Ali financial report released its unaudited financial report for the second quarter of the company's financial year 2020 as of September 30, 2019 on November 1.
It shows that Alibaba Group's revenue in the second fiscal quarter was 119.02 billion yuan, an increase of 40% year-on-year; the net profit attributable to common shareholders was 72.54 billion yuan, with a market expectation of 16.93 billion yuan, and 20.03 billion yuan, an increase of 262% year-on-year. Both revenue and profit exceeded market expectations.
It is worth mentioning that the reason why Alibaba's net profit soared is not from the business level, but from the significant one-off income recognized when it received 33% equity of ant financial services. The company's net profit was 32.75 billion yuan, up 40% year-on-year, excluding the calculation of 69.2 billion yuan of one-time income and other items, and not measured in accordance with the U.S. general accounting standards.
Through the financial report, Tencent's Qianwang news thinks that the following seven key points are worth noting:
1. The revenue growth of this fiscal quarter is 40%, a new low, and the revenue growth mainly depends on the rapid growth of new retail. In the second fiscal quarter, the item reflecting the level of new retail revenue recorded 18.21 billion yuan, with a year-on-year growth rate of 125%, far higher than the growth rate of total revenue, and once again became the revenue growth engine of Alibaba in this fiscal quarter.
2. Alibaba's traditional business continued to grow at a low speed. Alibaba's traditional two revenue pillars: the growth rate of merchant service revenue and commission revenue are 25% and 24%, respectively, far lower than the growth rate of total revenue. The two accounts for 49% of the total revenue, which is in the lowest level in Ali's history, only 48% higher than that in the last financial quarter.
3, the substantial increase in net profit is mainly due to the gains gained from Alipay equity. Under nongaap, the growth rate of net profit was 40%, equal to the growth rate of revenue. But even so, it exceeded market expectations.
4. After the adjustment period of the first two quarters, the new retail business (mainly HEMA fresh) returns to the investment period. In terms of spending on goods and equipment, which reflects the level of new retail investment, this quarter saw a significant increase from 5.856 billion yuan in the previous quarter to 9.156 billion yuan, up 56.35% month on month. In terms of its own stores, at the end of the financial quarter, the total number of its own stores was 170, with a net increase of 20 stores in the period, higher than the 15 stores in the previous financial quarter, and 15 stores were the lowest since 2018, indicating that the layout of HEMA is speeding up again.
5. The cloud business continued the trend of loss expansion in the last quarter, and the loss hit a new high. At the same time, Alibaba cloud continued the trend of continuous decline in revenue growth in recent years. In this quarter, Alibaba cloud's revenue growth was 64% year-on-year, slightly lower than the 66% of the previous quarter, making a new low.
6. Compared with the same period last year, the revenue growth of cultural and entertainment business increased rapidly, from the lowest level in the history of 6% in the last quarter to 23%. Moreover, the adjusted EBITDA of Alida entertainment in this quarter was 2.207 billion yuan, the lowest since 2018q3.
7. The sinking bonus has not disappeared. In this financial quarter, Taobao tmall Mobile's monthly activity was 785 million, an increase of 119 million and 30 million compared with the same period last year and the previous financial quarter, with a year-on-year growth rate of 17.8% and a month on month growth rate of 3.97%. As a comparison, in the last financial quarter, Taobao tmall Mobile's monthly active users reached 755 million, an increase of 121 million and 34 million over the same period last year and the previous financial quarter, a year-on-year increase of 19.1% and a month on month increase of 4.7%. The data has fallen, which indicates that the platform dividend, especially the dividend from the sinking market, has declined, but the decline is not obvious.
The growth of traditional pillar business is sluggish, while the growth of new retail is still high
In the financial quarter, the total revenue was 119.017 billion yuan, a year-on-year increase of 40%, lower than the year-on-year growth of 42% in the previous quarter, setting a new low in revenue growth.
Among them, statistics show that the two traditional pillar businesses, i.e. merchant management and commission, account for only 49% of the total revenue, lower than 52% in the last quarter, slightly higher than the lowest 48% in history, and in the low range. This shows that the contribution rate of pillar business to total business is also in the low range.
In terms of the growth rate of the two revenues, after two consecutive quarters of continuous decline in the growth rate of merchant service revenue, the indicator fell again in this quarter, at 25%, lower than 27% in the previous quarter and 32% in the previous quarter. This shows that the willingness of merchants to invest advertising and marketing expenses in Taobao tmall platform is not very strong.
The growth rate of commission income closely related to the transaction level is 24%, slightly higher than the 23% in the last quarter, indicating that the growth rate of transaction volume and monetization level of tmall has picked up.
The traditional pillar business is pan shankechen. In contrast, others, representing the income level of new retail formats such as HEMA, continue to play an outstanding role before.
This index recorded 18.21 billion yuan in the financial quarter, accounting for 15% of Ali's total revenue, higher than 14% in the previous quarter; the revenue increased by 125% year-on-year, slightly lower than 134% in the previous quarter, but the growth rate of 125% still won the growth champion in all Ali's business sectors.
This shows that the new retail business continues to be the driving force of Alibaba's revenue growth, and there is no obvious trend of momentum decline.
HEMA has entered the expansion period again, with a substantial increase in investment
Unlike Alibaba's cautious investment in new retail businesses such as HEMA in the last fiscal quarter, this fiscal quarter has completed the strategic adjustment of HEMA from "big store" to "small store" mode, and entered the high-speed expansion period again.
After statistics on the cost of purchasing goods and equipment, Tencent News "Qianwang" found that Alibaba's HEMA store expansion peak in 2019q2 / 2019q3 (corresponding to the third quarter and the fourth quarter of 2018 in natural year respectively), which rose to more than 10 billion yuan. However, from the beginning of 2019q4 (the first quarter of 2019 in natural year), this expenditure has been cut short and lasted until the second quarter of 2019 in natural year.
