Board authorizes US$6 billion stock repurchase
plan
Alibaba Group Holding Limited (NYSE:BABA) today announced its
financial results for the quarter ended March 31, 2017 and the
fiscal year then ended.
“Alibaba Group had another outstanding quarter and fiscal year,
demonstrating our ability to successfully engage and monetize the
half a billion consumers across our platforms,” said Daniel Zhang,
Chief Executive Officer of Alibaba Group. “Our core commerce
segment continued its significant growth and strong cash flow at
large scale, enabling our aggressive investment in cloud computing,
digital media and entertainment to drive the digital transformation
of the economy and high-quality consumption across China.”
“We reported another excellent quarter, with revenue growth
accelerating to 60%, the highest growth rate we’ve achieved since
our IPO. We also reported very strong fiscal year revenue growth of
56% with annual non-GAAP free cash flow of approximately US$10
billion1,” said Maggie Wu, Chief Financial Officer of Alibaba
Group. “Our robust results demonstrate the strength of our core
businesses, as well as the positive momentum of our emerging
businesses, including cloud computing, where we continue to see
strong growth and market leadership.”
1
For the fiscal year ended March 31, 2017, net cash provided
by operating activities was RMB80,326 million (US$11,670 million)
and non-GAAP free cash flow was RMB68,790 million (US$9,994
million).
BUSINESS HIGHLIGHTS
In the quarter ended March 31,
2017:
- Revenue was RMB38,579 million
(US$5,605 million), an increase of 60% year-over-year.
- Revenue from core commerce increased
47% year-over-year to RMB31,570 million (US$4,587 million).
- Revenue from cloud computing increased
103% year-over-year to RMB2,163 million (US$314 million).
- Revenue from digital media and
entertainment increased 234% year-over-year to RMB3,927 million
(US$571 million).
- Revenue from innovation initiatives and
others increased 88% year-over-year to RMB919 million (US$133
million).
- Annual active buyers on our
China retail marketplaces reached 454 million, an increase of 11
million from the 12-month period ended in December 2016.
- Mobile MAUs on our China retail
marketplaces reached 507 million in March, an increase of 14
million over December 2016.
- The number of paying customers of
our cloud computing business grew to 874,000 from 765,000 in
the previous quarter. Operating loss from cloud computing was
RMB505 million (US$73 million) and adjusted EBITA loss was RMB169
million (US$24 million).
- Net income was RMB9,852 million
(US$1,431 million), income from operations was RMB9,532
million (US$1,385 million) and adjusted EBITDA was RMB16,597
million (US$2,411 million). Operating margin was 25%,
adjusted EBITDA margin was 43% and adjusted EBITA margin
for core commerce was 59%.
- Diluted EPS was RMB4.12
(US$0.60) and non-GAAP diluted EPS was RMB4.35
(US$0.63).
- Net cash provided by operating
activities was RMB10,746 million (US$1,561 million) and
non-GAAP free cash flow was RMB7,980 million (US$1,159
million).
In the fiscal year ended March 31,
2017:
- Revenue was RMB158,273 million
(US$22,994 million), an increase of 56% year-over-year.
- Revenue from core commerce increased
45% year-over-year to RMB133,880 million (US$19,450 million).
- Revenue from cloud computing increased
121% year-over-year to RMB6,663 million (US$968 million).
- Revenue from digital media and
entertainment increased 271% year-over-year to RMB14,733 million
(US$2,141 million).
- Revenue from innovation initiatives and
others increased 65% year-over-year to RMB2,997 million (US$435
million).
- Annual active buyers on our
China retail marketplaces reached 454 million, an increase of 31
million from the 12-month period ended on March 31, 2016. Combined
annual active buyers on our AliExpress and Lazada marketplaces was
83 million.
- Mobile MAUs on our China retail
marketplaces reached 507 million in March, an increase of 97
million over March 2016.
- GMV transacted on our China
retail marketplaces in fiscal year 2017 was RMB3,767 billion
(US$547 billion), an increase of 22% compared to RMB3,092 billion
in fiscal year 2016.
- We have capitalized on the trend of
user growth and proliferation of usage in the transition from
desktop computers to mobile. Mobile GMV transacted on our
China retail marketplaces was RMB2,981 billion (US$433 billion), or
79% of total GMV, an increase of 49% year-over-year. Mobile
revenue from the China commerce retail business was RMB90,731
million (US$13,182 million), or 80% of our China commerce retail
revenue, an increase of 80% year-over-year. During fiscal year
2017, monetization of our mobile commerce platforms outpaced the
monetization of the desktop computer platforms.
- The number of paying customers of
our cloud computing business grew to 874,000 from 513,000 as of
March 31, 2016. For the full fiscal year 2017, operating loss from
cloud computing was RMB1,681 million (US$244 million) and adjusted
EBITA loss was RMB476 million (US$69 million).
- Net income was RMB41,226 million
(US$5,989 million), income from operations was RMB48,055
million (US$6,981 million) and adjusted EBITDA was RMB74,456
million (US$10,817 million). Operating margin was 30%,
adjusted EBITDA margin was 47% and adjusted EBITA margin for
core commerce was 62%.
- Diluted EPS was RMB16.97
(US$2.47) and non-GAAP diluted EPS was RMB23.44
(US$3.41).
- Net cash provided by operating
activities was RMB80,326 million (US$11,670 million) and
non-GAAP free cash flow was RMB68,790 million (US$9,994
million).
BUSINESS AND STRATEGIC UPDATES
Core Commerce
Taobao – personalized data powering higher consumer
engagement. The Taobao App’s highly relevant and engaging
content continues to drive robust growth in active users and
engagement. In the three months since December 2016, we added 14
million mobile MAUs on our China retail marketplaces, increasing
mobile MAUs to 507 million in March 2017. This strong mobile user
growth reflects our efforts to establish the Taobao App as a
destination platform not only for shopping, but also for sharing
product knowledge and lifestyle content, which drive effective user
engagement and retention. During the quarter, we launched new
features and content, continuing to offer enhanced and unique user
experience on the Taobao App. For example, the “digital mirror”
feature on the Taobao App allows consumers to virtually apply
different shades of makeup. In addition, following the successful
launch of its webisodes series in 2016, during this quarter Taobao
aired “Night Warriors,” a new series of webisodes that promotes
household products. This video campaign is part of Taobao’s larger
efforts to position itself as a lifestyle destination for
consumers, especially younger shoppers.
Tmall – brands’ partner of choice. We have established
Tmall as a leading brand-building platform that is capturing
increasing marketing spend from owners of both domestic and
international branded products doing business in China. As of March
2017, 75% of the consumer brands that ranked in Forbes Top 100
World’s Most Valuable Brands have established digital operations on
Tmall. Tmall also enables brands to gain invaluable consumer
insights for the China market for new product launches,
brand-building, customer acquisition and customer lifecycle
management. For example, during the quarter, Alfa Romeo, the luxury
auto brand, forged an exclusive strategic partnership with Tmall to
market and sell its cars online in China. The consumer data
generated through our platforms enabled the automaker to gain
greater insights about its potential customers in China faster and
more effectively. In addition, Mattel, the leading global childhood
play and development company, began working with our AI Lab to
develop new and innovative products, designed to aid child
development through the use of cutting-edge technology and
interactive learning.
Commerce technologies and services – offering value enhancing
technologies and services for merchants. Since November 2015,
we have used artificial intelligence to handle the massive volume
of inquiries from consumers through chatbots. As of March 2017,
this AI technology is able to handle on a real-time basis millions
of customer inquiries daily.
During this quarter, we made our AI technology available to
merchants doing business on our China retail marketplaces through a
service named “Store Concierge.” This proprietary technology uses
natural-language processing to help merchants to efficiently handle
consumer inquiries such as returns and refunds, especially during
peak promotional seasons. It also supports other services, such as
providing personalized recommendations and promotion and discount
information.
International – laying the foundation for long-term
growth. Our international consumer and cross-border businesses
saw robust growth during the quarter. Our international consumer
platform AliExpress and Lazada achieved 83 million annual active
buyers combined for the twelve months ended March 2017. AliExpress
currently operates sixteen local language sites, including sites in
Russian, Spanish and French.
During the quarter, we joined forces with government entities to
launch an e-hub for trade clearance and logistics in Malaysia under
our Electronic World Trade Platform (eWTP) initiative to facilitate
cross-border trade between China and Southeast Asia and among
Southeast Asian countries. This digital free trade zone will offer
simple and straightforward regulations, lower barriers for entry
into new markets and provide small businesses with easier access to
financing.
Cloud Computing
Alibaba Cloud was China’s largest provider of public cloud
services in 2016, as measured by revenue, according to IDC. In the
March 2017 quarter, Alibaba Cloud launched 152 new products and
features including cutting edge big data solutions. As of March
2017, paying customers for cloud computing grew to 874,000, an
increase of approximately 109,000 from the previous quarter,
driving revenue growth to 103% year-over-year. Our cloud computing
customer base spans a variety of industries and businesses from
start-ups to large corporations, covering industry segments across
consumer brands, energy, financial institutions, healthcare,
manufacturing, media and retail. Alibaba Cloud’s top priority
remains expanding its market leadership.
