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 June 30, 2023.
“Alibaba delivered a solid quarter as we continue to execute our Reorganization, which is beginning to unleash new energy across our businesses,” said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. “Through this self-driven transformation, we aim to catalyze innovation, promote vitality in our organization and enable businesses to focus on long-term growth. We look forward to positive impacts on our business, including strengthening competitiveness, sustainable growth and shareholder value creation.”
“Due to the strong business momentum and our focus on operating efficiency across businesses, we achieved robust financial performance in the past quarter. Revenue and adjusted EBITA increased 14% and 32% year-on-year, respectively, due to improvements across all business segments,” said Toby Xu, Chief Financial Officer of Alibaba Group. “We repurchased US$3.1 billion worth of ADSs this quarter, which is supported by our continuous generation of strong free cash flow. Our strong free cash flow and balance sheet put us in an excellent position to strengthen our competitiveness and capture new opportunities.”
BUSINESS HIGHLIGHTS
In the quarter ended June 30, 2023:
- Revenue was RMB234,156 million (US$32,292 million), an increase of 14% year-over-year.
- Income from operations was RMB42,490 million (US$5,860 million), an increase of 70% year-over-year. Excluding the reversal of share-based compensation expense of RMB6,901 million (US$952 million) as discussed in “June Quarter Other Financial Results” below, income from operations would have increased by 43% year-over-year. Adjusted EBITA, a non-GAAP measurement, increased 32% year-over-year to RMB45,371 million (US$6,257 million).
- Net income attributable to ordinary shareholders was RMB34,332 million (US$4,735 million) and net income was RMB33,000 million (US$4,551 million). Non-GAAP net income was RMB44,922 million (US$6,195 million), an increase of 48% year-over-year, mainly due to an increase in adjusted EBITA and an increase in share of results of equity method investees.
- Diluted earnings per ADS was RMB13.30 (US$1.83) and diluted earnings per share was RMB1.66 (US$0.23 or HK$1.80). Non-GAAP diluted earnings per ADS was RMB17.37 (US$2.40), an increase of 48% year-over-year and non-GAAP diluted earnings per share was RMB2.17 (US$0.30 or HK$2.35), an increase of 48% year-over-year.
- Net cash provided by operating activities was RMB45,306 million (US$6,248 million), an increase of 34% compared to RMB33,869 million in the same quarter of 2022. Free cash flow, a non-GAAP measurement of liquidity, was RMB39,089 million (US$5,391 million), an increase of 76% compared to RMB22,173 million in the same quarter of 2022.
BUSINESS AND STRATEGIC UPDATES
Starting from the quarter ended June 30, 2023, we have implemented a new organizational and governance structure, under which we are a holding company of six major business groups and various other businesses, with each business operating with a high degree of independence (the “Reorganization”). The six major business groups are:
- Taobao and Tmall Group, which includes Taobao, Tmall, Xianyu, 1688.com and other businesses;
- Alibaba International Digital Commerce Group, which includes Lazada, AliExpress, Trendyol, Alibaba.com and other businesses;
- Local Services Group, which mainly includes the “To-Home” business of Ele.me and the “To-Destination” business of Amap;
- Cainiao Smart Logistics Network Limited;
- Cloud Intelligence Group, which includes Alibaba Cloud, DingTalk and other businesses; and
- Digital Media and Entertainment Group, which includes Youku, Damai and Alibaba Pictures.
Our other businesses include Sun Art, Freshippo, Alibaba Health, Lingxi Games, Intime, Intelligent Information Platform (which mainly consists of UCWeb and Quark businesses), Fliggy and other businesses. Accordingly, our segment reporting has been updated to reflect how our chief operating decision maker (“CODM”) reviews information under this new structure.
