China telco subscription data for February, other China
market news updates and operator results for 2016 - Part 3
Alibaba maintains explosive
momentum with a 53% revenue growth
Alibaba results for the 5 years
2012 to 16 ended March 31st
(RMB millions):
Latest financial Q3 and YTD 2017
results
On January 24th Alibaba stock was
up 3% following Q3 FY2017 results that beat market expectations on both revenue
and earnings. Specifically, Alibaba reported:
1. Revenue up 54% to
RMB 53.25 billion ($7.67 billion), ahead of analyst calls by about $375 million
(5%). CFO Maggie Wu said that with three quarters already ahead of expectations
Alibaba was raising its growth-rate forecast for the full year from 48% to 53%,
versus 33% growth for FY 2015/16.
2. Net earnings of RMB
17.12 billion ($2.57 billion) and adjusted EPS of $1.30, 17 `cents, or 15 %
more than the markets were expecting; free cash flow during the quarter was RMB
31 billion ($4.9 billion).
3. Core e-commerce
revenue for Q3 generated by its Taobao and Tmall business systems was RMB 46.58
billion ($6.71 billion), up 45% YoY. Alibaba claims it now has over 493 million
users, of which 443 million are classified as active buyers, a significant
proportion of China's estimated 731 million Internet users, of whom 95% do
their business via mobile phones.
4. Although still
quite a small percentage of its total business Alibaba's cloud computing
revenue grew 115% from Q3 2016 to RMB 1.76 billion ($254 million) and was up
nearly 50% sequentially. Apart from the encouraging growth rate the cloud
business loss in Q3 was $49 million, a significant improvement on its Q2 loss
of $66 million, suggesting it could become profitable within the next three
quarters. The cloud computing unit added 114,000 paying customers during the
quarter to a total of 755,000 customers. At the same time Alibaba launched data
centres internationally, following its Chinese customers to new markets as well
as acquiring new customers outside China.
5. Mobile
MAUs were up 43 million to a total of 493 million.
6. Revenue per annual
active buyer continued to increase reaching $35 in the December quarter; on the
mobile front, revenue per mobile user, which had also been increasing for
several quarters, reached $24 in the quarter.
7. Digital media and
entertainment business rose 273% to RMB 4.1 billion ($585 million) as Alibaba
continued to integrate its Youku Toudou multi-screen entertainment and media
company and other investments in film, music and sports.
8. Other
activities accounted for RMB 845 million ($122 million), up 61%.
Other Alibaba strategic developments
In its January 24th releases
Alibaba noted that Koubei , a 12 years old Alibaba affiliate focused on
enabling local commerce, had closed a $1.1 billion financing round in January. A
major part of Alibaba's e-commerce strategy is now being devoted to its so
called 'online-to-offline' initiative, or O2O,which attempts to blur the line
between physical and electronic retail.
On January 9th Alibaba announced
that, together with the founder of the target company, Shen Guo Jun, it was
leading an offer of $2.6. billion to delist from the Hong Kong stock exchange
and privatise the Intime Retail Group, a company registered in the Cayman
Islands that operates 29 department stores and 17 shopping malls across urban
China, mainly in Zhejiang province. Alibaba already owned 28%, acquired in 2014
for $692 million In the official announcement Alibaba CEO Daniel Zhang commented:
- "China’s
total retail sector is a US$4.5 trillion economy and is growing at 10.7% a
year. Alibaba is working with offline retailers to transform conventional
approach, create new consumer shopping experience and use actions to embrace
future opportunities under the new retail model".
- "We don’t
divide the world into real or virtual economies, only the old and the new.
Those who cling on to the old ways of retailing will be disrupted, and brick
and mortar businesses will be able to create value for consumers if they are
integrated with the power of mobile reach, real-time consumer insights, and
technology capability to improve operating efficiency".
On February 21st it was announced
that Alibaba had agreed for its delivery affiliate, Cainiao Smart Logistics
Network, to work with the 4,700-store Shanghai Bailian Group, one of China's
largest supermarket and department store chains, to employ its various
e-commerce technologies to improve the traditional physically-based retail
sector in areas such as customer relations, payment and logistics. This is
similar to its tie-ups with other players such as electronics chain Suning
Commerce Group and the Sanjiang Shopping Club (in November 2016 Alibaba
invested around $300 million to acquire 30% of Sanjiang SC).
Alibaba is now beginning also to
accelerate its international expansion. In April 2016 the company invested $1
billion to acquire a majority share of Lazada.com a privately owned German
e-commerce company with sites in Indonesia, Malaysia, the Philippines,
Singapore, Thailand and Vietnam. In early February 2017 sources claimed that
Alibaba and its affiliate company ANT Financial were leading an additional investment
of up to $200 million in Indian e-commerce and digital payment platform Paytm (a
company in which they had already invested $680 million and owned 42%). The
deal that would essentially give them a majority stake in the company. Paytm
competes in the emerging Indian e-commerce market with companies such as Amazon
India, Flipkart and Snapdeal.
"This significant addition of SD-WAN to the current available portfolio of Wholesale solutions - including MEF 2.0 Certified Carrier Ethernet, MPLS and Dedicated Internet Access and more - enables a full-scale, flexible and powerful technology that positions resellers as trusted advisers to their end users," said Jeff Brown, director of product management and marketing for Windstream's Wholesale business unit. "By leveraging the reach of the Internet, Windstream Wholesale's SD-WAN solution combines end-user locations and services through an easy-to-use interface, eliminates the need for manual monitoring and allows our resellers to deliver a fully managed solution to their customers."
"This significant addition of SD-WAN to the current available portfolio of Wholesale solutions - including MEF 2.0 Certified Carrier Ethernet, MPLS and Dedicated Internet Access and more - enables a full-scale, flexible and powerful technology that positions resellers as trusted advisers to their end users," said Jeff Brown, director of product management and marketing for Windstream's Wholesale business unit. "By leveraging the reach of the Internet, Windstream Wholesale's SD-WAN solution combines end-user locations and services through an easy-to-use interface, eliminates the need for manual monitoring and allows our resellers to deliver a fully managed solution to their customers."
