Alibaba profit down 75% in Q4 2021

Alibaba’s revenue was RMB242,580 million (US$38,066 million) in Q4 2021, an increase of 10% year-over-year that was primarily driven by the revenue growth of China commerce segment by 7% year-over-year to RMB172,226 million (US$27,026 million), cloud computing segment by 20% year-over-year to RMB19,539 million (US$3,066 million), local consumer services segment by 27% year-over-year to RMB12,141 million (US$1,905 million) and International commerce segment by 18% year-over-year to RMB16,449 million (US$2,581 million).

Annual active consumers of the Alibaba Ecosystem across the world reached approximately 1.28 billion for the twelve months ended December 31, 2021, an increase of approximately 43 million from the twelve months ended September 30, 2021. This includes 979 million consumers in China and 301 million consumers overseas, representing a quarterly net increase of over 26 million and 16 million, respectively.

Income from operations was RMB7,068 million (US$1,109 million), a decrease of 86% year-over-year, which included a RMB25,141 million (US$3,945 million) impairment of goodwill in relation to the digital media and entertainment segment.

Excluding this impairment of goodwill, income from operations would have been RMB32,209 million (US$5,054 million), a decrease of 34% year-over-year. The year-over-year decrease was primarily due to Alibaba’s increased investments in growth initiatives and its increased spending for user growth, as well as the support to merchants.

Net income attributable to ordinary shareholders was RMB20,429 million (US$3,206 million) and net income was RMB19,224 million (US$3,017 million), showing year-over-year decreases of 74% and 75%, respectively, primarily due to the impairment of goodwill of RMB25,141 million (US$3,945 million) and the decrease in net gains arising from the changes in fair value of its equity investments, both of which Alibaba excluded from Alibaba’s non-GAAP measures.

Non-GAAP net income was RMB44,624 million (US$7,002 million), a decrease of 25% year-over-year.

Diluted earnings per ADS was RMB7.51 (US$1.18) and diluted earnings per share was RMB0.94 (US$0.15 or HK$1.15). Non-GAAP diluted earnings per ADS was RMB16.87 (US$2.65), a decrease of 23% year-over-year and non-GAAP diluted earnings per share was RMB2.11 (US$0.33 or HK$2.58), a decrease of 23% year-over-year.

Net cash provided by operating activities was RMB80,366 million (US$12,611 million). Non-GAAP free cash flow was RMB71,022 million (US$11,145 million), a decrease of 26% year-over-year compared to RMB96,210 million in the same quarter of 2020.

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Alibaba Retail Business Highlights

For the twelve months ended December 31, 2021, Alibaba’s China commerce businesses had approximately 882 million annual active consumers, representing a quarterly net increase of about 20 million, primarily driven by additions from Taobao Deals.

For the twelve months ended December 31, 2021, there were 280 million annual active consumers on Taobao Deals, up 39 million from the prior quarter. Taobao Deals has also successfully executed several initiatives to optimize logistics costs and improve the delivery experience for consumers.

During the quarter, paid orders on Taobao Deals grew strongly at over 100% year-over-year.

Taocaicai, Alibaba’s community marketplaces business, continued to penetrate into less developed areas while generating robust GMV growth of 30% quarter-over-quarter.

In December 2021, Alibaba international commerce retail business, mainly including Lazada, AliExpress, Trendyol, and Daraz, grew strongly and achieved about 301 million annual active consumers in the twelve months ended December 31, 2021, representing a quarterly net increase of 16 million.

During the quarter, combined order growth of these businesses was around 25% year-over-year, driven by robust growth in Lazada of 52% and Trendyol of 49%, which was partially offset by a decrease in orders for AliExpress in Europe due to the value-added tax levied on cross-border parcels below €22 in value.

Alibaba’s international commerce wholesale business exhibited robust growth of around 50% year-over-year in value of transactions completed on Alibaba.com, driven by solid export growth of consumer and industrial goods from China to other major developed and developing countries.

Alibaba.com facilitates international trade by offering value-added services such as global logistics and trade assurance that have been increasingly adopted by global buyers and sellers.

For the quarter ended December 31, 2021, its international commerce wholesale B2B revenue grew strongly by 29% year-over-year. In particular, value-added service revenue grew 43% year-over-year.

Dossier: China E-Commerce