Alibaba Group Holding Ltd, the world’s largest e-commerce company, posted its weakest quarterly revenue growth since coming public in 2014 on Thursday, owing to a dip in sales in its main business area and increased competition.

The corporation has been hurt by the faltering Chinese economy, as customers cut back on discretionary spending.

Alibaba reported that group revenue increased by roughly 10 per cent to 242.6 billion yuan ($38.37 billion) in October-December 2021, marking the first time quarterly sales growth fell below 20 per cent.

According to Refinitiv data, analysts predicted sales of 246.37 billion yuan on average.

Customer management revenue declined 1 per cent year over year, a crucial indicator that gauges how much money merchants spend on advertisements and promotions on Alibaba’s website.

This is the first time since Alibaba’s IPO that revenue from the sector, which accounted for 41 per cent of overall sales, has fallen.

On an investor call, Deputy CFO Toby Xu said the decline was partly due to reduced merchant fees as the economy slowed.

Last November, the company had a record low gross merchandise value growth of 8.5 per cent during China’s annual Singles’ Day promotional event.

Before the morning bell in New York, Alibaba’s stock was down roughly 3 per cent. They dropped approximately 7 per cent when the findings were revealed, mirroring worldwide stock market losses following Russia’s all-out invasion of Ukraine.

Alibaba is also facing increasing competition from rivals such as ByteDance-owned Douyin and Kuaishou, which have benefited from the rising livestreaming craze.

“Merchants now have to allocate their advertising dollars to different platforms,” said Vinci Zhang, who tracks China’s e-commerce sector at research firm Pacific Epoch.

“In the past, if you were an apparel merchant, maybe you would allocate 100% to Alibaba, but now a percentage of that goes to the short video players.”

According to Alibaba’s disclosures on Thursday, Ant Group, Alibaba’s fintech unit, made a profit of around 17.6 billion yuan for the quarter ending September, up from 15 billion yuan a year ago.

Alibaba discloses Ant’s profit one quarter behind schedule.

China has restructured Ant, delaying its $37 billion initial public offering (IPO) in late 2020.

The company spent $7.7 billion on stock purchases in the nine months ended in December.

The company’s cloud business generated sales of 19.5 billion yuan ($3.08 billion) in the fiscal third quarter, up 20 per cent year on year, but adjusted core profits (EBITDA) fell 66 per cent sequentially from the previous quarter.

“It seems like Alibaba is finding it difficult to maintain the growth trajectory in most markets including the cloud business,” said Oshadhi Kumarasiri, an analyst at Lightstream Research

From 79.43 billion yuan a year before, quarterly net income attributable to shareholders fell to 20.43 billion yuan.

Alibaba, formerly Asia’s largest publicly traded business, has long lost ground to Taiwanese chipmaker TSMC, and has even lost ground to local competitor Tencent and beverage maker Kweichow Moutai.

Due to Beijing’s regulatory crackdown on specific industries, the shares listed in the United States have lost approximately half their value in the past year.

(Adapted from RTE.ie)