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Yahoo
24-05-2025
- Business
- Yahoo
3 Signs That Alibaba's Turnaround Effort Is Bearing Fruit
E-commerce revenue growth accelerated in recent quarters. Artificial intelligence-related revenue grew by triple digits. Investors enjoyed $16.5 billion in buybacks and dividends. 10 stocks we like better than Alibaba Group › Alibaba Group (NYSE: BABA) has been on a journey of transformation over the past two years as it prepares for the next growth phase. In this process, the Chinese e-commerce giant almost completely reshuffled its senior leadership team (including its CEO), doubled down on core businesses, and paid more attention to delivering shareholder value. While its turnaround work is ongoing, there are early indicators that this effort has begun to deliver positive outcomes. Let's dive in and take a closer look. Once the undisputed leader in the Chinese e-commerce industry, Alibaba seems to have lost its way in the last few years as younger peers like Pinduoduo and Douyin gradually expanded their market share at the expense of the incumbent. But since Eddie Wu took over as Alibaba's CEO, he has brought new focus to the company by doubling down on core aspects of the business -- customer delight and artificial intelligence (AI) -- while axing unrelated companies, such as offline supermarkets. For instance, early this year, the tech conglomerate disposed of its shares in Sun Art, a brick-and-mortar supermarket, to focus on its core e-commerce platform business. So far, these efforts have already brought positive results to the business. For example, the Chinese e-commerce business reported 12% growth in customer management revenue in the quarter ended March 31, an acceleration from the 9% growth reported in the quarter ended Dec. 31, 2024. Comparatively, the customer management revenue growth rate was just 4% in the fiscal year ended March 31, 2024. It is also worth mentioning that 88VIP, the highest-spending customer group, grew by double digits year over year to more than 50 million. Beyond its Chinese e-commerce business, Alibaba's international e-commerce business grew 22% for the latest reported quarter. This business is highly diversified in regions (Europe, Asia, and the Gulf Region) and platforms (Aliexpress, Trendyol, etc.), providing enormous growth opportunities in the coming years. Once dubbed the rising star within Alibaba Group, Alibaba Cloud experienced a difficult period in fiscal 2024, when revenue grew at just 3% amid weak demand and competition. It didn't help that Alibaba Cloud cancelled its planned initial public offering, further impacting investor sentiment. Fortunately, things have turned for the better lately, as the business is growing again, leveraging the AI trend. In the latest quarter, revenue surged 18% to 30 billion yuan, driven mainly by faster public cloud revenue growth. In particular, AI-related revenue sustained triple-digit growth, the seventh consecutive quarter of triple-digit growth rates. The solid improvements in AI-related revenue were across a wide range of verticals, such as the internet, retail, manufacturing, and media. In other words, businesses are increasingly adopting cloud computing and AI offerings to improve their operations, suggesting that the AI adoption trend could continue for the foreseeable future. Internally, Alibaba Cloud continues to invest in the latest technology to ensure that it remains a leading contender in the AI race. For instance, it launched the Qwen 3 model, "a new generation of hybrid reasoning models that combine the capabilities of fast, simple responses and deeper chain-of-thought reasoning into a single model." This new model aims to deliver stronger performance at lower costs, making it highly appealing to enterprises and developers. Besides, Alibaba has committed to spending heavily on building the infrastructure needed to accommodate the expected increase in AI demand in the future, aiming to spend more than $50 billion in the next three years. In short, Alibaba Cloud is well-positioned to sustain its growth momentum in the coming years. For the latest fiscal year, Alibaba repurchased $11.9 billion of its stock (5.1% of the outstanding shares) and approved the distribution of $4.6 billion of annual and special dividends, returning $16.5 billion in cash to shareholders. And that's after returning $16.5 billion to investors in fiscal 2024. Alibaba's ongoing efforts to reward its shareholders are essential to building trust, especially as it seeks to rebuild confidence following years of regulatory pressure, slowing growth, and leadership transitions. It will also help attract investors, especially those from the Western markets, to hold the stock for the long term. Moreover, returning cash to investors also signals that the tech giant is in good financial shape, so much so that it can invest in growth and reward shareholders simultaneously. Alibaba's recent performance suggests that its turnaround efforts are gaining momentum and that the tech giant is much better positioned today than it was in the last few years. If it can sustain its growth momentum in the coming quarters, investors can be confident that the worst is over. All eyes are on for the next few quarters. Before you buy stock in Alibaba Group, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Alibaba Group wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $639,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $804,688!* Now, it's worth noting Stock Advisor's total average return is 957% — a market-crushing outperformance compared to 167% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Lawrence Nga has positions in Alibaba Group. The Motley Fool recommends Alibaba Group. The Motley Fool has a disclosure policy. 3 Signs That Alibaba's Turnaround Effort Is Bearing Fruit was originally published by The Motley Fool
Yahoo
16-05-2025
- Business
- Yahoo
Alibaba Group Holding Ltd (BABA) (FY 2025) Earnings Call Highlights: Strong AI Growth and ...
