Alibaba Group Holding Limited (NYSE: BABA) today announced its
financial results for the quarter and fiscal year ended March 31,
2019.
“More and more, Alibaba is becoming synonymous with everyday
consumption in China, growing our base to 654 million annual active
consumers and extending our penetration in less-developed cities,”
said Daniel Zhang, Chief Executive Officer of Alibaba Group. “Our
cloud and data technology and tremendous traction in New Retail
have enabled us to continuously transform the way businesses
operate in China and other emerging markets, which will contribute
to our long-term growth.”
“We delivered another strong quarter and excellent fiscal year,
led by fiscal year revenue growth of 51% as well as robust user
growth and engagement across our ecosystem. Excluding the effects
of consolidating acquired businesses, revenue would have increased
by 39% year-over-year,” said Maggie Wu, Chief Financial Officer of
Alibaba Group. “Over the years, our steady profit growth and cash
flow have enabled us to strengthen our core business, invest in new
businesses and create unique value for our customers. These
investments have expanded our total addressable market and
positioned us well for long-term growth. Looking ahead to fiscal
2020, we expect revenue to be over RMB500 billion, reflecting our
confidence and positive momentum going forward.”
BUSINESS HIGHLIGHTS
In the quarter ended March 31,
2019:
- Revenue was RMB93,498 million
(US$13,932 million), an increase of 51% year-over-year.
- Annual active consumers on our
China retail marketplaces reached 654 million, an increase of 18
million from the 12-month period ended December 31, 2018.
- Mobile MAUs on our China retail
marketplaces reached 721 million in March 2019, an increase of 22
million over December 2018.
- Income from operations was
RMB8,765 million (US$1,306 million), a decrease of 5%
year-over-year mainly due to our US$250 million settlement of a
U.S. federal class action lawsuit. Adjusted EBITDA increased
29% year-over-year to RMB25,166 million (US$3,750 million).
- Adjusted EBITA for core commerce
was RMB27,484 million (US$4,095 million), an increase of 24%
year-over-year. Our marketplace-based core commerce adjusted
EBITA (see definition at the end of this results announcement),
a non-GAAP measurement, increased 38% year-over-year to RMB34,688
million (US$5,169 million).
- Net income attributable to ordinary
shareholders was RMB25,830 million (US$3,849 million), and
net income was RMB23,379 million (US$3,484 million).
Non-GAAP net income was RMB20,056 million (US$2,988
million), an increase of 42% year-over-year.
- Diluted EPS was RMB9.84
(US$1.47) and non-GAAP diluted EPS was RMB8.57 (US$1.28), an
increase of 50% year-over-year.
- Net cash provided by operating
activities was RMB18,553 million (US$2,764 million) and
non-GAAP free cash flow was RMB10,714 million (US$1,596
million).
In the fiscal year ended March 31,
2019:
- Revenue was RMB376,844 million
(US$56,152 million), an increase of 51% year-over-year. Excluding
the effects of consolidating acquired businesses, revenue would
have increased by 39% year-over-year.
- Annual active consumers on our
China retail marketplaces reached 654 million, an increase of 102
million from the 12-month period ended March 31, 2018.
- Mobile MAUs on our China retail
marketplaces reached 721 million in March 2019, an increase of 104
million over March 2018.
- GMV transacted on our China
retail marketplaces was RMB5,727 billion (US$853 billion) for
fiscal year 2019, representing a year-over-year growth rate of 19%.
Excluding unpaid orders, total physical goods GMV from our
China retail marketplaces grew 25% year-over-year, Tmall
physical goods GMV increased 31% year-over-year and Taobao
physical goods GMV increased 19% year-over-year.
- Income from operations was
RMB57,084 million (US$8,506 million) and adjusted EBITDA
increased 15% year-over-year to RMB121,943 million (US$18,170
million);
- Adjusted EBITA for core commerce
was RMB136,167 million (US$20,290 million), an increase of 19%
year-over-year. Our marketplace-based core commerce adjusted
EBITA, a non-GAAP measurement, increased 31% year-over-year to
RMB161,589 million (US$24,078 million).
- Net income attributable to ordinary
shareholders was RMB87,600 million (US$13,053 million) and
net income was RMB80,234 million (US$11,955 million).
Non-GAAP net income was RMB93,407 million (US$13,918
million), an increase of 12% year-over-year.
- Diluted EPS was RMB33.38
(US$4.97) and non-GAAP diluted EPS was RMB38.40 (US$5.72),
an increase of 17% year-over-year.
- Net cash provided by operating
activities was RMB150,975 million (US$22,496 million) and
non-GAAP free cash flow was RMB104,478 million (US$15,568
million).
BUSINESS AND STRATEGIC UPDATES
Core Commerce
Our Core Commerce segment delivered robust revenue growth of 51%
year-over-year in fiscal year 2019. The strong performance of the
Core Commerce segment was primarily driven by:
- effective user acquisition and
penetration into less developed cities;
- solid revenue growth of China retail
marketplaces reflecting higher user engagement driving improving
click-through rate and better purchase conversion; and
- expansion of our total addressable
market by investing in local consumer services and New Retail
businesses that captured additional consumer wallet share and
improved user loyalty.
China Retail – Solid increase in annual active users
catalyzes GMV growth; improved merchant sentiment in allocating
marketing spend.
In March 2019, our China retail marketplaces had 721 million
mobile MAUs, representing an annual and quarterly net increase of
104 million and 22 million, respectively. Annual active consumers
on our China retail marketplaces was 654 million for the 12 months
ended March 31, 2019, representing an annual and quarterly net
increase of 102 million and 18 million, respectively. This robust
growth reflects successful user acquisition programs, such as
referrals through the Alipay app, and has been a leading indicator
of increased consumption activities on our platforms. In fiscal
year 2019, more than 70% of the increase in annual active consumers
was from less developed cities.
During fiscal year 2019, our China retail marketplaces recorded
total GMV of RMB5,727 billion (US$853 billion), up 19%
year-over-year, primarily driven by an increase in the number of
annual active consumers, putting us on track to achieve our US$1
trillion total GMV target by fiscal year end 2020. Total physical
goods GMV from our China retail marketplaces, excluding unpaid
orders, exhibited strong growth of 25% year-over-year in fiscal
year 2019. Tmall physical goods GMV, excluding unpaid orders, grew
31% year-over-year, which continued to exceed the sector average.
Taobao physical goods GMV, excluding unpaid orders, delivered
healthy and accelerated growth of 19% in fiscal year 2019.
The number of paying merchants that generate customer management
revenue increased during the quarter, which we believe reflects
improved merchant confidence in allocating marketing spend. We are
making progress on the monetization of recommendation feeds and
enhancing recommendation algorithms. During the quarter, we
allocated more traffic for testing of recommendation monetization,
which generated incremental customer management revenue in a
quarter with seasonally lower revenue.
Taobao – fast growing consumer community and new shopping
experience. Taobao is a fast growing consumer community that
continues to redefine the shopping experience through content
innovation and intelligent personalized recommendations. We are
improving the user experience and adding greater value to merchants
with our proprietary consumption knowledge graph.
In fiscal year 2019, we successfully launched a new Taobao app
interface, which delivers a customized shopping experience by
segmenting users based on behavior data and providing them with
more recommendations to enhance product and content discovery. The
new interface also includes Taobao’s innovative content, such as
curated posts, short-form videos and live-broadcast events. These
initiatives drove strong growth in user engagement, purchase
conversion and annual active consumers.
Tmall – the leading consumer engagement and distribution
platform for brands in China. Tmall continues to gain wallet
share and grow faster than the sector average. The growth of
physical goods GMV, excluding unpaid orders, accelerated to 33%
year-over-year in the quarter ended March 31, 2019, compared to the
year-on-year growth rate of 29% in the previous quarter. This
robust growth was driven primarily by strong performance of
fast-moving consumer goods (FMCG), apparel, electronics and home
furnishing categories during the March quarter.
In fiscal year 2019, Tmall extended its leadership position as
the consumer engagement and distribution platform of choice for
brands in China. We have had great success in identifying new
consumption trends in China that drove robust sub-category growth
within consumer electronics and personal care product categories.
To help brands build awareness of new products with our large base
of annual active consumers, we developed a suite of product-launch
marketing solutions, including tools that assist brands to measure
the effectiveness of new product-launch campaigns along the full
consumer journey, from discovery to purchase.
As an example of Tmall’s powerful capabilities to enable brands
to build their business in China, Alexander McQueen and Mulberry
launched flagship stores on Tmall and joined the premium Luxury
Pavilion channel during this quarter. As of March 31, 2019, our
Tmall Luxury Pavilion had more than 100 luxury brands, all of which
have also opened Tmall flagship stores.
New Retail – digital transformation of brick-and-mortar
retailing. Through our New Retail strategy, we are at the
forefront of transforming the retail industry by digitizing all
aspects of store-based operations. We enable traditional retailers
to deliver an unrivalled consumer experience and achieve operating
efficiency through our consumer insight technology, on-demand
delivery, inventory tracking, supply chain management and mobile
payments.
In fiscal year 2019, Alibaba Group and Starbucks Coffee Company
jointly announced a comprehensive strategic New Retail partnership
to enable a seamless Starbucks Experience and enhance the way
customers enjoy their food and beverages. By the end of April 2019,
we had enabled on-demand delivery of Starbucks offerings in more
than 2,100 stores across 35 cities throughout China. We have also
helped accelerate membership acquisition for its new Starbucks
Reward program through the Alipay and Taobao apps.
At the end of March 2019, we had digitized about 470 Sun Art
stores with our New Retail know-how and proprietary technology. The
transformation enables these stores to accelerate the integration
of their various retail systems, while allowing consumers to place
orders through the Taobao app and secure delivery through our
on-demand delivery platform operated by Ele.me.
Our self-owned-and-operated grocery retail chain Freshippo
(known as “Hema” in Chinese) continues to achieve robust same-store
sales growth, expand its footprint, optimize its stores and
introduce new initiatives to improve customer experience. As of
March 31, 2019, we had 135 self-operated Freshippo stores in China,
primarily located in tier one and tier two cities.
