Alibaba Group Holding Limited (NYSE: BABA) today announced its
financial results for the quarter ended June 30, 2019.
“Alibaba had a great quarter, expanding our user base to 674
million annual active consumers, demonstrating our superior user
experience,” said Daniel Zhang, Chief Executive Officer of Alibaba
Group. “We will continue to expand our customer base, increase
operating efficiency and deliver robust growth. With strong cash
flow from our core commerce business, we will continue to invest in
technology and bring digital transformation to millions of
businesses globally.”
“We had a strong quarter to start our fiscal year, with revenue
growing 42% and adjusted EBITDA growing 34% year-over-year,” said
Maggie Wu, Chief Financial Officer of Alibaba Group. “We are
pleased to see sustained user engagement and consumer spending
across our platforms. We continue to invest for long-term growth
while at the same time gaining cost efficiencies in our investment
areas.”
BUSINESS HIGHLIGHTS
In the quarter ended June 30,
2019:
- Revenue was RMB114,924 million (US$16,741 million), an
increase of 42% year-over-year.
- Annual active consumers on our China retail marketplaces
reached 674 million, an increase of 20 million from the 12-month
period ended March 31, 2019.
- Mobile MAUs on our China retail marketplaces reached 755
million in June 2019, an increase of 34 million over March
2019.
- Income from operations was RMB24,375 million (US$3,551
million), an increase of 204% year-over-year. The increase would
have been 27% excluding share-based compensation expense resulting
from Ant Financial’s awards to our employees. This expense was
significantly higher in the quarter ended June 30, 2018 because
during the quarter Ant Financial completed an equity financing at a
higher valuation, which required us to recognize the increase in
value of these awards. Adjusted EBITDA increased 34%
year-over-year to RMB39,238 million (US$5,716 million).
- Adjusted EBITA for core commerce was RMB41,025 million
(US$5,976 million), an increase of 25% year-over-year. Our
marketplace-based core commerce adjusted EBITA, a non-GAAP
measurement, increased 27% year-over-year to RMB46,800 million
(US$6,817 million).
- Net income attributable to ordinary shareholders was
RMB21,252 million (US$3,096 million), and net income was
RMB19,122 million (US$2,785 million). Non-GAAP net income
was RMB30,949 million (US$4,508 million), an increase of 54%
year-over-year.
- Diluted earnings per ADS was RMB8.06 (US$1.17) and
non-GAAP diluted earnings per ADS was RMB12.55 (US$1.83), an
increase of 56% year-over-year.
- Net cash provided by operating activities was RMB34,612
million (US$5,042 million) and non-GAAP free cash flow was
RMB26,361 million (US$3,840 million).
BUSINESS AND STRATEGIC UPDATES
Core Commerce
In June 2019, our China retail marketplaces had 755 million
mobile MAUs, representing a quarterly net increase of 34 million.
Annual active consumers on our China retail marketplaces was 674
million for the 12 months ended June 30, 2019, compared to 654
million for the 12 months ended March 31, 2019.
Taobao – fast-growing consumer community, adding users and
strengthening engagement in less developed areas. The increase
in annual active consumers reflects strong user acquisition
programs, such as referrals through the Alipay app and another
record-breaking 6.18 Mid-Year Shopping Festival, which deepened our
penetration into less developed areas. During the quarter, over 70%
of the increase in annual active consumers was from less developed
areas, demonstrating the success of our initiatives to cater to a
broader base of users, such as using simpler interfaces for
first-time or less-frequent users.
Tmall – the leading consumer engagement and distribution
platform for brands in China. Tmall continues to gain wallet
share and grow faster than the sector average. Physical goods GMV,
excluding unpaid orders, grew 34% year-over-year in the quarter
ended June 30, 2019. The growth in physical goods GMV was driven by
both increases in the number of users and average spend, reflecting
strength in fast-moving consumer goods (FMCG), apparel, consumer
electronics and home furnishing categories.
In June 2019, our China retail marketplaces achieved our largest
ever 6.18 Mid-Year Shopping Festival in scale and reach. During the
promotional period from June 1 to June 18, Tmall physical goods
GMV, excluding unpaid orders, was up 38% year-over-year. The
successful promotional event saw robust consumption demand that
supported solid sales and greater penetration into less developed
areas for brands and merchants, as over 120 brands each generated
more than RMB100 million in GMV.
New Retail – digital transformation of brick-and-mortar
retailing. Through digitizing all aspects of store-based retail
operations using our solutions such as consumer insight technology,
on-demand delivery, inventory tracking, supply chain management and
mobile payment, we enable traditional retailers to deliver an
unrivaled consumer experience and improve their operating
efficiencies.
Our self-owned-and-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 the customer experience. As of
June 30, 2019, there were 150 self-operated Freshippo stores in
China in 17 cities.
Local consumer services – Food delivery business enjoys
improving operating efficiency and robust GMV growth. During
the quarter, we achieved strong growth in daily on-demand GMV
driven by robust order growth and increasing average order size. We
will continue to focus on delivering value to restaurants and other
local service merchants through digitization enabled by our
technology, as well as extending the coverage of our products and
services to less developed areas.
Cainiao Network – robust international and cross-border
fulfillment and last-mile solutions. Cainiao Network has
developed robust import fulfilment solutions for Tmall Global
utilizing a combination of bonded warehouses in China and direct
shipment from foreign countries. In June 2019, Cainiao Network’s
import fulfilment solutions served over 97% of Tmall Global’s
packages. During the 6.18 Mid-Year Shopping Festival, Cainiao’s
bonded warehouse facilitated the shipment of tens of millions of
packages imported by Tmall Global, representing year-over-year
growth of over 60%.
Cainiao Network continued to focus on providing consumers with
comprehensive last-mile solutions, including neighborhood and
campus pick-up stations and self-pickup lockers. Consumers also
benefit from Cainiao’s Guoguo app, which offers on-demand pick-up
and delivery services that allow consumers to send packages from
the comfort of their homes, thereby facilitating returns.
International – Strong order growth in Southeast Asia.
Lazada showed solid operational improvement after strengthening its
third-party marketplace business, management team and technology
infrastructure. For the third consecutive quarter, Lazada achieved
over 100% year-over-year order growth, reflecting our operational
focus on user loyalty and purchase frequency. Lazada continues to
focus on maintaining strong user growth and user engagement. During
the quarter, Lazada executed effective user acquisition programs
with mobile DAUs doubling year-over-year.
Cloud Computing
Cloud computing revenue grew 66% year-over-year to RMB7,787
million (US$1,134 million) during the June 2019 quarter, primarily
driven by an increase in average revenue per customer. During the
June 2019 quarter, Alibaba Cloud launched over 300 new products and
features, including those related to core cloud offerings,
security, data intelligence and AI applications. We are focusing on
delivering high value-added services while rationalizing our
offerings of commodity products and services. We will continue to
execute a strategy of expanding our market leadership, increasing
investments in talent and technology infrastructure and developing
new value-added products and features.
