Full Year 2021 Alibaba Group Holding Ltd Earnings Call (Chinese, English)
Good day, ladies and gentlemen.
Goodbye welcome to Alibaba.
March quarter, 'twenty, 'twenty, one and for fiscal year 2021 day.
This conference call.
You can actually manage them.
So there will be a question and answer session.
To turn the call over to Rob Lin head of Investor Relations of other dialogues.
Please go ahead.
Good day, and good evening, everyone and welcome to Alibaba group's March quarter, 2021, and for fiscal year, 2020 One results conference call.
With us.
Good day are Daniel Zhang our chairman and CEO.
Joe Tsai Executive Vice Chairman, Maggie <unk>, Chief Financial Officer.
This call is also being webcast from the IR section of our corporate website. A replay of this call will be available on our website later today.
Let me cover the <unk>.
Safe Harbor.
Today's discussion may contain forward looking statements forward looking statements involve inherent risks and uncertainties that may cause actual results to differ materially correct patients, but detailed discussion of these risks and uncertainties. Please refer to our latest annual report on form 20-F, and other documents filed with the U S SEC or.
Now on the web sales Hong Kong stock exchange any forward looking statements that we make on this call are based on our assumptions as of today and we do not undertake any obligation to update these statements except as required under applicable law.
Please note that certain financial measures we use on this call suggests adjusted EBITDA adjusted EBITDA margin adjusted adjusted EBITA adjusted EBITDA margin marketplace based core commerce adjusted EBITA non-GAAP net income non-GAAP diluted earnings per share or a D. S and free cash flow are expressed on a non-GAAP basis.
GAAP results and reconciliation of non-GAAP to GAAP measures can be found in our earnings press release on.
Yes, otherwise stated growth rate of all other stated metrics mentioned during this call refers to year over year growth versus the same quarter same period last year.
In addition, during the call today management will give their prepared remarks in English.
Party translator will provide them with genius translation.
Chinese and other conference line. Please refer to our press release for details during the Q&A session. We will take a question you can both English and Chinese.
How do you translate it will provide consecutive translation ultra installations are for convenience purpose on wheat into in the case of discrepancy management statement. The Orajel language, what we dealt with that I will turn the call now to Daniel.
Thank you Rob.
Everyone. Thank you for joining our earnings call today.
Where do you live on another solid quarter.
Making the strong finish to this event full fiscal year.
China's thought is this past year with the net.
No battle against the COVID-19 outbreak and ended the year at the firm.
This country in the world to effectively control the pandemic and return to normal life.
Based on line that.
Estimates China was the only major economy achieved positive real GDP growth in 2020.
According to the National Bureau of statistics.
China recorded retail sales on 42 trillion RMB during the 12 months ended.
March 31st 2021 on the GDP growth in the quarter and did.
2021 reached 18, 3% year over year.
Against the backdrop of this macroeconomic recovery.
Accelerated.
Digitalization in China Alibaba.
Alibaba group achieved healthy growth across all businesses.
During the past fiscal year, we've made significant progress in our three key strategies, namely.
Namely domestic consumption.
Organization on cloud computing.
Such progress demonstrated the tremendous power on Alibaba digital commerce infrastructure as well as our long term commitment to invest for the future and to create value for our consumers merchants on our partners through innovations.
For our consumer facing businesses.
Our ecosystem recorded.
On one trillion.
RMB in G. N D. One two trillion U S dollar during the fiscal year.
Net increase of over one true RMB year over year.
Annual active consumers for our ecosystem reached a historical milestone of over 1 billion.
Was it a net increase of $117 million year over year.
Sure.
Our annual active consumers almost like on China increased by 60 million to over 240 million as of March 2021.
Which reflects the progress of our globalization strategy.
Benefiting from the increasing demand for digital for digitalization across industries.
Alibaba cloud revenue exceeded 60 per in R&D.
Uh huh.
Fiscal year.
Representing a year over year growth of 50%.
Is it continued to strengthen its market leadership in China and Asia Pacific.
During the past fiscal year, we have gone through all kinds of challenges.
Including.
The COVID-19 pandemic.
Fierce competitions as well as the anti monopoly investigation and the penalty decision by Chinese regulators.
We believe the best way to overcome this challenge.
Look forward and true and invest for the long run.
For the long term.
Value for our customers through technology and innovation and true.
So major problems in society.
Therefore, we plan to convert all of our incremental profit in this coming year into core strategic areas.
Such as technology innovation.
Support programs for merchants to lower their operating costs.
User acquisition and experience enhancements.
Merchandising and supply chain capabilities even.
The infrastructure development and new business initiatives.
Considering that our incremental profits are expected to be significant.
Our investments will be highly targeted and disciplined.
They will be designed to enlarge our total addressable market.
Deficient eight consumer and merchant value proposition from our competitors.
On the January greater consumer engagement and purchase frequency.
We will establish key metrics to measure the effectiveness of these investments, which we believe will generate significant result in the long term.
Oh yeah.
And your active consumers in China reached 880 891 billion by the end of March.
We hope to grow.
This customer base in China by over 100 million in the coming fiscal year to reach over 1 billion.
And your active consumers for our China retail marketplaces, where 811 billion by the end of March.
Representing a net increase of 85 million per year.
These consumers spent an average of 9200 you on.
Annually per person on our.
Platforms.
We believe this is the largest and highest quality consumer base in China.
We will continue to serve the demands of consumers.
We'll see if my lifestyle based on the optic mounted preferences.
Yeah.
As the largest digital consumption marketplace in China.
All up we will continue to strength of its comprehensive supply of branded product value for money products agricultural products imported products.
Depreciated long tail products to meet the diversified demands of our consumers.
