Alibaba reported 881 million mobile MAU in its retail marketplaces with 757 million annual customers in the third quarter of 2020. Its cross-border e-commerce platform Tmall Global saw 37% YoY growth in GMV.
Alibaba China Retail Marketplaces
In September 2020, its China retail marketplaces, the largest consumer platform in China, had 881 million mobile MAUs. Annual active consumers on its China retail marketplaces reached 757 million for the 12 months ended September 30, 2020, representing a quarterly net increase of 15 million.
One of the key drivers of its acquisition of new users and consumers in less developed areas is Taobao Deals, its marketplace for value-conscious consumers.
During the quarter, Alibaba focused on developing differentiated product supplies for Taobao Deals by onboarding export-oriented enterprises and merchants from industrial belts and 1688.com, its domestic wholesale marketplace.
Taobao Deals recorded over 70 million MAUs in September 2020 (it reported 40 million MAU in the previous quarter financial results).
Consumers who use both Taobao app and Taobao Deals app to make purchases showed faster growth in purchase frequency and average spending compared to consumers who only use the Taobao app.
In September 2020, Alibaba launched a new Taobao app interface to deliver a more immersive user experience, such as expanding the recommendation feed section on the landing page and making product displays more accessible. Alibaba believes this new interface will help increase user engagement and consumer purchase conversion rates in the future.
Tmall online physical goods GMV, excluding unpaid orders, grew 21% year-over-year during the September 2020 quarter. FMCG continued to be the fastest-growing Tmall category, primarily driven by the strength of food and beverage, healthcare, beauty and personal care.
In addition, the growth rate of Tmall’s apparel category recovered to a level that exceeded pre-COVID-19 levels.
Quarterly growth of Taobao GMV continued to accelerate since the trough in the March 2020 quarter, during the peak of the COVID-19 pandemic in China. This accelerating growth is primarily driven by higher purchase frequency resulting from the success of its value-for-money offerings.
Tmall Global, Alibaba’s cross-border import e-commerce platform saw the number of brands and merchants on the platform as of September 30, 2020 grew at a double-digit rate year-over-year. Tmall Global GMV, excluding unpaid orders, grew 37% year-over-year during the quarter.
Taobao Live, its live streaming portal, has become an essential marketing and distribution tool for merchants, brands, KOLs (key opinion leaders), and its own businesses, such as Juhuasuan, enabling them to engage directly with users and customers.
GMV generated by Taobao Live exceeded RMB350 billion for the 12 months ended September 30, 2020. Alibaba redesigned the Taobao Live portal to make it easier for users to discover new products and brands.
Going forward, Alibaba believes the entire e-commerce shopping experience will become increasingly entertaining and interactive.
Alibaba continued to enhance its two paid membership programs.
- 88VIP gives consumers access to savings and loyalty rewards on various Alibaba platforms, including Taobao, Tmall, Youku and Ele.me.
- Taobao Pass targets value-conscious consumers and offers monthly savings coupons.
The combined number of paying members of 88VIP and Taobao Pass was 35 million as of September 30, 2020. its membership programs have also driven an increase in user stickiness and consumer spending.
On October 21, 2020, Alibaba kicked off preparations for its 12th annual Double 11 Global Shopping Festival.
In October, Alibaba invested approximately US$3.6 billion to acquire a controlling stake in Sun Art Retail Group Limited.
Through this deeper collaboration with Sun Art, Alibaba will be able to digitalize offline traffic, synchronize online and offline channel inventories, broaden its supply chain network and increase online purchases.
Its self-operated grocery retail chain Freshippo (known as “Hema” in Chinese) achieved healthy same-store sales growth during the quarter as Alibaba continues to optimize its store operations and improve customer experience.
As of September 30, 2020, Alibaba self-operated 222 Freshippo stores in China, primarily located in tier 1 and tier 2 cities. With its comprehensive offerings of private labels, imported products, and new products, Freshippo’s differentiated merchandise is attracting new customers and growing the spending of existing customers.
For the twelve months ended September 30, 2020, annual active consumers for Freshippo reached over 26 million.