Local consumer services – ecosystem synergy and focus on
market share gains in less developed cities.
In fiscal year 2019, we acquired the on-demand food delivery
platform Ele.me and integrated it with restaurant and local service
guide platform Koubei to create a business which revenues are
reported under “local consumer services” within the core commerce
segment. Our strategy for the local consumer services business is
to leverage the 654 million annual active consumers on our China
retail marketplaces and our data technology to expand our offerings
from shopping to services, further tapping into new addressable
markets for consumption in China.
We are focused on gaining market share by integrating the local
consumer services business with the Alibaba ecosystem and
penetrating into less developed cities. For example, the local
consumer services business has acquired users and increased orders
by leveraging the Alipay and Taobao apps, which have more than 600
million MAUs each and have gained a significant number of users in
less developed cities in recent quarters. Approximately 30% of
Ele.me platform’s total orders are generated through these two
mobile apps.
Cainiao Network and logistics investments – achieving
progress in last-mile solutions as well as international and
cross-border fulfillment. During the 2019 fiscal year, Cainiao
Network focused on delivering a comprehensive last-mile solution to
consumers through both organic growth and strategic investments. In
urban areas, Cainiao Network has developed neighborhood delivery
solutions with a combination of community and campus stations and
residential self-pickup lockers, which we call Cainiao Post. These
solutions have become an important complement to the last-mile
delivery network of Cainiao’s express delivery partners. In March
2019, these Cainiao Post stations handled over 10% of total daily
packages generated by our China retail marketplaces. In addition,
during the fiscal year, we enhanced our relationship with the
express delivery industry through our investments in ZTO Express
and STO Express, two of the major express delivery companies in
China.
In international logistics, Cainiao Network and the logistics
arm of Lazada have developed a strong and growing network of assets
and partners to support our international commerce retail
businesses (AliExpress and Lazada). In March 2019, our proprietary
fulfillment and logistics solutions served over 75% of AliExpress
packages and about 80% of Lazada packages were delivered out of its
own sortation centers. From a China import standpoint, Cainiao
Network is focused on developing cross-border fulfillment solutions
for Tmall Global, utilizing a combination of bonded warehouses in
China and direct shipping from foreign countries. In March 2019,
these cross-border fulfillment solutions served over 90% of all
Tmall Global packages.
International – building foundation for long-term growth.
Our cross-border and international retail businesses continue to
show promising growth. In the twelve months ended March 31, 2019,
Lazada and AliExpress had a total of more than 120 million annual
active consumers.
In fiscal year 2019, we strengthened Lazada’s third party
marketplace business, management team and technology
infrastructure. At the same time, Lazada reduced its exposure to
direct product sales of low-margin categories, such as electronics,
as we believe this strategy will better position Lazada for
sustainable, scalable and less capital-intensive long-term growth.
Lazada will continue to invest in logistics infrastructure in order
to improve user experience and reduce delivery cost, as factors
such as delivery speed and convenience have become key competitive
advantages in the Southeast Asian market.
To address increasing Chinese consumer demand for international
products and brands, Tmall Global serves as the premier platform
that helps overseas brands and merchants reach Chinese consumers
directly, build brand awareness and gain valuable consumer insight
that inform their overall China strategy. Some of the brands and
merchants that have a presence on Tmall Global are well established
names, such as nutritional products from Chemists Warehouse and
Blackmores, baby products from Pampers, accessories from Emporio
Armani and nuts from Kirkland. Tmall Global was the number one
e-commerce import platform in China based on transaction value in
calendar year 2018, according to Analysys.
Cloud Computing
Cloud computing revenue grew 76% year-over-year to RMB7,726
million (US$1,151 million) during the March 2019 quarter, primarily
driven by an increase in average spending per customer. We are
seeing significant traction and diversification of customers and
revenue. In fiscal year 2019, Alibaba Cloud served more than half
of the A-share listed companies in China. We will continue to
invest to further expand our market share by developing value-added
products and features.
During the March 2019 quarter, Alibaba Cloud launched major
products in the areas of graph database, anti-bot protection,
blockchain-as-a-service and real time communications. We continue
to use our scale to lower the pricing of products and services in
the areas of content delivery network, security, database and
network infrastructure so that we are able to pass on cost savings
to our customers.
According to Gartner (April 2019), Alibaba Cloud is the largest
cloud computing service provider in Asia Pacific, as measured by
market share for IaaS (Infrastructure as a Service) and IUS
(Infrastructure Utility Service).
Digital Media and
Entertainment
Digital Media and Entertainment is a key piece of our
Live@Alibaba vision and an extension of our strategy to capture
consumption beyond our core commerce businesses. In fiscal year
2019, we emphasized developing our original content production
capabilities in order to attain greater control over content
quality, format and scheduling. We will continue to execute this
strategy as we believe original content will drive paying
subscriber and advertising revenue growth. Youku’s daily average
subscriber base continues to grow at a healthy rate, increasing
about 88% and 50% year-over-year during fiscal year 2019 and March
2019 quarter, respectively.
In March 2019, we increased our shareholding in Alibaba Pictures
to 51% and aligned the management of Digital Media and
Entertainment and Alibaba Pictures. Alibaba Pictures is principally
engaged in the production, promotion and distribution of theatrical
entertainment, serving consumers, studios, and cinema operators.
Alibaba Pictures was involved in the production, promotion and
distribution of highly popular films, including Chinese box-office
hit The Wandering Earth, which to-date is the second highest
grossing domestic film in China, and the Oscar-winning movie Green
Book. We believe the alignment of management and content strategy
between Alibaba Pictures and our Digital Media and Entertainment
businesses will support and enhance our original content strategy
in the future.
Innovation Initiatives & Technology
Development
Amap app is the largest provider of mobile digital map,
navigation and real-time traffic information in China by daily
active users. Amap also operates a leading open digital maps
platform that powers many major mobile apps in different
industries, such as food delivery, ride service, taxi-hailing and
social networking.
Tmall Genie, our AI-powered smart speaker, connects consumers
with interactive services offered by participants in our digital
economy. Since Tmall Genie’s official launch in August 2017, more
than 10 million units have been activated.
Cash Flow from Operating Activities and
Free Cash Flow
In the quarter ended March 31, 2019, net cash provided by
operating activities was RMB18,553 million (US$2,764 million), an
increase of 29% compared to RMB14,383 million in the same quarter
of 2018. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended March 31, 2019 increased by 22% to RMB10,714
million (US$1,596 million), from RMB8,767 million in the same
quarter of 2018.
In the fiscal year ended March 31, 2019, net cash provided by
operating activities was RMB150,975 million (US$22,496 million), an
increase of 20% compared to RMB125,805 million in the fiscal year
2018. Free cash flow, a non-GAAP measurement of liquidity, in
fiscal year 2019 increased by 4% to RMB104,478 million (US$15,568
million), from RMB99,996 million in fiscal year 2018, primarily due
to an increase in capital expenditures (excluding acquisition of
land use rights and construction in progress relating to office
campus) by RMB16,735 million and an increase in acquisition of
licensed copyrights and other intangible assets by RMB3,953
million.
A reconciliation of net cash provided by operating activities to
free cash flow is included at the end of this results
announcement.
Share Repurchase
In September 2018, we announced an ADS repurchase plan to
implement the previously announced US$6 billion share repurchase
program. As of the end of March 2019, we had repurchased
approximately 10.9 million of our ADSs for a total of approximately
US$1.57 billion.
Guidance
Looking ahead, we are confident about our value proposition to
consumers and merchants, and we will focus on solid execution to
build our businesses. In fiscal year 2020, we expect to generate
over RMB500 billion in revenue.
KEY OPERATIONAL METRICS*
March 31,2018
December 31,2018
March 31,2019
Net adds YoY QoQ China
Commerce Retail: Annual active consumers(1) (in millions) 552
636 654 102 18 Mobile monthly active users (MAUs)(2) (in millions)
617 699 721 104 22
__________________
* For definitions of terms used but not defined in this
results announcement, please refer to our annual report on Form
20-F for the fiscal year ended March 31, 2018. (1) For the twelve
months ended on the respective dates. (2) For the month ended on
the respective dates.
MARCH QUARTER SUMMARY FINANCIAL RESULTS
Three months ended March 31, 2018
2019 RMB RMB
US$(1)
YoY %Change
(in millions, except percentages and per share amounts)
Revenue 61,932 93,498 13,932 51% Income from
operations 9,221 8,765 1,306 (5)%(3) Operating margin 15 % 9 %
Adjusted EBITDA(2) 19,454 25,166 3,750 29% Adjusted EBITDA
margin(2) 31 % 27 % Adjusted EBITA(2) 16,805 20,757 3,093 24%
Adjusted EBITA margin(2) 27 % 22 % Net income 6,641 23,379
3,484 252%(4) Net income attributable to ordinary shareholders
7,561 25,830 3,849 242%(4) Non-GAAP net income(2) 14,099 20,056
2,988 42% Diluted earnings per share/ADS (EPS) 2.88 9.84
1.47 242% Non-GAAP diluted EPS(2) 5.73 8.57 1.28 50%
__________________
(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 RMB6.7112 to US$1.00, the
exchange rate on March 29, 2019 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 our US$250 million settlement of a U.S. federal class action
lawsuit. Excluding this impact, our income from operations would
have increased by 13%.
(4) Includes revaluation gains of investments and businesses, as
discussed in detail in “Interest and investment income, net” below.