Digital Media and
Entertainment
We see tremendous opportunities to drive synergies between our
digital media and entertainment and core commerce offerings. We
have leveraged the consumer reach of our commerce and affiliate
payment businesses to drive subscriber growth for Youku Tudou’s
premium online video content. In addition, data generated from our
entertainment offerings have enabled us to drive better
personalized recommendations on our core commerce platforms.
UCWeb continues to experience rapid growth in its international
user base. During the quarter, UCWeb’s news and content aggregator
service, UC News Feeds, crossed 100 million MAUs in India and
Indonesia combined.
Innovation Initiatives and
Others
AutoNavi has been strengthening its leading position as a
digital map, navigation and location-based services infrastructure
provider in China by utilizing big data and machine learning
technology. Currently, AutoNavi not only supports our core commerce
and other affiliated businesses (Taobao, Tmall, Koubei and Cainiao
Network), but also serves enterprises in other industries in our
eco-system, such as ride sharing, mobile phone, food delivery,
social media, and travel services. The use case expansion and
improving user experience have supported rapid user growth for the
AutoNavi App. According to Quest Mobile, the AutoNavi App is one of
the top two map apps in China during the quarter, as measured by
MAUs.
Updates on Equity Investees and
Others
Cainiao Network – data enabled logistics. During the
March quarter, which is an off-peak season for e-commerce, Cainiao
Network’s platform helped enable the delivery of an average of 42
million packages per day. Cainiao Network’s data platform enables
logistics service providers to improve the quality and efficiency
of their services. We have seen rapid adoption of Cainiao Network’s
data platform and technology by the express courier partners in our
logistics ecosystem. In March 2017, 81% of the shipping labels used
by these express courier firms for orders generated on our China
retail marketplaces used Cainiao Network’s standardized structured
data format to ensure faster and more accurate delivery to
consumers, up from 60% in the same period last year.
Koubei – Local Services. Koubei, our local services joint
venture with Ant Financial, generated RMB75 billion (US$11 billion)
in payment volume transacted through Alipay during the March
quarter, compared to RMB21 billion in the same period last
year.
Suning Cooperation. With Suning, we have executed a plan
to drive synergies in e-commerce, logistics and incremental
business since entering into a strategic collaboration in August
2015. The Suning Tmall flagship store had a strong performance this
quarter, with GMV more than tripling year-over-year, as well as
continued acceleration of growth of the consumer electronics
category on Tmall as a whole over the past several quarters.
Corporate Responsibility
Initiatives
Joint efforts to protect water resources. On April 8,
2017, Alibaba Foundation formed an alliance with several
non-governmental environment protection organizations focused on
protecting water resources in China. Alibaba Foundation and Green
Hunan, an environmental organization based in Hunan Province, also
announced the formation of the Yangtze River Protection Center.
We are committed to establishing a unique charitable ecosystem
that focuses on innovation and scalability. In 2016, the Research
Center for Corporate Social Responsibility of the Chinese Academy
of Social Sciences named us as one of the top 10 charitable
enterprises in China and the top charitable private enterprise in
China.
Cash Flow from Operating Activities and
Free Cash Flow
In the March quarter, net cash provided by operating activities
was RMB10,746 million (US$1,561 million). We generated RMB7,980
million (US$1,159 million) in non-GAAP free cash flow. For the full
fiscal year 2017, net cash provided by operating activities was
RMB80,326 million (US$11,670 million) and non-GAAP free cash flow
was RMB68,790 million (US$9,994 million). A reconciliation of net
cash provided by operating activities to free cash flow is included
at the end of this results announcement.
Share Repurchase Program
Our Board of Directors has authorized a new share repurchase
program in an aggregate amount of up to US$6.0 billion over a
period of two years, primarily to offset dilution from our
share-based compensation programs. This new share repurchase
program replaces our current share repurchase program.
KEY OPERATIONAL METRICS*
March 31,
December 31,
March 31,
% Change
2016
2016
2017
YoY
QoQ
China Commerce Retail: Annual active buyers(1) (in
millions) 423 443 454
7
% 2 % Mobile monthly active users (MAUs)(2) (in millions) 410 493
507 24 % 3 %
Cloud Computing: Paying customers(3) (in
thousands) 513 765 874 70 % 14 % _________________ * For
definitions of terms used but not defined in this results
announcement, please refer to our annual report on Form 20-F for
the fiscal year ended March 31, 2016. (1) For the twelve months
ended on the respective dates. (2) For the month ended on the
respective dates. (3) As of the respective dates.
SUMMARY FINANCIAL RESULTS
Three months ended March 31, 2016
2017 RMB RMB
US$(1)
YoY % Change
(in millions, except percentages and
per share amounts)
Revenue 24,184 38,579 5,605 60 % Income from
operations 5,112 9,532 1,385 86 % Operating margin 21 % 25 %
Adjusted EBITDA(2) 11,498 16,597 2,411 44 % Adjusted EBITDA
margin(2) 48 % 43 % Adjusted EBITA(2) 10,408 15,151 2,201 46 %
Adjusted EBITA margin(2) 43 % 39 % Net income 5,314 9,852
1,431 85 % Non-GAAP net income(2) 7,556 10,440 1,517 38 %
Diluted earnings per share/ADS (EPS) 2.11 4.12 0.60 95 % Non-GAAP
diluted EPS(2) 2.99 4.35 0.63 45 % _______________ (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 RMB6.8832 to US$1.00, the exchange rate on March
31, 2017 as set forth in the H.10 statistical release of the
Federal Reserve Board. The percentages stated in this announcement
are calculated based on the RMB amounts. (2)
See the sections entitled “Information
about Segments,” “Non-GAAP Financial Measures” and “Reconciliations
of Non-GAAP Measures to the Nearest Comparable GAAP Measures” for
more information about the non-GAAP measures referred to within
this results announcement.
INFORMATION ABOUT SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended March 31, 2017
Digital media Innovation
Core Cloud and initiatives
commerce computing entertainment and
others
Unallocated(1)
Consolidated RMB RMB RMB RMB
RMB RMB US$ (in millions, except
percentages) Revenue 31,570 2,163
3,927 919
—
38,579 5,605 Income (loss) from
operations
16,500
(505
)
(2,586
)
(1,888
)
(1,989
)
9,532
1,385
Add: Share-based compensation expense 1,477 335 418 1,043 1,033
4,306 625 Add: Amortization of intangible assets 602 1
457 163 90 1,313 191
Adjusted EBITA 18,579 (169
) (1,711 ) (682 ) (866
) 15,151 2,201 Adjusted EBITA
margin 59 % (8 )% (44
)% (74 )%
39 % Three months ended March 31, 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 21,455 1,066 1,174 489
—
24,184 Income (loss) from operations
10,733 (607 ) (838 )
(1,971 ) (2,205 ) 5,112
Add: Share-based compensation expense
1,770
440
327
781
1,235
4,553
Add: Amortization of intangible assets 190 1 310
165 77 743
Adjusted EBITA
12,693 (166 ) (201 )
(1,025 ) (893 ) 10,408
Adjusted EBITA margin 59 % (16
)% (17 )% (210 )% 43
% ____________________ (1) Unallocated expenses are
primarily related to corporate administrative costs and other
miscellaneous items that are not allocated to individual segments.
MARCH QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended March 31, 2017 was RMB38,579
million (US$5,605 million), an increase of 60% compared to
RMB24,184 million in the same quarter of 2016. The increase was
mainly driven by the robust revenue growth of our China commerce
retail business and Alibaba Cloud, as well as the consolidation of
Youku Tudou and Lazada.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended March 31, 2016
2017 % of % of
YoY % RMB Revenue RMB US$
Revenue Change (in millions, except
percentages) Core commerce: China commerce retail 18,340 76 %
25,815 3,750 67 % 41 % China commerce wholesale 1,083 4 % 1,469 213
4 % 36 % International commerce retail 590 2 % 2,429 353 6 % 312 %
International commerce wholesale 1,395 6 % 1,509 219 4 % 8 % Others
47 1 % 348 52 1 % 640 % Total core commerce 21,455 89 % 31,570
4,587 82 % 47 % Cloud computing 1,066 4 % 2,163 314 6 % 103
% Digital media and entertainment 1,174 5 % 3,927 571 10 % 234 %
Innovation initiatives and others 489 2 % 919 133 2 % 88 % Total
24,184 100 % 38,579
5,605
100 % 60 %
Core commerce segment
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in the quarter ended March 31, 2017 was RMB25,815
million (US3,750 million), or 67% of total revenue, an increase of
41% compared to RMB18,340 million in the same quarter of 2016. The
increased revenue was due to robust growth of online marketing
service revenue, as well as growth in commission revenue. Online
marketing service revenue grew by 46% year-over-year, which was
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 improved data technology. This growth
resulted in higher average spending on our online marketing
services by an increasing number of brands and merchants.
