On May 23rd, Alibaba Group released its 2024 annual report.
Data shows that in the fiscal year 2024, Alibaba Group's revenue increased by 8% year-on-year to 941.168 billion yuan, and adjusted EBITA (Earnings Before Interest, Tax and Amortization) increased by 12% year-on-year to 165.028 billion yuan. Among them, Taotian Group's revenue was 434.9 billion yuan, and platform consumers continued to show high retention rates; Cross border business is growing rapidly, with Alibaba International Digital Business Group's revenue exceeding 100 billion yuan, a year-on-year increase of 46%; Cainiao Group's revenue increased by 28% year-on-year, and the daily fulfillment of cross-border and international business exceeded 5 million packages; Alibaba Cloud's adjusted EBITA increased by 49% year-on-year, providing cloud computing services to 35 regions worldwide.
As of May 24th, Alibaba's Hong Kong stock (HK9988) closed at HKD 78.45, a decrease of 0.25%, with a market value of HKD 1.6 trillion.
According to the Alibaba website, in a jointly signed letter to shareholders, Cai Chongxin and Wu Yongming elaborated on "who Alibaba is" in the new development stage and why they made the decision of "putting users first" The strategic trade-off of "AI driven" and sharing Alibaba's development strategy and how to invest in the future.
The shareholder letter pointed out that Alibaba has two core businesses: e-commerce and cloud computing. E-commerce includes both platforms that serve Chinese consumers and businesses - Taotian Group, and platforms that serve international consumers and businesses - Alibaba International Digital Business Group; The goal of cloud computing is to become a leading provider of public cloud infrastructure and platform technology in China. According to the annual report of Alibaba Group, according to third-party organizations, Taobao and Tmall jointly constitute the world's largest digital retail business, while Alibaba Cloud is the largest provider of Infrastructure as a Service (IaaS) in the Asia Pacific region and the largest provider of public cloud services (including PaaS and IaaS) in China.
"Alibaba will always focus on the future." Cai Chongxin and Wu Yongming candidly wrote in shareholder letters that in the past 25 years, Alibaba has experienced continuous growth and also experienced some symptoms of "big company disease". They also expressed their determination to actively treat "big company disease" and maintain entrepreneurial spirit: "In the next 10 years, we will once again see ourselves as a startup, adhere to the mission of 'making the world no difficult business', and continue to innovate with the spirit of entrepreneurship. We will uphold long-term principles, choose for today, and invest for tomorrow."
On April 10th, Jack Ma posted on the Alibaba intranet titled "To Reform and Innovation", expressing his affirmation of the new management team composed of Cai Chongxin and Wu Yongming's courage to change, and stating that "Alibaba has returned to a healthy growth track". Jack Ma also stated that he will continue to support Alibaba's reforms.
Jack Ma stated in his post that the most crucial change for Alibaba over the past year has not been to catch up with KPIs, but to recognize oneself and return to the customer value track. By targeting large companies, Alibaba has returned to prioritizing efficiency and market, becoming simple and agile.
Jack Ma pointed out that the new management team "faces problems and the future directly, trusts young people, fully empowers the young team, and makes decisive and clear choices about what we want and don't". "It is not only a breakthrough from yesterday's fixed strategy, but also to build the future of Alibaba.". For the future of the industry, Ma Yun judged that "the time span of three to five years is just like a century long for the Internet field, which is enough to bring about earth shaking changes, The AI era has just arrived, everything has just begun, it's just the right time for us! "
Attachment: Full text of letter to shareholders for the fiscal year 2024
Dear investors
The past fiscal year ending on March 31, 2024 was a watershed for Alibaba. This year, we have made a series of key adjustments around strategic clarity and focus. The clarity and focus of our strategy help us define who we are, our direction, and how we will execute our development strategy. We believe it is necessary to share our thinking process over the past year and its significance for Alibaba's future.
Who are we
Alibaba has two core businesses: e-commerce and cloud computing. As part of China's consumer economy, we have built an ecosystem based on the Internet platform, aiming to seize the opportunities in local services, communications, search, digital entertainment and other fields.
In the e-commerce field, we operate Taotian Group (TTG), a platform that serves domestic Chinese consumers and the B2B market, as well as Alibaba International Digital Commerce Group (AIDC), a platform that serves international consumers and the B2B market. The strategic value of other business departments lies in leveraging synergies to make our e-commerce business more valuable. For example, as an instant delivery infrastructure, Ele.me serves the demand of consumers to purchase fresh products from our e-commerce platform; Our logistics subsidiary Cainiao relies on its supply chain, transportation, and distribution capabilities to create a good user experience for consumers shopping on Taotian and AIDC platforms.
In the field of cloud computing, our goal is to become a leading provider of public cloud infrastructure and platform technology in China, providing our customers with a wide range of capabilities, including elastic computing, storage, network infrastructure, security, big data, and artificial intelligence (AI).
Our strategic direction
We have chosen two important paths for the company's strategic direction. As leaders of the company, we must clearly articulate our direction.
The first strategy is "user first". For all the platforms we have, users are the top priority, which means that we prioritize "user first" in designing our company's business goals and product processes from our business philosophy to our product philosophy. China has the world's largest Internet population -1.1 billion users. China is one of the countries with the highest e-commerce penetration rate in the world, and e-commerce accounts for about 28% of the total retail sales of consumers. Today, the supply of consumer goods on the Internet is very rich. Brands and businesses want to stand out, and increasingly need accurate consumer marketing services provided by the Internet platform.
