Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988,
“Alibaba” or “Alibaba Group”) today announced its financial results
for the quarter ended September 30, 2020.
“Alibaba had another strong quarter. We continued to help
businesses recover and find new opportunities for growth through
digitalization in the post-pandemic landscape. The solid
performance of our core commerce and robust growth of Alibaba Cloud
are the direct results of our commitment to value creation for
customers,” said Daniel Zhang, Chairman and Chief Executive Officer
of Alibaba Group. “We remain focused on our three long-term growth
engines – domestic consumption, cloud computing and data
intelligence, and globalization – to effectively capture
opportunities from the ongoing changes in consumer demand and
acceleration of digitalization of businesses across our digital
economy.”
“We delivered another solid quarter, with revenue growth of 30%
year-over-year and adjusted EBITDA up 28% year-over-year,” said
Maggie Wu, Chief Financial Officer of Alibaba Group. “Our domestic
core commerce business continued to grow steadily during the
post-COVID-19 environment in China through higher purchase
frequency and consumer spending, while cloud computing revenue grew
60% year-over-year, driven by the acceleration in digitalization
across all industries and businesses of all sizes in China. We are
happy to see that our strategic investments are starting to see
improving operational efficiencies and the effect of scale.”
BUSINESS HIGHLIGHTS
In the quarter ended September 30,
2020:
- Revenue was RMB155,059 million (US$22,838 million), an
increase of 30% year-over-year.
- Annual active consumers on our China retail marketplaces
reached 757 million, an increase of 15 million from the twelve
months period ended June 30, 2020.
- Mobile MAUs on our China retail marketplaces reached 881
million in September 2020, an increase of 7 million over June
2020.
- Income from operations was RMB13,634 million (US$2,008
million), a decrease of 33% year-over-year due to a RMB15,753
million increase in share-based compensation expense related to Ant
Group share-based awards granted to our employees. Excluding this
impact, our income from operations would have increased 44%
year-over-year, from RMB20,667 million in the quarter ended
September 30, 2019 to RMB29,690 million (US$4,373 million) in the
quarter ended September 30, 2020.
- Adjusted EBITDA, a non-GAAP measurement, increased 28%
year-over-year to RMB47,525 million (US$7,000 million). Adjusted
EBITA, a non-GAAP measurement, increased 28% year-over-year to
RMB41,216 million (US$6,070 million).
- Net income attributable to ordinary shareholders was
RMB28,769 million (US$4,237 million), and net income was
RMB26,524 million (US$3,907 million), which represent decreases of
60% and 63%, respectively, over the same period last year, when we
booked a significant one-time gain upon the receipt of the 33%
equity interest in Ant Group. In addition, the increase in
share-based compensation expense described in “Income from
operations” above also negatively affected the year-on-year
comparison. Excluding this one-time gain, share-based compensation
expense and certain other items, non-GAAP net income was
RMB47,088 million (US$6,935 million), an increase of 44%
year-over-year.
- Diluted earnings per ADS was RMB10.48 (US$1.54) and
non-GAAP diluted earnings per ADS was RMB17.97 (US$2.65), an
increase of 37% year-over-year. Diluted earnings per share
was RMB1.31 (US$0.19 or HK$1.49) and non-GAAP diluted earnings
per share was RMB2.25 (US$0.33 or HK$2.56), an increase of 37%
year-over-year.
- Net cash provided by operating activities was RMB54,296
million (US$7,997 million) and non-GAAP free cash flow was
RMB40,540 million (US$5,971 million).
Reconciliations of GAAP measures to non-GAAP measures presented
above are included at the end of this results announcement.
BUSINESS AND STRATEGIC UPDATES
Core commerce
China Retail Marketplaces – comprehensive product supply and
engaging user experience drive consumer growth and higher purchase
frequency
Consumers – largest consumer platform continues to grow,
partially driven by increased penetration into less developed
areas
In September 2020, our China retail marketplaces, the largest
consumer platform in China, had 881 million mobile MAUs. Annual
active consumers on our China retail marketplaces was 757 million
for the twelve months ended September 30, 2020, representing a
quarterly net increase of 15 million. We are continuing to grow
consumer mindshare and wallet share among our users, as reflected
in higher purchase frequency and growth in average annual spending
from all city tiers.
We continue to increase penetration in less developed areas,
reflecting our success in broadening product offerings to meet
diverse demands. One of the key drivers of our acquisition of new
users and consumers in less developed areas is Taobao Deals (特价版),
our marketplace for value-conscious consumers. During the quarter,
we focused on developing differentiated product supplies for Taobao
Deals by onboarding export-oriented enterprises and merchants from
industrial belts and 1688.com, our domestic wholesale marketplace.
Taobao Deals achieved strong growth since it launched a new version
in March 2020, recording over 70 million MAUs in September 2020.
Consumers who use both Taobao app and Taobao Deals app to make
purchases showed faster growth in purchase frequency and average
spending compared to consumers who only use Taobao app.
Product Supply – broad and differentiated product offerings meet
diverse demands and drive GMV growth
Tmall online physical goods GMV, excluding unpaid orders, grew
21% year-over-year during the September 2020 quarter. Fast-moving
consumer goods (“FMCG”) continued to be the fastest growing Tmall
category, primarily driven by the strength of food and beverage,
healthcare, beauty and personal care. In addition, the growth rate
of Tmall’s apparel category recovered to a level that exceeded
pre-COVID-19 levels. The year-over-year growth rate of Taobao
online physical goods GMV, excluding unpaid orders, was in the
high-teens for the September 2020 quarter.
Quarterly growth of Taobao GMV continued to accelerate since the
trough in the March 2020 quarter, during the peak of the COVID-19
pandemic in China. This accelerating growth is primarily driven by
higher purchase frequency resulting from the success of our
value-for-money offerings.
Tmall Global is the premier platform that international brands
and merchants depend on to enter the China market online and build
brand awareness. The number of brands and merchants on the platform
as of September 30, 2020 grew at a double-digit rate
year-over-year. With its comprehensive and high-quality product
offerings, Tmall Global has been successful at meeting new consumer
demand as appetite for imports and new, personalized or limited
edition products continues to grow. Tmall Global GMV, excluding
unpaid orders, grew 37% year-over-year during the quarter.
Engagement – numerous entertaining interactive formats drive
higher user engagement and consumer spending
Taobao Live, our live streaming portal, has become an essential
marketing and distribution tool for merchants, brands, KOLs (key
opinion leaders) and our own businesses, such as Juhuasuan,
enabling them to engage directly with users and customers. GMV
generated by Taobao Live exceeded RMB350 billion for the twelve
months ended September 30, 2020. We redesigned the Taobao Live
portal to make it easier for users to discover new products and
brands. Going forward, we believe the entire e-commerce shopping
experience will become increasingly entertaining and
interactive.
In September 2020, we launched a new Taobao app interface to
deliver a more immersive user experience, such as expanding the
recommendation feed section on the landing page and making product
displays more accessible. We believe this new interface will help
increase user engagement and consumer purchase conversion rates in
the future.
We continued to enhance our two paid membership programs. 88VIP
gives consumers access to savings and loyalty rewards on various
Alibaba platforms, including Taobao, Tmall, Youku and Ele.me.
Taobao Pass targets value conscious consumers and offers monthly
savings coupons. The combined number of paying members of 88VIP and
Taobao Pass was 35 million as of September 30, 2020. Our membership
programs have also driven an increase in user stickiness and
consumer spending.
On October 21, 2020, we kicked off preparations for our 12th
annual 11.11 Global Shopping Festival. Over 250,000 brands will
participate and two million new products will debut in this year’s
festival. Unlike in previous years, the sales extravaganza will
span two sales periods, from November 1 to November 3 and November
11, giving small-and-medium businesses more exposure and
opportunities to reach consumers. For consumers, the extended
festival offers more time to browse and snatch up deals. Consumers
who make purchases during the first sales period will also receive
their products sooner. This year, we are also focused on
positioning the world’s largest shopping festival as a catalyst to
help brands recover by leveraging Chinese consumers’ rising demand
for overseas brands.
New Retail – transforming brick-and-mortar retailing by
redesigning business models and providing digital solutions
Transforming the Old – In October, we invested approximately
US$3.6 billion to acquire a controlling stake in Sun Art Retail
Group Limited (“Sun Art”). We continue to innovate New Retail
formats and models by digitalizing our offline retail partners and
enabling them to offer an integrated omni-channel experience for
consumers. Through this deeper collaboration with Sun Art, we will
be able to digitalize offline traffic, synchronize online and
offline channel inventories, broaden our supply chain network and
increase online purchases.