We are focusing on expanding SaaS offerings by working with SaaS
partners to build an ecosystem to better serve our enterprise
customers. During the June 2019 quarter, we announced the Alibaba
Cloud SaaS Accelerator, a solution that helps SaaS partners to
build, launch and commercialize their offerings at scale within the
Alibaba Cloud SaaS marketplace. Alibaba Cloud offers these partners
proprietary technologies such as AI applications, data analytics
and software and development operations tools in order for them to
deploy solutions for enterprise customers in various industries.
The SaaS Accelerator enables seamless integration of SaaS offerings
of different vendors on the Alibaba Cloud platform.
Digital Media and
Entertainment
Digital media and entertainment segment revenue for the June
quarter grew 6% year-over-year as the industry undergoes
rationalization and tighter regulatory scrutiny on content. Youku
continued to focus on delivering a superior user experience and
driving increased paying subscribers. During the quarter, Youku’s
average daily subscribers increased 40% year-over-year. While we
continue to invest in original content production capabilities,
which gives us better control over content quality, format and
scheduling, we are also taking systematic analytical measures to
ensure content cost efficiencies and return on investment. These
measures have been reflected in reduced losses year-over-year
during the quarter.
Cash Flow from Operating Activities and
Free Cash Flow
In the quarter ended June 30, 2019, net cash provided by
operating activities was RMB34,612 million (US$5,042 million), a
decrease of 4% compared to RMB36,117 million in the same quarter of
2018, which was mainly due to a decrease in annual payment of
royalty fees and software technology service fees from Ant
Financial and payment of a US$250 million cash settlement of a U.S.
federal class action lawsuit that we agreed last quarter.
Free cash flow, a non-GAAP measurement of liquidity, in the
quarter ended June 30, 2019 was RMB26,361 million (US$3,840
million) compared to RMB26,358 million in the same quarter of 2018,
which, in addition to the factors affecting net cash provided by
operating activities, also reflected a RMB2,359 million decrease in
spending to acquire licensed copyrights and other intangible
assets.
A reconciliation of net cash provided by operating activities to
free cash flow is included at the end of this results
announcement.
New Share Repurchase
Program
In May 2019, our board of directors authorized to refresh our
share repurchase program for an amount of up to US$6.0 billion over
a period of two years.
Altaba Inc. Sales of our
ADSs
As publicly disclosed by Altaba, since commencing sales on May
20, 2019, Altaba has disposed 261 million of our ADSs. As of August
9, 2019, the latest date of publicly available information, Altaba
held approximately 22 million of our ADSs.
KEY OPERATIONAL METRICS*
June 30,
March 31,
June 30,
Net adds
2018
2019
2019
YoY
QoQ
China Commerce Retail:
Annual active consumers(1) (in
millions)
576
654
674
98
20
Mobile monthly active users (MAUs)(2) (in
millions)
634
721
755
121
34
_______________
*
For definitions of terms used but not
defined in this results announcement, please refer to our annual
report on Form 20-F for the fiscal year ended March 31, 2019.
(1)
For the twelve months ended on the
respective dates.
(2)
For the month ended on the respective
dates.
JUNE QUARTER SUMMARY FINANCIAL RESULTS
Three months ended June
30,
2018
2019
YoY %
RMB
RMB
US$(1)
Change
(in millions, except
percentages and per share amounts)
Revenue
80,920
114,924
16,741
42
%
Income from operations
8,020
24,375
3,551
204%(3)
Operating margin
10
%
21
%
Adjusted EBITDA(2)
29,359
39,238
5,716
34
%
Adjusted EBITDA margin(2)
36
%
34
%
Adjusted EBITA(2)
26,502
34,556
5,034
30
%
Adjusted EBITA margin(2)
33
%
30
%
Net income
7,650
19,122
2,785
150%(3)
Net income attributable to ordinary
shareholders
8,685
21,252
3,096
145% (3)
Non-GAAP net income(2)
20,101
30,949
4,508
54
%
Diluted earnings per share(4)
0.41
1.01
0.15
146%(3)
Diluted earnings per ADS(4)
3.30
8.06
1.17
144%(3)
Non-GAAP diluted earnings per
share(2)(4)
1.01
1.57
0.23
55
%
Non-GAAP diluted earnings per
ADS(2)(4)
8.04
12.55
1.83
56
%
(1)
This results announcement contains
translations of certain Renminbi (“RMB”) amounts into U.S. dollars
(“US$”) for the convenience of the reader. Unless otherwise stated,
all translations of RMB into US$ were made at RMB6.8650 to US$1.00,
the exchange rate on June 28, 2019 as set forth in the H.10
statistical release of the Federal Reserve Board. The percentages
stated in this announcement are calculated based on the RMB amounts
and there may be minor differences due to rounding.
(2)
See the sections entitled “Information
about Segments,” “Non-GAAP Financial Measures” and “Reconciliations
of Non-GAAP Measures to the Nearest Comparable GAAP Measures” for
more information about the non-GAAP measures referred to within
this results announcement.
(3)
The year-over-year increase of income from
operations, net income, net income attributable to ordinary
shareholders, diluted earnings per share and diluted earnings per
ADS would have been 27%, 2%, 7%, 6% and 7%, respectively excluding
share-based compensation expense resulting from Ant Financial’s
awards to our employees. This expense was significantly higher in
the quarter ended June 30, 2018 because during the quarter Ant
Financial completed an equity financing at a higher valuation,
which required us to recognize the increase in value of these
awards.
(4)
Each ADS represents eight ordinary shares.
See the section entitled “Share Subdivision and ADS Ratio Change"
for more information.
JUNE QUARTER INFORMATION BY SEGMENTS
The table below sets forth selected financial information of our
operating segments for the periods indicated:
Three months ended June 30,
2019
Digital media
Innovation
Core
Cloud
and
initiatives
commerce
computing
entertainment
and others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
US$
(in millions, except
percentages)
Revenue
99,544
7,787
6,312
1,281
—
114,924
16,741
Income (loss) from operations
35,049
(1,509
)
(3,159
)
(3,000
)
(3,006
)
24,375
3,551
Add: Share-based compensation expense
3,310
1,147
596
1,015
1,047
7,115
1,036
Add: Amortization of intangible assets
2,666
4
330
20
46
3,066
447
Adjusted EBITA
41,025 (2
)
(358
)
(2,233
)
(1,965
)
(1,913
)
34,556
5,034
Adjusted EBITA margin
41
%
(5
)%
(35
)%
(153
)%
30
%
Three months ended June 30,
2018
Digital media
Innovation
Core
Cloud
and
initiatives
commerce
computing
entertainment
and others
Unallocated(1)
Consolidated
RMB
RMB
RMB
RMB
RMB
RMB
(in millions, except
percentages)
Revenue
69,188
4,698
5,975
1,059
—
80,920
Income (loss) from operations
23,022
(2,074
)
(4,290
)
(3,775
)
(4,863
)
8,020
Add: Share-based compensation expense
8,095
1,581
818
2,564
3,320
16,378
Add: Amortization of intangible assets
1,680
5
340
9
70
2,104
Adjusted EBITA
32,797
(488
)
(3,132
)
(1,202
)
(1,473
)
26,502
Adjusted EBITA margin
47
%
(10
)%
(52
)%
(114
)%
33
%
___________________
(1)
Unallocated expenses are primarily related
to corporate administrative costs and other miscellaneous items
that are not allocated to individual segments.