Local Consumer Services
In July, Ele.me rolled out a major strategic and platform upgrade. Ele.me expanded its on-demand delivery services to cover a wide range of categories, such as fresh produce, grocery and flowers, and upgraded the benefits of its membership program, including launching a rewards system by which members can accumulate points that are exchangeable for coupons or products and services.
Ele.me’s average daily number of paying members in the September quarter grew 45% year-over-year.
In China, Cainiao expanded the coverage of Cainiao Post (neighborhood and campus stations and residential self- pick-up stations), and also expanded the services of Cainiao Guoguo (crowdsourced parcel pick-up and delivery service) and improved customer experiences on the app.
Internationally, Cainiao broadened its export business by collaborating with more global partners and had established local logistics networks in 15 countries and regions.
During the quarter, merchant adoption of “Fulfilled by Cainiao” services continued to improve, with almost million daily cross-border packages delivered in September 2020.
Lazada, its Southeast Asian e-commerce platform, continued to achieve robust growth in buyers and sellers and to benefit from the acceleration of digitalization across industries in Southeast Asia. Despite new waves of COVID-19 in many markets, order volume grew 100% year-over-year for the September 2020 quarter.
In the September quarter, cloud computing revenue grew 60% year-over-year to RMB14,899 million (US$2,194 million), primarily driven by growth in revenues from customers in the Internet, finance, and retail industries.
Customers across all sizes and industries continued to enjoy its products and services. As of September 30, 2020, approximately 60% of A-share listed companies are customers of Alibaba Cloud, and their average spending grew 45% year-over-year in September 2020.
Digital Media and Entertainment
Youku maintained its strong focus on providing a superior user experience and blockbuster content in a wide range of genres.
During the September quarter, Youku’s average daily subscriber base increased 45% year-over-year, driven by its offering of appealing original content and also by the contribution from the 88VIP membership program.
Alibaba Pictures invested in and distributed two of the top three grossing films during China’s National Day Golden Week, and participated in the production and distribution of films that collectively accounted for over 50% of China box office sales in the first half of this fiscal year, according to Beacon box office data.
During the quarter, adjusted EBITA loss for the digital media and entertainment segment narrowed year-over-year.
Revenue was RMB155,059 million (US$22,838 million), an increase of 30% year-over-year.
Income from operations was RMB13,634 million (US$2,008 million), a decrease of 33% year-over-year due to a RMB15,753 million increase in share-based compensation expense related to Ant Group share-based awards granted to our employees.
Excluding this impact, our income from operations would have increased 44% year-over-year, from RMB20,667 million in the quarter ended September 30, 2019 to RMB29,690 million (US$4,373 million) in the quarter ended September 30, 2020.
Adjusted EBITDA, a non-GAAP measurement, increased 28% year-over-year to RMB47,525 million (US$7,000 million). Adjusted EBITA, a non-GAAP measurement, increased 28% year-over-year to RMB41,216 million (US$6,070 million).
Net income attributable to ordinary shareholders was RMB28,769 million (US$4,237 million), and net income was RMB26,524 million (US$3,907 million), which represent decreases of 60% and 63%, respectively, over the same period last year, when we booked a significant one-time gain upon the receipt of the 33% equity interest in Ant Group.
In addition, the increase in share-based compensation expense described in “Income from operations” above also negatively affected the year-on-year comparison.
Excluding this one-time gain, share-based compensation expense and certain other items, non-GAAP net income was RMB47,088 million (US$6,935 million), an increase of 44% year-over-year.
Diluted earnings per ADS was RMB10.48 (US$1.54) and non-GAAP diluted earnings per ADS was RMB17.97 (US$2.65), an increase of 37% year-over-year.
Diluted earnings per share was RMB1.31 (US$0.19 or HK$1.49) and non-GAAP diluted earnings per share was RMB2.25 (US$0.33 or HK$2.56), an increase of 37% year-over-year.
Net cash provided by operating activities was RMB54,296 million (US$7,997 million) and non-GAAP free cash flow was RMB40,540 million (US$5,971 million).