Abstract: Ali International Digital Business Group, Local Life Group, Dawen Entertainment Group, and others are still losing money (welcome to pay attention to leveraged games)
Written by Zhang Yinyin & Editor | Xin Xinran
On the evening of May 14, 2024, Alibaba released its financial results for the quarter ended March 2024 and the fiscal year 2024 (the fiscal year starts and ends on April 1, 2023 - March 31, 2024).
In the 2023-2024 fiscal year (hereinafter referred to as "FY2024"), Alibaba's revenue reached 941.168 billion yuan, a year-on-year increase of 8.34%; The net profit attributable to the parent company was about 80 billion yuan, a year-on-year increase of nearly 10%.
Compared to the revenue growth in the 2022-2023 fiscal year (hereinafter referred to as "fiscal year 2023"), the performance in fiscal year 2024 should be said to be good.
In today's "Demolition Annual Report" column, Leveraged Games and Pole Friends take a look at Ali's financial reports that are relatively late for most companies.
1. The performance in fiscal year 2024 will still rebound
For the fiscal year ending March 2024, Alibaba's revenue was RMB941.168 billion (US$130.350 billion), up about 8% year-on-year, as mentioned above.
Operating profit was 113.350 billion yuan (US$15.699 billion), a year-on-year increase of about 13%. The year-over-year increase was primarily due to higher Adjusted EBITA and lower share-based incentive expense, partially offset by higher impairments of intangible assets and goodwill.
During the fiscal year, the impairment of intangible assets was mainly related to Sun Art Retail, while the impairment of goodwill was mainly related to Youku. Adjusted EBITA, a non-GAAP financial measure, increased 12% year-over-year to RMB165.028 billion (US$22.856 billion), excluding share-based incentive expense, impairment of intangible assets and goodwill, and certain other items.
Net profit attributable to ordinary shareholders was 79.741 billion yuan ($11.044 billion). Net profit was 71.332 billion yuan (US$9.879 billion), a year-on-year increase of 9% and 5.759 billion yuan.
This was primarily due to an increase in operating profit, partially offset by an increase in net loss from mark-to-market changes in our equity holdings.
Non-GAAP net income for fiscal 2024 was RMB157.479 billion (US$21.811 billion), up 11% year-on-year from RMB141.379 billion in fiscal 2023, excluding share-based incentive expenses, gains (losses) on investments, impairment of intangible assets and goodwill, and certain other items.
Net cash flow from operating activities was RMB182.593 billion (US$25.289 billion), down 9% from RMB199.752 billion in FY2023.
Free cash flow, a non-GAAP financial liquidity measure, was $156.210 billion ($21.635 billion), down 9% from $171.663 billion in fiscal 2023.
The year-over-year decrease primarily reflects the receipt of a special dividend of RMB14.464 billion from Ant Group in fiscal 2023 and changes in working capital, partially offset by year-over-year Adjusted EBITA.
1) Alibaba's operating costs were $586,323 million ($81,205 million) in FY2024, accounting for 62% of revenue, compared to $549,695 mln, or 63% of revenue, in FY2023.
Excluding the impact of equity incentive expenses, operating costs as a percentage of revenue will remain stable at 62% in FY2023 and FY2024.
2) Product development expenses were $52,256 million ($7,237 million), or 6% of revenue, in FY2024, compared to $56,744 million, or 7% of revenue, in FY2023.
Excluding the impact of equity incentive expenses, product development expenses as a percentage of revenue will remain stable at 5% in FY2023 and FY2024.
3) Sales and marketing expenses of $115,141 million ($15,947 million) as a percentage of revenue in fiscal year 2024, compared to $103,496 million in fiscal year 2023, or 12% of station revenue.
Excluding the impact of equity incentive expenses, the ratio of sales and marketing expenses to revenue in FY2023 and FY2024 will remain stable at 12%.
4) General and administrative expenses were $41,985 million ($5,815 million), or 5% of revenue, compared to $42,183 million, or 5% of revenue, in fiscal 2023.
Excluding the impact of share-based incentive expenses, general and administrative expenses as a percentage of revenue will remain stable at 4% in FY2023 and FY2024.
5) Equity Incentive Expense: Equity-based incentive expense included in the above costs and expenses was $18,546 million ($2,569 million) in FY2024 and $30,831 million in FY2023. Share-based incentive expenses as a percentage of revenue decreased from 4% in FY2023 to 2% in FY2024.
