Alibaba Group Holding Ltd posted a 2% rise in quarterly revenue that missed expectations on Thursday, but announced plans to list its cloud computing business in the next year. The company has been struggling to attract new users as China’s e-commerce sector matures and it grapples with inroads made by new competitors.
Earlier this year, Alibaba announced plans to restructure into six units following a two-year regulatory crackdown on China’s tech sector. It expects all of the units except for its China-facing e-commerce division to seek outside funding and go public. On Thursday it approved a full spinoff of the Cloud Intelligence Group via a stock dividend distribution to shareholders, aiming to complete the public listing within the next 12 months.
Finance chief Toby Xu said Alibaba’s board has also approved the process to start external financing for Alibaba International Digital Commerce Business Group. Freshippo, its grocery arm, will kick off the IPO process and logistics unit Cainiao will explore an IPO in the next 12-18 months.
Chinese consumer spending has gained some momentum since the country abandoned draconian zero-COVID policies late last year, but it still remains relatively muted amid a wobbly economic recovery. Net income attributable to ordinary shareholders was 23.52 billion yuan for the quarter, reversing a year earlier loss of 16.24 billion yuan.
Amid soft corporate demand and excess capacity, both Alibaba and rival Tencent Holdings Ltd have recently announced drastic price cuts for their cloud computing services, plunging the sector into a price war. Last month Alibaba showed off Tongyi Qianwen, a generative artificial intelligence model which is similar to the model that powers OpenAI’s ChatGPT. A number of other Chinese companies, including search giant Baidu have released similar AI models.