Alibaba Q3 Profit Drops, To Buy Back Addl. $25 Bln Shares; Stock Down

(RTTNews) - Chinese e-commerce giant Alibaba Group Holdings Ltd. reported Wednesday sharply lower profit in its third quarter on significant charges, despite growth in revenues. Further, the company's board of directors has approved an increase of $25 billion to share repurchase program through the end of March 2027.

In pre-market activity on the NYSE, the shares were losing around 4 percent.

Eddie Wu, Chief Executive Officer of Alibaba, said, "We delivered a solid quarter as we are executing our focused strategies across the organization. Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing. We will step up investment to improve users' core experiences to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year."

In its third quarter, net income attributable to ordinary shareholders was RMB14.43 billion or $2.03 billion, down 69 percent from RMB46.82 billion last year.

Earnings per share were RMB0.71 or $0.10, compared to RMB2.24 last year. Earnings per ADS were RMB5.65 or $0.80, down from RMB17.91 a year ago.

The year-over-year decrease was primarily attributable to mark-to-market changes from equity investments and the decrease in income from operations due to the impairment of intangible assets of Sun Art and impairment of goodwill of Youku..

Adjusted net income was RMB47.95 billion or $6.75 billion, compared to RMB49.93 billion in the same quarter of 2022. Adjusted earnings per share were RMB2.37 or $0.33, compared to RMB2.41 last year. Adjusted earnings per ADS were RMB18.97 or $2.67, compared to RMB19.26 last year.

Revenue was RMB260.35 billion or $36.67 billion, an increase of 5 percent from last year's RMB247.76 billion.

Analysts on average expected the company to report earnings of $2.69 per share on revenues of $36.74 billion, according to figures compiled by Thomson Reuters. Analysts' estimates typically exclude special items.

Adjusted EBITA, a key earnings metric, increased 2 percent year-over-year to RMB52.84 billion or $7.44 billion. Adjusted EBITDA grew 1 percent to RMB59.57 billion or $8.39 billion, while adjusted EBITDA margin fell to 23 percent from 24 percent last year.

For the quarter, revenue from Taobao and Tmall Group was RMB129.07 billion or $18.18 billion, a growth of 2 percent year-over-year. The company said I is in the process of revitalizing Taobao and Tmall Group and positioning it for future growth.

Revenue from Cloud Intelligence Group was up 3 percent year-over-year, and Alibaba International Digital Commerce Group revenues climbed 44 percent.

Revenue from Cainiao grew 24 percent year-over-year, primarily driven by revenue from cross-border fulfillment solutions, and revenue from Local Services Group grew 13 percent.

Following the upsize in share repurchase program, the company currently has $35.3 billion available under share repurchase program through the next three fiscal years.

In pre-market activity on the NYSE, BABA shares were losing around 4 percent to trade at $75.12.

In Hong Kong, Alibaba shares closed Wednesday's trading at HK$74.90, down 1.45 percent.

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