Categories: Wire Stories

Alibaba Group Announces December Quarter 2023 Results

HANGZHOU, China–(BUSINESS WIRE)–$BABA #alibaba–Alibaba Group Holding Limited (NYSE: BABA and HKEX: 9988 (HKD Counter) and 89988 (RMB Counter), “Alibaba” or “Alibaba Group”) today announced its financial results for the quarter ended December 31, 2023.


We delivered a solid quarter as we are executing our focused strategies across the organization. Our top priority is to reignite the growth of our core businesses, e-commerce and cloud computing. We will step up investment to improve users’ core experiences to drive growth in Taobao and Tmall Group and strengthen market leadership in the coming year. We will also focus our resources on developing public cloud products and sustaining the strong growth momentum in international commerce business,” said Eddie Wu, Chief Executive Officer of Alibaba Group.

Alibaba Group delivered a healthy quarter with revenue growth of 5% year-over-year. We increased our investment in strategic priorities and improved shareholder return by leveraging our strong balance sheet and cash flow. Our board of directors approved an increase of US$25 billion to our share repurchase program, demonstrating our confidence in the outlook of our business and cash flow. Our consistent share repurchase has also reduced outstanding share count while achieving EPS and cash flow per share accretion,” said Toby Xu, Chief Financial Officer of Alibaba Group.

BUSINESS HIGHLIGHTS

In the quarter ended December 31, 2023:

  • Revenue was RMB260,348 million (US$36,669 million), an increase of 5% year-over-year.
  • Income from operations was RMB22,511 million (US$3,171 million), a decrease of 36% year-over-year. The year-over-year decrease was primarily attributable to impairment of intangible assets of Sun Art and impairment of goodwill of Youku. Adjusted EBITA, a non-GAAP measurement (excluding share-based compensation expense, impairment of intangible assets and goodwill and certain other items), increased 2% year-over-year to RMB52,843 million (US$7,443 million).
  • Net income attributable to ordinary shareholders was RMB14,433 million (US$2,033 million). Net income was RMB10,717 million (US$1,509 million), a decrease of 77% or RMB35,029 million year-over-year, primarily attributable to mark-to-market changes from our equity investments and the decrease in income from operations due to the impairment as mentioned above. Excluding share-based compensation expense, gains/losses of investments, impairment of intangible assets and goodwill, and certain other items, non-GAAP net income in the quarter ended December 31, 2023 was RMB47,951 million (US$6,754 million), a decrease of 4% compared to RMB49,932 million in the same quarter of 2022.
  • Diluted earnings per ADS was RMB5.65 (US$0.80) and diluted earnings per share was RMB0.71 (US$0.10 or HK$0.78). Non-GAAP diluted earnings per ADS was RMB18.97 (US$2.67), a decrease of 2% year-over-year and non-GAAP diluted earnings per share was RMB2.37 (US$0.33 or HK$2.62), a decrease of 2% year-over-year.
  • Net cash provided by operating activities was RMB64,716 million (US$9,115 million), a decrease of 26% compared to RMB87,370 million in the same quarter of 2022. Free cash flow, a non-GAAP measurement of liquidity, was RMB56,540 million (US$7,963 million), a decrease of 31% compared to RMB81,514 million in the same quarter of 2022. The decrease in free cash flow was attributed to increased capex and several one-time factors including timing of income tax payments and working capital changes related to several of our businesses.

BUSINESS AND STRATEGIC UPDATES

Taobao and Tmall Group

We are in the process of revitalizing Taobao and Tmall Group and positioning it for future growth. Our growth strategy is to put users first, build ecosystem for brands and merchants to thrive on our platform, and realize technology-driven innovation. We are committed to building an e-commerce ecosystem where brands, merchants and manufacturers operate with high efficiency, thereby providing multi-tiered Chinese consumers with good products and services at attractive prices. In December 2023, we appointed a new management team to execute Taobao and Tmall Group’s strategy and drive business growth through technological innovation.

