Strong box office helps Alibaba’s film and music units cut losses

AlibabaThe Chinese e-commerce and entertainment giant, revealed a 9% revenue improvement and return to profits in the three months to the end of September, the second quarter of its financial year.

The group, which is in the process of splitting into six separate businesses, had revenue of RMB 225 billion ($30.8 billion). Net income of RMB 26.7 billion ($3.66 billion) compared to a net loss of RMB 22.5 billion in the same period last year. But the group explained that this fluctuation in results largely reflected the revaluation of its investment assets: they fell a year ago and rose again in the July to September quarter.

Using Alibaba’s preferred profitability analysis, non-GAAP net income, the group posted a 19% improvement in profits. Non-GAAP net income rose from RMB 33.8 billion a year ago to RMB 40.1 billion ($5.51 billion) this time. And it is confident enough to announce an inaugural dividend for 2023.

Revenue in the digital media and entertainment segment was RMB 5,779 million ($792 million) in the quarter, an increase of 11% compared to RMB 5,228 million in the same quarter of 2022. This was mainly due to strong offline revenue growth. Damai and Alibaba Pictures’ entertainment businesses.

Streaming service Youku enjoyed an increase in Youku subscription revenue, but this was partly offset by declining Youku advertising revenue. The group does not disclose subscription figures for Youku, but analysts believe it is China’s third-largest premium video streamer, behind Tencent Video and iQiyi.

The segment saw “adjusted EBITA” losses narrow in the quarter, to RMB 201 million ($28 million), compared to a loss of RMB 362 million in the same quarter of 2022.

The entertainment segment benefited from the recovery of the offline entertainment market and strong demand during the summer. The Damai ticketing business improved its profitability year after year. In August, Damai and Youku jointly sold tickets to pop group TFBoys’ 10th anniversary concert, for offline performance and online streaming, respectively. The online broadcast attracted more than 1.68 million viewers and 100 million interactions.

China’s box office surged over the summer. Alibaba Pictures participated as a co-producer of successful live-action films “No more bets” and “Lost in the stars.” He was also co-producer and distributor of the biggest animated film of the year, “Chang’an.”

While there was no word on a possible reorganization of the digital media and entertainment group (parts of which sit outside Hong Kong Stock Exchange-listed Alibaba Pictures), Alibaba said it had abandoned plans to spin off its group. intelligence in the cloud.

He explained that new US restrictions on advanced computer chips and semiconductor manufacturing equipment, announced in October, will affect the unit’s ability to fulfill existing cloud computing contracts. Additionally, “these new restrictions may also impact our businesses more generally by limiting our ability to upgrade our technological capabilities,” the group said in a regulatory filing.