Alibaba Q4 FY2022 Earnings Preview: Expected EPS $0.92 and Revenue Trends in 2022

Key Insights to Watch

• Analysts forecast adjusted EPS of RMB 6.11 ($0.92), down from RMB 10.31 in Q4 FY2021.
• Revenue growth is projected to continue but at a significantly slower rate than previous quarters.
• Alibaba’s expansion is slowing sharply due to China’s regulatory crackdown on technology firms and ongoing Covid Zero restrictions.

Alibaba Group Holding Ltd. (NYSE: BABA), a leader in China’s e-commerce and cloud computing sectors, has experienced a notable decline in earnings and revenue over the past year. This downward trend is anticipated to persist in the near term, influenced heavily by China’s stringent Covid Zero strategy and government regulations targeting major tech companies. These factors have hindered Alibaba’s pursuit of Amazon-level dominance within China.

Investors will closely monitor Alibaba’s Q4 FY2022 earnings report, scheduled for release on May 26, 2022. The fiscal year ended on March 31, 2022. Market analysts predict a drop in adjusted earnings per share (EPS) alongside modest revenue growth. Note that the stock discussed here refers to Alibaba’s American Depositary Shares (ADS) traded on the NYSE under the ticker "BABA."

The effects of China’s Covid Zero policy remain critical, with recent data showing industrial output and consumer spending at their lowest since the pandemic began. These economic headwinds directly affect Alibaba’s core business segments.

Over the past year, Alibaba’s stock performance has lagged the broader market. While there were brief periods of outperformance between May and July 2021, the stock has since underperformed significantly, delivering a total return of -60.8% compared to the S&P 500’s -5.3% over the same period.

Alibaba’s Recent Earnings Performance

In Q3 FY2022, Alibaba exceeded analyst expectations despite a 23.4% year-over-year decline in adjusted EPS—the second consecutive quarter of earnings decline. Revenue grew 9.7% year-over-year, marking the slowest growth in over three years. The company reported approximately 1.3 billion global annual active consumers during this period.

During Q2 FY2022, both earnings and revenue fell short of forecasts. Adjusted EPS dropped 37.7% year-over-year, the first decline in three years, while revenue increased 29.4%, continuing a deceleration trend. Notably, Alibaba’s cloud computing segment revenue rose 33% year-over-year, highlighting a key growth area.

Looking ahead to Q4 FY2022, analysts anticipate a further decline in adjusted EPS by 40.7% year-over-year, marking a third consecutive quarter of earnings contraction. Revenue growth is expected to slow to 6.5%, the weakest pace in over three years. For the full fiscal year 2022, adjusted EPS is projected to decline by 22.1%, the first annual drop in seven years, with annual revenue growth slowing to 18.4%, also the slowest in seven years.

Source: Visible Alpha

Given Alibaba’s significant reliance on the Chinese market, investors will be evaluating how China’s zero-Covid policy impacts its financial health. The stringent restrictions have led to a 2.9% drop in industrial output and an 11.1% decline in retail sales in April, surpassing expectations. Extended lockdowns in major cities like Shanghai have severely dampened consumer demand, especially in sectors such as apparel and cosmetics that are vital to Alibaba’s business.

Explore useful articles in Company News as of 30-05-2022. The article titled " Alibaba Q4 FY2022 Earnings Preview: Expected EPS $0.92 and Revenue Trends in 2022 " offers in-depth analysis and practical advice in the Company News field. Each article is carefully crafted by experts to provide maximum value to readers.

The " Alibaba Q4 FY2022 Earnings Preview: Expected EPS $0.92 and Revenue Trends in 2022 " article expands your knowledge in Company News, keeps you informed about the latest developments, and helps you make well-informed decisions. Each article is based on unique content, ensuring originality and quality.