(2)
Marketplace-based core commerce adjusted
EBITA increased 27% year-over-year to RMB46,800 million (US$6,817
million).
JUNE QUARTER OPERATIONAL AND FINANCIAL RESULTS
Revenue
Revenue for the quarter ended June 30, 2019 was RMB114,924
million (US$16,741 million), an increase of 42% compared to
RMB80,920 million in the same quarter of 2018. The increase was
mainly driven by the robust revenue growth of our China commerce
retail business, Ele.me (which we consolidated in May 2018) and
Alibaba Cloud.
The following table sets forth a breakdown of our revenue by
segment for the periods indicated:
Three months ended June
30,
2018
2019
% of
% of
YoY %
RMB
Revenue
RMB
US$
Revenue
Change
(in millions, except
percentages)
Core commerce:
China commerce retail
- Customer management
33,053
41%
41,954
6,111
37%
27%
- Commission
13,756
17%
16,902
2,462
15%
23%
- Others*
7,159
9%
16,745
2,440
14%
134%
53,968
67%
75,601
11,013
66%
40%
China commerce wholesale
2,250
3%
2,992
436
3%
33%
International commerce retail
4,316
6%
5,567
811
5%
29%
International commerce wholesale
1,837
2%
2,245
327
2%
22%
Cainiao logistics services
3,327
4%
5,005
729
4%
50%
Local consumer services
2,612
3%
6,180
900
5%
137%
Others
878
1%
1,954
284
2%
123%
Total core commerce
69,188
86%
99,544
14,500
87%
44%
Cloud computing
4,698
6%
7,787
1,134
7%
66%
Digital media and entertainment
5,975
7%
6,312
920
5%
6%
Innovation initiatives and others
1,059
1%
1,281
187
1%
21%
Total
80,920
100%
114,924
16,741
100%
42%
___________________
*
“Others” revenue under China commerce
retail is primarily generated by our New Retail and direct sales
businesses, mainly Freshippo, Tmall Supermarket, Tmall Direct
Import and Intime.
Core commerce
- China commerce retail business Revenue – Revenue
from our China commerce retail business in the quarter ended June
30, 2019 was RMB75,601 million (US$11,013 million), an increase of
40% compared to RMB53,968 million in the same quarter of 2018.
Revenue from our China retail marketplaces continued to see strong
growth. Combined customer management and commission revenues grew
26% year-over-year, which represents an increase of 27% in customer
management revenue and an increase of 23% in commission revenue.
The growth of customer management revenue was primarily the result
of increases in the volume of paid clicks due to user growth and
more relevant listings driven by better algorithms, which resulted
in better consumer experience. The growth of commission revenue was
primarily due to the strong 34% year-over-year growth of Tmall
physical goods GMV (excluding unpaid orders), partly offset by the
revenue mix shift within Tmall Supermarket from commission-based
revenue towards direct sales, which is classified as “Others”
revenue under China commerce retail business. “Others” revenue
under China commerce retail business was RMB16,745 million
(US$2,440 million), a significant increase compared to RMB7,159
million in the same quarter of 2018, primarily driven by
contributions from direct sales businesses, including Tmall
Supermarket and Freshippo.
- China commerce wholesale business Revenue from our China
commerce wholesale business in the quarter ended June 30, 2019 was
RMB2,992 million (US$436 million), an increase of 33% compared to
RMB2,250 million in the same quarter of 2018. The increase was
primarily due to an increase in the average revenue from paying
members on 1688.com, our domestic wholesale marketplace.
- International commerce retail business Revenue from our
international commerce retail business in the quarter ended June
30, 2019 was RMB5,567 million (US$811 million), an increase of 29%
compared to RMB4,316 million in the same quarter of 2018. The
increase was primarily due to our consolidation of Trendyol,
Turkey’s leading e-commerce platform, and an increase in revenue
from AliExpress.
- International commerce wholesale business Revenue from
our international commerce wholesale business in the quarter ended
June 30, 2019 was RMB2,245 million (US$327 million), an increase of
22% compared to RMB1,837 million in the same quarter of 2018. The
increase was primarily due to increases in the average revenue from
paying members and the number of paying members on Alibaba.com, our
global wholesale marketplace.
- Cainiao logistics services Revenue from Cainiao
logistics services, which represents revenue from the domestic and
international one-stop-shop logistics services and supply chain
management solutions provided by Cainiao Network, after elimination
of inter-company transactions, was RMB5,005 million (US$729
million) in the quarter ended June 30, 2019, an increase of 50%
compared to RMB3,327 million in the same quarter of 2018, mainly
due to the increase in the volume of orders fulfilled.
- Local consumer services Revenue from local consumer
services, which primarily represents platform commissions, fees
from provision of delivery services and other services provided by
our on-demand delivery and local services platform Ele.me, was
RMB6,180 million (US$900 million) in the quarter ended June 30,
2019, an increase of 137% compared to RMB2,612 million in the same
quarter of 2018. We started to consolidate Ele.me in May 2018 and
Koubei in December 2018.
Cloud computing
Revenue from our cloud computing business in the quarter ended
June 30, 2019 was RMB7,787 million (US$1,134 million), an increase
of 66% compared to RMB4,698 million in the same quarter of 2018,
primarily driven by an increase in average revenue per
customer.
Digital media and entertainment
Revenue from our digital media and entertainment business in the
quarter ended June 30, 2019 was RMB6,312 million (US$920 million),
an increase of 6% compared to RMB5,975 million in the same quarter
of 2018. The increase was primarily due to our consolidation of
Alibaba Pictures.
Innovation initiatives and others
Revenue from innovation initiatives and others in the quarter
ended June 30, 2019 was RMB1,281 million (US$187 million), an
increase of 21% compared to RMB1,059 million in the same quarter of
2018. The increase was mainly due to an increase in revenue from
Amap.
Costs and Expenses
The following tables set forth a breakdown of our costs and
expenses, share-based compensation expense and costs and expenses
excluding share-based compensation expense by function for the
periods indicated.