Creating the New – Our self-operated grocery retail chain
Freshippo (known as “Hema” in Chinese) achieved healthy same-store
sales growth during the quarter as we continue to optimize its
store operations and improve customer experience. As of September
30, 2020, we self-operated 222 Freshippo stores in China, primarily
located in tier 1 and tier 2 cities. With its comprehensive
offerings of private labels, imported products and new products,
Freshippo’s differentiated merchandise is attracting new customers
and growing the spending of existing customers. For the twelve
months ended September 30, 2020, annual active consumers for
Freshippo reached over 26 million.
Local Consumer Services – fast and high-quality growth of
merchants and consumers
Demand for digitalization in the restaurant and service industry
remains strong after the impact of the COVID-19 pandemic in China.
Ele.me has captured this market opportunity and attracted high
quality merchants by providing digital technology solutions and
other value-added services.
In July, Ele.me rolled out a major strategic and platform
upgrade. Ele.me expanded its on-demand delivery services to cover a
wide range of categories, such as fresh produce, grocery and
flowers, and upgraded the benefits of its membership program,
including launching a rewards system by which members can
accumulate points that are exchangeable for coupons or products and
services. As a result of onboarding high quality merchants and
adding engaging content, Ele.me’s average daily number of paying
members in the September quarter grew 45% year-over-year.
Cainiao Network – driving increased efficiency across the
Alibaba digital economy and the logistics industry in China and
internationally
Cainiao Network continued to expand both its domestic services
and global smart logistics infrastructure by deepening integration
with logistics partners as well as offering more products and
services. In China, Cainiao expanded the coverage of Cainiao Post
(neighborhood and campus stations and residential self- pick-up
stations), and also expanded the services of Cainiao Guoguo
(crowdsourced parcel pick-up and delivery service) and improved
customer experiences on the app. Internationally, Cainiao broadened
its export business by collaborating with more global partners and
had established local logistics networks in 15 countries and
regions.
Our ongoing investments in and upgrades of Cainiao have
positioned it as one of the premier logistics and fulfilment
providers for our international retail merchants seeking to expand
to global markets. During the quarter, merchant adoption of
“Fulfilled by Cainiao” services continued to improve, with almost
four million daily cross-border packages delivered in September
2020.
International – consistent strong growth in Southeast
Asia
Lazada, our Southeast Asian e-commerce platform, continued to
achieve robust growth in buyers and sellers and to benefit from the
acceleration of digitalization across industries in Southeast Asia.
Despite new waves of COVID-19 in many markets, order volume grew
100% year-over-year for the September 2020 quarter.
Cloud Computing
Alibaba Cloud empowers the digital transformation of enterprises
by providing comprehensive technology solutions and services in the
cloud for a wide range of industries. In the September quarter,
cloud computing revenue grew 60% year-over-year to RMB14,899
million (US$2,194 million), primarily driven by growth in revenues
from customers in the Internet, finance and retail industries.
Customers across all sizes and industries continued to enjoy our
products and services. As of September 30, 2020, approximately 60%
of A-share listed companies are customers of Alibaba Cloud, and
their average spending grew 45% year-over-year in September
2020.
Digital Media and
Entertainment
Youku maintained its strong focus on providing a superior user
experience and blockbuster content in a wide range of genres.
During the September quarter, Youku’s average daily subscriber base
increased 45% year-over-year, driven by its offering of appealing
original content and also by contribution from the 88VIP membership
program.
Alibaba Pictures invested in and distributed two of the top
three grossing films during China’s National Day Golden Week, and
participated in the production and distribution of films that
collectively accounted for over 50% of China box office sales in
the first half of this fiscal year, according to Beacon box office
data.
We continued to improve the operational efficiency of our
digital media and entertainment businesses through disciplined
investment in content and production capability, as well as
optimization of subscriber membership programs. During the quarter,
adjusted EBITA loss for the digital media and entertainment segment
narrowed year-over-year.
Innovation Initiatives and
Others
Amap continued to be the largest provider in China of mobile
digital maps, navigation and real-time traffic information by both
monthly active users and daily active users, according to
QuestMobile. During the quarter, we improved user experience by
adding new functionality and services. On October 1, 2020, the
first day of the week-long National Day holiday in China, Amap
achieved a record high of 150 million daily active devices.
Cash Flow from Operating Activities and
Free Cash Flow
In the September 2020 quarter, net cash provided by operating
activities was RMB54,296 million (US$7,997 million), an increase of
15% compared to RMB47,326 million in the same quarter of 2019. Free
cash flow, a non-GAAP measurement of liquidity, increased by 33% to
RMB40,540 million (US$5,971 million), from RMB30,488 million in the
same quarter of 2019, mainly due to our robust profit growth. A
reconciliation of net cash provided by operating activities to free
cash flow is included at the end of this results announcement.
KEY OPERATIONAL METRICS*
September 30,
June 30,
September 30,
Net adds
2019
2020
2020
YoY
QoQ
China Commerce Retail:
Annual active consumers(1) (in
millions)
693
742
757
64
15
Mobile monthly active users (MAUs)(2) (in
millions)
785
874
881
96
7
______________________
*
For definitions of terms used but not
defined in this results announcement, please refer to our annual
report for the fiscal year ended March 31, 2020.
(1)
For the twelve months ended on the
respective dates.
(2)
For the month ended on the respective
dates.
SEPTEMBER QUARTER SUMMARY FINANCIAL
RESULTS
Three months ended September
30,
2019
2020
RMB
RMB
US$(1)
YoY % Change
(in millions, except
percentages and per share amounts)
Revenue
119,017
155,059
22,838
30
%
Income from operations
20,364
13,634
2,008
(33)
%(3)
Operating margin
17
%
9
%
Adjusted EBITDA(2)
37,101
47,525
7,000
28
%
Adjusted EBITDA margin(2)
31
%
31
%
Adjusted EBITA(2)
32,091
41,216
6,070
28
%
Adjusted EBITA margin(2)
27
%
27
%
Net income
70,748
26,524
3,907
(63)
%(4)
Net income attributable to ordinary
shareholders
72,540
28,769
4,237
(60)
%(4)
Non-GAAP net income(2)
32,750
47,088
6,935
44
%
Diluted earnings per share(5)
3.44
1.31
0.19
(62)
%(4)
Diluted earnings per ADS(5)
27.51
10.48
1.54
(62)
%(4)
Non-GAAP Diluted earnings per share(2)
(5)
1.64
2.25
0.33
37
%
Non-GAAP Diluted earnings per ADS(2)
(5)
13.10
17.97
2.65
37
%
______________________
(1)
This results announcement contains
translations of certain Renminbi (“RMB”) amounts into U.S. dollars
(“US$”) and Hong Kong dollars (“HK$”) for the convenience of the
reader. Unless otherwise stated, all translations of RMB into US$
were made at RMB6.7896 to US$1.00, the exchange rate on September
30, 2020 as set forth in the H.10 statistical release of the
Federal Reserve Board, and all translations of RMB into HK$ were
made at RMB0.87872 to HK$1.00, the middle rate on September 30,
2020 as published by the People’s Bank of China. The percentages
stated in this announcement are calculated based on the RMB amounts
and there may be minor differences due to rounding.
(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.
(3)
The year-over-year decrease was primarily
due to a RMB15,753 million increase in share-based compensation
expense related to Ant Group share-based awards granted to our
employees (see “Cost and Expenses – Share-based Compensation
Expense” below). Excluding this impact, our income from operations
would have increased 44% year-over-year, from RMB20,667 million in
the quarter ended September 30, 2019 to RMB29,690 million (US$4,373
million) in the quarter ended September 30, 2020.
(4)
Decreased from the same period last year,
when we booked a significant one-time gain upon the receipt of the
33% equity interest in Ant Group. The increase in share-based
compensation expense described above also contributed to the
year-over-year decrease, which was partly offset by a net gain
arising from changes in the fair value of our equity investments in
the quarter ended September 30, 2020, as well as impairment charges
relating to our equity method investees in the quarter ended
September 30, 2019.
(5)
Each ADS represents eight ordinary shares,
which reflects the share subdivision and ADS ratio change that
became effective on July 30, 2019.
