Full Year 2022 Alibaba Group Holding Ltd Earnings Call (Chinese, English)
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Good day, ladies and gentlemen, thank you for standing by welcome to Alibaba group's March quarter, 'twenty, 'twenty, two and full fiscal year 2022 results conference call. At this time all participants are in a listen only mode. After management's prepared remarks, there will be a question and answer session.
I would now like to turn the call over to Rob Lin head of Investor Relations of Alibaba Group. Please go ahead.
Good day, everyone and welcome to Alibaba group's March quarter 2022.
Oh fiscal year 'twenty results conference call.
With us today are Daniel Zhang Chairman and CEO .
Joe Tsai Executive Vice Chairman.
Toby Shea Chief Financial Officer.
This call is also being webcast from the IR section of our corporate website, 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.
Looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from current expectations.
For detailed discussion of the risks and uncertainties. Please refer to our latest annual report on form 20-F, and other documents filed with the U S. S E C.
Now on the.
The Hong Kong stock exchange 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 law.
Please note that certain financial measures that we are using on this call such as adjusted EBITDA adjusted EBITDA margin.
Adjusted EBITA margin non-GAAP net income non-GAAP diluted earnings per share.
And free cash flow.
On a non-GAAP basis, our GAAP results and reconciliation of GAAP to non-GAAP measures can be found in our earnings press release, unless otherwise stated growth rate.
Of all stated metrics mentioned during this call refer to year over year growth versus the same quarter last year.
In addition, during today's call management will give their prepared remarks in English.
Marty.
Simultaneous chat Chinese translation or another conference Lai, please refer to our press release for details in.
And then a Q&A session you will we will take questions in both English and Chinese and the third party translator will provide consecutive translation.
All translation to offer convenience purpose only in the case of any discrepancy management statement in there which are language will prevail with that I will now turn to Daniel.
Thank you Rob.
Hello, everyone. Thank you for joining our earnings call today.
We completed a solid fiscal year amidst the macroeconomic challenges in China due to the residual yourself covey and tremendous uncertainties in the global geopolitical landscape.
During the fiscal year, we achieved the target of one getting a CS in China with.
With annual net increase of 113 million.
Globally, we reached 1.31 billion a six.
Annual net increase of 177 minutes.
And we achieved a total G N V off.
<unk> three trillion RMB.
It was close to a treaty RMB in China industry.
In the 341 billion RMB outside of China.
Our cloud computing business completed its fifth its first profitable fiscal year, while maintaining market leadership in China.
Now I would like to share a bit more about the latest situation in China with a recent resurgence of Colgate.
As you all know.
<unk> started to spread in China in March and has impacted several major consumption and the manufacturing centers, such as CRO, we alert delta, including Shenzhen the.
The young so you have a delta, including Shanghai and Beijing.
During the second half of April .
Over 80 cities in China reported confirmed Covid cases.
And in most of our national economic centers.
Such widespread impact has brought significant uncertainties, so the China economy.
We saw the national retail sales reporting negative year over year growth in March and April .
And online sales all physical goods also reported a historical decline year over year.
Yeah.
The resurgence of Covey has also impacted our business to varying degrees.
Overall speaking we saw a low single digit decline in revenue growth in April compared to the same period last year.
All of my physical goods <unk> of our China retail marketplaces.
Slowly unpaid orders so year over year decline in the.
Low teens percentage in April .
To give you a sense of the scope of impact.
Based on our consumer address.
Cities with new Colby Casey's in April represented more than half of our China retail marketplaces G. M D.
These cities also included a major merchant hubs, such as Shanghai, Shenzhen and their nearby cities.
We our supply chain and the logistic disruptions have resulted in west Brett impacts.
During the same period.
Our user traffic and engagement.
And resilient.
Patterns of consumption cross categories, all of our platforms have shifted.
Fashion and electronics consumption decrease.
Men for essential supplies, such as food and F. M C G products increased significantly.
With more consumers.
Stockpiling.
At home.
Emerging categories, such as health care.
Activewear and outdoor products also grew rapidly.
We have seen seeing a major recovery in local logistic capacity compared to April .
We believe operating stability and sustainability. During this period is a primary concern of all businesses.
Ensuring stability of supply chain and logistics aimed the uncertainties is the best way to improve consumption sentiment and foster a more and.
A more positive environment for business operations.
We are also facing uncertainties in the macro environment outside of China.
During the quarter.
Order growth slowed down to a 32% year over year as offline consumption, graduating recovered post pandemic in southeast Asia.
With Malaysia, Vietnam, and Thailand achieved higher than original average order growth rates.
Trendy will continue its market leadership in Turkey, with quarterly order volume growing by 48% year over year.
The order volume of aliexpress decreased year over year this quarter.
Due to the impact of European Union's policy change in V. A T exception.
Recovery of local supply chain and offline consumption post pandemic as well as international logistics disruptions due to the original conflict.
Despite geopolitical conflicts and uncertainties we.
We will continue efforts to deliver to our globalization strategy in consumption.
We will serve international consumers through a combination of cross border and the local commerce models.
And are proactively invest in our global logistic networks as part of our overseas digital commerce infrastructure buildup.
Facing the challenges of geopolitical and macroeconomic uncertainties.
Many companies started to focus on high quality growth with cost control and the loss cutting.
For Alibaba Hi.
High quality high quality growth has been a principal for years.
Especially during the pandemic.
We see the benefits of the solid foundation that we had built overtime carrying out this principle.
Number one the high quality consumer that we serve.
Number two the high quality infrastructure, we are building for digital commerce and number three the high quality technology innovations that drive the vast potential of our cloud computing business.
I will elaborate more in the following sections.
First of all the high quality consumer base.
We serve the largest and the highest quality consumer base in China, like Taobao and Tmall.
Among our one bidding as he's in China 124 million consumers spend more than.
So the RMB annually.
<unk> and Tmall.
98% of those consumers continue to stay active in the following years.
Looking ahead, we will continue to strengthen our comprehensive consumer asphalt application portfolio was clearly the Fischer <unk> user value propositions.
And I trust of diversified needs of different consumer segments in accordance with their consumption power and mindset.
Especially those of our customers.
What does it mean.
In pre purchase stage it means establish.
A clear consumer mindset.
Stimulating consumer interest through increasing user engagement and time spent on consumption related contents.
And the influencing consumer decision.
Impulse purchase stage, it means and enhance the fulfillment and customer customer service experience.
I believe this is a winning formula for earnings silver Mindshare and wallet share in a highly competitive landscape.
Okay.
Secondly, the high quality infrastructure for digital Commerce.
Over the years Ali.
Alibaba has established a comprehensive infrastructure for digital commerce, but it's on a hybrid model combining intercity and interested he fulfillment.
