Alibaba Group Holding missed market expectations for first-quarter revenue on Thursday, as the company’s domestic e-commerce sales came under pressure from cautious spending by Chinese consumers in a faltering economy.

US-listed shares of the company fell about 4 percent in premarket trading.

A halting economic recovery in China coupled with a persistently weak property market and high job insecurity levels have sapped consumer confidence and spending power in the world’s No. 2 economy, hitting global firms across the board.

Alibaba is also grappling with stiff competition from rivals including JD.com and discount-focused retail platforms such as PDD Holdings’ Pinduoduo and ByteDance-owned Douyin.

Alibaba reported revenue of 243.24 billion yuan ($33.98 billion) for the quarter ended June 30, compared with analysts’ average estimate of 249.05 billion yuan, according to LSEG data.

Revenue at the firm’s domestic e-commerce arm fell 1% even as the number of purchasers and their purchase frequency increased order growth by double digits.

Chinese e-commerce giants have had to resort to heavy discounting and promotions to attract shoppers, a move that is pressuring margins across the retail sector, from big players like Alibaba and JD.com to small businesses.

In June, sales at China’s blowout mid-year e-commerce sales festival fell for the first time ever according to third party estimates, despite major platforms’ efforts to dole out offers for an extended period to woo consumers.

Alibaba executives have maintained in recent quarters that increased purchasing and the introduction of new tools for merchants will increase advertising and customer management revenue to the platform in the future.

Alibaba in March 2023 announced the biggest shake-up in the company’s history, splitting into six units and sharpening its focus on its core businesses, including domestic e-commerce.

Helped by the company’s investments to expand its global presence and growing demand around the world for lower-priced goods from China, Alibaba’s international e-commerce unit saw a 32 percent rise in revenue to 29.3 billion yuan.

Revenue from Alibaba’s cloud segment grew 6% to 26.55 billion yuan, accelerating from the 3 percent growth seen in the prior quarter, thanks to an uptick in public cloud adoption and strong demand for AI-related products.

The company has moved to reduce low-margin project-based contracts and has said a scale-up in its cloud infrastructure has been helping it cut prices across its cloud products.

Net income attributable to ordinary shareholders in the quarter was 24.27 billion yuan, compared with 34.33 billion yuan a year earlier.

By Deborah Sophia and Casey Hall; Editors: Sriraj Kalluvila and Kirsten Donovan

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