Shulou(Shulou.com)11/24 Report--

On the evening of November 17, Beijing time, Alibaba (NYSE: BABA;HKEX: 9988) today released its financial results for the second quarter of fiscal year 2023 ending September 30, 2022. (note: Alibaba's fiscal year is out of sync with the natural year, beginning on April 1 of each year and ending on March 31 of the second year. Alibaba's revenue in the second quarter was 207.176 billion yuan ($29.124 billion), up 3 percent from 200.69 billion yuan a year earlier, according to the financial report. The net loss was 22.467 billion yuan ($3.158 billion), compared with a net profit of 3.377 billion yuan in the same period last year. Without non-GAAP, net profit was 33.82 billion yuan ($4.754 billion), up 19% from 28.524 billion yuan a year earlier.

After the release of the results, Alibaba Group Chairman, CEO Zhang Yong, Executive Vice Chairman Cai Chongxin and CFO Xu Hong attended the subsequent conference call to interpret the results and answer analysts' questions.

The following is the main content of the question and answer session of the analyst in this conference call:

Goldman Sachs analyst Ronald Keung: a question about the company's customer management revenue, what is the management's outlook for total sales and revenue conversion? The management mentioned that the total sales of Singles' Day this year were the same as last year, that is, it was better than the decline in the number of units in September, but at the same time, we saw a year-on-year decline in the number of parcels in the post office in November. so how should we understand these trends? With the epidemic and the macro situation stabilizing, can the company's total sales and customer management revenue resume growth in the next few quarters?

Zhang Yong: in my previous opening remarks, I introduced in detail the analysis of customer management income. I know that investors are very concerned about this issue. The total sales of the company are affected by the epidemic, as well as changes in e-commerce operations and sales methods, especially the rapid development of sales methods such as live broadcast, which will have a certain impact on the return rate of the platform. For the discussion of customer management income, we usually look at customer management income and revenue conversion rate together, but in fact, these two factors are a little different: first, part of the revenue conversion rate in customer management income is related to the sales commission after returns, and is highly related to the return rate. Second, the performance of advertising revenue in customer management income is still related to the willingness of advertisers to invest, as well as the overall business situation.

From our own point of view, we still actively take customer management income as a result, and the most important thing is to help businesses operate their consumers and users on the platform. Whether it is paid search that everyone is familiar with, as well as recommendations developed in recent years, as well as the recent rapid rise of live streaming and other sales methods, business activities can be highly related. It is a way to help businesses better manage consumers and users, and finally to achieve the growth of Ali customer management income, our road and prospects are very clear.

Jeffery analyst Thomas Chung: Zhang Yonggang just mentioned the factors affecting Singles Day sales. The first is the impact of logistics. We can see that the epidemic in Guangdong and the whole country is quite serious. How does the management view the impact of different factors-logistics, live broadcast and consumer sentiment-on sales in the third quarter? If these factors are ranked, which factor has a greater impact on total sales and customer management income? The second question is that the profit before interest, tax, depreciation and amortization of the company's business business in China has increased by 6%. Will the macro impact on customer management income in the short term be transferred to the growth of profit before interest, tax, depreciation and amortization?

Zhang Yong: first, for Ali's retail platform, the impact of the three situations I just mentioned is dynamic. If we do a ranking, I think the most important thing is consumer confidence in the macro-economic environment. Consumers' needs and aspirations, this is the most basic point, which applies not only to Ali, but also to the entire consumer industry, not only online, but also offline. Second, the adjustment of the epidemic policy should have a positive effect on the protection of logistics, and we have also seen some local progress, although there will still be some areas where logistics has not fully returned to normal or even interrupted at this moment, but we think the situation will improve. Third, with regard to live streaming, this is the impact on returns caused by changes in sales methods. For Ali, compared with our competitors, especially compared with live streaming-based e-commerce platforms or platforms that rely entirely on live streaming, we will be much less affected, because Ali's live broadcast accounts for a relatively small share of sales, and during the Singles' Day holiday. Live broadcast mainly plays the function of pre-sale, and the proportion of live broadcast may be larger during large-scale events, but it is usually only a sales mode and management mode of merchants, not all of the operation. Ali will strive to balance the combination of many sales methods, and the merchant will eventually choose to operate his business in a way that is both popular with consumers and acceptable operating cost. Ali as an integrated e-commerce platform. Will always make good use of new technology, while maintaining a balance between consumer experience, business continuity and cost acceptability.

Xu Hong: on the second question, the decline in income in each sector will have a certain impact on profits, but as you can see, the profit before interest, tax, depreciation and amortization in China's commercial retail sector has increased compared with the same period last year. The main reason is the control of investment and the improvement of input efficiency of all businesses, including continuing to improve the profits of the original profitable business and narrowing the losses of the original loss-making business. Finally, it has realized the promotion of almost 6 points of the whole plate.

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