©深响原创 · Author|依民 Aachen, the first picture of this article comes from Visual China.

The core is going to be

▪ Explain the Alibaba financial report data and analyze the financial situation of each business segment.

▪ Alibaba’s net profit for the quarter increased by 262.1% year-on-year. This was mainly due to the fact that Alibaba confirmed a one-time equity gain of RMB 69.2 billion for Ant Financial in this quarter, resulting in a sharp increase in net profit.

Alibaba’s core e-commerce business is still the only profitable segment, while Alibaba Cloud, Ali Entertainment and Innovative Business are still losing money.

Alibaba’s more than 700 million DAU “not only comes from first- and second-tier cities, but more from low-tier cities.”

Alibaba also hopes to tap the value of individual users to maintain growth.

Alibaba is not disappointing.

In the second-quarter earnings report released on November 1, Alibaba maintained a high growth rate in both hard revenue and net profit. Specifically:

  • Revenue was RMB119.02 billion (approximately US$16.651 billion), with market expectations of 116.8 billion yuan, compared with 85.15 billion yuan in the same period last year, a year-on-year increase of 40%;

  • The net profit was RMB 70.448 billion (US$9.898 billion), including a significant one-off gain recognized upon receipt of a 33% stake in Ant Financial. Does not include RMB 69.2 billion (approximately US$ 9.7 billion) of one-time gains and itsHis project, net income not measured in accordance with US GAAP, was RMB 32.75 billion (US$ 4.582 billion), a year-on-year increase of 40%.

Before, the market is worried about whether Alibaba’s second-quarter results will continue to grow. Since the 2017 fiscal year, Alibaba’s quarterly revenue growth rate has remained above 40%, for such a huge volume. For the company, it is not easy to maintain this growth rate.

It’s not difficult to see how to dismantle Alibaba’s financial report. Under the general trend of the market shifting from incremental to stock, we will increase the number of users by increasing investment in the sinking market, and simultaneously mine individual users through mutual diversion within the system. Value has become the two major weights of Alibaba.

Financial Data Interpretation

The earnings report shows that Alibaba’s second-quarter revenue is RMB 119.017 billion (approximately US$16.651 billion) increased by 40% year-on-year. Of which:

  • The core e-commerce business revenue was 101.22 billion yuan, a year-on-year increase of 40%, accounting for 85% of total revenue. In the core e-commerce business, the new retail business data consisting mainly of Box Horse, Tmall Supermarket, Import Business and Intime was prominent, with revenue of RMB 18.21 billion in the quarter, a year-on-year increase of 125%; The local lifestyle business, which is mainly hungry, has performed steadily, up 48% and 36% respectively.

  • On the other hand, Alibaba Cloud’s business continued to grow at a high rate this quarter, achieving 92.The income of 900 million yuan was 64% higher than that of the same period of last year. The net loss was 1.928 billion yuan and the loss rate was 6%.

  • The overall performance of Ali Entertainment was slightly dim. This quarter recorded a revenue of 7.30 billion yuan, a year-on-year increase of 23%, lower than the overall revenue growth of Alibaba Group.

  • Company innovation and other businesses achieved revenue of 1.21 billion yuan in the quarter, accounting for 1% of total revenue.

In terms of profitability, Alibaba’s net profit attributable to ordinary shareholders was RMB 72.54 billion in the quarter, and net profit increased by 262.1% year-on-year. This was mainly due to the fact that Alibaba confirmed a one-time interest in Ant Financial in this quarter. The profit was 69.2 billion yuan, which led to a sharp increase in net profit. Under non-general criteria (Non-GAAP), the net profit attributable to ordinary shareholders was 34.54 billion yuan, and the net profit margin was 29.0%. The net profit margin showed a steady upward trend. In addition, Alibaba’s profit after depreciation and amortization (EBITDA) was 37.10 billion yuan and EBITDA Margin was 31.2%.

From the perspective of segment business, Alibaba’s core e-commerce business is still the only profitable segment. After adjusting for this quarter, EBITA was 38.57 billion yuan and EBITA Margin was 38%. In addition to core e-commerce, Alibaba Cloud, Ali Entertainment and Innovative Business are still losing money.

It is worth noting that the EBITA of the Alibaba Entertainment sector was negative 2.21 billion yuan after the adjustment this quarter, which was significantly narrower than the negative 3.80 billion yuan in the same period last year. EBITA Margin also had -64% from the same period last year. Narrowed to -30% for the quarter.

The loss of the innovative business segment based on Gaode Navigation and YunOS is still expanding, from RMB 1.24 billion in the same period last year to RMB 1.92 billion in the current quarter, and the loss rate has been expanded from 116% to 158%.

In terms of operating expenses, Alibaba’s total operating expenses in the third quarter of 2019 was RMB 29.53 billion, and the operating expense ratio was 24.8%. The overall operating efficiency was stable. Among them, product research and development expenses were 10.94 billion yuan, accounting for 9.2% of the total; sales and marketing expenses were 12.2 billion yuan, accounting for 10.1%; management expenses were 6.59 billion yuan, accounting for 5.5%..

In terms of cash reserves, Alibaba’s book balance of cash and cash equivalents as of the end of the quarter was as high as 234.18 billion yuan, compared with 189.98 billion yuan at the beginning of the fiscal year, an increase of about 44.2 billion yuan, and sufficient cash reserves. During the quarter, the company achieved a net cash inflow of operating activities of RMB 47.33 billion and a free cash flow of RMB 30.49 billion. The cash flow from operating activities maintained healthy growth.

