Q2 2021 Alibaba Group Holding Ltd Earnings Call (Chinese, English)
Good day, ladies and gentlemen, thank you for standing by welcome to only by this group the September quarter 2000, <unk> results Conference call.
This time, all participants are in a listen only mode. After.
After managements prepared remarks, there will be a question and answer session.
I'd now like to the call over to Mr. Rob Lynch head of Investor Relations of Alibaba Group. Please go ahead.
Good evening and good morning, everyone and welcome to Alibaba Group's September quarter, 2020, <unk> results conference call.
We're stuck with us today are.
Since I'm sure named CEO Joe.
<unk> <unk> <unk> <unk>.
<unk> CFO this.
This call is also being webcast one section of our corporate website <unk>.
A replay of the call will be available on our website later today.
Now, let me quickly cover the safe Harbor.
Today's discussion may contain forward looking statements forward.
These statements involve inherent risks and uncertainties.
Actual results could differ materially.
Current expectations.
Discussion of these risks.
Currency, please refer to our latest annual report.
And other documents filed with the U.S. FCC announced on the website of course Doctor Strange I.
Any forward looking statements that we make on this call are based on assumptions as of today and we do not undertake any obligation to update these statements except as required under applicable.
Good couple what law.
Please note that certain financial measures that we use on this call such as adjusted EBITDA adjusted EBITDA margin.
Adjusted EBITDA margin.
Good play space, what comments adjusted EBITDA non.
GAAP net income non-GAAP diluted earnings per share.
And free cash flow.
On a non-GAAP basis.
GAAP results and reconciliations of GAAP to non-GAAP measures can be found in your earnings press release.
Unless otherwise stated all.
Oh student metrics mentioned during this call refer us to year over year growth versus the same quarter last year.
In addition, during today's call management will give prepared remarks in English.
Party translate I would put my simultaneous translation.
I need to find another conference line.
Please refer to our press release for details.
During the Q an extension, we will take questions do both English and Chinese third party translate I will go back on sick of this nation.
Oh translations are for convenience purposes, only the case up any discrepancy.
Management statement in other words your language will prevail.
I will now turn the call right now.
Thanks Walt.
Yeah.
Thanks for joining our earnings call today [noise].
Uh huh.
[noise] <unk> adoption accelerates.
Like coal and the rapid economic recovery in China.
If I could control.
Okay.
According to National Bureau of statistics.
The economy continues to recover in the September quarter.
With GDP growth, reaching 4.9% year over year and retail sales just assuming positive growth.
[music].
It is now.
We recognized as a way for you know post <unk>.
[music].
Sure.
To date.
That's position.
Everyone to capture that opportunity.
They should.
Our China retail marketplaces continued healthy growth this quarter.
Consumers are trying to read your marketplaces reached.
Hundred and 57 million for the coal.
And at September 30, 2020.
Okay.
Quarterly increase of 15 guidance.
No.
You use it.
Hunger anyone.
It's with the.
How about continuing strong consumer mindshare.
The user stickiness.
Aging user experience.
Leading consumer community globally.
On T. more physical goods.
Excluding unpaid holder.
21% year over year this quarter.
I couldn't see GE continues to be the Fox pockets.
Degree.
With 28.
Gross.
Which.
Health care increased.
Hey.
Person under 50% year over year.
Respectively.
In addition, well see more apparel is now higher than what it was during the pre <unk> December quarter.
Well <unk> electronics.
Gross flows so do.
During the quarter.
Possibly due to the delayed <unk> new modem release date this year relative to last year.
October we saw growth of over 50% year over year in T., most mobile phone category.
This past quarter.
We upgraded the Taobao mobile home page.
For user feedback.
That's being incredibly positive.
The new home page features.
Immersive user experience.
Has to come from distribution.
Recommendation fee.
We saw a marked increase in both.
The time span as well as page views oppose product Liftings incontinence in response to the changes.