Through digital user outreach effective organization of product and services supply as.
As well as fulfillment service capabilities covering cities and communities.
Our infrastructure has become an important way for consumers to obtain daily necessities during the pandemic.
In particular.
Over the last few years, we have created our location based commerce business by building core capabilities in supply chain and fulfillment and online offline integrated distribution networks.
Pulp off eight existing marketplace model.
Based on our data in March and April .
And average order value of customers in our low Cushing based commerce business has increased significantly as consumers in Colby.
He has rushed to stock up.
As a result.
Our order volumes were negatively impacted by the fulfillment capacity constrained during the pandemic.
G N D of these location based commerce business have shown robust a year on year growth.
Taking Shanghai as a as an example.
While all of them are 40 delivery business has been significantly impacted.
Deliveries of retail categories happen rapidly.
In particular demand for groceries, and pharmaceutical pharmaceuticals are extremely strong with young year growth above 100%.
As all of them are continuing to enhance its operations and to reduce unit cost or unit logistic cost.
Its unit economics also improved significantly to almost breakeven during the quarter.
Our infrastructure is playing an important role during the pandemic.
For example, our different businesses, including fishing pole Halcyon dock chemo supermarket.
Et cetera, all providing essential supplies in cities impacted by Covid in China.
Through these efforts, we hope to integrate fitness capabilities with social responsibility leveraging the power of digital commerce and technology in the fight against Covid, and a provider and providing essential supply support for local communities.
Let me name a few examples.
So not appreciable in other business units supported the supply and delivery of essentials.
Residents by dispatching Sullivan of Covid, and the frontline workers from various regions in China to Shanghai.
Oh, no not deliver more than $2 5 million pharmaceutical magazine orders to homes in Shanghai in April 2022.
It also launched emerges emergency delivery services for more full vulnerable groups in the city and a dress is nearly 70000 emergency requests during the month.
Tonya on logistic built a emergency logistics system that in composite disaster preparedness management.
Emergency transportation.
Transit and distribution to deal with contingencies.
Hey map, our navigation tool launched them that PCR test sites, which cover more than 350 cities in China by mid May.
Users can easily search for a locations and open.
Opening hours of nearby test sites.
Taobao and Tmall have launched a series of targeted relief measures that would help merchants in Shanghai and then those participants.
In our June 18th shopping festival after cash flow east to east there are cash flow pressure reduce operating cost and a speed up there.
Consumption, a resumption of work and production to the largest extent possible.
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The high quality technology innovations that drive the vast potential of our cloud computing business.
Alibaba cloud competitive advantage, it's webcast perpetual technology and the products that support the highly demanding and.
Complex business across Alibaba group.
While serving customers across a wide range a wide variety of vertical globally.
In fiscal year 2022 Alibaba cloud continues to be the leader in terms of market share in China and achieve the full year profitability for the first time.
It got revenue reached.
$74 6 billion RMB during the year was 23% you only get growth.
Before intersegment eliminate elimination cloud revenue for the fiscal year has exceeded 100 billion RMB.
During the past quarter, Alibaba cloud revenue increased by 12% year on year.
The growth deceleration was a result of several factors.
Including the decline in corporate activities and the delay in project delivery due to the impact of Covid restrictions.
Slowdown in the growth of Internet industry customers.
And the gradual termination of contracts by a top customer for our public cloud services outside of China.
We believe these impacts are temporary.
Well I'll try to China's internet industry customers show a deceleration in cloud service demand.
As the entire sector faced a challenge.
Seating in user traffic and time spent.
Digitization of other industry is just starting.
And we see plenty of opportunities.
Cloud computing and data intelligence services, often the mental to every business in every sector undergoing digital transformation.
According to the industry estimates.
Lynas cloud market size will reach one trillion RMB by 2025.
Alibaba cloud will continue to.
How did they it's called comp ex coal technology and products to maintain its leadership in this highly potential market.
The cumulative results of Alibaba strong management and operations over the years has produced a high quality customer base.
A sophisticated digital commerce infrastructure and World class technology innovation.
With <unk>, we also have a multi engine growth strategy.
Financial conditions, and a profitable business and a strong cash flow.
These provide important assurance in the face of macro uncertainty and more importantly, a source of confidence as we continue to pursue healthy and sustainable development for the future.
In the new fiscal year, we will focus even more on cost control and continue to improve our operating efficiency.
This includes streamlining unprofitable businesses.
Improving cash cycles, and enhancing investment efficiency in personnel fixed assets and other areas to maintain financial flexibility and Mr. Uncertainties.
Recently, the Chinese government has released important policy signals on its commitment to stabilize the economy and the job market.
In response to Covid impacts.
They have also issue clear statements on promoting the development of Internet platform economy, So a healthy regulatory environment.
Yesterday, the state Council held a national meeting to mobilize the implementation of several economic policies.
That's one of the representative companies of China Internet platform economy.
Alibaba is it he is committed to supporting China's development, so with a combination of technology.
Innovation and commercial innovation.
We aim to serve Chinese consumers pursuit for a better life.
Well as the digital transformation needs of different industries.
We also will be on the front lines in the fight against Covid and ensuring the availability of food and other essential supplies to communities in need.
We look forward to the introduction and the implementation of policies that will enable the internet platform companies to contribute more towards stabilizing the market.
Creating jobs and furthering high quality development of China economy.
The history of economic development has always being filled with twists and turns.
In the long run we strongly believe in the resilience and the potential of the China economy.
We will strengthen our fundamentals during this unique period.
Our focus on innovation and customer value accretion.
And to continue investing in our planning for Alibaba as long term growth.
Thank you everyone for your time.
I'll now turn the mic.
Over to Toby who will walk you through.
The details of our financial results.
Thank you Daniel.
Hello, everyone let.
Let me walk you through the details of our financial results.
For the quarter ended March 31st 2022 total revenue was RMB 204 billion, an increase of 9% that was primarily driven by the revenue growth of China Commerce segment by 8% to RMB 140 billion.
Local consumer services segment by 29% to RMB 10 billion and cloud segment by 12% to RMB 19 billion.
Income from operations for the quarter was RMB 16, 7 billion compared to a loss from operations of RMB seven 7 billion in the same quarter of last year.
The year over year change of RMB $24 4 billion was primarily due to RMB 18 billion NT multiply fine levied in the March 'twenty, 'twenty, one quarter and a mark to market adjustment of SBC expenses of RMB 13 billion in the March 'twenty 'twenty.
Two quarter.
Excluding these impacts income from operations would have decreased by RMB 7 billion, primarily due to changes in adjusted EBIDTA.
