Analyzing the sustainable profitability behind ALI PICTURES: A solid foundation and diversified layout bring new growth

Since turning a profit in adjusted EBITA for the fiscal year 2020/21, Alibaba Pictures (01060) has achieved EBITA profitability for five consecutive years. Over the past five years, Alibaba Pictures has experienced the film market's transition from post-pandemic restart to a cooling period, and then to industry recovery, with a bumpy journey. Amidst this, Alibaba Pictures has still been "feeling its way across the river," carving out a path to sustainable profitability.

Recently, as Alibaba Pictures disclosed its performance for the fiscal year 2024/25, it provides a glimpse into how Alibaba Pictures has managed to achieve steady development in a fluctuating environment.

Solid Foundation, Steady Growth of Entertainment Ticketing Leader

Since 2024, due to an overall shortage of content supply in the market, the box office for films has declined. Nevertheless, Alibaba Pictures' overall performance remains commendable. Data shows that in the fiscal year 2025, Alibaba Pictures achieved revenue of 6.702 billion yuan, with adjusted EBITA of 809 million yuan, representing year-on-year growth of 33% and 61%, respectively.

During the reporting period, Alibaba Pictures' film business made steady progress, participating in the production and distribution of several highly acclaimed films, including "Grab the Doll," "Silent Kill," "The Investiture of the Gods Part II," "What Kind of Life Do You Want to Live," "Little Me," "Good Things," "Peacekeeping Riot Squad," "A Small Shop at the Edge of the Cloud," "Break·Hell," and "The Sinking of the Lisbon Maru." Among them, "Grab the Doll" achieved a box office of 3.33 billion, becoming the box office champion of the summer season in 2024; "Good Things" topped the daily box office for 24 consecutive days, ultimately earning 720 million at the box office, receiving widespread acclaim! At the same time, Alibaba Pictures has also focused on imported films, with "What Kind of Life Do You Want to Live" and "Grandma's Grandson" achieving impressive box office results with its promotional assistance.

In the past year, Damai has played an increasingly important role in Alibaba Pictures' performance growth, continuing to perform steadily and contributing significant incremental revenue to the company. As the largest ticketing platform in China by user scale, Damai continued to "sell well," with GMV achieving high growth records for two consecutive years.

The strong growth is attributed to Damai's diversified layout, sustained leading project agency rates, and its "internal skill training" in technology and on-site services. Zhitong Finance observed that to consolidate its full-chain ticketing service advantage, Damai has continuously increased investment in core technology research and development, enhancing data processing capabilities through computing power integration and cloud resource upgrades, optimizing ticketing system product functions, and ensuring stable system operation and smooth transactions in high-concurrency business scenarios, thereby solidifying its leading position in the ticketing service field with a high-quality user experience. The performance announcement disclosed that during the reporting period, projects with over 100,000 concurrent ticket purchasing users exceeded 1,000, a year-on-year increase of 63%. It can be seen that the comprehensive and smooth ticket purchasing service is making Damai the preferred ticket purchasing platform for domestic users.

Damai's promotional capabilities and achievements in building an audience decision-making platform are also commendable. Data shows that during the period, the number of "want to see" users on the Damai platform increased by 29% year-on-year to 316 million, with the cumulative number of "wish" users for concert cities reaching 150 million.

In the past two years, China's IP economy has evolved from "blockbuster frenzy" to overall industry prosperity. As the market heats up, Alibaba Pictures, which occupies a first-mover advantage, is also entering an accelerated growth phase During the period, as a leading IP licensing management and commercialization development platform in China, Alibaba You has been fully operational, achieving significant growth in retail sales of licensed IP products, which in turn drove Alibaba You's revenue to increase by over 90% year-on-year.

Additionally, as an important part of Alibaba Pictures' content landscape, the series business also achieved orderly development in the fiscal year 2025. During this period, several highly acclaimed series produced by the company, such as "Xihua Zhi," were released. "In the Name of Law," "The Tang Palace Mystery: The Whisper of the Green Mist," and "Brilliant Youth" have completed filming. Meanwhile, the series studio has over 20 key reserve projects and more than 30 projects under development, continuously building momentum for the future market.

Proactive Diversified Layout Contributing to Sustainable Growth Momentum for the Future

From officially entering the film industry ten years ago, to introducing Alibaba You in 2018, to strategically merging film and performance businesses in 2020, and completing the acquisition of Damai in 2023, Alibaba Pictures has evolved into an industry-leading full-industry chain entertainment group through years of internal and external development.

Looking back over the past decade, the diversification strategy has undoubtedly been one of the key factors in Alibaba Pictures' success. Given that the film industry is accumulating new momentum for development during its consolidation phase, while the performance and IP economy are on the rise, there is reason to believe that Alibaba Pictures, with its multi-engine drive, can bring more imaginative space to the capital market.

In terms of the film market, the industry will enter lightly with a low base, and Alibaba Pictures has reserved as many as 40 films for future market strength. Among them, "Silent Awakening" directed by Zhang Yimou is the first domestic film focusing on contemporary national security themes; "Dongji Island," co-directed by Guan Hu and Fei Zhenxiang, is a war epic based on the real historical event of the "Lisbon Maru sinking" during World War II. Additionally, quality projects in reserve include the martial arts comic adaptation film "Biao Ren: Wind Rises in the Desert" directed by Yuen Woo-ping and produced by Wu Jing, Feng Xiaogang's new work in the strong genre film style "Catching Spies," and the large sci-fi film "Stars Shine Bright." In the upcoming wait for the industry reversal, Alibaba Pictures, with its "strong confidence," is expected to maintain resilient development.

At the same time, Alibaba Pictures' film ticketing and technology platform business has become part of the industry's infrastructure, serving as a "stabilizer" for the company's performance. It is reported that Alibaba Pictures has already built and put into use four virtual shooting studios, effectively reducing the scene-setting costs of film and television projects; the newly launched five digital humans have achieved commercial monetization in areas such as endorsements and customized collaborations; the smart marketing data product "Lighthouse AI," after integrating with the Tongyi Qianwen large model, is significantly improving users' work efficiency.

Looking at Damai, it has moved from ticketing to deep layout across the entire industry chain and further extended its business reach overseas. In terms of user scale and business volume, it is approaching the global performance industry leader Live Nation. In the future, as Damai's ticketing coverage expands further and its industry chain capabilities improve, going global is just a matter of time. As for the IP derivative products sector, under the dual catalysis of high industry growth and its own accelerating growth momentum, Alibaba You's growth potential is evidently not to be underestimated.

In summary, considering the company's resilient fundamentals and the emerging new growth drivers, Zhitong Finance believes that Alibaba Pictures' growth prospects are highly visible and have strong momentum. Currently, the capital market's judgment on its growth may still have deviations, making long-term growth highly anticipated