Which set the stage of potential monetization opportunities in the future.
How about deals.
Marketplace I do conscious consumers continued its strong growth during the quarter.
Mobile M&A you exceeded 17 bidding September.
Which represents net adds.
Oh 30 million you since June.
Consumers, who use both cobalt cobalt deal.
To make purchases showed.
Growth in purchase frequency and average spending compared to those who only use public cloud.
We kicked off the 2020 November 11 Global shopping festival.
And this year, we extended the festival from 24 hours to a 11 Dick can thing was to shopping windows.
The first window is from November the first November the third and the second is November 11.
We have made this change for a number of important reasons.
We want to give consumers more time to browse and to get the deal well eating.
Pressure on the logistic infrastructure.
This helps consumers receive package sooner and enjoy a better shopping experience.
Our merchants will also benefit from exposure on a city opportunities that will help them recover from the impact of chronic.
November 11, this year goes beyond online shopping for physical goods.
How do you pay together with our local service platforms.
Well also hole for digital vouchers for services and experiences such as finding beauty treatments travel and entertainment.
Oh well useful.
[music].
Interactive engagement features this year into Creed.
Delightful shopping experience for our consumers.
Not a problem.
Brian expression.
For our merchants.
On November the first.
The first day of November 11.
The 100 brands.
So talk over.
100 million RMB GMB, winning the first 111 minutes.
All the same day.
357, new Brent Oh possible become the top sellers in their respective categories.
Our new retail business appreciable Ocean Dol continued their rapid growth during the quarter.
Many consumers started ordering fresh produce and groceries online from their LIBOR plus four during the pandemic.
Under this has become a habit seemed a post <unk> environment.
Certainly the local neighborhoods through online channels has become a necessity for brick and motor business.
In October we invested 3.6 bid at U.S. dollar.
[music] acquired the controlling speaking sundar.
The purpose of these investments is to further strengthen our exploration in new retail by driving deeper digital transformation of the Hypermarcas hypermarket model.
To elaborate just on a competitive advantage in supply chain.
To create more seem to just fitting sudden or an aldi public digital of course system.
<unk> average daily number of paying customers in December quarter.
Girls, 45% year over year due to the acquisition of high quality merchants and addition of highly engaged Thompson.
How do you pay continues to play an important role in go to most new user acquisition.
Through category expansion and the service differentiation.
<unk> is also expanding from a food delivery platform to a destination for 90 minutes, so delivery service an install consumption services.
Our business is.
Late into international markets continued to enjoy rapid growth.
As the leading cross border import platform in China.
Global GDP growth, so the 7% year over year during the quarter X.
Excluding unpaid orders.
The number of brands and merchants on Timo Global Oh.
As of December 30, 2020, well at a double digit rate year over year.
Yes October.
Okay, and lastly, do free.
International travel retailer to set up.
Both strategic joint venture in China.
The travel retail market.
That's not Oh what.
Leading ecommerce platform in southeast Asia continued to grow over 100% year over year, you order volume despite new ways of Koby 19 in many markets.
Oh, the express how international cross border marketplace continue its business recovery.
Named the ongoing impact of the pandemic.
Hi, Neil networks continue to expand both domestic services on a global smaller just infrastructure.
Its consumer facing services in China include Hi, Neal posts.
Which operates a network of community station temperature stations and a smart pick up blockers.
And it's hard to know cool, which offer us close.
<unk>.
Possible pickup and delivery service through its mobile app.
These two services continues to grow rapidly during the quarter.
Overseas Tonya I'll have to establish.
He market local logistics.
Networks being 50 kind of in 15 countries.
Enriches by collaborating with global partners.
Oh, you must today.
No. That's fine you know is it expected to achieve positive operating cash flow this fiscal year.
We are happy to see the progress of tiniest business development.
An improvement its financial results.
At the same time, Tanya, we'll continue to invest for the future to create long term value.
