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Alibaba Group Boosted by User Increases at Home and Abroad

Alibaba benefited from robust gains in Chinese and international commerce to post strong income and revenue increases in the quarter.

In a Nutshell: Alibaba Group Holding Limited said annual active consumers on its China retail marketplaces reached 674 million in the three months through June, an increase of 20 million from the previous quarter.

Mobile monthly active users (MAUs) on its marketplaces reached 755 million in June, an increase of 34 million over March 2019.

The company’s Tmall consumer engagement and distribution platform for brands in China continued to “gain wallet share and grow faster than the sector average,” the company said. The growth was driven by both increases in the number of users and average spend, reflecting strength in fast-moving consumer goods such as apparel, consumer electronics and home furnishing categories.

Alibaba’s Cainiao Network for international and cross-border fulfillment and last-mile solutions has developed robust import fulfillment solutions for Tmall Global, the company said, utilizing a combination of bonded warehouses in China and direct shipment from foreign countries. In June, Cainiao Network’s import fulfillment solutions served more than 97 percent of Tmall Global’s packages.

Sales: Revenue for the company’s fiscal third quarter ended June 30 increased 42 percent to 114.92 billion yuan ($16.74 billion.) Revenue from the China commerce retail business in the quarter increased 40 percent to 75.6 billion yuan ($11.01 billion). Combined customer management and commission revenues grew 26 percent year-over-year.

Revenue from international commerce retail business in the quarter rose 29 percent to 5.57 billion yuan ($811 million). The increase was primarily due to consolidation of Trendyol, Turkey’s leading e-commerce platform, and an increase in revenue from AliExpress.

Earnings: Net income for the period more than doubled to 21.25 billion yuan ($3.1 billion), compared to 8.69 billion yuan ($1.24 billion).

Income from operations jumped 204 percent to 24.38 billion yuan ($3.55 billion). The increase would have been 27 percent excluding a share-based compensation expense resulting from Ant Financial’s awards to employees. This expense was significantly higher in the quarter ended June 30, 2018, because during that quarter Ant Financial completed an equity financing at a higher valuation.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased 34 percent year-over-year to 39.24 billion yuan ($5.72 billion).

Cloud computing revenue grew 66 percent year-over-year to 7.79 billion yuan ($1.13 billion) during the quarter, primarily driven by an increase in average revenue per customer.

CEO’s Take: Daniel Zhang, CEO of Alibaba Group, said: “Alibaba had a great quarter, expanding our user base to 674 million annual active consumers, demonstrating our superior user experience. 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.”

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