On the 24th, Alibaba released the third quarter financial report of fiscal year 2022 as agreed.
According to the financial report, the revenue in the third quarter of fiscal year 2022 was 242.58 billion yuan, a year-on-year increase of 10%; The net profit was 20.429 billion yuan, a year-on-year decrease of 75%. Not calculated according to US GAAP, the net profit was 44.624 billion yuan (about US $9.074 billion), a year-on-year decrease of 25%.
After the release of the financial report, Alibaba once fell nearly 9% in the opening, reaching a minimum of $100.02, a new low in nearly five years, but the decline soon narrowed. As of press time, Alibaba fell 2.35% to $107.14 per share.
While publishing the financial report, Alibaba also said that it had spent about $7.7 billion to buy back about 10.1 million American Depositary Shares (equivalent to about 80.7 million ordinary shares). The repurchase program will continue until the end of 2022.
goodwill impairment exceeding 25 billion
reduced net profit by 75%
According to the financial report, Alibaba’s revenue in this quarter was 242.58 billion yuan (the same below), a year-on-year increase of 10%, mainly due to the year-on-year increase of 7% to 172.226 billion yuan in the revenue of China’s commercial segment, 20% to 19.539 billion yuan in the revenue of cloud business segment, and 27% to 12.141 billion yuan in the revenue of local life service segment, And the international business segment revenue increased by 18% year-on-year to 16.449 billion yuan.
In this quarter, Alibaba’s net profit attributable to common shareholders was 20.429 billion yuan and net profit was 19.224 billion yuan, down 74% and 75% respectively year-on-year. Alibaba explained that this was mainly due to the decrease in net income caused by the impairment of goodwill of 25.141 billion yuan and the change in the fair price of equity investment held by the company, These two items are not included in non GAAP financial indicators.
With regard to the impairment of goodwill of RMB 25.141 billion, Alibaba said that the impairment reflected that the book value of several reporting units of the digital media and entertainment division exceeded their fair value.
According to the financial report, Alibaba’s digital media and entertainment revenue was 8.113 billion and its loss was 2.139 billion in the third quarter. Among them, the average number of daily subscribers of Youku increased by 14% year-on-year.
Ali film participated in the production and distribution of more than 70% of China’s major box office films in this quarter.
In fact, Alibaba’s financial report shows that in all businesses of Alibaba, in addition to the adjusted EBITA profits of businesses and cloud services in China, the adjusted EBITA profits of many businesses, including local life and rookies, are in a state of loss.
Alibaba explained that the loss making businesses are losses caused by increasing investment to obtain scale.
However, many people in the industry said that this was expected. At the end of fiscal year 2021, Alibaba announced that all incremental profits in fiscal year 2022 were used to support businesses, invest in new businesses and strategic areas.
the number of global active users reached 1.3 billion
nearly 1 billion Chinese users
Alibaba investment has also seen results.
The financial report shows that Alibaba’s Chinese consumer business continues to maintain rapid growth. For the 12 months ended December 31, 2021, the annual active consumers in the Chinese market reached 979 million. By the end of this fiscal year, the goal of China’s annual active consumers reaching 1 billion will be completed as planned.
Alibaba has also made positive progress in overseas markets. In this quarter, consumers in overseas markets exceeded 300 million for the first time. Lazada and trendyol achieved strong growth of 52% and 49% respectively, driving the order of the whole international retail business to maintain a year-on-year growth of 25%. International wholesale business Alibaba international station Gmv increased by 50% year-on-year.
On the 24th, Zhang Yong, chairman of Alibaba’s board of directors and CEO, said in a performance teleconference that we believe that with the acquisition of 1 billion high-quality AAC, we have basically covered the vast majority of users with consumption capacity in China, and the focus in the future has changed from the growth of users to the retention of users and the growth of ARPU value. We will always adhere to serving the people’s livelihood, serving our customers represented by small and medium-sized enterprises, serving the digitization of the service industry, serving the real economy, benefiting the society, facing the future and adhering to the road of healthy and sustainable development.
Alibaba cloud has made profits for five consecutive quarters
Alibaba’s Alibaba cloud business was a surprise. It achieved a 20% revenue growth in this quarter, with an adjusted EBITA profit of 134 million yuan, making profits for five consecutive quarters.
According to the financial report, Alibaba cloud added one data center in South Korea and one data center in Thailand during the quarter, and the number of operating regions increased to 25. According to other data, Alibaba cloud’s overseas market has increased by more than 10 times in the past three years.
Zhang Yong said in the conference call that the strong demand growth in the financial and telecommunications industries partially offset the impact of the slowdown in customer demand in the Internet industry. In the just concluded Beijing Winter Olympics, the core information system has been 100% running on Alibaba cloud. This is the first time in the history of the Olympic Games that cloud computing replaces traditional it to carry the organization and operation of the Olympic Games.
Zhang Yong also said that with the general trend of digitalization of consumption patterns and industry becoming clearer, the process of industrial digitization serving customers in all walks of life has become the biggest opportunity and foundation for Alibaba’s long-term, healthy and sustainable development.
The process of China’s industrial digitization has just begun. Ali will be committed to serving the real economy and all walks of life for a long time. This is also the biggest opportunity and foundation for Ali’s long-term, healthy and sustainable development.
Zhang Yong believes that, just like the cloud in the Winter Olympics, Alibaba has seen great opportunities for digitization in many industries in the future, such as new energy vehicles, finance and medical treatment, which are high potential industries with great demand for computing power and intelligence. Alibaba will take advantage of Alibaba cloud’s self-developed technology and products to launch corresponding solutions for these industries.
Surprisingly, in November last year, due to security vulnerabilities, Alibaba cloud did not immediately notify the Ministry of industry and information technology, resulting in the termination of the contract between the Ministry of industry and information technology and Alibaba cloud, said that it would not cooperate with Alibaba cloud within six months, and launched an audit procedure for Alibaba cloud.
At present, we can see that this accident has not had a significant impact on Alibaba cloud.
continue repurchase
has spent $7.7 billion to buy back 340 million shares
According to the financial report, according to the share purchase plan, Alibaba spent about $1.4 billion to buy back about 10.1 million American Depositary Shares (equivalent to about 80.7 million ordinary shares) in the third quarter of fiscal year 2022 (October December). In the nine months ended December 31, 2021, Alibaba has spent about $7.7 billion to buy back about 42.2 million American Depositary Shares (equivalent to about 337.5 million ordinary shares).
It is understood that on December 28, 2020, the board of directors of Alibaba Group authorized the repurchase of US $10 billion of American depositary shares. On August 3, 2021, when Alibaba Group announced the financial report of the first quarter of fiscal year 2022, it announced that it would expand the share repurchase plan from US $10 billion to US $15 billion, which is also the largest repurchase plan in the history of Alibaba group.
It is reported that the repurchase plan will last until the end of December 2022. At present, the cumulative number of share repurchases has accounted for 51% of the $15 billion share repurchase plan.
Alibaba’s share price has fallen nearly 50% in the nine months of continuous repurchase.
Wu Wei, chief financial officer of Alibaba group, said: Alibaba has always adhered to innovation and investment in the future. As disclosed in the new business segment, our continued investment in growth business has achieved clear results. We are confident in the company’s current and long-term prospects.