Ali Baba cloud deliver strong revenue growth, 60% year over year during the quarter.
With public sectors, and the financial services contributing the highest growth.
Now I'll worrying, what's the date that public cloud is expected to turn profitable by the end of this fiscal year.
We believe cloud computing is fundamental infrastructure in the digital era.
But it is still in the early stage of growth.
We are committed to further increasing our investments in cloud computing.
I see you may know.
<unk> group closed its IPO subscription.
Global city with bullets subscription from institutional and retail investors.
However.
November the Threerd.
Group announced that it was notified by the relevant regulators.
Its proposed.
Sure lifting on the strong focus change what's the spend it due to the material matters relating to the regulatory interview.
Oh, its ultimate controller because.
<unk>, Chairman and Chief Executive Officer, President rather than regulators and the recent.
Propose the change in the phenotype regulatory environment.
Consequently, the.
Concurrent proposed it.
Sure.
I think on the Hong Kong stock Exchange was also suspended.
I hadn't groups major shareholder.
<unk> is actively evaluating the impact on <unk>.
Business in response to the recent proposed change in the phenotype regulatory environment and will take appropriate measures accordingly.
[noise] theory that you must have a date I had to shoot my view that digitalization is the biggest opportunity all the time.
All the ballpark is 40 prepared to capture the opportunity with the solid foundation that Weve built.
Over the past two years.
Looking forward, we will continue to drive our business.
Three strategies.
Plastic consumption cloud computing and the Internet.
<unk> Teligent and globalization.
We look forward to exploring the future of this digital I wrote together with you.
Now I will turn it over to Maggie who will walk you through the details of our financial results. Thank you.
Thank you Daniel.
Thank you everyone for joining us.
Let me start with financial highlights for the quarter.
During the September quarter, we continued to acquiring new users and consumers on both top tier cities.
C piece and left it developed areas in China.
Every sending us consumers, our China retail marketplaces continue to t. into a class Oh see TTAC, which was primarily driven by increase in purchase frequency, reflecting our ongoing success in broadening product offerings, improving user engagement and meeting.
[noise] diverse customer needs.
Our total revenue was 155 billion RMB up 30% year on year.
The increase was mainly driven by the robust growth of our China Commerce retail.
Computing and Chinese logistic [noise].
Our GAAP net income in September.
September quarter was 26.5 billion a year on year decrease was.
Mainly because in the same quarter last year, we booked a significant one time gain upon the receipt of a 33% equity interest <unk> cool [noise].
Excluding one time gains and other items non-GAAP net income and September quarter was up 44% to 47 games R&D.
Our free cash flow in the quarter increased about 33% to 41 billion.
Our solid revenue and a robust topic well reflect the value we create for our customers and enable us to reinvest into our business for the longer term.
Now, let's look at our revenue in more detail.
We continue to strengthen our Montana engine drivers to sustain long term revenue growth.
Our businesses have become more diversified and more integrated actually provide more value added services to merchandise our retail marketplace globally.
The value we add it is reflected not only in our main revenue sources such as she CNR.
But also other revenue drivers such as titanium Cogs, No quick service and international retail.
[laughter] overly CMR, which now includes commission revenue grew 20% the increase.
The increase was mainly driven by growth in average spending per merchants and the number of paying merchants.
[laughter] CMR account for 45% of overall revenue since revenues from our new business, who even faster.
With these DMR revenue a search revenue continue to show healthy growth.
We've also seen a well.
And a number of clicks cpcs.
Which is and also the greater beating and test intensity amount merchants.
Revenue from feed recommendations as a percentage of total CMR has increased to mid teens.
The increase is due to greater paying merchant adoption actually improved user experience that drove higher CPR and accelerated growth in consumer numbers.
[noise] International Commerce retail businesses.
Revenue was up 30% second quarter. The increase was primarily driven by revenue growth from that I thought I'd try and do 40.
