September Quarter 2014 Results - Alibaba Groupof goodwill and intangible assets that Alibaba Group...
Transcript of September Quarter 2014 Results - Alibaba Groupof goodwill and intangible assets that Alibaba Group...
September Quarter 2014 Results
November 4, 2014
Disclaimer
This presentation contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,”
“expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “potential,” “continue,” “ongoing,” “targets” and
similar statements. Among other things, statements that are not historical facts, including statements about Alibaba’s beliefs and
expectations, the business outlook and quotations from management in this presentation, as well as Alibaba’s strategic and
operational plans, are or contain forward-looking statements. Alibaba may also make written or oral forward-looking statements in
its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in press releases and other written materials and
in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks
and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking
statement, including but not limited to the following: Alibaba’s goals and strategies; Alibaba’s future business development;
Alibaba’s ability to maintain the trusted status of its ecosystem, reputation and brand; Alibaba’s ability to retain or increase
engagement of buyers, sellers and other participants in its ecosystem and enable new offerings; Alibaba’s ability to successfully
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engagement of buyers, sellers and other participants in its ecosystem and enable new offerings; Alibaba’s ability to successfully
monetize traffic on its mobile platform; risks associated with limitation or restriction of services provided by Alipay; risks associated
with increased investments in Alibaba’s business; risks associated with acquisitions; privacy and regulatory concerns; competition;
security breaches; the continued growth of the e-commerce market in China and globally; and fluctuations in general economic
and business conditions in China and globally and assumptions underlying or related to any of the foregoing. Further information
regarding these and other risks is included in Alibaba’s filings with the SEC. All information provided in this presentation is as of the
date of this presentation and are based on assumptions that we believe to be reasonable as of this date, and Alibaba does not
undertake any obligation to update any forward-looking statement, except as required under applicable law.
This presentation contains certain financial measures that are not recognized under generally accepted accounting principles in the
United States (“GAAP”), including Non-GAAP EBITDA, Non-GAAP net income and free cash flow. For a reconciliation of these non-
GAAP financial measures to the most directly comparable GAAP measures, see GAAP to Non-GAAP Reconciliation.
49%YoY GMV
Growth
September Quarter 2014 Highlights
307MMAnnual
Active Buyers (2)
54%YoY Revenue
Growth
3
217MMMobile MAUs (3)
US$ 95Bn12-MTH
Mobile GMV (1)(2)
Note: Unless otherwise indicated, all figures above are for the three months ended September 30, 2014(1) Assumes 1 US$ = 6.1380 RMB(2) For the twelve months ended September 30, 2014(3) For the month ended September 30, 2014. Based on the aggregate mobile MAUs of apps that contribute GMV on our China retail marketplaces
183
135
159
176
346 345374
529
430
501
556
Quarterly GMV (China Retail Marketplaces)
GMV
(RMB Bn)
53% 46%YoY
Growth 65% 64% 45%65%62%62% 49%
179
255223
257 275
346295
342380
49
91
71
8899
135
228
346
294
345
Sep 30,
2012
Dec 31,
2012
Mar 31,
2013
Jun 30,
2013
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
Taobao Marketplace Tmall
4
For 3M
ended
Active Buyers & Mobile MAUs
202
231255
279
307
(In Millions)
Annual Active Buyers Mobile MAUs
136
163
188
217
(In Millions)
YoY
Growth 51% 52%48%44%39%
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
For 12M
ended
136
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
For 1M
ended
5
Mobile GMV Contribution
19.7%
27.4%
32.8%
35.8%
(RMB Bn)
Mobile GMV and Mobile Penetration (China Retail Marketplaces)
(%)
6
13 26 32 4155
104118
164
199
5.6% 7.4%
10.7% 12.0%
14.7%
Sep 30,
2012
Dec 31,
2012
Mar 31,
2013
Jun 30,
2013
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
Mobile GMV Mobile GMV as % of total GMV
For 3M
ended
0.61%
1.87%
2.31% 2.30%
Sep 30, 2013 Sep 30, 2014
Mobile monetization rate
Blended monetization rate
(1)
374 556
14.7%
35.8%
