Alibaba Group Holding Limited

Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's September quarter 2023 results conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a Q&A session. I would now like to turn the conference over to Rob Lynn, Head of Investor Relations of Alibaba Group. Please go ahead.

Good day, everyone. Good day, everyone, and welcome to Alibaba Group's September quarter 2023 results conference call. With us are Joe Tsai, Chairman, Eddie Wu, Chief Executive Officer, Toby Hsu, Chief Financial Officer, Trudy Dai, CEO of Taobao Tmall Group, and Jiang Fan, the CEO of Alibaba International Digital Commerce. This call is also being webcasted 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 cover the safe harbor. Today's discussion may contain forward-looking statements, including without limitation statements about our new organization and governance structure, strategies and business plans, as well as our belief and expectations about our business prospects, such as future growth of our business, revenue, and return on investments. Forward-looking statements involving inherent risks and uncertainties 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 U.S. SEC, or announced on the website of the Hong Kong Stock Exchange. Any further looking statements that we make on this call are based on assumptions as of today, and we do not undertake any obligation to update these statements except as required under applicable law. Please note that same financial measure that we use on this call such as adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income, non-GAAP diluted earnings per share or ADS, and free cash flow are expressed on a non-GAAP basis. Our GAAP results and reconciliation of GAAP to non-GAAP measures can be found in our earnings press release. Unless otherwise stated, growth rates of all stated metrics mentioned during this call refer to year-over-year growth versus the same quarter last year. With that, I will now turn to Joe.

Thank you, Rob. Hello, ladies and gentlemen. Thank you for joining our earnings call for the September quarter. Although this is the first communication in my new role as chairman of the company, I'm pleased to connect with some old friends in the investment community. This is not your normal earnings report for the quarter. This is the first time you will hear directly from our group CEO, Eddie Wu, on his strategic thinking. He will lay out our plan for growing the business as well as our strategic priorities for execution and investment. We're pleased with this quarter's results, which show that our strategic focus on user-centric value proposition and technology innovation are driving improvements across our businesses. In addition, while global markets remain volatile, we are entering a phase of a more stable operating environment in China. In terms of asset reorganization to highlight the value of our businesses, here are a few updates. First we announced in our earnings release that Alibaba will not pursue a full spinoff of cloud intelligence group in light of uncertainties created by recent us export restrictions on advanced computing chips. Instead, we will focus on developing a sustainable growth model based on emerging AI driven demand for networked and highly scaled cloud computing services. Second in August, Tainiao Smart Logistics filed its prospectus and application for an IPO on the Hong Kong Stock Exchange. While the success of an IPO transaction is subject to market conditions and relevant approvals, we're confident of the business fundamentals of our logistics unit. Other areas of reorganization and focus are going well across our businesses, as evidenced by strong revenue growth for AIDC and Tainiao. and narrowing losses in local services and digital media entertainment. As I travel around to speak with investors, many have asked me about the relationship between the group company and our business units in a post-reorganized world. I want to make two points here. First, Alibaba Group will continue to support our operating businesses with the group's strong balance sheet. We ended the quarter with $63 billion in net cash, and we generated $27 billion in free cash flow in the last 12 months. Alibaba has never been in a better financial position to invest for the growth of our businesses. Second, while each business is expected to operate independently and interact with each other based on arm's-length market principles, the group will use our resources to ensure long-term strategic synergies can be realized. We have businesses that are very symbiotic with each other and their relationships are highly strategic. For example, Tynell supports the logistics needs of our e-commerce businesses and Alibaba Cloud provides superior technology capabilities to all of our own businesses. Eddie and my job is to balance the short-term goals of each business unit against the opportunities for long-term value creation. Now, Let me say a few words about capital management. We're focused on unlocking value to improve shareholder returns. We are looking at four areas in capital management. Number one, enhanced return on invested capital of our operating businesses. We have undertaken a review of our operating businesses and ways to enhance ROIC, return on invested capital. In the fiscal year end of March 23, our ROIC was in the single digits. Obviously, there's room for improvement and we're targeting to lift our ROIC into the double digits. Number two, invest our cash flow for future growth. The clarity of focus emerging from our reorganization has highlighted many strategic growth opportunities for investment. Given the strength of our balance sheet, Alibaba is well positioned to capture these opportunities. Later on, Eddie will discuss our growth strategy and priorities for investment. Number three, monetize the value of non-core assets. Our balance sheet carries $67 billion in equity, securities, and other investments, as well as investment in equity method investees. In addition, we have operating businesses that tie up capital but generate low growth. Not all of these investments are core to investments, are not all of these investments are core or strategic to our business. We are evaluating creative ways to monetize the value of these assets in order to return value to shareholders. Number four, speaking of returning value to shareholders, this may take the form of our share repurchase program or cash distributions via dividends. We already have a share repurchase plan that still gives us $13 billion in dry powder as of today. In addition, as we have just announced, the company will pay an annual dividend. Our capital management activities are dynamic and remain a top priority for our management team and our board of directors. Now, I turn to Eddie for his remarks.