Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988,
“Alibaba” or “Alibaba Group”) today announced its financial results
for the quarter and fiscal year ended March 31, 2020.
“Alibaba achieved the historic milestone of US$1 trillion in GMV
across our digital economy this fiscal year,” said Daniel Zhang,
Chairman and Chief Executive Officer of Alibaba Group. “Our overall
business continued to experience strong growth, with a total annual
active consumer base of 960 million globally, despite concluding
the fiscal year with a quarter impacted by the economic effects of
the COVID-19 pandemic. The pandemic has fundamentally altered
consumer behavior and enterprise operations, making digital
adoption and transformation a necessity. We are well positioned and
prepared to help large and small businesses across a wide spectrum
of industries achieve the digital transformation they need to
survive this difficult period and eventually prevail in the new
normal. By focusing on the long term and investing in value
creation for our consumers and business customers, we believe we
will emerge from this crisis stronger and be ready to capture more
growth in the future.”
“Despite a challenging quarter due to reduced economic
activities in light of the COVID-19 pandemic in China, we achieved
our annual revenue guidance of over RMB500 billion. Revenue growth
of 35% year-over-year was driven by solid performance of our
domestic retail businesses as well as robust cloud computing
revenue growth,” said Maggie Wu, Chief Financial Officer of Alibaba
Group. “Our adjusted EBITDA grew 29% year-over-year, reflecting our
discipline in allocating resources to key strategic growth areas
while optimizing costs and improving efficiency. Although the
pandemic negatively impacted most of our domestic core commerce
businesses starting in late January, we have seen a steady recovery
since March. Based on our current view of Chinese domestic
consumption and enterprise digitization, we expect to generate over
RMB650 billion in revenue in fiscal year 2021.”
BUSINESS HIGHLIGHTS
In the quarter ended March 31,
2020:
- Revenue was RMB114,314 million (US$16,144 million), an
increase of 22% year-over-year.
- Annual active consumers on our China retail marketplaces
reached 726 million, an increase of 15 million from the 12-month
period ended December 31, 2019.
- Mobile MAUs on our China retail marketplaces reached 846
million in March 2020, an increase of 22 million over December
2019.
- Income from operations was RMB7,131 million (US$1,007
million), a decrease of 19% year-over-year, primarily due to the
impact of the COVID-19 pandemic. Adjusted EBITDA, a non-GAAP
measurement, increased 1% year-over-year to RMB25,440 million
(US$3,593 million).
- Net income attributable to ordinary shareholders was
RMB3,162 million (US$447 million), a decrease of 88%
year-over-year, and net income was RMB348 million (US$49
million), a decrease of 99% year-over year. The year-over-year
decrease was primarily due to a net loss in investment income,
mainly reflecting decreases in the market prices of our equity
investments in publicly-traded companies, compared to a net gain
recorded in the same quarter of 2019. Non-GAAP net income,
which excludes the above-mentioned loss and gain, was RMB22,287
million (US$3,148 million), an increase of 11% year-over-year.
- Diluted earnings per ADS was RMB1.16 (US$0.16) and
non-GAAP diluted earnings per ADS was RMB9.20 (US$1.30), an
increase of 7% year-over-year. Diluted earnings per share
was RMB0.14 (US$0.02 or HK$0.15) and non-GAAP diluted earnings
per share was RMB1.15 (US$0.16 or HK$1.26), an increase of 7%
year-over-year.
- Net cash provided by operating activities was RMB2,164
million (US$306 million), compared to RMB18,553 million in the same
quarter of 2019, and non-GAAP free cash flow was an outflow
of RMB4,214 million (US$595 million), compared to an inflow of
RMB10,714 million in the same quarter of 2019. The year-over-year
decreases were mainly due to the effect of the one-off AliExpress
Payment Services Restructuring, as discussed in further detail in
the section entitled “Cash Flow from Operating Activities and Free
Cash Flow” below. Excluding the effect of the AliExpress Payment
Services Restructuring, non-GAAP free cash flow for the quarter
would have been an inflow of RMB1,977 million (US$279
million).
In the fiscal year ended March 31,
2020:
- Revenue was RMB509,711 million (US$71,985 million), an
increase of 35% year-over-year.
- Annual active consumers for the Alibaba Digital Economy
reached 960 million globally, including 780 million consumers in
China and 180 million consumers outside China. Annual active
consumers on our China retail marketplaces reached 726 million, an
increase of 72 million from the 12-month period ended March 31,
2019.
- Mobile MAUs on our China retail marketplaces reached 846
million in March 2020, an increase of 125 million over March
2019.
- GMV transacted in the Alibaba Digital Economy was
RMB7,053 billion (US$1 trillion) for fiscal year 2020, which mainly
included China retail marketplaces GMV of RMB6,589 billion (US$945
billion), as well as international retail marketplaces and local
consumer services GMV.
- Income from operations was RMB91,430 million (US$12,912
million), an increase of 60% year-over-year. Adjusted
EBITDA, a non-GAAP measurement, increased 29% year-over-year to
RMB157,659 million (US$22,266 million). Adjusted EBITA, a
non-GAAP measurement, increased 28% year-over-year to RMB137,136
million (US$19,367 million).
- Adjusted EBITA for core commerce was RMB165,800 million
(US$23,415 million), an increase of 22% year-over-year. Our
marketplace-based core commerce adjusted EBITA, a non-GAAP
measurement, increased 19% year-over-year to RMB192,771 million
(US$27,224 million).
- Net income attributable to ordinary shareholders was
RMB149,263 million (US$21,080 million), and net income was
RMB140,350 million (US$19,821 million). Non-GAAP net income
was RMB132,479 million (US$18,710 million), an increase of 42%
year-over-year.
- Diluted earnings per ADS was RMB55.93 (US$7.90) and
non-GAAP diluted earnings per ADS was RMB52.98 (US$7.48), an
increase of 38% year-over-year. Diluted earnings per share
was RMB6.99 (US$0.99 or HK$7.65) and non-GAAP diluted earnings
per share was RMB6.62 (US$0.93 or HK$7.25), an increase of 38%
year-over-year.
- Net cash provided by operating activities was RMB180,607
million (US$25,507 million) and non-GAAP free cash flow was
RMB130,914 million (US$18,489 million).
Reconciliations of GAAP measures to non-GAAP measures presented
above are included at the end of this results announcement.
BUSINESS AND STRATEGIC UPDATES
Alibaba Digital Economy
The consumer commerce businesses of the Alibaba Digital Economy,
mainly comprised of our China retail marketplaces, international
retail marketplaces and local consumer services, reached RMB7,053
billion (US$1 trillion) of GMV in the twelve months ended March 31,
2020. In September 2019, on the occasion of Alibaba’s 20th
anniversary, we set our strategic goals for the next five years,
consistent with our mission “to make it easy to do business
anywhere,” to:
- Continue to expand our globalization efforts;
- Serve more than 1 billion Chinese consumers; and
- Facilitate more than RMB10 trillion of consumption on our
platforms.
These five-year goals are guide posts that will help us achieve
our vision for 2036 to:
- Serve 2 billion global consumers;
- Enable 10 million businesses to be profitable; and
- Create 100 million jobs.
We manage our consumer-facing businesses as one integrated
platform serving one user base with access to our various
offerings. For the twelve months ended March 31, 2020, 780 million
consumers in China purchased goods or services on our China retail,
local consumer services and digital media and entertainment
platforms. These consumers account for around 85% and 40% of the
Chinese population in developed and less developed areas,
respectively. We have also expanded into international markets,
with over 180 million annual active consumers on our international
retail marketplaces. Our digital infrastructure, such as smart
logistics and cloud computing, which cuts across platforms to serve
our major commerce, local services and entertainment businesses,
gives us unparalleled and unique insights to meet changing consumer
demands. Through the Alibaba Business Operating System (ABOS), we
offer our data technologies and analytics to help our enterprise
customers and partners achieve digital transformation.
COVID-19 Pandemic
Business Customer Support Programs
Starting in late January 2020, the COVID-19 pandemic triggered a
series of lockdowns, social distancing requirements and travel
restrictions that drastically reduced economic activities in China.
In the initial phase of the crisis in China, the most pressing
concern of all enterprises was business continuity – solving for
issues like minimizing supply chain disruptions, cutting costs,
identifying new revenue opportunities, improving cash flow and
managing a remote workforce. We helped our merchant customers to
overcome these challenges and took proactive measures to fulfill
our mission.
Starting in February, together with Ant Financial, we
implemented a comprehensive set of financial and business support
measures to help alleviate the near-term challenges faced by our
business customers and partners.
- Financial support – We worked with Ant Financial and
other partners to advance RMB128 billion to provide liquidity to
our merchants and to facilitate over RMB12 billion in 12-month
loans with preferential interest rates (each as of April 30, 2020)
to merchants who sell through our China retail marketplaces.
- Business support – Alibaba’s domestic and international
businesses provided billions of Renminbi in value in the form of
subsidies and technical support to our merchants and users,
including waivers of platform technology fees, annual service fees
and warehousing fees, reduction of commissions and logistics costs,
as well as free support for remote work and education programs
through DingTalk, our digital collaboration platform for
enterprises and schools all over the world.
- New initiatives – In April 2020, we launched our “2020
Spring Thunder” initiative, which aims to:
- help export-oriented SMEs to explore opportunities in the China
domestic market through our China retail marketplaces, as well as
expand into new markets through our international wholesale and
retail marketplaces, such as Alibaba.com and AliExpress;
- develop digitalized manufacturing clusters;
- accelerate the digital transformation of China’s agriculture
sector; and
- alleviate financing challenges faced by SMEs by working with
Ant Financial and its partners.
Social Responsibility
We leveraged our platform technology and other resources across
our ecosystem to support those impacted by the COVID-19 pandemic
within China and around the world.
- Donations of PPE and equipment – Through their combined
efforts, the Alibaba Foundation, the Jack Ma Foundation and the Joe
and Clara Tsai Foundation donated over 200 million units of
personal protective equipment, testing kits and ventilators to over
150 countries and regions. Tmall Global, Tmall Supermarket,
Alibaba.com and Lazada sourced, verified and procured many of these
scarce supplies.
- Delivery of medical supplies – Our logistics subsidiary
Cainiao delivered medical supplies to destinations around the world
through its extensive global logistics network of airport hubs,
customs clearance operations, trucking companies and local delivery
personnel.
- Knowledge sharing – The Alibaba Foundation and Jack Ma
Foundation jointly established an online exchange called the Global
MediXchange for Combating COVID-19 (GMCC) to facilitate sharing of
best practices and knowledge for fighting the pandemic among
medical professionals around the world in real-time in 11
languages. Close to 10,000 healthcare workers from 120 countries
and regions have joined the GMCC.
- Fund for medical and related supplies – Within China, we
established a new RMB1 billion special fund to procure medical and
related supplies for parts of the country affected by the COVID-19
pandemic.
- AI technology – We made available AI technology to over
550 hospitals in China to help improve the speed and efficiency of
their COVID-19 diagnosis using CT scans.
- Jobs – Freshippo, Ele.me and Koubei launched
employee-sharing initiatives to temporarily hire furloughed
employees of businesses in negatively impacted service sectors,
including restaurants, hotels, movie theaters and department
stores.
Financial and Operational Impact on our Businesses
During the quarter, businesses in China and around the world,
including merchants on our platforms and logistics companies, have
been unable to conduct normal activities due to disruptions in
supply chain and workforce availability. The substantial decline in
business activities starting in late January in China negatively
affected most of our domestic core commerce businesses, such as our
China retail marketplaces and local consumer services businesses,
while our key international commerce businesses began to experience
a negative impact in February.
During the March quarter, some of our businesses experienced
slowing or negative year-over-year growth due to the pandemic.
- China retail marketplaces – Tmall online physical goods
GMV, excluding unpaid orders, grew 10% year-over-year, driven by
growth of fast-moving consumer goods (“FMCG”), including daily
necessities and household goods, and resilient demand for consumer
electronics, which together grew approximately 25% year-over-year,
offset by negative growth in other major categories such as apparel
and accessories, home furnishing and auto parts. Combined customer
management and commission revenues grew 1% year-over-year,
reflecting an increase of 3% in customer management revenue and a
decrease of 2% in commission revenue.
- Local consumer services – Our local consumer services
business recorded an 8% year-over-year revenue decline during the
quarter ended March 31, 2020, reflecting mass closure of
restaurants and local merchants.
- International retail marketplaces – AliExpress revenue
growth was significantly slower year-over-year, primarily due to
supply chain and logistics disruptions that negatively impacted GMV
growth from sales to North and South America and Europe. Lazada
experienced some negative impact in certain countries beginning in
March, but order growth remained strong.
- Other businesses – Our businesses that involve travel,
transportation and offline entertainment, including Fliggy, Alibaba
Pictures, Damai and Amap, have all been negatively impacted by the
pandemic.
While the magnitude of near-term financial impact differs by
business, the growth of our domestic businesses started to recover
in March. Tmall online physical goods GMV, excluding unpaid orders,
saw a strong recovery in April and continue to further improve in
May. Similarly, Ele.me food delivery GMV growth turned positive in
April as lockdown measures eased, restaurants began reopening and
people began returning to work in China. For our international
commerce businesses, which represented 7% of total revenue in
fiscal year 2020, the timing and pace of recovery is still
uncertain as demand in countries outside China remains soft. It is
not possible to determine the ultimate impact of the COVID-19
pandemic on our business operations and financial results, which is
highly dependent on numerous factors, many of which we are not able
to predict or control. See the section entitled “Guidance” below
for further details.
Business Opportunities
The COVID-19 pandemic created opportunities for consumer
adoption of a broader digital lifestyle and the shift to online
purchase of daily necessities. More businesses are adopting new
digital tools and solutions to grow and manage their operations.
