Alibaba faced its “most severe” external environment in decades in its last financial year, CEO Daniel Zhang said on Tuesday, as the Chinese e-commerce giant faced a number of headwinds from regulatory scrutiny to a Covid-19 resurgence in the world’s second-largest economy.
“Over the past year, we were deeply impacted by the tremendous uncertainties brought about by the capricious nature of the COVID-19 pandemic, the new expectations of the Internet sector in China, and high frequency of international geopolitical conflicts,” Zhang wrote in a letter to Alibaba’s shareholders.
“This may be the year in which changes in the external environment has been most severe in decades. In response to these big and impactful changes, our guiding principle has been ‘be confident, be flexible and be ourselves.'”
During the company’s financial year from Apr. 1, 2021 to Mar. 31, 2022, Alibaba posted its slowest revenue growth on record and its share price collapsed more than 50%.
Last year, Alibaba was hit with a 18.23 billion Chinese yuan ($2.7 billion) fine as part of an anti-monopoly probe as regulators increased scrutiny of the country’s internet giants.
Zhang said “despite the challenges, Alibaba delivered a stable and rewarding year,” highlighting the e-commerce giant’s focus on three key areas — consumption, cloud computing and globalization.
The CEO said the company had achieved its goal of serving more than 1 billion annual active consumers in China. Zhang touted the growth of its discount shopping platform Taobao Deal and its group buying platform Taocaicai. Both of these are seen as key products to help Alibaba grow users in smaller, less-affluent Chinese cities.
“We believe that these two businesses will make greater contributions in the future to our overall retail matrix,” Zhang said.
He also said the cloud computing business realized full profitability for the first time in the last financial year. Alibaba’s cloud business has more than 4 million paying customers, Zhang said.
“For cloud, we expect BABA to be well positioned to capture the market opportunities in the next few years,” Jefferies said in a note on Tuesday.
Over the past three months, there are signs that China’s strict regulatory approach to its domestic technology sector could be easing. Alibaba shares are up about 20% over the last three months. Last week, Bernstein upgraded its price target for Alibaba citing a more positive outlook on sales.
On Tuesday, Alibaba said it will apply for a dual primary listing in Hong Kong as it looks to expand its investor base in Asia.
