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The backstory: Chinese tech giant Alibaba has navigated a year of transformations. Back in March, the company announced a major plan – a kind of makeover that involves splitting the company into six different parts. Each part will be led by its own CEO and board and focus on specific things like cloud computing, e-commerce, logistics, media and entertainment. This also allows those subsidiaries to do their own thing, like going public or raising funding.
More recently: China’s President Xi Jinping has been pushing different strategies to boost the country's economy. And it seemed like some of the regulatory challenges that started in 2020 might be behind the country’s tech sector after Beijing wrapped up an investigation into Ant Group last month. Since May, both Alibaba and another Chinese tech giant, Tencent, have seen their value shoot up by US$70 billion, as investors are hopeful that tech companies will start growing strongly again.
The development: Alibaba clocked in a better-than-expected 14% jump in revenue in the first quarter of the year. This was a surprisingly good rebound amid China’s economic hustle to recover from the aftermath of COVID.
Alibaba's report card for the June quarter showed that the company raked in 234.16 billion yuan (about US$32.3 billion) in revenue. Its net income also leaped by roughly 50%, hitting 34.3 billion yuan (about US$4.7 billion.) Alibaba's cloud division, which was in a bit of a slump, bounced back with a 4% revenue boost. And its International Digital Commerce Group, which covers platforms like Lazada and Trendyol, scored a 41% growth in revenue. And back home in China, its e-commerce sector saw a 13% rise. During an analyst conference call, CEO Daniel Zhang, who steps down in September, saw these numbers as a sign that their restructuring move is off to a promising start.
“We view the solid revenues and profit beat delivered in FY1Q24 as what the Street has been waiting for,” said Citigroup analysts led by Alicia Yap. “Most investors had expected an OK quarter, but the magnitude of the outperformance, especially on the profit beat, likely has exceeded most expectations.”
"The latest macro data indicates some uncertainties in the pace of post-COVID recovery, but as economic and consumer activities continue to resume, our businesses demonstrated encouraging trends," said Alibaba Group CEO and Chairman Daniel Zhang to analysts in a post-earnings call.
"Our value-for-money battle will continue and will be an area of major investment," said Trudy Dai, CEO of Taobao and Tmall Group.