In underpenetrated categories, such as groceries.
Home furnishings.
On the Pharmaceuticals, we will redefine the consumer journey.
Life experience for the sector to enhance its online and then youll retail penetration.
We will also look on improving the overall consumer experience and engagement.
Cobalt up by offering diversified consumer journeys based on different user segments.
Based on different user segmentation and intent.
At the same time, we are improving the tools and enabling capability for merchants to enhance their customer engagement.
In reviewing our cocklin policies to lower their operating costs.
As part of our China retail marketplaces.
About deals has grown rapidly over the past year.
Reaching over 150 million annual active consumers.
As an indication of.
Activities I'll follow up a P P use us.
Monthly active users of cobalt deals reached 130 million in March.
Net increase of 27 million from December.
How about deals offers the best value for money products for price conscious consumers.
It featured simple product design and the direct to consumer supply from firms and manufacturers.
The rapid growth of cobalt deals could contribute positively to our China retail marketplaces.
During the park.
Yeah.
Average spending of consumers, who purchased the on top of all deals increased more than the average spending of China retail marketplaces consumers.
We will further increase our investment income about deals in the new fiscal year to serve more price conscious consumers in less developed areas.
Next I'd like to talk about new retail.
Which include the community marketplace model that has attracted a lot of attention lately.
Alibaba introduced our new retail strategies in 2016.
And we have executed our strategy based on multiple business models to serve the various demands of consumers.
For groceries fresh produce and F N C G products.
Transform offline retailers, such as Walmart so digitizing their operations.
And created new retail formats, such as free ship holds that integrate on offline experience.
The combination of these new retail formats satisfy consumer demands not only installed but also in nearby communities by offering.
Comprehensive deliver on delivery options from.
One hour half a day same day and next day.
As part of our latest exploration in new retail.
We started the community marketplace business in select regions in China.
Our community marketplace is supported by the supply chain capabilities appreciable sundog and other partners.
In addition to one hour half day same day on the next day delivery options mentioned above.
We now offer on music consumers with the option of order to date and the pick up tomorrow.
We believe new retail it's a multiple.
We believe on you.
Believe new retail is a multi format consumer infrastructure.
Of which the community marketplace model is one of the essential ways to serve price conscious consumers.
This model can help us acquire new customers in low tier cities and rural areas and further increased our users' consumption frequency on the state.
Thickness.
We believe the key to unlocking the full value of the community marketplace model is not only about the standard loans P&L of the business but.
But also about the overall efficiency on the servicing capability.
All of the in car Commerce platform, where the business sits.
And we believe the latter can generate far greater value than the former.
How do you think about the most.
Sophisticated and efficient Congress infrastructure in China.
With the most comprehensive product and service offerings to serve consumers of diversify segmentation and demands.
Accordingly, we believe we will be able to create and capture the highest consumer lifetime value through investment into the community marketplace business.
We will grow this business leveraging alibaba ecosystem.
<unk> core capabilities.
Including merchandising and supply chain capabilities.
Logistics and fulfillment infrastructure.
Consumer engagement capabilities.
The distribution channel development and measurement capabilities.
While we are still in the early stage of business expansion.
Our goal for the new fiscal year is to expand our geography coverage nationwide.
Despite a healthy and a sustainable community marketplace business model.
Hang on network has to deliver solid revenue growth during the fiscal year.
Revenue from external customers outside of Alibaba group.
Growth, 68% year over year and contribute to over 70% of the time Youll networks total revenues.
Have you also reached an important milestone of generating positive operating cash flow during the year.
We believe time youll continuous growth.
Will be driven by three important engines.
Number one.
First of all business based on the timing of post.
On the timing of vocal.
Second fulfillment service from factory to consumers.
Sure.
Cross border supply chain services for importing and exporting merchants.
Building on top of the significant improvement in operating efficiency in the new fiscal.
In the last fiscal in the last few quarters.
Put them on investing in user acquisition and the logistic capacity during the Chinese new year period.
Where many residents were encouraged by the local government to stay in the same city they work and avoid long distance travel due to the pandemic.
As a result.
And on the annual active consumer growth.
<unk> strong at close to 20% year over year during the fiscal year.
User experience is improved.
Looking forward we.
We will continue to investing.
Consumers my share.
As the anchor point for local service.
True converting more consumers in Alibaba ecosystem into all of them are user.
As well as cross selling between food delivery and other non Tim.
Other net services to increase order frequency.
In our international Commerce retail business because the other.
And on express each achieved more than $100 million of annual active consumers by March 2021.
There's other delivered another quarter with things.
Report digit order growth year over year.
Aliexpress continued to achieve rapid growth by significantly improving.
Experience for its consumers leveraging triangle networks.
Mobile Smart network.
Modern logistic infrastructure.
For example, <unk>.
France, and Spain, two other key market the unexpressed invested in logistic infrastructure improvement.
Recorded triple digit year on the growth year over year during the quarter.
In the future we will continue to invest in key cross border logistic hubs in Europe.
Develop local logistics network in target markets.
And the strength and infrastructure support for our cross border on a local e-commerce businesses.
In fiscal year 2021 hour.
Our cloud computing revenue grew 50%.
Year over year to over 60 billion RMB.
I'm very excited about the massive potential of our cloud computing business.
As the post pandemic world is facing a massive opportunity for industrial Digitization.
Cloud infrastructure will eventually replace infrastructure Inc.
Empowering enterprises to achieve digital operation.
As China's industrial sector undergoing.
Digital transformation.
Manufacturers are moving forward.
Manufacturing and the direct to consumer initiatives.
Other traditional industries such as retail.
<unk> finance on the transportation have all noticed the tremendous value and a new opportunities the big data and intelligence applications could create.
