Alibaba Group Holding Limited

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's June quarter of 2021 results conference call. At this time, all participants are on listen-only mode. After management's prepared remarks, there will be a question and answer session. I would like to turn the call over to Rob Lynn, Head of Investor Relations of Alibaba Group. Please go ahead.

Good day, everyone, and welcome to Alibaba Group's June quarter 2021 results conference call. With us today are Daniel Zhang, our chairman and CEO, Joe Tsai, executive vice chairman, and Maggie Gu, our chief financial officer. This call is also being webcast from the RL section of our corporate website. A replay of the call will be available on the website later today. Now, let me quickly cover the safe harbor. Today's discussion may contain forward-looking statements, forward-looking statements involving inherent risks and uncertainties that may cause actual 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 U.S. SEC, or announce on the website of the Hong Kong Stock Exchange. Any follow-looking statements that we make on this call are based on assumptions as of today, and we do not undertake any obligations to update these statements except as required 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, commerce adjusted EBITDA before strategic investments, non-GAAP net income, non-GAAP diluted earnings per shares or ADS, and free cash flow are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. Unless otherwise stated, 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 the call, management will give their prepared remarks in English A third-party translator will provide simultaneous translation in Chinese 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 case of any discrepancy, management statements in the original language will prevail. With that, I will turn the call to Daniel.

