Alibaba Cloud

Alibaba Cloud was founded in September 2009. It develops cloud computing and data management platforms and provides a full suite of cloud computing services to support enterprises around the world. It is a division of the largest Chinese Internet company Alibaba Group. By May 2018, Alibaba Cloud has several partners in Russia. Among them is Selectel.

Performance indicators

2023: Revenue growth 4% to 77.2 billion yuan

At the end of the fiscal year ended March 31, 2023, the cloud division of the Chinese corporation Alibaba Group Holding showed revenue at 77.2 billion yuan (approximately $11.24 billion). This is 4% more than the result for the previous fiscal year, when the corresponding services brought in 74.57 billion yuan. Such figures are reflected in the report published on May 18, 2023.

It is noted that the growth rate of Alibaba's cloud business has decreased: for example, during the fiscal year closed on March 31, 2022, the increase in sales was 9%. The slowdown in the segment is explained by several reasons: these are macroeconomic factors, weakening corporate demand, increased competition and the availability of excess hardware capacity. Against this background, Alibaba significantly reduced the cost of cloud services - in some areas, prices fell by 50%.

Cloud division of Alibaba holding raised 77.2 billion yuan for fiscal year

Alibaba's cloud division includes the Alibaba Cloud platform itself and the DingTalk corporate communication and collaboration system. The financial report states that the company is striving to further expand the client base of public cloud services. Considerable attention is paid to services related to generative artificial intelligence: interest in applications of this type is growing rapidly. In addition, Alibaba is developing a partnership. The DingTalk system is overgrown with new functions based on AI algorithms.

In general, as noted, the revenue of the cloud segment is becoming more diversified. The share of income from industries that are not directly related to the Internet is growing. These are, in particular, retail, financial products, the automotive industry and media resources. By the end of the fiscal year, closed on March 31, 2023, the share of such areas in the total revenue of the cloud segment amounted to 55%.

Alibaba Group Announces March Quarter and Full Fiscal Year 2023 Results

2021: Revenue growth of 50%, to RMB60.12 billion

The revenue of Alibaba's cloud division in fiscal 2021 reached 60.12 billion yuan (about $9.18 billion, the dollar equivalent is indicated in the company's report), which is 50% more than a year earlier.

Alibaba Cloud's revenue growth at the company was attributed to an increase in orders from customers representing the internet industry, the public sector and the financial industry.

By the end of the reporting year, Alibaba's cloud revenue began to grow more slowly, which the company explained by the termination of work with a large client with a "significant presence outside of China." The name of this customer has not been disclosed. The report said only that this company stopped using Alibaba's cloud services as part of a global business "due to non-product requirements." Excluding the loss of this contract, the top 10 customers accounted for up to 8% of Alibaba Cloud's annual revenue. In the structure of turnover of the entire Alibaba, the cloud business also occupies 8% of revenue.

Alibaba's cloud business grows more slowly after TikTok leaves

According to Nikkei, ByteDance, known for creating the social network TikTok, refused to further use Alibaba's cloud tools outside the Celestial Empire.

Due to the closure of the deal, Alibaba will lose about $800 million annually, ByteDance plans to transfer part of its business to cloud services Amazon and Oracle, the publication says. According to observers, ByteDance's decision may be related to pressure from the US authorities.

Alibaba cites data from analysts, Gartner according to which the company at the end of 2020 took first place in the Asian market IaaS and third in the world.

Alibaba Cloud's net profit has not been disclosed since the launch of the business. Only operating losses are indicated - 9.05 billion yuan in 2021 fiscal year against 7.02 billion yuan in 2020.^[1][2]

History

2023

Alibaba refuses to spin off cloud business into new company due to US sanctions

In November 2023, Alibaba Holding announced that it had changed its mind about separating the cloud business into a separate company due to the American sanctions restricting the supply of chips in. PEOPLE'S REPUBLIC OF CHINA

The recent expansion of U.S. restrictions on the export of advanced computer chips has created uncertainty about Cloud Intelligence Group's prospects. We believe the full spin-off of Cloud Intelligence Group may not achieve the desired effect of increasing shareholder value. Accordingly, we decided not to proceed with full spin-off, but instead focus on developing a sustainable growth model for Cloud Intelligence Group in the current volatile circumstances, Alibaba said in its quarterly reporting.

Dismissal of 7% of employees

On May 23, 2023, it became known that the cloud division of Alibaba Group Holding had begun to reduce the number of personnel. This measure is part of a comprehensive program to separate the Cloud Intelligence Group structure into an independent company, followed by a public share issue (IPO) procedure.

