Alibaba Group Holding Limited (NYSE:BABA) today announced its
financial results for the quarter ended March 31, 2018 and fiscal
year then ended.
“Alibaba Group had an excellent quarter and fiscal year, driven
by robust growth in our core commerce business and investments we
have made over the past several years in longer-term growth
initiatives,” said Daniel Zhang, Chief Executive Officer of Alibaba
Group. “With the continuing roll out of our New Retail strategy,
our e-commerce platform is developing into the leading retail
infrastructure of China. During the past year we also doubled down
on technology development, cloud computing, logistics, digital
entertainment and local services so that we are in a position to
capture consumption growth in China and other emerging
markets.”
“Fiscal 2018 culminated with a quarter we are very proud of.
Full year revenue grew 58%, core commerce revenue grew 60%, with
profit growth of over 40% and annual free cash flow of US$15.8
billion,” said Maggie Wu, Chief Financial Officer of Alibaba Group.
“Looking ahead to fiscal 2019, we expect overall revenue growth
above 60%, reflecting our confidence in our core business as well
as positive momentum in new businesses. We expect our new growth
initiatives will drive long-term, sustainable value for our
customers and partners and increase our total addressable
market.”
BUSINESS HIGHLIGHTS
In the quarter ended March 31,
2018:
- Revenue was RMB61,932 million
(US$9,873 million), an increase of 61% year-over-year.
- Revenue from core commerce increased
62% year-over-year to RMB51,287 million (US$8,176 million).
- Revenue from cloud computing increased
103% year-over-year to RMB4,385 million (US$699 million).
- Revenue from digital media and
entertainment increased 34% year-over-year to RMB5,272 million
(US$840 million).
- Revenue from innovation initiatives and
others increased 8% year-over-year to RMB988 million (US$158
million).
- Annual active consumers on our
China retail marketplaces reached 552 million, an increase of 37
million from the 12-month period ended December 31, 2017.
- Mobile MAUs on our China retail
marketplaces reached 617 million in March 2018, an increase of 37
million over December 2017.
- Income from operations was
RMB9,221 million (US$1,470 million) and adjusted EBITA
increased 11% year-over-year to RMB16,805 million (US$2,679
million); adjusted EBITA for core commerce was RMB22,186
million (US$3,537 million), an increase of 19% year-over-year.
- Adjusted EBITA margin for core
commerce was 43%. Excluding New Retail, revenue of which we
primarily record on a gross basis, the consolidation of Cainiao
Network and investments in Lazada, adjusted core commerce EBITA
margin was similar to the prior year period. Our New Retail
businesses primarily include Hema, Intime and Tmall Import.
- Net income attributable to ordinary
shareholders was RMB7,561 million (US$1,206 million) and net
income was RMB6,641 million (US$1,059 million). Non-GAAP net
income was RMB14,099 million (US$2,248 million), an increase of
35% year-over-year.
- Diluted EPS was RMB2.88
(US$0.46) and non-GAAP diluted EPS was RMB5.73 (US$0.91), an
increase of 32% year-over-year.
- Net cash provided by operating
activities was RMB14,180 million (US$2,261 million) and
non-GAAP free cash flow was RMB8,564 million (US$1,365
million).
In the fiscal year ended March 31,
2018:
- Revenue was RMB250,266 million
(US$39,898 million), an increase of 58% year-over-year.
- Revenue from core commerce increased
60% year-over-year to RMB214,020 million (US$34,120 million).
- Revenue from cloud computing increased
101% year-over-year to RMB13,390 million (US$2,135 million).
- Revenue from digital media and
entertainment increased 33% year-over-year to RMB19,564 million
(US$3,119 million).
- Revenue from innovation initiatives and
others increased 10% year-over-year to RMB3,292 million (US$524
million).
- Annual active consumers on our
China retail marketplaces reached 552 million, an increase of 98
million from the 12-month period ended March 31, 2017.
- Mobile MAUs on our China retail
marketplaces reached 617 million in March 2018, an increase of 110
million over March 2017.
- GMV transacted on our China
retail marketplaces was RMB4,820 billion (US$768 billion),
representing an accelerated year-over-year growth rate of 28%
(compared to an annual growth rate of 22% in fiscal year 2017).
Tmall physical goods GMV increased 45% year-over-year.
- Income from operations was
RMB69,314 million (US$11,050 million) and adjusted EBITA
increased 40% year-over-year to RMB97,003 million (US$15,465
million); adjusted EBITA for core commerce was RMB114,100
million (US$18,190 million), an increase of 38%
year-over-year.
- Adjusted EBITA margin for core
commerce was 53%. Excluding New Retail, revenue of which we
primarily record on a gross basis, the consolidation of Cainiao
Network and investments in Lazada, adjusted core commerce EBITA
margin would have been 63%. Our New Retail businesses primarily
include Intime, Hema and Tmall Import.
- Net income attributable to ordinary
shareholders was RMB63,985 million (US$10,201 million) and
net income was RMB61,412 million (US$9,791 million).
Non-GAAP net income was RMB83,214 million (US$13,266
million), an increase of 44% year-over-year.
- Diluted EPS was RMB24.51
(US$3.91) and non-GAAP diluted EPS was RMB32.86 (US$5.24),
an increase of 40% year-over-year.
- Net cash provided by operating
activities was RMB125,171 million (US$19,955 million) and
non-GAAP free cash flow was RMB99,362 million (US$15,841
million).
BUSINESS AND STRATEGIC UPDATES
Core Commerce
Our Core Commerce segment delivered 60% in year-over-year
revenue growth in fiscal year 2018, the highest revenue growth rate
since our IPO. The robust performance in this segment benefited
from significant contributions from several areas: personalization
of our China retail marketplaces through investments in content and
technology, expansion of our global and cross-border retail
marketplaces through organic growth and acquisitions, and expansion
of our total addressable market beyond e-commerce to capture
consumer wallet share through online/offline integration (i.e., New
Retail).
During fiscal year 2018, our China retail marketplaces recorded
total GMV of RMB4,820 billion (US$768 billion), up 28%
year-over-year. This robust growth was driven by Tmall physical
goods GMV, which increased 45% year-over-year, demonstrating
Tmall’s ability to capture incremental B2C market share while
operating at scale.
Taobao – redefining the shopping experience. Fiscal year
2018 witnessed the success of Taobao App’s strategy to redefine the
shopping experience through innovative content formats and
intelligent personal recommendations. These initiatives drove
strong growth in user engagement, purchase conversion and annual
active consumers. A robust content ecosystem has developed around
the Taobao App to propel it into one of the most popular mobile
apps in China. As of March 31, 2018, approximately 1.5 million
content creators were actively supporting the Taobao App and
helping brands on our platform engage with consumers through
curated posts, short-form videos and live-broadcast events.
We achieved strong results from investments in user acquisition,
engagement and repeat visits and transactions. In March 2018, we
achieved a net increase from the prior quarter of 37 million mobile
MAUs on our China retail marketplaces to a total of 617 million
mobile MAUs. The robust growth of mobile users and a successful
Chinese New Year promotional campaign resulted in the increase of
annual active consumers to 552 million for the 12 months ended
March 31, 2018.
Tmall – reaccelerating growth and furthering market
leadership. Tmall continued to gain wallet share and expand our
B2C market leadership, with physical goods GMV up 45%
year-over-year in fiscal year 2018. For fiscal year 2018, Tmall
recorded 45% year-over-year growth for physical goods GMV,
reflecting strength in apparels, FMCG, home appliances and consumer
electronics categories. Tmall demonstrated its strong value
proposition to brands and merchants not only as a distribution
platform but also an enabler for brands and merchants to reach new
customers and service repeat customers through our marketing tools
and consumer data insights.
Tmall continues to be the platform of choice for the world’s top
brands. H&M, Marni and Yonex established flagship stores on
Tmall this quarter. As of March 31, 2018, there were over
150,000 brands on Tmall. Our newly established Luxury Pavilion now
counts close to 50 brands, including Burberry, Dom Perignon, Tod's,
Zenith, La Mer, Maserati, and Guerlain.
New Retail – capturing consumption patterns of the
future. Through incubation of new concepts and technologies and
strategic alliances, our New Retail strategy is shaping consumer
behavior of the future by offering a seamless integration of
online/offline shopping experience. In the process, we are driving
a massive transformation of the traditional retail industry by
digitizing the entire retail operation, with a focus on in-store
technology, digitized inventory and supply chain systems, consumer
insights and mobile payments.
Hema, our unique proprietary grocery retail format, exemplifies
the convergence of online and offline activities by using retail
stores to warehouse and fulfill online orders in addition to
offering a rich and fun experience for customers who shop in-store.
Because of the proximity of store locations to consumer
communities, Hema can deliver to customers who order online within
30 minutes. Recently, Hema started a 24-hour delivery service in
Shanghai and Beijing with an expanding selection of products.
International – investments for long-term growth. Our
cross-border and international retail businesses continue to show
promising growth. Revenue from our international commerce retail
business grew 94% year-over-year in fiscal year 2018.
Over the past year, we have integrated Lazada’s operations into
the Alibaba ecosystem by re-architecting its core technology
infrastructure and strengthening its management team. Southeast
Asia has developed into a very competitive market but is still in
the early stages of online retail penetration. Our commitment to
the region is reflected in our recent decision to invest US$2
billion, in addition to the approximately US$2 billion we have
already invested, into Lazada to accelerate its growth and customer
reach.
