June Q 2015 IR Deck -Draft -Aug 14 - Final Final
Transcript of June Q 2015 IR Deck -Draft -Aug 14 - Final Final
June Quarter 2015 Results
August 12, 2015
Disclaimer
This presentation contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S.
Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “will,”
“expects,” “anticipates,” “future,” “intends,” “plans,” “believes,” “estimates,” “potential,” “continue,” “ongoing,” “targets” and
similar statements. Among other things, statements that are not historical facts, including statements about Alibaba’s beliefs and
expectations, the business outlook and quotations from management in this presentation, as well as Alibaba’s strategic and
operational plans, are or contain forward-looking statements. Alibaba may also make written or oral forward-looking statements in
its periodic reports to the U.S. Securities and Exchange Commission (the “SEC”), in press releases and other written materials and
in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks
and uncertainties. A number of factors could cause actual results to differ materially from those contained in any forward-looking
statement, including but not limited to the following: Alibaba’s goals and strategies; Alibaba’s future business development;
Alibaba’s ability to maintain the trusted status of its ecosystem, reputation and brand; Alibaba’s ability to retain or increase
engagement of buyers, sellers and other participants in its ecosystem and enable new offerings; Alibaba’s ability to successfully
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engagement of buyers, sellers and other participants in its ecosystem and enable new offerings; Alibaba’s ability to successfully
monetize traffic on its mobile platform; risks associated with limitation or restriction of services provided by Alipay; risks associated
with increased investments in Alibaba’s business; risks associated with acquisitions; privacy and regulatory concerns; competition;
security breaches; the continued growth of the e-commerce market in China and globally; and fluctuations in general economic
and business conditions in China and globally and assumptions underlying or related to any of the foregoing. Further information
regarding these and other risks is included in Alibaba’s filings with the SEC. All information provided in this presentation is as of the
date of this presentation and are based on assumptions that we believe to be reasonable as of this date, and Alibaba does not
undertake any obligation to update any forward-looking statement, except as required under applicable law.
This presentation contains certain financial measures that are not recognized under generally accepted accounting principles in the
United States (“GAAP”), including Non-GAAP EBITDA, Non-GAAP net income and free cash flow. For a reconciliation of these non-
GAAP financial measures to the most directly comparable GAAP measures, see GAAP to Non-GAAP Reconciliation.
June Quarter 2015 Business Highlights & Strategic Updates& Strategic Updates
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Strategic Updates
• Recent M&A
• Mobile Monetization
• Logistics
• Cloud Computing
• International Operations
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• International Operations
• Mobile Internet Services
• Local Services
• Customer Experience
Strategic Investment in Suning
Builds on Synergies in Ecommerce, Logistics & Builds on Synergies in Ecommerce, Logistics &
OmniOmni--channel Initiativeschannel Initiatives
Nationwide Logistics
Network
Exploring
Omni-channel
Opportunities
Flagship
Store on
Tmall.com
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Expanding
Nationwide
Logistics
Network
• 1,600+ physical stores in 289
cities across China
• 3,000+ after-sales service
locations
• 5,000+ affiliate serving partners
in 320 cities across China
• 8 national distribution centers
• 57 regional distribution centers
• 353 city forwarding centers
• +1,700 last-mile delivery
stations
Frequency of UseFrequency of Use
Unrivaled Mobile Leadership
Big DataBig DataMobile Store Mobile Store Management Management
Local ClimateConsumer Behavior
Targeted ResultsUS$ 60Bn
6
125% YoYMobile GMV Growth
Note: Unless otherwise indicated, all figures above are for the three months ended June 30, 2015.(1) Assumes 1 US$ = 6.200 RMB.
