Jan 29, 2015 - China Commerce Wholesale. 3. International Commerce Retail. 4. International Commerce Wholesale. 5. Cloud
December Quarter 2014 Results
January 29, 2015
Disclaimer
This presentation contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,” “expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “potential,” “continue,” “ongoing,” “targets” and similar statements. Among other things, statements that are not historical facts, including statements about Alibaba’s beliefs and expectations, the business outlook and quotations from management in this presentation, as well as Alibaba’s strategic and operational plans, are or contain forward-looking statements. Alibaba may also make written or oral forward-looking statements in its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking statement, including but not limited to the following: Alibaba’s goals and strategies; Alibaba’s future business development; Alibaba’s ability to maintain the trusted status of its ecosystem, reputation and brand; Alibaba’s ability to retain or increase engagement of buyers, sellers and other participants in its ecosystem and enable new offerings; Alibaba’s ability to successfully monetize traffic on its mobile platform; risks associated with limitation or restriction of services provided by Alipay; risks associated with increased investments in Alibaba’s business; risks associated with acquisitions; privacy and regulatory concerns; competition; security breaches; the continued growth of the e-commerce market in China and globally; and fluctuations in general economic and business conditions in China and globally and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks is included in Alibaba’s filings with the SEC. All information provided in this presentation is as of the date of this presentation and are based on assumptions that we believe to be reasonable as of this date, and Alibaba does not undertake any obligation to update any forward-looking statement, except as required under applicable law. This presentation contains certain financial measures that are not recognized under generally accepted accounting principles in the United States (“GAAP”), including Non-GAAP EBITDA, Non-GAAP net income and free cash flow. For a reconciliation of these nonGAAP financial measures to the most directly comparable GAAP measures, see GAAP to Non-GAAP Reconciliation.
2
December Quarter 2014 Highlights
49%
334MM
40%
YoY GMV Growth
Annual Active Buyers (2)
YoY Revenue Growth
US$ 130Bn
265MM
12-MTH Mobile GMV (1)(2)
Mobile MAUs (3)
Note: Unless otherwise indicated, all figures above are for the three months ended December 31, 2014 (1) Assumes 1 US$ = 6.2046 RMB (2) For the twelve months ended December 31, 2014 (3) For the month ended December 31, 2014; based on the aggregate mobile MAUs of apps that contribute GMV on our China retail marketplaces
3
GMV Quarterly GMV (China Commerce Retail) (RMB Bn)
YoY Growth
62%
65%
65%
64%
53%
46%
45%
49%
49%
787
293 556
529
183 345 294
88
176
430 159
374
346 91
501
135 99
71
494 346
255
For 3M Dec 31, 2012 ended
223
Mar 31, 2013
257
275
Jun 30, 2013
Sep 30, 2013
Dec 31, 2013
Taobao Marketplace
295
Mar 31, 2014
342
Jun 30, 2014
380
Sep 30, 2014
Dec 31, 2014
Tmall 4
Active Buyers & Mobile MAUs Annual Active Buyers
Mobile MAUs
(In Millions)
(In Millions)
334 307 265
279 255 217
231 188 163 136
For 12M Dec 31, 2013 ended
Mar 31, 2014
Jun 30, 2014
Sep 30, 2014
Dec 31, 2014
For 1M Dec 31, ended 2013
Mar 31, 2014
Jun 30, 2014
Sep 30, 2014
Dec 31, 2014
5
Mobile GMV Contribution Quarterly Mobile GMV and Mobile Penetration (China Commerce Retail) (RMB Bn)
(%)
42% 36% 33% 27%
20%
327
15% 11%
12%
7%
For 3M ended
164
26
32
41
55
Dec 31, 2012
Mar 31, 2013
Jun 30, 2013
Sep 30, 2013 Mobile GMV
104
118
Dec 31, 2013
Mar 31, 2014
Jun 30, 2014
199
Sep 30, 2014
Dec 31, 2014
Mobile GMV as a % of Total GMV
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December Quarter 2014 Financial Highlights Revenue
GMV and Mobile Penetration (RMB Bn)
42%
(%)
20% +49%
+40%
787 18.7
529
Dec 31, 2013 GMV
26.2
Dec 31, 2013
Dec 31, 2014
Dec 31, 2014
Mobile GMV as a % of Total GMV
Non-GAAP EBITDA (1) and Margin
Non-GAAP Net Income (2) and Margin
(RMB Bn)
(RMB Bn)
Margin
60%
11.2 Dec 31, 2013
58%
15.1
Dec 31, 2014
Margin
56%
10.5 Dec 31, 2013
50%
13.1 Dec 31, 2014
Note: For the three months ended on the respective dates (1) Non-GAAP EBITDA represents income from operations (which excludes interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity investees) before certain non-cash expenses, consisting of share-based compensation expense, amortization, depreciation and impairment of goodwill and intangible assets, and an equity-settled donation expense that we do not believe are reflective of its core operating performance during the periods presented. (2) Non-GAAP net income represents net income before share-based compensation expense, amortization, impairment of goodwill, intangible assets and investments, gain (loss) on deemed disposals/disposals/revaluation of investments, amortization of excess value receivable arising from the restructuring of commercial arrangements with Ant Financial, and one-time expense items consisting of the expenses relating to the sale of shares by existing shareholders in our initial public offering, equity-settled donation expense and an immediate recognition of unamortized upfront fees and professional fees upon early repayment of bank borrowings.
