As the Spring Festival approaches, online consumption remains hot.
On the evening of February 7th, Alibaba released its financial report for the third quarter of the 2024 fiscal year. According to the financial report, Alibaba's revenue in the third quarter was 260.35 billion yuan, a year-on-year increase of 5%; After adjustment, the net profit was 47.951 billion yuan, a year-on-year decrease of 4%.
In the just past year 2023, Alibaba has undergone significant organizational changes.
Cai Chongxin and Wu Yongming officially took over as the Chairman and CEO of Alibaba Group in September last year. Subsequently, Wu Yongming announced the establishment of two strategic priorities, "user first and AI (artificial intelligence) driven", and conducted business analysis around these two priorities, reshaping business strategic priorities, and carrying out reforms to rejuvenate the management team.
In 2024, Alibaba will continue to undergo market testing with a brand new organizational structure and updated team. Wu Yongming stated at the performance meeting that he will continue to invest in core businesses such as domestic and international e-commerce, Alibaba Cloud, and Cainiao.
He specifically revealed that he will increase investment in user core experience, and 2024 will be a year for Taotian Group to enhance its comprehensive capabilities and also a big year for investment.
Regarding the progress of the initial public offering (IPO) of Hema and Cainiao, he revealed that Alibaba has established a professional team to promote the synergy of various businesses, in order to maximize the value of each business. The listing will not be rushed.
This year, Alibaba's "entry and exit" will revolve around business goals, either investing or calming down. Comprehensive capacity building and strengthening platform supply will be Alibaba's sustained goals for the future.
The number of merchants has maintained double-digit growth for four consecutive quarters, and 2024 will become a major investment year for Taotian
According to the financial report, the operating profit for this quarter was 22.511 billion yuan (3.171 billion US dollars), a year-on-year decrease of 36%. The year-on-year decrease is mainly due to the impairment of intangible assets of Gaoxin Retail and the impairment of goodwill of Youku. If equity incentive expenses, intangible and goodwill impairment, and several other items are not considered, the adjusted EBITA (a non GAAP financial indicator) increased by 2% year-on-year to 52.843 billion yuan (7.443 billion US dollars).
The net profit attributable to common shareholders is 14.433 billion yuan (2.033 billion US dollars). The net profit was 10.717 billion yuan (1.509 billion US dollars), a year-on-year decrease of 77% to 35.029 billion yuan. Without considering equity incentive expenses, investment gains (losses), impairment of intangible assets and goodwill, and several other items, as of December 31, 2023, the non GAAP net profit was RMB 47.951 billion (USD 6.754 billion), a decrease of 4% from RMB 49.932 billion in the same period of 2022.
This quarter, Taobao and Tmall achieved growth in online GMV (total transaction volume), while Alibaba International Digital Business Group's revenue increased by 44% year-on-year. Alibaba Cloud continued to focus on the "public cloud priority" strategy, and Cainiao Group's revenue increased by 24% year-on-year. The local lifestyle group achieved double-digit year-on-year growth in revenue and order volume, with over 390 million active consumers for the year. The revenue of Da Wen Yu Group increased by 18% year-on-year.
In 2024, Alibaba will actively invest in its core business. Alibaba Group CEO Wu Yongming said, "Under strategic focus, we have achieved a stable quarter. The group's top priority is to reignite the growth momentum of its two core businesses, e-commerce and cloud computing. In the next year, we will increase investment in improving user core experiences to support Taotian Group in regaining growth and solidifying its market leadership position.". We will focus on resource development of public cloud products and maintain the growth momentum of international business
The financial report shows that Taobao and Tmall achieved a healthy year-on-year growth in online GMV this quarter, with strong growth in transaction buyers and order volume. In addition, the number of platform merchants continues to record double-digit growth year-on-year, and has maintained double-digit growth for the past four quarters.
After the Double 11 of 2023, the order volume of Taobao and Tmall in the second half of this quarter increased in double digits year-on-year, and the price power strategy was promoted. Meanwhile, official data reveals that the platform has retained and expanded the high-end consumer group, with over 32 million 88VIP members in this quarter, continuing to achieve double-digit year-on-year growth.
Wu Yongming stated at the performance meeting that Taotian still needs to make targeted investments and improvements in terms of product pricing, services, and product experience.
He specifically revealed that he will increase investment in user core experience and provide "good goods, good prices, and good services" to different consumer groups under the consumption classification system, supporting Taotian to regain growth and stabilize its market leadership position. Therefore, 2024 will be a year of comprehensive capacity improvement and investment for Taotian Group.
All overseas retail platforms of Alibaba International have achieved growth, and the IPOs of Hema and Cainiao will not be rushed
The financial report shows that in this quarter, Alibaba International Digital Business Group's revenue increased by 44% year-on-year, and overall orders increased by 24% year-on-year. All of its overseas retail platforms achieved growth.
Specifically, AliExpress achieved over 60% year-on-year growth in quarterly orders, mainly driven by Choice (a smart product under AliExpress). In January 2024, Choice orders accounted for approximately half of the total order volume on AliExpress and continued to grow.
According to market data analysis platform Similarweb, AliExpress has become one of the three websites with the fastest monthly average traffic growth in the United States in 2023.
Trendyol (e-commerce platform) has achieved double-digit quarterly order growth. Except for Türkiye, its business will further expand to the Gulf region. Lazada continues to focus on improving operational efficiency and reducing logistics costs, with losses per order narrowing year-on-year this quarter.
