Alibaba Group Holding Limited (NYSE:BABA) today announced its
financial results for the quarter ended June 30, 2017.
“Alibaba had a strong start to fiscal 2018, reflecting the
strength and diversity of our businesses and the value we bring to
customers on our platforms. Our technology is driving significant
growth across our business and strengthening our position beyond
core commerce,” said Daniel Zhang, Chief Executive Officer of
Alibaba Group. “We are excited about the future as we continue to
innovate and drive synergies among the businesses throughout the
Alibaba ecosystem.”
“We delivered excellent results in the first quarter, with
robust revenue growth of 56%. The significant growth in customer
management revenue represents the differentiated business value we
provide to our customers,” said Maggie Wu, Chief Financial Officer
of Alibaba Group. “It is our intention to continue investing in
long-term growth opportunities, some of which are already
delivering significant value to customers and investors.”
BUSINESS HIGHLIGHTS
In the quarter ended June 30,
2017:
- Revenue was RMB50,184 million
(US$7,403 million), an increase of 56% year-over-year.
- Revenue from core commerce increased
58% year-over-year to RMB43,027 million (US$6,347 million).
- Revenue from cloud computing increased
96% year-over-year to RMB2,431 million (US$359 million).
- Revenue from digital media and
entertainment increased 30% year-over-year to RMB4,081 million
(US$602 million).
- Revenue from innovation initiatives and
others increased 21% year-over-year to RMB645 million (US$95
million).
- Annual active consumers
(formerly annual active buyers) on our China retail marketplaces
reached 466 million, an increase of 12 million from the 12-month
period ended March 31, 2017.
- Mobile MAUs on our China retail
marketplaces reached 529 million in June, an increase of 22 million
over March 2017.
- The number of paying customers of
our cloud computing business grew to 1,011,000 from 874,000 in
the previous quarter. Operating loss from cloud computing was
RMB532 million (US$78 million) and adjusted EBITA loss was RMB103
million (US$15 million).
- Net income was RMB14,031 million
(US$2,070 million), income from operations was RMB17,513
million (US$2,583 million) and adjusted EBITDA was RMB25,124
million (US$3,706 million). Operating margin was 35%,
adjusted EBITDA margin was 50% and adjusted EBITA margin
for core commerce was 63%.
- Diluted EPS was RMB5.65
(US$0.83) and non-GAAP diluted EPS was RMB7.95
(US$1.17).
- Net cash provided by operating
activities was RMB25,311 million (US$3,733 million) and
non-GAAP free cash flow was RMB22,149 million (US$3,267
million).
BUSINESS AND STRATEGIC UPDATES
Core Commerce
Core Commerce – consumer engagement and technology drive
monetization. Revenue acceleration in our China retail
marketplaces continues to benefit from robust growth in average
spending per merchant and the number of paying merchants, which
reached a historical high during the quarter. At the core of our
broader value proposition to merchants is the consumer insights
gathered from providing e-commerce and entertainment services to
consumers within our ecosystem, which enable our merchants to
target, engage and manage their customer assets along the entire
consumer journey. This broader value proposition is recognized by
the merchants and reflected in our customer management revenue
(formerly online marketing service revenue).
Taobao – a vibrant ecosystem driven by personalized content
and innovation. Taobao App’s highly relevant and engaging
content continues to drive robust growth in active users and
engagement. In the quarter ended June 30, 2017, mobile MAUs on our
China retail marketplaces increased by 22 million to a total of 529
million mobile MAUs, driven by the strength of the Taobao App. In
May, we rolled out a new mobile Taobao user interface that
integrates the latest in personalization technology, which we
believe will continue to improve user experience and enhance
engagement.
Taobao is a vibrant ecosystem that promotes, enables and
benefits from the innovation of China’s SME’s and entrepreneurs. In
July, we held the second annual Taobao Maker Festival in Hangzhou,
which showcased original quality designs and trend setting products
from millennial entrepreneurs who embody the innovative thinking of
China’s younger generation. Tens of millions of consumers attended
the five-day event virtually and in person.
Tmall – gaining B2C market share in core categories and more
collaboration with brands. Tmall recorded 49% year-over-year
growth for physical goods GMV in the quarter ended June 30, 2017.
Fashion and apparel, consumer electronics and fast moving consumer
goods, or FMCG, were among the key categories that experienced
robust and reaccelerating GMV growth during the quarter.
We have established Tmall as a leading brand-building and
distribution platform that is capturing increasing digital
marketing and commerce spending from owners of both domestic and
international branded products that are doing business in China.
During the quarter, international brands such as Moet Hennessy,
Victoria’s Secret, Roland and Abercrombie & Fitch established
Tmall flagship stores to engage with and sell their products to
consumers on our platforms.
New Retail – seamless integration of online and offline
retail experience. In May 2017, we completed the privatization
and the acquisition of a controlling stake in Intime Retail Group
for HK$12.6 billion (US$1.6 billion). Intime is a leading
department store and mall operator in China with 49 department
stores and shopping malls as of June 30, 2017. We expect Intime to
support our strategy to transform conventional retail, especially
in soft goods and branded products, by leveraging our substantial
consumer reach, insight and technology.
In the fresh food category, we incubated Hema in 2015 to
digitize and transform the traditional supermarket and big-box
retail format in China, using technology to offer consumers a more
efficient and flexible shopping experience whether they are online
or in the store. As part of our New Retail strategy, Hema leverages
our consumer insight, mobile technologies and other proprietary
in-store technologies to provide a seamless omni-channel experience
for consumers. Hema stores double as warehouses for online orders,
and our proprietary fulfillment system enables 30-minute delivery
to customers.
International – laying the foundation for long-term
growth. Our cross-border and international consumer businesses
continue to exhibit robust growth. Revenue from our international
commerce retail business reached meaningful scale at RMB2,638
million (US$389 million) in the quarter ended June 30, 2017,
representing a 136% year-on-year growth, driven by strong growth in
our Southeast Asian platform Lazada and our China outbound platform
AliExpress. The growth of Lazada and AliExpress further expands our
customer base outside China.
During the quarter we increased our ownership in Lazada to 83%,
reflecting confidence in the growth potential of its businesses and
the Southeast Asian markets. During the quarter, Lazada launched
the “LiveUp” subscription-based membership program in Singapore,
with free shipping for eligible products and grocery deliveries
within 24 hours. Members also enjoy free trial subscriptions from
Netflix and VIP benefits from Uber and UberEats. Under cooperation
with Taobao Marketplace, Lazada launched “Taobao Collection” in
Singapore and Malaysia, which expands Lazada’s product offering by
giving local customers access to high-quality products from China.
We will continue to aggressively invest in the high potential
markets of Southeast Asia as well as launch innovative services to
benefit consumers in the region.
This quarter, we made significant progress in educating the US
market on Alibaba and the opportunities we enable for businesses of
all sizes to use our platform to build their brands and sell their
products to millions of Chinese consumers who desire quality
American goods. In June, we hosted Gateway ’17 in Detroit, Michigan
– a conference where 3000 U.S. small businesses, farmers, brands
and entrepreneurs attended to learn about how to sell to China
using Alibaba as their gateway. Businesses such as Gerber, Stadium
Goods, and 100% Pure shared their experiences on how Alibaba has
helped them grow their businesses by tapping into the China market,
which is good for the Chinese consumer as well as for business
growth and job creation in the United States. On September 25, we
will host a similar event in Canada to educate and engage Canadian
businesses in selling to China.
