BABA handed in his report card for the second quarter of fiscal 2020 before the US stock market opened on November 1 (corresponding to Q3 in 2019, as defined below).

Revenue reached 119 billion, up 40% from a year earlier and exceeding Bloomberg's consensus forecast of 116.7 billion.

In terms of business, the core business revenue was 101.2 billion, up 40% from the same period last year, and the growth rate continued to slow on the basis of a large base; cloud computing revenue was 9.2 billion, up 64% from the same period last year; large entertainment revenue was 7.2 billion, and innovative business revenue was 1.2 billion, all moderate growth over the same period last year.

Non-gaap net profit rose 40% year-on-year to 32.7 billion, another quarterly high and well above Bloomberg's consensus estimate of 26.9 billion.

As BABA's business system is already very large, we simply select a few key business and indicators to observe the performance of this financial quarter.

Domestic retail platform

Users grow steadily, GMV slows down

Over the past year, Pinduoduo has been infiltrating into first-and second-tier cities, while BABA has moved aggressively into the sinking market of Pinduoduo. BABA's annual active consumers grew by 20 million last quarter, with about 70 per cent of new users coming from less developed areas.

This quarter, this indicator is added.19 million, the month-on-month growth rate slowed down slightly.. As a contrastPinduoduo's active consumers increased by 40 million last quarter compared with the previous quarter.Q3 if Pinduoduo continues to increase by 40 million month-on-month, it will reach 520 million, accounting for 75% of BABA. The relative volume change of this slow and fast, spelling more is very scary.

GMV aspectTmall's physical GMV as a growth rate of 26%, although still significantly higher than the online physical retail growth rate of about 21% in the same period.However, there is still a relatively obvious slowdown, which is in sharp contrast to the accelerated growth of GMV in the last quarter.

Cash Bull-- domestic retail platform revenue maintains high growth

Customer management revenue of 41.3 billion (which can be understood as advertising) grew by 25% in the current quarter, and commission income was 16.2 billion, 24% year-on-year, a combined growth rate of 25%.

Domestic retail customer management and commission income represents the basic market of BABA, which has maintained a growth rate of 25% on a year-on-year base in this quarter, and the growth is quite steady.But on the other hand, if the GMV growth rate continues to slow down, it is bound to put pressure on the cash growth rate in the future, which will slow down BABA's pace.

New retail

The revenue of new retail business (Box Horse, Tmall Import, Yintai, Tmall supermarket) was 18.4 billion, an increase of 125% over the same period last year.Down from 134% in the previous quarter.

In the most closely watched box horse business, the number of stores increased from 150 to 170 at the end of the quarter, a net increase of 20. With the wild running of box horses from sacrificing their lives to protecting their lives, although the number of stores is still growing, box horses begin to pay more attention to fine operation, and the format of box horse stores is also exploring the direction of differentiation in small stores.

Local consumer services

Consumer service (ele.me, word of mouth) Q3 revenue 6.83 billion, up 36% from the same period last year. By comparisonMeituan Q2 has 12.8 billion revenue from the takeout business alone., an increase of 44% over the same period last year.

At present, BABA's market share in local life is still being squeezed by Meituan, life is difficult, and the pattern is difficult to change for the time being. But in the long run, BABA's investment in this business will continue, with the help of new retail, entertainment and other ecological offensive, is still expected to maintain market share. The trillions of market space for the local living business is also vast enough to accommodate two players.

Cloud Computing

Aliyun's revenue reached 9.29 billion in this quarter, an increase of 64% over the same period last year.Compared with the year-on-year growth rate of 66% in the previous quarter, it continues to decline slightly, but it is still on the track of rapid growth. On the whole, it is expected that with the increase in domestic cloud computing penetration and single customer fees continue to increase.Aliyun's business revenue will continue to grow at a high level, and it should be able to maintain a level of 40% + for at least the last 5 years.On the profit side, Aliyun's profit margin is conservatively expected to reach 510% in 2025, which will contribute at least billions of operating profits.

Profitability

BABA has the ability to make a high profit in terms of huge economies of scale, with an EBITA rate of 27% this quarter, slightly lower than the previous quarter but still healthy.

In the core businessThis quarter 4 new (loss from big to small for local services, lazada, new retail, rookie) operating loss of 7 billion，The month-on-month ratio has expanded.The losses of large entertainment and innovative businesses have not improved significantly.

Summary

This quarter is BABA's fourth consecutive higher-than-expected financial report to the capital market, but unlike Q2, Q3 is only a small lead this time. Two points worth paying attention to and thinking about this quarterFirst, Tmall GMV growth significantly slowed down, behind the seasonal fluctuations or Pinduoduo more competitive role? The second is whether the new business with heavy assets and heavy investment can stabilize its share and continue to reduce losses in the fierce external competitive environment.

However, investors can rest assured that these external factors are more likely to bring profitability and growth rate interference, and will not affect BABA's basic market. BABA's mature ecology and absolutely leading e-commerce scale make it have a very wide moat. The strategic layout of new retail, entertainment, finance, payment, logistics and other infrastructure continues to consolidate BABA's long-term competitiveness in the core business ecology and science and technology areas, ensuring long-term growth space.