$BABA (BABA.US) $The release of fiscal fourth quarter results (that is, the first quarter of 2021), of which revenue was 187.395 billion yuan, an increase of 64% over the same period last year. In terms of the number of users, the number of annual active consumers in China's retail market was 811 million, an increase of 32 million from the previous month, and the number of mobile monthly active users was 925 million, an increase of 23 million from the previous month.

BABA had a net loss of 5.479 billion yuan ($836 million) and a net loss of 7.654 billion yuan ($1.168 billion), mainly due to fines imposed by the antitrust law, according to the financial report. Excluding this impact and several other items, non-GAAP net profit was 26.216 billion yuan ($4.001 billion), up 18% from a year earlier.

After the release of the results, BABA CEO Zhang Yong and CFO Wu Wei attended the conference call to interpret the latest results and answer analysts' questions.

JPMorgan Chase & Co analyst: in terms of investment, the management mentioned the reinvestment of incremental profits. Will there be zero profit growth? What are the key areas of investment? Management is cautious about investment and will use KPI and other methods to measure the return on investment.

Wu Wei:In the performance announcement, we mentioned that the profit increment of all investment, investors will ask whether they want profits or growth? Does full investment mean a profit of zero? In fact, for BABA, profit and growth are not contradictory. In the past few years, a very small number of companies have been able to invest in potential growth areas while achieving profit growth at the same time. I think there is still a lot of market potential, including core business and other areas, and there is also a lot of value that can be done in core business.

I think it is very stupid for BABA's long-term investors to just protect profits. There are many competitors who are making huge losses and are constantly putting into the market. And our hot areas, the value we can create and the resources we already have give us no reason not to invest. We do not guarantee the growth, balance or decline of profits, our investment is disciplined, which will be reflected in the customer's score. So in the end, it comes down to long-term profit growth or revenue growth.

In terms of the different business areas invested, it currently includes core business areas, new retail, community services, international operations, local services and logistics. In terms of investment, we hope to achieve results, such as the growth of the number of users, the improvement of user stickiness, and businesses to get value from our services.

Zhang Yong:In terms of investment, we mainly adopt three strategies, whether it is domestic demand, globalization or high-tech integration, we will invest, because we see huge incremental opportunities in these three areas. In the field of domestic demand, first of all, China's AAC (annual active users) has reached 890 million. In China's broad consumer market, BABA's ecological platforms add up to 890 million, which is our latest figure, but in fact, in terms of purchase frequency, how to turn 890 million users into not only AAC users but monthly buyers, or even daily buyers, there is great potential. China's largest and most capable consumers and consumers of different levels are on our platform. How can we increase this frequency is a very important perspective.

At the same time, although we have 890 million annual buyers in China's domestic demand market, there is still a huge population space in the vast number of low-level cities and rural areas, as we said in the last fiscal year. We have increased 84 million users in China's retail market, 70% of which are from low-level areas. We think this space is still very large, and we will still add new users. We hope to take the lead in achieving 1 billion buyers in China in the coming fiscal year, which is also our second investment area.

In addition to the growth of consumers and the growth of consumption frequency, the growth of businesses includes reducing the burden of businesses and reducing their operating costs. We have also introduced a series of measures for long-term growth and sustainable growth, some of which have been announced. We are making efforts one after another, hoping to give businesses a more relaxed business environment, which is also a direction of our investment.

In addition to these, we also have infrastructure construction and logistics system construction in the field of domestic demand, including supply chain and procurement and sales construction, all these are for long-term value discovery of users and satisfaction of user needs, we will continue to work hard, in these areas we will have corresponding goals and KPI to monitor our progress.

In the field of globalization, we are now pleased to see that overseas AAC has reached 240 million. We will continue to invest to increase our overseas consumer base, and we hope to double this figure in the next few years.

In the field of technology, especially cloud computing, this is an opportunity of the times, so we will also increase our investment in core technologies, especially cloud computing and big data, which will involve not only cloud, but also technology investment. we can invest in the next generation of consumer experience and logistics. This is because we firmly believe that such technological investment will benefit the growth of our domestic demand and the progress of globalization.

Jeffery analyst: my first question is to know the outlook for customer management income CMR in the coming year. We also see that CMR figures are relatively solid. What are the prospects for FY22? In particular, what is the trend in take rate (conversion rate)? The second question is about the competition pattern. BABA has a wide range of products, rich varieties and strong science and technology. how to give full play to these advantages to enter low-line cities?

Wu Wei:With regard to the growth of customer management income CMR, we have also reported a year-on-year growth of 24% in this quarter. If we look at the strong growth in each quarter in the past, especially considering the high base, I think there is still potential to maintain high growth in the future. This part of the income is actually the budget of business expenditure, so to buy some services, then our take rate is 4%. We provide some sales, marketing, branding services, charge fees, there is also room for further improvement, of course, there are other channels to provide services for businesses.

Over the years, our take rate has been improving. We will also increase our support for merchants. In the last conference call, we already mentioned some of these measures, such as waiving some fees for merchants and investing in some support measures such as our platform infrastructure. Therefore, it can be seen that the value we have created for merchants has not been actively and rapidly realized. Our customer management income accounts for about 43% of total revenue, so if you look at the past few years, this figure is as high as 70 or 80 percent, so our CMR is growing rapidly, but at the same time, the proportion of total revenue continues to decline. I think this trend will continue. The reason is that we are now pursuing a multi-engine growth strategy, emerging businesses are constantly booming, and the percentage of total revenue is also increasing accordingly.

Let me correct the figure I just mentioned. CMR24% growth is for the whole of the fiscal year, which is actually 40 per cent year-on-year.

Zhang Yong:Let me answer the second question, how to use technology to enhance our competitiveness. BABA has always believed that technology is the key, and we are also very proud to have such a strong ability to develop technology. and in a highly competitive market environment, constantly integrate the new technologies developed into the actual operation. In terms of domestic consumption, a big problem is how to keep getting new customers and how to retain consumers in the market. On the one hand, we mainly use our technological advantages to match well and seize the needs of consumers. We now have a very rich product supply and a huge user base. We rely on fully automated artificial intelligence-driven matching technology to constantly improve and optimize the conversion rate.

On the one hand, it can increase the transaction volume, and at the same time, it can also meet the more diverse needs of more different customers, which is the first. Second, after obtaining new consumers, another key consideration is how to maximize the life cycle value of each customer, in which there are a lot of cross-selling, so we will build a profile of each user. Understand his needs, combined with the characteristics of different products, can continue to provide customers with new products and services, personalized customization.

The advantage of technology lies not only in the operation of consumers, but also in other areas. for example, in the field of logistics, technology is very important to rookies, relying on technology to build intelligent data-driven logistics. And running networks to provide the best services for domestic and international businesses, cloud technology is also the key. As mentioned in our written speech just now, we are also constantly investing in cloud technology. Cloud products target not only the core cloud products of domestic competitors, but also the core cloud products of international competitors, so as to ensure that the products are at the best level of similar products.