Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988,
“Alibaba” or “Alibaba Group”) today announced its financial results
for the quarter ended June 30, 2022.
“During the past quarter, we actively adapted to changes in the
macro environment and remained focused on our long-term strategy by
continuing to strengthen our capability for customer value
creation,” said Daniel Zhang, Chairman and Chief Executive Officer
of Alibaba Group. “Following a relatively slow April and May, we
saw signs of recovery across our businesses in June. We are
confident in our growth opportunities in the long term given our
high-quality consumer base and the resilience of our diversified
business model catering to different demands of our customers.”
“Despite the challenges posed by the COVID-19 resurgence, we
delivered stable revenue performance year-over-year. We have
narrowed losses in key strategic businesses given ongoing
improvements in operating efficiency and increasing focus on cost
optimization,” said Toby Xu, Chief Financial Officer of Alibaba
Group. “We recently shared our plan to add Hong Kong as another
primary listing venue. By becoming primary listed on both Hong Kong
and New York stock exchanges, we aim to further expand and
diversify our investor base.”
BUSINESS HIGHLIGHTS
In the quarter ended June 30,
2022:
- Revenue was RMB205,555 million (US$30,689 million) and
remained stable year-over-year primarily due to a decline in China
commerce segment revenue by 1% year-over-year to RMB141,935 million
(US$21,190 million) offset by revenue growth of Cloud segment by
10% year-over-year to RMB17,685 million (US$2,640 million).
- Income from operations was RMB24,943 million (US$3,724
million), a decrease of 19% year-over-year. Adjusted EBITA,
a non-GAAP measurement, decreased 18% year-over-year to RMB34,419
million (US$5,139 million).
- Net income attributable to ordinary shareholders was
RMB22,739 million (US$3,395 million) and net income was
RMB20,298 million (US$3,030 million). Non-GAAP net income
was RMB30,252 million (US$4,517 million), a decrease of 30%
year-over-year, mainly due to a decrease in adjusted EBITA and a
decrease in share of results of equity method investees.
- Diluted earnings per ADS was RMB8.51 (US$1.27) and
diluted earnings per share was RMB1.06 (US$0.16 or HK$1.24).
Non-GAAP diluted earnings per ADS was RMB11.73
(US$1.75), a decrease of 29% year-over-year and non-GAAP diluted
earnings per share was RMB1.47 (US$0.22 or HK$1.72), a decrease
of 29% year-over-year.
- Net cash provided by operating activities was RMB33,869
million (US$5,057 million), an increase of 1% compared to RMB33,603
million in the same quarter of 2021. Free cash flow, a
non-GAAP measurement of liquidity, was RMB22,173 million (US$3,310
million), an increase of 7% compared to RMB20,683 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 June 30, 2022, online physical goods GMV
generated on Taobao and Tmall, excluding unpaid orders, declined
mid-single-digit year-over-year mainly due to impacts from COVID-19
resurgence and restrictions that resulted in supply chain and
logistics disruptions in April and most of May. In late May, as
logistics capacity normalized, we saw recovering GMV driven by a
successful 6.18 Shopping Festival that was strongly supported by
our merchants and loyal consumers. The 6.18 Shopping Festival
achieved positive paid GMV growth year-over-year and we saw
especially strong purchasing demands from our 88VIP members.
Negatively impacted by COVID-19, paid GMV declined for key
categories such as fashion & accessories and consumer
electronics during the quarter. Nevertheless, we continue to
observe increasing consumption in the healthcare category as well
as interests-based consumption categories such as pet care,
collectibles and outdoor & active gears. Despite near-term
challenges, Taobao and Tmall continue to achieve high consumer
retention, especially among consumers with higher spending power.
98% of the annual active consumers who each spent over RMB10,000 on
Taobao and Tmall in the twelve months ended June 30, 2021 continued
to be active in the twelve months ended June 30, 2022. In the
twelve months ended June 30, 2022, more than 123 million annual
active consumers each spent over RMB10,000 on Taobao and Tmall. As
of June 30, 2022, we had 25 million 88VIP members with over
RMB57,000 annual average spending per member.
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 June
quarter, paid GMV of M2C products on Taobao and Taobao Deals grew
more than 40% year-over-year. During the quarter, Taobao Deals
significantly narrowed losses year-over-year as well as
quarter-over-quarter driven by optimizing spending in user
acquisition as well as improving average spending of active
consumers.
Taocaicai, our business offering consumers next day pick-up
service for grocery and fresh goods at neighborhood pick-up points,
has rapidly established market presence in regions that have high
population density with meaningful consumption power. In the June
quarter, Taocaicai GMV grew rapidly at more than 200%
year-over-year while its losses increased moderately compared to
the same quarter last year. Moreover, driven by optimized pricing
strategy, better sourcing capability and lowered operating costs,
Taocaicai significantly reduced losses quarter-over-quarter in the
June quarter.
During the quarter ended June 30, 2022, our direct sales and
others revenue grew 8% year-over-year to RMB64,714 million
(US$9,661 million), primarily driven by strong growth of online
purchases of food, grocery and FMCG goods that benefitted
Freshippo, Tmall Supermarket and Sun Art, partly offset by
softening offline sales due to COVID-19 impacts. The percentage of
online sales for Freshippo and Sun Art reached 68% and 36%,
respectively, during the quarter. By leveraging our multiple direct
sales businesses and on-demand delivery infrastructure, we believe
we are well positioned to better serve consumers’ increasing demand
for on-demand delivery of food, grocery and daily necessities in
the future.
International Commerce
International Commerce Retail
Our International commerce retail businesses include Lazada,
AliExpress, Trendyol and Daraz. During the June quarter, the
combined number of orders of Lazada, AliExpress, Trendyol and Daraz
declined by 4% year-over-year, primarily driven by declining orders
of AliExpress due to change in the European Union’s VAT rules,
depreciation of the Euro against the U.S dollar as well as ongoing
supply chain and logistics disruptions due to the Russia-Ukraine
conflict.
In Southeast Asia, Lazada exhibited healthy order growth of 10%
year-over-year during the quarter ended June 30, 2022.
