Alibaba Beijing time on the evening of February 24, the U.S. stock market pre-market announcement of the third quarter of fiscal year 2022 as of the end of December last year, directly on the dry goods:
1. Revenue is still poor: Alibaba's revenue in the quarter was 242.5 billion yuan, an increase of 10% year-on-year, lower than the market expectation of 245.4 billion, Taobao Tmall's unprecedented negative growth in customer management revenue, and Alibaba Cloud's growth stalled to 20% are all drags;
2. Profit continued to be poor: Non-GAAP net profit of 44.6 billion, market expectations of 44.2 billion, considering that expectations have been fully communicated in advance, it does not mean much to exceed or not to exceed.
3. The number of users barely passed: This quarter, domestic e-commerce users (including Taobao Tmall, Hema/Yintai, 1688, etc.) have a net increase of 19 million annual active buyers, reaching 880 million as a whole, and in the case of obviously touching the ceiling, such growth is also passable;
4. Platform retail fell to the bottom: the customer management revenue represented by Taobao Tmall showed an unprecedented negative growth (-1.3% year-on-year) year-on-year, basically sticking to the lower limit of expectations;
5. Macro is not good coupled with intensified competition, Taobao Tmall transaction volume continues to grow in single digits, merchant support is still increasing, and the realization rate of platform retail continues to decline.
Overall, for the situation in the December quarter, such as the slowdown in Taobao Tmall transaction volume, and the further decline in revenue generation (monetization) capabilities, poorer profits, etc., Ali has actually communicated on a small scale shortly after the end of December, and the market is fully expected, so the actual result can only be said to be as bad as expected.
In the last interpretation, Longbridge Dolphin Jun stressed that only underestimating one advantage is easy to fall into the value trap, and the anti-transformation company must wait for the inflection point of reversal (a. Improvements on the revenue and operations (user, GMV) side: or b. improvements on the profit side), while the undervalued Ali has still fallen by nearly 30% since the last quarter's earnings report.
At present, the stock price has approached $100, close to the closing price of $94 on the first day of Alibaba's U.S. stock listing (Ali was listed at $68 in 2014, rising 38% on the day to $94), such a market value means that net cash is excluded, the market valuation of Ali's 3P platform retail business PE is only 10 times, and Alibaba Cloud and other Alibaba assets are basically not valued.
Although Ali's short-term fundamentals are still weak, and the stock price will fluctuate, there is no need to take a magnifying glass to pick faults under this valuation, and the follow-up should pay more attention to the recovery of macro consumption, the progress of Douyin e-commerce, and Ali's possible reversal opportunities in this process.
The following is a detailed analysis of this financial report:
1. Ali has greatly adjusted the disclosure caliber
The matter of releasing more detailed data, Ali has actually said at the recent investor conference, from this earnings season is officially launched.
In terms of specific caliber, it is mainly to split the original core e-commerce business into four parts: domestic e-commerce, international e-commerce, local life and rookie, especially the profit performance of these four parts has begun to be independently disclosed.
Data source: Longbridge Dolphin Research Collation
In terms of income, such as putting AutoNavi's income into local life, these are relatively small, and some of the income of the e-commerce sector has been fine-tuned to the category, the most important thing is that Ali has begun to disclose the profit and loss of the corresponding sector, and even excluded the independent business income before the internal business overlap, such as cloud and cainiao and so on.
In the view of Dolphin Jun, it is more friendly for funds to adopt a more detailed step-by-step valuation for various businesses in Ali's retail sector, and it can also help investors better compare year-on-year and make more appropriate valuation judgments, and it may even be that Ali has begun to pave the way for independent financing and listing of some subsequent businesses.
2. The performance of the number of users is basically passed
Since last quarter, Ali has no longer disclosed the domestic retail platform separately, that is, the monthly active and annual active users of Taobao Tmall, but has replaced it with the number of active buyers in the domestic e-commerce business (in addition to the original Taobao Tmall, plus Hema, Yintai, and 1688.com, etc.).
Dolphin Jun here reasonable judgment, the new business due to the small volume, user overlap is high, it is difficult to bring real meaning of the new user to get the word, probably will see such a result:
The e-commerce season ending the end of December last year:
a. The growth rate of the number of annual active users on Alibaba's domestic e-commerce platform (the number of accounts that have made shopping on the above platforms in the past 12 months) reached 882 million, an increase of 13% year-on-year.