Location
Personalization
ResultsUS$ 60BnMobile GMV (1)
Quarterly Penetration of Mobile Revenue and Mobile GMV (China Commerce Retail)
Mobile Revenue Follows Mobile GMV
27%
33%
36%
42%
51%
55%
29% 30%
40%
51%
2.50%
3.00%
3.50%
4.00% (% of
Monetization
rate)
(% of Revenue)
7
For 3M
ended
12%
15%
20%
3% 4%
7%12%
19%
0.58% 0.61%
1.12% 0.98%
1.49%
1.87% 1.96%
1.73%
2.16%
0.50%
1.00%
1.50%
2.00%
Jun 30,
2013
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
Dec 31,
2014
Mar 31,
2015
Jun 30,
2015
Mobile GMV as a % of Total GMV Mobile Revenue as a % of China Commerce Retail Revenue Mobile Monetization Rate
Delivery Network with Unrivaled ScaleDelivery Network with Unrivaled Scale
Largest Logistics Service Ecosystem
100,000+
Delivery Stations
25,000+ 95%
8
25,000+
Pick-up Stations
500,000+
Villages
95%of all
counties
Strategic Logistics Partners
Service Quality
Largest Logistics Service Ecosystem
Home Appliances
& Customer Satisfaction
9
Next-day
Delivery
Same-day
Grocery Delivery
Home Appliances White Goods
Cross-border Domestic
Last-mile
China’s Leading Cloud Computing Service Provider
Most Comprehensive Service Offering in ChinaMost Comprehensive Service Offering in China
ODPS DPCADS CDP
Large Scale ComputingECS SLBESS VPC
Elastic Computing
Trusted Cloud Partner for MissionTrusted Cloud Partner for Mission--Critical WorkloadsCritical Workloads
ONS SLS Open Search ACEPTS
Application Services
Storage & Content Delivery
Network
OSSCDN OAS
RDS OCS
DRDS
OTS
Database Services
CMS
Security & Management
Yundun
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China’s Leading Cloud Computing Service Provider
Internet CompaniesDiversified
growing
customer base
Across public
Enterprises
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Transportation
Across public
& private
industries
Financial Services
International: Cross Border Business
367M active buyers
• Largest Chinese consumer audience
• Data analytics to enable brands to directly engage customers
• End-to-end logistical service offering
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Country Pavilions:
New Zealand
South Korea
Spain
United States
FranceAustralia
TurkeySwitzerland
Malaysia
ThailandSingapore
British
No. 1 Mobile BrowserNo. 1 Mobile Browser(1)(1)
Leading Mobile Browser in Developing Markets
China
India
Indonesia
Mobile EcosystemMobile Ecosystem
• Mobile Search
• Apps Distribution
• Game Communities
13(1) No. 1 mobile browser in China according to iResearch, and the most popular third-party mobile browser in India and Indonesia according to StatCounter(2) Global basis for the month ended Jun 30, 2015.
330+MMMAUs(2)
Indonesia
Fast food Restaurants
Foray into the Huge Local Services Market with Strategic JV
307MMMobile MAUs (1)
~400MMAlipay Active Users (2)
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Groceries
CafeTakeout
Projected O2O penetration of local services market in China: > RMB 300bn in GMV in 2015 (3)
(1) For the month ended June 30, 2015; based on the aggregate mobile MAUs of apps that contribute GMV on our China retail marketplaces.(2) Annual active users for the twelve months ended June 30, 2015; 80% are mobile users.(3) Source: iResearch Report.
Convenient
store &
Supermarket
183176
293
219
246529
430
501
556
787
600
673
Quarterly GMV (China Commerce Retail)
GMV
(RMB Bn)
53% 46%YoY
Growth 65% 64% 45% 34%40%49%49%
257 275346
295342
380
494
381427
8899
183
135
159
176
345374
430
Jun 30,
2013
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
Dec 31,
2014
Mar 31,
2015
Jun 30,
2015
Taobao Marketplace Tmall
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For 3M
ended
Active Buyers & Mobile MAUs
279307
334350
367
(In Millions)
Annual Active Buyers Mobile MAUs
217
265289
307
(In Millions)
FY2013 FY2014 FY2015
Orders per Active Buyer 42 50 58
Active Buyers 172MM 255MM 350MM
279
Jun 30,
2014
Sep 30,
2014
Dec 31,
2014
Mar 31,
2015
Jun 30,
2015
For 12M
ended
188
217
Jun 30,
2014
Sep 30,
2014
Dec 31,
2014
Mar 31,
2015
Jun 30,
2015For 1M
ended
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Mobile GMV & Revenue Contribution
20%
27%
33% 36%
42%
51% 55%
19%
29% 30%
40%
51%
(RMB Bn)
Quarterly Mobile GMV, Mobile Revenue and Mobile Penetration (China Commerce Retail)
(%)
17
41 55104 118
164199
327 304371
12% 15%
20%
3% 4%7%
12%
19%
Jun 30,
2013
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
Dec 31,
2014
Mar 31,
2015
Jun 30,
2015
Mobile GMV
Mobile GMV as a % of Total GMV
Mobile Revenue as a % of China Commerce Retail Revenue
For 3M
ended
June Quarter 2015 Financial Review
18
34%YoY GMV
Growth
June Quarter 2015 Highlights
367MMAnnual
Active Buyers (2)
28%YoY Revenue
Growth
US$1.54BnFree Cash Flow (1)
19
307MMMobile MAUs (3)
US$ 60BnMobile GMV (1)
55% of China Commerce Retail
GMV
Note: Unless otherwise indicated, all figures above are for the three months ended June 30, 2015.(1) Assumes 1 US$ = 6.200 RMB.(2) For the twelve months ended June 30, 2015.(3) For the month ended June 30, 2015; based on the aggregate mobile MAUs of apps that contribute GMV on our China retail marketplaces.
