StockSelector.com
  Research, Select, & Monitor Wednesday, February 20, 2019 11:39:08 AM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
Alibaba Group Holding Ltd.$172.01$1.831.08%

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 Alibaba Group Announces December Quarter 2017 Results
   Thursday, February 01, 2018 6:37:06 AM ET

Alibaba Group Holding Limited (BABA ) today announced its financial results for the quarter ended December 31, 2017.

"Alibaba had another great quarter driven by the continued strength of the Chinese consumer and the wide and innovative range of services we provide for merchants and consumers," said Daniel Zhang, Chief Executive Officer of Alibaba Group. "We are excited by the continued momentum in New Retail, which came to life during another record-breaking 11.11 Global Shopping Festival. We expanded the scale and footprint of our New Retail initiatives with the vision of delivering true convergence of the online and offline consumer experience through mobile and enterprise technology."



"We had an excellent quarter, with revenue growth of 56% year-over-year. Given our strong performance and clear visibility as we approach the end of the fiscal year, we are taking up our 2018 fiscal year revenue guidance to 55% to 56%, which is an increase over the top end of the range of 53% that we communicated last quarter," said Maggie Wu, Chief Financial Officer of Alibaba Group. "Our core business generated significant free cash flow of US$7.1 billion during the quarter, enabling us to invest in New Retail, cloud computing, digital entertainment and globalization."

BUSINESS HIGHLIGHTS

In the quarter ended December 31, 2017:

-- Revenue was RMB83,028 million (US$12,761 million), an increase of 56% year-over-year.

-- Revenue from core commerce increased 57% year-over-year to RMB73,244 million (US$11,257 million).

-- Revenue from cloud computing increased 104% year-over-year to RMB3,599 million (US$553 million).

-- Revenue from digital media and entertainment increased 33% year-over-year to RMB5,413 million (US$832 million).

-- Revenue from innovation initiatives and others decreased 9% year-over-year to RMB772 million (US$119 million).

-- Annual active consumers on our China retail marketplaces reached 515 million, an increase of 27 million from the 12-month period ended September 30, 2017.

-- Mobile MAUs on our China retail marketplaces reached 580 million in December 2017, an increase of 31 million over September 2017.

-- Net income was RMB23,332 million (US$3,586 million), income from operations was RMB25,996 million (US$3,996 million) and adjusted EBITDA was RMB36,183 million (US$5,561 million). Operating margin was 31%, adjusted EBITDA margin was 44% and adjusted EBITA margin for core commerce was 53%.

-- Diluted EPS was RMB9.20 (US$1.41) and non-GAAP diluted EPS was RMB10.61 (US$1.63).

-- Net cash provided by operating activities was RMB55,173 million (US$8,480 million) and non-GAAP free cash flow was RMB46,144 million (US$7,092 million).

BUSINESS AND STRATEGIC UPDATES

Core Commerce

Taobao - artificial intelligence drives user engagement. Taobao App’s intelligent personal recommendations and innovative content formats continue to drive strong growth in user engagement, conversion and annual active consumers. We continue to invest in machine learning technologies which we apply to use cases that match consumer intent and product selection to deliver the best consumer experience.

Engagement on the Taobao App drove the increase in the number of mobile MAUs on our China retail marketplaces to a total of 580 million in December 2017, an increase of 31 million mobile users from the prior quarter. The robust growth of mobile users has resulted in the increase of annual active consumers to 515 million for the 12 months ended December 31, 2017. The net increase of 27 million in annual active consumers from the 12 month period ended September 30, 2017 represents the largest net add in the past 12 quarters.

Tmall - B2C market share gains. Tmall recorded 43% year-over-year growth in physical goods GMV during the quarter, reflecting robust growth across all major categories including apparel and accessories, consumer electronics (mobile phones) and FMCG. Tmall continues to be the platform of choice for the world’s top brands, with Givenchy, Giorgio Armani Beauty and Volvo establishing Tmall flagship stores and Longines, Hennessy, Dom Perignon and Baccarat joining our Luxury Pavilion in this quarter.

Our 2017 annual November 11 Global Shopping Festival exceeded last year’s records, with GMV settled through Alipay on our marketplaces up 39% year-over-year to RMB168.2 billion (US$25.9 billion). The continuous success of this record-breaking event is enabled by our resilient and scalable technology, as well as payments and logistics infrastructure that is capable of operating at massive scale. For example, we processed a peak of 325,000 purchase orders per second on the Alibaba Cloud computing stack, compared to 175,000 during last year’s festival. Alipay processed 1.5 billion payment transactions in total, an increase of 41% year-over-year from 2016.

New Retail - rapid expansion through partnerships and innovative technologies. During the quarter, Hema expanded its fresh grocery footprint by adding five new stores in Shanghai, Beijing, Ningbo and Suzhou, bringing the total number of Hema stores to 25 as of December 31, 2017. Hema exemplifies the convergence of online and offline retail by leveraging our in-store proprietary technology, digitized supply chain system, consumer insights and mobile ecosystem to provide a seamless experience for consumers.

In November 2017, we formed a strategic alliance with Sun Art Group Limited, the number one hypermarket and supermarket chain by revenue in China with over 440 stores nationwide. Through this partnership, we aim to equip traditional retailers with our proprietary technology and know-how in online offline convergence to implement their digital transformation. In addition, the partnership with Sun Art will also enable us to accelerate the expansion of our New Retail offerings with national scale. In connection with this alliance, Alibaba and an affiliate invested an aggregate of HK$22.4 billion (US$2.9 billion) for an effective 36% equity stake in Sun Art.

International - investing for long-term growth. Our cross-border and international retail businesses continue to show strong growth. Revenue from our international commerce retail business reached RMB4,733 million (US$727 million) in the quarter ended December 31, 2017, representing 93% year-on-year growth, driven by the strong growth of our Southeast Asian platform Lazada and our global retail marketplace AliExpress. While the markets for Southeast Asia and cross-border commerce remain very competitive, they are in the early innings of the game. We are optimistic about the long-term secular growth prospects of our international markets and will therefore continue to make significant investments for market share growth and focusing on the best customer experience.

Cainiao Network - Cainiao Network continues to bring greater efficiency for our merchants and logistics partners and improve the consumer experience. During the 2017 November 11 Global Shopping Festival, Cainiao Network processed 812 million logistics orders. Cainiao Network operates an electronic shipping label system that standardizes shipping data into structured formats, which enables efficient pick-and-pack operations for merchants and sorting and routing operations for delivery partners. The advantages of this system have resulted in broad adoption by merchants and logistics service providers, both on and off our platforms, putting us in position to serve the growing consumption economy in China and roll out our New Retail strategy.

Cloud Computing

Cloud computing revenue grew 104% year-over-year to RMB3,599 million (US$553 million), driven by both robust growth in paying customers and revenue mix toward higher value-add product. Alibaba Cloud remains the leader in China’s market for infrastructure-as-a-service (IaaS), as measured by revenue and, according to the IDC Semi-annual Public Cloud Services Tracker (Nov 2017), Alibaba Cloud was the largest platform-as-a-service (PaaS) player in China based on data in the first half of 2017.

In the December 2017 quarter, Alibaba Cloud launched 396 new products and features and continued to introduce proprietary AI technologies to tackle real-world challenges, such as traffic planning and optimizing efficiency in manufacturing and airport operations. Alibaba Cloud continues to expand its customer base across a variety of industries. Selected large enterprise customers and major partnerships include:

-- Watsons China, the leading health and beauty retailer in China, is using our cloud products and services to support their digital online business. The company is exploring to use our data technology and other New Retail related services to enhance customer experience and shopping journey.

-- Geely, a leading automobile manufacturer in China, has adopted our middleware, security and database products to create a digital marketing platform that allows the company to optimize product design and manufacturing by engaging with customers in real-time.

-- Beijing Capital International Airport, one of the largest aviation hubs in China, is launching a pilot program on our ET Aviation Brain cloud platform to improve the overall efficiency of its operation.

Digital Media and Entertainment

During the quarter, Youku video’s daily average subscribers more than doubled year-on-year, driven by several original drama series and shows that became popular hits with users, such as "The Advisors Alliance 2," "Day and Night," "Gong Shou Dao" and "Oh My General." The value of original content is reflected through growing subscriber base as well as increasing mindshare among users. Youku will continue to invest and execute on a strategy of shifting its content mix toward original content. During the quarter, Netflix signed an agreement to distribute "Day and Night," a 32-episode detective thriller developed by Youku, to Netflix audiences around the world. This is the first time that China-developed original content is widely distributed digitally to a global audience, and the distribution agreement with Netflix demonstrates the creative capability of our digital video business.

Innovation Initiatives and Technology Development

During the quarter, our AI-powered voice assistant, Tmall Genie, surpassed one million units sold since its official launch in July 2017. Tmall Genie is supported by a growing collection of content and services and is an effective vehicle for offering a comprehensive set of every-day living applications within the Alibaba ecosystem.

In January, Alibaba’s Institute of Data Science Technologies (iDST), our artificial intelligence research arm, developed a deep-learning neural network for natural language processing that scored higher than humans on a Stanford reading-comprehension test, the first time a machine has outperformed humans on such a test. This development underscores Alibaba’s commitment to technology research which we believe builds the foundation for our growth in the long run.

Ant Financial

We have agreed to a 33% equity stake in Ant Financial that will strengthen our strategic relationship pursuant to the series of agreements reached with Ant Financial in 2014.

We believe deepening our relationship through an equity stake in Ant Financial would bring key strategic benefits to us, including advancing our New Retail strategy with mobile payments, increasing user acquisition and retention through collaboration with the Alipay digital wallet ("Alipay Wallet"), and enhancing the execution of our international expansion. In addition, the equity stake in Ant Financial enables Alibaba and our shareholders to participate in the future growth of the financial technology sector.

During the December 2017 quarter, Ant Financial continued to deliver rapid revenue growth from its key businesses including digital payment, wealth management and consumer finance. During the quarter, Ant Financial successfully executed an aggressive user growth plan that resulted in substantial new user additions and increased user engagement. As a result of the user growth initiatives, in December 2017, Alipay Wallet’s daily active users more than doubled on a year-over-year basis. We expect that Ant Financial will continue to invest to expand its market leadership in digital payment, develop new technologies for inclusive financial services, and accelerate its globalization strategy.

Social Impact

In December 2017, we announced plans to launch a RMB10 billion (US$1.5 billion) Alibaba Poverty Relief Program, as part of the company’s ongoing effort to promote positive social change and combat poverty in China. The program will focus on the fields of education, rural commerce advancement, empowering women and environmental protection. The program will be funded by the Alibaba Foundation, a charitable foundation we established to allocate 0.3% of our annual revenues to support social responsibility initiatives, as well as the partners in the Alibaba Partnership and employees of Alibaba and our affiliates.