Alibaba cloud will capture the historical.
Opportunity.
By number one investing in coal and Pos products, such as database storage elastic computing and big data platforms to Istar.
Our coal product competencies benchmarking against a global cloud leaders.
Number two further expanding the integration of intelligence with cloud infrastructure to provide our customers with more diversified industry.
Encourages solutions together with our partners.
Lastly.
We announced in April 2021 that we received the administrative penalty decision issued by the China State administration of market regulation.
We have stated that we accept the penalty with sincerity and will ensure our compliance with determination.
As a result of the anti monopoly fine on <unk>.
Two good on B level by the <unk>.
Recorded an operating loss this quarter for the first time since our history as a public company.
The penalty decision motivate us to reflect on the relationship between a platform economy and society.
As well as our social responsibilities and commitments.
We believe the self reflection on adjustment with Nate.
Will help us better serve our community of consumers merchants and partners.
And it positions us well in the future.
Thank you all now I will turn it over to Maggie who will walk you through the details of our financial results.
Thank you Danielle.
Hello, everyone. Let me start with financial highlights for the fiscal year 2021 and for the March quarter.
So our total revenue was 717 billion, an increase of 41% year over year ex.
Excluding the consolidations guard our revenue would have grown 32% Yao here too.
674 game this is a wow exceeded.
Revenue guidance, we gave at the beginning of the year, which was a 606 8 billion.
So march quarter on total revenue was 187 billion up 64% year on year.
<unk> sorry.
So it would have been 40% still very strong.
The growth was driven by the robust revenue growth, China Commerce retail business as well as continued growth of cloud computing business.
Total adjusted EBITA was 170 billion, an increase of 24% year on year and for the March quarter.
The 23 billion RMB.
Uh huh.
Per cent year over year, primarily driven by a healthy profit pool, our profit growth.
From a market based core commerce business, partially offset by increased investment in new businesses and key strategic areas.
Total adjusted EBITDA increased 25% year on year to 197 billion.
So like a year and income.
18.
18% year on year for the.
The March quarter.
Yeah.
Net income was one of them is what you see.
Daniel.
So I guess just here which includes.
One time fine levied and increases in SBC expenses the non.
Non-GAAP net income per year with 172, 2 billion 30 per cent Gilead coach.
March quarter.
We showed a net loss of $7 7 billion, primarily due to the anti monopoly fine.
$18 2 billion RMB, excluding this impact and certain other items non-GAAP net income was 26 billion RMB.
The increase of 18% year over year.
We continue to maintain a solid cash position on 72 billion.
The other with strong cash flow generation capability, our free cash flow, it's Johnny at 32% to 173 billion RMB or around 26 million U S. Dollar.
Yes.
Now, let's look at fiscal 'twenty, one revenue in more detail.
Our revenue continued to be more diversified on the back of strong organic growth.
The revenue off of our China retail marketplaces continued to grow strongly as reflected by our consumer customer management revenue growth.
4%.
Our Alibaba cloud and China businesses, what are the two fastest growing businesses and are important drivers of our organic revenue growth.
<unk> has also achieved important financial milestones with our cloud computing business moving its capability to be profitable in December quarter and continue.
Continue to showing increasing profit in March with her tiny on generating positive cash flow is two growth businesses that exemplify our track worker us committing to investing businesses over the long term.
That we believe can create tremendous value for the ecosystem.
It is important to know that we have continued to invest in growing new seats.
Such as.
How 'bout deal.
Lastly, our effective on market, which does come easy marketplace businesses and new features on the core platform such as top of life and short form video.
These initiatives address new consumption demands and behaviors that will continue to expand our addressable markets in China and create many cross selling opportunities in our ecosystem.
We believe these businesses have the potential to be the long term revenue close factors that continue to catalyze our marquee coil and sheet in the future.
Let's look at our overall cost trends.
Excluding SBC as a percentage of revenue cost of revenue ratio increased in March quit her anticipate here due to higher proportion of direct sales business.
The increase was primarily attributable to higher proportion of direct sales. This business from the consolidation of some art as well as the growth of Tmall supermarket.
Direct sales.
This will continue to strengthen our new retail initiatives, especially in the development of our product sourcing stability.
Sales and marketing ratio also increased in March quarter, and sit here, given increasing marketing and promotion spending to drive user growth and engagement.
I would like to remind everyone that we added 84 million annual active consumers on our China retail marketplace in fiscal 'twenty, one, especially in lower tier cities.
How 'bout deals ending the year with 115 million on Yankee as consumers.
G&A expense ratio was significantly higher at 30% for the quarter, primarily due to expensing of the one off on time and healthy line. Excluding this item G&A ratio would have decreased by one percentage point to four four per cent.
Revenue on adjusted EBITA on this.
Yes.
Slides provide you with an overall summary on our second my revenue possibilities weighed on Mark Smucker anticipate year.
So the next part of that discussion I will first provide you with our overall financial recap our second line for fiscal year, and then followed by quarterly discussion on important segments.
Let's look at the secondary revenue on profitability for fiscal year 2021 starting this quarter for purposes of presenting on market based core commerce. Adjusted EBITA. We expanded this stuff on new initiatives businesses that we break out in order to present, the progress of our strategic.
<unk> as well as the possibility of a market based.
E Commerce business and this is on a like for like basis.
On initiatives businesses, which now include our new retail business.
Local consumer service line.
How 'bout deal and China.
Represents a strategic area, where we are executing to capture incremental opportunities.
As previously mentioned, we are very excited about the growth prospectus of these fast growing businesses.
That will not only increase our addressable market.
But also we acquired long term investment commitment.
We believe these are new businesses that will be the drivers the foreign market on change revenue growth in the future.