For the quarter ended December 31, 2023, revenue from Taobao and Tmall Group was RMB129,070 million (US$18,179 million), a growth of 2% year-over-year. During the quarter, online GMV achieved healthy growth year-over-year, with the number of transacting buyers and order volume growing strongly, partly offset by decrease in average order value. Under our user engagement and price-competitive strategies, we continued to increase interactive content and broaden the assortment of value-for-money products. Additionally, we continued our efforts to onboard a wider range of brands and merchants. The number of merchants operating on our platform during the quarter continued to grow at double digits year-over-year, and this double-digit growth trend has sustained over the past four quarters.

Following a successful 11.11 Global Shopping Festival, order volume grew double digits year-over-year during the second half of the quarter. This reflected increasing consumer demand and willingness to make purchases on our platform driven by our price-competitive strategy.

On the other hand, we have been successful in retaining and growing premium shoppers as the number of 88VIP members continued to increase double digits year-over-year, surpassing 32 million.

Cloud Intelligence Group

For the quarter ended December 31, 2023, revenue from Cloud Intelligence Group was RMB28,066 million (US$3,953 million), a growth of 3% year-over-year. We continue to improve revenue quality by reducing the revenue from low-margin project-based contracts. On the other hand, revenue from public cloud products and services grew healthily which contributed to profitability improvement.

Recent highlights of our proprietary products and technology include:

  • Elastic Compute: In January 2024, Alibaba Cloud unveiled its newest general-purpose ECS instance g8i, which significantly boosts overall performance and AI inferencing capabilities.
  • Database: In the 2023 Gartner® Magic Quadrant™ for Cloud Database Management Systems report, Alibaba Cloud was named a Leader for the fourth year in a row.

Alibaba International Digital Commerce Group (“AIDC”)

For the quarter ended December 31, 2023, revenue from AIDC grew 44% year-over-year to RMB28,516 million (US$4,016 million), and the combined orders of AIDC grew 24% year-over-year. The strong performance was driven by solid growth across all of AIDC’s retail platforms, especially from the cross-border AliExpress Choice business. Our cross-border businesses exhibited rapid year-over-year growth in response to increasing global demand for high-quality products at attractive prices. To sustain this momentum and provide differentiated services to customers, we increased investments during this quarter and will continue to invest in further growth.

During the quarter, AliExpress delivered over 60% year-over-year order growth, driven by Choice, which provides an enhanced experience to consumers by combining better product selection, price and quality with speed of logistics and great customer support. Choice represented about half of AliExpress’ total orders in January 2024 and continues to deliver rapid order growth.

During the quarter, Trendyol continued its robust double-digit order growth. While maintaining its leading e-commerce position in Türkiye, Trendyol has further extended its operations into the Middle East with a wide range of merchandise as well as speedy and reliable logistics experience.

Lazada continues to focus on optimizing its operating efficiency. With further increased monetization and decreased logistics costs, Lazada’s loss per order continued to narrow year-over-year during the quarter.

Cainiao Smart Logistics Network Limited (“Cainiao”)

For the quarter ended December 31, 2023, revenue from Cainiao grew 24% year-over-year to RMB28,476 million (US$4,011 million), primarily driven by revenue from cross-border fulfillment solutions.

Cainiao continues to execute its strategy of building a global smart logistics network, reinforcing comprehensive end-to-end capabilities in first-mile pick-up, line haul, customs clearance, sortation, and last-mile delivery. To support cross-border business development, with the upgrade of end-to-end capabilities, Cainiao further expanded its premium 5-day delivery service coverage, adding two more countries during the quarter. The order volume for the premium 5-day delivery service achieved robust triple-digit quarter-over-quarter growth.

