Alibaba Earnings: More Positive Outlook Despite Mixed Results; Raising Fair Value Estimate by 2%

Alibaba Group’s March-quarter revenue beat our estimate by 1% but missed our adjusted EBITA by 2%. We find management’s fiscal 2025 (ending March) outlook on gross merchandise volume, or GMV, growth, take rate (customer management revenue/GMV), and cloud revenue encouraging. We think the 6% share price correction during US trading hours after the results was due to the 5% year-on-year decline in adjusted EBITA amid higher investments. That said, we expect these investments to bring positive returns to Alibaba in the longer term.