# Alibaba Earnings Update (Growth is back!) | BABA & HK:9988 Stock

## Метаданные

- **Канал:** Investing with Tom
- **YouTube:** https://www.youtube.com/watch?v=3ZjbliEsBgU
- **Дата:** 18.08.2023
- **Длительность:** 28:36
- **Просмотры:** 7,232

## Описание

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Alibaba earnings results and conference call:
https://www.alibabagroup.com/en-US/ir-financial-reports-quarterly-results

Time Stamps:
0:00 - Alibaba earnings!
1:40 - Stock analysis with Seeking Alpha
2:38 - Chinese consumption backdrop
4:24 - CEO comments
8:19 - Revenue and earnings numbers
9:56 - Margins and cost structure
10:44 - Free cash flow and buybacks
13:24 - Net cash position
14:37 - Segment results: Taobao & T-mall Group
16:14 - Segment results: International Digital Commerce Group
17:19 - Segment results: Local Services Group
18:00 - Segment results: Cainiao Smart Logistic Network
18:38 - Segment results: Cloud
19:36 - Segment results: Digital Media and entertainment
20:21 - Segment results: All other segments
21:13 - Overall segments result thoughts
21:45 - Q&A Conference call highlights
27:30 - Final thoughts

Enjoy :)

Disclaimer:
I am not a financial adviser. This video is for education and entertainment purposes only. Seek professional help before making any investment decision.​

## Содержание

### [0:00](https://www.youtube.com/watch?v=3ZjbliEsBgU) Alibaba earnings!

Alibaba stock investors seem either to love it or hate it on one side of the argument you have people that will tell you Chinese businesses as a whole are simply uninvestable due to the major geopolitical risks yet on the other side of the equation you will find people that say if you look at the actual underlying business you'll find a massive company that produces roughly double the operating income of retail giant Costco yet trades at a 15 lower price Alibaba stock remains down about 60 from its highs back in late 2020 and at this point the business is starting to string together quite a few increasingly profitable quarters and as we'll discuss in this video now that China is largely through a lot of their harsh covert restrictions the business of Alibaba is actually returning to growth this video is going to be a comprehensive overview of alibaba's latest earnings for the three months ended June 30th and the video we'll go through some of the opening remarks from high level management at Alibaba we'll talk through alibaba's financial results their revenue earnings free cash flow share repurchases their balance sheet health and we'll also look at some of the individual segment results how their Chinese Commerce businesses performing versus their Cloud business and international Commerce and Logistics and so on and Alibaba each quarter also hosts about an hour and a half long conference call which is a good chance for analysts and investors to ask management some questions about how Alibaba is tracking so towards the end of the video I'll also share some highlights from that management q a session so be sure to sit back relax and

### [1:40](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=100s) Stock analysis with Seeking Alpha

subscribe to the channel if you haven't already but just before we get into that I would like to welcome a brand new sponsor to the channel Seeking Alpha founded in 2004 Seeking Alpha has become one of the world's best known platforms for stock analysis interested in digging deeper into a company you like you seeking Alpha to access up to 10 years of company financial data as well as news earnings releases and transcripts and detailed write-ups on the company from other investors and analysts once your initial research is complete you can even use Seeking Alpha to set custom price alerts so that you never miss an opportunity to buy a stock you like at a price you like use the first link in the description seekingalpha. me forward slash invest in more time to access a free 14-day trial of Seeking Alpha premium it's rare that I partner with new companies here on the channel and I'm very pleased to be able to do so with Seeking Alpha but with all that said let's get right back to the video now just for a bit of context on

### [2:38](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=158s) Chinese consumption backdrop

the quarterly results here from Alibaba this is actually the first full quarter we're going to have kind of past the harsh covert restrictions and lockdowns and so on in China we had sort of work and life seem to normalize in China back in early February and this quarter will give us data from the first of April to the end of June so a kind of First full quarter out of some of those harsher covered restrictions and as you'll see in some of the numbers here there's sort of a increasing return to consumption in China which is very beneficial for the business of Alibaba which sells a very wide range of goods uh the other thing to keep in mind is that for the past several quarters now at Alibaba the theme has really been very modest uh to almost flat Revenue very little growth on the revenue front but quite significant gains in profitability mainly through reducing the losses and many of alibaba's loss making businesses so in the last quarter Revenue was up two percent year over year whereas non-gaap net income was up 30 percent year over year and free cash flow was 32. 3 billion RMB versus a loss of 15 billion RMB the same quarter of the prior year and of course one of the biggest news stories with Alibaba this year is that they have announced plans to sort of restructure the business and split it into six different business units Each of which can potentially seek their own external funding and go on to have their own IPO and separate stock listing we get to see one of those IPOs happen just yet but investors are certainly keeping a very close eye on those developments as well okay so