MARCH QUARTER INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended March 31, 2019
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
US$ (in millions, except percentages)
Revenue 78,894 7,726 5,671 1,207
—
93,498 13,932 Income (loss) from
operations 21,632 (1,036 ) (3,854
) (3,270 ) (4,707 ) 8,765
1,306 Add: Share-based compensation expense 3,054 869 691
1,318 1,178 7,110 1,060 Add: Amortization of intangible assets
2,798 3 335 20 47 3,203 477
Add: Settlement of U.S. federal class
action lawsuit
— — — —
1,679 1,679
250
Adjusted EBITA
27,484
(2)
(164 ) (2,828 ) (1,932 )
(1,803 ) 20,757 3,093
Adjusted EBITA margin 35 % (2 )%
(50 )% (160 )%
22 % Three months ended March 31, 2018
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
(in millions, except percentages) Revenue
51,287 4,385 5,272 988 —
61,932 Income (loss) from operations
18,660 (1,063 ) (3,541 )
(2,019 ) (2,816 )
9,221
Add: Share-based compensation expense
2,693
707
536
1,153
1,166
6,255
Add: Amortization of intangible assets
833 3 410 6 77 1,329
Adjusted EBITA 22,186 (353
) (2,595 ) (860 ) (1,573
) 16,805 Adjusted EBITA margin
43 % (8 )% (49 )%
(87 )% 27 %
__________________
(1) Unallocated expenses are primarily related to corporate
administrative costs and other miscellaneous items that are not
allocated to individual segments. (2) Marketplace-based core
commerce adjusted EBITA increased 38% year-over-year to RMB34,688
million (US$5,169 million).
MARCH QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended March 31, 2019 was RMB93,498
million (US$13,932 million), an increase of 51% compared to
RMB61,932 million in the same quarter of 2018. The increase was
mainly driven by the robust revenue growth of our China commerce
retail business, the consolidation of Ele.me, as well as strong
revenue growth of Alibaba Cloud.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended March 31, 2018
2019 RMB
% ofRevenue
RMB US$
% ofRevenue
YoY %Change
(in millions, except percentages) Core commerce: China
commerce retail - Customer management 22,993 37% 30,119 4,488 32%
31% - Commission 11,367 18% 14,790 2,204 16% 30% - Others 5,825 10%
13,532 2,016 15% 132% 40,185 65% 58,441 8,708 63% 45% China
commerce wholesale 1,883 3% 2,547 380 3% 35% International commerce
retail 3,967 6% 4,944 737 5% 25% International commerce wholesale
1,699 3% 2,133 318 2% 26% Cainiao logistics services 2,852 5% 3,861
575 4% 35% Local consumer services
— — 5,266 785 5%
N/A Others 701 1% 1,702 253 2% 143% Total core commerce 51,287 83%
78,894 11,756 84% 54% Cloud computing 4,385 7% 7,726 1,151
8% 76% Digital media and entertainment 5,272 8% 5,671 845 6% 8%
Innovation initiatives and others 988 2% 1,207 180 2% 22% Total
61,932 100% 93,498 13,932 100% 51%
Core commerce
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in the quarter ended March 31, 2019 was RMB58,441
million (US$8,708 million), an increase of 45% compared to
RMB40,185 million in the same quarter of 2018. Revenue from our
China retail marketplaces continued to see strong growth. Combined
customer management and commission revenues grew 31%
year-over-year, which represents an increase of 31% in customer
management revenue and an increase of 30% in commission revenue.
The growth of customer management revenue was primarily the result
of increases in the volume of paid clicks. The growth of commission
revenue was primarily due to the strong 33% year-over-year growth
of Tmall physical goods GMV (excluding unpaid orders). “Others”
revenue was RMB13,532 million (US$2,016 million), a significant
increase compared to RMB5,825 million in the same quarter of 2018,
primarily driven by contributions from direct sale businesses,
including Tmall Direct Import and Freshippo.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
the quarter ended March 31, 2019 was RMB2,547 million (US$380
million), an increase of 35% compared to RMB1,883 million in the
same quarter of 2018. The increase was primarily due to an increase
in the average revenue from paying members on 1688.com, our
domestic wholesale marketplace.
- International commerce retail
businessRevenue from our international commerce retail business
in the quarter ended March 31, 2019 was RMB4,944 million (US$737
million), an increase of 25% compared to RMB3,967 million in the
same quarter of 2018. The increase was primarily due to our
consolidation of Trendyol, Turkey’s leading e-commerce platform,
and to a lesser extent an increase in revenue from AliExpress.
Lazada’s revenue decreased by 4% in the quarter ended March 31,
2019 primarily due to a decrease in revenue generated from its
direct sales business (where revenue is recorded on a gross basis
including the cost of inventory). Last quarter, Lazada strengthened
its core marketplace businesses and reduced exposure to direct
sales in select merchandise categories. This business model shift
continued to drive third-party marketplace GMV growth, although
direct sales revenue declined during the same period.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in the quarter ended March 31, 2019 was RMB2,133 million
(US$318 million), an increase of 26% compared to RMB1,699 million
in the same quarter of 2018. The increase was primarily due to
increases in the average revenue from paying members and the number
of paying members on Alibaba.com, our global wholesale
marketplace.
- Cainiao logistics
servicesRevenue from Cainiao logistics services, which
represents revenue from the domestic and international
one-stop-shop logistics services and supply chain management
solutions provided by Cainiao Network, after elimination of
inter-company transactions, was RMB3,861 million (US$575 million),
an increase of 35% compared to RMB2,852 million in the same quarter
of 2018.
- Local consumer servicesRevenue
from local consumer services, which primarily represents revenues
from platform commissions, provision of food delivery services and
other services provided by our on-demand food delivery platform
Ele.me, was RMB5,266 million (US$785 million). We started to
consolidate Ele.me in May 2018 and Koubei in December 2018.
Cloud computing
Revenue from our cloud computing business in the quarter ended
March 31, 2019 was RMB7,726 million (US$1,151 million), an increase
of 76% compared to RMB4,385 million in the same quarter of 2018,
primarily driven by an increase in average spending per
customer.
Digital media and entertainment
Revenue from our digital media and entertainment business in the
quarter ended March 31, 2019 was RMB5,671 million (US$845 million),
an increase of 8% compared to RMB5,272 million in the same quarter
of 2018. The increase was primarily due to an increase in revenue
from mobile value-added services provided by UCWeb, such as mobile
search and game publishing.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended March 31, 2019 was RMB1,207 million (US$180 million), an
increase of 22% compared to RMB988 million in the same quarter of
2018. The increase was mainly due to an increase in revenue from
Tmall Genie and Amap.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended March 31,
%
ofRevenueYoYchange
2018 2019 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Costs and expenses:
Cost of revenue 32,504 53% 55,610 8,286 60% 7% Product development
expenses 6,686 11% 8,659 1,290 10% (1)% Sales and marketing
expenses 7,641 12% 9,649 1,439 10% (2)% General and administrative
expenses 4,551 7% 7,612 1,134 8% 1% Amortization of intangible
assets 1,329 2% 3,203 477 3% 1% Total costs and expenses 52,711 85%
84,733 12,626 91% 6%
Share-based compensation expense by
function: Cost of revenue 1,680 3% 1,951 291 2% (1)% Product
development expenses 2,461 4% 2,801 417 3% (1)% Sales and marketing
expenses 671 1% 764 114 1% 0% General and administrative expenses
1,443 2% 1,594 238 2% 0% Total share-based compensation expense
6,255 10% 7,110 1,060 8% (2)%
Costs and expenses
excluding share-based compensation expense: Cost of revenue
30,824 50% 53,659 7,995 58% 8% Product development expenses 4,225
7% 5,858 873 7% 0% Sales and marketing expenses 6,970 11% 8,885
1,325 9% (2)% General and administrative expenses 3,108 5% 6,018
896 6% 1% Amortization of intangible assets 1,329 2% 3,203 477 3%
1% Total costs and expenses excluding share-based compensation
expense 46,456 75% 77,623 11,566 83% 8%
Cost of revenue – Cost of revenue in the quarter ended
March 31, 2019 was RMB55,610 million (US$8,286 million), or 60% of
revenue, compared to RMB32,504 million, or 53% of revenue, in the
same quarter of 2018. Without the effect of share-based
compensation expense, cost of revenue as a percentage of revenue
would have increased from 50% in the quarter ended March 31, 2018
to 58% in the quarter ended March 31, 2019. The increase was
primarily due to our consolidation of Ele.me, as well as an
increase of the cost of inventory and logistics from our New Retail
and direct sale businesses.
Product development expenses – Product development
expenses in the quarter ended March 31, 2019 were RMB8,659 million
(US$1,290 million), or 10% of revenue, compared to RMB6,686
million, or 11% of revenue, in the same quarter of 2018. Without
the effect of share-based compensation expense, product development
expenses as a percentage of revenue would have remained stable at
7% in the quarter ended March 31, 2019 and the same quarter last
year.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended March 31, 2019 were RMB9,649 million
(US$1,439 million), or 10% of revenue, compared to RMB7,641
million, or 12% of revenue, in the same quarter of 2018. Without
the effect of share-based compensation expense, sales and marketing
expenses as a percentage of revenue would have decreased from 11%
in the quarter ended March 31, 2018 to 9% in the quarter ended
March 31, 2019.
General and administrative expenses – General and
administrative expenses in the quarter ended March 31, 2019 were
RMB7,612 million (US$1,134 million), or 8% of revenue, compared to
RMB4,551 million, or 7% of revenue, in the same quarter of 2018.
Without the effect of share-based compensation expense, general and
administrative expenses as a percentage of revenue would have
increased from 5% in the quarter ended March 31, 2018 to 6% in the
quarter ended March 31, 2019, primarily due to our US$250 million
settlement of a U.S. federal class action lawsuit.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended March 31, 2019 was RMB7,110 million (US$1,060
million), an increase of 14% compared to RMB6,255 million in the
same quarter of 2018. Share-based compensation expense as a
percentage of revenue decreased to 8% in the quarter ended March
31, 2019, as compared to 10% in the same quarter last year. The
following table sets forth our analysis of share-based compensation
expense for the quarters indicated by type of share-based
awards:
Three months ended
March 31,2018
December 31,2018
March 31,2019
% Change
RMB
% ofRevenue
RMB
% ofRevenue
RMB US$
% ofRevenue
YoY QoQ (in millions, except percentages)
By type of awards:
Alibaba Group share-based awards granted
to:
- Our employees
4,176 7% 5,853 5% 5,613 836 6% 34% (4)%
- Ant Financial employees and other
consultants(1)
389 1% 26
0%
486 73
1%
25%
1,769%
Ant Financial share-based awards granted
to our employees(1)
1,483 2% 505
0%
435 65
0%
(71)%
(14)% Others 207 0% 576 1% 576 86 1% 178% 0% Total share-based
compensation expense 6,255 10% 6,960 6% 7,110 1,060 8%
14%
2%
__________________
(1) Awards subject to mark-to-market
accounting treatment.