51%Mobile Revenue as
a % of China
Commerce Retail
Revenue
June Quarter 2015 Financial Highlights GMV and Mobile Penetration
+34%
(RMB Bn)
15.820.2
Jun 30, 2014 Jun 30, 2015
+28%
Revenue
(RMB Bn)(%)
501 673
33%
55%
Jun 30, 2014 Jun 30, 2015
GMV Mobile GMV as % of Total GMV
20
Non-GAAP EBITDA (1) and Margin(RMB Bn)
7.3 9.5
Jun 30, 2014 Jun 30, 2015
Non-GAAP Net Income (2) and Margin
(RMB Bn)
Margin 46% 47%
Note: For the three months ended on the respective dates. (1) Non-GAAP EBITDA represents income from operations (which excludes interest and investment income, net, interest expense, other income, net, income tax
expenses and share of results of equity investees) before certain non-cash expenses, consisting of share-based compensation expense, amortization and depreciation that we do not believe are reflective of its core operating performance during the periods presented.
(2) Non-GAAP net income represents net income before share-based compensation expense, amortization, impairment of goodwill, intangible assets and investments, gain on deemed disposals/disposals/revaluation of investments and amortization of excess value receivable arising from the restructuring of commercial arrangements with Ant Financial.
8.6 10.6
Jun 30,2014 Jun 30, 2015
Margin 54% 52%
2.77%
3.53%
3.03% 3.23%
Quarterly Monetization Rate Trends
Quarterly Monetization Rate (China Commerce Retail)
(%)
Non-mobile
monetization
We manage the business for growth in GMV and active buyers, not for monetization rate
• Mobile monetization rate increased significantly to 2.16%
• Blended monetization rate
• Decreased Y/Y due to: 1) the higher % of total GMV contributed by mobile GMV, which has a lower monetization rate compared to the non-mobile monetization rate, and 2) a decrease in non-mobile monetization rate, partially offset by the Y/Y increase in mobile monetization rate
• Reflected the negative impact of 1) the decrease in commission revenue as a result of the suspension of the online lottery business in late Feb 2015, and 2) the decrease in the pricing charged on Juhuasuan
0.58% 0.61%
1.12% 0.98%
1.49%
1.87% 1.96% 1.73%
2.16%
2.77% 2.61% 2.63%
3.03%
2.54% 2.63% 2.55%
2.51%2.31%
3.05%
2.18%
2.52% 2.30%
2.70%
2.17%
2.33%
Jun 30,
2013
Sep 30,
2013
Dec 31,
2013
Mar 31,
2014
Jun 30,
2014
Sep 30,
2014
Dec 31,
2014
Mar 31,
2015
Jun 30,
2015
Mobile Monetization Rate Non-mobile Monetization Rate Blended Monetization Rate
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Notes:
(1) Derived from China commerce retail non-mobile revenue / non-mobile GMV.
(2) Derived from China commerce retail mobile revenue / mobile GMV.
