HONG KONG--(BUSINESS WIRE)--Alibaba.com Limited (HKSE:1688) (1688.HK), the world’s leading small business e-commerce company, today announced unaudited financial results for the quarter ended March 31, 2011. The results reflect the Company’s renewed focus on supplier quality, buyer experience and trust and safety. Revenue increased by 26 percent year-on-year, which drove year-on-year diluted EPS growth of 42 percent. In addition, revenue composition continues to shift away from fixed membership fees towards performance-based monetization, including fees based on pay-for-performance click-throughs and transaction volume.
Q1 2011 Financial and Operational Highlights |
||||||||||||||
FINANCIAL HIGHLIGHTS (UNAUDITED) |
Q1 2010 RMB million |
Q1 2011
RMB million |
YoY
Change |
Q4 2010 RMB million |
QoQ
Change |
|||||||||
Revenue | 1,220.6 | 1,531.7 | +25.5% | 1,521.5 | +0.7% | |||||||||
Earnings before interest, taxes and amortization (“EBITA”) | 374.6 |
509.8 |
+36.1% | 398.4 | +28.0% | |||||||||
Profit attributable to equity owners | 330.0 | 452.5 | +37.1% | 410.4 | +10.2% | |||||||||
Share-based compensation expense | 51.1 | 85.2 | +66.7% | 101.9 | -16.5% | |||||||||
Deferred revenue and customer advances | 3,567.9 | 4,210.2 | +18.0% | 4,434.4 | -5.1% | |||||||||
Recurring free cash flow | 438.4 | 158.6 | -63.8% | 1,187.2 | -86.6% | |||||||||
EBITA margin (before share-based compensation) (%) | 34.9% | 38.8% | +3.9% pts | 32.9% | +5.9%pts | |||||||||
Earnings per share, basic (HK$) (Note 1) | 7.5 cents | 10.6 cents | +41.3% | 9.5 cents | +11.6% | |||||||||
Earnings per share, diluted (HK$) (Note 1) | 7.4 cents | 10.5 cents | +41.9% | 9.4 cents | +11.7% | |||||||||
OPERATIONAL HIGHLIGHTS |
March 31, 2010 |
March 31, 2011 |
YoY
Change |
December 31, 2010 |
QoQ
Change |
Q1 2011 Net adds |
|||||||||||||||||||
Registered users | 50,249,939 | 65,034,254 | +29.4% | 61,801,281 | +5.2% | 3,232,973 | |||||||||||||||||||
International marketplace | 12,577,930 | 19,723,404 | +56.8% | 18,024,993 | +9.4% | 1,698,411 | |||||||||||||||||||
China marketplace | 37,672,009 | 45,310,850 | +20.3% | 43,776,288 | +3.5% | 1,534,562 | |||||||||||||||||||
Storefronts | 7,278,770 | 8,847,072 | +21.5% | 8,544,544 | +3.5% | 302,528 | |||||||||||||||||||
International marketplace | 1,476,784 | 1,777,292 | +20.3% | 1,696,905 | +4.7% | 80,387 | |||||||||||||||||||
China marketplace | 5,801,986 | 7,069,780 | +21.9% | 6,847,639 | +3.2% | 222,141 | |||||||||||||||||||
Paying members (Note 2) | 658,701 | 832,469 | +26.4% | 809,362 | +2.9% | 23,107 | |||||||||||||||||||
China Gold Supplier | 100,694 | 116,454 | +15.7% | 121,274 | -4.0% | -4,820 | |||||||||||||||||||
Global Gold Supplier | 16,330 | 9,549 | -41.5% | 10,434 | -8.5% | -885 | |||||||||||||||||||
China TrustPass | 541,677 | 706,466 | +30.4% | 677,654 | +4.3% | 28,812 | |||||||||||||||||||
Note 1:
The weighted average number of ordinary shares in
issue during the first quarter of 2011 for the calculation of basic
earnings per share is 5,048,138,000 (first and fourth quarters of 2010:
5,041,508,000 and 5,044,754,000, respectively). The weighted average
number of ordinary shares in issue during the first quarter of 2011 for
the calculation of diluted earnings per share is 5,079,821,000 (first
and fourth quarters of 2010: 5,094,681,000 and 5,074,445,000,
respectively).