### [4:24](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=264s) CEO comments

before we get into the specific Financial results uh let's go through some of the opening remarks and opening comments from Senior Management at Alibaba now typically this would be done by Daniel Zhang who's the group CEO this is actually his last quarterly conference call as group CEO which I'll get to in a sec and we would typically hear from Toby Zhu as well who is the Alibaba Chief Financial Officer we did still hear from Toby Zoo but a little bit different than the opening remarks this time around we heard from Daniel Zhang as usual but we also heard from Trudy die who is the CEO of the taobao our teamwork Group which are two of alibaba's monster China Commerce businesses and that group represented close to 50 percent of alibaba's revenue for the quarter so Daniel Jones started off by saying the latest macro data indicates some uncertainties in the pace of post-covert recovery but is economic and consumer activities continue to resume our business has demonstrated encouraging Trends economic resilience confidence in the consumption recovery and the significant Potential from an integrative development of the digital economy and the real economy the solid quarter also showed promising early results of our reorganization which is beginning to unleash new Energy across our businesses we also further strengthen the company's Capital Management moving ahead with our various programs to improve shareholder return under the leadership of the newly established Capital Management committee the Capital Market projects we announced last quarter are all underway and we have also been continuing share repurchase activities in the market and like I mentioned before uh this will be Daniel Zhang's last quarterly conference call as the Alibaba CEO he is to be replaced by Joseph Sai who's one of the uh kind of original 18 I think there was Alibaba co-founders so on that Daniel Zhang said lastly this will be my 36th earnings call I have participated since our IPO in 2014 and the final one is Chairman and CEO of Alibaba group This truly has been a privilege of a lifetime to lead the company by CEO on our three strategies of consumption cloud computing and globalization since 2015 and be a part of alibaba's high growth period and lastly with some of the opening remarks some comments here from Trudy die the CEO of the taobao and Timor group under outputting user's first strategy the taobao apps user base has been put on a rapid track of growth from April of this fiscal year the average number of daily average users each month has grown by 6 six percent or higher year over year last month July growth was over seven percent based on third party data our daily active user leadership in the e-commerce space continues to widen more and more users are choosing to use the taobao app since we launched the value for money battle this fiscal year we've seen a very clear trend of merchant growth on taoba and T model in the June quarter we onboarded a large number of new Merchants a significant portion of homes started contributing to that value for money battle winning over and converting users Merchant confidence in doing business on our platform increased significantly and Merchant spending also grew with an increase of over 20 percent and the daily average number of merchants paying for advertising this all goes to show that more and more Merchants are taking taobao and t-mall as their first choice platform for stable operation of long-term businesses and in terms of sort of the longer term Outlook and plans for taobao and teemol I actually I said we will build a more advanced open and inclusive Merchant ecosystem and attract more Merchants to engage in the value for money battle so as to create a virtuous cycle on taobao and T Mall of merchant ecosystem Revenue growth stronger profitability and that is precisely what our mission has always been okay next up let's look at some of

### [8:19](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=499s) Revenue and earnings numbers

the high-level Financial results for the overall Alibaba group we'll dive into some of the individual business units shortly but in terms of the overall Alibaba group level for the quarter Consolidated Revenue was up 14 year over year that was phenomenal to see given the last several quarters have been like zero percent Revenue growth two percent Revenue growth to suddenly come out and have double digits is I think really a good sign for Alibaba so revenue is up 14 income from operations was up 70 percent now I am essentially ignoring that plus 7 20 number and the income from operations line uh Alibaba for the past few quarters it seems to be quite a common occurrence that they often have these quite large adjustments that can really skew uh the earnings and income from operations figures at this quarter it was a stock based compensational reversal which inflated that income from operations number quite significantly without that reversal of stock based compensation uh the growth and income from operations would have been quite significantly lower so I tend to focus on some of the adjusted figures which kind of weed out a lot of that noise so on that front we had adjusted ebitter up 32 percent and non-gaap diluted earnings per share of 48 so even after weeding out some of those you know unusual accounting items that came up through the quarter massive improvements in profitability yet again for Alibaba next

