Alibaba Group Holding Limited (BABA) 26 May 222022 Q4 Earnings call transcript

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's March Quarter 2022 and Full Fiscal Year 2022 Results Conference Call. At this time all participants are in a listen-only mode. After management's prepared remarks, there will be a question-and-answer session. to Investor call Relations like Lin, to now of Head of would turn over the Rob I Alibaba Group. ahead. go Please

Good With Joe us Tsai, Alibaba to are Daniel full fiscal and and quarter today XXXX everyone, CEO; Chairman year call. and full year Group's conference results Executive Zhang, XXXX – day, March welcome the available Chairman; Xu, Chief corporate also our the from webcasted of today. Toby Financial our is be Vice IR A website. call website later of replay being on Officer. This will section call

the me quickly harbor. let contain Now may forward-looking cover safe Today's discussion statements.

Forward-looking from that may our involve cause materially risks expectations. differ to statements and current inherent actual uncertainties results

XX-F EBITDA EBITA and to that please income, share, Kong update with the on detailed filed that note assumptions basis. required as our announced and adjusted the diluted do call applicable as of as a under these call are and U.S. For EBITDA, except ADS, adjusted today, net cash earnings on on SEC Form we non-GAAP Any statements, based the Exchange. refer Please such we Hong other uncertainties, adjusted not adjusted the discussions make website of obligation expressed free that this EBITA, and on this financial or law. documents latest using risks statements to margin, forward-looking measures on certain Stock are non-GAAP any we per on margin, non-GAAP annual undertake flow of report are

during call last same stated, stated earnings versus growth and in non-GAAP refer press Unless GAAP to growth measures quarter otherwise this reconciliations mentioned year-over-year results can our to all GAAP of metrics rate year. found Our release. of the be

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Rob. you, solid amidst in challenges the of to uncertainties We the year call landscape. you today. in Hello for Thank everyone. COVID a and joining fiscal China earnings geopolitical macroeconomic completed the our due Thank resurgence global tremendous

Globally, year, achieved of China. billion we fiscal annual AACs AACs net target close annual with billion RMBX.XX we achieved X.XX XXX the trillion X total and increase RMBX.X with net China During GMV million. of RMBX trillion in billion million of we the increase a of and with outside China reached XXX of in to

leadership Our cloud profitable computing China. business maintaining while in first fiscal year completed its market

resurgence I with in recent bit the like Now latest situation the more COVID. would China share about to a of

spread started Delta, As centers you manufacturing River in China and River in Shanghai consumption impacted Yangtze March Delta to Omicron such Pearl Shenzhen, all the and major including Beijing. has know, and including several as

retail Such year-over-year. saw reported in April in to varying year-over-year of widespread saw April economy. and goods a business national the Overall reported in our China impact of retail in China in and with sense COVID cases are half has the cities GMV. hubs give growth online revenue resulted decline the impact also compared chain growth in you nearby a During cases of centers. consumer in COVID the supply address on over year. we These to excluding To decline our such based decline of where and March as same logistic physical widespread digit sales low brought saw period marketplaces the half and China of COVID negative the second last impacted our single physical have percentage April. historical scope goods resurgence GMV also most their Shenzhen unpaid of reporting degrees. orders, to a also more cities, cities Shanghai, cities new economic The April of marketplaces, speaking, Online and national China April, uncertainties major our retail disruptions represented merchants' sales included low-teens in has than significant XX year-over-year the confirmed We impacts.

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facing also are of China. in uncertainties environment We macro the outside

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consumers through focus control global will the our loss on infrastructure Facing our cutting. as companies networks international overseas cost digital commerce commerce geopolitical in of started many macroeconomic We growth buildup. logistic invest local and proactively part high to a models and and and of border with challenges uncertainties, cross combination quality of serve

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infrastructure Our important is during playing the role an pandemic.