Year-over-year order growth decelerated due to shopping activities
normalizing back to offline channels with the lifting of COVID-19
restrictions in the region. Lazada has continued to focus on
improving operating efficiency, which has resulted in narrowing of
losses quarter-over-quarter and year-over-year during the quarter
ended June 30, 2022.
During the June quarter, overall orders of Trendyol grew 46%
year-over-year. To better serve its significant consumer base,
Trendyol has continued to invest and expand into high-frequency
local consumer services business. As of June 30, 2022, Trendyol
served more than 225 thousand merchants on its marketplace
platform.
International Commerce Wholesale
During the June quarter, international commerce wholesale
revenue grew 12% year-over-year. Value of transactions completed on
Alibaba.com grew 16% year-over-year, driven by solid growth in
industrial goods, partly offset by weakening demand of consumer
products from sourcing customers in key developed countries
challenged by supply chain disruptions and increasing retail
channel inventory build-up.
Local Consumer Services
Local consumer services segment includes “To-Home” and
“To-Destination” businesses. For the quarter ended June 30, 2022,
Local consumer services order volume declined by 5% year-over-year
mainly due to declining Ele.me restaurant delivery orders, impacted
by COVID-19 resurgence and restrictive measures, partly offset by
solid growth of Ele.me non-restaurant delivery orders and strong
growth of Amap orders. During the quarter, overall segment GMV
declined year-over-year but has improved each month as COVID-19
impacts eased. Overall segment GMV growth turned positive in the
month of June 2022.
To-Home
In the quarter ended June 30, 2022, Ele.me continued to focus on
improving user retention and operating efficiency in strategic
cities as well as increasing growth in non-restaurant delivery
services. During the quarter, restaurant order volumes were
negatively impacted by COVID-19 resurgence and restrictive measures
throughout China, especially in affluent cities such as Shanghai.
Ele.me adapted quickly to meet surging demands for daily
necessities such as grocery, medicine and baby care products, which
resulted in increased basket size. During the quarter ended June
30, 2022, Ele.me’s unit economics per order was 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 June 30, 2022, “To-Destination” businesses,
which include Amap and Fliggy, were also negatively impacted by
COVID-19, but Amap saw a strong recovery in June as COVID-19
restrictions eased. In June, the number of average daily active
users of Amap reached a new high of over 120 million, driven by
easing COVID-19 impacts and ongoing enrichments of local contents
and services that allow Amap users to discover, connect with and
visit local merchants.
Cainiao
In the quarter ended June 30, 2022, revenue from Cainiao, before
inter-segment elimination, grew 7% year-over-year to RMB17,292
million (US$2,582 million), primarily driven by the growth of
fulfillment solutions and value-added services provided to our
China commerce retail businesses, partly offset by declining
revenue from merchants of our international commerce retail
businesses. During the quarter, 70% of Cainiao’s total revenue was
generated from external customers. Revenue from Cainiao, after
inter-segment elimination, grew 5% year-over-year to RMB12,142
million (US$1,813 million).
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 July
2022, Cainiao commenced operation of a new international sorting
center in Israel, bringing the number of overseas sorting centers
in operation to ten. Cainiao is also building and investing in
capabilities to improve delivery experience for our global
consumers and enrich our value proposition to cross-border
merchants. For example, during the quarter, we increased smart
lockers capacity and made a bolt-on acquisition that enhanced our
last mile delivery capability in Europe. As of June 30, 2022,
Cainiao had more than 7,700 smart lockers in operation in
Europe.
In China, Cainiao continues to expand its value-added services,
including door-step parcel delivery service, through Cainiao Post
to improve consumer experience, which complements our China
commerce businesses. As of June 30, 2022, excluding those in rural
areas and universities, approximately 70% of Cainiao Posts offer
door-step parcel delivery service to consumers.
Cloud
Our Cloud segment is comprised of Alibaba Cloud and DingTalk.
For the quarter ended June 30, 2022, total revenue from our Cloud
segment before inter-segment elimination, which includes revenue
from services provided to other Alibaba businesses, was RMB23,938
million (US$3,574 million). Revenue after inter-segment elimination
was RMB17,685 million (US$2,640 million) for the quarter ended June
30, 2022, an increase of 10% year-over-year. Year-over-year revenue
growth of our Cloud segment reflected recovering growth of overall
non-Internet industries, driven by financial services, public
services, and telecommunication industries, partly offset by
decline in 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,
online education customers as well as softening demand from other
customers in China’s Internet industry. For the quarter ended June
30, 2022, after inter-segment elimination, non-Internet industries
contributed 53% of Cloud revenue, up more than five percentage
points compared to the same quarter last year.
Alibaba Cloud
Alibaba Cloud continues to develop, expand and support our
partners to better serve our enterprise customers. During our Cloud
Partners Summit in July 2022, we emphasized ecosystem enhancing
initiatives, including capability building and training programs as
well as reward programs for ecosystem partners, and we expect such
initiatives will further increase revenue contribution from
ecosystem partners.
Alibaba Cloud’s advantages are its proprietary technology and
continued commitment to investing in research and development in
new product offerings and industry-specific solutions for our
customers. Highlights of our proprietary technologies in last
quarter include:
Data Centers and Hardware:
- During Alibaba Cloud Summit 2022 (阿里云峰会) in June, Alibaba Cloud
unveiled a proprietary cloud infrastructure system designed to
power its cloud-native data centers. The new system, Cloud
Infrastructure Processing Unit (CIPU), will help Alibaba Cloud
deliver performance improvements in networking, storage, security
and computing power by offloading virtualization functions from
servers to dedicated hardware. Coupled with the Apsara Cloud
operating system, the CIPU system is expected to become the core of
our next generation of cloud computing infrastructure.
- Alibaba Cloud is committed to achieving carbon neutrality for
Scope 1~3 GHG emissions by 2030. Over the years, we have invested
in more energy-efficient server population, improving server
utilization and employing cutting-edge technologies to improve
energy efficiency of our self-owned IDCs including liquid cooling
technology and renewable electricity storage.
