Performance will hit directly | Alibaba Zhang Yong: Always be confident in yourself

　　Attending the call were Chairman of the Board and CEO Zhang Yong, Executive Vice Chairman Cai Chongxin, and Chief Financial Officer Xu Hong.

　　According to financial data, in the second quarter of fiscal year 2023, Alibaba Group's revenue was 207.176 billion yuan, up 3% year on year; operating profit was 25.137 billion yuan, up 68% year on year; and adjusted EBITA (profit before interest, tax, depreciation and amortization) was 36.164 billion yuan, up 29% year on year.

　　Before it was released on the list, the majority of the market was optimistic that it was expected to resume positive growth after four consecutive seasons of decline in earnings. The financial data after publication also lived up to expectations and was better than market expectations.

　　Ali people are also full of confidence in themselves and the future. As Zhang Yong said in his speech, “Regardless of the ebb and flow, we are always full of confidence in ourselves, and even more so in the future.”

　　Focus on “Double Eleven”

　　In the conference call, this year's special “Double Eleven” was mentioned many times. Since hosting the event in 2009, it is also the first time that major platforms have not disclosed final transaction data.

　　Although Ali said that the scale of Tmall's “Double Eleven” transaction was the same as last year (GMV in 2021 was 540.3 billion yuan, an increase of 8.45% over the same period in 2020, and the growth rate slowed down), it is still difficult to satisfy investors' curiosity.

　　Citibank analysts say they conservatively forecast Alibaba's GMV growth rate for this year's Double 11 event to be 0.9%-3.6%.

　　Financial reports show that more than 600 million consumers and 290,000 brands from more than 90 countries and regions around the world participated throughout the “Double Eleven” period this year. The number of purchasers decreased compared to the same period last year, but the purchase amount per capita increased.

　　In terms of consumer groups, more than 98% of 88VIP users spent money during the Double 11 period, and their contribution to the overall transaction increased. In terms of categories, as in the September quarter, interest categories such as sports and outdoor activities, pets, health-related categories, and consumer electronics categories achieved positive year-on-year growth.

　　In terms of live streaming delivery, Alibaba usually accounts for a relatively small share of total sales, while large-scale events such as “Double Eleven” account for a relatively large share. It said that it is necessary to balance the combination of various sales methods, make good use of new technology, maintain a good consumer experience, and consider the cost acceptance of the continuous operation of merchants.

　　During the meeting, Zhang Yong also mentioned several adverse factors for the final results of “Double Eleven.” This includes the weakening of non-rigid consumer demand represented by apparel in the pandemic atmosphere; the impact of the epidemic has caused partial disruptions in logistics services; and in an uncertain environment, merchants want to make good use of “Double Eleven,” and their desire for business growth through all channels is very strong, objectively giving consumers more choices online and offline.

　　Alibaba has achieved remarkable results in further consolidating the scale and stickiness of high-quality consumer groups, and its basic market is good. As of September 30, 2022, the number of consumers who purchased more than RMB 10,000 on Taobao and Tmall in the past year remained at 124 million, and the retention rate was as high as 98%. At the end of this quarter, the number of 88VIP users remained at 25 million. Retention was stable, and consumption contribution continued to grow.

　　According to information, Tmall's “Double Eleven” has been weakening GMV indicators since last year, and the core has shifted to consumer experience optimization, business empowerment, and continuous enrichment of the platform ecosystem. Tmall's “Double Eleven” high growth attributes have weakened, but its contribution to GMV throughout the year has stabilized, and its position as a leading position for concentrated consumer consumption and business operators at the end of the year remains stable.

　　Basic performance market

　　Good fundamentals were the key for Alibaba to stay strong during the quarter.

　　When several factors such as the continued recurrence of the epidemic, the impact of international geopolitics, inflation in overseas markets, and currency depreciation are combined, its non-GAAP EBITA increased 29% over the same period last year, highlighting the resilience of Ali's business ecosystem.

　　According to financial reports, Alibaba's business mainly includes Chinese business, international business, local lifestyle services, rookie, cloud business, and digital media and entertainment.

