Jack Ma-Backed Ant Group Sees 31 Percent Profit Decline
Hangzhou, China – May 18, 2025 – Ant Group Co., the Chinese fintech giant founded by Jack Ma, reported a 31% decline in quarterly profit for the three months ended December 31, 2024, as it ramps up investments in artificial intelligence (AI) and other growth initiatives. According to Bloomberg calculations based on Alibaba Group Holding Ltd.’s earnings report, Ant contributed 1.76 billion yuan ($244 million) to Alibaba’s profits, translating to an estimated 5.3 billion yuan in profit for Ant, down from the previous year.
The profit drop reflects Ant’s strategic pivot toward emerging technologies and international expansion to counter slowing domestic growth and lingering regulatory challenges. The company, which operates the Alipay mobile payments platform, has faced significant hurdles since its planned $37 billion initial public offering (IPO) was halted by Chinese regulators in 2020, leading to a multi-year crackdown on its operations.
Key Factors Behind the Profit Decline
- Heavy Investment in AI and New Ventures: Ant Group has prioritized AI development, launching services like Zhixiaobao, a “life assistant” app integrated into Alipay for tasks such as meal ordering and taxi-hailing. Additionally, the company established a unit focused on humanoid robot development in 2023, signaling its ambition to diversify beyond fintech. These initiatives, while promising for long-term growth, have increased operational costs, contributing to the profit decline.
- Regulatory Aftermath: Although China’s regulatory crackdown on tech giants, including a $1 billion fine on Ant in July 2023, has largely concluded, its impact lingers. The company has restructured to comply with regulations, setting up independent boards for its international, database, and digital technology units to prepare for potential spinoffs. These changes, coupled with a one-time 7 billion yuan fine in 2023, have strained profitability.
- Economic Slowdown in China: A broader economic downturn has dampened consumer spending, affecting Ant’s core payment and lending businesses. Alibaba, Ant’s affiliate, reported only a 4% revenue increase, reflecting challenges in driving domestic consumption despite aggressive promotions.
- Overseas Expansion Costs: To offset domestic challenges, Ant has expanded its cross-border payment network, Alipay+, partnering with over 25 e-wallet platforms in Southeast Asia and Europe. While this has connected 88 million merchants across 57 countries, the costs of building infrastructure, such as the blockchain-based Whale treasury management platform, have weighed on short-term profits.
Analysis: A Strategic Pivot at a Cost
Ant Group’s profit decline underscores a deliberate shift from its traditional fintech dominance to a tech-driven, globally diversified conglomerate. The company’s focus on AI aligns with global trends, as competitors like Alibaba and Tencent also invest heavily in generative AI and large language models. Ant’s 21.19 billion yuan ($2.92 billion) investment in technology R&D in 2023 highlights its commitment to innovation, but the payoff remains uncertain in a competitive landscape.
The regulatory overhaul, while costly, has forced Ant to mature as a corporate entity. Jack Ma’s reduced influence—having ceded control in 2023 and holding only 6% voting rights—has allowed Ant to adopt a more transparent governance structure, potentially paving the way for a future IPO. The company’s valuation, now at $79 billion compared to $280 billion pre-IPO, reflects these challenges but also offers room for recovery if new ventures succeed.
However, Ant faces risks. The economic slowdown in China could continue to suppress Alipay’s transaction volumes, and international expansion carries geopolitical and operational uncertainties. Moreover, the profitability of AI and robotics ventures is not guaranteed, as these fields require sustained investment and face fierce competition.
Looking Ahead
Ant Group’s recent performance contrasts with a 50-fold profit surge in the September 2024 quarter, driven by a one-time investment gain, indicating volatility in its earnings. The company is awaiting a financial holding company license, which could revive its IPO prospects, but analysts suggest a listing remains distant. In the meantime, Ant’s focus on AI, blockchain, and global markets positions it for potential long-term growth, provided it can balance innovation with profitability.
As Jack Ma re-emerges in the public eye, notably at Ant’s 20th anniversary celebration in December 2024, his vision for the company’s future in AI and global fintech remains a driving force. However, navigating China’s regulatory landscape and economic headwinds will be critical for Ant to reclaim its status as a global fintech leader.