Share-based compensation expense related to Alibaba Group
share-based awards granted to our employees remained stable in this
quarter compared to the previous quarter. Share-based compensation
expense related to Alibaba Group share-based awards granted to Ant
Financial employees and other consultants increased from the
previous quarter, due to the increase in the fair value of Alibaba
Group share-based awards.
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,
we expect that our share-based compensation expense will continue
to be affected by future changes in the valuation of Ant Financial,
although any such changes 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, 2019 was RMB3,203
million (US$477 million), an increase of 141% from RMB1,329 million
in the same quarter of 2018, primarily due to an increase in
amortization of intangible assets acquired from business
combinations of Ele.me and Koubei.
Income from operations and operating
margin
Income from operations in the quarter ended March 31, 2019 was
RMB8,765 million (US$1,306 million), or 9% of revenue, a decrease
of 5% compared to RMB9,221 million, or 15% of revenue, in the same
quarter of 2018, primarily due to our US$250 million settlement of
a U.S. federal class action lawsuit. Excluding this impact, our
income from operations would have increased by 13%.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA increased 29% year-over-year to RMB25,166
million (US$3,750 million) in the quarter ended March 31, 2019,
compared to RMB19,454 million in the same quarter of 2018. Adjusted
EBITA increased 24% year-over-year to RMB20,757 million (US$3,093
million) in the quarter ended March 31, 2019, compared to RMB16,805
million in the same quarter of 2018. Reconciliations of net income
to adjusted EBITDA and adjusted EBITA are included at the end of
this results announcement.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended March 31, 2018
2019 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Core commerce
22,186 43 % 27,484 4,095 35 % Cloud computing (353 ) (8 )% (164 )
(24 ) (2 )% Digital media and entertainment (2,595 ) (49 )% (2,828
) (421 ) (50 )% Innovation initiatives and others (860 ) (87 )%
(1,932 ) (288 ) (160 )%
Core commerce segment – Adjusted EBITA increased by 24%
to RMB27,484 million (US$4,095 million) in the quarter ended March
31, 2019, compared to RMB22,186 million in the same quarter of
2018. Marketplace-based core commerce adjusted EBITA increased 38%
year-over-year to RMB34,688 million (US$5,169 million). Adjusted
EBITA margin decreased from 43% in the quarter ended March 31, 2018
to 35% in the quarter ended March 31, 2019 due to strategic
investments, primarily including aggressive investment in local
consumer services and gradual revenue mix shift towards
self-operated New Retail and direct sale businesses where revenue
is recorded on a gross basis including the cost of inventory. A
reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
We expect that our core commerce adjusted EBITA margin will
continue to be affected by the pace of our investments in new
businesses and revenue mix shift to self-operated New Retail and
direct sale businesses.
Cloud computing segment – Adjusted EBITA in the quarter
ended March 31, 2019 was a loss of RMB164 million (US$24 million),
compared to a loss of RMB353 million in the same quarter of 2018.
Adjusted EBITA margin improved to negative 2% in the quarter ended
March 31, 2019 from negative 8% in the quarter ended March 31,
2018.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended March 31, 2019 was a loss of RMB2,828 million
(US$421 million), compared to a loss of RMB2,595 million in the
same quarter of 2018. Adjusted EBITA margin decrease from negative
49% in the quarter ended March 31, 2018 to negative 50% in the
quarter ended March 31, 2019.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended March 31, 2019 was a loss of RMB1,932
million (US$288 million), compared to a loss of RMB860 million in
the same quarter of 2018. The increase in adjusted EBITA loss was
primarily due to investments in new business initiatives, including
Tmall Genie, as well as our investments in technological research
and innovation.
Interest and investment income,
net
Interest and investment income, net in the quarter ended March
31, 2019 was RMB18,665 million (US$2,781 million), which mainly
included net gains arising from the change in fair value of listed
equity investments and a non-cash gain of RMB5,825 million (US$868
million) arising from the revaluation of our previously held equity
interest in Alibaba Pictures when we obtained control in March
2019. The above-mentioned gains were excluded from our non-GAAP net
income.
Other income, net
Other income, net in the quarter ended March 31, 2019 was
RMB1,449 million (US$216 million), compared to RMB884 million in
the same quarter of 2018. Royalty fees and software technology
service fees under our profit sharing arrangement with Ant
Financial amounted to RMB517 million (US$77 million) in the quarter
ended March 31, 2019. In the current quarter, Ant Financial
continued its strategic investments to acquire new users and
capture growth opportunities in the offline payment market.
Currently, Alipay and its local e-wallet partners have over 1
billion annual active users globally.
Income tax expenses
Income tax expenses in the quarter ended March 31, 2019 were
RMB5,025 million (US$748 million), compared to RMB4,164 million in
the same quarter of 2018.
Our effective tax rate was 18% in the quarter ended March 31,
2019, compared to 38% in the same quarter of 2018. Excluding
share-based compensation expense, investment gain/loss and
impairment of investments, our effective tax rate would have been
21% in the quarter ended March 31, 2019.
Share of results of equity
investees
Share of results of equity investees in the quarter ended March
31, 2019 was a profit of RMB828 million (US$123 million), compared
to a loss of RMB70 million in the same quarter of 2018. We record
our share of results of equity investees one quarter in arrears.
Share of results of equity investees in the quarter ended March 31,
2019 and the comparative periods consisted of the following:
Three months ended March 31, 2018
December 31, 2018 March 31, 2019 RMB
RMB RMB US$ (in millions) Share
of profit of equity investees 480 22 1,306 194 Impairment loss
— (493 )
— — Dilution (loss) gain (75 ) 26 (62
) (9 ) Others(1) (475 ) (416 ) (416 ) (62 ) Total (70 ) (861 ) 828
123
__________________
(1) Others mainly include amortization of intangible assets
of equity investees and share-based compensation expense.
The share of profit of equity investees in the quarter ended
March 31, 2019 primarily included our share of profit in
Suning.
Net income and Non-GAAP net
income
Our net income in the quarter ended March 31, 2019 was RMB23,379
million (US$3,484 million), an increase of 252% compared to
RMB6,641 million in the same quarter of 2018.
Excluding share-based compensation expense, investment
gain/loss, impairment of investments and certain other items,
non-GAAP net income in the quarter ended March 31, 2019 was
RMB20,056 million (US$2,988 million), an increase of 42% compared
to RMB14,099 million in the same quarter of 2018. 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, 2019 was RMB25,830 million (US$3,849 million), an
increase of 242% compared to RMB7,561 million in the same quarter
of 2018.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in the quarter ended March 31, 2019 was RMB9.84
(US$1.47) on a weighted average of 2,625 million diluted shares
outstanding during the quarter, an increase of 242% compared to
RMB2.88 on a weighted average of 2,619 million diluted shares
outstanding during the same quarter of 2018. Excluding share-based
compensation expense, investment gain/loss, impairment of
investments and certain other items, non-GAAP diluted EPS in the
quarter ended March 31, 2019 was RMB8.57 (US$1.28), an increase of
50% compared to RMB5.73 in the same quarter of 2018. 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, 2019, cash, cash equivalents and short-term
investments were RMB193,238 million (US$28,794 million), compared
to RMB192,317 million as of December 31, 2018. The increase in
cash, cash equivalents and short-term investments during the
quarter ended March 31, 2019 was primarily due to free cash flow
generated from operations of RMB10,714 million (US$1,596 million),
partly offset by net cash used in investment and acquisition
activities of RMB9,218 million (US$1,374 million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
March 31, 2019 was RMB18,553 million (US$2,764 million), an
increase of 29% compared to RMB14,383 million in the same quarter
of 2018. Free cash flow, a non-GAAP measurement of liquidity, in
the quarter ended March 31, 2019 was RMB10,714 million (US$1,596
million), compared to RMB8,767 million in the same quarter of 2018.
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, 2019, net cash used in
investing activities of RMB16,751 million (US$2,496 million)
primarily reflected (i) cash outflow of RMB11,855 million (US$1,766
million) for investment and acquisition activities, including those
relating to STO Express and iKang Healthcare, (ii) capital
expenditures of RMB6,537 million (US$973 million), which included
cash outflow for acquisition of land use rights and construction in
progress relating to office campus of RMB849 million (US$126
million), as well as (iii) acquisition of licensed copyrights and
other intangible assets of RMB2,151 million (US$321 million). These
cash outflows were partly offset by cash inflow of RMB2,637 million
(US$392 million) from disposal of various investments.
Employees
As of March 31, 2019, we had a total of 101,958 employees,
compared to 101,550 as of December 31, 2018.
FULL FISCAL YEAR 2019 SUMMARY FINANCIAL RESULTS
Year ended March 31, 2018
2019 RMB RMB US$(1)
YoY %Change
(in millions, except percentages and per share amounts)
Revenue 250,266 376,844 56,152 51 % Income from
operations 69,314 57,084 8,506 (18
)%(3)
Operating margin 28 % 15 % Adjusted EBITDA(2) 105,792 121,943
18,170 15 % Adjusted EBITDA margin(2) 42 % 32 % Adjusted EBITA(2)
97,003 106,981 15,941 10 % Adjusted EBITA margin(2) 39 % 28 %
Net income 61,412 80,234 11,955 31 % Net income attributable
to ordinary shareholders 63,985 87,600 13,053 37 % Non-GAAP net
income(2) 83,214 93,407 13,918 12 % Diluted earnings per
share/ADS (EPS) 24.51 33.38 4.97 36 % Non-GAAP diluted EPS(2) 32.86
38.40 5.72 17 %
__________________
(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 RMB6.7112 to US$1.00, the
exchange rate on March 29, 2019 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 an increase in share-based compensation expense and our
US$250 million settlement of a U.S. federal class action lawsuit.
