Alibaba reaches $1tn five-year goal despite COVID-19

Chinese-based e-commerce giant Alibaba has reached its goal of reaching $1 trillion in gross merchandise value (GMV).

On Friday, the company announced its financial results for the quarter and fiscal year ended 31 March.

“Alibaba achieved the historic milestone of $1 trillion in GMV across our digital economy this fiscal year, which was a strategic goal we set for ourselves five years ago,” says Daniel Zhang, chairman and chief executive officer of Alibaba Group.

“We at Alibaba have always been aiming for the stars while keeping our feet on the ground. The $1 trillion GMV milestone reflects the vitality of Alibaba’s digital economy, as well as strong execution against a clear strategic vision.”

GMV is a term used in online retailing to indicate a total sales dollar value for merchandise sold through a particular marketplace over a certain time frame.

Alibaba is the world's largest retailer and e-commerce company, is on the list of the largest Internet and artificial intelligence organisations, is one of the biggest venture capital firms, and one of the biggest investment corporations in the world.

“Our overall business continued to experience strong growth, with a total annual active consumer base of 960 million globally, despite concluding the fiscal year with a quarter impacted by the economic effects of the COVID-19 pandemic,” Zhang notes.

He points out that the pandemic has fundamentally altered consumer behaviour and enterprise operations, making digital adoption and transformation a necessity.

Chinese business magnate, Jack Ma, a former English teacher, co-founded Alibaba in 1999 and it has become one of the world’s biggest Internet firms.

Ma officially stepped down as Alibaba’s executive chairman in September 2019 before his position was taken over by Zhang.

“We are well-positioned and prepared to help large and small businesses across a wide spectrum of industries achieve the digital transformation they need to survive this difficult period and eventually prevail in the new normal. By focusing on the long term and investing in value creation for our consumers and business customers, we believe we will emerge from this crisis stronger and be ready to capture more growth in the future,” Zhang says.

Says Maggie Wu, chief financial officer of Alibaba Group: “Despite a challenging quarter due to reduced economic activities in light of the COVID-19 pandemic in China, we achieved our annual revenue guidance of over RMB500 billion.”

Wu notes that revenue growth of 35% year-over-year was driven by solid performance of the company’s domestic retail businesses as well as robust cloud computing revenue growth.

“Our adjusted EBITDA [earnings before interest, taxes, depreciation and amortisation] grew 29% year-over-year, reflecting our discipline in allocating resources to key strategic growth areas while optimising costs and improving efficiency.

“Although the pandemic negatively impacted most of our domestic core commerce businesses starting in late January, we have seen a steady recovery since March. Based on our current view of Chinese domestic consumption and enterprise digitisation, we expect to generate over RMB650 billion in revenue in fiscal year 2021,” says Wu.

Among the highlights of the results, revenue was RMB114 314 million ($16.1 billion), an increase of 22% year-over-year.

“Annual active consumers on our China retail marketplaces reached 726 million, an increase of 15 million from the 12-month period ended 31 December 2019,” says Alibaba.

Income from operations was RMB7 131 million ($1 billion), a decrease of 19% year-over-year, primarily due to the impact of the COVID-19 pandemic.

Adjusted EBITDA, a non-GAAP measurement, increased 1% year-over-year to RMB25 440 million ($3.6 billion). Net income attributable to ordinary shareholders was RMB3 162 million ($447 million), a decrease of 88% year-over-year, and net income was RMB348 million (US$49 million), a decrease of 99% year-over year.

Alibaba explains the year-over-year decrease was primarily due to a net loss in investment income, mainly reflecting decreases in the market prices of equity investments in publicly-traded companies, compared to a net gain recorded in the same quarter of 2019.

Non-GAAP net income, which excludes the above-mentioned loss and gain, was RMB22 287 million (US$3.1 billion), an increase of 11% year-over-year.