Taobao and Tmall Group
Our Taobao and Tmall Group’s strategy is to put users first, build a prosperous ecosystem and realize technology-driven innovation. Taobao app is at the core of this strategy as we build mindshare as a one-stop destination for consumption and daily life needs serving the largest number of users. In fiscal year 2024, we remain focused on improving the customer value proposition of the Taobao app by (i) increasing media content that strengthens consumer engagement, (ii) enhancing price competitiveness through effective targeting and introduction of new marketing features and (iii) catering to consumers’ time-sensitive needs for high-frequency everyday necessities through our neighborhood businesses.
For the month ended June 30, 2023, Taobao app grew average daily active users (DAU) by 6.5% year-over-year, resulting from effective user acquisition programs and improving retention of Taobao app users during the quarter. Importantly, the improvements in user acquisition and retention supported a successful 6.18 Shopping Festival that generated solid growth in order volume and average order value. The 6.18 Shopping Festival enjoyed increasing purchasing demands from a broader range of consumers, including 88VIP members. During the festival, spending by 88VIP members grew double digits, while the number of paying subscribers also recorded strong growth. The 6.18 Shopping Festival also gained strong support from existing and new merchants offering rich assortment of price competitive products as well as creators introducing new interactive content.
Xianyu (闲鱼), a fun community and marketplace, continues to grow strongly with DAU up 18% year-over-year during the quarter ended June 30, 2023. Through Xianyu, users can find a rich variety of secondhand, recycled, for-rent and vintage products as well as interest-based content.
Alibaba International Digital Commerce Group
Alibaba International Digital Commerce Group (“AIDC”) operates various retail and wholesale platforms to empower brands, merchants and SMEs to serve global buyers and consumers through wide product selection and differentiated customer experiences. During the June quarter, the combined order growth of AIDC’s retail businesses was around 25% year-over-year, driven by solid performance from all major retail platforms.
AliExpress delivered robust order growth driven by growth of transacting users and enhanced consumer experience. During the quarter, AliExpress’ Choice continued to upgrade consumer experience with price competitiveness and improved service standards, through supply chain optimization and parcel consolidation in key strategic countries. These convenient services enhanced consumer experience and significantly improved AliExpress’ user retention rate and purchase frequency.
Lazada recorded double-digit order growth year-over-year during the quarter. Lazada continued to improve monetization rate by offering more value-added services to merchants. As a result of improving monetization and operating efficiency, Lazada’s unit economics continued to improve compared to the same period last year.
Trendyol continued to deliver strong order growth driven by growth in both its e-commerce and local consumer services businesses. Through robust revenue growth and continuing improvement in operating efficiency, for the first time, Trendyol achieved positive operating results during the quarter.
Local Services Group
For the quarter ended June 30, 2023, revenue from Local Services Group grew 30% year-over-year to RMB14,450 million (US$1,993 million), driven by strong revenue growth in both Ele.me and Amap businesses. During this quarter, order growth of Local Services Group exceeded 35% year-over-year. Annual active consumers of Local Services Group for the twelve months ended June 30, 2023 continued to grow quarter over quarter, due to more efficient acquisition and retention of consumers as well as increasing user demand. For this quarter, its losses continued to narrow driven by improving overall business scale and efficiency.
To-Home
During this quarter, Ele.me experienced GMV growth year-over-year, primarily due to strong order growth that benefited from improving consumer demand, increasing number of active merchants and improving delivery capacity. Ele.me continues to focus on diversifying the availability of quality items from non-restaurant categories. During this quarter, Ele.me increased its supply of consumer electronics by onboarding authorized Apple franchise stores and Suning.com offline stores. For the quarter ended June 30, 2023, Ele.me’s unit economics per order continued to be positive and order density continued to improve. As a result, Ele.me’s losses continued to narrow year-over-year.
To-Destination
For the quarter ended June 30, 2023, order growth of Amap increased rapidly year-over-year, due to its new position and additional capabilities as a comprehensive “To-Destination” service platform, as well as due to the strong recovery in commuting and travel demand. During the Labor Day holiday in May 2023, Amap achieved over 200 million peak daily active users, the highest number of daily active users compared to Labor Day holidays in previous years, as the Chinese economy experienced strong recovery in travel demand.