Note 2:
Includes paying members with active storefront
listings on our international and China marketplaces as well as paying
members who have paid membership package subscription fees but whose
storefronts have not been activated.
Action plan to further enhance supplier quality
In the wake of the Company’s announcement on supplier quality issues on February 21, Alibaba.com has been aggressively implementing a five-point plan to enhance trust and safety of the Gold Supplier program on our international marketplace:
1) Enhance measures to prevent suppliers with high-risk characteristics from entering the Gold Supplier program and improve verification of Gold Supplier storefronts;
2) Further enhance proprietary methodologies to monitor the quality of information displayed in existing Gold Supplier storefronts;
3) Strengthen enforcement of take-down policies and promptly eliminate questionable Gold Supplier storefronts;
4) Revamp the incentive and disciplinary systems of the Company’s field sales organization; and
5) Improve governance structures, policies and procedures, including organizational changes to strengthen independence of the Company’s quality assurance and trust and safety functions.
Communicating the Company’s priorities, as well as setting a tone at the top about the importance of upholding integrity, has been clearly emphasized by the Company’s management team both internally and externally.
“Looking ahead, our priority will be to enhance the value of our existing paying member base by focusing our resources on the development of quality supplier information on our marketplaces, giving our buy-side users a great experience when they use our websites, and enhancing trust and safety in online trade between buyers and suppliers,” said Jonathan Lu, CEO and Executive Director of Alibaba.com. “In the short run, this emphasis on quality rather than quantity will temper our paying member growth, which will likely entail slower revenue growth in the next few quarters. However, we believe these initiatives will be crucial to securing a sustainable foundation for the next phase of our growth. In the future, monetization from paying suppliers, whether membership, performance-based or transaction-based fees, will be built on the foundation of buyers who choose to come to our marketplace because they trust the quality of our information and the security of our online trading environment.
“In the reporting quarter, we have achieved satisfactory progress in our performance-driven and transaction-based services. Revenues from value-added services continue to grow within our revenue mix. The encouraging performance of AliExpress and Wu Ming Liang Pin gives us confidence in the potential opportunities to provide transaction-based distribution services to our customers in future.” Wu Ming Liang Pin, or the white-label mall, is the Company’s first B2C online transaction platform on Taobao.
Outlook
Looking ahead, the Company sees opportunities to leverage industry and user data to create more value for small businesses. "The future is all about consumer needs driving demand," Lu said. "Our strength is our ability to combine information on consumer trends and demand from Taobao with Alibaba.com’s manufacturing insights. We believe that our solid market position will be strengthened by further utilizing this intelligence to help small businesses grow.”
Business highlights and review
During the first quarter, we added 3.2 million registered users to a total of 65.0 million and more than 300,000 storefronts to a total of 8.8 million. More than 23,000 paying members were added on our international and China marketplaces in the first quarter, making a total of 832,469 and representing a growth of 26.4 percent y-o-y and 2.9 percent q-o-q.
International marketplace:
- Registered users: We added 1,698,411 registered users and increased to 19,723,404 as of the end of March, growing by 56.8 percent y-o-y, 9.4 percent q-o-q. Website traffic and buyer activities continued to trend up in the first quarter, demonstrating an increasing attractiveness of our platform to our buyers around the world.
- Storefronts: We had 80,387 more storefronts, growing by 20.3 percent y-o-y, 4.7 percent q-o-q, to 1,777,292 as of the end of March.
- A&V: We reviewed our authentication and verification process in the first quarter to further tighten and deepen the information we collected, enhancing quality of our paying members.
- Sales force restructuring: We restructured our sales force by combining customer acquisition, customer retention and VAS sales together to deliver better service catering for customer needs.
- Enhanced fraud detection: Utilizing our website database and experience, we are able to more effectively identify potential fraudulent suppliers for further monitoring, aiming to achieve healthy long-term growth of our marketplace.