Platform-as-a-Service and other solutions:
- AI leadership: According to Gartner’s Cloud AI Developer
Services Critical Capabilities Report published in May 2022,
Alibaba Cloud’s AI language technology ranked second among global
cloud AI developer service vendors. Alibaba Cloud offers a
comprehensive suite of AI-based capabilities, including Natural
Language Processing, intelligent voice recognition, image
recognition, video recognition, among others.
DingTalk
DingTalk, our digital collaboration workplace and application
development platform, offers new ways of working, sharing and
collaboration for modern enterprises and organizations. DingTalk
experienced increased usage of its products and services from
enterprises, schools and organizations due to greater hybrid-work
adoption in China driven by COVID-19 resurgence since March 2022.
Specifically, DingTalk saw robust demand for its document sharing
and virtual conferencing products, both of which are core DingTalk
products that enhance long-term customer value and ensure user
stickiness.
Digital Media and
Entertainment
In the June quarter, Youku’s daily average paying subscriber
base increased 15% year-over-year, primarily driven by quality
content and continued contribution from our 88VIP membership
program. Youku continues to improve operational efficiency through
disciplined investment in content and production capability, which
resulted in narrowing of losses year-over-year for five consecutive
quarters.
Appointment of Independent
Director
We appointed Irene Yun-Lien Lee, chairman of Hysan Development
Company Limited and independent non-executive chairman of Hang Seng
Bank Limited, and Albert Kong Ping Ng, former chairman of Ernst
& Young China who currently serves as an independent
non-executive director of a number of companies publicly listed on
the Hong Kong Stock Exchange and the Shanghai Stock Exchange, as
independent directors. Following this appointment, our board
consists of twelve directors, including seven independent
directors.
Share Repurchases
During the quarter ended June 30, 2022, we repurchased
approximately 38.6 million of our ADSs (the equivalent of
approximately 308.7 million of our ordinary shares) for
approximately US$3.5 billion under our share repurchase program. As
of June 30, 2022, we had approximately 21.2 billion ordinary shares
(the equivalent of approximately 2.6 billion ADSs) outstanding. Our
current US$25 billion share repurchase program is effective through
March 2024. As of June 30, 2022, we still have an un-utilized
amount of US$12 billion under this program.
JUNE QUARTER SUMMARY FINANCIAL
RESULTS
Three months ended June
30,
2021
2022
RMB
RMB
US$
YoY % Change
(in millions, except
percentages and per share amounts)
Revenue
205,740
205,555
30,689
(0)%
Income from operations
30,847
24,943
3,724
(19)%(2)
Operating margin
15%
12%
Adjusted EBITDA(1)
48,628
41,114
6,138
(15)%(2)
Adjusted EBITDA margin(1)
24%
20%
Adjusted EBITA(1)
41,731
34,419
5,139
(18)%(2)
Adjusted EBITA margin(1)
20%
17%
Net income
42,835
20,298
3,030
(53)%(3)
Net income attributable to ordinary
shareholders
45,141
22,739
3,395
(50)%(3)
Non-GAAP net income(1)
43,441
30,252
4,517
(30)%(4)
Diluted earnings per share(5)
2.05
1.06
0.16
(48)%(3) (6)
Diluted earnings per ADS(5)
16.38
8.51
1.27
(48)%(3) (6)
Non-GAAP diluted earnings per share(1)
(5)
2.08
1.47
0.22
(29)%(4) (6)
Non-GAAP diluted earnings per ADS(1)
(5)
16.60
11.73
1.75
(29)%(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 decreases were
primarily due to the decrease in China commerce adjusted EBITA,
which was primarily due to a decrease in customer management
revenue. Customer management revenue decreased year-over-year,
primarily as a result of a mid-single-digit decline year-over-year
in online physical goods GMV of Taobao and Tmall, excluding unpaid
orders, as well as increased order cancellation due to the impacts
from COVID-19 resurgence and restrictions that resulted in supply
chain and logistics disruptions in April and most of May. The
decrease in China commerce adjusted EBITA was partly offset by the
narrowed adjusted EBITA loss of Local consumer services driven by
Ele.me’s improved unit economics per order. Ele.me’s unit economics
per order was positive during the June quarter due to increased
average order value year-over-year as well as its ongoing focus on
optimizing user acquisition spending and reducing delivery cost per
order.
(3)
The year-over-year decreases were
primarily attributable to the decrease in income from operations,
the decrease in share of results of equity method investee, as well
as the decrease in net gains arising from change in market prices
of our equity investments in publicly-traded companies.
(4)
The year-over-year decreases were
primarily attributable to the decrease in adjusted EBITA, and the
decrease in share of results of equity method investees.
(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.
JUNE QUARTER INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended June 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
141,935
15,451
10,632
12,142
17,685
7,231
479
—
205,555
30,689
YoY% change
(1
)%
2
%
5
%
5
%
10
%
(10
)%
(30
)%
N/A
(0
)%
Income (Loss) from operations
41,035
(2,142
)
(5,311
)
(811
)
(1,304
)
(1,215
)
(2,518
)
(2,791
)
24,943
3,724
Add: Share-based compensation expense
1,951
557
836
372
1,548
399
411
651
6,725
1,004
Add: Amortization of intangible assets
588
18
1,431
254
3
186
211
60
2,751
411
Adjusted EBITA
43,574
(1,567
)
(3,044
)
(185
)
247
(630
)
(1,896
)
(2,080
)
34,419
5,139
Adjusted EBITA YoY% change(2)
(14
)%
(52
)%
36
%
(27
)%
(27
)%
(50
)%
(32
)%
(27
)%
(18
)%
Adjusted EBITA margin
31
%
(10
)%
(29
)%
(2
)%
1
%
(9
)%
(396
)%
N/A
17
%
Three months ended June 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
144,029
15,202
10,099
11,601
16,051
8,073
685
—
205,740
Income (Loss) from operations
47,603
(1,732
)
(7,205
)
(633
)
(1,643
)
(1,010
)
(1,950
)
(2,583
)
30,847
Add: Share-based compensation expense
2,383
671
788
212
1,979
383
503
892
7,811
Add: Amortization of intangible assets
836
31
1,647
275
4
208
14
58
3,073
Adjusted EBITA
50,822
(1,030
)
(4,770
)
(146
)
340
(419
)
(1,433
)
(1,633
)
41,731
Adjusted EBITA margin
35
%
(7
)%
(47
)%
(1
)%
2
%
(5
)%
(209
)%
N/A
20
%
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.