Three months ended June
30,
% of Revenue YoY
change
2018
2019
RMB
% of Revenue
RMB
US$
% of Revenue
(in millions, except
percentages)
Costs and expenses:
Cost of revenue
43,720
54%
59,987
8,738
53%
(1)%
Product development expenses
11,510
14%
10,478
1,526
9%
(5)%
Sales and marketing expenses
8,921
11%
10,698
1,558
9%
(2)%
General and administrative expenses
6,645
8%
6,320
921
5%
(3)%
Amortization of intangible assets
2,104
3%
3,066
447
3%
0%
Total costs and expenses
72,900
90%
90,549
13,190
79%
(11)%
Share-based compensation expense by
function:
Cost of revenue
3,816
4%
1,747
254
2%
(2)%
Product development expenses
6,512
8%
3,009
438
2%
(6)%
Sales and marketing expenses
2,063
3%
862
126
1%
(2)%
General and administrative expenses
3,987
5%
1,497
218
1%
(4)%
Total share-based compensation expense
16,378
20%
7,115
1,036
6%
(14)%
Costs and expenses excluding
share-based compensation expense:
Cost of revenue
39,904
50%
58,240
8,484
51%
1%
Product development expenses
4,998
6%
7,469
1,088
7%
1%
Sales and marketing expenses
6,858
8%
9,836
1,432
8%
0%
General and administrative expenses
2,658
3%
4,823
703
4%
1%
Amortization of intangible assets
2,104
3%
3,066
447
3%
0%
Total costs and expenses excluding
share-based compensation expense
56,522
70%
83,434
12,154
73%
3%
Cost of revenue – Cost of revenue in the quarter ended
June 30, 2019 was RMB59,987 million (US$8,738 million), or 53% of
revenue, compared to RMB43,720 million, or 54% of revenue, in the
same quarter of 2018. Without the effect of share-based
compensation expense, cost of revenue as a percentage of revenue
would have increased from 50% in the quarter ended June 30, 2018 to
51% in the quarter ended June 30, 2019. The increase was primarily
due to an increase in the cost of inventory from our direct sales
and New Retail businesses, as well as an increase in logistics cost
from our on-demand delivery service by Ele.me, partly offset by a
decrease in content spending by Youku.
Product development expenses – Product development
expenses in the quarter ended June 30, 2019 were RMB10,478 million
(US$1,526 million), or 9% of revenue, compared to RMB11,510
million, or 14% of revenue, in the same quarter of 2018. Without
the effect of share-based compensation expense, product development
expenses as a percentage of revenue would have increased from 6% in
the quarter ended June 30, 2018 to 7% in the quarter ended June 30,
2019.
Sales and marketing expenses – Sales and marketing
expenses in the quarter ended June 30, 2019 were RMB10,698 million
(US$1,558 million), or 9% of revenue, compared to RMB8,921 million,
or 11% of revenue, in the same quarter of 2018. Without the effect
of share-based compensation expense, sales and marketing expenses
as a percentage of revenue would have remained stable at 8% in the
quarter ended June 30, 2019 and the same quarter last year.
General and administrative expenses – General and
administrative expenses in the quarter ended June 30, 2019 were
RMB6,320 million (US$921 million), or 5% of revenue, compared to
RMB6,645 million, or 8% of revenue, in the same quarter of 2018.
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, 2018 to 4% in the
quarter ended June 30, 2019.
Share-based compensation expense – Total share-based
compensation expense included in the cost and expense items above
in the quarter ended June 30, 2019 was RMB7,115 million (US$1,036
million), a decrease of 57% compared to RMB16,378 million in the
same quarter of 2018. Share-based compensation expense as a
percentage of revenue decreased to 6% in the quarter ended June 30,
2019, as compared to 20% in the same quarter last year. The
following table sets forth our analysis of share-based compensation
expense for the quarters indicated by type of share-based
awards:
Three months ended
June 30,
March 31,
June 30,
2018
2019
2019
% Change
RMB
% of Revenue
RMB
% of Revenue
RMB
US$
% of Revenue
YoY
QoQ
(in millions, except
percentages)
By type of awards:
Alibaba Group share-based awards(1)
4,584
6
%
6,099
7
%
5,898
859
5
%
29
%
(3
)%
Ant Financial share-based awards granted
to our employees(2)
11,477
14
%
435
0
%
352
51
0
%
(97
)%
(19
)%
Others(3)
317
0
%
576
1
%
865
126
1
%
173
%
50
%
Total share-based compensation expense
16,378
20
%
7,110
8
%
7,115
1,036
6
%
(57
)%
0
%
___________________
(1)
This includes awards granted to our
employees, Ant Financial employees and other consultants. Awards
granted to nonemployees were subject to mark-to-market accounting
treatment until March 31, 2019. Beginning on April 1, 2019, we
adopted ASU 2018-07, “Compensation — Stock Compensation (Topic
718): Improvements to Nonemployee Share-Based Payment Accounting”
under US GAAP. As a result of adopting this new accounting update,
these awards are no longer subject to mark-to-market accounting
treatment.
(2)
Awards subject to mark-to-market
accounting treatment.
(3)
Others primarily relate to share-based
awards underlying the equity of our subsidiaries.
Share-based compensation expense related to Alibaba Group
share-based awards remained stable in this quarter compared to the
previous quarter.
Share-based compensation expense resulting from Ant Financial
share-based awards granted to our employees decreased significantly
in this quarter compared to the quarter ended June 30, 2018. This
expense was significantly higher in the quarter ended June 30, 2018
because during the quarter Ant Financial completed an equity
financing at a higher valuation, which required us to recognize the
increase in value of these awards.
We expect that our share-based compensation expense will
continue to be affected by changes in the fair value of our shares,
our subsidiaries’ share-based awards and the quantity of awards
that we grant in the future. Furthermore, we expect that our
share-based compensation expense will continue to be affected by
future changes in the valuation of Ant Financial, although any such
changes will be non-cash and will not result in any economic cost
or equity dilution to our shareholders.
Amortization of intangible assets – Amortization of
intangible assets in the quarter ended June 30, 2019 was RMB3,066
million (US$447 million), an increase of 46% from RMB2,104 million
in the same quarter of 2018, primarily due to an increase in
amortization of intangible assets acquired from business
combinations of Koubei.
Income from operations and operating
margin
Income from operations in the quarter ended June 30, 2019 was
RMB24,375 million (US$3,551 million), or 21% of revenue, an
increase of 204% compared to RMB8,020 million, or 10% of revenue,
in the same quarter of 2018. The increase would have been 27%
excluding share-based compensation expense resulting from Ant
Financial’s awards to our employees. This expense was significantly
higher in the quarter ended June 30, 2018 because during the
quarter Ant Financial completed an equity financing at a higher
valuation, which required us to recognize the increase in value of
these awards.
Adjusted EBITDA and Adjusted
EBITA
Adjusted EBITDA increased 34% year-over-year to RMB39,238
million (US$5,716 million) in the quarter ended June 30, 2019,
compared to RMB29,359 million in the same quarter of 2018. Adjusted
EBITA increased 30% year-over-year to RMB34,556 million (US$5,034
million) in the quarter ended June 30, 2019, compared to RMB26,502
million in the same quarter of 2018. Reconciliations of net income
to adjusted EBITDA and adjusted EBITA are included at the end of
this results announcement.
Adjusted EBITA and adjusted EBITA
margin by segments
Adjusted EBITA and adjusted EBITA margin by segments are set
forth in the table below. See the section entitled “Information
about Segments” above for a reconciliation of income from
operations to adjusted EBITA.
