Alibaba's Financial Outlook Brightens

Alibaba's financial outlook is showing signs of improvement due to the growth in e-commerce income. The company's customer management revenue is returning to growth in fiscal 4Q. The external cloud revenue is expected to return to double-digit growth in the second half of fiscal year 2025, as the impact of low-margin projects is expected to decrease in the next one to two quarters.

In a recent quarter, Alibaba reported double-digit year-on-year growth in gross merchandise value (GMV). This growth was driven by the demand elasticity of price discounts. Despite a shift to a lower-priced platform, the China commerce margin remained steady. However, the company's consolidated EBITA declined on a year-on-year basis, primarily due to higher investments in international businesses and Cainiao.

The quarterly results also showed a return to double-digit growth in GMV and orders at TTG (Taobao and Tmall Group). The China Commerce Retail, which accounts for around 40% of the company's revenues, recorded a 3% year-on-year growth. This growth was driven by a 5% growth in advertising and commissions revenues.

Alibaba's revenue growth is expected to accelerate in the second half of fiscal year 2025 as earnings recover. The double-digit gross merchandise value growth in fiscal 4Q suggests that the company's core e-commerce business is on track. The management also has a positive outlook on the cloud and the international commerce business.