HANGZHOU, China--(BUSINESS WIRE)--Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988, �Alibaba� or �Alibaba Group�) today announced its financial results for the quarter ended September 30, 2020.

�Alibaba had another strong quarter. We continued to help businesses recover and find new opportunities for growth through digitalization in the post-pandemic landscape. The solid performance of our core commerce and robust growth of Alibaba Cloud are the direct results of our commitment to value creation for customers,� said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. �We remain focused on our three long-term growth engines � domestic consumption, cloud computing and data intelligence, and globalization � to effectively capture opportunities from the ongoing changes in consumer demand and acceleration of digitalization of businesses across our digital economy.�

�We delivered another solid quarter, with revenue growth of 30% year-over-year and adjusted EBITDA up 28% year-over-year,� said Maggie Wu, Chief Financial Officer of Alibaba Group. �Our domestic core commerce business continued to grow steadily during the post-COVID-19 environment in China through higher purchase frequency and consumer spending, while cloud computing revenue grew 60% year-over-year, driven by the acceleration in digitalization across all industries and businesses of all sizes in China. We are happy to see that our strategic investments are starting to see improving operational efficiencies and the effect of scale.�

BUSINESS HIGHLIGHTS

In the quarter ended September 30, 2020:

• Revenue was RMB155,059 million (US$22,838 million), an increase of 30% year-over-year.
• Annual active consumers on our China retail marketplaces reached 757 million, an increase of 15 million from the twelve months period ended June 30, 2020.
• Mobile MAUs on our China retail marketplaces reached 881 million in September 2020, an increase of 7 million over June 2020.
• Income from operations was RMB13,634 million (US$2,008 million), a decrease of 33% year-over-year due to a RMB15,753 million increase in share-based compensation expense related to Ant Group share-based awards granted to our employees. Excluding this impact, our income from operations would have increased 44% year-over-year, from RMB20,667 million in the quarter ended September 30, 2019 to RMB29,690 million (US$4,373 million) in the quarter ended September 30, 2020.
• Adjusted EBITDA, a non-GAAP measurement, increased 28% year-over-year to RMB47,525 million (US$7,000 million). Adjusted EBITA, a non-GAAP measurement, increased 28% year-over-year to RMB41,216 million (US$6,070 million).
• Net income attributable to ordinary shareholders was RMB28,769 million (US$4,237 million), and net income was RMB26,524 million (US$3,907 million), which represent decreases of 60% and 63%, respectively, over the same period last year, when we booked a significant one-time gain upon the receipt of the 33% equity interest in Ant Group. In addition, the increase in share-based compensation expense described in �Income from operations� above also negatively affected the year-on-year comparison. Excluding this one-time gain, share-based compensation expense and certain other items, non-GAAP net income was RMB47,088 million (US$6,935 million), an increase of 44% year-over-year.
• Diluted earnings per ADS was RMB10.48 (US$1.54) and non-GAAP diluted earnings per ADS was RMB17.97 (US$2.65), an increase of 37% year-over-year. Diluted earnings per share was RMB1.31 (US$0.19 or HK$1.49) and non-GAAP diluted earnings per share was RMB2.25 (US$0.33 or HK$2.56), an increase of 37% year-over-year.
• Net cash provided by operating activities was RMB54,296 million (US$7,997 million) and non-GAAP free cash flow was RMB40,540 million (US$5,971 million).

Reconciliations of GAAP measures to non-GAAP measures presented above are included at the end of this results announcement.

BUSINESS AND STRATEGIC UPDATES

Core commerce

China Retail Marketplaces � comprehensive product supply and engaging user experience drive consumer growth and higher purchase frequency

Consumers � largest consumer platform continues to grow, partially driven by increased penetration into less developed areas

In September 2020, our China retail marketplaces, the largest consumer platform in China, had 881 million mobile MAUs. Annual active consumers on our China retail marketplaces was 757 million for the twelve months ended September 30, 2020, representing a quarterly net increase of 15 million. We are continuing to grow consumer mindshare and wallet share among our users, as reflected in higher purchase frequency and growth in average annual spending from all city tiers.

We continue to increase penetration in less developed areas, reflecting our success in broadening product offerings to meet diverse demands. One of the key drivers of our acquisition of new users and consumers in less developed areas is Taobao Deals (???), our marketplace for value-conscious consumers. During the quarter, we focused on developing differentiated product supplies for Taobao Deals by onboarding export-oriented enterprises and merchants from industrial belts and 1688.com, our domestic wholesale marketplace. Taobao Deals achieved strong growth since it launched a new version in March 2020, recording over 70 million MAUs in September 2020. Consumers who use both Taobao app and Taobao Deals app to make purchases showed faster growth in purchase frequency and average spending compared to consumers who only use Taobao app.

