Caixin News Agency, August 16th (Reporter Xu Cihao, Researcher Liang Youyun) Yesterday evening (15th), Alibaba Group released its financial report for the first quarter of fiscal year 2025 (ending June 30, 2024).
According to the financial report, Alibaba's revenue during the reporting period was 243.24 billion yuan, a year-on-year increase of 4%; Operating profit was 35.989 billion yuan, a year-on-year decrease of 15%; The adjusted EBITA decreased by 1% year-on-year to 45.035 billion yuan; The net profit attributable to common shareholders was 24.269 billion yuan, with a net profit of 24.022 billion yuan, a year-on-year decrease of 27%.
At the Q1 financial report analyst conference call for the 2025 fiscal year, Alibaba Group CEO Wu Yongming stated that in addition to the two core businesses of e-commerce and cloud, the group has carefully evaluated and analyzed the product capabilities and market competition of other important businesses, and has readjusted its business strategy. Most businesses will prioritize their commercialization capabilities while maintaining product competitiveness
We assess that most of our businesses will gradually achieve breakeven within 1-2 years and begin to contribute to the scale of profitability, "said Wu Yongming.
Increase investment in e-commerce
According to the financial report, the total merchandise trading volume (GMV) of Taotian Group increased by high single digits year-on-year, with the number of buyers and purchase frequency continuing to grow, and the order volume achieving double-digit growth year-on-year. Among them, the number of 88VIP members continued to grow in double digits year-on-year, exceeding 42 million. This means that in the fierce competition of e-commerce, Taobao has maintained a stable market share.
However, the revenue of Taotian Group has declined. During the reporting period, Taotian Group contributed 113.373 billion yuan, a decrease of 1.37% compared to 114.953 billion yuan in the same period last year.
Tmall Supermarket, Tmall Global, and other directly operated businesses contributed 27.306 billion yuan, a year-on-year decrease of 9.48% compared to 30.167 billion yuan in the same period last year. In response, Alibaba explained in its financial report that the main reason is to increase investment in consumer retention rate, purchase frequency, and technology infrastructure, and partly offset by the narrowing of losses in several businesses.
It is worth noting that Taotian Group has revealed that it may increase revenue by adjusting the business rules of merchants. Starting from September 1st this year, Alibaba will charge a "basic software service fee" of 0.6% of the order transaction amount to all merchants, including Taobao and Tmall, and cancel the annual fees of 30000 and 60000 that are only charged to Tmall merchants. Meanwhile, Xianyu also announced that it will charge all sellers a basic software service fee of 0.6% starting from September 1st, with a maximum charge of 60 yuan per transaction.
In addition, on July 26th, Taobao was the first in the e-commerce industry to announce the "relaxation" of refund only policies and optimize the "refund only" strategy for all merchants; On August 9th, Taobao officially launched the "refund only" optimization strategy for all merchants.
According to data disclosed by Alibaba, in the first week of the strategy's launch, thanks to the improvement of merchants' after-sales autonomy and the upgrade of the "refund only" abnormal behavior recognition model, the intervention of Taobao and Tmall platforms in the "received goods only refund" scenario has been reduced by 20%, and the number of unreasonable refunds has sharply decreased.
Based on comprehensive internal and external information, we have seen changes in the e-commerce market share, reflecting the trend of Taobao's market share gradually stabilizing, which further verifies the effectiveness of investing in user shopping experience. "During the Q1 financial report analyst conference call for the 2025 fiscal year, Alibaba Group's CE Wu Yongming stated that the priority is to improve users' purchasing experience, thereby promoting their purchasing frequency.
AI and price reductions drive Alibaba Cloud back to growth
During the reporting period, the revenue contributed by Cloud Intelligence Group increased by 6% from 25.065 billion yuan in the same period last year to 26.549 billion yuan, with AI related product revenue achieving triple digit growth and public cloud business achieving double-digit growth.
At the same time, Alibaba Cloud's profits have skyrocketed, with adjusted EBITA profits increasing by 155% year-on-year. The quarterly EBITA profit reached 2.337 billion yuan, compared to 916 million yuan in the same period of 2023.
Alibaba explained in its financial report that the growth was mainly due to its focus on public cloud strategy and improved operational efficiency, but the profit growth was partially offset by continued investment in customers and technology.