### [9:56](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=596s) Margins and cost structure

up some of alibaba's major costs as a percentage of Revenue you'll see here that some of these are significantly more meaningful than others so we'll go through them kind of in that order now cost of Revenue as a percentage of Revenue was down from 62 to 61 percent uh sales and marketing as a percentage of Revenue was flat at 12 product development was down from five percent to four percent and general and administrative was flat at four percent so not as dramatic a cost declines as we have seen in some previous quarters but every single item here was either down or flat so we're continuing to see some of these cost savings at least as a percentage of Revenue flow through to improve margins for the business next up

### [10:44](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=644s) Free cash flow and buybacks

let's look at some of the cash flow and sort of balance sheet Health kind of figures here for Alibaba now there's a lot of noise in some of the earnings numbers for Alibaba there's various adjustments you've got to get your head around those can have a huge impact on the sort of reported results and earnings and so on for the business but it's really hard to fudge cash flow how much cash your business generated in the quarter how much cash you've got setting in the bank and so on so I tend to pay quite a bit of attention to the cash flow numbers for Alibaba as a result I then also pay a lot of attention to how that cash has been used whether it's been used for Acquisitions or to buy back shares or um you know whatever it is I just want to have a good idea of kind of where that cache has eventually been allocated and we also have to keep in mind that Alibaba is a somewhat seasonal business so cash flows do fluctuate quite a bit quarter to quarter but with all that said in terms of how some of the numbers came in operating cash flow for the quarter was 45. 3 billion RMB or about 6. 2 billion US Dollars up 34 year over year so really good increases on the operating cash flow front free cash flow was 39 0. 1 billion RMB or 5. 4 billion US Dollars up 76 year over year now free cash flow is simply the uh cash produced from the operations of the business minus any capital expenditure that happened during the quarter uh so the big jump up and free cash flow is sort of a combination of a better cash produced from alibaba's business operations but also lower capital expenditure than in the same quarter last year as well now in terms of how that cash flow was used during the quarter of the 5. 4 billion dollars in US dollars in free cash flow uh 3. 1 billion was used to repurchase shares they repurchased 35. 6 million of their sort of ads units Alibaba do also issue shares they have stock based compensation the issue shares to management new employees so they sort of repurchase shares which brings the share count down but at the same time the issuing shares those two forces are sort of fighting against one another but nonetheless the number of shares outstanding went down by about half a percent in the quarter by my maths and it's down about 3. 8 percent versus the same time last year and some of those sheer repurchase numbers uh they imply an 87 share price with sort of the average price that Alibaba paid for their stock BuyBacks and after all of

### [13:24](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=804s) Net cash position

that Alibaba continued to have 57. 8 billion US dollars in net cash which as of recording this video is almost a quarter of alibaba's market cap about 24 at the time of recording and a further 16. 3 billion dollars is still remaining under the current uh buyback authorization that runs through till March 2025. okay next up let's jump into some of the individual segment results for Alibaba this has changed a little bit this quarter worth their reorganization action splitting into the six different business units they've sort of reshuffled slightly which um subsidiaries fit into which category and they've renamed some of the categories and things so it's a little different to what it's been like in previous quarterly updates but nonetheless I'll try to give you some context on what actually brands or platforms we're talking about in each of these segments for Alibaba and some of the segments are simply way larger and way more important than other segments so I'll try and give you a feel for how much revenue and profitability each of these parts of alibaba's business is contributing to the overall pie first up

### [14:37](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=877s) Segment results: Taobao & T-mall Group

we have the taobao and Timor group segment by Far and Away the largest and most important business unit at Alibaba it represented 49 of Revenue in the quarter and this never ceases to amaze me but it was 108 of adjusted ebitter in the quarter which is sort of the profitability metric Alibaba tend to use most commonly so it's producing half the revenue and more than all of the profit so in a lot of ways it's sort of subsidizing some of alibaba's loss making businesses and with the reorganization it of course includes taobao and Timor as the group name suggests but it's also got in their taobao deals Tau Tai Thai and 1688 this segment used to be called the China Commerce segment I believe and it also used to include freshypo and Alibaba Health but those two subsidiaries have been moved out of this category uh for this quarters reporting but with all that said uh revenue for the taobao and Timor group and the quarter end in June 30th was up 14 versus the prior year adjusted ebitar was up nine percent and ibadan margin which I've calculated manually here they used to report this for all the business units but that's dropped off the slides for whatever reason uh decreased from 44 to 43 but still a very high margin in business absolute based extremely profitable part of Alibaba and to see it jump from having next to no growth reported over the past few quarters to a 14 growth in revenue is a great sign for the health of alibaba's business okay next up we

