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Alibaba Group Holding Limited (BABA - Free Report) reported fourth-quarter fiscal 2023 non-GAAP earnings of $1.56 per ADS (RMB 10.71), which surpassed the Zacks Consensus Estimate by 20%. The figure increased 35% from the year-ago fiscal quarter’s reported figure in RMB terms.
Revenues of RMB 208.2 billion ($30.32 billion) rose 2% from the year-ago fiscal quarter’s level. However, the top line lagged the Zacks Consensus Estimate of $30.35 billion.
The top-line increase was driven by growing momentum across Alibaba’s international commerce business. Strength across the local consumer services and Cainiao logistics services contributed well.
However, weakness in the China Commerce segment was a major concern. Sluggish consumer demand, along with logistics and supply chain disruptions, remained concerns.
Additionally, the weak performance of Alibaba’s cloud business was an overhang.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
China Commerce (65% of total revenues): The segment comprises marketplaces operating in China’s retail and wholesale commerce markets. Alibaba generated RMB 136.1 billion ($19.8 billion) of revenues from the segment, which fell 3% from the year-ago fiscal quarter’s reported figure.
China commerce retail (63% of total revenues): The business vertical’s revenues for the reported quarter were RMB 132.1 billion ($19.2 billion), reflecting a 3% dip from the year-ago fiscal quarter’s reported number. The downfall was attributed to the decline in customer management revenues due to sluggish growth in online physical goods GMV at Taobao and Tmall marketplaces. Further, coronavirus pandemic-related disruptions and seasonal volatility negatively impacted offline store sales, due to which the company’s direct sales and other revenues were hurt during the reported quarter.
China commerce wholesale (2% of total revenues): The business generated revenues of RMB 4.01 billion ($584 million), which declined 8% on a year-over-year basis.
International Commerce (9% of total revenues): The segment comprises marketplaces operating in the international retail and wholesale commerce markets. Alibaba generated RMB 18.5 billion ($2.7 billion) in revenues from the segment, which grew 29% from the year-ago fiscal quarter’s reported figure.
International commerce retail (7% of total revenues): Revenues for the reported quarter were RMB 13.97 billion ($2.03 billion), up 41% from the year-ago fiscal quarter’s reported figure, owing to solid momentum across Trendyol, Lazada and AliExpress. International commerce wholesale (2% of total revenues): The business generated revenues of RMB 4.6 billion ($666 million), which increased 3% on a year-over-year basis.
Local Consumer Services (6% of total revenues): Revenues grossed RMB 12.55 billion ($1.83 billion), up 17% from the year-ago fiscal quarter’s reported figure. The rise was driven by the improved average order value of Ele.me, which increased its GMV growth.
Cainiao Logistics Services (7% of total revenues): Revenues summed up to RMB 13.6 billion ($1.98 billion), up 18% from the year-ago fiscal quarter’s reported figure. The upside was led by strong momentum across consumer logistics services and international fulfillment solution services.
Cloud Computing (9% of total revenues): The segment generated revenues of RMB 18.6 billion ($2.71 billion), down 2% from the year-ago fiscal quarter’s reading. This was attributed to the resurgence in COVID-19 cases in January, which caused delays in the delivery of hybrid cloud projects.
Digital Media and Entertainment (4% of total revenues): Revenues logged RMB 8.3 billion ($1.2 billion), increasing 3% from the year-ago fiscal quarter’s reported figure.
Innovation Initiatives and Others (0.3% of total revenues): Revenues from the segment were RMB 563 million ($82 million), up 47% from the year-ago fiscal quarter’s reported figure.
Operating Details
In the fiscal fourth quarter, sales and marketing expenses were RMB 24.9 billion ($3.6 billion), down 8.3% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure contracted 100 basis points (bps) from the year-ago fiscal quarter’s reported figure to 12%.
General and administrative expenses were RMB 12.8 billion ($1.9 billion), up 73.1% from the year-ago fiscal quarter’s level. As a percentage of total revenues, the figure expanded by 200 bps from the prior-year fiscal quarter’s reading.
Product development expenses were RMB 13.9 billion ($2.02 billion), up 26.8% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure expanded by 200 bps year over year.
The operating income was RMB 15.24 billion ($2.22 billion) in the reported quarter, down 8.8% year over year. The operating margin was 7% in the fiscal fourth quarter, down 100 bps from the year-ago quarter.
Adjusted EBITDA increased 37% from the year-ago fiscal quarter’s reported figure to RMB 32.1 billion ($4.7 billion).
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and cash equivalents were $28.12 billion (RMB 193.1 billion), down from $28.3 billion (RMB 195.25 billion) as of Dec 31, 2022.
Short-term investments totaled $47.5 billion (RMB 326.5 billion) at the end of fourth-quarter fiscal 2023, up from $45.8 billion (RMB 315.9 billion) at the end of third-quarter fiscal 2023.
Alibaba generated $4.6 billion (RMB 31.4 billion) in cash from operations in the reported quarter, down from $12.6 billion (RMB 87.4 billion) in the previous fiscal quarter.
BABA’s free cash flow was $4.7 billion or RMB 32.3 billion.
Zacks Rank & Stocks to Consider
Currently, Alibaba carries a Zacks Rank #3 (Hold).
Image: Bigstock
Alibaba (BABA) Q4 Earnings Beat Estimates, Revenues Rise Y/Y
Alibaba Group Holding Limited (BABA - Free Report) reported fourth-quarter fiscal 2023 non-GAAP earnings of $1.56 per ADS (RMB 10.71), which surpassed the Zacks Consensus Estimate by 20%. The figure increased 35% from the year-ago fiscal quarter’s reported figure in RMB terms.
