Alibaba forecasts slower revenue growth for 2021

Alibaba Group Holding Limited has announced its financial results for the quarter and fiscal year ended March 31, 2020, revealing strong revenue growth of 22% in Q4 despite the challenges of COVID-19.

However the company predicts revenue growth of about 27% in the next 12 months  – down from 35% last year “based on our current view of Chinese domestic consumption and enterprise digitization”.

Daniel Zhang, Chairman and Chief Executive Officer of Alibaba Group said: “Alibaba achieved the historic milestone of US$1 trillion in GMV across our digital economy this fiscal year.

“Our overall business continued to experience strong growth, with a total annual active consumer base of 960 million globally, despite concluding the fiscal year with a quarter impacted by the economic effects of the COVID-19 pandemic. The pandemic has fundamentally altered consumer behaviour and enterprise operations, making digital adoption and transformation a necessity. We are well positioned and prepared to help large and small businesses across a wide spectrum of industries achieve the digital transformation they need to survive this difficult period and eventually prevail in the new normal.

“By focusing on the long term and investing in value creation for our consumers and business customers, we believe we will emerge from this crisis stronger and be ready to capture more growth in the future.”

Maggie Wu, Chief Financial Officer of Alibaba Group said: “Despite a challenging quarter due to reduced economic activities in light of the COVID-19 pandemic in China, we achieved our annual revenue guidance of over RMB500 billion. Revenue growth of 35% year over-year was driven by solid performance of our domestic retail businesses as well as robust cloud computing revenue growth,”

“Our adjusted EBITDA grew 29% year-over-year, reflecting our discipline in allocating resources to key strategic growth areas while optimizing costs and improving efficiency. Although the pandemic negatively impacted most of our domestic core commerce businesses starting in late January, we have seen a steady recovery since March. Based on our current view of Chinese domestic consumption and enterprise digitization, we expect to generate over RMB650 billion in revenue in fiscal year 2021.”

In the quarter ended March 31, 2020:

• Revenue was RMB114,314 million (US$16,144 million), an increase of 22% year-over-year.  Annual active consumers on our China retail marketplaces reached 726 million, an increase of 15 million from the 12-month period ended December 31, 2019.  Mobile MAUs on our China retail marketplaces reached 846 million in March 2020, an increase
  of 22 million over December 2019.
• Income from operations was RMB7,131 million (US$1,007 million), a decrease of 19% yearover-year, primarily due to the impact of the COVID-19 pandemic. Adjusted EBITDA, a nonGAAP measurement, increased 1% year-over-year to RMB25,440 million (US$3,593 million).
• Net income attributable to ordinary shareholders was RMB3,162 million (US$447 million), a decrease of 88% year-over-year, and net income was RMB348 million (US$49 million), a decrease of 99% year-over year. The year-over-year decrease was primarily due to a net loss in investment income, mainly reflecting decreases in the market prices of our equity investments in publicly-traded companies, compared to a net gain recorded in the same quarter of 2019. NonGAAP net income, which excludes the above-mentioned loss and gain, was RMB22,287 million (US$3,148 million), an increase of 11% year-over-year.
• Diluted earnings per ADS was RMB1.16 (US$0.16) and non-GAAP diluted earnings per ADS was RMB9.20 (US$1.30), an increase of 7% year-over-year. Diluted earnings per share was RMB0.14 (US$0.02 or HK$0.15) and non-GAAP diluted earnings per share was RMB1.15 (US$0.16 or HK$1.26), an increase of 7% year-over-year.
• Net cash provided by operating activities was RMB2,164 million (US$306 million), compared to RMB18,553 million in the same quarter of 2019, and non-GAAP free cash flow was an outflow of RMB4,214 million (US$595 million), compared to an inflow of RMB10,714 million in the same quarter of 2019. The year-over-year decreases were mainly due to the effect of the oneoff AliExpress Payment Services Restructuring, as discussed in further detail in the section entitled “Cash Flow from Operating Activities and Free Cash Flow” below. Excluding the effect of the AliExpress Payment Services Restructuring, non-GAAP free cash flow for the quarter would have been an inflow of RMB1,977 million (US$279 million).

In terms of Alibaba’s delivery arms which have operated well during the pandemic:

• 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 year-over-year. Our Taoxianda (淘鲜达) business, which enables on-demand delivery for our partner grocery retailers with physical stores,
  also generated increased online revenue for these stores.
• Cainiao Post – Cainiao Post, which operates a network of neighborhood stations, campus stations and smart pick-up lockers, helped consumers and delivery personnel during this period of logistics disruptions. In March, as social distancing measures remained in place, we saw robust adoption of Cainiao Post by consumers who needed convenient and contactless pick-up and delivery options in their neighbourhoods. In March 2020, daily packages handled by Cainiao Post’s neighborhood stations grew over 100% year-over-year.