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Alibaba Group Holding Limited (BABA - Free Report) reported second-quarter fiscal 2024 non-GAAP earnings of $2.14 per ADS (RMB 15.63), which surpassed the Zacks Consensus Estimate by 1.4%. The figure increased by 21% from the year-ago fiscal quarter’s reported figure in RMB terms.
Revenues of RMB 224.8 billion ($30.8 billion) rose 9% from the year-ago fiscal quarter’s level. However, the top line missed the Zacks Consensus Estimate of $31.01 billion.
The top-line increase was driven by solid momentum across international commerce retail business. Strength across the local services and Cainiao logistics services businesses also contributed well.
Revenues by Segments
Taobao and Tmall Group (43.4% of total revenues): The segment comprises Taobao, Tmall, Xianyu, 1688.com and other businesses operating in China’s retail and wholesale markets. Alibaba generated RMB 97.65 billion ($13.4 billion) of revenues from the segment, which grew 4% from the year-ago fiscal quarter’s reported figure.
China commerce retail (41.2% of total revenues): The business vertical’s revenues for the reported quarter were RMB 92.6 billion ($12.7 billion), reflecting a 3% rise from the year-ago fiscal quarter’s registered number. The growth was attributed to the strength in customer management revenues owing to the growing interest of merchants in advertising investment. Also, strong sales in the consumer electronics category contributed well to direct sales and other revenues.
However, the company witnessed sluggish online GMV on Taobao and Tmall during the reported quarter.
China commerce wholesale (2.3% of total revenues): The business generated revenues of RMB 5.1 billion ($698 million), which grew by 18% on a year-over-year basis. This was attributed to increasing revenues from value-added services.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba International Digital Commerce Group (10.9% of total revenues): The segment comprises Lazada, AliExpress, Trendyol, Alibaba.com and other businesses operating in the international retail and wholesale markets. Alibaba generated RMB 24.5 billion ($3.4 billion) in revenues from the segment, which grew 53% from the year-ago fiscal quarter’s reported figure.
International commerce retail (8.4% of total revenues): Revenues for the reported quarter were RMB 18.98 billion ($2.6 billion), up 73% from the year-ago fiscal quarter’s reported figure, owing to solid combined order growth in AIDC’s retail businesses. Also, the strong momentum in AliExpress’ Choice was a positive.
International commerce wholesale (2.5% of total revenues): The business generated revenues of RMB 5.5 billion ($758 million), which increased by 9% on a year-over-year basis. Strength in cross-border related value-added services contributed well.
Local Services Group (6.9% of total revenues): Revenues grossed RMB 15.6 billion ($2.13 billion), up 16% from the year-ago fiscal quarter’s reported figure. The rise was driven by the strong growth in Ele.me and Amap businesses.
Cainiao Smart Logistics Network (10.1% of total revenues): Revenues summed up to RMB 22.8 billion ($3.1 billion), up 25% from the year-ago fiscal quarter’s reported figure. The upside was led by solid momentum across cross-border fulfillment solutions.
Cloud Intelligence Group (12.3% of total revenues): The segment generated revenues of RMB 27.6 billion ($3.8 billion), up 2% from the year-ago fiscal quarter’s reading. This was attributed to strength across Alibaba’s consolidated businesses.
Digital Media and Entertainment Group (2.6% of total revenues): Revenues logged RMB 5.8 billion ($792 million), increasing 11% from the year-ago fiscal quarter’s reported figure. This was driven by strength in the offline entertainment businesses of Damai and Alibaba Pictures. Also, increasing Youku’s subscription revenues were a plus.
All Others (19.4% of total revenues) revenues were RMB 48.05 billion ($6.6 billion), down 0.2% from the year-ago fiscal quarter’s reported figure. Declining revenues from Sun Art due to a decline in ticket size were concerns.
Nevertheless, strength across Alibaba Health, Fliggy, Freshippo and Intelligent Information Platform contributed well.
Operating Details
In the fiscal second quarter, sales and marketing expenses were RMB 25.5 billion ($3.5 billion), up 13.9% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure remained flat year over year at 11%.
