Alibaba photo:IC

Alibaba reported a net loss of 7.65 billion yuan ($1.17 billion) in the fiscal fourth quarter of 2021 ended on March 31, which is caused by a hefty anti-trust fine of $2.8 billion imposed by the regulators.

Its business revenue for the quarter rose 64 percent year-on-year to reach 187.4 billion yuan, mainly fueled by a strong rebound of the world's second largest economy that props up domestic consumption.

If the impact of the fine is factored out, the top e-commerce company's net profit for the quarter would have reached 26.2 billion yuan, up 18 percent year-on-year, according to the company's quarterly financial report released on Thursday. 

The report comes as market investors are closely watching how the e-commerce giant has navigated uncharted waters over the heavy fine for monopolistic misconduct, as well as a business overhaul of its financial offshoot Ant Group.

In the fourth quarter of fiscal 2021, Alibaba recorded its first net loss since its IPO due to the anti-trust fine, which has made Alibaba deeply examine the relationship between the growth of the internet economy and social development, and its own social responsibility as a platform company. Alibaba will take the penalty as an opportunity to fully reflect and adjust, said Daniel Zhang Yong, chairman and CEO of Alibaba Group, at an earnings call after the quarterly results were made public.

Analysts predicted that Alibaba's profit growth would slow down this year amid tightening anti-monopoly scrutiny, with transaction volume shrinking and certain business lines rectified to align with regulatory requirements. 

Alibaba's business lines also saw an expansion to other emerging sectors that serve the real economy, including cloud computing and big data.

Annual active consumers for Alibaba's ecosystem have reached a new milestone of more than 1 billion, of whom annual active consumers on China retail market place hitting 811 million by March 31, 2021, an increase of 32 million from the previous 12 months.  

Maggie Wu, CFO of Alibaba Group, said that the company expects to generate more than 930 billion yuan business revenue in fiscal year of 2022. Alibaba's revenue was 717 billion yuan in the fiscal year of 2021, up 41 percent year-on-year.

"We plan to use all of our incremental profits and additional capital in fiscal year 2022 to support our merchants and invest into new business lines and key strategic frontiers," Wu said.

"Alibaba's record $2.8 billion fine eroded its profitability for the quarter, which is a setback for the company to continue its impressive business growth this year," Wang Peng, an assistant professor at the Gaoling School of Artificial Intelligence at the Renmin University of China, told the Global Times on Thursday.

He added that Alibaba's business rectification over forced exclusivity arrangements, known as "choosing one out of two (platforms)", would also weigh on orders placed via the platform and corresponding transaction volume. It will also affect investors' confidence and market capitalization. 

In April, Alibaba was slapped with the $2.8 billion antirust fine, equivalent to 4 percent of its total 2019 revenue, after an investigation by the regulator that began in December found that the e-commerce giant had abused its market dominant position for years to squeeze its competitors.

Industry observers predicted that Alibaba's strategic focus will see an obvious departure from its reliance on fintech and online retail. But the overall ecosystem will remain intact. 

"In 2021, the company's priority is to comply with regulations and gain licenses for its fintech and other divisions. So business expansion may also slow down," Wang said, noting that the company would participate more in sectors involving the real economy, such as pushing for digitalization of the services industry. 

In recent months, China's financial regulators have also summoned Ant Group, Alibaba's financial arm, for talks over its problematic financial business practices, after the suspension of mega dual listings on the Shanghai and Hong Kong stock exchanges last year. The fintech giant was required to overhaul its business to transform itself into a financial holding company.

"This means the company's profits from regulatory arbitrage would evaporate. But it is necessary for Alibaba to actively embrace enhanced supervision, which is conducive for its long-term development," Wang said, adding that cash flow may also be affected.