Alibaba Group Holding Limited (NYSE: BABA) today announced its
financial results for the quarter ended September 30, 2017.
“We had an outstanding quarter. Our consumer insights and
technology innovation were the key drivers behind our customer
value proposition across the Alibaba economy,” said Daniel Zhang,
Chief Executive Officer of Alibaba Group. “We are seeing the early
results from our efforts to integrate online and offline with our
New Retail strategy, and consumers have benefited from access to
high quality products, improved customer experience and the
tremendous convenience of shopping anytime, anywhere.”
“This quarter we delivered excellent results, with overall
revenue growth of 61% demonstrating the robust momentum in our core
commerce business and across the Alibaba economy,” said Maggie Wu,
Chief Financial Officer of Alibaba Group. “We generated
approximately US$3.4 billion in non-GAAP free cash flow during the
quarter,1 which enables us to invest in our future growth areas of
core commerce, including logistics, cloud computing, digital
entertainment and other innovation initiatives.”
1 For the quarter ended September 30, 2017, net cash provided by
operating activities was RMB30,507 million (US$4,585 million).
BUSINESS HIGHLIGHTS
In the quarter ended September 30,
2017:
- Revenue was RMB55,122 million
(US$8,285 million), an increase of 61% year-over-year.
- Revenue from core commerce increased
63% year-over-year to RMB46,462 million (US$6,983 million).
- Revenue from cloud computing increased
99% year-over-year to RMB2,975 million (US$447 million).
- Revenue from digital media and
entertainment increased 33% year-over-year to RMB4,798 million
(US$721 million).
- Revenue from innovation initiatives and
others increased 27% year-over-year to RMB887 million (US$134
million).
- Annual active consumers on our
China retail marketplaces reached 488 million, an increase of 22
million from the 12-month period ended June 30, 2017.
- Mobile MAUs on our China retail
marketplaces reached 549 million in September 2017, an increase of
20 million over June 2017.
- Net income was RMB17,408 million
(US$2,616 million), income from operations was RMB16,584
million (US$2,493 million) and adjusted EBITDA was RMB25,031
million (US$3,762 million). Operating margin was 30%,
adjusted EBITDA margin was 45% and adjusted EBITA margin
for core commerce was 57%.
- Diluted EPS was RMB6.78
(US$1.02) and non-GAAP diluted EPS was RMB8.57
(US$1.29).
- Net cash provided by operating
activities was RMB30,507 million (US$4,585 million) and
non-GAAP free cash flow was RMB22,505 million (US$3,383
million).
BUSINESS AND STRATEGIC UPDATES
Core Commerce
Taobao – innovative programs driving loyalty and
engagement. Taobao App’s highly relevant personal
recommendations and engaging content continue to drive robust
growth in active users and engagement. In September 2017, user
activities on the Taobao App drove a quarterly net increase of 20
million mobile MAUs on our China retail marketplaces to a total of
549 million mobile MAUs. The Taobao App is not only a destination
for shopping but a community-based platform for sharing product
knowledge and lifestyle content that drives user engagement and
retention.
During the quarter, we launched a unified rewards-based loyalty
program across the Tmall and Taobao marketplaces, called 88 Loyalty
Membership, to enhance consumer engagement and loyalty. Membership
is free and members are tiered by loyalty scores based on their
quality and frequency of spending and social engagement, entitling
them to different levels of loyalty benefits. Members in
progressively higher tiers gain more access to exclusive
privileges, products and content. Over 29 million consumers
participated in our inaugural Members Festival on August 8.
Tmall – extending B2C market leadership and delivering high
quality products to consumers. Tmall recorded 49%
year-over-year growth for physical goods GMV in the quarter ended
September 30, 2017. We achieved robust growth across all major
categories. In particular, the accelerated growth in consumer
electronics and FMCG categories reflects our commitment to building
leadership in these two important categories. We witnessed success
in new customer acquisitions through highly coordinated marketing
and promotional campaigns, which partially drove an accelerated
increase in annual active consumers to 488 million for the 12
months ended September 30, 2017, a net increase of 22 million from
the prior quarter and taking annualized growth to double digits for
the first time in the past four quarters.
During the quarter, Tmall demonstrated its data technology
capabilities as the leading brand-building and retail distribution
platform in China. Our Luxury Pavilion on Tmall offers a unique
channel for premium brands to extend their reach, launch new
product campaigns and take advantage of omni-channel solutions
specifically targeting affluent Chinese consumers. For example, the
algorithms powering our Tmall App enabled easy access by higher
tier members of our 88 Loyalty Membership to the Luxury Pavilion,
with personalized brand pages and product recommendations. These
members also receive exclusive perks such as pre-orders of limited
edition products and invitations to celebrity events. The growing
list of partnering brands include Loewe, Burberry, LA MER,
Maserati, Guerlain and Zenith.
11.11 Global Shopping Festival. In the ninth year of the
world’s largest 24-hour shopping event, this year’s 11.11 will
showcase:
- Alibaba Economy at scale. 11.11
will demonstrate the technological innovation and global scale of
the entire Alibaba Economy. More than 140,000 brands and hundreds
of millions of consumers will participate in 11.11 this year. This
shopping festival will be supported by our global cloud, payment
and logistics infrastructure. Consumers will enjoy seamless payment
and consumer loan services provided by Ant Financial. Alibaba Cloud
will serve as the core technology and computing backbone to ensure
the best consumer experience throughout the festival. Cainiao
Network expects over 3 million logistics personnel to facilitate
the hundreds of millions of packages that will be generated from
the festival.
- Power of the Chinese consumer.
We expect that hundreds of millions of Chinese consumers who visit
our platforms on November 11 will have access to over 60,000
international brands and merchants to satisfy their increasing
demand for goods and products from around the world. This year,
Tmall will, for the first time, leverage its popularity outside
China to bring over 100 domestic Chinese brands to international
markets, targeting millions of overseas Chinese consumers in Asia
and the rest of the world.
- New Retail implementation. Our
unique New Retail model with integrated online-offline customer
offerings will be showcased in store locations across China. More
than 1,000 brands will convert nearly 100,000 physical locations
into “smart stores” and our channel distribution solutions make it
easy for more than 500,000 local neighborhood stores and Rural
Taobao service centers to sell to consumers in lower-tier cities
and rural villages.
New Retail – from proof of concept to rapid expansion. As
part of our effort to create a seamless online and offline consumer
experience, we expanded our Hema fresh grocery footprint and
launched Tmall-branded franchised convenience stores.
During the quarter, Hema added new stores in major cities in
China, bringing the total number of Hema stores to 20 as of
September 30, 2017. We have taken our Hema model to our retail
partners, who have begun to open and operate Hema franchised
stores, extending coverage for the benefit of consumers.
In August, the first Tmall-branded franchised convenience store
opened through the Lingshoutong Retail Sourcing Platform (“LST”).
