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Alibaba Group Holding Limited (BABA - Free Report) reported first-quarter fiscal 2021 (ended Jun 30, 2020) earnings of $2.10 per ADS, which surpassed the Zacks Consensus Estimate of $1.97. Also, the bottom line increased 14.8% year over year.
It reported revenues of RMB153.8 billion (US$21.8 billion), up 34% from the prior-year quarter. The year-over-year revenue increase was driven by strength in the company’s China commerce retail business and cloud computing.
Also, revenues surpassed the Zacks Consensus Estimate of US$21.1 billion.
Revenues by Segments
Alibaba has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives. The details of these segments are discussed below.
Core Commerce: This segment comprises marketplaces operating in retail and wholesale commerce in China, as well as international commerce. The segment’s revenues for the quarter totaled RMB133.3 billion (US$18.9 billion), reflecting an increase of 34% on a year-over-year basis.
China commerce retail business (accounting for 66% of total revenues) — The business vertical’s revenues for the quarter were RMB101.3 billion (US$14.3 billion), reflecting an increase of 34% year over year.
China commerce wholesale business (2% of total revenues) — This business generated revenues of RMB3.5 billion (US$493 million), reflecting a 16% increase from the year-ago quarter. This was due to an increase in revenues from Lingshoutong, a digital sourcing platform that connects FMCG brand manufacturers and their distributors directly to local mom-and-pop stores in China. In addition, an increase in average revenues from paying members on 1688.com aided revenue growth.
International commerce retail business (5% of total revenues) — Revenues for the quarter were RMB7 billion (US$992 million), increasing 26% year over year. The increase was driven by revenue growth from Lazada and Trendyol, partially offset by decrease in revenues from AliExpress, and the ongoing supply chain and logistics disruptions caused by the COVID-19 pandemic.
International commerce wholesale business (2% of total revenues) — This business generated revenues of RMB3.2 billion (US$454 million), which increased 43% from the prior-year quarter. The growth was due to an increase in the number of paying members on the alibaba.com platform.
Cainiao logistics services (5% of total revenues) — This business generated revenues of RMB7.7 billion (US$1.1 billion), up 54% year over year. The segment represents revenues from growing cross-border and international commerce retail businesses.
Local consumer services (4% of total revenues) — This business generated revenues of RMB7.1 billion (US$1 billion), which increased 15% year over year.
Others business (2% of total revenues) — The business generated revenues of RMB3.5 billion (US$493 million), reflecting a 78% year-over-year increase.
Cloud Computing: This segment comprises Alibaba Cloud that offers a complete suite of cloud services. Revenues for the quarter were RMB12.3 billion (US$1.75 billion), up 59% from the year-ago quarter, driven by increased revenue contribution from both public cloud and hybrid cloud businesses.
Digital Media and Entertainment: The segment operates businesses through media properties that include UCWeb, Youku Tudou, OTT TV service, Alibaba Music and Alibaba Sports. Revenues from the segment were RMB7 billion (US$990 million), reflecting an increase of 9% on a year-over-year basis.
Innovation Initiatives and Others: This segment includes businesses such as the YunOS operating system, AutoNavi, DingTalk enterprise messaging and others. Revenues for the quarter were RMB1.1 billion (US$155 million), down 6% year over year.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Mobile Monthly Active Users (MAUs) — Mobile MAUs were 874 million, improving 15.8% from the prior-year quarter and 3.3% sequentially.
Annual Active Consumers — China retail marketplaces had 742 million annual active buyers, reflecting 10.1% year-over-year growth and 2.2% sequential improvement.
Operating Results
Alibaba’s operating expenses (product development + sales and marketing + general and administrative) of RMB31.6 billion increased 14.8% from a year ago.
Operating margin was 23%, down 200 basis points year over year.
Adjusted EBITDA increased 30% year over year to RMB51 billion (US$7.2 billion).
Cash Flow/Share Repurchase
Net cash flow from operations was RMB50.1 billion (US$7.1 billion) and free cash flow was RMB36.6 billion (US$5.2 billion) for the fiscal first quarter.
Zacks Rank & Key Picks
Alibaba currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Dropbox (DBX - Free Report) , Lam Research Corporation (LRCX - Free Report) and Maxim Integrated Products, Inc. . While Lam Research sports a Zacks Rank #1 (Strong Buy), both Dropbox and Maxim carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate of Dropbox, Lam Research, and Maxim is pegged at 34.4%, 15.4% and 10%, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Image: Bigstock
Alibaba (BABA) Surpasses Q1 Earnings & Revenue Estimates
Alibaba Group Holding Limited (BABA - Free Report) reported first-quarter fiscal 2021 (ended Jun 30, 2020) earnings of $2.10 per ADS, which surpassed the Zacks Consensus Estimate of $1.97. Also, the bottom line increased 14.8% year over year.