Excluding these impacts, our income from operations would have
increased by 8%. The increase in share-based compensation expense
was mainly due to the increase in share-based compensation expense
related to Ant Financial share-based awards granted to our
employees as a result of the increase in the fair value of such
awards during the year.
FULL FISCAL YEAR 2019 INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the fiscal year 2019:
Year ended March 31, 2019
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
US$ (in millions, except percentages)
Revenue 323,400 24,702 24,077
4,665
—
376,844
56,152 Income (loss) from operations
109,312 (5,508 ) (20,046 )
(11,795 ) (14,879 )
57,084
8,506 Add: Share-based compensation expense 17,694 4,332
2,988 5,774 6,703
37,491
5,586 Add: Amortization of intangible assets 9,161 18 1,262 50 236
10,727
1,599
Add: Settlement of U.S. federal class
action lawsuit
— — — —
1,679
1,679
250
Adjusted EBITA 136,167((2 ))
(1,158 ) (15,796 ) (5,971
) (6,261 )
106,981
15,941 Adjusted EBITA margin 42
% (5 )% (66 )% (128
)%
28
%
Year ended March 31, 2018
Corecommerce
Cloudcomputing
Digital
mediaandentertainment
Innovationinitiativesand
others
Unallocated(1)
Consolidated
RMB RMB RMB RMB RMB RMB
(in millions, except percentages) Revenue
214,020 13,390 19,564 3,292 —
250,266
Income (loss) from operations 102,743
(3,085 ) (14,140 ) (6,901
) (9,303 )
69,314
Add: Share-based compensation expense
8,466
2,274
2,142
3,707
3,486
20,075
Add: Amortization of intangible assets 2,891 12 3,693 198 326
7,120
Add: Impairment of goodwill
— —
— —
494
494
Adjusted EBITA 114,100
(799 ) (8,305 ) (2,996 )
(4,997 )
97,003
Adjusted EBITA margin 53 % (6
)% (42 )% (91 )%
39
%
__________________
(1) Unallocated expenses are primarily related to corporate
administrative costs and other miscellaneous items that are not
allocated to individual segments. (2) Marketplace-based core
commerce adjusted EBITA increased 31% year-over-year to RMB161,589
million (US$24,078 million).
FULL FISCAL YEAR 2019 OPERATIONAL AND FINANCIAL
RESULTS
Revenue
Revenue in fiscal year 2019 was RMB376,844 million (US$56,152
million), an increase of 51% compared to RMB250,266 million in
fiscal year 2018. The increase was mainly driven by the robust
revenue growth of our China commerce retail business, the
consolidation of newly acquired businesses, mainly Ele.me, as well
as strong revenue growth of Alibaba Cloud.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Year ended March 31, 2018
2019 RMB
% ofRevenue
RMB US$
% ofRevenue
YoY %Change
(in millions, except percentages) Core commerce: China
commerce retail - Customer management 114,285 46% 145,684 21,708
39% 27% - Commission 46,525 19% 61,847 9,215 16% 33% - Others
15,749
6%
40,084 5,973 11% 155% 176,559 71% 247,615 36,896 66% 40% China
commerce wholesale 7,164 3% 9,988 1,488 3% 39% International
commerce retail 14,216 6%
19,558
2,914 5% 38% International commerce wholesale 6,625 2% 8,167 1,217
2% 23% Cainiao logistics services 6,759 3% 14,885 2,218 4% 120%
Local consumer services
— — 18,058 2,691 5% N/A
Others 2,697 1% 5,129 764 1% 90% Total core commerce 214,020 86%
323,400 48,188 86% 51% Cloud computing 13,390 5% 24,702
3,681 7% 84% Digital media and entertainment 19,564 8% 24,077 3,588
6% 23% Innovation initiatives and others 3,292 1% 4,665 695 1% 42%
Total 250,266 100% 376,844 56,152 100% 51%
Core commerce
- China commerce retail
businessRevenue – Revenue from our China commerce
retail business in fiscal year 2019 was RMB247,615 million
(US$36,896 million), an increase of 40% compared to RMB176,559
million in fiscal year 2018. Revenue from our China retail
marketplaces continued to see strong growth. Combined customer
management and commission revenues grew 29% year-over-year, which
represents an increase of 27% in customer management revenue and an
increase of 33% in commission revenue. The growth of customer
management revenue was primarily the result of increases in the
volume of paid clicks and to a lesser extent the increase in price
per click. The growth of commission revenue was primarily due to
strong 31% year-over-year growth of Tmall physical goods GMV
(excluding unpaid orders). “Others” revenue was RMB40,084 million
(US$5,973 million), a significant increase compared to RMB15,749
million in fiscal year 2018, primarily driven by contributions from
direct sale businesses, including Tmall Direct Import and
Freshippo. We expect that the proportion of revenue of our direct
sales businesses will continue to increase as we further implement
our New Retail strategy.
- China commerce wholesale
businessRevenue from our China commerce wholesale business in
fiscal year 2019 was RMB9,988 million (US$1,488 million), an
increase of 39% compared to RMB7,164 million in fiscal year 2018.
The increase was primarily due to an increase in the average
revenue from paying members on 1688.com, our domestic wholesale
marketplace.
- International commerce retail
businessRevenue from our international commerce retail business
in fiscal year 2019 was RMB19,558 million (US$2,914 million), an
increase of 38% compared to RMB14,216 million in fiscal year 2018.
The increase was primarily due to an increase in revenue from
Lazada, our consolidation of Trendyol, Turkey’s leading e-commerce
platform, as well as an increase in revenue from AliExpress.
- International commerce wholesale
businessRevenue from our international commerce wholesale
business in fiscal year 2019 was RMB8,167 million (US$1,217
million), an increase of 23% compared to RMB6,625 million in fiscal
year 2018. The increase was primarily due to increases in the
average revenue from paying members and the number of paying
members on Alibaba.com, our global wholesale marketplace.
- Cainiao logistics
servicesRevenue from Cainiao logistics services, which
represents revenue from the domestic and international
one-stop-shop logistics services and supply chain management
solutions provided by Cainiao Network, after elimination of
inter-company transactions, was RMB14,885 million (US$2,218
million), an increase of 120% compared to RMB6,759 million. The
increase mainly reflected the full year effect of consolidation of
Cainiao in fiscal year 2019. We started to consolidate Cainiao
Network in mid-October 2017.
- Local consumer servicesRevenue
from local consumer services, which primarily represents revenues
from platform commissions, provision of food delivery services and
other services provided by our on-demand food delivery platform
Ele.me, was RMB18,058 million (US$2,691 million). We started to
consolidate Ele.me in May 2018 and Koubei in December 2018.
Cloud computing
Revenue from our cloud computing business in fiscal year 2019
was RMB24,702 million (US$3,681 million), an increase of 84%
compared to RMB13,390 million in fiscal year 2018, primarily driven
by an increase in average spending per customer.
Digital media and entertainment
Revenue from our digital media and entertainment business in
fiscal year 2019 was RMB24,077 million (US$3,588 million), an
increase of 23% compared to RMB19,564 million in fiscal year 2018.
The increase was primarily due to an increase in revenue from
mobile value-added services provided by UCWeb, such as mobile
search and game publishing, and an increase in subscription revenue
from Youku.
Innovation initiatives and others
Revenue from innovation initiatives and others in fiscal year
2019 was RMB4,665 million (US$695 million), an increase of 42%
compared to RMB3,292 million in fiscal year 2018. The increase was
mainly due to an increase in revenue from Tmall Genie and Amap.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Year ended March 31,
%
ofRevenueYoYchange
2018 2019 RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Costs and expenses:
Cost of revenue 107,044 43% 206,929 30,833 55% 12% Product
development expenses 22,754 9% 37,435 5,578 10% 1% Sales and
marketing expenses 27,299 11% 39,780 5,928 11% 0% General and
administrative expenses 16,241 6% 24,889 3,708 6% 0% Amortization
of intangible assets 7,120 3% 10,727 1,599 3% 0% Impairment of
goodwill 494 0%
— — — 0% Total costs and
expenses 180,952 72% 319,760 47,646 85% 13%
Share-based
compensation expense by function: Cost of revenue 5,505 2%
8,915 1,328 2% 0% Product development expenses 7,374 3% 15,378
2,291 4% 1% Sales and marketing expenses 2,037 1% 4,411 657 2% 1%
General and administrative expenses 5,159 2% 8,787 1,310 2% 0%
Total share-based compensation expense 20,075 8% 37,491 5,586 10%
2%
Costs and expenses excluding share-based compensation
expense: Cost of revenue 101,539 41% 198,014 29,505 53% 12%
Product development expenses 15,380 6% 22,057 3,287 6% 0% Sales and
marketing expenses 25,262 10% 35,369 5,271 9% (1)% General and
administrative expenses 11,082 4% 16,102 2,398 4% 0% Amortisation
of intangible assets 7,120 3% 10,727 1,599 3% 0% Impairment of
goodwill 494 0% — — — 0% Total costs and expenses excluding
share-based compensation expense 160,877 64% 282,269 42,060 75% 11%
Cost of revenue – Cost of revenue in fiscal year 2019 was
RMB206,929 million (US$30,833 million), or 55% of revenue, compared
to RMB107,044 million, or 43% of revenue, in fiscal year 2018.
Without the effect of share-based compensation expense, cost of
revenue as a percentage of revenue would have increased from 41% in
fiscal year 2018 to 53% in fiscal year 2019. The increase was
primarily due to our consolidation of newly acquired businesses,
mainly Ele.me and Cainiao, as well as an increase of the cost of
inventory and logistics from our New Retail and direct sale
businesses.
Product development expenses – Product development
expenses in fiscal year 2019 were RMB37,435 million (US$5,578
million), or 10% of revenue, compared to RMB22,754 million, or 9%
of revenue, in fiscal year 2018. Without the effect of share-based
compensation expense, product development expenses as a percentage
of revenue would have remained stable at 6% in fiscal year 2019 and
2018.