(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.
JUNE QUARTER SEGMENT RESULTS
Revenue for the quarter ended June 30, 2022 was RMB205,555
million (US$30,689 million), stable compared to RMB205,740 million
in the same quarter of 2021.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended June
30,
2021
2022
RMB
% of Revenue
RMB
US$
% of Revenue
YoY % Change
(in millions, except
percentages)
China commerce:
China commerce retail
- Customer management
80,397
39
%
72,263
10,789
35
%
(10
)%
- Direct sales and others(1)
59,708
29
%
64,714
9,661
32
%
8
%
140,105
68
%
136,977
20,450
67
%
(2
)%
China commerce wholesale
3,924
2
%
4,958
740
2
%
26
%
Total China commerce
144,029
70
%
141,935
21,190
69
%
(1
)%
International commerce:
International commerce retail
10,800
5
%
10,524
1,571
5
%
(3
)%
International commerce wholesale
4,402
2
%
4,927
736
2
%
12
%
Total International commerce
15,202
7
%
15,451
2,307
7
%
2
%
Local consumer services
10,099
5
%
10,632
1,587
5
%
5
%
Cainiao
11,601
6
%
12,142
1,813
6
%
5
%
Cloud
16,051
8
%
17,685
2,640
9
%
10
%
Digital media and entertainment
8,073
4
%
7,231
1,080
4
%
(10
)%
Innovation initiatives and others
685
0
%
479
72
0
%
(30
)%
Total
205,740
100
%
205,555
30,689
100
%
(0
)%
________________
(1)
Direct sales and others revenue under
China commerce retail primarily represents our direct sales
businesses, comprising mainly Sun Art, Tmall Supermarket and
Freshippo, 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 June 30, 2022 was RMB136,977 million (US$20,450 million), a
decrease of 2% compared to RMB140,105 million in the same quarter
of 2021.
Customer management revenue decreased by 10% year-over-year,
primarily because online physical goods GMV generated on Taobao and
Tmall, excluding unpaid orders, declined mid-single-digit
year-over-year, and increased order cancellation due to the impacts
from COVID-19 resurgence and restrictions that resulted in supply
chain and logistics disruptions in April and most of May.
Direct sales and others revenue under China commerce retail
business in the quarter ended June 30, 2022 was RMB64,714 million
(US$9,661 million), an increase of 8% compared to RMB59,708 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 June 30, 2022 was RMB4,958 million (US$740 million),
an increase of 26% compared to RMB3,924 million in the same quarter
of 2021, primarily due to an increase in revenue from new duty-free
wholesale business and value-added services to paying members.
(ii) Segment adjusted EBITA
China commerce adjusted EBITA decreased by 14% to RMB43,574
million (US$6,505 million) in the quarter ended June 30, 2022,
compared to RMB50,822 million in the same quarter of 2021. The
decrease was primarily due to the decrease in customer management
revenue, which also led to a decrease in adjusted EBITA margin from
35% in the quarter ended June 30, 2021 to 31% in the quarter ended
June 30, 2022. During the quarter ended June 30, 2022, Taobao Deals
significantly narrowed losses year-over-year as well as
quarter-over-quarter driven by optimizing spending in user
acquisition as well as improving average spending of active
consumers. Taocaicai significantly reduced losses
quarter-over-quarter, driven by optimized pricing strategy, better
sourcing capability and lowered operating costs.
International Commerce
(i) Segment revenue
- International Commerce Retail Business
Revenue from our International commerce retail business in the
quarter ended June 30, 2022 was RMB10,524 million (US$1,571
million), a decrease of 3% compared to RMB10,800 million in the
same quarter of 2021. The decrease was primarily due to the
declining orders of AliExpress due to change in the European
Union’s VAT rules, depreciation of Euro against U.S dollar as well
as ongoing supply chain and logistics disruptions due to the
Russia-Ukraine conflict, partly offset by the increase in revenue
contributed by Lazada as a result of GMV growth and active increase
in monetarization initiatives that resulted in higher
monetarization rate.
- International Commerce Wholesale Business
Revenue from our International commerce wholesale business in
the quarter ended June 30, 2022 was RMB4,927 million (US$736
million), an increase of 12% compared to RMB4,402 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 RMB1,567
million (US$234 million) in the quarter ended June 30, 2022,
compared to a loss of RMB1,030 million in the same quarter of 2021.
The increase in loss year-over-year was primarily due to increase
in loss of Trendyol resulting from its investments in new
businesses, such as international business and local consumer
services in Türkiye, offset by the reduced loss from Lazada as a
result of revenue growth and enhanced operation 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 RMB10,632 million (US$1,587 million) in the quarter ended June
30, 2022, an increase of 5% compared to RMB10,099 million in the
same quarter of 2021, primarily due to 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 RMB3,044
million (US$454 million) in the quarter ended June 30, 2022,
compared to a loss of RMB4,770 million in the same quarter of 2021,
primarily due to the continued narrowing of losses from our
“To-Home” businesses, driven by Ele.me’s improved unit economics
per order. Ele.me’s unit economics per order was positive during
the June quarter due to increased average order value
year-over-year as well as its ongoing focus on optimizing user
acquisition spending and reducing delivery cost per order.
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
RMB12,142 million (US$1,813 million) in the quarter ended June 30,
2022, an increase of 5% compared to RMB11,601 million in the same
quarter of 2021, primarily contributed by the increase in revenue
from consumer logistics services as a result of service upgrade to
enhance consumer experience, partly offset by the decrease in
international orders from AliExpress.