Product Supply � broad and differentiated product offerings meet diverse demands and drive GMV growth

Tmall online physical goods GMV, excluding unpaid orders, grew 21% year-over-year during the September 2020 quarter. Fast-moving consumer goods (�FMCG�) continued to be the fastest growing Tmall category, primarily driven by the strength of food and beverage, healthcare, beauty and personal care. In addition, the growth rate of Tmall�s apparel category recovered to a level that exceeded pre-COVID-19 levels. The year-over-year growth rate of Taobao online physical goods GMV, excluding unpaid orders, was in the high-teens for the September 2020 quarter.

Quarterly growth of Taobao GMV continued to accelerate since the trough in the March 2020 quarter, during the peak of the COVID-19 pandemic in China. This accelerating growth is primarily driven by higher purchase frequency resulting from the success of our value-for-money offerings.

Tmall Global is the premier platform that international brands and merchants depend on to enter the China market online and build brand awareness. The number of brands and merchants on the platform as of September 30, 2020 grew at a double-digit rate year-over-year. With its comprehensive and high-quality product offerings, Tmall Global has been successful at meeting new consumer demand as appetite for imports and new, personalized or limited edition products continues to grow. Tmall Global GMV, excluding unpaid orders, grew 37% year-over-year during the quarter.

Engagement � numerous entertaining interactive formats drive higher user engagement and consumer spending

Taobao Live, our live streaming portal, has become an essential marketing and distribution tool for merchants, brands, KOLs (key opinion leaders) and our own businesses, such as Juhuasuan, enabling them to engage directly with users and customers. GMV generated by Taobao Live exceeded RMB350 billion for the twelve months ended September 30, 2020. We redesigned the Taobao Live portal to make it easier for users to discover new products and brands. Going forward, we believe the entire e-commerce shopping experience will become increasingly entertaining and interactive.

In September 2020, we launched a new Taobao app interface to deliver a more immersive user experience, such as expanding the recommendation feed section on the landing page and making product displays more accessible. We believe this new interface will help increase user engagement and consumer purchase conversion rates in the future.

We continued to enhance our two paid membership programs. 88VIP gives consumers access to savings and loyalty rewards on various Alibaba platforms, including Taobao, Tmall, Youku and Ele.me. Taobao Pass targets value conscious consumers and offers monthly savings coupons. The combined number of paying members of 88VIP and Taobao Pass was 35 million as of September 30, 2020. Our membership programs have also driven an increase in user stickiness and consumer spending.

On October 21, 2020, we kicked off preparations for our 12th annual 11.11 Global Shopping Festival. Over 250,000 brands will participate and two million new products will debut in this year�s festival. Unlike in previous years, the sales extravaganza will span two sales periods, from November 1 to November 3 and November 11, giving small-and-medium businesses more exposure and opportunities to reach consumers. For consumers, the extended festival offers more time to browse and snatch up deals. Consumers who make purchases during the first sales period will also receive their products sooner. This year, we are also focused on positioning the world�s largest shopping festival as a catalyst to help brands recover by leveraging Chinese consumers� rising demand for overseas brands.

New Retail � transforming brick-and-mortar retailing by redesigning business models and providing digital solutions

Transforming the Old � In October, we invested approximately US$3.6 billion to acquire a controlling stake in Sun Art Retail Group Limited (�Sun Art�). We continue to innovate New Retail formats and models by digitalizing our offline retail partners and enabling them to offer an integrated omni-channel experience for consumers. Through this deeper collaboration with Sun Art, we will be able to digitalize offline traffic, synchronize online and offline channel inventories, broaden our supply chain network and increase online purchases.

Creating the New � Our self-operated grocery retail chain Freshippo (known as �Hema� in Chinese) achieved healthy same-store sales growth during the quarter as we continue to optimize its store operations and improve customer experience. As of September 30, 2020, we self-operated 222 Freshippo stores in China, primarily located in tier 1 and tier 2 cities. With its comprehensive offerings of private labels, imported products and new products, Freshippo�s differentiated merchandise is attracting new customers and growing the spending of existing customers. For the twelve months ended September 30, 2020, annual active consumers for Freshippo reached over 26 million.

Local Consumer Services � fast and high-quality growth of merchants and consumers

Demand for digitalization in the restaurant and service industry remains strong after the impact of the COVID-19 pandemic in China. Ele.me has captured this market opportunity and attracted high quality merchants by providing digital technology solutions and other value-added services.