Over the years, Alibaba has pioneered and developed businesses that
allow us to capture the long-term benefits of these trends,
including:
- Accelerated merchant on-boarding – We have seen a
growing range of offline merchants going online, as well as
increased adoption by existing merchants of new ways to engage with
and sell to consumers. For example, daily active merchants using
livestreaming on Taobao Live grew 88% year-over-year for the three
months ended March 31, 2020.
- New Retail (grocery category) – Freshippo’s revenue
showed strong growth in February and March driven by an increased
number of online customers, higher purchase frequency and larger
order size. For the quarter ended March 31, 2020, online purchases
represented approximately 60% of Freshippo’s GMV, up by 10
percentage points year-over-year. Our Taoxianda (淘鲜达) business,
which enables on-demand delivery for our partner grocery retailers
with physical stores, also generated increased online revenue for
these stores.
- DingTalk – DingTalk is a platform that offers new ways
of working, sharing and collaborating for modern enterprises and
organizations. Millions more enterprises and users in China are now
using DingTalk to stay connected and work remotely. In the month of
March, DingTalk’s average daily active users on workdays reached
155 million. DingTalk also made significant penetration in the
education sector as schools adopted the platform for their teachers
and students. In March, DingTalk conducted on average over one
million active classroom sessions each workday.
- Cainiao Post – Cainiao Post, which operates a network of
neighborhood stations, campus stations and smart pick-up lockers,
helped consumers and delivery personnel during this period of
logistics disruptions. In March, as social distancing measures
remained in place, we saw robust adoption of Cainiao Post by
consumers who needed convenient and contactless pick-up and
delivery options in their neighborhoods. In March 2020, daily
packages handled by Cainiao Post's neighborhood stations grew over
100% year-over-year.
Core Commerce
China retail marketplaces – broad product selections and
enhanced user experience result in higher purchase frequency from a
large-scale consumer base.
Consumers – the largest consumer platform in China with
improving purchase frequency
In fiscal year 2020, our China retail marketplaces achieved
strong results reflecting our strategic focus on user acquisition
and engagement as well as on increasing our offerings of
value-for-money products. In March 2020, our China retail
marketplaces had 846 million mobile MAUs, representing an annual
and quarterly net increase of 125 and 22 million, respectively.
Annual active consumers on our China retail marketplaces was 726
million for the 12 months ended March 31, 2020, representing an
annual and quarterly net increase of 72 million and 15 million,
respectively. In fiscal year 2020, over 70% of new annual active
consumers were from less developed areas.
The longer consumers have been with us, the more orders they
place, across a more diverse range of product categories, and as a
result we experience increasing average spend per user on our China
retail marketplaces. In fiscal year 2020, GMV growth of our China
retail marketplaces was driven by robust increase in annual active
consumers and greater purchase frequency per consumer.
Product Supply – largest online physical goods platform in
the world with the most comprehensive product offering that caters
to the needs of different consumer segments
The Alibaba Digital Economy has a comprehensive range of
products and services made available by tens of millions of
merchants and ecosystem partners to meet the diverse demands of our
large-scale consumer base. We continually work to secure relevant
and new products, such as increasing our range of branded and
imported products, going upstream to directly source fresh
agricultural products, and expanding the breadth of selection of
value-for-money and long-tail products. Having a broad product
range is the key to our consumer segmentation and category
expansion strategy.
Tmall online physical goods GMV, excluding unpaid orders, grew
23% year-over-year in fiscal year 2020. In addition to Tmall, we
have multiple fast growing platforms, including Juhuasuan (聚划算) and
Taobao Deals (特价版), that offer attractively priced products from
brands, retailers and factories. Idle Fish is the largest C2C
community and marketplace in China for long-tail products,
including second-hand, recycled, refurbished and for-rent products,
with approximately RMB200 billion GMV in fiscal year 2020.
Engagement – the largest digital commerce platform in China
enabled by unrivalled consumer insights and proprietary data
technology
In March 2020, over 300 million daily active users came to our
China retail marketplaces to browse and purchase from billions of
listings. The massive amount of user and merchant activities taking
place every day on our China retail marketplaces generate
significant consumer insights. By leveraging proprietary AI and
data technology, we are able to build on these deep consumer
insights to provide more accurate search results and relevant
recommendation feeds that enhance the shopping experience for our
consumers.
The Taobao app is the largest social commerce platform in China,
offering rich, highly relevant and curated content and features
that enable merchants to engage with consumers through
live-streaming, short-form videos, interactive games and
microblogs. For example, Taobao Live, where merchants and key
opinion leaders (“KOLs”) use live-streaming to market to their fans
and customers, has become one of the fastest growing sales formats
on our China retail marketplaces. In the fiscal year ended March
2020, GMV generated from live-streaming grew over 100%
year-over-year.
New Retail – developing new business models to enable digital
transformation of brick-and-mortar retailing.
Creating the new – Our self-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. In
fiscal year 2020, Freshippo strengthened its direct procurement of
agricultural products and built a nationwide cold chain logistics
network in order to support its rapid growth. As of March 31, 2020,
we had 207 self-operated Freshippo stores in China, primarily
located in tier one and tier two cities.
Transforming the old – Taoxianda, our online-offline
retail integration service provider for grocery retailer partners
with physical stores, puts us at the forefront of transforming the
retail industry by digitalizing all aspects of store-based
operations. By digitalizing SunArt’s hypermarket stores, Taoxianda
has contributed to an increase in SunArt’s online revenue. In the
twelve months ended March 31, 2020, Alibaba commerce platforms –
primarily Taoxianda – generated and enabled around 10% of SunArt’s
total revenue.
Local consumer services – ecosystem synergy and focus on
market share gains in lower tier cities.
Our local consumer service business continues to expand our
China retail offerings from shopping to services, further tapping
into new addressable markets for consumption in China. We are
leveraging resources and technology in the Alibaba Digital Economy
to benefit our local consumer services business. For example, in
the fiscal year and quarter ended March 31, 2020, over 40% of new
food delivery customers came from the Alipay app.
Cainiao Network – enabling greater efficiency and cost
savings for merchants and other Alibaba businesses. Cainiao
Network continues to focus on improving domestic and international
one-stop-shop logistics services and supply chain management
solutions for the Alibaba Digital Economy. We are seeing increased
adoption of “Fulfilled by Cainiao” services from our fast growing
cross-border businesses, including AliExpress and Tmall Global.
Cainiao Network has developed robust import fulfilment solutions
for Tmall Global by utilizing a combination of bonded warehouses in
China and direct shipment from foreign countries. During fiscal
year 2020, Cainiao Network used data insights and improved
efficiency to lower fulfillment costs per order for our direct
sales businesses, such as Tmall Supermarket, as these businesses
increased their logistics volumes.
International – building foundation for long-term growth.
Our cross-border and international retail businesses continued to
show strong growth in fiscal year 2020, as we only started to
experience the negative impacts of the COVID-19 pandemic in
February. In the twelve months ended March 31, 2020, Lazada,
AliExpress and other international retail businesses had a total of
more than 180 million annual active consumers.
Lazada – In fiscal year 2020, Lazada, our Southeast Asian
e-commerce platform, saw robust growth momentum in its marketplace
business, driven by strong order volume, which increased over 100%
year-over-year, reflecting strong user growth and improved purchase
conversion rate as we continued to broaden our product assortment.
Lazada’s order growth remained strong despite movement control
orders imposed by governments in response to the COVID-19 pandemic.
Lazada introduced a stimulus package across Southeast Asia to help
SMEs start online businesses. There was strong adoption of consumer
engagement tools, especially livestreaming, by brands and sellers
to engage with consumers and diversify revenue channels to
compensate for drop in offline retail activities.
AliExpress – AliExpress delivered robust user and GMV
growth in the first ten months of fiscal year 2020. Starting in
February 2020, AliExpress GMV growth declined as a result of the
COVID-19 pandemic, primarily due to supply chain and logistics
disruptions that impacted GMV growth in North and South America and
Europe.
Cloud Computing
Alibaba Cloud has maintained its leadership position in Asia
Pacific’s cloud computing market by developing technology and
business solutions that enable the digital transformation of
businesses across industries in the public and private sectors.
According to Gartner (April 2020), Alibaba Cloud is the largest
cloud computing service provider in the Asia Pacific region, as
measured by market share for IaaS (Infrastructure as a Service) and
IUS (Infrastructure Utility Service).
Cloud computing revenue grew 58% year-over-year to RMB12,217
million (US$1,725 million) in the quarter ended March 31, 2020 and
62% year-over-year in fiscal year 2020 to RMB 40,016 million
(US$5,651 million), primarily driven by increased revenue
contribution from both our public cloud and hybrid cloud
businesses.
Digital Media and
Entertainment
The digital media and entertainment segment revenue grew 5%
year-over-year in the quarter ended March 31, 2020 and 12%
year-over-year in fiscal year 2020 as the industry underwent
rationalization and tighter regulatory scrutiny on content. Youku
continued to focus on delivering a superior user experience and
increasing paying subscribers. Youku’s daily average subscriber
base continued to grow at a healthy rate, increasing over 50% and
60% year-over-year during fiscal year 2020 and the March 2020
quarter, respectively. The increases in paying subscribers were
driven by our offerings of original and exclusive content, our
effective targeting of new subscribers and a greater contribution
from the 88VIP membership program on our China retail marketplaces.
We invested in original and exclusive content while ensuring cost
efficiencies and return on investment, which resulted in narrowing
annual adjusted EBITA losses year-over-year in fiscal year
2020.
Cash Flow from Operating Activities and
Free Cash Flow
In the fiscal year ended March 31, 2020, net cash provided by
operating activities was RMB180,607 million (US$25,507 million), an
increase of 20% compared to RMB150,975 million in the fiscal year
2019. Free cash flow, a non-GAAP measurement of liquidity, in
fiscal year 2020 increased by 25% to RMB130,914 million (US$18,489
million), from RMB104,478 million in fiscal year 2019, primarily
due to our robust profitability growth.
In the quarter ended March 31, 2020, net cash provided by
operating activities was RMB2,164 million (US$306 million), a
decrease of 88% compared to RMB18,553 million in the same quarter
of 2019. Free cash flow, a non-GAAP measurement of liquidity, was
an outflow of RMB4,214 million (US$595 million), compared to an
inflow of RMB10,714 million in the same quarter of 2019. The
year-over-year decreases of RMB16,389 million in net cash provided
by operating activities and RMB14,928 million in free cash flow,
respectively, were primarily due to a decrease of RMB7,651 million
in connection with the AliExpress Payment Services Restructuring
(as further explained below), as well as an increase in the amount
of total refunds of annual service fee deposits from merchants of
RMB2,688 million because more merchants achieved their agreed GMV
targets in 2019. Excluding the effect of the AliExpress Payment
Services Restructuring, non-GAAP free cash flow for the quarter
would have been an inflow of RMB1,977 million (US$279 million).
Starting in the quarter ended September 30, 2019, because of a
change in regulatory requirements, AliExpress began the process of
restructuring payment related services provided to merchants on its
platform (the “AliExpress Payment Services Restructuring”).
Pursuant to this restructuring, AliExpress will no longer hold
consumer funds before their release to merchants upon completion of
the relevant transactions. Starting in the September 2019 quarter,
as a result of the restructuring, we started to de-recognize these
client fund balances from our balance sheet. This de-recognition, a
significant portion of which were completed during this quarter,
resulted in cash outflows from operating activities. We expect the
restructuring will be substantially completed in the quarter ending
June 30, 2020. The client fund balances accounted for RMB8.4
billion and RMB3.1 billion (US$438 million) of restricted cash and
escrow receivables on our balance sheet as of March 31, 2019 and
March 31, 2020, respectively.
A reconciliation of net cash provided by operating activities to
free cash flow is included at the end of this results
announcement.
Guidance
The guidance below is a forward-looking statement that reflects
assumptions that we believe to be reasonable as of the date of this
announcement and involve inherent risks and uncertainties, many of
which we are not able to predict or control. In particular, it is
not possible to determine the ultimate impact of the COVID-19
pandemic on our business operations and financial results, which is
highly dependent on numerous factors, including: the duration and
spread of the pandemic and any resurgence of COVID-19 in China or
elsewhere, actions taken by governments, domestically and in
international relations, the response of businesses and individuals
to the pandemic, the impact of the pandemic on business and
economic conditions in China and globally, consumer demand, our
ability and the ability of merchants, retailers, logistics service
providers and other participants in the Alibaba Digital Economy to
continue operations in areas affected by the pandemic and our
efforts and expenditures to support merchants and partners and
ensure the safety of our employees.
Based on our current view of Chinese domestic consumption and
enterprise digitization, and subject to the uncertainties
highlighted above and those under the section entitled “Safe Harbor
Statements” below, we expect to generate over RMB650 billion in
revenue in fiscal year 2021.
KEY OPERATIONAL METRICS*
March 31, 2019
December 31, 2019
March 31, 2020
Net adds
YoY
QoQ
China Commerce Retail:
Annual active consumers(1) (in
millions)
654
711
726
72
15
Mobile monthly active users (MAUs)(2) (in
millions)
721
824
846
125
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, 2019.