Cash Flow from Operating Activities and Free Cash Flow

Net cash provided by operating activities in the quarter ended December 31, 2017 was RMB55,173 million (US$8,480 million), an increase of 47% compared to RMB37,416 million in the same quarter of 2016. Free cash flow, a non-GAAP measurement of liquidity, in the quarter ended December 31, 2017 was RMB46,144 million (US$7,092 million), an increase of 35% compared to RMB34,122 million in the same quarter of 2016. A reconciliation of net cash provided by operating activities to free cash flow is included at the end of this results announcement.

KEY OPERATIONAL METRICS*

 
                                                        December 31,      September 30,    December 31,                         % Change
                                                                                                  2016                                                    2017                                                   2017
                                                                                                                                                                                                                                                                    ---------------------------------------------
                                                                                                                     YoY                                 QoQ
                                                                         -------------------- ------------ -------------------- -------------------- ------------- -------------------- -------------------- ------------ -------------------- --------------------
                                                                                                                                                                                                                                                                           
China Commerce Retail:
Annual active consumers(1) (in millions)                                                               443                                                     488                                                    515                                           16%                                           6%
Mobile monthly active users (MAUs)(2) (in millions)                                                    493                                                     549                                                    580                                           18%                                           6%
 
__________________
  *      For definitions of terms used but not defined in this results
                                               announcement, please refer to our annual report on Form 20-F for the
                                               fiscal year ended March 31, 2017.
 (1)                                           For the twelve months ended on the respective dates.
 (2)                                           For the month ended on the respective dates.
 
SUMMARY FINANCIAL RESULTS
 
                                                                                            Three months ended December 31,                                                      
                                                                               -------------------------------------------------------------------------------------------------------------------------------------
                                                                                 2016                                     2017
                                                                               ------- --------------------                                           --------------------------------------------------------------
                                                                                            RMB                                                            RMB         US$(1)                                               YoY % Change
                                                                               -----------------------------                                          -------------                                          ------                                           ---------------------
                                                                                                                                                      (in millions, except percentages and per share amounts)
                                                                                                                                                                                                                                                               
Revenue                                                                         53,248                                                                 83,028                                                12,761                                                   56 %
                                                                                                                                                                                                                                                               
Income from operations                                                          20,664                                                                 25,996                                                 3,996                                                   26 %
Operating margin                                                                    39 %                                                                   31 %
Adjusted EBITDA(2)                                                              27,021                                                                 36,183                                                 5,561                                                   34 %
Adjusted EBITDA margin(2)                                                           51 %                                                                   44 %
Adjusted EBITA(2)                                                               25,669                                                                 33,662                                                 5,174                                                   31 %
Adjusted EBITA margin(2)                                                            48 %                                                                   41 %
                                                                                                                                                                                                                                                               
Net income                                                                      17,157                                                                 23,332                                                 3,586                                                   36 %
Non-GAAP net income(2)                                                          22,491                                                                 27,007                                                 4,151                                                   20 %
                                                                                                                                                                                                                                                               
Diluted earnings per share/ADS (EPS)                                              6.94                                                                   9.20                                                  1.41                                                   33 %
Non-GAAP diluted EPS(2)                                                           9.02                                                                  10.61                                                  1.63                                                   18 %
 
                                                                                                                                  Nine months ended December 31,
                                                                               -------------------------------------------------------------------------------------------------------------------------------------
                                                                                 2016                                                                           2017
                                                                               ------- --------------------                                           --------------------------------------------------------------
                                                                                            RMB                                                            RMB                                               US$(1)                                               YoY % Change
                                                                               -----------------------------                                          -------------                                          ------                                           ---------------------
                                                                                                                                                      (in millions, except percentages and per share amounts)
                                                                                                                                                                                                                                                               
Revenue                                                                        119,694                                                                188,334                                                28,946                                                   57 %
                                                                                                                                                                                                                                                               
Income from operations                                                          38,523                                                                 60,093                                                 9,236                                                   56 %
Operating margin                                                                    32 %                                                                   32 %
Adjusted EBITDA(2)                                                              57,859                                                                 86,338                                                13,270                                                   49 %
Adjusted EBITDA margin(2)                                                           48 %                                                                   46 %
Adjusted EBITA(2)                                                               54,021                                                                 80,198                                                12,326                                                   48 %
Adjusted EBITA margin(2)                                                            45 %                                                                   43 %
                                                                                                                                                                                                                                                               
Net income                                                                      31,374                                                                 54,771                                                 8,418                                                   75 %
Non-GAAP net income(2)                                                          47,431                                                                 69,115                                                10,623                                                   46 %
                                                                                                                                                                                                                                                               
Diluted earnings per share/ADS (EPS)                                             12.85                                                                  21.64                                                  3.33                                                   68 %
Non-GAAP diluted EPS(2)                                                          19.10                                                                  27.14                                                  4.17                                                   42 %
 
__________________
 (1)     This results announcement contains translations of certain Renminbi
                                               ("RMB") amounts into U.S. dollars ("US$") for the convenience of the
                                               reader. Unless otherwise stated, all translations of RMB into US$
                                               were made at RMB6.5063 to US$1.00, the exchange rate on December 29,
                                               2017 as set forth in the H.10 statistical release of the Federal
                                               Reserve Board. The percentages stated in this announcement are
                                               calculated based on the RMB amounts.
 (2)                                           See the sections entitled "Information about Segments," "Non-GAAP
                                               Financial Measures" and "Reconciliations of Non-GAAP Measures to the
                                               Nearest Comparable GAAP Measures" for more information about the
                                               non-GAAP measures referred to within this results announcement.
                                                

INFORMATION ABOUT SEGMENTS

The table below sets forth selected financial information of our operating segments for the periods indicated:

 
                                                                                                                                                                                                                                Three months ended December 31, 2017
                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Digital media             Innovation                                  
                                                                                         Core                                                           Cloud                                                           and                                                        initiatives                                                                                                                            
                                                                                       commerce                                                       computing                                                    entertainment                                                   and others                                                   Unallocated (1)                                                                                 Consolidated
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------------------------------------------------------------------
                                                                                          RMB                                                            RMB                                                            RMB                                                            RMB                                                            RMB                                                            RMB                      US$
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------
                                                                                                                                                                                                                                                                        (in millions, except percentages)
Revenue                                                                                 73,244                                                          3,599                                                          5,413                                                           772                                                      --                                                     83,028                                                         12,761
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Income (loss) from operations                                                           35,439                                                          (793)                                                         (3,828)                                                        (1,814)                                                        (3,008)                                                        25,996                                                          3,996
Add: Share-based compensation expense                                                                                                                                                                                                                                                                                                                     
                                                                                         2,226                                                           608                                                            510                                                            808                                                            963                                                           5,115                                                           786
Add: Amortization of intangible assets                                                                                                                                                                                                                                                                                                                    
                                                                                          865                                                             4                                                            1,105                                                     --                                                       83                                                            2,057                                                           316
Add: Impairment of goodwill                                                         --                                                 --                                                 --                                                 --                                                       494                                                            494                                                            76
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Adjusted EBITA                                                                          38,530                                                          (181)                                                         (2,213)                                                        (1,006)                                                        (1,468)                                                        33,662                                                          5,174
                                                                                 ====================                                           ====================                                           ====================                                           ====================                                           ====================                                           ====================                                           ====================
Adjusted EBITA margin                                                                     53%                                                           (5)%                                                           (41)%                                                         (130)%                                                                                                       41%
 
                                                                                                                                                                                                                                                                      Three months ended December 31, 2016
                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                             Digital media                                                   Innovation
                                                                                         Core                                                           Cloud                                                           and                                                        initiatives                                                                                                                            
                                                                                       commerce                                                       computing                                                    entertainment                                                   and others                                                   Unallocated (1)                                                                                 Consolidated
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------------------------------------------------------------------
                                                                                          RMB                                                            RMB                                                            RMB                                                            RMB                                                            RMB                                                                                            RMB
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           ------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                        (in millions, except percentages)
Revenue                                                                                 46,576                                                          1,764                                                          4,063                                                           845                                                      --                                                                                     53,248
                                                                                                                                                                                                                                                                                                                                                                                                             
Income (loss) from operations                                                           27,439                                                          (339)                                                         (3,196)                                                        (1,450)                                                        (1,790)                                                                                        20,664
Add: Share-based compensation expense                                                    1,590                                                                                                                                                   502                                                                                                                                       3,744
                                                                                                                                                         246                                                            344                                                                                                                          1,062
Add: Amortization of intangible assets                                                    601                                                             1                                                             421                                                            163                                                            75                                                                                            1,261
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           ------------------------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                             
Adjusted EBITA                                                                          29,630                                                          (92)                                                          (2,431)                                                         (785)                                                          (653)                                                                                         25,669
                                                                                 ====================                                           ====================                                           ====================                                           ====================                                           ====================                                           ====================================================================================
Adjusted EBITA margin                                                                     64%                                                           (5)%                                                           (60)%                                                          (93)%                                                                                                                                                          48%
 
__________________
 (1)     Unallocated expenses are primarily related to corporate
                                               administrative costs and other miscellaneous items that are not
                                               allocated to individual segments.
                                                

DECEMBER QUARTER OPERATIONAL AND FINANCIAL RESULTS

Revenue

Revenue for the quarter ended December 31, 2017 was RMB83,028 million (US$12,761 million), an increase of 56% compared to RMB53,248 million in the same quarter of 2016. The increase was mainly driven by the robust revenue growth of our China commerce retail business, international commerce retail business and Alibaba Cloud, as well as the consolidation of Cainiao Network.