- China Gold Supplier: The total number of China Gold Supplier members as of the end of the first quarter was 116,454, growing by 15.7 percent y-o-y but decreasing by 4.0 percent q-o-q. The quarterly drop was expected, as compared with the surge in customer acquisitions in Q4 2010 prior to the price adjustment. Slowdown was also due to the price increase effective January 2011 plus the Chinese New Year holidays. The level of renewal rate remained very steady in the reporting quarter.
- Global Gold Supplier: The total number of Global Gold Supplier members declined to 9,549 as of the end of March. However, its revenue continued to grow, compensating the decline in customer base.
- VAS: Revenue contribution continued to exceed 25 percent of China Gold Supplier revenue. In the first quarter, we introduced Ali-ADvance, a pay-for-performance model for keyword search, to our international marketplace. It will take several quarters to mature on our platform then generate meaningful revenue. We also started to extend in-depth, export-related services offered by One-Touch to our existing customer base, which is expected to result in higher customer stickiness.
- AliExpress, our one-year-old transaction-based wholesale platform: Its transaction volume doubled within half a year’s time. As of the end of March, it is ranked by Alexa.com as having the highest level of traffic among all international B2B online transaction platforms. While it does not currently contribute significant revenue, its growth momentum continues to be strong. Fulfillment service was launched in the reporting quarter to increase logistical benefits for members.
China marketplace:
- Registered users: We added 1,534,562 registered users to 45,310,850 as of the end of March, growing by 20.3 percent y-o-y, 3.5 percent q-o-q.
- Storefronts: We had 222,141 more storefronts, growing by 21.9 percent y-o-y, 3.2 percent q-o-q, to 7,069,780 as of the end of March.
- China TrustPass: The total number of China TrustPass members was 706,466 as of the end of March, growing by 30.4 percent y-o-y and 4.3 percent q-o-q. The level of renewal rate remained very steady in the reporting quarter.
- VAS usage continued to grow. More than 15 percent of our China TrustPass members use Ali-Advance. Overall, VAS revenue contribution continued to exceed 20 percent of total China TrustPass revenue.
- Wu Ming Liang Pin: We designed Wu Ming Liang Pin to give our quality wholesale members direct access to the massive number of consumers on Taobao. Currently a trial effort, Wu Ming Liang Pin is charging a transaction fee based on the transaction value, which is shared between Alibaba.com and Taobao.
HiChina:
- About 2.2 million domain names in service. Total number of paying members for non-domain name services was around 267,200.
- Besides developing further in domain name services, HiChina is also dedicated to developing website design and development services and hosting services leveraging Cloud Computing technology, working closely with Alibaba Cloud Computing.
Ali-Loan:
- Ali-Loan program is available in five provinces: Zhejiang, Jiangsu, Guangdong, Fujian and Shandong and three major cities: Beijing, Shanghai and Chongqing.
- Monetization is at a trial stage, and we expect the revenue contribution from Ali-Loan to be minimal in the following quarters.
Financial results
We maintained steady growth in the first quarter of 2011.
Revenue:
- Total GAAP revenue in the first quarter of 2011 was RMB1.53 billion (US$233.1 million), representing a 25.5 percent y-o-y growth.
- International marketplace: Revenue increased to RMB910.5 million (US$138.6 million) in the period, a 26.6 percent increase y-o-y and a 3.3 percent increase q-on-q, mainly driven by the increase in revenue from VAS and our China Gold Supplier members as well as the contribution from our subsidiaries acquired in the second half of 2010 and the first quarter of 2011, which include Vendio, Auctiva and One-Touch.
- China marketplace: Revenue totaled RMB515.2 million (US$78.4 million) in the period, representing a 26.8 percent increase y-o-y, mainly driven by the increase of revenue from VAS and China TrustPass. It recorded a 1.8 percent q-o-q decrease because of the Chinese New Year holidays.
- Other revenue, mainly represented by revenue from HiChina, was RMB106.1 million (US$16.1 million) in the period, an 11.0 percent increase y-o-y and an 8.2 percent decrease q-o-q.
Gross profit increased to RMB1,254.7 million (US$191.0 million) in the period, up 22.3 percent y-o-y from RMB1,026.3 million (US$156.2 million) and was flat from RMB1,254.1 million (US$190.9 million) in the fourth quarter of 2010.