On the cross-border trade front, Tmall Global is the premier
platform for overseas brands and retailers to reach Chinese
consumers, build brand awareness and gain valuable Chinese consumer
insights without the need for physical operations in China. As of
March, 2018, there were 18,000 brands from 74 countries and regions
selling into China through Tmall Global. According to Analysys,
during the nine months ended in December 2017, Tmall Global was the
number one cross-border e-commerce platform in China based on
transaction value.
Cainiao Network – data enabled logistics. Cainiao Network
continued to develop its data platform and technology as the
infrastructure for our New Retail strategy and means to ensure
faster and more accurate delivery to consumers. In March, we
launched the first e-commerce dedicated intercontinental flight,
significantly shortening the delivery time of packages shipped from
China to Russia.
Cloud Computing
Cloud computing revenue grew 101% year-over-year to RMB13,390
million (US$2,135 million) in fiscal year 2018, driven by robust
growth of paying customers and increasing revenue-per-customer,
reflecting higher value-added products. According to IDC, Alibaba
Cloud is the leader in China’s market for
infrastructure-as-a-service (IaaS) with a 47.6% market share as
measured by revenue in the first half of 2017, an increase from
42.4% in the first half of 2016. We are seeing significant traction
and diversification of customers and revenue, and will continue to
invest to further expand the market by developing value-added
products and features.
In the March 2018 quarter, Alibaba Cloud launched 316 new
products and features, over 60 of which were focused on artificial
intelligence, data management and security. Most recently, we
launched Link Edge, a proprietary edge computing software to enable
the development of IoT applications in industries such as
manufacturing, real estate and public facilities such as airports
and train stations.
Alibaba Cloud continues to expand its global footprint and
customer base, most recently adding a new data center in Indonesia,
increasing Alibaba Cloud’s global footprint to 18 countries and
regions worldwide. For the March 2018 quarter, selected large
enterprise customers and major partnerships included:
- China National Petroleum
Corporation, one of the largest petroleum companies in China,
is building its procurement platform on Alibaba Cloud, leveraging
our private cloud, big data, and security products and
services.
- Malaysia Digital Economy
Corporation: The Malaysian Government is adopting our City
Brain platform for traffic management in Malaysia’s capital city of
Kuala Lumpur. This platform leverages advanced technologies,
including AI, big data analytics and computer vision to manage and
optimize city traffic.
- Cathay Pacific, a leading global
airline headquartered in Hong Kong, adopted our security and data
protection consultancy services to protect its operations in
China.
Digital Media and
Entertainment
We believe consumer spending on entertainment will continue to
increase in China as the country’s growing middle class increase
their share of consumption of discretionary items beyond basic
material needs. Through our investment in technology, content and
talent during fiscal year 2018, we have built a solid foundation to
expand into the digital consumption economy beyond our core
commerce business. We are well-positioned to execute our strategy
to grow the digital media and entertainment business as we leverage
our customer base of 552 million annual active consumers and
insights about their interests and preferences. The synergy between
our commerce business and entertainment can deliver a superior user
experience while increasing customer loyalty and subscription
revenue, as well as return on investment for advertisers.
During the quarter, our online video unit Youku demonstrated the
powerful effects of original content development, as our
proprietary reality shows and exclusive drama series drove the
growth of daily average subscribers by over 160%
year-over-year.
Innovation Initiatives & Technology
Development
During fiscal year 2018, several of our innovation initiatives
resulted in products that have acquired significant user scale.
AutoNavi is the largest provider of mobile digital maps,
navigation and real-time traffic information in China by daily
active users as of March 2018, with the number of daily active
users reaching approximately 60 million, according to QuestMobile.
AutoNavi’s open digital map platform also powers major mobile apps
for food delivery, ride hailing service and social networking.
During this quarter, AutoNavi’s proprietary navigation system for
vehicles (AMAP AUTO 3.0) was launched and implemented in select
vehicles of major China automakers.
DingTalk, with messaging as its core product feature, has
successfully penetrated the enterprise communication and
collaboration market. DingTalk unifies the critical tasks of
communication and collaboration in the work place, offering text,
photo, voice and video communication, collaboration features and
workflow management, such as convenient attendance recording and
expense approval features.
Local Services
Ele.me – strategic acquisition that will enlarge our
addressable market and better service our consumers. On April
2, 2018, we announced our agreement to acquire the remaining
outstanding equity interest in Ele.me, one of the two leading
online food delivery platforms in China. According to Analysys, the
size of the online food delivery industry in China was RMB208
billion (US$33 billion) in 2017. Through this acquisition, we will
integrate Ele.me, which operates in over 600 cities serving
millions of consumers, into our ecosystem and its local delivery
network will become a core piece of our New Retail strategy.
Ele.me’s consumer reach and its relationship with restaurants will
be complementary with Koubei, our joint venture with Ant Financial
that provides listings of local service establishments including
restaurants, bars and beauty salons. By combining Ele.me’s online
delivery service with Koubei’s consumer engagement capability for a
range of food and beverage-related and other service
establishments, we will be able to offer an integrated local
services experience to consumers.
Ant Financial
During fiscal year 2018, we agreed to take a 33% equity stake in
Ant Financial to strengthen our strategic relationship pursuant to
a series of agreements reached with Ant Financial in 2014.
We believe deepening our relationship through an equity stake in
Ant Financial would bring key strategic benefits to us, including
advancing our New Retail strategy with mobile payments, increasing
user acquisition and retention through collaboration with the
Alipay digital wallet, and enhancing the execution of our
international expansion. In addition, the equity stake in Ant
Financial enables Alibaba and our shareholders to participate in
the future growth of the financial technology sector.
Ant Financial has built a unique value proposition through its
capability to offer integrated financial solutions, such as wealth
management and consumer finance services, leading to a fast
expanding user base and business scale.
During the March 2018 quarter, Ant Financial continued to
aggressively invest in their business leading to robust user
acquisition and engagement. These investments resulted in a net
loss for Ant Financial in the quarter. During the fiscal year ended
March 31, 2018, Alipay, together with its global JV partners,
served around 870 million annual active users globally. Ant
Financial also supports economic development in China by serving
more than 15 million small businesses as of March 2018 through
lending, cash management and insurance services.
Cash Flow from Operating Activities and
Free Cash Flow
Net cash provided by operating activities in the quarter ended
March 31, 2018 was RMB14,180 million (US$2,261 million), an
increase of 32% compared to RMB10,746 million in the same quarter
of 2017. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended March 31, 2018 was RMB8,564 million (US$1,365
million), an increase of 7% compared to RMB7,980 million in the
same quarter of 2017. A reconciliation of net cash provided by
operating activities to free cash flow is included at the end of
this results announcement.
KEY OPERATIONAL METRICS*
March 31,2017
December 31,2017
March 31,2018
% Change YoY QoQ
China Commerce Retail: Annual active consumers(1) (in
millions) 454 515 552 22% 7% Mobile monthly active users (MAUs)(2)
(in millions) 507 580 617 22% 6%
__________________
* For definitions of terms used but not defined in
this results announcement, please refer to our annual report on
Form 20-F for the fiscal year ended March 31, 2017. (1) For the
twelve months ended on the respective dates. (2) For the month
ended on the respective dates.
MARCH QUARTER SUMMARY FINANCIAL
RESULTS
Three months ended March 31,
2017 2018 RMB RMB
US$(1) YoY % Change (in
millions, except percentages and per share amounts)
Revenue 38,579 61,932 9,873 61 % Income from operations
9,532 9,221 1,470 (3 )%(3) Operating margin 25 % 15 % Adjusted
EBITDA(2) 16,597 19,454 3,101 17 % Adjusted EBITDA margin(2) 43 %
31 % Adjusted EBITA(2) 15,151 16,805 2,679 11 % Adjusted EBITA
margin(2) 39 % 27 % Net income 9,852 6,641 1,059 (33
)%(4)
Net income attributable to ordinary
shareholders
10,647
7,561
1,206
(29
)%(4)
Non-GAAP net income(2) 10,440 14,099 2,248 35 % Diluted
earnings per share/ADS (EPS) 4.12 2.88 0.46 (30
)%(4)
Non-GAAP diluted EPS(2) 4.35 5.73 0.91 32 %
__________________
(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 RMB6.2726 to US$1.00, the
exchange rate on March 30, 2018 as set forth in the H.10
statistical release of the Federal Reserve Board. The percentages
stated in this announcement are calculated based on the RMB
amounts. (2) See the sections entitled “Information about
Segments,” “Non-GAAP Financial Measures” and “Reconciliations of
Non-GAAP Measures to the Nearest Comparable GAAP Measures” for more
information about the non-GAAP measures referred to within this
results announcement. (3) The year-over-year decrease was primarily
due to the increase in share-based compensation expenses by
RMB1,949 million, from RMB4,306 million in the quarter ended March
31, 2017 to RMB6,255 million in the quarter ended March 31, 2018.
(4) The year-over-year decrease was primarily due to non-recurring
disposal gains arising from sale of certain investments in the same
quarter of 2017.
