Alibaba (BABA): Here’s how the Chinese ecommerce giant’s main businesses fared in Q3

Shares of Alibaba Group Holding (NYSE: BABA) were down nearly 2% on Friday, a day after the company reported mixed results for the third quarter of 2022. While adjusted earnings per ADS of $2.65 surpassed estimates, revenue of $38 billion fell short of expectations. The stock has dropped 10% since the start of the year. Let’s take a look at how the company’s two main businesses performed during the quarter:

Commerce

Alibaba’s total revenue in Q3 increased 10% year-over-year, helped by growth in both China and international commerce, which grew 7% and 18%, respectively. China commerce retail grew 7% while China commerce wholesale rose 10% YoY. International commerce retail and wholesale delivered revenue growth of 14% and 29% respectively.

At quarter-end, Alibaba’s global annual active consumers stood at 1.28 billion, reflecting quarterly net adds of 43 million. Annual active consumers in China rose to 979 million while outside of China, they rose to 301 million from 953 million and 285 million, respectively in Q2.

On a trailing 12-month basis, Alibaba’s China commerce businesses had around 882 million annual active consumers, reflecting a quarterly increase of about 20 million. This growth was mainly driven by Taobao Deals which was instrumental in new user acquisition. The company is gaining more customers in less developed areas as it continues to expand its product offerings to meet their varied demands.

The China commerce business continues to face headwinds from slowing market conditions and increased competition. Despite this, Alibaba remains optimistic in terms of its goal of reaching 1 billion annual active consumers in China by the end of this fiscal year.

In the international commerce retail business, annual active consumers reached 301 million, reflecting a quarterly net increase of 16 million. The combined order growth of these businesses was around 25% YoY. The international commerce wholesale business grew around 50% YoY in value of transactions completed on Alibaba.com, driven by strong growth in exports.  

Cloud

During the third quarter, Alibaba’s cloud business generated $3 billion in revenue, reflecting a growth of 20% year-over-year, driven by strong momentum in the financial services and telecom industries. Cloud revenues saw some impact from slowdown in demand from customers in the Internet industry like online entertainment and education.

Alibaba’s cloud revenues are becoming more diversified as the contribution from non-Internet industries continues to increase. In Q3, revenues from non-Internet industries made up 52% of total cloud revenue.

AliCloud continues to expand its international infrastructure. It added two data centers in Asia-Pacific, one in Korea and one in Thailand during the third quarter. AliCloud currently provides cloud computing services in 25 regions across the world. China’s cloud market is expected to be a RMB1 trillion opportunity by 2025.

Click here to read the full transcript of Alibaba’s Q4 2021 earnings conference call