Total revenue generated by Cainiao, before inter-segment
elimination, which includes revenue from services provided to other
Alibaba businesses, was RMB17,292 million (US$2,582 million), an
increase of 7% compared to RMB16,198 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 loss of RMB185 million (US$28
million) in the quarter ended June 30, 2022, compared to a loss of
RMB146 million in the same quarter of 2021. The year-over-year
increase in loss was primarily due to our investment in expanding
our global smart logistics infrastructure, as well as reduced
profit from AliExpress fulfilments.
Cloud
(i) Segment revenue
Revenue from our Cloud segment, after inter-segment elimination,
was RMB17,685 million (US$2,640 million) in the quarter ended June
30, 2022, an increase of 10% compared to RMB16,051 million in the
same quarter of 2021. Year-over-year revenue growth of our Cloud
segment reflected recovering growth of overall non-Internet
industries, driven by financial services, public services, and
telecommunication industries; partly offset by decline in 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, 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 RMB23,938 million (US$3,574 million), an
increase of 8% compared to RMB22,186 million in the same quarter of
2021.
(ii) Segment adjusted EBITA
Cloud adjusted EBITA, which comprises Alibaba Cloud and
DingTalk, was RMB247 million (US$37 million) in the quarter ended
June 30, 2022, compared to RMB340 million in the same quarter of
2021. The year-over-year decrease was primarily due to our
investments in technology and increase in colocation and bandwidth
costs as a result of increased usage of DingTalk’s products and
services from enterprises, schools and organizations due to greater
hybrid-work adoption in China driven by COVID-19 resurgence since
March 2022.
Digital Media and
Entertainment
(i) Segment revenue
Revenue from our Digital media and entertainment segment in the
quarter ended June 30, 2022 was RMB7,231 million (US$1,080
million), a decrease of 10%, compared to RMB8,073 million in the
same quarter of 2021, primarily due to the decrease in revenue from
Alibaba Pictures, Youku and other entertainment businesses.
(ii) Segment adjusted EBITA
Digital media and entertainment adjusted EBITA in the quarter
ended June 30, 2022 was a loss of RMB630 million (US$94 million),
compared to a loss of RMB419 million in the same quarter of 2021.
Youku narrowed losses year-over-year, which was offset by the
increased loss of other entertainment businesses due to the impacts
of COVID-19.
Innovation Initiatives and
Others
(i) Segment revenue
Revenue from Innovation initiatives and others was RMB479
million (US$72 million) in the quarter ended June 30, 2022, a
decrease of 30% compared to RMB685 million in the same quarter of
2021.
(ii) Segment adjusted EBITA
Innovation initiatives and others adjusted EBITA in the quarter
ended June 30, 2022 was a loss of RMB1,896 million (US$283
million), compared to a loss of RMB1,433 million in the same
quarter of 2021, primarily due to our investments in technology and
innovation.
JUNE QUARTER OTHER FINANCIAL RESULTS
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended June
30,
% of Revenue YoY
change
2021
2022
RMB
% of Revenue
RMB
US$
% of Revenue
(in millions, except
percentages)
Costs and expenses:
Cost of revenue
124,097
60
%
129,657
19,357
63
%
3
%
Product development expenses
13,519
7
%
14,193
2,119
7
%
0
%
Sales and marketing expenses
27,036
13
%
25,578
3,819
12
%
(1
)%
General and administrative expenses
7,168
4
%
8,433
1,259
4
%
0
%
Amortization of intangible assets
3,073
1
%
2,751
411
2
%
1
%
Total costs and expenses
174,893
85
%
180,612
26,965
88
%
3
%
Share-based compensation
expense:
Cost of revenue
1,691
1
%
1,613
241
1
%
0
%
Product development expenses
3,800
2
%
2,987
446
2
%
0
%
Sales and marketing expenses
813
0
%
900
134
0
%
0
%
General and administrative expenses
1,507
1
%
1,225
183
0
%
(1
)%
Total share-based compensation expense
7,811
4
%
6,725
1,004
3
%
(1
)%
Costs and expenses excluding
share-based compensation expense:
Cost of revenue
122,406
59
%
128,044
19,116
62
%
3
%
Product development expenses
9,719
5
%
11,206
1,673
5
%
0
%
Sales and marketing expenses
26,223
13
%
24,678
3,685
12
%
(1
)%
General and administrative expenses
5,661
3
%
7,208
1,076
4
%
1
%
Amortization of intangible assets
3,073
1
%
2,751
411
2
%
1
%
Total costs and expenses excluding
share-based compensation expense
167,082
81
%
173,887
25,961
85
%
4
%
Cost of revenue – Cost of revenue in the quarter ended
June 30, 2022 was RMB129,657 million (US$19,357 million), or 63% of
revenue, compared to RMB124,097 million, or 60% 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 increased from 59% in the quarter ended June 30, 2021 to
62% in the quarter ended June 30, 2022. The increase was primarily
attributable to (i) the higher proportion of our direct sales
businesses, such as Freshippo and Tmall Supermarket, as well as
growth in Alibaba Health direct sales businesses, that resulted in
increased cost of inventory as a percentage of revenue, and (ii)
the growth of Cainiao domestic businesses that led to an increase
in logistics costs as a percentage of revenue, which is partly
offset by the reduction in delivery cost per order of Ele.me.
Product development expenses – Product development
expenses in the quarter ended June 30, 2022 were RMB14,193 million
(US$2,119 million), or 7% of revenue, compared to RMB13,519
million, or 7% 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 remained stable at
5% in the quarter ended June 30, 2022 compared to the same quarter
of 2021.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended June 30, 2022 were RMB25,578 million
(US$3,819 million), or 12% of revenue, compared to RMB27,036
million, or 13% 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 June 30, 2021 to 12% in the quarter ended June
30, 2022.
General and administrative expenses – General and
administrative expenses in the quarter ended June 30, 2022 were
RMB8,433 million (US$1,259 million), or 4% of revenue, compared to
RMB7,168 million, or 4% 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
increased from 3% in the quarter ended June 30, 2021 to 4% in the
quarter ended June 30, 2022.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended June 30, 2022 was RMB6,725 million (US$1,004
million), compared to RMB7,811 million in the same quarter of 2021.
