Alibaba Profit Slumped on Heavy Food-Delivery Spending
By Sherry Qin
Alibaba Group's profit halved in its fiscal second quarter as fierce competition in the food-delivery sector dragged on the e-commerce giant's profitability.
The Hangzhou, China-based company said Tuesday that net profit was 20.99 billion yuan, equivalent to $2.96 billion, down sharply from 43.87 billion yuan a year earlier. Still, that was better than the 2.39 billion yuan estimated in a FactSet poll of analysts. Adjusted net profit declined by even sharper 72% to 10.35 billion yuan, a tad below market expectations for 10.77 billion yuan.
Revenue rose 5% to 247.795 billion yuan for the three months ended September, slightly higher than the consensus of 243.10 billion yuan.
E-commerce players have invested heavily in the food-delivery sector in recent quarters, resorting to aggressive promotions to capture more market share. New entrant JD.com earlier this month reported a 55% drop in net profit for the latest quarter. Food-delivery leader Meituan is set to report results by the end of November.
While the competition will continue to eat into earnings, analysts said Alibaba stands to benefit in the long term.
Morningstar sees the company as the biggest winner of China's on-demand delivery price battle this year, even though Meituan is expected to continue holding a dominant share of the pie, analysts Chelsey Tam and Junhao Yang wrote in a note.
"We believe investors are overly focused on the short-term earnings impact of the food-delivery price war, which we expect to conclude by the end of 2027," they said, viewing Alibaba, JD.com and Meituan as undervalued.
For the second quarter, Alibaba's overseas e-commerce unit posted a 10% increase in revenue. Total revenue from its China e-commerce division, which includes Taobao and Tmall as well as on-demand delivery platform Ele.me, rose 16%.
Its cloud business revenue climbed 34% during the period in the wake of surging demand for AI services, picking up from the 26% increase in the previous quarter.
Write to Sherry Qin at sherry.qin@wsj.com
(END) Dow Jones Newswires
November 25, 2025 06:11 ET (11:11 GMT)
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