According to Nikkei Asia, the staff of Alibaba's cloud division will be reduced by about 7%, or about 1000 people. It is noted that the company has already begun to send notifications about restructuring to its employees. Some specialists who fall under this program will be offered other positions within the group, while the rest will receive severance pay. These measures are aimed at optimizing business in the current macroeconomic situation.

Alibaba's cloud division will be reduced by about 7%

It is noted that Alibaba is the largest provider of public cloud services in China in terms of revenue, but faces growing pressure from competitors such as Huawei and mobile operators. In addition, in China, government control over cloud services, whose providers are private companies, is strengthened.

Nikkei Asia also cites another reason for the decrease in the staff of Alibaba Cloud Intelligence Group. After the corporation announced plans to split into six main groups, the so-called middle office (a significant team that serves all business units) transferred many of its employees to the cloud division. As a result, the number of its personnel turned out to be excessive. It is said that Alibaba has chosen its cloud division as one of the first IPO candidates due to its more developed business model, as well as the fact that this area differs from other consumer-oriented activities of the company.^[3]

Separate into a separate company

On May 18, 2023, the Chinese corporation Alibaba announced that the board of directors approved the full spin-off of the cloud division into the new Cloud Intelligence Group.

Alibaba is the leading provider of cloud services in. PEOPLE'S REPUBLIC OF CHINA It is estimated that in Canalys 2022 this corporation accounted for approximately 36% of total spending in the Chinese cloud market. Growth compared to 2021 was recorded at 7%. However, in the current macroeconomic environment, the Alibaba cloud platform faced a decrease in revenue growth in the Internet customer segment. In addition, the corporation is experiencing increasing pressure from Chinese competitors - primarily Huawei Cloud Tencent Cloud and AI Baidu Cloud. As a result, Alibaba was forced to revise the organizational model of the cloud division.

Alibaba Group splits cloud division into a separate company Cloud Intelligence Group

We are taking concrete steps to unlock the value of our business and are pleased to announce that the board of directors has approved the full separation of the Cloud Intelligence Group by redistributing shares with the intention of turning it into an independent public company, Alibaba said in an official statement.

In order to attract new corporate customers, Alibaba announced a significant reduction in tariffs for cloud services. We are talking about computing and network resources, storage and security tools. In some cases, the drop in value reaches 50%. In addition, Alibaba has announced a new family of instances that provide the same level of stability and reliability as previously available solutions, but offer up to 40% cost savings. It is assumed that the transformation of the cloud division will better compete with American leaders - AWS and Microsoft Azure.^[4]

2022: OKX crypto exchange forced to halt withdrawals due to Alibaba Cloud issues

In December 2022, the crypto exchange OKX and provider Gate suspended the withdrawal of funds due to the cloud provider Alibaba Cloud.

2021

Chinese government ditches Alibaba Cloud services over cloud service holes

In mid-December 2021, Chinese regulators suspended an information-sharing partnership with Alibaba Cloud Computing, a subsidiary of e-commerce conglomerate Alibaba Group, over allegations that the company failed to report and address a vulnerability in cloud services in a timely manner.

According to Reuters, which refers to the notification of the Ministry of Industry and Informatization of the People's Republic of China (MIIT), Alibaba Cloud did not immediately report vulnerabilities in the popular open source logging platform Apache Log4j2 to China's telecommunications regulator.

PRC authorities refused Alibaba Cloud services due to holes in cloud services

In response, MIIT suspended its joint partnership with Alibaba's cloud division due to cybersecurity threats. The decision will be reviewed by the authorities in six months and resumed depending on the company's internal reforms, MIIT said in a notice.

This vulnerability can lead to remote management of equipment, which can cause serious damage, for example, theft of confidential information and interruption of equipment maintenance. This is a high-risk vulnerability, the regulator said in a statement.

This latest measure by the Chinese government underscores Beijing's desire to tighten its grip on key network infrastructure and data in the name of national security. The Chinese government has asked state-owned companies to move their data from private operators such as Alibaba and into a Tencent state-backed cloud system by 2022.

The suspension of status shows Beijing's concern about the vulnerability, which has caused a wave of panic among corporations and governments around the world. Apache Log4j2 is a Java-based tool that is widely used in enterprise systems and web applications.^[5]

Hacking Alibaba Cloud servers and mining cryptocurrency with them

On November 15, 2021, it became known that several hacker groups hacked Alibaba Cloud malware mining cryptocurrencies with the aim of installing Monero - "."cryptojacking

Cryptojacking, in which an attacker hijacks an organization's servers to mine cryptocurrencies, is nothing new, but Trend Micro has noticed that cybercriminals are increasingly targeting Alibaba's cloud mining infrastructure for the Monero cryptocurrency because it cannot be traced.

