Alibaba Group Holding Ltd – ADR (NYSE:BABA) stock fell 4.61% (As on November 19, 11:43:52 AM UTC-4, Source: Google Finance) after the company posted a smaller-than-expected rise in quarterly revenue as COVID-19 curbs and a worsening economic outlook stifled consumer spending. Retail spending in China has sagged this year alongside the government’s strict zero-COVID policies that have led to frequent snap lockdowns and hurt economic activity. The company has also yet to fully recover from a regulatory crackdown on the tech sector that has curtailed growth opportunities. Non-GAAP net income was RMB33,820 million (US$4,754 million), an increase of 19% year-over-year. Net cash provided by operating activities was RMB47,112 million (US$6,623 million), an increase of 31% compared to RMB35,830 million in the same quarter of 2021. Free cash flow, a non-GAAP measurement of liquidity, was RMB35,709 million (US$5,020 million), an increase of 61% compared to RMB22,239 million in the same quarter of 2021.
Excluding one-off items, Alibaba earned 12.92 yuan per American Depository Share, beating the analysts’ estimates for the adjusted earnings per share of 13 cents. Revenue grew 3% to 207.18 billion yuan ($28.96 billion) in the three months ended Sept. 30, compared with a Refinitiv consensus estimate of 208.62 billion yuan drawn from 25 analysts.
Moreover, for the quarter ended September 30, 2022, online physical goods GMV generated on Taobao and Tmall, excluding unpaid orders, declined low-single-digit year-over-year, mainly due to soft consumption demand, COVID-19 resurgence and restrictions as well as ongoing competition. However, the decline narrowed compared to the prior June quarter as key categories such as apparel and accessories and consumer electronics saw less year-over-year decline. Healthcare products and interests-based consumption categories such as outdoor and active gear, and pet care continued to exhibit resilient demand. For the twelve months ended September 30, 2022, the number of consumers who each spent over RMB10,000 on Taobao and Tmall remained around 124 million with a retention rate of 98%.
The company would raise its share repurchase program by an additional $15 billion and extend it to the end of the 2025 fiscal year. Under the existing $25 billion share repurchase program, the company said it had repurchased approximately $18 billion in shares by November 16. Alibaba said it will not complete its primary conversion of shares to the Hong Kong Stock Exchange by the end of 2022 as originally announced in August.