SEPTEMBER QUARTER INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended September
30, 2020
Core commerce
Cloud computing
Digital media and
entertainment(1)
Innovation initiatives and
others(1)
Unallocated(2)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
US$
(in millions, except
percentages)
Revenue
130,922
14,899
8,066
1,172
—
155,059
22,838
Income (Loss) from operations
30,894
(3,796
)
(2,351
)
(4,282
)
(6,831
)
13,634
2,008
Add: Share-based compensation expense
12,483
3,635
1,413
1,880
5,283
24,694
3,637
Add: Amortization of intangible assets
2,581
5
228
21
53
2,888
425
Adjusted EBITA
45,958
(3)
(156
)
(710
)
(2,381
)
(1,495
)
41,216
6,070
Adjusted EBITA margin
35
%
(1
)%
(9
)%
(203
)%
27
%
Three months ended September
30, 2019
Core commerce
Cloud computing
Digital media and
entertainment(1)
Innovation initiatives and
others(1)
Unallocated(2)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
(in millions, except
percentages)
Revenue
101,220
9,291
7,442
1,064
—
119,017
Income (Loss) from operations
32,069
(1,928
)
(3,535
)
(2,865
)
(3,377
)
20,364
Add: Share-based compensation expense
3,901
1,400
825
1,101
918
8,145
Add: Amortization of intangible assets
2,604
7
330
20
45
3,006
Add: Impairment of goodwill
—
—
—
—
576
576
Adjusted EBITA
38,574
(3)
(521
)
(2,380
)
(1,744
)
(1,838
)
32,091
Adjusted EBITA margin
38
%
(6
)%
(32
)%
(164
)%
27
%
______________________
(1)
Starting from the quarter ended June 30,
2020, we reclassified the results of our self-developed online
games business, which was previously reported under the innovation
initiatives and others segment, to the digital media and
entertainment segment because it has moved beyond the incubation
stage. This reclassification conforms to the way that we manage and
monitor segment performance. Comparative figures have also been
reclassified to conform to the current presentation.
(2)
Unallocated expenses primarily relate to
corporate administrative costs and other miscellaneous items that
are not allocated to individual segments.
(3)
Marketplace-based core commerce adjusted
EBITA increased 12% year-over-year to RMB50,940 million (US$7,503
million). A reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
SEPTEMBER QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended September 30, 2020 was RMB155,059
million (US$22,838 million), an increase of 30% compared to
RMB119,017 million in the same quarter of 2019. The increase was
mainly driven by the robust revenue growth of our China commerce
retail, cloud computing and Cainiao logistics services
businesses.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended September
30,
2019
2020
RMB
% of Revenue
RMB
US$
% of Revenue
YoY % Change
(in millions, except
percentages)
Core commerce:
China commerce retail
- Customer management(1)
57,576
49
%
69,338
10,212
45
%
20
%
- Others(2)
18,210
15
%
26,132
3,849
17
%
44
%
75,786
64
%
95,470
14,061
62
%
26
%
China commerce wholesale
3,283
3
%
3,637
536
2
%
11
%
International commerce retail
6,007
5
%
7,789
1,147
5
%
30
%
International commerce wholesale
2,434
2
%
3,510
517
2
%
44
%
Cainiao logistics services
4,759
4
%
8,226
1,212
5
%
73
%
Local consumer services
6,835
6
%
8,839
1,302
6
%
29
%
Others
2,116
1
%
3,451
508
2
%
63
%
Total core commerce
101,220
85
%
130,922
19,283
84
%
29
%
Cloud computing
9,291
8
%
14,899
2,194
10
%
60
%
Digital media and entertainment(3)
7,442
6
%
8,066
1,188
5
%
8
%
Innovation initiatives and others(3)
1,064
1
%
1,172
173
1
%
10
%
Total
119,017
100
%
155,059
22,838
100
%
30
%
______________________
(1)
Starting this quarter, we have grouped our
commission revenue as previously reported into the customer
management revenue in order to better reflect our value proposition
to merchants on our platforms. Comparative figures have also been
revised to conform to the current presentation.
(2)
“Others” revenue under China commerce
retail is primarily generated by our New Retail and direct sales
businesses, comprising mainly Tmall Supermarket, Freshippo, direct
import and Intime.
(3)
Starting from the quarter ended June 30,
2020, we reclassified revenue from our self-developed online games
business, which was previously reported under the innovation
initiatives and others segment, as revenue from digital media and
entertainment segment because it has moved beyond the incubation
stage. This reclassification conforms to the way that we manage and
monitor segment performance. Comparative figures have also been
reclassified to conform to the current presentation.
Core commerce
- China commerce retail business Revenue from our China
commerce retail business in the quarter ended September 30, 2020
was RMB95,470 million (US$14,061 million), an increase of 26%
compared to RMB75,786 million in the same quarter of 2019. Customer
management revenue grew 20% year-over-year, primarily due to robust
growth in revenue from new monetization formats, such as
recommendation feeds, an increase in the volume of paid clicks in
search monetization, as well as the 21% year-over-year growth of
Tmall online physical goods GMV, excluding unpaid orders. “Others”
revenue under China commerce retail business was RMB26,132 million
(US$3,849 million), achieving year-over-year growth of 44% compared
to RMB18,210 million in the same quarter of 2019. The increase was
primarily driven by contributions from our direct sales businesses,
including Tmall Supermarket and Freshippo. We expect that the
proportion of revenue of our direct sales businesses will continue
to increase as we further implement our New Retail strategy,
particularly after we began to consolidate Sun Art in October
2020.
- China commerce wholesale business Revenue from our China
commerce wholesale business in the quarter ended September 30, 2020
was RMB3,637 million (US$536 million), an increase of 11% compared
to RMB3,283 million in the same quarter of 2019. The increase was
primarily due to an increase in average revenue from paying members
on 1688.com.
- International commerce retail business Revenue from our
international commerce retail business in the quarter ended
September 30, 2020 was RMB7,789 million (US$1,147 million), an
increase of 30% compared to RMB6,007 million in the same quarter of
2019. The increase was primarily due to the growth in revenue
generated by Lazada and Trendyol, which was partially offset by the
decrease in revenue from AliExpress as a result of the
deconsolidation of the AliExpress Russia business in October
2019.
- International commerce wholesale business Revenue from
our international commerce wholesale business in the quarter ended
September 30, 2020 was RMB3,510 million (US$517 million), an
increase of 44% compared to RMB2,434 million in the same quarter of
2019. The increase was primarily due to an increase in the number
of paying members on Alibaba.com, as well as an increase in revenue
generated by cross-border related value-added services.
- Cainiao logistics services Revenue from Cainiao
Network’s logistics services, which represents revenue from its
domestic and international one-stop-shop logistics services and
supply chain management solutions, after elimination of
inter-company transactions, was RMB8,226 million (US$1,212 million)
in the quarter ended September 30, 2020, an increase of 73%
compared to RMB4,759 million in the same quarter of 2019, primarily
due to the increases in both average revenue per order and volume
of orders fulfilled from our fast growing cross-border and
international commerce retail businesses.
- Local consumer services Revenue from local consumer
services, which primarily represents platform commissions, fees
from provision of delivery services and other services provided by
our on-demand delivery and local services platform Ele.me, was
RMB8,839 million (US$1,302 million) in the quarter ended September
30, 2020, an increase of 29% compared to RMB6,835 million in the
same quarter of 2019, primarily due to an increase in average
revenue per order.
Cloud computing
Revenue from our cloud computing business in the quarter ended
September 30, 2020 was RMB14,899 million (US$2,194 million), an
increase of 60% compared to RMB9,291 million in the same quarter of
2019, primarily driven by growth in revenues from customers in the
Internet, finance and retail industries.
Digital media and entertainment
Revenue from our digital media and entertainment segment in the
quarter ended September 30, 2020 was RMB8,066 million (US$1,188
million), an increase of 8% compared to RMB7,442 million in the
same quarter of 2019. The increase was primarily due to the
increase in revenue from online games, partly offset by the
decrease in revenue from customer management.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended September 30, 2020 was RMB1,172 million (US$173 million), an
increase of 10% compared to RMB1,064 million in the same quarter of
2019.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended September
30,
% of Revenue YoY
change
2019
2020
RMB
% of Revenue
RMB
US$
% of Revenue
(in millions, except
percentages)
Costs and expenses:
Cost of revenue
65,546
55%
89,960
13,250
58%
3%
Product development expenses
10,938
9%
19,245
2,834
12%
3%
Sales and marketing expenses
11,996
10%
17,371
2,559
11%
1%
General and administrative expenses
6,591
6%
11,961
1,762
8%
2%
Amortization of intangible assets
3,006
3%
2,888
425
2%
(1)%
Impairment of goodwill
576
0%
—
—
—
0%
Total costs and expenses
98,653
83%
141,425
20,830
91%
8%
Share-based compensation expense by
function:
Cost of revenue
2,033
2%
5,397
795
4%
2%
Product development expenses
3,517
3%
10,542
1,553
6%
3%
Sales and marketing expenses
990
1%
2,499
368
2%
1%
General and administrative expenses
1,605
1%
6,256
921
4%
3%
Total share-based compensation expense
8,145
7%
24,694
3,637
16%
9%
Costs and expenses excluding
share-based compensation expense:
Cost of revenue
63,513
53%
84,563
12,455
54%
1%
Product development expenses
7,421
6%
8,703
1,281
6%
0%
Sales and marketing expenses
11,006
9%
14,872
2,191
9%
0%
General and administrative expenses
4,986
5%
5,705
841
4%
(1)%
Amortization of intangible assets
3,006
3%
2,888
425
2%
(1)%
Impairment of goodwill
576
0%
—
—
—
0%
Total costs and expenses excluding
share-based compensation expense
90,508
76%
116,731
17,193
75%
(1)%
Cost of revenue – Cost of revenue in the quarter ended
September 30, 2020 was RMB89,960 million (US$13,250 million), or
58% of revenue, compared to RMB65,546 million, or 55% of revenue,
in the same quarter of 2019. Without the effect of share-based
compensation expense, cost of revenue as a percentage of revenue
would have increased from 53% in the quarter ended September 30,
2019 to 54% in the quarter ended September 30, 2020. The increase
was primarily due to increased revenue contributions from our
direct sales businesses such as Tmall Supermarket and New Retail,
which resulted in increased cost of inventory, partly offset by a
decrease in delivery costs per order of our local consumer
services.