The following table sets forth a breakdown of our revenue by segment for the periods indicated:

                                                                                                                                       Three months ended December 31,                                                                                                 
                                                                              ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                2016                                                                                         2017
                                                                              ------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------
                                                                                                      % of                                                                        % of                                                    YoY %
                                                                                    RMB                                                    Revenue                                                RMB                                              US$                                             Revenue                                                 Change
                                                                              --------------                                           --------------                                           ------                                           ------                                           -------                                           --------------------
                                                                                                                                                                                                           (in millions, except percentages)
Core commerce:
   China commerce retail
      - Customer management                                                           27,918                                                      52%                                           38,800                                            5,964                                               47%                                                            39%
      - Commission                                                                    12,071                                                      23%                                           16,221                                            2,493                                               19%                                                            34%
      - Others                                                                           813                                                       2%                                            5,084                                              781                                                6%                                                           525%
                                                                              --------------                                           --------------                                           ------                                           ------                                           -------
                                                                                      40,802                                                      77%                                           60,105                                            9,238                                               72%                                                            47%
   China commerce wholesale                                                            1,514                                                       3%                                            1,926                                              296                                                2%                                                            27%
   International commerce retail                                                       2,452                                                       4%                                            4,733                                              727                                                6%                                                            93%
   International commerce wholesale                                                    1,554                                                       3%                                            1,666                                              256                                                2%                                                             7%
   Cainiao logistics services                                                 --                                           --                                            3,907                                              600                                                5%                                                            N/A
   Others                                                                                254                                                       0%                                              907                                              140                                                1%                                                           257%
                                                                              --------------                                           --------------                                           ------                                           ------                                           -------
Total core commerce                                                                   46,576                                                      87%                                           73,244                                           11,257                                               88%                                                            57%
                                                                              --------------                                           --------------                                           ------                                           ------                                           -------
                                                                                                                                                                                                                                                                                                                                                     
Cloud computing                                                                        1,764                                                       3%                                            3,599                                              553                                                4%                                                           104%
Digital media and entertainment                                                        4,063                                                       8%                                            5,413                                              832                                                7%                                                            33%
Innovation initiatives and others                                                        845                                                       2%                                              772                                              119                                                1%                                                           (9)%
                                                                              --------------                                           --------------                                           ------                                           ------                                           -------
Total                                                                                 53,248                                                     100%                                           83,028                                           12,761                                              100%                                                            56%
                                                                              ==============                                           ==============                                           ======                                           ======                                           =======
                                                                                                                                                                                                                                                                                                                                                     

Core commerce

-- China commerce retail business Revenue - Revenue from our China commerce retail business in the quarter ended December 31, 2017 was RMB60,105 million (US$9,238 million), or 72% of total revenue, an increase of 47% compared to RMB40,802 million in the same quarter of 2016. Robust revenue growth includes the growth of our New Retail initiatives (included in "China commerce retail - Others" above) in the China commerce retail business, including Intime Department Stores, import, and fresh food grocery Hema. In addition, revenues from our China retail marketplaces (mainly comprised of Taobao and Tmall) continued to see strong growth. Customer management revenue grew by 39% year-over-year, driven largely by increases in the average unit price per click and to a lesser extent the volume of clicks, reflecting our ability to deliver highly relevant recommendations to consumers through personalization technology and the higher value that merchants put on such technology to reach the relevant users and increase conversion. This growth resulted in higher average spending on our customer management services by an increasing number of merchants. Commission revenue, representing 27% of China commerce retail revenue in the quarter ended December 31, 2017, grew by 34% year-over-year, primarily due to strong 43% year-over-year growth in physical goods GMV on Tmall. The commission revenue growth rate was lower than the physical goods GMV growth rate, because of discounts and rebates we provided to merchants during promotions. Other revenue was RMB5,084 million (US$781 million), a significant increase compared to RMB813 million in the same quarter of 2016, primarily driven by our New Retail businesses, including consolidation of Intime and contribution from Tmall Import and Hema. Our annual China commerce retail revenue per annual active consumer increased from RMB241 for the quarter ended December 31, 2016 to RMB315 (US$48) for the quarter ended December 31, 2017, and mobile revenue per mobile MAU grew from RMB166 for the quarter ended December 31, 2016 to RMB229 (US$35) for the quarter ended December 31, 2017, as illustrated in these charts and the table at the end of this announcement. Annual active consumers - Our China retail marketplaces had 515 million annual active consumers in the 12 months ended December 31, 2017, compared to 488 million in the 12 months ended September 30, 2017, representing a net addition of 27 million from the prior quarter, and a 16% increase from 443 million in the 12 months ended December 31, 2016. Average annual spend per active consumer for the 12 months ended December 31, 2017 also continued to increase from prior quarters. The longer consumers have been with our platform, the more they spend and the more orders they place across more product categories. Mobile MAUs - Mobile MAUs on our China retail marketplaces grew to 580 million in December 2017, compared to 549 million in September 2017, representing a net addition of 31 million MAUs in the quarter and an 18% increase from 493 million in December 2016.

-- China commerce wholesale business Revenue from our China commerce wholesale business in the quarter ended December 31, 2017 was RMB1,926 million (US$296 million), an increase of 27% compared to RMB1,514 million in the same quarter of 2016. The increase was primarily due to an increase in the average revenue from paying members on our 1688.com platform.

-- International commerce retail business Revenue from our international commerce retail business in the quarter ended December 31, 2017 was RMB4,733 million (US$727 million), an increase of 93% compared to RMB2,452 million in the same quarter of 2016. The increase was primarily due to the growth in revenue generated from Lazada and AliExpress, driven by robust GMV growth on these two marketplaces.

-- International commerce wholesale business Revenue from our international commerce wholesale business in the quarter ended December 31, 2017 was RMB1,666 million (US$256 million), an increase of 7% compared to RMB1,554 million in the same quarter of 2016.

-- Cainiao logistics services Revenue from Cainiao logistics services represents revenue from the domestic and cross-border fulfilment services provided by Cainiao Network, after elimination of inter-company transactions. We started to consolidate Cainiao Network in mid-October 2017.

Cloud computing

Revenue from our cloud computing business in the quarter ended December 31, 2017 was RMB3,599 million (US$553 million), an increase of 104% compared to RMB1,764 million in the same quarter of 2016, primarily driven by an increase in the number of paying customers and also by an increase in their usage of our cloud computing services including more complex offerings, such as database, storage and security services.

Digital media and entertainment

Revenue from our digital media and entertainment business in the quarter ended December 31, 2017 was RMB5,413 million (US$832 million), an increase of 33% compared to RMB4,063 million in the same quarter of 2016. The increase was primarily due to an increase in revenue from mobile value-added services provided by UCWeb, such as news feeds and mobile search, and an increase in subscription revenue from Youku Tudou.

Innovation initiatives and others

Revenue from innovation initiatives and others in the quarter ended December 31, 2017 was RMB772 million (US$119 million), a decrease of 9% compared to RMB845 million in the same quarter of 2016.

Costs and Expenses

The following tables set forth a breakdown of our costs and expenses, share-based compensation expense and costs and expenses excluding share-based compensation expense by function for the periods indicated.

 
                                                                                                                                                                      Three months ended December 31,                                                                                                          % of
                                                                                                                                                                                                                                                                                                                                                                                          Revenue
                                                                                                                                                                                                                                                                                                                                                                                            YoY
                                                                                                                                                                                                                                                                                                                                                                                          change
                                                                                                              --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                2016                                                                                        2017
                                                                                                              ------------------------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------------
                                                                                                                    RMB               % of                                                  RMB        US$       % of
                                                                                                                                                                           Revenue                                                                                                                                                Revenue
                                                                                                              --------------                                           --------------                                           ------                                           -----                                           -------
                                                                                                                                                                                                                                           (in millions, except percentages)
Costs and expenses:
Cost of revenue                                                                                                       19,126                                                      36%                                           35,078                                           5,390                                               42%                                                             6%
Product development expenses                                                                                           4,420                                                       8%                                            6,289                                             967                                                7%                                                           (1)%
Sales and marketing expenses                                                                                           4,490                                                       9%                                            8,542                                           1,313                                               10%                                                             1%
General and administrative expenses                                                                                    3,287                                                       6%                                            4,572                                             703                                                6%                                                             0%
Amortization of intangible assets                                                                                      1,261                                                       2%                                            2,057                                             316                                                3%                                                             1%
Impairment of goodwill                                                                                        --                                           --                                              494                                              76                                                1%                                                             1%
                                                                                                              --------------                                           --------------                                           ------                                           -----                                           -------                                           --------------------
Total costs and expenses                                                                                              32,584                                                      61%                                           57,032                                           8,765                                               69%                                                             8%
                                                                                                              ==============                                           ==============                                           ======                                           =====                                           =======                                           ====================
                                                                                                                                                                                                                                                                                                                                                                                    
Share-based compensation expense by function:
Cost of revenue                                                                                                          590                                                       1%                                            1,328                                             204                                                2%                                                             1%
Product development expenses                                                                                           1,591                                                       3%                                            1,895                                             291                                                2%                                                           (1)%
Sales and marketing expenses                                                                                             386                                                       1%                                              469                                              72                                                0%                                                           (1)%
General and administrative expenses                                                                                    1,177                                                       2%                                            1,423                                             219                                                2%                                                             0%
                                                                                                              --------------                                           --------------                                           ------                                           -----                                           -------                                           --------------------
Total share-based compensation expense                                                                                 3,744                                                       7%                                            5,115                                             786                                                6%                                                           (1)%
                                                                                                              ==============                                           ==============                                           ======                                           =====                                           =======                                           ====================
                                                                                                                                                                                                                                                                                                                                                                                    
Costs and expenses excluding share-based compensation expense:
Cost of revenue                                                                                                       18,536                                                      35%                                           33,750                                           5,186                                               40%                                                             5%
Product development expenses                                                                                           2,829                                                       5%                                            4,394                                             676                                                5%                                                             0%
Sales and marketing expenses                                                                                           4,104                                                       8%                                            8,073                                           1,241                                               10%                                                             2%
General and administrative expenses                                                                                    2,110                                                       4%                                            3,149                                             484                                                4%                                                             0%
Amortization of intangible assets                                                                                      1,261                                                       2%                                            2,057                                             316                                                3%                                                             1%
Impairment of goodwill                                                                                        --                                           --                                              494                                              76                                                1%                                                             1%
                                                                                                              --------------                                           --------------                                           ------                                           -----                                           -------                                           --------------------
Total costs and expenses excluding share-based compensation expense                                                   28,840                                                      54%                                           51,917                                           7,979                                               63%                                                             9%
                                                                                                              ==============                                           ==============                                           ======                                           =====                                           =======                                           ====================
 

Cost of revenue - Cost of revenue in the quarter ended December 31, 2017 was RMB35,078 million (US$5,390 million), or 42% of revenue, compared to RMB19,126 million, or 36% of revenue, in the same quarter of 2016. Without the effect of share-based compensation expense, cost of revenue as a percentage of revenue would have increased from 35% in the quarter ended December 31, 2016 to 40% in the quarter ended December 31, 2017. The increase was primarily due to our investments in New Retail, globalization and improving user experience.

Product development expenses - Product development expenses in the quarter ended December 31, 2017 were RMB6,289 million (US$967 million), or 7% of revenue, compared to RMB4,420 million, or 8% of revenue, in the same quarter of 2016. Without the effect of share-based compensation expense, product development expenses as a percentage of revenue in the quarter ended December 31, 2017 would have remained stable at 5% as compared to the same quarter in 2016.

Sales and marketing expenses - Sales and marketing expenses in the quarter ended December 31, 2017 were RMB8,542 million (US$1,313 million), or 10% of revenue, compared to RMB4,490 million, or 9% of revenue, in the same quarter of 2016. Without the effect of share-based compensation expense, sales and marketing expenses as a percentage of revenue would have increased from 8% in the quarter ended December 31, 2016 to 10% in the quarter ended December 31, 2017, primarily due to an increase in advertising and promotional spending in relation to the 2017 November 11 Global Shopping Festival.

General and administrative expenses - General and administrative expenses in the quarter ended December 31, 2017 were RMB4,572 million (US$703 million), or 6% of revenue, compared to RMB3,287 million, or 6% of revenue, in the same quarter of 2016. Without the effect of share-based compensation expense, general and administrative expenses as a percentage of revenue in the quarter ended December 31, 2017 would have remained stable at 4% as compared to the same quarter in 2016.

