Alibaba's Q1 Profits Drop 27% to $3.3 Billion, Miss Revenue Estimates

Alibaba Group Holding reported revenue of 243.24 billion yuan ($33.98 billion) for the quarter ended June 30, falling short of the analysts' average estimate of 249.05 billion yuan. The company's US-listed shares fell about 4% in premarket trading. This revenue shortfall is attributed to a weak economy, high job insecurity in China, and a sluggish property market, which have collectively dampened consumer confidence and spending.

Despite a 4% year-over-year increase in revenue, Alibaba's net profits dropped by 27% to 24 billion yuan ($3.31 billion), primarily due to lower operational profits and increased impairments related to its investments. The domestic retail arm saw a 1% decline in revenue, even as the number of purchasers and their purchase frequency increased by double digits. Conversely, the international e-commerce unit experienced a 32% rise in revenue to 29.3 billion yuan, and the cloud segment grew by 6% to 26.55 billion yuan.

Alibaba is also facing heightened competition from rivals like JD.com and discount-focused platforms such as PDD Holdings' Pinduoduo and Douyin. While Alibaba's entertainment business saw a 4% revenue increase, sector earnings before interest, taxation, and depreciation fell from 63 million yuan ($14 million) to a loss of 103 million yuan ($13 million). The company continues to focus on stabilizing the market share of its key marketplaces, Taobao and Tmall, and expanding its cloud computing business.