Adjusted EBIDTA decreased by RMB, six 8 billion to RMB 15, 8 billion year over year in the quarter.
The decrease was primarily due to RMB seven 4 billion decrease in China Commerce segment, EBITA, there, mainly reflected investments in Palatine and how 'bout deal impact from Covid as well.
As losses incurred by some not.
However, it's important to know that the combined losses of Tau about deal and Tau Type-high declined quarter over quarter as we focused on driving high quality growth for our China Commerce segment.
Importantly, during the March 2022 quarter, we are also making progress in improving operating efficiency and in steel cost discipline through the company. This has resulted in narrowing losses year over year of RMB, One 2 billion.
For local consumer services narrowing losses of RMB $732 million for D. M E settlement and improving profitability of RMB $618 million for Klaus Heckman.
Cost of revenue ratio, excluding SBC increased to 68% in the quarter ended March 31st 2022.
The increase was primarily due to firstly higher proportion of direct sales businesses, such as fresh Apple and Tmall supermarket that increased the cost of inventory as a percentage of revenue.
And secondly growth off Taotao tiny tiny businesses that led to an increase in logistics costs as a revenue.
As a percentage of revenue.
Excluding SBC product.
<unk> expenses as a percentage of revenue slightly increased two 6% in the quarter.
And at March 31st 2022, reflecting our continued investments in talent to drive technology and product innovation.
Sales and marketing expenses.
Excluding SBC as a percentage of revenue remained stable at 13% in the March quarter compared to the same quarter of last year.
Excluding SBC and the impact from and to multiply fine general and administrative expenses as a percentage of revenue would be flattish in the quarter.
non-GAAP net income attributable to ordinary shareholders in the quarter was RMB 21, 5 billion a decline of 6.9 billion, primarily due to decrease in adjusted EBIDTA.
GAAP net loss is attributable to about two ordinary shares was RMB 16, 2 billion. The difference between GAAP net losses and non-GAAP net income was primarily due to increase in the market prices a decrease in the market prices of our equity.
Men in publicly traded companies.
As of March 31st 2022, we continue to maintain a strong net cash position of RMB 343 billion or U S. Dollar 54 billion.
Our strong net cash position is supported by robust cash flow generation.
In fiscal year, 2022 net cash flow from operation and free cash flow, where on the $142 8 billion and RMB 98.89 billion respectively.
Majority of the difference is operating Capex spending at RMB 42 billion, reflecting our investment in cow business and logistic fulfillment infrastructure.
Free cash flow in March quarter, 2022 was an outflow of RMB 15 billion, mainly due to the payment of a final settlement of installment in the amount of RMB nine 1 billion. After RMB 18.2 billion the N T multiply fine and that <expletive>.
Creasing profit.
Yeah.
Importantly, we have continued to enhance returns to shareholders through share repurchases, given our strong balance sheet and free cash flow generation capability.
In fiscal year 'twenty, two we repurchased approximately 60 million of our Ats for approximately U S. Dollar nine 6 billion and our share repurchase program.
On March 22, our Companys Board has authorized an increase of our share repurchase program for U S dollars 15 billion to U S dollar 25 billion.
Since April the first two months may 25th we have repurchased another U S. Dollar three 4 billion in a D. S S.
As of May 25th we still have an unused amount of U S. Dollar 12 billion under the share repurchase program.
Before I start with our segment results.
I like to highlight something in the December 2021 quarter financial results.
In the December quarter that net income attributable to ordinary shareholders, what was understated by RMB seven 3 billion.
This was caused by a goodwill impairment charge that should have been partially attributed to noncontrolling interests, but was fully recorded net income attributable to ordinary shareholders. This does not impact our non-GAAP measures and does not impact revenue income from operations.
Total net income for the December quarter.
The attribution has been ratified and properly reflected in the full year consolidated financial information for fiscal year 2022.
The distribution has no impact on the consolidated financial information for the March 2022 quarter.
Now, let's look at our segment results.
Revenue from our China Commerce settlement in March quarter was on the 140 billion, an increase of 8% year over year.
Customer management revenue remained stable year over year at RMB 63 billion. Despite a low single digit decline in taobao and Tmall online physical goods G N V. Excluding unpaid orders.
For the March quarter to combine the T. N V growth of January and February was flat.
But was offset by a decline in G. N V in March driven by COVID-19 impacts.
If we further break down custom magnum and revenue growth.
Diving in a commission revenue total advertising revenue delivered a positive growth during the quarter Commission revenue recorded high single digit decline due to D. N V decline and higher order cancellation and delays as a result of logistic bottleneck from COVID-19 resurgence in March.
Direct sales and others revenue in March quarter was on the 73 billion, an increase of 14% year over year.
Primarily driven by robust revenue growth of fresh a poll and Tmall supermarket.
China Commerce segment, adjusted EBITDA decreased by RMB, seven 4 billion year over year to RMB $32 1 billion in the March quarter.
Decline reflected investments in Cotai time, how 'bout deal as well as over RMB 1 billion losses incurred by some not primarily due to one off asset impairments and special provisions.
We are making progress in our commitment to improve efficiency and narrow losses for Tau about deal and <unk> that have been successful in acquiring new consumers in the less developed areas.
During the quarter, how about deals had over 300 million annual active consumers more than 20% of these AUC of Tau about dose what consumers that did not shop on taobao or tmall in fiscal year, 2022 and Palletize that had over 90 million, a a sea of which more than 50%.
Time fresh produce of buyers.
Our various platforms.
At the same time, the combined the Loftus of Tau about deal and how it ties a decline quarter over quarter, we expect that the combined that's how 'bout deal and how it has had losses to continue to narrow as we focus on driving high quality growth for our China Commerce Sakhalin.
Onto our major direct sales businesses.
As Safra son Na as mentioned losses narrowed the year over year for fresh Hippo, Tmall global and Tmall supermarket.
We have continued to expand our direct sales business to enrich product supply for our marketplaces.
Okay.
And then supply chain capabilities for various verticals and offer comprehensive high frequency fulfillment services that seamlessly integrate with physical stores and pickup stations. They.
These businesses delivered solid top line growth during the quarter and we expect them to contribute more to the overall segment revenue mix, which will continue to affect the China Commerce EBITA margin.
Our international No Commerce segment revenue in March quarter was RMB 14, 3 billion, an increase of 7% year over year. The increase was primarily driven by lasagna and Alibaba Dot com our international wholesale business.
<unk> delivered solid order growth of 32%, while Alibaba Dot com grew transaction value completely honest platform by 22%.
The slower year over year growth rate as compared to previous quarters was mainly due to firstly revenue to kind of trend deal that was negatively impacted by the ongoing depreciation of Turkish lira against RMB.
