(Bloomberg) -- Alibaba Group Holding Ltd. reported revenue that missed estimates, suggesting plans to hike spending in pursuit of growth have yet to gain traction.

Revenue for the three months ended June climbed from a year earlier to 205.7 billion yuan ($31.8 billion), compared with the 209.4 billion yuan average of analyst estimates. Net income was 45.1 billion yuan, rebounding from a loss in the previous quarter following the firm’s record antitrust penalty.

Alibaba, among the first of China’s internet giants to feel the heat from Beijing, has been closely watched for clues to the real-world impact of the upheaval that’s ensued since regulators went after industries from online commerce to ride-hailing and edtech. Months after swallowing a $2.8 billion fine for violations such as forced exclusivity with merchants, Jack Ma’s flagship e-commerce firm is plowing money into areas like its bargains platform and community commerce to offset slowing growth, at a time when rivals like Pinduoduo Inc. and JD.com Inc. are eroding its dominance in China’s e-commerce sales.

Alibaba is “undergoing an investment phase,” Daiwa analysts led by John Choi wrote in a recent research report. “Investment in Taobao Deals and Community Marketplaces will likely drag down core-commerce EBITA. These are the key investment areas for Alibaba to add 100 million new consumers in China by FY22.”

Resurgent pandemic risks in China, which was the first major economy to recover last year, have clouded the outlook for companies like Alibaba. The country is currently facing its broadest coronavirus outbreak since the pathogen first emerged in late 2019. But even before the recent spike in infections, the rebound in consumer spending has been uneven. During the so-called June 18 shopping festival, total parcel delivery volume rose 24% across the country, half the year-earlier pace, according to data from the State Post Bureau.

Along with slowing online retail sales, “both Douyin and Kuaishou actively joined the competition,” Blue Lotus Capital Advisor analyst Shawn Yang wrote in a July note. “Alibaba’s strategy for 6.18 of this year is more on user retention rather than GMV growth.”

Alibaba in May forecast revenue growth of at least 30% for the 12 months ending in March, a deceleration from the 41% seen a year earlier. That prediction suggests that Alibaba’s share of China’s e-commerce sales will fall below 50% for the first time ever in 2021, industry researcher eMarketer said in a July 30 report.

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