Share-based compensation expense - Total share-based compensation expense included in the cost and expense items above in the quarter ended December 31, 2017 was RMB5,115 million (US$786 million), an increase of 37% compared to RMB3,744 million in the same quarter of 2016. Share-based compensation expense as a percentage of revenue decreased to 6% in the quarter ended December 31, 2017 from 7% in the same quarter of 2016. The following table sets forth our analysis of share-based compensation expense for the quarters indicated by type of share-based awards:

 
                                                                                                                                                                                                                                   Three months ended                                                                                                                                                                                               
                                                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                           December 31, 2016                                          September 30, 2017                                                                                        December 31, 2017                                                                                                                                                 % Change
                                                                                                       --------------------------------------------------------                                          --------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------------------------------------------------------                                          ------------------------------------------------------------------------------------
                                                                                                                   % of                                                        % of                                                                                                      % of
                                                                                                         RMB                                            Revenue                                            RMB                                            Revenue                                                   RMB                                                            US$                                                          Revenue                                                          YoY                                                            QoQ
                                                                                                       -----                                           -------                                           -----                                           -------                                           --------------------                                           --------------------                                           --------------------                                           --------------------                                           --------------------
                                                                                                                                                                                                                                                                                                                                 (in millions, except percentages)
By type of awards:
Alibaba Group share-based awards granted to:
                                                                                                       3,263                                                6%                                           3,697                                                7%                                                          4,371                                                            672                                                             5%                                                            34%                                                            18%
   - Our employees
                                                                                                       (134)                                                0%                                             469                                                1%                                                            293                                                             45                                                                                                                                    
   - Ant Financial employees and other consultants(1)                                                                                                                                                                                                                                                                                                                                                                                                      1%                                                            N/A                                                          (38)%
Ant Financial share-based awards granted to our employees(1)                                             433                                                1%                                             266                                                0%                                                                                                                                                                                                                            
                                                                                                                                                                                                                                                                                                                            232                                                             35                                                             0%                                                          (46)%                                                          (13)%
Others                                                                                                   182                                                0%                                             254                                                0%                                                            219                                                             34                                                             0%                                                            20%                                                          (14)%
                                                                                                       -----                                           -------                                           -----                                           -------                                           --------------------                                           --------------------                                           --------------------
Total share-based compensation expense                                                                 3,744                                                7%                                           4,686                                                8%                                                          5,115                                                            786                                                             6%                                                                                        
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         37%                                                             9%
                                                                                                       =====                                           =======                                           =====                                           =======                                           ====================                                           ====================                                           ====================
___________________
 (1)     Awards subject to mark-to-market accounting treatment.
                                                

Share-based compensation expense relating to Alibaba Group share-based awards granted to our employees increased in this quarter compared to the previous quarter. The increase reflected the effect of the expense arising from promotion awards granted in this quarter.

We expect that our share-based compensation expense will continue to be affected by changes in the fair value of our shares, our subsidiaries’ share-based awards and the quantity of awards we grant to our employees and consultants in the future. Furthermore, our share-based compensation expense will also be affected by the anticipated increase in fair value of share-based awards of Ant Financial Services. As a result of these factors, we expect that our share-based compensation expense will likely increase, although any such increase will be non-cash and will not result in any economic cost or equity dilution to our shareholders.

Amortization of intangible assets - Amortization of intangible assets in the quarter ended December 31, 2017 was RMB2,057 million (US$316 million), an increase of 63% from RMB1,261 million in the same quarter of 2016. The increase was due to an increase in intangible assets recognized relating to our strategic acquisitions and investments.

Income from operations and operating margin

Income from operations in the quarter ended December 31, 2017 was RMB25,996 million (US$3,996 million), or 31% of revenue, an increase of 26% compared to RMB20,664 million, or 39% of revenue, in the same quarter of 2016.

Adjusted EBITDA and Adjusted EBITDA margin

Adjusted EBITDA increased by 34% to RMB36,183 million (US$5,561 million) in the quarter ended December 31, 2017, compared to RMB27,021 million in the same quarter of 2016. Adjusted EBITDA margin decreased to 44% in the quarter ended December 31, 2017 from 51% in the same quarter of 2016, mainly due to our investments in New Retail, globalization, user base and user experience, partly offset by increased operating leverage. A reconciliation of net income to adjusted EBITDA is included at the end of this results announcement.

As many of our newly developed and acquired businesses have different cost structures and lower margins, we expect that our margin will continue to be negatively impacted by these new businesses.

Adjusted EBITA and adjusted EBITA margin by segments

Adjusted EBITA and adjusted EBITA margin by segments are set forth in the table below. See the section entitled "Information about Segments" above for a reconciliation of income from operations to adjusted EBITA.

 
                                                                                                                                    Three months ended December 31,
                                                                            ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                       2016                                                                                        2017
                                                                            ----------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------
                                                                                          % of                                                                          % of
                                                                               RMB                                             Revenue                                             RMB                                              US$                                                  Revenue
                                                                            -------                                           -------                                           -------                                           -----                                           --------------------
                                                                                                                                                                         (in millions, except percentages)
                                                                                                                                                                                                                                                                                   
Core commerce                                                                29,630                                               64%                                            38,530                                           5,922                                                            53%
Cloud computing                                                                (92)                                              (5)%                                             (181)                                            (28)                                                           (5)%
Digital media and entertainment                                             (2,431)                                             (60)%                                           (2,213)                                           (340)                                                          (41)%
Innovation initiatives and others                                             (785)                                             (93)%                                           (1,006)                                           (155)                                                         (130)%
 

Core commerce segment - Adjusted EBITA increased by 30% to RMB38,530 million (US$5,922 million) in the quarter ended December 31, 2017, compared to RMB29,630 million in the same quarter of 2016. Adjusted EBITA margin decreased to 53% in the quarter ended December 31, 2017, as compared to 64% in the same quarter of 2016, primarily due to our investments in New Retail businesses, including Intime, Tmall Import and Hema, globalization, user base and user experience, including the consolidation of Cainiao Network.

Cloud computing segment - Adjusted EBITA in the quarter ended December 31, 2017 was a loss of RMB181 million (US$28 million), compared to a loss of RMB92 million in the same quarter of 2016. Adjusted EBITA margin remained stable at negative 5% in the quarter ended December 31, 2017 compared to the same quarter in 2016.

Digital media and entertainment segment - Adjusted EBITA in the quarter ended December 31, 2017 was a loss of RMB2,213 million (US$340 million), compared to a loss of RMB2,431 million in the same quarter of 2016. Adjusted EBITA margin improved to negative 41% in the quarter ended December 31, 2017 from negative 60% in the quarter ended December 31, 2016, primarily due to improved results from UCWeb and other media and entertainment businesses, partly offset by an increase in investment in content costs of Youku Tudou.

Innovation initiatives and others segment - Adjusted EBITA in the quarter ended December 31, 2017 was a loss of RMB1,006 million (US$155 million), compared to a loss of RMB785 million in the same quarter of 2016. Adjusted EBITA margin decreased to negative 130% in the quarter ended December 31, 2017, compared to negative 93% in the quarter ended December 31, 2016, primarily due to investments in new business initiatives.

Interest and investment income, net

Interest and investment income, net in the quarter ended December 31, 2017 was RMB23,643 million (US$3,634 million), a significant increase from RMB837 million in the same quarter of 2016, primarily due to a non-cash gain of RMB22,442 million (US$3,449 million) arising from the revaluation of our previously held equity interest in Cainiao Network when we acquired control over Cainiao Network in mid-October 2017.

Other income (loss), net

Other loss, net in the quarter ended December 31, 2017 was RMB348 million (US$54 million), compared to other income, net of RMB3,015 million in the same quarter of 2016. The loss was primarily due to higher foreign exchange loss due to fluctuation of the Renminbi exchange rate and a decrease in our profit share from Ant Financial represented by royalty and software technology service fees, which amounted to RMB196 million (US$30 million) during the quarter. Our profit share from Ant Financial declined because of Ant Financial’s aggressive user growth plan during the quarter which increased expenses in return for substantial additions in new users for Alipay Wallet.

Income tax expenses

Income tax expenses in the quarter ended December 31, 2017 were RMB6,663 million (US$1,024 million), compared to RMB5,110 million in the same quarter of 2016.

Our effective tax rate was 14% in the quarter ended December 31, 2017, compared to 21% in the same quarter of 2016. Excluding share-based compensation expense, impairment of goodwill and investments and other unrealized investment gain/loss, our effective tax rate would have been 21% in the quarter ended December 31, 2017, compared to 18% in the same quarter of 2016. The increase in effective tax rate was primarily due to higher withholding tax accrued on unremitted earnings arising from our PRC operations.

Share of results of equity investees

Share of results of equity investees in the quarter ended December 31, 2017 was a loss of RMB18,452 million (US$2,836 million), compared to a loss of RMB1,548 million in the same quarter of 2016 and a loss of RMB882 million in the quarter ended September 30, 2017. We record our share of results of equity investees one quarter in arrears. Share of results of equity investees in the quarter ended December 31, 2017 and the comparative periods consisted of the following:

 
                                                                                                                                       Three months ended
                                                                                      -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                       December 31, 2016    September 30, 2017                                 December 31, 2017
                                                                                      -----------------                                           ------------------                                           ------------------------------------------------------------------------
                                                                                              RMB                                                         RMB                                                        RMB                US$
                                                                                      -----------------                                           ------------------                                           --------------                                           --------------
                                                                                                                                                                                (in millions)
Share of (loss) profit of equity investees:
                                                                                                  (237)                                                        (369)                                                    (580)                                                     (89)
   - Koubei
                                                                                                  (234)                                                        (273)                                           --                                           --
   - Cainiao Network(1)
                                                                                                  (373)                                                          190                                                      681                                                      105
   - Other equity investees
Impairment losses                                                                                 (245)                                                            -                                                 (18,153)                                                  (2,790)
Dilution losses                                                                                    (82)                                                         (14)                                                     (10)                                                      (2)
Others(2)                                                                                         (377)                                                        (416)                                                    (390)                                                     (60)
                                                                                      -----------------                                           ------------------                                           --------------                                           --------------
Total                                                                                           (1,548)                                                        (882)                                                 (18,452)                                                  (2,836)
                                                                                      =================                                           ==================                                           ==============                                           ==============
 
___________________
 (1)     We started to consolidate Cainiao Network in mid-October 2017 after
                                               obtaining control over Cainiao Network.
 (2)                                           Others mainly include amortization of intangible assets of equity
                                               investees and share-based compensation expense.
                                                

During the quarter we took an impairment loss of RMB18,116 million (US$2,784 million) with respect to Alibaba Pictures, one of our affiliated movie production businesses. The impairment represented the difference between the market value and our carrying value of this investment as of December 31, 2017. In June 2015, following a financing transaction that diluted our shareholding from a controlling position to minority investment, we were required to write up the carrying value to the substantially increased market value of Alibaba Pictures at the time. As a result, we booked a non-cash accounting gain of RMB24,734 million, which increased the carrying value of our investment in Alibaba Pictures from RMB4,818 million to RMB29,552 million. Since June 2015, the market value of Alibaba Pictures has declined and remained below our increased carrying value. The continued low market price combined with Alibaba Pictures’ recent strategic decision to increase investments and expenses for market share growth of its online movie ticketing business caused us to conclude that the decline in market value against our carrying value may be "other-than-temporary," which led us to take the impairment this quarter.