Mobile
monetization
rate(2)
monetization
rate(1)
Blended
monetization
rate
For 3M
ended
Quarterly Revenue
The lower YoY revenue growth was mainly a result of:
1. suspension of online lottery business in late February 2015
2. a reduction of revenue from the SME loan business because we transferred the business to
Ant Financial in Feb 2015
3. merchant acquisition through reduction in the pricing charged on Juhuasuan
Total Revenue
26.2
20.2+28%
Revenue Growth
(RMB Bn)
+36%
Reported Revenue
Revenue excl. the effect of
the online lottery business
and the SME loan business
(RMB Bn)
15.8 16.8 17.420.2
Jun 30,
2014
Sep 30,
2014
Dec 31,
2014
Mar 31,
2015
Jun 30,
2015
15.820.2
14.7
20.0
Jun 30,
2014
Jun 30,
2015
Jun 30,
2014
Jun 30,
2015
Note: For the three months ended on the respective dates. 22
Impact from Online Lottery Sales Suspension
Reported Revenue
Revenue excl. the
effect of the online
lottery business
+24% +29%
China Commerce Retail RevenueGMV
Reported GMV
GMV excl. the
effect of the online
lottery business
+34% +36%
(RMB Bn) (RMB Bn)
Reported
Commission Revenue
+26% +42%
Commission Revenue
(RMB Bn)
Commission Revenue
excl. the effect of the
online lottery business
501
673
494
673
Jun 30,
2014
Jun 30,
2015
Jun 30,
2014
Jun 30,
2015
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12.615.7
12.115.7
Jun 30,
2014
Jun 30,
2015
Jun 30,
2014
Jun 30,
2015
Note: For the three months ended on the respective dates.
4.05.1
3.65.1
Jun 30,
2014
Jun 30,
2015
Jun 30,
2014
Jun 30,
2015
78%
5%3%
6%2% 6%
24%
41% 40%
12%
106%
82%
Quarterly Revenue Breakdown
Revenue Breakdown by Businesses
(% of Total Revenue)
Others
Revenue Growth of Major Businesses(YoY growth % )
Cloud Computing
and Internet
InfrastructureInternational
Commerce Wholesale
International
Commerce Retail
China Commerce
Wholesale
(1)
78%
24
For three months ended Jun 30, 2015
(1) Other revenue mainly represents the mobile Internet services
revenue generated from UCWeb and AutoNavi.
1 2 3 4 5
1. China Commerce Retail
2. China Commerce Wholesale
3. International Commerce Retail
4. International Commerce Wholesale
5. Cloud Computing and Internet Infrastructure
6. Others
China Commerce Retail
Wholesale
6
Quarterly Margin Trends
Non-GAAP Net Income(2) and MarginNon-GAAP EBITDA(1) and Margin (RMB Bn) (RMB Bn)
• We don’t manage to a margin target
• Lower Y/Y non-GAAP EBITDA margin was due to:
• Consolidation of acquired businesses (mainly UCWeb, AutoNavi) with lower margins
• Investment in new business initiatives such as over-the-top TV services and local services
• Will continue to invest in new and existing businesses to drive long-term growth in GMV, new active buyers, revenue and profit
52%54% 47%46%Margin Margin49% 44%
7.3 7.7 9.5
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
8.6 8.6 10.6
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
25
Note: For the three months ended on the respective dates. (1) Non-GAAP EBITDA represents income from operations (which excludes interest and investment income, net, interest expense, other income, net,
income tax expenses and share of results of equity investees) before certain non-cash expenses, consisting of share-based compensation expense, amortization and depreciation that Alibaba Group does not believe are reflective of its core operating performance during the periods presented.
(2) Non-GAAP net income represents net income before share-based compensation expense, amortization of intangible assets, impairment of goodwill, intangible assets and investments, gain on deemed disposals/disposals/revaluation of investments, amortization of excess value receivable arising from the restructuring of commercial arrangements with Ant Financial.
