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 and fiscal year ended March 31, 2020.
“Alibaba achieved the historic milestone of US$1 trillion in GMV across our digital economy this fiscal year,” said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. “Our overall business continued to experience strong growth, with a total annual active consumer base of 960 million globally, despite concluding the fiscal year with a quarter impacted by the economic effects of the COVID-19 pandemic. The pandemic has fundamentally altered consumer behavior and enterprise operations, making digital adoption and transformation a necessity. We are well positioned and prepared to help large and small businesses across a wide spectrum of industries achieve the digital transformation they need to survive this difficult period and eventually prevail in the new normal. By focusing on the long term and investing in value creation for our consumers and business customers, we believe we will emerge from this crisis stronger and be ready to capture more growth in the future.”
“Despite a challenging quarter due to reduced economic activities in light of the COVID-19 pandemic in China, we achieved our annual revenue guidance of over RMB500 billion. Revenue growth of 35% year-over-year was driven by solid performance of our domestic retail businesses as well as robust cloud computing revenue growth,” said Maggie Wu, Chief Financial Officer of Alibaba Group. “Our adjusted EBITDA grew 29% year-over-year, reflecting our discipline in allocating resources to key strategic growth areas while optimizing costs and improving efficiency. Although the pandemic negatively impacted most of our domestic core commerce businesses starting in late January, we have seen a steady recovery since March. Based on our current view of Chinese domestic consumption and enterprise digitization, we expect to generate over RMB650 billion in revenue in fiscal year 2021.”
BUSINESS HIGHLIGHTS
In the quarter ended March 31, 2020:
In the fiscal year ended March 31, 2020:
Reconciliations of GAAP measures to non-GAAP measures presented above are included at the end of this results announcement.
BUSINESS AND STRATEGIC UPDATES
Alibaba Digital Economy
The consumer commerce businesses of the Alibaba Digital Economy, mainly comprised of our China retail marketplaces, international retail marketplaces and local consumer services, reached RMB7,053 billion (US$1 trillion) of GMV in the twelve months ended March 31, 2020. In September 2019, on the occasion of Alibaba’s 20th anniversary, we set our strategic goals for the next five years, consistent with our mission “to make it easy to do business anywhere,” to:
These five-year goals are guide posts that will help us achieve our vision for 2036 to:
We manage our consumer-facing businesses as one integrated platform serving one user base with access to our various offerings. For the twelve months ended March 31, 2020, 780 million consumers in China purchased goods or services on our China retail, local consumer services and digital media and entertainment platforms. These consumers account for around 85% and 40% of the Chinese population in developed and less developed areas, respectively. We have also expanded into international markets, with over 180 million annual active consumers on our international retail marketplaces. Our digital infrastructure, such as smart logistics and cloud computing, which cuts across platforms to serve our major commerce, local services and entertainment businesses, gives us unparalleled and unique insights to meet changing consumer demands. Through the Alibaba Business Operating System (ABOS), we offer our data technologies and analytics to help our enterprise customers and partners achieve digital transformation.
COVID-19 Pandemic
Business Customer Support Programs
Starting in late January 2020, the COVID-19 pandemic triggered a series of lockdowns, social distancing requirements and travel restrictions that drastically reduced economic activities in China. In the initial phase of the crisis in China, the most pressing concern of all enterprises was business continuity – solving for issues like minimizing supply chain disruptions, cutting costs, identifying new revenue opportunities, improving cash flow and managing a remote workforce. We helped our merchant customers to overcome these challenges and took proactive measures to fulfill our mission.
Starting in February, together with Ant Financial, we implemented a comprehensive set of financial and business support measures to help alleviate the near-term challenges faced by our business customers and partners.
Social Responsibility
We leveraged our platform technology and other resources across our ecosystem to support those impacted by the COVID-19 pandemic within China and around the world.
Financial and Operational Impact on our Businesses
During the quarter, businesses in China and around the world, including merchants on our platforms and logistics companies, have been unable to conduct normal activities due to disruptions in supply chain and workforce availability. The substantial decline in business activities starting in late January in China negatively affected most of our domestic core commerce businesses, such as our China retail marketplaces and local consumer services businesses, while our key international commerce businesses began to experience a negative impact in February.
During the March quarter, some of our businesses experienced slowing or negative year-over-year growth due to the pandemic.
While the magnitude of near-term financial impact differs by business, the growth of our domestic businesses started to recover in March. Tmall online physical goods GMV, excluding unpaid orders, saw a strong recovery in April and continue to further improve in May. Similarly, Ele.me food delivery GMV growth turned positive in April as lockdown measures eased, restaurants began reopening and people began returning to work in China. For our international commerce businesses, which represented 7% of total revenue in fiscal year 2020, the timing and pace of recovery is still uncertain as demand in countries outside China remains soft. It is not possible to determine the ultimate impact of the COVID-19 pandemic on our business operations and financial results, which is highly dependent on numerous factors, many of which we are not able to predict or control. See the section entitled “Guidance” below for further details.
