said.
However, the decline narrowed compared to the previous quarter as key categories such as apparel and accessories and consumer electronics saw less year-over-year decline.
China's October retail sales were down 0.5% year-over-year, indicating that the weak consumption may linger into the fourth quarter. During the earnings call, the giant did not release sales figures for its annual 11.11 global shopping festival, but said it was flat compared to last year.
"Roughly 50% of places in China experienced abnormal logistics and delivery services due to COVID-19 protocols, which affected performance over the shopping festival. The unusually warm weather for the season also affected apparel purchases," Daniel Zhang, CEO of Alibaba, told investors on the call.
In the September quarter, orders from overseas e-commerce businesses, including Lazada, AliExpress, Trendyol and Daraz, fell 3% year-on-year.
Order volume on AliExpress, its cross-border export business, fell 12% year-on-year due to rising logistics costs caused by inflation and the depreciation of the yuan against the US dollar.
The adjusted EBITA loss of the international commerce segment narrowed by 1.5 billion yuan to 960 million yuan in the quarter, mainly due to lower losses from Lazada and Trendyol. This quarter, Lazada’s loss per order narrowed by more than 25% compared with the same period last year.
Customer management revenue, which tracks how much money merchants spend on Alibaba, fell 7% annually, marking the steepest-ever decline for the segment that typically accounts for 30% of the company's total revenue.
Revenue from Cainiao, the giant's logistics services and supply chain management solutions, came in at $13.36 billion ($1.87 billion) in the quarter, up 36% year-on-year.
Alibaba Cloud, its cloud computing business, generated 4% year-over-year growth to 20.75 billion yuan in the quarter. Among it, public cloud revenue grew double-digits year-over-year in the quarter, while hybrid cloud declined.
Thanks to lower expenses, the company posted a better-than-expected operating profit of 25.137 billion yuan, up 68% from a year earlier.
Excluding one-off items, Alibaba earned 12.92 yuan per American Depository Share, beating estimates of 11.62 yuan per share profit.