Revenues of RMB 208.2 billion ($30.32 billion) rose 2% from the year-ago fiscal quarter’s level. However, the top line lagged the Zacks Consensus Estimate of $30.35 billion.
The top-line increase was driven by growing momentum across Alibaba’s international commerce business. Strength across the local consumer services and Cainiao logistics services contributed well.
However, weakness in the China Commerce segment was a major concern. Sluggish consumer demand, along with logistics and supply chain disruptions, remained concerns.
Additionally, the weak performance of Alibaba’s cloud business was an overhang.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba Group Holding Limited price-consensus-eps-surprise-chart | Alibaba Group Holding Limited Quote
Revenues by Segments
China Commerce (65% of total revenues): The segment comprises marketplaces operating in China’s retail and wholesale commerce markets. Alibaba generated RMB 136.1 billion ($19.8 billion) of revenues from the segment, which fell 3% from the year-ago fiscal quarter’s reported figure.
China commerce retail (63% of total revenues): The business vertical’s revenues for the reported quarter were RMB 132.1 billion ($19.2 billion), reflecting a 3% dip from the year-ago fiscal quarter’s reported number. The downfall was attributed to the decline in customer management revenues due to sluggish growth in online physical goods GMV at Taobao and Tmall marketplaces. Further, coronavirus pandemic-related disruptions and seasonal volatility negatively impacted offline store sales, due to which the company’s direct sales and other revenues were hurt during the reported quarter.
China commerce wholesale (2% of total revenues): The business generated revenues of RMB 4.01 billion ($584 million), which declined 8% on a year-over-year basis.
International Commerce (9% of total revenues): The segment comprises marketplaces operating in the international retail and wholesale commerce markets. Alibaba generated RMB 18.5 billion ($2.7 billion) in revenues from the segment, which grew 29% from the year-ago fiscal quarter’s reported figure.
International commerce retail (7% of total revenues): Revenues for the reported quarter were RMB 13.97 billion ($2.03 billion), up 41% from the year-ago fiscal quarter’s reported figure, owing to solid momentum across Trendyol, Lazada and AliExpress.
International commerce wholesale (2% of total revenues): The business generated revenues of RMB 4.6 billion ($666 million), which increased 3% on a year-over-year basis.
Local Consumer Services (6% of total revenues): Revenues grossed RMB 12.55 billion ($1.83 billion), up 17% from the year-ago fiscal quarter’s reported figure. The rise was driven by the improved average order value of Ele.me, which increased its GMV growth.
Cainiao Logistics Services (7% of total revenues): Revenues summed up to RMB 13.6 billion ($1.98 billion), up 18% from the year-ago fiscal quarter’s reported figure. The upside was led by strong momentum across consumer logistics services and international fulfillment solution services.
Cloud Computing (9% of total revenues): The segment generated revenues of RMB 18.6 billion ($2.71 billion), down 2% from the year-ago fiscal quarter’s reading. This was attributed to the resurgence in COVID-19 cases in January, which caused delays in the delivery of hybrid cloud projects.
Digital Media and Entertainment (4% of total revenues): Revenues logged RMB 8.3 billion ($1.2 billion), increasing 3% from the year-ago fiscal quarter’s reported figure.
Innovation Initiatives and Others (0.3% of total revenues): Revenues from the segment were RMB 563 million ($82 million), up 47% from the year-ago fiscal quarter’s reported figure.
Operating Details
In the fiscal fourth quarter, sales and marketing expenses were RMB 24.9 billion ($3.6 billion), down 8.3% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure contracted 100 basis points (bps) from the year-ago fiscal quarter’s reported figure to 12%.
General and administrative expenses were RMB 12.8 billion ($1.9 billion), up 73.1% from the year-ago fiscal quarter’s level. As a percentage of total revenues, the figure expanded by 200 bps from the prior-year fiscal quarter’s reading.
Product development expenses were RMB 13.9 billion ($2.02 billion), up 26.8% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure expanded by 200 bps year over year.
The operating income was RMB 15.24 billion ($2.22 billion) in the reported quarter, down 8.8% year over year. The operating margin was 7% in the fiscal fourth quarter, down 100 bps from the year-ago quarter.
Adjusted EBITDA increased 37% from the year-ago fiscal quarter’s reported figure to RMB 32.1 billion ($4.7 billion).
Balance Sheet & Cash Flow
As of Mar 31, 2023, cash and cash equivalents were $28.12 billion (RMB 193.1 billion), down from $28.3 billion (RMB 195.25 billion) as of Dec 31, 2022.
Short-term investments totaled $47.5 billion (RMB 326.5 billion) at the end of fourth-quarter fiscal 2023, up from $45.8 billion (RMB 315.9 billion) at the end of third-quarter fiscal 2023.
Alibaba generated $4.6 billion (RMB 31.4 billion) in cash from operations in the reported quarter, down from $12.6 billion (RMB 87.4 billion) in the previous fiscal quarter.
BABA’s free cash flow was $4.7 billion or RMB 32.3 billion.
Zacks Rank & Stocks to Consider
Currently, Alibaba carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the retail-wholesale sector are Booking Holdings (BKNG - Free Report) , The Kroger Co. (KR - Free Report) and Rush Enterprises (RUSHA - Free Report) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Booking Holdings has gained 38% on a year-to-date basis. The long-term earnings growth rate for BKNG is currently projected at 16.5%.
Kroger has gained 10.7% on a year-to-date basis. The long-term earnings growth rate for KR is currently projected at 5.99%.
Rush Enterprises has gained 2.4% on a year-to-date basis. The long-term earnings growth rate for RUSHA is currently projected at 15%.