For the September quarter, Lazanda older volume grew 100% year over year.
Revenue from tying out the 73% young yet.
This growth was mainly due to the increase in both average revenue per order and the volume off August fulfilled from our fast growing.
Okay that many cross border and international Commerce retail businesses.
[noise] revenue from local consumer services was 8.8 billion RMB up 29%. This growth was due to increased average revenue per order and ongoing recovery in on demand delivery. She N equals after pandemic.
Our merchant acquisition continued to accelerate Opcone 19.
I I'm boarding high quality merchants and upgrading membership benefits are paying membership experience continuous and rapid growth.
I'd card continued its solid revenue growth.
Revenue.
60%, primarily driven by growth in the Internet finance and reach out in the sheet customers [noise].
Tradition.
And the penetration rate of I'd cards, among China Chinese listed companies continue to increase and ARPU growth accelerated.
Let's look at our cost trends.
We continue to improve operating efficiency and maintain a healthy cost structure.
We read that.
The savings from operating efficiency improvement.
And Ah. This this isn't that fit into strategically important businesses with strong long term growth potential.
Now, let's move onto our segment reporting.
For the core Commerce segment marketplace based a core commerce possibilities maintain healthy gross.
<unk> increased by 5.3 billion RMB.
To 50.9 billion, we continue to invest in our new seeds businesses in our China retail marketplaces, such as how about life and Talbot deal both of which are showing solid growth.
At the same time developing business such as local consumer service Lazada, new retail and titanium continued to show solid revenue growth improving operating efficiency.
The combined losses at these developing businesses narrow it.
I RMB 2 billion.
From 7 million 225 billion.
The cloud computing business revenue a good gross is very strong we just talked about and then the adjusted EBITDA loss narrowed your year to around 166 million RMB, which represents only 1% lost margin.
Again, we expect a I'd call it to turn profitable in the second half of this fiscal year.
For <unk>, we continue to focus on reducing losses seen you cool sue content cost control, while increasing paying subscriber growth.
Losses reduced by about 1.7 billion RMB two.
To 10, Oh, RMB 10 million for it at the EM segment.
[music].
[laughter] for innovation initiatives and others increased.
Increased losses were mainly due to our investment in technology research and innovation.
Overall, our businesses continued to deliver robust revenue growth and strong profit growth there.
The incremental profits generated are invested in key strategic businesses that increase our addressable market and drive our Oh pro quo.
Share of results as equity method that you might see in the quarter was 4.2 billion RMB, we record our share of resolves Oh equity messy messy one quarter, you know rare [noise].
The share of profit of our equity method at U.S.C. seem to quarter.
Compared to a share of losses of other equity method in previous quarter was mainly due to a general improvement in financial performance of our equity method Investees.
For the quarter free cash flow was 41 billion RMB, which increased by 36% mainly due to our robust profit ability growth.
[noise] and cash cash equivalents and short term investments were 406 billion RMB approximately 60 Binney U.S. dollar.
Our solid balance sheet allows us to you last not only in organic growth, but also your lighting business that will empower it reached I thought about digital economy recently, we invested approximately 2.6 billion a U.S. dollar to acquire a controlling stake.
So art retail, which is the largest hypermarket retail chain China.
Our new retail initiatives, but if I look at the business and technology to enable our offline retail partners to offer a seamless omni channel experience for consumers.
So with this investment we expect even deeper collaboration with Saar that include increasing digitization of offline traffic and activities synchronizing online and offline channel inventories broadening our supply chain network and increasing so our successful marquee to greater.
My purchases.
We expect to start consolidating seminar and that shows a in the coming December quarter.
In the long run well focus on better serving our customers and carrying out our mission.
Two.
Continuously grow our business.
Thank you so let's open for the Q anyway.
[noise] [noise] netsuite corridors for today's call.
Welcome to ask question concerning sporting goods that.
Third party translator will provide consecutive interpretation for the Q an extension.
