Alibaba (NYSE:BABA) missed analysts' expectations for both Q1 total revenue and customer management revenue (CMR). The company's shares initially dropped in premarket trading but later recovered, trading 1.6% higher after the market opened.
The company’s Q2 earnings per share (EPS) of RMB16.44, topping consensus estimates of RMB15.00. However, Alibaba’s revenue for the quarter came in at RMB243.24 billion, slightly below the consensus estimate of RMB248.38 billion.
The company's CMR fell 1% year-over-year, while analysts expected a 3% growth.
The Taobao and Tmall Group reported revenue of RMB113.37 billion, a 22% increase quarter-over-quarter, but also below the estimated RMB117.58 billion.
Alibaba's International Digital Commerce Group posted revenue of RMB29.29 billion, up 6.7% quarter-over-quarter, compared to the expected RMB29.56 billion.
The Cloud Intelligence Group reported revenue of RMB26.55 billion, a 3.7% increase quarter-over-quarter, slightly above the expected RMB26.27 billion.
Following the results, Mizuho analysts said negative CMR was consistent with their checks "as we expected growth headwinds due to weaker macro and mix shift to lower monetizing surfaces."
For the earnings call, analysts said they will focus on the CMR growth outlook into the second half of 2024, the trajectory of consumer demand, and the full-year outlook.
Similarly, Morgan Stanley analysts said they will await to hear about details on primary listing progress, which is expected to be completed by the end of Aug. 2024, as well as consumption and top-line growth expectations.
Alibaba's adjusted EBITDA for the quarter came in at RMB51.16 billion, a 1.7% decrease year-over-year, yet above the estimated RMB47.52 billion.
“Our results this quarter demonstrated our strategy at work. Our focus on enhancing user experience by offering quality products at attractive prices with great service led to stabilizing market share of Taobao and Tmall Group as we returned the business on the growth trajectory,” said Eddie Wu, Chief Executive Officer of Alibaba Group.
“The cloud business achieved positive revenue growth momentum, driven by public cloud and AI-related product adoption as we continue to invest to maintain our market leadership,”