Share-based compensation expense as a percentage of revenue
decreased to 3% in the quarter ended June 30, 2022, as compared to
4% in the same quarter of 2021.
The following table sets forth our analysis of share-based
compensation expense for the quarters indicated by type of
share-based awards:
Three months ended June
30,
2021
2022
% Change
RMB
% of Revenue
RMB
US$
% of Revenue
YoY
(in millions, except
percentages)
By type of awards:
Alibaba Group share-based awards(1)
6,693
3
%
5,615
838
2
%
(16
)%
Ant Group share-based awards(2)
392
0
%
25
4
0
%
(94
)%
Others(3)
726
1
%
1,085
162
1
%
49
%
Total share-based compensation expense
7,811
4
%
6,725
1,004
3
%
(14
)%
________________
(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 June 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 June 30, 2022 was RMB2,751
million (US$411 million), a decrease of 10% from RMB3,073 million
in the same quarter of 2021.
Income from operations and operating
margin
Income from operations in the quarter ended June 30, 2022 was
RMB24,943 million (US$3,724 million), or 12% of revenue, a
decreased of 19% compared to RMB30,847 million, or 15% of revenue,
in the same quarter of 2021, primarily due to decrease in China
commerce adjusted EBITA as a result of a decrease in customer
management revenue. Customer management revenue decreased
year-over-year, primarily as a result of a mid-single-digit decline
year-over-year in online physical goods GMV of Taobao and Tmall,
excluding unpaid orders, as well as increased order cancellation
due to the impacts from COVID-19 resurgence and restrictions that
resulted in supply chain and logistics disruptions in April and
most of May. The decrease in China commerce adjusted EBITA was
partly offset by the narrowed adjusted EBITA loss of Local consumer
services driven by Ele.me’s improved unit economics per order.
Ele.me’s unit economics per order was positive during the June
quarter due to increased average order value year-over-year as well
as its ongoing focus on optimizing user acquisition spending and
reducing delivery cost per order.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA decreased 15% year-over-year to RMB41,114
million (US$6,138 million) in the quarter ended June 30, 2022,
compared to RMB48,628 million in the same quarter of 2021. Adjusted
EBITA decreased 18% year-over-year to RMB34,419 million (US$5,139
million) in the quarter ended June 30, 2022, compared to RMB41,731
million in the same quarter of 2021. The year-over-year decrease
was primarily due to decrease in China commerce adjusted EBITA,
partly offset by the narrowed adjusted EBITA loss of Local consumer
services. 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 as well as
a reconciliation of income from operations to adjusted EBITA are
set forth in the section entitled “June Quarter Information by
Segments” above.
Interest and investment income,
net
Interest and investment income, net in the quarter ended June
30, 2022 was RMB5,369 million (US$802 million), compared to
RMB14,101 million in the same quarter of 2021. The year-over-year
decrease was primarily due to the decrease in net gains arising
from the change in market prices of our equity investments in
publicly-traded companies.
The above-mentioned gains were excluded from our non-GAAP net
income.
Other income, net
Other income, net in the quarter ended June 30, 2022 was RMB109
million (US$16 million), compared to RMB2,157 million in the same
quarter of 2021. The year-over-year decrease was primarily due to
the net exchange losses arising from exchange rate fluctuation
between Renminbi and U.S. dollar in the quarter ended June 30,
2022, compared to net exchange gains in the same quarter last
year.
Income tax expenses
Income tax expenses in the quarter ended June 30, 2022 were
RMB5,399 million (US$806 million), compared to RMB9,096 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
21% in the quarter ended June 30, 2022.
Share of results of equity method
investees
We record our share of results of all equity method investees
one quarter in arrears. Share of results of equity method investees
in the quarter ended June 30, 2022 was a loss of RMB3,480 million
(US$520 million), compared to a profit of RMB6,093 million in the
same quarter of 2021. Share of results of equity method investees
in the quarter ended June 30, 2022 and the same quarter in the
prior year consisted of the following:
Three months ended June
30,
2021
2022
RMB
RMB
US$
(in millions)
Share of profit (loss) of equity method
investees
- Ant Group
4,494
3,717
555
- Others
2,642
(2,613
)
(390
)
Impairment loss
—
(3,563
)
(532
)
Others(1)
(1,043
)
(1,021
)
(153
)
Total
6,093
(3,480
)
(520
)
________________
(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.
Net income and Non-GAAP net
income
Our net income in the quarter ended June 30, 2022 was RMB20,298
million (US$3,030 million), a decrease of 53% compared to RMB42,835
million in the same quarter of 2021. The year-over-year decrease
was primarily attributable to the decrease in income from
operations, the decrease in share of results of equity method
investees, as well as the decrease in net gains arising from the
change in market prices of our equity investments in
publicly-traded companies.
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 June
30, 2022 was RMB30,252 million (US$4,517 million), a decrease of
30% compared to RMB43,441 million in the same quarter of 2021. 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 June 30, 2022 was RMB22,739 million (US$3,395 million), a
decrease of 50% compared to RMB45,141 million in the same quarter
of 2021. The year-over-year decrease was primarily attributable to
decrease in net income as mentioned above.
Diluted earnings per ADS/share and
non-GAAP diluted earnings per ADS/share
Diluted earnings per ADS in the quarter ended June 30, 2022 was
RMB8.51 (US$1.27), compared to RMB16.38 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 June 30, 2022 was RMB11.73 (US$1.75), a decrease of
29% compared to RMB16.60 in the same quarter of 2021.
Diluted earnings per share in the quarter ended June 30, 2022
was RMB1.06 (US$0.16 or HK$1.24), compared to RMB2.05 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 June 30, 2022 was RMB1.47 (US$0.22 or
HK$1.72), a decrease of 29% compared to RMB2.08 in the same quarter
of 2021.
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.
