Alibaba’s quarterly profits fall as entertainment unit posts losses again

Alibaba Group, the Chinese e-commerce and entertainment giant, reported a 27% drop in net profit in the April-June period, the first quarter of its fiscal year from April to March.

On Thursday, the company, which is listed in New York and Hong Kong, posted revenue of RMB243 billion ($33.4 billion), up 4% year-on-year. Net income for the three months fell to RMB24 billion ($3.31 billion) on lower operating profits and increased write-downs on investments. Using the group’s preferred non-GAAP presentation, net income was $5.60 billion, down just 9% from the same quarter last year.

The group has scrapped a planned split into separately funded businesses and instead remains a conglomerate with six divisions. Management said it was focused on stabilizing market share in marketplaces Taobao and Tmall and scaling up its cloud computing business.

Cloud computing was particularly busy during the Olympic Games, which took place after the reporting period. “Two-thirds of national broadcasters used Alibaba Cloud’s live signals in real time around the world, reaching billions of viewers. Alibaba Cloud also hosted more than 11,000 hours of Games-related video content produced by Olympic Broadcasting Services, which was used by broadcasters. In addition, this is the first Olympic Games to make extensive use of AI, with Alibaba Cloud’s AI technology deployed at 14 Olympic venues to generate high-quality, real-time 360-degree replays,” the group said.

The entertainment business delivered mixed results. Digital Media and Entertainment Group revenue was RMB5.58 billion ($768 million) in the quarter, up 4% year-on-year, “primarily driven by gross volume and revenue growth from its online ticketing platform for live events.”

However, the sector’s earnings before interest, tax, depreciation and amortization rose from RMB63 million in the April-June quarter last year to a loss of RMB103 million ($14 million) in the latest period. The group’s regulatory filings did not provide any explanation. However, Alibaba Pictures, the Hong Kong-listed arm of the media unit, is likely to provide a more detailed figure in the coming days.