The market value of our investment in Alibaba Pictures as of December 31, 2017 was RMB10,919 million (US$1,678 million), which remains well above our original cash investment amount of RMB4,955 million that we paid in June 2014.

Net income and Non-GAAP net income

Our net income in the quarter ended December 31, 2017 was RMB23,332 million (US$3,586 million), an increase of 36% compared to RMB17,157 million in the same quarter of 2016. Excluding share-based compensation expense, non-cash revaluation gain and certain other items, non-GAAP net income in the quarter ended December 31, 2017 was RMB27,007 million (US$4,151 million), an increase of 20% compared to RMB22,491 million in the same quarter of 2016. A reconciliation of net income to non-GAAP net income is included at the end of this results announcement.

Net income attributable to ordinary shareholders

Net income attributable to ordinary shareholders in the quarter ended December 31, 2017 was RMB24,073 million (US$3,700 million), an increase of 35% compared to RMB17,855 million in the same quarter of 2016.

Diluted EPS and non-GAAP diluted EPS

Diluted EPS in the quarter ended December 31, 2017 was RMB9.20 (US$1.41) on a weighted average of 2,615 million diluted shares outstanding during the quarter, an increase of 33% compared to RMB6.94 on a weighted average of 2,571 million diluted shares outstanding during the same quarter of 2016. Excluding share-based compensation expense, non-cash revaluation gain and certain other items, non-GAAP diluted EPS in the quarter ended December 31, 2017 was RMB10.61 (US$1.63), an increase of 18% compared to RMB9.02 in the same quarter of 2016. A reconciliation of diluted EPS to non-GAAP diluted EPS is included at the end of this results announcement.

Cash, cash equivalents and short-term investments

As of December 31, 2017, cash, cash equivalents and short-term investments were RMB220,380 million (US$33,872 million), compared to RMB159,855 million as of September 30, 2017. The increase in cash, cash equivalents and short-term investments during the quarter ended December 31, 2017 was primarily due to proceeds from our issuance of US$7.0 billion unsecured senior notes and free cash flow generated from operations of RMB46,144 million (US$7,092 million), partly offset by cash used in investing activities, including investments in Sun Art Retail Group Limited, and repayment of unsecured senior notes due 2017 of US$1,300 million.

Cash flow from operating activities and free cash flow

Net cash provided by operating activities in the quarter ended December 31, 2017 was RMB55,173 million (US$8,480 million), an increase of 47% compared to RMB37,416 million in the same quarter of 2016. Free cash flow, a non-GAAP measurement of liquidity, in the quarter ended December 31, 2017 was RMB46,144 million (US$7,092 million), compared to RMB34,122 million in the same quarter of 2016. A reconciliation of net cash provided by operating activities to free cash flow is included at the end of this results announcement.

Net cash used in investing activities

During the quarter ended December 31, 2017, net cash used in investing activities of RMB24,479 million (US$3,762 million) primarily reflected cash outflow of RMB21,308 million (US$3,275 million) for investment and acquisition activities, including our investment in Sun Art Retail Group, as well as capital expenditures and intangible assets of RMB10,422 million (US$1,602 million), which included cash outflow for acquisition of land use rights and construction in progress of RMB1,393 million (US$214 million). The outflow was partially offset by cash inflow of RMB5,325 million (US$818 million) from treasury activities.

Employees

As of December 31, 2017, we had a total of 63,809 employees, compared to 59,572 as of September 30, 2017. The number of employees as of December 31, 2017 increased by 4,237 from September 30, 2017, primarily due to the consolidation of Cainiao Network.

ADJUSTMENT TO REVENUE GUIDANCE

Given our clear visibility on the full year results for fiscal year 2018, we are adjusting our revenue guidance to 55% to 56% (previously 49% to 53%).

WEBCAST AND CONFERENCE CALL INFORMATION

Alibaba Group’s management will hold a conference call to discuss the financial results at 7:30 a.m. U.S. Eastern Time (8:30 p.m. Hong Kong Time) on February 1, 2018.

Details of the conference call are as follows: International: +65 6713 5090 U.S.: +1 845 675 0437 U.K.: +44 203 621 4779 Hong Kong: +852 3018 6771 Conference ID: 5799288

A live webcast of the earnings conference call can be accessed at http://www.alibabagroup.com/en/ir/earnings . An archived webcast will be available through the same link following the call. A replay of the conference call will be available for one week (dial-in number: +61 2 8199 0299; conference ID: 5799288).

Our results announcement and accompanying slides are available at Alibaba Group’s Investor Relations website at http://www.alibabagroup.com/en/ir/home on February 1, 2018.

ABOUT ALIBABA GROUP

Alibaba Group’s mission is to make it easy to do business anywhere. The company aims to build the future infrastructure of commerce. It envisions that its customers will meet, work and live at Alibaba, and that it will be a company that lasts at least 102 years.

SAFE HARBOR STATEMENTS

This announcement 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," "guidance" and similar statements. Among other things, statements that are not historical facts, including statements about Alibaba’s strategies and business plans, Alibaba’s beliefs and expectations regarding the growth of its business and its revenue, the business outlook and quotations from management in this announcement, as well as Alibaba’s strategic and operational plans, are or contain forward-looking statements. Alibaba may also make 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; risks associated with increased investments in Alibaba’s business and new business initiatives; risks associated with strategic acquisitions and investments; Alibaba’s ability to retain or increase engagement of consumers, merchants and other participants in its ecosystem and enable new offerings; Alibaba’s ability to maintain or grow its revenue or business; risks associated with limitation or restriction of services provided by Alipay; changes in laws, regulations and regulatory environment that affect Alibaba’s business operations; privacy and regulatory concerns; competition; security breaches; the continued growth of the e-commerce market in China and globally; risks associated with the performance of our business partners, including but not limited to Ant Financial; 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 results announcement is as of the date of this results announcement 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.

NON-GAAP FINANCIAL MEASURES

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use the following non-GAAP financial measures: for our consolidated results, adjusted EBITDA (including adjusted EBITDA margin), adjusted EBITA (including adjusted EBITA margin), non-GAAP net income, non-GAAP diluted EPS and free cash flow. For more information on these non-GAAP financial measures, please refer to the section entitled "Information about Segments" and the table captioned "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" in this results announcement.

We believe that adjusted EBITDA, adjusted EBITA, non-GAAP net income and non-GAAP diluted EPS help identify underlying trends in our business that could otherwise be distorted by the effect of certain income or expenses that we include in income from operations, net income and diluted EPS. We believe that adjusted EBITDA, adjusted EBITA, non-GAAP net income and non-GAAP diluted EPS provide useful information about our core operating results, enhance the overall understanding of our past performance and future prospects and allow for greater visibility with respect to key metrics used by our management in our financial and operational decision-making. We consider free cash flow to be a liquidity measure that provides useful information to management and investors about the amount of cash generated by our business that can be used for strategic corporate transactions, including investing in our new business initiatives, making strategic investments and acquisitions and strengthening our balance sheet. Adjusted EBITDA, adjusted EBITA, non-GAAP net income, non-GAAP diluted EPS and free cash flow should not be considered in isolation or construed as an alternative to income from operations, net income, diluted EPS, cash flows or any other measure of performance or as an indicator of our operating performance. These non-GAAP financial measures presented here may not be comparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measures differently, limiting their usefulness as comparative measures to our data.

Adjusted EBITDA represents net income before (i) interest and investment income, net, other income (loss), net, interest expense, income tax expenses and share of results of equity investees, and (ii) certain non-cash expenses, consisting of share-based compensation expense, amortization, depreciation and impairment of goodwill, which we do not believe are reflective of our core operating performance during the periods presented.

Adjusted EBITA represents net income before (i) interest and investment income, net, other income (loss), net, interest expense, income tax expenses and share of results of equity investees, and (ii) certain non-cash expenses, consisting of share-based compensation expense, amortization and impairment of goodwill, which we do not believe are reflective of our core operating performance during the periods presented.

Non-GAAP net income represents net income before share-based compensation expense, amortization, impairment of goodwill and investments, gain on deemed disposals/disposals/revaluation of investments, amortization of excess value receivable arising from the restructuring of commercial arrangements with Ant Financial, immediate recognition of unamortized professional fees and upfront fees upon termination of bank borrowings and others, as adjusted for the tax effects on non-GAAP adjustments.

Non-GAAP diluted EPS represents non-GAAP net income attributable to ordinary shareholders divided by the weighted average number of shares outstanding during the periods on a diluted basis, including accounting for the effects of the assumed conversion of convertible preference shares.

Free cash flow represents net cash provided by operating activities as presented in our consolidated cash flow statement less purchases of property and equipment and intangible assets (excluding acquisition of land use rights and construction in progress) and others.

The section entitled "Information about Segments" and the table captioned "Reconciliations of Non-GAAP Measures to the Nearest Comparable GAAP Measures" in this results announcement have more details on the non-GAAP financial measures that are most directly comparable to GAAP financial measures and the related reconciliations between these financial measures.

