SHANGHAI — Alibaba Group’s latest quarter ended Sept. 30 showed strong top- and bottom-line growth on the back of a buoyant consumer recovery in China, even as the company remained vague on questions about how a possible tightening of restrictions on Ant Group, its financial payments subsidiary, may impact spending on its core retail marketplaces.
Investors were stunned on Tuesday after Ant Group abruptly called off its $34.5 billion dual-listings in Hong Kong and Shanghai in what would have been the world’s largest market debut, following a meeting with Mainland Chinese regulators.
Only speaking in broad terms about the incident in an earnings call, chief executive officer Daniel Zhang said, “As an Ant Group major shareholder, Alibaba is actively evaluating the impact on our business in response to the proposed change.”
Zhang declined to disclose what percentage of spending on its platforms took place via Alipay’s Huabei, which essentially functions like a digital credit card, and how a potential curtailment of Ant Group’s activities may impact Alibaba’s growth of its marketplaces.
The majority of Chinese shoppers skipped right over the physical credit card era to digital wallets like Ant Group-operated Alipay, using the app for a multitude of tasks: from shopping on credit to managing their investment accounts and taking out mortgages and other loans.
Nonetheless, the fundamentals of China’s consumer economy are looking bright, with national GDP rising 4.9 percent year-over-year in the third quarter.
For the quarter ended Sept. 30, Alibaba’s revenue totaled 155.1 billion renminbi, or $22.8 billion, an increase of 30 percent year-over-year. Adjusted earnings before interest, taxes, depreciation and amortization increased 28 percent year-over-year to 47.5 billion renminbi, or $7 billion.
Net income attributable to ordinary shareholders was 28.8 billion renminbi, or $4.2 billion, down 60 percent over the same period last year, due to a onetime gain upon the receipt of the 33 percent equity interest in Ant Group. Excluding the gain, non-GAAP net income rose 44 percent.
Core commerce revenue came to 130.9 billion renminbi, or $19.3 billion, up 29 percent year-over-year. Tmall online physical goods gross merchandise value gained 21 percent year-over-year, Taobao online physical goods GMV grew at a high-teens percent and Tmall Global GMV rose 37 percent year-over-year.
Fast-moving consumer goods in particular saw big increases, growing 28 percent for the period. Food items leapt 38 percent and health care products, 58 percent. Growth of Tmall apparel is now higher than what it was in the pre-COVID-19 period, the company said.
Annual active consumers on China retail marketplaces reached 757 million, an increase of 15 million from June 30, while mobile monthly active users reached 881 million in that same period, an increase of seven million.
Alibaba is right in the midst of Singles’ Day Sale festivities. This year the company added Nov. 1 to 3 as an additional shopping window before the main event arrives on Nov. 11, creating a four-day-long sale in total. It gives merchants and consumers greater flexibility to maneuver the globe’s largest consumer event, stirring up more spending and easing the pressures of the sale on Alibaba’s logistics network.
This week, reports circulated that Alibaba is about to invest $300 million in luxury e-commerce platform Farfetch, which was followed a day later by the announcement that Eurazeo had netted 90.4 million euros by selling all of its shares in Farfetch. Neither company has commented on the speculation.
In October, Alibaba Group spent $3.6 billion to acquire a controlling stake in Sun Art Retail Group, China’s largest supermarket operator and struck a deal with Dufry to form a joint venture to explore the booming domestic Chinese travel-retail market, particularly in Sanya, Hainan.
“Alibaba has a lot of infrastructure relevant to any opportunities including travel retail because we have a digital wallet, we have a travel platform, and China retail marketplaces, which is a huge interface for hundreds of millions of consumers,” Zhang elaborated. “Many could be travelers to a duty-free store in a free trade port [of Hainan]. We could try to leverage what we have in our family to grow the travel-retail business.”