This is compared with the end of the last quarter of the new 19 million, in the whole network users have basically penetrated to the top, Dolphin Jun believes that the quarterly addition of 19 million is still reasonable, and the expectations of Dolphin Jun are basically in line with the expectations of Dolphin Jun. And structurally:
These new users should mainly rely on Taote to contribute, because its annual active buyers reached 280 million, a net increase of 40 million.
In addition, the annual active users of local life in China reached 372 million, an increase of 17 million, and it seems that after AutoNavi strengthened the integration with local life, the user growth was also OK.
Data source: company financial report, Longbridge Dolphin investment research collation
b: Coupled with the addition of 16 million overseas users to reach 300 million annual active users (Southeast Asia Lazada, Turkey Trendyol, Pakistan Daraz, AliExpress, etc.), Ali's global annual active buyers have reached 1.28 billion, an increase of 40 million over the end of the previous quarter;
Chinese users accounted for 953 million, adding 40 million+ new, in addition to the 863 million domestic physical retail buyers, there are 90 million buyers of local life and other services.
3, Taobao Tmall negative growth as scheduled
Ali's current "lifeblood" business Taobao Tmall commission + advertising customer management revenue is 100.1 billion, an increase of -1% year-on-year, which should also be the first time in Ali's history that revenue growth has directly turned negative in this hematopoietic business that generates revenue and basically contributes all profits!
And this part of the income is not good, in fact, Ali has also made a hint earlier, dolphin Jun saw the market expectations are generally in -2% to 2% growth rate, the actual results are basically attached to the lower limit of expectations.
Considering that the physical GMV growth rate of Taobao Tmall (excluding unpaid orders) in the same period is still a positive growth in single digits, it can only mean that the realization rate of Taobao Tmall has further declined.
However, in the current regulatory authorities continue to guide the platform to reduce the rate (such as the Ministry of Transport requiring Didi and other public pricing rules, agreed pricing ceilings, etc.; the National Development and Reform Commission guides takeaway platforms such as Meituan to reduce the rate), coupled with the rise of Ali in the field of physical e-commerce, such as Douyin, Kuaishou, Pinduoduo and other emerging opponents, there is no suspense in the decline in the realization rate.
Overall, in terms of the current user, GMV and monetization rate indicators, Dolphin Jun will pay more attention to the situation of users and GMV, and at present, users have basically passed, GMV is not a significant improvement, and behind it is still a huge bleeding cost.
4, Ali profits in the past
Ali's Non-GAAP EBITA profit this quarter was 44.8 billion, with a profit margin of 18%, which is basically in the lower middle of the consensus expectations that Dolphin Jun has seen has been guided.
Data source: company financial report, dolphin investment research collation
In this profit disclosure adjustment, Ali has no longer announced the retail profits of domestic platforms before excluding strategic investment areas. Instead, it began to be disclosed according to the dimensions of domestic e-commerce, international e-commerce, local life and rookie. From the perspective of each sub-item:
a. Cainiao's improvement is more obvious, and while the revenue growth is different, the loss is still narrowing, and by the end of December quarter, it only lost 90 million;
b. International e-commerce can clearly see that Ali has increased its investment, and the loss margin has directly doubled, from a loss of 1.4 billion to 2.9 billion;
c. The adjusted EBITA profit of the most important domestic e-commerce (mainly including self-operated businesses such as Yintai Hema and 1688) is 49.7 billion, a year-on-year increase of -24%, the decline is very obvious, behind the same reasons as the decline in Taobao Tmall revenue, retail poor, intensified competition, merchant support and so on.
d. Local life lost 4.9 billion, compared with 4.3 billion in the same period last year, but this loss is mainly due to the large losses of destination business (Gaode, Fliggy), etc., while the Ele.me unit economy is improving.
5, new retail: the growth rate slowed down under the high base
The domestic asset-heavy retail business mainly includes Hema, Gaoxin Retail, Yintai, Maochao self-operated, Tmall International self-operated and Koala. In this quarter, the revenue of the heavy asset retail business was 67.9 billion yuan, and due to the end of the Gaoxin consolidation effect, the year-on-year growth fell from 111% in the previous quarter to 21%, which was basically within expectations.
6. Online "retailer" Ali
On the cost and expense side, Alibaba excluded non-GAAP gross profit of equity incentives of 98.2 billion yuan this quarter, a year-on-year growth rate of -3.7%, gross margin of 40.5%. Judging from the results, the gross profit margin performance is actually quite good, and it should be higher than the market expectations.
