Alibaba's annual results: revenue up 35%

Charles Chan
Senior Retail Analyst
@RetailAnalysis

Date : 22 May 2020

Alibaba has posted its financial results for the fiscal year ended March 31, 2020. Total revenue was up 35% to CNY509,711m (US$71,985m) YoY.

Robust top line figures for the fiscal year

  • GMV transacted in the Alibaba Digital Economy was CNY7,053bn (US$1tn), CNY6,589bn (US$945bn) of which came from China retail marketplaces
  • Core commerce revenue up 35% YoY to CNY436,104m (US$61,130m)
  • Cloud computing revenue up 8% YoY to CNY40,016m (US$5,611m)
  • Digital media and entertainment revenue up 5% YoY to CNY26,948m (US$3,777m)
  • Innovation initiatives and others revenue up 1% YoY to CNY6,643m (US$931m)

Strong consumer engagement

  • Annual active consumers for the Alibaba Digital Economy reached 960m globally, 780m of which are based in China. Annual active consumers on its China retail marketplaces reached 726m, an increase of 72m YoY
  • In fiscal year ending March 31, 2020, over 70% of new annual active consumers in China were from less developed areas
  • Mobile monthly active users (MAUs) on its China retail marketplaces reached 846m, an increase of 125m YoY

Other business highlights

  • Tmall – online physical goods GMV, excluding unpaid orders, grew 23% YoY for the fiscal year ended March 31, 2020
  • Idle Fish – C2C community and marketplace in China for second hand, recycled, refurbished and for-rent products, achieved approximately CNY200bn (US$28bn) GMV for the fiscal year
  • Taobao – the largest social commerce platform in China. In the fiscal year ended March 2020, GMV generated from live-streaming grew over 100% YoY. Daily active merchants using livestreaming on Taobao Live grew 88% YoY in the March quarter
  • Freshippo – achieved robust same-store sales growth. As of March 31, 2020, there were 207 self-operated Freshippo stores in China, primarily located in tier one and tier two cities. The retailer has built a nationwide cold chain logistics network in order to support growth
  • Transforming bricks-and-mortar retail in China – Alibaba partners with many businesses to help integrate online and offline, digitising all aspects of store-based operations. The transformation of Sun Art’s hypermarkets, for example, has contributed to an increase in Sun Art’s online revenue. In the twelve months ended March 31, 2020, Alibaba commerce platforms – primarily Taoxianda (enables on-demand delivery for its partner grocery retailers with physical stores) – generated and enabled around 10% of Sun Art’s total revenue
  • Local consumer services – Alibaba’s integrated food and services delivery business continues to focus on market share gains in lower tier cities and less developed areas. It does this by wrapping customers into its ecosystem. In the fiscal year and quarter ended March 31, 2020, over 40% of new food delivery customers came from the Alipay app
  • Cainiao Network – developed robust import fulfilment solutions for Tmall Global by utilising a combination of bonded warehouses in China and direct shipment from foreign countries
  • International – in the twelve months ended March 31, 2020, Lazada, AliExpress and other international retail businesses had a total of more than 180m annual active consumers. Order volume at Lazada increased by over 100% YoY, reflecting strong user growth and improved purchase conversion. For groceries, Lazada achieved the following:
    • Malaysia: help Cameron Highland farmers sell 1.5 tonnes of vegetables daily
    • Indonesia: enable 2,500 Rumah Sayur Group farmers to sell online
    • Vietnam: launch 2-hour delivery for fresh produce category in HCMC
    • Singapore: RedMart serves 50% more consumers daily

Impact of Coronavirus (COVID-19)

From late January, Alibaba cites that Coronavirus negatively affected most of its domestic core commerce businesses, such as its China retail marketplaces and local consumer services businesses. The retailer’s key international commerce businesses began to experience a negative impact in February.

  • China retail marketplaces – Tmall online physical goods GMV, excluding unpaid orders, grew 10% YoY. FMCG together with consumer electronics grew approximately 25% YoY, which was offset by negative growth in other major categories such as apparel and accessories, home furnishing and auto parts
  • Local consumer services – recorded an 8% YoY revenue decline during the quarter ended March 31, 2020, reflecting mass closure of restaurants and local merchants
  • International retail marketplaces – AliExpress revenue growth was significantly slower YoY, primarily due to supply chain and logistics disruptions that negatively impacted GMV growth from sales to North and South America and Europe
  • Other businesses – travel, transportation and offline entertainment, including Fliggy, Alibaba Pictures, Damai and Amap, were all negatively impacted by the pandemic

New opportunities driven by Coronavirus (COVID-19)

  • Accelerated merchant on-boarding – growing range of offline merchants going online, as well as increased adoption by existing merchants of new ways to engage and sell to consumers
  • Growing grocery category – Freshippo’s revenue showed strong growth in February and March driven by an increased number of online customers, higher purchase frequency and larger order size. For the quarter ended March 31, 2020, online purchases represented approximately 60% of Freshippo’s GMV, up by 10 percentage points YoY
  • Cainiao Post – operates a network of neighbourhood stations, campus stations and smart pick-up lockers. In March 2020, daily packages handled by Cainiao Post’s neighbourhood stations grew over 100% YoY

2020 Spring Thunder Initiative

Last month, Alibaba launched its 2020 Spring Thunder initiative: 

  • Help export-oriented SMEs to explore opportunities in the China domestic market through Alibaba’s China retail marketplaces, as well as expand into new markets through the retailer’s international wholesale and retail marketplaces, such as Alibaba.com and AliExpress
  • Develop digitalised manufacturing clusters
  • Accelerate the digital transformation of China’s agriculture sector
  • Alleviate financing challenges faced by SMEs by working with Ant Financial and its partners

Alibaba targets over CNY650bn (US$91.1bn) in revenue next year

In a press release, Daniel Zhang, Alibaba’s CEO, said, “Alibaba achieved the historic milestone of US$1 trillion in GMV across our digital economy this fiscal year [...] we achieved our annual revenue guidance of over CNY500bn […] based on our current view of Chinese domestic consumption and enterprise digitisation, we expect to generate over CNY650bn in revenue in fiscal year 2021.”