Alibaba Group Holding Ltd. is increasing its stock-buyback program by billions of dollars, signaling confidence in the business. The Chinese-commerce giant announced on Wednesday that it was enhancing its buyback program with an additional $25 billion, leaving more than $35 billion remaining on its authorization for the next three fiscal years. This move demonstrates Alibaba’s commitment to capital returns, following the announcement three months ago of an annual cash dividend of $1 per American depositary share by its board. Meanwhile, the news of Alibaba’s improved buyback program coincided with the company’s fiscal-third quarter results, which showed a slight miss on the bottom line.
The company reported quarterly net income of 10.7 billion renminbi ($1.5 billion), or 5.65 renminbi per American depositary share, down from 46.8 billion renminbi, or 17.91 renminbi per ADS, in the year-earlier period. On an adjusted basis, Alibaba earned 18.97 renminbi per share, down from 19.26 renminbi a share a year before, while analysts were modeling 19.12 renminbi. This resulted in a 3% drop in Alibaba’s shares in premarket action on Wednesday. Revenue for the December quarter rose to 260.3 billion renminbi from 247.8 billion renminbi, in line with the FactSet consensus view.
Cloud revenue increased by 3% from a year before, while revenue from the Taobao and Tmall e-commerce platforms grew by 2%. Alibaba highlighted strong growth in order volume and the number of transacting buyers, although it noted a decrease in the average order value. The company also mentioned its efforts to “improve revenue quality by reducing the revenue from low-margin project-based contracts” within the cloud. Additionally, Alibaba reported healthy growth in revenue from public-cloud products and services, which contributed to improved profits for the unit.
