Alibaba has released its quarterly performance announcement for the end of September 2024, which shows a combined decrease in operating revenue and profit with adjusted EBITA. Specifically, in the third quarter of 2024, Alibaba's total revenue was 236.53 billion yuan, a year-on-year increase of -9.15%, and the consolidated adjusted EBITA was 40.561 billion yuan, a year-on-year decrease of 5.33%; Its profit margin also slightly decreased by 1.91 percentage points to 17.15%
The highlight of Alibaba's financial report is that its non core businesses such as entertainment, local lifestyle, and all other businesses have significantly reduced losses without showing a significant decline in revenue. This indicates that its loss reduction is mainly driven by efficiency improvement, rather than simply shrinking its scale.
In terms of core business, Alibaba Cloud's revenue has steadily increased, and the adjusted EBITA profit margin has also slightly improved for several consecutive quarters; The revenue growth rate of the International Digital Business Group is 29.22%, and the adjusted EBITA loss continues to narrow, with significant results in refined operations; Due to the slowdown in international e-commerce business growth, Cainiao, which is highly related to it, saw its revenue growth rate drop from 15.74% in the previous quarter to 7.99%. Additionally, due to sustained capital investment, the adjusted EBITA profit margin was also dragged down, with its value dropping to 0.22%.
It is worth mentioning that as Alibaba's cash cow business, the revenue of Taobao Group, consisting of Taobao and Tmall, stabilized after a brief fluctuation in the second quarter. In the third quarter of 2024, its revenue was 98.994 billion yuan, increasing from -1.37% in the previous quarter to 1.37%.
Among them, Taobao's domestic customer management revenue was 930.08 billion yuan, a year-on-year increase of 2.48%, higher than the previous quarter's 0.57%. There are two main reasons for promoting the recovery of customer management business. Firstly, Taotian has made strategic adjustments, weakened its low price strategy, reduced its dependence on the "five-star price power", and put GMV back on priority; Secondly, the company announced the cancellation of the fixed annual fee on Tmall from September 1, 2020, and the addition of a commission of 0.60% after successful transactions with Taobao. This means that Tmall will cancel the fixed fee, Taobao will bid farewell to the era of free fees, and new commissions will be added.
Prior to this, there was a clear inverse relationship between Taobao's GMV and customer management revenue, with the latter's revenue growth rate lower than the former's. For example, in the second quarter of 2024, the growth rate of Taobao's GMV was in the middle to high single digits, but the growth rate of customer management revenue was only 0.57%.
After the business focus returns to GMV orientation and the adjustment of service fee model, the growth gap between customer management revenue and GMV will gradually narrow, and drive the overall revenue growth of Taobao. This is already reflected in the data for the third quarter of 2024, and the company stated in its financial report that "the year-on-year growth of customer management revenue was mainly driven by online GMV growth, and Takerate remained stable year-on-year.
GMV growth, stable monetization rate, and growth in customer management revenue indicate that the adjustment of business focus and service fee model has played a role, and the growth gap between customer management revenue and GMV is narrowing. It should be pointed out that the initial implementation time of the adjustment of the above service fee model is September 1st, and the impact of the new model on the business only accounts for one-third of the duration of the third quarter.
Therefore, in the fourth quarter of 2024, it is expected that the growth gap between Taobao's customer management revenue and GMV will further narrow.
Compared with the platform business, Taotian's self operated business performance has been weak, and the "trade in" national subsidy policy has failed to promote the recovery and growth of the company's self operated business. During the reporting period, its revenue was 22.644 billion yuan, a year-on-year decrease of 5.25%. The company also stated in its financial report that the negative growth of self operated business revenue was due to the decline in sales of electrical appliances.
In addition to the adjustment of business focus and service fee model, Taotian also has one point worth paying attention to. While weakening its low price strategy, it has not significantly reduced subsidy expenditures. In the third quarter of 2024, Alibaba's sales and marketing expenses were 32.471 billion yuan, a year-on-year increase of 27.41%, higher than the previous quarter's 20.89%. From the data, the increase in sales and marketing expenses is the main reason for Taobao Group's revenue growth, but the adjusted EBITA has decreased.