Product development expenses – Product development
expenses in the quarter ended September 30, 2020 were RMB19,245
million (US$2,834 million), or 12% of revenue, compared to
RMB10,938 million, or 9% of revenue, in the same quarter of 2019.
Without the effect of share-based compensation expense, product
development expenses as a percentage of revenue would have remained
stable at 6% in the quarter ended September 30, 2020 and the same
quarter last year.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended September 30, 2020 were RMB17,371
million (US$2,559 million), or 11% of revenue, compared to
RMB11,996 million, or 10% of revenue, in the same quarter of 2019.
Without the effect of share-based compensation expense, sales and
marketing expenses as a percentage of revenue would have remained
stable at 9% in the quarter ended September 30, 2020 and in the
same quarter last year.
General and administrative expenses – General and
administrative expenses in the quarter ended September 30, 2020
were RMB11,961 million (US$1,762 million), or 8% of revenue,
compared to RMB6,591 million, or 6% of revenue, in the same quarter
of 2019. Without the effect of share-based compensation expense,
general and administrative expenses as a percentage of revenue
would have decreased from 5% in the quarter ended September 30,
2019 to 4% in the quarter ended September 30, 2020, reflecting
operating leverage.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended September 30, 2020 was RMB24,694 million
(US$3,637 million), an increase of 203% compared to RMB8,145
million in the same quarter of 2019. Share-based compensation
expense as a percentage of revenue increased to 16% in the quarter
ended September 30, 2020, as compared to 7% in the same quarter
last year.
The following table sets forth our analysis of share-based
compensation expense for the quarters indicated by type of
share-based awards:
Three months ended
September 30, 2019
June 30, 2020
September 30, 2020
% Change
RMB
% of Revenue
RMB
% of Revenue
RMB
US$
% of Revenue
YoY
QoQ
(in millions, except
percentages)
By type of awards:
Alibaba Group share-based awards(1)
6,899
6%
6,758
4%
7,703
1,134
5%
12%
14%
Ant Group share-based awards(2)
303
0%
273
0%
16,056
2,365
10%
5,199%
5,781%
Others(3)
943
1%
684
1%
935
138
1%
(1)%
37%
Total share-based compensation expense
8,145
7%
7,715
5%
24,694
3,637
16%
203%
220%
______________________
(1)
This includes Alibaba Group share-based
awards granted to our employees and Ant Group employees. Commencing
upon the receipt of the 33% equity interest in Ant Group on
September 23, 2019, the expense relating to these awards granted to
Ant Group employees are recognized in share of results of equity
method investees.
(2)
This represents Ant Group share-based
awards granted to our employees which is subject to mark-to-market
accounting treatment.
(3)
Others includes share-based awards of our
subsidiaries.
Share-based compensation expense related to Alibaba Group
share-based awards granted to our employees increased in this
quarter compared to the previous quarter, mainly due to the full
quarter effect of the expense arising from the annual
performance-based awards granted in the middle of the previous
quarter.
Share-based compensation expense related to Ant Group
share-based awards increased in this quarter compared to the
previous quarter, primarily because we recognized an increase in
the value of these awards.
We expect that our share-based compensation expense will
continue to be affected by changes in the fair value of the
underlying awards and the quantity of awards we grant in the
future.
Amortization of intangible assets – Amortization of
intangible assets in the quarter ended September 30, 2020 was
RMB2,888 million (US$425 million), a decrease of 4% from RMB3,006
million in the same quarter of 2019.
Income from operations and operating
margin
Income from operations in the quarter ended September 30, 2020
was RMB13,634 million (US$2,008 million), or 9% of revenue, a
decrease of 33% compared to RMB20,364 million, or 17% of revenue,
in the same quarter of 2019. The year-over-year decrease was
primarily due to a RMB15,753 million increase in share-based
compensation expense related to Ant Group share-based awards
granted to our employees. Excluding this impact, our income from
operations would have increased 44% year-over-year, from RMB20,667
million in the quarter ended September 30, 2019 to RMB29,690
million (US$4,373 million) in the quarter ended September 30,
2020.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA increased 28% year-over-year to RMB47,525
million (US$7,000 million) in the quarter ended September 30, 2020,
compared to RMB37,101 million in the same quarter of 2019. Adjusted
EBITA increased 28% year-over-year to RMB41,216 million (US$6,070
million) in the quarter ended September 30, 2020, compared to
RMB32,091 million in the same quarter of 2019. A reconciliation of
net income to adjusted EBITDA and adjusted EBITA is included at the
end of this results announcement.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended September
30,
2019
2020
RMB
% of Segment Revenue
RMB
US$
% of Segment Revenue
(in millions, except
percentages)
Core commerce
38,574
38
%
45,958
6,769
35
%
Cloud computing
(521
)
(6
)%
(156
)
(23
)
(1
)%
Digital media and entertainment(1)
(2,380
)
(32
)%
(710
)
(105
)
(9
)%
Innovation initiatives and others(1)
(1,744
)
(164
)%
(2,381
)
(351
)
(203
)%
______________________
(1)
Starting from the quarter ended June 30,
2020, we reclassified the results of our self-developed online
games business, which was previously reported under the innovation
initiatives and others segment, to the digital media and
entertainment segment because it has moved beyond the incubation
stage. This reclassification conforms to the way that we manage and
monitor segment performance. Comparative figures have also been
reclassified to conform to the current presentation.
Core commerce segment – Adjusted EBITA increased by 19%
to RMB45,958 million (US$6,769 million) in the quarter ended
September 30, 2020, compared to RMB38,574 million in the same
quarter of 2019, primarily due to an increase in marketplace-based
core commerce adjusted EBITA to RMB50,940 million (US$7,503
million), as well as reduced losses for local consumer services
business. Adjusted EBITA margin decreased from 38% in the quarter
ended September 30, 2019 to 35% in the quarter ended September 30,
2020, primarily due to increased revenue contribution from our
self-operated New Retail and direct sales businesses, in respect of
which revenue is recorded on a gross basis, including the cost of
inventory.
A reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
We expect that our core commerce adjusted EBITA margin will
continue to be affected by the pace of our investment in new
businesses and the growth of our self-operated New Retail and
direct sales businesses, particularly after we began to consolidate
Sun Art in October 2020.
Cloud computing segment – Adjusted EBITA in the quarter
ended September 30, 2020 was a loss of RMB156 million (US$23
million), compared to a loss of RMB521 million in the same quarter
of 2019. Adjusted EBITA margin improved to negative 1% in the
quarter ended September 30, 2020 from negative 6% in the quarter
ended September 30, 2019, primarily attributable to the economies
of scale realized.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended September 30, 2020 was a loss of RMB710
million (US$105 million), compared to a loss of RMB2,380 million in
the same quarter of 2019. Adjusted EBITA margin improved to
negative 9% in the quarter ended September 30, 2020 from negative
32% in the quarter ended September 30, 2019, primarily due to
increased contribution from our online games business and reduced
losses in Youku.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended September 30, 2020 was a loss of
RMB2,381 million (US$351 million), compared to a loss of RMB1,744
million in the same quarter of 2019, mainly due to our investments
in technological research and innovation.
Interest and investment income,
net
Interest and investment income, net in the quarter ended
September 30, 2020 was RMB10,510 million (US$1,548 million), a
decrease from RMB63,348 million in the same quarter of 2019, when
we booked a one-time gain of RMB69.2 billion upon the receipt of
the 33% equity interest in Ant Group, which was partly offset by a
net gain arising from changes in the fair value of our equity
investments in the quarter ended September 30, 2020. The
above-mentioned gains were excluded from our non-GAAP net
income.