In August, with Marriott, we established a joint venture to
provide a completely new travel experience for hundreds of millions
of Chinese consumers with personalized VIP experiences, cashless
travel and an integrated loyalty program. Marriott’s award-winning
loyalty platform coupled with our unparalleled digital consumption
ecosystem in China present tremendous opportunities to create the
best-in-class membership platform for over 500 million active
mobile users on our China retail marketplaces.
Cloud Computing
Alibaba Cloud reached a key milestone of exceeding one million
paying customers, an increase of 137,000 from the previous quarter.
Cloud computing revenue grew 96% year-over-year to RMB2,431 million
(US$359 million), driven by robust paying customer growth and
improving revenue mix of higher valued-added services, as reflected
by ongoing ARPU expansion. Market expansion remains our top
priority, and we will continue to invest to acquire customers by
developing innovative solutions and deploying efficient and cost
effective products and services.
During the quarter, Alibaba Cloud launched several new products
that lower the barrier of migrating large-scale data to cloud
services for traditional companies. For example, Cloud Storage
Gateway allows customers to seamlessly connect their on-premise
storage with Alibaba Cloud storage. Lightning Cube, a
petabyte-scale data transport solution, helps enterprises to
transfer large amounts of data at high speed between their data
centers and Alibaba Cloud through portable storage appliances.
Alibaba Cloud also continues to expand its Elastic Computing
Service product portfolio. As of mid-August 2017, Alibaba Cloud is
providing 19 types of Elastic Computing Service products that can
be applied to 173 application scenarios, such as artificial
intelligence, healthcare, video streaming, finance, e-commerce, and
IoT.
Our cloud computing customer base spans a variety of industries
and businesses from startups to large corporations, covering
industry segments across consumer brands, energy, financial
institutions, healthcare, manufacturing, media and retail. Selected
enterprise customers in China include:
- CITIC Group, a major state-owned
multinational diversified company in China, is using our hybrid
cloud solutions to enhance the integration of internal
processes;
- China Huaneng Group, a fortune 500
company, adopted our hybrid cloud solution to digitize and upgrade
its global procurement system;
- ofo, a leading, rapidly growing bike
sharing company in China, is expanding the range of cloud services
including security, storage and big data, to support its business
expansion; and
- PICC Finance, a subsidiary of PICC, one
of the largest insurance companies in Asia, will adopt our
financial vertical solution to support its expansion into Internet
financing services.
On the international front, Alibaba Cloud continues to expand
its global footprint and customer base. During the quarter, we
announced plans to build two new data centers in Malaysia and
Indonesia, adding to our presence in over 14 countries and regions
to serve customers worldwide. For example, AirAsia, a Pan-Asian
airline based in Malaysia and the largest low-cost carrier in Asia
in terms of fleet size, began to operate their business on our
cloud computing platform, utilizing security and content delivery
network services.
Digital Media and
Entertainment
During the quarter, the management focus of our digital media
and entertainment segment was on broadening our access to quality
content, developing Youku’s subscription based business, and
expanding the products and services of UCWeb.
Our strategy of acquiring and developing a mixture of licensed
and original content yielded hit drama and variety shows during the
quarter. In addition, daily average subscribers of Youku video
subscriptions increased over 100% year-on-year in the quarter ended
June 30, 2017. We believe a strong pipeline of content, especially
with a focus on original content with visibility of content
availability and broadcast timing flexibility, will bring us
sustainable long-term advantages in video entertainment.
UCWeb continues its strategy of deepening its products and
services beyond the browser. We saw increased engagement of
value-added services of UCWeb. We will continue to invest in
product expansion as well as the international footprint of
UCWeb.
Innovation Initiatives
We continue to deliver innovative products that serve the
day-to-day needs of our customers. In July we launched our first
AI-powered voice assistant, Tmall Genie, which was developed by our
AI Lab leveraging our group’s proprietary AI technology. The Tmall
Genie assists with shopping, ordering local services, searching for
information, controlling smart appliances and playing multi-media
content, including educational stories and music for children.
Tmall Genie is equipped with our proprietary “voice-print payment”
technology that accurately identifies a user’s voice (analogous to
using finger-print to identify individuals) to authenticate the
user and complete the payment process.
Commitment to Intellectual Property
Protection
In August, 180 brand representatives attended our second Brand
Rights’ Holder Day in Beijing. The event featured presentations
from our brand-protection team and workshops detailing our
initiatives in intellectual property protection. Brands and rights
holders see increasing benefits from the unique aspects of our
technology to monitor and to protect the integrity of our
platforms. In the first month after the recent implementation of
technology enhancements on our IP protection platform, almost all
cases submitted by rights holders were handled and closed within 24
hours.
We also announced a partnership with French luxury group Kering
to cooperate in intellectual property protection. The two companies
have established a joint task force to collaborate fully, exchange
information, and work closely with law enforcement to take
appropriate action against infringers of Kering’s brands identified
with Alibaba’s advanced technology capabilities. As part of the
agreement, Kering dismissed the lawsuit against us and our
affiliate Alipay in the federal district court in New York.
Updates on Equity Investees and
Others
Cainiao Network – data enabled logistics network. During
the quarter, Cainiao Network’s platform enabled the delivery of an
average of 55 million packages per day on our China retail
marketplaces. Cainiao Network continues to focus on improving user
experience and merchant efficiency. For example, in June, Cainiao
Network launched automated guided vehicles in a fulfillment center
in Guangdong, which improved sorting efficiency.
Koubei and Ele.me – restaurant, food delivery and local
services. Koubei, our local services joint venture with Ant
Financial, generated RMB92 billion (US$14 billion) in payment
volume transacted through Alipay during the quarter ended June 30,
2017, compared to RMB75 billion in the prior quarter, achieving a
sequential growth rate of 23%. During this quarter, we and Ant
Financial jointly invested further capital into food delivery
company Ele.me, an equity investee, to fuel its rapid expansion.
Ele.me currently provides services in over 2,000 cities and
counties.
Social Impact
Job training for women. In June, the Alibaba Foundation
expanded its job creation program to Hubei Province to support and
train impoverished mothers with professional skills to enter the
e-commerce industry. As of July 2017, the program, which the
Alibaba Foundation started in 2010, has helped more than 5,000
mothers in different Chinese cities gain employment.
Recovery of missing children. The “Reunion” platform that
helps locate missing children across China celebrated its first
anniversary in May 2017. The Reunion platform is an ecosystem of
connected Alibaba and partner mobile apps that provides the
infrastructure for law enforcement authorities to receive
crowd-sourced information from the public in order to more
effectively conduct searches for missing children. According to the
Chinese authorities, the platform had successfully located 1,274
missing children since inception in May 2016, with a 97% success
rate.
Cash Flow from Operating Activities and
Free Cash Flow
Net cash provided by operating activities in the quarter ended
June 30, 2017 was RMB25,311 million (US$3,733 million), an increase
of 69% compared to RMB14,958 million in the same quarter of 2016.
Free cash flow, a non-GAAP measurement of liquidity, in the quarter
ended June 30, 2017 was RMB22,149 million (US$3,267 million), an
increase of 74% compared to RMB12,745 million in the same quarter
of 2016. A reconciliation of net cash provided by operating
activities to free cash flow is included at the end of this results
announcement.
