Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988,
“Alibaba” or “Alibaba Group”) today announced its financial results
for the quarter ended September 30, 2022.
“We delivered solid results this past quarter despite ongoing
macro environment challenges, which is a testament to our resilient
business model and unmatched customer value proposition,” said
Daniel Zhang, Chairman and Chief Executive Officer of Alibaba
Group. “The uncertainties of the global landscape have only
reinforced our resolve to focus on building capacity that will
yield sustainable, high-quality growth for our customers and our
own business over the long term. The trust of our shareholders has
enabled Alibaba's development over the past 23 years, and we are
committed to improving shareholder return as we continue to
strengthen the foundations for Alibaba’s future."
“We generated another quarter of healthy revenue growth of 3%
year-over-year in spite of the impact on consumption demand by the
COVID-19 resurgence in China as well as slowing cross border
commerce due to increasing logistics costs and foreign currency
volatility," said Toby Xu, Chief Financial Officer of Alibaba
Group. "We have continued to take a holistic approach to improve
operating efficiency and cost optimization throughout the company
that resulted in adjusted EBITA growth of 29% year-over-year. With
strong net cash position and cash flow generation, as
of November 16, 2022, we had repurchased approximately US$18
billion of our shares under our existing US$25 billion share
repurchase program. In addition, our board has approved to upsize
the share repurchase program by another US$15 billion and extend
the program to the end of fiscal year 2025."
BUSINESS HIGHLIGHTS
In the quarter ended September 30,
2022:
- Revenue was RMB207,176 million (US$29,124 million), an
increase of 3% year-over-year.
- Income from operations was RMB25,137 million (US$3,534
million), an increase of 68% year-over-year. The year-over-year
increase was primarily attributable to an increase in adjusted
EBITA, as well as a decrease in share-based compensation expense.
We excluded share-based compensation expense from our non-GAAP
measurements. Adjusted EBITA, a non-GAAP measurement,
increased 29% year-over-year to RMB36,164 million (US$5,084
million).
- Net loss attributable to ordinary shareholders was
RMB20,561 million (US$2,890 million). Net loss was RMB22,467
million (US$3,158 million), compared to net income of RMB3,377
million in the same quarter of 2021, primarily attributable to an
increase in net losses arising from the decrease in market prices
of our equity investments in publicly-traded companies and a
decrease in share of results of equity method investees, partly
offset by the increase in adjusted EBITA. We excluded net gains or
losses arising from the changes in fair value of our investments
from our non-GAAP measurements. Non-GAAP net income was
RMB33,820 million (US$4,754 million), an increase of 19%
year-over-year.
- Diluted loss per ADS was RMB7.77 (US$1.09) and
diluted loss per share was RMB0.97 (US$0.14 or HK$1.07).
Non-GAAP diluted earnings per ADS was RMB12.92 (US$1.82), an
increase of 15% year-over-year and non-GAAP diluted earnings per
share was RMB1.61 (US$0.23 or HK$1.78), an increase of 15%
year-over-year.
- Net cash provided by operating activities was RMB47,112
million (US$6,623 million), an increase of 31% compared to
RMB35,830 million in the same quarter of 2021. Free cash
flow, a non-GAAP measurement of liquidity, was RMB35,709
million (US$5,020 million), an increase of 61% compared to
RMB22,239 million in the same quarter of 2021.
BUSINESS AND STRATEGIC UPDATES
China Commerce
China commerce segment mainly includes our China commerce retail
businesses such as Taobao, Tmall, Taobao Deals, Taocaicai,
Freshippo, Tmall Supermarket, Sun Art, Tmall Global and Alibaba
Health, as well as wholesale businesses including 1688.com.
For the quarter ended September 30, 2022, online physical goods
GMV generated on Taobao and Tmall, excluding unpaid orders,
declined low-single-digit year-over-year, mainly due to soft
consumption demand, COVID-19 resurgence and restrictions as well as
ongoing competition. However, the decline narrowed compared to the
prior June quarter as key categories such as apparel and
accessories and consumer electronics saw less year-over-year
decline. Healthcare products and interests-based consumption
categories such as outdoor and active gear, and pet care continued
to exhibit resilient demand.
Taobao and Tmall continue to identify opportunities to better
serve consumers of different demographics and have achieved high
consumer retention. For the twelve months ended September 30, 2022,
the number of consumers who each spent over RMB10,000 on Taobao and
Tmall remained around 124 million with a retention rate of 98%. In
November 2022, we successfully concluded our 14th annual 11.11
Global Shopping Festival and delivered results in line with last
year’s GMV performance despite macro challenges and COVID
19-related impact. This year’s festival featured over 290,000
brands from over 90 countries and regions across 7,000 product
categories.
Upgrading consumer shopping experience is one of the top
priorities for Taobao and Tmall in fiscal year 2023. We are
investing in content that generate more engagement and purchasing
interest from targeted consumers as well as providing consumers
with better logistics and customer service experience.
- Content – User engagement and browsing activity on the
Taobao app continue to improve primarily driven by a series of
enhancements on the content and recommendations displayed on the
home page of the Taobao app.
- Logistics – Serviced by Cainiao and partners, doorstep
parcel deliveries of Taobao and Tmall orders increased
significantly year-over-year. As of September 30, 2022, doorstep
delivery service for Taobao and Tmall orders was offered in more
than 300 urban cities throughout China.
- Customer Service – We adopt a hybrid approach for
customer service that leverages both human and AI-driven robots to
resolve millions of daily queries from consumers on our platforms.
During the quarter, we have continued to invest in human customer
service capacity, which resulted in improving post-purchase net
promoter score (NPS).
Taobao Deals, our value-for-money platform, continued to enrich
product supply and enhance digital consumption experience for
consumers in less developed areas. Specifically, Taobao Deals has
been helping an expanding base of manufacturers to sell directly to
consumers (M2C) on Taobao and Taobao Deals and, in the September
quarter, paid GMV of M2C products grew more than 60% year-
over-year. During the quarter, Taobao Deals significantly narrowed
losses year-over-year by optimizing spending in user acquisition,
and continued to improve average spending and purchase frequency of
active consumers.
Taocaicai, our business offering consumers next day pick-up
service for grocery and fresh goods at neighborhood pick-up points,
continued to deepen its supply chain and strengthen its logistics
capabilities in existing cities. During the quarter ended September
30, 2022, not only did Taocaicai GMV grow strongly at over 40%
year-over-year, but it also reduced losses significantly by
optimizing pricing strategy, enhancing sourcing capability and
lowering operational and fulfillment costs. During the September
quarter, Taocaicai continued to drive fresh produce category
penetration on our China retail marketplaces, and the percentage of
Taocaicai orders generated through Taobao and Taobao Deals apps
continued to grow year-over-year.
During the quarter ended September 30, 2022, our direct sales
and others revenue grew 6% year-over-year to RMB64,725 million
(US$9,099 million), primarily driven by strong revenue growth of
Freshippo with its percentage of revenue from online orders
remaining high at over 65%. During the quarter, Freshippo generated
healthy same store sales growth and significantly reduced losses
through improved gross margin, lowered delivery costs for online
orders and increased operating efficiency. Excluding those stores
that were opened for less than twelve months, the vast majority of
Freshippo stores are cash flow positive as of September 30,
2022.
International Commerce
International Commerce Retail
Our International commerce retail businesses include Lazada,
AliExpress, Trendyol and Daraz. During the September quarter, the
combined number of orders of Lazada, AliExpress, Trendyol and Daraz
declined by 3% year-over-year, primarily driven by declining orders
of Lazada and AliExpress, partly offset by strong order growth of
Trendyol.
During the quarter, the decline in AliExpress orders slowed
compared to prior quarters as the impact from European Union's VAT
rules became annualized. We continue to face challenges in
cross-border e-commerce demand in Europe due to the depreciating
Euro and increasing logistics costs.
In Southeast Asia, Lazada orders also declined year-over-year
during the quarter, mainly due to shopping activities normalizing
back to offline channels with the lifting of COVID-19 restrictions
in the region. Lazada has continued to improve monetization rate by
offering more value-added services as well as enhancing operating
efficiency. During the quarter, losses per order for Lazada
narrowed by over 25% compared to the same period last year.
