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Alibaba Group Announces June Quarter 2022 Results

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 ended June 30, 2022.

“During the past quarter, we actively adapted to changes in the macro environment and remained focused on our long-term strategy by continuing to strengthen our capability for customer value creation,” said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. “Following a relatively slow April and May, we saw signs of recovery across our businesses in June. We are confident in our growth opportunities in the long term given our high-quality consumer base and the resilience of our diversified business model catering to different demands of our customers.”

“Despite the challenges posed by the COVID-19 resurgence, we delivered stable revenue performance year-over-year. We have narrowed losses in key strategic businesses given ongoing improvements in operating efficiency and increasing focus on cost optimization,” said Toby Xu, Chief Financial Officer of Alibaba Group. “We recently shared our plan to add Hong Kong as another primary listing venue. By becoming primary listed on both Hong Kong and New York stock exchanges, we aim to further expand and diversify our investor base.”

BUSINESS HIGHLIGHTS

In the quarter ended June 30, 2022:

  • Revenue was RMB205,555 million (US$30,689 million) and remained stable year-over-year primarily due to a decline in China commerce segment revenue by 1% year-over-year to RMB141,935 million (US$21,190 million) offset by revenue growth of Cloud segment by 10% year-over-year to RMB17,685 million (US$2,640 million).
  • Income from operations was RMB24,943 million (US$3,724 million), a decrease of 19% year-over-year. Adjusted EBITA, a non-GAAP measurement, decreased 18% year-over-year to RMB34,419 million (US$5,139 million).
  • Net income attributable to ordinary shareholders was RMB22,739 million (US$3,395 million) and net income was RMB20,298 million (US$3,030 million). Non-GAAP net income was RMB30,252 million (US$4,517 million), a decrease of 30% year-over-year, mainly due to a decrease in adjusted EBITA and a decrease in share of results of equity method investees.
  • Diluted earnings per ADS was RMB8.51 (US$1.27) and diluted earnings per share was RMB1.06 (US$0.16 or HK$1.24). Non-GAAP diluted earnings per ADS was RMB11.73 (US$1.75), a decrease of 29% year-over-year and non-GAAP diluted earnings per share was RMB1.47 (US$0.22 or HK$1.72), a decrease of 29% year-over-year.
  • Net cash provided by operating activities was RMB33,869 million (US$5,057 million), an increase of 1% compared to RMB33,603 million in the same quarter of 2021. Free cash flow, a non-GAAP measurement of liquidity, was RMB22,173 million (US$3,310 million), an increase of 7% compared to RMB20,683 million in the same quarter of 2021.

BUSINESS AND STRATEGIC UPDATES

China Commerce

China commerce segment mainly includes our China commerce retail businesses such as Taobao, Tmall, Taobao Deals, Taocaicai, Freshippo, Tmall Supermarket, Sun Art, Tmall Global and Alibaba Health, as well as wholesale businesses including 1688.com.

For the quarter ended June 30, 2022, online physical goods GMV generated on Taobao and Tmall, excluding unpaid orders, declined mid-single-digit year-over-year mainly due to impacts from COVID-19 resurgence and restrictions that resulted in supply chain and logistics disruptions in April and most of May. In late May, as logistics capacity normalized, we saw recovering GMV driven by a successful 6.18 Shopping Festival that was strongly supported by our merchants and loyal consumers. The 6.18 Shopping Festival achieved positive paid GMV growth year-over-year and we saw especially strong purchasing demands from our 88VIP members.

Negatively impacted by COVID-19, paid GMV declined for key categories such as fashion & accessories and consumer electronics during the quarter. Nevertheless, we continue to observe increasing consumption in the healthcare category as well as interests-based consumption categories such as pet care, collectibles and outdoor & active gears. Despite near-term challenges, Taobao and Tmall continue to achieve high consumer retention, especially among consumers with higher spending power. 98% of the annual active consumers who each spent over RMB10,000 on Taobao and Tmall in the twelve months ended June 30, 2021 continued to be active in the twelve months ended June 30, 2022. In the twelve months ended June 30, 2022, more than 123 million annual active consumers each spent over RMB10,000 on Taobao and Tmall. As of June 30, 2022, we had 25 million 88VIP members with over RMB57,000 annual average spending per member.