And secondly orders decline.
Our express which was mainly driven by the ongoing impacts from V. A T. Ruth.
Well as supply chain and logistics disruptions for parcel entering the eurozone due to Russia and Ukraine conflict.
And then slowing China export growth and supply chain disruptions from COVID-19 impacts.
International Commerce segment, adjusted EBITA losses was a loss of RMB, two 6 billion in March quarter.
This slightly increase the year over year, mainly driven by <unk> investments in new businesses, such as international businesses and local consumer services in Turkey.
Partly offset by continued profit growth of Alibaba dot com narrowed losses of aliexpress and narrowed losses of lasagna through optimization of Opex and logistics cost.
Revenue from local consumer services was RMB 10, 4 billion in March quarter, an increase of 29% year over year, driven by more efficient use of subsidies and higher average order value driven resilience GMB growth for all of them.
Local consumer service adjusted EBITA losses reduced by $1 2 billion year over year to RMB, five 5 billion, primarily due to the narrowed losses of our two home business driven by optimized user acquisition and reduced delivery costs.
Revenue from tiny all off the intersegment elimination was RMB 11, 6 billion in March quarter, an increase of 16% year over year, primarily contributed by the increase in revenue from consumer logistics services as a result of service upgrade for enhance.
<unk> consumer experience, partly offset by the decrease in international orders that was mainly impacted by the supply chain and logistic disruptions for parcels entering the euro zone due to Russia and Ukraine conflict.
During the fiscal year 'twenty 'twenty, 269% of China's total revenue was generated from external customers.
Tonya adjusted EBITA loss was RMB $912 million.
Loss widened by RMB 327 million year over year, primarily due to increase in operating costs from expansion of our global smart logistics infrastructure as well as the impact from COVID-19, resurgence in China, and Russia, and Ukraine country.
Going forward, we will continue our efforts in building comprehensive logistic.
And the fulfillment infrastructure in China and internationally laying the foundation for sustainable long term growth for our digital commerce businesses.
Revenue from our cloud Sackman after into secondly, elimination was RMB 19 billion in March quarter, an increase of 12% year over year.
Revenue growth was slower in march quarter compared to prior quarters.
Reflecting slowing economic activities softening demand from customers in China, Internet industry and delays in completing hybrid cloud projects due to COVID-19 impacts.
Excluding revenue generated from a top customer in the internet industry that gradually phased out using our cloud services for its international business. Our cloud segment revenue after elimination would have grown 15% year over year jewelry March quarter, and 29% for fish.
Oh year 2022.
Excluding this customer our customer base and industry coverage continues to diversify the next top 10 non affiliated customers contribute to less than 10% of Ali cloud revenue in fiscal year 2022.
Importantly revenue contribution from the Internet industries continues to increase as well during the March quarter revenue growth was strong in telecommunications financial services and retail industries, but declined in selected internet verticals, including online.
Education and entertainment.
Adjusted EBIDTA of cloud segment, which comprises of Alibaba cloud and Ding talk was a profit of RMB $278 million in March quarter, which improved by RMB $618 million year over year. This is primarily attributable to ongoing improve.
And then in cloud profitability.
Partly offset by increasing losses from Dean talk.
In the new fiscal year, our cloud secondly, we will focus on high quality revenue growth.
That's in talent, and R&D and improve operating efficiency and expand internationally.
Revenue from our digital media and entertainment and secondly in March quarter was RMB 8 billion, a decrease of 1% year over year.
Adjusted EBITA was a loss of 2 billion RMB narrow the biofuel point 7 billion RMB year over year.
Let me close with a short recap of last fiscal year and then our outlook.
In fiscal year 'twenty, two we have faced with increasing challenges from many fronts.
These have been brought about by slowing macro activities increased competition and COVID-19 resurgence domestically as well as changes in geopolitical conditions internationally, but they also bring into focus the fact that that there's much we can do to create value for customers.
And key stakeholders.
During this past year, we have made a number of achievements that position us well for the future first we have read react reached a historical milestone of over 1 billion annual active consumers for all our consumer facing businesses in China.
This was made possible through the strong execution and growth of businesses, such as Taobao <unk> titi.
Our unique value proposition of having both e-commerce and location based commerce businesses at scale position us well to serve these 1 billion consumers in China.
Second we're see increasing benefit from our development of an integrated into city and interestingly logistic network allow us to offer multiple delivery and fulfillment options to our consumers. This network also allow us to further increase penetration in categories such as grocery.
F M C D and consumer electronics in the future lastly in fiscal 'twenty, two we had to spend over time, the 120 billion in technology related costs and expenses that continued to strengthen our leading position in China's car market support to the sophisticate.
The technological demands of our consumer facing businesses and advanced our research and development in the next generation technologies.
Now in terms of guidance.
Since mid March 2022 we have seen significant impacts to our domestic businesses from COVID-19.
China, particularly in Shanghai.
Considering the risks and uncertainties arising from COVID-19, which we are not able to control and are difficult for us to predict we believe it's prudent at this time not to give financial guidance that is typically provided at the start of the.
Our fiscal year.
Looking forward in fiscal year 'twenty three.
Emphasizing what Daniel has mentioned, we will focus and execute several key operation principals and financial objectives.
Including <unk>.
First <unk>.
January .
Sustainable high quality revenue that reflects our ongoing commitment to developing high quality consumers high quality digital.
It's commerce infrastructure and high quality Tech knowledge innovations. We believe these efforts will continue to build a strong and durable relationship with our consumers and customers.
Second we will focus on optimizing our overall cost structure, we will control costs and improve returns for our major businesses that are already at significant scale compared to peers for growth businesses. We will also optimizing spending.
And at the same time identify increasing monetization opportunities that you are a sustainable high quality revenue the incremental revenue generated will be invested back to the respective businesses and create value for their customers, thereby creating a virtuous growth loop.
To achieve long term profitability.
At a high level, we will seek to improve gross margin of our direct sales businesses.
Optimize logistics and fulfillment costs for consumer facing businesses and control, our overall sales and marketing spend.
So it.
Continue to build in and energy efficient power infrastructure, and global warehouse and logistics network that enhance our competitiveness in China and in international markets at the same time, we expect ongoing improvement in efficiency and utilization of these infrastructures.
Can benefit both our customers and our own staff operating businesses.
Lastly.
We seek to maintain strong operating cash flow generation and a strong net cash position that gives us the financial flexibility to invest in businesses and capabilities that expand the pie and benefit all of our key stakeholders.
We have a lot of work ahead of us.
But by being steadfast and executing the key strategic and financial objectives that we have set out we believe alibaba will emerge stronger in the future.
Thank you now.
Now, let's turn to Q&A.
