Alibaba Group reported better-than-expected revenue results in the October-December quarter, sending its US-listed shares up over 5.6% in premarket trading Thursday. Still, revenue growth came in slower than in the prior quarter, emphasizing the financial toll of China’s zero Covid policy on local businesses.

Alibaba CEO Welcomes a “Solid Quarter” Amid Recent Headwinds

US-listed shares of Alibaba Group are up 5.6% in premarket trading Thursday after the e-commerce behemoth beat revenue expectations in the quarter ending Dec. 31. The stronger-than-expected financial report comes after Alibaba showed resilience amid China’s deteriorating economy, benefiting significantly from the recently lifted coronavirus restrictions.

The company reported revenue of 247.76 billion yuan ($35.92 billion) in the latest quarter, up 2% year-over-year. This compares with analysts’ expectations of 245.18 billion yuan.

Alibaba’s income from operations stood at 35.03 million yuan ($5.07 million) in the quarter, up 396% year-over-year. The jump comes mainly due to a 22.42 million yuan decrease in goodwill impairment concerning Alibaba’s digital media and entertainment unit.

Net income attributable to ordinary shareholders came in at 46.82 billion yuan ($6.8 billion), compared to 27.69 billion yuan in the same period last year. Net income increased 138% from last year to 45.74 million ($6.63 million).

“We delivered a solid quarter despite softer demand, supply chain and logistics disruptions due to impact of changes in Covid-19 measures.”

– said Alibaba CEO Daniel Zhang.

Alibaba’s Tepid Revenue Growth Likely a Result of Bejing’s zero-Covid Policy in 2022

While Alibaba’s recent performance exceeded expectations, the company’s revenue grew slower than in the prior quarter, highlighting the financial impact of Beijing’s strict Covid policy and pressure from competition.

Nationwide lockdowns and other Covid-control measures significantly dented consumer spending in China last year. The government eased the zero-Covid measures in December 2022, but the move resulted in a fresh infection surge in the country, leaving a notable impact on businesses.

Meanwhile, things have been even worse for China’s economy. Total retail sales in the country shrank by 1.8% in December, while its economy grew by just 3% during the full year of 2022, marking one of the slowest growth rates in nearly 500 years. The full-year economic growth was significantly affected by China’s disappointing gross domestic product (GDP) data in Q2 2022.

Alibaba’s New York-listed shares stand at $94.78 ahead of the market opening. The stock saw a minor gain since the start of the year, up around 3%.

This article originally appeared on The Tokenist