Alibaba Q2 FY23 Earnings Highlights
[Rewards] BABA achieved stronger than expected earnings, with pandemic-related curbs
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● Revenue was $29,124 million and increased 3% YoY, mainly due to soft consumption demand in China commerce segment.
● Non-GAAP net income was $4,754 million, an increase of 19% YoY, which was stronger than estimated and showed Alibaba had increased its focus on driving profitability.
● Net cash provided by operating activities was $6,623 million, an increase of 31% YoY. Free cash flow, a non-GAAP measurement of liquidity, was $5,020 million, an increase of 61% compared to Q2 FY22 because the company held back on capital expenditures.
● For the $25B stock buybacks authorization, $18B was finished and the management just approved an additional $15 billion of buybacks.
●Online physical goods GMV generated on Tmall and Taobao, declined low-single-digit YoY, because of the softness in China, COVID-19 restrictions as well as ongoing competition.
*SBC: Stock-based compensation
● For China Commerce, Taobao and Tmall continue to identify opportunities and have achieved high consumer retention. For the twelve months that ended September quarter, the number of consumers who each spent over RMB10,000 remained around 124 million with a retention rate of 98%.
● For International Commerce, the combined order quantity, including Lazada and AliExpress declined by 3% YoY. During the September quarter, increasing logistics costs and foreign currency volatility created headwinds for cross-border e-commerce demand.
● The Cloud segment revenue grew 4% YoY to $2.91 billion, mainly driven by growth in the public cloud and partly offset by a fall in hybrid cloud revenue.
● The company continued to take a holistic approach to improve operating efficiency and cost optimization. When combined with easing COVID restrictions in China, Alibaba may have tailwinds helping its net income and revenue.
● Alibaba did not disclose sales numbers for its 2022 Singles Day shopping festival, merely stating that results were flat with last year.
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According to Morningstar, by November 15 2022, BABA's share had dropped approximately 31% since the start of 2022, underperforming the S&P 500 (.SPX), which is about a 17% decline in the same period.
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