The company also said that sales for its current fiscal year should increase between 20% and 23% from the previous year. Analysts were forecasting growth of almost 28%.
In its earnings report, Alibaba cited “regulations” and a “regulatory environment affecting Alibaba’s business operations”, as well as “regulations and privacy and data protection concerns” as some of the uncertainties it faced.
Earlier this year, Alibaba was forced to cancel plans to go public with its subsidiary Ant Group, which owns financial technology giant Alipay.
However, Alibaba’s gigantic cloud business continues to deliver impressive results. Revenues were up 33% from the prior year for that unit. Alibaba Cloud has also helped the company expand beyond China, a key goal.
“Alibaba continued to invest firmly in our three strategic pillars of domestic consumption, globalization and cloud computing to lay a strong foundation for our long-term goal of sustainable growth going forward,” said Alibaba President and CEO Daniel Zhang, it’s a statement.
Part of that is likely due to the regulatory environment, but Alibaba is also facing tougher competition, as well as a slowdown in the Chinese economy.
During a conference call with analysts on Thursday, Zhang said that “economic headwinds, along with intensifying market competition, also affected our core trading business in China.”
He noted that there was a slowdown in clothing and merchandise in general, but that demand for furniture and consumer electronics remained resilient.
“Consumers and business partners are increasingly trusting JD, and we were able to outperform the industry growth in China in the third quarter,” JD.com President Lei Xu said in the earnings release.
JD.com shares have risen more than 25% in the past six months, while Alibaba shares have fallen nearly 25% over the same time period.