So under this new.
Presentation.
For fiscal 2020, one our marquee base pocket from basic core Commerce adjusted EBITA was 279 billion.
Good day, and 17% year on year combined losses of strategic investment areas.
$34 6 billion, reflecting yeah, that's named new retail.
Consumer services like that that is why is the addition of.
Losses, reflecting our aggressive investment in top of deal.
Core commerce adjusted EBITDA reached 194 being in the cloud computing and D. N E continue to narrow our losses and during this fiscal year.
Innovation initiatives recorded that adjusted EBITDA loss of 10 billion RMB one.
One 8 billion as we continue to be 19 technology research and innovation.
Overall, our adjusted EBITDA for fiscal year grew 24%.
Reflecting the strength of.
Our core commerce business that was partly offset by a day less now than they had in the new initiatives areas.
Secondary reporting.
We didn't go into detail for each one of them just some highlights so for the core commerce.
Yeah, Mark grew 40% year 264 billion. These are old for a discussion for the quarter.
This growth are actually is driven by solid growth of our China retail marketplaces overall on lines at CME.
<unk> grew 32%, reflecting the rapid recovery.
Our growth in apparel accessory and home furnishing category et cetera.
S. M. C. G also exhibited solid growth during the quarter from.
Merchant spending perspective, we saw a strong plus the higher spending per merchant and the increasing number of paying merchants on our China retail marketplace marketplace.
<unk>.
In March Okay.
On a week of August revenue, 134% to 60 billion is consolidation of starch.
In March quarter.
Marquee place basically EBITA reached 44 billion up 28%, yeah, yeah, reflecting solid C N mark wealth, partially offset by the increase in B on.
Marketing and promotional spending for user acquisition and increasing engagement, our China retail marketplace.
Let's take a look at the car computing business Iot cloud revenue grew 37% year on year to 17 billion during the quarter.
Slower revenue growth due to the <unk> during the quarter was due to a change in our relationship with a top cloud customer in the internet industry.
This customer has a sizeable presence outside of China that used to our overseas cost services.
They have decided to terminate that relationship with us with respect to their international business.
Two non product related requirement.
We expect the impact of a reduction on your revenue from this customer to affect our year on year growth gross state.
With <unk> when compared to prior years.
Excluding this customer impact.
Alibaba cloud top 10, non affiliated customers together accounted for no more than 8% of Alibaba cost total revenue. So you get a sense on this.
Concentrations.
It's on it's really not not high going forward with the leaf that are on our cloud computing revenue will be further diversified across customers and industries.
Alibaba cloud was profitable for the quarter and generated an adjusted EBITA of 308 million RMB.
Our core business has delivered profit over the last two quarters, which demonstrates that we can run this business on a profitable business.
We believe it is still more important to drive market share and leadership given the rapid growth of the industry.
We will continue to invest in our innovation and innovative technology.
Expanding customer servicing capabilities, and enabling a robust developer ecosystem part of car business in the future.
Are there any business our second quarter growth.
Two 8 billion in revenue, 12% you are on your quote this is a sector that on.
On impacted by the pandemic as well.
Income statement selected financial metrics.
So when you look at the interest on investment income. It was one of only 11 million RMB in March quarter. This year over year increase is probably due to the.
Decreasing net loss arising from the fair value change itself our lessons.
Our share of results of equity method Investees was 6 billion RMB theory March quarter.
Our free cash flow was that all flow 600 on 58 million. This quarter. It was also on this list Petr.
Pet her.
Similar pattern last year the cash.
So all flow during this quarter was mainly due to our increased strategic investment and that's why I say, increasing marketing and promotional spend.
<unk> for user acquisition and retention.
And at the same time there was on merchant deposit funds that are that's a practice that we're.
We were discussing the earnings release that we just.
Just take it out from the free cash flow calculation.
Okay. So let's take a look at our.
Non-GAAP net income attributable to shareholders.
It was $5 5 billion for the quarter. This was mostly due to expensing of 18.2 billion fine.
Partially offset that by the reduced the net loss arising from the fair value changes sorry investments.
Now I'll look in the guidance.
So total revenue excluding sorry consolidation on was 674 billion for a physical 2021, which as I mentioned surpassed our annual revenue guidance.
With our children die robust performance of our core business as well as continued plaza a class.
Going forward, we expect to generate over 930 billion RMB revenue in physical 'twenty 'twenty two cash.
So during the <unk> total market potential.
Well as the the our strong profit and cash flow generation capability.
This gives us the internal resources to focus on long term value creation.
In fiscal 2022, we plan to invest all of our incremental profit and <unk>.
Capital interest supporting our merchants and developing new businesses and the key strategic areas that will help us increase consumer wallet share and penetrate into new addressable markets.
That <unk> completed our prepared remarks, let's open up for Q&A. Thank you.
Hi, everyone. So for today's call, we will come to US you are welcome to ask questions in Chinese to English.
Third party translator will provide consecutive interpretation for the Q&A session on.
Management will address your question on the language you ask them. Please know that the translation is for convenience purpose only in the case of any discrepancy.
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Back to the Speaker and SRA Conference line.
And start our Q&A session when ready thank you.
Yeah.
Thank you David.
To ask a question you need the best Taiwan on the telephone.
Your question. Please press the pound of Husky.
By while we compile the Q&A Boston.
To give more people the opportunity to ask questions. Please keep yourself from no more than one question at a time once again it is probably one to ask a question.
First question comes from the line of.
The catalog J P. Morgan Your line is open. Please go ahead.
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Yeah.
Thank you and good evening management I have some questions. So on the investment side first of all I'd like to know if you could.
Please clarify remarks made I believe by both Maggie and Daniel.
