Chinese e-commerce giant Alibaba (BABA) reported a strong revenue beat for the third quarter driven by double-digit percentage gains in its core operating segments, most notably in the cloud intelligence group.
Shares of the company were up as much as 4% in premarket trading in the U.S. on Tuesday before paring some gains.
Cloud intelligence revenue grew 34%, which was driven by public cloud revenue growth, including the increasing adoption of AI-related products, Alibaba said.
“Robust AI demand further accelerated our Cloud Intelligence Group business, with revenue up 34% and AI-related product revenue achieving triple-digit year-over-year growth for the ninth consecutive quarter,” CEO Eddie Wu said in a statement.
Revenue from China e-commerce rose 16%, as the segment substantially improved its unit economics since September, driven by higher fulfillment logistics efficiency, strong customer retention, and increasing average order value.
International digital commerce revenue grew 10%, as the segment continued to diversify and enrich product offerings by onboarding local merchants and partners while leveraging the company’s supply chain.
“I think their organic sales growth is going to continue to grow further as AI accounts for a larger share within the sales mix. Alibaba’s unit economics metrics within the core e-commerce business are improving, so AI is working not only on the cloud computing front,” said Danil Sereda, Investing Group Leader for Beyond the Wall Investing on Seeking Alpha. “I see more room for margin expansion, especially when the disposed assets are gone from the books.”
Net income attributable to ordinary shareholders fell to RMB 20.99B, or RMB 1.09 per share, compared to RMB 43.87B, or RMB 2.27 per share, hurt by more than a 100% surge in sales and marketing expenses to RMB 66.45B.
Total revenue rose 5% to RMB 247.79B, ahead of the consensus estimate of RMB 243.75B.