Alibaba Group Holding Ltd has exceeded expectations with its quarterly revenue, reporting a 2% increase to 247.76 billion yuan ($35.92 billion) for the fiscal third quarter ending on December 31. This growth can be attributed to the company’s efforts in cutting costs and the easing of Covid-19 restrictions in China. The results have surpassed analysts’ consensus estimate of 245.18 billion yuan.

Compared to the same period last year, Alibaba’s net income attributable to ordinary shareholders has seen a substantial rise of 69%, reaching 46.82 billion yuan from 27.69 billion yuan. Following the announcement, the company’s US shares experienced a 1.8% increase after Wall Street opened, with pre-market trades seeing a peak of 6% growth.

Despite challenges in the retail landscape in China, including a contraction of total retail sales by 1.8% in December and a low growth rate of 3% in 2022, Alibaba has managed to navigate these obstacles. The company achieved this by scaling back its international operations and implementing staff reductions. In 2022, Alibaba reduced its workforce by 19,576 employees, a 7.5% decrease.

Although analysts predict weak retail spending in China during the beginning of this year, they anticipate stimulus policies and the eventual release of consumer savings to stimulate the economy in the spring. Alibaba CEO Daniel Zhang expressed optimism during an earnings call, stating that the economy is “getting back on track” and that both consumer and business confidence are increasing.

While Alibaba’s revenue figures have surpassed expectations, its key customer management revenue metric, which measures payments from vendors and represents the company’s largest sales segment, experienced a year-on-year decline of 9%. In addition to dealing with a sluggish economy, Alibaba has faced regulatory challenges since late 2020. Founder Jack Ma, who has maintained a low profile during this regulatory crackdown, has reportedly spent a significant amount of time outside China. Ma relinquished control of Ant Group, a fintech entity partially owned by Alibaba and a major target for Beijing regulators, in January. Ant Group reported a significant decrease in profit for the quarter ending in late September.

Recognizing the importance of restoring private sector confidence and boosting economic activity, Chinese authorities have expressed their intention to support private firms and ease regulatory crackdowns. Alibaba recently announced the development of an AI tool similar to ChatGPT, which is being internally tested. This aligns with the global enthusiasm for OpenAI’s chatbot technology. Other Chinese tech giants and research institutes, including Baidu and, are also working on developing similar AI platforms. Alibaba’s CEO confirmed that the company will continue to develop its own large-scale pretraining model for AI and provide computing power through its cloud computing division.

Useful links:

1. Reuters: provides further insights and details on Alibaba’s quarterly revenue and financial performance.
2. The Wall Street Journal: discusses the impact of regulatory challenges on Alibaba and its future prospects.