Blue Whale News, November 16th (Reporter Wu Jingjing) On November 15th, Alibaba Group released its Q2 financial report for the fiscal year 2025 (Q3 2024), with quarterly revenue of 236.503 billion yuan, a year-on-year increase of 5%, and net profit of 43.874 billion yuan, a year-on-year increase of 63%. Adjusted net profit was 36.518 billion yuan (5.2 billion US dollars), a decrease of 9% from 40.188 billion yuan in the same period last year.
The performance of Singles' Day exceeded expectations, and the positive effect of interconnectivity still needs time
Specifically, for each business segment, Taotian Group's revenue was 98.994 billion yuan, an increase of 1.37% year-on-year; Cainiao Group's revenue was 24.647 billion yuan, up 7.99%; Cloud Intelligence Group's revenue was 29.61 billion yuan, an increase of 7.1%; Alibaba International Digital Business Group has a revenue of 31.672 billion yuan. An annual increase of 29.22%.
Taotian business is Alibaba's largest core business segment. Taotian Group's revenue for the third quarter of 2024 was 98.994 billion yuan (approximately 14.1 billion US dollars), an increase of 1% compared to the same period last year's 97.654 billion yuan, but the growth rate was not significant.
In the past few months, amid the intensifying market competition in the e-commerce industry, Taobao has made breakthroughs in retaining core users and increasing new user growth, "Alibaba CEO Wu Yongming said in a conference call." We will continue to invest in our core business and improve the quality of our operations, and we are confident in our future development
Taotian's optimistic performance on the 2024 Singles' Day is also expected to further drive the overall performance of the e-commerce sector to improve. HSBC Research has published a report stating that the GMV of the e-commerce industry in mainland China has grown by 27% year-on-year during this year's Double 11 shopping festival, outperforming the 618 period and the same period last year. The growth in the categories of home appliances, beauty, and smartphones exceeded expectations.
During the conference call, executives stated that the performance of Double Eleven in 2024 still exceeded internal expectations. Data shows that in 2024, Tmall's Singles' Day sales reached a new high with a user base of 10%. During the period, 589 brands achieved a transaction volume of over 100 million, an increase of 46.5% compared to last year, setting a new historical record. As of midnight on November 11th, the number of orders placed by 88VIP members has increased by over 50% compared to the same period last year. Over the past year, Taobao 88VIP has maintained double-digit growth, with a membership size of over 42 million as of June.
In addition, interconnectivity is also expected to bring more new users to Taobao. After Taobao and Tmall integrated with WeChat Pay, JPMorgan Chase released a research report stating that platform interconnectivity is expected to bring 20-30% incremental users to Taobao, with a total scale of 200-300 million.
However, regarding the expected positive effects of interconnectivity in the market, executives only responded during the conference call that "there has been a significant increase in monthly trading user growth," without disclosing specific performance, and also stated that the platform needs to maintain investment in the medium and long term.
Alibaba Cloud's business is under pressure, with growth slowing down and competition intensifying
Cloud intelligence business is Alibaba's second largest business segment outside of Taobao Group. Alibaba Intelligent Cloud's revenue for the third quarter of 2024 was 29.6 billion yuan (approximately 4.219 billion US dollars), an increase of 7% compared to the same period last year's 27.648 billion yuan, and a slight increase from the previous quarter's 6% growth rate. During the conference call, executives stated that quarterly revenue growth is driven by double-digit growth in public cloud.
In recent years, as the entire Chinese public cloud market is facing a slowdown in growth and fierce market competition, Alibaba Cloud's revenue growth rate is continuously slowing down. From fiscal year 2019 to fiscal year 2022, Alibaba Cloud's revenue growth rates were 84%, 62%, 50%, and 29%, respectively, with a downward trend. By 2023 and 2024, the growth rates will also be in the single digits.
The rapid development of AI has provided new opportunities for cloud providers, but it has also intensified market competition. Currently, the industry concentration of the public cloud market in China is declining. According to the latest report from IDC, Alibaba, Tencent, Huawei, AWS, and China Telecom rank among the top five in the market, with a total market share of 64.7%, a year-on-year decrease of 1.7% in concentration.
The fierce competition in the market also poses a certain threat to Alibaba Cloud's top positioning. Currently, Alibaba Cloud's market share in the domestic public market is declining year by year. According to IDC data, in the first half of 2024, Alibaba Cloud's market share in the public cloud IaaS market was 25.8%, lower than the 27% market share in 2023.
Price reductions and AI products are expected to further enhance Alibaba Cloud's business competitiveness in the public cloud market. At present, the new generation open source model Qwen2.5 of Tongyi Qianwen has been released, and its flagship version Qwen2.5-72B has performed well in multiple benchmark tests. In addition, thanks to the accumulation of public cloud and AI, Alibaba Cloud is using its price advantage to further enhance the competitiveness of its cloud products. This year, Alibaba Cloud reduced API (Application Programming Interface) call rates to gain market advantage.
Executives revealed that Alibaba Cloud's AI related product revenue has achieved double-digit year-on-year growth for five consecutive quarters. Meanwhile, since the implementation of the "AI driven" strategy one year ago, multiple businesses under Alibaba have been focusing on AI. Taobao has launched its AI product "Business Manager" for all merchants, serving 4 million merchants during this year's Double 11 shopping festival and helping small and medium-sized merchants generate over 100 million products and marketing materials.
In addition, although AI is very expensive, executives say that a large amount of capital expenditure will be concentrated in the cloud computing field, especially in AI infrastructure.