 
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED INCOME STATEMENTS
 
                                                                                                                 Three months ended December 31,                                                                                               Nine months ended December 31,
                                                                                                            --------------------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                 2016                                     2017                                                                           2016                                            2017
                                                                                                            --------------                                           -----------------------------------------------------------                                          --------------                                           ------------------------------------------------------------------------
                                                                                                                  RMB                                                   RMB          US$                                                  RMB                                                   RMB                US$
                                                                                                            --------------                                           --------                                           -------                                           --------------                                           --------                                           --------------------
                                                                                                                                                    (in millions, except per share data)                                                                                                                                (in millions, except per share data)
Revenue                                                                                                             53,248                                             83,028                                            12,761                                                  119,694                                            188,334                                                         28,946
Cost of revenue                                                                                                   (19,126)                                           (35,078)                                           (5,390)                                                 (43,993)                                           (74,540)                                                       (11,457)
Product development expenses                                                                                       (4,420)                                            (6,289)                                             (967)                                                 (12,542)                                           (16,068)                                                        (2,469)
Sales and marketing expenses                                                                                       (4,490)                                            (8,542)                                           (1,313)                                                 (11,982)                                           (19,658)                                                        (3,021)
General and administrative expenses                                                                                (3,287)                                            (4,572)                                             (703)                                                  (8,845)                                           (11,690)                                                        (1,797)
Amortization of intangible assets                                                                                  (1,261)                                            (2,057)                                             (316)                                                  (3,809)                                            (5,791)                                                          (890)
Impairment of goodwill                                                                                      --                                              (494)                                              (76)                                           --                                              (494)                                                           (76)
                                                                                                            --------------                                           --------                                           -------                                           --------------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                                       
Income from operations                                                                                              20,664                                             25,996                                             3,996                                                   38,523                                             60,093                                                          9,236
Interest and investment income, net                                                                                    837                                             23,643                                             3,634                                                    2,006                                             28,550                                                          4,388
Interest expense                                                                                                     (701)                                              (844)                                             (130)                                                  (1,995)                                            (2,391)                                                          (368)
Other income (loss), net                                                                                             3,015                                              (348)                                              (54)                                                    5,646                                              3,276                                                            504
                                                                                                            --------------                                           --------                                           -------                                           --------------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                                       
Income before income tax and share of results of equity investees                                                   23,815                                             48,447                                             7,446                                                   44,180                                             89,528                                                         13,760
Income tax expenses                                                                                                (5,110)                                            (6,663)                                           (1,024)                                                  (9,223)                                           (14,035)                                                        (2,157)
Share of results of equity investees                                                                               (1,548)                                           (18,452)                                           (2,836)                                                  (3,583)                                           (20,722)                                                        (3,185)
                                                                                                            --------------                                           --------                                           -------                                           --------------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                                       
Net income                                                                                                          17,157                                             23,332                                             3,586                                                   31,374                                             54,771                                                          8,418
Net loss attributable to noncontrolling interests                                                                      698                                                741                                               114                                                    1,654                                              1,653                                                            254
                                                                                                            --------------                                           --------                                           -------                                           --------------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                                       
Net income attributable to ordinary shareholders                                                                    17,855                                             24,073                                             3,700                                                   33,028                                             56,424                                                          8,672
                                                                                                            ==============                                           ========                                           =======                                           ==============                                           ========                                           ====================
                                                                                                                                                                                                                                                                                                                                                                                       
Earnings per share attributable to ordinary shareholders
Basic                                                                                                                 7.19                                               9.41                                              1.45                                                    13.32                                              22.12                                                           3.40
Diluted                                                                                                               6.94                                               9.20                                              1.41                                                    12.85                                              21.64                                                           3.33
                                                                                                                                                                                                                                                                                                                                                                                       
Weighted average number of share used in calculating net income
per ordinary share
Basic                                                                                                                2,485                                              2,557                                                                                                      2,479                                              2,551
Diluted                                                                                                              2,571                                              2,615                                                                                                      2,569                                              2,607
 
 
ALIBABA GROUP HOLDING LIMITED
REVENUE
 
The following table sets forth our revenue by segments for the
periods indicated:
 
                                                                              Three months ended December 31,                                                                                      Nine months ended December 31,
                                                                               ---------------------------------------------------------------------------------------------------------                                          -------------------------------------------------------------------------------------------------------------------------
                                                                                2016                                2017                                                                      2016                                       2017
                                                                               ------                                           --------------------------------------------------------                                          -------                                           -----------------------------------------------------------------------
                                                                                 RMB                                              RMB        US$                                               RMB                                               RMB               US$
                                                                               ------                                           ------                                           ------                                           -------                                           -------                                           --------------------
                                                                                                                             (in millions)                                                                                                                                              (in millions)
Core commerce(1)                                                               46,576                                           73,244                                           11,257                                           102,310                                           162,733                                                         25,012
Cloud computing(2)                                                              1,764                                            3,599                                              553                                             4,500                                             9,005                                                          1,384
Digital media and entertainment(3)                                              4,063                                            5,413                                              832                                            10,806                                            14,292                                                          2,197
Innovation initiatives and others(4)                                              845                                              772                                              119                                             2,078                                             2,304                                                            353
                                                                               ------                                           ------                                           ------                                           -------                                           -------                                           --------------------
                                                                                                                                                                                                                                                                                                                                       
Total                                                                          53,248                                           83,028                                           12,761                                           119,694                                           188,334                                                         28,946
                                                                               ======                                           ======                                           ======                                           =======                                           =======                                           ====================
 
__________________
 (1)     Revenue from core commerce is primarily generated from our China
                                               retail marketplaces, 1688.com, AliExpress, Alibaba.com, Lazada.com
                                               and Cainiao logistics services.
 (2)                                           Revenue from cloud computing is primarily generated from the
                                               provision of services, such as data storage, elastic computing,
                                               database and large scale computing services, as well as web hosting
                                               and domain name registration.
 (3)                                           Revenue from digital media and entertainment mainly represents
                                               advertising and subscription revenue generated from our digital
                                               entertainment business provided by Youku Tudou and mobile Internet
                                               services revenue from UCWeb businesses.
 (4)                                           Revenue from innovation initiatives and others mainly represents
                                               revenue generated by AutoNavi and YunOS, as well as fees from Ant
                                               Financial related to the SME loan business.
 
ALIBABA GROUP HOLDING LIMITED
INFORMATION ABOUT SEGMENTS
 
The following table sets forth our income (loss) from operations
by segments for the periods indicated:
 
                                                                            Three months ended December 31,                                                                                       Nine months ended December 31,
                                                                            ----------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------
                                                                              2016                                2017                                                                      2016                                        2017
                                                                            -------                                           --------------------------------------------------------                                          -------                                           ------------------------------------------------------------------------
                                                                               RMB                                               RMB        US$                                              RMB                                               RMB                US$
                                                                                                                           (in millions)                                                                                                                                               (in millions)
Core commerce                                                                27,439                                            35,439                                           5,447                                            57,680                                             84,083                                                         12,923
Cloud computing                                                               (339)                                             (793)                                           (122)                                           (1,176)                                            (2,022)                                                          (311)
Digital media and entertainment                                             (3,196)                                           (3,828)                                           (588)                                           (7,296)                                           (10,599)                                                        (1,629)
Innovation initiatives and others                                           (1,450)                                           (1,814)                                           (279)                                           (4,910)                                            (4,882)                                                          (750)
Unallocated                                                                 (1,790)                                           (3,008)                                           (462)                                           (5,775)                                            (6,487)                                                          (997)
                                                                            -------                                           -------                                           -----                                           -------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                      
Total                                                                        20,664                                            25,996                                           3,996                                            38,523                                             60,093                                                          9,236
                                                                            =======                                           =======                                           =====                                           =======                                           ========                                           ====================
 
The following table sets forth our adjusted EBITA by segments for
the periods indicated:
 
                                                                                                                  Three months ended December 31,                                                                                                                             Nine months ended December 31,
                                                                            ----------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------
                                                                              2016                                                                      2017                                                                      2016                                                                              2017
                                                                            -------                                           --------------------------------------------------------                                          -------                                           ------------------------------------------------------------------------
                                                                               RMB                                               RMB                                              US$                                              RMB                                               RMB                                                      US$
                                                                                                                           (in millions)                                                                                                                                               (in millions)
Core commerce                                                                29,630                                            38,530                                           5,922                                            63,853                                             91,914                                                         14,127
Cloud computing                                                                (92)                                             (181)                                            (28)                                             (307)                                              (446)                                                           (69)
Digital media and entertainment                                             (2,431)                                           (2,213)                                           (340)                                           (4,831)                                            (5,710)                                                          (878)
Innovation initiatives and others                                             (785)                                           (1,006)                                           (155)                                           (2,443)                                            (2,136)                                                          (328)
Unallocated                                                                   (653)                                           (1,468)                                           (225)                                           (2,251)                                            (3,424)                    (526)
                                                                            -------                                           -------                                           -----                                           -------                                           -------- -------------------- -------------------- --------------------
                                                                                                                                                                                                                                                                                                                                      
Total                                                                        25,669                                            33,662                                           5,174                                            54,021                                             80,198                                                         12,326
                                                                            =======                                           =======                                           =====                                           =======                                           ========                                           ====================
 
 
The table below sets forth selected financial information of our
operating segments for nine months ended December 31, 2017:
 
                                                                                                                                                                                                                        Nine months ended December 31, 2017
                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                 Digital media          Innovation                               
                                                                                         Core                                                           Cloud                                                           and                                                     initiatives                                                                                                                  
                                                                                       commerce                                                       computing                                                    entertainment                                                and others                                                Unallocated (1)                                                                          Consolidated
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------                                           --------------------                                           -------------------------------------------------------------------
                                                                                          RMB                                                            RMB                                                            RMB                                                         RMB                                                         RMB                                                      RMB               US$
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------                                           --------------------                                           -------                                           --------------------
                                                                                                                                                                                                                                                               (in millions, except percentages)
Revenue                                                                                       162,733                                                          9,005                                                         14,292                                                    2,304                                                 --                                           188,334                                                         28,946
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Income (loss) from operations                                                                  84,083                                                        (2,022)                                                       (10,599)                                                  (4,882)                                                        (6,487)                                            60,093                                                          9,236
Add: Share-based compensation expense                                                           5,773                                                          1,567                                                          1,606                                                    2,554                                                          2,320                                            13,820                                                          2,124
Add: Amortization of intangible assets                                                          2,058                                                              9                                                          3,283                                                      192                                                            249                                             5,791                                                            890
Add: Impairment of goodwill                                                            --                                                 --                                                 --                                           --                                                            494                                               494                                                             76
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------                                           --------------------                                           -------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                         
Adjusted EBITA                                                                                 91,914                                                          (446)                                                        (5,710)                                                  (2,136)                                                        (3,424)                                            80,198                                                         12,326
                                                                                 ====================                                           ====================                                           ====================                                           ==============                                           ====================                                           =======                                           ====================
Adjusted EBITA margin                                                                             56%                                                           (5)%                                                          (40)%                                                    (93)%                                                                                           43%
 
                                                                                                                                                                                                                                                              Nine months ended December 31, 2016
                                                                                 ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                             Digital media                                                Innovation
                                                                                         Core                                                           Cloud                                                           and                                                     initiatives                                                                                                                  
                                                                                       commerce                                                       computing                                                    entertainment                                                and others                                                Unallocated (1)                                                                          Consolidated
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------                                           --------------------                                           -------------------------------------------------------------------
                                                                                          RMB                                                            RMB                                                            RMB                                                         RMB                                                         RMB                                                                                     RMB
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------                                           --------------------                                           -----------------------------------------------------------------------
                                                                                                                                                                                                                                                               (in millions, except percentages)
Revenue                                                                                       102,310                                                          4,500                                                         10,806                                                    2,078                                                 --                                                                                                          119,694
                                                                                                                                                                                                                                                                                                                                                                                                       
Income (loss) from operations                                                                  57,680                                                        (1,176)                                                        (7,296)                                                  (4,910)                                                        (5,775)                                                                                                           38,523
Add: Share-based compensation expense                                                           4,517                                                                                                                                            1,974                                                                                                                                                       11,689
                                                                                                                                                                 866                                                          1,036                                                                                                                   3,296
Add: Amortization of intangible assets                                                          1,656                                                              3                                                          1,429                                                      493                                                            228                                                                                                            3,809
                                                                                 --------------------                                           --------------------                                           --------------------                                           --------------                                           --------------------                                           -----------------------------------------------------------------------
                                                                                                                                                                                                                                                                                                                                                                                                       
Adjusted EBITA                                                                                 63,853                                                          (307)                                                        (4,831)                                                  (2,443)                                                        (2,251)                                                                                                           54,021
                                                                                 ====================                                           ====================                                           ====================                                           ==============                                           ====================                                           =======================================================================
Adjusted EBITA margin                                                                             62%                                                           (7)%                                                          (45)%                                                   (118)%                                                                                                                                                                             45%
 
__________________
 (1)     Unallocated expenses are primarily related to corporate
                                               administrative costs and other miscellaneous items that are not
                                               allocated to individual segments.
 
