In Q2 2021, Alibaba’s net profit was 28.52 billion yuan, a year-on-year decrease of 39% From Alibaba financial report

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On November 18, Alibaba group released the second quarter financial report of fiscal year 2022. According to the financial report, the revenue in the second quarter was RMB 2006.9 billion, and the market forecast was RMB 206.17 billion, which was lower than the market expectation. The adjusted net profit in the second quarter was 28.52 billion yuan, a year-on-year decrease of 39%. Adjusted EBITDA was RMB 34.84 billion, a year-on-year decrease of 27%.

In the second quarter, the cloud business revenue was 20.01 billion yuan, and the market forecast was 19.25 billion yuan. The number of active consumers in Alibaba’s entire ecosystem reached 1.24 billion annually, an increase of 62 million in a single quarter. Alibaba expects the revenue of fiscal year 2022 to increase by 20% to 23% year-on-year.

Zhang Yong, chairman and CEO of Alibaba group, said: “In this quarter, Alibaba continued to invest firmly in the three strategies of domestic demand, globalization and cloud computing, laying a solid foundation for the group’s long-term sustainable development. Alibaba’s ecological global active consumers reached about 1.24 billion annually, with a net growth of 62 million in a single quarter, and is steadily moving towards the long-term goal of serving 2 billion consumers around the world.”

As of September 30, 2021, the global annual active consumers of Alibaba ecosystem had reached about 1.24 billion, with a year-on-year increase of about 62 million. Among them, 953 million consumers come from the Chinese market and 285 million consumers come from overseas.

This quarter, Alibaba Group’s revenue increased by 29% year-on-year. In the six months ended September 30, Alibaba’s domestic business sector increased by 31% year-on-year, its global business increased by 41% year-on-year, and its enterprise digitization and services based on Alibaba cloud and rookie increased by 32% year-on-year.

In this quarter, cloud computing business revenue increased by 33% year-on-year to RMB 20.007 billion, making profits for four consecutive quarters. Taote has more than 240 million active consumers in the year. Through high-quality supply and supply chain capacity, Gmv grew by more than 150% quarter on quarter. Local living service orders increased by more than 30% year-on-year.

In the global market, lazada’s orders increased by more than 82% year-on-year, and trendyol Gmv increased by more than 80% year-on-year. As of the quarter ended September 30, the revenue of Alibaba’s international business sector increased by 34% year-on-year to RMB 15.092 billion.

ESG (environment, society and corporate governance) has increasingly become an important indicator to measure the long-term, healthy and sustainable development of global enterprises. In September, Alibaba announced that it would invest 100 billion yuan before 2025 to support actions in ten fields such as scientific and technological innovation, economic development, high-quality employment and care for vulnerable groups.

Wu Wei, chief financial officer of Alibaba group, said: “driven by the performance of diversified businesses, the group’s revenue increased by 29% in this quarter. We continued to invest in key strategic areas in this quarter and achieved significant growth in these young businesses.”

Performance summary

For the quarter ended September 30, 2021:

·The revenue was RMB 2006.90 billion (US $31.147 billion), a year-on-year increase of 29%. Without considering the impact of the merger of Gaoxin retail, our revenue will increase by 16% year-on-year to 180.438 billion yuan (US $28.004 billion). The total revenue of cross-border and global retail and wholesale businesses increased by 34% year-on-year to RMB 15.092 billion (US $2.342 billion). The revenue of our cloud computing business increased by 33% year-on-year to 20.007 billion yuan ($3.105 billion).

·The global annual active consumers of Alibaba ecosystem reached about 1.24 billion in the 12 months ended September 30, 2021, an increase of about 62 million over the 12 months ended June 30, 2021. Among them, 953 million consumers came from the Chinese market and 285 million consumers came from overseas, with a net increase of 41 million and 20 million in a single quarter respectively.

·The operating profit was RMB 15.006 billion (US $2.329 billion), a year-on-year increase of 10%, mainly due to the decrease of RMB 15.690 billion in equity incentive expenses related to ant group and granted to our employees. Equity incentive expenses are not included in non GAAP financial indicators. Adjusted EBITDA (a non GAAP financial indicator) decreased by 27% year-on-year to RMB 34.840 billion (US $5.407 billion). Adjusted EBITA (a non GAAP financial indicator) decreased by 32% year-on-year to RMB 28.033 billion (US $4.351 billion). The year-on-year decrease was mainly due to our increased investment in key strategic areas showing steady business growth and our measures to support businesses. Our investment in key strategic areas within the business segment (such as taote, local life services, community business platform and lazada) increased by RMB 12.575 billion year-on-year. Without considering the impact of such inputs, the profit of our commercial segment will continue to be stable year-on-year.

·The net profit attributable to common shareholders was RMB 5.367 billion (US $833 million) and the net profit was RMB 3.377 billion (US $524 million). Non GAAP net profit was RMB 28.524 billion (US $4.427 billion), a year-on-year decrease of 39%.

