Chinese e-commerce and media giant Alibaba posted declining profits in the 12 months to March 2022 after a turbulent year for tech companies, a weakening Chinese economy, a COVID recovery and the Russia’s war in Ukraine.
The group’s revenue rose 19% in the year to March, reaching $135 billion (RMB 853 billion). In the fourth quarter, revenue grew 9% to $32.2 billion (RMB 204 billion).
Net profits suffered from the harsh conditions and the market value of some of its investments in other companies declined by about $7 billion. Annual net income was reported at $7.43 billion (RMB 47.1 billion), down two-thirds. The group’s preferred non-GAAP earnings analysis (which excludes these investment assessments) instead came in at $21.5 billion (RMB 136 billion), down 21% less alarmingly.
Alibaba has minority stakes in media companies ranging from movie theater chains to film sales and production companies. It has majority control of movie ticketing platform Taopiaopiao, video streaming business Youku, South China Morning Post newspaper and separately listed movie production and distribution unit Alibaba Pictures.
The group said that during the March quarter, Youku’s average daily paid subscriber base grew 14% year-over-year “primarily due to quality content and the continued contribution of our 88VIP membership program”. Youku continued to improve operational efficiency “through disciplined investments in content and production capacity, which resulted in reduced year-over-year losses in the quarter.” But ti did not disclose subscriber numbers.
Revenue from the broader “Digital Media and Entertainment” segment in the quarter ended March 2022 was RMB 8.00 billion ($1.26 billion), a decrease of 1%. Quarterly operating losses for the industry fell 27% to RMB 1.97 billion ($310 million).
In the full 12 months between April 2021 and March 2022, digital media and entertainment saw a 3% increase in revenue to RMB 32.3 billion ($5.09 billion). Quarterly operating losses fell to 4.69 billion RMB ($739 million), from 6.12 billion RMB ($964 million).
“Despite macro challenges that impacted supply chains and consumer sentiment, we continued to focus on the customer value proposition and build value creation capabilities. We saw progress tangible across our business, particularly in operational improvements in key strategic areas,” said Daniel Zhang, Chairman and CEO of Alibaba.
Speaking later on a conference call with financial analysts, Zhang gave a cautious overview of his understanding of the changing regulatory landscape.
“Chinese leaders have sent a very clear message to the market that they want the platform economy to play an important role in economic development and to encourage the healthy development of the platform economy,” said Zhang: “Alibaba is committed to fulfilling its responsibility in terms of helping to develop a better life for consumers and helping merchants, especially in technological innovation.”
He added: “At the same time, we are monitoring policy developments to ensure that we are fully compliant with all regulatory requirements.”
Subscribe to Variety newsletters and email alerts!