KEY OPERATIONAL METRICS*
June 30,2016
March 31,2017
June 30,2017
% Change YoY QoQ
China Commerce Retail: Annual active consumers(1) (in
millions) 434 454 466 7% 3% Mobile monthly active users (MAUs)(2)
(in millions) 427 507 529 24% 4%
Cloud Computing: Paying
customers(3) (in thousands) 577 874 1,011 75% 16%
_________________
* For definitions of terms used but not defined in
this results announcement, please refer to our annual report on
Form 20-F for the fiscal year ended March 31, 2017. (1) For the
twelve months ended on the respective dates. (2) For the month
ended on the respective dates. (3) As of the respective dates.
SUMMARY FINANCIAL RESULTS
Three months ended June 30,
2016 2017 RMB RMB
US$(1) YoY % Change (in
millions, except percentages and per share amounts)
Revenue 32,154 50,184 7,403 56 % Income from operations
8,814 17,513 2,583 99 % Operating margin 27 % 35 % Adjusted
EBITDA(2) 14,963 25,124 3,706 68 % Adjusted EBITDA margin(2) 47 %
50 % Adjusted EBITA(2) 13,759 23,518 3,469 71 % Adjusted EBITA
margin(2) 43 % 47 % Net income 7,142 14,031 2,070 96 %
Non-GAAP net income(2) 11,991 20,019 2,953 67 % Diluted
earnings per share/ADS (EPS) 2.94 5.65 0.83 92 % Non-GAAP diluted
EPS(2) 4.83 7.95 1.17 65 %
_______________
(1) This results announcement contains translations
of certain Renminbi (“RMB”) amounts into U.S. dollars (“US$”) for
the convenience of the reader. Unless otherwise stated, all
translations of RMB into US$ were made at RMB6.7793 to US$1.00, the
exchange rate on June 30, 2017 as set forth in the H.10 statistical
release of the Federal Reserve Board. The percentages stated in
this announcement are calculated based on the RMB amounts. (2) See
the sections entitled “Information about Segments,” “Non-GAAP
Financial Measures” and “Reconciliations of Non-GAAP Measures to
the Nearest Comparable GAAP Measures” for more information about
the non-GAAP measures referred to within this results announcement.
INFORMATION ABOUT SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended June 30, 2017
Digital media Innovation
Core
Cloud
and initiatives
commerce
computing
entertainment and others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
US$ (in millions, except percentages)
Revenue 43,027 2,431 4,081 645
— 50,184 7,403 Income (loss) from
operations
24,808
(532)
(3,388)
(1,612)
(1,763)
17,513
2,583
Add: Share-based compensation expense 1,560 428 502 816 713 4,019
593 Add: Amortization of intangible assets 602 1 1,138 162 83 1,986
293
Adjusted EBITA 26,970 (103)
(1,748) (634) (967) 23,518 3,469
Adjusted EBITA margin 63% (4)% (43)%
(98)%
47% Three months ended June 30, 2016
Digital media Innovation
Core
Cloud
and initiatives
commerce
computing
entertainment and others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
(in millions, except percentages) Revenue
27,241 1,243 3,135 535 —
32,154 Income (loss) from operations
14,682 (439) (1,853) (1,572)
(2,004) 8,814 Add: Share-based compensation expense
1,456
280
334
520
1,104
3,694 Add: Amortization of intangible assets 486 1 523 165 76 1,251
Adjusted EBITA 16,624 (158)
(996) (887) (824) 13,759 Adjusted
EBITA margin 61% (13)% (32)% (166)%
43%
____________________
(1) Unallocated expenses are primarily related to
corporate administrative costs and other miscellaneous items that
are not allocated to individual segments.
JUNE QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended June 30, 2017 was RMB50,184
million (US$7,403 million), an increase of 56% compared to
RMB32,154 million in the same quarter of 2016. The increase was
mainly driven by the robust revenue growth of our China commerce
retail business, international commerce retail business and Alibaba
Cloud.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended June 30,
2016 2017
% of
% of YoY % RMB
Revenue
RMB US$ Revenue Change (in millions,
except percentages) Core commerce: China commerce retail -
Customer management 15,882 49% 26,220 3,868 52% 65% - Commission
6,926 22% 8,878 1,309 18% 28% - Others 575 2% 1,614 238 3% 181%
23,383 73% 36,712 5,415 73% 57% China commerce wholesale 1,261 4%
1,641 242 3% 30% International commerce retail 1,117 4% 2,638 389
6% 136% International commerce wholesale 1,432 4% 1,609 237 3% 12%
Others 48 0% 427 64 1% 790% Total core commerce 27,241 85% 43,027
6,347 86% 58% Cloud computing 1,243 4% 2,431 359 5% 96%
Digital media and entertainment 3,135 10% 4,081 602 8% 30%
Innovation initiatives and others 535 1% 645 95 1% 21% Total 32,154
100% 50,184 7,403 100% 56%
Core commerce
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in the quarter ended June 30, 2017 was RMB36,712
million (US$5,415 million), or 73% of total revenue, an increase of
57% compared to RMB23,383 million in the same quarter of 2016. The
increase in revenue was due to robust growth of customer management
revenue (formerly online marketing service revenue), as well as
growth in commission revenue. Customer management revenue grew by
65% year-over-year, driven primarily by increases in the volume of
clicks, reflecting mobile user growth and our ability to deliver
more relevant content to consumers through our enhancements in
personalization technology. This growth resulted in higher average
spending on our customer management services by an increasing
number of merchants. Commission revenue, representing 24% of China
commerce retail revenue in the quarter ended June 30, 2017, grew by
28% year-over-year, while Tmall recorded 49% year-over-year growth
for physical goods GMV for the same period. The relatively lower
growth rate of reported commission revenue was primarily due to the
netting-off of expenditures against commissions paid by merchants
as a result of new promotion initiatives for customer acquisition
and retention. In mid-May, we started consolidating Intime, which
contributed primarily to the increase in other revenue for our
China commerce retail business.Our annual China commerce retail
revenue per annual active consumer increased from RMB202 for the
quarter ended June 30, 2016 to RMB273 (US$40) for the quarter ended
June 30, 2017, and mobile revenue per mobile MAU grew from RMB140
for the quarter ended June 30, 2016 to RMB196 (US$29) for the
quarter ended June 30, 2017, as illustrated in these charts and the
table at the end of this announcement.Annual active
consumers – Our China retail marketplaces had 466
million annual active consumers in the 12 months ended June 30,
2017, compared to 454 million in the 12 months ended March 31,
2017, representing a net addition of 12 million from the prior
quarter, and a 7% increase from 434 million in the 12 months ended
June 30, 2016. Average annual spend per active consumer for the 12
months ended June 30, 2017 also continued to increase from prior
quarters. The longer consumers have been with our platform, the
more they spend, placing more orders across more product
categories.Mobile MAUs – Mobile MAUs on our China retail
marketplaces grew to 529 million in June 2017, compared to 507
million in March 2017, representing a net addition of 22 million
MAUs in the quarter and a 24% increase from 427 million in June
2016.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
the quarter ended June 30, 2017 was RMB1,641 million (US$242
million), an increase of 30% compared to RMB1,261 million in the
same quarter of 2016. The increase was primarily due to an increase
in the average revenue from paying members on our 1688.com
platform.
