Alibaba Group Holding Limited

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's September quarter 2021 results conference call. At this time, all participants are only in only mode. After management's prepared remarks, there will be a question and answer session. I would now 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 September quarter 2021 results conference call. With us today are Daniel Zhang, Chairman and CEO, Joe Tsai, Executive Vice Chairman, Maggie Wu, Chief Financial Officer. This call is also being webcast from the IR section of our corporate website. A replay of the call will be available on our website later today. Now, let me quickly go over the safe harbor. Today's discussion may contain forward-looking statements. Forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussion 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 are based on assumptions as of and we do not undertake any obligation 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 share or ADS, and free cash flow are expressed on a non-GAAP basis. Our gap results and reconciliation of the gap to non-gap measure can be found on our earnings press release. Unless otherwise stated, growth rates of all stated metrics mentioned during the call refers 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 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 the case of any discrepancies, management statements in the original language will prevail. With that, I will now turn the call over to Daniel.

Thank you, Rob. Hello, everyone. Thanks for joining our earnings call today. In the past quarter, Alibaba continued to firmly invest into our three strategic pillars of domestic consumption, globalization, cloud computing, and data intelligence. We believe this will establish solid foundations of our long-term goal of sustainable growth in the future. Some context on the China macro environment before I share our business updates. In the September quarter, China's GDP and consumption continued to grow but slower than the previous quarters. Overall retail sales for the quarter increased 5% year-over-year. Online retail of physical goods rose 8% year-over-year compared to the 19% during the same period last year. Offline retail has only just returned to the same level as two years ago. These economic headwinds coupled by intensifying market competition also affected our core commerce business in China. In line with industry retail trends in China, physical goods GMV year-over-year growth rate moderated to single-digit this quarter, mainly due to a slowdown in apparel and general merchandise categories. That said, growth rates of consumer electronics and home furniture categories remain resilient. In the challenging macro environment, we continue to invest in user acquisition and have seen promising progress in low-tier cities, which I will elaborate on later. Our global annual active consumers reach approximately 1.24 billion. which is a net increase of 62 million quarter-over-quarter and a 20% growth year-over-year this past quarter. Our AAC grew to 953 million in China and 285 million overseas. We are on track to deliver the 1 billion China AAC target by the end of this fiscal year. and remain firmly committed to achieving our long-term target to serve 2 billion consumers globally. Let me turn to our long-term investment strategies. In less developed areas across China, Taobao deals have continued incremental growth to our overall user base and stimulate more user activity and engagement in our China consumer ecosystem. Taobao Deals AAC surpassed $240 million this past quarter. Close to half of Taobao Deals daily active users are unique incremental users in addition to Taobao App DAUs. Consumers are attracted by the value for money products and differentiated user experiences offered by Taobao Deals. At the same time, manufacturers take advantage of its one-stop full-service solution that includes online stock operation and fulfillment to sell directly to end customers. We call this solution M2C, or manufacturers to consumers. During this past quarter, Taobao deals M2C orders grow nearly 400% year-over-year. For our community marketplace's business, Tao Cai Cai, We continue to focus on investing in and building a new digitalized community commerce model that is sustainable and healthy. Taozhai has expanded operations to close to 200 cities, and its GMV growth surpassed 150% year over quarter over quarter. We are deliberate in our approach and faithful to our belief in true value creation rather than blinded pursuit of unqualified and unsustainable growth. We are instead focused on leveraging core capabilities that Alibaba has built over years in the supply chain, logistics, user engagement, and the channel development. We aim to grow a new digitalized social commerce infrastructure that offers consumers quality services and products with highly competitive price. Consumer survey results have shown that product quality is the top deciding factor for consumers to choose TaoCaiCai over other platforms. TaoCaiCai has contributed to increasing the purchase frequency of our core commerce consumers. More than 50% of TaoCaiCai users were first time buyers of fresh produce on our China retail marketplaces. We believe the ultimate value proposition of the community commerce infrastructure is in our ability to elevate the quality of routine everyday services in local communities. It ranges from guaranteeing supplies during pandemic lockdowns, supporting local farmers to sell high quality produce, vocational training and job creation, we will continue to enhance these services to create value for our communities. In local services, we are creating a product and service matrix centering