General and administrative expenses were RMB 9.4 billion ($1.3 billion), down 11.2% from the year-ago fiscal quarter’s level. As a percentage of total revenues, the figure contracted by 100 basis points (bps) from the prior-year fiscal quarter’s reading.
Product development expenses were RMB 14.2 billion ($1.95 billion), down 6.1% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure contracted by 100 bps year over year.
The operating income was RMB 33.6 billion ($5.9 billion) in the reported quarter, up 34% year over year. The operating margin was 15% in the fiscal second quarter, expanding 300 bps from the year-ago quarter.
Adjusted EBITDA increased by 14% from the year-ago fiscal quarter’s reported figure to RMB 49.2 billion ($6.7 billion).
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash and cash equivalents were $33.4 billion (RMB 243.7 billion), up from $31.2 billion (RMB 226.4 billion) as of Jun 30, 2023.
Short-term investments totaled $40.7 billion (RMB 296.8 billion) at the end of second-quarter fiscal 2024, up from $39.16 billion (RMB 283.95 billion) at the end of first-quarter fiscal 2024.
Alibaba generated $6.7 billion (RMB 49.2 billion) in cash from operations in the reported quarter, up from $6.2 billion (RMB 45.3 billion) in the previous fiscal quarter.
BABA’s free cash flow was $6.2 billion (RMB 45.2 billion).
Zacks Rank & Stocks to Consider
Currently, Alibaba carries a Zacks Rank #4 (Sell).
Image: Bigstock
Alibaba (BABA) Q2 Earnings Beat Estimates, Revenues Rise Y/Y
Alibaba Group Holding Limited (BABA - Free Report) reported second-quarter fiscal 2024 non-GAAP earnings of $2.14 per ADS (RMB 15.63), which surpassed the Zacks Consensus Estimate by 1.4%. The figure increased by 21% from the year-ago fiscal quarter’s reported figure in RMB terms.
Revenues of RMB 224.8 billion ($30.8 billion) rose 9% from the year-ago fiscal quarter’s level. However, the top line missed the Zacks Consensus Estimate of $31.01 billion.
The top-line increase was driven by solid momentum across international commerce retail business. Strength across the local services and Cainiao logistics services businesses also contributed well.
Revenues by Segments
Taobao and Tmall Group (43.4% of total revenues): The segment comprises Taobao, Tmall, Xianyu, 1688.com and other businesses operating in China’s retail and wholesale markets. Alibaba generated RMB 97.65 billion ($13.4 billion) of revenues from the segment, which grew 4% from the year-ago fiscal quarter’s reported figure.
China commerce retail (41.2% of total revenues): The business vertical’s revenues for the reported quarter were RMB 92.6 billion ($12.7 billion), reflecting a 3% rise from the year-ago fiscal quarter’s registered number. The growth was attributed to the strength in customer management revenues owing to the growing interest of merchants in advertising investment. Also, strong sales in the consumer electronics category contributed well to direct sales and other revenues.
However, the company witnessed sluggish online GMV on Taobao and Tmall during the reported quarter.
China commerce wholesale (2.3% of total revenues): The business generated revenues of RMB 5.1 billion ($698 million), which grew by 18% on a year-over-year basis. This was attributed to increasing revenues from value-added services.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba Group Holding Limited price-consensus-eps-surprise-chart | Alibaba Group Holding Limited Quote
Alibaba International Digital Commerce Group (10.9% of total revenues): The segment comprises Lazada, AliExpress, Trendyol, Alibaba.com and other businesses operating in the international retail and wholesale markets. Alibaba generated RMB 24.5 billion ($3.4 billion) in revenues from the segment, which grew 53% from the year-ago fiscal quarter’s reported figure.
International commerce retail (8.4% of total revenues): Revenues for the reported quarter were RMB 18.98 billion ($2.6 billion), up 73% from the year-ago fiscal quarter’s reported figure, owing to solid combined order growth in AIDC’s retail businesses. Also, the strong momentum in AliExpress’ Choice was a positive.