In your presentations as regarding the Finfet.
Invention to completely reinvest all incremental profit in the.
Coming a year does that mean that we're talking about on outlook with a zero profit growth in the coming financial year.
Secondly, you listed a lot of different areas into which that investment won't be channel I'm wondering if you could tell us which of those will be the top priorities.
And thirdly, Daniel in his remarks.
Spoke of how these investments will be managed in a pre.
Route and fashion with our internally defined kpis to monitor interest me and effectiveness I'm wondering if you could please tell us more.
More about how that will work and on those key P. R's, how performance has been year to date. Thank you.
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Yes, Hi, Alex and a good evening, let me start by answering.
As to what we intend to but what we met with this on ultimate off our investment bank.
The incremental profit from what the priorities will be in terms of making.
This investment so as we stated in our earnings guidance.
We plan to invest all incremental profit.
The coming year.
Into growing our business further on investing for the future.
Does that mean the other than that.
In the coming year, there will be no prospect of profitability or profit growth.
Maximum profit growth be.
Strict it to what it was this year.
Well, let's let's look at our what we can achieve with this investment first.
In the market as you know other very very few companies that can do what we've done in terms of.
On investing a lot of money into future business growth into strategic initiatives, while still enjoying a very robust.
<unk> growth.
So.
I think it's fair to say that there's a huge potential for us to further.
Growth.
Be it in our core market or in the other areas. There's still lots of scope on lots of room for us to do new things and grow the business.
And I think any long term investor would say that.
Promising to maintain a certain level of profit are prioritizing a higher level of profit would be a stupid thing to do because in the market. Today. There are so many competitors who were investing large amounts to gain a foothold on the market to grow the market.
And we're in a great position to create value and capitalize on our existing.
Resources to drive future growth going forward. So that is the intention we're going to be investing in.
<unk> targeted and highly disciplined we are in.
In order to lay a foundation for even better growth going.
Forward and at the end of the day users will vote with their feet.
So we see these investments ultimately.
Playing out in terms of growing the business and more deeply engaged users.
I think when I spoke to totally you went on to either you'll note on the capital that kind of totally on tissue. So we go with this other kind of woman in fact, you call somebody and they tend on LOE and then say assuming you show that you can hold a year and we cannot assure that you've got.
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Yeah.
Okay.
And then by way of follow up in terms of the specific areas, we intend to be investing in our other as we've talked about are.
Certainly core commerce, new retail as Daniel mentioned in his remarks, the community marketplace business top out deals, but also our international business.
Local services and logistics.
The linguist outdoor share pushes from you know what kinds of a show on that cyclically without the other Oh gosh I mean on the Jaguar No decision on Hiseq and South Asia.
User base.
Does he go on engagement.
Oh sure yeah, so on the food attach it.
And then on another way of breaking down on the investments not by business, but in terms of the results that we seek.
Certainly these would include include growth in the user base.
Enhanced engagement as well as the provision of more value to merchants.
Yes.
How what type of 20 shall interest.
And good.
Sure.
On to go with Memorial Day Sun, Good thought or it's on the willingness as.
Zero day issue high Suzuka torrential.
Uh huh.
Like if you can Oh, Kochi a woman she said, though.
Touching on some interest as it comes on wage into scripted bench on dollar Tree's woman totally changing dig on total types.
So some good and you are on a little cundall true dollar you've got somebody on the cheap.
Yes, I'd, just like to add to that briefly.
When it comes to making these investments we.
Do you have three major strategic priority. So as I mentioned in my in my script is our domestic consumption.
Globalization and the cloud were high.
That's technology part of the business.
And we intend to be investing in all three of those because we see large incremental opportunity.
So I took the they shouldn't you choose associates, a woman shingle I shouldn't say Eugene bolt on to go.
On June call you thought the other E C thought about enjoy from go to the US go on either shelf is telling you about alibaba other somehow.
Because when you are looking I charge that I bought enjoy interest until the cheese, a woman to see similar sorts of things.
Some of them on like on a particular time.
I think Oh until school my P mood I jumped on somebody on parts of the body until either you don't.
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Hub to go through the cyclical Maggie and they see citizen they tend to come at Yahoo opportunity sits.
Yeah, you'll choose other channel to go to.
It puts on the appellate process.
Hopefully they'll put them on the faintly some gains on sale on the Chile, which is let's say this.
Well two channel was sort of too so you'll see kantar, though so let's see on shelf in the only the shelf. These are put on the shelf either.
And so not only the shelf is the auto side on the Peanuts zone, well and then somebody else in Georgetown day Eagle.
So just want to wish you all do on Comex.
It's a good take on the thing Josh So I'm afraid on swap that you got from either Suzhou.
Starting with the first of those three strategic priorities, namely a domestic demand domestic consumption. Our AAC number has now reached $890 million.
In China. This is the latest total figure across the ecosystem all of the different platforms in aggregate you see.
Figure of 890 million.
However, there's still a lot of scope to grow the frequency.
On purchase.
And engagement all these 890.
He sees to convert them into M. A c's monthly active consumers or even daily on consumers.
So huge scope for development there.
We have today within this user base.
The broadest and largest multi tiered.
Consumer base in China, So as I sit on my remarks, a major priority for us and further developing our user base is to continue to drive higher levels on purchase frequency across all classes from consumers.
C G.
Once I took on the niche.
How much you know about enjoy the nimble on my own.
So it just sounds like Guangdong.
She is a tendency for non swing highs.
He or she thought that either didn't coke loans, yeah, two shots on the Chicago Ching into two Italian Townswoman said, China retail marketplaces in the other by chance or by one day, you don't put onto on chip on from that she uses for that to let's say the D. C. The C. The decent you that the true or when they're going to Wei.
