Alibaba grows revenue by 9% in Q2, cancels spinning off cloud unit

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Alibaba Group, China’s largest ecommerce company, increased its revenue by 9% in the second quarter of FY 2024 to US$30.8 billion, slightly exceeding analyst estimates.

Operating profit for Q2 surged 34% year on year to US$4.6 billion but marked a 21.5% decrease compared to the last quarter. The company, whose financial year ends March 31, also generated US$5.9 billion in adjusted EBITDA, an 18% jump compared to the same period last year.

“Under our capital management plan, we are prioritizing investment in technology and innovations for our businesses to drive new growth,” said Alibaba CFO Toby Xu.

Meanwhile, the company dropped plans to spin off its Cloud Intelligence Group – Alibaba’s competitor to Amazon Web Services and Microsoft Azure – because the move “may not achieve the intended effect of shareholder value enhancement.”

Trade restrictions implemented by the US may also dampen the cloud unit’s ability to offer its services under existing contracts, “negatively affecting [Alibaba’s] results of operations and financial condition.”

Alibaba’s cloud unit posted US$3.79 million in revenue for the quarter, just a 2% increase compared to the same year-ago period.

Meanwhile, its international digital commerce segment grew 53%, with revenue totaling US$3.36 billion. The group, which includes Lazada, AliExpress, Trendyol, and Daraz, is preparing to raise external funding.

However, Alibaba’s plans to pursue an IPO for Freshippo, its tech-enabled retail chain, have been put off.

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