Management would address your questions. Your language you asked.
Please note that this information is for convenience purposes, only in the case of any discrepancies or minutes and stay many doors, whereas your language will prevail.
Hutchinson of democracy when in your own someone Gordon wants to do it with <unk> since you're going to see the thing when you sum, but I mean you wouldn't.
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So operator no. Please can they speaker Anosike conference line.
He started soon especially when it is thank you.
Thank you, ladies and gentlemen, the question and answer session will begin Momenta relate you asked the question today. Please press star one.
Right. Thank you.
Ladies and gentlemen, we will now begin the question and Ocensa session if.
If you wish you asked the question now please press star one on your telephone keypad and wait for name to be announced if.
If you wish to cancel your request please press the pound ohashi.
To keep more people the opportunity to ask questions. Please keep yourself to no more than one question at a time once.
Once again, ladies and gentlemen, if you wish you asked the question.
Please press star one on your telephone.
Our first question comes from the line of BT Wong from H SBC. Please ask your question.
Hi, Good evening management compression in another solid quarter and thank you for the additional metrics like Taobao GMV me like Genie GMI this quarter, which are very helpful.
You can't use that on some Oh, what is the ultimate goal of the integration here and second is that as we expand into more self operated by by cells business or what are the child and just be see see how do you manage like shopping locations to also party merchants see when a third party merchant also selling to same category well either.
<unk> <unk> with all one p. products, how do you manage that thank you.
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Oh 200 meal Chujah pit all saw that something you got to go to yet.
Yes, if you don't got Suniva treats we won the P. Lula border to teach would you book, but that's yet to be done.
Well the ones you know some of your goals using salty fortunate given to it just.
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Thank you Pete Selby some piece of it.
Thank you this is Daniel.
Let me answer your questions.
First first for summer as I've said in my script I think the purpose of our investment is to sort of.
Leveraged so not so crazy across the country and leverage their supply chain.
Two to 10 or more too that this was the most of it was the CRT Barbara and.
And also we want to further upgrade so not a business model up.
To a multi digital Oh 40 digitalize operations.
And today, we also want to place too.
To even upgrade the existing hyper my model to a full model more community to them and they have to accept more young people back to school. So.
So that's the part of the reason the knees our primary reasons why we further in but you must incident or.
Because we as you know that said if you want to try to rebuild a triple play into cost dependency, that's a data, but it's a it's oh. This it's very difficult at the wheel is we believe this is a very important a cynical network across the country, which will will be for the integrate with a digital network, but digital platform.
Under this supply chain also Heidi, but some from entry to our business.
In terms of the lumpy and a CP calls.
Jose I will say actually party Barbara.
We always believe being Lucky place model, we always believed in partnership. So CP is boy is our priority and but we do see some categories like ink cigarette categories actually we can leverage the <unk>.
That'd be the pole retailers and the and to create a more integrated experience for customers such as.
Oh, that's produced such as groceries, because well have many bulky close race <unk>.
Logistic cost is quite high while the it's very difficult to do a lot to do a oh, So party model up.
And based on a bus delivery hub network country up thought to doing that work. So in this case, we will further integrate our [noise] Oh, one p. with Oh.
With our offline <unk> partners.
And to give people by the experiences so it's a mixture, but so it was stupid eating up partnership and we think Oh, so to enable the merchant is our first priority and even in that lumpy business. Our motor is quite different with other one piece of what we do is what supposedly with a with a supplier.
Well with our brand partners and that not only help them to sell but also help them to market the product and lucky there Brent and I will also share some of the cells that up.
To to our supply until Brentanos, when we help them to food retail sales. So it's a different one p. models.
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[noise] [noise]. Thank you next question comes from the line of Thomas Chong from.
Jefferies. Please go ahead.
Hi, Good evening offense management about taking my question and congratulation on another solid <unk> results. My question is about the commodity perjury Oh, we have been not seeing that alumbaugh did when he is being not spending a lot of what we saw.