The LST platform is a digital sourcing platform that has been
adopted by over 500,000 neighborhood mom-and-pop shops across
China. The platform allows merchants to source from a broad
selection of brands and products that can be efficiently delivered
to their stores; increasing their potential revenue opportunity and
lowering operational costs. The brand partners of LST benefit from
deeper distribution channels, especially in lower tier cities in
China where organized retail is less developed.
International – further investments for long-term growth.
Our cross-border and international consumer businesses continue to
exhibit robust growth. Revenue from our international commerce
retail business reached RMB2,878 million (US$433 million) in the
quarter ended September 30, 2017, representing a 115% year-on-year
growth, driven by strong growth in our Southeast Asian platform
Lazada and our China outbound platform AliExpress. The growth of
Lazada and AliExpress further expands our customer base outside
China.
During the quarter, cooperating with Taobao Marketplace, Lazada
expanded the “Taobao Collection” to expand Lazada’s product
offerings in three additional markets including Indonesia, the
Philippines and Thailand, adding to the existing markets of
Singapore and Malaysia. We will continue to invest aggressively in
the nascent markets in Southeast Asia as well as launch innovative
services to benefit consumers in the region.
Building upon the significant progress made in educating the
U.S. market on the Chinese consumption economy during the Gateway
’17 conference in June, we expanded the geographic reach of our
efforts to on-board small businesses from outside China to sell
into China by hosting the first Gateway ’17 conference in Canada in
September. Over 3,000 Canadian small businesses and entrepreneurs
attended the event in Toronto to learn about business opportunities
in the China market that present themselves through our
ecosystem.
Cloud Computing
Cloud computing revenue grew 99% year-over-year to RMB2,975
million (US$447 million), driven by both robust growth in paying
customers and improving revenue mix to higher valued-added
services. We are seeing significant traction and diversification of
customers and revenue, and will continue to invest to further
expand the market through valuable services for our cloud
customers.
In the September 2017 quarter, Alibaba Cloud launched 245 new
products and features, including major products that enable large
enterprises to achieve higher computing performance and storage
capability. For example, our new self-developed X-Dragon Cloud
server combines the performance and isolation capabilities of bare
metal servers and the elasticity and agility of virtual machines.
It is particularly suitable for mission critical applications
requiring high performance guarantee and strong tenant isolation
for enterprises. In addition, the newly released relational
database POLARDB is integrated with our proprietary distributed
storage backend for optimized performance and can store up to 100TB
of data per TB instance.
Alibaba Cloud continues to develop holistic solutions to tackle
the challenges of large enterprises spanning a variety of
industries. Selected large enterprise customers in China
include:
- Philips, one of Fortune 500
companies, has migrated their Enterprise IT applications in China
onto Alibaba Cloud. This has resulted in improved operational data
utilization and efficacy as well as largely reduced costs.
- Kweichow Moutai, one of the
world’s most valuable Chinese liquor companies, which is
publicly-traded in China, is using our cloud products including
elastic computing, content delivery, database, security and others
services to build its digital marketing platform which enables it
to better engage with its consumers.
- Bank of Nanjing, a
publicly-traded bank in China, is migrating the core system of its
Internet finance business to the Alibaba Cloud platform. Bank of
Nanjing is adopting a range of proprietary cloud products including
our OceanBase database and big data platform as well as other
services designed specifically for the financial service sector by
both Alibaba Cloud and Ant Financial.
We held the annual Computing Conference 2017 in Hangzhou in
early October. The four-day event featured more than 800 industry
experts and thought leaders at over 120 forums, covering topics
such as artificial intelligence, blockchain, Big Data, quantum
computing, DevOps and the Internet of Things (IoT). Approximately
60,000 people attended in person and millions viewed the conference
online.
During the conference, we launched an innovative global research
program, “Alibaba DAMO Academy,” which is designed to bridge the
gap between academic and industry research in the field of
technology development to solve real-world problems.
We intend to invest more than US$15 billion over the next three
years on our research and development efforts, which will include
the Alibaba DAMO Academy.
Digital Media and
Entertainment
During the quarter, we successfully executed our strategy of
acquiring and developing a mixture of licensed and original content
that resulted in greater consumer mind share in both the drama and
variety show categories. As a result, daily average subscribers of
Youku video subscriptions increased over 180% year-on-year during
the quarter ended September 30, 2017. We believe a strong content
pipeline, especially with a focus on original content, offering
greater flexibility around availability and distribution, will
bring us sustainable long-term advantages in video
entertainment.
Innovation Initiatives
AutoNavi continues to strengthen its position as a leading
provider of digital map, navigation and location-based services in
China. For the National Day Golden Week holiday campaign, AutoNavi
launched location-based interactive marketing services for brands
and retailers across different industries, resulting in
approximately 4.7 billion branded impressions and enabled the
distribution of RMB1.1 billion in targeted coupons.
Updates on Equity Investees and
Others
Cainiao Network – greater synergy with Alibaba ecosystem and
commitment to increased logistics capability. We have completed
an additional investment of US$803 million (RMB5.3 billion) to
increase our ownership of Cainiao Network to a majority stake of
51%. The investment demonstrates our commitment to implement our
New Retail strategy and to enhance the logistics capabilities
within the Alibaba ecosystem. Together with Cainiao Network, we
plan to invest RMB100 billion (US$15.0 billion) over the next five
years to further strengthen our global logistics network with the
aim to realize the mission of fulfilling orders within 24 hours in
China and within 72 hours anywhere in the world, and enable greater
efficiencies and lower costs in China’s logistics sector.
Cash Flow from Operating Activities and
Free Cash Flow
Net cash provided by operating activities in the quarter ended
September 30, 2017 was RMB30,507 million (US$4,585 million), an
increase of 77% compared to RMB17,206 million in the same quarter
of 2016. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended September 30, 2017 was RMB22,505 million
(US$3,383 million), an increase of 61% compared to RMB13,943
million in the same quarter of 2016. A reconciliation of net cash
provided by operating activities to free cash flow is included at
the end of this results announcement.
KEY OPERATIONAL METRICS*
September 30,2016
June 30,2017
September 30,2017
% Change YoY QoQ China
Commerce Retail: Annual active consumers(1) (in millions) 439
466 488 11% 5% Mobile monthly active users (MAUs)(2) (in millions)
450 529 549 22% 4% * For definitions of terms used but not
defined in this results announcement, please refer to our annual
report on Form 20-F for the fiscal year ended March 31, 2017. (1)
For the twelve months ended on the respective dates. (2) For the
month ended on the respective dates.