Three months ended June
30,
2018
2019
RMB
% of Revenue
RMB
US$
% of Revenue
(in millions, except
percentages)
Core commerce
32,797
47
%
41,025
5,976
41
%
Cloud computing
(488
)
(10
)%
(358
)
(52
)
(5
)%
Digital media and entertainment
(3,132
)
(52
)%
(2,233
)
(325
)
(35
)%
Innovation initiatives and others
(1,202
)
(114
)%
(1,965
)
(286
)
(153
)%
Core commerce segment – Adjusted EBITA increased by 25%
to RMB41,025 million (US$5,976 million) in the quarter ended June
30, 2019, compared to RMB32,797 million in the same quarter of
2018. Marketplace-based core commerce adjusted EBITA increased 27%
year-over-year to RMB46,800 million (US$6,817 million). Adjusted
EBITA margin decreased from 47% in the quarter ended June 30, 2018
to 41% in the quarter ended June 30, 2019 due to strategic
investments, primarily including aggressive investment in local
consumer services and gradual revenue mix shift towards
self-operated New Retail and direct sales businesses where revenue
is recorded on a gross basis including the cost of inventory. A
reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA is included at the
end of this results announcement.
We expect that our core commerce adjusted EBITA margin will
continue to be affected by the pace of our investments in new
businesses and revenue mix shift to self-operated New Retail and
direct sales businesses.
Cloud computing segment – Adjusted EBITA in the quarter
ended June 30, 2019 was a loss of RMB358 million (US$52 million),
compared to a loss of RMB488 million in the same quarter of 2018.
Adjusted EBITA margin improved to negative 5% in the quarter ended
June 30, 2019 from negative 10% in the quarter ended June 30, 2018,
primarily due to economies of scale.
Digital media and entertainment segment – Adjusted EBITA
in the quarter ended June 30, 2019 was a loss of RMB2,233 million
(US$325 million), compared to a loss of RMB3,132 million in the
same quarter of 2018. Adjusted EBITA margin improved to negative
35% in the quarter ended June 30, 2019 from negative 52% in the
quarter ended June 30, 2018, primarily due to the decrease of
content spending by Youku.
Innovation initiatives and others segment – Adjusted
EBITA in the quarter ended June 30, 2019 was a loss of RMB1,965
million (US$286 million), compared to a loss of RMB1,202 million in
the same quarter of 2018. The increase in adjusted EBITA loss was
primarily due to our investments in technological research and
innovation, as well as investments in other business
initiatives.
Interest and investment income,
net
Interest and investment income, net in the quarter ended June
30, 2019 was RMB187 million (US$27 million), compared to RMB7,246
million in the same quarter of 2018, which was primarily due to net
losses arising from changes in fair value of our equity investments
in the quarter ended June 30, 2019 as opposed to net gains in the
same quarter of 2018. The above-mentioned net gains/losses arising
from changes in fair value of equity investments were excluded from
our non-GAAP net income.
Other income, net
Other income, net in the quarter ended June 30, 2019 was
RMB2,101 million (US$306 million), compared to other loss, net of
RMB83 million in the same quarter of 2018. The increase in other
income was primarily due to a decrease in exchange loss and an
increase in royalty fees and software technology service fees from
Ant Financial. Royalty fees and software technology service fees
under our profit sharing arrangement with Ant Financial amounted to
RMB1,627 million (US$237 million) in the quarter ended June 30,
2019, compared to RMB910 million in the same quarter of 2018.
Income tax expenses
Income tax expenses in the quarter ended June 30, 2019 were
RMB6,712 million (US$978 million), compared to RMB5,665 million in
the same quarter of 2018.
Our effective tax rate was 27% in the quarter ended June 30,
2019, compared to 41% in the same quarter of 2018. Excluding
share-based compensation expense, revaluation gains/losses and
impairment of investments, our effective tax rate would have been
20% in the quarter ended June 30, 2019.
Share of results of equity
investees
Share of results of equity investees in the quarter ended June
30, 2019 was a profit of RMB517 million (US$75 million), compared
to a loss of RMB655 million in the same quarter of 2018, mainly due
to the general improvements in the financial performance of our
equity investees, as well as the cessation of equity pick-up from
Alibaba Pictures upon our consolidation in March 2019. We record
our share of results of equity investees one quarter in arrears.
Share of results of equity investees in the quarter ended June 30,
2019 and the comparative periods consisted of the following:
Three months ended
June 30, 2018
March 31, 2019
June 30, 2019
RMB
RMB
RMB
US$
(in millions)
Share of (loss) profit of equity
investees
(66
)
1,306
941
137
Dilution loss
(108
)
(62
)
(5
)
(1
)
Others(1)
(481
)
(416
)
(419
)
(61
)
Total
(655
)
828
517
75
___________________
(1)
Others mainly include amortization of
intangible assets of equity investees and share-based compensation
expense.
Net income and Non-GAAP net
income
Our net income in the quarter ended June 30, 2019 was RMB19,122
million (US$2,785 million), an increase of 150% compared to
RMB7,650 million in the same quarter of 2018.
Excluding share-based compensation expense, revaluation
gains/losses and impairment of investments and certain other items,
non-GAAP net income in the quarter ended June 30, 2019 was
RMB30,949 million (US$4,508 million), an increase of 54% compared
to RMB20,101 million in the same quarter of 2018. 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, 2019 was RMB21,252 million (US$3,096 million), an
increase of 145% compared to RMB8,685 million in the same quarter
of 2018.
Diluted earnings per ADS and non-GAAP
diluted earnings per ADS
Diluted earnings per ADS in the quarter ended June 30, 2019 was
RMB8.06 (US$1.17) on a weighted average of 21,075 million diluted
shares outstanding during the quarter, an increase of 144% compared
to RMB3.30 on a weighted average of 21,014 million diluted shares
outstanding during the same quarter of 2018. Excluding share-based
compensation expense, revaluation gains/losses and impairment of
investments and certain other items, non-GAAP diluted earnings per
ADS in the quarter ended June 30, 2019 was RMB12.55 (US$1.83), an
increase of 56% compared to RMB8.04 in the same quarter of 2018. A
reconciliation of diluted earnings per ADS to non-GAAP diluted
earnings per ADS is included at the end of this results
announcement. Each ADS represents eight ordinary shares. See the
section entitled “Share Subdivision and ADS Ratio Change" for more
information.
Cash, cash equivalents and short-term
investments
As of June 30, 2019, cash, cash equivalents and short-term
investments were RMB212,189 million (US$30,909 million), compared
to RMB193,238 million as of March 31, 2019. The increase in cash,
cash equivalents and short-term investments during the quarter
ended June 30, 2019 was primarily due to free cash flow generated
from operations of RMB26,361 million (US$3,840 million), partly
offset by net cash used in investment and acquisition activities of
RMB14,037 million (US$2,045 million).
Cash flow from operating activities and
free cash flow
Net cash provided by operating activities in the quarter ended
June 30, 2019 was RMB34,612 million (US$5,042 million), a decrease
of 4% compared to RMB36,117 million in the same quarter of 2018,
which was mainly due to a decrease in annual payment of royalty
fees and software technology service fees from Ant Financial and
payment of a US$250 million cash settlement of a U.S. federal class
action lawsuit that we agreed last quarter.