- International commerce retail
businessRevenue from our international commerce retail business
in the quarter ended June 30, 2017 was RMB2,638 million (US$389
million), an increase of 136% compared to RMB1,117 million in the
same quarter of 2016. The increase was primarily due to the growth
in revenue generated from Lazada and AliExpress, driven by robust
GMV growth in these two marketplaces.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in the quarter ended June 30, 2017 was RMB1,609 million
(US$237 million), an increase of 12% compared to RMB1,432 million
in the same quarter of 2016. The increase was due to growth in
revenue generated by import/export related value-added services and
online marketing revenue.
Cloud computing
Revenue from our cloud computing business in the quarter ended
June 30, 2017 was RMB2,431 million (US$359 million), an increase of
96% compared to RMB1,243 million in the same quarter of 2016,
primarily driven by an increase in the number of paying customers
to 1,011,000, representing a year-over-year increase of 75%, and
also by an increase in their usage of our cloud computing services
including more complex offerings, such as our database services and
content delivery network, as reflected in the increase of average
revenue per paying customer to RMB2,405 (US$355) in the quarter
ended June 30, 2017 from RMB2,154 in the same quarter of 2016.
Digital media and entertainment
Revenue from our digital media and entertainment business in the
quarter ended June 30, 2017 was RMB4,081 million (US$602 million),
an increase of 30% compared to RMB3,135 million in the same quarter
of 2016. The increase was primarily due to an increase in revenue
from mobile value-added services provided by UCWeb, such as news
feeds and mobile search. Youku Tudou is a core part of our digital
entertainment strategy, and we will continue to invest in digital
entertainment content on Youku Tudou to drive user and paying
subscription growth. We will continue to leverage the cross selling
opportunities between our digital media and entertainment business
and core commerce businesses presented by the vast consumer base of
our ecosystem.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended June 30, 2017 was RMB645 million (US$95 million), an increase
of 21% compared to RMB535 million in the same quarter of 2016,
primarily due to an increase in revenue from AutoNavi. Starting
this quarter, we reclassified revenue from our fresh food stores
Hema, previously reported under this segment, as revenue from China
commerce retail because Hema has moved beyond the incubation
stage.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended June 30,
%
ofRevenueYoYchange
2016 2017 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Costs and expenses:
Cost of revenue 11,744 37% 17,460 2,576 35% (2)% Product
development expenses 3,988 12% 4,696 693 9% (3)% Sales and
marketing expenses 3,614 11% 4,850 715 10% (1)% General and
administrative expenses 2,743 9% 3,679 543 7% (2)% Amortization of
intangible assets 1,251 4% 1,986 293 4% 0% Total costs and expenses
23,340 73% 32,671 4,820 65% (8)%
Share-based compensation
expense by function: Cost of revenue 894 3% 1,128 166 2% (1)%
Product development expenses 1,276 4% 1,332 197 3% (1)% Sales and
marketing expenses 447 1% 396 58 1% 0% General and administrative
expenses 1,077 3% 1,163 172 2% (1)% Total share-based compensation
expense 3,694 11% 4,019 593 8% (3)%
Costs and expenses
excluding share-based compensation expense: Cost of revenue
10,850 34% 16,332 2,410 33% (1)% Product development expenses 2,712
8% 3,364 496 6% (2)% Sales and marketing expenses 3,167 10% 4,454
657 9% (1)% General and administrative expenses
1,666
6% 2,516 371 5% (1)% Amortization of intangible assets 1,251 4%
1,986 293 4% 0%
Total costs and expenses excluding
share-based compensation expense
19,646 62% 28,652 4,227 57% (5)%
Cost of revenue – Cost of revenue in the quarter ended
June 30, 2017 was RMB17,460 million (US$2,576 million), or 35% of
revenue, compared to RMB11,744 million, or 37% of revenue, in the
same quarter of 2016. Without the effect of share-based
compensation expense, cost of revenue as a percentage of revenue
would have decreased from 34% in the quarter ended June 30, 2016 to
33% in the quarter ended June 30, 2017. The decrease was primarily
due to increased operating leverage, partly offset by an increase
in costs of inventory of Lazada, content acquisition costs of Youku
Tudou and logistics costs paid to Cainiao Network relating to
fulfillment services provided to Tmall Supermarket.
Product development expenses – Product development
expenses in the quarter ended June 30, 2017 were RMB4,696 million
(US$693 million), or 9% of revenue, compared to RMB3,988 million,
or 12% of revenue, in the same quarter of 2016. Without the effect
of share-based compensation expense, product development expenses
as a percentage of revenue would have decreased from 8% in the
quarter ended June 30, 2016 to 6% in the quarter ended June 30,
2017, reflecting operating leverage.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended June 30, 2017 were RMB4,850 million
(US$715 million), or 10% of revenue, compared to RMB3,614 million,
or 11% of revenue, in the same quarter of 2016. Without the effect
of share-based compensation expense, sales and marketing expenses
as a percentage of revenue would have decreased from 10% in the
quarter ended June 30, 2016 to 9% in the quarter ended June 30,
2017, reflecting operating leverage.
General and administrative expenses – General and
administrative expenses in the quarter ended June 30, 2017 were
RMB3,679 million (US$543 million), or 7% of revenue, compared to
RMB2,743 million, or 9% of revenue, in the same quarter of 2016.
Without the effect of share-based compensation expense, general and
administrative expenses as a percentage of revenue would have
decreased from 6% in the quarter ended June 30, 2016 to 5% in the
quarter ended June 30, 2017, reflecting operating leverage.
Share-based compensation expense –Total share-based
compensation expense included in the cost and expense items above
in the quarter ended June 30, 2017 was RMB4,019 million (US$593
million), an increase of 9% compared to RMB3,694 million in the
same quarter of 2016. Share-based compensation expense as a
percentage of revenue decreased to 8% in the quarter ended June 30,
2017 from 11% in the same quarter of 2016. The following table sets
forth our analysis of share-based compensation expense for the
quarters indicated by type of share-based awards:
Three months ended June 30,
2016 March 31, 2017 June
30, 2017 % Change % of
% of % of
RMB Revenue RMB Revenue
RMB US$ Revenue YoY QoQ (in
millions, except percentages) By type of awards: Alibaba
Group share-based awards granted to:
- Our employees
2,457 7% 3,180 8% 3,023 446 6% 23% (5)%
- Ant Financial employees and other
consultants(1)
234 1% 579 2% 452 67 1% 93% (22)%
Ant Financial share-based awards granted
to our employees(1)
873 3% 339 1% 297 44 1% (66)% (12)% Others 130 0% 208 0% 247 36 0%
90% 19% Total share-based compensation expense 3,694 11% 4,306 11%
4,019 593 8% 9% (7)%
___________________
(1)
Awards subject to mark-to-market
accounting treatment.
Share-based compensation expense related to Alibaba Group
share-based awards granted to our employees and consultants
decreased in this quarter compared to the previous quarter. This
decrease primarily reflected annual performance-based equity awards
that became vested and ceased to incur share-based compensation
expense during this quarter.
We expect that our share-based compensation expense will
continue to be affected by changes in the fair value of our shares
and Ant Financial shares, as well as the quantity of awards we
grant to our employees and consultants in the future. Due to the
accounting treatment of Ant Financial share-based awards granted to
our employees, if the fair value of Ant Financial equity continues
to increase in the future, our share-based compensation expense
will likely increase, although any such increase will be non-cash
and will not result in any economic cost or equity dilution to our
shareholders.
