HONG KONG -- Chinese e-commerce conglomerate Alibaba Group Holding swung to a net loss of 5.5 billion yuan ($850 million) in the January-to-March quarter, hit by a record 18 billion yuan fine from Beijing over anticompetitive practices.
"We recorded a loss this quarter for the first time since our history as a public company," said Daniel Zhang, chairman and chief executive, on a call with analysts Thursday.
Zhang said the company has gone through "all kinds of challenges" over the past year including the COVID-19 pandemic, fierce competition and a tightening regulatory environment.
"We believe the best way to overcome this challenge is to look forward and to invest for the long run, to create value for our customers through technology and innovation, and to solve major problems in society," he added.
Excluding the boost from a recent acquisition, revenue for the online business empire started by Jack Ma grew at its slowest annual pace in at least five years as competition intensified with livestreaming platforms and other internet shopping newcomers.
For the three months to March 31, Alibaba's revenue rose 64% to 187.4 billion yuan, beating the consensus forecast of analysts surveyed by Refinitiv. For the full year, Alibaba reported revenue of 717.3 billion yuan. Excluding consolidated results from supermarket chain Sun Art, which it acquired control of during the period, revenue grew 32% from a year earlier to 674.4 billion yuan.
The fine against Alibaba is the largest imposed so far in Beijing's continuing crackdown on China's powerful technology companies, which had been aggressively expanding into new business areas. Authorities fear that big players like Alibaba could exploit their massive customer data pools and extensive range of interlinked services to fend off challengers and hurt the interests of consumers.
In addition to the fine, Alibaba was ordered to rectify practices that have been crucial to its past success, such as exclusive listings and data-driven price discrimination.
The regulatory actions do not seem to have dampened Alibaba's ambition for growth.
On the contrary, the Hangzhou-based company said it plans to invest all of the group's incremental profits this year into core strategic areas, such as technology, user acquisition, infrastructure, programs that help lower merchants' operating costs as well as new business initiatives. And a profit is not guaranteed for the coming fiscal year, according to Chief Financial Officer Maggie Wu.
"In our core market or in other areas, there's still lots of scope and lots of room for us to do new things. We're in a great position to create value and capitalize on our existing resources to drive future growth going forward," Wu said during the same call.
She said promising to maintain a certain level of profit or prioritizing a higher profitability would be a "stupid" thing to do for the company because its competitors are investing large amounts to get a foothold in new markets. But Alibaba will make sure the investments will be made in a highly targeted and disciplined manner, Wu added.
These focused investment areas include the fast-growing community marketplace business, the Taobao Deals bargain platform under its main marketplace, expansion into more international markets, local services and logistics, Wu said.
By the end of March, Alibaba grew its annual active consumers to 891 million in China and had about 240 million overseas consumers. Zhang said the company plans to reach 1 billion users in China in the coming fiscal year and double the number of overseas users within the next few years.
As Zhang tries to convince investors that the worse is over for the company, Alibaba still needs to prove its value to society as Beijing keeps a close watch on its government-imposed rectification plan.
"The penalty decision motivates us to reflect on the relationship between a platform economy and the society as well as our social responsibilities and commitments," Zhang said. "We believe the self-reflection and adjustments we've made will help us better serve our community of consumers, merchants and partners and the position us well in the future."
Jack Ma, the group's once-outspoken founder and former chairman, has stayed out of the public eye since late last year. He reappeared at a company event at Alibaba's Hangzhou headquarters this week, but did not speak publicly.
Last year, Ma ran afoul of Chinese authorities when he likened traditional banks to pawnshops and labeled the existing financial regulatory framework an "old people's club." Regulators abruptly suspended the roughly $34 billion initial public offering of Ant Group, an Alibaba spinoff of which Ma is a controlling shareholder.