Alibaba Quarterly Profits Slide as Entertainment Unit Returns to Loss

Alibaba Group, China’s e-commerce and entertainment giant, saw net profits fall by 27% in the April-June period, which represents the first quarter of its April to March financial year.

On Thursday, the company which has share listings in New York an Hong Kong, reported revenue of RMB243 billion ($33.4 billion), a 4% year-over-year increase. Net income for the three months dropped to RMB24 billion ($3.31 billion), due to lower profits from operations and increased impairments attributed to its investments. Using the group’s preferred non-GAAP presentation, net income was $5.60 billion, a decrease of just 9% compared with the same quarter of last year.

The group has given up on its planned breakup into separately-financed businesses and instead remains as a conglomerate with six divisions. Management said that it had focused on stabilizing the market share of marketplaces Taobao and Tmall and on growing the scale of 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 live signals transmitted by Alibaba Cloud in real-time around the world, reaching billions of viewers. Alibaba Cloud also hosted more than 11,000 hours of Olympic Broadcasting Services-produced games related video content used by the broadcasters. Additionally, this is the first Olympic Games to extensively use AI, with Alibaba Cloud’s AI technology deployed in 14 Olympic venues to generate high-fidelity 360-degree replays in real-time,” the group said.

The entertainment business turned in mixed results. Revenues at the’ Digital Media and Entertainment Group’ was RMB5.58 billion ($768 million) in the quarter, an increase of 4% year-over-year, “primarily driven by gross merchandize volume and revenue growth of its online ticketing platform for live events.”

The sector earnings before interest, taxation and depreciation, however, went from RMB63 million in the April-June quarter of last year to loss of RMB103 million ($14 million) in the latest period. No explanation was offered in the group’s regulatory filing. But Alibaba Pictures, a Hong Kong listed component of the media division, is likely to report more detailed numbers in the coming days.