Commission revenue, representing 32% of China commerce retail
revenue in the quarter ended March 31, 2017, grew by 34%
year-over-year, reflecting robust GMV growth.Mobile revenue from
the China commerce retail business in the quarter ended March 31,
2017 was RMB22,056 million (US$3,204 million), or 85% of our China
commerce retail revenue, an increase of 69% compared to RMB13,084
million in the same quarter of 2016.As a result of the foregoing,
our annual China commerce retail revenue per annual active buyer
increased from RMB189 for the quarter ended March 31, 2016 to
RMB251 (US$36) for the quarter ended March 31, 2017, and mobile
revenue per mobile MAU grew from RMB123 for the quarter ended March
31, 2016 to RMB179 (US$26) for the quarter ended March 31, 2017, as
illustrated in these charts and the table at the end of this
announcement.Annual active buyers – Our China retail
marketplaces had 454 million annual active buyers in the 12 months
ended March 31, 2017, compared to 443 million in the 12 months
ended December 31, 2016, representing a net addition of 11 million
annual active buyers from the prior quarter, and a 7% increase from
423 million in the 12 months ended March 31, 2016. Average annual
spend per active buyer for the 12 months ended March 31, 2017 also
continued to increase from prior quarters.Mobile MAUs –
Mobile MAUs on our China retail marketplaces grew to 507 million in
the month ended March 31, 2017, compared to 493 million in the
month ended December 31, 2016, representing a net addition of 14
million MAUs in the quarter and a 24% increase from 410 million in
the month ended March 31, 2016.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
the quarter ended March 31, 2017 was RMB1,469 million (US$213
million), an increase of 36% compared to RMB1,083 million in the
same quarter of 2016. The increase was primarily due to an increase
in the average revenue from paying members and also to an increase
in the number of paying members on our 1688.com platform.
- International commerce retail
businessRevenue from our international commerce retail business
in the quarter ended March 31, 2017 was RMB2,429 million (US$353
million), an increase of 312% compared to RMB590 million in the
same quarter of 2016. The increase was primarily due to the
consolidation of Lazada starting from mid-April 2016 and also due
to the growth in revenue generated from AliExpress.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in the quarter ended March 31, 2017 was RMB1,509 million
(US$219 million), an increase of 8% compared to RMB1,395 million in
the same quarter of 2016. The increase was due to growth in revenue
generated by import/export related value-added services.
Cloud computing
Revenue from our cloud computing business in the quarter ended
March 31, 2017 was RMB2,163 million (US$314 million), an increase
of 103% compared to RMB1,066 million in the same quarter of 2016,
primarily driven by an increase in the number of paying customers
to 874,000, representing a year-over-year increase of 70%, and also
by an increase in their usage of our cloud computing services
including more complex offerings, such as our content delivery
network and database services.
Digital media and entertainment
Revenue from our digital media and entertainment business in the
quarter ended March 31, 2017 was RMB3,927 million (US$571 million),
an increase of 234% compared to RMB1,174 million in the same
quarter of 2016. The increase was primarily due to the
consolidation of Youku Tudou starting from the quarter ended June
30, 2016, and also to an increase in revenue from mobile
value-added services provided by UCWeb, such as mobile search and
news feeds, as well as apps and game publishing.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended March 31, 2017 was RMB919 million (US$133 million), an
increase of 88% compared to RMB489 million in the same quarter of
2016, primarily due to an increase in revenue from YunOS and
AutoNavi.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended March 31,
%
ofRevenueYoYchange
2016 2017 RMB
% ofRevenue
RMB
US$
% ofRevenue
(in millions, except
percentages)
Costs and expenses: Cost of revenue 9,562 39 % 15,490 2,250
40 % 1 % Product development expenses 3,573 15 % 4,518 657 12 % (3
)% Sales and marketing expenses 2,861 12 % 4,332 629 11 % (1 )%
General and administrative expenses 2,333 10 % 3,394 493 9 % (1 )%
Amortization of intangible assets 743 3 % 1,313 191 3 % 0 % Total
costs and expenses 19,072 79 % 29,047 4,220 75 % (4 )%
Share-based compensation expense by function: Cost of
revenue 1,047 4 % 1,226 178 3 % (1 )% Product development expenses
1,585 7 % 1,394 202 4 % (3 )% Sales and marketing expenses 571 2 %
461 67 1 % (1 )% General and administrative expenses 1,350 6 %
1,225 178 3 % (3 )% Total share-based compensation expense 4,553 19
% 4,306 625 11 % (8 )%
Costs and expenses excluding
share-based compensation expense: Cost of revenue 8,515 35 %
14,264 2,072 37 % 2 % Product development expenses 1,988 8 % 3,124
455 8 % 0 % Sales and marketing expenses 2,290 10 % 3,871 562 10 %
0 % General and administrative expenses 983 4 % 2,169 315 6 % 2 %
Amortization of intangible assets 743 3 % 1,313 191 3 % 0 % Total
costs and expenses excluding share-based compensation expenses
14,519 60 % 24,741
3,595
64 % 4 %
Cost of revenue – Cost of revenue in the quarter ended
March 31, 2017 was RMB15,490 million (US$2,250 million), or 40% of
revenue, compared to RMB9,562 million, or 39% 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 increased from 35% in the quarter ended March 31, 2016
to 37% in the quarter ended March 31, 2017. The increase was
primarily due to an increase in content acquisition costs of Youku
Tudou, costs of inventory of Lazada 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 March 31, 2017 were RMB4,518 million
(US$657 million), or 12% of revenue, compared to RMB3,573 million,
or 15% of revenue, in the same quarter of 2016. Without the effect
of share-based compensation expense, product development expenses
as a percentage of revenue in the quarter ended March 31, 2017
would have remained stable at 8% as compared to the same quarter in
2016.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended March 31, 2017 were RMB4,332 million
(US$629 million), or 11% of revenue, compared to RMB2,861 million,
or 12% 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 in the quarter ended March 31, 2017
would have remained stable at 10% as compared to the same quarter
in 2016.
General and administrative expenses – General and
administrative expenses in the quarter ended March 31, 2017 were
RMB3,394 million (US$493 million), or 9% of revenue, compared to
RMB2,333 million, or 10% 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
increased from 4% in the quarter ended March 31, 2016 to 6% in the
quarter ended March 31, 2017, reflecting a non-recurring adjustment
during the quarter ended March 31, 2016.
Share-based compensation expense –Total share-based
compensation expense included in the cost and expense items above
in the quarter ended March 31, 2017 was RMB4,306 million (US$625
million), a decrease of 5% compared to RMB4,553 million in the same
quarter of 2016. Share-based compensation expense as a percentage
of revenue decreased to 11% in the quarter ended March 31, 2017
from 19% in the same quarter of 2016. The following table sets
forth our analysis of share-based compensation expense for the
quarters indicated by type of share-based awards:
Three months ended March 31,
2016 December 31, 2016 March 31,
2017 % Change % of % of
% of RMB Revenue RMB
Revenue RMB US$ Revenue YoY
QoQ (in millions, except percentages) By type of
awards: Alibaba Group share-based awards granted to:
- Our employees
2,966 12 % 3,263 6 % 3,180 462 8 % 7 % (3 )%
- Ant Financial employees and other
consultants(1)
198 1 % (134 ) 0 % 579 84 2 % 192 % N/A Ant Financial share-based
awards granted to our employees(1) 1,338 6 % 433 1 % 339 49 1 % (75
)% (22 )% Others 51 0 % 182 0 % 208 30 0 % 308 % 14 % Total
share-based compensation expense 4,553 19 % 3,744 7 % 4,306
625
11 % (5 )% 15 % ___________________ (1) Awards subject to
mark-to-market accounting treatment.
Share-based compensation expense related to Alibaba Group
share-based awards granted to our employees in this quarter
remained relatively stable as compared to the previous quarter.
The increase from the quarter ended December 31, 2016 in
share-based compensation expense related to Alibaba Group
share-based awards granted to Ant Financial employees and other
consultants reflected the mark-up of the fair value of Alibaba
Group share-based awards, which are subject to mark-to-market
accounting treatment.
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 March 31, 2017 was RMB1,313
million (US$191 million), an increase of 77% from RMB743 million in
the same quarter of 2016. The increase was due to an increase in
intangible assets recognized arising from our strategic
acquisitions and investments, including Lazada and Youku Tudou.
Income from operations and operating
margin
Income from operations in the quarter ended March 31, 2017 was
RMB9,532 million (US$1,385 million), or 25% of revenue, an increase
of 86% compared to RMB5,112 million, or 21% of revenue, in the same
quarter of 2016.
Adjusted EBITDA and Adjusted EBITDA
margin
Adjusted EBITDA increased by 44% to RMB16,597 million (US$2,411
million) in the quarter ended March 31, 2017, compared to RMB11,498
million in the same quarter of 2016. Adjusted EBITDA margin
decreased to 43% in the quarter ended March 31, 2017 from 48% in
the same quarter of 2016, mainly due to the consolidation of Youku
Tudou and Lazada, partially offset by increased operating leverage.
A reconciliation of net income to adjusted EBITDA is included at
the end of this results announcement.
As many of our newly developed and acquired businesses have
different cost structures and lower margins, we expect that our
margin will continue to be negatively impacted by these new
businesses.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended March 31, 2016
2017 % of % of RMB
Revenue RMB US$ Revenue (in
millions, except percentages) Core commerce 12,693 59 %
18,579
2,699
59 % Cloud computing (166 ) (16 )% (169 ) (24 ) (8 )% Digital media
and entertainment (201 ) (17 )% (1,711 ) (249 ) (44 )%
Innovation initiatives and others
(1,025
)
(210
)%
(682
)
(99
)
(74
)%
Core commerce segment – Adjusted EBITA increased by 46%
to RMB18,579 million (US$2,699 million) in the quarter ended March
31, 2017, compared to RMB12,693 million in the same quarter of
2016. Adjusted EBITA margin remained the same at 59% in the quarter
ended March 31, 2017, as compared to the same quarter of 2016,
reflecting operating leverage achieved, offset by the consolidation
of Lazada and investment in Tmall Supermarket.