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Quarterly Monetization Rate Trends We manage the business for growth in GMV and active buyers, not for monetization rate • Blended monetization rate is lower Y/Y due to 1) a greater percentage of GMV coming from mobile and 2) lower P4P monetization on the PC interface driven by user experience improvements • Blended monetization rate is higher sequentially due to strong GMV growth on Tmall Quarterly Monetization Rate (China Commerce Retail) (%)
3.53% Non-mobile monetization 2.95% rate(1) Blended monetization 2.77% rate
3.23%
3.03% 2.77% 2.52% 2.51% 2.30%
2.61%
3.05%
2.63%
2.54% 2.52%
2.31%
2.18%
2.70%
2.30%
1.96%
1.87% 1.49%
Mobile monetization rate(2)
For 3M ended
1.12% 0.55%
0.47%
Dec 31, 2012
Mar 31, 2013
0.58%
0.61%
Jun 30, 2013
Sep 30, 2013
Mobile Monetization Rate
Dec 31, 2013
0.98%
Mar 31, 2014
Non-mobile Monetization Rate
Notes: (1) Derived from China commerce retail non-mobile revenue / non-mobile GMV (2) Derived from China commerce retail mobile revenue / mobile GMV
Jun 30, 2014
Sep 30, 2014
Dec 31, 2014
Blended Monetization Rate 8
Quarterly Revenue Total Revenue
Revenue Breakdown by Business
(RMB Bn)
(% of Total Revenue)
26.2 International Commerce Wholesale
18.7 15.8
International Commerce Retail
16.8
2%
Cloud Computing and Internet Infrastructure
5%
1%
(1)
Others
7%
China Commerce 3% Wholesale
12.0
82% China Commerce Retail
For 3M Dec 31, ended 2013
Mar 31, 2014
Jun 30, 2014
Sep 30, 2014
Dec 31, 2014
For 3M ended Dec 31, 2014 (1)
Revenue Growth of Major Businesses
Other revenue mainly represents interest income generated from micro loans and revenue generated by UCWeb and AutoNavi. We expect the restructuring of our relationship with Ant Financial to close in the March 2015 quarter, upon which we will no longer consolidate revenue generated by the SME loan business in our financial results.
(YoY growth % )
110% 85%
32%
1
1. 2. 3. 4. 5.
41% 21%
2
3
4
5
China Commerce Retail China Commerce Wholesale International Commerce Retail International Commerce Wholesale Cloud Computing and Internet Infrastructure 9
Quarterly Margin Trends • We don’t manage a margin target • Lower Y/Y non-GAAP EBITDA margin was due to: • Consolidation of acquired businesses (mainly UCWeb, AutoNavi) with lower margins • Investment in initiatives such as mobile OS, local services and digital entertainment • Higher Q/Q non-GAAP EBITDA margin was primarily due to the operating leverage in this seasonally strong quarter • We will continue to invest in new and existing businesses to drive long-term growth in GMV, new active buyers, revenue and profit Non-GAAP EBITDA (1) and Margin
Non-GAAP Net Income (2) and Margin
(RMB Bn)
(RMB Bn)
Margin
60%
51%
58%
Margin
56%
40%
15.1 11.2
13.1 10.5
8.5
Dec 31, 2013
50%
Sep 30, 2014
6.8
Dec 31, 2014
Dec 31, 2013
Sep 30, 2014
Dec 31, 2014
Note: For the three months ended on the respective dates (1) Non-GAAP EBITDA represents income from operations (which excludes interest and investment income, net, interest expense, other income, net, income tax expenses and share of results of equity investees) before certain non-cash expenses, consisting of share-based compensation expense, amortization, depreciation and impairment of goodwill and intangible assets, and an equity-settled donation expense that we do not believe are reflective of its core operating performance during the periods presented. (2) Non-GAAP net income represents net income before share-based compensation expense, amortization, impairment of goodwill, intangible assets and investments, gain (loss) on deemed disposals/disposals/revaluation of investments, amortization of excess value receivable arising from the restructuring of commercial arrangements with Ant Financial, and one-time expense items consisting of the expenses relating to the sale of shares by existing shareholders in our initial public offering, equity-settled donation expense and an immediate recognition of unamortized upfront fees and professional fees upon early repayment of bank borrowings.