Thanks, Rob. Hello, everyone. Thank you for joining our earnings call today. We started this fiscal year with a strong quarter. Over the past 22 years, Alibaba has grown into a company encompassing consumer internet and industrial internet, with multiple engines driving our long-term growth. In consumer business, we operated the largest consumer marketplace globally with 1.18 billion annual active consumers as of June 30, 2021. During the first fiscal quarter, our annual active consumers grow from 890 million to 12 million in China, and from 240 million to 255 million outside of China, representing quarterly net ads of 45 million in total. At the beginning of this fiscal year, we announced the plan to invest all of our incremental profit this year into core strategic areas such as technology innovation, support programs for merchants to lower their operating costs, user acquisition and experience enhancement, merchandising and supply chain capability, infrastructure development, and new business initiatives. They were designed to enlarge our total addressable market, differentiate consumer and merchant value propositions from our competitors, and generate greater consumer engagement and purchase frequency. Now, I would like to share an update on the business progress in these strategic areas. For our China retail marketplaces, a key strategic area for our incremental investments is to evolve from one super app of mobile Taobao into a multi-app product matrix. We are glad to see Taobao deals progress in user acquisition in less diverse areas, contributing to over 10 million of our new AACs during the quarter, thanks to its best value for money value proposition. I do fish. which is expanding from a marketplace for secondhand product trading to a consumer-to-consumer community-based marketplace for products and services, reached over 100 million app MAUs during the quarter. Mobile Taobao, our flagship app for China retail marketplaces, is focusing on creating a more engaging shopping and discovery experience while satisfying the diversified consumer demands with the most comprehensive product offerings. New retail is another strategic area for our incremental investment, where we have built a multi-format business model to serve a wide range of consumer needs. Today, our consumer can enjoy one-hour doorstep delivery of products ordered online through FisherPo and TaoxianDa. or same-day or next-day delivery of groceries purchased from Timor supermarket, or order value-for-money products delivered next day to neighborhood pickup points. We believe such multi-format, multi-service-level new retail infrastructure built on a highly efficient digitalized supply chain and fulfillment model can best satisfy the diversified demand of different consumer segments. in different regions. Our community marketplaces business grow approximately 200% quarter-over-quarter in terms of GMV, while we expanded the gross flow area of our original distribution centers at a faster rate at 260% quarter-over-quarter to provide better logistics support for business growth. We view community marketplaces not as an independent market segment, but one of the multiple business formats in new retail, which is meaningful to us for continuous consumer acquisition and engagement. In the past few months, Chinese regulators have issued ratification requirements against community marketplace players selling below cost, which hurts the market integrity and community livelihoods. We have paid full attention to the regulatory requirements and will continue to operate with discipline. We are committed to building a sustainable digital community marketplace with improvement of livelihoods and create incremental value for our consumers. In local consumer services, we completed an important organizational upgrade and formed a business matrix consisting of Erlema, AMAP, and Fliki. Erlema and AMAP will be our major consumer entry points for local services to home and to destination, respectively. During the quarter, Erlema achieved strong order growth of over 50% year-over-year. We will continue to increase our investments in Ulema, especially to grow the contribution of non-mule categories and to further enhance our operating efficiency. AMAP, after years of investment, is evolving from a MAP service provider to an important entry point for consumers' discovery of local services near their destinations. our consumers can find a wide range of services in AMAP, such as ride-hailing, fuel services, hotel booking, tourist attraction ticketing, and so on. During this fiscal year, we expect to attract over 100 million transacting consumers in AMAP across the destination-based local service. our vertical business for travel services will focus on organizing high-quality supply of hotel rooms, transportation, and the tourist attraction services for consumer platforms such as AMAP and Alipay to further expand its penetration in our more than 900 million annual active consumer base in Alibaba ecosystem. In our international market, we continue to see strong growth in both revenue and AAC across our consumer-facing business, achieving 265 million AAC, over 10 billion revenue, and a 55% year-over-year revenue growth during the quarter. Lazada recorded over 90% year-over-year order growth for the quarter, and Indonesia and achieving the highest growth of over 100% year-over-year. Aliexpress continues strong momentum in its major markets, such as Spain, France, and Russia, leveraging the improved cross-border logistics solutions in partnership with Tainil. However, as the European Union recently abolished the VAT exemption for imported goods below €22, effective on July 1, 2021, we expect AliExpress business growth in Europe will be negatively impacted starting in the September quarter. Over the long run, we remain confident towards the growth prospects for our international retail market and will continue our commitment to invest in this area. Tanyao, the digital logistics infrastructure operator for our consumer business, deliver another solid quarter with over 10 billion RMB revenue and revenue growth of 50% year-over-year, which is an indicator of healthy business development across multiple segments. The consumer logistics segment, Tanyao Post, an important network of consumer-facing logistics service points continue to process increasing volume of packages. China Post operators also see new business opportunities in our community marketplaces business, which offer the potential to their role from logistics service providers to community group promoters. In supply chain segment, China sees a major business opportunity in providing manufacturers with a highly efficient supply chain and the logistics services, alongside the rapid growth of Taobao deal. In global logistics segment, China's development of cross-border export logistics network from China to our major markets in Europe significantly improved the logistics experience for our users on the e-commerce platforms, which supported further business volume growth in e-commerce and logistics in a virtuous cycle. Alibaba Cloud's revenue increased by 29% year-over-year during the quarter, primarily driven by robust growth in revenue from customers in the internet, financial services, and the retail industries. From a product perspective, solutions for storage, analytics, learning, efficiency, and safety use of data were among the important growth engines for Ali Cloud and deliver higher revenue growth than overall business, reflecting common demands by enterprise customers as cloud infrastructure replaces traditional IT infrastructure. Similar to the last quarter, the slower year-on-year revenue growth of Ali Cloud was primarily due to revenue decline from a top cloud customer in the internet industry, which has stopped using our overseas cloud service due to local regulatory requirements. Excluding the revenue from this customer, Alibaba Cloud's revenue growth this quarter would be close to 40% year over year. As an important partner to the International Olympic Committee, Alibaba's cloud solution, in collaboration with Olympic Broadcasting Services, is supporting service delivery for rights holder broadcasters for the first time during the Olympic Games Tokyo 2020, transforming how the Olympic Games are broadcasted to the world since Tokyo 1964. Other than the updates on our business side this quarter, I believe our investors will be even more focused on the recent regulatory change in the China internet industry and expected impact on Alibaba. We are in the process of studying the regulatory requirements, evaluating the potential impacts on our relevant businesses, and we will respond positively with actions. We believe all these new regulations aim to foster the healthy development of the internet industry over the long run. In the context of China's economic growth and livelihoods improvement, this is consistent with Alibaba's long-term vision and vision to serve SMEs with digital technology, to serve the underprivileged groups and to serve our consumers' demand for a better life. We continue to stay optimistic about the long-term potential of China's economy and the long-term growth prospects of Alibaba. We will fulfill our responsibilities as a platform in accordance with the regulatory requirements and continue to carry out our commitment to be a good company that creates long-term value for the society in China and globally. Thank you all. Now, I will turn it over to Maggie, who will walk you through the details of our financial results.