SUMMARY FINANCIAL RESULTS
Three months ended September 30,
2016 2017 RMB RMB
US$(1) YoY % Change (in millions, except
percentages and per share amounts) Revenue 34,292 55,122
8,285 61% Income from operations 9,045 16,584 2,493 83%
Operating margin 27% 30% Adjusted EBITDA(2) 15,875 25,031 3,762 58%
Adjusted EBITDA margin(2) 46% 45% Adjusted EBITA(2) 14,593 23,018
3,460 58% Adjusted EBITA margin(2) 43% 42% Net income 7,075
17,408 2,616 146% Non-GAAP net income(2) 12,949 22,089 3,320 71%
Diluted earnings per share/ADS (EPS) 2.97 6.78 1.02 128%
Non-GAAP diluted EPS(2) 5.26 8.57 1.29 63% (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 RMB6.6533 to US$1.00, the exchange rate on September
30, 2017 as set forth in the H.10 statistical release of the
Federal Reserve Board. The percentages stated in this announcement
are calculated based on the RMB amounts. (2) See the sections
entitled “Information about Segments,” “Non-GAAP Financial
Measures” and “Reconciliations of Non-GAAP Measures to the Nearest
Comparable GAAP Measures” for more information about the non-GAAP
measures referred to within this results announcement.
INFORMATION ABOUT SEGMENTS
The table below sets forth selected
financial information of our operating segments for the periods
indicated:
Three months ended September 30, 2017
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
US$ (in millions, except percentages)
Revenue 46,462 2,975 4,798 887
— 55,122 8,285 Income (loss) from
operations
23,836
(697)
(3,383)
(1,456)
(1,716)
16,584
2,493
Add: Share-based compensation expense 1,987 531 594 930 644 4,686
704 Add: Amortization of intangible assets 591 4 1,040 30 83 1,748
263
Adjusted EBITA 26,414 (162)
(1,749) (496) (989) 23,018 3,460
Adjusted EBITA margin 57% (5)% (36)%
(56)%
42% Three months ended September 30, 2016
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
(in millions, except percentages) Revenue
28,493 1,493 3,608 698 —
34,292 Income (loss) from operations
15,559 (398) (2,247) (1,888)
(1,981) 9,045 Add: Share-based compensation expense
1,471
340
358
952
1,130
4,251 Add: Amortization of intangible assets 569 1 485 165 77 1,297
Adjusted EBITA 17,599 (57)
(1,404) (771) (774) 14,593 Adjusted
EBITA margin 62% (4)% (39)% (110)%
43% (1) Unallocated expenses are primarily related to
corporate administrative costs and other miscellaneous items that
are not allocated to individual segments.
SEPTEMBER QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended September 30, 2017 was RMB55,122
million (US$8,285 million), an increase of 61% compared to
RMB34,292 million in the same quarter of 2016. The increase was
mainly driven by the robust revenue growth of our China commerce
retail business, international commerce retail business and Alibaba
Cloud.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended September 30, 2016
2017 RMB
% ofRevenue
RMB US$
% ofRevenue
YoY %Change
(in millions, except percentages) Core commerce: China
commerce retail - Customer management 16,645 48% 26,272 3,949 48%
58% - Commission 6,864 20% 10,059 1,512 18% 47% - Others 600 2%
3,226 484 6% 438% 24,109 70% 39,557 5,945 72% 64% China commerce
wholesale 1,435 4% 1,714 258 3% 19% International commerce retail
1,338 4% 2,878 433 5% 115% International commerce wholesale 1,506
5% 1,651 248 3% 10% Others 105 0% 662 99 1% 530% Total core
commerce 28,493 83% 46,462 6,983 84% 63% Cloud computing
1,493 4% 2,975 447 5% 99% Digital media and entertainment 3,608 11%
4,798 721 9% 33% Innovation initiatives and others 698 2% 887 134
2% 27% Total 34,292 100% 55,122 8,285 100% 61%
Core commerce
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in the quarter ended September 30, 2017 was
RMB39,557 million (US$5,945 million), or 72% of total revenue, an
increase of 64% compared to RMB24,109 million in the same quarter
of 2016. The increase in revenue was due to robust growth of
customer management revenue and commission revenue, as well as the
consolidation of Intime starting in mid-May 2017. Customer
management revenue grew by 58% year-over-year, driven largely by
increases in the volume of clicks and to a lesser extent average
unit price per click, reflecting continuous mobile user growth and
our ability to deliver more relevant content to consumers through
our enhancements in personalization technology. This growth
resulted in higher average spending on our customer management
services by an increasing number of merchants. Commission revenue,
representing 25% of China commerce retail revenue in the quarter
ended September 30, 2017, grew by 47% year-over-year, primarily due
to strong growth in physical goods transactions on Tmall. Other
revenue was RMB3,226 million (US$484 million), a significant
increase compared to RMB600 million in the same quarter of 2016,
primarily driven by our New Retail businesses, including
consolidation of Intime and contribution from Hema.Our annual China
commerce retail revenue per annual active consumer increased from
RMB215 for the quarter ended September 30, 2016 to RMB293 (US$44)
for the quarter ended September 30, 2017, and mobile revenue per
mobile MAU grew from RMB151 for the quarter ended September 30,
2016 to RMB213 (US$32) for the quarter ended September 30, 2017, as
illustrated in these charts and the table at the end of this
announcement.Annual active consumers – Our China
retail marketplaces had 488 million annual active consumers in the
12 months ended September 30, 2017, compared to 466 million in the
12 months ended June 30, 2017, representing a net addition of 22
million from the prior quarter, and an 11% increase from 439
million in the 12 months ended September 30, 2016. Average annual
spend per active consumer for the 12 months ended September 30,
2017 also continued to increase from prior quarters. The longer
consumers have been with our platform, the more they spend, placing
more orders across more product categories.Mobile MAUs –
Mobile MAUs on our China retail marketplaces grew to 549 million in
September 2017, compared to 529 million in June 2017, representing
a net addition of 20 million MAUs in the quarter and a 22% increase
from 450 million in September 2016.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
the quarter ended September 30, 2017 was RMB1,714 million (US$258
million), an increase of 19% compared to RMB1,435 million in the
same quarter of 2016. The increase was primarily due to an increase
in the average revenue from paying members on our 1688.com
platform.
- International commerce retail
businessRevenue from our international commerce retail business
in the quarter ended September 30, 2017 was RMB2,878 million
(US$433 million), an increase of 115% compared to RMB1,338 million
in the same quarter of 2016. The increase was primarily due to the
growth in revenue generated from Lazada and AliExpress, driven by
robust GMV growth on these two marketplaces.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in the quarter ended September 30, 2017 was RMB1,651
million (US$248 million), an increase of 10% compared to RMB1,506
million in the same quarter of 2016, primarily due to an increase
in online marketing revenue.
Cloud computing
Revenue from our cloud computing business in the quarter ended
September 30, 2017 was RMB2,975 million (US$447 million), an
increase of 99% compared to RMB1,493 million in the same quarter of
2016, primarily driven by an increase in the number of paying
customers and also by an increase in their usage of our cloud
computing services including more complex offerings, such as
content delivery network, database services, as well as data and
security services.