Cloud computing segment – Adjusted EBITA in the quarter
ended March 31, 2017 was a loss of RMB169 million (US$24 million),
compared to a loss of RMB166 million in the same quarter of 2016.
Adjusted EBITA margin improved to negative 8% in the quarter ended
March 31, 2017 from negative 16% in the quarter ended March 31,
2016, primarily due to robust growth in revenue and economies of
scale.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended March 31, 2017 was a loss of RMB1,711 million
(US$249 million), compared to a loss of RMB201 million in the same
quarter of 2016. Adjusted EBITA margin decreased to negative 44% in
the quarter ended March 31, 2017 from negative 17% in the quarter
ended March 31, 2016, primarily due to the consolidation of Youku
Tudou.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended March 31, 2017 was a loss of RMB682
million (US$99 million), compared to a loss of RMB1,025 million in
the same quarter of 2016. Adjusted EBITA margin improved to
negative 74% in the quarter ended March 31, 2017, compared to
negative 210% in the quarter ended March 31, 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 March
31, 2017 was RMB6,553 million (US$952 million), a significant
increase from RMB3,778 million in the same quarter of 2016,
primarily due to an increase in disposal gains arising from sale of
certain investments.
Other income or loss,
net
Other income, net in the quarter ended March 31, 2017 was RMB440
million (US$64 million), compared to other loss, net of RMB529
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 RMB789 million (US$115 million) in the quarter
ended March 31, 2017. In the same quarter of 2016, Ant Financial
sustained a net loss as a result of its marketing and promotion
activities to drive user growth and engagement, which lead to our
reversal of RMB207 million in income recognized in respect of
royalty fees and software technology service fees under our profit
sharing arrangement.
Income tax expenses
Income tax expenses in the quarter ended March 31, 2017 were
RMB4,553 million (US$662 million), an increase of 149% compared to
RMB1,825 million in the same quarter of 2016. Our effective tax
rate was 29% in the quarter ended March 31, 2017, compared to 23%
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 23% in the
quarter ended March 31, 2017, compared to 14% 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. In this quarter, we also incurred taxes
arising from our disposal gain of certain investments.
Share of results of equity
investees
Share of results of equity investees in the quarter ended March
31, 2017 was a loss of RMB1,444 million (US$210 million), compared
to a loss of RMB712 million in the same quarter of 2016. We record
our share of results of equity investees one quarter in arrears.
Share of results of equity investees in the quarter ended March 31,
2017 and the comparative periods consisted of the following:
Three months ended
March 31, 2016
December 31, 2016 March 31, 2017
RMB RMB RMB
US$
(in millions) Share of profit (loss) of equity investees:
- Koubei
(762 ) (237 ) (505 ) (73 )
- Youku Tudou(2)
(152 )
— — —
- Cainiao Network
(94 ) (234 ) (375 ) (55 )
- Other equity investees
(102 ) (373 ) (41 ) (6 ) Impairment loss
— (245 )
—
— Dilution gains (losses) 745 (82 ) (61 ) (9 )
Others(1)
(347 ) (377 ) (462 ) (67 ) Total (712 ) (1,548 ) (1,444 ) (210 )
________________
(1)
Others mainly include amortization of intangible assets of
equity investees and share-based compensation expenses.
(2)
We began consolidating the results of Youku Tudou in the quarter
ended June 30, 2016, and consequently, ceased to account for our
investments in Youku Tudou as an equity method investee.
The share of results of equity investees in the quarter ended
March 31, 2017 was a loss of RMB1,444 million (US$210 million),
compared to a loss of RMB1,548 million in the quarter ended
December 31, 2016, primarily due to a decrease in our share of
losses from other equity investees and an impairment loss on an
equity investee in the December quarter, partially offset by an
increase in our share of Koubei’s loss. Our share of Koubei’s loss
for the quarter ended December 31, 2016, which we picked up in
arrears in our income statements in the quarter ended March 31,
2017, reflects Koubei’s higher promotional spending in the December
quarter.
Net income and Non-GAAP net
income
Our net income in the quarter ended March 31, 2017 was RMB9,852
million (US$1,431 million), an increase of 85% compared to RMB5,314
million in the same quarter of 2016. Excluding the disposal
revaluation gains, share-based compensation and certain other
items, non-GAAP net income in the quarter ended March 31, 2017 was
RMB10,440 million (US$1,517 million), an increase of 38% compared
to RMB7,556 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 March 31, 2017 was RMB10,647 million (US$1,547 million), an
increase of 98% compared to RMB5,365 million in the same quarter of
2016.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in the quarter ended March 31, 2017 was RMB4.12
(US$0.60) on a weighted average of 2,581 million diluted shares
outstanding during the quarter, an increase of 95% compared to
RMB2.11 on a weighted average of 2,546 million diluted shares
outstanding during the same quarter of 2016. Excluding the disposal
gains, share-based compensation and certain other items, non-GAAP
diluted EPS in the quarter ended March 31, 2017 was RMB4.35
(US$0.63), an increase of 45% compared to RMB2.99 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 March 31, 2017, cash, cash equivalents and short-term
investments were RMB146,747 million (US$21,319 million), compared
to RMB138,488 million as of December 31, 2016. The increase in
cash, cash equivalents and short-term investments during the
quarter ended March 31, 2017 was primarily due to free cash flow
generated from operations of RMB7,980 million (US$1,159
million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
March 31, 2017 was RMB10,746 million (US$1,561 million), an
increase of 111% compared to RMB5,082 million in the same quarter
of 2016. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended March 31, 2017 was RMB7,980 million (US$1,159
million), compared to RMB4,388 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 March 31, 2017, net cash used in
investing activities of RMB3,035 million (US$441 million) primarily
reflected cash outflow of RMB5,457 million (US$793 million) for
investment and acquisition activities, as well as capital
expenditures and intangible assets of RMB3,407 million (US$495
million), which included cash outflow for acquisition of land use
rights and construction in progress of RMB575 million (US$84
million), partially offset by cash inflow of RMB5,784 million
(US$840 million) from disposals of various investments and
liquidation of certain short-term investments.
Employees
As of March 31, 2017, we had a total of 50,092 employees,
compared to 46,819 as of December 31, 2016 and 36,446 as of March
31, 2016. The number of employees as of March 31, 2017 increased by
13,646 from March 31, 2016, primarily due to the addition of
approximately 12,000 employees from our newly acquired businesses,
mainly Lazada and Youku Tudou.
FULL FISCAL YEAR 2017 OPERATIONAL AND FINANCIAL
RESULTS*
Year ended March 31, 2016
2017 YoY % RMB RMB
US$(1)
Change Annual GMV (in billions) 3,092 3,767
547
22 %
Annual Mobile GMV (in billions) 2,003 2,981
433
49 %
Annual Mobile GMV as a percentage of annual GMV 65 % 79
%
Revenue (in millions) 101,143 158,273 22,994 56 %
Mobile Revenue (in millions) 50,337 90,731 13,182 80 %
Mobile Revenue as a percentage of China Commerce Retail
Revenue 63 % 80 %
Income from Operations (in
millions) 29,102 48,055 6,981 65 %
Adjusted EBITDA (in
millions)(2)
52,340 74,456 10,817 42 %
Adjusted EBITDA Margin(2) 52 % 47
%
Adjusted EBITA (in millions)(2) 48,570 69,172 10,049 42 %
Adjusted EBITA Margin(2) 48 % 44 %
Net Income (in
millions) 71,289 41,226 5,989 (42
)%(3)
Non-GAAP Net Income (in millions)(2) 42,791 57,871 8,408 35
%
Diluted Earnings per Share/ADS (EPS) 27.89 16.97
2.47 (39
)%(3)
Non-GAAP Diluted EPS(2) 16.77 23.44 3.41 40 %
_______________ * Our fiscal year ends on March 31 and
references to fiscal years 2016 and 2017 are to the fiscal years
ended March 31, 2016 and 2017, respectively. (1) This results
announcement contains translation 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 RMB6.8832 to US$1.00, the exchange rate on March 31,
2017 as set forth in the H.10 statistical release of the Federal
Reserve Board. The percentages stated in this release are
calculated based on the RMB amounts. (2) See the sections entitled
“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 non-recurring disposal and revaluation gains of RMB43,337
million in fiscal year 2016, as discussed in detail in “Interest
and investment income, net” below.
Revenue
Revenue in fiscal year 2017 was RMB158,273 million (US$22,994
million), an increase of 56% compared to RMB101,143 million in
fiscal year 2016. The increase was mainly driven by the continued
rapid growth of our China commerce retail business, Alibaba Cloud
as well as the consolidation of newly acquired businesses, mainly
Youku Tudou and Lazada. The following table sets forth a breakdown
of our revenue for the periods indicated.