Taobao Deals, our value-for-money platform, continued to enrich product supply and enhance digital consumption experience for consumers in less developed areas. Specifically, Taobao Deals has been helping an expanding base of manufacturers to sell directly to consumers (M2C) on Taobao and Taobao Deals and, in the June quarter, paid GMV of M2C products on Taobao and Taobao Deals grew more than 40% year-over-year. During the quarter, Taobao Deals significantly narrowed losses year-over-year as well as quarter-over-quarter driven by optimizing spending in user acquisition as well as improving average spending of active consumers.

Taocaicai, our business offering consumers next day pick-up service for grocery and fresh goods at neighborhood pick-up points, has rapidly established market presence in regions that have high population density with meaningful consumption power. In the June quarter, Taocaicai GMV grew rapidly at more than 200% year-over-year while its losses increased moderately compared to the same quarter last year. Moreover, driven by optimized pricing strategy, better sourcing capability and lowered operating costs, Taocaicai significantly reduced losses quarter-over-quarter in the June quarter.

During the quarter ended June 30, 2022, our direct sales and others revenue grew 8% year-over-year to RMB64,714 million (US$9,661 million), primarily driven by strong growth of online purchases of food, grocery and FMCG goods that benefitted Freshippo, Tmall Supermarket and Sun Art, partly offset by softening offline sales due to COVID-19 impacts. The percentage of online sales for Freshippo and Sun Art reached 68% and 36%, respectively, during the quarter. By leveraging our multiple direct sales businesses and on-demand delivery infrastructure, we believe we are well positioned to better serve consumers’ increasing demand for on-demand delivery of food, grocery and daily necessities in the future.

International Commerce

International Commerce Retail

Our International commerce retail businesses include Lazada, AliExpress, Trendyol and Daraz. During the June quarter, the combined number of orders of Lazada, AliExpress, Trendyol and Daraz declined by 4% year-over-year, primarily driven by declining orders of AliExpress due to change in the European Union’s VAT rules, depreciation of the Euro against the U.S dollar as well as ongoing supply chain and logistics disruptions due to the Russia-Ukraine conflict.

In Southeast Asia, Lazada exhibited healthy order growth of 10% year-over-year during the quarter ended June 30, 2022. Year-over-year order growth decelerated due to shopping activities normalizing back to offline channels with the lifting of COVID-19 restrictions in the region. Lazada has continued to focus on improving operating efficiency, which has resulted in narrowing of losses quarter-over-quarter and year-over-year during the quarter ended June 30, 2022.

During the June quarter, overall orders of Trendyol grew 46% year-over-year. To better serve its significant consumer base, Trendyol has continued to invest and expand into high-frequency local consumer services business. As of June 30, 2022, Trendyol served more than 225 thousand merchants on its marketplace platform.

International Commerce Wholesale

During the June quarter, international commerce wholesale revenue grew 12% year-over-year. Value of transactions completed on Alibaba.com grew 16% year-over-year, driven by solid growth in industrial goods, partly offset by weakening demand of consumer products from sourcing customers in key developed countries challenged by supply chain disruptions and increasing retail channel inventory build-up.

Local Consumer Services

Local consumer services segment includes “To-Home” and “To-Destination” businesses. For the quarter ended June 30, 2022, Local consumer services order volume declined by 5% year-over-year mainly due to declining Ele.me restaurant delivery orders, impacted by COVID-19 resurgence and restrictive measures, partly offset by solid growth of Ele.me non-restaurant delivery orders and strong growth of Amap orders. During the quarter, overall segment GMV declined year-over-year but has improved each month as COVID-19 impacts eased. Overall segment GMV growth turned positive in the month of June 2022.

To-Home

In the quarter ended June 30, 2022, Ele.me continued to focus on improving user retention and operating efficiency in strategic cities as well as increasing growth in non-restaurant delivery services. During the quarter, restaurant order volumes were negatively impacted by COVID-19 resurgence and restrictive measures throughout China, especially in affluent cities such as Shanghai. Ele.me adapted quickly to meet surging demands for daily necessities such as grocery, medicine and baby care products, which resulted in increased basket size. During the quarter ended June 30, 2022, Ele.me’s unit economics per order was positive due to increased average order value year-over-year as well as its ongoing focus in optimizing user acquisition spending and reducing delivery cost per order.