Quarterly Cost Trends
Cost of Revenue (Pre-SBC) Product Development Expenses (Pre-SBC)
1.7 1.4 2.0
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
(RMB Bn) (RMB Bn)
4.0 5.1 5.7
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
28%25%% of
Revenue29% 10%11%
% of
Revneue8%
0.8 1.1 1.0
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
26
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
Sales & Marketing Expenses (Pre-SBC)
1.2 1.9 1.7
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
General & Administrative Expenses (Pre-SBC)(RMB Bn) (RMB Bn)
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
Note: For the three months ended on the respective dates
9%7%% of
Revenue11% 5%5%
% of
Revenue6%
1.8
Free Cash Flow, Capital Expenditures and Cash
Capital Expenditures
(RMB Bn)
130.7 122.3
115.3 23.7
14.1 11.2
Cash, Cash Equivalents and
Short-term Investments
(RMB Bn)
10.6
Free Cash Flow (1)
(RMB Bn)
47%67%% of
Revenue 33% 6%7%
Non-real
Estate
CAPEX as
a % of
Revenue
4%
1.2 0.7
1.1
0.1 0.8
0.7 1.3 1.5
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
Non-real Estate CAPEX
Acquisitions of Land Use Rights and
Construction in Progress
27
107.0 108.2 104.1
As of Dec 31,
2014
As of Mar 31,
2015
As of Jun 30,
2015
Cash and Cash Equivalents
Short-term Investments
10.6
5.7
9.5
Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
Free Cash Flow
Note: Unless otherwise indicated, all figures in the above charts are for the three months ended on the respective dates.(1) Free cash flow represents net cash provided by operating activities as presented in Alibaba Group’s consolidated cash flow statement less purchases of
property and equipment and intangible assets (excluding acquisition of land use rights and construction in progress) and adjusted for changes in loan receivables relating to micro loans of its SME loan business and others.
GAAP to Non-GAAP Reconciliation
For the Three Months Ended
RMB MM Jun 30, 2014 Mar 31, 2015 Jun 30, 2015
Non-GAAP EBITDA
Income from operations 6,844 2,599 5,161
Add: Share based compensation expense 1,073 4,632 3,995
Add: Amortization of intangible assets 234 643 647
Add: Depreciation and amortization of property and equipment and land use rights 423 709 782
Non-GAAP EBITDA 8,574 8,583 10,585
Non-GAAP net income
Net income 12,438 2,869 30,816
Add: Share based compensation expense 1,073 4,632 3,995
Add: Amortization of intangible assets 234 643 647
28
Add: Amortization of intangible assets 234 643 647
Add: Impairment of goodwill, intangible assets and investments - - 60
Add: Gain on deemed disposals /disposals/revaluation of investments (6,428) (468) (26,088)
Add: Amortization of excess value receivable arising from the restructuring of
commercial arrangements with Ant Financial - 65 66
Non-GAAP net income 7,317 7,741 9,496
Free cash flow
Net cash provided by operating activities 10,177 5,767 10,400
Less: Purchase of property, equipment and intangible assets
(excluding land use rights and construction in progress)(1,155) (700) (1,130)
Add: Changes in loan receivables, net and others 1,572 598 278
Free cash flow 10,594 5,665 9,548
Market Cap
(USD bn)Shareholding
BABA Holding
Value (USD Bn)
Alibaba Pictures(1) 7 49.5%(2) 4
Alibaba Health(1) 7 38%(2) 3
Ant Financial(3) 43 33%(3) 14
Strategic Investment Portfolio
Notional
Interest
YoukuTudou(1) 4 17%(4) 1
Weibo(1) 3 30%(4) 1
Net Cash Balance as of June 30, 2015(5) 10
Total Value 33
29
Note: (1) Alibaba Pictures, Alibaba Health YoukuTudou and Weibo market cap as of Aug 11, 2015 closing pricing. (2) On primary shareholding basis.(3) Ant Financial valuation based on estimated valuation of USD 43 billion; Alibaba Group receives 37.5% of Ant’s pre-tax income now, and if regulations
allow, Alibaba Group is entitled to acquire up to a 33% equity interests in Ant Financial. For conservative purpose, 33% is used in calculating Alibaba Group’s economics in Ant Financial here.
(4) On fully diluted shareholding basis.(5) Net Cash = Cash, cash equivalents, and short term investments – Bank borrowings – Unsecured senior notes.
Lock-up
Total no. of shares Lock-up Expiry
Total no. of shares to be un-locked 1,579MM Sept 19, 2015 (Saturday)
First Public Trading Day:
Sept 21, 2015 (Monday)
Major components
Softbank 798MM
30
Softbank 798MM
Yahoo 384MM
Jack Yun MA and Joseph C. TSAI 269MM