Other income, net
Other income, net in the quarter ended September 30, 2020 was
RMB1,148 million (US$169 million), compared to RMB3,171 million in
the same quarter of 2019. The decrease in other income, net was
primarily due to the termination of royalty fees and software
technology service fees from Ant Group upon our receipt of its 33%
equity interest in September 2019.
Income tax expenses
Income tax expenses in the quarter ended September 30, 2020 were
RMB1,911 million (US$281 million), compared to RMB2,815 million in
the same quarter of 2019.
Our effective tax rate was 8% in the quarter ended September 30,
2020, compared to 3% in the same quarter of 2019. During the
quarter ended September 30, 2020, we recognized tax credits of
approximately RMB6.1 billion (US$898 million), compared to RMB4.1
billion in the same quarter last year, as certain key subsidiaries
were notified this quarter of the renewal of their Key Software
Enterprise status for calendar year 2019 by the relevant tax
authorities. Excluding share-based compensation expense,
revaluation and disposal gains/losses of investments, impairment of
investments, deferred tax effects arising from our share of results
of equity method investees, as well as the above-mentioned tax
credits from the renewal of the Key Software Enterprise status, our
effective tax rate would have been 16% in the quarter ended
September 30, 2020.
Share of results of equity method
investees
Share of results of equity method investees in the quarter ended
September 30, 2020 was a profit of RMB4,244 million (US$625
million), compared to a loss of RMB11,960 million in the same
quarter of 2019. Share of results of equity method investees in the
quarter ended September 30, 2020 and the comparative periods
consisted of the following:
Three months ended
September 30, 2019
June 30, 2020
September 30, 2020
RMB
RMB
RMB
US$
(in millions)
Share of (loss) profit of equity method
investees
- Ant Group
—
3,034
4,681
689
- Others
(2
)
(1,471
)
987
145
Impairment loss
(11,590
)
—
(5
)
—
Dilution loss
(20
)
(6
)
(3
)
—
Others(1)
(348
)
(1,208
)
(1,416
)
(209
)
Total
(11,960
)
349
4,244
625
______________________
(1)
Others mainly include amortization of
intangible assets of equity method investees and share-based
compensation expense related to share-based awards granted to
employees of our equity method investees.
We record our share of results of all equity method investees
one quarter in arrears. The share of profit of other equity method
investees in the quarter ended September 30, 2020, compared to a
share of loss of other equity method investees in the previous
quarter, was mainly due to the general improvement in financial
performance of our equity method investees.
The COVID-19 pandemic has caused widespread disruption to the
economy, and the businesses of our equity method investees may
continue to be adversely affected, which could negatively impact
our share of results of equity method investees in future
periods.
Net income and Non-GAAP net
income
Our net income in the quarter ended September 30, 2020 was
RMB26,524 million (US$3,907 million), a decrease of 63% compared to
RMB70,748 million in the same quarter of 2019, when we booked a
significant one-time gain upon the receipt of the 33% equity
interest in Ant Group. The increase in share-based compensation
expense related to Ant Group share-based awards granted to our
employees also contributed to the year-over-year decrease in net
income, which was partly offset by a net gain arising from changes
in the fair value of our equity investments in the quarter ended
September 30, 2020, as well as impairment charges relating to our
equity method investees in the quarter ended September 30,
2019.
Excluding the one-time gain in relation to the receipt of the
33% equity interest in Ant Group in the September 2019 quarter,
share-based compensation expense, revaluation and disposal
gains/losses of investments, impairment of investments and goodwill
and certain other items, non-GAAP net income in the quarter ended
September 30, 2020 was RMB47,088 million (US$6,935 million), an
increase of 44% compared to RMB32,750 million in the same quarter
of 2019. 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 September 30, 2020 was RMB28,769 million (US$4,237 million),
a decrease of 60% compared to RMB72,540 million in the same quarter
of 2019, when we booked a significant one-time gain upon the
receipt of the 33% equity interest in Ant Group. The increase in
share-based compensation expense related to Ant Group share-based
awards granted to our employees also contributed to the
year-over-year decrease in net income attributable to ordinary
shareholders, which was partly offset by a net gain arising from
changes in the fair value of our equity investments in the quarter
ended September 30, 2020, as well as impairment charges relating to
our equity method investees in the quarter ended September 30,
2019.
Diluted earnings per ADS/share and
non-GAAP diluted earnings per ADS/share
Diluted earnings per ADS in the quarter ended September 30, 2020
was RMB10.48 (US$1.54) on a weighted average of 21,962 million
diluted shares outstanding during the quarter, a decrease of 62%
compared to RMB27.51 on a weighted average of 21,093 million
diluted shares outstanding during the same quarter in 2019.
Excluding the one-time gain in relation to the receipt of the 33%
equity interest in Ant Group in the September 2019 quarter,
share-based compensation expense, revaluation and disposal
gains/losses of investments, impairment of investments and goodwill
and certain other items, non-GAAP diluted earnings per ADS in the
quarter ended September 30, 2020 was RMB17.97 (US$2.65), an
increase of 37% compared to RMB13.10 in the same quarter of
2019.
Diluted earnings per share in the quarter ended September 30,
2020 was RMB1.31 (US$0.19 or HK$1.49), a decrease of 62% compared
to RMB3.44 in the same quarter of 2019. Excluding the one-time gain
in relation to the receipt of the 33% equity interest in Ant Group
in the September 2019 quarter, share-based compensation expense,
revaluation and disposal gains/losses of investments, impairment of
investments and goodwill and certain other items, non-GAAP diluted
earnings per share in the quarter ended September 30, 2020 was
RMB2.25 (US$0.33 or HK$2.56), an increase of 37%, compared to
RMB1.64 in the same quarter of 2019.
A reconciliation of diluted earnings per ADS/share to non-GAAP
diluted earnings per ADS/share is included at the end of this
results announcement. Each ADS represents eight ordinary shares,
which reflects the share subdivision and ADS ratio change that
became effective on July 30, 2019.
Cash, cash equivalents and short-term
investments
As of September 30, 2020, cash, cash equivalents and short-term
investments were RMB405,912 million (US$59,784 million), compared
to RMB381,578 million as of June 30, 2020. The increase in cash,
cash equivalents and short-term investments during the quarter
ended September 30, 2020 was primarily due to free cash flow
generated from operations of RMB40,540 million (US$5,971 million),
partly offset by cash used in investment and acquisition activities
of RMB18,710 million (US$2,756 million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
September 30, 2020 was RMB54,296 million (US$7,997 million), an
increase of 15% compared to RMB47,326 million in the same quarter
of 2019. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended September 30, 2020 increased by 33% to RMB40,540
million (US$5,971 million), from RMB30,488 million in the same
quarter of 2019, mainly due to our robust profit growth. 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 September 30, 2020, net cash used in
investing activities of RMB69,053 million (US$10,170 million)
primarily reflected (i) an increase in short-term investments by
RMB34,538 million (US$5,087 million), (ii) cash outflow of
RMB18,710 million (US$2,756 million) for investment and acquisition
activities, including the investments in YTO Express and Xpeng, as
well as (iii) capital expenditures of RMB14,280 million (US$2,103
million), which included cash outflow for acquisition of land use
rights and construction in progress relating to office campuses of
RMB2,404 million (US$354 million).
We adopted ASU 2019-02, “Entertainment — Films — Other Assets —
Film Costs (Subtopic 926-20) and Entertainment — Broadcasters —
Intangibles — Goodwill and Other (Subtopic 920-350),” on April 1,
2020. As a result of our adoption of this new accounting update, we
are now reporting cash outflows for the acquisition of licensed
copyrights as operating activities in the consolidated statements
of cash flows prospectively beginning on April 1, 2020. Prior to
our adoption of ASU 2019-02, cash outflows for the acquisition of
licensed copyrights were previously classified as investing
activities in the consolidated statements of cash flows.
Employees
As of September 30, 2020, we had a total of 122,399 employees,
compared to 120,535 as of June 30, 2020.
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 (8:30
p.m. Hong Kong Time) on November 5, 2020.
Details of the conference call are as follows: International:
+65 6713 5330 U.S.: +1 347 549 4094 U.K.: +44 203 713 5084 Hong
Kong: +852 3018 8307 China Landline: 800 8700 532 China Mobile: 400
624 0407 Conference ID: 6140225 (English) Conference ID: 6438996
(simultaneous interpretation in Chinese, listen only mode)
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; same conference ID as shown
above).
Our results announcement and accompanying slides are available
at Alibaba Group’s Investor Relations website at
http://www.alibabagroup.com/en/ir/home on November 5, 2020.