Total operating expenses was RMB821.0 million (US$125.0 million) in the period, representing a 16.3 percent increase y-o-y from RMB706.1 million (US$107.5 million) due to business expansion and a 9.6 percent decrease q-o-q from RMB908.2 million (US$138.2 million) due to seasonality.
EBITA (non-GAAP) was RMB509.8 million (US$77.6 million) for the period, a 36.1 percent increase from RMB374.6 million (US$57.0 million) in the same period of 2010 and a 28.0 percent increase from RMB398.4 million (US$60.6 million) in the fourth quarter of 2010. EBITA margin (non-GAAP) was 33.3 percent for the period, as compared with 30.7 percent in the same period of 2010 and 26.2 percent in the fourth quarter of 2010. EBITA margin before share-based compensation expense (non-GAAP) was 38.8 percent for the period, an increase from 34.9 percent in the same period last year and an increase from 32.9 percent in the fourth quarter of 2010. The increase was mainly due to lower sales and marketing expenses as a percentage of revenue and a higher margin contribution from VAS revenue.
Profit attributable to equity owners was RMB452.5 million (US$68.9 million) in the period, an increase of 37.1 percent from the same period in 2010 and 10.2 percent from the fourth quarter of 2010.
Earnings per share, basic and diluted, were 10.6 Hong Kong cents (1.4 US cents) and 10.5 Hong Kong cents (1.3 US cents), respectively, for the period, compared to 7.5 Hong Kong cents (1.0 US cents) and 7.4 Hong Kong cents (0.9 US cents) (basic and diluted, respectively) in the first quarter of 2010 and 9.5 Hong Kong cents (1.2 US cents) and 9.4 Hong Kong cents (1.2 US cents) (basic and diluted respectively) in the fourth quarter of 2010.
Deferred revenue and customer advances were RMB4,210.2 million (US$640.8 million) as of the end of March, representing an 18.0 percent increase from RMB3,567.9 million (US$543.1 million) as of March 31, 2010 and a 5.1 percent decrease from RMB4,434.4 million (US$674.9 million) as of end of last year.
Recurring free cash flow (non-GAAP) in the period was RMB158.6 million (US$24.1 million), representing a 63.8 percent decrease y-o-y and an 86.6 percent decrease q-o-q.
Cash and bank balances as of March 31, 2011 remained strong at RMB9,414.9 million (US$1,433.0 million), representing a 25.0 percent increase y-o-y and flat from the fourth quarter of 2010.
Note: All U.S. dollar conversions are based on an exchange rate of US$1.00=HK$7.80 and US$1.00=RMB6.57.
About Alibaba.com Limited
Alibaba.com (HKSE:1688) (1688.HK) is the global leader in e-commerce for small businesses and the flagship company of Alibaba Group. Founded in 1999 in Hangzhou, China, Alibaba.com makes it easy for millions of buyers and suppliers around the world to do business online through three marketplaces: a global trade platform (www.alibaba.com) for importers and exporters; a Chinese platform (www.1688.com) for domestic trade in China; and, through an associated company, a Japanese platform (www.alibaba.co.jp) facilitating trade to and from Japan. In addition, Alibaba.com offers a transaction-based wholesale platform on the global site (www.aliexpress.com) geared for smaller buyers seeking fast shipment of small quantities of goods. Together, these marketplaces form a community of more than 65 million registered users in more than 240 countries and regions. As part of its strategy to transition into a holistic platform where small companies can build and manage their online business more easily, Alibaba.com also offers Chinese traders a wide array of business management software, Internet infrastructure services and export-related services directly or through companies it has acquired including HiChina and One-Touch, as well as educational services to incubate enterprise management and e-commerce professionals. Alibaba.com also owns Vendio and Auctiva, leading providers of third-party e-commerce solutions for online merchants. Alibaba.com has offices in more than 70 cities across Greater China, India, Japan, Korea, Europe and the United States.
For photos and broadcast-standard video supporting this press release, please visit www.thenewsmarket.com/alibaba. If you are a first-time user, please take a moment to register. If you have any questions, please email journalisthelp@thenewsmarket.com.