During the September quarter, Trendyol’s overall orders grew by
over 65% year-over-year as a result of strong growth of its
e-commerce business and rapid growth of its local consumer
services.
International Commerce Wholesale
Alibaba.com facilitates international trade and offers
value-added services such as global logistics and trade assurance
that have been increasingly adopted by global buyers and sellers.
For the quarter ended September 30, 2022, our International
commerce wholesale revenue grew 6% year-over-year; which was
supported by increasing contribution from value-added services.
Local Consumer Services
Local consumer services segment includes “To-Home” and
“To-Destination” businesses. For the quarter ended September 30,
2022, Local consumer services order volume increased by 5%
year-over-year mainly driven by strong order growth of Amap
business. Segment losses also continued to narrow driven by
improving business operations of Ele.me.
To Home
During the quarter, Ele.me recorded positive GMV growth due to
higher average order value as Ele.me continued to improve the
quality and diversity of its merchant base and better engage with
high frequency users through innovative marketing events and its
loyalty program. For the quarter ended September 30, 2022, Ele.me's
unit economics per order continued to be positive due to increased
average order value year-over-year, as well as its ongoing focus in
optimizing user acquisition spending and reducing delivery cost per
order.
To Destination
In the quarter ended September 30, 2022, order volume of
"To-Destination" business grew rapidly year-over-year, driven by
Amap business. During the week-long National Day holiday in
October, Amap achieved a record high of over 220 million daily
active users in China.
Cainiao
In the quarter ended September 30, 2022, revenue from Cainiao,
before inter-segment elimination, grew 26% year-over-year to
RMB18,282 million (US$2,570 million) of which 73% was generated
from external customers. Revenue from Cainiao, after inter-segment
elimination, grew 36% year-over-year to RMB13,367 million (US$1,879
million), primarily contributed by the increase in revenue from
domestic consumer logistics services as a result of service model
upgrade since late 2021 to enhance consumer experience, and
international fulfillment solution services.
Cainiao continues to expand its international logistics network
by strengthening its end-to-end logistics capabilities, including
eHubs, line-haul, sorting centers and last-mile network. In October
2022, Cainiao commenced operation of two new international sorting
centers, bringing the number of overseas sorting centers in
operation to 12.
In China, Cainiao continues to expand its Cainiao Post network
that offers a variety of value-added services to improve consumer
experience and delivery efficiency, which complements our China
commerce businesses. During the quarter, the total number of
Cainiao Posts, including those in rural areas and universities,
grew more than 20% year-over-year to over 170,000. Cainiao Posts
located in urban residential communities grew to over 116,000, of
which over 80,000 offer doorstep parcel delivery services.
Cloud
Our Cloud segment comprises Alibaba Cloud and DingTalk. For the
quarter ended September 30, 2022, total revenue from our Cloud
segment before inter-segment elimination, which includes revenue
from services provided to other Alibaba businesses, was RMB26,760
million (US$3,762 million). For the quarter ended September 30,
2022, revenue after inter-segment elimination grew 4%
year-over-year to RMB20,757 million (US$2,918 million) mainly
driven by healthy public cloud growth, partially offset by
declining hybrid cloud revenue, as we continue to drive
high-quality, recurring revenue growth.
During the quarter, after inter-segment elimination, revenue
growth from non-Internet industries continued to improve, growing
28% year-over-year and contributing 58% of overall Cloud revenue.
Strong revenue growth of the non-Internet industries was driven by
financial services, telecommunication and public services
industries. Revenue from customers in the Internet industry
declined by 18% year-over-year that was mainly driven by declining
revenue from the top Internet customer that has gradually stopped
using our overseas cloud services for its international business
due to non-product related requirements and online education
customers, as well as by softening demand from other customers in
China’s Internet industry.
Alibaba Cloud
Alibaba Cloud continues to develop, expand and support our
partners to better serve our enterprise customers. Highlights of
our proprietary technologies during our annual Apsara Conference in
November 2022 include:
Data Centers and Hardware:
- Cloud Infrastructure Processing Unit (or CIPU) is our cloud
infrastructure system solely for Alibaba Group’s proprietary use
that brings IDC compute, storage, and network infrastructure into
the cloud and supports hardware acceleration. Today, Alibaba
Group’s core businesses have widely adopted the CIPU system that is
integrated with our Apsara Operating System and supported by
cloud-oriented CPU chips, which together deliver significant
improvement in computing power and efficiency. The performance
under this new architecture demonstrated more than 20% improvement
compared to the industry average.
Serverless:
- Alibaba Cloud is making its key cloud products serverless to
enable customers to concentrate on product development and
deployment without worrying about managing servers and
infrastructure. Continuing adoption of serverless technologies
helps our customers increase business flexibility and cost
effectiveness. Currently, Alibaba Cloud has more than 20 serverless
products and continues to enable more product categories to become
serverless.
Ecosystem:
- Alibaba DAMO Academy unveiled ModelScope, an open-source
community dedicated for global researchers and developers to
develop and share AI models in an easy and cost-effective way that
can be deployed on Alibaba Cloud and other cloud platforms.
ModelScope community provides over 300 ready-to-deploy AI models
developed by Alibaba DAMO Academy that cover a wide range of fields
from computer vision to natural language processing (NLP).
Developers and researchers can test these AI models online for free
and they can also download and customize these models to develop
applications for their own use cases.
DingTalk
DingTalk, our digital collaboration workplace and application
development platform, offers new ways of working, sharing and
collaboration for modern enterprises and organizations. Through
offering the low-code and no-code application development platform,
the integration of DingTalk with Alibaba Cloud continues to further
facilitate the digital transformation of our enterprise
customers.
Digital Media and
Entertainment
In the September quarter, Youku’s daily average paying
subscriber base increased 8% year-over-year, primarily driven by
continued contribution from our 88VIP membership program and
quality content. Youku continues to improve operating efficiency
through disciplined investment in content and production
capability, which resulted in narrowing of losses year-over-year
for six consecutive quarters.
Updates on ESG
Initiatives
In August, we published our 2022 Environmental, Social and
Governance Report. The report sets forth our strategy and
initiatives in seven key areas: restoring our green planet,
supporting our people, enabling a sustainable digital life, fueling
small businesses, enhancing community inclusion and resilience,
facilitating participatory philanthropy, and building trust.
Share Repurchases
During the quarter ended September 30, 2022, we repurchased
approximately 24.3 million of ADSs (the equivalent of approximately
194.7 million of ordinary shares) for approximately US$2.1 billion
under our share repurchase program. As of September 30, 2022, we
had approximately 21.0 billion ordinary shares (the equivalent of
approximately 2.6 billion ADSs) outstanding. As of November
16, 2022, we had repurchased approximately US$18 billion of our
shares under our existing US$25 billion share repurchase program.
In addition, our board of directors has approved to increase our
existing share repurchase program by another US$15 billion and
extend the program through the end of March 2025.
SEPTEMBER QUARTER SUMMARY FINANCIAL
RESULTS
Three months ended September
30,
2021
2022
RMB
RMB
US$
YoY % Change
(in millions, except
percentages and per share amounts)
Revenue
200,690
207,176
29,124
3%
Income from operations
15,006
25,137
3,534
68%(2)
Operating margin
7%
12%
Adjusted EBITDA(1)
34,840
43,311
6,089
24%(3)
Adjusted EBITDA margin(1)
17%
21%
Adjusted EBITA(1)
28,033
36,164
5,084
29%(3)
Adjusted EBITA margin(1)
14%
17%
Net income (loss)
3,377(4)
(22,467)(4)
(3,158)
N/A
Net income (loss) attributable to ordinary
shareholders
5,367(4)
(20,561)(4)
(2,890)
N/A
Non-GAAP net income(1)
28,524
33,820
4,754
19%(4)
Diluted earnings (loss) per share(5)
0.25(4)
(0.97)(4)
(0.14)
N/A
Diluted earnings (loss) per ADS(5)
1.97(4)
(7.77)(4)
(1.09)
N/A
Non-GAAP diluted earnings per share(1)
(5)
1.40
1.61
0.23
15%(4)(6)
Non-GAAP diluted earnings per ADS(1)
(5)
11.20
12.92
1.82
15%(4)(6)
________________
(1)
See the sections entitled “Non-GAAP
Financial Measures” and “Reconciliations of Non-GAAP Measures to
the Nearest Comparable U.S. GAAP Measures” for more information
about the non-GAAP measures referred to within this results
announcement.