Sales and marketing expenses – Sales and marketing
expenses in fiscal year 2019 were RMB39,780 million (US$5,928
million), or 11% of revenue, compared to RMB27,299 million, or 11%
of revenue, in fiscal year 2018. Without the effect of share-based
compensation expense, sales and marketing expenses as a percentage
of revenue would have decreased from 10% in fiscal year 2018 to 9%
in fiscal year 2019.
General and administrative expenses – General and
administrative expenses in fiscal year 2019 were RMB24,889 million
(US$3,708 million), or 6% of revenue, compared to RMB16,241
million, or 6% of revenue, in fiscal year 2018. Without the effect
of share-based compensation expense, general and administrative
expenses as a percentage of revenue would have remained stable at
4% in fiscal year 2019 and 2018.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in fiscal year 2019 was RMB37,491 million (US$5,586 million), an
increase of 87% compared to RMB20,075 million in fiscal year 2018.
Share-based compensation expense as a percentage of revenue
increased from 8% in fiscal year 2018 to 10% in fiscal year 2019.
The following table sets forth our analysis of share-based
compensation expense for the periods indicated by type of
share-based awards:
Year ended March 31, 2018
2019 RMB
% ofRevenue
RMB US$
% ofRevenue
YoY %Change
(in millions, except percentages) By type of awards:
Alibaba Group share-based awards granted to:
- Our employees
15,267 6% 21,942 3,269 6% 44%
- Ant Financial employees and other
consultants(1)
1,603 1% 785 117 0% (51)% Ant Financial share-based awards granted
to our employees(1) 2,278 1% 12,855 1,915 3% 464% Others 927 0%
1,909 285 1% 106% Total share-based compensation expense 20,075 8%
37,491 5,586 10% 87%
___________________
(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 2019 as compared to fiscal year 2018. This increase is
primarily due to general increase in the average fair market value
of the awards granted.
Share-based compensation expense related to Ant Financial
share-based awards granted to our employees increased significantly
in fiscal year 2019 as compared to fiscal year 2018, mainly due to
the increase in the fair value of such awards during the year.
Amortization of intangible assets – Amortization of
intangible assets in fiscal year 2019 was RMB10,727 million
(US$1,599 million), an increase of 51% from RMB7,120 million in
fiscal year 2018, primarily due to an increase in amortization of
intangible assets acquired from business combinations of Ele.me and
Koubei.
Income from operations and operating
margin
Income from operations in fiscal year 2019 was RMB57,084 million
(US$8,506 million), or 15% of revenue, a decrease of 18% compared
to RMB69,314 million, or 28% of revenue, in fiscal year 2018. The
year-over-year decrease was primarily due to an increase in
share-based compensation expense (as discussed in the section
titled “Share-based compensation expense” above) and our US$250
million settlement of a U.S. federal class action lawsuit.
Excluding these impacts, our income from operations would have
increased by 8%.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA increased 15% year-over-year to RMB121,943
million (US$18,170 million) in fiscal year 2019, compared to
RMB105,792 million in fiscal year 2018. Adjusted EBITA increased
10% year-over-year to RMB106,981 million (US$15,941 million) in
fiscal year 2019, compared to RMB97,003 million in fiscal year
2018, primarily due to the increase in marketplace-based core
commerce adjusted EBITA, offset by the consolidation of Ele.me and
Cainiao Network, investments in digital media and entertainment and
other strategic initiatives. Reconciliations of net income to
adjusted EBITDA and adjusted EBITA are included at the end of this
results announcement.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Year ended March 31, 2018 2019
RMB
% ofRevenue
RMB US$
% ofRevenue
(in millions, except percentages) Core commerce
114,100 53 % 136,167 20,290 42 % Cloud computing (799 ) (6 )%
(1,158 ) (172 ) (5 )% Digital media and entertainment (8,305 ) (42
)% (15,796 ) (2,354 ) (66 )% Innovation initiatives and others
(2,996 ) (91 )% (5,971 ) (890 ) (128 )%
Core commerce segment – Adjusted EBITA increased by 19%
to RMB136,167 million (US$20,290 million) in fiscal year 2019,
compared to RMB114,100 million in fiscal year 2018.
Marketplace-based core commerce adjusted EBITA increased 31%
year-over-year to RMB161,589 million (US$24,078 million). Adjusted
EBITA margin decreased from 53% in fiscal year 2018 to 42% in
fiscal year 2019 due to strategic investments, primarily including
aggressive investment in local consumer services and gradual
revenue mix shift towards self-operated New Retail and direct sale
businesses where revenue is recorded on a gross basis including the
cost of inventory. A reconciliation of adjusted EBITA for core
commerce to marketplace-based core commerce adjusted EBITA is
included at the end of this results announcement.
We expect that our core commerce adjusted EBITA margin will
continue to be affected by the pace of our investments in new
businesses and revenue mix shift to self-operated New Retail and
direct sale businesses.
Cloud computing segment – Adjusted EBITA in fiscal year
2019 was a loss of RMB1,158 million (US$172 million), compared to a
loss of RMB799 million in fiscal year 2018. Adjusted EBITA margin
improved to negative 5% in fiscal year 2019 from negative 6% in
fiscal year 2018.
Digital media and entertainment segment – Adjusted EBITA
in fiscal year 2019 was a loss of RMB15,796 million (US$2,354
million), compared to a loss of RMB8,305 million in fiscal year
2018. Adjusted EBITA margin decreased to negative 66% in fiscal
year 2019 from negative 42% in fiscal year 2018, primarily due to
our continued investments in licensing rights and the production of
original content and an increase in impairment charges on licensed
copyrights.
Innovation initiatives and others segment – Adjusted
EBITA in fiscal year 2019 was a loss of RMB5,971 million (US$890
million), compared to a loss of RMB2,996 million in fiscal year
2018. The increase in adjusted EBITA loss was primarily due to
investments in new business initiatives, including Tmall Genie and
our investments in technological research and innovation.
Interest and investment income,
net
Interest and investment income, net in fiscal year 2019 was
RMB44,106 million (US$6,572 million), which mainly included
non-cash gains of RMB21,990 million (US$3,277 million) and RMB5,825
million (US$868 million) arising from the revaluation of our
previously held equity interest in Koubei and Alibaba Pictures when
we obtained control in December 2018 and March 2019, respectively,
as well as net gains arising from change in fair value of certain
equity investments. These gains were partly offset by impairment
charges of RMB10,867 million (US$1,619 million) on certain
investments. The above-mentioned gains and impairment charges were
excluded from our non-GAAP net income.
Interest expense
Interest expense in fiscal year 2019 was RMB5,190 million
(US$773 million), an increase of 46% compared to RMB3,566 million
in fiscal year 2018. The increase was primarily due to an increase
in average debt outstanding in fiscal year 2019 as compared to
fiscal year 2018, reflecting primarily an additional US$7.0 billion
unsecured senior notes issued in December 2017.
Other income, net
Other income, net in fiscal year 2019 was RMB221 million (US$32
million), compared to RMB4,160 million in fiscal year 2018. The
decrease in other income was primarily due to a decrease in income
recognized in respect of royalty fees and software technology
services fees from Ant Financial, which was RMB517 million (US$77
million) in fiscal year 2019, compared to RMB3,444 million in
fiscal year 2018 as Ant Financial continued its strategic
investments to expand its user base significantly.
Income tax expenses
Income tax expenses in fiscal year 2019 were RMB16,553 million
(US$2,466 million), compared to RMB18,199 million in fiscal year
2018.
Our effective tax rate decreased to 17% in fiscal year 2019 from
18% in fiscal year 2018. Excluding share-based compensation
expense, investment gain/loss and impairment of investments, our
effective tax rate would have remained at 17% in fiscal year
2019.
Share of results of equity
investees
Share of results of equity investees in fiscal year 2019 was a
profit of RMB566 million (US$84 million), compared to a loss of
RMB20,792 million in fiscal year 2018. As previously disclosed, the
loss in fiscal year 2018 was primarily due to an impairment loss of
RMB18,116 million with respect to Alibaba Pictures. The increase in
share of profit of other equity investees in fiscal year 2019,
compared to fiscal year 2018, was primarily due to an increase in
our share of profit in Suning. We record our share of results of
equity investees one quarter in arrears. Share of results of equity
investees in fiscal year 2019 and the comparative periods consisted
of the following:
Year ended March 31, 2018 2019
RMB RMB US$ (in millions)
Share of (loss) profit of equity
investees:
- Koubei(1)
(1,340)
— —
- Cainiao Network(2)
(518)
— —
- Others
1,040 2,997 446 Impairment loss (18,153) (493) (73) Dilution loss
(128) (185) (28) Others(3) (1,693) (1,753) (261) (20,792) 566 84
(1) We started to consolidate Koubei in December 2018 after
obtaining control over Koubei. (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 fiscal year 2019 was RMB80,234 million
(US$11,955 million), an increase of 31% compared to RMB61,412
million in fiscal year 2018.
Excluding share-based compensation expense, investment
gain/loss, impairment of investments and certain other items,
non-GAAP net income in fiscal year 2019 was RMB93,407 million
(US$13,918 million), an increase of 12% compared to RMB83,214
million in fiscal year 2018. 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
2019 was RMB87,600 million (US$13,053 million), an increase of 37%
compared to RMB63,985 million in fiscal year 2018.
