Alibaba Group Holding Ltd (NYSE:BABA) announced its financial results for the quarter ended June 30, 2016.
“Alibaba Group had an outstanding quarter. Our results show the scale and leverage of our ecosystem, as we strengthen our competitive positions in core commerce, cloud computing and digital media and entertainment,” said Daniel Zhang, Chief Executive Officer of Alibaba Group. “The acceleration of our revenue growth reflects the deep value propositions that we bring to our customers. We are changing the way our 434 million active buyers engage with our platform, as we introduce social, community and personalization driven by smart data into our e-commerce marketplaces, realizing our vision of ‘Live@Alibaba.’ We are poised for strong profitable growth into the future.”
“We delivered excellent results this quarter. The 59% revenue growth for the company overall and the 49% revenue growth of our China retail marketplaces represent the highest growth rates we’ve achieved since our IPO,” said Maggie Wu, Chief Financial Officer of Alibaba Group. “We passed an important milestone this quarter in achieving higher monetization of mobile users than non-mobile users for the first time, reflecting the success of our strategy to stay ahead of the curve by embracing mobile. As we demonstrate from our segmental disclosure, our results reflect the unrivaled strength of our core commerce business, as well as the accelerating traction we are seeing from our cloud computing and digital media and entertainment businesses.”
In the quarter ended June 30, 2016:
- Revenue was RMB32,154 million (US$4,838 million), an increase of 59% year-over-year. China retail marketplaces revenue was RMB23,383 million (US$3,518 million), an increase of 49% year-over-year; and mobile revenue of China retail marketplaces was RMB17,514 million (US$2,635 million), an increase of 119% year-over-year, representing 75% of our total China retail marketplaces revenue.
- Core commerce earnings before interest, tax and amortization* was RMB16,624 million (US$2,501 million), an increase of 38% year-over-year, representing an adjusted EBITA margin of 61%.
- Non-GAAP diluted EPS* was RMB4.90 (US$0.74), an increase of 33% year-over-year.
- Mobile MAUs in June reached 427 million, an increase of 17 million over March 2016, while annual active buyers on our China retail marketplaces increased to 434 million, a net addition of 11 million annual active buyers from the prior quarter.
- GMV transacted on our China retail marketplaces was RMB837 billion (US$126 billion), an increase of RMB164 billion (US$25 billion), or 24% year-over-year, with mobile GMV accounting for 75% of total GMV.
- Our cloud computing business continued its rapid expansion, with revenue in this quarter increasing 156% year-over-year to RMB1,243 million (US$187 million). Adjusted EBITA loss narrowed to RMB158 million (US$24 million) this quarter from RMB368 million in the same quarter of 2015.
- In the June quarter, we repurchased US$2.0 billion of our shares, and the partners of Alibaba Partnership, acting collectively, purchased US$400 million of our shares, in a transaction with SoftBank. Since the September quarter 2015, we have repurchased a total of US$5.1 billion of our shares.
BUSINESS AND STRATEGIC UPDATES
Taobao – adding dimensions from a distribution platform to a highly engaged social commerce platform empowered by data. We continue to add new features, such as “Your Advice Please” and live streaming, to encourage a vibrant interactive community to further enhance user engagement. During June, daily active users launched the Taobao App an average of seven times a day and users posted more than 20 million reviews and comments a day. Our Taobao App had a DAU/MAU ratio of 40% in June, reflecting our focus on providing users with relevant content and personalized recommendations.
In July, Taobao hosted its inaugural Taobao Maker Festival, which focuses on TAO (Technology, Art and Originality) and highlights young entrepreneurs who develop products for a new generation of young consumers who want to shop for things that are innovative, artistic and original.
Tmall – enhancing market-leading position as the first-choice platform for brands.More than 8,700 new branded stores opened on Tmall in the June quarter, including Sunglass Hut, Clé de Peau and Hasbro.
In June, Tmall held the 618 Super Fan Festival, where over 270 brands launched interactive marketing and fan campaigns to reach, educate and engage consumers.
GMV settled through Alipay increased by 70% year-over-year for the handsets category, 67% for fast moving consumer goods (FMCG) and 202% for Tmall Supermarket.
