Alibaba missed expectations both in revenue and net profit in the second quarter as its domestic retail businesses faced continued pressure from rivals and the macro environment. Total earnings grew 4% from a year earlier to RMB 249.8 billion ($34.8 billion), with China-focused Taobao Tmall Group recording a 1% revenue drop. The tech giant’s cloud computing unit returned to positive growth of 6% during the three month period. According to Alibaba, Taobao and Tmall nevertheless achieved high single-digit online GMV growth and double-digit order growth, and executives emphasized multiple times that the company is aiming for higher monetization rates on its earnings call. Alibaba CEO Eddie Wu, who is also in direct charge of Alibaba Cloud, said he was confident that the unit’s revenue from external customers will achieve double-digit growth largely thanks to “robust demand” for AI. The firm’s International Digital Commerce Group saw revenue up 32% year-on-year, clearly outpacing its domestic e-commerce operations.
Rival JD, in contrast, hit a record high in net profit while recording a 1.2% revenue rise to RMB 291.4 billion. Its earnings were up 7% in the first quarter. The firm’s net profit for the June quarter nearly doubled to RMB 12.6 billion due to improved gross margins from supply chain efficiencies, the company said. JD Retail, the unit where the Beijing-based firm’s main revenue source is rooted, only saw 1.5% earnings growth in the quarter that included China’s second-biggest shopping festival 618. Last quarter, the retail unit recorded a 6.8% rise in net revenues. [Alibaba; JD]
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