Cainiao Smart Logistics Network Limited
For the quarter ended June 30, 2023, revenue from Cainiao grew 34% year-over-year to RMB23,164 million (US$3,194 million), primarily driven by the increase of revenue from international fulfillment solution services as well as domestic consumer logistics services. Contribution to revenue growth came from external customers as well as Alibaba-consolidated businesses.
Cainiao has a global end-to-end logistics network at scale that uses its proprietary technology to optimize efficiencies across first-mile pick-up, line haul, overseas distribution, and last-mile delivery. During the quarter, Cainiao supported merchants on AliExpress’ Choice by offering services with lower costs and faster delivery, including the recently-launched flagship service of “5-Day Global Delivery.” In June 2023, Cainiao commenced operation of three new international sorting centers, bringing the number of overseas sorting centers in operation to 18.
In China, Cainiao continues to expand its value-added services to enhance consumer experience. During the quarter, Cainiao prioritized the development of fulfillment services, offering “Half-Day Delivery” and “Next-Day Delivery” in key strategic cities. Consumers can enjoy time-guaranteed doorstep delivery services.
Cloud Intelligence Group
For the quarter ended June 30, 2023, total revenue from Cloud Intelligence Group, which consists of revenue from customers within and beyond our ecosystem, was RMB25,123 million (US$3,465 million), a growth of 4% year-over-year.
Alibaba Cloud
During this quarter, from a product perspective, the year-over-year revenue growth of Alibaba Cloud excluding revenue from Alibaba-consolidated businesses was driven by storage, networks and AI computing related products, partly offset by the normalization of CDN demand compared to the same period last year. From a customer base perspective, the growth was driven by revenue from the financial services, education, electric power, and automobile industries, partly offset by our proactive efforts to manage revenue from project-based cloud services.
Alibaba Cloud has been committed to the research and development of core technologies of cloud computing, big data and AI, as well as promoting customer adoption of cloud computing and AI services. With rapid development in AI-generated content, we made the following progress in building a model community, research and development in our large language models and supporting industry development during this quarter:
- AI Community: ModelScope (魔搭), our open-source platform providing a large number of machine-learning and deep learning models, tools and services, hosted over 1,000 AI models and received in aggregate over 45 million downloads as of July 2023. The platform is one of China’s leading online community for open-source model resources and allows developers to train and experiment with the models by leveraging Alibaba Cloud's AI computing capabilities.
- Generative AI: Alibaba Cloud announced a series of new features for our generative AI model. Since unveiling Tongyi Qianwen (通义千问) in April 2023, Alibaba Cloud upgraded its audio transcription platform Tingwu (听悟) with AI-powered meeting analysis capability. In July, Alibaba Cloud launched its generative AI text-to-image model Tongyi Wanxiang (通义万相).
- AI for Science: During this quarter, Fudan University and Alibaba Cloud jointly launched one of the largest cloud-based scientific research and intelligent computing platforms for universities in China. Leveraging our AI infrastructure and services, Alibaba Cloud supports scientific research to improve efficiency and reduce cost, and promotes the development and adoption of large language models in scientific research.
Additionally, in June 2023, Forrester released its report “The Forrester Wave™: Functions-As-A-Service Platforms, Q2 2023.” Alibaba Cloud received the highest score possible in 26 out of 40 criteria with its product capabilities of Function Compute, and was placed in the Leaders category for service providers globally.
DingTalk
DingTalk, our intelligent collaboration workplace and application development platform, offers new ways of working, sharing and collaboration for modern enterprises and organizations. During this quarter, DingTalk integrated the capabilities of Tongyi Qianwen and offered beta testing access to enterprise customers. DingTalk will further help customers and ecosystem partners to unlock the potential of AI capabilities.