Rural Taobao – enabling rural communities greater access to goods and services.As of the end of the June quarter, we had a presence in over 17,700 villages in China. This coverage has enabled us to help brands, especially global FMCG companies, to distribute products into China’s rural communities.
International – building cross-border linkages that enable international brands to access Chinese consumers. In the June quarter, Tmall Global’s GMV growth exceeded 130% year-over-year, driven by strong growth across categories, including FMCG, digital devices and home appliances. We have also enhanced merchant recruitment efforts in U.S., Europe, Japan, Korea, Australia and New Zealand, particularly in categories of food and personal and health care.
Paying customers grew to 577,000, driving revenue growth to 156% year-over-year while narrowing losses. Alibaba Cloud launched 319 new products and features in the June quarter, including key products enhancing storage, big data and security offerings for our customers.
In the June quarter, we expanded our markets to Japan and Korea. Alibaba Cloud and SoftBank formed a joint venture to launch cloud computing services in Japan, enabling us to further expand our cloud computing platform to business customers in Japan.
Digital Media and Entertainment
Digital media and entertainment is a key component of commerce and a key piece of our Live@Alibaba vision. Consolidating the strengths of the key media investments we have made, in the June quarter we combined Youku Tudou, UCWeb and OTT TV service into a Digital Media and Entertainment unit under a unified management structure. We believe the synergies derived from this combination will accelerate development and catalyze future growth.
UCWeb has evolved from a mobile browser to a mobile media asset, offering mobile search and news feeds to over 420 million monthly active users in June. International expansion is robust. UCWeb browser is the No. 1 independent browser in India and Indonesia and is one of the world’s top three mobile browsers, according to StatCounter.
In early July, our mobile operating system division, YunOS, and Shanghai Automotive jointly released a pioneering Internet-enabled car, which establishes a platform for us to deliver broad Internet product offerings to passengers, such as paying at parking lots and gas stations through Alipay, smart voice control, personalized settings through Internet IDs and intelligent map.
Updates on Equity Investees
Cainiao Network – Logistics. During the June quarter, Cainiao Network’s platform enabled the delivery of an average of 42 million packages per day, which is made possible by over 1.7 million delivery and warehouse personnel and 180,000 delivery stations through Cainiao Network’s logistics partners.
Koubei – Local Services. Koubei, our local services joint venture with Ant Financial, generated RMB31 billion (US$5 billion) in payment volume transacted through Alipay during the June quarter, representing sequential growth of 48% over the prior quarter.
Free Cash Flow
In the June quarter, we generated RMB12,745 million (US$1,918 million) in non-GAAP free cash flow (see reconciliation at the end of this results announcement). Our strong cash generation provides us the flexibility to take strategic initiatives and make strategic investments.
In the June quarter, we repurchased and canceled approximately 27 million of our shares for US$2.0 billion, and the partners of Alibaba Partnership, acting collectively, purchased US$400 million of our shares, in a transaction with Softbank. This transaction was in addition to the approximately US$3.1 billion in share repurchases that we have executed since our Board of Directors authorized a US$4 billion stock buy-back plan in August 2015. As a result of these accretive buy-backs, as of June 30, 2016, we had approximately 2.50 billion shares issued and outstanding.(Original Source)
Shares of Alibaba are up nearly 6% to $92.59 in pre-market trading Tuesday. BABA has a 1-year high of $87.73 and a 1-year low of $57.20. The stock’s 50-day moving average is $81.64 and its 200-day moving average is $76.30.
On the ratings front, Alibaba has been the subject of a number of recent research reports. In a report released yesterday, Brean Murray Carret analyst Fawne Jiang reiterated a Buy rating on BABA. Separately, on August 9, RBC’s Mark Mahaney reiterated a Buy rating on the stock and has a price target of $105.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Fawne Jiang and Mark Mahaney have a total average return of 7.1% and 20.4% respectively. Jiang has a success rate of 59.5% and is ranked #285 out of 4110 analysts, while Mahaney has a success rate of 67% and is ranked #6.
Overall, 2 research analysts have assigned a Hold rating and 20 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $101.35 which is 16% above where the stock closed yesterday.