Cash, cash equivalents and short-term
investments
As of June 30, 2022, cash, cash equivalents and short-term
investments were RMB453,193 million (US$67,660 million), compared
to RMB446,412 million as of March 31, 2022. The increase in cash,
cash equivalents and short-term investments during the quarter
ended June 30, 2022 was primarily due to free cash flow generated
from operations of RMB22,173 million (US$3,310 million) and net
proceeds from bank borrowings of RMB3,978 million (US$594 million),
partly offset by cash used in repurchase of ordinary shares of
RMB23,880 million (US$3,565 million).
Net cash from operating activities and
free cash flow
In the quarter ended June 30, 2022, net cash provided by
operating activities was RMB33,869 million (US$5,057 million), an
increase of 1% compared to RMB33,603 million in the same quarter of
2021. Free cash flow, a non-GAAP measurement of liquidity, was
RMB22,173 million (US$3,310 million), an increase of 7% compared to
RMB20,683 million in the quarter ended June 30, 2021, during which
we made a partial payment in the amount of RMB9,114 million of the
RMB18,228 million anti-monopoly fine. The year-over-year increase
also reflected dividend received from Ant Group of RMB3,945 million
(US$589 million) in the quarter ended June 30, 2022, partly offset
by decrease in profit. 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 June 30, 2022, net cash used in
investing activities of RMB27,607 million (US$4,122 million)
primarily reflected (i) an increase in short-term investments by
RMB14,130 million (US$2,110 million), (ii) capital expenditures of
RMB11,843 million (US$1,768 million), as well as (iii) cash outflow
of RMB4,537 million (US$677 million) for investment and acquisition
activities.
Net cash used in financing
activities
During the quarter ended June 30, 2022, net cash used in
financing activities of RMB21,022 million (US$3,139 million)
primarily reflected cash used in repurchase of ordinary shares of
RMB23,880 million (US$3,565 million), partly offset by net proceeds
from bank borrowings of RMB3,978 million (US$594 million).
Employees
As of June 30, 2022, we had a total of 245,700 employees,
compared to 254,941 as of March 31, 2022.
WEBCAST AND CONFERENCE CALL INFORMATION
Alibaba Group’s management will hold a conference call to
discuss the financial results at 7:30 a.m. U.S. Eastern Time (7:30
p.m. Hong Kong Time) on Thursday, August 4, 2022.
All participants must pre-register to join this conference call
using the Participant Registration link below:
English: https://s1.c-conf.com/diamondpass/10023575-aldn42.html
Chinese: https://s1.c-conf.com/diamondpass/10023578-d17m2a.html
Upon registration, each participant will receive details for the
conference call, including dial-in numbers, conference call
passcode and a unique access PIN. To join the conference, please
dial the number provided, enter the passcode followed by your PIN,
and you will join the conference.
A live webcast of the earnings conference call can be accessed
at https://www.alibabagroup.com/en/ir/earnings. An archived webcast
will be available through the same link following the call. A
replay of the conference call will be available for one week from
the date of the conference (Dial-in number: +1 855 883 1031;
English conference PIN 10023575; Chinese conference PIN
10023578).
Please visit Alibaba Group’s Investor Relations website at
https://www.alibabagroup.com/en/ir/home on August 4, 2022 to view
the earnings release and accompanying slides prior to the
conference call.
ABOUT ALIBABA GROUP
Alibaba Group’s mission is to make it easy to do business
anywhere. The company aims to build the future infrastructure of
commerce. It envisions that its customers will meet, work and live
at Alibaba, and that it will be a good company that lasts for 102
years.
EXCHANGE RATE INFORMATION
This results announcement contains translations of certain
Renminbi (“RMB”) amounts into U.S. dollars (“US$”) and Hong Kong
dollars (“HK$”) for the convenience of the reader. Unless otherwise
stated, all translations of RMB into US$ were made at RMB6.6981 to
US$1.00, the exchange rate on June 30, 2022 as set forth in the
H.10 statistical release of the Federal Reserve Board, and all
translations of RMB into HK$ were made at RMB0.85519 to HK$1.00,
the middle rate on June 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, 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, 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 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, 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 June
30,
2021
2022
RMB
RMB
US$
(in millions, except per share
data)
Revenue
205,740
205,555
30,689
Cost of revenue
(124,097
)
(129,657
)
(19,357
)
Product development expenses
(13,519
)
(14,193
)
(2,119
)
Sales and marketing expenses
(27,036
)
(25,578
)
(3,819
)
General and administrative expenses
(7,168
)
(8,433
)
(1,259
)
Amortization of intangible assets
(3,073
)
(2,751
)
(411
)
Income from operations
30,847
24,943
3,724
Interest and investment income, net
14,101
5,369
802
Interest expense
(1,267
)
(1,244
)
(186
)
Other income, net
2,157
109
16
Income before income tax and share of
results of equity method investees
45,838
29,177
4,356
Income tax expenses
(9,096
)
(5,399
)
(806
)
Share of results of equity method
investees
6,093
(3,480
)
(520
)
Net income
42,835
20,298
3,030
Net loss attributable to noncontrolling
interests
2,233
2,361
353
Net income attributable to Alibaba Group
Holding Limited
45,068
22,659
3,383
Accretion of mezzanine equity
73
80
12
Net income attributable to ordinary
shareholders
45,141
22,739
3,395
Earnings per share attributable to
ordinary shareholders(1)
Basic
2.08
1.07
0.16
Diluted
2.05
1.06
0.16
Earnings per ADS attributable to
ordinary shareholders(1)
Basic
16.60
8.54
1.27
Diluted
16.38
8.51
1.27
Weighted average number of shares used
in calculating earnings per ordinary share (million
shares)(1)
Basic
21,754
21,299
Diluted
22,038
21,384
________________
(1) Each ADS represents eight ordinary
shares.
