Alibaba posted adjusted net income of 86 million yuan ($12 million) in its fiscal fourth quarter, down from 29.85 billion yuan in the year-ago period, as spending on AI infrastructure and quick commerce delivery weighed on earnings.
The results released Wednesday also included Alibaba's first operating loss since 2021, with a loss from operations of 848 million yuan ($123 million), according to Bloomberg. Total revenue of 243.38 billion yuan ($35.28 billion) rose 3% year-over-year but fell short of analyst expectations, according to Reuters. Excluding revenue from the disposed Sun Art and Intime businesses, revenue grew 11%, the company said.
CEO Eddie Wu said in a statement that the company's AI investments have moved from development into commercialization, pointing to the integration of e-commerce capabilities into the Qwen app and the launch of enterprise AI agents. Alibaba has committed to reaching $100 billion in combined annual revenue from cloud and AI within five years, according to Bloomberg.
Alibaba stock fell about 1.3% in premarket U.S. trading on Wednesday.
Adjusted EBITA fell 84% from a year earlier to 5.1 billion yuan ($740 million), the company said. On a GAAP basis, net income doubled to roughly 25.48 billion yuan, largely reflecting mark-to-market gains on equity investments and a favorable comparison to a year-ago period when Alibaba booked losses on the disposals of Sun Art and Intime.
Alibaba's Cloud Intelligence Group was the standout performer. The segment posted revenue of 41.63 billion yuan ($6.04 billion), up 38% year-over-year, with adjusted EBITA expanding 57%. AI-related product revenue reached 8.97 billion yuan, extending a streak of triple-digit year-over-year growth to 11 consecutive quarters and now representing 30% of the cloud division's external revenue, the company said.
"Cloud Intelligence Group's revenue continued to accelerate, with AI-related product revenue achieving triple-digit growth for the eleventh consecutive quarter," CFO Toby Xu said in a statement.
China e-commerce revenue climbed 6% to 122.22 billion yuan, though the segment's adjusted EBITA contracted 40% to 24.01 billion yuan as Alibaba competed against Meituan and JD.com in food and instant delivery. Quick commerce revenue rose 57% to 19.99 billion yuan.
The company's international e-commerce arm posted revenue of 35.43 billion yuan, up 6%, with its adjusted EBITA loss narrowing to 138 million yuan from 3.57 billion yuan a year earlier.
Free cash flow swung to an outflow of 17.3 billion yuan from an inflow of 3.74 billion yuan in the year-ago period.