(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,
2019
2020
RMB
RMB
US$(1)
YoY % Change
(in millions, except
percentages and per share amounts)
Revenue
93,498
114,314
16,144
22
%
Income from operations
8,765
7,131
1,007
(19
)%
Operating margin
9
%
6
%
Adjusted EBITDA(2)
25,166
25,440
3,593
1
%
Adjusted EBITDA margin(2)
27
%
22
%
Adjusted EBITA(2)
20,757
19,827
2,800
(4
)%
Adjusted EBITA margin(2)
22
%
17
%
Net income
23,379
348
49
(99)%(3)
Net income attributable to ordinary
shareholders
25,830
3,162
447
(88)% (3)
Non-GAAP net income(2)
20,056
22,287
3,148
11
%
Diluted earnings per share(4)
1.23
0.14
0.02
(89)% (3)
Diluted earnings per ADS(4)
9.84
1.16
0.16
(88)% (3)
Non-GAAP Diluted earnings per share(2)
(4)
1.07
1.15
0.16
7
%
Non-GAAP Diluted earnings per ADS(2)
(4)
8.57
9.20
1.30
7
%
______________________
(1)
This results announcement contains
translations of certain Renminbi (“RMB”) amounts into U.S. dollars
(“US$”) and Hong Kong dollars (“HK$”) for the convenience of the
reader. Unless otherwise stated, all translations of RMB into US$
were made at RMB7.0808 to US$1.00, the exchange rate on March 31,
2020 as set forth in the H.10 statistical release of the Federal
Reserve Board, and all translations of RMB into HK$ were made at
RMB0.9137 to HK$1.00, the middle rate on March 31, 2020 as
published by The People’s Bank of China. The U.S. dollar amounts of
annual GMV for fiscal year 2020 presented in this results
announcement represent the sums of GMV in U.S. dollars for the
quarters ended June 30, September 30 and December 31, 2019 and
March 31, 2020, each converted from the RMB amounts at the average
daily exchange rate for each relevant quarter. The percentages
stated in this announcement are calculated based on the RMB amounts
and there may be minor differences due to rounding.
(2)
See the sections entitled “Information
about Segments,” “Non-GAAP Financial Measures” and “Reconciliations
of Non-GAAP Measures to the Nearest Comparable GAAP Measures” for
more information about the non-GAAP measures referred to within
this results announcement.
(3)
The year-over-year decrease was primarily
due to a net loss in investment income, mainly reflecting decreases
in the market prices of our equity investments in publicly-traded
companies, compared to a net gain recorded in the same quarter of
2019.
(4)
Each ADS represents eight ordinary shares.
See the section entitled “Share Subdivision and ADS Ratio Change”
for more information.
MARCH QUARTER INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended March 31,
2020
Core commerce
Cloud computing
Digital media and
entertainment
Innovation initiatives and
others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
US$
(in millions, except
percentages)
Revenue
93,865
12,217
5,944
2,288
—
114,314
16,144
Income (loss) from operations
20,166
(1,757
)
(4,491
)
(4,022
)
(2,765
)
7,131
1,007
Add: Share-based compensation expense
4,353
1,570
726
936
1,067
8,652
1,222
Add: Amortization and impairment of
intangible assets
3,607
8
387
23
19
4,044
571
Adjusted EBITA
28,126
(2)
(179
)
(3,378
)
(3,063
)
(1,679
)
19,827
2,800
Adjusted EBITA margin
30
%
(1
)%
(57
)%
(134
)%
17
%
Three months ended March 31,
2019
Core commerce
Cloud computing
Digital media and
entertainment
Innovation initiatives and
others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
(in millions, except
percentages)
Revenue
78,894
7,726
5,671
1,207
—
93,498
Income (loss) from operations
21,632
(1,036
)
(3,854
)
(3,270
)
(4,707
)
8,765
Add: Share-based compensation expense
3,054
869
691
1,318
1,178
7,110
Add: Amortization of intangible assets
2,798
3
335
20
47
3,203
Add: Settlement of U.S. federal class
action lawsuit
—
—
—
—
1,679
1,679
Adjusted EBITA
27,484
(2)
(164
)
(2,828
)
(1,932
)
(1,803
)
20,757
Adjusted EBITA margin
35
%
(2
)%
(50
)%
(160
)%
22
%
______________________
(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 decreased 2% year-over-year to RMB33,990 million (US$4,800
million). A reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
MARCH QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended March 31, 2020 was RMB114,314
million (US$16,144 million), an increase of 22% compared to
RMB93,498 million in the same quarter of 2019. The increase was
mainly driven by the solid revenue growth of our China commerce
retail business and robust revenue growth of cloud computing.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended March
31,
2019
2020
RMB
% of Revenue
RMB
US$
% of Revenue
YoY % Change
(in millions, except
percentages)
Core commerce:
China commerce retail
- Customer management
30,119
32
%
30,906
4,365
27
%
3
%
- Commission
14,790
16
%
14,500
2,048
13
%
(2
)%
- Others(1)
13,532
15
%
25,499
3,601
22
%
88
%
58,441
63
%
70,905
10,014
62
%
21
%
China commerce wholesale
2,547
3
%
2,787
394
3
%
9
%
International commerce retail
4,944
5
%
5,353
756
5
%
8
%
International commerce wholesale
2,133
2
%
2,458
347
2
%
15
%
Cainiao logistics services
3,861
4
%
4,951
699
4
%
28
%
Local consumer services
5,266
5
%
4,841
684
4
%
(8
)%
Others
1,702
2
%
2,570
362
2
%
51
%
Total core commerce
78,894
84
%
93,865
13,256
82
%
19
%
Cloud computing
7,726
8
%
12,217
1,725
11
%
58
%
Digital media and entertainment
5,671
6
%
5,944
840
5
%
5
%
Innovation initiatives and others
1,207
2
%
2,288
323
2
%
90
%
Total
93,498
100
%
114,314
16,144
100
%
22
%
______________________ (1)
“Others” revenue under China commerce
retail is primarily generated by our New Retail and direct sales
businesses, comprising mainly Freshippo, Tmall Supermarket, direct
import and Intime.
Core commerce
- China commerce retail business Revenue from our China
commerce retail business in the quarter ended March 31, 2020 was
RMB70,905 million (US$10,014 million), an increase of 21% compared
to RMB58,441 million in the same quarter of 2019. Combined customer
management and commission revenues grew 1% year-over-year,
reflecting an increase of 3% in customer management revenue and a
decrease of 2% in commission revenue. The growth of customer
management revenue was primarily due to the increase in revenue
from recommendation feeds and Taobao Live, partly offset by a
decrease in volume of paid clicks and average unit price per click
in search monetization as a result of the impact of the COVID-19
pandemic. Although Tmall online physical goods GMV, excluding
unpaid orders, grew by 10% year-over-year, commission revenue
decreased by 2%. The decline in commission revenue was primarily
due to the impact of the COVID-19 pandemic, including the
cancellation of orders as a result of logistics disruption in
February, weakness in the apparel category and our waiver of annual
service fees for the first half of 2020 as part of our support to
merchant customers. “Others” revenue under China commerce retail
business was RMB25,499 million (US$3,601 million), a significant
increase compared to RMB13,532 million in the same quarter of 2019,
primarily driven by contributions from direct sales businesses,
including Freshippo and Tmall Supermarket, as well as our
consolidation of Kaola starting in September 2019. 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 business Revenue from our China
commerce wholesale business in the quarter ended March 31, 2020 was
RMB2,787 million (US$394 million), an increase of 9% compared to
RMB2,547 million in the same quarter of 2019. The increase was
primarily due to an increase in revenue from Lingshoutong, a
digital sourcing platform that connects FMCG brand manufacturers
and their distributors directly to local mom-and-pop stores in
China, as well as an increase in average revenue from paying
members on 1688.com, our domestic wholesale marketplace.
- International commerce retail business Revenue from our
international commerce retail business in the quarter ended March
31, 2020 was RMB5,353 million (US$756 million), an increase of 8%
compared to RMB4,944 million in the same quarter of 2019. The
increase was primarily due to the growth in revenues generated by
Lazada and Trendyol, which was partially offset by the exclusion of
revenue from the AliExpress Russia businesses, which we
deconsolidated upon the formation of a Russian joint venture in
October 2019. In addition to the exclusion of revenue from the
AliExpress Russia businesses, AliExpress revenue growth during the
quarter was significantly slower year-over-year, primarily due to
supply chain and logistics disruptions caused by the COVID-19
pandemic that negatively impacted GMV growth from sales to North
and South America and Europe.
- International commerce wholesale business Revenue from
our international commerce wholesale business in the quarter ended
March 31, 2020 was RMB2,458 million (US$347 million), an increase
of 15% compared to RMB2,133 million in the same quarter of 2019.
The increase was primarily due to an increase in the number of
paying members on Alibaba.com, our global wholesale
marketplace.
- Cainiao logistics services Revenue from Cainiao
Network’s logistics services, which represents revenue from its
domestic and international one-stop-shop logistics services and
supply chain management solutions, after elimination of
inter-company transactions, was RMB4,951 million (US$699 million)
in the quarter ended March 31, 2020, an increase of 28% compared to
RMB3,861 million in the same quarter of 2019, primarily due to the
increase in the volume of orders fulfilled from our fast growing
cross-border and international commerce retail businesses.
- Local consumer services Revenue from local consumer
services, which primarily represents platform commissions, fees
from provision of delivery services and other services provided by
our on-demand delivery and local services platform Ele.me, was
RMB4,841 million (US$684 million) in the quarter ended March 31,
2020, a decrease of 8% compared to RMB5,266 million in the same
quarter of 2019, reflecting mass closure of restaurants and local
merchants in China due to the COVID-19 pandemic.
Cloud computing
Revenue from our cloud computing business in the quarter ended
March 31, 2020 was RMB12,217 million (US$1,725 million), an
increase of 58% compared to RMB7,726 million in the same quarter of
2019, primarily driven by increased revenue contributions from both
our public cloud and hybrid cloud businesses.
Digital media and entertainment
Revenue from our digital media and entertainment segment in the
quarter ended March 31, 2020 was RMB5,944 million (US$840 million),
an increase of 5% compared to RMB5,671 million in the same quarter
of 2019. The increase was primarily due to an increase in
subscription revenue from Youku driven by an increase in number of
paying subscribers.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended March 31, 2020 was RMB2,288 million (US$323 million), an
increase of 90% compared to RMB1,207 million in the same quarter of
2019. The increase was primarily due to an increase in revenue from
online games and other business initiatives.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended March
31,
% of Revenue YoY
change
2019
2020
RMB
% of Revenue
RMB
US$
% of Revenue
(in millions, except
percentages)
Costs and expenses:
Cost of revenue
55,610
60
%
72,502
10,239
64
%
4
%
Product development expenses
8,659
10
%
10,587
1,495
9
%
(1
)%
Sales and marketing expenses
9,649
10
%
12,179
1,720
11
%
1
%
General and administrative expenses
7,612
8
%
7,871
1,112
7
%
(1
)%
Amortization and impairment of intangible
assets
3,203
3
%
4,044
571
3
%
0
%
Total costs and expenses
84,733
91
%
107,183
15,137
94
%
3
%
Share-based compensation expense by
function:
Cost of revenue
1,951
2
%
1,857
262
2
%
0
%
Product development expenses
2,801
3
%
3,484
492
3
%
0
%
Sales and marketing expenses
764
1
%
1,017
144
1
%
0
%
General and administrative expenses
1,594
2
%
2,294
324
2
%
0
%
Total share-based compensation expense
7,110
8
%
8,652
1,222
8
%
0
%
Costs and expenses excluding
share-based compensation expense:
Cost of revenue
53,659
58
%
70,645
9,977
62
%
4
%
Product development expenses
5,858
7
%
7,103
1,003
6
%
(1
)%
Sales and marketing expenses
8,885
9
%
11,162
1,576
10
%
1
%
General and administrative expenses
6,018
6
%
5,577
788
5
%
(1
)%
Amortization and impairment of intangible
assets
3,203
3
%
4,044
571
3
%
0
%
Total costs and expenses excluding
share-based compensation expense
77,623
83
%
98,531
13,915
86
%
3
%
Cost of revenue – Cost of revenue in the quarter ended
March 31, 2020 was RMB72,502 million (US$10,239 million), or 64% of
revenue, compared to RMB55,610 million, or 60% of revenue, in the
same quarter of 2019. Without the effect of share-based
compensation expense, cost of revenue as a percentage of revenue
would have increased from 58% in the quarter ended March 31, 2019
to 62% in the quarter ended March 31, 2020. The increase was
primarily due to an increase in revenue mix shift towards direct
sales businesses such as New Retail and Tmall Supermarket, which
resulted in increased cost of inventory, as well as our
consolidation of Kaola, partly offset by a decrease in delivery
costs of our local consumer services.
Product development expenses – Product development
expenses in the quarter ended March 31, 2020 were RMB10,587 million
(US$1,495 million), or 9% of revenue, compared to RMB8,659 million,
or 10% of revenue, in the same quarter of 2019. Without the effect
of share-based compensation expense, product development expenses
as a percentage of revenue would have decreased from 7% in the
quarter ended March 31, 2019 to 6% in the quarter ended March 31,
2020.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended March 31, 2020 were RMB12,179 million
(US$1,720 million), or 11% of revenue, compared to RMB9,649
million, or 10% of revenue, in the same quarter of 2019. Without
the effect of share-based compensation expense, sales and marketing
expenses as a percentage of revenue would have increased from 9% in
the quarter ended March 31, 2019 to 10% in the quarter ended March
31, 2020.
General and administrative expenses – General and
administrative expenses in the quarter ended March 31, 2020 were
RMB7,871 million (US$1,112 million), or 7% of revenue, compared to
RMB7,612 million, or 8% of revenue, in the same quarter of 2019.
Without the effect of share-based compensation expense, general and
administrative expenses as a percentage of revenue would have
decreased from 6% in the quarter ended March 31, 2019 to 5% in the
quarter ended March 31, 2020, primarily due to our US$250 million
settlement of a U.S. federal class action lawsuit in the quarter
ended March 31, 2019.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended March 31, 2020 was RMB8,652 million (US$1,222
million), an increase of 22% compared to RMB7,110 million in the
same quarter of 2019. Share-based compensation expense as a
percentage of revenue remained stable at 8% in the quarter ended
March 31, 2020 and 2019.