Free cash flow, a non-GAAP measurement of liquidity, in the
quarter ended June 30, 2019 was RMB26,361 million (US$3,840
million) compared to RMB26,358 million in the same quarter of 2018,
which, in addition to the factors affecting net cash provided by
operating activities, also reflected a RMB2,359 million decrease in
spending to acquire licensed copyrights and other intangible
assets.
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, 2019, net cash used in
investing activities of RMB21,136 million (US$3,079 million)
primarily reflected (i) cash outflow of RMB18,146 million (US$2,643
million) for investment and acquisition activities, including those
relating to Red Star Macalline and China TransInfo, (ii) capital
expenditures of RMB6,382 million (US$930 million), which included
cash outflow for acquisition of land use rights and construction in
progress relating to office campus of RMB526 million (US$77
million), as well as (iii) acquisition of licensed copyrights and
other intangible assets of RMB2,395 million (US$349 million). These
cash outflows were partly offset by cash inflow of RMB4,109 million
(US$598 million) from disposal of various investments.
Employees
As of June 30, 2019, we had a total of 103,699 employees,
compared to 101,958 as of March 31, 2019.
Share Subdivision and ADS Ratio
Change
On July 30, 2019, we effected a 1-to-8 share subdivision, as a
result of which each ordinary share was subdivided into eight
ordinary shares (the “Share Subdivision”). On the same day, we
changed our ordinary share-to-ADS ratio. Following the ADS ratio
change, each ADS now represents eight ordinary shares. Because the
ADS ratio change was exactly proportionate to the Share
Subdivision, no new ADSs were issued to any ADS holder and the
total number of our outstanding ADSs remains unchanged.
The table below sets forth the pre- and post-share subdivision
earnings per share/ADS attributable to ordinary shareholders and
weighted average number of shares used in calculating earnings per
ordinary share for the periods indicated.
Three months ended June
30,
2018
2019
Pre-Share
Post-Share
Pre-Share
Post-Share
Subdivision
Subdivision
Subdivision
Subdivision
RMB
RMB
RMB
US$
RMB
US$
(except share data)
Earnings per share attributable to
ordinary shareholders
Basic
3.36
0.42
8.18
1.19
1.02
0.15
Diluted
3.30
0.41
8.06
1.17
1.01
0.15
Non-GAAP diluted
8.04
1.01
12.55
1.83
1.57
0.23
Earnings per ADS attributable to
ordinary shareholders
Basic
3.36
3.36
8.18
1.19
8.18
1.19
Diluted
3.30
3.30
8.06
1.17
8.06
1.17
Non-GAAP diluted
8.04
8.04
12.55
1.83
12.55
1.83
Weighted average number of shares used
in calculating earnings per ordinary share (million shares)
Basic
2,581
20,648
2,597
20,776
Diluted
2,627
21,014
2,634
21,075
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 August 15, 2019.
Details of the conference call are as follows: International:
+65 6713 5090 U.S.: +1 845 675 0437 U.K.: +44 203 621 4779 Hong
Kong: +852 3018 6771 Conference ID: 9666737
A live webcast of the earnings conference call can be accessed
at http://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
(dial-in number: +61 2 8199 0299; conference ID: 9666737).
Our results announcement and accompanying slides are available
at Alibaba Group’s Investor Relations website at
http://www.alibabagroup.com/en/ir/home on August 15, 2019.
ABOUT ALIBABA GROUP
Our mission is to make it easy to do business anywhere. We aim
to build the infrastructure of commerce. We envision that our
customers will meet, work and live at Alibaba, and that we will be
a company that lasts at least 102 years.
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
“will,” “expects,” “anticipates,” “future,” “intends,” “plans,”
“believes,” “estimates,” “potential,” “continue,” “ongoing,”
“targets,” “guidance” 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 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, including but not
limited to the following: Alibaba’s expected revenue growth;
Alibaba’s goals and strategies; Alibaba’s future business
development; Alibaba’s ability to maintain the trusted status of
its ecosystem, reputation and brand; risks associated with
increased investments in Alibaba’s business and new business
initiatives; risks associated with strategic acquisitions and
investments; Alibaba’s ability to retain or increase engagement of
consumers, merchants and other participants in its ecosystem and
enable new offerings; Alibaba’s ability to maintain or grow its
revenue or business; risks associated with limitation or
restriction of services provided by Alipay; changes in laws,
regulations and regulatory environment that affect Alibaba’s
business operations; privacy and regulatory concerns; competition;
security breaches; the continued growth of the e-commerce market in
China and globally; risks associated with the performance of our
business partners, including but not limited to Ant Financial; and
fluctuations in general economic and business conditions in China
and globally 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. 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), marketplace-based
core commerce adjusted EBITA, 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 section
entitled “Information about Segments” and the table captioned
“Reconciliations of Non-GAAP Measures to the Nearest Comparable
GAAP Measures” in this results announcement.
We believe that adjusted EBITDA, adjusted EBITA,
marketplace-based core commerce 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, as well as one measure that
provides supplemental information on our core commerce segment,
namely marketplace-based core commerce adjusted EBITA, 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, marketplace-based core commerce
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, adjusted
EBITA for core commerce, 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 or loss,
net, income tax expenses and share of results of equity investees,
(ii) certain non-cash expenses, consisting of share-based
compensation expense, amortization and depreciation, 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 or loss,
net, income tax expenses and share of results of equity investees,
(ii) certain non-cash expenses, consisting of share-based
compensation expense and amortization, which we do not believe are
reflective of our core operating performance during the periods
presented.
Marketplace-based core commerce adjusted EBITA represents
adjusted EBITA for core commerce excluding the effects of (i) local
consumer services, (ii) Lazada, (iii) New Retail and direct import
and (iv) Cainiao Network. Marketplace-based core commerce adjusted
EBITA reflects the performance of our most established businesses,
namely, those of our China retail marketplaces and wholesale
marketplaces which primarily adopt a marketplace-based approach. By
excluding certain businesses that are in the earlier stages of
their development and with business approaches that continue to
evolve, marketplace-based core commerce adjusted EBITA enables
investors to clearly evaluate the performance of our most
established businesses on a like-for-like basis.
Non-GAAP net income represents net income before
share-based compensation expense, amortization, impairment of
investments, gain or loss on deemed disposals/disposals/revaluation
of investments, amortization of excess value receivable arising
from the restructuring of commercial arrangements with Ant
Financial and others, as adjusted for the tax effects on non-GAAP
adjustments.
Non-GAAP diluted earnings per share represents non-GAAP
net income attributable to ordinary shareholders divided by the
weighted average number of shares outstanding during the periods on
a diluted basis. 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
campus), licensed copyrights and other intangible assets.