Local Services Group

For the quarter ended December 31, 2023, revenue from Local Services Group grew 13% year-over-year to RMB15,160 million (US$2,135 million), driven by healthy growth of Ele.me and rapid growth of Amap. During this quarter, order growth of Local Services Group exceeded 20% year-over-year. Local Services Group’s annual active consumers reached over 390 million and their annual purchasing frequency grew strongly year-over-year for the twelve months ended December 31, 2023. For this quarter, its losses continued to narrow driven by improving business scale and efficiency.

Digital Media and Entertainment Group

During the quarter ended December 31, 2023, revenue of Digital Media and Entertainment Group was RMB5,040 million (US$710 million), an increase of 18% year-over-year, driven by strong revenue growth of offline entertainment businesses of Alibaba Pictures. During the quarter, Damai, a subsidiary of Alibaba Pictures, consolidated its industry-leading position by servicing almost all the major concerts in China, which contributed to rapid GMV growth year-over-year. Total box office of movies produced, promoted and distributed by Alibaba Pictures’ movie segment accounted for more than half of China’s total box office during the quarter.

Updates on ESG Initiatives

Progress in Decarbonization

We continue to accelerate our transition to clean energy. In November 2023, Bloomberg New Energy Finance released the “China’s Top Clean Energy Buyers and Sellers in 2023.” Alibaba Group, with a green electricity transaction volume of 1,610 gigawatt-hours, became the national leader for green electricity procurement for the first time.

In November 2023, Alibaba Group was the first Asian Internet technology company to join the World Business Council for Sustainable Development (WBCSD), a group of over 200 businesses, to support WBCSD’s drive to make global value chains more sustainable. At COP28, Alibaba Group together with WBCSD and other corporate members, advocated for “Scope 3+” carbon reduction actions by promoting the “Guidance on Avoided Emissions” report.

Upsize of Share Repurchase Program

As previously announced, during the quarter ended December 31, 2023, we repurchased a total of 292.7 million ordinary shares (equivalent of 36.6 million ADSs) for a total of US$2.9 billion, and a total of 897.9 million ordinary shares (equivalent of 112.2 million ADSs) for a total of US$9.5 billion during the 2023 calendar year. As of December 31, 2023, we had 20.0 billion ordinary shares (equivalent of 2.5 billion ADSs) outstanding. Our share repurchase program resulted in a net reduction of 3.3% in our outstanding shares in the 2023 calendar year after accounting for shares issued under our ESOP.

Our board of directors has approved an increase of US$25 billion to our share repurchase program through the end of March 2027. Following this upsize, we currently have US$35.3 billion available under our share repurchase program through the next three fiscal years. We have undertaken to update investors on our share repurchases immediately after the end of each quarter with the next update expected to be published in early April.

DECEMBER QUARTER SUMMARY FINANCIAL RESULTS

 

 

Three months ended December 31,

 

 

 

2022

 

2023

 

 

 

RMB

 

RMB

 

US$

 

YoY %

Change

 

(in millions, except percentages and per share amounts)

 

 

 

 

 

Revenue

247,756

 

260,348

 

36,669

 

5%

 

 

 

 

 

 

 

 

Income from operations

35,031

 

22,511

 

3,171

 

(36)%(2)

Operating margin

14%

 

9%

 

 

 

 

Adjusted EBITDA(1)

59,162

 

59,572

 

8,391

 

1%(3)

Adjusted EBITDA margin(1)

24%

 

23%

 

 

 

 

Adjusted EBITA(1)

52,048

 

52,843

 

7,443

 

2%(3)

Adjusted EBITA margin(1)

21%

 

20%

 

 

 

 

 

 

 

 

 

 

 

 

Net income

45,746

 

10,717

 

1,509

 

(77)%(4)

Net income attributable to ordinary shareholders

46,815

 

14,433

 

2,033

 

(69)%(4)

Non-GAAP net income(1)

49,932

 

47,951

 

6,754

 

(4)%(4)

 

 

 

 

 

 

 

 

Diluted earnings per share(5)

2.24

 

0.71

 

0.10

 

(68)%(4)(6)

Diluted earnings per ADS(5)

17.91

 

5.65

 

0.80

 

(68)%(4)(6)

Non-GAAP diluted earnings per share(1)(5)

2.41

 

2.37

 

0.33

 

(2)%(4)(6)

Non-GAAP diluted earnings per ADS(1)(5)

19.26

 

18.97

 

2.67

 

(2)%(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 decrease was primarily attributable to impairment of intangible assets of Sun Art and impairment of goodwill of Youku.