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revenue XXXX, billion. in RMB from of For segment primarily Cloud XX% the total RMB XXX quarter quarter. XXX that billion; RMB XX.X RMB of a XX of of in XX% a to by same XX X% RMB was services billion segment to X.X March was was expenses in was consumer the by driven RMB March due operations increase year-over-year XX, from RMB XXXX growth million; The of Anti-monopoly by quarter quarter in compared by ended the change the to of loss billion, adjustment year. for to Income operations an March segment commerce X% to primarily XX.X China XX XX XXXX local the of levied quarter billion RMB billion in last mark-to-market RMB billion fine the SBC billion revenue

in decreased Excluding billion by RMB have Sun decrease as Taobao XX.X China in primarily Adjusted EBITDA, by in billion Taocaicai was primarily EBITDA. to RMB due in X these adjusted impacts, The RMB Impacts as are well decrease losses segment X.X incurred the income decreased from and billion, X.X will to quarter. COVID commerce investments reflected Deals. billion year-over-year to changes operations by Art. mainly RMB EBITDA they due from

note quality the quarter-over-quarter, Deals for we that losses combined Taobao it's to Taocaicai and segment. However, important growth China of declined as a focused high commerce driving our

during million and X.X services, also progress for company. instill segment the to, narrowing of ratio revenue Tmall due Importantly, of quarter, are inventory increase the consumer increased increased RMB March led efficiency the narrowing resulted secondly, XXXX Taocaicai of of businesses, revenue. for primarily losses improving of Freshippo as of as has was direct percentage an and Cost This in billion million such Cloud in making higher segment. the Supermarket operating XX, of costs quarter excluding Cainiao DME RMB of cost local cost in discipline that businesses March percentage year-over-year RMB ended to improving firstly, as to a And of a increase The sales logistics XXX XXXX. in profitability through XXX losses SBC we growth XX% revenue. and that and for proportion

slightly of XX% marketing same SBC development product quarter increased XX, in last Sales ended remain stable SBC compared to percentage as to technology reflecting X% our continued expenses innovation. quarter the Excluding talent as quarter a drive in expenses, revenue, at year. XXXX, March of the March the product excluding a of to investments and percentage revenue in and

a in losses Anti-monopoly impact decrease on and prices the shareholders in as net quarter flattish GAAP traded net X.X will ordinary of SBC non-GAAP ordinary a RMB publicly the income and billion. adjusted difference investments income Fine, between was shares Non-GAAP billion, due market net a percentage losses companies. Excluding quarter. the of prices general revenue primarily the expenses in to due EBITDA. administrative from primarily in net to be – our in and equity GAAP RMB decrease RMB XX.X was of in the The market attributed decline billion to XX.X increase attributable was to

As continue billion maintain of XXX RMB March of strong position to or cash XX, billion. XXXX, a we net US$XX

in Our were and billion billion strong RMB net generation. from cash free XX is fulfillment Anti-monopoly CapEx final March cash mainly to position flow X.X the of the XX RMB infrastructure. year an logistic XX.X cash cash XXXX RMB billion at supported the decreasing RMB of XXXX Majority Free respectively. of outflow and due In a amount business net flow flow quarter reflecting and by installment our RMB robust operation spending of profit. XX.X flow the and billion, Cloud investment Fine, is RMB fiscal operating payment XXX.X billion, billion the in was of in difference cash

balance we shareholders to our has US$XX share repurchases, an million increase for our enhance billion. billion through given share XX XXXX, cash our ADS repurchased approximately our we In under have Since program sheet repurchased strong free capability. we share another board have returns On X of XXXX, billion to XX, year generation to of US$X.X flow our approximately April company's to in program. fiscal and Importantly, May for billion repurchase US$XX ADS. repurchase March US$X.X authorized continued

we billion under May an share As unused of US$XX still program. of have the XX, repurchase amount

shareholders. This measures, to and was partially operations This reflected fully XXXX consolidated attributed highlight our does not attributable year the does quarter, primarily impact has in X.X financial shareholders in impairment quarter. the financial results, attributable for for should quarter. income with was attribution revenue, recorded been The has ordinary start not income income no net goodwill net was something the December, RMB attribution This consolidated year financial by understated segment to to total XXXX. a from results. ordinary our have charge fiscal In by XXXX for caused been interests, income December rectified noncontrolling billion. non-GAAP the and I’d that to the on net information like Before full but the or impact I in impact December the quarter the information March,

of RMB at quarter increase goods XXX at segment our low Taobao revenue Now, let’s single-digit a our remained in year-over-year look management results. from stable decline commerce Tmall Revenue despite orders. physical an unpaid year-over-year. RMB XX billion, China online was and billion, Customer segment March in GMV, excluding X%