To-Destination

In the quarter ended June 30, 2022, “To-Destination” businesses, which include Amap and Fliggy, were also negatively impacted by COVID-19, but Amap saw a strong recovery in June as COVID-19 restrictions eased. In June, the number of average daily active users of Amap reached a new high of over 120 million, driven by easing COVID-19 impacts and ongoing enrichments of local contents and services that allow Amap users to discover, connect with and visit local merchants.

Cainiao

In the quarter ended June 30, 2022, revenue from Cainiao, before inter-segment elimination, grew 7% year-over-year to RMB17,292 million (US$2,582 million), primarily driven by the growth of fulfillment solutions and value-added services provided to our China commerce retail businesses, partly offset by declining revenue from merchants of our international commerce retail businesses. During the quarter, 70% of Cainiao’s total revenue was generated from external customers. Revenue from Cainiao, after inter-segment elimination, grew 5% year-over-year to RMB12,142 million (US$1,813 million).

Cainiao continues to expand its international logistics network by strengthening its end-to-end logistics capabilities, including eHubs, line-haul, sorting centers and last-mile network. In July 2022, Cainiao commenced operation of a new international sorting center in Israel, bringing the number of overseas sorting centers in operation to ten. Cainiao is also building and investing in capabilities to improve delivery experience for our global consumers and enrich our value proposition to cross-border merchants. For example, during the quarter, we increased smart lockers capacity and made a bolt-on acquisition that enhanced our last mile delivery capability in Europe. As of June 30, 2022, Cainiao had more than 7,700 smart lockers in operation in Europe.

In China, Cainiao continues to expand its value-added services, including door-step parcel delivery service, through Cainiao Post to improve consumer experience, which complements our China commerce businesses. As of June 30, 2022, excluding those in rural areas and universities, approximately 70% of Cainiao Posts offer door-step parcel delivery service to consumers.

Cloud

Our Cloud segment is comprised of Alibaba Cloud and DingTalk. For the quarter ended June 30, 2022, total revenue from our Cloud segment before inter-segment elimination, which includes revenue from services provided to other Alibaba businesses, was RMB23,938 million (US$3,574 million). Revenue after inter-segment elimination was RMB17,685 million (US$2,640 million) for the quarter ended June 30, 2022, an increase of 10% year-over-year. Year-over-year revenue growth of our Cloud segment reflected recovering growth of overall non-Internet industries, driven by financial services, public services, and telecommunication industries, partly offset by decline in revenue from the top Internet customer that has gradually stopped using our overseas cloud services for its international business due to non-product related requirements, online education customers as well as softening demand from other customers in China’s Internet industry. For the quarter ended June 30, 2022, after inter-segment elimination, non-Internet industries contributed 53% of Cloud revenue, up more than five percentage points compared to the same quarter last year.

Alibaba Cloud

Alibaba Cloud continues to develop, expand and support our partners to better serve our enterprise customers. During our Cloud Partners Summit in July 2022, we emphasized ecosystem enhancing initiatives, including capability building and training programs as well as reward programs for ecosystem partners, and we expect such initiatives will further increase revenue contribution from ecosystem partners.

Alibaba Cloud’s advantages are its proprietary technology and continued commitment to investing in research and development in new product offerings and industry-specific solutions for our customers. Highlights of our proprietary technologies in last quarter include:

Data Centers and Hardware:

  • During Alibaba Cloud Summit 2022 (?????) in June, Alibaba Cloud unveiled a proprietary cloud infrastructure system designed to power its cloud-native data centers. The new system, Cloud Infrastructure Processing Unit (CIPU), will help Alibaba Cloud deliver performance improvements in networking, storage, security and computing power by offloading virtualization functions from servers to dedicated hardware. Coupled with the Apsara Cloud operating system, the CIPU system is expected to become the core of our next generation of cloud computing infrastructure.
  • Alibaba Cloud is committed to achieving carbon neutrality for Scope 1~3 GHG emissions by 2030. Over the years, we have invested in more energy-efficient server population, improving server utilization and employing cutting-edge technologies to improve energy efficiency of our self-owned IDCs including liquid cooling technology and renewable electricity storage.

Platform-as-a-Service and other solutions:

  • AI leadership: According to Gartner’s Cloud AI Developer Services Critical Capabilities Report published in May 2022, Alibaba Cloud’s AI language technology ranked second among global cloud AI developer service vendors. Alibaba Cloud offers a comprehensive suite of AI-based capabilities, including Natural Language Processing, intelligent voice recognition, image recognition, video recognition, among others.