The following table sets forth our analysis of share-based
compensation expense for the quarters indicated by type of
share-based awards:
Three months ended
March 31, 2019
December 31, 2019
March 31, 2020
% Change
RMB
% of Revenue
RMB
% of Revenue
RMB
US$
% of Revenue
YoY
QoQ
(in millions, except
percentages)
By type of awards:
Alibaba Group share-based awards(1)
6,099
7
%
6,587
4
%
6,832
965
6
%
12
%
4
%
Ant Financial share-based awards granted
to our employees(2)
435
0
%
347
0
%
259
37
0
%
(40
)%
(25
)%
Others(3)
576
1
%
896
0
%
1,561
220
2
%
171
%
74
%
Total share-based compensation expense
7,110
8
%
7,830
4
%
8,652
1,222
8
%
22
%
10
%
______________________
(1)
This includes awards granted to our
employees, Ant Financial and other consultants. Awards granted to
nonemployees were subject to mark-to-market accounting treatment
until March 31, 2019. Beginning on April 1, 2019, we adopted ASU
2018-07, “Compensation — Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting” under
US GAAP. As a result of adopting this new accounting update, these
awards are no longer subject to mark-to-market accounting
treatment. Commencing upon the receipt of the 33% equity interest
in Ant Financial on September 23, 2019, the expense relating to
Alibaba Group share-based awards granted to Ant Financial employees
are recognized in share of results of equity investees.
(2)
Awards subject to mark-to-market
accounting treatment.
(3)
Others primarily relate to share-based
awards underlying the equity of our subsidiaries.
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 share-based awards underlying the equity of our
subsidiaries increased in this quarter compared to the previous
quarter, mainly due to the impact arising from the cash settlement
of such awards in this quarter.
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 any future changes in the valuation of Ant
Financial, although such changes will be non-cash and will not
result in any economic cost or equity dilution to our
shareholders.
Amortization and impairment of intangible assets –
Amortization and impairment of intangible assets in the quarter
ended March 31, 2020 was RMB4,044 million (US$571 million), an
increase of 26% from RMB3,203 million in the same quarter of 2019,
primarily due to an impairment loss of intangible assets recorded
in the quarter ended March 31, 2020.
Income from operations and operating
margin
Income from operations in the quarter ended March 31, 2020 was
RMB7,131 million (US$1,007 million), or 6% of revenue, a decrease
of 19% compared to RMB8,765 million, or 9% of revenue, in the same
quarter of 2019, primarily due to the impact of the COVID-19
pandemic.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA increased 1% year-over-year to RMB25,440 million
(US$3,593 million) in the quarter ended March 31, 2020, compared to
RMB25,166 million in the same quarter of 2019. Adjusted EBITA
decreased 4% year-over-year to RMB19,827 million (US$2,800 million)
in the quarter ended March 31, 2020, compared to RMB20,757 million
in the same quarter of 2019, primarily due to the impact of the
COVID-19 pandemic. A reconciliation of net income to adjusted
EBITDA and adjusted EBITA is included at the end of this results
announcement.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended March
31,
2019
2020
RMB
% of Segment Revenue
RMB
US$
% of Segment Revenue
(in millions, except
percentages)
Core commerce
27,484
35
%
28,126
3,972
30
%
Cloud computing
(164
)
(2
)%
(179
)
(25
)
(1
)%
Digital media and entertainment
(2,828
)
(50
)%
(3,378
)
(477
)
(57
)%
Innovation initiatives and others
(1,932
)
(160
)%
(3,063
)
(433
)
(134
)%
Core commerce segment – Adjusted EBITA increased by 2% to
RMB28,126 million (US$3,972 million) in the quarter ended March 31,
2020, compared to RMB27,484 million in the same quarter of 2019,
primarily due to our reduced loss in strategic businesses, partly
offset by a decrease in marketplace-based core commerce adjusted
EBITA to RMB33,990 million (US$4,800 million) mainly as a result of
the negative impact on customer management and commission revenue
from the COVID-19 pandemic, which was also one of the factors that
led to adjusted EBITA margin decreasing from 35% in the quarter
ended March 31, 2019 to 30% in the quarter ended March 31, 2020.
The continuing revenue mix shift towards self-operated New Retail
and direct sales businesses, where revenue is recorded on a gross
basis, including the cost of inventory, as well as the effects of
our consolidation of Kaola, also contributed to the decrease in
adjusted EBITA margin.
A reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
We expect that our core commerce adjusted EBITA margin will
continue to be affected by the pace of our investment in new
businesses and by a continuing revenue mix shift to self-operated
New Retail and direct sales businesses.
Cloud computing segment – Adjusted EBITA in the quarter
ended March 31, 2020 was a loss of RMB179 million (US$25 million),
compared to a loss of RMB164 million in the same quarter of 2019.
Adjusted EBITA margin improved to negative 1% in the quarter ended
March 31, 2020 from negative 2% in the quarter ended March 31,
2019.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended March 31, 2020 was a loss of RMB3,378 million
(US$477 million), compared to a loss of RMB2,828 million in the
same quarter of 2019. Adjusted EBITA margin decreased to negative
57% in the quarter ended March 31, 2020 from negative 50% in the
quarter ended March 31, 2019, primarily due to our provision for
doubtful debts of RMB437 million (US$62 million) on receivables
from ticketing services and film related businesses that have been
severely affected by the COVID-19 pandemic.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended March 31, 2020 was a loss of RMB3,063
million (US$433 million), compared to a loss of RMB1,932 million in
the same quarter of 2019, primarily due to the increased loss from
DingTalk as a result of our support to enterprises by providing
remote working capabilities free-of-charge during the COVID-19
pandemic.
Interest and investment income,
net
Interest and investment income, net in the quarter ended March
31, 2020 was a loss of RMB7,715 million (US$1,089 million),
compared to an income of RMB18,665 million in the same quarter of
2019, primarily due to a net loss arising from decreases in the
market prices of our equity investments in publicly-traded
companies in the quarter ended March 31, 2020, compared to a net
gain recorded in the same quarter of 2019. The above-mentioned
gains and losses were excluded from our non-GAAP net income.
Other income, net
Other income, net in the quarter ended March 31, 2020 was
RMB1,180 million (US$167 million), compared to RMB1,449 million in
the same quarter of 2019.
Income tax expenses
Income tax expenses in the quarter ended March 31, 2020 were
RMB2,628 million (US$371 million), compared to RMB5,025 million in
the same quarter of 2019.
Excluding share-based compensation expense, revaluation and
disposal gains/losses of investments, impairment of investments, as
well as the deferred tax effects on basis differences arising from
our share of results of equity investees, our effective tax rate
would have been 20% in the quarter ended March 31, 2020.
Share of results of equity
investees
Share of results of equity investees in the quarter ended March
31, 2020 was RMB3,545 million (US$500 million), compared to RMB828
million in the same quarter of 2019. We record our share of results
of equity investees one quarter in arrears. Share of results of
equity investees in the quarter ended March 31, 2020 and the
comparative periods consisted of the following:
Three months ended
March 31, 2019
December 31, 2019
March 31, 2020
RMB
RMB
RMB
US$
(in millions)
Share of profit of equity investees
- Ant Financial(1)
—
215
5,109
721
- Others
1,306
2,229
164
23
Impairment loss
—
—
(234
)
(33
)
Dilution (loss) gain
(62
)
166
(249
)
(35
)
Others(2)
(416
)
(445
)
(1,245
)
(176
)
Total
828
2,165
3,545
500
______________________
(1)
We received the 33% equity interest in Ant
Financial on September 23, 2019. Similar to other equity method
investees, we record our share of results of Ant Financial one
quarter in arrears. As such, the share of profit of Ant Financial
in the quarter ended December 31, 2019 reflects our share of profit
of Ant Financial for the period from the day following receipt of
the equity interest to the end of the quarter on September 30,
2019.
(2)
Others mainly include amortization of
intangible assets of equity investees and share-based compensation
expense.
The year-over-year increase in share of results of equity
investees was mainly due to our starting to recognize share of
profit in Ant Financial after we received the 33% equity in Ant
Financial in September 2019, partly offset by a decrease in our
share of results of Suning. In addition, the increase in "Others"
in the quarter ended March 31, 2020 was primarily due to the
commencement of amortization of intangible assets of Ant Financial
upon our receipt of an equity interest in Ant Financial. The
COVID-19 pandemic has caused widespread disruptions to the economy
and the businesses of our equity investees may be adversely
affected, which could negatively impact our share of results of
equity investees in future periods.
Net income and Non-GAAP net
income
Our net income in the quarter ended March 31, 2020 was RMB348
million (US$49 million), a decrease of 99% compared to RMB23,379
million in the same quarter of 2019. The year-over-year decrease
was primarily due to a net loss in investment income, mainly
reflecting decreases in the market prices of our equity investments
in publicly-traded companies, compared to a net gain recorded in
the same quarter of 2019.
Excluding share-based compensation expense, revaluation and
disposal gains/losses of investments, impairment of investments and
intangible assets and certain other items, non-GAAP net income in
the quarter ended March 31, 2020 was RMB22,287 million (US$3,148
million), an increase of 11% compared to RMB20,056 million in the
same quarter of 2019. A reconciliation of net income to non-GAAP
net income is included at the end of this results announcement.
Net income attributable to ordinary
shareholders
Net income attributable to ordinary shareholders in the quarter
ended March 31, 2020 was RMB3,162 million (US$447 million), a
decrease of 88% compared to RMB25,830 million in the same quarter
of 2019. The year-over-year decrease was primarily due to a net
loss in investment income, mainly reflecting decreases in the
market prices of our equity investments in publicly-traded
companies, compared to a net gain recorded in the same quarter of
2019.
Diluted earnings per ADS/share and
non-GAAP diluted earnings per ADS/share
Diluted earnings per ADS in the quarter ended March 31, 2020 was
RMB1.16 (US$0.16) on a weighted average of 21,822 million diluted
shares outstanding during the quarter, a decrease of 88% compared
to RMB9.84 on a weighted average of 21,002 million diluted shares
outstanding during the same quarter in 2019 (giving effect, in each
case, to our share split in July 2019). Excluding share-based
compensation expense, revaluation and disposal gains/losses of
investments, impairment of investments and intangible assets and
certain other items, non-GAAP diluted earnings per ADS in the
quarter ended March 31, 2020 was RMB9.20 (US$1.30), an increase of
7% compared to RMB8.57 in the same quarter of 2019.
Diluted earnings per share in the quarter ended March 31, 2020
was RMB0.14 (US$0.02 or HK$0.15), a decrease of 89% compared to
RMB1.23 in the same quarter of 2019. Excluding share-based
compensation expense, revaluation and disposal gains/losses of
investments, impairment of investments and intangible assets and
certain other items, non-GAAP diluted earnings per share in the
quarter ended March 31, 2020 was RMB1.15 (US$0.16 or HK$1.26), an
increase of 7%, compared to RMB1.07 in the same quarter of
2019.
A reconciliation of diluted earnings per ADS/share to non-GAAP
diluted earnings per ADS/share is included at the end of this
results announcement. Each ADS represents eight ordinary shares.
See the section entitled “Share Subdivision and ADS Ratio Change”
for more information.
Cash, cash equivalents and short-term
investments
As of March 31, 2020, cash, cash equivalents and short-term
investments were RMB358,981 million (US$50,698 million), compared
to RMB351,946 million as of December 31, 2019. The increase in
cash, cash equivalents and short-term investments during the
quarter ended March 31, 2020 was primarily due to the cash inflow
of RMB9,816 million (US$1,386 million) from disposal of various
investments, partly offset by outflow of free cash flow from
operations of RMB4,214 million (US$595 million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
March 31, 2020 was RMB2,164 million (US$306 million), a decrease of
88% compared to RMB18,553 million in the same quarter of 2019. Free
cash flow, a non-GAAP measurement of liquidity, was an outflow of
RMB4,214 million (US$595 million), compared to an inflow of
RMB10,714 million in the same quarter of 2019. The year-over-year
decreases of RMB16,389 million in net cash provided by operating
activities and RMB14,928 million in free cash flow, respectively,
were primarily due to a decrease of RMB7,651 million in connection
with the AliExpress Payment Services Restructuring, as explained in
further detail above, as well as an increase in the amount of total
refunds of annual service fee deposits from merchants of RMB2,688
million because more merchants achieved their agreed GMV targets in
2019. Excluding the effect of the AliExpress Payment Services
Restructuring, non-GAAP free cash flow for the quarter would have
been an inflow of RMB1,977 million (US$279 million). 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, 2020, net cash used in
investing activities of RMB32,995 million (US$4,660 million)
primarily reflected (i) an increase in short-term investments by
RMB26,919 million (US$3,802 million), (ii) capital expenditures of
RMB9,683 million (US$1,367 million), which included cash outflow
for acquisition of land use rights and construction in progress
relating to office campuses of RMB5,802 million (US$819 million),
(iii) cash outflow of RMB3,368 million (US$476 million) for
investment and acquisition activities, as well as (iv) acquisition
of licensed copyrights and other intangible assets of RMB2,716
million (US$384 million). These cash outflows were partly offset by
cash inflow of RMB9,816 million (US$1,386 million) from disposal of
various investments.
Employees
As of March 31, 2020, we had a total of 117,600 employees,
compared to 116,519 as of December 31, 2019.