Our "user first" strategy will ensure that user experience is given top priority in business strategy and product design, and improving user experience will enhance user retention and repurchase. This will provide the best value proposition for sellers of goods and services on platforms such as Taobao, Tmall, Xianyu, Feizhu, Ele.me, Gaode Map, and AliExpress. Because on the Alibaba platform, merchants can find the most dynamic, segmented, and high-frequency online consumer group.
The second strategic direction is to focus on artificial intelligence. We consider AI as the most powerful variable for changing and accelerating business growth.
In the next decade, no industry will be immune to the disruption brought by AI. AI will not provide protection for old ways of doing things, but will reignite our entrepreneurial passion and imagination. Each of our businesses has a large number of application scenarios, all of which can create greater value through artificial intelligence. At the same time, the deployment of artificial intelligence will increase computing demand, which will also drive the growth of Alibaba Cloud. AI is not a threat, but a driving force for breakthrough user experience and business models, which will bring huge opportunities. If we cannot keep up with the continuous and amazing progress brought by AI every day, we will be replaced.
Business principles
We follow the following business principles when executing our strategy.
Firstly, when making difficult decisions, it is important to uphold a long-term perspective. We consider strategy on a 10-year cycle, as the development pace of technology companies typically goes through stages of investment, growth, harvest, profitability, and inevitable decline. Our business is at different stages of development and must be managed in different ways. For example, AIDC has just started and requires early investment; Alibaba Cloud is investing in future growth while reaping the benefits of economies of scale; As a mature enterprise, Taotian Group must innovate quickly and seize the next growth cycle.
Secondly, when doing everything, we need to be extremely focused and have a clear purpose. Focusing means we won't be distracted by irrelevant things, stay focused when deciding what is important or unimportant, and don't become emotional when facing difficult choices. Clear purpose means that when making decisions, we must have sufficient and solid reasons. For example, Alibaba Cloud's shift towards prioritizing public clouds reflects our structural advantages in technology and scale; At the same time, we made a difficult choice and abandoned the short-term revenue from low profit project business.
Finally, we conveyed a clear direction to the team and aligned our goals with them by establishing a sound incentive mechanism. We believe that transparency in strategic direction and clear goals of company leaders will make teams more efficient and happy. We have established an employee incentive system that is consistent with our medium - and long-term strategic goals, so that our team's personal wealth can be highly aligned with business performance.
Capital management
In the fiscal year 2024, Alibaba Group generated $21.6 billion in free cash flow. The management has the responsibility to decide how we allocate cash to maximize shareholder value, and we face a trade-off between returning cash to shareholders and reinvesting in existing or new businesses. In the capital management of fiscal year 2024, we reflected the company's focus on core business. We did not invest funds in developing new business segments, and for the first time in history, the company announced and distributed $2.5 billion in dividends and repurchased $12.5 billion in stocks, resulting in a net decrease of 5.1% in outstanding shares. In the fiscal year 2024, we created value for shareholders by returning cash and increasing profits.
Investing in the future
Returning cash to shareholders does not mean we will stop investing. Alibaba will continue to invest in two major areas: (1) accelerating core business growth; (2) Maintain the leading position in basic technology and innovation, including artificial intelligence.
It is important for shareholders to understand our investment in AI. The latest developments in generative AI around big models are closely related to Alibaba in three aspects by major global technology companies.
Firstly, as pioneers of technology, we are committed to exploring the potential of machine intelligence to achieve General Artificial Intelligence (AGI). Ultimately, humans may achieve AGI at certain levels. The current approach to promoting AGI is to use the Transformer architecture as a large model. The scale of large models is increasing and moving towards multimodality, including not only text but also voice, video, and image. The investment in infrastructure and development can only be borne by large technology companies that generate a large amount of free cash flow from their core businesses. Alibaba has a market leading proprietary foundational model - Tongyi Qianwen. We will continue to invest in foundational models and other AI innovations to break through the limits of machine intelligence.
Secondly, investing in large models can help develop our cloud computing business, as training and using large models during development or inference processes will require computational resources. We have opened up versions of Tongyi Qianwen with multiple parameter scales to the whole society, which has brought incremental and computational power requirements to our proprietary models. We also have the largest AI open-source model community in China, including third-party large models, for developers who access our computing resources to use. Therefore, becoming a leader in AI development will bring direct positive growth to our cloud computing business.
Thirdly, Alibaba is an integral part of the consumer economy. Our countless scenarios and applications for layered consumers - from consumer recommendations, virtual fitting rooms, to personal assistants - can all be transformed through AI. We are excited about the infinite possibilities of AI driven "user first" strategies.
Finally, we would like to say that Alibaba always focuses on the future. In the past 25 years, Alibaba has experienced continuous growth and has also encountered some "big company diseases". In the next 10 years, we will once again see ourselves as a startup, adhering to the mission of "making the world no difficult business" and continuously innovating with the spirit of entrepreneurship. We will uphold long-term principles, make choices for today, and invest in tomorrow.
Cai Chongxin
Group Chairman
Wu Yongming
CEO
May 23, 2024
转播
