Alibaba Achieved $ 1Trillion in GMV Revenue in Fiscal 2020

Hülya Karahan

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“Alibaba”  today announced its financial results for the quarter and fiscal year ended March 31, 2020

Zhang Yong, chairman and CEO of Alibaba Group, said that this fiscal year, Alibaba ’s digital economy achieved $ 1 trillion in GMV.

“Alibaba achieved the historic milestone of US$1 trillion in GMV across our digital economy this fiscal year,” said Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group. “Our overall business continued to experience strong growth, with a total annual active consumer base of 960 million globally, despite concluding the fiscal year with a quarter impacted by the economic effects of the COVID-19 pandemic. The pandemic has fundamentally altered consumer behavior and enterprise operations, making digital adoption and transformation a necessity. We are well positioned and prepared to help large and small businesses across a wide spectrum of industries achieve the digital transformation they need to survive this difficult period and eventually prevail in the new normal. By focusing on the long term and investing in value creation for our consumers and business customers, we believe we will emerge from this crisis stronger and be ready to capture more growth in the future.” “Despite a challenging quarter due to reduced economic activities in light of the COVID-19 pandemic in China, we achieved our annual revenue guidance of over RMB500 billion. Revenue growth of 35% yearover-year was driven by solid performance of our domestic retail businesses as well as robust cloud computing revenue growth,” said Maggie Wu, Chief Financial Officer of Alibaba Group. “Our adjusted EBITDA grew 29% year-over-year, reflecting our discipline in allocating resources to key strategic growth areas while optimizing costs and improving efficiency. Although the pandemic negatively impacted most of our domestic core commerce businesses starting in late January, we have seen a steady recovery since March. Based on our current view of Chinese domestic consumption and enterprise digitization, we expect to generate over RMB650 billion in revenue in fiscal year 2021

The performance report shows that fourth-quarter revenue was 114.314 billion yuan, an increase of 22% year-on-year; net profit was 348 million yuan, a decrease of 99% year-on-year, mainly due to the decline in transaction prices of listed companies ’equity securities invested by Alibaba This resulted in a net investment loss. Non-GAAP net profit (excluding the aforementioned investment losses and gains) was 22.287 billion yuan, an increase of 11% year-on-year. Affected by the new coronary pneumonia epidemic, the operating profit was 7.131 billion yuan, down 19% year-on-year.

FY 2020 revenue was 509.711 billion yuan, an increase of 35% year-on-year; net profit was 140.35 billion yuan. Non-GAAP net profit was 132.479 billion yuan, a year-on-year increase of 42%.

Alibaba’s digital economy has 960 million annual active consumers worldwide, of which 780 million consumers come from China and 180 million consumers come from overseas. The annual active consumers in China’s retail market reached 726 million, an increase of 72 million compared to fiscal year 2019. In March 2020, the number of mobile monthly active users in the Chinese retail market reached 846 million, an increase of 125 million compared with March 2019.

In FY 2020, Alibaba ’s digital economy ’s commodity transaction value (GMV) was 7.053 trillion yuan (US $ 1 trillion), mainly including the Chinese retail market GMV of 6.589 trillion yuan, as well as cross-border and global retail markets and Local life service GMV. The consumer business of Alibaba’s digital economy is mainly composed of the Chinese retail market, cross-border and global retail markets, and local lifestyle services.

Zhang Yong said that despite the impact of the new coronary pneumonia epidemic on the economy in the last quarter of the fiscal year, the overall business remained strong. The epidemic has fundamentally changed consumer behavior and business operations, and digitalization is the general trend. Alibaba has seized the opportunity and made sufficient preparations to help all industries and industries achieve digital transformation, overcome difficulties, and achieve ultimate success under the new normal in the future. By focusing on long-term value and investing in the value creation of consumers and corporate customers, I believe that Alibaba can grow from this test and further seize the opportunities for future growth.

Retail and cloud computing are driving annual revenues to exceed expectations, with total revenue expected to exceed 650 billion in the new fiscal year

In terms of specific business segments, core business revenue in the fourth fiscal quarter was 93.865 billion yuan, an increase of 19% year-on-year; cloud computing revenue was 12.217 billion yuan, an increase of 58% year-on-year; digital media and entertainment revenue was 5.944 billion yuan. A year-on-year increase of 5%; innovative business and other revenues were 2.288 billion yuan, a year-on-year increase of 90%.

FY 2020 core business revenue was 436.104 billion yuan, an increase of 35% year-on-year. Among them, China’s retail business revenue was 332.75 billion yuan, an increase of 34% year-on-year, Cainiao logistics service revenue was 22.233 billion yuan, an increase of 49% year-on-year, and local life service revenue was 25.440 billion yuan, an increase of 41% year-on-year.

