Alibaba Group Holding Ltd, on Thursday reported flat quarterly revenue growth for the first time in its history, showing how China’s COVID lockdowns have hit its business.
The slowdown adds to challenges facing China’s e-commerce giant, which has enjoyed double-digit revenue growth almost every quarter since it went public in 2014, as it navigates Beijing’s crackdown on tech companies as well as its scrutiny of founder Jack Ma.
Still, Alibaba’s performance was better than expected and its shares jumped 5% in pre-market trading.
China locked down dozens of cities between April and May as the Omicron COVID variant swept through the country, with major cities, including Shanghai, facing some of the harshest restrictions that paralysed intra and inter-city delivery and prevented households from shopping online.
Analysts at Nomura estimated in mid-April that 45 cities in China, representing 40% of its GDP, were under full or partial lockdowns.
Alibaba said: “Following a relatively slow April and May, we saw signs of recovery across our businesses in June. Despite near-term challenges, Taobao and Tmall continue to achieve high consumer retention, especially among consumers with higher spending power.”
Revenue stood at 205.56 billion yuan ($30.43 billion) in the quarter to end June, a 0% year-on-year change but beating analyst expectations.
Customer management revenue, which tracks how much money merchants provide Alibaba for placements and promotions, fell a whopping 10% to 80.4 billion yuan. The revenue segment is Alibaba’s bread and butter, routinely making up roughly one third of its total revenue.
The company has already faced slowing revenue growth in the past year, due to a weakening economy and stiffer competition from rivals like Pinduoduo and ByteDance.
Cloud computing revenue, its main growth driver outside of e-commerce, grew 10%.
Alibaba’s has been caught up in Beijing’s sweeping crackdown on China’s tech sector. The company’s shares have fallen by roughly two-thirds since late 2020, when regulators in Beijing abruptly halted the IPO of its finance affiliate Ant Group, an event that marked the beginning of the tech crackdown.
In the quarter, Alibaba earned 11.73 yuan per share on an adjusted basis, compared to analysts’ estimates of 10.39 yuan per share, based on Refinitiv IBES data.
On an adjusted basis, Alibaba earned 11.73 yuan per ADS, compared to analysts’ estimates of 10.39 yuan, according to Refinitiv IBES data.
Net income attributable to ordinary shareholders nearly halved to 22.74 billion yuan.
