Alibaba Grows Income from Operations by 70%, Pushing Stock Higher

Alibaba Group Holdings Ltd. (BABA) delivered serious gains in the quarter ended June 30, with income from operations up 70% year-over-year, sending its stock up nearly 7% this morning.

During the same quarter a year ago, cities around China were under strict COVID lockdown, with the country’s largest city, Shanghai, shut down from April 1, 2022, to June 1, 2022. But Alibaba’s earnings results are still good, showing balance sheet growth from the previous quarter.

An overall revenue increase of 14% translates to a revenue beat and a 56% jump in diluted earnings per share. The strong quarter was driven by growth across all segments, including 36% growth in Digital Media and Entertainment. Free cash flow was up 76% year-over-year.

There have been concerns this year that slowing consumer spend in China would translate to lower gains for the retail giant. The Alibaba International Digital Commerce Group notched 41% growth in the quarter, showing that the company’s foreign sales can make up the difference.

Alibaba’s growth across all segments suggests its restructuring plan announced in March is paying off in the face of domestic economic headwinds.

In September, Alibaba CEO and Chairman Daniel Zhang will step down to instead head the company’s cloud computing and artificial intelligence (AI) segment. Alibaba plans to spin out that computing business, which recently announced it would support an AI model for Chinese customers created by Meta Platforms Inc. (META). Last month, Alibaba was hit with a nearly $1 billion fine, though investors believe that may signal the end of regulatory punishment.