It was this im not committed people will probably change that he needs shade here just want to get some color one of our strategies are on display and a quick question you talked about on on the cloud computing side, how should we think about the profitability trend in this.
Second half I mean, it's been a it's a it's going to be profitable and about the long from mocking trend well be speaking this thank you.
Ladies and gentlemen, your speaker line is experiencing some technical difficulties. Please continue to stand on line.
Ladies and Gents me a speaker is currently experiencing some technical difficulties with the line. Please stand by while we address the situation.
Yeah.
Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with the line. Please continue to standby, while we address the situation.
Ladies and gentlemen, your speaker is currently experiencing some technical difficulties with the line. Please continue to standby, while we address the situation.
[noise].
Hi, Andrew.
Hello.
Operator.
[noise]. Please go ahead.
[noise] [noise] Hi, this is Rob Thomas given the technological difficulties do you mind to keeping your questions again.
Yes, sure I'll walk up and.
Look at Asia is Ah Hey, Bobby I saw that's that's all from me stops. My question is about a couple of minutes. He will penetrate given that a lot of all the industry pays I spend a lot of resources in this area.
Should we think about our strategies in these industries and on my second question is about cloud computing, how should we think about the profitability trend in the second half and in terms of the margin profile, how we should we compare with opus. These pieces in a moment.
Thank you.
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You mean, what's your thoughts on how to to go ahead with your commentary from inside I got to tell you that normalizing going through call Felicia Ollie's Army under sort of you so much.
The argument is required guidance you struck Sean through at all.
Sure how about yet to the entry into new leasing Paul Targa equates it yeah, the whole chunks, Eli shore or whether they could be revenue.
Of course, you sounded triggered some great yields and will be too.
For the.
First question community buying.
As you said today the market is very hot and in many players already.
Already entering to this market and we are actually we are also correct.
The progress.
I'm going to try and go to market very closely.
No. We think that this is a very very interesting.
Total.
But but as we always said.
At the end of the we'll have to evaluate that David yes, Okay, Yes model apply.
Hi, Nick.
Yes, and a customer of <unk>.
Value, So oh, well Ali Baba we strongly believe this is highly relevant to consumption and the relevant to the low tier cities even grow areas. So we are very committed to our too.
To the to the new omni initiatives and and also.
Moving the new models to serve the customers being in areas and if you look at what we have the automobile ecosystem actually we have a lot of infrastructure, which is very critical for the <unk> for the penetration of the low low tier cities I didn't even rural areas with a new model and and.
Including the community buying so I think I think now is the still early stage and older people are trying to.
Okay, the customers first but I think that.
The cousins always easy to change if somebody come and give them a better.
Better value. So we are well position and we will go after this thank you.
Hi told us regarding your second question.
Oh, sorry.
Hi, Angie good okay. Thank you.
Good. This is for you to go short shooting to try and go outside to go Shukarno tire shoe.
George what are your thoughts I would like to go back quite normal me I should say meet your quad to shutdown the two yeah Park.
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[noise], Okay. So how much this is actually up with regarding to your second question on the clock profit ability Oh first as you can see from our September quarter reporting a cloud computing is very close to the profit.
Paul So this quarter, we reported a loss of around 150, mainly in R&D, which represents 91%.
EBITDA margin.
So we definitely expect to.
See the profitability in the following two quarters.
You asked about the longer term margin level <unk> talk about during the Investor day.
We don't see any reason that for a long long time I thought about cloud computing cannot reach to the margin level that we've seen a other peer companies before that are we going to continue to focus on expanding expanding our talk.
Computing market leadership and also well our profit thank you.
Oh, no. It's a Maggie will Oh wait ice anyone takes you to the argument Tcl gradually increase on year would give me some color.
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No that's not true channel from a big issue frankly, when they're caught out wanting to shut holdings and D wave, which he got form into <unk>.
