Alibaba misses by $0.03, beats on revs; Takes a stake in Ant Financial; Raises FY18 revenue guidance (204.29)
- Reports Q3 (Dec) earnings of $1.63 per share, $0.03 worse than the Capital IQ Consensus of $1.66; revs +56% y/y to $12.76 bln compared to $12.36 bln Capital IQ consensus; revs +56% y/y to $12.76 bln compared to $12.36 bln Capital IQ consensus.
- Given clear visibility on the full year results for fiscal year 2018, BABA is adjusting revenue guidance to 55% to 56% (previously 49% to 53%).
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Revs by Segment
- Revenue from core commerce increased 57% y/y to $11,257 million.
- Revenue from cloud computing increased 104% y/y to $553 million.
- Revenue from digital media and entertainment increased 33% y/y to $832 million.
- Revenue from innovation initiatives and others decreased 9% y/y to $119 million.
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Key Metrics
- Annual active consumers on China retail marketplaces reached 515 million (+16% y/y, +6% q/q)
- Mobile MAUs on our China retail marketplaces reached 580 million (+18% y/y, +6% q/q)
- Net income was $3,586 million), income from operations was $3,996 million and adjusted EBITDA was US$5,561 million. Operating margin was 31%, adjusted EBITDA margin was 44% and adjusted EBITA margin for core commerce was 53%.
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Ant Financial Stake
- BABA has agreed to a 33% equity stake in Ant Financial that will strengthen it's strategic relationship pursuant to the series of agreements reached with Ant Financial in 2014. BABA believes deepening relationship through an equity stake in Ant Financial would bring key strategic benefits, including advancing New Retail strategy with mobile payments, increasing user acquisition and retention through collaboration with the Alipay digital wallet, and enhancing the execution of international expansion. In addition, the equity stake in Ant Financial enables Alibaba and shareholders to participate in the future growth of the financial technology sector.
- During Q4, Ant Financial successfully executed an aggressive user growth plan that resulted in substantial new user additions and increased user engagement. As a result of the user growth initiatives, in December 2017, Alipay Wallet's daily active users more than doubled on a year-over-year basis.
- Under the terms of the amended agreements, Alibaba will acquire newly-issued equity from Ant Financial in exchange for certain intellectual property rights owned by Alibaba exclusively related to Ant Financial. There will be no cash impact to Alibaba following completion of the transaction. Upon closing, the companies will terminate the current profit-sharing arrangement under which Ant Financial pays royalty and technology service fees in an amount equal to 37.5% of its pre-tax profits to Alibaba.