On November 15th, Alibaba (NYSE: BABA, HKEX: 9988) released its Q2 financial report for the fiscal year 2025 (as of September 30th). The financial report shows that the revenue for the quarter was 236.503 billion yuan, a year-on-year increase of 5%. Net profit was 43.547 billion yuan, a year-on-year increase of 63%; Without following the US Generally Accepted Accounting Principles, the net profit was 36.518 billion yuan, a year-on-year decrease of 9%. (Note: Alibaba's fiscal year is not synchronized with the calendar year, starting from April 1st each year and ending on March 31st of the following year).
Alibaba stated that from July to September, the year-on-year double-digit growth in Taotian orders drove the growth of online GMV, and the number of 88VIP members continued to grow in double digits to 46 million yuan. During this year's Singles' Day holiday, Taobao and Tmall achieved strong growth in GMV, with a record high number of buyers.
This year's Singles' Day performance exceeded expectations, "Alibaba Group CEO Wu Yongming further stated. This is not only a positive cycle formed by Alibaba's adherence to" user first "and investment in merchant ecosystem construction, but also marks a new starting point for the industry to return to value orientation.
However, the capital market is paying more attention to how Alibaba continues to improve its take rate and the latest developments in its "all site promotion" for merchants. Before the opening of Singles' Day, Alibaba Group Vice President Wu Jia said in an interview with media reporters including China Business News, "In the past September, about 50 million products have been promoted on the entire website
E-commerce has entered the era of stock competition, and it is difficult for various e-commerce platforms to make substantial breakthroughs in total transaction volume and user numbers. Therefore, they will be more concerned about the efficiency of making money, and whether they can effectively improve the monetization rate is crucial for Alibaba, "said a person close to the capital market. The monetization rate of e-commerce in 2023 calculated by Guosen Securities shows that the monetization rate of Tiktok e-commerce will soar to 9%, Pinduoduo's monetization rate will exceed 4.5%, and Taobao Tmall's monetization rate will be about 3.77% in 2023.
Taotian shows signs of rebound
After Alibaba CEO Wu Yongming personally took charge of Taotian Group, accelerating its commercialization is of utmost importance. From this season's financial report, there are signs of a rebound for Taobao.
As a core e-commerce business, Taotian Group's Q2 revenue for fiscal year 2025 was 98.994 billion yuan, an increase of 1% compared to the same period last year, which was 97.654 billion yuan; Among them, Taotian Group's customer management revenue was 70.364 billion yuan, a year-on-year increase of 2%; The self operated and other income was 22.644 billion yuan, a decrease of 5% compared to the same period last year's 23.9 billion yuan; China's wholesale business revenue was 5.986 billion yuan, a year-on-year increase of 18%.
Among them, customer management revenue (CMR) increased from 68.661 billion yuan in the same period last year to 70.364 billion yuan. Year on year growth of 2%, higher than the 1% in the previous quarter.
In Q1 of fiscal year 2025, the GMV on Taobao's platform continued to show a high growth trend, with customer management revenue only increasing by 1% year-on-year, partially offset by a decrease in monetization rate. The optimization of Taobao's monetization rate will become a top priority in the reform of the Taobao system, "said speculative finance author Tong Zhibin." Compared to the previous fiscal quarter, the growth gap between CMR and GMV has narrowed, and Taobao has begun to rebound
Specifically for other business segments, Alibaba Intelligent Cloud's Q2 revenue was 29.61 billion yuan, a year-on-year increase of 7%. Adjusted EBITA was 2.661 billion yuan, an increase of 89% compared to the same period last year's 1.4 billion yuan.
Alibaba stated that the growth is mainly driven by double-digit revenue growth from public cloud products, including AI related products, partially offset by a decrease in non-public cloud revenue due to a gradual reduction in project based contract revenue with lower profit margins and a focus on high-quality revenue.
The Q2 revenue of the International Digital Business Group was 31.672 billion yuan, an increase of 29% compared to 24.511 billion yuan in the same period last year. Among them, the revenue from international retail business was 25.618 billion yuan, a year-on-year increase of 35%, mainly driven by revenue growth from AliExpress Choice and Trendyol.
When it comes to the profit margin of future cloud business, Wu Yongming specifically stated that we need to consider the variable of AI and take a long-term perspective. Wu Yongming also specifically mentioned the continuous price reduction of API tokens for the Tongyi Qianwen model. Price reduction can be understood as a means of promoting user growth or acquiring more users. In their view, more new users will use their model because of the price reduction. This will drive the use of Alibaba's other cloud products, such as computing, storage, or databases.
'Full site promotion' is highly anticipated
The capital market pays more attention to Alibaba's profitability, and the effective tool of "full site promotion" is highly anticipated. During the analyst conference call after the performance release, analysts showed a rare unanimous attention to the "full site push".
At the Q1 financial conference call for fiscal year 2025, Wu Yongming stated that starting from this quarter, measures to increase monetization rates and commercialization will begin to accelerate. According to its introduction, these measures mainly include monetizing new product forms such as live streaming and billions of subsidies, promoting the full launch of the entire website, and levying a basic software service fee of 0.6% from merchants on Taobao and Xianyu platforms.
In April of this year, Alimama launched a new marketing tool called "Full Site Push" for Taobao merchants. According to Shu Yang, the person in charge of Alibaba Mama, the biggest difference of "whole site promotion" is that it connects the free and paid traffic pools of Taobao series, and helps merchants achieve a certain ROI (return on investment) in the form of payment free linkage.
By launching 'full site promotion', merchants can achieve a certain ROI in the Taobao ecosystem, which may further drive their investment in Taobao, help them achieve more income, and improve monetization rates, "said a capital market insider.
Taking Pinduoduo as an example, "full site promotion" has greatly promoted the platform's monetization efficiency. According to a research report by Minsheng Securities, before the launch of the "full site promotion" tool in the second quarter of 2022, Pinduoduo only used 20% of its internal traffic for trading. After the launch of the "full site promotion", Pinduoduo's commercialization has further accelerated. In 2021, Pinduoduo's monetization rate was 3.6%. According to Dolphin Investment Research, the comprehensive monetization rate of Pinduoduo's main site advertising and commission will increase to 4.7% in Q3 2023.
The capital market seems to have reason to believe that the same upward trend will happen again on Taobao. However, currently the management of Alibaba still maintains a cautious and low-key attitude towards the progress and effectiveness of "full site promotion".
Alibaba CFO Xu Hong responded to analysts' questions by stating that the overall commercialization rate of the company has become relatively stable, mainly due to factors such as the introduction of a 0.6% software service fee and further penetration through "full site promotion". It was revealed that it will continue to increase the penetration speed of "full site promotion" in the future.
According to public information, in August of this year, "Full Site Push" was fully opened to merchants on Taobao and Tmall. There is a case study that shows, taking a certain agricultural and sideline food product in Taochang as an example, after the new product was launched, the store's products were promoted on the 4th day of listing, and the search visitors increased by 80% and the recommended visitors increased by 3000% in 5 days, resulting in a rapid rise in search rankings.
Regarding the latest progress of total site promotion, before the opening of Singles' Day, Wu Jia stated in an interview with reporters that he is still in the stage of helping businesses do business, so he attaches great importance to the achievement rate of ROI for total site promotion. After full-scale advertising and practical experience on Singles' Day, the effectiveness of the full site promotion will be more clearly reflected in the next fiscal quarter. "The above-mentioned capital market insider said that Alibaba still needs some patience and time.