around synergies between ULMA, AMAP, and FLEGI. ULMA and AMAP are positioned as our two main user entry points for home-bound and destination-bound local services, respectively. Ullama delivered 29% growth in AACs and 30% growth in order volume year-over-year, with non-meal delivery order growth outpacing total order growth this past quarter. In addition to MAP navigation services, AMAP has been expanding into service offerings around the users' journeys and destinations, such as ride-hailing, hotel bookings, et cetera. During the quarter, transacting users of these destination services on AMAP increased more than 200% year-over-year. Although the recent resurgence of COVID-19 in parts of China impacted stability in the supply of hotel rooms and travel products in many provinces, we see the positive contribution in user value from adding fleeky product supply to AMAP and other and our other user platforms. We just celebrate our 13th November 11 Global Shopping Festival with a record GMV of 54.03 billion RMB, excluding unpaid orders, representing a year-over-year growth rate of 8.5% for the 11-day campaign. The stable and healthy growth of the high base over last year reflects China's consumption power and economic resilience. Looking forward, we remain confident in development of China's consumption. Today, we already have the largest and the most valuable consumer base in China, with 953 million AACs which are still growing. At the same time, we will serve our large and a diverse consumer population through user segmentation, addressing different needs and use cases through an assortment of apps with differentiated value propositions. Further, through cross-selling of products and services, we will increase our user sickness, water share, and overall retail penetration. Outside of China, we continued healthy expansion of our user base and revenues, achieving 285 million AACs and a 33% revenue growth during the quarter. In Southeast Asia, Lazada produced 82% order growth year over year during the quarter, with triple digit growth in Thailand, Vietnam, and Malaysia. Trendio, the largest e-commerce platform in Turkey, delivered GMV growth of over 80% year-over-year. AliExpress GMV growth decelerated this quarter due to the negative impact of net VAT rules in Europe and the gradual recovery of the local supply chain and consumption in its destination markets. Looking ahead, AliExpress will further invest to expanding local operations in its strategic markets in Europe. For our logistics business, Tanya Post has achieved coverage in over 200 cities as of the end of September. They have become our stations for consumer services in more than 100 counties and towns across less developed areas. The daily average package volume delivered to Tanya Post increased nearly 70% year-over-year to $69 million during the quarter. In the domestic supply chain business, China's fulfillment volume for Taobao Deal's M2C business increased by more than 200% year over year. As part of its global logistics network expansion, China launched new initiatives to improve the user experience for international consumers by introducing self-pickup lockers in Russia, Spain, France, and Poland. while continuing to enhance its cross-border end-to-end logistics capabilities. Last but not least, Alibaba Cloud delivered revenue growth of 33% year-over-year this past quarter, driven by strong revenue growth from customers in the Internet, financial services, and retail sectors. In October, we held our 13th Apasara Conference, which is now the biggest technology conference in China by attendees. We unveiled several new proprietary product and technologies upgrades, including ETN 710 server chip, the X-Dragon architecture, Kanjio Cloud Native Server Series, Alibaba AI, and Big Data Platform. and a new generation of PolyDB database. These show that Alibaba Cloud is benchmarking against the world's top cloud computing technologies and a milestone in its proprietary product capabilities in OS and POS. In September, we announced 10 initiatives and pledged to invest 100 billion RMB by 2025 to advance scientific and technological innovation, economic development, high-quality employment, and vulnerable growth support in China. We believe these four areas are among the common focus of all responsible companies in the world under the ESG framework. We will incorporate these 10 initiatives into the social responsibility pillar of our ESG strategy and hope that our digital commerce and technology ecosystem can contribute our part in these areas. Looking ahead, we will continue to invest heavily into our three growth engines of domestic consumption, globalization, cloud computing, and data intelligence, as we announced at the beginning of our fiscal year. In cold commerce, we have started to see encouraging initial results of our investment in low-tier cities, local services, and logistics in the form of user growth and enhanced logistics capabilities. Our investment in globalization has also delivered progress in user base, consumption, and revenue growth. In cloud computing and data intelligence, we will strengthen our market leadership by further enhancing our core product and technology capability. No matter the challenges in the current macroeconomic environment and with more and more players entering into the industry, we remain very confident in our business strategy and our future. We will continue to focus on capacity building, value creation, and a multi-engine approach to growth. We firmly believe our strategy and perseverance will bring mid- and long-term returns to our customers and investors. Now, I would like to turn it over to Maggie, who will walk you through the details of our financial results.