Cainiao Group's revenue for this quarter was RMB 28.476 billion, a year-on-year increase of 24%. The financial report shows that cross-border logistics has become the main driving force for Cainiao's growth. This quarter, Cainiao's flagship cross-border logistics product "Global 5-Day Delivery" has covered 10 countries, with orders achieving triple digit month on month growth and an adjusted EBITA of 961 million yuan.
The Cloud Intelligence Group continues to focus on the "AI driven, public cloud priority" strategy to reduce revenue from project-based contracts with lower profit margins. In this quarter, Cloud Intelligence Group's revenue was 28.066 billion yuan (3.953 billion US dollars), a year-on-year increase of 3%. After adjustment, EBITA increased by 86% year-on-year and reached a new high for the fiscal year.
Alibaba Cloud has currently formed a comprehensive AI infrastructure in the IaaS+PaaS layer. At the same time, as the proposer of the MaaS concept, Alibaba Cloud is leading the construction and operation of the largest and most active AI model open source community in China, the Magic Model Scope.
At present, Wu Yongming, as the number one position, directly leads Alibaba Cloud Intelligence Group and Alibaba Group. Wu Yongming stated at the performance meeting that in the future, "Tongyi Qianwen" will empower Taotian's search advertising and related products, and is currently in the early stage of product research and testing.
In terms of entertainment group, the revenue was 5.04 billion yuan (710 million US dollars), a year-on-year increase of 18%, mainly from the revenue growth of Alibaba Pictures' offline entertainment business. According to the financial report, the total box office of films produced and promoted by Alibaba Pictures Film Division in this quarter accounted for more than half of the total box office in China.
The local lifestyle group's revenue increased by 13% year-on-year to 15.16 billion yuan (2.135 billion US dollars), mainly due to the business growth of Ele.me and Gaode. This quarter, local lifestyle group orders increased by over 20% year-on-year. As of December 31, 2023, the annual active consumers of the local lifestyle group exceeded 390 million, with a year-on-year increase in their annual purchasing frequency. This quarter, the group's losses narrowed.
Regarding the progress of the initial public offering (IPO) of Hema and Cainiao, Wu Yongming responded at the performance meeting that when Alibaba announced its restructuring goals last year, it expressed the hope of reflecting the actual value of each business in valuation. At that time, it was also said that market conditions should be taken into consideration when advancing the transaction, but the current actual market conditions may not be able to reflect the actual value of the business. He also revealed that currently, Alibaba has established a professional team to promote collaboration among various businesses, in order to maximize the value of each business, and the listing will not be rushed.
Share repurchase plan increases by $25 billion, increasing investment in branded and industrial products
"Through comprehensive capacity building in 2024, we have great confidence in Taotian's return to growth," said Wu Yongming.
At the performance meeting, when it comes to core e-commerce business, Wu Yongming said that in 2024, Taotian will increase investment in user core experience, focusing on several aspects: first, increase investment in branded products and industrial belt products, and strengthen platform supply advantages; The second is to increase investment in product capacity building and optimize the business model relationship between merchants and platforms, creating better cost-effectiveness on the Taobao platform; The third is to invest in improving the overall experience of consumer service; The fourth is to increase the frequency of user consumption. The improvement of platform consumption experience and service quality can bring about an increase in user consumption frequency and a significant improvement in user growth efficiency.
Regarding the price power strategy that has received much market attention, Wu Yongming emphasized, "The price power we focus on is the good price based on good goods. This is the demand of consumers across cycles, and it is also the responsibility of doing business."
In addition to business, the financial report also revealed that the board of directors has approved an increase of $25 billion in the share repurchase plan.
In May 2019, Alibaba announced that it would repurchase $6 billion worth of stocks. In December 2020, Alibaba increased the total amount of its share repurchase plan from $6 billion to $10 billion. In August 2021, the share repurchase plan was increased from $10 billion to $15 billion. In March 2022, Alibaba announced that it would continue to expand its share buyback program to $25 billion. In November 2022, Alibaba announced an additional $15 billion in share buyback plans, expanding the total size of buybacks to $40 billion. This time, it is announced to expand the repurchase of 25 billion US dollars, and the total scale of Alibaba's repurchase has increased to 65 billion US dollars.
According to Alibaba's financial report, the validity period of the share repurchase plan after the scale increase has been extended until the end of March 2027. In the next three fiscal years, there is still a $35.3 billion share repurchase quota.
As of December 31, 2023, Alibaba repurchased 292.7 million shares of common stock (equivalent to 36.6 million American depositary shares) for $2.9 billion. In the natural year of 2023, a total of 8979 million shares of common stock (equivalent to 112.2 million American depositary shares) were repurchased for a total of $9.5 billion. In the natural year of 2023, after considering the issuance of shares under the employee stock ownership plan, Alibaba's share repurchase plan resulted in a net decrease of 3.3% in outstanding shares.
Previously, Alibaba Group founders Jack Ma and Chongxin Cai significantly increased their holdings in Alibaba stocks. Cai Chongxin's family fund increased its holdings of Alibaba stocks worth $150 million, and Jack Ma also made significant increases during the same period. Alibaba executives expressed at the performance meeting that both buybacks and dividends are serious, and considering future cash generation capabilities, they are confident in continuing to bring value to shareholders.