Alibaba Group Holdings Ltd. narrowly missed revenue expectations but posted a sizable profit beat for its March quarter Thursday, while disclosing plans for its first spinoff of a business unit since announcing a reorganization earlier this year.
The company reported fiscal fourth-quarter net income of RMB23.5 billion ($3.4 billion), or RMB9.00 per American depositary share, whereas it posted a loss of RMB16.2 billion, or RMB6.07 per ADS, in the year-prior quarter. On an adjusted basis, Alibaba
earned RMB10.71 per ADS, compared with RMB7.95 per ADS a year before. Analysts tracked by FactSet were modeling RMB9.44 per ADS.
Revenue rose to RMB208.2 billion from RMB204.1 billion a year before, while analysts were expecting RMB208.7 billion.
Consumption in China “gradually recovered” through the March quarter, Alibaba said in its earnings release, while noting that gross merchandise volume growth for online physical goods on its Taobao and Tmall platforms turned positive in the month of March when excluding unpaid orders. This growth was helped by strong momentum in the fashion, accessories and healthcare categories.
Alibaba shares were up about 1% in premarket trading.
The earnings report was the first for Alibaba since the company announced in late March that it planned to reorganize into six business units that would have their own chief executives and the flexibility to attract outside capital or pursue initial public offerings. The company indicated progress on that initiative in Thursday’s release.
“We are taking concrete steps towards unlocking value from our businesses and are pleased to announce that our board has approved a full spin-off of the Cloud Intelligence Group via a stock dividend distribution to shareholders, with the intention for it to become an independent publicly listed company,” Chief Executive Daniel Zhang said.
The company is targeting for the spinoff to be complete within 12 months.
Zhang added that Alibaba’s board “has approved the process to start external financing for Alibaba International Digital Commerce Business Group; exploration of IPO for Cainiao Smart Logistics Group; and execution of IPO for Freshippo.”
Shares of Alibaba have gained 2.9% so far this year, though they’ve fallen 1.4% over a 12-month span. The KraneShares CSI China Internet ETF
is down 7.3% so far in 2023 but ahead 4.9% over a 12-month period.