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE |
|||||||||||||
Q1 2010 | Q1 2011 | Q4 2010 | Q1 2011 | ||||||||||
RMB’000 | RMB’000 | RMB’000 | RMB’000 | ||||||||||
Revenue | |||||||||||||
International marketplace | 718,949 | 910,530 | 881,103 | 910,530 | |||||||||
China marketplace | 406,137 | 515,157 | 524,847 | 515,157 | |||||||||
Others | 95,524 | 106,050 | 115,521 | 106,050 | |||||||||
Total revenue | 1,220,610 | 1,531,737 | 1,521,471 | 1,531,737 | |||||||||
Cost of revenue | (194,357 | ) | (277,072 | ) | (267,401 | ) | (277,072 | ) | |||||
Gross profit | 1,026,253 | 1,254,665 | 1,254,070 | 1,254,665 | |||||||||
Sales and marketing expenses | (466,246 | ) | (481,037 | ) | (560,019 | ) | (481,037 | ) | |||||
Product development expenses | (117,367 | ) | (171,355 | ) | (170,269 | ) | (171,355 | ) | |||||
General and administrative expenses | (122,467 | ) | (168,568 | ) | (177,878 | ) | (168,568 | ) | |||||
Other operating income, net | 49,321 | 49,214 | 31,133 | 49,214 | |||||||||
Profit from operations | 369,494 | 482,919 | 377,037 | 482,919 | |||||||||
Finance income, net | 33,125 | 56,776 | 51,779 | 56,776 | |||||||||
Share of losses of associated companies and a jointly controlled entity, net of tax |
(3,802 |
) |
(692 |
) |
(937 |
) |
(692 |
) |
|||||
Profit before income taxes | 398,817 | 539,003 | 427,879 | 539,003 | |||||||||
Income tax charges | (68,719 | ) | (87,676 | ) | (16,635 | ) | (87,676 | ) | |||||
Profit for the period | 330,098 | 451,327 | 411,244 | 451,327 | |||||||||
Other comprehensive income/(expense) | |||||||||||||
Net fair value gains on available-for-sale investments |
240 |
2,418 |
5,080 |
2,418 |
|||||||||
Currency translation differences | (644 | ) | (5,581 | ) | (8,833 | ) | (5,581 | ) | |||||
Total comprehensive income for the period | 329,694 | 448,164 | 407,491 | 448,164 | |||||||||
Profit/(Loss) attributable to | |||||||||||||
Equity owners of our Company | 329,999 | 452,501 | 410,440 | 452,501 | |||||||||
Non-controlling interests | 99 | (1,174 | ) | 804 | (1,174 | ) | |||||||
Profit for the period | 330,098 | 451,327 | 411,244 | 451,327 | |||||||||
Total comprehensive income/(expense) attributable to | |||||||||||||
Equity owners of our Company | 329,595 | 449,338 | 406,687 | 449,338 | |||||||||
Non-controlling interests | 99 | (1,174 | ) | 804 | (1,174 | ) | |||||||
Total comprehensive income for the period | 329,694 | 448,164 | 407,491 | 448,164 | |||||||||
Dividend per share | |||||||||||||
Special cash dividend (HK$) | - | - | 22.0 cents | - | |||||||||
Earnings per share, basic (RMB) | 6.6 cents | 9.0 cents | 8.1 cents | 9.0 cents | |||||||||
Earnings per share, diluted (RMB) | 6.5 cents | 8.9 cents | 8.1 cents | 8.9 cents | |||||||||
Earnings per share, basic (HK$) (Note 3) | 7.5 cents | 10.6 cents | 9.5 cents | 10.6 cents | |||||||||
Earnings per share, diluted (HK$) (Note 3) | 7.4 cents | 10.5 cents | 9.4 cents | 10.5 cents | |||||||||
Note 3:
The translation of Renminbi amounts into Hong
Kong dollars has been made at the rate of RMB0.8455 to HK$1.0000 for the
first quarter of 2011 (first and fourth quarters of 2010: RMB0.8793 and
RMB0.8580 to HK$1.0000). No representation is made that the Renminbi
amounts have been, could have been or could be converted into Hong Kong
dollars or vice versa, at that rate, or at any rate or at all.