The section entitled “Information about Segments” and the table
captioned “Reconciliations of Non-GAAP Measures to the Nearest
Comparable 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,
2018
2019
RMB
RMB
US$
(in millions, except per share
data)
Revenue
80,920
114,924
16,741
Cost of revenue
(43,720
)
(59,987
)
(8,738
)
Product development expenses
(11,510
)
(10,478
)
(1,526
)
Sales and marketing expenses
(8,921
)
(10,698
)
(1,558
)
General and administrative expenses
(6,645
)
(6,320
)
(921
)
Amortization of intangible assets
(2,104
)
(3,066
)
(447
)
Income from operations
8,020
24,375
3,551
Interest and investment income, net
7,246
187
27
Interest expense
(1,213
)
(1,346
)
(196
)
Other (loss) income, net
(83
)
2,101
306
Income before income tax and share of
results of equity investees
13,970
25,317
3,688
Income tax expenses
(5,665
)
(6,712
)
(978
)
Share of results of equity investees
(655
)
517
75
Net income
7,650
19,122
2,785
Net loss attributable to noncontrolling
interests
1,070
2,326
339
Net income attributable to Alibaba Group
Holding Limited
8,720
21,448
3,124
Accretion of mezzanine equity
(35
)
(196
)
(28
)
Net income attributable to ordinary
shareholders
8,685
21,252
3,096
Earnings per share attributable to
ordinary shareholders(1)
Basic
0.42
1.02
0.15
Diluted
0.41
1.01
0.15
Earnings per ADS attributable to
ordinary shareholders(1)
Basic
3.36
8.18
1.19
Diluted
3.30
8.06
1.17
Weighted average number of shares used
in calculating earnings per ordinary share (million
shares)(1)
Basic
20,648
20,776
Diluted
21,014
21,075
___________________
(1)
Each ADS represents eight ordinary shares.
See the sections entitled “Share Subdivision and ADS Ratio Change”
for more information.
ALIBABA GROUP HOLDING LIMITED REVENUE
The following table sets forth our revenue by segments for the
periods indicated:
Three months ended June
30,
2018
2019
RMB
RMB
US$
(in millions)
Core commerce(1)
69,188
99,544
14,500
Cloud computing(2)
4,698
7,787
1,134
Digital media and entertainment(3)
5,975
6,312
920
Innovation initiatives and others(4)
1,059
1,281
187
Total
80,920
114,924
16,741
___________________
(1)
Revenue from core commerce is primarily
generated from our China retail marketplaces, Freshippo, 1688.com,
AliExpress, Lazada.com, Alibaba.com, Cainiao logistics services and
local consumer services.
(2)
Revenue from cloud computing is primarily
generated from the provision of services, such as elastic
computing, database, storage, network virtualization services,
large scale computing, security, management and application
services, big data analytics, a machine learning platform and IoT
services.
(3)
Revenue from digital media and
entertainment is primarily generated from UCWeb and Youku.
(4)
Revenue from innovation initiatives and
others is primarily generated from businesses such as Amap, Tmall
Genie and other innovation initiatives. Other revenue also includes
SME annual fee received from Ant Financial and its affiliates.
ALIBABA GROUP HOLDING LIMITED INFORMATION ABOUT
SEGMENTS
The following table sets forth our income (loss) from operations
by segments for the periods indicated:
Three months ended June
30,
2018
2019
RMB
RMB
US$
(in millions)
Core commerce
23,022
35,049
5,105
Cloud computing
(2,074
)
(1,509
)
(220
)
Digital media and entertainment
(4,290
)
(3,159
)
(460
)
Innovation initiatives and others
(3,775
)
(3,000
)
(437
)
Unallocated
(4,863
)
(3,006
)
(437
)
Total
8,020
24,375
3,551
The following table sets forth our adjusted EBITA by segments
for the periods indicated:
Three months ended June
30,
2018
2019
RMB
RMB
US$
(in millions)
Core commerce
32,797
41,025
5,976
Cloud computing
(488)
(358
)
(52
)
Digital media and entertainment
(3,132)
(2,233
)
(325
)
Innovation initiatives and others
(1,202)
(1,965
)
(286
)
Unallocated
(1,473)
(1,913
)
(279
)
Total
26,502
34,556
5,034
ALIBABA GROUP HOLDING LIMITED UNAUDITED CONSOLIDATED BALANCE
SHEETS
As of March 31,
As of June 30,
2019
2019
RMB
RMB
US$
(in millions)
Assets
Current assets:
Cash and cash equivalents
189,976
210,539
30,669
Short-term investments
3,262
1,650
240
Restricted cash and escrow receivables
8,518
7,301
1,063
Investment securities
9,927
8,431
1,228
Prepayments, receivables and other
assets
58,590
62,711
9,135
Total current assets
270,273
290,632
42,335
Investment securities
157,090
168,709
24,576
Prepayments, receivables and other
assets(1)
28,018
46,820
6,821
Investment in equity investees
84,454
85,596
12,468
Property and equipment, net
92,030
94,184
13,719
Intangible assets, net
68,276
66,019
9,617
Goodwill
264,935
266,894
38,877
Total assets
965,076
1,018,854
148,413
Liabilities, Mezzanine Equity and
Shareholders’ Equity
Current liabilities:
Current bank borrowings
7,356
7,564
1,102
Current unsecured senior notes
15,110
15,455
2,251
Income tax payable
17,685
17,764
2,588
Escrow money payable
8,250
6,868
1,000
Accrued expenses, accounts payable and
other liabilities(1)
117,711
119,965
17,475
Merchant deposits
10,762
11,167
1,627
Deferred revenue and customer advances
30,795
31,917
4,649
Total current liabilities
207,669
210,700
30,692
ALIBABA GROUP HOLDING LIMITED UNAUDITED CONSOLIDATED BALANCE
SHEETS (CONTINUED)
As of March 31,
As of June 30,
2019
2019
RMB
RMB
US$
(in millions)
Deferred revenue
1,467
1,657
241
Deferred tax liabilities
22,517
21,874
3,187
Non-current bank borrowings
35,427
38,237
5,570
Non-current unsecured senior notes
76,407
78,133
11,381
Other liabilities(1)
6,187
23,196
3,379
Total liabilities
349,674
373,797
54,450
Commitments and contingencies
—
—
—
Mezzanine equity
6,819
7,091
1,033
Shareholders’ equity:
Ordinary shares
1
1
—
Additional paid-in capital
231,783
238,023
34,672
Treasury shares at cost
—
—
—
Restructuring reserve
(97
)
(31
)
(5
)
Subscription receivables
(49
)
(49
)
(7
)
Statutory reserves
5,068
5,166
753
Accumulated other comprehensive loss
(2,335
)
(1,313
)
(191
)
Retained earnings
257,886
279,236
40,675
Total shareholders’ equity
492,257
521,033
75,897
Noncontrolling interests
116,326
116,933
17,033
Total equity
608,583
637,966
92,930
Total liabilities, mezzanine equity and
equity
965,076
1,018,854
148,413
___________________
(1)
We adopted ASU 2016-02, “Leases (Topic
842)” beginning in the first quarter of fiscal year 2020 using the
modified retrospective method and no adjustments are made to the
comparative periods. Adoption of the standard resulted in the
recognition of operating lease right-of-use assets of approximately
RMB24.9 billion and operating lease liabilities of approximately
RMB19.4 billion on the consolidated balance sheet as of April 1,
2019.