MARCH QUARTER INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended March 31, 2018
Digital media Innovation
Core
Cloud
and initiatives
commerce
computing
entertainment and others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
US$ (in millions, except percentages)
Revenue 51,287 4,385 5,272 988
— 61,932 9,873 Income (loss) from
operations 18,660 (1,063) (3,541)
(2,019) (2,816) 9,221 1,470 Add:
Share-based compensation expense 2,693 707 536 1,153 1,166 6,255
997 Add: Amortization of intangible assets 833 3 410 6 77 1,329
212
Adjusted EBITA 22,186 (353)
(2,595) (860) (1,573) 16,805
2,679 Adjusted EBITA margin
43%(2)
(8)% (49)% (87)%
27% 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
(in millions, except percentages) Revenue
31,570 2,163 3,927 919 —
38,579 Income (loss) from operations
16,500 (505) (2,586) (1,888)
(1,989) 9,532 Add: Share-based compensation expense
1,477
335
418
1,043
1,033
4,306 Add: Amortization of intangible assets 602 1 457 163 90 1,313
Adjusted EBITA 18,579 (169)
(1,711) (682) (866) 15,151 Adjusted
EBITA margin 59% (8)% (44)% (74)%
39%
__________________
(1) Unallocated expenses are primarily related to
corporate administrative costs and other miscellaneous items that
are not allocated to individual segments.
(2)
Adjusted EBITA margin is lower than prior
year period mainly due to New Retail, the consolidation of Cainiao
Network, investments in Lazada and spending in growing user base
and improving user experience. Revenue of New Retail,
which is included in the core commerce segment, is primarily
recorded on a gross basis, which implies lower gross margins. Our
New Retail businesses primarily include Hema, Intime and Tmall
Import.
MARCH QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended March 31, 2018 was RMB61,932
million (US$9,873 million), an increase of 61% compared to
RMB38,579 million in the same quarter of 2017. The increase was
mainly driven by the robust revenue growth of our China commerce
retail business, Alibaba Cloud and international commerce retail
business, as well as the consolidation of Cainiao Network and
Intime.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended March 31,
2017 2018
% of
% of YoY % RMB
Revenue
RMB US$ Revenue Change (in millions,
except percentages) Core commerce: China commerce retail -
Customer management 17,086 44% 22,993 3,666 37% 35% - Commission
8,205 21% 11,367 1,812 18% 39% - Others 524 2% 5,825 928 10% 1,012%
25,815 67% 40,185 6,406 65% 56% China commerce wholesale 1,469 4%
1,883 300 3% 28% International commerce retail 2,429 6% 3,967 632
6% 63% International commerce wholesale 1,509 4% 1,699 271 3% 13%
Cainiao logistics services
— — 2,852 455 5% N/A
Others 348 1% 701 112 1% 101% Total core commerce 31,570 82% 51,287
8,176 83% 62% Cloud computing 2,163 6% 4,385 699 7% 103%
Digital media and entertainment 3,927 10% 5,272 840 8% 34%
Innovation initiatives and others 919 2% 988 158 2% 8% Total 38,579
100% 61,932 9,873 100% 61%
Core commerce
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in the quarter ended March 31, 2018 was RMB40,185
million (US$6,406 million), or 65% of total revenue, an increase of
56% compared to RMB25,815 million in the same quarter of 2017. This
robust revenue growth reflected the growth of our New Retail
initiatives (included in “China commerce retail – Others” above) in
the China commerce retail business, mainly the Hema fresh food
grocery business, the import business and Intime Department Stores.
In addition, revenue from our China retail marketplaces (mainly
comprised of Taobao and Tmall) continued to see strong growth.
Customer management revenue grew by 35% year-over-year, driven
largely by increases in the average unit price per click and to a
lesser extent the volume of clicks, reflecting our ability to
deliver highly relevant recommendations to consumers through
personalization technology and the higher value that merchants put
on such technology to reach the relevant users and increase
conversion. This growth resulted in higher average spending per
merchant on our customer management services. Commission revenue
grew by 39% year-over-year, primarily due to strong 40%
year-over-year growth in physical goods GMV on Tmall. Other revenue
was RMB5,825 million (US$928 million), a significant increase
compared to RMB524 million in the same quarter of 2017, primarily
driven by our New Retail businesses, including consolidation of
Intime and contribution from Tmall Import and Hema.Annual active
consumers – Our China retail marketplaces had 552
million annual active consumers in the 12 months ended March 31,
2018, compared to 515 million in the 12 months ended December 31,
2017, representing a net addition of 37 million from the prior
quarter, and a 22% increase from 454 million in the 12 months ended
March 31, 2017. The increase in annual active consumers is
primarily due to better new customer acquisition in lower tier
cities and the successful Chinese New Year promotional campaign.
The longer consumers have been with our platform, the more they
spend and the more orders they place across more product
categories.Mobile MAUs – Mobile MAUs on our China retail
marketplaces grew to 617 million in March 2018, compared to 580
million in December 2017, representing a net addition of 37 million
MAUs in the quarter and a 22% increase from 507 million in March
2017.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
the quarter ended March 31, 2018 was RMB1,883 million (US$300
million), an increase of 28% compared to RMB1,469 million in the
same quarter of 2017. 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 March 31, 2018 was RMB3,967 million (US$632
million), an increase of 63% compared to RMB2,429 million in the
same quarter of 2017. The increase was primarily due to the growth
in revenue generated from Lazada and AliExpress, driven by strong
GMV growth on these two marketplaces.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in the quarter ended March 31, 2018 was RMB1,699 million
(US$271 million), an increase of 13% compared to RMB1,509 million
in the same quarter of 2017.
- Cainiao logistics
servicesRevenue from Cainiao logistics services represents
revenue from the domestic and cross-border fulfilment services
provided by Cainiao Network, after elimination of inter-company
transactions. We started to consolidate Cainiao Network in
mid-October 2017.
Cloud computing
Revenue from our cloud computing business in the quarter ended
March 31, 2018 was RMB4,385 million (US$699 million), an increase
of 103% compared to RMB2,163 million in the same quarter of 2017,
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 and database services.
Digital media and entertainment
Revenue from our digital media and entertainment business in the
quarter ended March 31, 2018 was RMB5,272 million (US$840 million),
an increase of 34% compared to RMB3,927 million in the same quarter
of 2017. The increase was primarily due to an increase in
subscription revenue from Youku Tudou and an increase in revenue
from mobile value-added services provided by UCWeb, such as news
feeds and mobile search.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended March 31, 2018 was RMB988 million (US$158 million), an
increase of 8% compared to RMB919 million in the same quarter of
2017.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended March 31,
%
ofRevenueYoYchange
2017 2018
RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Costs and expenses:
Cost of revenue 15,490 40% 32,504 5,182 53% 13% Product development
expenses 4,518 12% 6,686 1,066 11% (1)% Sales and marketing
expenses 4,332 11% 7,641 1,218 12% 1% General and administrative
expenses 3,394 9% 4,551 725 7% (2)% Amortization of intangible
assets 1,313 3% 1,329 212 2% (1)% Total costs and expenses 29,047
75% 52,711 8,403 85% 10%
Share-based compensation expense
by function: Cost of revenue 1,226 3% 1,680 268 3% 0% Product
development expenses 1,394 4% 2,461 392 4% 0% Sales and marketing
expenses 461 1% 671 107 1% 0% General and administrative expenses
1,225 3% 1,443 230 2% (1)% Total share-based compensation expense
4,306 11% 6,255 997 10% (1)%
Costs and expenses excluding
share-based compensation expense: Cost of revenue 14,264 37%
30,824 4,914 50% 13% Product development expenses 3,124 8% 4,225
674 7% (1)% Sales and marketing expenses 3,871 10% 6,970 1,111 11%
1% General and administrative expenses 2,169 6% 3,108 495 5% (1)%
Amortization of intangible assets 1,313 3% 1,329 212 2% (1)% Total
costs and expenses excluding share-based compensation expense
24,741 64% 46,456 7,406 75% 11%
Cost of revenue – Cost of revenue in the quarter ended
March 31, 2018 was RMB32,504 million (US$5,182 million), or 53% of
revenue, compared to RMB15,490 million, or 40% of revenue, in the
same quarter of 2017. Without the effect of share-based
compensation expense, cost of revenue as a percentage of revenue
would have increased from 37% in the quarter ended March 31, 2017
to 50% in the quarter ended March 31, 2018. The increase was
primarily due to cost of inventory in our New Retail businesses and
Lazada, as well as investments in Cainiao Network and our spending
in growing user base and improving user experience.
Product development expenses – Product development
expenses in the quarter ended March 31, 2018 were RMB6,686 million
(US$1,066 million), or 11% of revenue, compared to RMB4,518
million, or 12% of revenue, in the same quarter of 2017. 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 March 31, 2017 to 7% in the quarter ended March
31, 2018.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended March 31, 2018 were RMB7,641 million
(US$1,218 million), or 12% of revenue, compared to RMB4,332
million, or 11% of revenue, in the same quarter of 2017. Without
the effect of share-based compensation expense, sales and marketing
expenses as a percentage of revenue would have increased from 10%
in the quarter ended March 31, 2017 to 11% in the quarter ended
March 31, 2018, primarily due to an increase in our discretionary
advertising and promotional spending for user acquisition that led
to a significant increase in annual active consumers and MAUs
during the quarter.
General and administrative expenses – General and
administrative expenses in the quarter ended March 31, 2018 were
RMB4,551 million (US$725 million), or 7% of revenue, compared to
RMB3,394 million, or 9% of revenue, in the same quarter of 2017.
