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Alibaba Group Holding Limited (BABA - Free Report) reported first-quarter fiscal 2022 non-GAAP earnings of $2.57 per ADS (RMB 16.60), which surpassed the Zacks Consensus Estimate by 18.9%. The figure increased 12% year over year.
Revenues of RMB205.7 billion ($31.9 billion), improved 34% from the prior-year quarter.However, the figure missed the Zacks Consensus Estimate of $31.6 billion.
Top-line growth was driven by the solid momentum across its China commerce retail business, which includes the positive contribution from Sun Art, without which revenues would have exhibited growth of 22%.
Improving mobile monthly active users (MAU) in the China retail marketplace remained noteworthy. The figure stood at 939 million in the reported quarter, up 7.4% from the prior-year quarter. Annual active consumers in the same marketplace were 828 million in total, reflecting 11.6% year-over-year growth.
Apart from this, strengthacross the cloud computing business and Cainiao logistics services contributed well to top-line growth.
However, the imposition of a huge amount of fine against the company’s monopolistic behavior affected its cash flows.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others. The details of the segments are discussed below.
Core Commerce (87% of total revenues): The segment comprises marketplaces operating in the retail and wholesale commerce spaces of China as well as international regions, logistic services and consumer services. The segment’s revenues for the reported quarter totaled RMB180.2 billion ($27.9 billion), reflecting an increase of 35% on a year-over-year basis.
China commerce retail (66% of total revenues) - The business vertical’s revenues for the reported quarter were RMB 135.8 billion ($21.03 billion), reflecting a year-over-yearincrease of 34%. Benefits from the Sun Art consolidation were positives. A spike in the average unit price per click, solid contributions from new monetization formats and strengthening onlinephysical goods GMV on China retail marketplaces were other positives. All of these drove customer management revenues.
China commerce wholesale (2% of total revenues)-The business generated revenues of RMB 3.9 billion ($608 million), reflecting a 13% increase from the year-ago quarter. The increase in average revenues from paying members on 1688.com aided revenue growth.
International commerce retail (5% of total revenues) -The business’s revenues for the reported quarter were RMB 10.8 billion ($1.7 billion), increasing 54% year over year. The increase was driven by well-performing Lazada and AliExpress.
International commerce wholesale (2% of total revenues) - The business generated revenues of RMB 4.4 billion ($682 million), which increased 37% from the prior-year quarter. This growth was attributed to a surge in the average revenues generated from paying members on the alibaba.com platform and revenues generated by cross-border-related value-added services.
Cainiao logistics services (6% of total revenues)-The business generated revenues of RMB 11.6 billion ($1.8 billion), up 50% year over year. This was driven by a spike in the volume of orders fulfilled and growth in the average revenues per order from cross-border and international commerce retail businesses.
Local consumer services (4% of total revenues)- The business generated revenues of RMB 8.8 billion ($1.4 billion), which increased 23% year over year.
Others (2% of total revenues) - The business generated revenues of RMB 4.9 billion ($767 million), reflecting a 42% year-over-year increase.
Cloud Computing (8% of total revenues): The segment generated revenues of RMB 16.1 billion ($2.5 billion), up 29% from the year-ago figure, driven by increasing revenues from customers in the Internet, retail and finance industries.
Digital Media and Entertainment (4% of total revenues): The segment yielded revenues of RMB 8.1 billion ($1.3 billion), reflecting an increase of 15% on a year-over-year basis. This was attributed to the strong momentum across Alibaba Pictures, Youku and other entertainment businesses.
Innovation Initiatives and Others (1% of total revenues): Revenues from the segment were RMB 1.4 billion ($213 million), up 37% year over year.
Operating Details
In the fiscal first quarter, sales and marketing expenses were RMB 27.04 billion ($4.2 billion), up 98% year over year. As a percentage of total revenues, the figure expanded 400 basis points (bps) year over year to 13%.
General and administrative expenses were RMB 7.2 billion ($1.1 billion), up 4.8% from the year-ago quarter. The figure remained flat year over year at 4% as a percentage of revenues.
Operating incoming was RMB 30.8 billion ($4.8 billion), down 11.1% from the year-ago quarter.
Adjusted EBITDA decreased 5% year over year to RMB48.6 billion ($7.5 billion).
Balance Sheet & Cash Flow
As of Jun 30, 2021, cash and cash equivalents were $45.2 billion (RMB 291.8 billion), down from $49.03 billion (RMB 321.3 billion)as of Mar 31, 2021.
Short-term investments totaled $27.7 billion (RMB 179.01 billion) at the end of the fiscal first quarter, up from $23.3 billion (RMB 152.4 billion) at the end of the fiscal fourth quarter.
The company generated $5.2 billion (RMB 33.6 billion) of cash from operations in the reported quarter compared with $3.7 billion (RMB 24.2 billion) in the previous quarter.
Alibaba’s free cash flow was a negative $3.2 billion (RMB 20.7 billion).
Zacks Rank & Stocks to Consider
Currently, the company carries a Zacks Rank #3 (Hold).
Image: Bigstock
Alibaba (BABA) Q1 Earnings Beat Estimates, Revenues Rise Y/Y
Alibaba Group Holding Limited (BABA - Free Report) reported first-quarter fiscal 2022 non-GAAP earnings of $2.57 per ADS (RMB 16.60), which surpassed the Zacks Consensus Estimate by 18.9%. The figure increased 12% year over year.