FULL FISCAL YEAR 2020 SUMMARY FINANCIAL RESULTS
Year ended March 31,
2019
2020
RMB
RMB
US$(1)
YoY % Change
(in millions, except
percentages and per share amounts)
Revenue
376,844
509,711
71,985
35
%
Income from operations
57,084
91,430
12,912
60
%
Operating margin
15
%
18
%
Adjusted EBITDA(2)
121,943
157,659
22,266
29
%
Adjusted EBITDA margin(2)
32
%
31
%
Adjusted EBITA(2)
106,981
137,136
19,367
28
%
Adjusted EBITA margin(2)
28
%
27
%
Net income
80,234
140,350
19,821
75
%(3)
Net income attributable to
ordinary shareholders
87,600
149,263
21,080
70
%(3)
Non-GAAP net income(2)
93,407
132,479
18,710
42
%
Diluted earnings per share(4)
4.17
6.99
0.99
68
%(3)
Diluted earnings per ADS(4)
33.38
55.93
7.90
68
%(3)
Non-GAAP Diluted earnings per
share(2) (4)
4.80
6.62
0.93
38
%
Non-GAAP Diluted earnings per ADS(2)
(4)
38.40
52.98
7.48
38
%
______________________
(1)
This results announcement contains
translations of certain Renminbi (“RMB”) amounts into U.S. dollars
(“US$”) and Hong Kong dollars (“HK$”) for the convenience of the
reader. Unless otherwise stated, all translations of RMB into US$
were made at RMB7.0808 to US$1.00, the exchange rate on March 31,
2020 as set forth in the H.10 statistical release of the Federal
Reserve Board, and all translations of RMB into HK$ were made at
RMB0.9137 to HK$1.00, the middle rate on March 31, 2020 as
published by The People’s Bank of China. The U.S. dollar amounts of
annual GMV for fiscal year 2020 presented in this results
announcement represent the sums of GMV in U.S. dollars for the
quarters ended June 30, September 30 and December 31, 2019 and
March 31, 2020, each converted from the RMB amounts at the average
daily exchange rate for each relevant quarter. The percentages
stated in this announcement are calculated based on the RMB amounts
and there may be minor differences due to rounding.
(2)
See the sections entitled “Information
about Segments,” “Non-GAAP Financial Measures” and “Reconciliations
of Non-GAAP Measures to the Nearest Comparable GAAP Measures” for
more information about the non-GAAP measures referred to within
this results announcement.
(3)
The year-over-year increase was primarily
due to a one-time gain of RMB71.6 billion (US$10.1 billion)
recognized upon the receipt of the 33% equity interest in Ant
Financial, partly offset by a year-over-year decrease in
revaluation and disposal gains (as discussed in detail under the
“Interest and investment income, net” section below), and net
losses from changes in the fair values and higher impairment
charges relating to equity investments this year. Excluding these
gains and losses and certain other items, our non-GAAP net income
would have increased by 42% year-over-year.
(4)
Each ADS represents eight ordinary shares.
See the section entitled “Share Subdivision and ADS Ratio Change”
for more information.
FULL FISCAL YEAR 2020 INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the fiscal year 2020:
Year ended March 31,
2020
Core commerce
Cloud computing
Digital media and
entertainment
Innovation initiatives and
others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
US$
(in millions, except
percentages)
Revenue
436,104
40,016
26,948
6,643
—
509,711
71,985
Income (loss) from operations
138,631
(7,016
)
(14,937
)
(12,951
)
(12,297
)
91,430
12,912
Add: Share-based compensation expense
15,427
5,577
2,444
4,050
4,244
31,742
4,483
Add: Amortization and impairment of
intangible assets
11,742
25
1,377
86
158
13,388
1,891
Add: Impairment of goodwill
—
—
—
—
576
576
81
Adjusted EBITA
165,800
(2)
(1,414
)
(11,116
)
(8,815
)
(7,319
)
137,136
19,367
Adjusted EBITA margin
38
%
(4
)%
(41
)%
(133
)%
27
%
Year ended March 31,
2019
Core commerce
Cloud computing
Digital media and
entertainment
Innovation initiatives and
others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
(in millions, except
percentages)
Revenue
323,400
24,702
24,077
4,665
—
376,844
Income (loss) from operations
109,312
(5,508
)
(20,046
)
(11,795
)
(14,879
)
57,084
Add: Share-based compensation expense
17,694
4,332
2,988
5,774
6,703
37,491
Add: Amortization of intangible assets
9,161
18
1,262
50
236
10,727
Add: Settlement of U.S. federal class
action lawsuit
—
—
—
—
1,679
1,679
Adjusted EBITA
136,167
(2)
(1,158
)
(15,796
)
(5,971
)
(6,261
)
106,981
Adjusted EBITA margin
42
%
(5
)%
(66
)%
(128
)%
28
%
______________________
(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 19% year-over-year to RMB192,771 million (US$27,224
million). A reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
FULL FISCAL YEAR 2020 OPERATIONAL AND FINANCIAL
RESULTS
Revenue
Revenue in fiscal year 2020 was RMB509,711 million (US$71,985
million), an increase of 35% compared to RMB376,844 million in
fiscal year 2019. The increase was mainly driven by the robust
revenue growth of our China commerce retail business and cloud
computing.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Year ended March 31,
2019
2020
RMB
% of Revenue
RMB
US$
% of Revenue
YoY % Change
(in millions, except
percentages)
Core commerce:
China commerce retail
- Customer management
145,684
39
%
175,396
24,771
34
%
20
%
- Commission
61,847
16
%
71,086
10,039
14
%
15
%
- Others(1)
40,084
11
%
86,268
12,183
17
%
115
%
247,615
66
%
332,750
46,993
65
%
34
%
China commerce wholesale
9,988
3
%
12,427
1,755
3
%
24
%
International commerce retail
19,558
5
%
24,323
3,435
5
%
24
%
International commerce wholesale
8,167
2
%
9,594
1,355
2
%
17
%
Cainiao logistics services
14,885
4
%
22,233
3,140
4
%
49
%
Local consumer services
18,058
5
%
25,440
3,593
5
%
41
%
Others
5,129
1
%
9,337
1,319
2
%
82
%
Total core commerce
323,400
86
%
436,104
61,590
86
%
35
%
Cloud computing
24,702
7
%
40,016
5,651
8
%
62
%
Digital media and entertainment
24,077
6
%
26,948
3,806
5
%
12
%
Innovation initiatives and others
4,665
1
%
6,643
938
1
%
42
%
Total
376,844
100
%
509,711
71,985
100
%
35
%
______________________ (1)
“Others” revenue under China commerce
retail is primarily generated by our New Retail and direct sales
businesses, comprising mainly Freshippo, Tmall Supermarket, direct
import and Intime.
Core commerce
- China commerce retail business Revenue from our China
commerce retail business in fiscal year 2020 was RMB332,750 million
(US$46,993 million), an increase of 34% compared to RMB247,615
million in fiscal year 2019. Revenue from our China retail
marketplaces continued to see strong growth. Combined customer
management and commission revenues grew 19% year-over-year, which
represents an increase of 20% in customer management revenue and an
increase of 15% in commission revenue. The growth of customer
management revenue was primarily the result of an increase in the
volume of paid clicks and an increase in the average unit price per
click. The growth of commission revenue was primarily due to strong
23% year-over-year growth of Tmall online physical goods GMV,
excluding unpaid orders. Commission revenue did not grow in
proportion to the growth of Tmall online physical goods GMV
(excluding unpaid orders) primarily because of the revenue mix
shift within Tmall Supermarket from commission-based revenue
towards direct sales, which is classified as “Others” revenue under
China commerce retail business, and also because more merchants,
under our merchant incentive program, achieved annual GMV targets
and received preferential commission rates. “Others” revenue was
RMB86,268 million (US$12,183 million), a significant increase
compared to RMB40,084 million in fiscal year 2019, primarily driven
by contributions from direct sales businesses, including Tmall
Supermarket and Freshippo, as well as our consolidation of Kaola
starting in September 2019. 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 business Revenue from our China
commerce wholesale business in fiscal year 2020 was RMB12,427
million (US$1,755 million), an increase of 24% compared to RMB9,988
million in fiscal year 2019. The increase was primarily due to an
increase in average revenue from paying members on 1688.com, our
domestic wholesale marketplace, as well as an increase in revenue
from Lingshoutong, a digital sourcing platform that connects FMCG
brand manufacturers and their distributors directly to local
mom-and-pop stores in China.
- International commerce retail business Revenue from our
international commerce retail business in fiscal year 2020 was
RMB24,323 million (US$3,435 million), an increase of 24% compared
to RMB19,558 million in fiscal year 2019. The increase was
primarily due to an increase in revenue from Lazada and Trendyol
(which we consolidated in July 2018), as well as an increase in
revenue from AliExpress.
- International commerce wholesale business Revenue from
our international commerce wholesale business in fiscal year 2020
was RMB9,594 million (US$1,355 million), an increase of 17%
compared to RMB8,167 million in fiscal year 2019. The increase was
primarily due to an increase in the number of paying members on
Alibaba.com, our global wholesale marketplace.
- Cainiao logistics services Revenue from Cainiao
Network’s logistics services, which represents revenue from its
domestic and international one-stop-shop logistics services and
supply chain management solutions, after elimination of
inter-company transactions, was RMB22,233 million (US$3,140
million) in fiscal year 2020, an increase of 49% compared to
RMB14,885 million in fiscal year 2019, primarily due to the
increase in the volume of orders fulfilled from our fast growing
cross-border and international commerce retail businesses.
- Local consumer services Revenue from local consumer
services, which primarily represents platform commissions, fees
from provision of delivery services and other services provided by
our on-demand delivery and local services platform Ele.me, was
RMB25,440 million (US$3,593 million) in fiscal year 2020, an
increase of 41% compared to RMB18,058 million in fiscal year 2019,
primarily due to an increase in volume of orders delivered and an
increase in average order value.
Cloud computing
Revenue from our cloud computing business in fiscal year 2020
was RMB40,016 million (US$5,651 million), an increase of 62%
compared to RMB24,702 million in fiscal year 2019, primarily driven
by increased revenue contributions from both our public cloud and
hybrid cloud businesses.
Digital media and entertainment
Revenue from our digital media and entertainment business in
fiscal year 2020 was RMB26,948 million (US$3,806 million), an
increase of 12% compared to RMB24,077 million in fiscal year 2019.
The increase was primarily due to our consolidation of Alibaba
Pictures starting in March 2019.
Innovation initiatives and others
Revenue from innovation initiatives and others in fiscal year
2020 was RMB6,643 million (US$938 million), an increase of 42%
compared to RMB4,665 million in fiscal year 2019. The increase was
primarily due to an increase in revenue from online games and other
business initiatives.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Year ended March 31,
% of Revenue YoY
change
2019
2020
RMB
% of Revenue
RMB
US$
% of Revenue
(in millions, except
percentages)
Costs and expenses:
Cost of revenue
206,929
55
%
282,367
39,878
55
%
0
%
Product development expenses
37,435
10
%
43,080
6,085
9
%
(1
)%
Sales and marketing expenses
39,780
11
%
50,673
7,156
10
%
(1
)%
General and administrative expenses
24,889
6
%
28,197
3,982
5
%
(1
)%
Amortization and impairment of intangible assets
10,727
3
%
13,388
1,891
3
%
0
%
Impairment of goodwill
—
—
576
81
0
%
0
%
Total costs and expenses
319,760
85
%
418,281
59,073
82
%
(3
)%
Share-based compensation expense by
function:
Cost of revenue
8,915
2
%
7,322
1,034
1
%
(1
)%
Product development expenses
15,378
4
%
13,654
1,928
3
%
(1
)%
Sales and marketing expenses
4,411
2
%
3,830
541
1
%
(1
)%
General and administrative expenses
8,787
2
%
6,936
980
1
%
(1
)%
Total share-based compensation expense
37,491
10
%
31,742
4,483
6
%
(4
)%
Costs and expenses excluding
share-based compensation expense:
Cost of revenue
198,014
53
%
275,045
38,844
54
%
1
%
Product development expenses
22,057
6
%
29,426
4,157
6
%
0
%
Sales and marketing expenses
35,369
9
%
46,843
6,615
9
%
0
%
General and administrative expenses
16,102
4
%
21,261
3,002
4
%
0
%
Amortization and impairment of intangible assets
10,727
3
%
13,388
1,891
3
%
0
%
Impairment of goodwill
—
—
576
81
0
%
0
%
Total costs and expenses excluding
share-based compensation expense
282,269
75
%
386,539
54,590
76
%
1
%
Cost of revenue – Cost of revenue in fiscal year 2020 was
RMB282,367 million (US$39,878 million), or 55% of revenue, compared
to RMB206,929 million, or 55% of revenue, in fiscal year 2019.
Without the effect of share-based compensation expense, cost of
revenue as a percentage of revenue would have increased from 53% in
fiscal year 2019 to 54% in fiscal year 2020. The increase was
primarily due to an increase in revenue mix shift towards direct
sales businesses such as Tmall Supermarket and New Retail, which
resulted in increased cost of inventory, as well as our
consolidation of Kaola, partly offset by a decrease in content cost
by Youku and efficiency gains from our technology and
infrastructure.
Product development expenses – Product development
expenses in fiscal year 2020 were RMB43,080 million (US$6,085
million), or 9% of revenue, compared to RMB37,435 million, or 10%
of revenue, in fiscal year 2019. 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 2020 and
2019.
Sales and marketing expenses – Sales and marketing
expenses in fiscal year 2020 were RMB50,673 million (US$7,156
million), or 10% of revenue, compared to RMB39,780 million, or 11%
of revenue, in fiscal year 2019. Without the effect of share-based
compensation expense, sales and marketing expenses as a percentage
of revenue would have remained stable at 9% in fiscal year 2020 and
2019.
General and administrative expenses – General and
administrative expenses in fiscal year 2020 were RMB28,197 million
(US$3,982 million), or 5% of revenue, compared to RMB24,889
million, or 6% of revenue, in fiscal year 2019. 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 2020 and 2019.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in fiscal year 2020 was RMB31,742 million (US$4,483 million), a
decrease of 15% compared to RMB37,491 million in fiscal year 2019.
Share-based compensation expense as a percentage of revenue
decreased from 10% in fiscal year 2019 to 6% in fiscal year
2020.