Year ended March 31, 2016
2017 % of % of YoY
% RMB Revenue RMB US$
Revenue Change (in millions, except
percentages) Core commerce: China commerce retail 80,033 79 %
114,109 16,578 72 % 43 % China commerce wholesale 4,288 4 % 5,679
825 4 % 32 % International commerce retail 2,204 2 % 7,336 1,066 5
% 233 % International commerce wholesale 5,425 6 % 6,001 872 4 % 11
% Others 385 0 % 755 109 0 % 96 % Total core commerce 92,335 91 %
133,880 19,450 85 % 45 % Cloud computing 3,019 3 % 6,663 968
4 % 121 % Digital media and entertainment 3,972 4 % 14,733 2,141 9
% 271 % Innovation initiatives and others 1,817 2 % 2,997 435 2 %
65 % Total 101,143 100 % 158,273
22,994
100 % 56 %
Core commerce segment
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in fiscal year 2017 was RMB114,109 million
(US$16,578 million), or 72% of total revenue, an increase of 43%
compared to RMB80,033 million in fiscal year 2016. The growth was
primarily driven by the robust growth of online marketing service
revenue, which grew 48% year-over-year, primarily driven by
increases in the volume of clicks, reflecting our ability to
deliver more relevant content to consumers through our improved
data technology. This resulted in higher average spending on our
marketing services by an increasing number of brands and merchants.
The growth of online marketing service revenue also reflected the
full effect of online marketing inventory we added in May and
September 2015. Commission revenue as a percentage of China
commerce retail revenue was 30% in fiscal year 2017.Mobile revenue
from the China commerce retail business in fiscal year 2017 was
RMB90,731 million (US$13,182 million), or 80% of our China commerce
retail revenue, an increase of 80% compared to RMB50,337 million in
fiscal year 2016. The mobile monetization rate in fiscal year 2017
reached 3.04%, surpassing the non-mobile monetization rate,
demonstrating the successful completion of our transition to
mobile.GMV – GMV transacted on our China retail
marketplaces in fiscal year 2017 was RMB3,767 billion (US$547
billion), an increase of 22% compared to RMB3,092 billion in fiscal
year 2016. GMV transacted on Taobao Marketplace in fiscal year 2017
was RMB2,202 billion (US$320 billion), an increase of 17% compared
to fiscal year 2016. GMV transacted on Tmall in fiscal year 2017
was RMB1,565 billion (US$227 billion), an increase of 29% compared
to fiscal year 2016. The growth of total GMV transacted on our
China retail marketplaces was primarily driven by an increase in
average annual spend per active buyer and an increase in the number
of active buyers.Mobile GMV transacted on our China retail
marketplaces in fiscal year 2017 was RMB2,981 billion (US$433
billion), an increase of 49% compared to fiscal year 2016. Mobile
GMV accounted for 79% of total GMV transacted on our China retail
marketplaces this year, compared to 65% in fiscal year 2016.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
fiscal year 2017 was RMB5,679 million (US$825 million), an increase
of 32% compared to RMB4,288 million in fiscal year 2016. The
increase was due to an increase in average revenue from paying
members and an increase in paying members.
- International commerce retail
businessRevenue from our international commerce retail business
in fiscal year 2017 was RMB7,336 million (US$1,066 million), an
increase of 233% compared to RMB2,204 million in fiscal year 2016.
The increase was primarily due to the consolidation of Lazada and
an increase in revenue generated from AliExpress.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in fiscal year 2017 was RMB6,001 million (US$872 million),
an increase of 11% compared to RMB5,425 million in fiscal year
2016. The increase was due primarily to growth in revenue generated
by import/export related services and to a lesser extent to an
increase in value added service revenue from China wholesale
suppliers.
Cloud computing
Revenue from our cloud computing business in fiscal year 2017
was RMB6,663 million (US$968 million), an increase of 121% compared
to RMB3,019 million in fiscal year 2016, primarily driven by an
increase in the number of paying customers to 874,000, representing
a year-over-year increase of 70%, and also to an increase in their
usage of our cloud computing services including more complex
offerings, such as our content delivery network and database
services.
Digital media and entertainment
Revenue from our digital media and entertainment business in
fiscal year 2017 was RMB14,733 million (US$2,141 million), an
increase of 271% compared to RMB3,972 million in fiscal year 2016.
The increase was primarily due to the consolidation of Youku Tudou,
and also to an increase in revenue from mobile value-added services
provided by UCWeb, such as mobile search, news feeds and game
publishing.
Innovation initiatives and others
Revenue from innovation initiatives and others in fiscal year
2017 was RMB2,997 million (US$435 million), an increase of 65%
compared to RMB1,817 million in fiscal year 2016, primarily due to
an increase in revenue from YunOS and other new initiatives.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Year ended March 31,
%
ofRevenueYoYchange
2016 2017 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Costs and expenses:
Cost of revenue 34,355 34 % 59,483 8,642 38 % 4 % Product
development expenses 13,788 14 % 17,060 2,479 11 % (3 )% Sales and
marketing expenses 11,307 11 % 16,314 2,370 10 % (1 )% General and
administrative expenses 9,205 9 % 12,239 1,778 8 % (1 )%
Amortization of intangible assets 2,931 3 % 5,122 744 3 % 0 %
Impairment of goodwill and intangible assets 455 0 % — — — 0
% Total costs and expenses 72,041 71 % 110,218 16,013 70 % (1 )%
Share-based compensation expense by function: Cost of
revenue 4,003 4 % 3,893 566 2 % (2 )% Product development expenses
5,703 6 % 5,712 830 4 % (2 )% Sales and marketing expenses 1,963 2
% 1,772 257 1 % (1 )% General and administrative expenses 4,413 4 %
4,618 671 3 % (1 )% Total share-based compensation expense 16,082
16 % 15,995 2,324 10 % (6 )%
Costs and expenses excluding
share-based compensation expense: Cost of revenue 30,352 30 %
55,590 8,076 36 % 6 % Product development expenses 8,085 8 % 11,348
1,649 7 % (1 )% Sales and marketing expenses 9,344 9 % 14,542 2,113
9 % 0 % General and administrative expenses 4,792 5 % 7,621 1,107 5
% 0 % Amortization of intangible assets 2,931 3 % 5,122 744 3 % 0 %
Impairment of goodwill and intangible assets 455 0 % — — — 0
% Total costs and expenses excluding share-based compensation
expenses 55,959 55 % 94,223
13,689
60 % 5 %
Cost of revenue – Cost of revenue in fiscal year 2017 was
RMB59,483 million (US$8,642 million), or 38% of revenue, compared
to RMB34,355 million, or 34% of revenue, in fiscal year 2016.
Without the effect of share-based compensation expense, cost of
revenue as a percentage of revenue would have increased from 30% in
fiscal year 2016 to 36% in fiscal year 2017. This increase was due
primarily to an increase in content acquisition costs of Youku
Tudou, costs of inventory of Lazada and logistics costs paid to
Cainiao Network relating to fulfillment services provided to Tmall
Supermarket.
Product development expenses – Product development
expenses in fiscal year 2017 were RMB17,060 million (US$2,479
million), or 11% of revenue, compared to RMB13,788 million, or 14%
of revenue, in fiscal year 2016. Without the effect of share-based
compensation expense, product development expenses as a percentage
of revenue would have decreased from 8% in fiscal year 2016 to 7%
in fiscal year 2017 due to operating leverage.
Sales and marketing expenses – Sales and marketing
expenses in fiscal year 2017 were RMB16,314 million (US$2,370
million), or 10% of revenue, compared to RMB11,307 million, or 11%
of revenue, in fiscal year 2016. Without the effect of share-based
compensation expense, sales and marketing expenses as a percentage
of revenue would have remained stable at 9% in both fiscal year
2016 and fiscal year 2017.
General and administrative expenses – General and
administrative expenses in fiscal year 2017 were RMB12,239 million
(US$1,778 million), or 8% of revenue, compared to RMB9,205 million,
or 9% of revenue, in fiscal year 2016. Without the effect of
share-based compensation expense, general and administrative
expenses as a percentage of revenue in fiscal year 2017 would have
remained stable at 5% in both fiscal year 2016 and fiscal year
2017.
Share-based compensation expense –Share-based
compensation expense included in the cost and expense items above
in fiscal year 2017 was RMB15,995 million (US$2,324 million),
compared to RMB16,082 million in fiscal year 2016. Share-based
compensation expense as percentage of revenue decreased to 10% in
fiscal year 2017 from 16% in fiscal year 2016. The following table
sets forth our analysis of share-based compensation expense for the
periods indicated by type of share-based awards:
Year ended March 31, 2016
2017 % of % of YoY
RMB Revenue RMB US$ Revenue
Change (in millions, except percentages) By type
of awards: Alibaba Group share-based awards granted to:
- Our employees
9,596 10 % 11,810 1,716 8 % 23 %
- Ant Financial employees and other
consultants(1)
889 1 % 1,277 186 1 % 44 % Ant Financial share-based awards granted
to our employees(1) 5,506 5 % 2,188 318 1 % (60 )% Others 91 0 %
720 104 0 % 691 % Total share-based compensation expense 16,082 16
% 15,995
2,324
10 % (1 )% ___________________ (1) Awards subject to
mark-to-market accounting treatment.
Share-based compensation expense related to Alibaba Group
share-based awards granted to our employees increased in fiscal
year 2017 as compared to fiscal year 2016. This increase was
primarily due to the general increase in the average fair market
value of the awards granted.