Digital media and entertainment
Revenue from our digital media and entertainment business in the
quarter ended September 30, 2017 was RMB4,798 million (US$721
million), an increase of 33% compared to RMB3,608 million in the
same quarter of 2016. The increase was primarily due to an increase
in revenue from mobile value-added services provided by UCWeb, such
as news feeds and mobile search, and an increase in subscription
and advertising revenue from Youku Tudou.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended September 30, 2017 was RMB887 million (US$134 million), an
increase of 27% compared to RMB698 million in the same quarter of
2016.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended September 30,
%
ofRevenueYoYchange
2016 2017 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Costs and expenses:
Cost of revenue 13,123 38% 22,002 3,307 40% 2% Product development
expenses 4,134 12% 5,083 764 9% (3)% Sales and marketing expenses
3,878 11% 6,266 942 11% 0% General and administrative expenses
2,815 8% 3,439 516 6% (2)% Amortization of intangible assets 1,297
4% 1,748 263 4% 0% Total costs and expenses 25,247 73% 38,538 5,792
70% (3)%
Share-based compensation expense by
function: Cost of revenue 1,183 4% 1,369 206 2% (2)% Product
development expenses 1,451 4% 1,686 253 3% (1)% Sales and marketing
expenses 478 1% 501 75 1% 0% General and administrative expenses
1,139 3% 1,130 170 2% (1)% Total share-based compensation expense
4,251 12% 4,686 704 8% (4)%
Costs and expenses excluding
share-based compensation expense: Cost of revenue 11,940 34%
20,633 3,101 38% 4% Product development expenses 2,683 8% 3,397 511
6% (2)% Sales and marketing expenses 3,400 10% 5,765 867 10% 0%
General and administrative expenses 1,676 5% 2,309 346 4% (1)%
Amortization of intangible assets 1,297 4% 1,748 263 4% 0% Total
costs and expenses excluding share-based compensation expense
20,996 61% 33,852 5,088 62% 1%
Cost of revenue – Cost of revenue in the quarter ended
September 30, 2017 was RMB22,002 million (US$3,307 million), or 40%
of revenue, compared to RMB13,123 million, or 38% 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 34% in the quarter ended September 30,
2016 to 38% in the quarter ended September 30, 2017. The increase
was primarily due to our investments in New Retail, globalization
and improving user experience. These increased costs primarily
reflected the consolidation of Intime, investments in Hema and
Lazada, content acquisition costs of Youku Tudou and logistics
costs related to Tmall Supermarket.
Product development expenses – Product development
expenses in the quarter ended September 30, 2017 were RMB5,083
million (US$764 million), or 9% of revenue, compared to RMB4,134
million, or 12% of revenue, in the same quarter of 2016. Without
the effect of share-based compensation expense, product development
expenses as a percentage of revenue would have decreased from 8% in
the quarter ended September 30, 2016 to 6% in the quarter ended
September 30, 2017, reflecting operating leverage.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended September 30, 2017 were RMB6,266
million (US$942 million), or 11% of revenue, compared to RMB3,878
million, or 11% of revenue, in the same quarter of 2016. Without
the effect of share-based compensation expense, sales and marketing
expenses as a percentage of revenue in the quarter ended September
30, 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 September 30, 2017
were RMB3,439 million (US$516 million), or 6% of revenue, compared
to RMB2,815 million, or 8% of revenue, in the same quarter of 2016.
Without the effect of share-based compensation expense, general and
administrative expenses as a percentage of revenue would have
decreased from 5% in the quarter ended September 30, 2016 to 4% in
the quarter ended September 30, 2017, reflecting operating
leverage.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended September 30, 2017 was RMB4,686 million
(US$704 million), an increase of 10% compared to RMB4,251 million
in the same quarter of 2016. Share-based compensation expense as a
percentage of revenue decreased to 8% in the quarter ended
September 30, 2017 from 12% in the same quarter of 2016. The
following table sets forth our analysis of share-based compensation
expense for the quarters indicated by type of share-based
awards:
Three months ended September 30,
2016 June 30, 2017 September 30,
2017 % Change RMB
% ofRevenue
RMB
% ofRevenue
RMB US$
% ofRevenue
YoY QoQ (in millions, except percentages)
By type of awards: Alibaba Group share-based awards granted
to:
- Our employees
2,910 8% 3,023 6% 3,697 556 7% 27% 22%
- Ant Financial employees and other
consultants(1)
598 2% 452 1% 469 70 1% (22)% 4% Ant Financial share-based awards
granted to our employees(1) 543 1% 297 1% 266 40 0% (51)% (10)%
Others 200 1% 247 0% 254 38 0% 27% 3% Total share-based
compensation expense 4,251 12% 4,019 8% 4,686 704 8% 10% 17%
(1) Awards subject to mark-to-market
accounting treatment.
Share-based compensation expense related to Alibaba Group
share-based awards granted increased in this quarter compared to
the previous quarter. The increase reflected the full quarter
effect of the expense arising from the annual performance-based
awards granted in the middle of the previous quarter.
We expect that our share-based compensation expense will
continue to be affected by changes in the fair value of our shares
and Ant Financial shares, as well as the quantity of awards we
grant to our employees and consultants in the future. Due to the
accounting treatment of Ant Financial share-based awards granted to
our employees, if the fair value of Ant Financial equity increases
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 September 30, 2017 was
RMB1,748 million (US$263 million), an increase of 35% from RMB1,297
million in the same quarter of 2016. The increase was due to an
increase in intangible assets recognized relating to our strategic
acquisitions and investments.
Income from operations and operating
margin
Income from operations in the quarter ended September 30, 2017
was RMB16,584 million (US$2,493 million), or 30% of revenue, an
increase of 83% compared to RMB9,045 million, or 27% of revenue, in
the same quarter of 2016.
Adjusted EBITDA and Adjusted EBITDA
margin
Adjusted EBITDA increased by 58% to RMB25,031 million (US$3,762
million) in the quarter ended September 30, 2017, compared to
RMB15,875 million in the same quarter of 2016. Adjusted EBITDA
margin decreased to 45% in the quarter ended September 30, 2017
from 46% in the same quarter of 2016, mainly due to our investments
in New Retail, globalization, user base and user experience, partly
offset by increased operating leverage. A reconciliation of net
income to adjusted EBITDA is included at the end of this results
announcement.
As many of our newly developed and acquired businesses have
different cost structures and lower margins, we expect that our
margin will continue to be negatively impacted by these new
businesses.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended September 30, 2016
2017 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Core commerce
17,599 62% 26,414 3,970 57% Cloud computing (57) (4)% (162) (24)
(5)% Digital media and entertainment (1,404) (39)% (1,749) (263)
(36)% Innovation initiatives and others
(771)
(110)%
(496)
(75)
(56)%
Core commerce segment – Adjusted EBITA increased by 50%
to RMB26,414 million (US$3,970 million) in the quarter ended
September 30, 2017, compared to RMB17,599 million in the same
quarter of 2016. Adjusted EBITA margin decreased to 57% in the
quarter ended September 30, 2017, as compared to 62% in the same
quarter of 2016, primarily due to our investment in New Retail
businesses, including Intime and Hema, globalization, including
Lazada, user base and user experience.