Well not really say on the sales of cone channel high fees on top of our motor hopefully choose us in Georgia.
So what is the solar on when she wants that with other tenure on Angola tight zone cool sessions without sees on yet to come on.
I'll tell you those sorts of machine doesn't yahtzee assortment. They are a good tolerability true supposedly.
Yeah.
And then although we already have.
$90 million.
He's still there is quite some scope for further growth in that figure.
With respect to users in lower tier cities and rural areas.
In fact on my script, just know I reported.
Growth achieved in the past year and our.
User base and 70% of those new users came from rural areas. We will continue as I said.
To strive to grow user base out of your users and have set as a target.
Surpassing 1 billion.
Right.
They'd say it took us totally shelf is are those two turns.
So let's see the shelf if you can see why women say selling to other things on bulk water to the changing some Jonathan Segal full time on particular chunky. So on the other genes humbling for me is simple.
Town shoes of fungi CECO sunjata deal consisting of other women, yeah. So youll because when the sales force called Youll hedge income, particularly women's is a little she doesn't see the true at all she wore on and cookies sounds Yao couldn't claims on the gene cleansing on city assortment closer to your phone shop.
Apart from growing the number of consumers and their frequency of consumption. Another important initiative for us is helping merchants by reducing their burden reducing their costs.
As well as creating facilitating.
And conducive environment for their long term development and success.
In this respect.
Any measure some have already been announced.
Some have yet to be announced but they all came to helping merchants.
So the toilet tissue I wish on sales issue that you on Ohio, how old it is a vocal on the cheese, we're supposed to cheer and so I'll tell you what what are the other teaching the chance of bulk whole woman to glean Nicolas I Shouldnt lead the channel so which on say it's also the way the town she does too.
Jonathan.
So the typical fashion.
The shoulder months.
So I'll tell you like to go see I'm glad she will puts on kind of sushi, if only a woman who was young in the take up will be also TPI liability true a woman does what it does to the teams on.
Finally also in the same area on domestic demand in domestic consumption.
Another police will be investing in the continued construction and improvement of our infrastructure, our logistics or supply chain and merchandising.
Capabilities.
This is also an important area, where we can discover.
Discover and satisfy you.
User demand and create long term value for users.
And for the company and the interest of time I will not expense any further I will merely end by saying that we.
We will put in place detailed kpis to monitor all of these investments and ensure that they are conducted in a disciplined fashion to a higher adjusted cigarette you're on that those inside of NIS.
They are on go to Utah, So you're trying to other than you women shouldn't say you can call. It you can kind of woman does he sees a highlight in sunbelt on audience lease on them yet.
Tissue the total shoots in general, but that highlight the shepherds of cheese.
Particular single women shoe on cigarettes.
With other Juniors and then go team quite a lot of shelf. These other G suite.
So the above was all always with respect to the domestic consumption.
Piece of our strategy, turning now to our globalization.
As we've mentioned in my speech earlier, we're very pleased that we now have 240 million international agencies.
We hoped double that figure going forward from growing international user base is also very important to us.
Two good sites and good to see that usually you a woman sorry. It took me so you're going to you're spot on to go see that so that that you wait and see you on my husband's out of Cushing Ts was October interest on the chiefs without switching to choose on how squeeze Sinyard Peru.
We'll call them on site, it's usually a total putting on so suddenly told you mean, yeah, who is on culture, such cookie the totals on quickly.
I show you that the shelf each yeah I'll tell you.
Julio.
Sushi from you well.
Well, mostly it's cheetos all always on cigar Joseph.
And then go on to the changing total cigarette cigarettes, a woman changing sales on the cheese was on the total policewoman Disney shooter two cartoons on Sue on the Changyou other teams on Sue them day in the tens on autos and then go. So you teach would have caused that.
Tobey, it's looks like interest of other things on went to chapter XI decision.
Finally on.
I'd like to talk briefly about technology, we see the cloud.
Epoch defining opportunity and we'll continue to invest in cloud technology, but also in our big data.
Other kinds of technology.
As well, including our technology to enable the next generation consumption experience to better support and logistics services are.
And in other areas to ensure the technology.
Is supporting.
The realization of our domestic consumption strategy, our globalization strategy as well as our cloud and high Tech strategy, we want to enable all of these strategic areas to benefit from further improvement in our <unk>.
Technology capabilities.
Okay.
Okay next question please.
Thank you yes. Our next question is from the line of US almost Chong of Jefferies. Your line is open. Please go ahead.
Hi, good evening, Thanks management.
Taking my questions.
On a step out.
The trend in terms of the CMO just on.
We have seen the CMO Wolseley why we saw that day.
You comment about the FY 'twenty two outlook.
But I could on how we should think about the take rate trend.
Yeah and on my second question is about other competitive landscape given that we have a wide product selections and maybe strong technology.
How would we left from each of our core capabilities in.
Different MBS like lower tier cities penetration as well as our strategic initiatives in local surface and sub out thank.
Thank you.
Uh huh.
So much on Haas isn't human tissue on the tier one.
What do you think about you know Shanghai, Alex Yeah, you shot couponing showroom.
Marty from yet.
On the Chartwell are when we are conducting to go from the CMO to shoot for that should feed on Joshua.
Our our Sarnia and going from two good chunk more ruthless tubular should take rate from it chooses.
Yeah.
Arguments to sure check where you had seen from.
Could you share your form yet.
Ali you don't want a good chunk.
Combing the two of them yes.
On to the pendulum freed from the from a few people I mean.
So I could tell you for me on the shown on some.
In fact, we share your should go hard on lighting, you shouldn't see the channel should catch on a tender.
Your approach.