### [16:14](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=974s) Segment results: International Digital Commerce Group

have the international digital Commerce group that group represented nine percent of Revenue in the quarter and it's currently loss making but it's getting less loss making and it's actually not too far off being profitable now so this includes Lazada AliExpress trendio and alibaba. com and it's been one of the faster growing segments of Alibaba over the past few quarters and this quarter did not disappoint on that front as well so Revenue was up 41 that was pretty much entirely from growth in international retail of 60 percent uh ebitda margin went from negative nine percent to negative two percent uh and the management team stated that was mostly from improved margins and trendial and Lazada basically as those businesses have continued to scale and we don't have the exact numbers for just Trend deals specifically on the slide but they did mention on the call that this was the first ever profitable quarter for trendia which is one of the large uh Turkish e-commerce businesses next up we have local Services Group

### [17:19](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1039s) Segment results: Local Services Group

which were six percent of Revenue on the quarter and is currently very loss making uh it includes two main Alibaba businesses firstly ulama which is sort of a Uber Eats equivalent and uh secondly amap which I understand to be almost like a Google Maps equivalent but it is also sold to auto manufacturers and kind of comes in Chinese vehicles as well so revenue for that segment was up 30 percent mostly from ulama growth and ebitda margin was negative 14 an improvement from negative 25 they said uh mainly from reduced losses as the businesses continue to

### [18:00](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1080s) Segment results: Cainiao Smart Logistic Network

scale kainal smart Logistics Network are this is 10 of Revenue in the quarter and it's just reaching profitability so our kind now handles a huge amount of both domestic and international Logistics and sort of fulfillment services for alibaba's various businesses and revenue on the quarter was up 34 they said primarily from higher Revenue per order and international fulfillment services and domestic consumer services adjusted ebitda margin was positive four percent so profitable on that basis up from a margin of negative one percent in the same quarter last year next up is cloud

### [18:38](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1118s) Segment results: Cloud

and the quarter that was 11 of Revenue and about one percent of the overall group's profitability and it's just recently breaking even and I must say it's been one of the more disappointing segments of Alibaba in recent years for a long time there was this great story around Alibaba out it was growing at 50 a year it was still a small part of alibaba's business but it was you know growing in size really rapidly but the growth kind of just ground to a halt and uh to a significant extent that has continued this quarter as well so the cloud segment includes two main platforms of course Alibaba Cloud their cloud service provider but also Deng talk uh sort of a slack type equivalent in China Revenue was up four percent year over year and adjusted ebitda roughly doubled but off a very small base so uh they're now at an ebitda margin of about 1. 5 percent digital

### [19:36](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1176s) Segment results: Digital Media and entertainment

media and entertainment this is only two percent of Revenue and it's just reaching profitability it includes Alibaba pictures uh Yoku which is sort of a Chinese YouTube and a few other small little subsidiaries kind of in the mix as well but revenue for the segment was up 36 year over year and significant improvements in profitability or at least uh and you know what was previously losing a lot of money so even our margin was a slim one percent but that is significantly up from negative 23 in the same quarter last year they see the improvements in profitability were a mix of growth and online entertainment and also a strong recovery and offline entertainment and finally

### [20:21](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1221s) Segment results: All other segments

what Alibaba are now just calling all other segments which is actually quite a big chunk of the business it was a 19 of Revenue in the quarter uh this is sort of a new reporting group where everything that we haven't already covered kind of just seems to be lumped into but uh nonetheless it includes Alibaba health and fresh hippo which were previously in the China Commerce segment and a range of other much smaller subsidiaries at Alibaba so in terms of that all other segments uh kind of section Revenue was up one percent uh adjusted ebitar margin was uh three percent which was a slight improvement from negative five percent in the same quarter last year they said that was mainly due to improved results at Fresh shippo uh lingji games and fliggy which is a travel Services platform owned by

### [21:13](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1273s) Overall segments result thoughts

Alibaba so really consistent theme starting to come through and some of these segment results over the last few Alibaba quarters uh with the exception this quarter of the Town Mountain Group where their margin went from 44 to 43 every other segment continued to improve their margins and become more profitable or at least less loss making and some of these segments had monster growth reported in the quarter like 30 or 40 percent uh year-over-year growth in some cases okay so lastly in this video I