Cloud computing segment – Adjusted EBITA in the quarter
ended September 30, 2017 was a loss of RMB162 million (US$24
million), compared to a loss of RMB57 million in the same quarter
of 2016. Adjusted EBITA margin decreased to negative 5% in the
quarter ended September 30, 2017 from negative 4% in the quarter
ended September 30, 2016, primarily due to our continued expansion
and enhancement of our customer base, products and services, both
within China and overseas.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended September 30, 2017 was a loss of RMB1,749
million (US$263 million), compared to a loss of RMB1,404 million in
the same quarter of 2016. Adjusted EBITA margin improved to
negative 36% in the quarter ended September 30, 2017 from negative
39% in the quarter ended September 30, 2016, primarily due to solid
results from UCWeb, partly offset by an increase in investment in
content costs of Youku Tudou.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended September 30, 2017 was a loss of RMB496
million (US$75 million), compared to a loss of RMB771 million in
the same quarter of 2016. Adjusted EBITA margin improved to
negative 56% in the quarter ended September 30, 2017, compared to
negative 110% in the quarter ended September 30, 2016, primarily
due to increase in revenue from new business initiatives.
Interest and investment income,
net
Interest and investment income, net in the quarter ended
September 30, 2017 was RMB3,435 million (US$516 million), a
significant increase from RMB419 million in the same quarter of
2016, primarily due to gains of RMB2,362 million (US$355 million)
arising from disposals of certain investments and an increase in
interest income, partly offset by impairment loss on certain
investments of RMB389 million (US$58 million).
Other income, net
Other income, net in the quarter ended September 30, 2017 was
RMB1,737 million (US$261 million), compared to RMB868 million in
the same quarter of 2016. The increase was primarily due to an
increase in royalty fees and software technology service fees
received from Ant Financial under our profit sharing arrangement,
which amounted to RMB1,995 million (US$300 million) in the quarter
ended September 30, 2017, offset by an increase in exchange
loss.
Income tax expenses
Income tax expenses in the quarter ended September 30, 2017 were
RMB2,719 million (US$409 million), compared to RMB2,022 million in
the same quarter of 2016.
Our effective tax rate was 13% in the quarter ended September
30, 2017, compared to 21% 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 10% in the quarter ended September 30, 2017, compared to
14% in the same quarter of 2016. The decrease in effective tax rate
was primarily due to the recognition of tax credits of
approximately RMB2.3 billion (US$346 million) during the quarter as
certain key subsidiaries were notified of the renewal of their Key
Software Enterprise status for calendar year 2016 by the relevant
tax authorities.
Share of results of equity
investees
Share of results of equity investees in the quarter ended
September 30, 2017 was a loss of RMB882 million (US$133 million),
compared to a loss of RMB567 million in the same quarter of 2016
and a loss of RMB1,388 million in the quarter ended June 30, 2017.
We record our share of results of equity investees one quarter in
arrears. Share of results of equity investees in the quarter ended
September 30, 2017 and the comparative periods consisted of the
following:
Three months ended September 30, 2016
June 30, 2017 September 30, 2017 RMB
RMB RMB US$ (in millions) Share
of (loss) profit of equity investees:
- Koubei
(3) (391) (369) (56)
- Cainiao Network
(220) (245) (273) (41)
- Other equity investees
(160) (311) 190 29 Dilution gains (losses) 46 (29) (14) (2)
Others(1) (230) (412) (416) (63) Total (567) (1,388) (882) (133)
(1) Others mainly include amortization of intangible assets
of equity investees and share-based compensation expense.
The share of results of equity investees in the quarter ended
September 30, 2017 was a loss of RMB882 million (US$133 million),
compared to a loss of RMB1,388 million in the quarter ended June
30, 2017, primarily due to an increase in our share of profit, net
of other equity investees.
Net income and Non-GAAP net
income
Our net income in the quarter ended September 30, 2017 was
RMB17,408 million (US$2,616 million), an increase of 146% compared
to RMB7,075 million in the same quarter of 2016. Excluding
share-based compensation expense, non-cash revaluation gain and
certain other items, non-GAAP net income in the quarter ended
September 30, 2017 was RMB22,089 million (US$3,320 million), an
increase of 71% compared to RMB12,949 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 September 30, 2017 was RMB17,668 million (US$2,656 million),
an increase of 132% compared to RMB7,623 million in the same
quarter of 2016.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in the quarter ended September 30, 2017 was RMB6.78
(US$1.02) on a weighted average of 2,607 million diluted shares
outstanding during the quarter, an increase of 128% compared to
RMB2.97 on a weighted average of 2,566 million diluted shares
outstanding during the same quarter of 2016. Excluding share-based
compensation expense, non-cash revaluation gain and certain other
items, non-GAAP diluted EPS in the quarter ended September 30, 2017
was RMB8.57 (US$1.29), an increase of 63% compared to RMB5.26 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 September 30, 2017, cash, cash equivalents and short-term
investments were RMB159,855 million (US$24,027 million), compared
to RMB148,152 million as of June 30, 2017. The increase in cash,
cash equivalents and short-term investments during the quarter
ended September 30, 2017 was primarily due to free cash flow
generated from operations of RMB22,505 million (US$3,383 million),
partly offset by cash used in investing activities, including
investments in Ele.me and Tokopedia.
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
September 30, 2017 was RMB30,507 million (US$4,585 million), an
increase of 77% compared to RMB17,206 million in the same quarter
of 2016. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended September 30, 2017 was RMB22,505 million
(US$3,383 million), compared to RMB13,943 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 September 30, 2017, net cash used in
investing activities of RMB25,683 million (US$3,860 million)
primarily reflected cash outflow of RMB15,121 million (US$2,273
million) for investment and acquisition activities, including
investments in Ele.me and Tokopedia, cash outflow of RMB8,117
million (US$1,220 million) for treasury activities, as well as
capital expenditures and intangible assets of RMB8,673 million
(US$1,303 million), which included cash outflow for acquisition of
land use rights and construction in progress of RMB671 million
(US$101 million). The increase in capital expenditures mainly
represented our investment in technology that supports the growth
of our cloud business as well as growth in our commerce platforms.
The outflow was partially offset by cash inflow of RMB5,130 million
(US$771 million) from disposals of various investments.
Employees
As of September 30, 2017, we had a total of 59,572 employees,
compared to 57,302 as of June 30, 2017. The number of employees as
of September 30, 2017 increased by 2,270 from June 30, 2017,
primarily due to the continued expansion of our cloud computing,
New Retail and international businesses.
Adjustment of Revenue
Guidance
As a result of the consolidation of Cainiao Network starting in
the December 2017 quarter, we are increasing our 2018 fiscal year
revenue guidance to 49% to 53% (previously 45% to 49%).
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 November 2, 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: 96302187
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: 96302187).
Our results announcement and accompanying slides are available
at Alibaba Group’s Investor Relations website at
http://www.alibabagroup.com/en/ir/home on November 2, 2017.