DingTalk

DingTalk, our digital collaboration workplace and application development platform, offers new ways of working, sharing and collaboration for modern enterprises and organizations. DingTalk experienced increased usage of its products and services from enterprises, schools and organizations due to greater hybrid-work adoption in China driven by COVID-19 resurgence since March 2022. Specifically, DingTalk saw robust demand for its document sharing and virtual conferencing products, both of which are core DingTalk products that enhance long-term customer value and ensure user stickiness.

Digital Media and Entertainment

In the June quarter, Youku’s daily average paying subscriber base increased 15% year-over-year, primarily driven by quality content and continued contribution from our 88VIP membership program. Youku continues to improve operational efficiency through disciplined investment in content and production capability, which resulted in narrowing of losses year-over-year for five consecutive quarters.

Appointment of Independent Director

We appointed Irene Yun-Lien Lee, chairman of Hysan Development Company Limited and independent non-executive chairman of Hang Seng Bank Limited, and Albert Kong Ping Ng, former chairman of Ernst & Young China who currently serves as an independent non-executive director of a number of companies publicly listed on the Hong Kong Stock Exchange and the Shanghai Stock Exchange, as independent directors. Following this appointment, our board consists of twelve directors, including seven independent directors.

Share Repurchases

During the quarter ended June 30, 2022, we repurchased approximately 38.6 million of our ADSs (the equivalent of approximately 308.7 million of our ordinary shares) for approximately US$3.5 billion under our share repurchase program. As of June 30, 2022, we had approximately 21.2 billion ordinary shares (the equivalent of approximately 2.6 billion ADSs) outstanding. Our current US$25 billion share repurchase program is effective through March 2024. As of June 30, 2022, we still have an un-utilized amount of US$12 billion under this program.

JUNE QUARTER SUMMARY FINANCIAL RESULTS

 

 

Three months ended June 30,

 

 

2021

2022

 

 

RMB

RMB

US$

YoY %

Change

 

(in millions, except percentages and per share amounts)

 

 

 

 

 

Revenue

205,740

 

205,555

 

30,689

 

(0)%

 

 

 

 

 

 

 

 

Income from operations

30,847

 

24,943

 

3,724

 

(19)%(2)

Operating margin

15%

 

12%

 

 

 

 

Adjusted EBITDA(1)

48,628

 

41,114

 

6,138

 

(15)%(2)

Adjusted EBITDA margin(1)

24%

 

20%

 

 

 

 

Adjusted EBITA(1)

41,731

 

34,419

 

5,139

 

(18)%(2)

Adjusted EBITA margin(1)

20%

 

17%

 

 

 

 

 

 

 

 

 

 

 

 

Net income

42,835

 

20,298

 

3,030

 

(53)%(3)

Net income attributable to ordinary shareholders

45,141

 

22,739

 

3,395

 

(50)%(3)

Non-GAAP net income(1)

43,441

 

30,252

 

4,517

 

(30)%(4)

 

 

 

 

 

 

 

 

Diluted earnings per share(5)

2.05

 

1.06

 

0.16

 

(48)%(3) (6)

Diluted earnings per ADS(5)

16.38

 

8.51

 

1.27

 

(48)%(3) (6)

Non-GAAP diluted earnings per share(1) (5)

2.08

 

1.47

 

0.22

 

(29)%(4) (6)

Non-GAAP diluted earnings per ADS(1) (5)

16.60

 

11.73

 

1.75

 

(29)%(4) (6)

________________

(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.

(2)

The year-over-year decreases were primarily due to the decrease in China commerce adjusted EBITA, which was primarily due to a decrease in customer management revenue. Customer management revenue decreased year-over-year, primarily as a result of a mid-single-digit decline year-over-year in online physical goods GMV of Taobao and Tmall, excluding unpaid orders, as well as increased order cancellation due to the impacts from COVID-19 resurgence and restrictions that resulted in supply chain and logistics disruptions in April and most of May. The decrease in China commerce adjusted EBITA was partly offset by the narrowed adjusted EBITA loss of Local consumer services driven by Ele.me’s improved unit economics per order. Ele.me’s unit economics per order was positive during the June quarter due to increased average order value year-over-year as well as its ongoing focus on optimizing user acquisition spending and reducing delivery cost per order.