·Diluted earnings per American depositary share were RMB 1.97 (US $0.31) and diluted earnings per share were RMB 0.25 (US $0.04 or HK $0.30). Non GAAP diluted earnings per American depositary share was RMB 11.20 (US $1.74), a year-on-year decrease of 38%, and non GAAP diluted earnings per share was RMB 1.40 (US $0.22 or HK $1.68), a year-on-year decrease of 38%.

·The net cash flow from operating activities was RMB 35.830 billion (USD 5.561 billion). Non GAAP free cash flow was RMB 22.239 billion (US $3.451 billion), a decrease compared with RMB 40.540 billion in the same period in 2020, mainly due to the decline in profitability due to our increased investment in key strategic areas.

cloud computing  

In the quarter of September, the revenue of cloud computing business increased by 33% year-on-year to 20.007 billion yuan ($3.105 billion), mainly driven by the strong growth of customer revenue in the Internet, financial services and retail industries. Products we announced several new products and technology upgrades at the 2021 yunqi conference held in October, focusing on:

·Yitian 710 server chip: we have released a self-developed processor that will be applied to our data center. This server chip is called Yitian 710, which can achieve strong computing performance and excellent energy efficiency. We will continue to work with global partners including Intel, NVIDIA, AMD and arm to promote Cloud Architecture Innovation and bring more diversified cloud computing services to global customers.

·DPCA architecture: the fourth generation DPCA architecture is the only technology architecture in the industry with large-scale RDMA (remote direct memory access) network capability. The delay is as short as five microseconds, further accelerating cloud data intensive applications.

technology

Alibaba cloud’s unique advantages come from its self-developed technology and Alibaba Group’s continuous investment in technology R & D, bringing more diversified new products and industry-specific solutions to customers and partners. In this quarter, our self-developed technology highlights include:

·Database: our self-developed technology continues to be recognized by leading research and consulting institutions in the industry. For example, according to the Research Report on China’s relational database market released by IDC in 2020, Alibaba cloud has long ranked first among cloud relational database manufacturers.

·Open source operating system Anolis OS: Alibaba cloud releases a new operating system, Anolis OS. The dragon lizard operating system is completely open source and provides services through operating system manufacturers and open source communities. Alibaba cloud plans to invest RMB 2 billion in the dragon lizard operating system to provide technical and service support for our ecological partners.

Cash flow and free cash flow from operating activities  

The net cash flow from operating activities for the three months ended September 30, 2021 was RMB 35.830 billion (US $5.561 billion), a decrease of 34% compared with RMB 54.296 billion in the same period in 2020. Free cash flow (a non GAAP liquidity indicator) decreased by 45% from RMB 40.54 billion for the three months ended September 30, 2020 to RMB 22.239 billion (US $3.451 billion) for the three months ended September 30, 2021, mainly due to the decline in profitability due to our increased investment in key strategic areas. The adjustment of net cash flow from operating activities to free cash flow is shown below in this performance announcement.

Share repurchase

In the September quarter, we repurchased approximately 26.9 million ADSS (equivalent to approximately 214.9 million ordinary shares) for approximately $5147.5 million in accordance with the company’s share repurchase plan.

Read more from Netease Technology: Alibaba’s financial report: in fiscal year 2020, Alibaba’s total revenue in Q2 was 119.02 billion yuan, a year-on-year increase of 40%. Alibaba’s financial report: in 2021, Alibaba’s net profit in Q2 was 43.441 billion yuan, a year-on-year increase of 10%. Alibaba’s financial report: in 2014, Q4’s revenue was 4.219 billion dollars, a year-on-year increase of 40%. Alibaba updated prospectus: in 2014, the total trading volume of its retail platforms was 501 billion yuan Year on year growth of 45.1% Alibaba financial report: Alibaba’s revenue in fiscal year Q2 of 2016 was $3.488 billion, a year-on-year increase of 32% Alibaba financial report: Alibaba’s net profit in fiscal year 2019-2020 was $30.949 billion, a year-on-year increase of 54% Alibaba financial report: Alibaba’s net profit in fiscal year Q4 of 2016 was $2.417 billion, a year-on-year increase of 38% Alibaba financial report: Alibaba’s net profit in fiscal year Q3 of 2018 was $3.7 billion, a year-on-year increase of Baba financial report: Q1 net profit of fiscal year 2018 was USD 2.953 billion, with a year-on-year increase of 67%. Alibaba financial report: Alibaba’s revenue in Q2 2015 was RMB 20.245 billion, with a net profit of RMB 30.816 billion. Alibaba financial report diagram: Alibaba’s revenue in Q2 2016 was RMB 32.154 billion, with a year-on-year increase of 59%. Read Alibaba’s 2014 financial report – information chart Alibaba financial report: Alibaba’s revenue in the first quarter of fiscal year 2017 was USD 4.838 billion, the same as that in the same period An increase of 59% over the previous year, Alibaba’s market value exceeded Portugal’s GDP in 2013 and became the world’s second-largest Internet company iResearch: in Q1 2012, Alibaba achieved a revenue of 1.59 billion yuan, a year-on-year increase of 3.7%

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