　　Among them, the direct sales and other revenue of Chinese retailers was 64.725 billion yuan, an increase of 6% over the same period in 2021, mainly due to the increase in direct business revenue from Hema and Ali Health.

　　International retail revenue was 10.738 billion yuan, an increase of 3% over the same period in 2021. This increase was mainly due to strong order volume growth and improved subsidy efficiency in Trendyol's e-commerce business, which led to an increase in its revenue contribution. It was partly offset by a decrease in AliExpress's revenue due to a decline in AliExpress order volume due to the depreciation of the euro against the US dollar.

　　In the international business sector, Lazada is one of Ali's fastest-growing and most promising business segments, and the international market has sufficient driving force.

　　This quarter, Alibaba's various measures to improve operating efficiency received initial positive results, and the scale of losses in businesses such as Taote, Quicai, Are You Hungry, Hema, Lazada, and Youku was significantly curtailed.

　　By increasing gross profit margin, reducing delivery costs for online orders, and improving operational efficiency, Hema has achieved healthy electricity sales growth and significant loss reduction. As of September 30, 2022, the vast majority of Hema stores had positive cash flow, excluding stores that have been in business for less than 12 months.

　　In addition, benefiting from factors such as the service model upgrade at the end of 2021 and the improvement of consumer experience, Cainiao's revenue increased 36% year-on-year to 13.367 billion yuan in the quarter after offsetting the impact of some transactions.

　　In China, Cainiao continues to provide a variety of value-added services by expanding the Cainiao Inn network. This quarter, the total number of Cainiao posts (including rural areas and universities, etc.) increased by more than 20% year on year to over 170,000, while the number of Cainiao posts located in urban residential areas increased to more than 116,000, of which more than 80,000 provided door-to-door delivery services.

　　The net loss attributable to common shareholders of RMB 20.561 billion recorded this time was a profit loss compared to the same period last year. Alibaba said that this is mainly due to a decrease in the market price of equity investments in listed companies held by the group, leading to an increase in net losses and a decrease in investment profit and loss in equity law accounting, which is partly offset by an increase in adjusted EBITA. The Group did not include net gains or losses arising from changes in the fair value of investments in non-GAAP financial indicators.

　　Cloud Computing and Buyback Plans

　　For a long time, Alibaba has had three main tracks: consumption, cloud computing, and globalization. Among them, cloud computing represents the future.

　　Looking back at the Yunqi Conference just held on November 3-5, Alibaba announced that the self-developed CPU Yitian 710 has been applied on a large scale. At the time, Alibaba Cloud Intelligence President Zhang Jianfeng also said that the software development paradigm is undergoing a new transformation. Among them, Serverless is one of the most important trends. Alibaba Cloud will firmly promote the full Serverless core products to help customers achieve agile innovation.

　　Looking forward to the future, Alibaba Cloud will continue to launch diverse industry solutions with industry partners based on its cloud computing capabilities and big data processing capabilities to serve the digitalization process of the Chinese industry.

　　According to some opinions, Alibaba Cloud represents the current top level of cloud computing in China, and can compete head-on with cloud computing giants such as Amazon and Microsoft on a global scale. Its first-mover advantage and technological competitiveness are also very obvious, and it will make an important contribution to the Group's revenue and valuation through continuous structural optimization.

　　As of November 16, Alibaba has repurchased about 18 billion US dollars of shares in accordance with the current $25 billion share repurchase plan. In addition, the board of directors has approved the expansion of the current share repurchase plan by $15 billion and the extension of the plan until the end of March 2025. Currently, after the scale expansion and extension of the term of the share repurchase plan, there is still an unused amount of $22 billion.

　　“Our strong balance sheet and free cash flow give us the flexibility to confidently execute the Group's share repurchase plan.”

　　Furthermore, Alibaba said it will not complete the conversion of the main listing on the Hong Kong Stock Exchange by the end of 2022 as originally planned. This is mainly due to the need to formulate and submit a new employee stock ownership plan to shareholders for approval before the conversion of the main listing in Hong Kong is officially completed. The new plan continues to be linked to the company's long-term development and is consistent with the interests of long-term shareholders