Business Opportunities
The COVID-19 pandemic created opportunities for consumer adoption of a broader digital lifestyle and the shift to online purchase of daily necessities. More businesses are adopting new digital tools and solutions to grow and manage their operations. Over the years, Alibaba has pioneered and developed businesses that allow us to capture the long-term benefits of these trends, including:
Core Commerce
China retail marketplaces – broad product selections and enhanced user experience result in higher purchase frequency from a large-scale consumer base.
Consumers – the largest consumer platform in China with improving purchase frequency
In fiscal year 2020, our China retail marketplaces achieved strong results reflecting our strategic focus on user acquisition and engagement as well as on increasing our offerings of value-for-money products. In March 2020, our China retail marketplaces had 846 million mobile MAUs, representing an annual and quarterly net increase of 125 and 22 million, respectively. Annual active consumers on our China retail marketplaces was 726 million for the 12 months ended March 31, 2020, representing an annual and quarterly net increase of 72 million and 15 million, respectively. In fiscal year 2020, over 70% of new annual active consumers were from less developed areas.
The longer consumers have been with us, the more orders they place, across a more diverse range of product categories, and as a result we experience increasing average spend per user on our China retail marketplaces. In fiscal year 2020, GMV growth of our China retail marketplaces was driven by robust increase in annual active consumers and greater purchase frequency per consumer.
Product Supply – largest online physical goods platform in the world with the most comprehensive product offering that caters to the needs of different consumer segments
The Alibaba Digital Economy has a comprehensive range of products and services made available by tens of millions of merchants and ecosystem partners to meet the diverse demands of our large-scale consumer base. We continually work to secure relevant and new products, such as increasing our range of branded and imported products, going upstream to directly source fresh agricultural products, and expanding the breadth of selection of value-for-money and long-tail products. Having a broad product range is the key to our consumer segmentation and category expansion strategy.
Tmall online physical goods GMV, excluding unpaid orders, grew 23% year-over-year in fiscal year 2020. In addition to Tmall, we have multiple fast growing platforms, including Juhuasuan (聚划算) and Taobao Deals (特价版), that offer attractively priced products from brands, retailers and factories. Idle Fish is the largest C2C community and marketplace in China for long-tail products, including second-hand, recycled, refurbished and for-rent products, with approximately RMB200 billion GMV in fiscal year 2020.
Engagement – the largest digital commerce platform in China enabled by unrivalled consumer insights and proprietary data technology
In March 2020, over 300 million daily active users came to our China retail marketplaces to browse and purchase from billions of listings. The massive amount of user and merchant activities taking place every day on our China retail marketplaces generate significant consumer insights. By leveraging proprietary AI and data technology, we are able to build on these deep consumer insights to provide more accurate search results and relevant recommendation feeds that enhance the shopping experience for our consumers.
The Taobao app is the largest social commerce platform in China, offering rich, highly relevant and curated content and features that enable merchants to engage with consumers through live-streaming, short-form videos, interactive games and microblogs. For example, Taobao Live, where merchants and key opinion leaders (“KOLs”) use live-streaming to market to their fans and customers, has become one of the fastest growing sales formats on our China retail marketplaces. In the fiscal year ended March 2020, GMV generated from live-streaming grew over 100% year-over-year.
New Retail – developing new business models to enable digital transformation of brick-and-mortar retailing.
Creating the new – Our self-operated grocery retail chain Freshippo (known as “Hema” in Chinese) continues to achieve robust same-store sales growth, expand its footprint, optimize its stores and introduce new initiatives to improve customer experience. In fiscal year 2020, Freshippo strengthened its direct procurement of agricultural products and built a nationwide cold chain logistics network in order to support its rapid growth. As of March 31, 2020, we had 207 self-operated Freshippo stores in China, primarily located in tier one and tier two cities.
Transforming the old – Taoxianda, our online-offline retail integration service provider for grocery retailer partners with physical stores, puts us at the forefront of transforming the retail industry by digitalizing all aspects of store-based operations. By digitalizing SunArt’s hypermarket stores, Taoxianda has contributed to an increase in SunArt’s online revenue. In the twelve months ended March 31, 2020, Alibaba commerce platforms – primarily Taoxianda – generated and enabled around 10% of SunArt’s total revenue.
Local consumer services – ecosystem synergy and focus on market share gains in lower tier cities.
Our local consumer service business continues to expand our China retail offerings from shopping to services, further tapping into new addressable markets for consumption in China. We are leveraging resources and technology in the Alibaba Digital Economy to benefit our local consumer services business.
Contacts
Investor Relations Contact
Rob Lin
investor@alibabagroup.com
Media Contacts
Brion Tingler
brion.tingler@alibaba-inc.com
Adam Najberg
adam.najberg@alibaba-inc.com
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