In July, Ele.me rolled out a major strategic and platform upgrade. Ele.me expanded its on-demand delivery services to cover a wide range of categories, such as fresh produce, grocery and flowers, and upgraded the benefits of its membership program, including launching a rewards system by which members can accumulate points that are exchangeable for coupons or products and services. As a result of onboarding high quality merchants and adding engaging content, Ele.me�s average daily number of paying members in the September quarter grew 45% year-over-year.

Cainiao Network � driving increased efficiency across the Alibaba digital economy and the logistics industry in China and internationally

Cainiao Network continued to expand both its domestic services and global smart logistics infrastructure by deepening integration with logistics partners as well as offering more products and services. In China, Cainiao expanded the coverage of Cainiao Post (neighborhood and campus stations and residential self- pick-up stations), and also expanded the services of Cainiao Guoguo (crowdsourced parcel pick-up and delivery service) and improved customer experiences on the app. Internationally, Cainiao broadened its export business by collaborating with more global partners and had established local logistics networks in 15 countries and regions.

Our ongoing investments in and upgrades of Cainiao have positioned it as one of the premier logistics and fulfilment providers for our international retail merchants seeking to expand to global markets. During the quarter, merchant adoption of �Fulfilled by Cainiao� services continued to improve, with almost four million daily cross-border packages delivered in September 2020.

International � consistent strong growth in Southeast Asia

Lazada, our Southeast Asian e-commerce platform, continued to achieve robust growth in buyers and sellers and to benefit from the acceleration of digitalization across industries in Southeast Asia. Despite new waves of COVID-19 in many markets, order volume grew 100% year-over-year for the September 2020 quarter.

Cloud Computing

Alibaba Cloud empowers the digital transformation of enterprises by providing comprehensive technology solutions and services in the cloud for a wide range of industries. In the September quarter, cloud computing revenue grew 60% year-over-year to RMB14,899 million (US$2,194 million), primarily driven by growth in revenues from customers in the Internet, finance and retail industries.

Customers across all sizes and industries continued to enjoy our products and services. As of September 30, 2020, approximately 60% of A-share listed companies are customers of Alibaba Cloud, and their average spending grew 45% year-over-year in September 2020.

Digital Media and Entertainment

Youku maintained its strong focus on providing a superior user experience and blockbuster content in a wide range of genres. During the September quarter, Youku�s average daily subscriber base increased 45% year-over-year, driven by its offering of appealing original content and also by contribution from the 88VIP membership program.

Alibaba Pictures invested in and distributed two of the top three grossing films during China�s National Day Golden Week, and participated in the production and distribution of films that collectively accounted for over 50% of China box office sales in the first half of this fiscal year, according to Beacon box office data.

We continued to improve the operational efficiency of our digital media and entertainment businesses through disciplined investment in content and production capability, as well as optimization of subscriber membership programs. During the quarter, adjusted EBITA loss for the digital media and entertainment segment narrowed year-over-year.

Innovation Initiatives and Others

Amap continued to be the largest provider in China of mobile digital maps, navigation and real-time traffic information by both monthly active users and daily active users, according to QuestMobile. During the quarter, we improved user experience by adding new functionality and services. On October 1, 2020, the first day of the week-long National Day holiday in China, Amap achieved a record high of 150 million daily active devices.

Cash Flow from Operating Activities and Free Cash Flow

In the September 2020 quarter, net cash provided by operating activities was RMB54,296 million (US$7,997 million), an increase of 15% compared to RMB47,326 million in the same quarter of 2019. Free cash flow, a non-GAAP measurement of liquidity, increased by 33% to RMB40,540 million (US$5,971 million), from RMB30,488 million in the same quarter of 2019, mainly due to our robust profit growth. A reconciliation of net cash provided by operating activities to free cash flow is included at the end of this results announcement.

KEY OPERATIONAL METRICS*

SEPTEMBER QUARTER INFORMATION BY SEGMENTS

The table below sets forth selected financial information of our operating segments for the periods indicated:

SEPTEMBER QUARTER OPERATIONAL AND FINANCIAL RESULTS

Revenue

Revenue for the quarter ended September 30, 2020 was RMB155,059 million (US$22,838 million), an increase of 30% compared to RMB119,017 million in the same quarter of 2019. The increase was mainly driven by the robust revenue growth of our China commerce retail, cloud computing and Cainiao logistics services businesses.

The following table sets forth a breakdown of our revenue by segment for the periods indicated:

Contacts

Investor Relations Contact:
Rob Lin

[email protected]

Media Contacts:
Brion Tingler

[email protected]

Cathy Yan

[email protected]

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