(3)

The year-over-year increases were primarily contributed by revenue growth and improved operating efficiency that was partly offset by the increase in investments in certain businesses.

(4)

The year-over-year decrease in net income was primarily attributable to mark-to-market changes from our equity investments and the decrease in income from operations due to the impairment as mentioned above. We excluded share-based compensation expense, gains/losses of investments, impairment of intangible assets and goodwill, and certain other items 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.

DECEMBER QUARTER SEGMENT RESULTS

Revenue for the quarter ended December 31, 2023 was RMB260,348 million (US$36,669 million), an increase of 5% year-over-year compared to RMB247,756 million in the same quarter of 2022.

Starting from the quarter ended June 30, 2023, we have implemented a new organizational structure which includes six major business groups and various other businesses (the “Reorganization”). Our segment reporting has been updated to reflect our Reorganization and how our chief operating decision maker (“CODM”) review information under our new structure.

The following table sets forth a breakdown of our revenue by segment for the periods indicated(1):

 

Three months ended December 31,

 

 

 

2022

 

2023

 

 

 

RMB

 

RMB

 

US$

 

YoY % Change

 

(in millions, except percentages)

Taobao and Tmall Group:

 

 

 

 

China commerce retail

 

 

 

 

– Customer management

91,694

 

92,113

 

12,974

 

0%

– Direct sales and others(2)

31,042

 

31,649

 

4,458

 

2%

 

122,736

 

123,762

 

17,432

 

1%

China commerce wholesale

4,329

 

5,308

 

747

 

23%

Total Taobao and Tmall Group

127,065

 

129,070

 

18,179

 

2%

 

 

 

 

 

 

 

 

Cloud Intelligence Group

27,364

 

28,066

 

3,953

 

3%

 

 

 

 

 

 

 

 

Alibaba International Digital Commerce Group:

 

 

 

 

 

 

 

International commerce retail

14,954

 

23,260

 

3,276

 

56%

International commerce wholesale

4,870

 

5,256

 

740

 

8%

Total Alibaba International Digital Commerce Group

19,824

 

28,516

 

4,016

 

44%

 

 

 

 

 

 

 

 

Cainiao Smart Logistics Network Limited

23,023

 

28,476

 

4,011

 

24%

Local Services Group

13,397

 

15,160

 

2,135

 

13%

Digital Media and Entertainment Group

4,261

 

5,040

 

710

 

18%

All others(3)

50,334

 

47,023

 

6,623

 

(7)%

Total segment revenue

265,268

 

281,351

 

39,627

 

6%

Unallocated

225

 

374

 

53

 

 

Inter-segment elimination

(17,737)

 

(21,377)

 

(3,011)

 

 

Consolidated revenue

247,756

 

260,348

 

36,669

 

5%

 

 

Nine months ended December 31,

 

 

 

2022

 

2023

 

 

 

RMB

 

RMB

 

US$

 

YoY % Change

 

(in millions, except percentages)

Taobao and Tmall Group:

 

 

 

 

China commerce retail

 

 

 

 

– Customer management

230,996

 

240,435

 

33,864

 

4%

– Direct sales and others(2)

78,599

 

85,715

 

12,073

 

9%

 

309,595

 

326,150

 

45,937

 

5%

China commerce wholesale

13,722

 

15,527

 

2,187

 

13%

Total Taobao and Tmall Group

323,317

 

341,677

 

48,124

 

6%

 

 

 

 

 

 

 

 

Cloud Intelligence Group

78,755

 

80,779

 

11,377

 

3%

 

 

 

 

 

 

 