Without the effect of share-based compensation expense, general and
administrative expenses as a percentage of revenue would have
decreased from 6% in the quarter ended March 31, 2017 to 5% in the
quarter ended March 31, 2018.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended March 31, 2018 was RMB6,255 million (US$997
million), an increase of 45% compared to RMB4,306 million in the
same quarter of 2017. Share-based compensation expense as a
percentage of revenue decreased to 10% in the quarter ended March
31, 2018 from 11% in the same quarter of 2017. The following table
sets forth our analysis of share-based compensation expense for the
quarters indicated by type of share-based awards:
Three months ended
March 31, 2017 December 31, 2017
March 31, 2018 % Change %
of % of
% of
RMB Revenue RMB Revenue RMB
US$
Revenue
YoY QoQ (in millions, except percentages)
By type of awards: Alibaba Group share-based awards granted
to:
- Our employees
3,180 8% 4,371 5% 4,176 666 7% 31% (4)%
- Ant Financial employees and other
consultants(1)
579 2% 293 1% 389 62
1%
(33)%
33%
Ant Financial share-based awards granted
to our employees(1)
339
1% 232 0% 1,483 236
2%
337%
539%
Others 208 0% 219 0% 207 33 0% 0% (5)%
Total share-based compensation expense
4,306 11% 5,115 6% 6,255 997 10%
45%
22%
__________________
(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.
Share-based compensation expense related to Ant Financial
share-based awards granted to our employees increased in this
quarter compared to the previous quarter, mainly due to the effect
of 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,
our subsidiaries’ share-based awards and the quantity of awards we
grant to our employees and consultants in the future. Furthermore,
our share-based compensation expense will also be affected by the
anticipated increase in fair value of share-based awards of Ant
Financial Services. As a result of these factors, we expect that
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, 2018 was RMB1,329
million (US$212 million), an increase of 1% from RMB1,313 million
in the same quarter of 2017.
Income from operations and operating
margin
Income from operations in the quarter ended March 31, 2018 was
RMB9,221 million (US$1,470 million), or 15% of revenue, a decrease
of 3% compared to RMB9,532 million, or 25% of revenue, in the same
quarter of 2017.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA achieved growth of 17% to RMB19,454 million
(US$3,101 million) in the quarter ended March 31, 2018, compared to
RMB16,597 million in the same quarter of 2017, despite adjusted
EBITDA margin decreasing from 43% in the quarter ended March 31,
2017 to 31% in the quarter ended March 31, 2018. Adjusted EBITA
achieved growth of 11% to RMB16,805 million (US$2,679 million) in
the quarter ended March 31, 2018, compared to RMB15,151 million in
the same quarter of 2017, despite adjusted EBITA margin decreasing
from 39% in the quarter ended March 31, 2017 to 27% in the quarter
ended March 31, 2018. Adjusted EBITA margin is lower mainly because
of New Retail, the consolidation of Cainiao Network, investments in
Lazada and spending in growing user base and improving user
experience. Revenue of New Retail, which is included in the core
commerce segment, is primarily recorded on a gross basis, which
implies lower gross margins. Reconciliations of net income to
adjusted EBITDA and adjusted EBITA are included at the end of this
results announcement.
As many of our newly developed and acquired businesses have
different cost structures, we expect that our margin will continue
to be negatively impacted by these businesses and the accounting
treatment of revenue recorded on a gross basis.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended March 31, 2017
2018 % of
% of RMB Revenue RMB
US$ Revenue (in millions, except percentages)
Core commerce 18,579 59% 22,186 3,537 43% Cloud computing
(169) (8)% (353) (56) (8)% Digital media and entertainment (1,711)
(44)% (2,595) (414) (49)% Innovation initiatives and others (682)
(74)%
(860) (137) (87)%
Core commerce segment – Adjusted EBITA achieved growth of
19% to RMB22,186 million (US$3,537 million) in the quarter ended
March 31, 2018, compared to RMB18,579 million in the same quarter
of 2017, despite adjusted EBITA margin decreasing from 59% in the
quarter ended March 31, 2017 to 43% in the quarter ended March 31,
2018. Adjusted EBITA margin is lower mainly because of New Retail,
Cainiao Network, Lazada and spending to increase user base and
improve user experience. Excluding New Retail, the consolidation of
Cainiao Network and investments in Lazada, adjusted core commerce
EBITA margin was similar to the prior year period. Our New Retail
businesses primarily include Hema, Intime and Tmall Import.
Cloud computing segment – Adjusted EBITA in the quarter
ended March 31, 2018 was a loss of RMB353 million (US$56 million),
compared to a loss of RMB169 million in the same quarter of 2017.
Adjusted EBITA margin remained stable at negative 8% in the quarter
ended March 31, 2018 compared to the same quarter in 2017.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended March 31, 2018 was a loss of RMB2,595 million
(US$414 million), compared to a loss of RMB1,711 million in the
same quarter of 2017. Adjusted EBITA margin decreased to negative
49% in the quarter ended March 31, 2018 from negative 44% in the
quarter ended March 31, 2017, primarily due to an increase in
investment in content costs of Youku Tudou.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended March 31, 2018 was a loss of RMB860
million (US$137 million), compared to a loss of RMB682 million in
the same quarter of 2017. Adjusted EBITA margin decreased to
negative 87% in the quarter ended March 31, 2018, compared to
negative 74% in the quarter ended March 31, 2017, primarily due to
investments in new business initiatives.
Interest and investment income,
net
Interest and investment income, net in the quarter ended March
31, 2018 was RMB1,945 million (US$310 million), compared to
RMB6,553 million in the same quarter of 2017, which included
non-recurring gains arising from disposals of certain investments
and businesses in the quarter ended March 31, 2017.
Other income, net
Other income, net in the quarter ended March 31, 2018 was RMB884
million (US$141 million), compared to RMB440 million in the same
quarter of 2017. The increase was primarily due to an increase in
exchange gain, offset by the net loss sustained by Ant Financial
during the quarter as a result of its aggressive marketing and
promotion activities which increased expenses. This spending had
brought substantial additions in new users of Alipay Wallet. Ant
Financial’s net loss in the quarter, in turn, resulted in our
reversal of income recognized in respect of royalty fees and
software technology services fees from Ant Financial under our
profit sharing arrangement. The reversal of income amounted to a
charge of RMB713 million (US$114 million) in the quarter ended
March 31, 2018, compared to income of RMB789 million recognized in
the same quarter ended March 31, 2017.
Income tax expenses
Income tax expenses in the quarter ended March 31, 2018 were
RMB4,164 million (US$664 million), compared to RMB4,553 million in
the same quarter of 2017.
Our effective tax rate was 38% in the quarter ended March 31,
2018, compared to 29% in the same quarter of 2017. Excluding
share-based compensation expense, impairment of investments and
other unrealized investment gain/loss, our effective tax rate would
have been 24% in the quarter ended March 31, 2018, compared to 23%
in the same quarter of 2017. The increase in effective tax rate was
primarily due to an increase in operating losses sustained by Youku
Tudou, Lazada and Cainiao.
Share of results of equity
investees
Share of results of equity investees in the quarter ended March
31, 2018 was a loss of RMB70 million (US$11 million), compared to a
loss of RMB1,444 million in the same quarter of 2017 and a loss of
RMB18,452 million in the quarter ended December 31, 2017. We record
our share of results of equity investees one quarter in arrears.
Share of results of equity investees in the quarter ended March 31,
2018 and the comparative periods consisted of the following:
Three months ended March 31, 2017
December 31, 2017 March 31,
2018 RMB RMB RMB US$
(in millions) Share of (loss) profit of equity investees:
- Koubei(1)
(505) (580)
— —
- Cainiao Network(2)
(375)
— — —
- Other equity investees
(41) 681 480 77 Impairment losses
— (18,153)
—
— Dilution losses (61) (10) (75) (12) Others(3) (462) (390)
(475) (76) Total (1,444) (18,452) (70) (11)
__________________
(1) Our cumulative share of Koubei’s losses had
brought down the carrying value of our investment in Koubei to
zero. As a result, we have ceased to recognize further losses for
this investment. (2) We started to consolidate Cainiao Network in
mid-October 2017 after obtaining control over Cainiao Network. (3)
Others mainly include amortization of intangible assets of equity
investees and share-based compensation expense.
Net income and Non-GAAP net
income
Our net income in the quarter ended March 31, 2018 was RMB6,641
million (US$1,059 million), a decrease of 33% compared to RMB9,852
million in the same quarter of 2017. The year-over-year decrease
was primarily due to non-recurring disposal gains arising from sale
of certain investments in the same quarter of 2017. Excluding
non-recurring disposal gains, net income in the quarter ended March
31, 2018 would have increased by 27%.
Excluding share-based compensation expense, non-recurring
disposal gains and certain other items, non-GAAP net income in the
quarter ended March 31, 2018 was RMB14,099 million (US$2,248
million), an increase of 35% compared to RMB10,440 million in the
same quarter of 2017. 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, 2018 was RMB7,561 million (US$1,206 million), a
decrease of 29% compared to RMB10,647 million in the same quarter
of 2017.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in the quarter ended March 31, 2018 was RMB2.88
(US$0.46) on a weighted average of 2,619 million diluted shares
outstanding during the quarter, a decrease of 30% compared to
RMB4.12 on a weighted average of 2,581 million diluted shares
outstanding during the same quarter of 2017. Excluding share-based
compensation expense, non-recurring disposal gains and certain
other items, non-GAAP diluted EPS in the quarter ended March 31,
2018 was RMB5.73 (US$0.91), an increase of 32% compared to RMB4.35
in the same quarter of 2017. 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, 2018, cash, cash equivalents and short-term
investments were RMB205,395 million (US$32,745 million), compared
to RMB220,380 million as of December 31, 2017. The decrease in
cash, cash equivalents and short-term investments during the
quarter ended March 31, 2018 was primarily due to cash used in
investing activities, including investments in Wanda Cinemas and
Easyhome, and cash used to acquire additional shares of Intime,
partly offset by free cash flow generated from operations of
RMB8,564 million (US$1,365 million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
March 31, 2018 was RMB14,180 million (US$2,261 million), an
increase of 32% compared to RMB10,746 million in the same quarter
of 2017. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended March 31, 2018 was RMB8,564 million (US$1,365
million), compared to RMB7,980 million in the same quarter of 2017.
