Alibaba Group Holding’s growth in the new fiscal year faces uncertainties both at home and abroad as China fights a COVID-19 resurgence and Southeast Asia tries to recover from the pandemic, top management at the Chinese e-commerce leader said Thursday.

In a conference call with analysts, Daniel Zhang, Alibaba’s chairman and CEO, said domestic businesses have been significantly affected by the COVID-19 outbreaks since mid-March, particularly in Shanghai, leading to low-single-digit declines in revenue growth in April compared with the same period last year.

Confronted with the uncertain outlook in its biggest market, Alibaba did not give its usual earnings guidance at the start of the fiscal year.

The company also faces risks outside of China, Zhang said. From January to March, Southeast Asian arm Lazada’s order growth slowed to 32% year-on-year as offline consumption gradually recovered in the region. Malaysia, Vietnam, and Thailand achieved higher-than-average order growth rates for the region.

Zhang signaled a stronger focus on profitability and efficiency.

“In the new fiscal year, we will focus even more on cost control and continue to improve our operating efficiency, including streamlining unprofitable businesses, improving cash cycles, and enhancing investment efficiency in personnel, fixed assets, and other areas to maintain financial flexibility amid uncertainties,” the CEO said.

Alibaba’s quarterly revenue grew 9% year on year to RMB 204.05 billion (USD 30.3 billion) in the January-March quarter, beating estimates but still marking the group’s slowest quarterly growth since it went public in 2014.

The quarterly data beat an average estimate of RMB 199.25 billion by 23 analysts surveyed by Refinitiv, as China’s leading internet and tech companies all reported slower growth in a sluggish economy.

Alibaba’s annual revenue growth for the fiscal year that ended on March 31 grew 19%, it said. That fell short of the target of between 20% and 23% announced in November.

Total China commerce, which accounts for about 69% of Alibaba’s revenue, stood at RMB 140.33 billion, up 8% from a year ago for the March quarter. The international commerce retail business grew 7%, mainly driven by Lazada and Turkish e-commerce arm Trendyol. But those gains were partly offset by reduced orders at AliExpress due to a change in the European Union’s VAT rules as well as supply chain and logistics disruptions from the Ukraine war.

Alibaba’s most important revenue source was the online shopping platform Taobao and Tmall’s customer management fees, including advertising income and commissions. This accounted for 31% of total revenue, but failed to grow in the March quarter after declining for the first time since its IPO in the December quarter.

Cloud computing, which comprises Alibaba Cloud and workplace app DingTalk, achieved its first profitable fiscal year, generating RMB 18.97 billion in revenue for the March quarter, an increase of 12% year-on-year. Revenue was down 3% from the December quarter.

The slowdown in cloud computing was caused by several factors, including a decline in corporate activities and delays in project delivery due to COVID-19 restrictions, and the gradual termination of contracts by “a top customer for the public cloud services outside of China,” Zhang said, without naming the customer.

Zhang called these headwinds “temporary,” adding that “digitalization of other industries is just starting, and we see plenty of opportunities.”

As of March 31, Alibaba Cloud offers computing services in 27 regions globally, adding new internet data centers in Indonesia, the Philippines, South Korea, Thailand, and Germany in fiscal 2022.

Alibaba shares have lost about one-third of their value this year, falling 1.52% to HKD 81.10 on the Hong Kong Stock Exchange on Thursday. The drop followed Chinese Premier Li Keqiang’s warning a day earlier that China may struggle to achieve positive growth for the second quarter as its zero-COVID policy has disrupted economic activity and left local governments struggling to make ends meet.

Alibaba’s shares were up 14% at one point in morning trading in New York.

Last week, Alibaba’s rival JD.com reported a year-on-year revenue increase of 18% to RMB 239.7 billion for the March quarter. Despite rising traffic and user numbers, CEO Xu Lei warned that the sluggish economy has affected consumer spending, as average transaction value on the platform came in lower than previous years.

In April, China’s retail sales were down 11.1% compared to last year, the biggest drop since the early days of the pandemic, and industrial output fell 2.9%. Unemployment rose to 6.1% from 5.8% in March.

It was reported this year that Alibaba would cut up to 30% of employees at its DingTalk segment, as well as roughly 15% of employees in various business units. As of March 31, Alibaba had 254,941 employees, compared with 259,316 at the end of 2021, according to the latest company filing.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.