The expense arising from Ant Financial’s share-based awards
granted to our employees represented a non-cash charge that will
not result in any economic cost or equity dilution to our
shareholders. It is the view of our Chairman, Jack Ma, who controls
Ant Financial, that the grant of Ant Financial equity awards to our
employees will benefit Alibaba Group because of the strategic
importance of Ant Financial as a payment service provider to us and
our significant participation in the profits and value accretion of
Ant Financial through our agreements with Ant Financial. The
decrease in this year as compared to the previous year was a result
of the revaluation of the fair value of Ant Financial shares in the
previous year.
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 fiscal year 2017 was RMB5,122 million (US$744
million), an increase of 75% from RMB2,931 million in fiscal year
2016. This increase was due to an increase in intangible assets
recognized arising from our strategic acquisitions and investments,
including Youku Tudou and Lazada.
Income from operations
Income from operations in fiscal year 2017 was RMB48,055 million
(US$6,981 million), or 30% of revenue, an increase of 65% compared
to RMB29,102 million, or 29% of revenue, in fiscal year 2016.
Adjusted EBITDA and Adjusted EBITDA
margin
Adjusted EBITDA increased by 42% to RMB74,456 million (US$10,817
million) in fiscal year 2017, compared to RMB52,340 million in
fiscal year 2016. Adjusted EBITDA margin decreased to 47% in fiscal
year 2017 from 52% in fiscal year 2016. As we will continue to
invest a portion of our free cash flow in new businesses and
acquired businesses, and such newly developed and acquired
businesses have a different cost structure and lower margin, we
expect our margin will continue to be negatively impacted. A
reconciliation of income from operations to adjusted EBITDA is
included at the end of this results announcement.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. A reconciliation of income from
operations to adjusted EBITA for each segment is included at the
end of this results announcement.
Year ended March 31, 2016 2017
% of % of RMB
Revenue RMB US$ Revenue (in
millions, except percentages) Core commerce 58,036 63 %
82,432 11,976 62 % Cloud computing (1,252 ) (41 )% (476 ) (69 ) (7
)% Digital media and entertainment (1,810 ) (46 )% (6,542 ) (951 )
(44 )% Innovation initiatives and others (3,467 )
(191
)%
(3,125 ) (454 ) (104 )%
Core commerce segment – Adjusted EBITA increased by 42%
to RMB82,432 million (US$11,976 million) in fiscal year 2017,
compared to RMB58,036 million in fiscal year 2016. Adjusted EBITA
margin decreased to 62% in fiscal year 2017 from 63% in fiscal year
2016, primarily due to the consolidation of Lazada and investment
in Tmall Supermarket, partially offset by operating leverage.
Cloud computing segment – Adjusted EBITA in fiscal year
2017 was a loss of RMB476 million (US$69 million), compared to a
loss of RMB1,252 million in fiscal year 2016. Adjusted EBITA margin
improved to negative 7% in fiscal year 2017 from negative 41% in
fiscal year 2016, primarily due to robust growth in revenue and
economies of scale.
Digital media and entertainment segment – Adjusted EBITA
in fiscal year 2017 was a loss of RMB6,542 million (US$951
million), compared to a loss of RMB1,810 million in fiscal year
2016. Adjusted EBITA margin improved to negative 44% in fiscal year
2017 from negative 46% in fiscal year 2016, primarily due to
improved margins at UCWeb driven by the increase in revenue from
mobile value-added services, partially offset by the consolidation
of Youku Tudou.
Innovation initiatives and others segment – Adjusted
EBITA in fiscal year 2017 was a loss of RMB3,125 million (US$454
million), compared to a loss of RMB3,467 million in fiscal year
2016. Adjusted EBITA margin improved to negative 104% in fiscal
year 2017, compared to negative 191% in fiscal year 2016, primarily
due to increase in revenue from new business initiatives.
Interest and investment income,
net
Interest and investment income, net in fiscal year 2017 was
RMB8,559 million (US$1,244 million), a significant decrease from
RMB52,254 million in fiscal year 2016. Interest and investment
income in fiscal year 2016 included a deemed disposal gain of
RMB24,734 million arising from the deconsolidation of Alibaba
Pictures, a gain of RMB18,603 million from the revaluation of our
previously held equity interest in Alibaba Health when we obtained
control over Alibaba Health, as well as gains arising from
disposals of certain investments and businesses.
Interest expense
Interest expense in fiscal year 2017 was RMB2,671 million
(US$388 million), an increase of 37% compared to RMB1,946 million
in fiscal year 2016, primarily due to an increase in average debt
outstanding reflecting primarily an additional US$4.0 billion
five-year term loan facility drawn down in fiscal year 2017.
Other income, net
Other income, net in fiscal year 2017 was RMB6,086 million
(US$884 million), an increase of 196% compared to RMB2,058 million
in fiscal year 2016. The increase was primarily due to an increase
in exchange gains and income recognized in respect of royalty fees
and software technology services fees from Ant Financial, which was
RMB2,086 million (US$303 million) in fiscal year 2017, compared to
RMB1,122 million in fiscal year 2016.
Income tax expenses
Income tax expenses in fiscal year 2017 were RMB13,776 million
(US$2,002 million), an increase of 63% compared to RMB8,449 million
in fiscal year 2016. Our effective tax rate increased to 23% in
fiscal year 2017 from 10% in fiscal year 2016. Profit before income
tax in fiscal year 2016 included a deemed disposal gain of
RMB24,734 million arising from the deconsolidation of Alibaba
Pictures and a gain of RMB18,603 million from the revaluation of
our previously held equity interest in Alibaba Health, which were
non-taxable, leading to a lower effective tax rate in fiscal year
2016. Excluding share-based compensation expense, impairment of
goodwill, intangible assets and investments, as well as other
unrealized investment gain/loss, our effective tax rate would have
been 18% in fiscal year 2017, compared to 15% in fiscal year 2016,
primarily due to the consolidation of Youku Tudou and Lazada, which
are both loss making.
Share of results of equity
investees
Share of results of equity investees in fiscal year 2017
consisted of the following:
Year ended March 31, 2016 2017
RMB RMB
US$
(in millions) Share of profit (loss) of equity investees:
- Koubei
(867 ) (990 ) (144 )
- Youku Tudou(2)
(391 )
— —
- Cainiao Network
(295 ) (1,056 ) (153 )
- Others
62 (838 ) (122 ) Impairment loss
— (245 ) (35 ) Dilution
gains (losses) 827 (336 ) (49 )
Others(1)
(1,066 ) (1,562 ) (227 ) (1,730 ) (5,027 ) (730 ) ________________
(1)
Others mainly include amortization of intangible assets of
equity investees and share-based compensation expenses.
(2)
We began consolidating the results of
Youku Tudou in the quarter ended June 30, 2016, and consequently,
ceased to account for our investment in Youku Tudou as an equity
method investee.
The share of results of equity investees in fiscal year 2017 was
a loss of RMB5,027 million (US$730 million), as compared to a loss
of RMB1,730 million in fiscal year 2016, primarily due to an
increase in share of losses of Cainiao Network and other equity
investees, as well as an accounting loss related to the dilution of
our ownership interest in Weibo in fiscal year 2017, which resulted
from Weibo’s issuance of share-based compensation, as compared to
accounting gains related the dilution of our ownership interests in
Cainiao Network and Evergrande FC, as these investees each raised
capital at a higher valuation in fiscal year 2016.
Net income and Non-GAAP net
income
As a result of the foregoing, our net income in fiscal year 2017
was RMB41,226 million (US$5,989 million), a decrease of 42%
compared to RMB71,289 million in fiscal year 2016. Non-GAAP net
income in fiscal year 2017 was RMB57,871 million (US$8,408
million), an increase of 35% compared to RMB42,791 million in
fiscal year 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 fiscal year
2017 was RMB43,675 million (US$6,345 million), a decrease of 39%
compared to RMB71,460 million in fiscal year 2016.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in fiscal year 2017 was RMB16.97 (US$2.47) on a
weighted average of 2,573 million diluted shares outstanding during
the year, a decrease of 39% compared to RMB27.89 on a weighted
average of 2,562 million diluted shares outstanding in fiscal year
2016. Non-GAAP diluted EPS in fiscal year 2017 was RMB23.44
(US$3.41), an increase of 40% compared to RMB16.77 in fiscal year
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 March 31, 2017, cash, cash equivalents and short-term
investments were RMB146,747 million (US$21,319 million), compared
to RMB111,518 million as of March 31, 2016. The increase in cash,
cash equivalent and short-term investments in fiscal year 2017 was
primarily due to free cash flow generated from operations and net
cash proceeds from bank borrowings, offset by net cash used for
investment and acquisition, including acquisitions of Youku Tudou
and Lazada and investment in Suning.
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in fiscal year 2017
was RMB80,326 million (US$11,670 million), an increase of 41%
compared to RMB56,836 million in fiscal year 2016. Free cash flow,
a non-GAAP measurement of liquidity, in fiscal year 2017 was
RMB68,790 million (US$9,994 million), compared to RMB51,279 million
in fiscal year 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 fiscal year 2017, net cash used in investing activities
of RMB78,364 million (US$11,385 million) mainly included investment
and acquisition activities of RMB77,552 million (US$11,267
million), primarily in media and entertainment, e-commerce and
local services, as well as capital expenditures and intangible
assets of RMB17,546 million (US$2,549 million), which included cash
outflow for acquisition of land use rights and construction in
progress of RMB5,326 million (US$774 million), partially offset by
cash inflow of RMB15,056 million (US$2,187 million) from disposals
of various investments and liquidation of certain short-term
investments.