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, 2018, net cash used in
investing activities of RMB19,816 million (US$3,159 million)
primarily reflected cash outflow of RMB15,572 million (US$2,483
million) for investment and acquisition activities, including
investments in Wanda Cinemas and Easyhome, as well as capital
expenditures and acquisition of intangible assets of RMB7,152
million (US$1,141 million), which included cash outflow for
acquisition of land use rights and construction in progress of
RMB1,536 million (US$245 million).
Employees
As of March 31, 2018, we had a total of 66,421 employees,
compared to 63,809 as of December 31, 2017. The number of employees
as of March 31, 2018 increased by 2,612 from December 31, 2017.
FULL FISCAL YEAR 2018 SUMMARY FINANCIAL
RESULTS*
Year ended March 31,
2017 2018 RMB RMB
US$(1) YoY % Change (in millions,
except percentages and per share amounts) Annual GMV (in
billions)
3,767
4,820 768 28% Revenue 158,273 250,266 39,898 58%
Income from operations 48,055 69,314 11,050 44% Operating margin
30% 28% Adjusted EBITDA(2) 74,456 105,792 16,866 42% Adjusted
EBITDA margin(2) 47% 42% Adjusted EBITA(2) 69,172 97,003 15,465 40%
Adjusted EBITA margin(2) 44% 39% Net income 41,226 61,412
9,791 49%
Net income attributable to ordinary
shareholders
43,675
63,985
10,201
47%
Non-GAAP net income(2) 57,871 83,214 13,266 44% Diluted
earnings per share/ADS (EPS) 16.97 24.51 3.91 44% Non-GAAP diluted
EPS(2) 23.44 32.86 5.24 40%
__________________
* Our fiscal year ends on March 31 and references to
fiscal years 2017 and 2018 are to the fiscal years ended March 31,
2017 and 2018, 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 RMB6.2726 to US$1.00,
the exchange rate on March 30, 2018 as set forth in the H.10
statistical release of the Federal Reserve Board. The percentages
stated in this release are calculated based on the RMB amounts. (2)
See the sections entitled “Non-GAAP Financial Measures” and
“Reconciliations of Non-GAAP Measures to the Nearest Comparable
GAAP Measures” for more information about the non-GAAP measures
referred to within this results announcement.
FULL FISCAL YEAR 2018 INFORMATION ABOUT SEGMENTS
The table below sets forth selected financial information of our
operating segments for fiscal year 2018:
Year ended March 31, 2018
Digital media Innovation
Core
Cloud
and initiatives
commerce
computing
entertainment and others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
US$ (in millions, except percentages)
Revenue 214,020 13,390 19,564
3,292 — 250,266 39,898 Income
(loss) from operations 102,743 (3,085)
(14,140) (6,901) (9,303) 69,314
11,050 Add: Share-based compensation expense 8,466 2,274
2,142 3,707 3,486 20,075 3,201 Add: Amortization of intangible
assets 2,891 12 3,693 198 326 7,120 1,135 Add: Impairment of
goodwill
—
—
—
—
494 494 79
Adjusted EBITA 114,100 (799)
(8,305) (2,996) (4,997) 97,003
15,465 Adjusted EBITA margin
53%(2)
(6)% (42)% (91)%
39% 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
(in millions, except percentages) Revenue
133,880 6,663 14,733 2,997 —
158,273 Income (loss) from operations
74,180 (1,681) (9,882) (6,798)
(7,764) 48,055
Add: Share-based compensation expense
5,994
1,201
1,454
3,017
4,329
15,995
Add: Amortization of intangible assets 2,258 4 1,886 656 318 5,122
Adjusted EBITA 82,432 (476)
(6,542) (3,125) (3,117) 69,172
Adjusted EBITA margin 62% (7)% (44)%
(104)% 44%
__________________
(1) Unallocated expenses are primarily related to
corporate administrative costs and other miscellaneous items that
are not allocated to individual segments.
(2)
Adjusted EBITA margin is lower than prior
year mainly due to New Retail, the consolidation of Cainiao
Network, investments in Lazada and spending in growing user base
and improving user experience. Revenue of New Retail,
which is included in the core commerce segment, is primarily
recorded on a gross basis, which implies lower gross margins. Our
New Retail businesses primarily include Intime, Hema and Tmall
Import.
FULL FISCAL YEAR 2018 OPERATIONAL AND FINANCIAL
RESULTS
Revenue
Revenue in fiscal year 2018 was RMB250,266 million (US$39,898
million), an increase of 58% compared to RMB158,273 million in
fiscal year 2017. The increase was mainly driven by the continued
rapid growth of our China and international commerce retail
business, Alibaba Cloud as well as the consolidation of newly
acquired businesses, mainly Cainiao Network and Intime. The
following table sets forth a breakdown of our revenue for the
periods indicated.
Year ended March 31, 2017
2018
% of
% of YoY % RMB
Revenue
RMB US$ Revenue Change (in millions,
except percentages) Core commerce: China commerce retail -
Customer management 77,530 49% 114,285 18,220 46% 47% - Commission
34,066 21% 46,525 7,417 19% 37% - Others 2,513 2% 15,749 2,511 6%
527% 114,109 72% 176,559 28,148 71% 55% China commerce wholesale
5,679 4% 7,164 1,142 3% 26% International commerce retail 7,336 5%
14,216 2,266 6% 94% International commerce wholesale 6,001 4% 6,625
1,056 2% 10% Cainiao logistics services — — 6,759 1,078 3% N/A
Others 755 0% 2,697 430 1% 257% Total core commerce 133,880 85%
214,020 34,120 86% 60% Cloud computing 6,663 4% 13,390 2,135
5% 101% Digital media and entertainment 14,733 9% 19,564 3,119 8%
33% Innovation initiatives and others 2,997 2% 3,292 524 1% 10%
Total 158,273 100% 250,266 39,898 100% 58%
Core commerce segment
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in fiscal year 2018 was RMB176,559 million
(US$28,148 million), or 71% of total revenue, an increase of 55%
compared to RMB114,109 million in fiscal year 2017. This robust
revenue growth reflected the growth of our New Retail initiatives,
including Hema fresh food grocery business, the import business and
Intime Department Stores.In addition, revenue from our China retail
marketplaces (mainly comprised of Taobao and Tmall) continued to
see strong growth. The growth was primarily driven by the robust
growth of customer management revenue, which grew 47%
year-over-year, primarily driven by increases in the average unit
price per clicks and the volume of clicks, reflecting our ability
to deliver more relevant recommendations to consumers through
personalization technology and the higher value that merchants put
on such technology to reach the relevant users and increase
conversion. This resulted in higher average spending on our
customer management services by an increasing number of brands and
merchants. Commission revenue grew by 37% year-over-year, primarily
due to strong growth in physical goods GMV on Tmall. The commission
revenue growth rate was lower than the physical goods GMV growth
rate, because of discounts and rebates we provided to merchants
during promotions. Other revenue was RMB15,749 million (US$2,511
million) in fiscal year 2018, a significant increase compared to
RMB2,513 million in fiscal year 2017, primarily driven by our New
Retail businesses, including the consolidation of Intime and
contribution from Tmall Import and Hema.GMV – GMV
transacted on our China retail marketplaces in fiscal year 2018 was
RMB4,820 billion (US$768 billion), an increase of 28% compared to
RMB3,767 billion in fiscal year 2017. GMV transacted on Taobao
Marketplace in fiscal year 2018 was RMB2,689 billion (US$428
billion), an increase of 22% compared to fiscal year 2017. GMV
transacted on Tmall in fiscal year 2018 was RMB2,131 billion
(US$340 billion), an increase of 36% compared to fiscal year 2017.
The growth of total GMV transacted on our China retail marketplaces
was primarily driven by an increase in the number of active
consumers and an increase in average annual spend per active
consumer.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
fiscal year 2018 was RMB7,164 million (US$1,142 million), an
increase of 26% compared to RMB5,679 million in fiscal year 2017.
The increase was due to an increase in average revenue from paying
members on our 1688.com platform.
- International commerce retail
businessRevenue from our international commerce retail business
in fiscal year 2018 was RMB14,216 million (US$2,266 million), an
increase of 94% compared to RMB7,336 million in fiscal year 2017.
The increase was primarily due to an increase in revenue generated
from Lazada and AliExpress, primarily driven by robust GMV growth
on these two marketplaces.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in fiscal year 2018 was RMB6,625 million (US$1,056
million), an increase of 10% compared to RMB6,001 million in fiscal
year 2017.
- Cainiao logistics
servicesRevenue from Cainiao logistics services represents
revenue from the domestic and cross-border fulfilment services
provided by Cainiao Network, after elimination of inter-company
transactions. We started to consolidate Cainiao Network in
mid-October 2017.
Cloud computing
Revenue from our cloud computing business in fiscal year 2018
was RMB13,390 million (US$2,135 million), an increase of 101%
compared to RMB6,663 million in fiscal year 2017, primarily driven
by an increase in the number of paying customers, 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 2018 was RMB19,564 million (US$3,119 million), an
increase of 33% compared to RMB14,733 million in fiscal year 2017.