Hackers hacked into Alibaba Cloud servers and began to mine cryptocurrency on them

Alibaba Elastic Computing Service (ECS) servers are of particular value to cybercriminals because they have an automatic scaling feature that allows the service to automatically customize computing resources based on the volume of user requests, according to a new report from the cybersecurity firm. While the feature is provided to Alibaba customers at no additional cost, the increased use of resources ultimately leads to additional problems for its customers.

It is reported that this malware removes the security agent built into ECS, and then establishes firewall rules that drop incoming packets from IP address ranges belonging to Alibaba's internal zones and regions. At the same time, the Alibaba ECS instance provides root access by default, which makes it much easier for attackers to use cloud servers for crypto-jacking.

With the highest possible privileges already available after the compromise, an attacker can deploy advanced payloads such as kernel module rootkits and achieve resilience on the victim's Alibaba ECS server. This may be one of the reasons why cybercriminals began to target the Chinese company's cloud computing service, and not competitors such as AWS or Microsoft Azure.

For organizations using Alibaba Cloud, Trend Micro recommends a shared responsibility model in which service providers and users are responsible for securing workloads, projects, and environments, configuring cloud project and workload security features, and following the principle of least privilege when the number of users with the highest access rights is limited.^[6]

2020

Revenue growth of 62% to 40 billion yuan

At the end of fiscal 2020, which ended on March 31, 2020 for Alibaba, the revenue of the cloud division exceeded 40 billion yuan ($5.65 billion - the figure is indicated in the company's reporting itself), which is 62% more than a year earlier.

Considering that the turnover of the entire Alibaba amounted to 509.71 billion yuan ($71.99 billion), it turns out that the cloud business accounted for about 7.8% of the Internet giant's revenue. Alibaba's net income is not reported. If you take the indicator before the expense of interest payments, taxes, depreciation and accumulated depreciation, then the cloud division remains unprofitable from the very beginning.

Financial performance of the entire Alibaba and cloud business, in particular

Alibaba linked the continued rise in revenue in the cloud computing market to growing results in the segments of public cloud services and hybrid solutions.

In addition, the global COVID-19 coronavirus pandemic fell in the fourth fiscal quarter, which spurred demand for tools for remote work and training (mainly cloud). True, in 2019, Alibaba's cloud business grew faster (+ 84% by 2018).

According to Alibaba CEO Daniel Zhang, in general, the business continued to grow at a high pace: the company's total annual active consumer base for the year amounted to 960 million people around the world, despite the fact that the fiscal year ended in a quarter affected by the economic impact of the COVID-19 pandemic.

Since Alibaba is the largest e-commerce operator in the Middle Kingdom, the company's financial results are considered by many investors as an indirect indicator of consumer spending in China and a barometer of its economic health.

According to Gartner, which is cited in Alibaba's press release, the company has become the largest cloud service provider in the Asia-Pacific region.

Alibaba 2020 Financial Statements

Recruitment of 5 thousand employees

On June 9, 2020, Alibaba announced the start of recruiting 5,000 employees for the cloud division around the world. This stage of hiring will last 10 months as part of the global expansion of Alibaba Cloud.

According to Alibaba, jobs will be created in various areas, including networks, databases,, servers chips and. artificial intelligence

In light of the rapidly growing demand for digital services from customers around the world, in all sectors we continue to offer world-class services , "said Jeff Zhang, President of Alibaba Cloud Intelligence, commenting on the launch of the recruiting initiative. - We not only create reliable cloud technologies and services, but also invest in global IT talents.

Alibaba also announced a 200 billion yuan (about $28 billion) investment in cloud services infrastructure. Investments are designed for three years.

The funds allocated will go to expand the network of servers and big data centers, which currently covers more than 20 countries and regions around the world, as well as the development of their own technologies related to chips, operating systems and artificial intelligence.

Alibaba is investing in cloud services due to growing interest in them. The fact is that in the context of the massive spread of the coronavirus COVID-19, people began to work and study at home en masse, which led to an increase in demand for cloud and various Internet solutions.

We have confidence in the future, we are confident in the future of the digital economy. Smart cloud services are one of Alibaba's key strategies. We have invested over the past 11 years and will not reduce investments due to the pandemic, on the contrary, it is necessary to increase investments, the cloud division of the Chinese Internet giant said.[7]

2019

Revenue growth of 84% to 24.7 billion yuan

For the fiscal year, which ended March 31, 2019 calendar, Alibaba Cloud's revenue reached 24.7 billion yuan ($3.68 billion - the figure is given in the company's proportion) against 13.39 billion yuan a year earlier. Sales grew by 84% due to an increase in average income per customer, as well as international expansion. The cloud business accounted for 7% of Alibaba's annual revenue.

Alibaba Cloud's full-year loss before taxes, interest on borrowings and amortization increased from 799 million yuan to 1.16 billion yuan.