In terms of the number of users, Alibaba has reached 693 million active users in the past 12 months, a net increase of 19 million compared with the previous quarter, an increase of 15.3% over the same period last year; the mobile terminal ended in September. The number of monthly active users (MAU) in China’s retail market reached 785 million, a net increase of 30 million compared with the end of June, an increase of 17.9% compared with the same period last year.

In addition, some business data is also worthy of attention:

  • In terms of local living services, the hungry word of mouth revenue was 6.835 billion yuan, up 36% from the 5.01 billion yuan in the same period last year, mainly due to the increase in orders.

  • Alibaba’s new retail business, as of September 30, the number of boxes of Xianmao stores reached 170. By the end of August, more than 800 offline merchants had access to Amoy, covering 278 cities across the country.

  • The rookie wraps, the package volume increased by more than 100% in the quarter. In the 12 months to August 2019, the rookie wraps over 100 million users per year.

On September 6 this year, Alibaba Group acquired Netease’s cross-border e-commerce platform koala for US$2 billion. This quarter’s financial report did not disclose the specific contribution of the koala to the overall revenue. It only said that the users of Tmall International and the koala platform have a low degree of overlap, so the koala app will remain independent, but will integrate the technology provided by Alibaba. Consumer channel and other medium-sized systems to enhance the business performance of koala.

Sinking in the market to maintain growth

This quarter, the sinking market is still a keyword.

From the perspective of the overall market, the number of Alibaba users is still growing, and the financial report shows:

  • The number of active consumers in the Chinese retail market reached 693 million, an increase of 19 million from the 674 million as of June 30, 2019;

  • In September 2019, the number of mobile active monthly users in the Chinese retail market reached 785 million, an increase of 30 million from June 2019.

It is not difficult to combine the contents of the financial reportIt is found that in the face of a fierce attack, the “underdeveloped areas” are the markets that Alibaba focuses on:

  • In introducing Taobao, one of its most important platforms, Alibaba said that in the six months ended September 30, 2019, Taobao’s DAU achieved healthy growth and stressed, “This reflects Alibaba. The continuous penetration of the Chinese retail market in developed and underdeveloped regions.”

  • In introducing its local life services business, Alibaba also emphasized the penetration of this business into underdeveloped regions.

  • On the new retail track, Alibaba has developed different strategies for different markets: its new retail representative, Box Masheng, is positioned to serve first- and second-tier cities; and the main task of its Amoy is to empower traditional retail. More cities.

    The financial report shows that as of the end of August 2019, Alibaba has already connected with 485 Gaoxin’s large-scale commercial supermarkets. In August this year, online orders accounted for 6.5% of Gaoxin’s total retail revenue. By continuing to sign traditional retailers, as of August this year, Alibaba has digitized more than 800 offline retail stores in 278 cities.

    In the last quarter earnings conference call, Zhang Yong, Chairman and CEO of Alibaba Group, revealed that “Alibaba has 20 million new users in the past year as of the end of March, 70% of which are from low-tier cities. .”

    In the earnings conference call held last night, the sinking market has still become the focus of analysts, and Zhang Yong once again emphasizedAlibaba’s more than 700 million DAU “not only comes from first- and second-tier cities, but more from low-tier cities.” Alibaba’s confidence in low-tier cities comes from three sources: commodity types, price advantages, and products that offer different price ranges. Therefore, “in this respect, technology is very important because it can accurately interface demand and supply.”

    It can be seen that the investment in the sinking market has helped Alibaba expand its user base, which has helped Alibaba maintain its growth in revenue. However, this is not the only strategy for Alibaba to maintain growth.

    Cross sales to promote revenue

    In the short-term, the double eleven is still an important event in determining Alibaba’s financial performance in the next quarter.

    In the earnings report, Alibaba said that the focus of this double eleven is consumption upgrade. More than 200,000 brands, including Tmall International’s over 22,000 brands, will participate in Double Eleven, about 1,000. Brands and merchants have been upgraded to Tmall flagship store 2.0.

    Zhang Yong expressed optimism about the upcoming double eleven in the conference call. He said, “We have invested a lot of technology for this double eleven event. The current hot event is progressing very well. We also give Ali’s mobile The end APP has a lot of new features on the line, attracting a lot of consumers. In general, we are ready, and will make every effort to ensure the success of this double eleven event.”

    From a long-term perspective, improving the ARPU value of users is an important way for Alibaba to maintain its growth momentum. Among them, the mutual diversion of products within the system is an important way.

    In this quarter’s financial report, Alibaba emphasized the significant effect of product diversion in the system. According to the financial report, during the reporting periodAbout 39% of the take-away users come from Alipay APP. As a whole, local life service users account for less than 25% of Alibaba’s overall users. Therefore, Alibaba believes that the mutual diversion potential in the system is huge.

    The mutual diversion within the Alibaba system is significant for the Group’s future revenue growth and cost control.

    Alibaba’s Executive Vice President Cai Chongxin explained this in the earnings conference call. “For example, the consumers we get in low-tier cities, such as those in the retail market like Taobao, can also use Alibaba. Other local services provided. In this way, we only need to make a marketing expenditure, and then use the cross-selling strategy between different platforms of Alibaba to let them use local services. This spending strategy is the result of synergy. Alibaba The different platforms of the company are connected to the same consumer base. This synergy has improved our operational efficiency.”

    For Alibaba’s ability to maintain growth, CFO Wuwei also said, “I think that in addition to the number of new users, the more important is the growth of ARPU.”

    It can be seen that under the premise that the traffic dividend tends to disappear, in addition to gaining more users in the overweight market, Alibaba also hopes to tap more value of individual users to maintain growth. Under the guidance of this strategy, the mutual penetration of various businesses in the Alibaba system will continue, and the actual implementation effect of this strategy will also determine the actual growth performance of Alibaba.