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 good company that lasts for 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. In addition,
statements that are not historical facts, including statements
about Alibaba’s strategies and business plans, Alibaba’s beliefs,
expectations and guidance 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 announcements
made on the website of The Stock Exchange of Hong Kong Limited (the
“Hong Kong Stock Exchange”), 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: impact of the COVID-19 pandemic, Alibaba’s expected
revenue growth; Alibaba’s goals and strategies; Alibaba’s future
business development; Alibaba’s ability to maintain the trusted
status of its digital economy; risks associated with sustained
investments in Alibaba’s business and strategic acquisitions and
investments; Alibaba’s ability to maintain or grow its revenue or
business; Alibaba’s ability to continue to compete effectively and
maintain and improve the network effects of its digital economy;
company culture; Alibaba’s ability to continue to innovate; risks
and challenges associated with operating a complex and large-scale
company, risks associated with international and cross-border
businesses and operations, including protectionist or national
security policies; uncertainties arising from competition among
countries and geopolitical tensions; changes in laws, regulations
and regulatory environment that affect Alibaba’s business
operations; privacy and regulatory concerns; security breaches;
risks associated with the performance of our business partners,
including but not limited to Ant Group; 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 and announcements on the website of
the Hong Kong Stock Exchange. 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), marketplace-based
core commerce adjusted EBITA, non-GAAP net income, non-GAAP diluted
earnings per share/ADS 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,
marketplace-based core commerce adjusted EBITA, non-GAAP net income
and non-GAAP diluted earnings per share/ADS 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 earnings per
share/ADS. We believe that these non-GAAP measures 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 its financial and operational decision-making. We
present three different income measures, namely adjusted EBITDA,
adjusted EBITA and non-GAAP net income, as well as one measure that
provides supplemental information on our core commerce segment,
namely marketplace-based core commerce adjusted EBITA, in order to
provide more information and greater transparency to investors
about our operating results.
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, marketplace-based core commerce
adjusted EBITA, non-GAAP net income, non-GAAP diluted earnings per
share/ADS and free cash flow should not be considered in isolation
or construed as an alternative to income from operations, adjusted
EBITA for core commerce, net income, diluted earnings per
share/ADS, cash flows or any other measure of performance or as an
indicator of our operating performance. These non-GAAP financial
measures presented here do not have standardized meanings
prescribed by U.S. GAAP and 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, interest expense, other income, net,
income tax expenses and share of results of equity method
investees, (ii) certain non-cash expenses, consisting of
share-based compensation expense, amortization of intangible
assets, depreciation of property and equipment, operating lease
cost relating to land use rights and impairment of goodwill, 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, interest expense, other income, net,
income tax expenses and share of results of equity method
investees, (ii) certain non-cash expenses, consisting of
share-based compensation expense, amortization of intangible assets
and impairment of goodwill, which we do not believe are reflective
of our core operating performance during the periods presented.
Marketplace-based core commerce adjusted EBITA represents
adjusted EBITA for core commerce excluding the effects of (i) local
consumer services, (ii) Lazada, (iii) New Retail and direct import
and (iv) Cainiao Network. Marketplace-based core commerce adjusted
EBITA reflects the performance of our most established businesses,
namely, those of our China retail marketplaces and wholesale
marketplaces which primarily adopt a marketplace-based approach. By
excluding certain businesses that are in the earlier stages of
their development and with business approaches that continue to
evolve, marketplace-based core commerce adjusted EBITA enables
investors to clearly evaluate the performance of our most
established businesses on a like-for-like basis.
Non-GAAP net income represents net income before
share-based compensation expense, amortization of intangible
assets, impairment of investments and goodwill, gain or loss on
deemed disposals/disposals/revaluation of investments, gain in
relation to the receipt of the 33% equity interest in Ant Group,
amortization of excess value receivable arising from the
restructuring of commercial arrangements with Ant Group and others,
as adjusted for the tax effects on non-GAAP adjustments.
Non-GAAP diluted earnings per share 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. Non-GAAP diluted earnings per ADS
represents non-GAAP diluted earnings per share after adjustment to
the ordinary share-to-ADS ratio.
Free cash flow represents net cash provided by operating
activities as presented in our consolidated cash flow statement
less purchases of property and equipment (excluding acquisition of
land use rights and construction in progress relating to office
campuses) and other intangible assets, as well as adjustments to
exclude from net cash provided by operating activities the consumer
protection fund deposits from merchants on our China retail
marketplaces. Prior to June quarter 2020, we also deducted
acquisition of licensed copyrights from cash flows from investing
activities. After our adoption of ASU 2019-02, “Entertainment —
Films — Other Assets — Film Costs (Subtopic 926-20) and
Entertainment — Broadcasters — Intangibles — Goodwill and Other
(Subtopic 920-350),” on April 1, 2020, we changed the
classification of cash outflows for the acquisition of licensed
copyrights from investing activities to operating activities in the
consolidated statements of cash flows, prospectively beginning on
April 1, 2020. We deduct certain items of cash flows from investing
activities in order to provide greater transparency into cash flow
from our revenue-generating business operations. We exclude
“acquisition of land use rights and construction in progress
relating to office campuses” because the office campuses are used
by us for corporate and administrative purposes and are not
directly related to our revenue-generating business operations. We
also exclude consumer protection fund deposits from merchants on
our China retail marketplaces because these deposits are restricted
for the purpose of compensating consumers for claims against
merchants.
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 September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions, except per share
data)
(in millions, except per share
data)
Revenue
119,017
155,059
22,838
233,941
308,810
45,483
Cost of revenue
(65,546
)
(89,960
)
(13,250
)
(125,533
)
(174,483
)
(25,698
)
Product development expenses
(10,938
)
(19,245
)
(2,834
)
(21,416
)
(30,327
)
(4,467
)
Sales and marketing expenses
(11,996
)
(17,371
)
(2,559
)
(22,694
)
(31,023
)
(4,569
)
General and administrative expenses
(6,591
)
(11,961
)
(1,762
)
(12,911
)
(18,798
)
(2,769
)
Amortization of intangible assets
(3,006
)
(2,888
)
(425
)
(6,072
)
(5,840
)
(860
)
Impairment of goodwill
(576
)
—
—
(576
)
—
—
Income from operations
20,364
13,634
2,008
44,739
48,339
7,120
Interest and investment income, net
63,348
10,510
1,548
63,535
32,647
4,808
Interest expense
(1,360
)
(1,101
)
(162
)
(2,706
)
(2,224
)
(328
)
Other income, net
3,171
1,148
169
5,272
2,641
389
Income before income tax and share of
results of equity method investees
85,523
24,191
3,563
110,840
81,403
11,989
Income tax expenses
(2,815
)
(1,911
)
(281
)
(9,527
)
(13,035
)
(1,920
)
Share of results of equity method
investees
(11,960
)
4,244
625
(11,443
)
4,593
677
Net income
70,748
26,524
3,907
89,870
72,961
10,746
Net loss attributable to noncontrolling
interests
1,843
2,352
346
4,169
3,448
508
Net income attributable to Alibaba Group
Holding Limited
72,591
28,876
4,253
94,039
76,409
11,254
Accretion of mezzanine equity
(51
)
(107
)
(16
)
(247
)
(49
)
(7
)
Net income attributable to ordinary
shareholders
72,540
28,769
4,237
93,792
76,360
11,247
Earnings per share attributable to
ordinary shareholders(1)
Basic
3.49
1.33
0.20
4.51
3.54
0.52
Diluted
3.44
1.31
0.19
4.45
3.48
0.51
Earnings per ADS attributable to
ordinary shareholders(1)
Basic
27.90
10.66
1.57
36.09
28.29
4.17
Diluted
27.51
10.48
1.54
35.58
27.83
4.10
Weighted average number of shares used
in calculating earnings per ordinary share (million
shares)(1)
Basic
20,800
21,602
20,788
21,591
Diluted
21,093
21,962
21,084
21,943
______________________
(1)
Each ADS represents eight ordinary shares,
which reflects the share subdivision and ADS ratio change that
became effective on July 30, 2019.
ALIBABA GROUP HOLDING LIMITED REVENUE
The following table sets forth our revenue by segments for the
periods indicated:
Three months ended September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Core commerce(1)
101,220
130,922
19,283
200,764
264,240
38,918
Cloud computing(2)
9,291
14,899
2,194
17,078
27,244
4,013
Digital media and entertainment(3)(5)
7,442
8,066
1,188
13,868
15,060
2,218
Innovation initiatives and
others(4)(5)
1,064
1,172
173
2,231
2,266
334
Total
119,017
155,059
22,838
233,941
308,810
45,483
(1)
Revenue from core commerce is primarily
generated from our China retail marketplaces, Freshippo, 1688.com,
Lazada.com, AliExpress, Alibaba.com, local consumer services and
Cainiao logistics services.