Hi, everyone for todays call you are welcome to ask a question in Chinese or English.
Third party translator will provide consecutive interpretation of the Q&A session.
And I imagine would address your question in the language you asked.
Please note that the translation is for convenience and we are in the case of any discrepancy or management statement and the origin of language will prevail. If you aren't able to hear at the Chinese translation bilingual Trust Trust scripts of this call will be available on our website within one week after the meeting.
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Operator, please connect speaker and S conference lifestyle.
And start a Q&A session. Thank you.
Thank you Lady.
Ladies and gentlemen, if you have a question at this time. Please press Star then one on your telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
To give more people the opportunity to ask questions. Please keep yourself to no more than one question at a time.
As a reminder to ask a question. Please press Star then one.
Our first question comes from the line of Ronald Keung with Goldman Sachs.
Hey, Yeah, Daniel Chow told me are Rob Nah, Yeah, Gucci took year T. Yes, anytime the resilient, none condom that Jacob C M or the revenue sure. It's your money talks with flat not not so he took the G. M. B, you've got low single digit that you setup, a CMO trips that contact.
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Thank you, Daniel Tobey and Rob and congratulations on the resilience that we see in the results.
You've just released.
We did see that.
<unk> revenues were flat, but there was nonetheless low single digit growth in G. M D and Daniel also spoke about how advertising was performing well certainly from April onwards, with the impact of Covid.
There's a.
And in part there, including on CMO revenue, but I'm wondering what what we're seeing in may in terms of the performance of our parcel network.
And if things are picking up and what we're seeing currently in terms of G. M V and orders in May Thank you.
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She all teaching hit total lightened yacht common that's a good a shoulder town acre you could see that she can walk. So he says she got you got you.
Well thanks for your question.
In Daniel's speech earlier, he did give you a presentation on the situation in April .
Overall as Daniel said.
<unk> was down.
Around 10% are typically C. M. R does tend to move in line with G. M V, but there can be a lag.
And.
It's the case that many merchants may need to invest in order to grow their revenues.
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You can go to a kind of a triple play for downhole uncertainties, all wasn't really high school.
She always just to jump at Chinchilla is yet a bulk or shelf ideal a phone call or take Oh hold me. It sounds y'all Eugene cases, they go to really help out at some day huh.
The loss on your case with you guys.
Do you know what you'll see.
So he said that he scientists Oh, well Macondo article Wilson.
So he came on Macondo, you Shanghai Sunday, you should see shop.
Yeah.
Oh, Thank you will.
You issued in May.
Situation in May over the past couple of weeks.
You know with the resumption of our express deliveries and with the.
Beginning of the normalization of the situation in Shanghai.
Certainly, we see things improving but it will take time for all of the outstanding parcels to be delivered and also for merchants to make their preparations for the upcoming 618 in fact preparations will be beginning tonight, but we certainly are seeing signs of improvement going into the month of may.
Yeah.
Okay next question.
Our next question comes from the line of Eddie Leung with Bank of America.
Good evening guys. Thank you much.
Taking my question I think you guys started to mention about some of the longer term D shaves off because of the Covid Lockdowns. So just looking ahead, assuming a reopening.
Do you see in the long term structural.
Structural change in the operation.
Customer demand and product mix of countries Lockdowns and what type of investment you need to make to handle the potential changes. Thank you.
Oh God, there's so much Oh gosh, yeah, just short of Q1.
Yes, she talked about should these are eating the union shop inside to watch where do you see a chunk. She the you shook out yes.
Sure sure No go shut venture formed a hot humid.
Human sized chunks either to go tell them you don't know when we're going to make sure it's what.
Are you sure you heard mark with our unions Yeah for sure. It's you don't Cook, who shoot you fucking up should champion juggled form yet.
She also worked with some younger chunks you guys get all which she also worked with me on the tour.
Okay.
Hello. Thank you for the question I think a lot during this I mean a widespread.
Colby I mean.
In late March and April we do see a shifts of the consumption pattern and.
I think up after this I mean this wave I think of what we see that actually consumers in China. They will tend to have some stocks are now home to prepare for the uncertainty.
And so then I mean are uncertain.
Situation, so how to how to grow for example, the supply by bulk and how to give them a on demand, but not necessary speedy delivery, but it's our own demand and our on time delivery I think it's very important.
For Us I think we are actually we are a.
We believe we are in a very we are in a good position, which we have both our our national wide I mean platform as well as the lavish by the others.
Terry networks, Oh with major delivery partners at the same time, we have our intra city and instant delivery I mean, our forces on the ground.
All of these major cities, so how to leverage these infrastructure and enhance these capabilities and capacities is our our priority in the future for all to support the various needs of the of the product so product wise I think it's more diversified to the two.
The bulk sales for the full provision for the future and maybe for the small package just for the insulin delivery and before the instant needs. So it's all about the need to diversify our retail formats as well as the delivery and the fulfillment network to support both of this thank you.
Yes.
Thank you.
Yeah.
Thank you.
Our next question comes from the line of Thomas Chong with Jefferies.
Alright.
Hold on SEC.
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Okay.
Operator next question.
Our next question comes from the line of Thomas Chong with Jefferies.
When somehow just like when you talk about what it is.
What happened here.
Consumer spending on the Blender what is homegoods.
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Yeah.
Thank you and good evening management My question has to do with consumer spending.
Wondering what changes you've seen in consumer spending within different segments of consumers high income middle income and low income consumers are lower income consumers perhaps.
Tending to be more and more cautious during this recent period are also I'd like to know what kpis.
For this year's.
<unk> and how you see recovery in the second half of the year do you think that once logistics capabilities have recovered that.
That will set the stage for recovery.
Or will we have to wait a bit longer perhaps to see consumer sentiment also recover thank you.
Hershey.
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Hard to tell them that your girlfriends and arches woman could you kind of put on the shelf so that you've got gosh yeah.
Take a Sunday someone will try to go to the tier two on what mcdonalds in call. So as you saw so each one of the highest as a species simply shelf hydrotherapy shipping, which I'll say to the thoughts on that.
But your billings you end up being a hot too so when shall we say like listen Nicholson, So totally peashooter assumed bush healthy P. Tau the huge holder can tell me it being churches that took him that she wants your childhood component.
We don't see the coupons and wish you all a shelf on T. A C P shipping the shelf.
We shouldn't a chunk of your charter communications.
Thank you well on Alibaba as retail platforms are we have a consumer base. The 1 billion that consumers who are highly diverse spanning all of those different tiers of spending.
So, yes, we certainly do see different patterns there but.
What I can tell you is during this special period of time are you really see a divergence between spending on essentials versus non essentials.