International commerce wholesale (2.5% of total revenues): The business generated revenues of RMB 5.5 billion ($758 million), which increased by 9% on a year-over-year basis. Strength in cross-border related value-added services contributed well.
Local Services Group (6.9% of total revenues): Revenues grossed RMB 15.6 billion ($2.13 billion), up 16% from the year-ago fiscal quarter’s reported figure. The rise was driven by the strong growth in Ele.me and Amap businesses.
Cainiao Smart Logistics Network (10.1% of total revenues): Revenues summed up to RMB 22.8 billion ($3.1 billion), up 25% from the year-ago fiscal quarter’s reported figure. The upside was led by solid momentum across cross-border fulfillment solutions.
Cloud Intelligence Group (12.3% of total revenues): The segment generated revenues of RMB 27.6 billion ($3.8 billion), up 2% from the year-ago fiscal quarter’s reading. This was attributed to strength across Alibaba’s consolidated businesses.
Digital Media and Entertainment Group (2.6% of total revenues): Revenues logged RMB 5.8 billion ($792 million), increasing 11% from the year-ago fiscal quarter’s reported figure. This was driven by strength in the offline entertainment businesses of Damai and Alibaba Pictures. Also, increasing Youku’s subscription revenues were a plus.
All Others (19.4% of total revenues) revenues were RMB 48.05 billion ($6.6 billion), down 0.2% from the year-ago fiscal quarter’s reported figure. Declining revenues from Sun Art due to a decline in ticket size were concerns.
Nevertheless, strength across Alibaba Health, Fliggy, Freshippo and Intelligent Information Platform contributed well.
Operating Details
In the fiscal second quarter, sales and marketing expenses were RMB 25.5 billion ($3.5 billion), up 13.9% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure remained flat year over year at 11%.
General and administrative expenses were RMB 9.4 billion ($1.3 billion), down 11.2% from the year-ago fiscal quarter’s level. As a percentage of total revenues, the figure contracted by 100 basis points (bps) from the prior-year fiscal quarter’s reading.
Product development expenses were RMB 14.2 billion ($1.95 billion), down 6.1% from the year-ago fiscal quarter’s reported figure. As a percentage of total revenues, the figure contracted by 100 bps year over year.
The operating income was RMB 33.6 billion ($5.9 billion) in the reported quarter, up 34% year over year. The operating margin was 15% in the fiscal second quarter, expanding 300 bps from the year-ago quarter.
Adjusted EBITDA increased by 14% from the year-ago fiscal quarter’s reported figure to RMB 49.2 billion ($6.7 billion).
Balance Sheet & Cash Flow
As of Sep 30, 2023, cash and cash equivalents were $33.4 billion (RMB 243.7 billion), up from $31.2 billion (RMB 226.4 billion) as of Jun 30, 2023.
Short-term investments totaled $40.7 billion (RMB 296.8 billion) at the end of second-quarter fiscal 2024, up from $39.16 billion (RMB 283.95 billion) at the end of first-quarter fiscal 2024.
Alibaba generated $6.7 billion (RMB 49.2 billion) in cash from operations in the reported quarter, up from $6.2 billion (RMB 45.3 billion) in the previous fiscal quarter.
BABA’s free cash flow was $6.2 billion (RMB 45.2 billion).
Zacks Rank & Stocks to Consider
Currently, Alibaba carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Badger Meter (BMI - Free Report) , Arista Networks (ANET - Free Report) and Salesforce (CRM - Free Report) . While Badger Meter sports a Zacks Rank #1 (Strong Buy), Arista Networks and Salesforce each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Badger Meter shares have gained 24.8% in the year-to-date period. BMI’s long-term earnings growth rate is currently projected at 20.39%.
Arista Networks shares have gained 56.4% in the year-to-date period. The long-term earnings growth rate for ANET is currently projected at 20.4%
Salesforce shares have gained 57.4% in the year-to-date period. CRM’s long-term earnings growth rate is currently projected at 22.54%.