Source : coinspeaker.com
Alibaba released its fiscal Q1 2022 came in stronger than expected and now sees the tech giant optimistic about the rest of the year.
Asian tech conglomerate Alibaba Group Holding Limited posted its fiscal Q1 2022 earnings report on Thursday, showing figures that beat expectations. Following the release, the company experienced a nearly 2% rise in stock price. Alibaba shares initially jumped as high as 6% before closing the session 1.8% higher at 97.43.
Alibaba Fiscal Q1 2022
For its fiscal Q1 2022 period, Alibaba raked in revenue of 205.55 billion Chinese yuan, or $30.68 billion. Although this surpassed the estimated 203.19 billion yuan, the e-commerce giant’s revenue growth remained flat year-over-year. Furthermore, according to Alibaba, this is the first time the company experienced flat revenue growth.
According to its fiscal quarterly financial report, Alibaba realized earnings per American depositary share (ADS) of 11.73 yuan. Although this beat out the 10.39-yuan ADS expected by analysts, Alibaba reported a 29% ADS decline year-over-year. Lastly, the tech heavyweight’s net income for the period came in at 22.73 billion yuan, versus the 18.72 billion yuan expected.
Commenting on the company’s latest earnings report, Alibaba chief executive officer Daniel Zhang said:
“Following a relatively slow April and May, we saw signs of recovery across our businesses in June. We are confident in our growth opportunities in the long term given our high-quality consumer base and the resilience of our diversified business model catering to different demands of our customers.”
During the fiscal quarter, Alibaba weathered several operational constraints, most especially a Covid resurgence in China. The Covid situation caused major Chinese cities, including Shanghai, to shut down. Overall, the entire Chinese economy stagnated during the lockdown period, causing its GDP growth to miss expectations. However, growth slowly resumed to normalcy after the country’s cities reemerged from lockdown in late May and early June. Retrospectively commenting on the covid resurgence period vis-à-vis Alibaba’s fiscal Q1 2022 performance, chief financial officer Toby Xu, noted that “despite the challenges posed by the Covid-19 resurgence, we delivered stable revenue performance.”
Regardless of improving financial optics, Alibaba continues to feel the brunt of a strict regulatory environment following Beijing’s crackdown over a year-and-a-half ago. The Chinese state capital instituted sweeping, stringent, and reformative measures on the country’s domestic tech sector. This period also saw the likes of Alibaba tech contemporaries such as Tencent, JD.com, and Pinduoduo all incur hefty fines for perceived malpractices.
Analysts expect Alibaba sales to fully pick up later this year despite the June quarter’s year-over-year shortcomings. For instance, as US Tiger Securities explained in a note last month:
“In aggregate, we believe the soft June quarter results are largely expected by investors and the current focus for the stock is the recovery trend in the 2H, on which we remain positive as the government continues to step up economic stimulus to achieve its GDP growth target.”
One area Alibaba is steadily picking up steam is its cloud-computing business which mirrors Amazon’s thriving web services business. Furthermore, although Alibaba’s cloud computing service currently accounts for just 9% of overall revenue, analysts view it as essential. According to analysts, the cloud computing arm is integral to the company’s future growth and profitability.
Tolu is a cryptocurrency and blockchain enthusiast based in Lagos. He likes to demystify crypto stories to the bare basics so that anyone anywhere can understand without too much background knowledge.
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