2. The performance of each sub-group: Alibaba International Digital Business Group, Local Life Group, Dawen Entertainment Group, and others are still losing money
For the three months ended June 30, 2023, Alibaba adopted a new organizational structure that includes six business groups and other business companies.
Based on this structure, we will look at the FY2024 situation of each subgroup one by one.
1) Taotian Group's China retail business revenue in FY2024 was RMB414,414 million (US$57,396 million), an increase of 5% from RMB395,352 million in FY2023 – Taotian Group's revenue mainstay is still significant.
Customer management revenue increased 4% year-over-year, with Leveraged Games noting that the annual report was mainly due to healthy year-over-year growth in online GMV (excluding unpaid orders).
In FY2024, direct sales and other revenues from retail commerce in China were RMB110,405 million (US$15,291 million), an increase of 6% from RMB103,811 million in FY2023, primarily driven by strong revenues from the Consumer Electronics and Appliances categories.
Taotian Group's China wholesale business revenue was RMB20,479 million (US$2,836 million) in FY2024, an increase of 15% from RMB17,854 million in FY2023, mainly due to higher revenue from value-added services provided to paid members.
In fiscal 2024, Taotian Group's adjusted EBITA was $194,827 million ($26,983 million), up 3% from $189,140 million in fiscal 2023. The increase was mainly attributable to higher revenue from managed customer services and narrower losses in certain businesses, partially offset by higher investments in user experience and technology infrastructure.
2) Cloud Intelligence Group's revenue in FY2024 was $106,374 million (US$14,733 million), an increase of 3% from $103,497 million in FY2023. The year-on-year increase in revenue was mainly driven by Alibaba's consolidated business.
Overall revenue, excluding revenue from Alibaba's consolidated subsidiaries, declined slightly year-over-year as lower lower-margin project-based contract revenues were gradually reduced. Strong revenue growth from public cloud and AI-related products is expected to offset the decline in project-based contract revenue.
Cloud Intelligence Group's Adjusted EBITA was $6,121 million ($848 million) in fiscal 2024, up 49% from $4,101 million in fiscal 2023, primarily due to product mix improvements and operational efficiencies due to a focus on the public cloud.
3) Alibaba International Digital Business Group's international retail business revenue in fiscal year 2024 was 81,654 million yuan (11,309 million US dollars), an increase of 60% compared to 50,933 million yuan in fiscal 2023 - a rapid growth, but we know that the growth of peers abroad is also very fast, and some are even more fierce.
The increase was mainly due to the strong growth of AIDC's overall retail business orders, the revenue contribution from AliExpress Choice, and the improvement in the realisation rate.
Alibaba International Digital Business Group's international wholesale business, in fiscal year 2024, generated revenue of $20,944 million ($2,901 million), an increase of 7% from $19,573 million in fiscal year 2023. The increase was mainly attributable to the increase in revenue from value-added services related to cross-border business.
Alibaba International Digital Business Group's Adjusted EBITA was a loss of $8,035 million ($1,113 million) in fiscal 2024, compared to a loss of $4,944 million in fiscal 2023.
The year-on-year increase in loss was mainly due to increased investment in businesses including AliExpress Choice, Trendyol and Miravia, partially offset by an increase in realisation rate.
4) Cainiao Group's revenue in FY2024 was RMB99,020 million (US$13,714 million), an increase of 28% from RMB77,512 million in FY2023, mainly contributed by revenue growth from cross-border logistics fulfillment services.
Cainiao Group's adjusted EBITA was a profit of $1,402 million ($194 million) in fiscal 2024, compared to a loss of $391 million in fiscal 2023. The year-on-year increase was primarily due to improved operating performance in cross-border logistics fulfillment services and domestic logistics businesses, partially offset by retention incentives granted to rookie employees due to the withdrawal of the initial public offering.
5) Local Living Group's revenue in FY2024 was $59,802 million (US$8,282 million), an increase of 19% from $50,249 million in FY2023, mainly due to order growth in Ele.me and AutoNavi's businesses.
Local Living Group's Adjusted EBITA was a loss of $9,812 million (US$1,359 million) in FY2024 compared to a loss of $13,148 million in FY2023, mainly due to the continued narrowing of losses in the Daojia business due to improved unit economics and scale expansion of Ele.me.