Digital Media and Entertainment Group
During the quarter ended June 30, 2023, revenue of Digital Media and Entertainment Group was RMB5,381 million (US$742 million), reflecting growth in our online entertainment business and strong recovery of offline entertainment business.
During the quarter, Youku’s total subscription revenue grew 5% year-over-year, primarily driven by increasing ARPU as well as benefiting from high-quality original content. Till the End of the Moon (长月烬明), exclusive in China on Youku, ranked No. 1 in terms of viewership among all TV series broadcasted on online video platforms in China during the quarter.
Damai, a leading online ticketing platform for live events in China, saw strong revenue recovery, driven by increasing demand for offline entertainment events, which grew rapidly compared to the same period last year.
For the quarter ended June 30, 2023, revenue from Alibaba Pictures’ movie and online platform business grew strongly year-over-year due to the launch of several blockbusters and robust China box office demands. Lost in the Stars (消失的她), a movie for which Alibaba Pictures is a co-producer and the leading promoter and distributor, was the top performer in terms of box office in China during the quarter.
Updates on ESG Initiatives
In July, we published our 2023 Environmental, Social and Governance Report. The report provides updates on our seven key ESG strategic dimensions, including progress and performance in key initiatives such as our carbon neutrality pledges. The full version of the report is available on our official website.
In fiscal year 2023, we achieved solid reduction in operational greenhouse gas emissions (Scope 1 and 2) and value chain emission intensity (Scope 3). We also made significant progress in driving a total of 22.907 million MtCO2e of emission reduction across our business ecosystem, roughly equivalent to the total annual greenhouse gas emissions of one million average households in China. Our Low-carbon Friendly Program brings together 1.91 million products from 409 brands. Through our Carbon88 ledger platform, 187 million consumers have participated in our Scope 3+ emission reduction efforts.
Share Repurchases
During the quarter ended June 30, 2023, we repurchased 35.6 million ADSs (the equivalent of 284.4 million ordinary shares) for US$3.1 billion under our share repurchase program. As of June 30, 2023, we had 20.4 billion ordinary shares (the equivalent of 2.5 billion ADSs) outstanding, a reduction of 136.8 million ordinary shares (the equivalent of 17.1 million ADSs) from last quarter, and US$16.3 billion remained under the current share buyback program authorized by the Board, which is effective through March 2025.
Other Updates
Ant Group Share Repurchase
In July 2023, the Company received notice from Ant Group of a shareholder meeting to approve, among other things, a proposal to repurchase from all of its shareholders up to 7.6% of Ant Group’s equity interest, with a repurchase price that implies the equity value of Ant Group at RMB567.1 billion. The shares repurchased will be allocated to employee incentive plans of Ant Group. Given Ant Group continues to be an important strategic partner to our various businesses, we have decided and announced on July 23, 2023 to not sell any shares to Ant Group under its proposed share repurchase. As of the date of this results announcement, the completion of these transactions is still pending.
Appointment of Independent Auditor
With the approval of our audit committee and board of directors, we have appointed PricewaterhouseCoopers Zhong Tian LLP and PricewaterhouseCoopers as our auditors for the fiscal year ending March 31, 2024 for U.S. financial reporting and Hong Kong financial reporting purposes, respectively. Previously, our auditor for both U.S. financial reporting and Hong Kong financial reporting purposes was PricewaterhouseCoopers.
