Robert Way
Alibaba (NYSE:BABA) stock fell about 8% premarket on Thursday after second quarter revenue missed estimates and the company scrapped plans to spin-off its cloud business.
Several Chinese stock were in the red; JD.Com (JD) was down about 6%, Bilibili (BILI) around 5% and Baidu (BIDU) about 3%.
Non-GAAP earnings per American depositary share, or ADS grew about 21% year-over-year to RMB15.63 ($2.14), beating estimates. Meanwhile, revenue grew about 8.5% year-over-year to RMB224.79B ($30.81B), missing analysts’ expectations.
The Chinese tech giant said that the recent expansion of U.S. restrictions on export of advanced computing chips has created uncertainties for the prospects of Cloud Intelligence Group.
The company believes that a full spin-off of Cloud Intelligence Group may not achieve the required effect of boosting shareholder value. Thus it has decided to not proceed with a full spin-off, and instead will focus on developing a sustainable growth model for Cloud Intelligence under the fluid circumstances.
Alibaba International Digital Commerce Group is preparing for external fundraising, while Cainiao Smart Logistics Network has applied for an IPO in Hong Kong and has submitted its A1 filing to the Hong Kong Stock Exchange. Freshippo (Hema)’s plan for an IPO have already been put on hold as the company evaluates market conditions and other factors.
Revenue from Cloud Intelligence, which is developing AI models, rose about 2.2% year-over-year to RMB27.65B or roughly $3.79B, driven by Alibaba-consolidated businesses.
The company noted that revenue excluding Alibaba-consolidated businesses slightly decreased year-over-year, mainly due to its effort to improve revenue quality by reducing the revenue from project-based contracts which are of low margins, and such decrease was mostly offset by the increase in revenue from its public cloud products and services.
Total Taobao and Tmall Group revenue grew about 4% year-over-year to RMB97.65B ($13.39B). Revenue from China commerce retail business in the quarter rose 3% year-over-year to RMB92.56B ($12.69B). China commerce wholesale business’ revenue increased 18% year-on-year to RMB5.09B ($698M).
Alibaba International Digital Commerce — which operates various retail and wholesale marketplaces including Lazada, AliExpress, Trendyol, Daraz, Miravia and Alibaba.com — saw revenues increase 53% year-over-year to RMB24.51B ($3.36B).
Local Services Group revenue grew 16% year-over-year to RMB15.56B ($2.13B), primarily due to the growth in both Ele.me and Amap businesses.
Revenue from Cainiao Smart Logistics Network rose 25% year-over-year to RMB22.82B ($3.13B).
Digital Media and Entertainment revenue climbed 11% year-over-year RMB5.78B ($792M), mainly driven by revenue growth of offline entertainment businesses of Damai and Alibaba Pictures, and increase in Youku’s subscription revenue, partly offset by decrease in Youku’s advertising revenue.
Dividend: Alibaba’s board approved an annual cash dividend for fiscal year 2023 of US$0.125 per ordinary share or US$1.00 per ADS, to holders of ordinary shares and holders of ADSs, as of Dec. 21, 2023. The aggregate amount of the dividend will be approximately $2.5B.
The payment date is expected to be on or around Jan. 11, 2024 for holders of ordinary shares and on or around Jan. 18, 2024 for holders of ADSs.
Buyback: During the quarter, the company bought back about 18.6M ADSs (the equivalent of 148.4M ordinary shares) for approximately $1.7B. About $14.6B remained under the current share buyback program, which is effective through March 2025.
Sale of Shares: In addition, Alibaba noted in SEC filings on Wednesday that Chinese billionaire Jack Ma’s family trust is set to sell about 10 million ADS for about $870.71M.
The sale is expected to be done on Nov. 21 by JSP Investment and JC Properties, funds which are part of the family trust.