Sep 30, 2013 Sep 30, 2014
GMV Mobile GMV as % of total GMV
September Quarter 2014 Financial Highlights
GMV and Mobile Penetration
+48.7%
(RMB Bn)
Monetization Rate
(%)
Note: For the three months ended on the respective dates
(1) Derived from China commerce retail mobile revenue / mobile GMV
(2) Non-GAAP EBITDA represents income from operations (which excludes interest and investment income, net, interest expense, other income, net, income tax expenses
and share of results of equity investees) before certain non-cash expenses, consisting of share-based compensation expense, amortization, depreciation and impairment
of goodwill and intangible assets that Alibaba Group does not believe are reflective of its core operating performance during the periods presented. 7
Revenue
11.0
16.8
Sep 30, 2013 Sep 30, 2014
+53.7%
(RMB Bn)
6.5 8.5
Sep 30, 2013 Sep 30, 2014
Non-GAAP EBITDA (2) and Margin
(RMB Bn)
Margin 59.4% 50.5%
2.57%
2.95%
2.52% 2.77%
2.61%
3.53%
2.63%
3.03%
2.54% 3.05%
Monetization Rate
Quarterly Monetization Rate (China Retail Marketplaces)
(%)
Non-mobile
monetization
rate(1)
We manage the business for growth in GMV and active buyers, not for monetization rate
• Blended monetization rate is at expected level, consistent with prior years
• Blended monetization rate is lower sequentially, due to strong GMV growth on Taobao Marketplace
0.47% 0.55% 0.47% 0.58% 0.61%
1.12% 0.98%
1.49% 1.87%
2.52% 2.54%
2.46%
2.77%
2.30%2.51% 2.31%
3.05%
2.18%2.52% 2.30%
Sep 30,
2012
Dec 31,
2012
Mar 31,
2013
Jun 30,
2013
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
Mobile monetization rate Non-mobile monetization rate Blended monetization rate
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Notes:
(1) Derived from China commerce retail non-mobile revenue / non-mobile GMV
(2) Derived from China commerce retail mobile revenue / mobile GMV
Mobile
monetization
rate(2)
rate(1)
Blended
monetization
rate
For 3M
ended
Quarterly RevenueRevenue Breakdown by BusinessTotal Revenue
(% of Total Revenue)(RMB Bn)
International
Retail
Marketplace
China
Wholesale
Marketplace
76%5%
2%
7%2%
8%
China Retail Marketplaces
Others
Alibaba Cloud
Computing
and Internet
InfrastructureInternational
Wholesale
Marketplace11.0
18.7
12.0
15.816.8
YoY
Growth 46% 54%39%62%47%
47.7%39.1%
99.5%
24.0%
50.0%
9
Marketplace China Retail Marketplaces
For 3M ended Sep 30, 2014
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
For 3M
ended
Revenue from newly acquired businesses
Revenue Growth of Major Businesses(YoY growth % )
1 2 3 4 5
1. China Retail Marketplaces
2. China Wholesale Marketplace
3. International Retail Marketplace
4. International Wholesale Marketplace
5. Alibaba Cloud Computing and Internet Infrastructure
8.6 8.5
Margin Trends
Non-GAAP Net Income (2) and MarginNon-GAAP EBITDA (1) and Margin (RMB Bn) (RMB Bn)
• We don’t manage to a margin target
• Lower adjusted EBITDA margin was attributable to:
• Consolidation of newly acquired businesses (mainly UC Web, AutoNavi) with lower margins
• Investments in new initiatives, including our mobile OS, local services and digital entertainment
• Tactical marketing, largely brand campaigns during the quarter
• We will continue to invest in new and existing businesses to drive long-term growth in GMV, revenue and profit
50.5%54.4%59.4% 40.5%46.4%53.8%Margin Margin
5.9
7.3 6.8
Sep 30,
2013
Jun 30,
2014
Sep 30,
2014
6.5
8.6 8.5
Sep 30,
2013
Jun 30,
2014
Sep 30,
2014
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Note: For the three months ended on the respective dates (1) Non-GAAP EBITDA represents income from operations (which excludes interest and investment income, net, interest expense, other income, net, income tax expenses and share of
results of equity investees) before certain non-cash expenses, consisting of share-based compensation expense, amortization, depreciation and impairment of goodwill and intangible assets that we do not believe are reflective of its core operating performance during the periods presented.
(2) Non-GAAP net income represents net income before share-based compensation expense, amortization, impairment of goodwill, intangible assets and investments, gain (loss) on deemed disposals/disposals/revaluation of investments, amortization of excess value receivable arising from the restructuring of commercial arrangement with Ant Financial, and a one-time expense item consisting of the expenses relating to the sale of shares by existing shareholders in our initial public offering.