Yes.
Yeah, Hey, Thomas in terms to see them or are close, but you've seen that we've reported since before per saying you're on your close for the quarter and if you look at the past few quarters, that's been going on strongly considering.
On a large phase.
I believe.
You see them or our growth is going to be.
<unk> continues to have high potential and if you look at a piece that's rather Neil actually the time is marching to budget right.
Paid for our services and Uh Huh.
We provided a currently.
Our take is somewhere around 4%. This is mainly a where a person is paying for the system. The marketing branding services were provided so even in this us so area, we still have a lot of potential.
And are there also other areas.
We provide a service so take rate has been growing over the past year I think this year as we talked about we got to provide more support to the merchants in our last call. We talk about the details on how we support our merchants. These include.
Waving a second charges six and also invest on.
Hum.
Our platform is the infrastructure support merchant so we're not aggressively monetizing.
The the value equation.
Created for merchants actually.
The one thing worth to mention is had a CMO currently accounts for approximately 43% Alex with a revenue. If you look at the three years ago five years ago. It used to be like a 70% 80% right. So it has been growing their fast that it is.
As a percentage of revenue coming down I think that trend will continue that is because of our <unk> engine strategy. We have so many new businesses and revenue contributed from.
From these new ships.
That becomes more and more.
Importantly on significant to our total revenue.
Hi, Susan.
From a according to recoup on you should see them or that song Chung.
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She can do it and you got some Zhang Jun yet seen senior we don't want on shoes.
That's on pump or fragile.
On chart four showed up I shouldn't be sung Chico.
Yeah, just one line or a correction the 24% Yao close is for the on any of our physical 2021 for this quarter the growth rates for C. M. R was 40%.
Oh Boy you suicide.
She went on contract surety because she was just.
I'll touch on the Newco.
C M R from.
Junk back into our food to go shoes is not true country tried yet our eats high net churn yet are you on that.
From a sure Vishal.
She due.
Two good sometimes can be thought of it from the system.
Well, let me answer the second question on in terms of the technology, how to apply technology into the competition actually we always believe the technology is so critical in the competition and we are proud of our.
Larger development and integration with our real operation on the.
Even in the it seems like in a fierce competition so.
Let me just give you a few a few examples in domestic consumption.
Carrier.
Actually the one of the key thing is how to.
Acquire and retain the customers and on our China retail marketplaces, but the key thing is how to use technology to match. The most comprehensive product offerings, we have on what platforms with the right customers on a journey right. The real consumption. So the matching our capabilities. It's all three of them.
By AI and it's driven by technologies. So I think that's all a big advantage to make sure. We have our most effective I mean conversion I mean over a years on our conversion rate on continuing to grow on which.
Not only to grow our G M D, but also to meeting the diversified demands.
Although customers.
Second example.
Example, I would give you is that.
Once we acquire new customers, it's all about how to maximize the lifetime value of this customer of ours across all categories setting opportunities and so in this regard we have these we built a very comprehensive user profile on the product.
Features profile to make sure we can maximize we can't understand our our our customers very well and to provide all day needs during their lifetime cycle.
Let me stop here.
For translation.
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Sure.
Oh Gee on how the shoe show share.
Q2 growth.
Put on chunky.
Which one do we do to Cook went on to go to Eagle pass, where she ought to assume that a good chunk of it.
Cushing.
Pushing hard on it.
Well on the technology application is not limited to the consumer monument site actually it cover all the areas.
Just a few more examples for example in on the logistics side and technology actually play a very important real true photon y'all to build a small day, they're drilling our logistic network and operating system and to serve alcohol to slow merchants as well.
In China on the.
On the international.
International market.
And on the close side I think technology is a key as I said in my script.
We continue to invest in technology to build our competitive advantage in the Aten pass products.
This oh, a benchmark is not only in China, we benchmark our global leaders involved there I mean coal cloud products on it.
Make sure we are as a top tier of other world. Thank you.
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What's your show on Sweden, Schinder to share it seemed to it coming to fruition.
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Okay next question.
Thank you next question is from the line of Joe.
Your line is open.
Okay. Thank you. Thank you management.
My question is really on the on the business model. If we look at the recent past years, we've seen an increase from the one P revenue mix right as Alibaba consolidates Sun Art's and as we grow Oklahoma or kind of simple.
So today, we talk about investing in community marketplace and from the presentation it looks like.
Providers on gross reason that's M. C. G into this business includes also some art and I believe from as well. So so as we are investing in these high frequency categories.
Does this change the long term business model you know how do we envision.
The ecosystem looking long term and maybe more specifically do we have the targets <unk> three P mix in mind. Thank you.
Oh feeling I.
Check on its own where do you go into you know showing simple gotcha.
Sure.
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So you can see me on women's shoot on treating disease.
Peter.
On shoulder the buy from Peanuts, I would want to go.
Switching to that goes from the shortage being.
Being peel off to them on to the year with a quota.
Number two share.
Sean thought to go short shoes.
Cash on you.
On.
My question goes you can talk to them.
Bush on surgical should shoot yes, Sean Yeah, we don't do them.
Yes sure.
People try to go through.
Sure.
You're going to share.
Return on B shoot shall we say cross shopping don't on the Mustang All true free line they'll find on.
Yeah on interest.
Yeah on white shot of a chunk too much on one or two good U P Sun P to trigger a glitch on the dog on where you'd say you know this from his seat on we should say on a wheel I don't want it to get true and cause some Pete.
Sure.
Obama.
In short we don't have any specific goal a full one P. Three P mix. We strongly believe that this mix is an organic result, oh.
I'll come full of operation and we don't manage the lumpy C P mix intentionally.
Over the years.
We have built our true flying wheels.