SHARE REPURCHASE
In fiscal year 2017, we repurchased and canceled approximately
27 million of our shares, substantially all from SoftBank, for
approximately US$2.0 billion. As of March 31, 2017, we had
approximately 2.53 billion shares issued and outstanding.
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 May 18, 2017.
Details of the conference call are as follows:
International: +65 6713 5090
U.S.: +1 845 675 0437
U.K.: +44 203 621 4779
Hong Kong: +852 3018 6771
Conference ID: 12468148
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: 12468148).
Our results announcement and accompanying slides are available
at Alibaba Group’s Investor Relations website at
http://www.alibabagroup.com/en/ir/home on May 18, 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 (loss), 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, depreciation 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, other income (loss), net, interest
expense, income tax expenses and share of results of equity
investees, and (ii) certain non-cash expenses, consisting of
share-based compensation expenses, amortization and impairment of
goodwill, 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 and amortization of
excess value receivable arising from the restructuring of
commercial arrangements with Ant Financial 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 adjusted for changes in loan receivables relating to
micro loans of the SME loan business (which we transferred to Ant
Financial in February 2015) and others. We present the adjustment
for changes in loan receivables because such receivables are
reflected under cash flow from operating activities, whereas the
secured borrowings and other bank borrowings used to finance them
are reflected under cash flows from financing activities, and
accordingly, the adjustment is made to show cash flows from
operating activities net of the effect of changes in loan
receivables.
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 March 31, Year ended March 31, 2016
2017 2016 2017 RMB RMB
US$ RMB RMB US$ (in
millions, except per share data) (in millions, except per
share data) Revenue 24,184 38,579 5,605 101,143 158,273
22,994 Cost of revenue (9,562 ) (15,490 ) (2,250 ) (34,355 )
(59,483 ) (8,642 ) Product development expenses (3,573 ) (4,518 )
(657 ) (13,788 ) (17,060 ) (2,479 ) Sales and marketing expenses
(2,861 ) (4,332 ) (629 ) (11,307 ) (16,314 ) (2,370 ) General and
administrative expenses (2,333 ) (3,394 ) (493 ) (9,205 ) (12,239 )
(1,778 ) Amortization of intangible assets (743 ) (1,313 ) (191 )
(2,931 ) (5,122 ) (744 ) Impairment of goodwill
—
— — (455 )
— —
Income from operations 5,112 9,532 1,385
29,102 48,055 6,981 Interest and investment income, net 3,778 6,553
952 52,254 8,559 1,244 Interest expense (510 ) (676 ) (98 ) (1,946
) (2,671 ) (388 ) Other income (loss), net (529 ) 440 64
2,058 6,086 884 Income before
income tax and share of results of equity investees 7,851 15,849
2,303 81,468 60,029 8,721 Income tax expenses (1,825 ) (4,553 )
(662 ) (8,449 ) (13,776 ) (2,002 ) Share of results of equity
investees (712 ) (1,444 ) (210 ) (1,730 ) (5,027 ) (730 )
Net income 5,314 9,852 1,431 71,289 41,226 5,989 Net loss
attributable to noncontrolling interests 51 795 116
171 2,449 356
Net income
attributable to ordinary shareholders 5,365 10,647
1,547 71,460 43,675 6,345
Earnings per share attributable to ordinary
shareholders Basic 2.19 4.24 0.62 29.07 17.52 2.55 Diluted
2.11 4.12 0.60 27.89 16.97 2.47
Weighted average number
of share used in calculating net income per ordinary share
Basic 2,448 2,513 2,458 2,493 Diluted 2,546 2,581 2,562 2,573
ALIBABA GROUP HOLDING LIMITED REVENUE
The following table sets forth our revenue
by segments for the periods indicated:
Three months ended March 31, Year
ended March 31, 2016 2017 2016
2017 RMB RMB US$
RMB RMB US$ (in millions) (in
millions) Core commerce(1) 21,455 31,570 4,587 92,335 133,880
19,450 Cloud computing(2) 1,066 2,163 314 3,019 6,663 968 Digital
media and entertainment(3) 1,174 3,927 571 3,972 14,733 2,141
Innovation initiatives and others(4) 489 919 133 1,817 2,997 435
Total 24,184 38,579 5,605 101,143 158,273 22,994
____________________ (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 March 31, Year ended
March 31, 2016 2017 2016
2017 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Core commerce 10,733 16,500 2,397 51,153 74,180
10,777 Cloud computing (607 ) (505 ) (73 ) (2,605 ) (1,681 ) (244 )
Digital media and entertainment (838 ) (2,586 ) (376 ) (4,112 )
(9,882 ) (1,436 ) Innovation initiatives and others (1,971 ) (1,888
) (274 ) (7,216 ) (6,798 ) (988 ) Unallocated (2,205 ) (1,989 )
(289 ) (8,118 ) (7,764 ) (1,128 ) Total 5,112 9,532
1,385 29,102 48,055 6,981
The following table sets forth our
adjusted EBITA by segments for the periods indicated:
Three months ended March 31, Year ended March
31, 2016 2017 2016 2017 RMB
RMB US$ RMB RMB US$ (in
millions) (in millions) Core commerce 12,693 18,579
2,699 58,036 82,432 11,976 Cloud computing (166 ) (169 ) (24 )
(1,252 ) (476 ) (69 ) Digital media and entertainment (201 ) (1,711
) (249 ) (1,810 ) (6,542 ) (951 ) Innovation initiatives and others
(1,025 ) (682 ) (99 ) (3,467 ) (3,125 ) (454 ) Unallocated (893 )
(866 ) (126 ) (2,937 ) (3,117 ) (453 ) Total 10,408
15,151 2,201 48,570 69,172 10,049
The table below sets forth selected
financial information of our operating segments for the year ended
March 31, 2017:
Year ended March 31, 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 133,880 6,663
14,733 2,997
—
158,273 22,994 Income (loss) from
operations
74,180
(1,681
)
(9,882
)
(6,798
)
(7,764
)
48,055
6,981
Add: Share-based compensation expense 5,994 1,201 1,454 3,017 4,329
15,995 2,324 Add: Amortization of intangible assets 2,258 4
1,886 656 318 5,122 744
Adjusted EBITA 82,432 (476
) (6,542 ) (3,125 )
(3,117 ) 69,172 10,049
Adjusted EBITA margin 62 % (7 )%
(44 )% (104 )%
44 % Year ended March 31, 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 92,335 3,019 3,972 1,817
—
101,143 Income (loss) from operations
51,153 (2,605 ) (4,112 )
(7,216 ) (8,118 ) 29,102 Add:
Share-based compensation expense
6,224
1,349
981
3,092
4,436
16,082
Add: Amortization of intangible assets
659
4
1,321
657
290
2,931
Add: Impairment of goodwill
— —
— — 455 455
Adjusted EBITA 58,036 (1,252 )
(1,810 ) (3,467 ) (2,937
) 48,570 Adjusted EBITA margin
63 % (41 )% (46 )%
(191 )% 48 % ____________________ (1)
Unallocated expenses are primarily related to corporate
administrative costs and other miscellaneous items that are not
allocated to individual segments.
ALIBABA GROUP
HOLDING LIMITED UNAUDITED CONSOLIDATED BALANCE SHEETS
As of March 31,
As of March 31,
2016
2017
RMB
RMB
US$
(note)
(in millions)
Assets Current assets: Cash and cash equivalents 106,818
143,736 20,882 Short-term investments 4,700 3,011 437 Restricted
cash and escrow receivables 1,346 2,655 386 Investment securities
4,178 4,054 589 Prepayments, receivables and other assets(1) 16,993
29,060 4,222 Total current assets 134,035 182,516 26,516
Investment securities 29,392 31,452 4,569 Prepayments, receivables
and other assets(1) 5,837 8,051 1,169 Investment in equity
investees 91,461 120,368 17,487 Property and equipment, net 13,629
20,206 2,936 Land use rights, net 2,876 4,691 682 Intangible
assets, net 5,370 14,108 2,050 Goodwill 81,645 125,420 18,221
Total assets 364,245
506,812
73,630
Liabilities, Mezzanine Equity and Shareholders’
Equity Current liabilities: Current bank borrowings 4,304 5,948
864 Current portion of unsecured notes
— 8,949 1,300 Income
tax payable 2,790 6,125 890 Escrow money payable
— 2,322 337
Accrued expenses, accounts payable and other liabilities 27,334
47,186 6,855 Merchant deposits 7,314 8,189 1,190 Deferred revenue
and customer advances 10,297 15,052 2,187 Total current liabilities
52,039 93,771 13,623 Deferred revenue 418 641 93 Deferred
tax liabilities 6,471 10,154 1,475 Non-current bank borrowings
1,871 30,959 4,498 Unsecured senior notes(1) 51,391 45,876 6,665
Other liabilities 2,166 1,290 188
Total liabilities 114,356
182,691 26,542
_____________________________
(1) Certain reclassifications in prepayments, receivables
and other assets and unsecured senior notes as of March 31, 2016
were retrospectively adjusted as a result of the adoption of a new
accounting standard effective in the first quarter of fiscal 2017.