But this is also the only good sub-item on the expenditure side, and other expenses are soaring.
7. Unstoppable cost delivery
In the past two quarters, Ali's performance on the expense side has basically been the same: research and development and sales expenses have continued to soar. Behind the reaction, on the one hand, is Ali's relative "generosity" in technology investment in the case of relative savings in various expenditures.
And in the context of increased competition, Ali's subsidies to users are also significantly increasing - with revenue growth of only 10%, sales and marketing expenses soared by 46%;
At the same time, at the company's difficult moment, Ali's management expenses were very restrained, down 7% year-on-year, but because the soaring marketing expenses were too obvious, the overall three fees were still rapidly expanding.
Overall, Non-GAAP's operating profit seems to be a staggering 16.8 billion, down 71% year-on-year, operating margin 7%, and the weakest quarter in history has not fallen to 10%.
However, note that many people here are prone to misinterpretation: there are more than 25 billion "goodwill impairments" generated around the acquisition of large entertainment assets in this quarter, and if this factor is not taken into account, the actual profit is close to 42 billion, and the profit margin is 17%, which is a reasonable level.
In addition, Non-GAPP net profit of 44.6 billion, market expectations of 44.2 billion, although it seems to be slightly higher, but basically within a reasonable margin of error, the profit expectations that have been guided and lowered, it does not matter if it exceeds expectations.
On the whole, you can still see the weakness of the domestic retail market, the deterioration of Ali's competitive landscape, etc. through Ali, and the market has actually fully recognized.
Under the new disclosure caliber, in the view of Dolphin Jun, the better place is that in the subdivision business, we see that the rookie's business income growth is good, and it is basically in a state of breakeven, and the unit economy of Ele.me is also constantly optimized.
Looking at retail and the company as a whole, we look at the performance of Alibaba's other high-profile businesses:
1. Alibaba Cloud fell into the mortal world
In this quarter, Alibaba Cloud's revenue was 19.5 billion, a year-on-year growth rate of 20%, basically sticking to the lower limit of market expectations, and for the first time, there was a month-on-quarter decline, which is basically non-existent among several cloud giants in the world.
As for the reason, in addition to Ali's loss of Tiktok, the growth of the entire Internet business in China has slowed down, and the demand for some education sectors has basically been hammered out, and the macro slowdown has lengthened the decision-making time of the traditional industry on the cloud.
In addition, in Alibaba Cloud, non-Internet customers have contributed 52% of the revenue.
Alibaba Cloud's profit also narrowed this quarter, only 134 million, and the profit margin fell from 2% in the previous quarter to 0.7%.
2, rookie growth slowed down
Since a large part of Cainiao's current growth is driven by cross-border retail business, and AliExpress has turned negative because Europe has also begun to tax small commodities, the growth of order volume has turned negative, which has a great impact on Cainiao's business, and the rapid decline in the last two quarters has only 15% growth.
3. The loss of entertainment has intensified
The revenue of the big cultural and entertainment business is basically stagnant, and this quarter is still 8.1 billion, with zero growth year-on-year, but the loss ratio has been further pulled to 17%.
As a result, after the Ali B and C businesses changed their heads, this time there was a one-time goodwill impairment of up to 25 billion yuan, which was equivalent to acknowledging the failed investment in the digital entertainment sector in the past.
At present, the entire long video track has almost become an outcast, such as the recent rumors that iQiyi sold Migu, etc., and the Youku days that have slipped to the second echelon are also very sad.
4, local life: hungry performance mediocre
AutoNavi, Ele.me and Koubei reached 12.1 billion yuan in the quarter, an increase of 28% year-on-year.
In this part of the income, Ali divided the business into home hungry and Taoxianda, as well as Gaode and Fliggy to the destination. The overall order growth rate is about 22%, a significant recovery from the 8% of the word-of-mouth of Ele.me in the previous quarter.
brief summary:
Overall, Ali is still in the midst of painful robbery and transformation, and there is no obvious brilliance from users, GMV, revenue, and profits. And from the current macro point of view, Ali's short-term fundamentals are still weak, the stock price will fluctuate, but the valuation has been revised down to $100, there is no need to take a magnifying glass to pick faults, follow-up should pay more attention to the recovery of macro consumption, the progress of douyin e-commerce, and Ali's possible reversal opportunities in this process.