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 also to an increase in subscription revenue
from Youku Tudou.
Innovation initiatives and others
Revenue from innovation initiatives and others in fiscal year
2018 was RMB3,292 million (US$524 million), an increase of 10%
compared to RMB2,997 million in fiscal year 2017. Starting from
fiscal year 2018, we reclassified revenue from our fresh food
stores Hema, previously reported under this segment, as revenue
from China commerce retail because Hema has moved beyond the
incubation stage.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Year ended March 31,
%
ofRevenueYoYchange
2017 2018 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Costs and expenses:
Cost of revenue 59,483 38% 107,044 17,065 43% 5% Product
development expenses 17,060 11% 22,754 3,628 9% (2)% Sales and
marketing expenses 16,314 10% 27,299 4,352 11% 1% General and
administrative expenses 12,239 8% 16,241 2,589 6% (2)% Amortization
of intangible assets 5,122 3% 7,120 1,135 3% 0% Impairment of
goodwill — — 494 79 0% 0% Total costs and expenses 110,218 70%
180,952 28,848 72% 2%
Share-based compensation expense by
function: Cost of revenue 3,893 2% 5,505 878 2% 0% Product
development expenses 5,712 4% 7,374 1,176 3% (1)% Sales and
marketing expenses 1,772 1% 2,037 325 1% 0% General and
administrative expenses 4,618 3% 5,159 822 2% (1)% Total
share-based compensation expense 15,995 10% 20,075 3,201 8% (2)%
Costs and expenses excluding share-based compensation
expense: Cost of revenue 55,590 36% 101,539 16,187 41% 5%
Product development expenses 11,348 7% 15,380 2,452 6% (1)% Sales
and marketing expenses 14,542 9% 25,262 4,027 10% 1% General and
administrative expenses 7,621 5% 11,082 1,767 4% (1)% Amortization
of intangible assets 5,122 3% 7,120 1,135 3% 0% Impairment of
goodwill — — 494 79 0% 0% Total costs and expenses excluding
share-based compensation expenses 94,223 60% 160,877 25,647 64% 4%
Cost of revenue – Cost of revenue in fiscal year 2018 was
RMB107,044 million (US$17,065 million), or 43% of revenue, compared
to RMB59,483 million, or 38% of revenue, in fiscal year 2017.
Without the effect of share-based compensation expense, cost of
revenue as a percentage of revenue would have increased from 36% in
fiscal year 2017 to 41% in fiscal year 2018. This increase was
primarily due to cost of inventory in our New Retail businesses and
Lazada, as well as investments in Cainiao Network and our spending
in growing user base and improving user experience.
Product development expenses – Product development
expenses in fiscal year 2018 were RMB22,754 million (US$3,628
million), or 9% of revenue, compared to RMB17,060 million, or 11%
of revenue, in fiscal year 2017. Without the effect of share-based
compensation expense, product development expenses as a percentage
of revenue would have decreased from 7% in fiscal year 2017 to 6%
in fiscal year 2018 due to operating leverage.
Sales and marketing expenses – Sales and marketing
expenses in fiscal year 2018 were RMB27,299 million (US$4,352
million), or 11% of revenue, compared to RMB16,314 million, or 10%
of revenue, in fiscal year 2017. Without the effect of share-based
compensation expense, sales and marketing expenses as a percentage
of revenue would have increased from 9% in fiscal year 2017 to 10%
in fiscal year 2018, primarily due to our discretionary advertising
and promotional spending for user acquisition that led to
significant increase in annual active consumers and MAUs in fiscal
year 2018.
General and administrative expenses – General and
administrative expenses in fiscal year 2018 were RMB16,241 million
(US$2,589 million), or 6% of revenue, compared to RMB12,239
million, or 8% of revenue, in fiscal year 2017. Without the effect
of share-based compensation expense, general and administrative
expenses as a percentage of revenue in fiscal year 2018 would have
decreased from 5% in fiscal year 2017 to 4% in fiscal year
2018.
Share-based compensation expense –Share-based
compensation expense included in the cost and expense items above
in fiscal year 2018 was RMB20,075 million (US$3,201 million),
compared to RMB15,995 million in fiscal year 2017. Share-based
compensation expense as a percentage of revenue decreased to 8% in
fiscal year 2018 from 10% in fiscal year 2017. The following table
sets forth our analysis of share-based compensation expense for the
periods indicated by type of share-based awards:
Year ended March 31, 2017
2018 % of
% of YoY % RMB Revenue
RMB US$ Revenue Change (in millions,
except percentages) By type of awards: Alibaba Group
share-based awards granted to:
- Our employees
11,810 8% 15,267 2,434 6% 29%
- Ant Financial employees and other
consultants(1)
1,277 1% 1,603 256 1% 26% Ant Financial share-based awards granted
to our employees(1) 2,188 1% 2,278 363 1% 4% Others 720 0% 927 148
0% 29% Total share-based compensation expense 15,995 10% 20,075
3,201 8% 26%
__________________
(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 2018 as compared to fiscal year 2017. This increase was
primarily due to the general increase in the average fair market
value of the awards granted.
Amortization of intangible assets – Amortization of
intangible assets in fiscal year 2018 was RMB7,120 million
(US$1,135 million), an increase of 39% from RMB5,122 million in
fiscal year 2017. This increase was due to an increase in
intangible assets recognized arising from our strategic
acquisitions and investments.
Income from operations
Income from operations in fiscal year 2018 was RMB69,314 million
(US$11,050 million), or 28% of revenue, an increase of 44% compared
to RMB48,055 million, or 30% of revenue, in fiscal year 2017.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA achieved growth of 42% to RMB105,792 million
(US$16,866 million) in fiscal year 2018, compared to RMB74,456
million in fiscal year 2017, despite adjusted EBITDA margin
decreasing from 47% in fiscal year 2017 to 42% in fiscal year 2018.
Adjusted EBITA achieved growth of 40% to RMB97,003 million
(US$15,465 million) in fiscal year 2018, compared to RMB69,172
million in fiscal year 2017, despite adjusted EBITA margin
decreasing from 44% in fiscal year 2017 to 39% in fiscal year 2018.
Adjusted EBITA margin is lower mainly because of New Retail, the
consolidation of Cainiao Network, investments in Lazada and
spending in growing user base and improving user
experience. Revenue of New Retail, which is included in the
core commerce segment, is primarily recorded on a gross basis,
which implies lower gross margins. Reconciliations of net income to
adjusted EBITDA and adjusted EBITA are included at the end of this
results announcement.
As we will continue to invest a portion of our free cash flow in
new businesses and acquired businesses, and these newly developed
and acquired businesses have different cost structures, we expect
our margin will continue to be negatively impacted by these
businesses and the accounting treatment of revenue recorded on a
gross basis.
Adjusted EBITA and Adjusted EBITA year-on-year growth are
illustrated in this chart.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. A reconciliation of income from
operations to adjusted EBITA for each segment is included at the
end of this results announcement.
Year ended March 31, 2017
2018 % of
% of RMB Revenue RMB US$
Revenue (in millions, except percentages) Core
commerce 82,432 62% 114,100 18,190 53% Cloud computing (476) (7)%
(799) (127) (6)% Digital media and entertainment (6,542) (44)%
(8,305) (1,324) (42)% Innovation initiatives and others (3,125)
(104)% (2,996) (478) (91)%
Core commerce segment – Adjusted EBITA achieved growth of
38% to RMB114,100 million (US$18,190 million) in fiscal year 2018,
compared to RMB82,432 million in fiscal year 2017, despite adjusted
EBITA margin decreasing from 62% in fiscal year 2017 to 53% in
fiscal year 2018. Core commerce adjusted EBITA margin is lower
mainly because of New Retail, Cainiao Network, Lazada and spending
to increase user base and improve user experience. Excluding New
Retail, the consolidation of Cainiao Network and investments in
Lazada, adjusted core commerce EBITA margin would have been 63% for
fiscal year 2018. Our New Retail businesses primarily include
Intime, Hema and Tmall Import.
Core commerce adjusted EBITA and core commerce adjusted EBITA
year-on-year growth are illustrated in this chart.
Cloud computing segment – Adjusted EBITA in fiscal year
2018 was a loss of RMB799 million (US$127 million), compared to a
loss of RMB476 million in fiscal year 2017. Adjusted EBITA margin
improved to negative 6% in fiscal year 2018 from negative 7% in
fiscal year 2017.
Digital media and entertainment segment – Adjusted EBITA
in fiscal year 2018 was a loss of RMB8,305 million (US$1,324
million), compared to a loss of RMB6,542 million in fiscal year
2017. Adjusted EBITA margin improved to negative 42% in fiscal year
2018 from negative 44% in fiscal year 2017, primarily due to
improved results from UCWeb and other media and entertainment
businesses, partially offset by an increase in investment in
content costs of Youku Tudou.
Innovation initiatives and others segment – Adjusted
EBITA in fiscal year 2018 was a loss of RMB2,996 million (US$478
million), compared to a loss of RMB3,125 million in fiscal year
2017. Adjusted EBITA margin was negative 91% in fiscal year 2018,
compared to negative 104% in fiscal year 2017.
Interest and investment income,
net
Interest and investment income, net in fiscal year 2018 was
RMB30,495 million (US$4,862 million), a significant increase from
RMB8,559 million in fiscal year 2017, primarily due to a non-cash
gain of RMB22,442 million (US$3,578 million) arising from the
revaluation of our previously held equity interest in Cainiao
Network when we acquired control over Cainiao Network in
mid-October 2017.
