Alibaba Reports Strong Q4 Earnings with Significant Revenue Growth

Alibaba (BABA) published its fourth-quarter fiscal 2025 report, revealing non-GAAP earnings of $1.73 per ADS, surpassing the Zacks Consensus Estimate by 16.89%. In domestic currency, earnings reached RMB 12.52, marking a 23% increase year-over-year.

Total revenues for the fourth quarter hit $32.6 billion, falling short of the Zacks Consensus Estimate by 1.49%. Translated to domestic currency, revenues totaled RMB 236.5 billion, reflecting a 7% year-over-year growth.

This revenue increase was primarily fueled by robust performance in its core domestic e-commerce segment, particularly through Taobao and Tmall Group. The Cloud Intelligence Group and International Digital Commerce segments also made substantial contributions to overall revenue growth.

After the earnings announcement, BABA shares rose 1.65% in pre-market trading. Year-to-date, BABA shares have appreciated by 46.2%, significantly outpacing the Zacks Retail and Wholesale sector’s 2.4% return during the same timeframe.

Alibaba Group’s Price, Consensus, and EPS Metrics

Overall, BABA’s earnings surpassed the Zacks Consensus Estimate in two quarters and fell short in the other two, averaging a surprise of 2.47%.

Segment Revenue Breakdown

Taobao and Tmall Group (42.9% of total revenues): This segment generated RMB 101.37 billion ($14.0 billion), up 9% from the prior year. Customer management revenues climbed 12% year-over-year to RMB 71.08 billion ($9.8 billion), boosted by an improved take rate and the adoption of Quanzhantui, Alibaba’s marketing solution.

The number of 88VIP members—BABA’s highest-spending consumer group—increased to 50 million, reflecting double-digit growth. The company plans to enhance the 88VIP subscription with attractive benefits and premium services.

China Commerce Retail (94.3% of Taobao and Tmall revenues): Revenues for this vertical were RMB 95.6 billion ($13.2 billion), an 8% increase from the previous year. This was driven by customer management revenues, which rose 12% to RMB 71.08 billion ($9.9 billion), though mitigated by reductions in direct sales revenues due to strategic changes in direct sales initiatives.

China Commerce Wholesale (5.7% of Taobao and Tmall revenues): Revenues reached RMB 5.8 billion ($798 million), reflecting a growth of 17% year-over-year, owing to increased income from value-added services.

Alibaba International Digital Commerce Group (14.2% of total revenues): This segment, which includes Lazada and AliExpress, produced RMB 33.6 billion ($4.63 billion) in revenues, a 22% increase compared to last year, driven by strong cross-border business performance.

International Commerce Retail (82.2% of international revenues): Revenues for this segment were RMB 27.6 billion ($3.80 billion), a rise of 24% year-over-year, attributable to gains from AliExpress and Trendyol.

International Commerce Wholesale (17.8% of international revenues): This segment generated RMB 6 billion ($823 million), representing a 16% increase, thanks to revenue growth from cross-border services.

Local Services Group (6.8% of total revenues): Revenues amounted to RMB 16.1 billion ($2.22 billion), up 10% year-over-year, fueled by order growth in Ele.me and Amap, along with increased marketing revenues.

Cainiao Smart Logistics Network (9.1% of total revenues): This segment’s revenues slipped to RMB 21.6 billion ($2.97 billion), down 12% year-over-year due to reduced domestic logistics revenues as the company shifted its logistics role.

Cloud Intelligence Group (12.7% of total revenues): Revenues rose to RMB 30.1 billion ($4.15 billion), marking an 18% year-over-year increase. Excluding Alibaba-consolidated subsidiaries, revenues grew 17%, bolstered by a spike in public cloud services and AI-related offerings.

In April, Alibaba launched the Qwen3 series, featuring hybrid reasoning models with advanced capabilities. These models have been open-sourced to enhance innovation and adoption across the industry.

Digital Media and Entertainment Group (2.3% of total revenues): Revenues reached RMB 5.6 billion ($765 million), a 12% increase year-over-year, led by strong performances in Alibaba Pictures.

All Others (22.8% of Total Revenues): This segment’s revenues grew 5% year-over-year to RMB 54 billion ($7.44 billion), supported by gains from Freshippo and Alibaba Health, despite a revenue decline from Sun Art following its deconsolidation.

Operating Expenses and Financials

In the fourth quarter, sales and marketing expenses totaled RMB 36.2 billion ($4.99 billion), up 25.5% year-over-year. This represented 15.3% of total revenues, reflecting a 230 basis point increase.

General and administrative expenses fell to RMB 10.3 billion ($1.42 billion), down 26.3% from a year ago, now comprising 4.4% of total revenues, a decline of 190 basis points.

Product development expenses were RMB 14.9 billion ($2.06 billion), up 6% from the previous year but stable as a percentage of total revenues.

Operating income stood at RMB 28.5 billion ($3.92 billion), marking a 92.8% year-over-year increase, driven by reduced impairments and higher adjusted EBITA. The operating margin improved to 12%, up 540 basis points.

Adjusted EBITDA increased by 36% year-over-year to RMB 32.6 billion ($4.5 billion), with the adjusted EBITDA margin expanding 300 basis points to 14%.

Financial Position

As of March 31, 2025, cash and cash equivalents declined to $20 billion (RMB 145.49 billion) from $22.3 billion (RMB 162.78 billion) reported on December 31, 2024.

Short-term…

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Alibaba’s Q4 Fiscal 2025 Financials Reflect Cash Flow Drop

Investments for Alibaba Group Holding Limited (BABA) stood at $31.5 billion (RMB 228.83 billion) at the conclusion of the fourth quarter of fiscal 2025. This marks a decrease from $32.5 billion (RMB 236.95 billion) in the prior quarter.

The company reported generating $3.8 billion (RMB 27.52 billion) in cash from operations, a significant drop from the previous quarter’s figure of $9.7 billion (RMB 70.92 billion).

In terms of free cash flow, Alibaba generated $516 million (RMB 3.74 billion) during this period.

Stock Rankings and Comparable Companies

Currently, Alibaba holds a Zacks Rank of #2 (Buy). This ranking highlights its favorable outlook within the investment community.

Several companies within the broader Zacks Retail-Wholesale sector share similar rankings. These include Advance Auto Parts (AAP), Costco Wholesale (COST), and Canada Goose (GOOS), all carrying a Zacks Rank of #2 as well.

Advance Auto Parts is slated to release its first-quarter fiscal 2025 results on May 22. Meanwhile, Costco Wholesale will announce its third-quarter fiscal 2025 results on May 29, and Canada Goose plans to disclose its fourth-quarter fiscal 2025 earnings on May 21.

Market Insights: Semiconductor Sector Highlights

In the semiconductor industry, strong earnings growth and an expanding customer base are poised to meet the increasing demand across sectors like Artificial Intelligence, Machine Learning, and the Internet of Things. The global semiconductor manufacturing market is projected to grow significantly, jumping from $452 billion in 2021 to an estimated $803 billion by 2028.

For comprehensive stock analysis, consider reviewing performance reports for industry players:

• Costco Wholesale Corporation (COST)
• Advance Auto Parts, Inc. (AAP)
• Alibaba Group Holding Limited (BABA)
• Canada Goose Holdings Inc. (GOOS)

The views and opinions expressed herein are solely those of the author and do not necessarily reflect the views of Nasdaq, Inc.

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