BABA(BABA) - 2025 Q1 - Quarterly Results

Alibaba Group June Quarter 2024 Results Financial & Business Highlights The Group reports 4% YoY revenue growth to RMB 243.2 billion, alongside declining profitability, accelerated share buybacks, and stabilizing e-commerce market share - CEO Eddie Wu highlighted that the strategy to enhance user experience has stabilized the market share of Taobao and Tmall Group, returning the business to a growth trajectory[2] - CFO Toby Xu noted continued investment in core businesses for growth while reducing losses in other units, returning US$5.8 billion to shareholders through share repurchases[3][23] June Quarter 2024 Key Financial Metrics (YoY) | Metric | Q2 2024 (RMB) | YoY Change | | :--- | :--- | :--- | | Revenue | 243,236 million | 4% | | Income from Operations | 35,989 million | -15% | | Adjusted EBITA | 45,035 million | -1% | | Net Income | 24,022 million | -27% | | Non-GAAP Net Income | 40,691 million | -9% | | Diluted Earnings per ADS | RMB 9.89 | -26% | | Non-GAAP Diluted Earnings per ADS | RMB 16.44 | -5% | | Free Cash Flow | 17,372 million | -56% | - The significant 56% decrease in free cash flow was mainly attributed to increased capital expenditure on Alibaba Cloud infrastructure and working capital changes[5][85] - The company repurchased US$5.8 billion worth of shares, leading to a 2.3% net reduction in outstanding shares as of June 30, 2024[23][24] Business and Strategic Updates by Segment Strategic investments drove varied segment performance, with strong growth in AIDC and Cainiao, while Taobao and Tmall stabilized and Local Services narrowed losses - Taobao and Tmall Group: Achieved high-single-digit online GMV growth and double-digit order growth YoY, driven by investments in user experience and price competitiveness[7][9][10] - Cloud Intelligence Group: Revenue grew 6% YoY, with AI-related product revenue continuing triple-digit YoY growth and the number of AI platform paying users increasing by over 200% QoQ[11][12][14] - AIDC: Revenue surged 32% YoY, driven by the cross-border Choice business on AliExpress, alongside increased investments in Europe and the Gulf region[17] - Cainiao: Revenue grew 16% YoY, primarily from increased demand for cross-border fulfillment solutions[19] - Local Services Group: Revenue increased 12% YoY, and losses narrowed significantly due to improved operating efficiency and scale in both Amap and Ele.me[20] Detailed Financial Analysis by Segment This section provides a detailed financial breakdown of each segment, highlighting strong AIDC revenue growth and a notable profitability surge in the Cloud group Segment Revenue Breakdown (June 2024 Quarter, YoY) | Segment | Revenue (RMB million) | YoY Change | | :--- | :--- | :--- | | Taobao and Tmall Group | 113,373 | -1% | | Cloud Intelligence Group | 26,549 | 6% | | Alibaba International Digital Commerce | 29,293 | 32% | | Cainiao Smart Logistics | 26,811 | 16% | | Local Services Group | 16,229 | 12% | | Digital Media and Entertainment | 5,581 | 4% | Segment Adjusted EBITA Breakdown (June 2024 Quarter, YoY) | Segment | Adj. EBITA (RMB million) | YoY Change | | :--- | :--- | :--- | | Taobao and Tmall Group | 48,810 | -1% | | Cloud Intelligence Group | 2,337 | 155% | | Alibaba International Digital Commerce | (3,706) | -782% | | Cainiao Smart Logistics | 618 | -30% | | Local Services Group | (386) | 81% | | Digital Media and Entertainment | (103) | N/A | Taobao and Tmall Group Revenue and adjusted EBITA both declined 1%, as a planned reduction in direct sales offset growth in customer management revenue - Customer management revenue grew 1% YoY, as high-single-digit GMV growth was partly offset by a lower take rate from new, less monetized models[36] - Direct sales revenue fell 9% YoY, mainly due to a planned reduction in consumer electronics and appliances sales[37][38] - Adjusted EBITA decreased by 1% to RMB 48.8 billion, attributed to higher investments in user experience and technology infrastructure[40] Cloud Intelligence Group Revenue grew 6% to RMB 26.5 billion while adjusted EBITA surged 155%, driven by a strategic shift to high-margin public cloud and AI products - Revenue growth of 6% was driven by public cloud, while the company strategically transitioned away from low-margin project-based revenues[41] - Adjusted EBITA increased by 155% to RMB 2.3 billion due to a better product mix and operating efficiency[42] Alibaba International Digital Commerce Group Revenue jumped 32% to RMB 29.3 billion, but increased investment in AliExpress and Trendyol widened the adjusted EBITA loss significantly - International commerce retail revenue grew 38% YoY, primarily driven by order growth from AliExpress' Choice[43] - Adjusted EBITA loss widened to RMB 3.7 billion due to increased investments in AliExpress and Trendyol, though partially offset by Lazada's reduced operating loss[46] Cainiao Smart Logistics Network Limited Revenue grew 16% to RMB 26.8 billion from cross-border fulfillment, but adjusted EBITA fell 30% due to increased investment in network capabilities - Revenue increased 16% YoY, primarily driven by cross-border fulfillment solutions[47] - Adjusted EBITA fell 30% YoY due to increased investments in cross-border fulfillment solutions[48] Local Services Group Revenue rose 12% to RMB 16.2 billion, while improved efficiency and scale led to a significant 81% reduction in the segment's adjusted EBITA loss - Revenue growth of 12% was driven by order growth from both Amap and Ele.me[49] - Adjusted EBITA loss narrowed by 81% to RMB 386 million, a significant improvement from a loss of RMB 1,982 million in the prior year[50] Consolidated Financial Performance Consolidated operating income and net income fell, impacted by a prior-year share-based compensation reversal, higher investments, and lower operating cash flow - Sales and marketing expenses as a percentage of revenue increased from 11.6% to 13.3% (ex-SBC), primarily due to increased investments in e-commerce businesses[59][60] - General and administrative expenses included a one-time provision of RMB 3,145 million for shareholder class action lawsuits[61] - Total share-based compensation expense was RMB 4,131 million, a significant swing from a net reversal of RMB 1,629 million in the same quarter last year[62][64] - Net cash provided by operating activities decreased 26% to RMB 33.6 billion, while free cash flow decreased 56% to RMB 17.4 billion[85] - Total employee count was 198,162 as of June 30, 2024, a decrease from 204,891 as of March 31, 2024[88] Unaudited Consolidated Financial Statements This section presents the unaudited income statements, balance sheets, and cash flow statements, along with reconciliations of GAAP to non-GAAP measures - The Unaudited Consolidated Income Statement details the components leading from Revenue (RMB 243.2B) to Net Income (RMB 24.0B)[110] - The Unaudited Consolidated Balance Sheet shows Total Assets of RMB 1,785.1 billion and Total Liabilities of RMB 731.7 billion as of June 30, 2024[112][114] - The Unaudited Condensed Consolidated Statement of Cash Flows shows Net Cash Provided by Operating Activities at RMB 33.6 billion[116] - The report provides detailed reconciliations for non-GAAP metrics, including Adjusted EBITA, Adjusted EBITDA, Non-GAAP Net Income, Non-GAAP Diluted EPS/ADS, and Free Cash Flow[118][120][122][126]