The following table sets forth our analysis of share-based
compensation expense for the periods indicated by type of
share-based awards:
Year ended March 31,
2019
2020
RMB
% of Revenue
RMB
US$
% of Revenue
YoY % Change
(in millions, except
percentages)
By type of awards:
Alibaba Group share-based awards(1)
22,727
6
%
26,216
3,703
5
%
15
%
Ant Financial share-based awards granted
to our employees(2)
12,855
3
%
1,261
178
0
%
(90
)%
Others(3)
1,909
1
%
4,265
602
1
%
123
%
Total share-based compensation expense
37,491
10
%
31,742
4,483
6
%
(15
)%
______________________
(1)
This includes awards granted to our
employees, Ant Financial and other consultants. Awards granted to
nonemployees were subject to mark-to-market accounting treatment
until March 31, 2019. Beginning on April 1, 2019, we adopted ASU
2018-07, “Compensation — Stock Compensation (Topic 718):
Improvements to Nonemployee Share-Based Payment Accounting” under
US GAAP. As a result of adopting this new accounting update, these
awards are no longer subject to mark-to-market accounting
treatment. Commencing upon the receipt of the 33% equity interest
in Ant Financial on September 23, 2019, the expense relating to
Alibaba Group share-based awards granted to Ant Financial employees
are recognized in share of results of equity investees.
(2)
Awards subject to mark-to-market
accounting treatment.
(3)
Others primarily relate to share-based
awards underlying the equity of our subsidiaries.
Share-based compensation expense related to Alibaba Group
share-based awards increased in fiscal year 2020 compared to fiscal
year 2019. This increase is primarily due to the 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 decreased significantly
in fiscal year 2020 compared to fiscal year 2019. This expense was
significantly higher in fiscal year 2019 because during the year
Ant Financial completed an equity financing at a higher valuation,
which required us to recognize the increase in value of these
awards.
Share-based compensation expense related to share-based awards
underlying the equity of our subsidiaries increased in fiscal year
2020 compared to fiscal year 2019, mainly due to the increase in
share-based awards granted and the impact arising from the cash
settlement of such awards in this year.
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 any future changes in the valuation of Ant
Financial, although such changes will be non-cash and will not
result in any economic cost or equity dilution to our
shareholders.
Amortization and impairment of intangible assets –
Amortization and impairment of intangible assets in fiscal year
2020 was RMB13,388 million (US$1,891 million), an increase of 25%
from RMB10,727 million in fiscal year 2019, primarily due to the
full year impact of the amortization of intangible assets acquired
from business combinations of Koubei in December 2018.
Income from operations and operating
margin
Income from operations in fiscal year 2020 was RMB91,430 million
(US$12,912 million), or 18% of revenue, an increase of 60% compared
to RMB57,084 million, or 15% of revenue, in fiscal year 2019.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA increased 29% year-over-year to RMB157,659
million (US$22,266 million) in fiscal year 2020, compared to
RMB121,943 million in fiscal year 2019. Adjusted EBITA increased
28% year-over-year to RMB137,136 million (US$19,367 million) in
fiscal year 2020, compared to RMB106,981 million in fiscal year
2019. A reconciliation of net income to adjusted EBITDA and
adjusted EBITA is included at the end of this results
announcement.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Year ended March 31,
2019
2020
RMB
% of Segment Revenue
RMB
US$
% of Segment Revenue
(in millions, except
percentages)
Core commerce
136,167
42
%
165,800
23,415
38
%
Cloud computing
(1,158
)
(5
)%
(1,414
)
(199
)
(4
)%
Digital media and entertainment
(15,796
)
(66
)%
(11,116
)
(1,570
)
(41
)%
Innovation initiatives and others
(5,971
)
(128
)%
(8,815
)
(1,245
)
(133
)%
Core commerce segment – Adjusted EBITA increased by 22%
to RMB165,800 million (US$23,415 million) in fiscal year 2020,
compared to RMB136,167 million in fiscal year 2019, primarily due
to an increase in marketplace-based core commerce adjusted EBITA to
RMB192,771 million (US$27,224 million). Adjusted EBITA margin
decreased from 42% in fiscal year 2019 to 38% in fiscal year 2020
primarily due to a continuing revenue mix shift towards
self-operated New Retail and direct sales businesses, where revenue
is recorded on a gross basis, including the cost of inventory, as
well as the effects of our consolidation of Kaola.
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 by a continuing revenue mix shift to self-operated
New Retail and direct sales businesses.
Cloud computing segment – Adjusted EBITA in fiscal year
2020 was a loss of RMB1,414 million (US$199 million), compared to a
loss of RMB1,158 million in fiscal year 2019. Adjusted EBITA margin
improved to negative 4% in fiscal year 2020 from negative 5% in
fiscal year 2019.
Digital media and entertainment segment – Adjusted EBITA
in fiscal year 2020 was a loss of RMB11,116 million (US$1,570
million), compared to a loss of RMB15,796 million in fiscal year
2019. Adjusted EBITA margin improved to negative 41% in fiscal year
2020 from negative 66% in fiscal year 2019, primarily due to
reduced content cost by Youku as a result of our more disciplined
content spending policy.
Innovation initiatives and others segment – Adjusted
EBITA in fiscal year 2020 was a loss of RMB8,815 million (US$1,245
million), compared to a loss of RMB5,971 million in fiscal year
2019. The increase in adjusted EBITA loss was primarily due to the
increased loss from DingTalk and other new business initiatives, as
well as our investments in technological research and
innovation.
Interest and investment income,
net
Interest and investment income, net in fiscal year 2020 was
RMB72,956 million (US$10,303 million), compared to RMB44,106
million in fiscal year 2019. In fiscal year 2020, we recognized
one-time gains of RMB71.6 billion (US$10.1 billion) and RMB10.3
billion (US$1.5 billion) in relation to the receipt of the 33%
equity interest in Ant Financial and our deconsolidation of the
AliExpress Russia businesses, respectively. In fiscal year 2019, we
recognized one-time gains of RMB22.0 billion and RMB5.8 billion
arising from the revaluation of our previously held equity interest
in Koubei and Alibaba Pictures when we obtained control over these
businesses in December 2018 and March 2019, respectively. The
increase in one-time gains in fiscal year 2020 was partly offset by
net losses arising from changes in the fair values of our equity
investments, compared to net gains recorded on such fair value
changes in fiscal year 2019.
The above-mentioned gains and losses were excluded from our
non-GAAP net income.
Other income, net
Other income, net in fiscal year 2020 was RMB7,439 million
(US$1,051 million), compared to RMB221 million in fiscal year 2019.
The increase in other income, net was primarily due to an increase
in royalty fees and software technology service fees from Ant
Financial and a decrease in exchange loss. Royalty fees and
software technology service fees under our profit sharing
arrangement with Ant Financial amounted to RMB3,835 million (US$542
million) in fiscal year 2020, as compared to RMB517 million in
fiscal year 2019. The profit sharing arrangement was terminated in
September 2019 upon our receipt of the 33% equity interest in Ant
Financial.
Income tax expenses
Income tax expenses in fiscal year 2020 were RMB20,562 million
(US$2,904 million), compared to RMB16,553 million in fiscal year
2019.
Our effective tax rate decreased to 12% in fiscal year 2020 from
17% in fiscal year 2019. Excluding the one-time gain in relation to
the receipt of the 33% equity interest in Ant Financial,
share-based compensation expense, revaluation and disposal
gains/losses of investments, impairment of investments and
goodwill, as well as the deferred tax effects on basis differences
arising from our share of results of equity investees, our
effective tax rate would have been 17% in fiscal year 2020.
Share of results of equity
investees
Share of results of equity investees in fiscal year 2020 was a
loss of RMB5,733 million (US$810 million), compared to a profit of
RMB566 million in fiscal year 2019. We record our share of results
of equity investees one quarter in arrears. Share of results of
equity investees in fiscal year 2020 and the comparative periods
consisted of the following:
Year ended March 31,
2019
2020
RMB
RMB
US$
(in millions)
Share of profit of equity investees:
- Ant Financial(1)
—
5,324
752
- Others
2,997
3,332
470
Impairment loss
(493
)
(11,824
)
(1,670
)
Dilution loss
(185
)
(108
)
(15
)
Others(2)
(1,753
)
(2,457
)
(347
)
Total
566
(5,733
)
(810
)
______________________
(1)
We received the 33% equity interest in Ant
Financial on September 23, 2019. Similar to other equity method
investees, we record our share of results of Ant Financial one
quarter in arrears. As such, the share of profit of Ant Financial
in fiscal year 2020 reflects our share of profit of Ant Financial
for the period from the day following receipt of the equity
interest to the end of the quarter on December 31, 2019.
(2)
Others mainly include amortization of
intangible assets of equity investees and share-based compensation
expense.
The year-over-year decrease in share of results of equity
investees was mainly due to impairment loss of RMB11,824 million
(US$1,670 million) with respect to certain equity investees as a
result of their prolonged decline in market values against our
carrying values, partly offset by our share of profit in Ant
Financial. The COVID-19 pandemic has caused widespread disruptions
to the economy and the businesses of our equity investees may be
adversely affected, which could negatively impact our share of
results of equity investees in future periods.
Net income and Non-GAAP net
income
Our net income in fiscal year 2020 was RMB140,350 million
(US$19,821 million), an increase of 75% compared to RMB80,234
million in fiscal year 2019.
Excluding the one-time gain in relation to the receipt of the
33% equity interest in Ant Financial, share-based compensation
expense, revaluation and disposal gains/losses of investments,
impairment of investments, intangible assets and goodwill and
certain other items, non-GAAP net income in fiscal year 2020 was
RMB132,479 million (US$18,710 million), an increase of 42% compared
to RMB93,407 million in fiscal year 2019. A reconciliation of net
income to non-GAAP net income is included at the end of this
results announcement.
Net income attributable to ordinary
shareholders
Net income attributable to ordinary shareholders in fiscal year
2020 was RMB149,263 million (US$21,080 million), an increase of 70%
compared to RMB87,600 million in fiscal year 2019.
Diluted earnings per ADS/share and
non-GAAP diluted earnings per ADS/share
Diluted earnings per ADS in the fiscal year 2020 was RMB55.93
(US$7.90) on a weighted average of 21,346 million diluted shares
outstanding during the year, an increase of 68% compared to
RMB33.38 on a weighted average of 20,988 million diluted shares
outstanding in fiscal year 2019 (giving effect, in each case, to
our share split in July 2019). Excluding the one-time gain in
relation to the receipt of the 33% equity interest in Ant
Financial, share-based compensation expense, revaluation and
disposal gains/losses of investments, impairment of investments,
intangible assets and goodwill and certain other items, non-GAAP
diluted earnings per ADS in fiscal year 2020 was RMB52.98
(US$7.48), an increase of 38% compared to RMB38.40 in fiscal year
2019.
Diluted earnings per share in fiscal year 2020 was RMB6.99
(US$0.99 or HK$7.65), an increase of 68% compared to RMB4.17 in
fiscal year 2019. Excluding the one-time gain in relation to the
receipt of the 33% equity interest in Ant Financial, share-based
compensation expense, revaluation and disposal gains/losses of
investments, impairment of investments, intangible assets and
goodwill and certain other items, non-GAAP diluted earnings per
share in fiscal year 2020 was RMB6.62 (US$0.93 or HK$7.25), an
increase of 38%, compared to RMB4.80 in fiscal year 2019.
A reconciliation of diluted earnings per ADS/share to non-GAAP
diluted earnings per ADS/share is included at the end of this
results announcement. Each ADS represents eight ordinary shares.
See the section entitled “Share Subdivision and ADS Ratio Change”
for more information.
Cash, cash equivalents and short-term
investments
As of March 31, 2020, cash, cash equivalents and short-term
investments were RMB358,981 million (US$50,698 million), compared
to RMB193,238 million as of March 31, 2019. The increase in cash,
cash equivalents and short-term investments in fiscal year 2020 was
primarily due to free cash flow generated from operations of
RMB130,914 million (US$18,489 million) and net proceeds of
RMB90,546 million (US$12,788 million) from the issuance of shares
in connection with our global offering, partly offset by net cash
used in investment and acquisition activities of RMB38,104 million
(US$5,381 million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in fiscal year 2020
was RMB180,607 million (US$25,507 million), an increase of 20%
compared to RMB150,975 million in fiscal year 2019. Free cash flow,
a non-GAAP measurement of liquidity, in fiscal year 2020 increased
by 25% to RMB130,914 million (US$18,489 million), from RMB104,478
million in fiscal year 2019, primarily due to our robust
profitability growth. A reconciliation of net cash provided by
operating activities to free cash flow is included at the end of
this results announcement.
Net cash used in investing
activities
During fiscal year 2020, net cash used in investing activities
of RMB108,072 million (US$15,263 million) primarily reflected (i)
cash outflow of RMB56,873 million (US$8,032 million) for investment
and acquisition activities, including the acquisition of Kaola and
investment in Meinian Onehealth Healthcare, Red Star Macalline, STO
Express and China TransInfo, (ii) capital expenditures of RMB32,550
million (US$4,597 million), which included cash outflow for
acquisition of land use rights and construction in progress
relating to office campuses of RMB7,888 million (US$1,114 million),
(iii) an increase in short-term investments by RMB24,907 million
(US$3,518 million), as well as (iv) acquisition of licensed
copyrights and other intangible assets of RMB12,836 million
(US$1,813 million). These cash outflows were partly offset by cash
inflow of RMB18,769 million (US$2,651 million) from the disposal of
various investments. In addition, in connection with the receipt of
the 33% equity interest in Ant Financial, the net cash impact is
minimal because the consideration paid was fully funded by the
amount we received for the transfer of certain intellectual
property and assets to Ant Financial.