(2)
Revenue from cloud computing is primarily
generated from the provision of services, such as elastic
computing, database, storage, network virtualization services,
large scale computing, security, management and application
services, big data analytics, a machine learning platform and IoT
services.
(3)
Revenue from digital media and
entertainment is primarily generated from Youku, online games and
UCWeb.
(4)
Revenue from innovation initiatives and
others is primarily generated from businesses such as Amap, Tmall
Genie and other innovation initiatives. Other revenue also includes
SME annual fee received from Ant Group and its affiliates.
(5)
Starting the quarter ended June 30, 2020,
we reclassified revenue from our self-developed online games
business, which was previously reported under the innovation
initiatives and others segment, as revenue from digital media and
entertainment segment because it has moved beyond the incubation
stage. This reclassification conforms to the way that we manage and
monitor segment performance. Comparative figures have also been
reclassified to conform to the current presentation.
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 September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Core commerce
32,069
30,894
4,550
67,118
76,086
11,206
Cloud computing
(1,928
)
(3,796
)
(559
)
(3,437
)
(5,570
)
(820
)
Digital media and entertainment(1)
(3,535
)
(2,351
)
(346
)
(6,817
)
(4,369
)
(643
)
Innovation initiatives and others(1)
(2,865
)
(4,282
)
(631
)
(5,742
)
(7,847
)
(1,156
)
Unallocated
(3,377
)
(6,831
)
(1,006
)
(6,383
)
(9,961
)
(1,467
)
Total
20,364
13,634
2,008
44,739
48,339
7,120
______________________
(1)
Starting the quarter ended June 30, 2020,
we reclassified the results of our self-developed online games
business, which was previously reported under the innovation
initiatives and others segment, to the digital media and
entertainment segment because it has moved beyond the incubation
stage. This reclassification conforms to the way that we manage and
monitor segment performance. Comparative figures have also been
reclassified to conform to the current presentation.
The following table sets forth our adjusted EBITA by segments
for the periods indicated:
Three months ended September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Core commerce
38,574
45,958
6,769
79,599
97,195
14,315
Cloud computing
(521
)
(156
)
(23
)
(879
)
(498
)
(73
)
Digital media and entertainment(1)
(2,380
)
(710
)
(105
)
(4,711
)
(2,031
)
(299
)
Innovation initiatives and others(1)
(1,744
)
(2,381
)
(351
)
(3,611
)
(5,086
)
(749
)
Unallocated
(1,838
)
(1,495
)
(220
)
(3,751
)
(2,992
)
(441
)
Total
32,091
41,216
6,070
66,647
86,588
12,753
______________________
(1)
Starting the quarter ended June 30, 2020,
we reclassified the results of our self-developed online games
business, which was previously reported under the innovation
initiatives and others segment, to the digital media and
entertainment segment because it has moved beyond the incubation
stage. This reclassification conforms to the way that we manage and
monitor segment performance. Comparative figures have also been
reclassified to conform to the current presentation.
ALIBABA GROUP HOLDING LIMITED INFORMATION ABOUT
SEGMENTS
The table below sets forth selected financial information of our
operating segments for six months ended September 30, 2020:
Six months ended September 30,
2020
Core commerce
Cloud computing
Digital media and
entertainment(1)
Innovation initiatives and
others(1)
Unallocated(2)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
US$
(in millions, except
percentages)
Revenue
264,240
27,244
15,060
2,266
—
308,810
45,483
Income (Loss) from operations
76,086
(5,570
)
(4,369
)
(7,847
)
(9,961
)
48,339
7,120
Add: Share-based compensation expense
15,908
5,060
1,865
2,717
6,859
32,409
4,773
Add: Amortization of intangible assets
5,201
12
473
44
110
5,840
860
Adjusted EBITA
97,195
(3)
(498
)
(2,031
)
(5,086
)
(2,992
)
86,588
12,753
Adjusted EBITA margin
37
%
(2
)%
(13
)%
(224
)%
28
%
Six months ended September 30,
2019
Core commerce
Cloud computing
Digital media and
entertainment(1)
Innovation initiatives and
others(1)
Unallocated(2)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
(in millions, except
percentages)
Revenue
200,764
17,078
13,868
2,231
—
233,941
Income (Loss) from operations
67,118
(3,437
)
(6,817
)
(5,742
)
(6,383
)
44,739
Add: Share-based compensation expense
7,211
2,547
1,446
2,091
1,965
15,260
Add: Amortization of intangible assets
5,270
11
660
40
91
6,072
Add: Impairment of goodwill
—
—
—
—
576
576
Adjusted EBITA
79,599
(3)
(879
)
(4,711
)
(3,611
)
(3,751
)
66,647
Adjusted EBITA margin
40
%
(5
)%
(34
)%
(162
)%
28
%
______________________
(1)
Starting from the quarter ended June 30,
2020, we reclassified the results of our self-developed online
games business, which was previously reported under the innovation
initiatives and others segment, to the digital media and
entertainment segment because it has moved beyond the incubation
stage. This reclassification conforms to the way that we manage and
monitor segment performance. Comparative figures have also been
reclassified to conform to the current presentation.
(2)
Unallocated expenses primarily relate to
corporate administrative costs and other miscellaneous items that
are not allocated to individual segments.
(3)
Marketplace-based core commerce adjusted
EBITA increased 15% year-over-year to RMB106,416 million (US$15,673
million). A reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
ALIBABA GROUP HOLDING
LIMITED
UNAUDITED CONSOLIDATED BALANCE
SHEETS
As of March 31,
As of September 30,
2020
2020
RMB
RMB
US$
(in millions)
Assets
Current assets:
Cash and cash equivalents
330,503
301,509
44,407
Short-term investments
28,478
104,403
15,377
Restricted cash and escrow receivables
15,479
13,380
1,971
Equity securities and other
investments
4,234
4,791
706
Prepayments, receivables and other
assets
84,229
98,852
14,559
Total current assets
462,923
522,935
77,020
Equity securities and other
investments
161,329
189,134
27,856
Prepayments, receivables and other
assets
57,985
61,521
9,061
Investment in equity method investees
189,632
209,449
30,848
Property and equipment, net
103,387
118,037
17,385
Intangible assets, net
60,947
56,378
8,304
Goodwill
276,782
276,172
40,676
Total assets
1,312,985
1,433,626
211,150
Liabilities, Mezzanine Equity and
Shareholders’ Equity
Current liabilities:
Current bank borrowings
5,154
4,903
722
Income tax payable
20,190
19,564
2,881
Escrow money payable
3,014
182
27
Accrued expenses, accounts payable and
other liabilities
161,536
178,337
26,267
Merchant deposits
13,640
14,051
2,069
Deferred revenue and customer advances
38,338
45,905
6,761
Total current liabilities
241,872
262,942
38,727
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
As of March 31,
As of September 30,
2020
2020
RMB
RMB
US$
(in millions)
Deferred revenue
2,025
2,195
323
Deferred tax liabilities
43,898
48,374
7,125
Non-current bank borrowings
39,660
39,399
5,803
Non-current unsecured senior notes
80,616
77,486
11,413
Other liabilities
25,263
22,007
3,241
Total liabilities
433,334
452,403
66,632
Commitments and contingencies
—
—
—
Mezzanine equity
9,103
8,033
1,183
Shareholders’ equity:
Ordinary shares
1
1
—
Additional paid-in capital
343,707
377,769
55,639
Treasury shares at cost
—
—
—
Subscription receivables
(51
)
(49
)
(7
)
Statutory reserves
6,100
6,876
1,013
Accumulated other comprehensive loss
(643
)
(9,114
)
(1,342
)
Retained earnings
406,287
481,920
70,979
Total shareholders’ equity
755,401
857,403
126,282
Noncontrolling interests
115,147
115,787
17,053
Total equity
870,548
973,190
143,335
Total liabilities, mezzanine equity and
equity
1,312,985
1,433,626
211,150
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three months ended September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net cash provided by operating
activities(1)
47,326
54,296
7,997
81,938
104,395
15,376
Net cash used in investing
activities(1)
(21,353
)
(69,053
)
(10,170
)
(42,489
)
(136,781
)
(20,146
)
Net cash provided by financing
activities
2,106
10,106
1,488
6,599
5,497
809
Effect of exchange rate changes on cash
and cash equivalents, restricted cash and escrow receivables
2,353
(3,853
)
(568
)
3,730
(4,204
)
(619
)
Increase (Decrease) in cash and cash
equivalents, restricted cash and escrow receivables
30,432
(8,504
)
(1,253
)
49,778
(31,093
)
(4,580
)
Cash and cash equivalents, restricted cash
and escrow receivables at beginning of period
217,840
323,393
47,631
198,494
345,982
50,958
Cash and cash equivalents, restricted cash
and escrow receivables at end of period
248,272
314,889
46,378
248,272
314,889
46,378
______________________
(1)
We adopted ASU 2019-02, “Entertainment —
Films — Other Assets — Film Costs (Subtopic 926-20) and
Entertainment — Broadcasters — Intangibles — Goodwill and Other
(Subtopic 920-350),” on April 1, 2020. As a result of our adoption
of this new accounting update, we are now reporting cash outflows
for the acquisition of licensed copyrights as operating activities
in the consolidated statements of cash flows prospectively
beginning on April 1, 2020. Prior to our adoption of ASU 2019-02,
cash outflows for the acquisition of licensed copyrights were
previously classified as investing activities in the consolidated
statements of cash flows.