(2)
The year-over-year increase was mainly due
to an increase in adjusted EBITA as well as a decrease in
share-based compensation expense.
(3)
The year-over-year increases were
primarily attributable to the narrowed adjusted EBITA loss of Local
consumer services driven by Ele.me’s improved unit economics per
order and an increase in China commerce adjusted EBITA primarily
due to Taobao Deals’ and Taocaicai’s reduced losses as a result of
improved operating efficiency, partly offset by a decrease in
customer management revenue.
(4)
The year-over-year change was primarily
attributable to an increase in net losses arising from the decrease
in market prices of our equity investments in publicly-traded
companies and a decrease in share of results of equity method
investees, partly offset by an increase in adjusted EBITA. We
excluded net gains or losses arising from the changes in fair value
of our investments from our non-GAAP measurements.
(5)
Each ADS represents eight ordinary
shares.
(6)
The year-over-year percentages as stated
are calculated based on the exact amount and there may be minor
differences from the year-over-year percentages calculated based on
the RMB amounts after rounding.
SEPTEMBER QUARTER INFORMATION BY SEGMENTS
The table below sets forth selected financial information of
our operating segments for the periods indicated:
Three months ended September
30, 2022
China
commerce
International
commerce
Local
consumer
services
Cainiao
Cloud
Digital
media and
entertainment
Innovation
initiatives
and others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
US$
(in millions, except
percentages)
Revenue
135,431
15,747
13,073
13,367
20,757
8,392
409
—
207,176
29,124
YoY% change
(1
)%
4
%
21
%
36
%
4
%
4
%
(45
)%
N/A
3
%
Income (Loss) from operations
41,283
(1,652
)
(5,702
)
(661
)
(1,442
)
(697
)
(2,521
)
(3,471
)
25,137
3,534
Add: Share-based compensation expense
2,107
670
808
533
1,873
394
364
1,038
7,787
1,094
Add: Amortization of intangible assets
590
22
1,401
253
3
186
211
63
2,729
384
Add: Equity-settled donation expense
—
—
—
—
—
—
—
511
511
72
Adjusted EBITA
43,980
(960
)
(3,493
)
125
434
(117
)
(1,946
)
(1,859
)
36,164
5,084
Adjusted EBITA YoY% change(2)
6
%
61
%
47
%
N/A
10
%
87
%
(19
)%
(2
)%
29
%
Adjusted EBITA margin
32
%
(6
)%
(27
)%
1
%
2
%
(1
)%
(476
)%
N/A
17
%
Three months ended September
30, 2021
China
commerce
International
commerce
Local
consumer
services
Cainiao
Cloud
Digital
media and
entertainment
Innovation
initiatives
and others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
(in millions, except
percentages)
Revenue
136,120
15,092
10,806
9,846
20,007
8,081
738
—
200,690
Income (Loss) from operations
37,676
(3,298
)
(9,133
)
(1,219
)
(1,985
)
(1,700
)
(2,313
)
(3,022
)
15,006
Add: Share-based compensation expense
2,857
793
1,089
630
2,377
566
664
1,145
10,121
Add: Amortization of intangible assets
821
24
1,509
274
4
203
14
57
2,906
Adjusted EBITA
41,354
(2,481
)
(6,535
)
(315
)
396
(931
)
(1,635
)
(1,820
)
28,033
Adjusted EBITA margin
30
%
(16
)%
(60
)%
(3
)%
2
%
(12
)%
(222
)%
N/A
14
%
Six months ended September 30,
2022
China
commerce
International
commerce
Local
consumer
services
Cainiao
Cloud
Digital
media and
entertainment
Innovation
initiatives
and others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
US$
(in millions, except
percentages)
Revenue
277,366
31,198
23,705
25,509
38,442
15,623
888
—
412,731
58,021
YoY% change
(1
)%
3
%
13
%
19
%
7
%
(3
)%
(38
)%
N/A
2
%
Income (Loss) from operations
82,318
(3,794
)
(11,013
)
(1,472
)
(2,746
)
(1,912
)
(5,039
)
(6,262
)
50,080
7,040
Add: Share-based compensation expense
4,058
1,227
1,644
905
3,421
793
775
1,689
14,512
2,040
Add: Amortization of intangible assets
1,178
40
2,832
507
6
372
422
123
5,480
770
Add: Equity-settled donation expense
—
—
—
—
—
—
—
511
511
72
Adjusted EBITA
87,554
(2,527
)
(6,537
)
(60
)
681
(747
)
(3,842
)
(3,939
)
70,583
9,922
Adjusted EBITA YoY% change(2)
(5
)%
28
%
42
%
87
%
(7
)%
45
%
(25
)%
(14
)%
1
%
Adjusted EBITA margin
32
%
(8
)%
(28
)%
(0
)%
2
%
(5
)%
(433
)%
N/A
17
%
Six months ended September 30,
2021
China
commerce
International
commerce
Local
consumer
services
Cainiao
Cloud
Digital
media and
entertainment
Innovation
initiatives
and others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
(in millions, except
percentages)
Revenue
280,149
30,294
20,905
21,447
36,058
16,154
1,423
—
406,430
Income (Loss) from operations
85,279
(5,030
)
(16,338
)
(1,852
)
(3,628
)
(2,710
)
(4,263
)
(5,605
)
45,853
Add: Share-based compensation expense
5,240
1,464
1,877
842
4,356
949
1,167
2,037
17,932
Add: Amortization of intangible assets
1,657
55
3,156
549
8
411
28
115
5,979
Adjusted EBITA
92,176
(3,511
)
(11,305
)
(461
)
736
(1,350
)
(3,068
)
(3,453
)
69,764
Adjusted EBITA margin
33
%
(12
)%
(54
)%
(2
)%
2
%
(8
)%
(216
)%
N/A
17
%
Starting from the quarter ended December 31, 2021, our chief
operating decision maker (“CODM”) started to review information
under a new reporting structure, and segment reporting has been
updated to conform to this change, which also provides greater
transparency in our business progress and financial performance.
Our updated segments comprise:
- China commerce, which mainly includes our China commerce retail
businesses such as Taobao, Tmall, Taobao Deals, Taocaicai,
Freshippo, Tmall Supermarket, Sun Art, Tmall Global and Alibaba
Health, as well as wholesale business including 1688.com;
- International commerce, which mainly includes our international
commerce retail and wholesale businesses such as Lazada,
AliExpress, Trendyol, Daraz and Alibaba.com;
- Local consumer services, which mainly includes location-based
services, such as Ele.me, Taoxianda, Amap (previously reported
under the Innovation initiatives and others segment) and
Fliggy;
- Cainiao, which mainly includes our domestic and international
one-stop-shop logistics services and supply chain management
solutions;
- Cloud, which is comprised of Alibaba Cloud and DingTalk;
- Digital media and entertainment, which is comprised of Youku,
Quark, Alibaba Pictures, and other content and distribution
platforms, as well as our online games business; and
- Innovation initiatives and others, which includes businesses
such as DAMO Academy, Tmall Genie and others.
Comparative figures were reclassified to conform to this
presentation.
(1) Unallocated expenses primarily relate to corporate
administrative costs and other miscellaneous items that are not
allocated to individual segments. The equity-settled donation
expense was related to the allotment of shares to a charitable
trust, which is presented as an unallocated item in the segment
information because our management does not consider this as part
of the segment operating performance measure.
(2) For a more intuitive presentation, widening of loss in YoY%
is shown in terms of negative growth rate, and narrowing of loss in
YoY% is shown in terms of positive growth rate.
