Alibaba saw the revenue growth of 61% in Q3 2017 to 55,122 million yuan (US$8,285 million) and generated US$3.4 billion in non-GAAP free cash flow.
- Revenue from core commerce increased 63% year-over-year to RMB46,462 million (US$6,983 million).
- Revenue from cloud computing increased 99% year-over-year to RMB2,975 million (US$447 million).
- Revenue from digital media and entertainment increased 33% year-over-year to RMB4,798 million (US$721 million).
- Revenue from innovation initiatives and others increased 27% year-over-year to RMB887 million (US$134 million)
The number of annual active consumers on Alibaba’s China retail marketplaces reached 488 million, an increase of 22 million from the 12-month period ended June 30, 2017. Mobile MAUs on its China retail marketplaces reached 549 million in September 2017, an increase of 20 million over June 2017.
Alibaba’s net income reached RMB17,408 million (US$2,616 million) in Q3 2017; and, income from operations was RMB16,584 million (US$2,493 million) and adjusted EBITDA was RMB25,031 million (US$3,762 million). Operating margin was 30%, adjusted EBITDA margin was 45% and adjusted EBITA margin for core commerce was 57%.
In September 2017, user activities on the Taobao App drove a quarterly net increase of 20 million mobile MAUs on Alibaba’s China retail marketplaces to a total of 549 million mobile MAUs. The Taobao App is not only a destination for shopping but a community-based platform for sharing product knowledge and lifestyle content that drives user engagement and retention.
Alibaba launched a unified rewards-based loyalty program across the Tmall and Taobao marketplaces, called 88 Loyalty Membership, to enhance consumer engagement and loyalty. Membership is free and members are tiered by loyalty scores based on their quality and frequency of spending and social engagement, entitling them to different levels of loyalty benefits. Members in progressively higher tiers gain more access to exclusive privileges, products, and content. Over 29 million consumers participated in its inaugural Members Festival on August 8.
Tmall recorded 49% year-over-year growth for physical goods GMV in the quarter ended September 30, 2017. Alibaba achieved robust growth across all major categories. In particular, the accelerated growth in consumer electronics and FMCG categories reflects Alibaba’s commitment to building leadership in these two important categories.
Alibaba witnessed success in new customer acquisitions through highly coordinated marketing and promotional campaigns, which partially drove an accelerated increase in annual active consumers to 488 million for the 12 months ended September 30, 2017, a net increase of 22 million from the prior quarter and taking annualized growth to double digits for the first time in the past four quarters.
During the quarter, Tmall demonstrated its data technology capabilities as the leading brand-building and retail distribution platform in China. Alibaba’s Luxury Pavilion on Tmall offers a unique channel for premium brands to extend their reach, launch new product campaigns and take advantage of omni-channel solutions specifically targeting affluent Chinese consumers.
For example, the algorithms powering Tmall App enabled easy access by higher tier members of 88 Loyalty Membership to the Luxury Pavilion, with personalized brand pages and product recommendations. These members also receive exclusive perks such as pre-orders of limited edition products and invitations to celebrity events. The growing list of partnering brands include Loewe, Burberry, LA MER, Maserati, Guerlain and Zenith.
During the quarter, Hema added new stores in major cities in China, bringing the total number of Hema stores to 20 as of September 30, 2017. Alibaba have taken their Hema model to retail partners, who have begun to open and operate Hema franchised stores, extending coverage for the benefit of consumers.
In August, the first Tmall-branded franchised convenience store opened through the Lingshoutong Retail Sourcing Platform (“LST”). The LST platform is a digital sourcing platform that has been adopted by over 500,000 neighborhood mom-and-pop shops across China.
The platform allows merchants to source from a broad selection of brands and products that can be efficiently delivered to their stores; increasing their potential revenue opportunity and lowering operational costs. The brand partners of LST benefit from deeper distribution channels, especially in lower-tier cities in China where organized retail is less developed.
The cross-border and international consumer businesses continue to exhibit robust growth. Revenue from Alibaba’s international commerce retail business reached RMB2,878 million (US$433 million) in the quarter ended September 30, 2017, representing a 115% year-on-year growth, driven by strong growth in Alibaba’s Southeast Asian platform Lazada and China outbound platform AliExpress.