Amortization of intangible assets – Amortization of
intangible assets in the quarter ended June 30, 2017 was RMB1,986
million (US$293 million), an increase of 59% from RMB1,251 million
in the same quarter of 2016. The increase was due to an increase in
intangible assets recognized relating to our strategic acquisitions
and investments.
Income from operations and operating
margin
Income from operations in the quarter ended June 30, 2017 was
RMB17,513 million (US$2,583 million), or 35% of revenue, an
increase of 99% compared to RMB8,814 million, or 27% of revenue, in
the same quarter of 2016.
Adjusted EBITDA and Adjusted EBITDA
margin
Adjusted EBITDA increased by 68% to RMB25,124 million (US$3,706
million) in the quarter ended June 30, 2017, compared to RMB14,963
million in the same quarter of 2016. Adjusted EBITDA margin
increased to 50% in the quarter ended June 30, 2017 from 47% in the
same quarter of 2016, mainly due to increased operating leverage. A
reconciliation of net income to adjusted EBITDA is included at the
end of this results announcement.
As many of our newly developed and acquired businesses have
different cost structures and lower margins, we expect that our
margin will continue to be negatively impacted by these new
businesses.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended June 30, 2016
2017 RMB % of Revenue
RMB US$ % of
Revenue (in millions, except percentages) Core
commerce 16,624 61% 26,970 3,978 63% Cloud computing (158) (13)%
(103) (15) (4)% Digital media and entertainment (996) (32)% (1,748)
(258) (43)%
Innovation initiatives and others
(887)
(166)%
(634)
(93)
(98)%
Core commerce segment – Adjusted EBITA increased by 62%
to RMB26,970 million (US$3,978 million) in the quarter ended June
30, 2017, compared to RMB16,624 million in the same quarter of
2016. Adjusted EBITA margin improved to 63% in the quarter ended
June 30, 2017, as compared to 61% in the same quarter of 2016,
reflecting operating leverage achieved, primarily offset by the
consolidation of Intime and an increase in costs of inventory of
Lazada.
Cloud computing segment – Adjusted EBITA in the quarter
ended June 30, 2017 was a loss of RMB103 million (US$15 million),
compared to a loss of RMB158 million in the same quarter of 2016.
Adjusted EBITA margin improved to negative 4% in the quarter ended
June 30, 2017 from negative 13% in the quarter ended June 30, 2016,
primarily due to robust growth in revenue and economies of
scale.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended June 30, 2017 was a loss of RMB1,748 million
(US$258 million), compared to a loss of RMB996 million in the same
quarter of 2016. Adjusted EBITA margin decreased to negative 43% in
the quarter ended June 30, 2017 from negative 32% in the quarter
ended June 30, 2016, primarily due to an increase in content
acquisition costs of Youku Tudou.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended June 30, 2017 was a loss of RMB634
million (US$93 million), compared to a loss of RMB887 million in
the same quarter of 2016. Adjusted EBITA margin improved to
negative 98% in the quarter ended June 30, 2017, compared to
negative 166% in the quarter ended June 30, 2016, primarily due to
increase in revenue from new business initiatives.
Interest and investment income,
net
Interest and investment income, net in the quarter ended June
30, 2017 was RMB1,472 million (US$217 million), a significant
increase from RMB750 million in the same quarter of 2016, primarily
due to a non-recurring gain of RMB1,861 million arising from
revaluation of our previously held equity interest in Intime, when
we obtained control over Intime in May 2017. The revaluation gain
was partly offset by impairment loss on certain investments of
RMB952 million.
Other income, net
Other income, net in the quarter ended June 30, 2017 was
RMB1,887 million (US$279 million), compared to RMB1,763 million in
the same quarter of 2016. The increase was primarily due to an
increase in royalty fees and software technology service fees
received from Ant Financial under our profit sharing arrangement,
which amounted to RMB1,966 million (US$290 million) in the quarter
ended June 30, 2017, offset by an increase in exchange loss.
Income tax expenses
Income tax expenses in the quarter ended June 30, 2017 were
RMB4,653 million (US$686 million), an increase of 123% compared to
RMB2,091 million in the same quarter of 2016. Our effective tax
rate was 23% in the quarter ended June 30, 2017, compared to 20% in
the same quarter of 2016. Excluding share-based compensation
expense, impairment of investments and other unrealized investment
gain/loss, our effective tax rate would have been 20% in the
quarter ended June 30, 2017, compared to 15% in the same quarter of
2016. In connection with our investment in Suning, from the quarter
ended March 31, 2016 to the quarter ended December 31, 2016, we
reserved a portion of our earnings for permanent reinvestment in
China, and therefore we were not required to accrue withholding tax
for that portion of earnings during that period. This quarter, we
accrued the 5% withholding tax on all the earnings distributable by
our PRC operations, which lead to an increase in our effective tax
rate.
Share of results of equity
investees
Share of results of equity investees in the quarter ended June
30, 2017 was a loss of RMB1,388 million (US$205 million), compared
to a loss of RMB1,468 million in the same quarter of 2016 and a
loss of RMB1,444 million in the quarter ended March 31, 2017. We
record our share of results of equity investees one quarter in
arrears. Share of results of equity investees in the quarter ended
June 30, 2017 and the comparative periods consisted of the
following:
Three months ended June 30, 2016
March 31, 2017 June 30, 2017
RMB RMB RMB US$ (in
millions) Share of loss of equity investees:
- Koubei
(245) (505) (391) (58)
- Cainiao Network
(227) (375) (245) (36)
- Other equity investees
(264) (41) (311) (46) Impairment loss (4)
— —
— Dilution losses (239) (61) (29) (4) Others(1) (489) (462)
(412) (61) Total (1,468) (1,444) (1,388) (205)
________________
(1) Others mainly include amortization of intangible assets of
equity investees and share-based compensation expense.
The share of results of equity investees in the quarter ended
June 30, 2017 was a loss of RMB1,388 million (US$205 million),
compared to a loss of RMB1,444 million in the quarter ended March
31, 2017, primarily due to a decrease in our share of losses of
Koubei and Cainiao Network, partially offset by an increase in our
share of losses from other equity investees.
Net income and Non-GAAP net
income
Our net income in the quarter ended June 30, 2017 was RMB14,031
million (US$2,070 million), an increase of 96% compared to RMB7,142
million in the same quarter of 2016. Excluding share-based
compensation expense, non-cash revaluation gain and certain other
items, non-GAAP net income in the quarter ended June 30, 2017 was
RMB20,019 million (US$2,953 million), an increase of 67% compared
to RMB11,991 million in the same quarter of 2016. A reconciliation
of net income to non-GAAP net income is included at the end of this
results announcement.
Net income attributable to ordinary
shareholders
Net income attributable to ordinary shareholders in the quarter
ended June 30, 2017 was RMB14,683 million (US$2,166 million), an
increase of 94% compared to RMB7,550 million in the same quarter of
2016.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in the quarter ended June 30, 2017 was RMB5.65
(US$0.83) on a weighted average of 2,599 million diluted shares
outstanding during the quarter, an increase of 92% compared to
RMB2.94 on a weighted average of 2,568 million diluted shares
outstanding during the same quarter of 2016. Excluding share-based
compensation expense, non-cash revaluation gain and certain other
items, non-GAAP diluted EPS in the quarter ended June 30, 2017 was
RMB7.95 (US$1.17), an increase of 65% compared to RMB4.83 in the
same quarter of 2016. A reconciliation of diluted EPS to non-GAAP
diluted EPS is included at the end of this results
announcement.