JUNE QUARTER SUMMARY FINANCIAL RESULTS
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Three months ended June 30, |
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2022 |
2023 |
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|
RMB |
RMB |
US$ |
YoY % |
||||
|
|
(in millions, except percentages and per share amounts) |
|||||||
|
|
|
|
|
|
||||
|
Revenue |
205,555 |
234,156 |
32,292 |
14% |
||||
|
|
|
|
|
|
||||
|
Income from operations |
24,943 |
42,490 |
5,860 |
70%(2) |
||||
|
Operating margin |
12% |
18% |
|
|
||||
|
Adjusted EBITDA(1) |
41,114 |
52,052 |
7,178 |
27%(3) |
||||
|
Adjusted EBITDA margin(1) |
20% |
22% |
|
|
||||
|
Adjusted EBITA(1) |
34,419 |
45,371 |
6,257 |
32%(3) |
||||
|
Adjusted EBITA margin(1) |
17% |
19% |
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|
|
|
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||||
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Net income |
20,298 |
33,000 |
4,551 |
63%(4) |
||||
|
Net income attributable to ordinary shareholders |
22,739 |
34,332 |
4,735 |
51%(4) |
||||
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Non-GAAP net income(1) |
30,252 |
44,922 |
6,195 |
48%(3) |
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||||
|
Diluted earnings per share(5) |
1.06 |
1.66 |
0.23 |
56%(4) (6) |
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|
Diluted earnings per ADS(5) |
8.51 |
13.30 |
1.83 |
56%(4) (6) |
||||
|
Non-GAAP diluted earnings per share(1) (5) |
1.47 |
2.17 |
0.30 |
48%(3) (6) |
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|
Non-GAAP diluted earnings per ADS(1) (5) |
11.73 |
17.37 |
2.40 |
48%(3) (6) |
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________________ |
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(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. |
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(2) |
Excluding the reversal of share-based compensation expense of RMB6,901 million (US$952 million) as discussed in “June Quarter Other Financial Results” below, our income from operations would have increased by 43% year-over-year, primarily contributed by revenue growth and increase in operating efficiency. Please refer to “June Quarter Other Financial Results” section below for details. |
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(3) |
The year-over-year increases were primarily contributed by the revenue growth and the increase in operating efficiency. |
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(4) |
The year-over-year increases were primarily attributable to the increase in income from operations and the increase in share of results of equity method investees, partly offset by the net losses arising from the decreases in market prices of our equity investments in publicly-traded companies, compared to net gains from these investments in the same quarter last year. |
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(5) |
Each ADS represents eight ordinary shares. |
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(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. |
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JUNE QUARTER SEGMENT RESULTS
Revenue for the quarter ended June 30, 2023 was RMB234,156 million (US$32,292 million), an increase of 14% year-over-year compared to RMB205,555 million in the same quarter of 2022.
Starting from the quarter ended June 30, 2023, our segment reporting has been updated to reflect our Reorganization and how our CODM reviews information under our new structure. Under our updated segment reporting, segment revenue and segment adjusted EBITA are presented before consolidation adjustments, which primarily relate to inter-segment adjustments, if any.
The following table sets forth a breakdown of our revenue by segment for the periods indicated(1):
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Three months ended June 30, |
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2022 |
2023 |
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RMB |
RMB |
US$ |
YoY % |
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(in millions, except percentages) |
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Taobao and Tmall Group: |
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China commerce retail |
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- Customer management |
72,425 |
|
79,661 |
|
10,986 |
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10% |
||||
|
- Direct sales and others(2) |
24,998 |
|
30,167 |
|
4,160 |
|
21% |
||||
|
|
97,423 |
|
109,828 |
|
15,146 |
|
13% |
||||
|
China commerce wholesale |
5,094 |
|
5,125 |
|
707 |
|
1% |
||||
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Total Taobao and Tmall Group |
102,517 |
|
114,953 |
|
15,853 |
|
12% |
||||
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|
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|
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Alibaba International Digital Commerce Group: |