(3)

The year-over-year decreases were primarily attributable to the decrease in income from operations, the decrease in share of results of equity method investee, as well as the decrease in net gains arising from change in market prices of our equity investments in publicly-traded companies.

(4)

The year-over-year decreases were primarily attributable to the decrease in adjusted EBITA, and the decrease in share of results of equity method investees.

(5)

Each ADS represents eight ordinary shares.

(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.

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, 2022

 

China

commerce

International

commerce

Local

consumer

services

Cainiao

Cloud

Digital

media and

entertainment

Innovation

initiatives

and others

Unallocated(1)

Consolidated

 

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

US$

 

(in millions, except percentages)

Revenue

141,935

 

15,451

 

10,632

 

12,142

 

17,685

 

7,231

 

479

 

 

205,555

 

30,689

YoY% change

(1

)%

2

%

5

%

5

%

10

%

(10

)%

(30

)%

N/A

 

(0

)%

 

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from operations

41,035

 

(2,142

)

(5,311

)

(811

)

(1,304

)

(1,215

)

(2,518

)

(2,791

)

24,943

 

3,724

Add: Share-based compensation expense

1,951

 

557

 

836

 

372

 

1,548

 

399

 

411

 

651

 

6,725

 

1,004

Add: Amortization of intangible assets

588

 

18

 

1,431

 

254

 

3

 

186

 

211

 

60

 

2,751

 

411

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITA

43,574

 

(1,567

)

(3,044

)

(185

)

247

 

(630

)

(1,896

)

(2,080

)

34,419

 

5,139

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITA YoY% change(2)

(14

)%

(52

)%

36

%

(27

)%

(27

)%

(50

)%

(32

)%

(27

)%

(18

)%

 

Adjusted EBITA margin

31

%

(10

)%

(29

)%

(2

)%

1

%

(9

)%

(396

)%

N/A

 

17

%

 

Three months ended June 30, 2021

 

China

commerce

International

commerce

Local

consumer

services

Cainiao

Cloud

Digital

media and

entertainment

Innovation

initiatives

and others

Unallocated(1)

Consolidated

 

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

RMB

 

(in millions, except percentages)

Revenue

144,029

 

15,202

 

10,099

 

11,601

 

16,051

 

8,073

 

685

 

 

205,740

 

 

 

 

 

 

 

 

 

 

 

Income (Loss) from operations

47,603

 

(1,732

)

(7,205

)

(633

)

(1,643

)

(1,010

)

(1,950

)

(2,583

)

30,847

 

Add: Share-based compensation expense

2,383

 

671

 

788

 

212

 

1,979

 

383

 

503

 

892

 

7,811

 

Add: Amortization of intangible assets

836

 

31

 

1,647

 

275

 

4

 

208

 

14

 

58

 

3,073

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITA

50,822

 

(1,030

)

(4,770

)

(146

)

340

 

(419

)

(1,433

)

(1,633

)

41,731

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITA margin

35

%

(7

)%

(47

)%

(1

)%

2

%

(5

)%

(209

)%

N/A

 

20

%

Starting from the quarter ended December 31, 2021, our chief operating decision maker (“CODM”) started to review information under a new reporting structure, and segment reporting has been updated to conform to this change, which also provides greater transparency in our business progress and financial performance. Our updated segments comprise:

  • China commerce, which mainly includes our China commerce retail businesses such as Taobao, Tmall, Taobao Deals, Taocaicai, Freshippo, Tmall Supermarket, Sun Art, Tmall Global and Alibaba Health, as well as wholesale business including 1688.com;
  • International commerce, which mainly includes our international commerce retail and wholesale businesses such as Lazada, AliExpress, Trendyol, Daraz and Alibaba.com;
  • Local consumer services, which mainly includes location-based services, such as Ele.me, Taoxianda, Amap (previously reported under the Innovation initiatives and others segment) and Fliggy;
  • Cainiao, which mainly includes our domestic and international one-stop-shop logistics services and suppl

Contacts

Investor Relations Contact
Rob Lin

Investor Relations

Alibaba Group Holding Limited

[email protected]

Media Contacts:
Cathy Yan

[email protected]

Ivy Ke

[email protected]

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