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Quarterly Cost Trends Product Development Expenses (Pre-SBC)
Cost of Revenue (Pre-SBC) (RMB Bn)
(% of revenue)
(RMB Bn)
(% of revenue)
26% 23%
21%
11%
6.1 3.9
Dec 31, 2013
8%
4.4
Sep 30, 2014
Dec 31, 2014
(RMB Bn)
(% of revenue)
9%
1.8
1.6
Dec 31, 2013
Sep 30, 2014
Note: For the three months ended on the respective dates (1) Excluded equity settled donation expenses
1.5
1.9
1.8
Dec 31, 2013
Sep 30, 2014
Dec 31, 2014
General & Administrative Expenses (1) (Pre-SBC)
Sales & Marketing Expenses (Pre-SBC)
10%
7%
(RMB Bn)
(% of revenue)
10% 2.6 Dec 31, 2014
3%
6%
0.6
1.0
Dec 31, 2013
Sep 30, 2014
5% 1.2 Dec 31, 2014
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Quarterly Net Income GAAP to Non-GAAP Reconciliation (RMB MM)
1,989
4,313
830
830
4,313
4,313 13,115
0
YoY: +25%
5,983
5,983
5,983
5,983
Share Based Compensation Expense
One-time Charge for Financing-related Fees
Others
YoY: -28%
GAAP Net Income
Non-GAAP Net Income
Note: For the three months ended December 31, 2014
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Free Cash Flow, Capital Expenditures and Cash • Our CAPEX decreased sequentially mainly due to decrease in acquisition of land use rights • Non-real estate CAPEX decreased sequentially due to higher spending in the September quarter ahead of Singles Day Free Cash Flow (1) (RMB Bn)
Capital Expenditures (% of revenue)
92%
Cash, Cash Equivalents and Short-term Investments
(RMB Bn)
(% of revenue)
(RMB Bn)
88%
130.7
22.9
10%
23.7
109.9 17.2
53%
21.8
3.4 6% 5% 1.7
8.9 1.6
1.5
0.4
0.3
1.2 Dec 31, 2013 Sep 30, 2014 Dec 31, 2014 Free Cash Flow % of Revenue
1.7
57.9 6.0
107.0 88.1
51.9 1.2
Dec 31, 2013 Sep 30, 2014 Dec 31, 2014
As of Jun 30, 2014
As of Sep 30, As of Dec 31, 2014 2014
Non-real Estate CAPEX
Cash and Cash Equivalents
Acquisitions of Land Use Rights and Construction in Progress Non-real Estate CAPEX as a % of Revenue
Short-term Investments
Note: Unless otherwise indicated, all figures in the above charts are for the three months ended on the respective dates (1) Free cash flow represents net cash provided by operating activities as presented in Alibaba Group’s consolidated cash flow statement less purchases of property and equipment and intangible assets (excluding acquisition of land use rights and construction in progress) and adjusted for changes in loan receivables relating to micro loans of its SME loan business.
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GAAP to Non-GAAP Reconciliation For the Three Months Ended RMB MM
Dec 31, 2013
Sep 30, 2014
Dec 31, 2014
Non-GAAP EBITDA Income from operations
8,801
4,345
9,347
Add: Share based compensation expense
659
3,010
4,313
Add: Amortization of intangible assets
123
598
614
Add: Depreciation and amortization of property and equipment and land use rights
394
540
654
-
-
175
Add: Impairment of goodwill and intangible assets Add: Equity-settled donation expense
1,269
-
-
11,246
8,493
15,103
8,357
3,030
5,983
Add: Share based compensation expense
659
3,010
4,313
Add: Amortization of intangible assets
123
598
614
Non-GAAP EBITDA Non-GAAP net income Net income
Add: Impairment of goodwill, intangible assets and investments
55
-
1,032
Add: (Gain) loss on deemed disposals /disposals/revaluation of investments
-
(60)
241
Add: Amortization of excess value receivable arising from the restructuring of commercial arrangements with Ant Financial
-
35
66
Add: Expenses relating to the sale of shares by existing shareholders in initial public offering
-
195
36
1,269
-
-
-
-
830
10,463
6,808
13,115
Net cash provided by operating activities
14,922
5,865
19,408
Less: Purchase of property, equipment and intangible assets (excluding land use rights and construction in progress)
(1,187)
(1,693)
(1,222)
3,428
4,766
4,738
17,163
8,938
22,924
Add: Equity-settled donation expense Add: Immediate recognition of unamortized upfront fees and professional fees upon early repayment of bank borrowings Non-GAAP net income Free cash flow
Add: Changes in loan receivables, net Free cash flow
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