Alibaba's cloud unit in the fiscal third quarter delivered revenue growth of 3%, but improved its adjusted earnings before interest, taxes and amortization by 86%.
In its third quarter earnings results, Alibaba's cloud unit delivered third quarter EBITA of $333 million on revenue of $3.5 billion, up 3% from a year ago.
Alibaba had planned to spin off its cloud unit, but shelved plans citing uncertainty over trade restrictions. Alibaba reported third quarter revenue of $36.67 billion, up 5% from a year ago, with net income of $2.03 billion, and announced another $25 billion to its share repurchase program.
The company has improved its cloud economics by focusing on revenue quality. The company said: "We continue to improve revenue quality by reducing the revenue from low-margin project-based contracts. On the other hand, revenue from public cloud products and services grew healthily which contributed to profitability improvement."
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Alibaba CEO Eddie Wu said:
"In cloud computing, we're committed to our strategy of prioritizing public cloud. We have proactively optimized our business structure, reduced revenue from project-based contracts and increased investment in public cloud products. These structural adjustments are showing results and Alibaba Cloud's overall profitability capability continues to improve.
We've also upgraded Alibaba Cloud's sales operations establishing different sales and service systems to serve different types and sizes of customers by improving our customer coverage and service capabilities, we will enhance our growth rate."
Alibaba's Cloud Intelligence Group delivered the company's second highest EBITA in the third quarter. The company added that it rolled out its new elastic compute instances aimed at AI inferencing and is gaining database workloads.
For the nine months ended, Dec. 31, 2023, Alibaba's cloud unit had revenue of $11.4 billion, up 3% compared to a year ago, with EBITA of $660 million.
