Alibaba earnings conference call record: Taobao special edition has brought 10 million new users to Alibaba

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Tencent technology news on the evening of August 3, Alibaba Group announced the first quarter financial report of fiscal year 2022. The report shows that in the quarter ended June 30, 2021, Alibaba’s revenue was 205.74 billion yuan, less than the market expected 209.38 billion yuan, compared with 153.751 billion yuan in the same period of the previous year, a year-on-year increase of 34%. Without considering the impact of the merger of Gaoxin retail, the revenue increased by 22% year-on-year.
After the release of the financial report, Alibaba group executive vice chairman Cai Chongxin, CEO Zhang Yong, CFO Wu Wei and other executives attended the subsequent analyst teleconference, interpreted the key points of the financial report and answered the questions of analysts.
The following is the main content of the analyst Q & a session:
Jeffrey investment bank analyst: the first question is about Taobao special edition. At present, the user growth of special edition is very strong. What is the management’s view on the KPI and liquidity of Taobao special edition? My second question is about the interconnection of media reports. What are the specific views of the management on traffic and other Internet portals?
Zhang Yong: as I said in the opening statement, what we are doing now is to create other apps besides Taobao to form a mobile app matrix through incremental investment in China’s consumer business. At present, we have 900 million users in China, who have different preferences, Even each individual user will have different preferences in different scenarios, so we must characterize consumers differently to serve different needs.
The value of Taobao special edition is very clear. It serves users who are more price sensitive. This is our positioning for this app. We also see that this clear positioning has led to a significant increase in the number of users. In Alibaba’s entire consumption matrix, the task of Taobao special edition is to bring incremental users to Alibaba’s consumption ecology, especially new users sinking the market, and meet the needs of users who pursue cost performance under specific circumstances, that is, it undertakes the task of bringing incremental users and meeting consumers’ demand for cost performance, This is also its goal.
We are also glad to see that the development of Taobao special edition this quarter has brought 10 million new users to Alibaba, which also proves the effectiveness of this strategy. Of course, while meeting the demand, we are also building a supply chain from producers to consumers, so as to truly form an efficient supply chain in which the industrial belt leads directly to consumers and the origin of agricultural products leads directly to consumers, which is also another goal of our development of special edition.
Our view on interconnection has always been very clear. We believe that the Internet should be interconnected as its name implies. This is the original intention of the Internet. At the same time, openness is also the basis for the joint construction of all our Internet companies and digital ecology. Therefore, on this issue, we believe in a large cycle between platforms, whether it is the cycle of users or the cycle of the whole information, Or the data cycle can exceed the small cycle of a single platform. If the interconnection between platforms can be realized, it will certainly bring new reform dividends.
We also note that interconnection is also a common concern of many businesses, including consumers. From the perspective of businesses, for small and medium-sized enterprises, lifting the external chain shielding can reduce their traffic costs, reduce operating costs and bring convenience to operation. For consumers, lifting the external chain shielding and sharing shielding, The diversification of payment instruments will certainly help consumers improve their convenience, so this is the common concern of multiple platform participants.
At the end of July, the Ministry of industry and information technology also launched a special rectification action for the Internet industry. In the middle, we noticed the key rectification problems, including malicious blocking of website links and interference with the operation of other industrial products. We think this rectification action is very necessary and we also attach great importance to it. We will do our work well according to the relevant requirements, To paraphrase a sentence that we often see, we are willing to work together with other platforms of the Internet to face the future and go against each other.
Bank of America Merrill Lynch analyst: how do the trends in supervision and data supervision affect Ali’s practices and it infrastructure planning? In addition, we also see that the media are reporting that Internet platforms use a lot of subsidies to get customers. How will this affect Ali’s future investment direction and change in getting customers?
