Chinese e-commerce and entertainment giant Alibaba Group saw its net profit fall 27% in the April-June period, which was the first quarter of its fiscal year that ended in March.
The New York and Hong Kong-listed company said on Thursday its revenue rose 4 percent from a year earlier to 243 billion yuan ($33.4 billion). Net profit for the three months fell to 24 billion yuan ($3.31 billion) on lower operating profit and higher investment impairments. On a non-GAAP basis, as recommended by the group, net profit was $5.6 billion, down just 9 percent from a year earlier.
The group has abandoned plans to spin itself off into separately funded businesses and will instead exist as a conglomerate with six units. Management said it has been focused on stabilizing market share for its marketplaces Taobao and Tmall and scaling its cloud-computing business.
Cloud computing was used particularly actively during the Olympic Games, which took place after the reporting period. “Two-thirds of state broadcasters used live signals transmitted in real time from Alibaba Cloud around the world, reaching billions of viewers. Alibaba Cloud also hosted more than 11,000 hours of games-related video content produced by its Olympic Broadcasting Services that was used by broadcasters. In addition, this was the first Olympic Games to make extensive use of AI, with Alibaba Cloud’s AI technology deployed in 14 Olympic venues to generate high-fidelity 360-degree replays in real time,” the group said.
The entertainment business had mixed results. The Digital Media and Entertainment Group’s quarterly revenue was RMB 5.58 billion ($768 million), up 4% year-on-year, “mainly due to increased total transaction volume and revenue from its live event online ticketing platform.”
But the unit’s earnings before interest, tax, depreciation and amortization slid to a loss of RMB103 million ($14 million) in the most recent quarter, from RMB63 million in the April-June period last year. The group’s regulatory filings did not explain this, but Alibaba Pictures, the Hong Kong-listed company of its media unit, is expected to report more detailed figures in the coming days.