ALIBABA GROUP HOLDING LIMITED UNAUDITED
CONSOLIDATED BALANCE SHEETS (CONTINUED)
As of March 31,
As of March 31,
2016
2017
RMB
RMB US$
(in millions)
Commitments and contingencies
— — —
Mezzanine equity
350 2,992 434
Alibaba Group Holding Limited
shareholders’ equity:
Ordinary shares 1 1
— Additional paid-in capital 132,206
164,585 23,911 Treasury shares at cost
— (2,823) (410)
Restructuring reserve (888) (624) (91) Subscription receivables
(172) (63) (9) Statutory reserves 3,244 4,080 593 Accumulated other
comprehensive income 3,844 5,085 738 Retained earnings 78,752
108,558 15,772 Total Alibaba Group Holding Limited
shareholders’ equity 216,987 278,799 40,504 Noncontrolling
interests 32,552 42,330 6,150
Total equity 249,539
321,129 46,654
Total liabilities, mezzanine equity and
equity 364,245
506,812
73,630
ALIBABA GROUP HOLDING LIMITED UNAUDITED
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, Year ended March
31, 2016 2017 2016
2017 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Net cash provided by operating activities
5,082 10,746 1,561 56,836 80,326 11,670 Net cash used in investing
activities (7,393 ) (3,035 ) (441 ) (42,831 ) (78,364 ) (11,385 )
Net cash (used in) provided by financing activities (990 ) 2,482
361 (15,846 ) 32,914 4,782 Effect of exchange rate changes on cash
and cash equivalents (182 ) (446 ) (65 ) 466 2,042
296 (Decrease) Increase in cash and cash equivalents
(3,483 ) 9,747 1,416 (1,375 ) 36,918 5,363 Cash and cash
equivalents at beginning of period 110,301 133,989
19,466 108,193 106,818 15,519
Cash and cash equivalents at end of period 106,818 143,736
20,882 106,818 143,736 20,882
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 March 31, Year ended March 31, 2016
2017 2016 2017 RMB RMB
US$ RMB RMB US$ (in
millions) (in millions) Net income 5,314
9,852 1,431 71,289 41,226 5,989
Less: Interest and investment income, net (3,778 ) (6,553 ) (952 )
(52,254 ) (8,559 ) (1,244 ) Add: Interest expense 510 676 98 1,946
2,671 388 Less: Other income (loss), net 529 (440 ) (64 ) (2,058 )
(6,086 ) (884 ) Add: Income tax expenses 1,825 4,553 662 8,449
13,776 2,002 Add: Share of results of equity investees 712
1,444 210 1,730 5,027 730
Income from operations 5,112 9,532
1,385 29,102 48,055 6,981 Add:
Share-based compensation expense 4,553 4,306 625 16,082 15,995
2,324 Add: Amortization of intangible assets 743 1,313 191 2,931
5,122 744 Add: Impairment of goodwill
— —
— 455
— —
Adjusted EBITA 10,408 15,151 2,201
48,570 69,172 10,049 Add: Depreciation and
amortization of property and equipment and land use rights 1,090
1,446 210 3,770 5,284 768
Adjusted EBITDA 11,498 16,597
2,411 52,340 74,456
10,817 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 March 31, Year ended
March 31, 2016 2017 2016 2017
RMB RMB US$ RMB RMB US$
(in millions) (in millions) Net income
5,314 9,852 1,431 71,289 41,226
5,989 Add: Share-based compensation expense 4,553 4,306 625
16,082 15,995 2,324 Add: Amortization of intangible assets 743
1,313 191 2,931 5,122 744 Add: Impairment of goodwill and
investments 3 133 19 2,319 2,542 369 Less: Gain on deemed
disposals/disposals/revaluation of investments and others (3,334 )
(5,603 ) (812 ) (50,435 ) (7,346 ) (1,066 ) Add: Amortization of
excess value receivable arising from the restructuring of
commercial arrangements with Ant Financial 65 65 9 264 264 38
Adjusted for tax effects on non-GAAP
adjustments(1)
212 374 54 341 68 10
Non-GAAP net income 7,556 10,440
1,517 42,791 57,871
8,408 _____________________________ (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 March 31,
Year ended March 31, 2016 2017
2016 2017 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 5,365 10,647 1,547 71,460
43,675 6,345 Dilution effect on earnings arising from
option plans operated by a subsidiary and equity investees
—
(5 ) (1 )
— (11 ) (2 ) Net income attributable to
ordinary shareholders – diluted 5,365 10,642 1,546 71,460 43,664
6,343 Add: Non-GAAP adjustments to net income(1) 2,242 588
86 (28,498 ) 16,645 2,419
Non-GAAP
net income attributable to ordinary shareholders for
computing non-GAAP diluted EPS 7,607 11,230
1,632 42,962 60,309
8,762 Weighted average number of
shares on a diluted basis 2,546 2,581
2,562 2,573 Diluted EPS(2) 2.11
4.12 0.60 27.89 16.97 2.47 Add:
Non-GAAP adjustments to net income per share(3) 0.88 0.23
0.03 (11.12 ) 6.47 0.94
Non-GAAP
diluted EPS(4) 2.99 4.35
0.63 16.77 23.44
3.41 ________________________
(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
March 31, Year ended March 31, 2016 2017
2016 2017 RMB RMB US$ RMB
RMB US$ (in millions) (in millions)
Net cash provided by operating activities 5,082
10,746 1,561 56,836 80,326
11,670 Less: Purchase of property and equipment and
intangible assets (excluding land use rights and construction in
progress) (683 ) (2,832 ) (411 ) (5,438 ) (12,220 ) (1,775 ) Add:
Changes in loan receivables, net and others (11 ) 66 9
(119 ) 684 99
Free cash flow
4,388 7,980 1,159
51,279 68,790 9,994
ALIBABA GROUP HOLDING LIMITED
SELECTED OPERATING DATA
Annual active buyers
The table below sets forth the number of
active buyers on our China retail marketplaces for the periods
indicated:
Twelve months ended Jun 30, Sep
30, Dec 31, Mar 31, Jun
30, Sep 30, Dec 31, Mar
31, 2015 2015 2015 2016 2016
2016 2016 2017 (in millions) Annual
active buyers 367 386 407 423 434 439 443 454
Mobile
The table below sets forth the mobile MAUs
on our China retail marketplaces for the periods indicated:
The month ended Jun 30, Sep
30, Dec 31, Mar 31, Jun
30, Sep 30, Dec 31, Mar
31, 2015 2015 2015 2016 2016
2016 2016 2017 (in millions) Mobile
MAUs 307 346 393 410 427 450 493 507
Revenue per active
buyer / mobile revenue per mobile MAU
The table below sets forth information
with respect to annual China commerce retail revenue per annual
active buyer and annualized mobile revenue per mobile MAU from
China commerce retail for the periods presented:
Jun 30, Sep 30, Dec
31, Mar 31, Jun 30, Sep
30, Dec 31, Mar 31, 2015
2015 2015 2016 2016 2016
2016 2017 (in RMB) Annual China commerce
retail revenue per annual active buyer(1) 171 174 184 189 202 215
241 251 Mobile revenue per mobile MAU from China commerce
retail – Annualized(2) 76 87 108 123 140 151 166 179
_____________________ (1) China commerce retail revenue per
active buyer for each of the above periods is calculated by
dividing the China commerce retail revenue for the last 12-month
period by the annual active buyers 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 last 12-month period by
the mobile MAUs for the last month of the same period.
ALIBABA GROUP HOLDING LIMITED
SELECTED OPERATING DATA
(CONTINUED)
GMV
The table below sets forth the GMV, mobile
GMV, revenue, monetization rate, mobile revenue and mobile
monetization rate in respect of our China retail marketplaces for
the periods indicated:
Year ended Mar 31, 2015 Mar
31, 2016 Mar 31, 2017 (in billions of RMB,
except percentages) GMV Taobao Marketplace GMV 1,597
1,877 2,202 Tmall GMV 847 1,215 1,565 Total GMV 2,444 3,092 3,767
Mobile GMV 994 2,003 2,981 as a percentage of GMV 41 % 65 %
79 %
(in millions of RMB, except percentages)
Revenue China commerce retail revenue 59,732 80,033 114,109
Mobile revenue 17,840 50,337 90,731 as a percentage of China
commerce retail revenue 30 % 63 % 80 % Monetization rate
2.44 % 2.59 % 3.03 % Mobile monetization rate 1.79 % 2.51 % 3.04 %
Cloud computing paying
customers
The table below sets forth the number of
paying customers on cloud computing as of the respective dates
indicated:
Jun 30, Sep 30, Dec 31,
Mar 31, Jun 30, Sep 30,
Dec 31, Mar 31, 2015 2015
2015 2016 2016 2016 2016
2017 (in thousands) Paying customers 263 313 383 513
577 651 765 874
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170518005564/en/
Alibaba Group Holding LimitedInvestor Relations ContactRob
Lininvestor@alibabagroup.comorMedia ContactRobert
Christiebob.christie@alibaba-inc.com
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