Alibaba’s revenue beats expectations despite contraction

HONG KONG (AP) — Chinese e-commerce company Alibaba Group Holding on Thursday beat market expectations for revenue for its June quarter, even as revenue was nearly flat and the company continues to struggle fallout from increased regulatory scrutiny and slowing economic growth .

Alibaba posted revenue of $205.6 billion ($30.4 billion) for its June quarter, down 1% from the same period last year. It was the first time the company reported a contraction in sales. That was even better than the average analyst estimate of $30.09 billion, according to FactSet.

Net profit fell 50% to 22.7 billion yuan ($3.4 billion). Excluding one-time charges, ADS-adjusted earnings totaled $1.75, beating analysts’ average estimate of $1.60 per share.

Its U.S.-listed shares rose about 5% in premarket trading on Thursday.

Alibaba was hit hard last quarter as China locked down various cities across the country to stem the spread of the coronavirus.

The decline in revenue was “primarily due to the impacts of the resurgence of COVID-19 and restrictions that led to supply chain and logistics disruptions in April and most of May,” the company said. company in its earnings release.

Customers in the cosmopolitan and bustling city of Shanghai, for example, were unable to shop online or even order food delivery during its two-month lockdown.

The Hangzhou-based company has also come under scrutiny from regulators in recent years and been hit with anti-monopoly fines. Its cloud business has also been linked to China’s biggest cybersecurity breach, when an online hacker tried to sell more than a billion personal records allegedly from a Shanghai police database. .

Alibaba also faces fierce competition from rivals such as Pinduoduo, which has reported a surge in users, as well as rival JD.com.

Last week, the U.S. Securities and Exchange Commission added Alibaba to a growing list of companies that could be delisted from U.S. exchanges unless they give U.S. regulators unfettered access to their audit processes. and their financial books.

Meanwhile, Alibaba is seeking a primary listing in Hong Kong by the end of the year that would give mainland Chinese investors direct access to its shares as it seeks a more diverse investor base.

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