Cai Chongxin: in June this year, China issued the data security law. In recent months, the regulatory authorities have also announced some guiding measures. We believe that these laws and regulations are very important and conducive to the long-term development of the digital economy, because the wave of the digital economy is inevitable, and data has become a core asset for users, countries and companies, This is already a consensus. Therefore, it is very important to publish laws and regulations on data, and China is not the only country in the world to do so. In the United States and Europe, laws and regulations on protecting key data infrastructure and personal data protection have been implemented for several years. Alibaba has always made digitization and data security a top priority, We also attach great importance to these two themes. We are also conducting internal self-examination to continue to strengthen data protection and maintain the long-term development of the digital economy.
Alibaba firmly believes that we must do a good job in long-term value creation, which is the key. Therefore, this year, we also see that our incremental investment focuses on value creation. We think that other companies have been losing money and want to obtain the user scale by means of subsidies, But in the end, they still have to find a way to let the market see that they can make profits by creating value.
JPMorgan Chase analyst: the return on investment cycle has been very clear in the financial statements. Because the expenditure has been reflected in the statements, how should we look back to the newspapers? For example, at the group level, do we look at user growth or some other indexes? How to consider the return on investment internally? Second, in terms of data, considering from the current regulatory environment, what changes will be made to the current regulatory environment for the collection, sorting and application of data, especially for realizable businesses, such as precision advertising?

Wu Wei: one of the films we give investors is investment in key strategic areas. In this film, we also list which businesses the expenditure is aimed at, mainly including taote, local life, international business lazada, new retail business, rookie, etc. In the same PPT, we listed the progress on the right. Almost all investment fields have made very rapid progress. For example, in the community platform market, our Gmv has increased by 200% in a quarter, and the area of RDC has also increased by 260%. This is a pre factor. If we have an increase in order volume, the growth of Gmv will come up; The Mau of idle fish has exceeded 100 million, and taote AAC has also exceeded 190 million. The number of hungry orders has increased by 50% year-on-year, and lazada’s orders have increased by 90% year-on-year.
Because different businesses may have different computing modes, first of all, in the consumer market, the users of the whole Alibaba group have reached 1.18 billion, including domestic and international users. Among them, the domestic is 912 million, with a net increase of 45 million in this quarter. We expect to see 1 billion Chinese consumer users in three quarters. From 900 million to 1 billion is not a particularly large growth, but when you see each business line, the space is actually very large. Whether it is local life, idle fish or taote, there is a lot of growth space, so our number of users contains users of different businesses.
We consider the progress of the business internally. In short, it is the user base, user applications and user experience. The number of user base just mentioned is very different from other platforms, that is, the gold content is different, because users can use our services across apps. Then, in the second type of applications, the growth of Gmv is actually about applications. On the third level, our user experience will reflect the achievements of infrastructure construction, including supply capacity and performance capacity. We will also share with you our community business. The regular delivery rate is very high. We will share with you our progress from this point of view.
Zhang Yong: we have strict requirements for the collection and use of data. With the promotion of more legislation, we will do a lot of work in strict accordance with the requirements of the law. I believe we have always maintained a high level to do a good job in data security, and we will do so as before.
We will never take the use of data or algorithms as a single goal, especially a single efficiency goal as our starting point. For example, in the advertising business of consumer business, the use of our entire data and the application of algorithms do not simply aim at maximizing efficiency or revenue. As a consumer platform, the core business of any advertising promotion, the click through rate is more important than consumer satisfaction and product quality, We have always regarded the use of the whole data, the creation of business value, the protection of user experience and the creation of social value as an organic whole. We consider the problem in this way.
In this sense, we believe that with the legislation of data security, the requirements for data use are becoming higher and higher. Companies that regulate the use of data can not only create better social value for a long time, but also obtain better development opportunities.
Goldman Sachs investment analyst: the first question is about cloud intelligence. Just now we saw that the growth rate of cloud intelligence decreased from 37% to 29%. Please introduce the loss of customers in the previous quarter. How much of the decline in revenue growth rate comes from the departure of customers? How much is caused by other factors? Another question is about customer management revenue. Please introduce its trend and its relationship with Gmv, and the outlook for the next quarter. According to the data of the National Bureau of statistics, the business in May is off-season, and the growth in June is very obvious, which is largely driven by Alibaba. What will be the performance in the next quarter?