In all of those different tiers of consumers' demand for essentials has gone up and there's been less price sensitivity, whereas with respect to non essential purchases there has been more price sensitivity.
So that's usually a good a new windows to go shop on your end to choose a single Glenshee, whether condos and town would you do it and good to.
The shelf either way for us at SUNS I'll, just say I'll call. It out in front of me into Libya, you found me intolerance.
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She had shellfish odell.
So you shouldn't find what's actually on shelf.
And this is also a.
Gary are relevant to the other part of your question about the trend for the coming half of the year.
Because in my view.
Recovery and growth of consumption to occur two things need to happen first as I mentioned in my script, our merchants in order to be able to operate.
Need to have a sustainable and robust supply chain and logistics are in place and at the same time.
Oh consumption demand needs to return to shellfish Shockwave for the fit until we all due to the heightened take a you don't want to do with either you Chi I'll do what I showed you cheat.
I assume you Chi who's trading commentary to the shelf either.
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You've got to assemble GDP, the father and social cohesion, a futon swelled are you going to change he tells you.
Yeah.
And in order for consumer demand to recover it's very important that there'll be strong expectations.
For the future.
Because only when people have a strong expectations for the future.
And in particular in their ongoing ability to grow their disposable income will they be able to grow their consumption. So going beyond the essentials for getting back also to the increased spending on the nonessential, which would be very important.
Four are also growing the economy in terms of stimulating GDP growth.
Yeah.
Uh huh.
Uh huh.
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They're all parts of the.
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You mentioned that you're going to hold or you got to go to see the you would choose to go also nowhere near Kandahar. So it does take us to generally you shouldn't do I'll pass you end up being something you could see the yugo holiday season. So he said go shelf each other really senior classes my monthly audience would I take C. Well me away its home pintail age out.
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Yeah.
Yeah.
Yes, and the other part of the question was about our this year's $6 18, which is just getting started this is an important midyear event coming out of this recent challenging period merchants are indeed excited they're looking at it as a good opportunity to recover those losses are achieved.
Sales so for us, we're making preparations to do that and we're seeing a lot of enthusiasm.
<unk> trends this year compared against last year in terms of merchant enrollment in terms of the <unk>.
<unk> offerings.
So this is.
Coming up into the holiday season, there's a lot of consumer enthusiasm doesn't platform, we intend to be strongly.
Supportive as was mentioned a four 618, we've already put in place so many policies to support and help our merchants as well as to.
Ensure that logistics are functioning effectively to help those merchants to be able to achieve good self. So these really are joint objectives for our merchants.
And for Us as a platform and of course, we do very much hope to see a pandemic.
Troll measures continue to be effective which will put in place the necessary conditions to make this a success.
Thank you our next question.
Our next question comes from the line of Jerry Liu with UBS.
Yeah.
It's just a SEC.
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I'm sorry, he couldn't see it.
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Davidson.
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Tiny.
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Since she won so they couldn't even go on and finish who Oh boy.
All right.
I am just as Xiaomi and to once again take a coup attempt in a condensed Rihanna she got it.
You could see some just since you're saying it would be cool all of them are almost didn't occur until the new ER since you've got a team that's really especially on the allergy shots.
Seem to Damian a woman Jacob Kruse at Samsung and then you'll see quite a tissue.
Thank you management. My question has to do with cost optimization cost control, which you mentioned are will be implemented across a lot of businesses.
Should we understand that as part of this cost optimization strategies and in the coming fiscal year. The objective is to achieve faster profit growth and revenue growth.
We've certainly seen a significant improvement in U V and the gorilla adults were but what will be the major focus is and priorities for cost optimization in the coming fiscal year.
How does that play out to go into your makeup.
So Shannon Hall, which sounds hung Chung.
Kind of a man, which is hey, Josh I mean, you just saw the tissue among core tenets that you do now without eating them away tissue to cool. It you said something good a chunk and some shortage onto when we're awake. She opened up one two hour tactically jumping in shadows out towards your suddenly younger filature, either come through which it should be on door.
Yeah, no one acquaintance how hitting their Jake Jacobs to moundsville. So they wouldn't have been right now because I just don't see much out do you see you look or shoot Jacob tongue sheet attach a booming yet no one well acquainted and that's how he got when he being done in China and get you more.
Hum.
Thank you. This is Toby I'll take that question I think for the group as a whole.
So.
It's very clear that our strategy in.
In the next few quarters or year as a whole is going to focus on cost optimization and cost control.
And that will involve a couple of things first of all for the parts of the business.
That arent generating long term value will find ways to make them more efficient or or scale them down.
With consolidation.
Okay got it.
With all of them and done what are you doing now, but that said he's still the year with one country a year.
Tom that Tata Hsinchu women don't where you're eating the jumping to Michele that challenge to eco Mod Belkin Yarchoan no kidding, Yeah G. T leads mutual take that Tirewoman chunky that you could take.
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Could shake our moly plant with Chi to you could be about Asia.
Kept them going to teach them take a shot at you the Altra holdings should that Jacob Julio.
Now one of your weight Ts T true take or two if you take a Charlotte Houston, Louisiana, Yarchoan Chunky Hershey likely date, all shut in telling you that you can get with a Y you got empty that you wish architecture.
Secondly, we do have a lot of different businesses that are different in nature, and therefore will be taking different approaches and putting in place different requirements to achieving a better cost efficiencies, but to give you. An example, our around our direct sales businesses and here it is.
We are clear on the one half.
In terms of gross margin were looking to drive higher efficiency and at the same par will also be looking to achieve more cost control better efficiency in logistics and it will be the combination of those two things that will drive cost optimization.
Nigel you hippie resources turnkey type two tons of men that she believes the people show you see challenges cause sittenfeld tilly's that Tim but the woman way Jacob you only you got something that I spoke with our young go to J, a shelter and couldn't even imagine two countries now Wade will you take that Ah I shouldn't that be the case I mean, we hit it.
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And more broadly at the group wide level.
Other example would be.
Marketing costs are sure we will be taking a more disciplined approach with specific.
<unk> measures.
And in many cases spending will be cut back.
So you know just at what time, what kind of helps you achieve at least the way down in the winter time and keep the charter that you.
When you consider when Kishore meals daily rain, so let them keep them on the mail County.
And that's what counts contact was quickly Nanchang Wuhan being way Lane you throw me out of the two of them are lifetime that too vicious only got tearful that Yahoo.
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Sticking with you that's the way like India jointly go to them.
Hi, Wendy.
So we we don't have a specific figure to share with you on the other part of your question is about our ratio as I've mentioned in my script.
As a CFO for the group.
A big priority for us is driving higher operational efficiency lowering cost achieving higher efficiency.