Share Subdivision and ADS Ratio
Change
On July 30, 2019, we effected a 1-to-8 share subdivision, as a
result of which each ordinary share was subdivided into eight
ordinary shares (the “Share Subdivision”). At the same time, we
changed our ordinary share-to-ADS ratio. Following the ADS ratio
change, each ADS now represents eight ordinary shares. Because the
ADS ratio change was exactly proportionate to the Share
Subdivision, no new ADSs were issued to any ADS holder and the
total number of our outstanding ADSs remains unchanged.
The tables below set forth the pre- and post-share subdivision
earnings per share/ADS attributable to ordinary shareholders and
weighted average number of shares used in calculating earnings per
ordinary share for the periods indicated.
Three months ended March
31,
2019
2020
Pre-Share Subdivision
Post-Share Subdivision
Pre-Share Subdivision
Post-Share Subdivision
RMB
RMB
RMB
US$
RMB
US$
(except share data)
Earnings per share attributable to
ordinary shareholders
Basic
10.02
1.25
1.18
0.17
0.15
0.02
Diluted
9.84
1.23
1.16
0.16
0.14
0.02
Non-GAAP diluted
8.57
1.07
9.20
1.30
1.15
0.16
Earnings per ADS attributable to
ordinary shareholders
Basic
10.02
10.02
1.18
0.17
1.18
0.17
Diluted
9.84
9.84
1.16
0.16
1.16
0.16
Non-GAAP diluted
8.57
8.57
9.20
1.30
9.20
1.30
Weighted average number of shares used
in calculating earnings per ordinary share (million shares)
Basic
2,579
20,635
2,679
21,435
Diluted
2,625
21,002
2,727
21,822
Year ended March 31,
2019
2020
Pre-Share Subdivision
Post-Share Subdivision
Pre-Share Subdivision
Post-Share Subdivision
RMB
RMB
RMB
US$
RMB
US$
(except share data)
Earnings per share attributable to
ordinary shareholders
Basic
33.95
4.24
56.82
8.02
7.10
1.00
Diluted
33.38
4.17
55.93
7.90
6.99
0.99
Non-GAAP diluted
38.40
4.80
52.98
7.48
6.62
0.93
Earnings per ADS attributable to
ordinary shareholders
Basic
33.95
33.95
56.82
8.02
56.82
8.02
Diluted
33.38
33.38
55.93
7.90
55.93
7.90
Non-GAAP diluted
38.40
38.40
52.98
7.48
52.98
7.48
Weighted average number of shares used
in calculating earnings per ordinary share (million shares)
Basic
2,580
20,640
2,627
21,017
Diluted
2,623
20,988
2,668
21,346
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 22, 2020.
Details of the conference call are as follows: International:
+65 6713 5330 U.S.: +1 347 549 4094 U.K.: +44 203 713 5084 Hong
Kong: +852 3018 8307 China Landline: 800 8700 532 China Mobile: 400
624 0407 Conference ID: 5870545 (English) Conference ID: 1575158
(simultaneous interpretation in Chinese)
A live webcast of the earnings conference call can be accessed
at http://www.alibabagroup.com/en/ir/earnings. An archived webcast
will be available through the same link following the call. A
replay of the conference call will be available for one week
(dial-in number: +61 2 8199 0299; same conference ID as shown
above).
Our results announcement and accompanying slides are available
at Alibaba Group’s Investor Relations website at
http://www.alibabagroup.com/en/ir/home on May 22, 2020.
ABOUT ALIBABA GROUP
Alibaba Group's mission is to make it easy to do business
anywhere. The company aims to build the future infrastructure of
commerce. It envisions that its customers will meet, work and live
at Alibaba, and that it will be a good company that lasts for 102
years.
SAFE HARBOR STATEMENTS
This announcement contains forward-looking statements. These
statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by terminology such as
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “potential,” “continue,” “ongoing,”
“targets,” “guidance” and similar statements. In addition,
statements that are not historical facts, including statements
about Alibaba’s strategies and business plans, Alibaba’s beliefs,
expectations and guidance regarding the growth of its business and
its revenue, the business outlook and quotations from management in
this announcement, as well as Alibaba’s strategic and operational
plans, are or contain forward-looking statements. Alibaba may also
make forward-looking statements in its periodic reports to the U.S.
Securities and Exchange Commission (the “SEC”), in announcements
made on the website of The Stock Exchange of Hong Kong Limited (the
“Hong Kong Stock Exchange”), in press releases and other written
materials and in oral statements made by its officers, directors or
employees to third parties. Forward-looking statements involve
inherent risks and uncertainties. A number of factors could cause
actual results to differ materially from those contained in any
forward-looking statement, including but not limited to the
following: impact of the COVID-19 pandemic, Alibaba’s expected
revenue growth; Alibaba’s goals and strategies; Alibaba’s future
business development; Alibaba’s ability to maintain the trusted
status of its digital economy; risks associated with sustained
investments in Alibaba’s business and strategic acquisitions and
investments; Alibaba’s ability to maintain or grow its revenue or
business; Alibaba’s ability to continue to compete effectively and
maintain and improve the network effects of its digital economy;
company culture; Alibaba’s ability to continue to innovate; risks
and challenges associated with operating a complex and large-scale
company, risks associated with international and cross-border
businesses and operations, including protectionist or national
security policies; uncertainties arising from competition among
countries and geopolitical tensions; changes in laws, regulations
and regulatory environment that affect Alibaba’s business
operations; privacy and regulatory concerns; security breaches;
risks associated with the performance of our business partners,
including but not limited to Ant 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 and announcements on the website of
The Hong Kong Stock Exchange. All information provided in this
results announcement is as of the date of this results announcement
and are based on assumptions that we believe to be reasonable as of
this date, and Alibaba does not undertake any obligation to update
any forward-looking statement, except as required under applicable
law.
NON-GAAP FINANCIAL MEASURES
To supplement our consolidated financial statements, which are
prepared and presented in accordance with GAAP, we use the
following non-GAAP financial measures: for our consolidated
results, adjusted EBITDA (including adjusted EBITDA margin),
adjusted EBITA (including adjusted EBITA margin), marketplace-based
core commerce adjusted EBITA, non-GAAP net income, non-GAAP diluted
earnings per share/ADS and free cash flow. For more information on
these non-GAAP financial measures, please refer to the section
entitled “Information about Segments” and the table captioned
“Reconciliations of Non-GAAP Measures to the Nearest Comparable
GAAP Measures” in this results announcement.
We believe that adjusted EBITDA, adjusted EBITA,
marketplace-based core commerce adjusted EBITA, non-GAAP net income
and non-GAAP diluted earnings per share/ADS help identify
underlying trends in our business that could otherwise be distorted
by the effect of certain income or expenses that we include in
income from operations, net income and diluted earnings per
share/ADS. We believe that these non-GAAP measures provide useful
information about our core operating results, enhance the overall
understanding of our past performance and future prospects and
allow for greater visibility with respect to key metrics used by
our management in its financial and operational decision-making. We
present three different income measures, namely adjusted EBITDA,
adjusted EBITA and non-GAAP net income, as well as one measure that
provides supplemental information on our core commerce segment,
namely marketplace-based core commerce adjusted EBITA, in order to
provide more information and greater transparency to investors
about our operating results.
We consider free cash flow to be a liquidity measure that
provides useful information to management and investors about the
amount of cash generated by our business that can be used for
strategic corporate transactions, including investing in our new
business initiatives, making strategic investments and acquisitions
and strengthening our balance sheet.
Adjusted EBITDA, adjusted EBITA, marketplace-based core commerce
adjusted EBITA, non-GAAP net income, non-GAAP diluted earnings per
share/ADS and free cash flow should not be considered in isolation
or construed as an alternative to income from operations, adjusted
EBITA for core commerce, net income, diluted earnings per
share/ADS, cash flows or any other measure of performance or as an
indicator of our operating performance. These non-GAAP financial
measures presented here do not have standardized meanings
prescribed by U.S. GAAP and may not be comparable to similarly
titled measures presented by other companies. Other companies may
calculate similarly titled measures differently, limiting their
usefulness as comparative measures to our data.
Adjusted EBITDA represents net income before (i) interest
and investment income, net, interest expense, other income, net,
income tax expenses and share of results of equity investees, (ii)
certain non-cash expenses, consisting of share-based compensation
expense, amortization, depreciation, operating lease cost relating
to land use rights, impairment of intangible assets and 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 intangible assets and
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. Marketplace-based core commerce adjusted
EBITA reflects the performance of our most established businesses,
namely, those of our China retail marketplaces and wholesale
marketplaces which primarily adopt a marketplace-based approach. By
excluding certain businesses that are in the earlier stages of
their development and with business approaches that continue to
evolve, marketplace-based core commerce adjusted EBITA enables
investors to clearly evaluate the performance of our most
established businesses on a like-for-like basis.
Non-GAAP net income represents net income before
share-based compensation expense, amortization, impairment of
investments, intangible assets and goodwill, gain or loss on deemed
disposals/disposals/revaluation of investments, settlement of a
U.S. federal class action lawsuit, gain in relation to the receipt
of the 33% equity interest in Ant Financial, amortization of excess
value receivable arising from the restructuring of commercial
arrangements with Ant Financial and others, as adjusted for the tax
effects on non-GAAP adjustments.
Non-GAAP diluted earnings per share represents non-GAAP
net income attributable to ordinary shareholders divided by the
weighted average number of shares outstanding during the periods on
a diluted basis. Non-GAAP diluted earnings per ADS
represents non-GAAP diluted earnings per share after adjustment to
the ordinary share-to-ADS ratio.
Free cash flow represents net cash provided by operating
activities as presented in our consolidated cash flow statement
less purchases of property and equipment (excluding acquisition of
land use rights and construction in progress relating to office
campuses), licensed copyrights and other intangible assets, as well
as adjustments to exclude from net cash provided by operating
activities the consumer protection fund deposits from merchants on
our China retail marketplaces. We deduct certain items of cash
flows from investing activities in order to provide greater
transparency into cash flow from our revenue-generating business
operations. We exclude “acquisition of land use rights and
construction in progress relating to office campuses” because the
office campuses are used by us for corporate and administrative
purposes and are not directly related to our revenue-generating
business operations. We also exclude consumer protection fund
deposits from merchants on our China retail marketplaces because
these deposits are restricted for the purpose of compensating
consumers for claims against merchants.
The section entitled “Information about Segments” and the table
captioned “Reconciliations of Non-GAAP Measures to the Nearest
Comparable GAAP Measures” in this results announcement have more
details on the non-GAAP financial measures that are most directly
comparable to GAAP financial measures and the related
reconciliations between these financial measures.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED INCOME
STATEMENTS
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions, except per share
data)
(in millions, except per share
data)
Revenue
93,498
114,314
16,144
376,844
509,711
71,985
Cost of revenue
(55,610
)
(72,502
)
(10,239
)
(206,929
)
(282,367
)
(39,878
)
Product development expenses
(8,659
)
(10,587
)
(1,495
)
(37,435
)
(43,080
)
(6,085
)
Sales and marketing expenses
(9,649
)
(12,179
)
(1,720
)
(39,780
)
(50,673
)
(7,156
)
General and administrative expenses
(7,612
)
(7,871
)
(1,112
)
(24,889
)
(28,197
)
(3,982
)
Amortization and impairment of intangible
assets
(3,203
)
(4,044
)
(571
)
(10,727
)
(13,388
)
(1,891
)
Impairment of goodwill
—
—
—
—
(576
)
(81
)
Income from operations
8,765
7,131
1,007
57,084
91,430
12,912
Interest and investment income, net
18,665
(7,715
)
(1,089
)
44,106
72,956
10,303
Interest expense
(1,303
)
(1,165
)
(165
)
(5,190
)
(5,180
)
(731
)
Other income, net
1,449
1,180
167
221
7,439
1,051
Income (loss) before income tax and
share of results of equity investees
27,576
(569
)
(80
)
96,221
166,645
23,535
Income tax expenses
(5,025
)
(2,628
)
(371
)
(16,553
)
(20,562
)
(2,904
)
Share of results of equity investees
828
3,545
500
566
(5,733
)
(810
)
Net income
23,379
348
49
80,234
140,350
19,821
Net loss attributable to noncontrolling
interests
2,534
2,872
406
7,652
9,083
1,283
Net income attributable to Alibaba Group
Holding Limited
25,913
3,220
455
87,886
149,433
21,104
Accretion of mezzanine equity
(83
)
(58
)
(8
)
(286
)
(170
)
(24
)
Net income attributable to ordinary
shareholders
25,830
3,162
447
87,600
149,263
21,080
Earnings per share attributable to
ordinary shareholders(1)
Basic
1.25
0.15
0.02
4.24
7.10
1.00
Diluted
1.23
0.14
0.02
4.17
6.99
0.99
Earnings per ADS attributable to
ordinary shareholders(1)
Basic
10.02
1.18
0.17
33.95
56.82
8.02
Diluted
9.84
1.16
0.16
33.38
55.93
7.90
Weighted average number of share used
in calculating earnings per ordinary share (million
shares)(1)
Basic
20,635
21,435
20,640
21,017
Diluted
21,002
21,822
20,988
21,346
______________________
(1)
Each ADS represents eight ordinary shares.
See the section entitled “Share Subdivision and ADS Ratio Change”
for more information.
ALIBABA GROUP HOLDING LIMITED REVENUE
The following table sets forth our revenue by segments for the
periods indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Core commerce(1)
78,894
93,865
13,256
323,400
436,104
61,590
Cloud computing(2)
7,726
12,217
1,725
24,702
40,016
5,651
Digital media and entertainment(3)
5,671
5,944
840
24,077
26,948
3,806
Innovation initiatives and others(4)
1,207
2,288
323
4,665
6,643
938
Total
93,498
114,314
16,144
376,844
509,711
71,985
(1)
Revenue from core commerce is primarily
generated from our China retail marketplaces, Freshippo, 1688.com,
Lazada.com, AliExpress, 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 online games,
Amap, Tmall Genie and other innovation initiatives. Other revenue
also includes SME annual fee received from Ant Financial and its
affiliates.
