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Alibaba's Q1 results show slower growth; Yahoo -5.6%

  • Alibaba (ABABA) had a GMV of RMB430B ($69.1B) for seasonally weak Q1, -19% Q/Q and +46% Y/Y. The Y/Y growth rate slipped from Q4's 53%.
  • Active buyers grew 10% Q/Q to 255M. Mobile accounted for 27.4% of GMV, up from 19.7% in Q4 and 10.7% a year ago. Mobile MAUs +20% Q/Q to 163M.
  • For the year ending March 31, Alibaba had revenue of $8.45B (+52% Y/Y), and adjusted net income of $4.44B. Free cash flow was $5.19B. Revenue growth slowed a bit from the 57% seen for the 9 months ending Dec. 31.
  • Alibaba's Taobao (consumer-to-consumer) marketplace had a Q1 GMV of RMB295B (+32% Y/Y, 69% of total), and its Tmall site (business-to-consumer) a GMV of RMB135B (+90% Y/Y, 31% of total).
  • Yahoo (YHOO) isn't responding well to the numbers. Alibaba still hasn't proposed a symbol or valuation. The company is reportedly looking to go public in early August.
  • Alibaba's revised F-1
  • Update: The figures imply calendar Q1 revenue of $1.93B, +39% Y/Y. That represents a big slowdown from the 66% growth reported for Q4.
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Comments (16)
  • Patent News
    , contributor
    Comments (1321) | Send Message
     
    funny
    16 Jun, 09:44 AM Reply Like
  • Pete P.
    , contributor
    Comments (657) | Send Message
     
    Wow, Ali's numbers are incredible. This company will easily have a market cap of $300 billion some time in 2015. Crazy growth and huge potential ahead.

     

    When Yahoo shows accelerated growth, that's when you will see Yahoo's share price really start to climb into the $60s. IMHO
    16 Jun, 09:55 AM Reply Like
  • James Sands
    , contributor
    Comments (2124) | Send Message
     
    Quarterly growth rate declined from 66% Y/Y in Q3 to 31% in Q4. During this same period JD growth rates were 65% and 65% respectively. Maybe JD is taking some market share.....
    16 Jun, 11:01 PM Reply Like
  • Genoregrets
    , contributor
    Comments (45) | Send Message
     
    People are just crazy. With numbers like that they expect every quarter to go up 100% ,did they ever hear of seasonality? Anyway I am buying more at this discount. Thanks people
    16 Jun, 10:08 AM Reply Like
  • gontiveros
    , contributor
    Comments (71) | Send Message
     
    "Alibaba IPO watch
    CNBC's Kayla Tausche discusses expectations for Alibaba's IPO. CNBC contributor Jon Steinberg, says Alibaba's aspirations are to be the next Google via the Amazon road."
    The company also provided updated profit and revenue figures, for the year ending March 2014:
    Net income: $3.71 billion (almost tripling)
    Revenue: $8.44 billion (up more than 50 percent)
    This revenue growth seems a bit less than expected. As a result Yahoo, which owns nearly a quarter of Alibaba, is under pressure. It also seems like an exercise in nit-picking, especially since net margins are at an astronomical 47 percent. There was also a breakdown on transaction volumes for two of their main businesses, Taobao (up 32 pecent) and Tmall (up 90 percent)."

     

    Crazy and Nit Picking says it all.
    16 Jun, 10:35 AM Reply Like
  • Andreas Hopf
    , contributor
    Comments (8900) | Send Message
     
    Good day for long term buyers.
    16 Jun, 10:09 AM Reply Like
  • javimaki
    , contributor
    Comment (1) | Send Message
     
    I don´t kmow how good or not are the numbers of Alibaba, but it seem than the mnarket espect a market value somewhere about 130. So I´m long in Yahoo,these levels and short in Alibaba at 194B MArket cap whit IG MArkets grey market.
    16 Jun, 10:21 AM Reply Like
  • Guy in Ithaca
    , contributor
    Comments (412) | Send Message
     
    Odd that a +46% year over year growth could be defined as "slipped." Don't they have a huge shopping holiday thing in China in November? Regardless +46% YoY is huge. Anyone with any objectivity would see this as extremely positive for Alibaba and very good news for Yahoo!. The "slower revenue growth" comments from financial sites seems like a rather absurd hand wringing emotionalism to me. This may be a great opportunity for those without weak knees and lily livers to buy more YHOO or SFTBY.

     

    Whatever the exact figures are, Yahoo's drop today looks like typical market overreaction, rapid breathing and anxiety. I agree with Pete that things will look very different for YHOO when they inevitably start showing increased revenue growth.

     

    Opportunities may be hidden here if the silly panic deepens.
    16 Jun, 11:21 AM Reply Like
  • James Sands
    , contributor
    Comments (2124) | Send Message
     
    GMV growth rates are good as well as number of members and active buyers. The number to me that is most important is that their Q4 revenue decreased from 65% in Q3 to 31% in Q4 Y/Y. Roughly $1.3 billion Q4 revenue.