### [21:45](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1305s) Q&A Conference call highlights

want to go through some of my personal highlights from the Q a conference call with management now they certainly won't cover every question that was asked in the conference call I will leave a link down in the description if you want to check out the full call for yourself but these were some highlights that at least I took away from some of the questions from analysts so first up we had a question can management share just how have broader consumption Trends been tracking after a pretty strong June 18 shopping Festival first up exiting group CEO Daniel Zhang said we've seen there is a gradual recovery underway in the Chinese economy and the Chinese government indeed has made many efforts to stimulate economic growth and drive consumption we're looking at creating a virtuous investment cycle by investing in users and user growth leading to Merchant growth driving higher revenues and then being able to further reinvest in growing users and use a scale so that's the positive cycle we'll be creating and Trudy die taobao and Timor CEO added there certainly will be uncertainties ahead of us on this road but I think faced with all these uncertainties and potential volatility the greater certainty we have is the need to continue to grow I'll use a scale and our Merchant scale and we are very optimistic that as long as we can maintain our leadership in terms of user and Merchant scale that the mid to long-term view of profitability and market share will be excellent continuing along the lines of sort of user growth there was a question on looking at the excellent growth numbers you've reported for daily average users and also on VIP members double digital growth there and if management could give us a little more detailed information on what lies behind those numbers for example in terms of new users where are they coming from how they've been acquired are they mostly from lower tier cities and how do those new users compare with existing users in terms of their willingness to spend and their spending power at which truly die said we're starting to see payoff from our investments and this value for money battle bringing to the market and increasing assortment of good items at good prices developing that supply and attracting users with this proposition and we are indeed seen among pain uses an increasing proportion of new users coming from lower tier cities or being young people or being older consumers another driver for sales this year has been the launch of new products with three million new brands been launched by products on tmall at this year's 618 driving significant sales and consumer electronics appliances apparel and other categories now there are quite a few questions through the call on what Alibaba is doing in the artificial intelligence space and cloud computing AI seems to be like a really major buzzword on Buzz category of things for a company to talk about this year so I've picked out a couple of highlights on some of those cloud computing and AI topics and things so question here are some in a lot of this up when do we expect to see Cloud Revenue growth to further accelerate to a higher level given there appears to be some reluctancy for corporate spend on it spending and related question on AI given the fast adoption of AI offerings that we have launched recently how should we look at the timeline and roadmap from a regulatory and also monetization standpoint to which Daniel Zhang said if you look at the cloud landscape in China the total Cloud infrastructure as a percentage of it infrastructure still is lower actually in a relatively low percentage as compared to U. S peers we still see the huge potential First In This Cloud infrastructure penetration companies want to use our AI capabilities to upgrade their services and in their own application but they need a high Computing high performance computing power to support this operation not only in today's training but also in the influence services to be provided I think right now we're taking some time to digest the impact from first the decline of the demand post pandemic as we said in our script for example for many servers is relating to remote work remote education as well as online streaming the demand obviously is lower post pandemic which I think is a very important factor to drive our growth rate and also we've had some impact from the decline and demand of one of our top customers so I think we still need some time to digest this and last sort of highlight question here from me was I'm wondering if you could talk to us about where you see things heading for the September quarter for both teamwall and taobao in terms of daily active users and revenues and then coming back to the June quarter we saw a decline in margin year on year so if you could please talk to us about margin in the June quarter as well as on team or supermarket and on tmall and taobao uh twitch true today I said Team or Supermarket uh this is a first party business that we're operating ourselves and profit continues to improve this year we have invested very heavily in improving user experience on team or Supermarket as part of that rolling out half day delivery services in 20 cities across China and in those cities with half day delivery we're seeing very significant improvements in growth and user scale orders and user satisfaction e-commerce in general as a kind of Commerce or business is affected by a variety of different factors of course including the macroeconomic environment and competition so rather than focusing on short-term competitive Dynamics and growth numbers we're much more preoccupied with ensuring the long-term

### [27:30](https://www.youtube.com/watch?v=3ZjbliEsBgU&t=1650s) Final thoughts

development so there you have it yet another core order of improved profitability at Alibaba and this time with quite a bit of growth thrown into the mix as well they still continue to produce a lot of cash by my maths 27 billion dollars of free cash flows being produced by Alibaba in the last 12 months that's against a 240 billion dollar market cap and even less if you kind of back out the big cash pile that Alibaba have sitting around and a lot of that cash has simply being allocated to buying back shares and retiring shares and shrinking the Share account and increasing the ownership we're ongoing uh shareholders in the business of course Alibaba issue shares through stock based compensation and that's somewhat of an offsetting Vector but nonetheless they're generating a lot of money and they continue to shrink the sheer account so let me know down in the comments below what you thought of that latest quarter from Alibaba if you're interested in a two-week free trial of Seeking Alpha check out the first link in the description as well be sure to subscribe to the channel if you haven't already and I will see you in the next video cheers

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*Источник: https://ekstraktznaniy.ru/video/53001*