It reported revenues of RMB153.8 billion (US$21.8 billion), up 34% from the prior-year quarter. The year-over-year revenue increase was driven by strength in the company’s China commerce retail business and cloud computing.
Also, revenues surpassed the Zacks Consensus Estimate of US$21.1 billion.
Revenues by Segments
Alibaba has four reportable segments — Core Commerce, Cloud Computing, Digital Media and Entertainment, and Innovation Initiatives. The details of these segments are discussed below.
Core Commerce: This segment comprises marketplaces operating in retail and wholesale commerce in China, as well as international commerce. The segment’s revenues for the quarter totaled RMB133.3 billion (US$18.9 billion), reflecting an increase of 34% on a year-over-year basis.
China commerce retail business (accounting for 66% of total revenues) — The business vertical’s revenues for the quarter were RMB101.3 billion (US$14.3 billion), reflecting an increase of 34% year over year.
China commerce wholesale business (2% of total revenues) — This business generated revenues of RMB3.5 billion (US$493 million), reflecting a 16% increase from the year-ago quarter. This was due to an increase in revenues from Lingshoutong, a digital sourcing platform that connects FMCG brand manufacturers and their distributors directly to local mom-and-pop stores in China. In addition, an increase in average revenues from paying members on 1688.com aided revenue growth.
International commerce retail business (5% of total revenues) — Revenues for the quarter were RMB7 billion (US$992 million), increasing 26% year over year. The increase was driven by revenue growth from Lazada and Trendyol, partially offset by decrease in revenues from AliExpress, and the ongoing supply chain and logistics disruptions caused by the COVID-19 pandemic.
International commerce wholesale business (2% of total revenues) — This business generated revenues of RMB3.2 billion (US$454 million), which increased 43% from the prior-year quarter. The growth was due to an increase in the number of paying members on the alibaba.com platform.
Cainiao logistics services (5% of total revenues) — This business generated revenues of RMB7.7 billion (US$1.1 billion), up 54% year over year. The segment represents revenues from growing cross-border and international commerce retail businesses.
Local consumer services (4% of total revenues) — This business generated revenues of RMB7.1 billion (US$1 billion), which increased 15% year over year.
Others business (2% of total revenues) — The business generated revenues of RMB3.5 billion (US$493 million), reflecting a 78% year-over-year increase.
Cloud Computing: This segment comprises Alibaba Cloud that offers a complete suite of cloud services. Revenues for the quarter were RMB12.3 billion (US$1.75 billion), up 59% from the year-ago quarter, driven by increased revenue contribution from both public cloud and hybrid cloud businesses.
Digital Media and Entertainment: The segment operates businesses through media properties that include UCWeb, Youku Tudou, OTT TV service, Alibaba Music and Alibaba Sports. Revenues from the segment were RMB7 billion (US$990 million), reflecting an increase of 9% on a year-over-year basis.
Innovation Initiatives and Others: This segment includes businesses such as the YunOS operating system, AutoNavi, DingTalk enterprise messaging and others. Revenues for the quarter were RMB1.1 billion (US$155 million), down 6% year over year.
Alibaba Group Holding Limited Price, Consensus and EPS Surprise
Alibaba Group Holding Limited price-consensus-eps-surprise-chart | Alibaba Group Holding Limited Quote
Key Metrics
Mobile Monthly Active Users (MAUs) — Mobile MAUs were 874 million, improving 15.8% from the prior-year quarter and 3.3% sequentially.
Annual Active Consumers — China retail marketplaces had 742 million annual active buyers, reflecting 10.1% year-over-year growth and 2.2% sequential improvement.
Operating Results
Alibaba’s operating expenses (product development + sales and marketing + general and administrative) of RMB31.6 billion increased 14.8% from a year ago.
Operating margin was 23%, down 200 basis points year over year.
Adjusted EBITDA increased 30% year over year to RMB51 billion (US$7.2 billion).
Cash Flow/Share Repurchase
Net cash flow from operations was RMB50.1 billion (US$7.1 billion) and free cash flow was RMB36.6 billion (US$5.2 billion) for the fiscal first quarter.
Zacks Rank & Key Picks
Alibaba currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader technology sector include Dropbox (DBX - Free Report) , Lam Research Corporation (LRCX - Free Report) and Maxim Integrated Products, Inc. . While Lam Research sports a Zacks Rank #1 (Strong Buy), both Dropbox and Maxim carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate of Dropbox, Lam Research, and Maxim is pegged at 34.4%, 15.4% and 10%, respectively.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.
Click here for the 6 trades >>