Sure.
And on what consumption business, one is to build on walk.
To build that capability to manage the customers smartly and efficiently.
In this regard we said on how to create a day men. So as the demand side, we've continued to invest to improve our user interface.
With creativity with technologies and we strongly believe that it's very important for us to to engage in our engagement with our customers not only to have more customers on our platform, but also.
To <unk> to help them I'll spend more time with us on the Wii.
We strongly believe that.
Diversify supply from the merchants.
From different sources is that very important and the selection is very very important to enhance the user stickiness. So I think that's something that's the area, we continue to invest and on to build our capability on the customer management and demand creation.
And on the other hand over yes are we.
We tried to build a very strong I mean, our merchandising capabilities and supply chain management capabilities, which we believe actually.
Yes, no matter how true.
How frequency.
How did how change all day.
The user interface will be on that.
The efficient supply is a must.
Successful commerce business, including E Commerce business. So that's why we are we are in line.
A lot to build our supply side, our capabilities and we believe that this capabilities on the vantage all this capability will not change.
Even without even with Oh.
User interface upgrading and a change. So these are two flywheels to Alibaba on the I'm. So proud that maybe we are well on the few companies in the world which have them.
The accident, I mean consumer management capabilities, but at the same time has this merchandising and supply chain management capabilities in one company and one team I think that these two flywheels are the critical successful factor for our long term growth.
So are you on chenault them until you free line too.
If you have some good signs of you know.
Maybe on putting the movie.
Moving on.
Yeah.
We do you can move your all true towards them with short order quantities and we're gonna be.
Sweet true sure from a BD toshi.
Sure George.
George.
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Next question.
Thank you next question is from the line of <unk> Kim of Macquarie.
Go ahead.
Great. Thank you for your tonnes a day I wanted to ask about turbo deals I think it's one on one of the fastest growing top line.
And then last year and are you guys on hiring at the true kind of growth.
700 to 800 million.
Okay, Here's or you just kind of see it as you know.
Yes.
Yeah.
Hello.
Can you repeat your question, maybe get closer to the mic.
Sure.
Regarding how about deals.
Wondering if we are empowering it.
Go to 708 other types of million users.
Yeah.
Thank you Mike.
So very noisy.
Okay.
Hopefully this is a little bit better.
Yes, yes, yes, sorry, just to repeat for turbo deals just wondering if this is a business you're empowering to try to get to 10 or 700 to 800 million kind of user base on a few years' time.
And if that's the case, how do we see this interacting with I guess, taobao and Tmall and the sense of as Tim on just how about your growth to see any kind of cap cannibalistic behavior.
On services and you know part of this is also I don't feel like I'm seeing your competitors in that similar space being particularly impacted as top line to a growth.
Most of the kind of thinking how this impacts perhaps the competitive landscape as well. Thank you.
Alex This is Sean on the other day, you're starting to talk about which up on you know we wish so I called you'd be from question again.
Is that a food on tour.
Ive walked by either telling you could greenwald Nomura group will shoot on the Ohio realize how about her jump on.
How about him on the question.
When she.
Talk about her job on the photo.
Finish it off to you on that how about mortgage.
Sure.
Yeah.
Well I think what you me on me or kind of tripped up on the contract to U G suite from a trivial to other you Michelle MA puts it on couillard seen from good you shall we say.
Well the value proposition of tableau deal is very clear, it's full of price conscious consumers on that we provide on pulp on deals platform the value for money products on these I mean price sensitive customers and our internal supply side actually we focus.
On Oh.
Manufacturers on the farmers and their direct offer.
And.
And to the customer in the.
Which kept more about price.
So I think on the value the value proposition and an end to end the simple on consumer journey shopping journey I think is a key awful.
About deals and we are very happy to see the progress we've made during the last year.
And as I said.
In the U R. E March reached a 130 million and for the entire year, our annual active consumer reached a 115 million.
So I think that's I think that's a good start.
And because China is so big and with so many other.
Population was different.
Consumption power on it with different segmentation on the preferences. So we try to as part of our Alibaba, China retail marketplaces, we tried to provide multiple destinations to the customers.
With different purposes. So I think our I think Pablo deals is a good supplement to our other application other business, we have in China retail marketplaces and in terms of the the incremental value we create from Pablo deals I just give a good example in mice.
To you, which is the the average spending of our customers on cobalt views.
There are the increased rate of spending for all for the customer on public deals is it.
It is bigger.
For the for those on spend for the average spending I'm trying to retail market places.
Oh, which indicate that if we have people if we give people multiple choices, but overall the total spending on winning Alibaba.
Of course system will be bigger so that's a very key indicator and so that's why we will continue to invest in public deals and Oh that's.
That's true whether this half.
Any impact on on.
On the other players.
Thank you.
I think it's very important that we on top of deal our goal and value proposition is very clear and straightforward and even simple. So we we are confident the impact is coming on because these customers. They just need a simple.
Simple choice on the price sensitive and the price advantage. That's it so we will strengthen our value proposition on public deals.
On top of all on mobile our flash it I think we provide more comprehensive offerings to a different segment customers.
And they will enjoy more selections and and more funds. So the value proposition all quite a quite different and we are well as I said our goal is to build a he metrics I E application metrics to serve the customers with different needs.
Oh.
What's on top of on Twitch up on how to attach a true which on a few things.
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You got on the Sofia two of them don't go read having a tea cold things out.
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No.
Can you talk to share a chunk of them, even gotten sick enough to go solve it so.
Todd other trigger.
George which I'm sure.
So if you don't shut them down.
Sure Todd you should get you on your share.
Sure of course things up either Sofia two if you don't shut down to you can go with traditional talked about towards the other.
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