SEPTEMBER QUARTER SEGMENT RESULTS
Revenue for the quarter ended September 30, 2022 was RMB207,176
million (US$29,124 million), an increase of 3% compared to
RMB200,690 million in the same quarter of 2021.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended September
30,
2021
2022
RMB
% of Revenue
RMB
US$
% of Revenue
YoY % Change
(in millions, except
percentages)
China commerce:
China commerce retail
- Customer management
71,131
36
%
66,497
9,348
32
%
(7
)%
- Direct sales and others(1)
60,815
30
%
64,725
9,099
31
%
6
%
131,946
66
%
131,222
18,447
63
%
(1
)%
China commerce wholesale
4,174
2
%
4,209
592
2
%
1
%
Total China commerce
136,120
68
%
135,431
19,039
65
%
(1
)%
International commerce:
International commerce retail
10,375
5
%
10,738
1,510
5
%
3
%
International commerce wholesale
4,717
2
%
5,009
704
3
%
6
%
Total International commerce
15,092
7
%
15,747
2,214
8
%
4
%
Local consumer services
10,806
5
%
13,073
1,838
6
%
21
%
Cainiao
9,846
5
%
13,367
1,879
7
%
36
%
Cloud
20,007
10
%
20,757
2,918
10
%
4
%
Digital media and entertainment
8,081
4
%
8,392
1,179
4
%
4
%
Innovation initiatives and others
738
1
%
409
57
0
%
(45
)%
Total
200,690
100
%
207,176
29,124
100
%
3
%
________________
(1)
Direct sales and others revenue under
China commerce retail primarily represents our direct sales
businesses, comprising mainly Sun Art, Freshippo and Tmall
Supermarket, where revenue and the cost of inventory are recorded
on a gross basis.
China Commerce
(i) Segment revenue
- China Commerce Retail Business
Revenue from our China commerce retail business in the quarter
ended September 30, 2022 was RMB131,222 million (US$18,447
million), a decrease of 1% compared to RMB131,946 million in the
same quarter of 2021.
Customer management revenue decreased by 7% year-over-year,
primarily due to the low single-digit decline of online physical
goods GMV generated on Taobao and Tmall, excluding unpaid orders
year-over-year, mainly as a result of softer consumption demand,
COVID-19 resurgence and restrictions, as well as ongoing
competition. However, the decline narrowed compared to the prior
June quarter as key categories such as apparel and accessories and
consumer electronics saw less year-over-year decline. Healthcare
products and interests-based consumption categories such as outdoor
and active gear and pet care continued to exhibit resilient
demand.
Direct sales and others revenue under China commerce retail
business in the quarter ended September 30, 2022 was RMB64,725
million (US$9,099 million), an increase of 6% compared to RMB60,815
million in the same quarter of 2021, primarily due to the revenue
growth contributed by our Freshippo and Alibaba Health’s direct
sales businesses.
- China Commerce Wholesale Business
Revenue from our China commerce wholesale business in the
quarter ended September 30, 2022 was RMB4,209 million (US$592
million), an increase of 1% compared to RMB4,174 million in the
same quarter of 2021.
(ii) Segment adjusted EBITA
China commerce adjusted EBITA increased by 6% to RMB43,980
million (US$6,183 million) in the quarter ended September 30, 2022,
compared to RMB41,354 million in the same quarter of 2021. The
increase was primarily due to Taobao Deals’ and Taocaicai’s reduced
losses as a result of improved operating efficiency, partly offset
by a decrease in customer management revenue, which also led to an
increase in adjusted EBITA margin from 30% in the quarter ended
September 30, 2021 to 32% in the quarter ended September 30, 2022.
During the quarter ended September 30, 2022, Taobao Deals
significantly narrowed losses year-over-year, driven by optimized
spending in user acquisition. Taocaicai significantly narrowed
losses year-over-year, driven by optimized pricing strategy,
enhanced sourcing capability and lowered operation and fulfillment
costs.
International Commerce
(i) Segment revenue
- International Commerce Retail Business
Revenue from our International commerce retail business in the
quarter ended September 30, 2022 was RMB10,738 million (US$1,510
million), an increase of 3% compared to RMB10,375 million in the
same quarter of 2021. The increase was primarily due to an increase
in revenue contributed by Trendyol as a result of the strong order
growth from its e-commerce business and more efficient use of
subsidies, partly offset by the decrease in revenue due to
declining orders of AliExpress as a result of the depreciation of
the Euro against U.S. dollar.
- International Commerce Wholesale Business
Revenue from our International commerce wholesale business in
the quarter ended September 30, 2022 was RMB5,009 million (US$704
million), an increase of 6% compared to RMB4,717 million in the
same quarter of 2021. The increase was primarily due to an increase
in revenue generated by cross-border related value-added
services.
(ii) Segment adjusted EBITA
International commerce adjusted EBITA was a loss of RMB960
million (US$135 million) in the quarter ended September 30, 2022,
compared to a loss of RMB2,481 million in the same quarter of 2021.
The decrease in loss year-over-year was primarily due to the
reduced losses from Lazada and Trendyol. Continued narrowing of
losses from Lazada was a result of continued improvement in
monetization rate by offering more value-added services as well as
enhancing operating efficiency. The reduced loss from Trendyol is
primarily due to revenue growth and enhanced operating
efficiency.
Local Consumer Services
(i) Segment revenue
Revenue from Local consumer services, which includes “To-Home”
and “To-Destination” businesses such as Ele.me, Amap and Fliggy,
was RMB13,073 million (US$1,838 million) in the quarter ended
September 30, 2022, an increase of 21% compared to RMB10,806
million in the same quarter of 2021, primarily due to revenue
growth resulted from strong growth of Amap orders, as well as
higher average order value and more efficient use of subsidies that
were contra revenue of Ele.me.
(ii) Segment adjusted EBITA
Local consumer services adjusted EBITA was a loss of RMB3,493
million (US$491 million) in the quarter ended September 30, 2022,
compared to a loss of RMB6,535 million in the same quarter of 2021,
primarily due to the continued narrowing of losses from our
“To-Home” and “To-Destination” businesses. Narrowing of loss from
our “To-Home” business was driven by Ele.me’s improved unit
economics per order, which was due to increased average order value
year-over-year, reduced delivery cost per order and optimized user
acquisition spending. Narrowing of loss from our “To-Destination”
business was driven by the strong order growth of Amap business, as
well as optimized spending in user acquisition.
Cainiao
(i) Segment revenue
Revenue from Cainiao, which represents revenue from its domestic
and international one-stop-shop logistics services and supply chain
management solutions, after inter-segment elimination, was
RMB13,367 million (US$1,879 million) in the quarter ended September
30, 2022, an increase of 36% compared to RMB9,846 million in the
same quarter of 2021, primarily contributed by the increase in
revenue from domestic consumer logistics services as a result of
service model upgrade since late 2021 where Cainiao takes on more
responsibilities throughout the logistics process to better serve
consumers and enhance consumer experience, as well as the increase
in revenue from international fulfillment solution services.
Total revenue generated by Cainiao, before inter-segment
elimination, which includes revenue from services provided to other
Alibaba businesses, was RMB18,282 million (US$2,570 million), an
increase of 26% compared to RMB14,559 million in the same quarter
of 2021. This increase also reflected the growth of fulfillment
solutions and value-added services provided to our China commerce
retail businesses, such as Tmall, Taobao and Taobao Deals.
(ii) Segment adjusted EBITA
Cainiao adjusted EBITA was a profit of RMB125 million (US$18
million) in the quarter ended September 30, 2022, compared to a
loss of RMB315 million in the same quarter of 2021.
Cloud
(i) Segment revenue
Revenue from our Cloud segment, after inter-segment elimination,
was RMB20,757 million (US$2,918 million) in the quarter ended
September 30, 2022, an increase of 4% compared to RMB20,007 million
in the same quarter of 2021. Year-over-year revenue growth of our
Cloud segment reflected the strong revenue growth from non-Internet
industries driven by financial services, telecommunication and
public services industries, partly offset by a decline in revenue
from customers in the Internet industry mainly driven by declining
revenue from the top Internet customer that has gradually stopped
using our overseas cloud services for its international business
due to non-product related requirements and online education
customers, as well as softening demand from other customers in
China’s Internet industry.
Total revenue from our Cloud segment, before inter-segment
elimination, which includes revenue from services provided to other
Alibaba businesses, was RMB26,760 million (US$3,762 million), an
increase of 2% compared to RMB26,262 million in the same quarter of
2021.
(ii) Segment adjusted EBITA
Cloud adjusted EBITA, which comprises Alibaba Cloud and
DingTalk, was RMB434 million (US$61 million) in the quarter ended
September 30, 2022, compared to RMB396 million in the same quarter
of 2021.