 

Alibaba International Digital Commerce Group:

 

 

 

 

 

 

 

International commerce retail

36,686

 

59,376

 

8,363

 

62%

International commerce wholesale

14,905

 

15,774

 

2,222

 

6%

Total Alibaba International Digital Commerce Group

51,591

 

75,150

 

10,585

 

46%

 

 

 

 

 

 

 

 

Cainiao Smart Logistics Network Limited

58,597

 

74,463

 

10,488

 

27%

Local Services Group

37,909

 

45,174

 

6,363

 

19%

Digital Media and Entertainment Group

13,455

 

16,200

 

2,282

 

20%

All others(3)

143,812

 

140,873

 

19,841

 

(2)%

Total segment revenue

707,436

 

774,316

 

109,060

 

9%

Unallocated

634

 

900

 

127

 

 

Inter-segment elimination

(47,583)

 

(55,922)

 

(7,877)

 

 

Consolidated revenue

660,487

 

719,294

 

101,310

 

9%

____________________

(1)

During the nine months ended December 31, 2023, our segment reporting has been updated to reflect our Reorganization and the reclassification of the revenue of our DingTalk business, which was previously reported under Cloud Intelligence Group, to All others, the purpose of which was to provide DingTalk with greater autonomy to promote innovation and enhance competitiveness. Our CODM started to review information under this new reporting structure and segment reporting has been updated to conform to this change as well as the way we manage and monitor segment performance. Comparative figures were reclassified to conform to this presentation.

(2)

Direct sales and others revenue under Taobao and Tmall Group primarily represents Tmall Supermarket, Tmall Global and other direct sales businesses, where revenue and cost of inventory are recorded on a gross basis.

(3)

All others include Sun Art, Freshippo, Alibaba Health, Lingxi Games, Intime, Intelligent Information Platform (which mainly consists of UCWeb and Quark businesses), Fliggy, DingTalk (previously reported under Cloud Intelligence Group segment) and other businesses. The majority of revenue within All others consist of direct sales revenue, which is recorded on a gross basis.

The following table sets forth a breakdown of our adjusted EBITA by segment for the periods indicated(1):

 

Three months ended December 31,

 

 

 

2022

 

2023

 

 

 

RMB

 

RMB

 

US$

 

YoY % Change (4)

 

(in millions, except percentages)

Taobao and Tmall Group

59,245

 

59,930

 

8,441

 

1%

Cloud Intelligence Group

1,269

 

2,364

 

333

 

86%

Alibaba International Digital Commerce Group

(645)

 

(3,146)

 

(443)

 

(388)%

Cainiao Smart Logistics Network Limited

(12)

 

961

 

135

 

N/A

Local Services Group

(2,923)

 

(2,068)

 

(291)

 

29%

Digital Media and Entertainment Group

(391)

 

(517)

 

(73)

 

(32)%

All others(2)

(1,698)

 

(3,172)

 

(447)

 

(87)%

Total segment adjusted EBITA

54,845

 

54,352

 

7,655

 

(1)%

Unallocated(3)

(2,173)

 

(808)

 

(114)

 

 

Inter-segment elimination

(624)

 

(701)

 

(98)

 

 

Consolidated adjusted EBITA

52,048

 

52,843

 

7,443

 

2%

Less: Share-based compensation expense

(8,773)

 

(6,222)

 

(876)

 

 

Less: Amortization and impairment of intangible assets

(5,530)

 

(14,601)

 

(2,056)

 

 

Less: Impairment of goodwill, and others

(2,714)

 

(9,509)

 

(1,340)

 

 

Income from operations

35,031

 

22,511

 

3,171

 

(36)%

 

 

Nine months ended December 31,

 

 

 

2022

 

2023

 

 

 

RMB

 

RMB

 

US$

 

YoY % Change (4)

 

(in millions, except percentages)

Taobao and Tmall Group

150,099

 

156,326

 

22,018

 

4%

Cloud Intelligence Group

3,114

 