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE
SHEETS
As of March 31,
As of June 30,
2022
2022
RMB
RMB
US$
(in millions)
Assets
Current assets:
Cash and cash equivalents
189,898
176,732
26,385
Short-term investments
256,514
276,461
41,275
Restricted cash and escrow receivables
37,455
39,187
5,851
Equity securities and other
investments
8,673
10,090
1,506
Prepayments, receivables and other
assets
145,995
142,494
21,274
Total current assets
638,535
644,964
96,291
Equity securities and other
investments
223,611
228,801
34,159
Prepayments, receivables and other
assets
113,147
111,546
16,653
Investment in equity method investees
219,642
217,981
32,544
Property and equipment, net
171,806
177,812
26,547
Intangible assets, net
59,231
56,733
8,470
Goodwill
269,581
270,531
40,389
Total assets
1,695,553
1,708,368
255,053
Liabilities, Mezzanine Equity and
Shareholders’ Equity
Current liabilities:
Current bank borrowings
8,841
8,858
1,322
Current unsecured senior notes
-
4,691
700
Income tax payable
21,753
17,461
2,607
Accrued expenses, accounts payable and
other liabilities
271,460
265,563
39,648
Merchant deposits
14,747
14,187
2,118
Deferred revenue and customer advances
66,983
64,824
9,678
Total current liabilities
383,784
375,584
56,073
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
(CONTINUED)
As of March 31,
As of June 30,
2022
2022
RMB
RMB
US$
(in millions)
Deferred revenue
3,490
3,460
516
Deferred tax liabilities
61,706
62,726
9,365
Non-current bank borrowings
38,244
43,764
6,534
Non-current unsecured senior notes
94,259
94,698
14,138
Other liabilities
31,877
31,806
4,749
Total liabilities
613,360
612,038
91,375
Commitments and contingencies
Mezzanine equity
9,655
9,257
1,382
Shareholders’ equity:
Ordinary shares
1
1
—
Additional paid-in capital
410,506
405,774
60,581
Treasury shares at cost
(2,221
)
—
—
Subscription receivables
(46
)
(48
)
(7
)
Statutory reserves
9,839
10,068
1,503
Accumulated other comprehensive loss
(33,157
)
(20,002
)
(2,986
)
Retained earnings
563,557
567,447
84,717
Total shareholders’ equity
948,479
963,240
143,808
Noncontrolling interests
124,059
123,833
18,488
Total equity
1,072,538
1,087,073
162,296
Total liabilities, mezzanine equity and
equity
1,695,553
1,708,368
255,053
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
Three months ended June
30,
2021
2022
RMB
RMB
US$
(in millions)
Net cash provided by operating
activities
33,603
33,869
5,057
Net cash used in investing activities
(47,775
)
(27,607
)
(4,122
)
Net cash used in financing activities
(11,468
)
(21,022
)
(3,139
)
Effect of exchange rate changes on cash
and cash equivalents, restricted cash and escrow receivables
(2,192
)
3,326
497
Decrease in cash and cash equivalents,
restricted cash and escrow receivables
(27,832
)
(11,434
)
(1,707
)
Cash and cash equivalents, restricted cash
and escrow receivables at beginning of period
356,469
227,353
33,943
Cash and cash equivalents, restricted cash
and escrow receivables at end of period
328,637
215,919
32,236
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 to adjusted EBITA and adjusted
EBITDA for the periods indicated:
Three months ended June
30,
2021
2022
RMB
RMB
US$
(in millions)
Net income
42,835
20,298
3,030
Adjustments to reconcile net income to
adjusted EBITA and adjusted EBITDA:
Interest and investment income, net
(14,101
)
(5,369
)
(802
)
Interest expense
1,267
1,244
186
Other income, net
(2,157
)
(109
)
(16
)
Income tax expenses
9,096
5,399
806
Share of results of equity method
investees
(6,093
)
3,480
520
Income from operations
30,847
24,943
3,724
Share-based compensation expense
7,811
6,725
1,004
Amortization of intangible assets
3,073
2,751
411
Adjusted EBITA
41,731
34,419
5,139
Depreciation and impairment of property
and equipment, and operating lease cost relating to land use
rights
6,897
6,695
999
Adjusted EBITDA
48,628
41,114
6,138
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 to non-GAAP net income for the
periods indicated:
Three months ended June
30,
2021
2022
RMB
RMB
US$
(in millions)
Net income
42,835
20,298
3,030
Adjustments to reconcile net income to
non-GAAP net income:
Share-based compensation expense
7,811
6,725
1,004
Amortization of intangible assets
3,073
2,751
411
Impairment of investments
397
3,114
465
Gain on deemed disposals/disposals/
revaluation of investments and others
(10,624
)
(1,712
)
(255
)
Tax effects (1)
(51
)
(924
)
(138
)
Non-GAAP net income
43,441
30,252
4,517
________________
(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 per share/ADS to non-GAAP
diluted earnings per share/ADS for the periods indicated:
Three months ended June
30,
2021
2022
RMB
RMB
US$
(in millions, except per share
data)
Net income attributable to ordinary
shareholders – basic
45,141
22,739
3,395
Dilution effect on earnings arising from
option plans operated by equity method investees and
subsidiaries
(2
)
-
-
Net income attributable to ordinary
shareholders – diluted
45,139
22,739
3,395
Non-GAAP adjustments to net income
attributable to ordinary shareholders(1)
606
8,616
1,286
Non-GAAP net income attributable
to ordinary shareholders for computing non-GAAP diluted earnings
per share/ADS
45,745
31,355
4,681
Weighted average number of shares on a
diluted basis for computing non-GAAP diluted earnings per share/ADS
(million shares)(4)
22,038
21,384
Diluted earnings per
share(2)(4)
2.05
1.06
0.16
Non-GAAP diluted earnings per
share(3)(4)
2.08
1.47
0.22
Diluted earnings per ADS(2)(4)
16.38
8.51
1.27
Non-GAAP diluted earnings per
ADS(3)(4)
16.60
11.73
1.75
________________
(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 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 June
30,
2021
2022
RMB
RMB
US$
(in millions)
Net cash provided by operating
activities
33,603
33,869
5,057
Less: Purchase of property and equipment
(excluding land use rights and construction in progress relating to
office campuses)
(10,897
)
(11,110
)
(1,659
)
Less: Acquisition of intangible assets
(1
)
(22
)
(4
)
Less: Changes in the consumer protection
fund deposits
(2,022
)
(564
)
(84
)
Free cash flow
20,683
22,173
3,310
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220803005654/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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