Digital Media and
Entertainment
(i) Segment revenue
Revenue from our Digital media and entertainment segment in the
quarter ended September 30, 2022 was RMB8,392 million (US$1,179
million), an increase of 4%, compared to RMB8,081 million in the
same quarter of 2021, primarily due to the increase in revenue from
Alibaba Pictures and Youku, which was partly offset by a decrease
in online games business revenue.
(ii) Segment adjusted EBITA
Digital media and entertainment adjusted EBITA in the quarter
ended September 30, 2022 was a loss of RMB117 million (US$16
million), compared to a loss of RMB931 million in the same quarter
of 2021, primarily due to our disciplined investment in content and
production capability and increase in revenue, which resulted in
narrowing of loss from Youku, as well as improved quality content
that resulted in an increase in revenue from Alibaba Pictures.
Innovation Initiatives and
Others
(i) Segment revenue
Revenue from Innovation initiatives and others was RMB409
million (US$57 million) in the quarter ended September 30, 2022, a
decrease of 45% compared to RMB738 million in the same quarter of
2021.
(ii) Segment adjusted EBITA
Innovation initiatives and others adjusted EBITA in the quarter
ended September 30, 2022 was a loss of RMB1,946 million (US$274
million), compared to a loss of RMB1,635 million in the same
quarter of 2021, primarily due to our investments in technology and
innovation.
SEPTEMBER QUARTER OTHER FINANCIAL RESULTS
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense, and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended September
30,
% of Revenue YoY
change
2021
2022
RMB
% of Revenue
RMB
US$
% of Revenue
(in millions, except
percentages)
Costs and expenses:
Cost of revenue
129,750
64
%
131,210
18,445
64
%
0
%
Product development expenses
15,297
8
%
15,150
2,130
7
%
(1
)%
Sales and marketing expenses
28,857
14
%
22,359
3,143
11
%
(3
)%
General and administrative expenses
8,874
5
%
10,591
1,488
5
%
0
%
Amortization of intangible assets
2,906
2
%
2,729
384
1
%
(1
)%
Total costs and expenses
185,684
93
%
182,039
25,590
88
%
(5
)%
Share-based compensation
expense:
Cost of revenue
2,419
1
%
1,202
169
1
%
0
%
Product development expenses
4,446
2
%
3,834
539
2
%
0
%
Sales and marketing expenses
1,237
1
%
871
122
0
%
(1
)%
General and administrative expenses
2,019
1
%
1,880
264
1
%
0
%
Total share-based compensation expense
10,121
5
%
7,787
1,094
4
%
(1
)%
Costs and expenses excluding
share-based compensation expense:
Cost of revenue
127,331
63
%
130,008
18,276
63
%
0
%
Product development expenses
10,851
6
%
11,316
1,591
5
%
(1
)%
Sales and marketing expenses
27,620
13
%
21,488
3,021
11
%
(2
)%
General and administrative expenses
6,855
4
%
8,711
1,224
4
%
0
%
Amortization of intangible assets
2,906
2
%
2,729
384
1
%
(1
)%
Total costs and expenses excluding
share-based compensation expense
175,563
88
%
174,252
24,496
84
%
(4
)%
Cost of revenue – Cost of revenue in the quarter ended
September 30, 2022 was RMB131,210 million (US$18,445 million), or
64% of revenue, compared to RMB129,750 million, or 64% of revenue,
in the same quarter of 2021. Without the effect of share-based
compensation expense, cost of revenue as a percentage of revenue
would have remained stable at 63% in the quarter ended September
30, 2022 and the same quarter last year.
Product development expenses – Product development
expenses in the quarter ended September 30, 2022 were RMB15,150
million (US$2,130 million), or 7% of revenue, compared to RMB15,297
million, or 8% of revenue, in the same quarter of 2021. Without the
effect of share-based compensation expense, product development
expenses as a percentage of revenue would have decreased from 6% in
the quarter ended September 30, 2021 to 5% in the quarter ended
September 30, 2022.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended September 30, 2022 were RMB22,359
million (US$3,143 million), or 11% of revenue, compared to
RMB28,857 million, or 14% of revenue, in the same quarter of 2021.
Without the effect of share-based compensation expense, sales and
marketing expenses as a percentage of revenue would have decreased
from 13% in the quarter ended September 30, 2021 to 11% in the
quarter ended September 30, 2022.
General and administrative expenses – General and
administrative expenses in the quarter ended September 30, 2022
were RMB10,591 million (US$1,488 million), or 5% of revenue,
compared to RMB8,874 million, or 5% of revenue, in the same quarter
of 2021. Without the effect of share-based compensation expense,
general and administrative expenses as a percentage of revenue
would have remained stable at 4% in the quarter ended September 30,
2022 and the same quarter last year.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended September 30, 2022 was RMB7,787 million
(US$1,094 million), compared to RMB10,121 million in the same
quarter of 2021. Share-based compensation expense as a percentage
of revenue decreased from 5% in the quarter ended September 30,
2021 to 4% in the quarter ended September 30, 2022.
The following table sets forth our analysis of share-based
compensation expense for the quarters indicated by type of
share-based awards:
Three months ended September
30,
2021
2022
% Change
RMB
% of Revenue
RMB
US$
% of Revenue
YoY
(in millions, except
percentages)
By type of awards:
Alibaba Group share-based awards(1)
8,412
4
%
6,472
909
3
%
(23
)%
Ant Group share-based awards(2)
366
0
%
163
23
0
%
(55
)%
Others(3)
1,343
1
%
1,152
162
1
%
(14
)%
Total share-based compensation expense
10,121
5
%
7,787
1,094
4
%
(23
)%
________________
(1)
This represents Alibaba Group share-based
awards granted to our employees.
(2)
This represents Ant Group share-based
awards granted to our employees, which is subject to mark-to-market
accounting treatment.
(3)
This represents share-based awards of our
subsidiaries.
Share-based compensation expense related to Alibaba Group
share-based awards decreased in the quarter ended September 30,
2022 compared to the same quarter of 2021. This decrease is
primarily due to the general decrease in the average fair market
value of the awards granted.
We expect that our share-based compensation expense will
continue to be affected by changes in the fair value of the
underlying awards and the quantity of awards we grant in the
future.
Amortization of intangible assets – Amortization of
intangible assets in the quarter ended September 30, 2022 was
RMB2,729 million (US$384 million), a decrease of 6% from RMB2,906
million in the same quarter of 2021.
Income from operations and operating
margin
Income from operations in the quarter ended September 30, 2022
was RMB25,137 million (US$3,534 million), or 12% of revenue, an
increase of 68% compared to RMB15,006 million, or 7% of revenue, in
the same quarter of 2021, mainly due to the increase in adjusted
EBITA as well as decrease in share-based compensation expense. The
year-over-year increase in adjusted EBITA was primarily
attributable to the narrowed adjusted EBITA loss of Local consumer
services driven by Ele.me’s improved unit economics per order and
an increase in China commerce adjusted EBITA primarily due to
Taobao Deals’ and Taocaicai’s reduced losses as a result of
improved operating efficiency, partly offset by a decrease in
customer management revenue.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA increased 24% year-over-year to RMB43,311
million (US$6,089 million) in the quarter ended September 30, 2022,
compared to RMB34,840 million in the same quarter of 2021. Adjusted
EBITA increased 29% year-over-year to RMB36,164 million (US$5,084
million) in the quarter ended September 30, 2022, compared to
RMB28,033 million in the same quarter of 2021. The year-over-year
increase was primarily due to the narrowed adjusted EBITA loss of
Local consumer services driven by Ele.me’s improved unit economics
per order and an increase in China commerce adjusted EBITA
primarily due to Taobao Deals’ and Taocaicai’s reduced losses as a
result of improved operating efficiency, partly offset by a
decrease in customer management revenue. A reconciliation of net
income (loss) 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 as well as
a reconciliation of income from operations to adjusted EBITA are
set forth in the section entitled “September Quarter Information by
Segments” above.
Interest and investment income,
net
Interest and investment income, net in the quarter ended
September 30, 2022 was a loss of RMB42,452 million (US$5,968
million), compared to a loss of RMB11,456 million in the same
quarter of 2021. The year-over-year increase in loss was primarily
due to an increase in net losses arising from the decrease in
market prices of our equity investments in publicly-traded
companies.