Interest expense
Interest expense in fiscal year 2018 was RMB3,566 million
(US$568 million), an increase of 34% compared to RMB2,671 million
in fiscal year 2017, primarily due to an increase in average debt
outstanding reflecting primarily an additional US$7.0 billion
unsecured senior notes issued in fiscal year 2018.
Other income, net
Other income, net in fiscal year 2018 was RMB4,160 million
(US$663 million), a decrease of 32% compared to RMB6,086 million in
fiscal year 2017. The decrease was primarily due to an increase in
exchange losses, partly offset by an increase in income recognized
in respect of royalty fees and software technology services fees
from Ant Financial, which was RMB3,444 million (US$549 million) in
fiscal year 2018, compared to RMB2,086 million in fiscal year
2017.
Income tax expenses
Income tax expenses in fiscal year 2018 were RMB18,199 million
(US$2,901 million), an increase of 32% compared to RMB13,776
million in fiscal year 2017. Our effective tax rate decreased to
18% in fiscal year 2018 from 23% in fiscal year 2017. Income before
income tax and share of results of equity investees in fiscal year
2018 included a gain of RMB22,442 million (US$3,578 million) from
revaluation of our previously held equity interest in Cainiao
Network when we acquired control over Cainiao Network in
mid-October 2017, which were non-taxable, leading to a lower
effective tax rate in fiscal year 2018. Excluding share-based
compensation expense, impairment of goodwill and investments, as
well as other unrealized investment gain/loss, our effective tax
rate would have been remained stable at 18% in fiscal year 2018,
compared to fiscal year 2017.
Share of results of equity
investees
Share of results of equity investees in fiscal year 2018
consisted of the following:
Year ended March 31, 2017
2018 RMB RMB US$ (in
millions) Share of (loss) profit of equity investees:
- Koubei
(990) (1,340) (214)
- Cainiao Network(1)
(1,056) (518) (83)
- Others
(838) 1,040 166 Impairment losses (245) (18,153) (2,894) Dilution
losses (336) (128) (20) Others(2) (1,562) (1,693) (270) (5,027)
(20,792) (3,315)
__________________
(1) We started to consolidate Cainiao Network in
mid-October 2017 after obtaining control over Cainiao Network. (2)
Others mainly include amortization of intangible assets of equity
investees and share-based compensation expenses.
During fiscal year 2018, we took an impairment loss of RMB18,116
million (US$2,888 million) with respect to Alibaba Pictures, one of
our affiliated movie production businesses. The impairment
represented the difference between the market value and our
carrying value of this investment as of December 31, 2017. In June
2015, following a financing transaction that diluted our
shareholding from a controlling position to minority investment, we
were required to write up the carrying value to the substantially
increased market value of Alibaba Pictures at the time. As a
result, we booked a non-cash accounting gain of RMB24,734 million,
which increased the carrying value of our investment in Alibaba
Pictures from RMB4,818 million to RMB29,552 million. Since June
2015, the market value of Alibaba Pictures has declined and
remained below our increased carrying value. The continued low
market price combined with Alibaba Pictures’ strategic decision to
increase investments and expenses for market share growth of its
online movie ticketing business caused us to conclude that the
decline in market value against our carrying value may be
“other-than-temporary,” which led us to take the impairment in
fiscal year 2018.
Net income and Non-GAAP net
income
As a result of the foregoing, our net income in fiscal year 2018
was RMB61,412 million (US$9,791 million), an increase of 49%
compared to RMB41,226 million in fiscal year 2017. Non-GAAP net
income in fiscal year 2018 was RMB83,214 million (US$13,266
million), an increase of 44% compared to RMB57,871 million in
fiscal year 2017. 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
2018 was RMB63,985 million (US$10,201 million), an increase of 47%
compared to RMB43,675 million in fiscal year 2017.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in fiscal year 2018 was RMB24.51 (US$3.91) on a
weighted average of 2,610 million diluted shares outstanding during
the year, an increase of 44% compared to RMB16.97 on a weighted
average of 2,573 million diluted shares outstanding in fiscal year
2017. Non-GAAP diluted EPS in fiscal year 2018 was RMB32.86
(US$5.24), an increase of 40% compared to RMB23.44 in fiscal year
2017. 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, 2018, cash, cash equivalents and short-term
investments were RMB205,395 million (US$32,745 million), compared
to RMB146,747 million as of March 31, 2017. The increase in cash,
cash equivalent and short-term investments in fiscal year 2018 was
primarily due to free cash flow generated from operations and
proceeds from our issuance of US$7.0 billion unsecured senior
notes, offset by net cash used for investment and acquisition, and
cash used to acquire additional shares of Lazada and Intime.
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in fiscal year 2018
was RMB125,171 million (US$19,955 million), an increase of 56%
compared to RMB80,326 million in fiscal year 2017. Free cash flow,
a non-GAAP measurement of liquidity, in fiscal year 2018 was
RMB99,362 million (US$15,841 million), compared to RMB68,790
million in fiscal year 2017. 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 2018, net cash used in investing activities
of RMB83,890 million (US$13,374 million) mainly included investment
and acquisition activities of RMB66,134 million (US$10,543
million), including investments in Sun Art Retail Group Limited,
Ele.me, Wanda Cinema, Easyhome, Tokopedia and Lianhua Supermarket,
and privatization of Intime, as well as capital expenditures and
acquisition of intangible assets of RMB29,836 million (US$4,756
million), which included cash outflow for acquisition of land use
rights and construction in progress of RMB4,027 million (US$642
million), partially offset by cash inflow of RMB13,408 million
(US$2,138 million) from disposals of various investments.
Revenue guidance for fiscal year
2019
We expect revenue growth for fiscal year 2019 to be over 60%
year over year. Excluding the consolidation of Ele.me and Cainiao
Network, we expect revenue growth for fiscal year 2019 to be over
50%. We will continue to invest our operating free cash flow to
generate long-term sustainable profit growth.
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 4, 2018.
Details of the conference call are as follows:
International: +65 6713 5090U.S.: +1 845 675 0437U.K.: +44 203
621 4779Hong Kong: +852 3018 6771Conference ID: 6887267
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: 6887267).
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 4, 2018.
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 expected revenue growth;
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, 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, 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 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, 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
March 31, Year ended March 31, 2017
2018 2017 2018
RMB RMB US$ RMB
RMB US$ (in millions, except per
share data) (in millions, except per share data)
Revenue 38,579 61,932 9,873 158,273 250,266 39,898 Cost of
revenue (15,490) (32,504) (5,182) (59,483) (107,044) (17,065)
Product development expenses (4,518) (6,686) (1,066) (17,060)
(22,754) (3,628) Sales and marketing expenses (4,332) (7,641)
(1,218) (16,314) (27,299) (4,352) General and administrative
expenses (3,394) (4,551) (725) (12,239) (16,241) (2,589)
Amortization of intangible assets (1,313) (1,329) (212) (5,122)
(7,120) (1,135) Impairment of goodwill
— — —
— (494) (79)
Income from operations 9,532
9,221 1,470 48,055 69,314 11,050 Interest and investment income,
net 6,553 1,945 310 8,559 30,495 4,862 Interest expense (676)
(1,175) (187) (2,671) (3,566) (568) Other income, net 440 884 141
6,086 4,160 663 Income before income tax and share of
results of equity investees 15,849 10,875 1,734 60,029 100,403
16,007 Income tax expenses (4,553) (4,164) (664) (13,776) (18,199)
(2,901) Share of results of equity investees (1,444) (70) (11)
(5,027) (20,792) (3,315)
Net income 9,852 6,641 1,059
41,226 61,412 9,791 Net loss attributable to noncontrolling
interests 795 1,028 164 2,449 2,681 427 Net income
attributable to Alibaba Group Holding Limited 10,647 7,669 1,223
43,675 64,093 10,218 Accretion of mezzanine equity — (108)
(17) — (108) (17)
Net income attributable to ordinary
shareholders 10,647 7,561 1,206 43,675 63,985 10,201
Earnings per share attributable to ordinary
shareholders Basic 4.24 2.95 0.47 17.52 25.06 4.00 Diluted
4.12 2.88 0.46 16.97 24.51 3.91
Weighted average number
of share used in calculating net income per ordinary share
Basic 2,513 2,560 2,493 2,553 Diluted 2,581 2,619 2,573 2,610
ALIBABA GROUP HOLDING LIMITEDREVENUE
The following table sets forth our revenue by segments for the
periods indicated:
Three months ended March 31,
Year ended March 31, 2017 2018
2017 2018 RMB RMB
US$ RMB RMB US$
(in millions) (in millions) Core commerce(1) 31,570
51,287 8,176 133,880 214,020 34,120 Cloud computing(2) 2,163 4,385
