Alibaba Group Holding Ltd’s revenue beat expectations after its core e-commerce arm returned to growth, a big step for a national icon trying to revive its business in a volatile economy.

Shares in China’s online commerce leader, a proxy for the broader consumer arena, jumped more than 3% in pre-market trading. It reported revenue of 234.16 billion yuan (US$32.3 billion or RM148.51 billion) for the June quarter, versus an average projection of 223.75 billion yuan. Net income rose about 50% to 34.3 billion yuan, also beating estimates.

The strong showing is a boost for Alibaba’s comeback effort, after a lethargic year in which it fought post-Covid economic turbulence, up-and-comers like PDD Holdings Inc, and regulatory curbs on its main business. This year, Alibaba enlisted two co-founders to replace Daniel Zhang at the helm and oversee a complicated six-way split of its main businesses from the cloud to local and global e-commerce.

Investors are waiting for more details of the spin-offs, including grocery arm Freshippo, the Amazon Web Services-like cloud business and Cainiao logistics. They’ll want to hear executives’s plans to resuscitate those platforms and the potential to draw new investors into a bedraggled sector. In the June quarter, the cloud business returned to growth, with revenue inching up 4%, while Chinese retail e-commerce revenue surged 13%.

“We continue to execute our reorganisation, which is beginning to unleash new energy across our businesses,” Zhang, who officially steps down next month, said in a filing. “Through this self-driven transformation, we aim to catalyse innovation, promote vitality in our organisation, and enable businesses to focus on long-term growth.”

China’s largest technology companies Alibaba and Tencent Holdings Ltd have gained some US$70 billion of market value since May’s end, propelled by expectations of a gradual return to the consistent double-digit growth they enjoyed before Beijing launched a blistering regulatory assault against its biggest private companies in 2020.

Driven by a need to rejuvenate the world’s No 2 economy, Chinese President Xi Jinping has in recent months led party cadres and state media in proclaiming Beijing’s support for a sector wracked by two years of unpredictable diktats. In July, Beijing signalled it’s ready to unfetter the sector when it wrapped up a probe into Jack Ma-backed Ant Group Co.

Yet some investors warn the celebration may be premature.

Chinese policymakers have stopped short of providing direct, major fiscal or policy support for businesses, and consumer spending remains muted, thanks to a subdued outlook for wages and record-high youth unemployment. Profit margins remain thin amid rising competition from upstarts that mostly escaped the brunt of the crackdown such as ByteDance Ltd and PDD.

Alibaba and Tencent cut more than 20,000 jobs between them last year to survive regulatory and economic turmoil. They face a two-pronged assault: Rivals like Baidu Inc and Meituan are vying for dominance of the internet, thanks to the emergence of generative artificial intelligence. Baidu has so far stolen much of their limelight in the post-ChatGPT race, debuting Ernie in March before launching into several iterations.

Abroad, ByteDance and PDD’s Temu continue to make strides, building on expansions that began when Alibaba and Tencent were forced to show restraint. During the crackdown, companies including ByteDance’s TikTok and Temu revved up overseas forays for growth. Despite rising geopolitical tensions, this generation of upstarts offer a template for older peers seeking to regain pre-crackdown heights.

  - Bloomberg