Is The Business Growing?

The short answer is yes, the business is growing. However, it is important to note that revenue growth significantly declined from 2022-2023 to a mere 1.8% compared to 18.9% growth in the year prior.

The reason for this decline is mainly attributed to the slowdown of Chinese domestic consumer spending, which Alibaba heavily relies on for the bulk of it's revenue as explained in the previous section. Additionally, increased competition within the Chinese e-commerce space from rivals such as Temu and JD have eaten into Alibaba's market share.

The situation has seemed to improve with the group posting 8.3% top line growth in the last fiscal year. This is still short of the 20% CAGR over the past 5 years, but is a positive step in the correct direction. I personally think this is impressive growth considering the turbulent market it has been operating in, which has forced the company into a "do or die" position in which it has come out more resilient.

Moving onto net income, I will address the elephant in the room which is the -59% drop in 2022. It's important to note this drop was not the result of ordinary business activities but due to decreases in market prices of their private equity investments in publicly traded companies, which in turn led to significant net losses from these investments. This is not reflected in non GAAP earnings regardless.

Between 2022 and 2024, cost of sales have remained around a stable 63% while EBITDA has increased from 18.5% of revenue in 2022 to 20.4% of revenue in 2024. This is positive at it suggests the core business model is becoming more profitable.

Finally, it is no secret that Alibaba has been sitting on a huge cash pile. At their current low valuation, for the fiscal year ended March 2024, Alibaba repurchased a considerable 1.25 billion ordinary shares for a total of $12.5B (CN¥90B). Management have also approved share buybacks of double this amount for fiscal year 2025. Alibaba group has also recently invested large sums of money into their cloud intelligence group infrastructure in hopes that it will provide positive returns in the future, as it attempts to establish itself as a key player within this field.