Cash, cash equivalents and short-term
investments
As of June 30, 2017, cash, cash equivalents and short-term
investments were RMB148,152 million (US$21,854 million), compared
to RMB146,747 million as of March 31, 2017. The increase in cash,
cash equivalents and short-term investments during the quarter
ended June 30, 2017 was primarily due to free cash flow generated
from operations of RMB22,149 million (US$3,267 million), primarily
offset by cash used in investing activities, including the
privatization of Intime and investments in Ele.me and Lianhua
Supermarket, and cash used to acquire additional shares of
Lazada.
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
June 30, 2017 was RMB25,311 million (US$3,733 million), an increase
of 69% compared to RMB14,958 million in the same quarter of 2016.
Free cash flow, a non-GAAP measurement of liquidity, in the quarter
ended June 30, 2017 was RMB22,149 million (US$3,267 million),
compared to RMB12,745 million in the same quarter of 2016. A
reconciliation of net cash provided by operating activities to free
cash flow is included at the end of this results announcement.
Net cash used in investing
activities
During the quarter ended June 30, 2017, net cash used in
investing activities of RMB13,912 million (US$2,052 million)
primarily reflected cash outflow of RMB14,133 million (US$2,085
million) for investment and acquisition activities, including the
privatization of Intime and investments in Ele.me and Lianhua
Supermarket, as well as capital expenditures and intangible assets
of RMB3,589 million (US$529 million), which included cash outflow
for acquisition of land use rights and construction in progress of
RMB427 million (US$63 million), partially offset by cash inflow of
RMB3,758 million (US$554 million) from disposals of various
investments and liquidation of certain short-term investments.
Employees
As of June 30, 2017, we had a total of 57,302 employees,
compared to 50,097 as of March 31, 2017. The number of employees as
of June 30, 2017 increased by 7,205 from March 31, 2017, primarily
due to the addition of approximately 7,600 employees from the
consolidation of Intime.
WEBCAST AND CONFERENCE CALL INFORMATION
Alibaba Group’s management will hold a conference call to
discuss the financial results at 7:30 a.m. U.S. Eastern Time (7:30
p.m. Hong Kong Time) on August 17, 2017.
Details of the conference call are as follows:International: +65
6713 5090U.S.: +1 845 675 0437U.K.: +44 203 621 4779Hong Kong: +852
3018 6771Conference ID: 61383477
A live webcast of the earnings conference call can be accessed
at http://www.alibabagroup.com/en/ir/earnings. An archived webcast
will be available through the same link following the call. A
replay of the conference call will be available for one week
(dial-in number: +61 2 8199 0299; conference ID: 61383477).
Our results announcement and accompanying slides are available
at Alibaba Group’s Investor Relations website at
http://www.alibabagroup.com/en/ir/home on August 17, 2017.
ABOUT ALIBABA GROUP
Alibaba Group’s mission is to make it easy to do business
anywhere. The company aims to build the future infrastructure of
commerce. It envisions that its customers will meet, work and live
at Alibaba, and that it will be a company that lasts at least 102
years.
SAFE HARBOR STATEMENTS
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “potential,” “continue,” “ongoing,”
“targets,” “guidance” and similar statements. Among other things,
statements that are not historical facts, including statements
about Alibaba’s strategies and business plans, Alibaba’s beliefs
and expectations regarding the growth of its business and its
revenue, the business outlook and quotations from management in
this announcement, as well as Alibaba’s strategic and operational
plans, are or contain forward-looking statements. Alibaba may also
make forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the “SEC”), in press releases
and other written materials and in oral statements made by its
officers, directors or employees to third parties. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not
limited to the following: Alibaba’s goals and strategies; Alibaba’s
future business development; Alibaba’s ability to maintain the
trusted status of its ecosystem, reputation and brand; risks
associated with increased investments in Alibaba’s business and new
business initiatives; risks associated with strategic acquisitions
and investments; Alibaba’s ability to retain or increase engagement
of consumers, merchants and other participants in its ecosystem and
enable new offerings; Alibaba’s ability to maintain or grow its
revenue or business; risks associated with limitation or
restriction of services provided by Alipay; changes in laws,
regulations and regulatory environment that affect Alibaba’s
business operations; privacy and regulatory concerns; competition;
security breaches; the continued growth of the e-commerce market in
China and globally; risks associated with the performance of our
business partners, including but not limited to Ant Financial; and
fluctuations in general economic and business conditions in China
and globally and assumptions underlying or related to any of the
foregoing. Further information regarding these and other risks is
included in Alibaba’s filings with the SEC. All information
provided in this results announcement is as of the date of this
results announcement and are based on assumptions that we believe
to be reasonable as of this date, and Alibaba does not undertake
any obligation to update any forward-looking statement, except as
required under applicable law.
NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use the
following non-GAAP financial measures: for our consolidated
results, adjusted EBITDA (including adjusted EBITDA margin),
adjusted EBITA (including adjusted EBITA margin), non-GAAP net
income, non-GAAP diluted EPS and free cash flow. For more
information on these non-GAAP financial measures, please refer to
the section entitled “Information about Segments” and the table
captioned “Reconciliations of Non-GAAP Measures to the Nearest
Comparable GAAP Measures” in this results announcement.
We believe that adjusted EBITDA, adjusted EBITA, non-GAAP net
income and non-GAAP diluted EPS help identify underlying trends in
our business that could otherwise be distorted by the effect of
certain income or expenses that we include in income from
operations, net income and diluted EPS. We believe that adjusted
EBITDA, adjusted EBITA, non-GAAP net income and non-GAAP diluted
EPS provide useful information about our core operating results,
enhance the overall understanding of our past performance and
future prospects and allow for greater visibility with respect to
key metrics used by our management in our financial and operational
decision-making. We consider free cash flow to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by our business that
can be used for strategic corporate transactions, including
investing in our new business initiatives, making strategic
investments and acquisitions and strengthening our balance sheet.
Adjusted EBITDA, adjusted EBITA, non-GAAP net income, non-GAAP
diluted EPS and free cash flow should not be considered in
isolation or construed as an alternative to income from operations,
net income, diluted EPS, cash flows or any other measure of
performance or as an indicator of our operating performance. These
non-GAAP financial measures presented here may not be comparable to
similarly titled measures presented by other companies. Other
companies may calculate similarly titled measures differently,
limiting their usefulness as comparative measures to our data.
Adjusted EBITDA represents net income before (i) interest
and investment income, net, other income, net, interest expense,
income tax expenses and share of results of equity investees, and
(ii) certain non-cash expenses, consisting of share-based
compensation expense, amortization and depreciation, which we do
not believe are reflective of our core operating performance during
the periods presented.
Adjusted EBITA represents net income before (i) interest
and investment income, net, other income, net, interest expense,
income tax expenses and share of results of equity investees, and
(ii) certain non-cash expenses, consisting of share-based
compensation expense and amortization, which we do not believe are
reflective of our core operating performance during the periods
presented.
Non-GAAP net income represents net income before
share-based compensation expense, amortization, impairment of
goodwill and investments, gain on deemed
disposals/disposals/revaluation of investments, amortization of
excess value receivable arising from the restructuring of
commercial arrangements with Ant Financial, immediate recognition
of unamortized professional fees and upfront fees upon termination
of bank borrowings and others, as adjusted for the tax effects on
non-GAAP adjustments.
