Alibaba's net profit jumps 138%
Alibaba's ability to make money once again shocked the industry.
Yesterday, Alibaba Group announced its fiscal 2023 results, which is the fourth quarter of 2022 in the middle of the calendar year.
Data show that Alibaba's revenue in the last quarter was 247.756 billion yuan, a year-on-year increase of 2%, while it harvested a net profit of 45.646 billion yuan, a year-on-year increase of 138%.
Net profit attributable to owners in the third quarter was 46.815 billion yuan, a year-on-year increase of 69%; Non-GAAP net profit was RMB49.932 billion, up 12% year-on-year.
Among them, the revenue of China's commercial sector was 169.986 billion yuan, and the adjusted profit was 58.627 billion yuan.
The more eye-catching data is that the revenue of the international business sector was 19.465 billion, an increase of 18% year-on-year, of which international retail revenue increased by 26%.
As the second growth curve, Alibaba Cloud maintained solid growth, with revenue of 26.693 billion yuan in the third quarter and adjusted EBITA profit of 356 million yuan, a year-on-year increase of 166%. This is Alibaba Cloud's 9th consecutive quarter of profitability.
The net profit figure doubled, exceeding industry expectations. It also once again let everyone see Alibaba's terrible ability to make money.
Friends who are familiar with Ali know that in the Ali family, the big Taotao family has always been mainly "making money to support the family", and many other businesses have been facing losses before.
At present, this situation is beginning to change, and when the general environment changes drastically, all businesses within the group must begin to support themselves and grow independently, at least not to bring huge losses to the entire group.
From the latest quarter, almost all businesses have achieved significant loss reduction, and some businesses have begun to move towards independent and healthy growth.
Previously, Hou Yi, CEO of Freshippo, said that Hema Xiansheng had achieved profitability. The financial report also shows that driven by Freshippo, Alibaba's direct sales and other revenues of China's retail business achieved a year-on-year growth of 10% in the quarter, and the quarterly revenue of Alibaba's direct business exceeded 10 billion US dollars.
Cainiao even achieved a rapid growth of 27%, a sharp reduction to 12 million yuan, and full profit is imminent. Ali Entertainment also achieved a significant reduction in losses, with the net loss in the quarter shrunk from 1 billion to 25 million.
Of course, there are also businesses that are not so fast, such as the local life business, which has continued to narrow segment losses driven by the improvement of Ele.me's business efficiency. From a loss of 5.076 billion yuan last year to a loss of 3.137 billion yuan, the reduction is obvious, but in the increasingly fierce local life market, the "flying high" combination still has a long way to go.
Overall, Alibaba has made steady progress as a whole, achieving steady revenue growth and above-expected growth in net profit.
In the new year, Ali is brewing more plans and ambitions.
The good news outweighs the worries, and the results of cost reduction and efficiency increase are remarkable
If you were to sum up this report card in one adjective, the joys outweigh the bad news, and it is absolutely not too much.
Just like the three major strategies that Daniel Zhang set for Alibaba, we should also disassemble them along the three directions of consumption, cloud computing, and internationalization when we analyze them specifically.
As Alibaba's most important core business, Dashao is actually facing very severe challenges.
The data shows that China's business sector still accounts for 69% of overall revenue. Similar to previous quarters, Alibaba still did not publish user data such as the number of annual active buyers and daily active users in this quarter, and in this context, the platform's customer management revenue has become an important data to measure performance growth.
Alibaba China Commerce's customer management revenue for the quarter was RMB91.3 billion, down 9% year-on-year. Alibaba's explanation for this was "mainly due to reduced consumer demand, continued competition, and the impact on supply chains and logistics in December due to the increase in new coronavirus cases in the mainland." ”
The impact of the general environment is not only Alibaba, we need to note that the current Ali e-commerce business is facing industry competition surrounded by wolves.
Source: Dolphin Investment Research
In addition to customer management revenue, we saw a year-on-year increase in GMV from payments generated by M2C goods on Taobao and Taote, as Taocai continued to drive category penetration of groceries and fresh products.
What's more worth mentioning is that Cainiao Logistics has become more mature, and 72% of Cainiao's revenue this quarter came from external customers. After offsetting the impact of cross-segment transactions, Cainiao's revenue increased 27% year-over-year.
With the continuous improvement of the general environment, Alibaba's strong categories such as clothing accessories, beauty and other businesses will usher in a definitive repair, in the new era, we have reason to believe that Ali's e-commerce continues to improve.
In addition to the big consumption strategy, we see the second growth curve cloud computing beginning to show its strength.
As the first in the domestic industry, Alibaba Cloud's revenue in the third quarter reached 26.693 billion yuan, and the adjusted EBITA profit was 356 million yuan, a year-on-year increase of 166%. Growth momentum is solid.
Especially when the head of Alibaba Daniel Zhang personally sits in the cloud computing business, the cloud business is playing a more important role as a growth engine. For example, in the face of the recent fire of ChatGPT technology, Daniel Zhang talked about Alibaba Cloud's plan.