the in total GMV year-over-year, an For investments in the was decline GMV breakdown well customer cancellation XX% quarter, positive resurgence COVID-XX Deals one-off from provisions. in growth commerce combined commission the by billion, March and growth X.X delivered year-over-year revenue, RMB XX Art, adjusted March quarter, as driven February but primarily increase we in by decline as by impairments decline Freshippo revenue quarter. sales due January Supermarket. primarily during COVID-XX China billion of and segment a high advertising asset and revenue offset and order incurred to XX.X RMB of growth special was in of Sun billion by reflected Taocaicai losses commission advertising decreased Taobao as recorded and X GMV March to to others driven over bottleneck the in The Direct in revenue and March result March. Tmall RMB EBITA logistic of management billion quarter was revenue If revenue decline RMB a by growth impacts. into a further single-digit due delays in higher the flat, robust

acquiring areas. Deals been commitment improve and in developed narrow for in are less We that consumers in to efficiency losses new making and successful our Taocaicai have Taobao progress

time which time, the Taocaicai the a XXX annual producer buyers on Deals During same Taobao more the of than Tmall quarter-over-quarter. active XX% Taobao that million not XX% had were fresh quarter over or Deals were than first over declined had Deals consumers platforms. combined year fiscal our these Taocaicai Taobao did XX on consumers, various more XXXX. Taobao of AAC losses of At and million in And of AAC shop

combine to businesses, we segment. China the Global expect focus losses We Supermarket. to commerce to Onto Deals the as major the Tmall our Art Freshippo and direct continue and growth quality for except sales Taocaicai narrow as our mentioned Tmall for narrow high on Sun year-over-year losses Taobao for driving

for direct have and enrich strengthen human top-line the margin. to marketplaces physical EBITDA our sales we overall delivered stations. China seamlessly which more that for product with verticals segment the solid and to continue These to comprehensive continued expand offer contribute quarter, business stores for them supply to and growth frequency expect various revenue pickup affect supply will commerce our to chain We integrate capabilities services high mix, businesses during

X% was RMB quarter billion March Our segment Lazada driven increase and The International commerce was and increase by revenue in year-over-year. primarily XX.X of Alibaba.com.

the XX% mainly Turkey, Trendyol in local AliExpress ongoing to Trendyol’s by grew narrowed such wholesale due consumer of supply disruptions by growth year-over-year, profit secondly, value partly and losses decline COVID-XX that from lira slowing EBITA negatively and was impacted of value more in average transaction RMB then subsidies the of revenue AliExpress, driven RMB business Russia impacts. mainly commerce to GMV resilient business, Eurozone and of compared by consumer from rules, optimization reduced through XX.X And two disruptions order primarily Local efficient Lazada a to of narrowed RMB well adjusted entering quarter, use XX% parcels driven of decline businesses the the X.X growth an and was by supply segment and our Ukraine in continued Revenue of increased for logistics China Alibaba.com slightly billion offset increase impacts by from driven International order quarter, of ongoing driven and costs. Ele.me. firstly conflict, was losses delivery quarter, by as XX% International inter-segment billion, by as of mainly for was narrowed while businesses, Local a acquisition logistics to increase billion contributed year-over-year reduced an higher enhancing partly from March losses losses the Cainiao and March RMB logistics services optimized for chain consumer EBITA conflict. consumer home entering experience, for year-over-year by billion primarily from by the due was OpEx in as losses the adjusted billion cost. growth year-over-year, elimination mainly in X.X XX.X Alibaba.com, Revenue depreciation against of chain X.X service which March that in of user increase was new by international by loss driven impacted offset losses year-over-year chain as Turkish international growth of after investments and orders the export Eurozone in Ukraine in RMB solid orders service Lazada XX%. result and the due services Our rate revenue VAT supply of the as Russia RMB. decrease due delivered growth on logistics and slower previous The the quarters to platform disruptions for was completed consumer parcels the to services upgrade

resurgence the of logistics from cost Russia in from COVID-XX year smart revenue well infrastructure, RMB increase million the conflict. our XXX by EBITA XX% customers. and and expansion During external due primarily Ukraine global from adjusted loss to was in XXX Cainiao China of impact million China’s RMB total was last year-over-year, XXXX, widened generated as operating as fiscal

from infrastructure Revenue China digital businesses. internationally the for inter-segment sustainable our in XX completing an Cloud due to was industry, in growth commerce projects economic fulfillment of demand in Going we after elimination foundation and and from year-over-year. RMB building March will impacts. our quarter logistic laying the forward, efforts COVID-XX compared March billion reflecting long-term continue in increase Revenue our for China’s activities, in and segment softening to customers growth slowing in was slower prior cloud quarter, internet XX% comprehensive delays hybrid quarters,

revenue generated faced internet business. international top out customer cloud our services in that the industry using for its from a Excluding gradually

would quarter, for segment XX% Cloud XXXX. year-over-year revenue grown XX% Our year fiscal inter-segment and during after elimination have March

revenue to year industry coverage XX our continues of customers customer, less top next customer XXXX. and Excluding affiliated diversify this fiscal than AliCloud’s contribute base XX% none to the in

from revenue industries increase contribution as Importantly continues to non-internet well.

