Alibaba Q1 Profit Halves

Chinese e-commerce giant Alibaba Group Holdings Ltd. (BABA) reported Thursday net income for the first quarter halved from last year, hurt by a 1 decline in revenues and a decrease in the market prices of its equity investments in publicly-traded companies.

“During the past quarter, we actively adapted to changes in the macro environment and remained focused on our long-term strategy by continuing to strengthen our capability for customer value creation,” said Daniel Zhang, Chairman and CEO.

For the first quarter, Alibaba reported net income attributable to ordinary shareholders of 22.74 billion Chinese yuan or $3.40 billion, sharply lower than last year’s 45.14 billion yuan. Earnings per ADS were 8.51 yuan or $1.27, compared to 16.38 yuan a year ago.

Excluding items, adjusted net income for the quarter was 30.25 billion yuan or $4.52 billion, compared to prior year’s 43.44 billion yuan. Adjusted earnings per ADS were 11.73 yuan or $1.75, compared to 16.60 yuan last year.

The company’s revenue for the quarter edged down to 205.56 billion yuan or $30.69 billion from 205.74 billion yuan last year, primarily driven by the revenue decline in China commerce, offset by revenue growth of Cloud segment.

China commerce segment revenues edged down 1 percent to 141.94 billion yuan or $21.19 billion, while International commerce segment revenue improved 2 percent to 15.45 billion yuan or $2.31 billion from last year.

Local consumer services segment revenue rose 5 percent to 10.63 billion yuan or $1.59 billion, Cloud segment revenue increased 10 percent to 17.69 billion yuan or $2.64 billion and Cainiao segment revenue grew 5 percent to 12.14 billion yuan or $1.81 billion from last year.

The company noted that it has narrowed losses in key strategic businesses given ongoing improvements in operating efficiency and increasing focus on cost optimization.

Looking ahead, Zhang added, “We are confident in our growth opportunities in the long term given our high-quality consumer base and the resilience of our diversified business model catering to different demands of our customers.”

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