Alibaba’s net profit fell 75% in the June quarter, to $1.54bn. The cause was not a weak business. It was the bill for building one. Capital spending reached $9.98bn in three months, up 75% on the same quarter last year, according to the results announcement. In the same accounts, the cloud unit that spending pays for turned a segment profit up 133%.
Revenue rose 9% to $39.64bn, slightly ahead of the LSEG consensus of RMB268.88bn, CNBC reported. Free cash flow went the other way. The company recorded an outflow of $6.58bn, against an outflow of $2.77bn a year earlier. Alibaba’s US shares fell around 5% after the market opened.
The cloud half is working
AI Cloud and Compute Services brought in $7.14bn, up 45% year on year. That is the division’s fastest growth in 22 quarters, the South China Morning Post calculated. AI-related product revenue inside it hit $1.82bn and grew in triple digits for the twelfth consecutive quarter.
The unit also made money. Its adjusted EBITA reached $830m, a rise of 133%. Chief financial officer Toby Xu put the cloud segment’s EBITA margin at 12%. Alibaba Cloud held the largest share of China’s AI cloud market at 38.1%, the company said, citing research firm Omdia.