ALIBABA GROUP HOLDING LIMITED INFORMATION ABOUT
SEGMENTS
The following table sets forth our income (loss) from operations
by segments for the periods indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Core commerce
21,632
20,166
2,848
109,312
138,631
19,578
Cloud computing
(1,036
)
(1,757
)
(248
)
(5,508
)
(7,016
)
(991
)
Digital media and entertainment
(3,854
)
(4,491
)
(634
)
(20,046
)
(14,937
)
(2,109
)
Innovation initiatives and others
(3,270
)
(4,022
)
(568
)
(11,795
)
(12,951
)
(1,829
)
Unallocated
(4,707
)
(2,765
)
(391
)
(14,879
)
(12,297
)
(1,737
)
Total
8,765
7,131
1,007
57,084
91,430
12,912
The following table sets forth our adjusted EBITA by segments
for the periods indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Core commerce
27,484
28,126
3,972
136,167
165,800
23,415
Cloud computing
(164
)
(179
)
(25
)
(1,158
)
(1,414
)
(199
)
Digital media and entertainment
(2,828
)
(3,378
)
(477
)
(15,796
)
(11,116
)
(1,570
)
Innovation initiatives and others
(1,932
)
(3,063
)
(433
)
(5,971
)
(8,815
)
(1,245
)
Unallocated
(1,803
)
(1,679
)
(237
)
(6,261
)
(7,319
)
(1,034
)
Total
20,757
19,827
2,800
106,981
137,136
19,367
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE
SHEETS
As of March 31,
As of March 31,
2019
2020
RMB
RMB
US$
(in millions)
Assets
Current assets:
Cash and cash equivalents
189,976
330,503
46,676
Short-term investments
3,262
28,478
4,022
Restricted cash and escrow receivables
8,518
15,479
2,186
Investment securities
9,927
4,234
598
Prepayments, receivables and other
assets
58,590
84,229
11,895
Total current assets
270,273
462,923
65,377
Investment securities
157,090
161,329
22,784
Prepayments, receivables and other
assets(1)
28,018
57,985
8,189
Investment in equity investees
84,454
189,632
26,782
Property and equipment, net
92,030
103,387
14,601
Intangible assets, net
68,276
60,947
8,607
Goodwill
264,935
276,782
39,089
Total assets
965,076
1,312,985
185,429
Liabilities, Mezzanine Equity and
Shareholders’ Equity
Current liabilities:
Current bank borrowings
7,356
5,154
728
Current unsecured senior notes
15,110
—
—
Income tax payable
17,685
20,190
2,851
Escrow money payable
8,250
3,014
426
Accrued expenses, accounts payable and
other liabilities(1)
117,711
161,536
22,813
Merchant deposits
10,762
13,640
1,926
Deferred revenue and customer advances
30,795
38,338
5,415
Total current liabilities
207,669
241,872
34,159
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
As of March 31,
As of March 31,
2019
2020
RMB
RMB
US$
(in millions)
Deferred revenue
1,467
2,025
286
Deferred tax liabilities
22,517
43,898
6,200
Non-current bank borrowings
35,427
39,660
5,601
Non-current unsecured senior notes
76,407
80,616
11,385
Other liabilities(1)
6,187
25,263
3,567
Total liabilities
349,674
433,334
61,198
Commitments and contingencies
—
—
—
Mezzanine equity
6,819
9,103
1,286
Shareholders’ equity:
Ordinary shares
1
1
—
Additional paid-in capital
231,783
343,707
48,541
Treasury shares at cost
—
—
—
Restructuring reserve
(97
)
—
—
Subscription receivables
(49
)
(51
)
(7
)
Statutory reserves
5,068
6,100
861
Accumulated other comprehensive loss
(2,335
)
(643
)
(91
)
Retained earnings
257,886
406,287
57,379
Total shareholders’ equity
492,257
755,401
106,683
Noncontrolling interests
116,326
115,147
16,262
Total equity
608,583
870,548
122,945
Total liabilities, mezzanine equity and
equity
965,076
1,312,985
185,429
______________________
(1)
We adopted ASU 2016-02, “Leases (Topic
842)” beginning in the first quarter of fiscal year 2020 using the
modified retrospective method and no adjustments are made to the
comparative periods. Adoption of the standard resulted in the
recognition of operating lease right‑of‑use assets of approximately
RMB24.9 billion and operating lease liabilities of approximately
RMB19.4 billion on the consolidated balance sheet as of April 1,
2019.
Operating lease right-of-use assets are
included in non-current prepayments, receivables and other assets,
and operating lease liabilities are included in current accrued
expenses, accounts payable and other liabilities and other
non-current liabilities on the consolidated balance sheets.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net cash provided by operating
activities
18,553
2,164
306
150,975
180,607
25,507
Net cash used in investing activities
(16,751
)
(32,995
)
(4,660
)
(151,060
)
(108,072
)
(15,263
)
Net cash provided by (used in) financing
activities
719
2,967
419
(7,392
)
70,853
10,006
Effect of exchange rate changes on cash
and cash equivalents, restricted cash and escrow receivables
(1,142
)
2,322
328
3,245
4,100
579
Increase (Decrease) in cash and cash
equivalents, restricted cash and escrow receivables
1,379
(25,542
)
(3,607
)
(4,232
)
147,488
20,829
Cash and cash equivalents, restricted cash
and escrow receivables at beginning of period
197,115
371,524
52,469
202,726
198,494
28,033
Cash and cash equivalents, restricted cash
and escrow receivables at end of period
198,494
345,982
48,862
198,494
345,982
48,862
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE GAAP MEASURES
The table below sets forth a
reconciliation of our net income to adjusted EBITA and adjusted
EBITDA for the periods indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net income
23,379
348
49
80,234
140,350
19,821
Less: Interest and investment income,
net
(18,665
)
7,715
1,089
(44,106
)
(72,956
)
(10,303
)
Add: Interest expense
1,303
1,165
165
5,190
5,180
731
Less: Other income, net
(1,449
)
(1,180
)
(167
)
(221
)
(7,439
)
(1,051
)
Add: Income tax expenses
5,025
2,628
371
16,553
20,562
2,904
Add: Share of results of equity
investees
(828
)
(3,545
)
(500
)
(566
)
5,733
810
Income from operations
8,765
7,131
1,007
57,084
91,430
12,912
Add: Share-based compensation expense
7,110
8,652
1,222
37,491
31,742
4,483
Add: Amortization and impairment of
intangible assets
3,203
4,044
571
10,727
13,388
1,891
Add: Impairment of goodwill
—
—
—
—
576
81
Add: Settlement of U.S. federal class
action lawsuit
1,679
—
—
1,679
—
—
Adjusted EBITA
20,757
19,827
2,800
106,981
137,136
19,367
Add: Depreciation and amortization of
property and equipment, and operating lease cost relating to land
use rights
4,409
5,613
793
14,962
20,523
2,899
Adjusted EBITDA
25,166
25,440
3,593
121,943
157,659
22,266
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA for the periods
indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Adjusted EBITA for core
commerce
27,484
28,126
3,972
136,167
165,800
23,415
Less: Effects of local consumer services,
Lazada, New Retail and direct import and Cainiao Network
7,204
5,864
828
25,422
26,971
3,809
Marketplace-based core commerce
adjusted EBITA
34,688
33,990
4,800
161,589
192,771
27,224
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of our net income to non-GAAP net income for the
periods indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net income
23,379
348
49
80,234
140,350
19,821
Add: Share-based compensation expense
7,110
8,652
1,222
37,491
31,742
4,483
Add: Amortization and impairment of
intangible assets
3,203
4,044
571
10,727
13,388
1,891
Add: Impairment of goodwill and
investments
3,450
709
100
11,360
25,656
3,623
Less: Gain (Loss) on deemed
disposals/disposals/ revaluation of investments and others
(19,961
)
10,334
1,460
(47,525
)
(4,764
)
(673
)
Add: Settlement of U.S. federal class
action lawsuit
1,679
—
—
1,679
—
—
Less: Gain in relation to the receipt of
the 33% equity interest in Ant Financial
—
—
—
—
(71,561
)
(10,106
)
Add: Amortization of excess value
receivable arising from the restructuring of commercial
arrangements with Ant Financial
66
—
—
264
97
14
Adjusted for tax effects on non-GAAP
adjustments(1)
1,130
(1,800
)
(254
)
(823
)
(2,429
)
(343
)
Non-GAAP net income
20,056
22,287
3,148
93,407
132,479
18,710
______________________
(1)
Tax effects on non-GAAP adjustments
primarily comprised of tax effects relating to the share-based
compensation expense, certain gains and losses from investments and
amortization and impairment of intangible assets.
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of our diluted earnings per share/ADS to non-GAAP
diluted earnings per share/ADS for the periods indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions, except per share
data)
(in millions, except per share
data)
Net income attributable to ordinary
shareholders – basic
25,830
3,162
447
87,600
149,263
21,080
Dilution effect on earnings arising from
option plans operated by equity investees and subsidiaries
(11)
(1)
—
(42)
(48)
(7)
Net income attributable to ordinary
shareholders – diluted
25,819
3,161
447
87,558
149,215
21,073
Add: Non-GAAP adjustments to net
income(1)
(3,323)
21,939
3,099
13,173
(7,871)
(1,111)
Non-GAAP net income attributable
to ordinary shareholders for computing non-GAAP diluted earnings
per share/ADS
22,496
25,100
3,546
100,731
141,344
19,962
Weighted average number of shares on a
diluted basis (million shares)(5)
21,002
21,822
20,988
21,346
Diluted earnings per
share(2)(5)
1.23
0.14
0.02
4.17
6.99
0.99
Add: Non-GAAP adjustments to net income
per share(3)(5)
(0.16)
1.01
0.14
0.63
(0.37)
(0.06)
Non-GAAP diluted earnings per
share(4)(5)
1.07
1.15
0.16
4.80
6.62
0.93
Diluted earnings per ADS(2)(5)
9.84
1.16
0.16
33.38
55.93
7.90
Add: Non-GAAP adjustments to net income
per ADS(3)(5)
(1.27)
8.04
1.14
5.02
(2.95)
(0.42)
Non-GAAP diluted earnings per
ADS(4)(5)
8.57
9.20
1.30
38.40
52.98
7.48
______________________
(1)
See the table above for the reconciliation
of net income to non-GAAP net income for more information of these
non-GAAP adjustments.
(2)
Diluted earnings per share is derived from
net income attributable to ordinary shareholders for computing
diluted earnings per share divided by weighted average number of
shares on a diluted basis. Diluted earnings per ADS is derived from
the diluted earnings per share after adjustment to the ordinary
share-to-ADS ratio.
(3)
Non-GAAP adjustments to net income per
share is derived from non-GAAP adjustments to net income divided by
weighted average number of shares on a diluted basis. Non-GAAP
adjustments to net income per ADS is derived from the non-GAAP
adjustments to net income per share after adjustment to the
ordinary share-to-ADS ratio.
(4)
Non-GAAP diluted earnings per share is
derived from non-GAAP net income attributable to ordinary
shareholders for computing non-GAAP diluted earnings per share
divided by weighted average number of shares on a diluted basis.
Non-GAAP diluted earnings per ADS is derived from the non-GAAP
diluted earnings per share after adjustment to the ordinary
share-to-ADS ratio.
(5)
Each ADS represents eight ordinary shares.
See the section entitled “Share Subdivision and ADS Ratio Change”
for more information.
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of net cash provided by operating activities to free
cash flow for the periods indicated:
Three months ended March
31,
Year ended March 31,
2019
2020
2019
2020
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net cash provided by operating
activities
18,553
2,164
306
150,975
180,607
25,507
Less: Purchase of property and equipment
(excluding land use rights and construction in progress relating to
office campuses)
(5,688
)
(3,881
)
(548
)
(32,336
)
(24,662
)
(3,483
)
Less: Acquisition of licensed copyrights
and other intangible assets
(2,151
)
(2,716
)
(384
)
(14,161
)
(12,836
)
(1,813
)
Less: Changes in the consumer protection
fund deposits
—
219
31
—
(12,195
)
(1,722
)
Free cash flow
10,714
(4,214
)
(595
)
104,478
130,914
18,489
ALIBABA GROUP HOLDING LIMITED SELECTED OPERATING
DATA
Annual active consumers
The table below sets forth the number of active consumers on our
China retail marketplaces for the periods indicated:
Twelve months ended
Jun 30, 2018
Sep 30, 2018
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Sept 30, 2019
Dec 31, 2019
Mar 31, 2020
(in millions)
Annual active consumers
576
601
636
654
674
693
711
726
Mobile
The table below sets forth the mobile MAUs on our China retail
marketplaces for the periods indicated:
The month ended
Jun 30, 2018
Sep 30, 2018
Dec 31, 2018
Mar 31, 2019
Jun 30, 2019
Sept 30, 2019
Dec 31, 2019
Mar 31, 2020
(in millions)
Mobile MAUs
634
666
699
721
755
785
824
846
GMV
The table below sets forth the GMV, in respect of our China
retail marketplaces for the periods indicated:
Year ended
Mar 31, 2018
Mar 31, 2019
Mar 31, 2020
(in billions of RMB)
GMV
Taobao Marketplace GMV
2,689
3,115
3,387
Tmall GMV
2,131
2,612
3,202
Total GMV
4,820
5,727
6,589
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200522005178/en/
Investor Relations Contact Rob Lin investor@alibabagroup.com
Media Contacts Brion Tingler brion.tingler@alibaba-inc.com
Adam Najberg adam.najberg@alibaba-inc.com
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