Alibaba Group (NYSE:BABA), delivered a mixed set of numbers in the second quarter, missing expectations for revenue growth but beating earnings forecasts, sending conflicting signals about the resilience of the Chinese e-commerce giant.
Net losses for the second quarter totalled 20.6 billion yuan (US$2.87 billion) reflecting falling market prices of equity investments in listed companies.
But revenue grew 3% compared to the same time last year to 207.2 billion yuan (US$29 billion) despite falling consumer spending as China continued its strict COVID-19 policies with lockdowns and mass-testing. The number was slightly below expectations of 208.62 billion yuan.
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Customer management revenue, which tracks how much money merchants spend on Alibaba, fell 7% annually, marking the steepest-ever decline for the segment that typically accounts for 30% of the company's total revenue.
“Consumer appetite was weak and we saw a drop in purchasing frequency,” said Alibaba chairman and CEO, Daniel Zhang adding that there was a drop in demand for categories such as consumer electronics and apparel.
But excluding one-off items, Alibaba earned 12.92 yuan per American Depository Share, beating estimates of 11.62 yuan per share.
The company also extended its share buy-back program and will buy an extra $15 billion shares on top of the existing $25 billion share buy-back program aimed at shoring up investor confidence.
Zhang described the expansion of the buy-back program as “tangible action towards enhancing shareholder return."
Alibaba said it had so far bought back about $18 billion of its US-listed shares.
Shares rose 7.27% on the news.
Contact Jeremy at jeremy@proactiveinvestors.com