Let have a look into Alibaba $Alibaba(BABA)$top three revenue contributors. Alibaba reported revenue in 7 segments. The three largest revenue contributors comes from China commerce (71% of total revenue), followed by Cloud (8% of total revenue), and International commerce (7% of total revenue). these top 3 segments make up 86% of total revenue.
For quarter result till end of Dec 2021, only China commerce and Cloud have positive adjusted EBITA margin (profitable).
As the main pillar for major part of the profit, the adjusted EBITA for China commerce segment decreased by 20% YoY due to slowing market conditions as well as competition. This segment revenue grew 7% YoY.
Cloud revenue, though has a growth of 20% YoY; was slightly less than Sep quarter (RMB 19.5 bil in Dec quarter and RMB 20 bil in Sep quarter).
The adjusted EBITA profit of RMB 134 mil in this quarter, compared to a loss of RMB 221 mil in Dec quarter of 2020, was a positive sign. But disappointing when compared to Sep 2021 quarter. Explanation given in the presentation was: “partially offset by the continuing impact of a top cloud customer’s decision to stop using our overseas cloud services for its international business due to non-product related requirements and slowing demand from customers in the Internet industry such as online entertainment and education.” Maybe there is seasonality in cloud business.
There was robust growth in International Commerce segment revenue which increased 18% YoY. However, adjusted EBITA loss was doubled, increased from RMB 1.4 bil to RMB 2.9 bil. This was mainly due to the increase marketing and promotional spending for user acquisition and engagement in Lazada.
Local consumer services and Cainiao each contributed 5%, Digital media and entertainment contributed 3%, Innovation initiatives and others contributed 1% to this quarter total revenue.
Among all segments, Local consumer services has the highest YoY revenue growth of 27%.
Going forward, I think the decrease in profit could be expected due to increased investments in growth initiatives and spending for user
growth.
Lastly, for the nine months ended December 31, 2021, Alibaba repurchased approximately 42.2 million of ADSs (about 1.56% of approximately 2.7 billion ADSs issued and outstanding). Marginally help in improving per share metrics.
A gem fading its glow.
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