The above-mentioned losses were excluded from our non-GAAP net
income.
Other income, net
Other income, net in the quarter ended September 30, 2022 was
RMB2,944 million (US$414 million), compared to RMB1,663 million in
the same quarter of 2021. The year-over-year increase was primarily
due to an increase in net exchange gain arising from exchange rate
fluctuation between Renminbi and U.S. dollar in the quarter ended
September 30, 2022.
Income tax expenses
Income tax expenses in the quarter ended September 30, 2022 were
RMB2,572 million (US$362 million), compared to RMB6,087 million in
the same quarter of 2021.
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 equity method investees, our effective tax rate would have been
18% in the quarter ended September 30, 2022.
Share of results of equity method
investees
Share of results of equity method investees in the quarter ended
September 30, 2022 was a loss of RMB4,136 million (US$581 million),
compared to a profit of RMB5,518 million in the same quarter of
2021. Share of results of equity method investees in the quarter
ended September 30, 2022 and the same quarter in the prior year
consisted of the following:
Three months ended September
30,
2021
2022
RMB
RMB
US$
(in millions)
Share of profit (loss) of equity method
investees
- Ant Group
6,504
2,392
336
- Others
(126
)
(1,878
)
(264
)
Impairment loss
—
(3,626
)
(510
)
Others(1)
(860
)
(1,024
)
(143
)
Total
5,518
(4,136
)
(581
)
________________
(1)
“Others” mainly include amortization of
intangible assets of equity method investees, share-based
compensation expense related to share-based awards granted to
employees of our equity method investees, as well as gain or loss
arising from the dilution of our investments in equity method
investees.
We record our share of results of all equity method investees
one quarter in arrears. The year-over-year decrease in share of
profit of Ant Group was due to the net decrease in fair values of
investments held by Ant Group and decrease in Ant Group's operating
profit. In addition, we recorded an impairment loss of RMB3,626
million (US$510 million) in this quarter with respect to certain
equity method investees as a result of severe and prolonged decline
in market values of certain equity method investees against their
respective carrying value.
Net income (loss) and Non-GAAP net
income
Our net loss in the quarter ended September 30, 2022 was
RMB22,467 million (US$3,158 million), compared to net income of
RMB3,377 million in the same quarter of 2021 was primarily
attributable to the increase in net losses arising from the
decrease in market prices of our equity investments in
publicly-traded companies, and a decrease in share of results of
equity method investees, partly offset by the increase in adjusted
EBITA.
Excluding share-based compensation expense, revaluation and
disposal gains/losses of investments, impairment of investments and
certain other items, non-GAAP net income in the quarter ended
September 30, 2022 was RMB33,820 million (US$4,754 million), an
increase of 19% compared to RMB28,524 million in the same quarter
of 2021. A reconciliation of net income (loss) to non-GAAP net
income is included at the end of this results announcement.
Net income (loss) attributable to
ordinary shareholders
Net loss attributable to ordinary shareholders in the quarter
ended September 30, 2022 was RMB20,561 million (US$2,890 million),
compared to net income attributable to ordinary shareholders of
RMB5,367 million in the same quarter of 2021 was primarily
attributable to an increase in net losses arising from the decrease
in market prices of our equity investments in publicly-traded
companies and a decrease in share of results of equity method
investees, partly offset by the increase in adjusted EBITA.
Diluted earnings (loss) per ADS/share
and non-GAAP diluted earnings per ADS/share
Diluted loss per ADS in the quarter ended September 30, 2022 was
RMB7.77 (US$1.09), compared to diluted earnings per ADS of RMB1.97
in the same quarter in 2021. Excluding share-based compensation
expense, revaluation and disposal gains/losses of investments,
impairment of investments and certain other items, non-GAAP diluted
earnings per ADS in the quarter ended September 30, 2022 was
RMB12.92 (US$1.82), an increase of 15% compared to RMB11.20 in the
same quarter of 2021.
Diluted loss per share in the quarter ended September 30, 2022
was RMB0.97 (US$0.14 or HK$1.07), compared to diluted earnings per
share of RMB0.25 in the same quarter of 2021. Excluding share-based
compensation expense, revaluation and disposal gains/losses of
investments, impairment of investments and certain other items,
non-GAAP diluted earnings per share in the quarter ended September
30, 2022 was RMB1.61 (US$0.23 or HK$1.78), an increase of 15%
compared to RMB1.40 in the same quarter of 2021.
A reconciliation of diluted earnings (loss) 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.
Cash and cash
equivalents, short-term investments
and other treasury investments
As of September 30, 2022, cash and cash equivalents, short-term
investments and other treasury investments included in equity
securities and other investments on the consolidated balance
sheets, were RMB484,877 million (US$68,163 million), compared to
RMB446,412 million as of March 31, 2022. Other treasury investments
consist of fixed deposits with original maturities over one year.
The increase in cash and cash equivalents, short-term investments
and other treasury investments during the six months ended
September 30, 2022 was primarily due to free cash flow generated
from operations of RMB57,882 million (US$8,137 million) and effect
of exchange rate changes of RMB19,588 million (US$2,754 million)
mainly due to the appreciation of the U.S. dollar against Renminbi,
partly offset by cash used in repurchase of ordinary shares of
RMB37,680 million (US$5,297 million) and net cash used in
investment and acquisition activities of RMB4,208 million (US$592
million).
Net cash from operating activities and
free cash flow
In the quarter ended September 30, 2022, net cash provided by
operating activities was RMB47,112 million (US$6,623 million), an
increase of 31% compared to RMB35,830 million in the same quarter
of 2021. Free cash flow, a non-GAAP measurement of liquidity, was
RMB35,709 million (US$5,020 million), an increase of 61% compared
to RMB22,239 million in the quarter ended September 30, 2021,
mainly due to narrowing losses in certain businesses as a result of
operating efficiency, as well as the decrease in capital
expenditures and acquisition of licensed copyrights. A
reconciliation of net cash provided by operating activities to free
cash flow is included at the end of this results announcement.
Net cash used in investing
activities
During the quarter ended September 30, 2022, net cash used in
investing activities of RMB8,148 million (US$1,145 million)
primarily reflected (i) capital expenditures of RMB12,112 million
(US$1,703 million), (ii) cash outflow of RMB6,049 million (US$850
million) for investment and acquisition activities, and (iii) an
increase in other treasury investments by RMB8,000 million
(US$1,125 million). These cash outflows were partially offset by a
decrease in short-term investments by RMB13,355 million (US$1,877
million) and cash inflow of RMB3,677 million (US$517 million) from
disposal of investments.
Net cash used in financing
activities
During the quarter ended September 30, 2022, net cash used in
financing activities of RMB11,470 million (US$1,613 million)
primarily reflected cash used in repurchase of ordinary shares of
RMB13,800 million (US$1,940 million).
Employees
As of September 30, 2022, we had a total of 243,903 employees,
compared to 245,700 as of June 30, 2022.
WEBCAST AND CONFERENCE CALL INFORMATION
Alibaba Group’s management will hold a conference call to
discuss the financial results at 7:30 a.m. U.S. Eastern Time (8:30
p.m. Hong Kong Time) on Thursday, November 17, 2022.
All participants must pre-register to join this conference call
using the Participant Registration link below: English:
https://s1.c-conf.com/diamondpass/10026188-8zkda0.html Chinese:
https://s1.c-conf.com/diamondpass/10026189-wl8eug.html
Upon registration, each participant will receive details for the
conference call, including dial-in numbers, conference call
passcode and a unique access PIN. To join the conference, please
dial the number provided, enter the passcode followed by your PIN,
and you will join the conference.
A live webcast of the earnings conference call can be accessed
at
https://www.alibabagroup.com/en-US/ir-financial-reports-quarterly-results.
An archived webcast will be available through the same link
following the call. A replay of the conference call will be
available for one week from the date of the conference (Dial-in
number: +1 855 883 1031; English conference PIN 10026188; Chinese
conference PIN 10026189).
Please visit Alibaba Group’s Investor Relations website at
https://www.alibabagroup.com/en-US/investor-relations on November
17, 2022 to view the earnings release and accompanying slides prior
to the conference call.