ABOUT ALIBABA GROUP
Alibaba Group’s mission is to make it easy to do business
anywhere. The company aims to build the future infrastructure of
commerce. It envisions that its customers will meet, work and live
at Alibaba, and that it will be a company that lasts at least 102
years.
SAFE HARBOR STATEMENTS
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “potential,” “continue,” “ongoing,”
“targets,” “guidance” and similar statements. Among other things,
statements that are not historical facts, including statements
about Alibaba’s strategies and business plans, Alibaba’s beliefs
and expectations regarding the growth of its business and its
revenue, the business outlook and quotations from management in
this announcement, as well as Alibaba’s strategic and operational
plans, are or contain forward-looking statements. Alibaba may also
make forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the “SEC”), in press releases
and other written materials and in oral statements made by its
officers, directors or employees to third parties. Forward-looking
statements involve inherent risks and uncertainties. A number of
factors could cause actual results to differ materially from those
contained in any forward-looking statement, including but not
limited to the following: Alibaba’s goals and strategies; Alibaba’s
future business development; Alibaba’s ability to maintain the
trusted status of its ecosystem, reputation and brand; risks
associated with increased investments in Alibaba’s business and new
business initiatives; risks associated with strategic acquisitions
and investments; Alibaba’s ability to retain or increase engagement
of consumers, merchants and other participants in its ecosystem and
enable new offerings; Alibaba’s ability to maintain or grow its
revenue or business; risks associated with limitation or
restriction of services provided by Alipay; changes in laws,
regulations and regulatory environment that affect Alibaba’s
business operations; privacy and regulatory concerns; competition;
security breaches; the continued growth of the e-commerce market in
China and globally; risks associated with the performance of our
business partners, including but not limited to Ant Financial; and
fluctuations in general economic and business conditions in China
and globally and assumptions underlying or related to any of the
foregoing. Further information regarding these and other risks is
included in Alibaba’s filings with the SEC. All information
provided in this results announcement is as of the date of this
results announcement and are based on assumptions that we believe
to be reasonable as of this date, and Alibaba does not undertake
any obligation to update any forward-looking statement, except as
required under applicable law.
NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use the
following non-GAAP financial measures: for our consolidated
results, adjusted EBITDA (including adjusted EBITDA margin),
adjusted EBITA (including adjusted EBITA margin), non-GAAP net
income, non-GAAP diluted EPS and free cash flow. For more
information on these non-GAAP financial measures, please refer to
the section entitled “Information about Segments” and the table
captioned “Reconciliations of Non-GAAP Measures to the Nearest
Comparable GAAP Measures” in this results announcement.
We believe that adjusted EBITDA, adjusted EBITA, non-GAAP net
income and non-GAAP diluted EPS help identify underlying trends in
our business that could otherwise be distorted by the effect of
certain income or expenses that we include in income from
operations, net income and diluted EPS. We believe that adjusted
EBITDA, adjusted EBITA, non-GAAP net income and non-GAAP diluted
EPS provide useful information about our core operating results,
enhance the overall understanding of our past performance and
future prospects and allow for greater visibility with respect to
key metrics used by our management in our financial and operational
decision-making. We consider free cash flow to be a liquidity
measure that provides useful information to management and
investors about the amount of cash generated by our business that
can be used for strategic corporate transactions, including
investing in our new business initiatives, making strategic
investments and acquisitions and strengthening our balance sheet.
Adjusted EBITDA, adjusted EBITA, non-GAAP net income, non-GAAP
diluted EPS and free cash flow should not be considered in
isolation or construed as an alternative to income from operations,
net income, diluted EPS, cash flows or any other measure of
performance or as an indicator of our operating performance. These
non-GAAP financial measures presented here may not be comparable to
similarly titled measures presented by other companies. Other
companies may calculate similarly titled measures differently,
limiting their usefulness as comparative measures to our data.
Adjusted EBITDA represents net income before (i) interest
and investment income, net, other income, net, interest expense,
income tax expenses and share of results of equity investees, and
(ii) certain non-cash expenses, consisting of share-based
compensation expense, amortization and depreciation, which we do
not believe are reflective of our core operating performance during
the periods presented.
Adjusted EBITA represents net income before (i) interest
and investment income, net, other income, net, interest expense,
income tax expenses and share of results of equity investees, and
(ii) certain non-cash expenses, consisting of share-based
compensation expense and amortization, which we do not believe are
reflective of our core operating performance during the periods
presented.
Non-GAAP net income represents net income before
share-based compensation expense, amortization, impairment of
goodwill and investments, gain on deemed
disposals/disposals/revaluation of investments, amortization of
excess value receivable arising from the restructuring of
commercial arrangements with Ant Financial, immediate recognition
of unamortized professional fees and upfront fees upon termination
of bank borrowings and others, as adjusted for the tax effects on
non-GAAP adjustments.
Non-GAAP diluted EPS represents non-GAAP net income
attributable to ordinary shareholders divided by the weighted
average number of shares outstanding during the periods on a
diluted basis, including accounting for the effects of the assumed
conversion of convertible preference shares.
Free cash flow represents net cash provided by operating
activities as presented in our consolidated cash flow statement
less purchases of property and equipment and intangible assets
(excluding acquisition of land use rights and construction in
progress) and others.
The section entitled “Information about Segments” and the table
captioned “Reconciliations of Non-GAAP Measures to the Nearest
Comparable GAAP Measures” in this results announcement have more
details on the non-GAAP financial measures that are most directly
comparable to GAAP financial measures and the related
reconciliations between these financial measures.
