Alibaba's Q1 revenue reached RMB153.7 billion: what is the growth engine?

On the evening of August 20, Alibaba announced its fiscal first quarter (April to end of June 2020) financial results. According to the report, Alibaba's revenue in the first fiscal quarter was 153.75 billion yuan, up 34% from the same period last year. Non-GAAP net profit was 39.47 billion yuan, up 28% year-on-year.

According to the results, the GMV of Tmall's physical payment goods grew 27%, with all major categories returning to or surpassing pre-epidemic levels. In cloud computing, Alibaba Cloud's first quarter revenue reached 12.345 billion yuan, up 59% year-on-year. The dual growth of public and hybrid clouds provided the impetus for its rapid growth.

According to the data, the number of monthly active mobile users in China's retail market increased to 874 million, with 742 million annual active consumers. The Taobao Special Edition, which focuses on third-, fourth- and fifth- tier markets, had nearly 40 million monthly active users (MAUs). In terms of core e-commerce business, the GMV of Tmall's physical payment goods grew 27%. Taobao has been pushing its live streaming business, with GMV growing 100% year-on-year, with merchant streaming contributing about 60% of Taobao's live streaming GMV.

In response to a previous media misstatement that Trump thinks Alibaba will be the next Chinese company to "deal" with, Alibaba Group Chairman and CEO Zhang Yong said in a conference call, "We are closely monitoring the U.S. government's policy changes towards Chinese companies, tracking and assessing the possible impact of these changes on Alibaba, and taking new compliance measures accordingly."

 

Alibaba's e-commerce business begins to recover

In his last earnings release, Zhang Yong warned every one that the epidemic would have an impact on the company's operations. According to the performance of Alibaba's second-quarter results, the steady growth shows that his concerns has not materialized. Besides, Alibaba Group's first-quarter revenue was 153.75 billion yuan, up 34% from 114.9 billion yuan in the same period last year.

The retail revenue in China, including the core e-commerce business, reached 101.3 billion yuan, up 34% year-on-year, which shows that the e-commerce business has started to recover from the impact of the epidemic earlier in the year. Alibaba's logistics hub, Cainiao, posted first-quarter revenue of 7.7 billion yuan, up 54% compared to the same period last year.

Taobao Special Edition, which was launched a few months ago looks to be doing well so far. According to the report, the number of its MAUs had reached 40 million in the first quarter. The app, like Pinduoduo, has become a part of Alibaba's C2M strategy.

This year's live commerce has boosted the development of all short video platforms. Alibaba has also pinned high hopes on Taobao Live, which was established just two years ago and had a GMV of 200 billion yuan last year. However, Taobao's first-quarter results show that the effects of Taobao Live are starting to show, with GMV growing 100% year-over-year from April to June, and 60% of the contribution coming from merchant self-broadcasting, which is what Taobao Live has been emphasizing, namely that the protagonists are merchants, not webcasters.

In March this year, Alipay transformed into a digital life open platform, which shifted offline services to online has become an important target. Among them, the greatest benefit is Ele.me. According to the report, the first quarter revenue of Ele.me reached 7.7 billion yuan, an increase of 15% year-on-year, of which 45% of new users from Alipay's diversion. At the same time, the number of Ele.me merchants increased by 30% compared to the same period last year. 

 

Cloud computing continues to lead the way

In the first fiscal quarter, Alibaba Cloud's revenue was 12.345 billion yuan, up 59% year-on-year, maintaining a rapid growth. The continued growth of public and hybrid clouds has become an important engine for Alibaba Cloud.

In cloud computing, Alibaba Cloud continues to maintain a rapid growth. Just two days before Alibaba's earnings report, IDC released a report that Alibaba Cloud has become the Asia-Pacific region cloud computing champion, at the same time, Alibaba Cloud is still in the leading position in China's Iaas and Pass cloud market. In April, Zhang Jianfeng, Chairman of Alibaba Cloud Intelligence, revealed at theAlibaba Cloud Summit that Alibaba Cloud would invest 200 billion yuan in cloud computing over the next three years, aiming to build Alibaba Cloud into a "new infrastructure" for data.

On the one hand, Alibaba Cloud is investing in new data centers around the world, and on the other hand, Alibaba Cloud is also pursuing the government enterprise market with rival Tencent, which has also advertised that it will invest 500 billion yuan in cloud computing in the future.

In terms of market expansion, Dingtalk, which was prominent during the epidemic, has become an important pioneer in Alibaba Cloud's efforts to penetrate the market. It has targeted the small and medium-sized enterprise and education markets, whose users have reached 300 million.

 

Will it still be hard to do business in the world?

Huawei, ByteDance and even Tencent have all been named by the Trump administration due to tensions between the US and China. A few days ago, a media outlet quoted information from foreign media that Trump had said in an interview that the next company to be "named" could be Alibaba. Although the information has since been falsified, the possibility certainly made all managers nervous.

In a conference call with analysts that evening, Alibaba Chairman and CEO Zhang Yong said that in addition to the epidemic, the growing tensions between the US and China have created new uncertainties.

"We believe that international trade and cooperation will continue, and that Alibaba's mission and practice is in the interests of both China and the United States," Zhang said.

In response to the recent changes in U.S. government policy towards Chinese Internet companies, he added that: "We are closely monitoring changes in U.S. government policy toward Chinese companies, tracking and assessing the potential impact of these changes on Alibaba, and taking new compliance measures accordingly."

This is an article from WeChat official accounts GeekPark (ID:geekpark), written by Jing Yu, translated by Chris Yuan.