For Alibaba, the core e-commerce business is still its ATM.
Article: Tinc V
In mid-August, I arrived at the Chinese stocks again.
Q1 Revenue and Profit Double Growth in the New Fiscal Year
Let's first look at the specific data in this financial report:
Zhang Yong, CEO of Alibaba Group, said:
Alibaba has harvested an excellent quarter, the user base continues to expand, with 674 million active consumers annually, which fully demonstrates our excellent user experience. We will continue to expand the consumer base, improve operational efficiency and achieve rapid growth. Based on the strong cash flow of core businesses, we will continue to invest in technology to enable millions of enterprises worldwide to achieve digital transformation.
In this earnings conference, Wu Wei, Chief Financial Officer of Alibaba Group, also introduced the company's management's efforts to improve profits. He said:
Our performance in total revenue is very rapid. First of all, this is due to the growth of the number of users and our efforts in user experience. Second, at the end of last year, we began to emphasize cost efficiency in all aspects, which involves not only marketing costs, but also the number of employees, the cost of content and so on. Therefore, we have taken a series of measures and calculated the return on investment for each expenditure.
Lei Feng also found in the report that Alibaba's main expenditure as a proportion of total revenue fell compared with the previous quarter; marketing costs, management costs, sales costs have declined. For multiple services
Core e e-commerce business is the biggest revenue source
In the Q1 financial quarter of fiscal year 2020, Ali's electricity business was particularly eye-catching, with revenue of 99.54 billion yuan, an increase of 44% over the previous quarter; compared with the astonishing growth rate of 54% in the previous quarter, the growth rate of e-commerce business in this quarter has declined.
Judging from the proportion of revenue, the ecommerce business can be said to be the cash machine of Ali's revenue.
However, the strong performance of Alibaba's core e-commerce business in the financial quarter is also related to the macro market environment, that is, the recovery of retail data.
According to the data released by the National Bureau of Statistics, in the first half of 2019, the total retail sales of consumer goods nationwide were 1952.1 billion yuan, an increase of 8.4% over the same period of last year; the total retail sales of online goods nationwide were 4816.1 billion yuan, an increase of 17.8% over the same period of last year, of which the net retail sales of physical goods were 3816.5 billion yuan, an increase of 21.6%.
In addition, Alibaba relies more on domestic consumption than on international trade, especially in the declining market.
According to the data in the financial report, Taobao and Tianmao, Alibaba's e-commerce platform, added nearly 100 million users in the past fiscal year, an increase of 20 million users compared with March 2009 (321 million users in Beijing and 10.8 million new users in the same period); more than 70% of the new consumers in this quarter came from underdeveloped areas. This is largely due to the success of Alibaba's initiatives to serve a wider user base, such as introducing simpler interfaces for first-time users.
Aliyun business is still the engine of growth
There is no doubt that the revenue of ecommerce business is the absolute main body of Alibaba's total revenue, then the cloud business is the growth engine of Ali's revenue.
In addition, during the quarter, Alibaba launched more than 300 new products and services, including Alibaba Cloud SaaS Accelerator, to help SaaS partners build, distribute and commercialize their product solutions on a large scale.
However, the adjusted EBITA lost 358 million yuan in the current quarter and 488 million yuan in the same period last year. EBITA profit margin rose from negative 10% to negative 5% in the same period last year, but still failed to achieve financial returns.
At present, Aliyun has become the world's top three, Asia-Pacific first cloud service providers, providing cloud computing, big data and artificial intelligence services to millions of customers in more than 200 countries and regions. However, the market share of Aliyun is 7.7%. To catch up with Amazon AWS 47.8% and Microsoft Azure 15.5%, Aliyun still needs to fill a big gap.
At the same time, Ariyun is also facing fierce competition in the domestic market. According to IDC's Q1 China Public Cloud Service Market tracking report 2019, in the first quarter of 2019, the top five in the IaaS PaaS market were Ariyun, Tencent Cloud, China Telecom and AWS, Baidu Cloud. Tencent recently released results show that its cloud computing business growth accelerated.
Other business sectors continue to burn money
In addition to the most focused e-commerce and Aliyun businesses, digital media and entertainment businesses, as well as innovation and other businesses, account for a smaller proportion.
Among them, the revenue of digital media and entertainment business was RMB 6.312 billion, up 6%year-on-year, which is also the slowest growth rate among all businesses;Moreover, this quarter's growth was largely due to the increase in Youku subscription revenue.
In addition, Alibaba digital media and entertainment sector adjusted EBITA losses sharply narrowed 900 billion yuan in the quarter. This is largely due to Ali Civic's propaganda, product technology and content.
The person in charge of Ali said:
With regard to digital media and entertainment, the decline in profit margins has slowed down, from 55% last year to 35% this year. The decline is very obvious. I think the slowdown in digital media and entertainment is mainly due to our improved understanding, especially of content.
Revenue of innovation and other businesses was 1.281 billion yuan, an increase of 21% over the same period last year. Among them, Gaode Map plays a key role in the growth of this plate.
The adjusted EBITA lost 1.965 billion yuan in the current quarter, compared with 1.202 billion yuan in the same period last year. Alibaba said the adjusted EBITA loss increase was mainly due to its investment in technology, research and innovation, and other business plans.
Summary of Leifeng Network
There is no doubt that for Alibaba, the core ecommerce business is still its cash machine.
However, it is worth noting that the losses of Aliyun business and major entertainment business have narrowed in the current quarter; this bodes well for the start of the year. As for innovation and other businesses with a loss of nearly $2 billion, we will continue to observe.