Alibaba Group Holding Limited

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's December Quarter 2020 Results Conference Call. At this time, all participants are on listen-only mode. After management has prepared the marks, there will be a question and answer session. I would now like to turn the call over to Rob Lin, Head of Investment Relations of Alibaba Group. Please go ahead.

Thank you. Good day, everyone, and welcome to Alibaba Group's December Quarter 2020 Results Conference Call. With us are Daniel Zhang, Chairman and CEO, Joe Tsai, Executive Vice Chairman, Maggie Wu, CFO. This call is also being webcast from our IR section of our corporate website. A replay of the call will be available on our website later today. Now let me quickly cover the safe harbor. Today's discussion may contain forward-looking statements. forward-looking statements involve inherent risks and uncertainties that may cause extra results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report on Form 20F and other documents filed with the US SEC or announced on the website of Hong Kong Stock Exchange. Any forward-looking statements that we make on this call based on assumptions as of today and we do not undertake any obligation to update these statements, except under applicable law. Please note that certain financial measures that we use on this call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, marketplace-based core commerce adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per shares, or ADS, and free cash flow, are expressed on a non-GAAP basis. of gap results and reconciliations of gap to non-gap measures can be found in our earnings press release. Unless otherwise noted, growth rate of all stated metrics mentioned during this call refer to year-over-year growth versus the same quarter last year. In addition, during today's call, management will give their prepared remarks in English. A third-party translator will provide a simultaneous Chinese translation on another conference line. Please refer to our press release for details. During the Q&A session, we will take questions in both English and Chinese, and a third-party translator will provide consecutive translation. All translations are for convenience purpose only. In the case of any discrepancy, management statement in the original language will prevail. With that, I will now turn it over to Daniel. Thanks, Rob.

Hello, everyone. Thank you for joining our earnings call today. Alibaba Group deliver another strong quarter. Our revenue increased 37% year over year to reach 221 billion RMB, while adjusted EBITDA increased 21% year over year to reach 61.3 billion RMB. Annual active consumers and GMV of our China retail marketplaces continue to enjoy healthy growth with Taobao deals surpassing 100 million mobile MAUs for the first time. We celebrated another milestone with Alibaba Cloud, which achieved its first profitable quarter with positive adjusted EBITDA. These business trends are all quite encouraging and are supported by a China economy that has recovered rapidly from the pandemic. Maggie will provide more details on our operating and financial performance in a few minutes. I would like to address another subject that everyone is equally focused on, which is the potential impact of China's changing regulatory environment on internet platform companies. I will share the latest updates on this topic. This past quarter, Alibaba experienced the suspicion of Ant Group's IPO due to change in the fintech regulatory environment, as well as the initiation of an anti-monopoly investigation by regulators in China. On December 24, 2020, Alibaba Group received a notice of an investigation from the State Administration for Market Regulation, or SAR, that it has commenced an investigation pursuant to the PRC anti-monopoly law. The investigation is ongoing and we are fully cooperating with the SAMR. We have established a special task force with leaders from our relevant business units to conduct internal reviews. We will continue to actively communicate with the SAMR on compliance with regulatory requirements. We will further update the market when the investigation is concluded. We approach this anti-monopoly investigation with a cooperative, receptive, and open mindset. As a China retail marketplace connecting hundreds of millions of consumers and the millions of merchants in transactions valued in trillions of RMB, we have a deep appreciation of the significant social and public responsibilities of operating our platform. Beyond complying with regulatory requirements, we will continue to do our best to fulfill our responsibilities to society and continue to causes such as consumer protection, Digitalization of Retail and Industrial Upgrading. Regarding Ant Group, as you know, in early November, Ant Group announced the suspension of its proposed daily listing and initial public offering on the Shanghai Stock Exchange Star Board and the Hong Kong Stock Exchange. Due to recent significant changes in the fintech regulatory environment in China, Ant Group is in the process of developing its ratification plan, which will need to go through the relevant regulatory procedures. Therefore, Ant Group's business prospects and IPO plans are subject to substantial uncertainties. Currently, we are unable to make a complete and fair assessment of the impact that these changes and uncertainties will have on Alibaba Group. We will update the market once Ant Group has completed the relevant regulatory procedures for its ratification plan. We received questions regarding whether any potential reduction in available consumer credit via Ant Group's offerings such as Huawei would impact consumer spending on our China retail marketplaces. I want to highlight that the availability of credit is not a major reason that motivates consumers to shop on our China retail marketplaces. They are attracted by our comprehensive and high-quality product and service offerings, our competitive pricing, and our ability to satisfy and stimulate consumption needs. Payments using Huawei on our China retail marketplaces only represent a very small percentage of total credit granted under Huawei. And the vast majority of our consumers have linked their payment accounts to multiple funding sources, including credit cards. And Huawei is only one of the funding channels. Although the changing regulatory landscape applicable to fintech and internet platform companies present near-term challenges to Alibaba, we regard this as important opportunities for reassessing and improving our business practices. In this highly competitive market environment, we will further challenge ourselves to constantly deliver and enhance value creation for customers through innovation. in multiple areas such as China commerce retail, local services, cloud computing, and international commerce. We see challenges in fierce competition, but also tremendous potential. Looking forward, we will be even more committed to investing in these core areas, investing for innovation, for value creation, and for long-term growth. Here, I will elaborate a little bit more on our thinking in four core areas. First, in China retail marketplaces, we will continue our user acquisition efforts, especially in less developed areas. We will build on Taobao MUSE 100 million mobile MAU base and further invest in expansion of the user base and the product supplies targeting less development area markets. In addition, in the community group purchase space, we are developing a unique model based on consumer value proposition as opposed to subsidization to ensure good consumer experience and business sustainability. Second, our local service flagship Ulama will continue to strengthen its partnership with Alipay to expand location-based on-demand delivery services to additional categories beyond meals, such as groceries and pharmaceuticals. On-demand deliveries of non-meal categories are growing rapidly on Ulama, which shows significant market potential. The current regulatory trend towards more healthy competition will benefit all market participants as consumers and merchants look for diversified supply. We will leverage this opportunity to continue investing to strengthen our local service business. Third, in cloud computing, we are pleased to have delivered our first quarter of positive adjusted EBITDA. This is the result of years of investment in pursuit of long-term value creation. Alibaba Cloud continues to grow at a rapid rate, with 50% revenue growth year-over-year in December quarter, reflecting the massive potential of China's cloud computing market. We believe the market is still at its early stage. as data intelligence applications and demands for computing power will become universal across all industry sectors. We will leverage Alibaba's unique advantage in technology and data intelligence applications while continuing to invest for growth. Finally, for globalization, Southeast Asia which is a core market for our international commerce business is witnessing Lazada's rapid growth in both user base and the transaction volume. We have spent several years upgrading Lazada's technology infrastructure, business model and operating efficiency. We believe we are now well positioned to capitalize on the Southeast Asian market which is experiencing accelerated growth through further investment into long-term opportunity with the goal of increasing our market share and the user's mind share. As China is fully evolving into a digital economy, Alibaba continues to be the best position in this historical transformation with our digital infrastructure in commerce financial services, logistics, and cloud computing that we have been building over the last 20 years. We continue to be confident about our three growth engines of domestic consumption, cutting-edge technology, and globalization, as these drivers are also consistent with China's policy direction in its economic development. Thank you all. Now, I would like to turn it over to Maggie, who will walk you through the details of our financial results.