Thank you operator next question please.
Thank you. Our next question comes from the line of Mark Mahaney from RBC. Please ask your question.
Thank you two questions. Please you talked about this recent acquisition in the travel retail space, how big of an opportunity do you think this is for the company and how can Ali Baba differentiate itself in that sector. And then secondly can you just addressed the question of whether a pre online retail growth trends do you do you think that the.
They are sustainably back to pre coated levels. Thank you very much.
[noise] Oh scissor what T. W are you going to use you need Oh God type of should sound on numerous kinda you go Oh being show you those two goals. So not only is going way too good to quit doing English or your thought that a hard hard without I'd point out that's how you anyway. So what she I'm sorry to do this year.
I want to be sure to take it sometimes you don't wish to see you do once you Josh it off we told the eating shandy this week.
Oh, thanks for the questions I think for the first question as you May know that China announced a master plan to transform the island of high non into a free trade support.
I think this is a very important step to a two well hang on for another FY <unk>. So 40, Barbara, but we strongly believe that if we report a uniquely oh business, our travel retail business, it's very very important and up because its all good.
It's based more convenient for Chinese consumers go too high now instead of all go to other parts of that other destinations too.
002 to enjoy the Oh shopping so so that's why are we you let the in duty free rather happy to partner with Oh do if we are to work with them to build a JV in China to leverage their supply chain.
In cover retail and to grow.
The business together.
Together with them in China of course, we are also working closely with local partners to make sure. We have the last set up to grow the our travel retail business and the <unk> thing Ali Baba, though as I said, we have a lot of infrastructure.
Rather than to to then two are these I mean are there any new opportunities including.
Including these travel retail because we have digital wallet.
We have our travel platform and the we have I'll walk, our China retail marketplaces, which is a huge interface for the hundreds of millions of consumers many of them could be eight our traveler and 280.
Its way to a delivery school Freaks report. So I think we would try to on average the scene on leverage I won't be happy hour family to grow a that the travel retail business. Thank you.
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Oh, obviously this I mean, I know they suddenly the digitization pace and Oh, the the only the only shopping become a net necessity for more and more like a.
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Thank you operator next question please.
Thank you next question comes from a line of Gregory child from Barkley's. Please ask the question.
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Zante, Bob I've been telling you with a G M B townhome tumbled poppy, who that she had been yourself V. P. D talk I should go shopping I always seem don't do that.
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Thank you My first question has to do with double 11th I'm looking at how 'bout guidelines I'm wondering if you can speak to a any impact that then maybe on advertising or revenues without development and as a follow up question I'd like to.
Understood more about the impact you spoke of the new regulations being worked out for Microlending in China, I'm wondering what percentage of G. M V. On your retail platforms is funded by a hobby and she has a.
Tightening potential tightening of restrictions may have an impact on TMP gross.
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Thank you well double 11th is not just the shopping festival per se. It's also about our engagement, it's about creating fun and interactive experiences for consumers and with the new upgrade consumer time spent on the platform and page views have increased.
Which of course is good for users for engagement. There's also a good opportunity to drive higher conversion as well.
No when it comes to search Ah and Ah browsing. These are two services that really serve different kinds of consumers search serves consumers who come with a clear purchase to Ah Ah clear intention to make a particular purchase that could be looking for mobile phone that could be looking for a winter coat.
Whereas recommendation feeds are there to ah create or to stimulate new consumption demand things that the consumer it didn't necessarily have on their mind when they came on the platform. So the two functions are mutually complementary as you heard from Maggie in her earlier presentation.
Growth in advertising revenues continues to be healthy and performance of a recommendation feeds is good with a higher click through rates and good opportunities for monetization going forward.
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And you know potent minds with others. So that you know well partition so that.
Just a moment.
Thank you and on on your second question you know throughout the entire history of of Alibaba.
With the creation of Ali pay.