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS
 
                                                                                       As of March 31,                                  As of December 31,
                                                                                                                            ---------------                                           --------------------------------------------------------------------------
                                                                                                                                  2017                                                                                     2017
                                                                                                                            ---------------                                           --------------------------------------------------------------------------
                                                                                                                                   RMB                                                      RMB                   US$
                                                                                                                            ---------------                                           --------------                                           --------------------
                                                                                                                                                                                                                                                
                                                                                                                                                                                          (in millions)
Assets
Current assets:
   Cash and cash equivalents                                                                                                        143,736                                                  212,196                                                         32,614
   Short-term investments                                                                                                             3,011                                                    8,184                                                          1,258
   Restricted cash and escrow receivables                                                                                             2,655                                                    3,381                                                            519
   Investment securities                                                                                                              4,054                                                    3,752                                                            577
   Prepayments, receivables and other assets(1)                                                                                      28,408                                                   40,777                                                          6,267
                                                                                                                            ---------------                                           --------------                                           --------------------
Total current assets                                                                                                                181,864                                                  268,290                                                         41,235
 
Investment securities                                                                                                                31,452                                                   34,855                                                          5,357
Prepayments, receivables and other assets(1)                                                                                          8,703                                                   14,750                                                          2,267
Investment in equity investees                                                                                                      120,368                                                  129,505                                                         19,905
Property and equipment, net                                                                                                          20,206                                                   64,973                                                          9,986
Land use rights, net                                                                                                                  4,691                                                    9,257                                                          1,423
Intangible assets, net                                                                                                               14,108                                                   27,119                                                          4,168
Goodwill                                                                                                                            125,420                                                  162,683                                                         25,004
                                                                                                                            ---------------                                           --------------                                           --------------------
Total assets                                                                                                                        506,812                                                  711,432                                                        109,345
                                                                                                                            ===============                                           ==============                                           ====================
                                                                                                                                                                                                                                                
Liabilities, Mezzanine Equity and Shareholders’ Equity
Current liabilities:
   Current bank borrowings                                                                                                            5,948                                                    6,447                                                            991
   Current portion of unsecured notes                                                                                                 8,949                                           --                                                 --
   Income tax payable                                                                                                                 6,125                                                   12,474                                                          1,917
   Escrow money payable                                                                                                               2,322                                                    2,844                                                            437
   Accrued expenses, accounts payable and other liabilities(1)                                                                       46,979                                                   77,358                                                         11,890
   Merchant deposits                                                                                                                  8,189                                                   15,287                                                          2,350
   Deferred revenue and customer advances                                                                                            15,052                                                   22,028                                                          3,385
                                                                                                                            ---------------                                           --------------                                           --------------------
Total current liabilities                                                                                                            93,564                                                  136,438                                                         20,970
 
__________________
 (1)     Certain reclassifications in prepayments, receivables and other
                                               assets, accrued expenses, accounts payable and other liabilities and
                                               deferred tax liabilities as of March 31, 2017 were retrospectively
                                               adjusted as a result of the adoption of a new accounting standard
                                               effective in the first quarter of fiscal 2018.
 
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONSOLIDATED BALANCE SHEETS (CONTINUED)
 
                                                                                         As of March 31,                                  As of December 31,
                                                                                                                              ---------------                                           --------------------------------------------------------------------------
                                                                                                                                    2017                                                                                     2017
                                                                                                                              ---------------                                           --------------------------------------------------------------------------
                                                                                                                                     RMB                                                      RMB                   US$
                                                                                                                              ---------------                                           --------------                                           --------------------
                                                                                                                                (in millions)
                                                                                                                                                                                                                                                  
Deferred revenue                                                                                                                          641                                                      898                                                            138
Deferred tax liabilities(1)                                                                                                            10,361                                                   19,076                                                          2,932
Non-current bank borrowings                                                                                                            30,959                                                   34,385                                                          5,285
Unsecured senior notes                                                                                                                 45,876                                                   88,499                                                         13,602
Other liabilities                                                                                                                       1,290                                                    2,186                                                            336
                                                                                                                              ---------------                                           --------------                                           --------------------
Total liabilities                                                                                                                     182,691                                                  281,482                                                         43,263
                                                                                                                              ---------------                                           --------------                                           --------------------
                                                                                                                                                                                                                                                  
Commitments and contingencies                                                                                                  --                                           --                                                 --
Mezzanine equity                                                                                                                        2,992                                                    2,979                                                            458
Alibaba Group Holding Limited shareholders’ equity:
   Ordinary shares                                                                                                                          1                                                        1                                                 --
   Additional paid-in capital                                                                                                         164,585                                                  179,686                                                         27,617
   Treasury shares at cost                                                                                                            (2,823)                                                  (2,233)                                                          (343)
   Restructuring reserve                                                                                                                (624)                                                    (426)                                                           (65)
   Subscription receivables                                                                                                              (63)                                                    (164)                                                           (25)
   Statutory reserves                                                                                                                   4,080                                                    4,183                                                            643
   Accumulated other comprehensive income                                                                                               5,085                                                    4,035                                                            620
   Retained earnings                                                                                                                  108,558                                                  164,879                                                         25,341
                                                                                                                              ---------------                                           --------------                                           --------------------
                                                                                                                                                                                                                                                  
Total Alibaba Group Holding Limited shareholders’ equity                                                   278,799                                                  349,961                                                         53,788
Noncontrolling interests                                                                                                               42,330                                                   77,010                                                         11,836
                                                                                                                              ---------------                                           --------------                                           --------------------
                                                                                                                                                                                                                                                  
Total equity                                                                                                                          321,129                                                  426,971                                                         65,624
                                                                                                                              ---------------                                           --------------                                           --------------------
                                                                                                                                                                                                                                                  
Total liabilities, mezzanine equity and equity                                                                                        506,812                                                  711,432                                                        109,345
                                                                                                                              ===============                                           ==============                                           ====================
 
__________________
 (1)     Certain reclassifications in prepayments, receivables and other
                                               assets, accrued expenses, accounts payable and other liabilities and
                                               deferred tax liabilities as of March 31, 2017 were retrospectively
                                               adjusted as a result of the adoption of a new accounting standard
                                               effective in the first quarter of fiscal 2018.
 
ALIBABA GROUP HOLDING LIMITED
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
                                                                                                        Three months ended December 31,                                                                                         Nine months ended December 31,
                                                                                                       -------------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------------------------------
                                                                                                         2016                                 2017                                                                        2016                                         2017
                                                                                                       -------                                           -----------------------------------------------------------                                          --------                                           ------------------------------------------------------------------------
                                                                                                          RMB                                               RMB          US$                                               RMB                                                RMB                US$
                                                                                                       -------                                           --------                                           -------                                           --------                                           --------                                           --------------------
                                                                                                                                                       (in millions)                                                                                                                                                 (in millions)
                                                                                                                                                                                                                                                                                                                                                                     
Net cash provided by operating activities                                                               37,416                                             55,173                                             8,480                                             69,580                                            110,991                                                         17,059
Net cash used in investing activities                                                                  (8,146)                                           (24,479)                                           (3,762)                                           (75,329)                                           (64,074)                                                        (9,848)
Net cash (used in) provided by financing activities                                                      (710)                                             34,274                                             5,268                                             30,432                                             24,964                                                          3,837
Effect of exchange rate changes on cash and cash equivalents                                             1,745                                            (1,518)                                             (234)                                              2,488                                            (3,421)                                                          (526)
                                                                                                       -------                                           --------                                           -------                                           --------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                     
Increase in cash and cash equivalents                                                                   30,305                                             63,450                                             9,752                                             27,171                                             68,460                                                         10,522
Cash and cash equivalents at beginning of period                                                       103,684                                            148,746                                            22,862                                            106,818                                            143,736                                                         22,092
                                                                                                       -------                                           --------                                           -------                                           --------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                     
Cash and cash equivalents at end of period                                                             133,989                                            212,196                                            32,614                                            133,989                                            212,196                                                         32,614
                                                                                                       =======                                           ========                                           =======                                           ========                                           ========                                           ====================
 
 
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES
 
The table below sets forth a reconciliation of our net income to
adjusted EBITA and adjusted EBITDA for the periods indicated:
                                                                                                                                                                                            
                                                                                                                                                      Three months ended December 31,                                                                                                                               Nine months ended December 31,
                                                                                                           --------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------
                                                                                                                2016                                     2017                                                                           2016                                     2017
                                                                                                           --------------                                           -----------------------------------------------------------                                          --------------                                           -----------------------------------------------------------
                                                                                                                 RMB                                                   RMB          US$                                                  RMB                                                   RMB          US$
                                                                                                           --------------                                           --------                                           -------                                           --------------                                           --------                                           -------
                                                                                                                                                               (in millions)                                                                                                                                                 (in millions)
Net income                                                                                                         17,157                                             23,332                                             3,586                                                   31,374                                             54,771                                             8,418
Less: Interest and investment income, net                                                                           (837)                                           (23,643)                                           (3,634)                                                  (2,006)                                           (28,550)                                           (4,388)
Add: Interest expense                                                                                                 701                                                844                                               130                                                    1,995                                              2,391                                               368
Less: Other income (loss), net                                                                                    (3,015)                                                348                                                54                                                  (5,646)                                            (3,276)                                             (504)
Add: Income tax expenses                                                                                            5,110                                              6,663                                             1,024                                                    9,223                                             14,035                                             2,157
Add: Share of results of equity investees                                                                           1,548                                             18,452                                             2,836                                                    3,583                                             20,722                                             3,185
                                                                                                           --------------                                           --------                                           -------                                           --------------                                           --------                                           -------
Income from operations                                                                                             20,664                                             25,996                                             3,996                                                   38,523                                             60,093                                             9,236
Add: Share-based compensation expense                                                                               3,744                                              5,115                                               786                                                   11,689                                             13,820                                             2,124
Add: Amortization of intangible assets                                                                              1,261                                              2,057                                               316                                                    3,809                                              5,791                                               890
Add: Impairment of goodwill                                                                                --                                                494                                                76                                           --                                                494                                                76
                                                                                                           --------------                                           --------                                           -------                                           --------------                                           --------                                           -------
Adjusted EBITA                                                                                                     25,669                                             33,662                                             5,174                                                   54,021                                             80,198                                            12,326
Add: Depreciation and amortization of property and equipment and                                                    1,352                                              2,521                                               387                                                    3,838                                              6,140                                               944
land use rights
                                                                                                           --------------                                           --------                                           -------                                           --------------                                           --------                                           -------
Adjusted EBITDA                                                                                                    27,021                                             36,183                                             5,561                                                   57,859                                             86,338                                            13,270
                                                                                                           ==============                                           ========                                           =======                                           ==============                                           ========                                           =======
 
