Recently, Alibaba disclosed that the revenue in Q3 of fiscal year 2022 (the fourth quarter of 2021) was 242580 billion yuan (about 38.066 billion US dollars), an increase of 10% year-on-year; Not calculated according to US GAAP, Alibaba’s net profit in this quarter was 44.624 billion yuan (about US $9.074 billion), down 25% year-on-year.
The financial report revealed several key words of the development path of this large company: Farewell profits, high growth rate, healthier development is given higher priority when business fitness is in progress; China’s annual active users exceeded 1 billion for the first time, and still has the most diverse and sticky online consumer group in China; Consumers in overseas markets exceeded 300 million, becoming one of the important forces for China’s digital economy to go to sea.
This is also Alibaba’s first quarterly financial report after upgrading its diversified governance system and re dividing its business segments. From higher and faster to better and stronger, what imagination will Ali bring at the critical moment of China’s digital economy?
bid farewell to high profit growth and embrace healthier development
This is the first quarterly financial report of Alibaba after its drastic re division of business segments at the end of last year. Since 2014, Alibaba has gradually defined three strategies for the future – domestic demand, globalization and cloud computing. At the end of 2021, Alibaba ushered in the latest round of organizational structure adjustment, with the establishment of “China digital commerce” and “overseas digital commerce”.
Among them, the “China digital commerce” segment includes big Taobao (including Taobao, tmall and Alibaba mom), B2C retail business group, taocai, taote and 1688; The “overseas digital commerce” segment includes two overseas businesses of global express and international trade (icbu), as well as several subsidiaries facing overseas markets such as lazada, which makes it clearer to promote domestic demand and globalization strategy.
Through the “three statements” (assets and liabilities, operating profit and loss, cash flow) data, it also reflects the business fitness effect after Alibaba’s structural transformation: continue to increase investment in Chinese businesses, focus on “internal skills”, strengthen the strength of diversified income growth, and give higher priority to healthier and higher quality.
According to the financial report data, in this quarter, China’s digital commerce sector achieved an operating revenue of 172226 billion yuan, with a year-on-year increase of 7%. Under the increasingly responsible and fierce competition pattern of the industry market development environment, the sector has made a series of adjustments, including increased investment in growing business and user growth, as well as measures to support businesses.
Therefore, after a series of adjustments, the growth rate of China’s digital commerce, which accounts for the largest proportion of revenue, declined in this quarter, but it still accounts for 71% of the company’s overall revenue; As the first time in Alibaba’s history, the “China digital business sector” has fully opened up the two business lines of “Amoy series” and “B series”, which has still stabilized Alibaba’s main position in fully promoting domestic demand strategy.
The operating revenue of overseas digital commerce was 16.449 billion yuan, a year-on-year increase of 18%, accounting for 7% of the company’s overall revenue. In the revenue performance of other businesses, in addition to digital media and entertainment business, the other six business segments are in a state of growth.
Under the strategic priority of improving “health”, it is the strong tenacity of enterprise revenue performance and the continuous optimization of growth structure, which is also confirmed by the growth curve of user data: in the 12 months ended December 31 last year, the annual active consumers of the global Alibaba ecosystem reached about 1.28 billion, with a quarterly increase of 43 million. Consumers in the Chinese market increased by 26 million to 979 million in a single quarter, while consumers in overseas markets exceeded 300 million for the first time.
fitness, resonance with national strategy
The health of financial statements is actually the health of the digital economy. From the financial report, Alibaba’s basic focus on China’s commercial consumption is still solid. At the same time, in the spirit of “constantly strengthening, optimizing and expanding China’s digital economy”, Alibaba has launched a series of measures to promote the transformation from consumer Internet to industrial Internet in the direction of accelerating the integration of digital economy and real economy.
By installing Alibaba cloud’s “industrial brain”, zheneng Jinjiang environmental Xishan waste power plant in Kunming, Yunnan Province can liberate the workers responsible for temperature control during incineration from nearly 10000 temperature control operations every day, reduce the workload by 90%, increase the power generation by five percentage points, and generate 10 degrees more green power per ton of waste, It has become an application innovation for digital technology to actively enable the goal of “double carbon”.
