Alibaba Reports Flat Revenue as China E-Commerce Competition Intensifies

Revenue Stagnation Reflects Structural Shift

Alibaba Group Holding Ltd. reported revenue of 244.6 billion yuan ($33.7 billion) for the quarter ended September 30, a 1% increase from the same period a year earlier and essentially flat when adjusted for the divestiture of its logistics unit. The result fell short of the 249 billion yuan consensus estimate compiled by Bloomberg.

The Taobao and Tmall Group, Alibaba's core domestic commerce division, generated 115.9 billion yuan in revenue, down 2% year-over-year. Customer management revenue, which reflects advertising spending by merchants on the platforms, declined 4% as brands shifted budgets to faster-growing channels.

PDD and Douyin Continue to Gain Share

PDD Holdings, operator of Pinduoduo and Temu, has aggressively expanded its domestic user base with ultra-low-price subsidies. ByteDance's Douyin, the Chinese version of TikTok, captured an estimated 15% of China's total e-commerce gross merchandise value in the quarter, up from 9% a year ago, according to research firm Syntun.

"The competitive dynamics in China e-commerce have fundamentally shifted," said Chi Tsang, an analyst at HSBC in Hong Kong. "Alibaba's marketplace model is being disrupted by content-driven commerce and price-first platforms."

Cloud Intelligence Group a Bright Spot

Alibaba's cloud computing division posted revenue of 29.6 billion yuan, growing 7% year-over-year. The segment's adjusted EBITA margin expanded to 9.8% from 6.2% a year earlier, reflecting cost discipline and improved utilization rates.

The company said demand for its Tongyi Qianwen large language model services more than doubled in the quarter. CEO Eddie Wu told analysts that AI-related cloud revenue was growing at "triple-digit" rates, though from a small base.

International Commerce Grows

The international digital commerce segment, which includes AliExpress and Lazada, reported revenue growth of 32% to 31.4 billion yuan. Cross-border e-commerce drove the expansion, with AliExpress Choice — a managed logistics service — processing over 40 million daily orders globally.

Lazada's Southeast Asian operations narrowed losses for the fifth consecutive quarter. The unit's order volume grew 28% in markets including Indonesia, Thailand, and the Philippines.

Buyback Program and Valuation

Alibaba repurchased $5.8 billion worth of shares during the quarter, bringing total buybacks in the current fiscal year to $12.3 billion. The company's share count has declined 7.4% over the past 12 months.

Despite the aggressive buyback, the stock trades at 9.2 times forward earnings, a steep discount to its five-year average of 18 times. U.S.-listed American depositary receipts fell 3.8% in pre-market trading following the earnings release.

Alibaba is scheduled to hold an investor day in December, where management is expected to provide a detailed update on the restructuring of its six business units and potential IPO timelines for the cloud and logistics divisions.