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International commerce retail |
10,742 |
|
17,138 |
|
2,364 |
|
60% |
||||
|
International commerce wholesale |
4,979 |
|
4,985 |
|
687 |
|
0% |
||||
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Total Alibaba International Digital Commerce Group |
15,721 |
|
22,123 |
|
3,051 |
|
41% |
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Local Services Group |
11,131 |
|
14,450 |
|
1,993 |
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30% |
||||
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Cainiao Smart Logistics Network Limited |
17,292 |
|
23,164 |
|
3,194 |
|
34% |
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Cloud Intelligence Group |
24,127 |
|
25,123 |
|
3,465 |
|
4% |
||||
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Digital Media and Entertainment Group |
3,966 |
|
5,381 |
|
742 |
|
36% |
||||
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All others(3) |
45,152 |
|
45,541 |
|
6,280 |
|
1% |
||||
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Total segment revenue |
219,906 |
|
250,735 |
|
34,578 |
|
14% |
||||
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Unallocated |
193 |
|
249 |
|
34 |
|
|
||||
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Consolidation adjustments(4) |
(14,544 |
) |
(16,828 |
) |
(2,320 |
) |
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||||
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Consolidated revenue |
205,555 |
|
234,156 |
|
32,292 |
|
14% |
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________________ |
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(1) |
Starting from the quarter ended June 30, 2023, our segment reporting has been updated to reflect our Reorganization. Our CODM started to review information under a new reporting structure, and segment reporting has been updated to conform to this change. Comparative figures were reclassified to conform to this presentation. |
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(2) |
Direct sales and others revenue under Taobao and Tmall Group primarily represents our direct sales businesses, comprising mainly Tmall Supermarket and Tmall Global, where revenue and cost of inventory are recorded on a gross basis. |
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(3) |
All others include Sun Art, Freshippo, Alibaba Health, Lingxi Games, Intime, Intelligent Information Platform (which mainly consists of UCWeb and Quark businesses), Fliggy and other businesses. The majority of revenue within all others consist of direct sales revenue, which is recorded on a gross basis. |
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(4) |
Consolidation adjustments primarily relate to inter-segment adjustments. |
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The following table sets forth a breakdown of our adjusted EBITA by segment for the periods indicated(1):
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Three months ended June 30, |
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2022 |
2023 |
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RMB |
RMB |
US$ |
YoY % |
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(in millions, except percentages) |
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Taobao and Tmall Group |
45,219 |
|
49,319 |
|
6,801 |
|
9% |
||||
|
Alibaba International Digital Commerce Group |
(1,380 |
) |
(420 |
) |
(58 |
) |
70% |
||||
|
Local Services Group |
(2,834 |
) |
(1,982 |
) |
(273 |
) |
30% |
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Cainiao Smart Logistics Network Limited |
(185 |
) |
877 |
|
121 |
|
N/A |
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Cloud Intelligence Group |
188 |
|
387 |
|
53 |
|
106% |
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Digital Media and Entertainment Group |
(907 |
) |
63 |
|
9 |
|
N/A |
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All others(2) |
(2,275 |
) |
(1,204 |
) |
(166 |
) |
47% |
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Total segment adjusted EBITA |
37,826 |
|
47,040 |
|
6,487 |
|
24% |
||||
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Unallocated(3) |
(2,901 |
) |
(1,463 |
) |
(202 |
) |
|
||||
|
Consolidation adjustments(4) |
(506 |
) |
(206 |
) |
(28 |
) |
|
||||
|
Consolidated adjusted EBITA |
34,419 |
|
45,371 |
|
6,257 |
|
32% |
||||
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Less: Share-based compensation expense |
(6,725 |
) |
1,629 |
|
225 |
|
|
||||
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Less: Amortization of intangible assets |
(2,751 |
) |
(2,479 |
) |
(342 |
) |
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Less: Impairment of goodwill |
— |
|
(2,031 |
) |
(280 |
) |
|
||||
|
Income from operations |
24,943 |
|
42,490 |
|
5,860 |
|
70% |
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Contacts
Investor Relations Contact
Rob Lin
Investor Relations
Alibaba Group Holding Limited
[email protected]
Media Contacts:
Justine Chao
[email protected]
Ivy Ke
[email protected]