In order to ensure that we have a strong balance sheet and strong cash flow generation capability.
Operator next question.
And our next question comes from the line of Alex Yao with JP Morgan.
Sure sure plenty of time good ones.
She has got anything to add.
Sure.
Kryptonian, therefore, youll come in to sell at some point to page two jobs.
Uh huh.
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Search engine project team industrial hold true bundled touch-up age Oh, what he told US we want to ensure you are down this year.
Chipset of tens of Punjab, India, depending Shea palm Yeah Youll cleanup.
Are you.
Sure you're watching a show me and Youll connector, which MTI each year.
So the whole time, Johnny go find new Xiaomi and things on the Alibaba Nashville woman, which.
Trish you showed a bunch at element colon.
And then I'll go to it's always you know something on the doorstep since yeah.
Thank you management Daniel in your script, I believe you talked about incentives or stim.
Stimuli that maybe forthcoming from the government to help support.
The business of Internet platforms, and drive consumer spending I'm wondering if you could tell us what what kinds of businesses do you think will benefit.
These kinds of incentives and what kind of stimulus, we can expect to see and how alibaba can position itself to capture the benefit of this policy.
Okay.
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Okay.
Yeah.
Uh huh.
Thank you well, we've seen that the government has been coming out with various policies lately.
Aimed at.
Stabilizing the economy stabilizing employment, ensuring the provision of essentials.
People, including yesterday, a very important national meeting convened by the State Council.
To implement.
Measures in six different.
Areas.
Several of which are highly relevant to the business of alibaba, including stimulating consumption, ensuring the provision of essentials.
And.
Us achieving.
Apply chain recovery, so that's all highly relevant to us.
As a responsible are representative of the platform economy and also as a constituent of China's real economy. Alibaba is of course keen to make our contribution.
Two driving progress and in all of these areas and are very.
Very important part of this of course is smbs.
Yes.
<unk> businesses because of their scale in the most vulnerable to the impact of the pandemic and we very much want to help them recover only one S. M. E's have recovered can more market based jobs unemployment be generated.
So he will then so all these elements.
And then go to yourself with a common share I'll tell you that Williams is I shouldn't say you go crazy when you Gotta shoots the hardest city changes or thoughts on how would you look to the high school, while neither cheapened clubwoman did cheapen the ballroom doesn't elite and then go to Cuba.
Today, you've got to talk with US right now my personal wish anti Audi Lea County, Romania, Thai King because he doesn't elite we think all of them are peanuts Alessandra people couldn't holidays, so that sets up a whole concept young daughter woman without really all box to go yet tasteful to go without phone me into ASO, which aren't you talked like since the sanjak them, how the pieces onto El Pas Thompson.
With me, it's that change he says somehow so you've got to put them on this whole need somebody selling had some jobs, which will appear either.
So the honest to tell the tender itself has some childhood sequence was I mean does she want tissue source.
Nickel ottens and a whole bunch of dealt with the peanuts on my son's Jacobi has gone down so much else yet.
For Alibaba.
This is where we can have a very unique role to play leveraging on our resources.
As a responsible company and society and as the operator of a digital economy and we see this as a basic responsibility.
We've been doing everything in our power to provide support and assistance to merchants.
As mentioned with the upcoming 618 festival, we have 20 initiatives in five major categories recently during a very difficult period in Shanghai.
We had 20 special measures.
To support merchants during that period, we hope very much to be able to support merchants.
These ways to facilitate their recovery at success.
Yeah.
Okay next question please.
And our next question comes from the line of Jong Shao with Barclays.
Yeah.
Thank you very much for taking my questions. You mentioned you just to pay the fine for the.
So the anti monopoly sort of new regulation last year last year was a year. There were a lot of government regulations set of wounds reduced to the internet industry.
Hum lately is as you know some of the senior leaders from the government and made some comments about the any further regulation.
I was just wondering could you share with us.
Ladies thoughts about government regulations for the industry for this year. Thank you.
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It sounds <unk>.
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Sure.
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I think sorry, Rob.
Sorry, Rob or I wasn't very clear my bad My point was that for example, one of the Vice Premier League set about actually some of the regulations last year. Many investors were very discouraged by it probably government government went up in overhead.
Boy I think can do who mentioned that.
Perhaps Chinese government to wrap up their regulation or any new regulation and move on and let the industry grow as they should sorry, if I wasn't clear before.
Our car side, what kind of if you want to show a mealtime attributes should Ah well short <unk>.
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So Josh as you go out see a shortage on weibo.
Green shoots you go poorly along it seems here.
You can see all the products.
Well I think we all know that recently the Chinese government.
Chinese leaders they like these.
Should a very clear message to the market that they wanted to do on the platform economy play an important role in the economic development and encourage the healthy development of platform economy and I think this is Doug.
The message is clear and as part of this plethora of economy in China Alibaba is committed to do.
What are we 022 to fulfill our responsibilities in terms of helping the development achieve a better lifestyle consumers and to help the merchants as well, especially in the Tech technology innovation I think in our core areas. So I think this is what what are we committed and we will.
To look part two two to make substantial progress in all these.
As pets, but at the same time, we are closely.
Watching the policy development under two to make sure we are fully compliant with all the regulatory requirements. Thank you.
Thank you.
Yeah.
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Future use of tuition Alibaba shoot me.
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Let's invite the last question.
And our next question comes from the line of Alicia Yap with Citigroup.
Hello, Thank you Juanita Washout Hall, she said, there's a lot of T. What what or when can you start Glen just.
Yes.
That's how he does.
This is lance yeah I saw Hum.
Phone call I took off where they alone.
So why now I have so much.
One woman took off.
Yeah, well that doesn't tell the whole told me that he got cut.
Well no.
She's a halt and a whole bunch of them.
Playful if he got some town hall, well, maybe we'll have to watch and go out.
Yes.
Uh huh.
Does that change or.
Okay.
Oh, Gee speaking too sure sure.
Daniel.
Oh goodness.
And then you end up being so without a J called Wakely woman she's on time.
It doesn't sound like.
Thank you management My question has to do with the cloud segment and the short term and long term prospects for the cloud business.
Starting with the short term I'd like to know Uh huh.
From the recent impact of the.
The pandemic and the.
The slowdown of the Internet sector as a whole what other factors are there that may be impacting the cloud business and then in the longer term when the Chinese economy has returned to normalcy.
What's your view about how the cloud business will develop a what kind of growth do you expect Alibaba cloud to achieve and then finally recently we've heard some news about some restructuring and some personnel changes in the cloud space could you tell us about the impacts that those are likely to have in the short.
And longer term thank you.
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So you want to reach out to the young childrens eyes up May go hungry it'll turns out as a particular union Hudson with others.