In addition, cloud computing revenue was 40.016 billion yuan, an increase of 62% year-on-year; digital media and entertainment revenue was 26.948 billion yuan, an increase of 12% year-on-year; innovative business and other revenue was 6.643 billion yuan, an increase of 42% year-on-year . However, the adjusted EBITA losses of cloud computing and innovation business and other parts have further expanded compared with fiscal year 2019, while the adjusted EBITA losses of digital media and entertainment have decreased.

In FY2020, other net income was RMB 7.439 billion, compared with RMB 221 million in FY2019. The increase was mainly due to the increase in licensing fees and software technical service fees obtained by Ant Financial and the decline in exchange losses. In FY 2020, under the profit sharing arrangement between Alibaba Group and Ant Financial, the license fee and software technical service fee were RMB 3.835 billion, compared with RMB 517 million in FY 2019.

Alibaba Group Chief Financial Officer Wu Wei said that driven by the solid development of China’s retail business and the strong growth of cloud computing revenue, the annual revenue still exceeded the guidance of 500 billion yuan given at the beginning of the year, a year-on-year increase of 35%. The Group’s adjusted EBITDA increased by 29% year-on-year, reflecting Alibaba’s achievements in targeted resource allocation, cost optimization and efficiency improvement in key strategic growth areas.

Wuwei also said that although most of Alibaba’s core business in China has been negatively affected by the epidemic since the end of January, it has begun to recover steadily in March. Based on current views on domestic consumption and digitalization of enterprises, Alibaba expects total revenue in fiscal year 2021 to exceed RMB 650 billion.

Under the impact of the epidemic, Alibaba’s multiple businesses seized the opportunity, and domestic business began to resume growth in March

For the impact of the new crown epidemic, the performance report revealed that Tmall ’s online physical goods GMV (excluding unpaid orders) increased by 10% year-on-year, the main growth momentum came from the strong growth of fast-moving consumer goods such as daily necessities and household goods, and The strong demand for these categories totaled a year-on-year increase of 25%. However, the above growth was also offset by negative growth in other categories, such as clothing accessories, home decor and auto parts. Total customer management and commission income increased by 1% year-on-year, customer management income increased by 3%, and commission income decreased by 2%.

In the local life service business segment, revenue in the fourth fiscal quarter fell by 8% year-on-year, mainly due to the large-scale closure of restaurants and local businesses. In the cross-border and global retail market segments, AliExpress revenue growth slowed significantly year-on-year, mainly due to the interruption of supply chain and logistics, which had a negative impact on the growth of GMV sales to North America, South America and Europe. Since March, Lazada has suffered some negative effects in some countries, but the order volume has remained strong. As for other businesses, Alibaba’s businesses related to tourism, transportation and offline entertainment, including Flying Pig, Alibaba Pictures, Barley and Goldman, were negatively affected during the epidemic.

Alibaba said that despite the different short-term financial impacts of various businesses, the growth of domestic business has resumed since March. In April, Tmall online physical goods GMV (excluding unpaid orders) recovered strongly, and continued to improve in May. Similarly, the hungry food delivery GMV also turned positive in April. However, the international commercial business, which accounts for 7% of total revenue in FY 2020, is still uncertain due to the weak demand in markets outside China, and the timing and pace of recovery are uncertain.

The epidemic also brought business opportunities. Alibaba said that in the past few years, it has created and developed a series of businesses that enable it to benefit from these trends in the long run. First of all, accelerate the merchants to go online. For example, in the fourth fiscal quarter, the number of daily active merchants using live broadcast on Taobao Live increased by 88% year-on-year.

Second, Hema Xiansheng achieved strong revenue growth in February and March, driven by the increase in the number of online consumers, the increase in purchase frequency and the increase in each unit price. In the fourth fiscal quarter, online purchases accounted for about 60% of Hema GMV, an increase of 10 percentage points year-on-year.

In March, the daily average daily active users reached 155 million. Dingding has also penetrated significantly into the education industry, with an average of more than 1 million active classrooms per working day. At the same time, as social distance measures are still being implemented, the use of cainiao post by consumers who need to receive packages conveniently and without contact has increased significantly. The daily average number of parcels handled by Cainiao Community Station increased by more than 100% year-on-year.

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Alibaba Achieved $ 1Trillion in GMV Revenue in Fiscal 2020 - /10

Summary

“Alibaba”  today announced its financial results for the quarter and fiscal year ended March 31, 2020

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