ALIBABA GROUP HOLDING LIMITED UNAUDITED
CONSOLIDATED INCOME STATEMENTS Three months ended
September 30, Six months ended September 30, 2016
2017 2016 2017 RMB
RMB US$ RMB RMB
US$ (in millions, except per share data) (in
millions, except per share data) Revenue 34,292 55,122
8,285 66,446 105,306 15,828 Cost of revenue (13,123) (22,002)
(3,307) (24,867) (39,462) (5,931) Product development expenses
(4,134) (5,083) (764) (8,122) (9,779) (1,470) Sales and marketing
expenses (3,878) (6,266) (942) (7,492) (11,116) (1,671) General and
administrative expenses (2,815) (3,439) (516) (5,558) (7,118)
(1,070) Amortization of intangible assets (1,297) (1,748) (263)
(2,548) (3,734) (561)
Income from operations 9,045
16,584 2,493 17,859 34,097 5,125 Interest and investment income,
net 419 3,435 516 1,169 4,907 738 Interest expense (668) (747)
(112) (1,294) (1,547) (233) Other income, net 868 1,737 261 2,631
3,624 545 Income before income tax and share of results of
equity investees 9,664 21,009 3,158 20,365 41,081 6,175 Income tax
expenses (2,022) (2,719) (409) (4,113) (7,372) (1,108) Share of
results of equity investees (567) (882) (133) (2,035) (2,270) (342)
Net income 7,075 17,408 2,616 14,217 31,439 4,725 Net
loss attributable to noncontrolling interests 548 260 40 956 912
137
Net income attributable to ordinary shareholders
7,623 17,668 2,656 15,173 32,351 4,862
Earnings per share
attributable to ordinary shareholders Basic 3.08 6.92
1.04 6.13 12.70 1.91 Diluted 2.97 6.78 1.02 5.91 12.43 1.87
Weighted average number of share used in calculating net income
per ordinary share Basic 2,478 2,552 2,476 2,547 Diluted 2,566
2,607 2,568 2,603
ALIBABA GROUP HOLDING
LIMITED REVENUE
The following table sets forth our revenue
by segments for the periods indicated:
Three months ended September 30, Six months ended
September 30, 2016 2017 2016
2017 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Core commerce(1) 28,493 46,462 6,983 55,734 89,489
13,450 Cloud computing(2) 1,493 2,975 447 2,736 5,406 813 Digital
media and entertainment(3) 3,608 4,798 721 6,743 8,879 1,335
Innovation initiatives and others(4) 698 887 134 1,233 1,532 230
Total 34,292 55,122 8,285 66,446 105,306 15,828 (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 September 30, Six months ended
September 30, 2016 2017 2016
2017 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Core commerce 15,559 23,836 3,583 30,241 48,644
7,311 Cloud computing (398) (697) (104) (837) (1,229) (184)
Digital media and entertainment (2,247) (3,383) (509) (4,100)
(6,771) (1,018) Innovation initiatives and others (1,888) (1,456)
(219) (3,460) (3,068) (461) Unallocated (1,981) (1,716) (258)
(3,985) (3,479) (523) Total 9,045 16,584 2,493 17,859 34,097
5,125
The following table sets forth our
adjusted EBITA by segments for the periods indicated:
Three months ended September 30, Six months ended
September 30 2016 2017 2016
2017 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Core commerce 17,599 26,414 3,970 34,223 53,384 8,024
Cloud computing (57) (162) (24) (215) (265) (40) Digital media and
entertainment (1,404) (1,749) (263) (2,400) (3,497) (526)
Innovation initiatives and others (771) (496) (75) (1,658) (1,130)
(170) Unallocated (774) (989) (148) (1,598) (1,956) (294)
Total 14,593 23,018 3,460 28,352 46,536 6,994
The table below sets forth selected
financial information of our operating segments for six months
ended September 30, 2017:
Six months ended September 30, 2017
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
US$ (in millions, except percentages)
Revenue 89,489 5,406 8,879 1,532
— 105,306 15,828 Income (loss) from
operations
48,644
(1,229)
(6,771)
(3,068)
(3,479)
34,097
5,125
Add: Share-based compensation expense 3,547 959 1,096 1,746 1,357
8,705 1,308 Add: Amortization of intangible assets 1,193 5 2,178
192 166 3,734 561
Adjusted EBITA 53,384
(265) (3,497) (1,130) (1,956)
46,536 6,994 Adjusted EBITA margin 60%
(5)% (39)% (74)%
44% Six months ended September 30, 2016
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
(in millions, except percentages) Revenue
55,734 2,736 6,743 1,233 —
66,446 Income (loss) from operations
30,241 (837) (4,100) (3,460)
(3,985) 17,859
Add: Share-based compensation expense
2,927
620
692
1,472
2,234
7,945
Add: Amortization of intangible assets 1,055 2 1,008 330 153 2,548
Adjusted EBITA 34,223 (215)
(2,400) (1,658) (1,598) 28,352
Adjusted EBITA margin 61% (8)% (36)%
(134)% 43% (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 September 30,
2017
2017
RMB
RMB
US$
(in millions)
Assets Current assets: Cash and cash equivalents 143,736
148,746 22,357 Short-term investments 3,011 11,109 1,670 Restricted
cash and escrow receivables 2,655 2,941 442 Investment securities
4,054 5,155 775 Prepayments, receivables and other assets(1) 28,408
36,697 5,515 Total current assets 181,864 204,648 30,759
Investment securities 31,452 33,049 4,967 Prepayments, receivables
and other assets(1) 8,703 13,173 1,979 Investment in equity
investees 120,368 126,850 19,066 Property and equipment, net 20,206
49,587 7,453 Land use rights, net 4,691 6,779 1,019 Intangible
assets, net 14,108 14,542 2,186 Goodwill 125,420 130,196 19,569
Total assets 506,812 578,824 86,998
Liabilities,
Mezzanine Equity and Shareholders’ Equity Current liabilities:
Current bank borrowings 5,948 7,696 1,157 Current portion of
unsecured notes 8,949 8,665 1,302 Income tax payable 6,125 11,637
1,749 Escrow money payable 2,322 2,602 391 Accrued expenses,
accounts payable and other liabilities(1) 46,979 60,580 9,105
Merchant deposits 8,189 8,689 1,306 Deferred revenue and customer
advances 15,052 19,665 2,956 Total current liabilities 93,564
119,534 17,966 (1) Certain reclassifications in prepayments,
receivables and other assets, accrued expenses, accounts payable
and other liabilities and deferred tax liabilities as of March 31,
2017 were retrospectively adjusted as a result of the adoption of a
new accounting standard effective in the first quarter of fiscal
2018.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)
As of March 31,
As of September 30,
2017
2017
RMB
RMB
US$
(in millions) Deferred revenue 641 800 120
Deferred tax liabilities(1) 10,361 13,523 2,032 Non-current bank
borrowings 30,959 30,971 4,655 Unsecured senior notes 45,876 44,402
6,674 Other liabilities 1,290 1,595 240
Total liabilities
182,691 210,825 31,687 Commitments and contingencies
— — —
Mezzanine equity
2,992 898 135
Alibaba Group Holding Limited
shareholders’ equity:
Ordinary shares 1 1
— Additional paid-in capital 164,585
175,186 26,331 Treasury shares at cost (2,823) (2,823) (424)
Restructuring reserve (624) (492) (74) Subscription receivables
(63) (164) (25) Statutory reserves 4,080 4,118 619 Accumulated
other comprehensive income 5,085 5,474 823 Retained earnings
108,558 140,872 21,173 Total Alibaba Group Holding Limited
shareholders’ equity 278,799 322,172 48,423 Noncontrolling
interests 42,330 44,929 6,753
Total equity 321,129
367,101 55,176
Total liabilities, mezzanine equity and
equity 506,812 578,824 86,998 (1) Certain
reclassifications in prepayments, receivables and other assets,
accrued expenses, accounts payable and other liabilities and
deferred tax liabilities as of March 31, 2017 were retrospectively
adjusted as a result of the adoption of a new accounting standard
effective in the first quarter of fiscal 2018.
