Alibaba (NYSE:BABA) has jumped to $89.05 after posting an FQ4 beat amid low expectations. Along with the results, the company has announced COO Daniel Zhang is its new CEO, effective May 10; current CEO Jonathan Lu will stay on board as vice chairman, joining Joseph Tsai in holding that title. Jack Ma remains executive chairman.
Revenue growth accelerated to 45% Y/Y from FQ3's 40%. Chinese marketplaces GMV rose 40% to RMB600B ($96.6B), a slowdown from FQ3's 49%. Mobile accounted for 51% of GMV, up from 42% in FQ3 and 36% in FQ2. Annual active buyers +5% Q/Q and +37% Y/Y to 350M.
A stabilizing monetization rate (revenue as a % of GMV) helped make the FQ4 beat possible: After falling 35 bps Y/Y in seasonally strong FQ3 to 2.7%, monetization rate fell just 1 bps Y/Y in FQ4 to 2.17%. Making this possible: Mobile monetization rate rose to 1.73% from 0.98% a year ago. Altogether, mobile revenue rose 352% Y/Y and was 40% of China retail marketplace revenue vs. 30% in FQ3 and 12% a year ago.
Segment performance: China retail commerce revenue +39% Y/Y to $2.11B. China wholesale +42% to $136M. International wholesale +19% to $190M. International retail +53% to $70M. Cloud computing/Web infrastructure +82% to $63M. Everything else (boosted by acquisitions) +169% to $243M. Taobao GMV +29% to $61B; Tmall GMV +62% to $35B.
Financials: Free cash flow +143% Y/Y to $914M; it trailed net income of $1.25B. R&D spend ($491M) was 17% of revenue vs. 10% a year ago; sales/marketing ($408M) was 15% of revenue vs. 11%; G&A ($400M) was 14% of revenue vs. 4%. Soaring stock compensation expenses (driven by the IPO) contributed to the spending growth. Alibaba had $19.7B in cash at the end of March.
Yahoo (NASDAQ:YHOO) has risen to $44.95 thanks to Alibaba. SoftBank (OTCPK:SFTBF) has seen the value of 797.7M-share Alibaba stake grow by over $7B.
SoftBank (OTCPK:SFTBY) reported a sharp drop in its profit for the October-December quarter this morning, weighed down by the continuing struggles at Sprint (NYSE:S), the U.S. mobile operator it acquired in 2013.
"Overall, SoftBank is doing well, but with Sprint...being in a tough situation, I think it will have a long battle to fight," said SoftBank's Chief Executive Masayoshi Son.
The telecommunications giant posted FQ3 net income of ¥32.3B ($272.3M), down from ¥93.8B a year earlier.
Alibaba's (NYSE:BABA) FQ3 GMV rose 49% Y/Y to RMB787B ($127B). However, its monetization rate (revenue as a % of GMV) fell 35 bps Y/Y to 2.7%, leading revenue growth to only reach 40%. By contrast, monetization rate fell just 1 bps (to 2.30%) in FQ2.
A major culprit: Mobile grew to 42% of GMV from 36% in FQ2 and 20% a year ago. And the mobile monetization rate (1.96% vs. 1.87% in FQ2 and 1.12% a year ago) remains well below the total rate. Mobile was 30% of revenue vs. 42% of GMV.
A bright spot: EBITDA rose 34% Y/Y to $2.43B, better than expectations for 24% growth and driving the EPS beat. Heavy spending led EBITDA margin to slip to 58% from 60% a year ago. With stock compensation spend (IPO-driven) rising to 16% of revenue from 4%, and new business initiatives growing, operating expenses rose to 33% of revenue from 30%, and gross margin fell to 71% from 78%.
China commerce revenue +32% to $3.6B (a slowdown from FQ2's 47%); international commerce (AliExpress-driven) +39% to $284M; cloud computing/infrastructure +85% to $58M; everything else (boosted by acquisitions) +266% to $309M.
Taobao GMV (driven by smaller merchants) +43% to $80B; Tmall GMV (driven by larger merchants) +60% to $47B. Annual active buyers rose to 334M from 307M in FQ2 and 231M a year ago.
