Alibaba’s Profit Plunges 72% on Costly Foray Into Instant Retail

Alibaba Group Holding Ltd. topped analysts’ revenue forecasts for the September quarter, but saw profits plummet as the e-commerce titan poured billions into its burgeoning instant retail operations — an aggressive bid to stave off mounting competition.

For the three months ended Sept. 30, Alibaba reported revenue of 247.8 billion yuan ($34.9 billion), up 5% from a year earlier and ahead of market expectations, the company said Tuesday. But its non-GAAP net profit fell 72% to 10.4 billion yuan, sharply missing consensus estimates. Adjusted EBITA — an internal measure of operating performance — slid 78% to 9.1 billion yuan.

The company blamed the earnings slide on increased investment in on-demand delivery, user experience upgrades, and new technologies. “We are investing our profits and free cash flow into our future,” chief financial officer Toby Xu said. He noted short-term profitability would likely remain volatile. Over the past year, Alibaba has spent roughly 120 billion yuan on capital expenditure, mostly in AI and cloud infrastructure.