4,689

 

660

 

51%

Alibaba International Digital Commerce Group

(2,773)

 

(3,950)

 

(556)

 

(42)%

Cainiao Smart Logistics Network Limited

(72)

 

2,744

 

387

 

N/A

Local Services Group

(9,085)

 

(6,614)

 

(932)

 

27%

Digital Media and Entertainment Group

(1,660)

 

(655)

 

(92)

 

61%

All others(2)

(7,533)

 

(6,342)

 

(893)

 

16%

Total segment adjusted EBITA

132,090

 

146,198

 

20,592

 

11%

Unallocated(3)

(7,779)

 

(3,290)

 

(463)

 

 

Inter-segment elimination

(1,680)

 

(1,849)

 

(261)

 

 

Consolidated adjusted EBITA

122,631

 

141,059

 

19,868

 

15%

Less: Share-based compensation expense

(23,285)

 

(11,423)

 

(1,609)

 

 

Less: Amortization and impairment of intangible assets

(11,010)

 

(19,511)

 

(2,748)

 

 

Less: Impairment of goodwill, and others

(3,225)

 

(11,540)

 

(1,626)

 

 

Income from operations

85,111

 

98,585

 

13,885

 

16%

____________________

(1)

During the nine months ended December 31, 2023, our segment reporting has been updated to reflect our Reorganization and the reclassification of the result of our DingTalk business, which was previously reported under Cloud Intelligence Group, to All others, the purpose of which was to provide DingTalk with greater autonomy to promote innovation and enhance competitiveness. Our CODM started to review information under this new reporting structure and segment reporting has been updated to conform to this change as well as the way we manage and monitor segment performance. Comparative figures were reclassified to conform to this presentation.

(2)

All others include Sun Art, Freshippo, Alibaba Health, Lingxi Games, Intime, Intelligent Information Platform (which mainly consists of UCWeb and Quark businesses), Fliggy, DingTalk (previously reported under Cloud Intelligence Group segment) and other businesses.

(3)

Unallocated primarily relates to certain costs incurred by corporate functions and other miscellaneous items that are not allocated to individual segments.

(4)

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.

Taobao and Tmall Group

(i) Segment revenue

  • China Commerce Retail Business

    Revenue from our China commerce retail business in the quarter ended December 31, 2023 was RMB123,762 million (US$17,432 million), an increase of 1% compared to RMB122,736 million in the same quarter of 2022.

    Customer management revenue remained stable year-over-year, primarily due to healthy growth in online GMV generated on Taobao and Tmall, excluding unpaid orders, partly offset by decline in overall take rate. The overall take rate decreased slightly year-over-year mainly because the increase in GMV came from Taobao merchants.

    Direct sales and others revenue under China commerce retail business in the quarter ended December 31, 2023 was RMB31,649 million (US$4,458 million), an increase of 2% compared to RMB31,042 million in the same quarter of 2022.

  • China Commerce Wholesale Business

    Revenue from our China commerce wholesale business in the quarter ended December 31, 2023 was RMB5,308 million (US$747 million), an increase of 23% compared to RMB4,329 million in the same quarter of 2022, primarily due to an increase in revenue from value-added services provided to paying members.

(ii) Segment adjusted EBITA

Taobao and Tmall Group adjusted EBITA increased by 1% to RMB59,930 million (US$8,441 million) in the quarter ended December 31, 2023, compared to RMB59,245 million in the same quarter of 2022. The increase was primarily due to narrowing losses in certain businesses, partly offset by an increase in investment in content, user acquisition and retention of Taobao app, as well as technological innovation.

Cloud Intelligence Group

(i) Segment revenue

Revenue from Cloud Intelligence Group was RMB28,066 million (US$3,953 million) in the quarter ended December 31, 2023, an increase of 3% compared to RMB27,364 million in the same quarter of 2022.

Contacts

Investor Relations Contact


Rob Lin

Head of 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

Read full story here

Alex

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