Speed is how fast you can go, and health is how far you can go; The key word of “China’s economy and even the world’s health” is not just China’s economy. To some extent, under the background of strong industry supervision and global competition, we also hope to see the market direction, enterprise trend, industry trend and even the new direction of the development of China’s digital economy from a financial report.
The digital economy advocated by Alibaba is not only protecting itself, but also sharing with the society. Taking the hard core technology and industrial Internet as an example, Alibaba’s path is: on the one hand, adhere to deep technology, from core software technology and cloud operating system to breakthroughs in key underlying technologies such as chips, and build core capabilities. On the other hand, relying on cloud computing capabilities, we will develop solutions based on the Internet, retail, finance, transportation, manufacturing and other industries, and deeply participate in the industrial digitization process of the whole society.
Behind the strategic direction of “pursuing health” is perhaps a new thinking: Ali, taking advantage of the consumption platform and good domestic demand, is more active in seeking service digitalization and presenting new stories that are consistent with the advanced nature of the times. Technology accumulation has increasingly entered the “hard core layer” in closer contact with manufacturing and technology from the initial commercial application innovation. In 2021, Alibaba officially released the arm server chip with the strongest performance in the industry – self-developed cloud chip Yitian 710 In October of that year, Alibaba cloud further opened the full-featured native distributed database polardb-x to the public.
At present, Alibaba cloud database has been widely used in government and enterprise markets, covering natural person tax management system, China Post, China Pacific Insurance (Group) Co.Ltd(601601) , AIA, Shenwan Hongyuan Group Co.Ltd(000166) securities and other government and enterprise users.
In the fourth quarter of 2021, Alibaba’s revenue from cloud computing business increased by 20% year-on-year, and its adjusted EBITA profit was 134 million yuan, realizing profits for five consecutive quarters. Although it was affected by the cessation of procurement by head customers and the slowdown of customer demand in industries such as mutual entertainment and online education, it also benefited from the development of the financial and telecommunications industry, The overall cloud business maintained steady growth and showed strong growth potential.
turning point imagination
According to the China Internet development report (2021) released by China Internet association, the growth rate of the industry decreased from 46.5% in 2015 to 16.7%, with an average annual growth rate of 6 percentage points.
For a long time, large Internet companies represented by Alibaba have sought productivity from technology and efficiency, achieved rapid growth with asset light and high efficiency, and attracted the attention of the outside world. At present, a new consensus has gradually formed: the era of heroes based on speed and flow is gradually moving away.
In the past two years, under the influence and pressure of various factors, the Internet industry has been severely disturbed in the secondary market, and the concept shares in the Internet have also experienced a sharp correction; As one of the representative companies, Alibaba’s share price trend is even steeper.
However, investment always depends on expectations and faces the future. From the fourth quarter of last year, some “smart money” continued to increase positions in Ariba. Jinqiao water, the world’s largest hedge fund, continued to increase its holdings, increasing its position in general shares of main e-commerce including Alibaba to about 30%. BlackRock also increased its holdings of Alibaba ADR by 116% in the fourth quarter of last year. The previously disclosed four seasons report also showed that 100 billion private Jinglin assets also increased their holdings of nearly 200000 shares of Alibaba ADR, with an increase of 182%.
Why did the capital increase its position? In addition to undervaluation, cash equivalents, oversold and other reasons, an important consideration is the future prospect. In a sense, all kinds of capital, including regulators, are happy to see a turning point. The digital economy and the Internet industry need a great change in growth logic and business model system.
At the turning point, Alibaba, which occupies an important position in the era of digital economy, is particularly noteworthy.
At the Alibaba performance teleconference, Zhang Yong, chairman of the board of directors and CEO, clearly explained the future development strategy, “The focus of the future has shifted 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, digitizing the service industry, serving the real economy, benefiting the society, facing the future and adhering to the road of healthy and sustainable development.”
From experiencing “explosive growth” to waiting for “long slope and thick snow”, when the market rediscovers the industry, the long-term growth power and solid barriers that Zhang Yong can have can still be expected from the large companies described in the performance meeting as “firmly implementing the multi engine growth strategy, highly focusing on capacity-building and value creation, and showing a positive development trend in key strategic businesses”.