Wu Wei: the decline in cloud intelligence revenue we mentioned earlier is due to the impact of a head customer’s inability to use overseas cloud services. As introduced in our speech just now, if we excluded the impact of this head customer, the revenue of cloud intelligence would have increased by 40% year-on-year, and our cloud intelligence business is in many different industries, especially the Internet, finance and retail, The growth is very strong. We expect the impact of a single customer mentioned just now to continue until the end of this fiscal year, when this international business will be separated from our cloud services.
Looking forward to the future, I think there may be some ups and downs in cloud services, which may affect other types of customers, such as online education customers. However, we think the market potential of cloud services is very large. Our focus is to comprehensively improve our services, products and technologies, better customer experience and continuously promote the growth of our business volume. Then, a related problem is the possibility of concentration risk in cloud intelligent services. After excluding the head customer I mentioned earlier, the percentage of external customers of our top ten cloud services in the total revenue of cloud services is the number of units, indicating that our concentration risk is very low.
The second question is that the growth of customer management revenue is indeed a linear relationship with the growth of Gmv. This relationship is still there. We just introduced that our CMR accounts for 39% of the total revenue, which fully shows that our new revenue stream is growing well. Just now you also mentioned the national figures of the National Bureau of statistics. Alibaba, as a large-scale platform, Gmv of RMB 8 trillion accounts for a large share of national online retail, which should be said to be representative. In other words, the performance of Alibaba platform will not deviate from the general trend of national online retail.
As for the future revenue flow, as mentioned earlier, we aim to create sustainable value for customers in many emerging strategic areas, including infrastructure capacity, supply chain capacity and performance capacity. Once we reach a certain scale and these customers continue to use these services, we will have the opportunity to realize these newly created values in the future, These will become new sources of income.

Zhang Yong: in terms of cloud intelligence business, the key point is its overall goal and the scale of long-term development of the market. I think everyone can clearly see that the cloud intelligence market is in the initial stage of development. Maggie just introduced cloud services from the customer portfolio, and I changed my angle to introduce it from the perspective of products. For enterprise users, how to use cloud services to obtain efficient infrastructure is an entry-level requirement. After they get on the cloud, they are used to using cloud services. They will have more advanced and broader requirements, including requirements for computing data collection and utilization, data storage, data analysis, etc. we can continue to provide them with services in this regard, In our speech just now, we also introduced that in the cloud intelligence sector, the growth rate of data storage, data analysis, database, including data security, is higher than that of the whole. Therefore, we can say that IAAs is an entry-level requirement. After completing the data upgrade of IAAs, we can do a lot of upgrades and cross sales for customers.
UBS analyst: the growth of market-based core business has slowed down. What are our investment priorities now? Especially Taobao live broadcast, how do you see the development here?
Zhang Yong: the simplest answer to the whole profit change is that we are now investing in new market business. Traditionally, we say that the marketplace is Taobao and tmall. Now, with our construction in new business areas, the marketplace has new user values with different characteristics, so we are building a marketplace matrix instead of a single marketplace, This is how we look at the changes in the financial data of the marketplace.
For live broadcasting, we always believe that live broadcasting is not only a new sales method, but also an integral part of the digital operation of the whole business. Therefore, for Alibaba, our advantage is that we can provide businesses with a multi scene, multi form and multi technology operation ecology that can operate continuously for 365 days. Among them, live broadcasting is a very important way, but not all. From the perspective of merchants, what they need is a choice to actively operate services throughout the user’s life cycle, and can measure the operation efficiency and the whole revenue growth and profit growth in the whole operation cycle, not just from one or two live broadcasts. This is only a single segment rather than the whole. Therefore, we will continue to operate the whole digital ecology and provide diversified services for businesses, which is not only their long-term demand for value, but also the guarantee of consumer experience.