Alibaba Group Holding Ltd.’s U.S.-listed shares were rising in premarket trading Thursday after the Chinese e-commerce giant beat revenue and earnings expectations for the latest quarter.
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Alibaba had posted three straight revenue misses prior to Thursday’s beat, according to an analysis of FactSet data.
Shares were up 4% in premarket trading Thursday.
Chief Executive Daniel Zhang shared on Alibaba’s earnings call that the latest COVID-19 wave in China has impacted the company’s business “to varying degrees.” New COVID cases have cropped up in areas where Alibaba generates significant gross merchandise volume and that are important from a logistics perspective.
He said that “electronics consumption” among the company’s customer base has decreased, according to a FactSet transcript, while demand for essential items such as food has gone up sharply. Consumers are stockpiling food, he added.
The company’s China commerce business recorded RMB140.3 billion in revenue in its latest quarter, up 8% from a year before. Alibaba disclosed that it had a combined 903 million annual active consumers for its China commerce segment as of March 31.
Alibaba shared in a release that it has seen success in its strategy to “attract and retain users of different demographics and shopping behaviors to our commerce ecosystem.”
The company logged a net loss of RMB16.2 billion, or RMB6.07 per American depositary share, compared with a loss of RMB5.5 billion, or RMB1.99 per ADS, in the year-earlier period. Alibaba noted that the loss reflected decreases in the market prices of its equity investments in public companies, which aren’t included in the company’s adjusted metrics.
After adjustments, Alibaba earned RMB7.95 per ADS, down from RMB10.32 a year before but above the FactSet consensus, which called for RMB7.10 per ADS.
While the company traditionally offers financial guidance to kick off a new fiscal year, Alibaba declined to do so this time around, citing uncertainty brought upon by the pandemic.
“Since mid-March 2022, our domestic businesses have been significantly affected by the COVID-19 resurgence in China, particularly in Shanghai,” Alibaba said in its press release. “Considering the risks and uncertainties arising from COVID-19, which we are not able to control and are difficult for us to predict, we believe it is prudent at this time not to give financial guidance as we typically do at the start of the fiscal year.”
Alibaba added that it expects to “continue to generate strong operating cash flow to maintain strategic flexibility as we calibrate our operations against changing economic and competitive circumstances.”