At present, the combination of cloud computing and artificial intelligence is in a critical period of technological breakthrough and development, and generative AI is undergoing a disruptive breakthrough, and Alibaba will "fully devote itself to the construction of generative AI large models" to provide good computing power support for the surging models and applications in the industry.
Previously, Meituan co-founder Wang Huiwen announced that he would invest $50 million to enter the AI market, and then some industry analysts pointed out that large model training costs $5 million at a time.
From this, we can see that in the critical research and development period of ChatGPT technology, Alibaba Cloud's huge computing power support can be used as the underlying industry support, so as to get a piece of the pie.
In addition to big consumption and cloud computing, Alibaba has also begun to grow high in overseas markets.
Alibaba's international commercial division revenue increased 18% year-over-year in the quarter, including a 26% increase in international retail revenue. It can be said that after Jiang Fan's one-year territorial expansion, Ali's overseas e-commerce has fought a turnaround battle.
It is worth noting that Alibaba's advantages and leading experience accumulated in the domestic consumer and cloud computing markets are also continuing to go to overseas markets.
The rapid growth of Cainiao Logistics has become an important support for Alibaba's international logistics capacity building and overseas e-commerce business development. According to the financial report, this quarter, Cainiao added 5 international sorting centers, and Cainiao's overseas sorting centers around the world have reached 15.
Cloud computing is another growth point of Alibaba's overseas business, and data shows that in 2022, Alibaba Cloud added a total of 6 new data centers in overseas markets, located in Saudi Arabia, Germany, Thailand, South Korea and Japan. In the past three years, Alibaba Cloud's revenue in overseas markets has increased by more than 10 times.
On the whole, Alibaba's e-commerce business is facing a more complex industry competitive environment while stabilizing, while cloud computing and overseas business continue to show resilience and potential for growth.
The industry is always looking forward to the moving story of bottoming out, and judging from Ali's current overall performance, after a full year of major adjustments, it is indeed time to "jump".
Perhaps based on this, Daniel Zhang put forward a new goal for Ali: in the new year, Ali should move from "fixed" to "advanced".
Ali went further
More than a decade ago, Ma Yun said, "Today's Alibaba is very lonely, and he can't find a rival with a telescope." ”
But now the pattern has been completely different, when Alibaba is fattening and thinning, and profits are reaping, there are more and more competitors around Ali.
Interestingly, e-commerce giants such as Ali, JD.com, Pinduoduo, Douyin, and Kuaishou have all achieved profit improvement by reducing costs and increasing efficiency in the past year. Now the giants have accumulated more power in their hands, waiting for a new outbreak.
Alibaba's free cash flow jumped 15 percent in the quarter, to 81.514 billion yuan, from 71 billion yuan in the same period last year.
Ali, which has more than 80 billion free cash flow, naturally began to show its ambitions.
Daniel Zhang said that in the past two decades, digital circulation, digital logistics and digital computing are the three things Ali has done, which also reflects Alibaba's long-term strategy.
In the future, Ali will continue to move forward under these three top-level strategies, rather than looking for the so-called new strategic track. "Because we think the ceiling of these three strategies is high enough, the market is large enough, and we can still find huge opportunities in today's continuous technological evolution."
Especially in the consumption track, Daniel Zhang showed great confidence and expectations.
As an example, he pointed out that the IMF estimates that China's GDP growth will reach 5% this year, and if a similar rate of growth can be achieved in the next 10 years, the share of consumption in this will surely increase.
In the future, the application of a new generation of technology represented by generative artificial intelligence will definitely bring new digital forms and user experiences, not only the transformation of the consumer side, but also the transformation of the supply chain, which contains opportunities, and Alibaba will insist on creating a new business future through technological breakthroughs.
It is worth noting that the turnaround has begun to appear, generally speaking, after the Spring Festival, especially after the Lantern Festival, the consumption situation has returned to normal with life and work, and there have been obvious changes in the expression of users' active consumption behavior.
At the same time, JD.com and Pinduoduo are also expanding, JD.com recently launched a 10 billion subsidy plan, looking forward to regaining the low-price advantage, and Pinduoduo is also investing heavily in overseas markets, spending more than 100 million yuan on advertising in the United States Spring Festival Gala. Not to mention Douyin's rapid expansion in the local life market, Meituan's competition for traditional e-commerce platforms in the instant retail market.
In the face of these industry challenges, Daniel Zhang appear confident.
Because in the past two decades of development, although price subsidies have appeared, it is hoped that subsidies can reverse the situation and win the first opportunity, but no company can completely change the situation through continuous price subsidies, and finally rely on differentiated advantages to occupy the market.
On the whole, after experiencing a quarter of good news and bad news, Ali's cash flow and net profit "ammunition" have become more and more sufficient, and it has gradually shown stronger and stronger strength in logistics, cloud computing, and overseas markets outside the main business of e-commerce.
It can be seen that Daniel Zhang is full of confidence when putting forward the core goal of "progress".
We also look forward to Alibaba's strong rebound and further progress.
Author | Old electricity