ABOUT ALIBABA GROUP
Alibaba Group’s mission is to make it easy to do business
anywhere. The company aims to build the future infrastructure of
commerce. It envisions that its customers will meet, work and live
at Alibaba, and that it will be a good company that lasts for 102
years.
EXCHANGE RATE INFORMATION
This results announcement contains translations of certain
Renminbi (“RMB”) amounts into U.S. dollars (“US$”) and Hong Kong
dollars (“HK$”) for the convenience of the reader. Unless otherwise
stated, all translations of RMB into US$ were made at RMB7.1135 to
US$1.00, the exchange rate on September 30, 2022 as set forth in
the H.10 statistical release of the Federal Reserve Board, and all
translations of RMB into HK$ were made at RMB0.90444 to HK$1.00,
the middle rate on September 30, 2022 as published by the People’s
Bank of China. The percentages stated in this announcement are
calculated based on the RMB amounts and there may be minor
differences due to rounding.
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
“may,” “will,” “expect,” “anticipate,” “future,” “aim,” “estimate,”
“intend,” “seek, ” “plan,” “believe,” “potential,” “continue,”
“ongoing,” “target,” “guidance,” “is/are likely to” 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 Hong Kong Stock Exchange 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. These factors include but are not limited to the
following: Alibaba’s corporate structure, including the VIE
structure it uses to operate certain businesses in the PRC,
Alibaba’s ability to maintain the trusted status of its ecosystem;
risks associated with sustained investments in Alibaba’s
businesses; Alibaba’s ability to maintain or grow its revenue or
business, including expanding its international and cross border
businesses and operations; risks associated with Alibaba’s
acquisitions, investments and alliances; uncertainties arising from
competition among countries and geopolitical tensions, including
protectionist or national security policies; uncertainties and
risks associated with a broad range of complex laws and regulations
(including in the areas of anti-monopoly and anti-unfair
competition, consumer protection, data security and privacy
protection and regulation of Internet platforms) in the PRC and
globally; cybersecurity risks; fluctuations in general economic and
business conditions in China and globally; impacts of the COVID-19
pandemic 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), 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 table captioned “Reconciliations of Non-GAAP Measures
to the Nearest Comparable U.S. GAAP Measures” in this results
announcement.
We believe that adjusted EBITDA, 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 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, 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, 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 method investees
(ii) certain non-cash expenses, consisting of share-based
compensation expense, amortization of intangible assets and,
depreciation and impairment of property and equipment, operating
lease cost relating to land use rights, as well as equity-settled
donation expense, 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 method
investees, (ii) certain non-cash expenses, consisting of
share-based compensation expense and amortization of intangible
assets, as well as equity-settled donation expense, which we do not
believe are reflective of our core operating performance during the
periods presented.
Non-GAAP net income represents net income before
share-based compensation expense, amortization of intangible
assets, impairment of investments, gain or loss on deemed
disposals/disposals/revaluation of investments, equity-settled
donation expense and others, as adjusted for the tax effects.
Non-GAAP diluted earnings per share represents non-GAAP
net income attributable to ordinary shareholders for computing
non-GAAP diluted earnings per share divided by the weighted average
number of shares outstanding during the periods on a diluted basis
for computing non-GAAP diluted earnings per share. 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) and intangible assets (excluding those acquired through
acquisitions), as well as adjustments to exclude from net cash
provided by operating activities the consumer protection fund
deposits from merchants on our 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 marketplaces because these deposits
are restricted for the purpose of compensating consumers for claims
against merchants.
The table captioned “Reconciliations of Non-GAAP Measures to the
Nearest Comparable U.S. GAAP Measures” in this results announcement
have more details on the non-GAAP financial measures that are most
directly comparable to GAAP financial measures and the related
reconciliations between these financial measures.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED INCOME
STATEMENTS
Three months ended September
30,
Six months ended September
30,
2021
2022
2021
2022
RMB
RMB
US$
RMB
RMB
US$
(in millions, except per share
data)
(in millions, except per share
data)
Revenue
200,690
207,176
29,124
406,430
412,731
58,021
Cost of revenue
(129,750
)
(131,210
)
(18,445
)
(253,847
)
(260,867
)
(36,672
)
Product development expenses
(15,297
)
(15,150
)
(2,130
)
(28,816
)
(29,343
)
(4,125
)
Sales and marketing expenses
(28,857
)
(22,359
)
(3,143
)
(55,893
)
(47,937
)
(6,740
)
General and administrative expenses
(8,874
)
(10,591
)
(1,488
)
(16,042
)
(19,024
)
(2,674
)
Amortization of intangible assets
(2,906
)
(2,729
)
(384
)
(5,979
)
(5,480
)
(770
)
Income from operations
15,006
25,137
3,534
45,853
50,080
7,040
Interest and investment income, net
(11,456
)
(42,452
)
(5,968
)
2,645
(37,083
)
(5,213
)
Interest expense
(1,267
)
(1,388
)
(195
)
(2,534
)
(2,632
)
(370
)
Other income, net
1,663
2,944
414
3,820
3,053
429
Income (Loss) before income tax and
share of results of equity method investees
3,946
(15,759
)
(2,215
)
49,784
13,418
1,886
Income tax expenses
(6,087
)
(2,572
)
(362
)
(15,183
)
(7,971
)
(1,120
)
Share of results of equity method
investees
5,518
(4,136
)
(581
)
11,611
(7,616
)
(1,071
)
Net income (loss)
3,377
(22,467
)
(3,158
)
46,212
(2,169
)
(305
)
Net loss attributable to noncontrolling
interests
2,111
2,034
286
4,344
4,395
618
Net income (loss) attributable to Alibaba
Group Holding Limited
5,488
(20,433
)
(2,872
)
50,556
2,226
313
Accretion of mezzanine equity
(121
)
(128
)
(18
)
(48
)
(48
)
(7
)
Net income (loss) attributable to
ordinary shareholders
5,367
(20,561
)
(2,890
)
50,508
2,178
306
Earnings (Loss) per share attributable
to ordinary shareholders(1)
Basic
0.25
(0.97
)
(0.14
)
2.33
0.10
0.01
Diluted
0.25
(0.97
)
(0.14
)
2.30
0.10
0.01
Earnings (Loss) per ADS attributable to
ordinary shareholders(1)
Basic
1.99
(7.77
)
(1.09
)
18.66
0.82
0.12
Diluted
1.97
(7.77
)
(1.09
)
18.44
0.82
0.12
Weighted average number of shares used
in calculating earnings per ordinary share (million
shares)(1)
Basic
21,562
21,164
21,658
21,231
Diluted
21,794
21,164
21,916
21,329
________________
(1)
Each ADS represents eight ordinary
shares.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE
SHEETS
As of March 31,
As of September 30,
2022
2022
RMB
RMB
US$
(in millions)
Assets
Current assets:
Cash and cash equivalents
189,898
206,711
29,059
Short-term investments
256,514
270,166
37,979
Restricted cash and escrow receivables
37,455
40,139
5,643
Equity securities and other
investments
8,673
10,233
1,439
Prepayments, receivables and other
assets
145,995
150,460
21,151
Total current assets
638,535
677,709
95,271
Equity securities and other
investments
223,611
198,197
27,862
Prepayments, receivables and other
assets
113,147
111,658
15,697
Investment in equity method investees
219,642
219,964
30,922
Property and equipment, net
171,806
179,567
25,243
Intangible assets, net
59,231
54,431
7,652
Goodwill
269,581
271,018
38,099
Total assets
1,695,553
1,712,544
240,746
Liabilities, Mezzanine Equity and
Shareholders’ Equity
Current liabilities:
Current bank borrowings
8,841
6,619
930
Current unsecured senior notes
—
4,983
701
Income tax payable
