Alibaba Q4 earnings surpass estimates, revenues increase Y/Y

Alibaba (BABA - Free Report) reported non-GAAP earnings of $1.73 per ADS in the fourth quarter of fiscal 2025, which beat the Zacks Consensus Estimate by 16.89%. In domestic currency, the company reported earnings of RMB 12.52, up 23% year over year.

The company posted fourth-quarter fiscal 2025 revenues of $32.6 billion. The top line missed the Zacks Consensus Estimate by 1.49%. In domestic currency, revenues of RMB 236.5 billion increased 7% year over year.

The top-line increase was driven by the strong performance of its core domestic e-commerce segment, Taobao and Tmall Group. Additionally, significant contributions came from the continued expansion of the Cloud Intelligence Group and robust growth in International Digital Commerce, which played key roles in driving overall revenue upward.

Following the release, BABA shares rose 1.65% in the pre-market trading. Year to date, BABA shares have jumped 46.2%, significantly outperforming the Zacks Retail and Wholesale sector’s 2.4% return over the same period.

Alibaba group holding limited price, consensus and EPS surprise

BABA’s earnings beat the Zacks Consensus Estimate twice and missed in the remaining two, the surprise being 2.47%, on average. (See the Zacks Earnings Calendar to stay ahead of market-making news.)

Revenues by segments

Taobao and Tmall Group (42.9% of total revenues): Alibaba generated RMB 101.37 billion ($14.0 billion) of revenues from the segment, which increased 9% from the year-ago quarter. Its customer management revenues grew 12% year over year to RMB 71.08 billion ($9.8 billion), driven primarily by an improved take rate. This improvement was supported by the introduction of software service fees and the growing adoption of Quanzhantui, Alibaba’s comprehensive marketing solution, which helped boost monetization efficiency across the platform.

The number of 88VIP members, BABA’s highest-spending consumer group, continued to increase year over year in the double digits to 50 million in the quarter. The company will continue to grow the subscription of 88VIP membership by providing attractive benefits and premium services.

China Commerce Retail (94.3% of Taobao and Tmall revenues): The business vertical’s revenues were RMB 95.6 billion ($13.2 billion), reflecting an 8% increase from the year-ago quarter. The rise was attributed to customer management revenues, which grew 12% year over year to RMB 71.08 billion ($9.9 billion), driven by the year-over-year improvement in take rate, partially offset by the decrease in direct sales revenues as a result of the company’s planned reduction of certain direct sales businesses.

China Commerce Wholesale (5.7% of Taobao and Tmall revenues): The business generated revenues of RMB 5.8 billion ($798 million), which grew 17% on a year-over-year basis. This upside was attributed to increasing revenues from value-added services.

Alibaba International Digital Commerce Group (14.2% of total revenues): The segment comprises Lazada, AliExpress, Trendyol, and other businesses operating in the international retail and wholesale markets. BABA generated RMB 33.6 billion ($4.63 billion) in revenues from the segment, which grew 22% from the year-ago quarter, primarily driven by the strong performance of cross-border businesses.

International Commerce Retail (82.2% of international revenues): Revenues were RMB 27.6 billion ($3.80 billion), up 24% from the year-ago quarter, driven by the increase in revenues contributed by AliExpress’ Choice and Trendyol.

International Commerce Wholesale (17.8% of international revenues): The business generated revenues of RMB 6 billion ($823 million), which increased 16% on a year-over-year basis due to an increase in revenue generated by cross-border related value-added services.

Local Services Group (6.8% of total revenues): The segment’s revenues grossed RMB 16.1 billion ($2.22 billion), up 10% from the year-ago quarter. The rise was driven by strong order growth in the Ele.me and Amap businesses, along with higher revenues from marketing services.

Cainiao Smart Logistics Network (9.1% of total revenues): Revenues were RMB 21.6 billion ($2.97 billion), down 12% from the year-ago quarter. The decrease was primarily attributed to reduced revenues from domestic logistics services, as a result of its e-commerce businesses taking on a certain logistics platform role.

Cloud Intelligence Group (12.7% of total revenues): The segment generated revenues of RMB 30.1 billion ($4.15 billion), up 18% from the year-ago quarter. In the quarter, overall revenues, excluding Alibaba-consolidated subsidiaries, achieved double-digit year-over-year growth of 17%. This momentum was primarily driven by an accelerated growth in public cloud revenues, including the rising adoption of AI-related products and services.

In April, Alibaba introduced the Qwen3 series — next-generation hybrid reasoning models that combine fast responses with advanced chain-of-thought capabilities. The lineup includes two Mixture-of-Experts (MoE) models and six dense models. All Qwen3 models have been fully open-sourced on platforms like ModelScope and Hugging Face to promote broad adoption and innovation.

Digital Media and Entertainment Group (2.3% of total revenues): Revenues were RMB 5.6 billion ($765 million), up 12% from the year-ago quarter. The rise was mainly driven by the strong performance of the movie and entertainment segment of Alibaba Pictures.

All Others (22.8% of Total Revenues): The segment’s revenues were RMB 54 billion ($7.44 billion), reflecting a 5% year-over-year increase. This rally was primarily driven by higher revenue contributions from Freshippo and Alibaba Health, partially offset by a decline in revenues from Sun Art following its sale and deconsolidation in February 2025.

Operating details

In the fiscal fourth quarter, sales and marketing expenses were RMB 36.2 billion ($4.99 billion), up 25.5% from the year-ago quarter. As a percentage of total revenues, the figure expanded 230 basis points (bps) to 15.3%.

General and administrative expenses were RMB 10.3 billion ($1.42 billion), down 26.3% from the year-ago quarter. As a percentage of total revenues, the figure contracted 190 bps year over year to 4.4%.

Product development expenses were RMB 14.9 billion ($2.06 billion), up 6% year over year. As a percentage of total revenues, the figure remained flat year over year.

Operating income was RMB 28.5 billion ($3.92 billion), up 92.8% year over year due to the increase in impairment of intangible assets and a rise in adjusted EBITA. The operating margin expanded 540 bps to 12%.

Adjusted EBITDA increased 36% from the year-ago quarter to RMB 32.6 billion ($4.5 billion). The adjusted EBITDA margin expanded 300 bps to 14%.

Balance sheet and cash flow

As of March 31, 2025, cash and cash equivalents were $20 billion (RMB 145.49 billion), down from $22.3 billion (RMB 162.78 billion) as of Dec. 31, 2024.

Short-term investments totaled $31.5 billion (RMB 228.83 billion) at the end of the fourth quarter of fiscal 2025, down from $32.5 billion (RMB 236.95 billion) in the previous quarter.

Alibaba generated $3.8 billion (RMB 27.52 billion) in cash from operations, down from $9.7 billion (RMB 70.92 billion) in the previous quarter.

BABA’s free cash flow was $516 million (RMB 3.74 billion).

---

Want the latest recommendations from Zacks Investment Research? Download 7 Best Stocks for the Next 30 Days. Click to get this free report