Operating lease right-of-use assets are
included in non-current prepayments, receivables and other assets,
and operating lease liabilities are included in current accrued
expenses, accounts payable and other liabilities and other
non-current liabilities on the consolidated balance sheets.
ALIBABA GROUP HOLDING LIMITED UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three months ended June
30,
2018
2019
RMB
RMB
US$
(in millions)
Net cash provided by operating
activities
36,117
34,612
5,042
Net cash used in investing activities
(71,670
)
(21,136
)
(3,079
)
Net cash provided by financing
activities
4,281
4,493
654
Effect of exchange rate changes on cash
and cash equivalents, restricted cash and escrow receivables
2,783
1,377
201
(Decrease) increase in cash and cash
equivalents, restricted cash and escrow receivables
(28,489
)
19,346
2,818
Cash and cash equivalents, restricted cash
and escrow receivables at beginning of period
202,726
198,494
28,914
Cash and cash equivalents, restricted cash
and escrow receivables at end of period
174,237
217,840
31,732
ALIBABA GROUP HOLDING LIMITED RECONCILIATIONS OF NON-GAAP
MEASURES TO THE NEAREST COMPARABLE 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,
2018
2019
RMB
RMB
US$
(in millions)
Net income
7,650
19,122
2,785
Less: Interest and investment income,
net
(7,246
)
(187
)
(27
)
Add: Interest expense
1,213
1,346
196
Less: Other (loss) income, net
83
(2,101
)
(306
)
Add: Income tax expenses
5,665
6,712
978
Add: Share of results of equity
investees
655
(517
)
(75
)
Income from operations
8,020
24,375
3,551
Add: Share-based compensation expense
16,378
7,115
1,036
Add: Amortization of intangible assets
2,104
3,066
447
Adjusted EBITA
26,502
34,556
5,034
Add: Depreciation and amortization of
property and equipment, and operating lease cost relating to land
use rights
2,857
4,682
682
Adjusted EBITDA
29,359
39,238
5,716
ALIBABA GROUP HOLDING LIMITED RECONCILIATIONS OF NON-GAAP
MEASURES TO THE NEAREST COMPARABLE GAAP MEASURES
(CONTINUED)
The table below sets forth a
reconciliation of adjusted EBITA for core commerce to
marketplace-based core commerce adjusted EBITA for the periods
indicated:
Three months ended June
30,
2018
2019
RMB
RMB
US$
(in millions)
Adjusted EBITA for core
commerce
32,797
41,025
5,976
Less: Effects of local consumer services,
Lazada, New Retail and direct import and Cainiao Network
4,159
5,775
841
Marketplace-based core commerce
adjusted EBITA
36,956
46,800
6,817
ALIBABA GROUP HOLDING LIMITED RECONCILIATIONS OF NON-GAAP
MEASURES TO THE NEAREST COMPARABLE 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,
2018
2019
RMB
RMB
US$
(in millions)
Net income
7,650
19,122
2,785
Add: Share-based compensation expense
16,378
7,115
1,036
Add: Amortization of intangible assets
2,104
3,066
447
Add: Impairment of investments
—
250
36
Less: Gain (loss) on deemed
disposals/disposals/revaluation of investments and others
(5,408
)
1,626
237
Add: Amortization of excess value
receivable arising from the restructuring of commercial
arrangements with Ant Financial
66
66
10
Adjusted for tax effects on non-GAAP
adjustments(1)
(689
)
(296
)
(43
)
Non-GAAP net income
20,101
30,949
4,508
___________________
(1)
Tax effects on non-GAAP adjustments
primarily comprised of tax provisions on the amortization of
intangible assets and certain gains or losses from investments.
ALIBABA GROUP HOLDING LIMITED RECONCILIATIONS OF NON-GAAP
MEASURES TO THE NEAREST COMPARABLE 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,
2018
2019
RMB
RMB
US$
(in millions, except per share
data)
Net income attributable to ordinary
shareholders – basic
8,685
21,252
3,096
Dilution effect on earnings arising from
option plans operated by an equity investee and a subsidiary
(3)
(11)
(2)
Net income attributable to ordinary
shareholders – diluted
8,682
21,241
3,094
Add: Non-GAAP adjustments to net
income(1)
12,451
11,827
1,723
Non-GAAP net income attributable
to ordinary shareholders for computing non-GAAP diluted earnings
per share/ADS
21,133
33,068
4,817
Weighted average number of shares on a
diluted basis (million shares)(5)
21,014
21,075
Diluted earnings per
share(2)(5)
0.41
1.01
0.15
Add: Non-GAAP adjustments to net income
per share(3)(5)
0.60
0.56
0.08
Non-GAAP diluted earnings per
share(4)(5)
1.01
1.57
0.23
Diluted earnings per ADS(2)(5)
3.30
8.06
1.17
Add: Non-GAAP adjustments to net income
per ADS(3)(5)
4.74
4.49
0.66
Non-GAAP diluted earnings per
ADS(4)(5)
8.04
12.55
1.83
___________________
(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 adjustments to net income per
share is derived from non-GAAP adjustments to net income divided by
weighted average number of shares on a diluted basis. Non-GAAP
adjustments to net income per ADS is derived from the non-GAAP
adjustments to net income per share after adjustment to the
ordinary share-to-ADS ratio.
(4)
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.
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.
(5)
Each ADS represents eight ordinary shares.
See the sections entitled “Share Subdivision and ADS Ratio Change”
for more information.
ALIBABA GROUP HOLDING LIMITED RECONCILIATIONS OF NON-GAAP
MEASURES TO THE NEAREST COMPARABLE 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,
2018
2019
RMB
RMB
US$
(in millions)
Net cash provided by operating
activities
36,117
34,612
5,042
Less: Purchase of property and equipment
(excluding land use rights and construction in progress relating to
office campus)
(5,005)
(5,856)
(853)
Less: Acquisition of licensed copyrights
and other intangible assets
(4,754)
(2,395)
(349)
Free cash flow
26,358
26,361
3,840
ALIBABA GROUP HOLDING LIMITED SELECTED OPERATING DATA
Annual active consumers
The table below sets forth the number of active consumers on our
China retail marketplaces for the periods indicated:
Twelve months ended
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
2017
2017
2018
2018
2018
2018
2019
2019
(in millions)
Annual active consumers
488
515
552
576
601
636
654
674
Mobile
The table below sets forth the mobile MAUs on our China retail
marketplaces for the periods indicated:
The month ended
Sep 30,
Dec 31,
Mar 31,
Jun 30,
Sep 30,
Dec 31,
Mar 31,
Jun 30,
2017
2017
2018
2018
2018
2018
2019
2019
(in millions)
Mobile MAUs
549
580
617
634
666
699
721
755
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190815005317/en/
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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