Revenue growth mainly depends on the rapid growth of new retail, and profit improvement mainly depends on the control of costs and expenses.
Editor’s note: This article comes from “Tencent Technology “Peeping” section “author: Ru super.
Alibaba released its unaudited financial results for the first fiscal quarter of 2020 as of June 30, 2019, on August 15.
The financial report shows that Ali’s fiscal quarter revenue was RMB 114.924 billion, up 42% year-on-year; under US non-GAAP, net profit was RMB 30.949 billion, a year-on-year increase of 54%. Both revenue and profit exceeded market expectations.
Through the financial report, Tencent’s “Plough” believes that the following eight key points are worth noting:
1. Revenue growth mainly depends on the rapid growth of new retail. In the first quarter, a new retail revenue level recorded 16.754 billion yuan, a year-on-year growth rate of 134%, higher than the previous quarter’s 132%, once again become the revenue growth engine of the quarter.
2. Ali’s traditional business continued to grow sluggishly. Ali’s two traditional revenue pillars: merchant service revenue growth (Commerce management) and commission revenue (Commission) growth rate of 27% and 23%, respectively, far lower than the total revenue growth. The two totals accounted for 52% of total revenue, which was in the low range of Ali history, only 48% higher than the previous quarter.
3. Profit improvement mainly depends on the control of costs and expenses. The two expenses accumulate in total revenue accounted for 79%, far lower than 91% in the previous quarter and 91% in the same period last year. Among them, the cost control is particularly good, the marketing expenses accounted for 9%, the first break 10%; product development and management sales expenses accounted for much lower than the previous quarter and the same period last year, in the historical low range. This shows that Ali has implemented a austerity policy and has received results.
4. Even with the fast-growing new retail business (mainly based on Box Horse Fresh Life), Ali has continued its trend of lowering its investment in the previous quarter and is cautiously investing in it. In terms of purchasing goods and equipment, this indicator reflecting the new retail investment level was 5.856 billion yuan, slightly higher than the 5.688 billion yuan in the last quarter (2019 fourth quarter), far lower than the 100.11 in the 2019 third quarter. 100 million yuan. This quarter’s net increase in self-owned stores also set the lowest since 2018, only 15, compared to the previous quarter close to the waist.
5. The loss of cloud business increased from the previous month, breaking the trend of narrowing losses for nearly a year, which was the highest in nearly one year. At the same time, the business revenue was almost the same as last quarter, with a year-on-year growth rate of only 66%; in contrast, the previous quarter and the same period last year were 76% and 93%, respectively, setting a new low in the history of the business..
6. The loss of large entertainment business improved, which was the lowest value in the past year and was 2.233 billion yuan. However, the revenue was only 6.312 billion yuan, and the loss-to-revenue ratio was 35.38%. It is still not optimistic; the revenue growth rate is only 6%, which is the new low.
7, Alipay contributed to the profit of Ali. In the same period last year, the amount of compensation for the index shares reflecting the contribution of Alipay was 16.378 billion yuan, only 7.115 billion yuan this year. However, in the past year, this indicator has been around 7 billion yuan, and there is not much floating.
8. The sinking bonus has not disappeared. During the fiscal quarter, Taobao Tmall mobile terminal monthly activity was 755 million, an increase of 121 million and 34 million compared with the same period last year and the previous fiscal year. The growth rate and the growth rate of the chain were 19.1% and 4.7% respectively. In contrast, in the previous fiscal quarter, Taobao Tmall Mobile had 721 million monthly active users, an increase of 104 million and 22 million compared with the same period last year and the previous fiscal quarter, an increase of 16.9% year-on-year and 3.1% quarter-on-quarter. The data has increased in all aspects.
The growth of traditional pillar business is sluggish, new retail 扛梁梁
This quarter, total revenue was 114.924 billion yuan, a year-on-year increase of 42%. After the inflection point of the year-on-year growth rate of revenue in the last quarter, the year-on-year growth rate continued to decline.
Among them, the statistics of the two traditional pillar businesses, that is, the total proportion of merchant service revenue growth (Costomer management) and commission revenue (Commission) in total revenue, only 52%, higher than the previous quarter’s 48 %, but still in the low range.
Where to see the growth rate of the two revenues separately, Ali’s merchant service camp this quarterThe decline in revenue growth has shown that merchants’ willingness to invest in advertising marketing expenses on the Taobao Tmall platform is not too strong.