Diluted EPS and non-GAAP diluted
EPS
Diluted EPS in fiscal year 2019 was RMB33.38 (US$4.97) on a
weighted average of 2,623 million diluted shares outstanding during
the year, an increase of 36% compared to RMB24.51 on a weighted
average of 2,610 million diluted shares outstanding in fiscal year
2018. Excluding share-based compensation expense, investment
gain/loss, impairment of investments and certain other items,
non-GAAP diluted EPS in fiscal year 2019 was RMB38.40 (US$5.72), an
increase of 17% compared to RMB32.86 in fiscal year 2018. 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, 2019, cash, cash equivalents and short-term
investments were RMB193,238 million (US$28,794 million), compared
to RMB205,395 million as of March 31, 2018. The decrease in cash,
cash equivalents and short-term investments in fiscal year 2019 was
primarily due to cash used in investment and acquisition activities
of RMB119,766 million (US$17,846 million) and share repurchase of
RMB10,872 million (US$1,620 million), largely offset by free cash
flow generated from operations of RMB104,478 million (US$15,568
million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in fiscal year 2019
was RMB150,975 million (US$22,496 million), an increase of 20%
compared to RMB125,805 million in fiscal year 2018. Free cash flow,
a non-GAAP measurement of liquidity, in fiscal year 2019 was
RMB104,478 million (US$15,568 million), compared to RMB99,996
million in fiscal year 2018. 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 2019, net cash used in investing activities
of RMB151,060 million (US$22,509 million) primarily reflected (i)
cash outflow of RMB119,766 million (US$17,846 million) for
investment and acquisition activities, including investments in
Ele.me, Focus Media and ZTO Express, (ii) capital expenditures of
RMB35,482 million (US$5,286 million), which included cash outflow
for acquisition of land use rights and construction in progress
relating to office campus of RMB3,146 million (US$468 million), as
well as (iii) acquisition of licensed copyrights and other
intangible assets of RMB14,161 million (US$2,110 million).
WEBCAST AND CONFERENCE CALL INFORMATION
Alibaba Group’s management will hold a conference call to
discuss the financial result at 7:30 a.m. U.S. Eastern Time (7:30
p.m. Hong Kong Time) on May 15, 2019.
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: 2579018
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: 2579018).
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 15, 2019.
ABOUT ALIBABA GROUP
Alibaba Group’s mission is to make it easy to do business
anywhere and the company aims to achieve sustainable growth for 102
years. For fiscal year ended March 2019, the company reported
revenue of US$56 billion.
SAFE HARBOR STATEMENTS
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “potential,” “continue,” “ongoing,”
“targets,” “guidance” and similar statements. In addition,
statements that are not historical facts, including statements
about Alibaba’s strategies and business plans, Alibaba’s beliefs,
expectations and guidance regarding the growth of its business and
its revenue, the business outlook and quotations from management in
this announcement, as well as Alibaba’s strategic and operational
plans, are or contain forward-looking statements. Alibaba may also
make forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the “SEC”), in 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), marketplace-based
core commerce adjusted EBITA, 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 investors identify and
understand underlying trends in our business without the effect of
certain income or expenses that are reflected in income from
operations, net income and diluted EPS. We believe that
marketplace-based core commerce adjusted EBITA is a measure that
can help investors better understand the performance of our
marketplace commerce business, which is the contributor of the
large majority of our revenue. We believe that adjusted EBITDA,
adjusted EBITA, non-GAAP net income, non-GAAP diluted EPS and
marketplace-based core commerce adjusted EBITA 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. These non-GAAP measures 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, interest expense, other income, net,
income tax expenses and share of results of equity investees, (ii)
certain non-cash expenses, consisting of share-based compensation
expense, amortization, depreciation and impairment of goodwill, and
(iii) settlement of a U.S. federal class action lawsuit, which we
do not believe are reflective of our core operating performance
during the periods presented.
Adjusted EBITA represents net income before (i) interest
and investment income, net, interest expense, other income, net,
income tax expenses and share of results of equity investees, (ii)
certain non-cash expenses, consisting of share-based compensation
expense, amortization and impairment of goodwill, and (iii)
settlement of a U.S. federal class action lawsuit, which we do not
believe are reflective of our core operating performance during the
periods presented.
Marketplace-based core commerce adjusted EBITA represents
adjusted EBITA for core commerce excluding the effects of (i) local
consumer services, (ii) Lazada, (iii) New Retail and direct import
and (iv) Cainiao Network.
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, settlement of a
U.S. federal class action lawsuit, 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 (excluding acquisition of
land use rights and construction in progress relating to office
campus), licensed copyrights and other intangible assets.
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 LIMITEDUNAUDITED CONSOLIDATED
INCOME STATEMENTS
Three months ended March 31, Year ended
March 31, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions, except per share
data) (in millions, except per share data)
Revenue 61,932 93,498 13,932 250,266 376,844 56,152 Cost of
revenue (32,504 ) (55,610 ) (8,286 ) (107,044 ) (206,929 ) (30,833
) Product development expenses (6,686 ) (8,659 ) (1,290 ) (22,754 )
(37,435 ) (5,578 ) Sales and marketing expenses (7,641 ) (9,649 )
(1,439 ) (27,299 ) (39,780 ) (5,928 ) General and administrative
expenses (4,551 ) (7,612 ) (1,134 ) (16,241 ) (24,889 ) (3,708 )
Amortization of intangible assets (1,329 ) (3,203 ) (477 ) (7,120 )
(10,727 ) (1,599 ) Impairment of goodwill — — —
(494 )
— — Income from
operations 9,221 8,765 1,306 69,314 57,084 8,506 Interest and
investment income, net 1,945 18,665 2,781 30,495 44,106 6,572
Interest expense (1,175 ) (1,303 ) (194 ) (3,566 ) (5,190 ) (773 )
Other income, net 884 1,449 216 4,160
221 32
Income before income tax and share
of results of equity investees 10,875 27,576 4,109 100,403
96,221 14,337 Income tax expenses (4,164 ) (5,025 ) (748 ) (18,199
) (16,553 ) (2,466 ) Share of results of equity investees (70 ) 828
123 (20,792 ) 566 84
Net
income 6,641 23,379 3,484 61,412 80,234 11,955 Net loss
attributable to noncontrolling interests 1,028 2,534
377 2,681 7,652 1,140 Net income
attributable to Alibaba Group Holding Limited 7,669 25,913 3,861
64,093 87,886 13,095 Accretion of mezzanine equity (108 )
(83 ) (12 ) (108 ) (286 ) (42 )
Net income attributable to
ordinary shareholders 7,561 25,830 3,849
63,985 87,600 13,053
Earnings per
share attributable to ordinary shareholders Basic 2.95
10.02 1.49 25.06 33.95 5.06 Diluted 2.88 9.84 1.47 24.51 33.38 4.97
Weighted average number of share used in calculating
earnings per ordinary share Basic 2,560 2,579 2,553 2,580
Diluted 2,619 2,625 2,610 2,623
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, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Core commerce(1) 51,287 78,894 11,756 214,020 323,400
48,188 Cloud computing(2) 4,385 7,726 1,151 13,390 24,702 3,681
Digital media and entertainment(3) 5,272 5,671 845 19,564 24,077
3,588 Innovation initiatives and others(4) 988 1,207 180 3,292
4,665 695 Total 61,932 93,498 13,932 250,266 376,844 56,152
__________________
(1)
Revenue from core commerce is primarily
generated from our China retail marketplaces, Freshippo, 1688.com,
AliExpress, Lazada.com, Alibaba.com, Cainiao logistics services and
local consumer services.
(2) Revenue from cloud computing is primarily generated from the
provision of services, such as elastic computing, database,
storage, network virtualization services, large scale computing,
security, management and application services, big data analytics,
a machine learning platform and IoT services. (3) Revenue from
digital media and entertainment is primarily generated from Youku
and UCWeb. (4) Revenue from innovation initiatives and others is
primarily generated from businesses such as Amap, Tmall Genie and
other innovation initiatives. Other revenue also includes SME
annual fee received from Ant Financial and its affiliates.
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, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in millions)
Core commerce 18,660 21,632 3,223 102,743 109,312 16,288 Cloud
computing (1,063 ) (1,036 ) (155 ) (3,085 ) (5,508 ) (821 ) Digital
media and entertainment (3,541 ) (3,854 ) (574 ) (14,140 ) (20,046
) (2,987 ) Innovation initiatives and others (2,019 ) (3,270 ) (487
) (6,901 ) (11,795 ) (1,757 ) Unallocated (2,816 ) (4,707 ) (701 )
(9,303 ) (14,879 ) (2,217 ) Total 9,221 8,765
1,306 69,314 57,084 8,506
The following table sets forth our adjusted EBITA by segments
for the periods indicated:
Three months ended March 31, Year ended
March 31, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Core commerce 22,186 27,484 4,095 114,100 136,167
20,290 Cloud computing (353 ) (164 ) (24 ) (799 ) (1,158 ) (172 )
Digital media and entertainment (2,595 ) (2,828 ) (421 ) (8,305 )
(15,796 ) (2,354 ) Innovation initiatives and others (860 ) (1,932
) (288 ) (2,996 ) (5,971 ) (890 ) Unallocated (1,573 ) (1,803 )
(269 ) (4,997 ) (6,261 ) (933 ) Total 16,805 20,757
3,093 97,003 106,981 15,941
ALIBABA GROUP HOLDING LIMITEDUNAUDITED CONSOLIDATED
BALANCE SHEETS
As of March 31,
As of March 31,
2018
2019
RMB
RMB
US$
(in millions)
Assets Current assets: Cash and cash equivalents 199,309
189,976
28,308
Short-term investments 6,086
3,262
486
Restricted cash and escrow receivables 3,417 8,518 1,269 Investment
securities 4,815 9,927 1,479 Prepayments, receivables and other
assets 43,228 58,590 8,730 Total current assets 256,855 270,273
40,272 Investment securities(1) 38,192 157,090 23,407
Prepayments, receivables and other assets 26,274 28,018 4,175
Investment in equity investees (1) 139,700 84,454 12,584 Property
and equipment, net 66,489 92,030 13,713 Intangible assets, net
27,465 68,276 10,173 Goodwill 162,149 264,935 39,477
Total
assets 717,124 965,076 143,801
Liabilities, Mezzanine
Equity and Shareholders’ Equity Current liabilities: Current
bank borrowings 6,028 7,356 1,096 Current unsecured senior notes
— 15,110 2,251 Income tax payable 13,689 17,685 2,635 Escrow
money payable 3,053 8,250 1,229 Accrued expenses, accounts payable
and other liabilities 81,165 117,711 17,540 Merchant deposits 9,578
10,762 1,604 Deferred revenue and customer advances 22,297 30,795
4,589 Total current liabilities 135,810 207,669 30,944
ALIBABA GROUP HOLDING LIMITEDUNAUDITED CONSOLIDATED
BALANCE SHEETS (CONTINUED)
As of March 31,
As of March 31,
2018
2019
RMB
RMB
US$
(in millions)
Deferred revenue 993 1,467 219 Deferred tax liabilities
19,312 22,517 3,355 Non-current bank borrowings 34,153 35,427 5,279
Non-current unsecured senior notes 85,372 76,407 11,385 Other
liabilities 2,045 6,187 922
Total
liabilities 277,685 349,674 52,104
Commitments and contingencies
— — —
Mezzanine equity
3,001 6,819 1,016
Shareholders’ equity:
Ordinary shares 1 1
— Additional paid-in capital 186,764
231,783 34,537 Treasury shares at cost (2,233 )
— —
Restructuring reserve (361 ) (97 ) (15 ) Subscription receivables
(163 ) (49 ) (7 ) Statutory reserves 4,378 5,068 755 Accumulated
other comprehensive income (loss) (1) 5,083 (2,335 ) (348 )
Retained earnings (1) 172,353 257,886 38,426
Total shareholders’ equity 365,822 492,257 73,348
Noncontrolling interests 70,616 116,326 17,333
Total equity 436,438 608,583 90,681
Total liabilities, mezzanine equity and equity 717,124
965,076 143,801
_______________________________
(1) We adopted ASU 2016-01, “Financial Instruments — Overall
(Subtopic 825-10): Recognition and Measurement of Financial Assets
and Financial Liabilities” beginning in the first quarter of fiscal
year 2019. After our adoption of this new accounting update, equity
investments other than those accounted for under the equity method
or those that result in the consolidation of the investee are
required to be measured at fair value, with subsequent changes in
fair value recognized in the income statement. We have adopted this
new accounting update using the modified retrospective method. For
available-for-sale securities, RMB8,196 million in unrealized
gains, net of tax recorded in accumulated other comprehensive
income as of March 31, 2018 was reclassified into retained earnings
upon the initial adoption as of April 1, 2018. Investments measured
under the cost method of RMB59,942 million as of March 31, 2018 was
reclassified into investment securities as of April 1, 2018. The
consolidated balance sheets as of March 31, 2018 was not
retrospectively adjusted.