and in which revenue but of in the by Cloud In year-over-year. year, offset increasing improve segment Cloud Revenue internet from March a improvement Cloud efficiency the on losses education in invest operating quarter, DingTalk. our and was billion, profit year-over-year. online RMB RMB Digital million Alibaba Media loss Adjusted focus and X.X the EBITA segment partly billion was quarter retail This narrowed and RMB in of was our and telecommunication, fiscal strong Entertainment March comprises X decrease RMB will cloud a and which [indiscernible] year-over-year. declined improved During quarter, of billion ongoing quality growth, with RMB to profitability, X% X internationally. expand EBITA from revenue high entertainment. selected million new is in services, of by growth primarily industries, DingTalk, March verticals, of XXX segment, in financial Adjusted including XXX attributable by

of In brought These with with we by increased macro Let increasing a fiscal challenges have activities, slowing recap short then been well as fronts. close the our about and resurgence our faced changes internationally, fiscal year conditions customers outlook. can do last in XXXX, many me year, competition, they also from bring to stakeholders. but fact there’s as COVID create into to focus and we much geopolitical domestically and value key for that have

that us the past number year, position of future. this a we well for made During achievements have

the execution was over Taocaicai. This First, a through such growth consumer made facing historical businesses, businesses as our of in X Taobao possible Deals for we strong and have milestone billion and of all annual China. consumers active reached

scale well unique to serve consumers commerce Our businesses these value proposition of China. in position at having and ecommerce us X location based both billion

from to also benefit seeing that us penetration and grocery, intercity further This allow network our consumer Second, electronics categories, increase FMCG us intercity options such as are to integrated of future. consumers. our increasing and in fulfillment multiple logistic delivery of we and development an allow the in network

technological Lastly, next market China’s and in the expenses technologies. position RMB in XXX demands strengthen of businesses that technology fiscal XXXX, we sophisticated our advance billion to development related consumer the had in spent support and research cloud leading continue generation in our facing our in over costs to

for and at financial in in domestic Now, considering believe restrictions to to we the this to able is impacts it’s China, mid-March in guidance, prudent COVID-XX, Shanghai, significant XXXX, fiscal of we our not control not at that of terms particularly guidance difficult which to typically from the the businesses are since from uncertain give We start us have arising predict. time, year. and case provided COVID-XX seen risks are

in mentioned. fiscal forward emphasizing Looking year XXXX, Daniel what has

execute generate principles and consumers, high operation high innovations. will and sustainable, relationship customers. these high a to financial objectives, build to and including a efforts a consumers quality continue reflects commerce We quality and high with ongoing commitments our quality digital durable technology will that our quality key believe and developing strong several infrastructure revenue focus We first,

optimizing Second, we our cost overall on will focus structure.

will We major control our are at significant scale already improve businesses compared for returns cost that peers. to and

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same energy international efficiency that the competitiveness time, enhance self-operated and both our in benefit warehouse markets. cloud an infrastructures our customers improvement in infrastructure the in efficient businesses. these in we own expect ongoing continue to a utilization and network in and China logistic build our Third, global can of At

cash flow generation the in strong maintain flexibility that net and to pie invest all businesses to of that and a cash the position seek we operating gives financial stakeholders. strong us and Lastly, our capabilities benefit key expand

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you. Thank

question? Next

Liu Our next question comes from Jerry UBS. the of line with

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Operator, next question.

J.P. from our the question line And comes of next Alex Yao Morgan. with

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please. question, Next

your line question And next Shao comes from the of Jiong Barclays. with

questions. Thank much for my you taking very

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today. everyone for Okay, thank participating you

Thanks. thank please team we'll If and you And you you out reach to see myself. IR any quarter. and next have questions, the

Ladies participating and gentlemen, you disconnect. for this and concludes today's may now you conference call. Thank