     

    This is interesting because during the same periods JD (largest e-commerce company in China by revenue) saw revenue remain stable during the same periods at 65%. Roughly $3.7 billion in revenue during Q1 2014 (Alibaba's Q4).

     

    The two top dogs with contrasting revenue growth is something to think about. Alibaba has high aspirations for cloud-based logistics and supply chain growth in China ($16 billion stated investment strategy through 2020). JD may end up dominating this area and Alibaba may become dependent on JD. Alibaba has been schizophrenic of late investing serious cash in enterprises indirect to its core businesses.

     

    Investment in equity investees has increased by over $2.5 billion to just under $3 billion. Total debt has increased just over $2 billion to $6.6 billion.

     

    Positives are obviously the net income and free cash flow growth; $3.7 and $3.3 billion respectively, reflecting roughly 170% growth Y/Y each. Profit margin is remaining pretty strong despite slowing growth; a little over 200 basis point decline Y/Y.

     

    No information as to the number of shares outstanding after the IPO which will be key in deducing a valuation for long-term potential. Right now assuming the 2.3 billion shares outstanding, I conservatively peg Alibaba at a $50/share price for a good long-term entry opportunity. This puts the valuation near $130 billion.

     

    I'm sure it will open higher on the first trading day though, however, long-term Alibaba is not going to be able to sustain 45% profit margins. With more shares outstanding, this makes the investment price less appealing as it approaches $60/share for long-term potential. Traders on the other hand will most likely have a field day.

     

    Thanks,
    James
    16 Jun, 11:15 PM Reply Like
  • Matt-Man
    , contributor
    Comments (556) | Send Message
     
    Wow, does this mean that even Amazon will someday expected to make money?
    16 Jun, 04:17 PM Reply Like
  • James Sands
    , contributor
    Comments (2124) | Send Message
     
    The company already makes money, just not that much.
    16 Jun, 11:16 PM Reply Like
  • Pete P.
    , contributor
    Comments (657) | Send Message
     
    Gee, Alibaba's net profits are Billions of dollars (almost $4 billion). Next 12 months may see Ali's net profits at $8 billion.

     

    I'll give that a PE ratio of 30.
    17 Jun, 07:56 AM Reply Like
  • James Sands
    , contributor
    Comments (2124) | Send Message
     
    Based on growth trajectories, Alibaba will most likely grow revenues during fiscal year 2015 between $11.5 to $12 billion; 35-40%. I would expect the profit margin to begin to decline once public due to more aggressive spending so I'm assuming a conservative 40% profit margin, which would translate to $4.6 - 4.8 billion or so.

     

    I think you may be getting a little ahead of yourself placing Alibaba near $3.50/share in earnings next year. At that rate, the stock could trade near $100 and still be undervalued assuming current 2.3 billion shares. The P/E of 30 though is a fine number to use for valuation. I think Alibaba will trade at a premium to this number though on the IPO day on a TTM basis for sure.

     

    Again, JD's revenue growth remained at 65% during the March quarter in 2014 while Alibaba's revenue growth declined to 39%. Something to think about.....
    17 Jun, 10:37 AM Reply Like
  • Pete P.
    , contributor
    Comments (657) | Send Message
     
    Well, if Alibaba trades at a premium to the 30 PE number, then at $4 billion trailing profit, it's value at IPO will be anywhere from $160 billion with 40 PE to $200 billion with 50 PE.

     

    All my opinion only, but prospects for Ali do look pretty darn good.
    17 Jun, 02:39 PM Reply Like
  • James Sands
    , contributor
    Comments (2124) | Send Message
     
    I agree with you on the P/E, Alibaba will trade around 40-50 times TTM earnings most likely. It's just hard to estimate valuation with no clear shares outstanding right now, maybe I missed this, but they disclosed 2.3 billion as of March 2014. I think they will have more by the IPO.

     

    I own Amazon, eBay and JD.com. I will consider adding Alibaba too. All four merit ownership based on global geographic segments. Alibaba has exceptional margins and free cash flow. But it is not going to come close to dominating e-commerce in North America or Europe in the near-term.

     

    Their initial foray into the U.S. is clearly targeting specialty and boutique shops. Long-term this may provide a fundamental change, but China is their core market. If they lose track of this buy spending too much on other businesses or industries, they'll get beat out by JD who is laser-focused on China.

     

    If Alibaba is anywhere near the $150 billion enterprise value, I would probably consider going long....
    17 Jun, 02:50 PM Reply Like
  • Pete P.
    , contributor
    Comments (657) | Send Message
     
    You have a good basket of stocks there, that should do well for you over the long term.
    18 Jun, 08:00 AM Reply Like
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