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 September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net income
70,748
26,524
3,907
89,870
72,961
10,746
Less: Interest and investment income,
net
(63,348
)
(10,510
)
(1,548
)
(63,535
)
(32,647
)
(4,808
)
Add: Interest expense
1,360
1,101
162
2,706
2,224
328
Less: Other income, net
(3,171
)
(1,148
)
(169
)
(5,272
)
(2,641
)
(389
)
Add: Income tax expenses
2,815
1,911
281
9,527
13,035
1,920
Add: Share of results of equity method
investees
11,960
(4,244
)
(625
)
11,443
(4,593
)
(677
)
Income from operations
20,364
13,634
2,008
44,739
48,339
7,120
Add: Share-based compensation expense
8,145
24,694
3,637
15,260
32,409
4,773
Add: Amortization of intangible assets
3,006
2,888
425
6,072
5,840
860
Add: Impairment of goodwill
576
—
—
576
—
—
Adjusted EBITA
32,091
41,216
6,070
66,647
86,588
12,753
Add: Depreciation of property and
equipment, and operating lease cost relating to land use rights
5,010
6,309
930
9,692
11,976
1,764
Adjusted EBITDA
37,101
47,525
7,000
76,339
98,564
14,517
ALIBABA GROUP HOLDING LIMITED RECONCILIATIONS OF
NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
(CONTINUED)
The table below sets forth a
reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA for the periods
indicated:
Three months ended September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Adjusted EBITA for core
commerce
38,574
45,958
6,769
79,599
97,195
14,315
Less: Effects of local consumer services,
Lazada, New Retail and direct import and Cainiao Network
7,036
4,982
734
12,811
9,221
1,358
Marketplace-based core commerce
adjusted EBITA
45,610
50,940
7,503
92,410
106,416
15,673
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 September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net income
70,748
26,524
3,907
89,870
72,961
10,746
Add: Share-based compensation expense
8,145
24,694
3,637
15,260
32,409
4,773
Add: Amortization of intangible assets
3,006
2,888
425
6,072
5,840
860
Add: Impairment of investments and
goodwill
19,855
5,666
835
20,105
5,769
850
Less: (Loss) Gain on deemed
disposals/disposals/ revaluation of investments and others
291
(12,721
)
(1,874
)
1,917
(31,751
)
(4,677
)
Less: Gain in relation to the receipt of
the 33% equity interest in Ant Group
(69,225
)
—
—
(69,225
)
—
—
Add: Amortization of excess value
receivable arising from the restructuring of commercial
arrangements with Ant Group
31
—
—
97
—
—
Adjusted for tax effects on non-GAAP
adjustments(1)
(101
)
37
5
(397
)
1,334
197
Non-GAAP net income
32,750
47,088
6,935
63,699
86,562
12,749
______________________
(1)
Tax effects on non-GAAP adjustments
primarily comprised of tax effects relating to certain gains and
losses from investments, share-based compensation expense and
amortization of intangible assets.
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 earnings per share/ADS to non-GAAP
diluted earnings per share/ADS for the periods indicated:
Three months ended September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions, except per share
data)
(in millions, except per share
data)
Net income attributable to ordinary
shareholders – basic
72,540
28,769
4,237
93,792
76,360
11,247
Dilution effect on earnings arising from
option plans operated by equity method investees and
subsidiaries
(4
)
(13
)
(2
)
(15
)
(26
)
(4
)
Net income attributable to ordinary
shareholders – diluted
72,536
28,756
4,235
93,777
76,334
11,243
Add: Non-GAAP adjustments to net
income(1)
(37,998
)
20,564
3,028
(26,171
)
13,601
2,003
Non-GAAP net income attributable
to ordinary shareholders for computing non-GAAP diluted earnings
per share/ADS
34,538
49,320
7,263
67,606
89,935
13,246
Weighted average number of shares on a
diluted basis (million shares)(5)
21,093
21,962
21,084
21,943
Diluted earnings per
share(2)(5)
3.44
1.31
0.19
4.45
3.48
0.51
Add: Non-GAAP adjustments to net income
per share(3)(5)
(1.80
)
0.94
0.14
(1.24
)
0.62
0.09
Non-GAAP diluted earnings per
share(4)(5)
1.64
2.25
0.33
3.21
4.10
0.60
Diluted earnings per ADS(2)(5)
27.51
10.48
1.54
35.58
27.83
4.10
Add: Non-GAAP adjustments to net income
per ADS(3)(5)
(14.41
)
7.49
1.11
(9.93
)
4.96
0.73
Non-GAAP diluted earnings per
ADS(4)(5)
13.10
17.97
2.65
25.65
32.79
4.83
______________________
(1)
See the table above for the reconciliation
of net income to non-GAAP net income for more information of these
non-GAAP adjustments.
(2)
Diluted earnings per share is derived from
net income attributable to ordinary shareholders for computing
diluted earnings per share divided by weighted average number of
shares on a diluted basis. Diluted earnings per ADS is derived from
the diluted earnings per share after adjustment to the ordinary
share-to-ADS ratio.
(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. Non-GAAP
adjustments to net income per ADS is derived from the non-GAAP
adjustments to net income per share after adjustment to the
ordinary share-to-ADS ratio.
(4)
Non-GAAP diluted earnings per share is
derived from non-GAAP net income attributable to ordinary
shareholders for computing non-GAAP diluted earnings per share
divided by weighted average number of shares on a diluted basis.
Non-GAAP diluted earnings per ADS is derived from the non-GAAP
diluted earnings per share after adjustment to the ordinary
share-to-ADS ratio.
(5)
Each ADS represents eight ordinary shares,
which reflects the share subdivision and ADS ratio change that
became effective on July 30, 2019.
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 September
30,
Six months ended September
30,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net cash provided by operating
activities(1)
47,326
54,296
7,997
81,938
104,395
15,376
Less: Purchase of property and equipment
(excluding land use rights and construction in progress relating to
office campuses)
(9,176
)
(11,876
)
(1,749
)
(15,032
)
(25,248
)
(3,719
)
Less: Acquisition of licensed
copyrights(1) and other intangible assets
(2,451
)
(1,662
)
(245
)
(4,846
)
(1,718
)
(253
)
Less: Changes in the consumer protection
fund deposits
(5,211
)
(218
)
(32
)
(5,211
)
(319
)
(47
)
Free cash flow
30,488
40,540
5,971
56,849
77,110
11,357
(1)
We adopted ASU 2019-02, “Entertainment —
Films — Other Assets — Film Costs (Subtopic 926-20) and
Entertainment — Broadcasters — Intangibles — Goodwill and Other
(Subtopic 920-350),” on April 1, 2020. As a result of our adoption
of this new accounting update, we are now reporting cash outflows
for the acquisition of licensed copyrights as operating activities
in the consolidated statements of cash flows prospectively
beginning on April 1, 2020. Prior to our adoption of ASU 2019-02,
cash outflows for the acquisition of licensed copyrights were
previously classified as investing activities in the consolidated
statements of cash flows.
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
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Sep 30, 2019
Dec 31, 2019
Mar 31, 2020
Jun 30, 2020
Sep 30, 2020
(in millions)
Annual active consumers
636
654
674
693
711
726
742
757
Mobile MAUs
The table below sets forth the mobile MAUs on our various mobile
apps that access our China retail marketplaces for the periods
indicated:
The month ended
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Sep 30, 2019
Dec 31, 2019
Mar 31, 2020
Jun 30, 2020
Sep 30, 2020
(in millions)
Mobile MAUs
699
721
755
785
824
846
874
881
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201105005549/en/
Investor Relations Contact: Rob Lin
investor@alibabagroup.com Media Contacts: Brion Tingler
brion.tingler@alibaba-inc.com Cathy Yan
cathy.yan@alibaba-inc.com
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