Alibaba, Tencent beat forecasts with strong results

Two Chinese tech giants, Alibaba and Tencent, unveiled their first-quarter results on Tuesday. Both of them maintained robust growth trajectories. Alibaba recorded significant growth in its international business, while Tencent witnessed a boost from increasing advertising sales and its upgraded video platform. 

Alibaba, China’s largest e-commerce group, underwent significant changes in March 2023, splitting into six units and refocusing on core businesses, including domestic e-commerce. Despite cautious consumer spending due to the pandemic and economic slowdown, Alibaba’s focus on low-cost goods led to a 7% growth in overall revenue for the quarter ending March 31. However, group net income was 3.27 billion yuan ($452 million), down from 23.52 billion yuan a year ago. Adjusted EBITA (non-GAAP) decreased by 5% YoY. 

On the other hand, Tencent outperformed analyst predictions with a 6% increase in revenue in the first quarter. The company also recorded a robust Q1 profit attributable to equity holders on an IFRS basis, marking a significant YoY increase of 62%.

Alibaba: Membership boom and Cloud rebound

Following its transformation last year, Alibaba’s Taobao and Tmall Group witnessed a strong recovery, given that gross merchandise volume (GMV) and order volume both grew at double-digit YoY, driven by a significant increase in buyer number and purchase frequency. Meanwhile, and the number of 88 VIP members is also up double digits YoY, surpassing 35 million and reflecting robust customer engagement. 

Alibaba International Digital Commerce Group (AIDC) has continued its robust growth momentum from the previous year, with revenue soaring by 45% YoY, mainly fuelled by AliExpress’ Choice. At the same time, revenue from Cainiao grew 30% YOY in Q1, primarily driven by revenue from cross-border fulfilment services supporting AliExpress.

Alibaba’s cloud business, which has been struggling for a long time, has started to show signs of improvement. The revenue from its core public cloud offerings has seen double-digit increase YoY. For the first time, the cloud business disclosed that its AI-related revenue grew by triple digits YoY.

Tencent: Ad powerhouse and gaming woes

Tencent’s robust growth is largely attributed to its more vigorous growth in the advertising section as the company upgraded its ad infrastructure and further commercialised its short video platform, WeChat Channel, a short video and live streaming video platform embedded into WeChat and a rival of ByteDance's TikTok sister app, Douyin, in China.

Tencent reported that the total user time spent on WeChat video accounts increased by over 80% YoY. The company strengthened its live-streaming ecommerce ecosystem by diversifying merchandise categories and enabling more content creators to monetise through ecommerce activities.

In addition, Tencent’s Mini Programs, another commercial offering, witnessed over 20% YoY increase in total user time spent. Daily activations for non-game Mini Programs grew at a double-digit rate YoY, while gross receipts for mini-games grew 30% year-on-year.

However, there are concerns that Tencent’s gaming business, which generates nearly half of its profits, remained weak. International gaming revenue grew 3% YoY in Q1, but the local market gaming revenue fell 2% YoY.