Alibaba Group (BABA) Q2 2020 earnings summary

Executive summary

• September-quarter revenue rose 40% YoY to RMB119.0B, led by China commerce retail and cloud computing.

• Adjusted EBITA increased 39% to RMB32.1B, adjusted EBITDA rose 39% to RMB37.1B, and non-GAAP net income grew 40% to RMB32.8B.

• Reported net income reached RMB70.7B, including a one-time RMB69.2B gain tied to the Ant Financial equity interest; China retail marketplaces had 693M annual active consumers and 785M mobile MAUs.

Financial highlights

• Revenue was RMB119.0B, up 40% YoY; excluding acquired-business consolidation effects, growth was 37%.

• Core commerce revenue grew 40% to RMB101.2B; cloud revenue rose 64% to RMB9.3B.

• Income from operations increased 51% to RMB20.4B; net income attributable to ordinary shareholders was RMB72.5B.

• Diluted EPS was RMB3.44 and diluted EPS per ADS RMB27.51; non-GAAP diluted EPS per ADS was RMB13.10, up 36% YoY.

• Operating cash flow rose 51% to RMB47.3B; non-GAAP free cash flow increased 90% to RMB30.5B.

Segment performance

• Core commerce adjusted EBITA increased 29% to RMB38.6B, with a 38% margin; marketplace-based core commerce adjusted EBITA rose 28% to RMB45.6B.

• Cloud revenue grew 64% to RMB9.3B, driven primarily by higher average revenue per customer; adjusted EBITA loss widened to RMB521M from RMB232M.

• Digital media and entertainment revenue rose 23% to RMB7.3B; adjusted EBITA loss narrowed to RMB2.2B from RMB3.8B, primarily on measured Youku content spending.

• Innovation initiatives and others revenue rose 14% to RMB1.2B; adjusted EBITA loss widened to RMB1.9B on investment in research, innovation and business initiatives.

• Lazada orders grew over 100% for a fourth consecutive quarter.