Something fundamentally important has been options available to consumers, they're free to make their their choices to how they want to to make their payments in front of their payments it could be from their debit card, which is linked to the account from a credit card later on we came up with you about.
And also quite a bit so on on the alley pay consumers have a whole range of different options and they can freely choose whatever option. They like to fund fund their purchase and the same is also true of Alibaba marketplaces, we're providing a broad range of options and choices for consumers and providing them with a convenient.
And a good shopping experience and will continue to focus on providing.
Kind of optimal experience and freedom of choice now you asked about the the percentage of G. D. G. M V. That's funded by a hobby that's not actually something that we track what we do track is the success rate of payments and purchases and also the existence of that diverse range of different options.
Ah freedom for our users.
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And I think Eddie.
Many answer your first question I I Maggie will affect your second one.
In terms of the how about Ah deals.
Users.
User base I would say actually when we grow this new business, we we view this.
From all put in perspective, we're doing this and an independent business. So we never tried to Ah Ah crap.
People from existing how 'bout mobile app ought to how 'bout deal instead, we do online marketing Ah we do.
A user engagement features and so on and so forth to attract.
Users to the to the Powerball.
You up and all of our the value proposition how 'bout deal.
It is it is value for money, so, it's very clear and well positioned so people Ah Ah goes with how 'bout deals they can enjoy your Ah.
Their experiences with a lot of selections, but all value for money. So as a result actually we we do see Ah Ah.
Asked moving off Kobo mobile Ah Ah, how 'bout deal Ah mobile M. A U. So as I said this September the end May you reach the 17 knitting a net.
Adding a 30 minute as compared to three months ago. So if you look at the the user based off of how 'bout actually we in cobalt we.
Cover a very high percentage of trying to internet users. So Ah back to your question. The overlap I I do believe that was his son overnight I think it's impossible for how 'bout with you too I tried to brand new.
100% brand new customers, because how 'bout mobile I already have a very high penetration in China mobile Internet, but I think we what we focus is.
The total spending if we act together offending how about when people have.
If they have both top of mobile App and how 'bout you up how how they're spending changed and we are happy to see people tend to spend more if they have both apps, but at the same time, we do have a lot of customers who are newly recruited by our how about you up and they will continue make all efforts I think.
At the end of days evaluations, the total spending and how can we have more water sure. If we can serve people with very different I mean body preposition services. Thank you.
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The Kobe or is it more because of the step Harper in new initiatives such as that how about you or do you last time. The second part of the question is to what extent is D known cool known uhm marketplace business imagine improvement.
Structural I, either I'm moving into the financial returns <unk> stage versus just a group level financial budget location to balance the group level financial performance. Thank you.
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Sure sure what she'd how spoiled of yellow.
People shouldn't look at our overall profit growth of 28% year on year. So that is probably one of the few amount appears global technology peers that are still has over 20% growth Nowadays so and then a marquee based.
Business.
Adjusted EBITDA actually say that the gross rate for for that part of the you'd be time also if reflects our investment in our core core. So if you look at the you know our touch up on right and also you mentioned July and August.
So our investment in sales and marketing to acquire customers a new buyers are these are all the investment we have voluntarily make to a extended the business.
And.
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<unk> what does your guidance on May, albeit yeah, Oh, it still got taobao GMV either up.
Beat a harder to goods and Josh to talk.
Got that in a whole creatures utiba quadrant, I know, who will take on what I see.
Thank you my question has to do with GMP growth in particular on tobacco. We noted from your press release that in the September quarter, you reported GMP growth on taobao as being in the height as being in the teens.
I'd like to know if that includes TBO deals or not at.
Marketplace, it's a growing it's in a phase of very fast close in terms of user acquisition. The numbers that were going fast and we're working now on the driving G M people.
Alright, Thank you, ladies and gentlemen that does conclude out conference for today. Thank you for participating you may I'll disconnect.
[music].