Total Revenue: RMB236.5 billion, an increase of 7% year-over-year. Revenue Growth Excluding Sun Art and Intime: 10% year-over-year. Adjusted EBITDA: RMB32.6 billion, an increase of 36% year-over-year. Non-GAAP Net Income: RMB29.8 billion, an increase of 22%. GAAP Net Income: RMB12 billion, an increase of RMB11.1 billion. Operating Cash Flow: RMB27.5 billion, an increase of 18%. Free Cash Flow: RMB3.7 billion, a decrease of 76%. Net Cash Position: RMB366.4 billion (USD50.5 billion). Taobao and Tmall Group Revenue: RMB101.4 billion, an increase of 9%. Customer Management Revenue Growth: 12% year-over-year. AIDC Revenue Growth: 22% year-over-year. Cloud Intelligence Group Revenue Growth: 18% year-over-year. AI-Related Product Revenue Growth: Triple-digit year-over-year growth for the seventh consecutive quarter. Annual Dividend: USD1.05 per ADS, a 5% increase year-over-year. Special Dividend: USD0.95 per ADS, higher than last year's USD0.66 per ADS. Total Cash Dividends: USD2 per ADS, amounting to USD4.6 billion. Total Shareholder Return: USD16.5 billion, including USD11.9 billion in share repurchases. Warning! GuruFocus has detected 2 Warning Signs with BABA. Release Date: May 15, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Alibaba Group Holding Ltd (NYSE:BABA) reported a 10% year-over-year revenue growth, excluding Sun Art and Intime, and a 36% increase in adjusted EBITDA. Alibaba Cloud's revenue grew by 18% this quarter, driven by robust AI demand, with AI-related product revenue maintaining triple-digit growth for the seventh consecutive quarter. The company has successfully open-sourced over 200 models under the QN family, with more than 300 million downloads worldwide, enhancing its leadership in AI technology. Taobao and Tmall Group saw a 12% year-over-year increase in customer management revenue, driven by improved take rates and software service fees. Alibaba Group Holding Ltd (NYSE:BABA) announced a total cash dividend of USD2 per ADS, reflecting a commitment to returning value to shareholders, alongside a USD11.9 billion share repurchase program. Free cash flow decreased by 76% to RMB3.7 billion, primarily due to increased cloud infrastructure expenditure. Despite revenue growth, Alibaba Cloud's adjusted EBITDA margin decreased quarter-over-quarter due to higher investments in technology and infrastructure. AIDC reported a loss of RMB3.6 billion, although it narrowed compared to the previous year, indicating ongoing challenges in achieving profitability. The company faces potential uncertainties in global trade regulations, which could impact its international e-commerce business. Alibaba Group Holding Ltd (NYSE:BABA) is in an investment phase for its instant commerce business, which may pressure EBITDA in the short term due to aggressive user acquisition strategies. Q: How has the adoption of AI impacted Alibaba Cloud's growth, and what industries are driving this demand? A: Eddie Wu, CEO, explained that Alibaba Cloud's revenue grew by 18% year-over-year, driven by AI-related demand, which has seen triple-digit growth for seven consecutive quarters. Initially, sectors like Internet services, finance, and education adopted AI, but now traditional industries such as manufacturing and animal farming are also migrating to the cloud to leverage AI capabilities. Q: What is Alibaba's strategy for applying AI in e-commerce, and how does it plan to enhance user experience? A: Fan Jiang, CEO of Alibaba International Digital Commerce Group, highlighted that AI is being used to improve user experience in search, recommendations, and advertising. AI is also enhancing internal efficiency for employees and merchants. In the long term, AI is expected to create new forms of interaction and engagement, driving further enhancements in user experience and commerce efficiency. Q: What are Alibaba's plans for monetization on Taobao and Tmall, and how does it compare to competitors? A: Xu Hong, CFO, stated that the primary objective is to stabilize market share while enhancing monetization. Recent initiatives like the software service fee and QCT have improved monetization rates, especially for white-label merchants. Alibaba plans to continue innovating and piloting new monetization models, including leveraging AI, to optimize monetization rates. Q: How is Alibaba Cloud addressing the demand for AI models of different sizes, and what impact does this have on cloud business? A: Eddie Wu, CEO, noted that smaller AI models are often run on local devices, while larger models require cloud resources for scalability and cost efficiency. The use of edge models complements cloud-based large parameter models, driving increased reliance on Alibaba Cloud's services. Q: What is Alibaba's approach to instant commerce, and how does it plan to integrate it with existing services? A: Fan Jiang, CEO of Alibaba International Digital Commerce Group, explained that Alibaba has been building capabilities in instant commerce for years. With a broad user base and mature logistics, Alibaba aims to integrate instant commerce into Taobao, leveraging its advantages to provide excellent service and drive user engagement. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
