Jack Ma-Backed Ant’s Profit Fell 19% as Regulations Curb Growth

Lulu Yilun Chen, Bloomberg News

The Ant Group booth at the World Artificial Intelligence Conference in Shanghai, China, in 2023. Photographer: Qilai Shen/Bloomberg , Bloomberg

(Bloomberg) -- Ant Group Co.’s quarterly earnings fell 19% as the Chinese fintech pioneer founded by Jack Ma struggles to find new drivers of growth following regulatory clampdowns at home.

The Hangzhou-based company contributed 2.57 billion yuan ($355 million) of profit to Alibaba Group Holding Ltd. Based on Alibaba’s one-third stake in Ant, that translates to an estimated 7.7 billion yuan in profit for the December quarter, according to Bloomberg calculations based on the listed company’s disclosures.

That fall narrowed compared with a 92% plunge in earnings for the previous three months, when Ant was hit by an investment loss. Its earnings lag a quarter behind Alibaba’s.

A representative for Ant declined to comment.

Ant has been expanding its overseas operations to overcome slowing growth at home. It’s tied up with at least 25 e-wallet platforms for cross-border payments in regions including Southeast Asia and Europe. The company made broad overhauls to its business in March, setting up independent boards for international, database and digital technologies units, paving the way for future spinoffs.

The moves come after billionaire Ma gave up control of Ant last year. China wrapped up its crackdown on the once high-flying internet sector by slapping more than $1 billion in fines on Ant and Tencent Holdings Ltd. in July.

Ant also proposed to buy back as much as 7.6% of its shares last year, giving investors such as Fidelity Investments and T. Rowe Price Group Inc. an opportunity to sell some stock. Under the repurchase plan, the valuation was trimmed to about $79 billion — well off its peak of $280 billion before regulators scrapped an initial public offering three years ago. The fintech company is awaiting a financial holding company license, which would help revive the IPO.

Initially catering to Chinese tourists traveling outside the country, the company has expanded its services into a backbone for cross-border payments known as Alipay+ that can be used by different wallets. For example, when customers of GCash from the Philippines travel to South Korea, they can pay with GCash when they see the Alipay+ logo displayed at merchants.

Alipay+ connected more than 88 million merchants in 57 countries and regions as of early March.

Ant’s affiliate Alibaba saw revenue rise 6.6% after it focused on gaining market share in e-commerce and cloud.