Alibaba stated in its financial report that Alibaba Cloud focuses on the "AI driven, public cloud first" strategy and continues to expand its technological and scale advantages. According to the financial report, Alibaba Cloud's external revenue (excluding cloud revenue from Alibaba affiliated companies) also increased by 6% year-on-year, mainly due to the increase in AI driven product adoption and double-digit growth in public cloud business. Among them, after achieving triple digit growth in revenue from AI related products in the previous quarter, it continued to maintain triple digit growth in the current quarter.
At the same time, Alibaba Cloud has significantly reduced the prices of the 9 main models of Tongyi Qianwen, which has also stimulated the usage of Alibaba Cloud's AI products. According to the financial report, the number of paid users on Alibaba Cloud AI platform Bailian has increased by over 200% compared to the previous quarter.
We are confident that Alibaba Cloud's revenue from customers outside the Alibaba Group will return to double-digit growth in the second half of the fiscal year and gradually accelerate. With high-intensity R&D investment, we will maintain sustained profitable growth and become an AI cloud service provider with healthy profitability and leading market share. "Wu Yongming said at the financial report conference that we will continue to optimize our cloud product structure and focus on competitive, sustainable gross profit, and revenue replicable public cloud products; At the same time, in the era of AI, we need to strengthen the synergy of cloud products, not only to help old customers practice new AI needs on Alibaba Cloud, but also to enable AI native enterprises to grow and succeed on Alibaba Cloud.
It is worth mentioning that at the 2024 Paris Olympics, Alibaba Cloud's technology achieved remote video production and transmission through cloud infrastructure, replacing satellite as the main transmission method for the first time in Olympic history. Two thirds of the broadcasters use Alibaba Cloud to transmit real-time Olympic live signals globally, covering billions of viewers. At the same time, Alibaba Cloud's AI technology has also penetrated into 14 Olympic venues to assist in event playback.
Alibaba International's high-speed growth and Lazada's profitability
Alibaba's international e-commerce business maintained strong growth, with revenue increasing by 32% year-on-year to RMB 29.293 billion, of which international retail business grew rapidly by 38%.
In response, Alibaba explained in its financial report that the strong performance was driven by the growth of cross-border business, especially the AliExpress Choice business. During the reporting period, AliExpress increased its "overseas custody" model and has partnered with three major overseas warehouses.
Meanwhile, Lazada, a cross-border e-commerce platform under Alibaba International Business, has achieved profitability by recording a positive EBITDA (earnings before interest, tax, depreciation, and amortization) in July of this year. As early as 2022, Lazada announced that its Thailand business had achieved profitability, and since 2023, Alibaba's financial reports have repeatedly revealed that Lazada's order losses have continued to narrow.
We hope to integrate the supply of Alibaba's domestic platforms, such as Taobao and 1688, and expand overseas as soon as possible. While maintaining market share based on market conditions, we will continue to optimize our profitability, "said Jiang Fan, CEO of Alibaba International Digital Business Group (AIDC), on the phone of this financial report analyst. Currently, our main focus is still on upgrading and transforming some business models, and in the next few quarters, we will continue to optimize efficiency and pursue healthier growth.
Multi business efficiency improvement and significant loss reduction
The steady growth of Alibaba International Business has also driven the revenue growth and confidence in supporting construction investment of Cainiao Logistics. Cainiao's revenue increased by 16% year-on-year to RMB 26.811 billion, mainly due to the revenue growth and operational efficiency improvement brought by cross-border logistics fulfillment services.
Although Alibaba International Business has made breakthroughs and growth in some of its businesses, there are still many areas that need to be explored and the associated cost investment if it wants to enter the global market.
Similarly, the local lifestyle segment also performed well. In this quarter, driven by the growth of orders from Ele.me and Gaode, the local lifestyle group's year-on-year revenue increased by 12% to 16.229 billion yuan; After adjustment, the EBITA loss significantly narrowed to 386 million yuan, and in the same period of 2023, its loss had reached 1.982 billion yuan.
Specifically, driven by the improvement in economic benefits and expansion of transaction scale of Ele.me, the losses of its home business have continued to narrow. During this quarter, Ele.me also announced the launch of the "Pengpai Plan" and released the TRUST business model: through two innovative businesses including "offline intelligent location selection" and "toB enterprise scenario exploration", as well as various new store subsidies and other resources, it helps catering brand merchants understand their consumers and improve their digital capabilities, thereby driving new growth in merchants' home business.
In addition, the quarterly operating performance of Gaoxin Retail, Hema, Alibaba Health, and Lingxi Interactive Entertainment has also improved.