Alibaba is a Cash Machine ( +$4.9 Billion Cash flow )

On Dec 31, 2016, Alibaba announced the financial result for its third fiscal quarter. Some of the noteworthy points that can be summed up are follows-


E-Commerce is Booming

For Alibaba, the third fiscal quarter brought good news for them. The witnessed a strong growth in the revenue. With an appraisal in the economy by 54% the overall revenue stood at a whopping US$ 7.7 billion. The contribution was indeed from both the core commerce segment and the cloud computing. According to the core ecommerce segment the YoY revenue growth is seen to be increased by 45%. On the other side, in case of cloud computing there is estimated 765,000 customers who are categorized in the paying customers’ zone. The overall YoY revenue growth is seen at 115%.

Profitability and Cash Flow

In the core segment section the increase is seen to be approximately 64% with revenue contributing to US$ 4.3 billion in the core commerce EBITA category. The amount of the free cash flow in the business stands at approximately US$ 4.9 billion


User Engagement

Alibaba disclosed in the third quarter financial report that it has an approximately 443 million annual active buyers. That is really a great number. On the other hand it has an almost the same number of active monthly mobile users that is the number stands out at 493 million.

Chinese Mobile users

As far as the revenue collected is concerned from the mobile users and the active buyers, it also stands the same with a mere difference of US$ 11 where the fund contributed by the annual active buyer surpasses the monthly mobile active user. The fund contributed by the annual active buyer stands at US$ 35 billion in Dec 2016 which was almost approx US$ 17 billion for the month of March 2015 and US$ 25 billion for the month of March 2016. While the amount contributed by the active users on mobiles showed almost a straight line. That means there is constant advancement in the fund collected. For the quarter ending in Dec 2016, the revenue stood at US$ 24 billion.


Some of the highlights of the press release of the financial statement for the third quarter ending on Dec 2016 are as follows-

  • A strong foothold in the market, showing the strength of both the Chinese consumers and the market reputation of the Alibaba. It also shows the ability of Alibaba to create value for the goods and service across the globe.
  • An emphatic jump in the revenue of approximately 54% YoY from every segments of its business.
  • The company has been successful in raising the revenue of the FY2017 from 48% to 53%. When compared to previous year that is FY2016 the growth was far less than expected that is 33%. This acceleration in the growth rate shows that Alibaba is making its strong market presence.

Summary on the Financial Part

  • Strong hold on the non-GAAP diluted EPS. It grew up by 38% YoY up to US$ 1.3
  • The total revenue growth has been seen at approximately 54% YoY to US$ 7.7 billion
  • The core commerce section has done considerably well. It showed a revenue growth of 45% to US$ 6.7 billion
  • The third quarter also saw a strong free cash flow of US$ 4.9 billion that enabled the growth in investment across the market in all the continents in the sector of digital media, entertainment. In the segment creativity has played a major role.

The overall figure showed that the core sector has been performing well and still stands tall.

  • As far as the usage and the contribution of mobile is concerned, mobile revenue has increased by approximately 73%. It accounts for almost 80% of the Chinese revenue from the retrial sector. The same segment contributed only 65% in the same quarter the previous year that is in the year 2015.
  • The revenue saw a rapid change of 273% to US$ 585 million. The reason behind is believed to be because of Youku Tudou and the revenue collected because of the increase in mobile services provided by the UCWeb.

New Retail Investment Strategy

The company is looking forward to increase its market presence by targeting the remaining potential consumers.  They are eyeing the technology to transform the big technology to traditional retail. The process has been made successful by understanding the needs of the consumers. The company is putting efforts in improving the efficiency of the retail chains, value of brands and the retailers.

New Strategy : the Retail Segment

The head of the board said that the new strategy would enable them to touch the mark of US$ 4.8 trillion in the retail segment. They also said that efforts are being made to eliminate the difference between the online and offline retail business. With full assurance, they added that the Chinese market only knew commerce irrespective of the mode.

New investment

Citing some of the examples, like that of Sanjiang Shopping Club and Intime Retail Group. The head said that in November 2016, the company agreed to invest RMB 2.1 billion for 35% equity stake in Sanjiang Shopping Club which is one of the leading grocery chains in the province of Zhejiang.

Citing another example, the head said that another such investment has been made in Intime Retail Group on January, 2017. They have put forward their wish to acquire a stake in Intime Retail Group which is a leading department store in china. The store has 29 department stores and an approximately 17 shopping malls. They are highly positive in maximising the cash flow which is expected to near to US$ 2.6 billion.

Cash Flow from Operating Activities

According to the report, the net cash flow being offered by the operating activities stood at US$ 5389 million. They generated a staggering US$ 4915 million in non-GAAP free cash flow which was 44% of the YoY growth.

Revenue +54%

As far as revenue is concerned for the third quarter that ended in December 2016, an increase of almost 54% was witnessed when compared to the 2015 quarter report.


The strong growth in revenue of China in the retail commerce sector shows that their efforts are bringing result. The application of experience and technology has yielded the best result for the retail market.

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