21,753
16,758
2,356
Accrued expenses, accounts payable and
other liabilities
271,460
271,863
38,218
Merchant deposits
14,747
13,530
1,902
Deferred revenue and customer advances
66,983
69,108
9,715
Total current liabilities
383,784
382,861
53,822
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
As of March 31,
As of September 30,
2022
2022
RMB
RMB
US$
(in millions)
Deferred revenue
3,490
3,490
490
Deferred tax liabilities
61,706
62,329
8,762
Non-current bank borrowings
38,244
49,046
6,895
Non-current unsecured senior notes
94,259
100,792
14,169
Other liabilities
31,877
31,554
4,436
Total liabilities
613,360
630,072
88,574
Commitments and contingencies
Mezzanine equity
9,655
9,720
1,367
Shareholders’ equity:
Ordinary shares
1
1
—
Additional paid-in capital
410,506
411,045
57,784
Treasury shares at cost
(2,221
)
(14,828
)
(2,085
)
Subscription receivables
(46
)
(51
)
(7
)
Statutory reserves
9,839
10,760
1,513
Accumulated other comprehensive loss
(33,157
)
(5,312
)
(747
)
Retained earnings
563,557
546,322
76,801
Total shareholders’ equity
948,479
947,937
133,259
Noncontrolling interests
124,059
124,815
17,546
Total equity
1,072,538
1,072,752
150,805
Total liabilities, mezzanine equity and
equity
1,695,553
1,712,544
240,746
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three months ended September
30,
Six months ended September
30,
2021
2022
2021
2022
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net cash provided by operating
activities
35,830
47,112
6,623
69,433
80,981
11,384
Net cash used in investing activities
(29,773
)
(8,148
)
(1,145
)
(77,548
)
(35,755
)
(5,026
)
Net cash used in financing activities
(23,670
)
(11,470
)
(1,613
)
(35,138
)
(32,492
)
(4,568
)
Effect of exchange rate changes on cash
and cash equivalents, restricted cash and escrow receivables
195
3,436
483
(1,997
)
6,762
951
(Decrease) Increase in cash and cash
equivalents, restricted cash and escrow receivables
(17,418
)
30,930
4,348
(45,250
)
19,496
2,741
Cash and cash equivalents, restricted cash
and escrow receivables at beginning of period
328,637
215,919
30,354
356,469
227,353
31,961
Cash and cash equivalents, restricted cash
and escrow receivables at end of period
311,219
246,849
34,702
311,219
246,849
34,702
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE U.S. GAAP MEASURES
The table below sets forth a
reconciliation of our net income (loss) to adjusted EBITA and
adjusted EBITDA for the periods indicated:
Three months ended September
30,
Six months ended September
30,
2021
2022
2021
2022
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net income (loss)
3,377
(22,467
)
(3,158
)
46,212
(2,169
)
(305
)
Adjustments to reconcile net income (loss)
to adjusted EBITA and adjusted EBITDA:
Interest and investment income, net
11,456
42,452
5,968
(2,645
)
37,083
5,213
Interest expense
1,267
1,388
195
2,534
2,632
370
Other income, net
(1,663
)
(2,944
)
(414
)
(3,820
)
(3,053
)
(429
)
Income tax expenses
6,087
2,572
362
15,183
7,971
1,120
Share of results of equity method
investees
(5,518
)
4,136
581
(11,611
)
7,616
1,071
Income from operations
15,006
25,137
3,534
45,853
50,080
7,040
Share-based compensation expense
10,121
7,787
1,094
17,932
14,512
2,040
Amortization of intangible assets
2,906
2,729
384
5,979
5,480
770
Equity-settled donation expense
—
511
72
—
511
72
Adjusted EBITA
28,033
36,164
5,084
69,764
70,583
9,922
Depreciation and impairment of property
and equipment, and operating lease cost relating to land use
rights
6,807
7,147
1,005
13,704
13,842
1,946
Adjusted EBITDA
34,840
43,311
6,089
83,468
84,425
11,868
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE U.S. GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of our net income (loss) to non-GAAP net income for
the periods indicated:
Three months ended September
30,
Six months ended September
30,
2021
2022
2021
2022
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net income (loss)
3,377
(22,467
)
(3,158
)
46,212
(2,169
)
(305
)
Adjustments to reconcile net income (loss)
to non-GAAP net income:
Share-based compensation expense
10,121
7,787
1,094
17,932
14,512
2,040
Amortization of intangible assets
2,906
2,729
384
5,979
5,480
770
Impairment of investments
3,120
10,020
1,408
3,517
13,134
1,846
Loss on deemed disposals/disposals/
revaluation of investments and others
11,273
38,560
5,421
649
36,848
5,180
Equity-settled donation expense
—
511
72
—
511
72
Tax effects (1)
(2,273
)
(3,320
)
(467
)
(2,324
)
(4,244
)
(596
)
Non-GAAP net income
28,524
33,820
4,754
71,965
64,072
9,007
________________
(1)
Tax effects primarily comprises tax
effects relating to share-based compensation expense, amortization
of intangible assets and certain gains and losses from investments,
and others.
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE U.S. GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of our diluted earnings (loss) per share/ADS to
non-GAAP diluted earnings per share/ADS for the periods
indicated:
Three months ended September
30,
Six months ended September
30,
2021
2022
2021
2022
RMB
RMB
US$
RMB
RMB
US$
(in millions, except per share
data)
(in millions, except per share
data)
Net income (loss) attributable to
ordinary shareholders – basic
5,367
(20,561
)
(2,890
)
50,508
2,178
306
Dilution effect on earnings arising from
option plans operated by equity method investees and
subsidiaries
(1
)
(1
)
—
(3
)
(1
)
—
Net income (loss) attributable to ordinary
shareholders – diluted
5,366
(20,562
)
(2,890
)
50,505
2,177
306
Non-GAAP adjustments to net income (loss)
attributable to ordinary shareholders(1)
25,147
54,909
7,718
25,753
63,525
8,930
Non-GAAP net income attributable
to ordinary shareholders for computing non-GAAP diluted earnings
per share/ADS
30,513
34,347
4,828
76,258
65,702
9,236
Weighted average number of shares on a
diluted basis for computing non-GAAP diluted earnings per share/ADS
(million shares)(4)
21,794
21,276
21,916
21,329
Diluted earnings (loss) per
share(2)(4)
0.25
(0.97
)
(0.14
)
2.30
0.10
0.01
Non-GAAP diluted earnings per
share(3)(4)
1.40
1.61
0.23
3.48
3.08
0.43
Diluted earnings (loss) per
ADS(2)(4)
1.97
(7.77
)
(1.09
)
18.44
0.82
0.12
Non-GAAP diluted earnings per
ADS(3)(4)
11.20
12.92
1.82
27.84
24.64
3.46
________________
(1)
See the table above for the reconciliation
of net income (loss) to non-GAAP net income for more information of
these non-GAAP adjustments.
(2)
Diluted earnings (loss) per share is
derived from net income (loss) attributable to ordinary
shareholders for computing diluted earnings (loss) per share
divided by weighted average number of shares on a diluted basis.
Diluted earnings (loss) per ADS is derived from the diluted
earnings (loss) per share after adjustment to the ordinary
share-to-ADS ratio.
(3)
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 for
computing non-GAAP diluted earnings per share. 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.
(4)
Each ADS represents eight ordinary
shares.
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO
THE NEAREST COMPARABLE U.S. GAAP MEASURES (CONTINUED)
The table below sets forth a
reconciliation of net cash provided by operating activities to free
cash flow for the periods indicated:
Three months ended September
30,
Six months ended September
30,
2021
2022
2021
2022
RMB
RMB
US$
RMB
RMB
US$
(in millions)
(in millions)
Net cash provided by operating
activities
35,830
47,112
6,623
69,433
80,981
11,384
Less: Purchase of property and equipment
(excluding land use rights and construction in progress relating to
office campuses)
(12,677
)
(10,957
)
(1,540
)
(23,574
)
(22,067
)
(3,102
)
Less: Purchase of intangible assets
(excluding those acquired through acquisitions)
(14
)
—
—
(15
)
(22
)
(3
)
Less: Changes in the consumer protection
fund deposits
(900
)
(446
)
(63
)
(2,922
)
(1,010
)
(142
)
Free cash flow
22,239
35,709
5,020
42,922
57,882
8,137
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221116005743/en/
Investor Relations Contact Rob Lin Investor Relations
Alibaba Group Holding Limited investor@alibaba-inc.com
Media Contacts: Cathy Yan cathy.yan@alibaba-inc.com
Ivy Ke ivy.ke@alibaba-inc.com
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