699 6,663 13,390 2,135 Digital media and entertainment(3) 3,927
5,272 840 14,733 19,564 3,119 Innovation initiatives and others(4)
919 988 158 2,997 3,292 524 Total 38,579 61,932 9,873
158,273 250,266 39,898
__________________
(1) Revenue from core commerce is primarily generated
from our China retail marketplaces, 1688.com, AliExpress,
Alibaba.com, Lazada.com and Cainiao logistics services. (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 LIMITEDINFORMATION 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, 2017 2018
2017 2018 RMB RMB
US$ RMB RMB US$
(in millions) (in millions) Core commerce 16,500
18,660 2,975 74,180 102,743 16,379 Cloud computing (505) (1,063)
(169) (1,681) (3,085) (492) Digital media and entertainment (2,586)
(3,541) (565) (9,882) (14,140) (2,254) Innovation initiatives and
others (1,888) (2,019) (322) (6,798) (6,901) (1,100) Unallocated
(1,989) (2,816) (449) (7,764) (9,303) (1,483) Total 9,532
9,221 1,470 48,055 69,314 11,050
The following table sets forth our adjusted EBITA by segments
for the periods indicated:
Three months ended March 31,
Year ended March 31, 2017 2018
2017 2018 RMB RMB
US$ RMB RMB US$
(in millions) (in millions) Core commerce 18,579
22,186 3,537 82,432 114,100 18,190 Cloud computing (169) (353) (56)
(476) (799) (127) Digital media and entertainment (1,711) (2,595)
(414) (6,542) (8,305) (1,324) Innovation initiatives and others
(682) (860) (137) (3,125) (2,996) (478) Unallocated (866) (1,573)
(251) (3,117) (4,997) (796) Total 15,151 16,805 2,679 69,172
97,003 15,465
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
As of March 31,
As of March 31,
2017
2018
RMB
RMB
US$
(in millions) Assets Current assets: Cash and
cash equivalents 143,736 199,309 31,775 Short-term investments
3,011 6,086 970 Restricted cash and escrow receivables 2,655 3,417
545 Investment securities 4,054 4,815 768 Prepayments, receivables
and other assets(1) 28,408 43,228 6,891 Total current assets
181,864 256,855 40,949 Investment securities 31,452 38,192
6,089 Prepayments, receivables and other assets(1) 8,703 16,897
2,694 Investment in equity investees 120,368 139,700 22,271
Property and equipment, net 20,206 66,489 10,600 Land use rights,
net 4,691 9,377 1,495 Intangible assets, net 14,108 27,465 4,378
Goodwill 125,420 162,149 25,850
Total assets 506,812 717,124
114,326
Liabilities, Mezzanine Equity and Shareholders’
Equity Current liabilities: Current bank borrowings 5,948 6,028
961 Current portion of unsecured notes 8,949
— —
Income tax payable 6,125 13,689 2,181 Escrow money payable 2,322
3,053 487 Accrued expenses, accounts payable and other
liabilities(1) 46,979 81,165 12,940 Merchant deposits 8,189 9,578
1,527 Deferred revenue and customer advances 15,052 22,297 3,555
Total current liabilities 93,564 135,810 21,651
__________________
(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 March 31,
2017
2018
RMB
RMB US$ (in millions)
Deferred revenue 641 993 158 Deferred tax liabilities(1) 10,361
19,312 3,079 Non-current bank borrowings 30,959 34,153 5,445
Unsecured senior notes 45,876 85,372 13,610 Other liabilities 1,290
2,045 327
Total liabilities 182,691 277,685 44,270
Commitments and contingencies
— — —
Mezzanine equity
2,992 3,001 478
Alibaba Group Holding Limited
shareholders’ equity:
Ordinary shares 1 1
— Additional paid-in capital 164,585
186,764 29,775 Treasury shares at cost (2,823) (2,233) (356)
Restructuring reserve (624) (361) (58) Subscription receivables
(63) (163) (26) Statutory reserves 4,080 4,378 698 Accumulated
other comprehensive income 5,085 5,083 810 Retained earnings
108,558 172,353 27,477 Total Alibaba Group Holding Limited
shareholders’ equity 278,799 365,822 58,320 Noncontrolling
interests 42,330 70,616 11,258
Total equity 321,129
436,438 69,578
Total liabilities, mezzanine equity and
equity 506,812 717,124 114,326
__________________
(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 March 31, Year ended
March 31, 2017 2018 2017
2018 RMB RMB
US$ RMB RMB US$ (in
millions) (in millions) Net cash provided by
operating activities 10,746 14,180 2,261 80,326 125,171 19,955 Net
cash used in investing activities (3,035) (19,816) (3,159) (78,364)
(83,890) (13,374) Net cash provided by (used in) financing
activities 2,482 (4,605) (734) 32,914 20,359 3,246 Effect of
exchange rate changes on cash and cash equivalents (446) (2,646)
(422) 2,042 (6,067) (967) Increase (decrease) in cash and
cash equivalents 9,747 (12,887) (2,054) 36,918 55,573 8,860 Cash
and cash equivalents at beginning of period 133,989 212,196 33,829
106,818 143,736 22,915 Cash and cash equivalents at end of
period 143,736 199,309 31,775 143,736 199,309 31,775
ALIBABA GROUP HOLDING LIMITEDRECONCILIATIONS 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, 2017 2018
2017 2018 RMB RMB
US$ RMB RMB US$
(in millions) (in millions) Net income
9,852 6,641 1,059 41,226 61,412
9,791 Less: Interest and investment income, net (6,553)
(1,945) (310) (8,559) (30,495) (4,862) Add: Interest expense 676
1,175 187 2,671 3,566 568 Less: Other income, net (440) (884) (141)
(6,086) (4,160) (663) Add: Income tax expenses 4,553 4,164 664
13,776 18,199 2,901 Add: Share of results of equity investees 1,444
70 11 5,027 20,792 3,315
Income from operations 9,532
9,221 1,470 48,055 69,314 11,050
Add: Share-based compensation expense 4,306 6,255 997 15,995 20,075
3,201 Add: Amortization of intangible assets 1,313 1,329 212 5,122
7,120 1,135 Add: Impairment of goodwill
— — —
— 494 79
Adjusted EBITA 15,151 16,805
2,679 69,172 97,003 15,465 Add:
Depreciation and amortization of property and equipment and land
use rights 1,446 2,649 422 5,284 8,789 1,401
Adjusted EBITDA
16,597 19,454 3,101 74,456
105,792 16,866
ALIBABA GROUP HOLDING LIMITEDRECONCILIATIONS 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, 2017 2018
2017 2018 RMB RMB
US$ RMB RMB US$
(in millions) (in millions) Net income
9,852 6,641 1,059 41,226 61,412
9,791 Add: Share-based compensation expense 4,306 6,255 997
15,995 20,075 3,201 Add: Amortization of intangible assets 1,313
1,329 212 5,122 7,120 1,135 Add: Impairment of goodwill and
investments 133 89 14 2,542 20,463 3,262 Less: Gain on deemed
disposals/disposals/revaluation of investments and others (5,603)
(153) (24) (7,346) (25,945) (4,137) Add: Amortization of excess
value receivable arising from the restructuring of commercial
arrangements with Ant Financial 65 65 10 264 264 42 Add: Immediate
recognition of unamortized professional fees and upfront fees upon
termination of bank borrowings — — — — 92 15 Adjusted for tax
effects on non-GAAP adjustments(1) 374 (127) (20) 68 (267) (43)
Non-GAAP net income
10,440
14,099
2,248
57,871
83,214
13,266
__________________
(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 LIMITEDRECONCILIATIONS 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, 2017 2018
2017 2018 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 10,647 7,561 1,206
43,675 63,985 10,201 Dilution effect on
earnings arising from option plans operated by a subsidiary and
equity investees (5) (11) (2) (11) (21) (3) Net income attributable
to ordinary shareholders – diluted 10,642 7,550 1,204 43,664 63,964
10,198 Add: Non-GAAP adjustments to net income(1) 588 7,458 1,189
16,645 21,802 3,475
Non-GAAP net income
attributable to ordinary shareholders for computing non-GAAP
diluted EPS 11,230 15,008 2,393
60,309 85,766 13,673 Weighted
average number of shares on a diluted basis 2,581
2,619 2,573 2,610 Diluted EPS(2)
4.12 2.88 0.46 16.97 24.51
3.91 Add: Non-GAAP adjustments to net income per share(3)
0.23 2.85 0.45 6.47 8.35 1.33
Non-GAAP diluted
EPS(4) 4.35 5.73 0.91 23.44
32.86 5.24
__________________
(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 LIMITEDRECONCILIATIONS 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, 2017 2018
2017 2018 RMB RMB
US$ RMB RMB US$
(in millions) (in millions) Net cash provided by
operating activities 10,746 14,180 2,261
80,326 125,171 19,955 Less: Purchase of
property and equipment and intangible assets (excluding land use
rights and construction in progress) (2,832) (5,616) (896) (12,220)
(25,809) (4,114) Add: Others 66 — — 684 — —
Free cash
flow 7,980 8,564 1,365 68,790
99,362 15,841
ALIBABA GROUP HOLDING LIMITEDSELECTED 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 Jun 30,
Sep 30, Dec 31,
Mar 31, Jun 30, Sep
30, Dec 31, Mar 31,
2016 2016 2016 2017 2017
2017 2017 2018 (in millions) Annual
active consumers 434 439 443 454 466 488 515 552
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,
2016 2016 2016 2017 2017
2017 2017 2018 (in millions) Mobile
MAUs 427 450 493 507 529 549 580 617
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:
Jun 30, Sep 30,
Dec 31, Mar 31,
Jun 30, Sep 30, Dec
31, Mar 31, 2016 2016
2016 2017 2017 2017 2017
2018 (in RMB) Annual China commerce retail revenue
per annual active consumer(1) 202 215 241 251 273 293 315 320
Mobile revenue per mobile MAU from China commerce retail –
Annualized(2) 140 151 166 179 196 213 229 230
__________________
(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: https://www.businesswire.com/news/home/20180504005297/en/
Alibaba Group Holding LimitedInvestor Relations ContactRob
Lininvestor@alibabagroup.comorMedia ContactRobert
Christiebob.christie@alibaba-inc.com
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