Alibaba financials

Alibaba cites data Gartner from April 2019, according to which Alibaba Cloud is the largest provider of cloud services IaaS and IUS (Infrastructure Utility Service) in the Asia-Pacific region.

According to Canalys experts for 2018, Alibaba Cloud is one of the four largest providers of services used in the cloud infrastructure in the world, which was largely facilitated by the company's investment in the development of the partner channel.

In fiscal 2019, Alibaba's cloud services were used by more than half of China's largest public companies.

During the reporting period, Alibaba Cloud released several new products in the areas of bot protection, BaaS (blockchain as a service), real-time communications and graph databases.

We continue to use our extensive portfolio of solutions to reduce the price of content delivery network, security, database and network infrastructure products and services, helping customers save money, Alibaba said in its reports.

Alibaba Cloud is expanding its geography of presence. In May 2019, the company announced its entry into the Brazilian market: UOL Diveo will promote its cloud services in the country. In addition, a partnership was launched with WeWork and Softbank to help global companies grow their business in the PRC.^[8]

ITglobal.com became the first partner of Alibaba Cloud in Russia

The company ITGLOBAL.COM on May 6, 2019 announced the status of an official reseller of Alibaba Cloud, the cloud computing division of Alibaba Group. Read more here.

2018

Cloud revenue exceeded $2 billion

In the 2018 fiscal year, which ended at the end of March 2018 calendar, the revenue of Alibaba's cloud division amounted to 13.39 billion yuan (about $2.1 billion - the amount in dollars is indicated in the report), an increase of 101% compared to the previous year, when sales were measured 6.66 billion yuan ($968 million).

Alibaba Cloud's annual loss was 1.68 billion yuan ($492 million) against 1.68 billion yuan in cash losses a year earlier. Alibaba Cloud's loss before taxes, interest on borrowed funds and depreciation (EBITA) turned out to be 799 million yuan ($127 million), which is almost double the losses of a year ago ($244 million).

Cloud business brings Alibaba about 5.5% of revenue

Alibaba associates the increase in turnover in the cloud business with an increase in the number of paid customers and revenue per customer, as well as an increase in the number of the most profitable products.

The financial report cites data from IDC analysts, according to which Alibaba Cloud leads the Chinese IaaS market with a share of 47.6%.

The Chinese company started the 2018 calendar year with the launch of 316 new products and features related to cloud services. More than 60 of them focus on artificial intelligence, data management and security. Among the innovations is the Link Edge program, which uses so-called edge computing to develop IoT applications in areas such as manufacturing, real estate and public spaces.

By the end of March 2018, Alibaba Cloud's global presence spans 18 countries and regions. The company is making international expansion largely due to the establishment of partnerships. At the end of fiscal year 2018, the cloud business accounted for almost 5.5% of the company's revenue against 4% in 2017.^[9]

Hundreds of Chinese businesses connect sensors to Siemens' MindSphere platform via Alibaba cloud

On July 9, 2018, the German industrial giant Siemens and the Chinese Internet company Alibaba Group announced an agreement under which hundreds of enterprises in the Celestial Empire will connect sensors to the Siemens  MindSphere IoT platform through the Alibaba cloud. The partners agreed to jointly develop the industrial Internet of Things in the Chinese market. Read more here.

2017: $1 billion cloud revenue

On May 17, 2017, Alibaba Group published a report on its work in fiscal year 2017. From it it became known that the cloud revenue of the Chinese company approached $1 billion.

At the end of the 12-month period, which ended on March 31, 2017, the revenue of Alibaba Cloud, a division specializing in cloud development and computing infrastructure rental services, reached 6.67 billion yuan ($968 million), which is 121% more than a year earlier. This business brought the company 4% of revenues against 3% in 2016.

Cloud business brings Alibaba about 4% of revenue

The increase in Alibaba Cloud turnover was primarily due to an increase in the number of paid customers (by 70% to 874 thousand), as well as an increase in the use of cloud solutions of companies, including the most complex ones, such as database services and content delivery networks, Alibaba said.

In 2017, Alibaba Cloud lost 1.68 billion yuan ($244 million) against 2.6 billion yuan in cash losses in 2016. Alibaba Cloud's loss before taxes, interest on borrowed funds and depreciation (EBITA) turned out to be 476 million yuan ($69 million) - almost three times the loss a year ago. At the same time, EBITA margin improved - from minus 41% to 7% - due to revenue growth and business coverage.

Alibaba Cloud became the largest provider of public cloud services in China in 2016, according to IDC, which is cited in the Internet giant's financial report. The customer base of the company covers various industries: finance, power, healthcare, consumer market, media, production, retail, etc.

In January-March 2017, Alibaba Cloud released 152 new products and features for already deployed solutions.^[10]

Notes