That's a true to photo to show them that somebody's acuity. So you just didn't.
I didn't see it at home how many of the Changyou mileage element always seek a piece on Guangzhou Tianjin.
Or what.
What else is quickly being dollar just aren't even open yet.
So challenging crunchy, that's what they're doing just fine.
Without that you wont need I mean.
Now it seems like junior English to you as a woman without a genius, you'll take a take or pay sounder tick up you won't see these multi.
Multiple street since Sunday, you sounded like there's somebody the town he gets into the somebody who can actually see what we can say so you could choose all that you got you got you can tie it to your weight.
The person that you went to D J.
Thank you well.
The performance of the cloud business in the short term I've already spoken about the factors.
That led to the.
Slowdown in revenue growth and Alibaba cloud.
So I won't repeat here, what I already said earlier.
But I think when it comes to economic development and the important role that.
<unk> can play there, but the key thing is that all industries are digitalized or need to digitalize.
Cloud.
Big data.
Our an important kind of infrastructure driving that upgrading of industry and therefore all industries.
Present important opportunities for us with Alibaba to assert I'm not really represents a huge market opportunity in fact as I mentioned in my script earlier.
The forecast is for the cloud market in China to reach one trillion RMB by 2025, so without potentially means that over the next few years, we have the potential to grow it.
Two times or three times.
Kind of multiples so it's gonna be a very big and exciting opportunities.
The audience when we are trying to move down that usually oh, let's see those sessions on our son's office I'm Glenn Chin of it you just couldn't.
Couldn't see the tie in to two pieces to.
Jenkins with element Unclouded. It uses a meager in sort of as a dengue people lunch in Shandong Bank couldn't show you something to eat and she was supposed to go totally off so as you look at it.
Well it seems like you all to take the food that you're going to either take the.
He is trying to teach some way to go for the teacher assistance doesn't wash on cigarettes. So you got <expletive> in to each one of the Hudson angle Bogging, Keyslot Thomasville Cheetah pinkeye for AI.
The bulk of what's in good share trends on where they're supposed to pacini, Don and go to things like being life changing so Shane I wish on cigarettes. So took a shell can make a hung it took us a truly all of the higher the single dose it down the Eagle Sheen sensors, you're fine.
Hong you show the Tempe, what do you see this on me two.
They basically they can deal with the fungi fit on somebody else to take our RTP shoot I took upon them you couldn't soil at the time of year that took a softer flu song cause some kind of quote bind each and I come from close to like him to.
Take the tons and tons of let's say on the Eagle Hawk cheaply. So he or she was going to say the single highest U haul either you're into it to the time frame that you can find the tool, which until China goes up like all I shouldn't say, you'll charge will make a high end solution I suppose a part of the town the Elisa cheaply.
Secondly in order to be able to fully.
Capitalize on that opportunity.
You need to take an industry specific approach.
Because you.
When we talk about cloud there are many different definitions out there.
The only part of that definition that everybody will agree on is the IRS layer, which seeks to replace traditional it infrastructure.
But to me.
The more important opportunity is beyond that it's when you start bringing in the big data AI.
As well as the ability to digitalize, the overall operations of different enterprises and enable all of that through the cloud and to do that this requires an industry or vertical.
Specific approach with products that are accustomed tailored for different applications in different vertical segments and I think this is very important for the cloud business.
And it is imperative.
But alibaba be working with these different industries different verticals, especially the major ones.
In depth with source.
And with our ecosystem.
<unk> in order to be able to deliver that value and capitalize on all of those opportunities going forward.
T Sunday and I wish you and what are the changes that you will you let it sit on so one of the highest volume woman's unions I see good says she's handling shouldn't the weight side, some good to us and a foothold in the polishing parcel timings on nickel of tissue tool, it's useful to Chongqing, she's sort of tool uncle, So you've got that I used to go through the holidays, you got cheesewood childhood.
So she has she's only a pseudo woman caught up to how the queen watching G. I, even thought it tilts it outside of Austin, just to take the beaches Something's in a cyclically and what changes are you go you can see so you take one more shot I'll put up more shock clinical excuse me the single suddenly jumped somewhat up so it will take us a take a fit on someone else.
This is hunting shinzo life called out inkjet and take a take a coding changes of D wave quit out easy I'm familiar delphine answer them all.
Yeah.
Thirdly, apart from that vertical oriented approach.
It's also incumbent upon us given our market leadership position to continue to innovate.
Also in the eye off there and also the core Pos layer.
So that we can continue to reap the dividends of technological innovation through.
<unk> the scale and particularly the I honestly are is all about economies of scale. So if we can continue to improve the technology.
Lower the cost.
There's a huge advantage.
But can you repeat that.
Two whole if somebody said to me it seems like you've got that one does it go to Alicia windows, even under the legal either either.
<unk> a single woman, yes, the judge on a woman she is when does it go.
Wondering what I'm doing.
Uh huh.
Okay.
So I'd say, it's that's typically not see got plenty to tell them that you will send you the coolness of the culture.
Jenkins likely being two opinion, it's hanging in fact, I can kind of like you can sort of take the take the Sun's Ali neighborhood of food.
To enable the food chain that suddenly Eagle Yamana, San Antonio Cui Mohan, putting soon yes Eagle Ford's other shuttle so eagle Ford's articles, where she told pulses.
So I took the teach lasalle she's suddenly they got in the Kwanza shelf a kiss a woman does have gene Shelly Buffalo Sushi and contact Toby you sort of wonder how does that sound to you got putting city. So you got to check because it seems like jumping yeah, both of them and sometimes one year without jumping something nickel. She doesn't have all the genes that are talking about.
Shelley being Chessington Zynga, she thought that the Chi Florida to the enterprise. So there's still need so I'll take a cultural facets. How would you just take us a woman so let's say like.
So let me take the gene can you change so we shall wait at Sunshine will change wish on what might be shut down to the keys.
And then finally to address your question about.
The team upgrade that has been implemented.
As you saw last year and in the previous.
Our fiscal.
Fiscal year.
The revenues of Alibaba cloud. If you include services provided within the group to Alibaba.
Already exceeded 100 billion. So it's a very complex system.
So looking for ways to make the operations of the cloud business more efficient and very much in line with what Toby was describing earlier.
For ways to drive more cost efficiency.
And achieved more cost optimization as.
As well as to position ourselves to.
To better provide the next generation of enterprise services to get us from the scale. We're at today of 100 billion to a future of 300 billion or even 500 billion that was the thinking underlying.
The way we've gone about.
Organizing the team.
Okay.
Thank you everyone for.
Participating today, if you have any questions. Please reach out to the IR team and myself and thank you and we'll see you next quarter.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
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