6) In FY2024, Dawen Entertainment Group's revenue was RMB21,145 million (US$2,929 million), an increase of 15% from RMB18,444 million in FY2023, mainly driven by strong revenue growth from Alibaba Pictures' offline entertainment business.
Entertainment Group's Adjusted EBITA was a loss of $1,539 million ($213 million) in fiscal 2024, compared to a loss of $2,789 million in fiscal 2023. The year-on-year narrowing of the loss was mainly due to the improvement of Alibaba Pictures' profitability.
7) All other revenue of $192,331 million ($26,637 million) in FY2024, a decrease of 2% compared to $197,115 million in FY2023, primarily due to a decline in Sun Art's retail revenue, partially offset by an increase in Hema revenue. The decrease in Sun Art's retail revenue was mainly due to the downsizing of the supply chain business and the decrease in the average order value.
All Other Segments Adjusted EBITA was a loss of $9,160 million ($1,268 million) in fiscal 2024, compared to a loss of $9,388 million in fiscal 2023.
3. How to change the personnel of the six major business groups
In addition, one of the major matters that pole friends are concerned about is Ali's personnel changes.
The latest full disclosure was made in this financial report. Leveraged Games noted that combined with the latest list of chairmen, CEOs, and directors of the six major business groups, as well as previous news, we can find:
At the end of 2023, Dai Shan, CEO of Taotian Group, stepped down, and after stepping down as CEO, Dai Shan will no longer serve as a director of Taotian Group, Jiang Fang, chief talent officer of Alibaba Group, will become the new director of Taotian Group, and Wu Yongming will be the CEO.
At the same time, Dai Shan also withdrew from the boards of directors of Ali International Digital Business Group and Cainiao Group, and was replaced by Tsai Chongxin and Liu Zheng, CFO of Cainiao Group, respectively. Jiang Fan was promoted to co-chairman of Alibaba International Digital Business Group.
After stepping down as chairman and CEO of Alibaba Group, Daniel Zhang also ceased to be the chairman and CEO of Alibaba Cloud Group. After Daniel Zhang's resignation, Wu Yongming also served as the chairman and CEO of Cloud Intelligence Group.
In March 2024, Yu Yongfu stepped down as chairman and CEO of Local Life Group. After Yu Yongfu stepped down, Local Life Group temporarily did not have a CEO, and AutoNavi Chairman Liu Zhenfei joined the board of directors of Local Life Group and served as co-chairman together with Wu Zeming, chairman of Ele.me.
Personnel changes, Alibaba's related groups also have some changes or progress in their work.
1) Taotian Group, for example, has increased strategic investment in the fields of competitively priced product supply, customer service, membership system rights and technology, aiming to improve user experience, thereby increasing consumer retention and purchase frequency.
In the first quarter of 2024, its online GMV and order volume achieved double-digit year-on-year growth, driven by strong growth in the number and frequency of purchases.
The number of 88VIP members increased by double digits year-on-year to more than 35 million.
2) Cloud Intelligence Group has reduced the price of more than 100 public cloud products, hoping to improve the cost performance of customers, and the price reduction measures have also been extended to overseas public cloud products, hoping to further enhance its competitiveness in the global market.
3) Alibaba International Digital Business Group invests more resources in cross-border e-commerce, providing competitive prices and high delivery speeds.
4) Cainiao Group's main event was the withdrawal of its initial public offering on the Hong Kong Stock Exchange in March.
The move allows Cainiao to work more closely with AliExpress to strengthen its integrated end-to-end cross-border logistics capabilities.
In the first quarter of 2024, Cainiao will add four new countries to the coverage of priority products (such as 5-10 day delivery), covering a total of 14 countries.
Local Life Group, Big Entertainment Group......
With the organizational change of Alibaba, as of the end of March 2024, Leveraged Games noticed that the total number of employees of Ali was 204,900, a decrease of more than 14,000 from the previous quarter, and the total number of employees in the fiscal year after Ali's separation was about 30,000.
Alibaba's Hong Kong stock was quoted at HK$82.65 per share on May 14, up 1.85% (May 15, Buddha's birthday, closed for 1 day).
On May 14, Eastern time, Alibaba's U.S. stock closed at $79.510, down $5.090, or 6.02%.
The financial charts not attributed in this article are all from Alibaba's relevant announcements, and are hereby explained and acknowledged
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