Non-GAAP diluted EPS represents non-GAAP net income
attributable to ordinary shareholders divided by the weighted
average number of shares outstanding during the periods on a
diluted basis, including accounting for the effects of the assumed
conversion of convertible preference shares.
Free cash flow represents net cash provided by operating
activities as presented in our consolidated cash flow statement
less purchases of property and equipment and intangible assets
(excluding acquisition of land use rights and construction in
progress) and others.
The section entitled “Information about Segments” and the table
captioned “Reconciliations of Non-GAAP Measures to the Nearest
Comparable GAAP Measures” in this results announcement have more
details on the non-GAAP financial measures that are most directly
comparable to GAAP financial measures and the related
reconciliations between these financial measures.
ALIBABA GROUP HOLDING LIMITED UNAUDITED
CONSOLIDATED INCOME STATEMENTS Three
months ended June 30, 2016 2017
RMB RMB US$ (in millions,
except per share data) Revenue 32,154 50,184 7,403 Cost
of revenue (11,744) (17,460) (2,576) Product development expenses
(3,988) (4,696) (693) Sales and marketing expenses (3,614) (4,850)
(715) General and administrative expenses (2,743) (3,679) (543)
Amortization of intangible assets (1,251) (1,986) (293)
Income from operations 8,814 17,513 2,583 Interest and
investment income, net 750 1,472 217 Interest expense (626) (800)
(118) Other income, net 1,763 1,887 279 Income before income
tax and share of results of equity investees 10,701 20,072 2,961
Income tax expenses (2,091) (4,653) (686) Share of results of
equity investees (1,468) (1,388) (205)
Net income
7,142 14,031 2,070 Net loss attributable to noncontrolling
interests 408 652 96
Net income attributable to ordinary
shareholders 7,550 14,683 2,166
Earnings per share
attributable to ordinary shareholders Basic 3.05 5.77
0.85 Diluted 2.94 5.65 0.83
Weighted average number of
share used in calculating net income per ordinary share Basic
2,473 2,543 Diluted 2,568 2,599
ALIBABA GROUP HOLDING
LIMITED REVENUE
The following table sets forth our revenue
by segments for the periods indicated:
Three months ended June 30, 2016
2017 RMB RMB
US$ (in millions) Core commerce(1) 27,241 43,027
6,347 Cloud computing(2) 1,243 2,431 359 Digital media and
entertainment(3) 3,135 4,081 602 Innovation initiatives and
others(4) 535 645 95 Total 32,154 50,184 7,403
____________________
(1) Revenue from core commerce is primarily generated
from our China retail marketplaces, 1688.com, AliExpress,
Alibaba.com and Lazada.com. (2) Revenue from cloud computing is
primarily generated from the provision of services, such as data
storage, elastic computing, database and large scale computing
services, as well as web hosting and domain name registration. (3)
Revenue from digital media and entertainment mainly represents
advertising and subscription revenue generated from our digital
entertainment business provided by Youku Tudou and mobile Internet
services revenue from UCWeb businesses. (4) Revenue from innovation
initiatives and others mainly represents revenue generated by
AutoNavi and YunOS, as well as fees from Ant Financial related to
the SME loan business.
ALIBABA GROUP HOLDING LIMITED
INFORMATION ABOUT SEGMENTS
The following table sets forth our income (loss) from
operations by segments for the periods indicated:
Three months ended June 30, 2016
2017 RMB RMB US$ (in
millions)
Core commerce
14,682
24,808
3,659
Cloud computing (439)
(532)
(78)
Digital media and entertainment (1,853)
(3,388)
(500)
Innovation initiatives and others (1,572)
(1,612)
(238)
Unallocated
(2,004)
(1,763)
(260)
Total 8,814
17,513
2,583
The following table sets forth our
adjusted EBITA by segments for the periods indicated:
Three months ended June 30, 2016 2017
RMB RMB US$ (in millions) Core commerce
16,624 26,970 3,978 Cloud computing (158) (103) (15) Digital media
and entertainment (996) (1,748) (258) Innovation initiatives and
others (887) (634) (93) Unallocated (824) (967) (143) Total
13,759 23,518 3,469
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE
SHEETS
As of March 31,
As of June 30,
2017
2017
RMB
RMB
US$
(in millions) Assets Current assets: Cash and
cash equivalents 143,736 145,144 21,410 Short-term investments
3,011 3,008 444 Restricted cash and escrow receivables 2,655 3,211
474 Investment securities 4,054 4,462 658 Prepayments, receivables
and other assets(1) 28,408 30,569 4,509 Total current assets
181,864 186,394 27,495 Investment securities 31,452 30,888
4,556 Prepayments, receivables and other assets(1) 8,703 11,127
1,641 Investment in equity investees 120,368 118,971 17,549
Property and equipment, net 20,206 43,922 6,479 Land use rights,
net 4,691 6,629 978 Intangible assets, net 14,108 16,244 2,396
Goodwill 125,420 129,539 19,108
Total assets 506,812 543,714
80,202
Liabilities, Mezzanine Equity and Shareholders’
Equity Current liabilities: Current bank borrowings 5,948 7,660
1,130 Current portion of unsecured notes 8,949 8,795 1,297 Income
tax payable 6,125 10,229 1,509 Escrow money payable 2,322 2,541 375
Accrued expenses, accounts payable and other liabilities(1) 46,979
51,988 7,668 Merchant deposits 8,189 8,481 1,251 Deferred revenue
and customer advances 15,052 17,312 2,554 Total current liabilities
93,564 107,006 15,784
_____________________________
(1) Certain reclassifications in prepayments,
receivables and other assets, accrued expenses, accounts payable
and other liabilities and deferred tax liabilities as of March 31,
2017 were retrospectively adjusted as a result of the adoption of a
new accounting standard effective in the first quarter of fiscal
2018.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)
As of March 31,
As of June 30,
2017
2017
RMB
RMB US$ (in millions)
Deferred revenue 641 812 120 Deferred tax liabilities(1) 10,361
12,968 1,913 Non-current bank borrowings 30,959 31,783 4,688
Unsecured senior notes 45,876 45,080 6,650 Other liabilities 1,290
1,660 245
Total liabilities 182,691 199,309 29,400
Commitments and contingencies
— — —
Mezzanine equity
2,992 763 112
Alibaba Group Holding Limited
shareholders’ equity:
Ordinary shares 1 1
— Additional paid-in capital 164,585
170,707 25,181 Treasury shares at cost (2,823) (2,823) (416)
Restructuring reserve (624) (559) (82) Subscription receivables
(63) (160) (24) Statutory reserves 4,080 4,051 598 Accumulated
other comprehensive income 5,085 4,132 609 Retained earnings
108,558 123,271 18,183 Total Alibaba Group Holding Limited
shareholders’ equity 278,799 298,620 44,049 Noncontrolling
interests 42,330 45,022 6,641
Total equity 321,129
343,642 50,690
Total liabilities, mezzanine equity and
equity 506,812 543,714 80,202
_____________________________
(1) Certain reclassifications in prepayments,
receivables and other assets, accrued expenses, accounts payable
and other liabilities and deferred tax liabilities as of March 31,
2017 were retrospectively adjusted as a result of the adoption of a
new accounting standard effective in the first quarter of fiscal