ALIBABA GROUP HOLDING LIMITEDUNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended March 31, Year ended
March 31, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Net cash provided by operating activities(1)
14,383 18,553 2,764 125,805 150,975 22,496 Net cash used in
investing activities(1) (19,976) (16,751) (2,496) (83,764)
(151,060) (22,509) Net cash (used in) provided by financing
activities (4,605) 719 108 20,359 (7,392) (1,101) Effect of
exchange rate changes on cash and cash equivalents, restricted cash
and escrow receivables (1) (2,653) (1,142) (170) (6,065) 3,245 484
(Decrease) increase in cash and cash equivalents, restricted
cash and escrow receivables (12,851) 1,379 206 56,335 (4,232) (630)
Cash and cash equivalents, restricted cash and escrow receivables
at beginning of period 215,577 197,115 29,371 146,391 202,726
30,207 Cash and cash equivalents, restricted cash and escrow
receivables at end of period 202,726 198,494 29,577 202,726 198,494
29,577
_______________________________
(1) We adopted ASU 2016-18, “Statement of Cash Flows (Topic
230): Restricted Cash,” beginning in the first quarter of fiscal
year 2019. As a result of adopting this new accounting update, we
retrospectively adjusted the consolidated statements of cash flows
to include restricted cash and escrow receivables in cash and cash
equivalents when reconciling the beginning-of-period and
end-of-period total amounts shown on the consolidated statements of
cash flows. The impact of the retrospective reclassification on
cash flows from operating activities, investing activities and
effect of exchange rate changes for the year ended March 31, 2018
was an increase of RMB634 million, an increase of RMB126 million
and an increase of RMB2 million, respectively.
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, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Net income 6,641 23,379
3,484 61,412 80,234 11,955 Less:
Interest and investment income, net (1,945) (18,665) (2,781)
(30,495) (44,106) (6,572) Add: Interest expense 1,175 1,303 194
3,566 5,190 773 Less: Other income, net (884) (1,449) (216) (4,160)
(221) (32) Add: Income tax expenses 4,164 5,025 748 18,199 16,553
2,466 Add: Share of results of equity investees 70 (828) (123)
20,792 (566) (84)
Income from operations
9,221 8,765 1,306 69,314 57,084
8,506 Add: Share-based compensation expense 6,255 7,110
1,060 20,075 37,491 5,586 Add: Amortization of intangible assets
1,329 3,203 477 7,120 10,727 1,599 Add: Impairment of goodwill
— — — 494 — —
Add: Settlement of U.S. federal class
action lawsuit
— 1,679 250 — 1,679 250
Adjusted EBITA 16,805
20,757 3,093 97,003 106,981
15,941
Add: Depreciation and amortization of
property and equipment and land use rights
2,649
4,409
657
8,789
14,962
2,229
Adjusted EBITDA 19,454 25,166 3,750
105,792 121,943 18,170
ALIBABA GROUP HOLDING LIMITEDRECONCILIATIONS OF
NON-GAAP MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
(CONTINUED)
The table below sets forth a reconciliation of adjusted EBITA
for core commerce to marketplace-based core commerce adjusted EBITA
for the periods indicated:
Three months ended March 31, Year ended
March 31, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Adjusted EBITA for core commerce 22,186
27,484 4,095 114,100 136,167
20,290 Less: Effects of local consumer services, Lazada, New
Retail and direct import and Cainiao Network 2,914 7,204 1,074
8,783 25,422 3,788
Marketplace-based core commerce adjusted
EBITA 25,100 34,688 5,169 122,883
161,589 24,078
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, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Net income 6,641 23,379
3,484 61,412 80,234 11,955 Add:
Share-based compensation expense 6,255 7,110 1,060 20,075 37,491
5,586 Add: Amortization of intangible assets 1,329 3,203 477 7,120
10,727 1,599 Add: Impairment of goodwill and investments 89 3,450
514 20,463 11,360 1,693 Less: Gain on deemed
disposals/disposals/revaluation of investments and others (153)
(19,961) (2,974) (25,945) (47,525) (7,081)
Add: Settlement of U.S. federal class
action lawsuit
— 1,679 250 — 1,679 250 Add: Amortization of excess value
receivable arising from the restructuring of commercial
arrangements with Ant Financial 65 66 10 264 264 39 Add: Immediate
recognition of unamortized professional fees and upfront fees upon
termination of bank borrowings — — — 92 — — Adjusted for tax
effects on non-GAAP adjustments(1)
(127)
1,130
167
(267)
(823)
(123)
Non-GAAP net income 14,099 20,056
2,988 83,214 93,407 13,918
__________________
(1) Tax effects on non-GAAP adjustments are comprised of tax
provisions on the amortization of intangible assets and certain
investment gains.
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, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions, except per share
data) (in millions, except per share data) Net
income attributable to ordinary shareholders – basic
7,561 25,830 3,849 63,985 87,600
13,053 Dilution effect on earnings arising from option plans
operated by equity investees (11) (11) (1) (21) (42) (6) Net income
attributable to ordinary shareholders – diluted 7,550 25,819 3,848
63,964 87,558 13,047 Add: Non-GAAP adjustments to net income(1)
7,458
(3,323)
(496)
21,802
13,173
1,963
Non-GAAP net income attributable to ordinary
shareholders for computing non-GAAP diluted EPS 15,008
22,496 3,352 85,766 100,731
15,010 Weighted average number of shares on a
diluted basis 2,619 2,625 2,610
2,623 Diluted EPS(2) 2.88 9.84
1.47 24.51 33.38 4.97 Add: Non-GAAP
adjustments to net income per share(3) 2.85 (1.27) (0.19) 8.35 5.02
0.75
Non-GAAP diluted EPS(4) 5.73
8.57 1.28 32.86 38.40 5.72
__________________
(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, 2018 2019 2018
2019 RMB RMB US$ RMB
RMB US$ (in millions) (in
millions) Net cash provided by operating
activities(1) 14,383 18,553 2,764
125,805 150,975 22,496 Less: Purchase of
property and equipment (excluding land use rights and construction
in progress relating to office campus) (2,603) (5,688) (847)
(15,601) (32,336) (4,818) Less: Acquisition of licensed copyrights
and other intangible assets
(3,013)
(2,151)
(321)
(10,208)
(14,161)
(2,110)
Free cash flow 8,767 10,714
1,596 99,996 104,478 15,568
__________________
(1) We adopted ASU 2016-18, “Statement of Cash Flows (Topic
230): Restricted Cash,” beginning in the first quarter of fiscal
year 2019. As a result of adopting this new accounting update, we
retrospectively adjusted the consolidated statements of cash flows
to include restricted cash and escrow receivables in cash and cash
equivalents when reconciling the beginning-of-period and
end-of-period total amounts shown on the consolidated statements of
cash flows. The impact of our retrospective reclassification on
cash flows from operating activities for the year ended March 31,
2018 was an increase of RMB634 million.
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 30,2017
Sep 30,2017
Dec 31,2017
Mar 31,2018
Jun 30,2018
Sep 30,2018
Dec 31,2018
Mar 31,2019
(in millions) Annual active consumers 466 488 515 552 576
601 636 654
Mobile
The table below sets forth the mobile MAUs on our China retail
marketplaces for the periods indicated:
The month ended
Jun 30,2017
Sep 30,2017
Dec 31,2017
Mar 31,2018
Jun 30,2018
Sep 30,2018
Dec 31,2018
Mar 31,2019
(in millions) Mobile MAUs 529 549 580 617 634 666 699 721
GMV
The table below sets forth the GMV, in respect of our China
retail marketplaces for the periods indicated:
Year ended Mar 31, 2017 Mar 31,
2018 Mar 31, 2019 (in billions of RMB)
GMV Taobao Marketplace GMV 2,202 2,689 3,115 Tmall GMV 1,565
2,131 2,612 Total GMV 3,767 4,820 5,727
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190515005446/en/
Investor Relations ContactRob Lininvestor@alibabagroup.com
Media ContactsBrion Tinglerbrion.tingler@alibaba-inc.com
Adam Najbergadam.najberg@alibaba-inc.com
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