On Tuesday, Alibaba (NYSE:BABA) Group Holding Limited (NYSE: BABA) reported its fourth-quarter financial results, which slightly exceeded analysts' revenue expectations.
The Chinese e-commerce giant posted a total revenue of Rmb221.9 billion ($34.9 billion), marking a 7% year-over-year increase. This figure modestly surpassed the Rmb220.4 billion ($34.7 billion) estimate and the consensus of Rmb219.8 billion ($34.6 billion).
The company's China retail revenues grew by 3% year-over-year to Rmb88.3 billion ($13.9 billion), with customer management revenues (CMR) increasing by 5% to Rmb63.6 billion ($10 billion). Notably, the total revenue for Taobao and Tmall Group climbed by 4% to Rmb93.2 billion ($14.7 billion), while Ali International Digital Commerce Group saw a significant 45% surge to Rmb27.4 billion ($4.3 billion).
Local Services Group experienced a 19% year-over-year growth, bringing in Rmb14.6 billion ($2.3 billion), and the Shipping Delivery Network saw a 30% increase to Rmb24.6 billion ($3.9 billion). However, the Cloud Intelligence Group reported a modest 3% growth to Rmb25.6 billion ($4 billion). Digital Media and Entertainment (DME) revenues slightly declined by 1% to Rmb4.95 million ($778,000).
The non-GAAP net income attributable to ordinary shareholders was Rmb25.3 billion ($4 billion), down 9% from the previous year. This result was 11% higher than the Rmb22.8 billion ($3.6 billion) forecast but 3% below the consensus of Rmb26.2 billion ($4.1 billion).
The decline in net income was attributed to a lower gross profit margin and increased general and administrative expenses, partially offset by reductions in research and development and sales and marketing expenses. Alibaba's non-GAAP earnings per ADS stood at Rmb10.14 ($1.59), compared to the Rmb9.06 ($1.42) estimate and the consensus of Rmb10.45 ($1.64).
InvestingPro Insights
Alibaba's recent financial performance reveals a company navigating through a challenging market environment with resilience. The InvestingPro data underscores this narrative, showcasing a company with a robust market capitalization of $205.88 billion and a reasonable P/E ratio of 14.21, which adjusts slightly to 14.0 when looking at the last twelve months as of Q3 2024. This valuation metric suggests that Alibaba's stock might be reasonably priced given its earnings.
The company's revenue growth of 7.28% over the last twelve months leading up to Q3 2024, coupled with a quarterly revenue growth of 5.08% in Q3 2024, aligns with the modest year-over-year increase reported in the recent quarter. Investors should take note of Alibaba's gross profit margin of 37.91%, which may reflect the company's ability to maintain profitability despite market pressures. Additionally, the operating income margin of 13.74% indicates a solid operational efficiency.
For those considering an investment in Alibaba, the InvestingPro Tips suggest looking at the company's return on assets, which stands at 5.14%, a figure that can give insight into how effectively the company is using its assets to generate earnings. Moreover, the 1-year price total return of 0.44% could be of interest to long-term investors seeking stability. With a fair value estimate from analysts at $107.01 and an InvestingPro fair value of $122.27, there appears to be potential upside for the stock. For readers looking to delve deeper into Alibaba's financial health and future prospects, InvestingPro provides additional analysis and tips. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, where numerous other tips await to inform your investment decisions.
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