 
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES (CONTINUED)
 
The table below sets forth a reconciliation of our net income to
non-GAAP net income for the periods indicated:
 
                                                                                                                         Three months ended December 31,                                                                                                      Nine months ended December 31,
                                                                                                              ---------------------------------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------------------------------------
                                                                                                                   2016                                            2017                                                                                 2016                                            2017
                                                                                                              --------------                                           ------------------------------------------------------------------------                                          --------------                                           ------------------------------------------------------------------------
                                                                                                                    RMB                                                      RMB                US$                                                      RMB                                                   RMB                US$
                                                                                                              --------------                                           --------------                                           --------------                                           --------------                                           --------                                           --------------------
                                                                                                                                                                        (in millions)                                                                                                                                                              (in millions)
                                                                                                                                                                                                                                                                                                                                                                                                      
Net income                                                                                                            17,157                                                   23,332                                                    3,586                                                   31,374                                             54,771                                                          8,418
Add: Share-based compensation expense                                                                                  3,744                                                    5,115                                                      786                                                   11,689                                             13,820                                                          2,124
Add: Amortization of intangible assets                                                                                 1,261                                                    2,057                                                      316                                                    3,809                                              5,791                                                            890
Add: Impairment of goodwill and investments                                                                            1,476                                                   19,033                                                    2,925                                                    2,409                                             20,374                                                          3,131
Less: Gain on deemed disposals/disposals/revaluation of investments                                                  (1,161)                                                 (22,406)                                                  (3,443)                                                  (1,743)                                           (25,792)                                                        (3,963)
and others
Add: Amortization of excess value receivable arising from the                                                             67                                                       66                                                       10                                                      199                                                199                                                             31
restructuring of commercial arrangements with Ant Financial
Add: Immediate recognition of unamortized professional fees and                                               --                                           --                                           --                                           --                                                 92                                                             14
upfront fees upon termination of bank borrowings
Adjusted for tax effects on non-GAAP adjustments(1)                                                                     (53)                                                    (190)                                                     (29)                                                    (306)                                              (140)                                                           (22)
                                                                                                              --------------                                           --------------                                           --------------                                           --------------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                                                      
Non-GAAP net income                                                                                                   22,491                                                   27,007                                                    4,151                                                   47,431                                             69,115                                                         10,623
                                                                                                              ==============                                           ==============                                           ==============                                           ==============                                           ========                                           ====================
 
_____________________
  (1)     Tax effects on non-GAAP adjustments comprise of tax provisions on
                                                the amortization of intangible assets and certain gains on disposal
                                                of investments, as well as tax benefits from share-based awards.
 
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES (CONTINUED)
 
The table below sets forth a reconciliation of our diluted EPS to
non-GAAP diluted EPS for the periods indicated:
                                                                                                                 Three months ended December 31,                                                                                    Nine months ended December 31,
                                                                                                                  --------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------
                                                                                                                   2016                               2017                                                                     2016                                       2017
                                                                                                                  ------                                           -------------------------------------------------------                                          ------                                           ----------------------------------------------------------------------
                                                                                                                    RMB                                              RMB        US$                                             RMB                                              RMB               US$
                                                                                                                  ------                                           ------                                           -----                                           ------                                           ------                                           --------------------
                                                                                                                                                    (in millions, except per share data)                                                                                                                     (in millions, except per share data)
Net income attributable to ordinary shareholders - basic                                             17,855                                           24,073                                           3,700                                           33,028                                           56,424                                                          8,672
Dilution effect on earnings arising from option plans operated by a                                                  (3)                                              (4)                                             (1)                                              (6)                                             (10)                                                            (2)
subsidiary and an equity investee
                                                                                                                  ------                                           ------                                           -----                                           ------                                           ------                                           --------------------
Net income attributable to ordinary shareholders - diluted                                           17,852                                           24,069                                           3,699                                           33,022                                           56,414                                                          8,670
Add: Non-GAAP adjustments to net income(1)                                                                         5,334                                            3,675                                             565                                           16,057                                           14,344                                                          2,205
                                                                                                                  ------                                           ------                                           -----                                           ------                                           ------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                       
Non-GAAP net income attributable to ordinary shareholders                                                         23,186                                           27,744                                           4,264                                           49,079                                           70,758                                                         10,875
for computing non-GAAP diluted EPS
                                                                                                                  ------                                           ------                                           -----                                           ------                                           ------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                       
Weighted average number of shares on a diluted basis                                                               2,571                                            2,615                                                                                            2,569                                            2,607
Diluted EPS(2)                                                                                                      6.94                                             9.20                                            1.41                                            12.85                                            21.64                                                           3.33
Add: Non-GAAP adjustments to net income per share(3)                                                                2.08                                             1.41                                            0.22                                             6.25                                             5.50                                                           0.84
                                                                                                                  ------                                           ------                                           -----                                           ------                                           ------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                       
Non-GAAP diluted EPS(4)                                                                                             9.02                                            10.61                                            1.63                                            19.10                                            27.14                                                           4.17
                                                                                                                  ======                                           ======                                           =====                                           ======                                           ======                                           ====================
__________________
(1)      See the table above for the reconciliation of net income to
                                               non-GAAP net income for more information of these non-GAAP
                                               adjustments.
(2)                                            Diluted EPS is derived from net income attributable to ordinary
                                               shareholders for computing diluted EPS divided by weighted average
                                               number of shares on a diluted basis.
(3)                                            Non-GAAP adjustments to net income per share is derived from
                                               non-GAAP adjustments to net income divided by weighted average
                                               number of shares on a diluted basis.
(4)                                            Non-GAAP diluted EPS is derived from non-GAAP net income
                                               attributable to ordinary shareholders for computing non-GAAP
                                               diluted EPS divided by weighted average number of shares on a
                                               diluted basis.
ALIBABA GROUP HOLDING LIMITED
RECONCILIATIONS OF NON-GAAP MEASURES TO THE NEAREST COMPARABLE
GAAP MEASURES (CONTINUED)
 
The table below sets forth a reconciliation of net cash provided
by operating activities to free cash flow for the periods
indicated:
 
                                                                                                          Three months ended December 31,                                                                                        Nine months ended December 31,
                                                                                                         ------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------
                                                                                                           2016                                 2017                                                                       2016                                        2017
                                                                                                         -------                                           ----------------------------------------------------------                                          -------                                           ------------------------------------------------------------------------
                                                                                                            RMB                                               RMB         US$                                               RMB                                               RMB                US$
                                                                                                         -------                                           -------                                           -------                                           -------                                           --------                                           --------------------
                                                                                                                                                         (in millions)                                                                                                                                                (in millions)
Net cash provided by operating activities                                                                 37,416                                            55,173                                             8,480                                            69,580                                            110,991                                                         17,059
Less: Purchase of property and equipment and intangible assets                                           (3,246)                                           (9,029)                                           (1,388)                                           (9,388)                                           (20,193)                                                        (3,104)
(excluding land use rights and construction in progress)
Add: Others                                                                                                 (48)                                                 -                                                 -                                               618                                                  -                                                              -
                                                                                                         -------                                           -------                                           -------                                           -------                                           --------                                           --------------------
                                                                                                                                                                                                                                                                                                                                                                     
Free cash flow                                                                                            34,122                                            46,144                                             7,092                                            60,810                                             90,798                                                         13,955
                                                                                                         =======                                           =======                                           =======                                           =======                                           ========                                           ====================
 
 
ALIBABA GROUP HOLDING LIMITED
SELECTED OPERATING DATA
 
Annual active consumers
 
The table below sets forth the number of active consumers on our
China retail marketplaces for the periods indicated:
 
                                                                                                                                                                                                      Twelve months ended
                                                                  ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Mar 31,     Jun 30,     Sep 30,     Dec 31,     Mar 31,     Jun 30,     Sep 30,     Dec 31,
                                                                    2016                                              2016                                              2016                                              2016                                              2017                                              2017                                              2017                                              2017
                                                                  -------                                           -------                                           -------                                           -------                                           -------                                           -------                                           -------                                           -------
                                                                                                                                                                                                                                               (in millions)
Annual active consumers                                               423                                               434                                               439                                               443                                               454                                               466                                               488                                               515
 
 
Mobile
 
The table below sets forth the mobile MAUs on our China retail
marketplaces for the periods indicated:
 
                                                                                                                                                                                            The month ended
                                                      ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Mar 31,     Jun 30,     Sep 30,     Dec 31,     Mar 31,     Jun 30,     Sep 30,     Dec 31,
                                                        2016                                              2016                                              2016                                              2016                                              2017                                              2017                                              2017                                              2017
                                                      -------                                           -------                                           -------                                           -------                                           -------                                           -------                                           -------                                           -------
                                                                                                                                                                                                                                   (in millions)
Mobile MAUs                                               410                                               427                                               450                                               493                                               507                                               529                                               549                                               580
 
Revenue per active consumer / mobile revenue per mobile MAU
 
The table below sets forth information with respect to annual
China commerce retail revenue per annual active consumer and
annualized mobile revenue per mobile MAU from China commerce
retail for the periods presented:
 
                                                                                           Mar 31,     Jun 30,     Sep 30,     Dec 31,     Mar 31,     Jun 30,     Sep 30,           Dec 31,
                                                                                                                                  2016                                              2016                                              2016                                              2016                                              2017                                              2017                                              2017                                                    2017
                                                                                                                                -------                                           -------                                           -------                                           -------                                           -------                                           -------                                           -------                                           --------------------
                                                                                                                                                                                                                                                                                                                     (in RMB)
Annual China commerce retail revenue per annual active consumer(1)                                                                  189                                               202                                               215                                               241                                               251                                               273                                               293                                                            315
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Mobile revenue per mobile MAU from China commerce retail - Annualized(2)                                               123                                               140                                               151                                               166                                               179                                               196                                               213                                                            229
 
____________________
  (1)     China commerce retail revenue per active consumer for each of the
                                                above periods is calculated by dividing the China commerce retail
                                                revenue for the previous 12-month period by the annual active
                                                consumers for the same 12-month period.
  (2)                                           Mobile revenue per mobile MAU from China commerce retail, annualized
                                                is calculated by dividing mobile revenue from China commerce retail
                                                for the previous 12-month period by the mobile MAUs for the last
                                                month of the same period.

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20180201005577r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20180201005577/en/

SOURCE: Alibaba Group Holding Limited

Alibaba Group Holding Limited 
Investor Relations Contact 
Rob Lin 
investor@alibabagroup.com 
or 
Media Contact 
Robert Christie 
bob.christie@alibaba-inc.com


Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2019 StockSelector.com. All rights reserved.