Revenues of RMB205.7 billion ($31.9 billion), improved 34% from the prior-year quarter.However, the figure missed the Zacks Consensus Estimate of $31.6 billion.
Top-line growth was driven by the solid momentum across its China commerce retail business, which includes the positive contribution from Sun Art, without which revenues would have exhibited growth of 22%.
Improving mobile monthly active users (MAU) in the China retail marketplace remained noteworthy. The figure stood at 939 million in the reported quarter, up 7.4% from the prior-year quarter. Annual active consumers in the same marketplace were 828 million in total, reflecting 11.6% year-over-year growth.
Apart from this, strengthacross the cloud computing business and Cainiao logistics services contributed well to top-line growth.
However, the imposition of a huge amount of fine against the company’s monopolistic behavior affected its cash flows.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba Group Holding Limited price-consensus-eps-surprise-chart | Alibaba Group Holding Limited Quote
Revenues by Segments
Alibaba has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives and Others. The details of the segments are discussed below.
Core Commerce (87% of total revenues): The segment comprises marketplaces operating in the retail and wholesale commerce spaces of China as well as international regions, logistic services and consumer services. The segment’s revenues for the reported quarter totaled RMB180.2 billion ($27.9 billion), reflecting an increase of 35% on a year-over-year basis.
China commerce retail (66% of total revenues) - The business vertical’s revenues for the reported quarter were RMB 135.8 billion ($21.03 billion), reflecting a year-over-yearincrease of 34%. Benefits from the Sun Art consolidation were positives. A spike in the average unit price per click, solid contributions from new monetization formats and strengthening onlinephysical goods GMV on China retail marketplaces were other positives. All of these drove customer management revenues.
China commerce wholesale (2% of total revenues)-The business generated revenues of RMB 3.9 billion ($608 million), reflecting a 13% increase from the year-ago quarter. The increase in average revenues from paying members on 1688.com aided revenue growth.
International commerce retail (5% of total revenues) -The business’s revenues for the reported quarter were RMB 10.8 billion ($1.7 billion), increasing 54% year over year. The increase was driven by well-performing Lazada and AliExpress.
International commerce wholesale (2% of total revenues) - The business generated revenues of RMB 4.4 billion ($682 million), which increased 37% from the prior-year quarter. This growth was attributed to a surge in the average revenues generated from paying members on the alibaba.com platform and revenues generated by cross-border-related value-added services.
Cainiao logistics services (6% of total revenues)-The business generated revenues of RMB 11.6 billion ($1.8 billion), up 50% year over year. This was driven by a spike in the volume of orders fulfilled and growth in the average revenues per order from cross-border and international commerce retail businesses.
Local consumer services (4% of total revenues)- The business generated revenues of RMB 8.8 billion ($1.4 billion), which increased 23% year over year.
Others (2% of total revenues) - The business generated revenues of RMB 4.9 billion ($767 million), reflecting a 42% year-over-year increase.
Cloud Computing (8% of total revenues): The segment generated revenues of RMB 16.1 billion ($2.5 billion), up 29% from the year-ago figure, driven by increasing revenues from customers in the Internet, retail and finance industries.
Digital Media and Entertainment (4% of total revenues): The segment yielded revenues of RMB 8.1 billion ($1.3 billion), reflecting an increase of 15% on a year-over-year basis. This was attributed to the strong momentum across Alibaba Pictures, Youku and other entertainment businesses.
Innovation Initiatives and Others (1% of total revenues): Revenues from the segment were RMB 1.4 billion ($213 million), up 37% year over year.
Operating Details
In the fiscal first quarter, sales and marketing expenses were RMB 27.04 billion ($4.2 billion), up 98% year over year. As a percentage of total revenues, the figure expanded 400 basis points (bps) year over year to 13%.
General and administrative expenses were RMB 7.2 billion ($1.1 billion), up 4.8% from the year-ago quarter. The figure remained flat year over year at 4% as a percentage of revenues.
Operating incoming was RMB 30.8 billion ($4.8 billion), down 11.1% from the year-ago quarter.
Adjusted EBITDA decreased 5% year over year to RMB48.6 billion ($7.5 billion).
Balance Sheet & Cash Flow
As of Jun 30, 2021, cash and cash equivalents were $45.2 billion (RMB 291.8 billion), down from $49.03 billion (RMB 321.3 billion)as of Mar 31, 2021.
Short-term investments totaled $27.7 billion (RMB 179.01 billion) at the end of the fiscal first quarter, up from $23.3 billion (RMB 152.4 billion) at the end of the fiscal fourth quarter.
The company generated $5.2 billion (RMB 33.6 billion) of cash from operations in the reported quarter compared with $3.7 billion (RMB 24.2 billion) in the previous quarter.
Alibaba’s free cash flow was a negative $3.2 billion (RMB 20.7 billion).
Zacks Rank & Stocks to Consider
Currently, the company carries a Zacks Rank #3 (Hold).
AutoNation, Inc. (AN - Free Report) , Target Coporation (TGT - Free Report) and Revolve Group, Inc. (RVLV - Free Report) are some better-ranked stocks in the broader Retail-Wholesale sector. While AutoNation sports a Zacks Rank #1 (Strong Buy) at present, Target and Revolve Group carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rates for AutoNation, Target and Revolve Group are pegged at 20.16%, 13.27% and 14.93%, respectively.