The company disclosed the FY24Q4 quarterly report (corresponding to the natural year 24Q1). FY24Q4 Ali achieved revenue of 221,874 billion yuan, yoy +7%, higher than Bloomberg's agreed forecast of 0.95%. Operating profit was 14.765 billion yuan, yoy -3%, and adjusted EBITA was 23.969 billion yuan, yoy -5%, mainly due to increased investment in e-commerce business and incentives for Cainiao employees to stay. Net profit was 919 million yuan, or YOY -96%. The net profit was partially offset by net losses due to changes in the market value of equity investments of listed companies held by Alibaba Group. The same period last year was net income. Non-GAAP net profit was $24.418 billion, yoy -11%, and net profit attributable to common shareholders was $3.270 billion. Share repurchases: During the quarter ending March 31, 2024, Alibaba repurchased a total of 524 million shares of common stock at a total price of US$4.8 billion.
By business: China's commercial revenue of 93.216 billion yuan, lower than Bloomberg's agreed expectations. The adjusted EBITDA reached 38.501 billion yuan, in line with Bloomberg's unanimous expectations.
Cloud business revenue of 25.595 billion yuan was lower than Bloomberg's agreed forecast of 1%, and adjusted EBITDA reached 1,432 billion yuan, lower than Bloomberg's agreed forecast of 2.2%. International e-commerce revenue of 27.448 billion yuan was higher than Bloomberg's agreed forecast of 8%, and adjusted EBITA loss of 4,085 billion yuan, lower than Bloomberg's agreed forecast of 1.4%.
Cainiao Group's revenue of 24.557 billion yuan was higher than Bloomberg's agreed forecast of 13.2%. The adjusted EBITDA loss was 1,342 million yuan, far lower than Bloomberg's agreed profit forecast of 331 million yuan.
China Business: FY24Q4 revenue was 93.216 billion yuan, yoy +4%, adjusted EBITDA of 38.501 billion yuan, yoy -1%. Among high-end consumers, the number of 88VIP members increased by double digits over the same period last year by more than 35 million. Price competitiveness is strong, and the user experience strategy has gradually paid off: 1) Strong growth in the number of purchasers and purchase frequency led to a year-on-year double-digit increase in GMV and order volume. 2) Strong revenue growth from searches and recommendations led to CRM yoy +5%. The overall monetization rate declined slightly: Taobao's GMV growth surpassed that of Tmall's GMV, reflecting an increase in demand for competitively priced products; the new business model had a lower monetization rate.
The company believes that based on the current low payment rates of SME merchants and the fact that new advertising tools have not yet been launched, merchant ROI will gradually increase with the introduction of new advertising tools, and merchant adoption rates and incremental consumption by paying merchants will increase, so there is still room for an increase in the overall monetization rate. Direct sales revenue was RMB 24.69 billion, yoy -2%, and commercial wholesale in China was RMB 4.95 billion, yoy +20%, mainly due to increased revenue from paid merchants from value-added services.
Cloud business: Cloud business revenue of 25.595 billion yuan, yoy +3%, lower than Bloomberg's agreed forecast of 1%, adjusted EBITDA of 1,432 billion yuan, yoy +45%, lower than Bloomberg's agreed forecast of 2.2%. Thanks to a 3-digit year-on-year increase in revenue from AI-related products, mainly from basic model companies, internet companies, and customers in various industries such as financial services and automobiles. As a result of Alibaba Cloud's previous optimization of its revenue structure, it focused on increasing the adoption of public cloud products and services to bring high-quality revenue by reducing project-based contracts with low profit margins. Revenue from core public cloud products (elastic computing, databases, AI products, etc.) increased by double digits over the same period last year. In order to increase the adoption rate of public clouds, under the cost advantages brought about by large-scale infrastructure and advanced technology, prices for more than 100 public cloud products will be reduced. Prices for overseas public cloud products will be reduced in April '24, further enhancing competitiveness in the global market. On May 9, Ali released Generic Thousand Questions 2.5 of the open source 110 billion parameter model. Compared with the previous version, it improved 9%/6%/19%/10% in terms of comprehension ability, logical reasoning, instruction following/code ability, respectively. The company said Alibaba Cloud revenue (excluding internal customers) will resume double-digit growth in the second half of FY2025, based on a leading product portfolio, significant infrastructure investments, and industry partner strategies.
International business: AIDC revenue of 27.448 billion yuan, yoy +45%, higher than Bloomberg's agreed forecast of 8%, order yoy +20%, adjusted EBITA loss of 4.085 billion yuan, lower than Bloomberg's agreed forecast of 1.4%. Overall orders on retail platforms increased 20% year over year, mainly due to strong growth in cross-border business, particularly the growth brought about by AliExpress's Choice business. Specifically, it is driven by 3 aspects: 1) AE Choice drove a strong increase in Aliexpress orders. In April, AE Choice orders accounted for about 70% of AliExpress's total orders. The synergy between AliExpress and Cainiao's cross-border logistics enhances Aliexpress's competitiveness, and the 5-day and 10-day delivery completion rates have doubled year over year. 2) Artificial intelligence technology has improved efficiency and user experience. Currently, 17,000 SMEs have subscribed to Alibaba's Artificial Intelligence Business Assistant, while searches for AI-optimized products have increased 37%. 3) Continued growth in key markets. Trendyol continues to record double-digit order growth, further expanding its cross-border business in the Gulf region. Trendyol has become one of the most downloaded e-commerce apps in the Bay Area. Lazada's losses per order narrowed significantly year-on-year, due to increased monetization rates and optimized operations.
Other business: Cainiao's revenue was 24.557 billion yuan, yoy +30%, higher than Bloomberg's consensus estimate of 13.2%. The adjusted EBITDA loss was $1,342 million. Mainly due to increased revenue from cross-border logistics fulfillment services supporting Aliexpress. Based on strategic collaboration to better achieve business, including collaboration between Cainiao and Aliexpress, to strengthen its comprehensive end-to-end cross-border logistics capabilities, Cainiao withdrew its initial public offering on the Hong Kong Stock Exchange in March. The company said that this quarter, Cainiao will add four additional countries for priority products (such as 5-10 day delivery), covering a total of 14 countries.
Investment advice: Consider competition or intensification in the domestic e-commerce industry and the company's continued investment to promote international e-commerce business. We downgraded Alibaba's FY 2025-2027 revenue to 10196/11100/ 1212.3 billion yuan (prior FY25-26 value: 10258/1127.1 billion yuan), yoy +8%/+9%; net profit attributable to shareholders (non-GAAP) for FY 2025-2027 was 1558/1604/163.8 billion yuan (FY25-26 previous value of 1683/179.5 billion yuan), yoy -2%/+3%/+2%, maintaining the “buy” rating.
Risk warning: macroeconomic downturn, repeated epidemics, weak consumption; policy and regulatory risks; increased competition in the e-commerce industry; new business development falls short of expectations