Key Takeaways

  • Annual active consumers in China came in below analyst forecasts.
  • The more active consumers Alibaba attracts, the more the company is able to generate advertising revenue from merchants that sell wares on its e-commerce platforms. It also creates more exposure to its cloud and entertainment businesses.
  • Alibaba announced that it was increasing its share repurchase program from $10 billion to $15 billion.
Alibaba Earnings Results
Metric  Beat/Miss/Match Reported Value Analysts' Prediction
Adjusted EPS Beat RMB 16.60 RMB 14.42
Revenue Miss RMB 205.7B RMB 209.4B
Annual Active Consumers in China Miss 828.0M 830.0M

Source: Predictions based on analysts' consensus from Visible Alpha

Alibaba (BABA) Financial Results: Analysis

Alibaba Group Holding Limited (BABA) reported mixed results for Q1 FY 2022. Adjusted earnings per share (EPS) came in above analysts' estimates, rising 12.0% year over year (YOY) to RMB16.60 ($2.57). Note that Alibaba shares referred to throughout this story represent Nasdaq-listed American depositary shares (ADS) with the ticker BABA. Revenue, however, missed analyst forecasts but was up 33.8% compared to the year-ago quarter. Alibaba's annual active consumers in China came in below consensus estimates. The company's shares fell nearly 1% in pre-market trading. Over the past year, Alibaba's shares have  provided a total return of -22.4%, well below the S&P 500's total return of 33.2%.

BABA Annual Active Consumes in China

Alibaba's annual active consumers in China rose 11.6% to a total of 828.0 million. Annual active consumers in China represent a key metric used to track the total number of user accounts that placed at least one confirmed order through Alibaba's China retail marketplaces in the past 12 months. The metric ignores whether or not the transaction was actually settled. Retaining and attracting active consumers is important to Alibaba's business model, which in large part consists of selling marketing services to the merchants that sell their wares on the company's online platforms. The more active consumers Alibaba attracts, the more the company is able to generate advertising revenue from those merchants.

But more active consumers also means more people exposed to Alibaba's cloud and entertainment businesses, which are key areas of future growth. Revenue for Alibaba's cloud computing segment rose 29% compared to the year-ago quarter. The company's digital media and entertainment segment saw revenue growth of 15% YOY.

BABA to Increase Share Repurchases

Alibaba said that it was increasing its share repurchase program from $10 billion to $15 billion, reflecting the company's confidence in its prospects for long-term growth. The company noted that it would be its largest buyback program in its history. The program will be effective through to the end of 2022.

Alibaba's next earnings report (for Q2 FY 2022) is estimated to be released on Oct. 29, 2021.