Cost Trends
Costs of Revenue (Pre-SBC)
2.8 4.0 4.4
25.2% 25.3% 26.4%
Sep 30, 2013 Jun 30, 2014 Sep 30, 2014
Product Development Expenses (Pre-SBC)
1.0 1.7 1.9
8.7% 10.8% 11.2%
Sep 30, 2013 Jun 30, 2014 Sep 30, 2014
(% of revenue)(RMB Bn) (% of revenue)(RMB Bn)
0.5 0.8 1.0
4.1% 4.9% 5.8%
Sep 30, 2013 Jun 30, 2014 Sep 30, 2014
11
Sales & Marketing Expenses (Pre-SBC)
0.6 1.2 1.6
5.5% 7.3%
9.4%
Sep 30, 2013 Jun 30, 2014 Sep 30, 2014
General & Administrative Expenses (Pre-SBC)(% of revenue)(RMB Bn) (% of revenue)(RMB Bn)
Note: For the three months ended on the respective dates
• Our capex increased sequentially mainly due to the purchase of land for office space in Shanghai (RMB1.4B)
• Non-real estate capex increased due to the investment in Alibaba Cloud and our data platform
6.7
10.6
8.9
61.0%
67.2%
53.1%
Free Cash Flow, Capital Expenditures and Cash
3.4
9.1%
7.3%
10.1%
Capital ExpendituresFree Cash Flow (1)
(% of revenue)(RMB Bn) (RMB Bn) (% of revenue)
57.9
109.9
21.8
Cash, Cash Equivalents and
Short-term Investments
(RMB Bn)
6.7
Sep 30, 2013 Jun 30, 2014 Sep 30, 2014
Free Cash Flow
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1.0 1.2 1.7
0.1 0.1
1.7
1.1 1.3
Sep 30, 2013 Jun 30, 2014 Sep 30, 2014
Non-real estate capital expenditures
Acquisition of land use rights and construction
in progress
Non-real estate capital expenditures
Note: Unless otherwise indicated, all figures in the above charts are for the three months ended on the respective dates(1) Free cash flow represents net cash provided by operating activities as presented in Alibaba Group’s consolidated cash flow statement less purchases of property and equipment and
intangible assets (excluding acquisition of land use rights and construction in progress) and adjusted for changes in loan receivables relating to micro loans of its SME loan business.
43.6
33.0
51.9
88.1 10.6
6.0
As of Mar31,
2014
As of Jun 30,
2014
As of Sep 30,
2014
Cash and cash equivalents
Short-term investments
GAAP to Non-GAAP Reconciliation
For the Three Months Ended
RMB MM Sep 30, 2013 Jun 30, 2014 Sep 30, 2014
Non-GAAP EBITDA
Income from operations 5,248 6,844 4,345
Add: Share based compensation expense 864 1,073 3,010
Add: Amortization of intangible assets 39 234 598
Add: Depreciation and amortization of property and equipment and land use rights 310 423 540
Add: Impairment of goodwill and intangible assets 44 - -
Non-GAAP EBITDA 6,505 8,574 8,493
Non-GAAP net income
Net income 4,937 12,438 3,030
Add: Share based compensation expense 864 1,073 3,010
Add: Amortization of intangible assets 39 234 598
*
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Add: Amortization of intangible assets 39 234 598
Add: Impairment of goodwill, intangible assets and investments 53 - -
Add: Gain on deemed disposals /disposals/revaluation of investments - (6,428) (60)
Add: Amortization of excess value receivable arising from the restructuring of
commercial arrangements with Ant Financial - - 35
Add: Expenses relating to the sale of shares by existing shareholders in initial public
offering - - 195
Non-GAAP net income 5,893 7,317 6,808
Free cash flow
Net cash provided by operating activities 4,526 10,177 5,865
Less: Purchase of property, equipment and intangible assets
(excluding land use rights and construction in progress)(996) (1,155) (1,693)
Add: Changes in loan receivables, net 3,153 1,572 4,766
Free cash flow 6,683 10,594 8,938
Note: * YoY declined largely driven by the increase of share based compensation ** A one-time deemed disposal gain (associated with the acquisition of UCWeb and OneTouch) in the June quarter
**