ALIBABA GROUP HOLDING LIMITED UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS Three months
ended September 30, Six months ended September 30,
2016 2017 2016 2017
RMB RMB US$ RMB RMB
US$ (in millions) (in millions)
Net cash provided by operating activities 17,206 30,507 4,585
32,164 55,818 8,390 Net cash used in investing activities (5,715)
(25,683) (3,860) (67,183) (39,595) (5,951) Net cash provided by
(used in) financing activities 9,830 (416) (63) 31,142 (9,310)
(1,399) Effect of exchange rate changes on cash and cash
equivalents 117 (806) (120) 743 (1,903) (287) Increase
(decrease) in cash and cash equivalents 21,438 3,602 542 (3,134)
5,010 753 Cash and cash equivalents at beginning of period 82,246
145,144 21,815 106,818 143,736 21,604 Cash and cash
equivalents at end of period 103,684 148,746 22,357 103,684 148,746
22,357
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES The table below sets forth a
reconciliation of our net income to adjusted EBITA and adjusted
EBITDA for the periods indicated:
Three months
ended September 30, Six months ended September 30,
2016 2017 2016 2017
RMB RMB US$ RMB RMB
US$ (in millions) (in millions) Net
income 7,075 17,408 2,616 14,217
31,439 4,725 Less: Interest and investment income,
net (419) (3,435) (516) (1,169) (4,907) (738) Add: Interest expense
668 747 112 1,294 1,547 233 Less: Other income, net (868) (1,737)
(261) (2,631) (3,624) (545) Add: Income tax expenses 2,022 2,719
409 4,113 7,372 1,108 Add: Share of results of equity investees 567
882 133 2,035 2,270 342
Income from operations 9,045
16,584 2,493 17,859 34,097 5,125
Add: Share-based compensation expense 4,251 4,686 704 7,945 8,705
1,308 Add: Amortization of intangible assets 1,297 1,748 263 2,548
3,734 561
Adjusted EBITA 14,593 23,018
3,460 28,352 46,536 6,994 Add:
Depreciation and amortization of property and equipment and land
use rights 1,282 2,013 302 2,486 3,619 544
Adjusted EBITDA
15,875 25,031 3,762 30,838
50,155 7,538 ALIBABA GROUP HOLDING
LIMITED RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST
COMPARABLE GAAP MEASURES (CONTINUED) The table below
sets forth a reconciliation of our net income to non-GAAP net
income for the periods indicated:
Three months ended September 30, Six months
ended September 30, 2016 2017 2016
2017 RMB RMB US$ RMB RMB
US$ (in millions) (in millions) Net
income 7,075 17,408 2,616 14,217
31,439 4,725 Add: Share-based compensation expense
4,251 4,686 704 7,945 8,705 1,308 Add: Amortization of intangible
assets 1,297 1,748 263 2,548 3,734 561 Add: Impairment of goodwill
and investments 856 389 58 933 1,341 202 Less: Gain on deemed
disposals/disposals/revaluation of investments and others (527)
(2,297) (344) (582) (3,386) (509) Add: Amortization of excess value
receivable arising from the restructuring of commercial
arrangements with Ant Financial 66 66 10 132 133 20 Add: Immediate
recognition of unamortized professional fees and upfront fees upon
termination of bank borrowings
— — — —
92
14
Adjusted for tax effects on non-GAAP adjustments(1) (69) 89 13
(253) 50 8
Non-GAAP net income 12,949
22,089 3,320 24,940 42,108 6,329
(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.
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 September
30,
Six months ended September 30, 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 7,623 17,668 2,656 15,173
32,351 4,862 Dilution effect on earnings
arising from option plans operated by an equity investee (3) (3) -
(3) (6) (1) Net income attributable to ordinary shareholders –
diluted 7,620 17,665 2,656 15,170 32,345 4,861 Add: Non-GAAP
adjustments to net income(1) 5,874 4,681 704 10,723 10,669 1,604
Non-GAAP net income attributable to ordinary
shareholders for computing non-GAAP diluted EPS 13,494
22,346 3,360 25,893 43,014 6,465
Weighted average number of shares on a diluted basis
2,566 2,607 2,568 2,603 Diluted
EPS(2) 2.97 6.78 1.02 5.91
12.43 1.87 Add: Non-GAAP adjustments to net income
per share(3) 2.29 1.79 0.27 4.17 4.09 0.61
Non-GAAP
diluted EPS(4) 5.26 8.57 1.29
10.08 16.52 2.48
(1)
See the table above for the reconciliation
of net income to non-GAAP net income for more information of these
non-GAAP adjustments.
(2)
Diluted 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
September 30, Six months ended September 30, 2016
2017 2016 2017 RMB RMB
US$ RMB RMB US$ (in millions)
(in millions) Net cash provided by operating
activities 17,206 30,507 4,585
32,164 55,818 8,390 Less: Purchase of property
and equipment and intangible assets (excluding land use rights and
construction in progress) (3,348) (8,002) (1,202) (6,142) (11,164)
(1,678) Add: Others 85 - - 666 - -
Free cash flow
13,943 22,505 3,383 26,688
44,654 6,712
ALIBABA GROUP HOLDING LIMITED
SELECTED OPERATING DATA
Annual active consumers
The table below sets forth the number of active consumers on our
China retail marketplaces for the periods indicated:
Twelve months ended
Dec 31,2015
Mar 31,2016
Jun 30,2016
Sep 30,2016
Dec 31,2016
Mar 31,2017
Jun 30,2017
Sep 30,2017
(in millions) Annual active consumers 407 423 434 439 443
454 466 488
Mobile
The table below sets forth the mobile MAUs on our China retail
marketplaces for the periods indicated:
The month ended
Dec 31,2015
Mar 31,2016
Jun 30,2016
Sep 30,2016
Dec 31,2016
Mar 31,2017
Jun 30,2017
Sep 30,2017
(in millions) Mobile MAUs 393 410 427 450 493 507 529 549
Revenue per active consumer / mobile revenue per mobile
MAU
The table below sets forth information with respect to annual
China commerce retail revenue per annual active consumer and
annualized mobile revenue per mobile MAU from China commerce retail
for the periods presented:
Dec 31,2015
Mar 31,2016
Jun 30,2016
Sep 30,2016
Dec 31,2016
Mar 31,2017
Jun 30,2017
Sep 30,2017
(in RMB) Annual China commerce retail revenue per annual
active consumer(1) 184 189 202 215 241 251 273 293 Mobile
revenue per mobile MAU from China commerce retail – Annualized(2)
108 123 140 151 166 179 196 213
(1)
China commerce retail revenue per active
consumer for each of the above periods is calculated by dividing
the China commerce retail revenue for the previous 12-month period
by the annual active consumers for the same 12-month period.
(2)
Mobile revenue per mobile MAU from China
commerce retail, annualized is calculated by dividing mobile
revenue from China commerce retail for the previous 12-month period
by the mobile MAUs for the last month of the same period.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20171102005702/en/
Alibaba Group Holding LimitedInvestor Relations ContactRob
Lininvestor@alibabagroup.comorMedia ContactRobert
Christiebob.christie@alibaba-inc.com
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