Yahoo (NASDAQ:YHOO) is following Alibaba lower, and is now down 9% since posting Q4 results and announcing its spinoff plans.
In a revised F-1, Alibaba (Pending:BABA) discloses it had calendar Q2 revenue of $2.54B (+46% Y/Y), and net income of $1.99B (boosted by $1.1B in interest/investment income). Op. income was $1.1B (+27% Y/Y). Revenue growth accelerated from Q1's 39% clip, a figure that had disappointed some investors.
Q2 free cash flow was $1.71B. Sales/marketing spend +70% Y/Y to $195M; R&D +68% to $315M.
GMV was RMB501B ($81.6B), +17% Q/Q and +45% Y/Y (46% growth was seen in Q1). Mobile accounted for 32.8% of GMV (up from Q1's 27.4%), and mobile revenue more than doubled Q/Q to $400M.
Annual orders +14% Q/Q to 14.5B; annual active buyers +9% to 279M; annual active sellers +11% to 8.5M; mobile monthly active users (MAUs) +15% to 188M.
Alibaba's Taobao marketplace (focused on smaller merchants) had a Q2 GMV of RMB342B, +33% Y/Y. The Tmall marketplace (focused on larger merchants) had a GMV of RMB159B, +81%.
Yahoo (YHOO +0.3%) is up slightly following Alibaba's release, which might be the company's last earnings update before its IPO.
In tandem with its Q2 report, Google (NASDAQ:GOOG) announces long-time sales chief Nikesh Arora (well-respected in the industry) is leaving to become SoftBank's (OTCPK:SFTBF) vice chairman and Internet/Media chief.
Google's paid clicks (boosted by mobile and product listing ads) rose 2% Q/Q and 25% Y/Y in Q2, after growing 25% Y/Y in Q1. Paid clicks on Google sites rose 6% Q/Q and 33% Y/Y, while those on ad networks were down 5% Q/Q and up 9% Y/Y.
Cost per click (hurt by low smartphone ad prices) was flat Q/Q and down 6% Y/Y. The Y/Y drop was narrower than Q1's 9%. CPC was down 2% Q/Q and 7% Y/Y on Google sites, and up 3% Q/Q and down 13% Y/Y on ad networks.
Google sites revenue (69% of total) +23% Y/Y vs. +21% in Q1. Network revenue (21% of total) +7% Y/Y vs. +4%. Other revenue (10% of total, includes hardware and Google Play) +53% vs. +48%.
Traffic acquisition costs were 23% of revenue, even with Q1 and down from 25% a year ago. Opex was 35% of revenue, even with Q1 and up from 34% a year ago.
Free cash flow was $2.98B, below net income of $4.18B. Capex was a hefty $2.65B.
Google ended Q2 with $61.2B in cash, up $1.8B Q/Q.
Sprint (S +7.2%) saw a net gain of 682K mobile platform subs in seasonally strong Q4 - 58K postpaid, 322K prepaid, 302K wholesale/affiliate. Though that figure is well below Verizon and T-Mobile's Q4 net adds, and moderately below AT&T's, it represents a turnaround from Q3's 95K net loss (includes a loss 360K postpaid subs).
The #3 U.S. carrier is also guiding for 2014 adjusted EBITDA of $6.5B-$6.7B, up from a 2013 level of $5.4B and a 2012 level of $4.8B. Q4 adjusted EBITDA margin was 14.5%, up from the year-ago period's 10.3%.
Mobile service revenue rose 2% Y/Y to $7.15B, equipment revenue (phone/tablet sales) rose 15% to $1.16B. SG&A spend was nearly flat at $2.44B.
Postpaid ARPU was $64.11, down slightly from $64.24 in Q3 and $64.17 a year ago. Postpaid churn rose to 2.07% from 1.99% in Q3 and 1.98% a year ago.
Sprint's wireline division saw revenue drop 9% to $859M. Its op. income fell to $23M from $71M.
With parent SoftBank (SFTBF) willing to spend aggressively to improve Sprint's 4G coverage, Sprint has set a 2014 capex budget of $8B, up from a 2013 level of $7.5B and a 2012 level of $5.4B.