These two quarters are also considered to be the transformation period of HEMA from the original gate store business to a more diversified and lower cost small business.
In this quarter, the index increased significantly to 9.156 billion yuan from 5.856 billion yuan in the previous quarter, with a growth rate of 56.35% month on month.
In terms of its own stores, at the end of the financial quarter, the total number of its own stores was 170, with a net increase of 20 stores in the period, higher than the 15 stores in the previous financial quarter, and 15 stores were the lowest since 2018, indicating that the layout of HEMA is speeding up again.
However, after the transformation of business form, the profit margin of new retail may still not be significantly improved.
Considering that Ali does not list the profit margin of the new retail part separately, the profit margin of Ali's core business part is counted. This part includes the new retail part. Besides the new retail part, the other two parts of merchant service revenue and commission business are relatively stable and mature, which can reflect the profit margin of the new retail part to a certain extent:
It can be seen that after adjustment in the last quarter, Alibaba's profit margin rebounded after reaching the bottom in the last quarter. But this quarter, the index fell back to 38.11%.
The proportion of cost fell, and the operating expenses continued to shrink
In the last fiscal quarter, Alibaba's operating cost was 55.61 billion yuan, accounting for 60% of its revenue; in the same period of last year, it was 53%, an increase of 7%. This is the highest level of Alibaba in recent years, indicating that Alibaba is out of control in cost, while hungry, new retail and rookie are more obvious drag on its cost.
This quarter, the cost problem was finally contained.
It can be seen that the cost proportion in this quarter is 55%, slightly higher than 53% in the previous quarter, but it is still 5 percentage points lower than 60% in 2019q4. This shows that new retail businesses such as HEMA still have cost control even if they expand again.
However, 55 per cent is still a high level. In fact, the cost growth in this quarter was 40.1%, almost the same as the revenue growth. For the increase of cost, Alibaba explained that the inventory cost of direct sales and new retail business increased, and partially offset the decrease of Youku's purchase cost and the improvement of logistics infrastructure efficiency.
This also means that without calculating the impact of Youku and rookie businesses, the pressure of new retail businesses such as HEMA on Ali's cost is even higher than the current level. The situation in HEMA is still grim.
In terms of operating expenses, it is still well controlled in this quarter, and the overall level basically keeps up with the better level in the first quarter.
After making statistics on the proportion of general management and sales expenses, marketing expenses and product R & D expenses in total revenue, Tencent News "Qianwang" found that all indicators were at a low level.
In the last quarter, Alibaba's general management and sales expenses accounted for 5% of the lowest level in recent years, and the proportion of marketing expenses hit a new low, breaking 10% for the first time, to 9%. In this quarter, the proportion of Ali's various expenses only increased by 2% compared with the previous quarter, which is still at a low level.
Continue to count costs and expenses. The cumulative proportion of all expenses in total revenue in this quarter is 83%, slightly higher than 79% in the previous quarter and slightly lower than 84% in the same period last year. On the whole, it is still under control.
According to the statistics of 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 non GAAP, the overall net profit maintained an upward trend. The net profit of this fiscal quarter increased by 40% year-on-year, in line with the growth rate of revenue.
However, under GAAP, the net profit increased abnormally, reaching 72.540 billion yuan, while the market expected only 16.93 billion yuan, 20.03 billion yuan in the same period last year, an increase of 262%. This is mainly due to the significant one-off income recognized when the 33% equity of ant financial service is received.
It is understood that the deal began with an agreement in 2014. At that time, ant financial promised to pay intellectual property and technical service fees to Alibaba every year, which is equivalent to 37.5% of ant financial's pre tax profit; at the same time, if conditions permit, Alibaba has the right to share and hold 33% of ant financial's shares, and transfer the corresponding intellectual property rights to ant financial, and the arrangement of the above service fees will be terminated simultaneously.
Alibaba cloud's loss continued to expand month on month, and its revenue growth rate hit a new low in history
Alibaba cloud's performance this quarter is not brilliant.
In this quarter, Alibaba cloud continued the trend of continuous decline in revenue growth in recent years. In this quarter, Alibaba cloud's revenue growth was 64% year-on-year, slightly lower than the 66% of the previous quarter, making a new low. Its share of total revenue was 8%, up from 6% in the previous quarter.
At the same time that the growth rate of revenue fell, Alibaba cloud's adjusted EBITDA for the fiscal quarter was a loss of 521 million yuan, the highest in the past two years.
In the last quarter, Alibaba cloud's loss jumped to 358 million yuan, twice the loss of 164 million yuan in 2019q4. This quarter has obviously continued the trend of loss expansion, and there is no prospect of profit in the short term.
It can be seen that while the loss has increased significantly, the growth rate has hit a new low, indicating that Alibaba cloud business may be facing a bottleneck period.
Alibaba's cultural and entertainment revenue is at a low level
Alida Entertainment (except alifilm) showed a performance turning point this quarter.
On the one hand, the adjusted EBITDA of Alida entertainment in this quarter is 2.207 billion yuan, basically equal to the loss of 2.238 billion yuan in the last quarter, the lowest since 2018q3.
It can be seen from the figure that Alibaba entertainment has opened a channel to narrow its losses since reaching a maximum loss of 6.034 billion yuan in 2019q3 (the fourth quarter of 2018 in natural year).
The continuous reduction of purchasing cost is undoubtedly the key to the decline of Youku's cost.
What's more, Alibaba cultural entertainment, whose revenue growth is declining, is finally growing again in this quarter with the help of works like "twelve hours of Chang'an" and "this is street dance".
In the last financial quarter, the year-on-year growth rate of Alida entertainment was only