2018.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended June 30, 2016
2017 RMB RMB
US$ (in millions) Net cash provided by
operating activities 14,958 25,311 3,733 Net cash used in investing
activities (61,468) (13,912) (2,052) Net cash provided by (used in)
financing activities 21,312 (8,894) (1,312) Effect of exchange rate
changes on cash and cash equivalents 626 (1,097) (161)
(Decrease) Increase in cash and cash equivalents (24,572) 1,408 208
Cash and cash equivalents at beginning of period 106,818 143,736
21,202 Cash and cash equivalents at end of period 82,246
145,144 21,410
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES The table below sets forth a
reconciliation of our net income to adjusted EBITA and adjusted
EBITDA for the periods indicated:
Three months
ended June 30, 2016 2017 RMB
RMB US$ (in millions) Net
income 7,142 14,031 2,070 Less: Interest
and investment income, net (750) (1,472) (217) Add: Interest
expense 626 800 118 Less: Other income, net (1,763) (1,887) (279)
Add: Income tax expenses 2,091 4,653 686 Add: Share of results of
equity investees 1,468 1,388 205
Income from operations
8,814 17,513 2,583 Add: Share-based
compensation expense 3,694 4,019 593 Add: Amortization of
intangible assets 1,251 1,986 293
Adjusted EBITA
13,759 23,518 3,469 Add: Depreciation and
amortization of property and equipment and land use rights 1,204
1,606 237
Adjusted EBITDA 14,963 25,124
3,706 ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES (CONTINUED) The table below sets forth a
reconciliation of our net income to non-GAAP net income for the
periods indicated:
Three months ended June
30, 2016 2017 RMB RMB
US$ (in millions) Net
income 7,142 14,031 2,070 Add: Share-based
compensation expense 3,694 4,019 593 Add: Amortization of
intangible assets 1,251 1,986 293 Add: Impairment of goodwill and
investments 77 952 140 Less: Gain on deemed
disposals/disposals/revaluation of investments and others (55)
(1,089) (161) Add: Amortization of excess value receivable arising
from the restructuring of commercial arrangements with Ant
Financial 66 67 10 Add: Immediate recognition of unamortized
professional fees and upfront fees upon termination of bank
borrowings — 92 14 Adjusted for tax effects on non-GAAP
adjustments(1) (184) (39) (6)
Non-GAAP net income
11,991 20,019 2,953
____________________________________
(1) Tax effects on non-GAAP adjustments comprise of
tax provisions on the amortization of intangible assets and certain
gains on disposal of investments, as well as tax benefits from
share-based awards. Comparative figures were updated to conform to
the current period presentation.
ALIBABA GROUP
HOLDING LIMITED RECONCILIATIONS OF NON-GAAP MEASURES TO THE
NEAREST COMPARABLE GAAP MEASURES (CONTINUED) The table
below sets forth a reconciliation of our diluted EPS to non-GAAP
diluted EPS for the periods indicated:
Three
months ended June 30, 2016 2017
RMB RMB US$ (in millions,
except per share data) Net income attributable to ordinary
shareholders – basic 7,550 14,683 2,166
Dilution effect on earnings arising from option plans operated by
an equity investee
— (3)
— Net income attributable to
ordinary shareholders – diluted 7,550 14,680 2,166 Add: Non-GAAP
adjustments to net income(1) 4,849 5,988 883
Non-GAAP net
income attributable to ordinary shareholders for computing
non-GAAP diluted EPS 12,399 20,668 3,049
Weighted average number of shares on a diluted basis
2,568 2,599 Diluted EPS(2) 2.94
5.65 0.83 Add: Non-GAAP adjustments to net income per
share(3) 1.89 2.30 0.34
Non-GAAP diluted
EPS(4) 4.83 7.95 1.17
___________________________
(1)
See the table above about the
reconciliation of net income to non-GAAP net income for more
information of these non-GAAP adjustments.
(2)
Diluted EPS is derived from net income
attributable to ordinary shareholders for computing diluted EPS
divided by weighted average number of shares on a diluted
basis.
(3)
Non-GAAP adjustments to net income per
share is derived from non-GAAP adjustments to net income divided by
weighted average number of shares on a diluted basis.
(4)
Non-GAAP diluted EPS is derived from
non-GAAP net income attributable to ordinary shareholders for
computing non-GAAP diluted EPS divided by weighted average number
of shares on a diluted basis.
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of net cash provided by operating activities to free
cash flow for the periods indicated:
Three months ended June 30, 2016
2017 RMB RMB
US$ (in millions) Net cash provided by operating
activities 14,958 25,311 3,733 Less:
Purchase of property and equipment and intangible assets (excluding
land use rights and construction in progress) (2,794) (3,162) (466)
Add: Others 581
— — Free cash flow
12,745 22,149 3,267 ALIBABA GROUP
HOLDING LIMITED SELECTED OPERATING DATA Annual
active consumers
The table below sets forth the number of
active consumers on our China retail marketplaces for the periods
indicated:
Twelve months ended Sep 30,
Dec 31, Mar 31,
Jun 30, Sep 30,
Dec 31, Mar 31,
Jun 30,
2015 2015 2016 2016 2016
2016 2017
2017
(in millions) Annual active consumers 386 407 423 434 439
443 454 466
Mobile
The table below sets forth the mobile MAUs
on our China retail marketplaces for the periods indicated:
The month ended Sep 30,
Dec 31, Mar 31,
Jun 30, Sep 30, Dec
31, Mar 31,
Jun 30,
2015 2015 2016 2016 2016
2016 2017
2017
(in millions) Mobile MAUs 346 393 410 427 450 493 507 529
Revenue per active consumer / mobile revenue per mobile
MAU
The table below sets forth information
with respect to annual China commerce retail revenue per annual
active consumer and annualized mobile revenue per mobile MAU from
China commerce retail for the periods presented:
Sep 30, Dec 31,
Mar 31, Jun 30,
Sep 30, Dec 31,
Mar 31, Jun 30, 2015 2015
2016 2016 2016 2016 2017
2017 (in RMB) Annual China commerce retail revenue
per annual active consumer(1) 174 184 189 202 215 241 251 273
Mobile revenue per mobile MAU from China commerce retail –
Annualized(2) 87 108 123 140 151 166 179 196
_____________________
(1) China commerce retail revenue per active consumer for each of
the above periods is calculated by dividing the China commerce
retail revenue for the previous 12-month period by the annual
active consumers for the same 12-month period. (2) Mobile revenue
per mobile MAU from China commerce retail, annualized is calculated
by dividing mobile revenue from China commerce retail for the
previous 12-month period by the mobile MAUs for the last month of
the same period.
ALIBABA GROUP HOLDING LIMITED
SELECTED OPERATING DATA (CONTINUED) Cloud
computing paying customers The table below sets forth
the number of paying customers on cloud computing as of the
respective dates indicated:
Sep 30,
Dec 31, Mar 31,
Jun 30, Sep 30, Dec
31, Mar 31, Jun 30,
2015 2015 2016 2016 2016
2016 2017 2017 (in thousands) Paying
customers 313 383 513 577 651 765 874 1,011
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170817005472/en/
Alibaba Group Holding LimitedInvestor Relations ContactRob
Lininvestor@alibabagroup.comorMedia ContactRobert
Christiebob.christie@alibaba-inc.com
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