The commission income related to the transaction level is 23%, which is higher than 16% in the previous quarter, indicating that Taobao Tmall’s trading volume and monetization level have rebounded.
If the traditional pillar business is good, then Others, which represents the income level of new retail formats such as Box Horse, is quite good.
This indicator recorded 16.745 billion yuan in this quarter, accounting for 14% of total revenue in Ali, up 134% year-on-year. The revenue growth and revenue growth were almost the same as last quarter. . The 134% growth rate has enabled the business segment to continue to be the growth champion for all of Alibaba’s business segments.
This shows that the new retail business continues to be the growth driver of Ali’s revenue, and there is no trend of momentum decline.
Careful investment in Box Horse: The net increase in store quarters is the lowest since 2018
Although the new retail sector continues to support Ali’s earnings, Ali’s investment in the new retail business such as Box Horse is still very cautious.
After counting the cost of purchasing goods and equipment, Tencent News “Plough” found that Ali in the 2019Q2/2019Q3 (corresponding to the third and fourth quarters of the natural year 2018), the peak of the expansion of the box store, the indicator Suddenly rose to more than 10 billion yuan. However, since 2019Q4 (natural year 2019 first quarter), this expenditure has suddenly faltered and continued to maintain a low level this quarter.
In the last two quarters, it was the transition period from the original big store business to the more expensive and lower-cost small business.
From the perspective of its own stores, there were only 15 net stores in the quarter, the lowest since 2018. In contrast, the net increase in the first three quarters was 32, 32, and 26, respectively, and this quarter was close to the waist.
The benefit of the business transformation is the increase in profit margins.
Considering that Ali does not separately list the profit margin of the new retail segment, the profit margin of Ali’s core commercial segment is consolidated.In this section, the new retail segment is included, and the other two parts of the merchant service revenue and commission business, except for the new retail segment, are relatively stable and mature, and can partly reflect the profitability of the new retail segment:
It can be seen that after the adjustment, Ali’s profit margin rebounded after hitting the bottom in the previous quarter. This shows that the help of the business adjustment of Box Horse to the profit rate may have been reflected in the financial report.
The cost ratio has fallen, and operating expenses have continued to be compressed
In the previous fiscal quarter, Ali’s operating cost was RMB 55.61 billion, accounting for 60% of revenue; the same period last year was 53%, an increase of 7 percentage points. This is the highest level of Ali in recent years, indicating that Ali is out of control in terms of cost, and that hungry, new retail and rookie are more burdensome.
This quarter, cost issues were finally brought under control.
It can be seen that the proportion of cost in this quarter fell to 53%, which was 7 percentage points lower than that of the previous quarter, and 1 percentage point lower than the same period last year. Controlling the cost of new retail businesses such as Box Horse is undoubtedly one of the important reasons.
However, the 53% share is still a high level. In fact, the cost growth rate in this quarter was 37.2%, slightly lower than the revenue growth rate. Ali explained the reasons for its cost increase for two reasons:
1. Increased inventory costs for direct sales and new retail operations;
2. Hungry, the logistics cost of delivery service increases.
The marketing cost of Youku has declined, partially offsetting the increased costs.
It can be seen that the cost of self-operated new retail business represented by box horses will still be under pressure in the short term; the cost of Ali Entertainment has improved.
While costs are being controlled, operating expenses have also fallen significantly this quarter.
After counting the general management sales expenses, marketing expenses, and product development expenses in the total revenue, Tencent News “Plough” found that all indicators are at a low level.
Among them, the general management sales expenses accounted for the lowest level in recent years, 5%; marketing expenses accounted for a new low, the first break 10%, 9%.
With statistical costs + expenses, all expenses accrued in total revenue accounted for 79%, far lower than 91% in the previous quarter and 91% in the same period last year.
It can be seen that tightening the belt to live is an important reason for Ali’s profit improvement.
To calculate the net profit under GAAP and Non-GAAP, Ali’s profit level has maintained a good level in the past year.
Among them, it can better reflect the actual situation of the company. Under the Non-GAAP, the overall net profit maintained an upward trend, and the net profit for the quarter increased by 54%.
Awkwardly, under GAAP, Alibaba’s net profit in the fiscal quarter showed a 154% year-on-year growth in the case of a sequential decline. This is mainly because GAPP does not count the contribution of Alipay business to Ali Group: As the contribution of Alipay increased significantly in the same period last year, the net profit under Non-GAAP was higher. The growth rate is lower than the growth rate of net profit under GAAP.
The contribution of Alipay to Ali’s profit
As can be seen from the above figure, in the 2019 fiscal quarter, the second quarter of 2018, the profit contribution of this part suddenly increased to 16.375 billion yuan, which made up for the bad profit level of the quarter; this quarter was only 7.115 billion. Yuan, contributes to the waist.
Alibaba Cloud’s loss increased from the previous month, and revenue growth rate hit a new low in history
Alibaba’s performance this quarter is not brilliant.
Continued the trend of continuous decline in revenue growth in recent years. In the quarter, Alibaba Cloud’s revenue growth rate was 66%, a new low. Its share of total revenue was 6%, compared with 8% in the previous quarter.
At the same time as the revenue growth rate fell, Alibaba Cloud’s adjusted profit before interest, taxes, depreciation and amortization (EBITDA) was a loss of 358 million yuan, twice the amount of the previous quarter’s loss of 164 million yuan. Although the loss of 488 million yuan was lower than that of the same period last year, it still broke the trend of maintaining a general decline in losses and keeping close to profit in the past year.
Alibaba’s entertainment cost control improved, but revenue growth was only 6% new low
Alibaba Entertainment (except for Ali Pictures) is mixed.
On the one hand, the adjusted profit before interest, depreciation and amortization (EBITDA) of Alibaba Entertainment in the quarter was RMB 2.238 billion, which was not only lower than the previous quarter’s 2.828 billion yuan, but also lower than the 3.132 billion yuan in the same period last year. .
It can be clearly seen from the figure that since the 2019Q3 (natural year 2018 fourth quarter) reached a maximum loss of 6.034 billion yuan, the opening of the loss narrowed the channel, and this quarter has dropped to the level of the fourth quarter of 2017.
The constant reduction in procurement costs is undoubtedly the key to the decline in Youku’s costs.
On the other hand, the development of Ali Entertainment is still very bad. In the current quarter, Ali’s entertainment grew by only 6% year-on-year, the lowest level in history.
This may be a drawback of low cost and low procurement: while improving the loss problem, it is difficult to achieve results in revenue.
Hungry and rookie accounted for 9% of total revenue, which was the same as last quarter
Two businesses that have long-term investment are hungry and rookie, and this quarter has seen steady growth in revenue.
Among them, the local service revenue represented by the hungry word-of-mouth business, since 2019Q3 (the fourth quarter of the natural year 2018) was first listed in the revenue item, this quarter accounted for its total revenue. The ratio is 5%, which is the same as the previous two quarters.
At the ring level, local service revenue increased by 17.36% quarter-on-quarter, indicating that the business still has great potential.
On the other hand, another business rookie, which has high hopes, has a revenue of 5.05 billion yuan this quarter, a 50% year-on-year growth rate, accounting for 4% of total revenue, and also flat with the previous two quarters. .
It is worth mentioning that the rookie business has experienced an upward trend of 15%, 35%, and 50% in the past three quarters. The revenue of 5.05 billion yuan in this quarter is the highest level in the history of the business, compared with the previous quarter, an increase of 29.63%.
Taobao monthly active users increased by 19.1% year-on-year, and the sinking market still has dividends
This quarter, Taobao Tmall mobile terminal monthly activity was 755 million, an increase of 121 million and 34 million compared with the same period last year and the previous fiscal year. The growth rate and the growth rate of the chain were 19.1% and 4.7% respectively.
As a comparison, in the previous fiscal quarter, Taobao Tmall Mobile had 721 million monthly active users, an increase of 104 million and 22 million from the same period last year and the previous fiscal quarter, an increase of 16.9% year-on-year and 3.1% quarter-on-quarter. The data has increased in all aspects.
In fact, from January 1, 2019, Ali has accumulated a cumulative growth of 56 million.
At the same time, the number of active consumers in the platform for the first 12 months ended June 30, 2019 reached 674 million, an increase of 650 million in the previous quarter, and an increase of 20 million.
The continued growth of users is mainly due to the sinking market. According to the financial report, more than 70% of Taobao’s new users came from sinking markets such as the 3rd and 5th tier cities and villages. In the fiscal year 2019 (the second year of the natural year 2018 to the first quarter of 2019), this proportion was as high as 77%.
It can be seen that although the proportion of new users in the sinking market has declined, the sinking market is still the continuous driving force for the growth of Ali users.