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Alibaba Group Holding Limited (BABA) Q1 2021 Earnings Call Transcript

BABA Earnings Call - Final Transcript

Alibaba Group Holding Limited  (NYSE: BABA) Q1 2021 earnings call dated Aug. 20, 2020

Corporate Participants:

Rob Lin — Investor Relations

Daniel Zhang — Chairman and Chief Executive Officer

Maggie Wu — Chief Financial Officer and Head of Strategic Investments

Analysts:

Eddie Leung — Bank of America — Analyst

Alicia Yap — Citigroup — Analyst

Binnie Wong — HSBC — Analyst

Mark Mahaney — RBC Capital Markets — Analyst

Youssef Squali — Truist — Analyst

Gregory Zhao — Barclays — Analyst

Jin Yoon — New Street Research — Analyst

Colin Sebastian — Baird — Analyst

Piyush Mubayi — Goldman Sachs — Analyst

Presentation:

Operator

Good day, ladies and gentlemen, thank you for standing by. Welcome to Alibaba Group’s June Quarter 2020 Results Conference Call. [Operator Instructions] After management’s prepared remarks, there will be a question-and-answer session.

I would now like to turn the call over to Rob Lin, Head of Investor Relations of Alibaba Group. Please go ahead.

Rob Lin — Investor Relations

Good day, everyone and welcome to Alibaba Group’s June quarter 2020 results conference call. With us are Daniel Zhang, Chairman and CEO; Joe Tsai, Executive Vice Chairman; Maggie Wu, Chief Financial Officer. This call is also being webcast on IR section of 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 will contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest Annual Report on Form 20-F and other documents filed with the US SEC or announced on the website of Hong Kong Stock Exchange.

Any forward-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 certain financial measures that we use on this call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted EBITDA, adjusted EBITDA margin marketplace-based core commerce adjusted EBITDA, non-GAAP net income, non-GAAP diluted earnings per share or ADS and free cash flow are expressed on a non-GAAP basis.

Also read: Digital transformation opens up new opportunities for Alibaba

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 the call refers to year-on-year growth versus the same quarter last year. In addition, during today’s call, management will give their prepared remarks in English and third-party translator will provide simultaneous Chinese translation on another conference line. Please refer to our press release for details. During the Q&A session, we will take questions in both English and Chinese and a third-party translator will provide consecutive translation. All translations are for convenience purposes only. In the case of any discrepancy management statement in the original language will prevail.

With that, I will now turn the call to Daniel.

Daniel Zhang — Chairman and Chief Executive Officer

Hello, everyone. Thanks for joining our earnings call today. We have delivered another strong quarter. Although, the global community continues to struggle with uncertainties surrounding the pandemic, we have seen encouraging signs of recovery in China due to effective management of the outbreak in vast majority of the country. COVID-19 has accelerated digital transformation of consumer behavior and enterprise operations. Alibaba is a key beneficiary of this development, with most of our businesses including core commerce and cloud computing have recovered and resumed healthy growth.

The pandemic has fundamentally altered our macroeconomic environment and everyday life, but it has also introduced new opportunities. Digital adoption and transformation is the prevailing trend in this changed landscape and we are confident that we can create Alibaba’s future by capitalizing on the opportunities in this challenging environment. Just as we did in 2003 during SARS and in 2008 during the global financial crisis.

In the 12 months ended June 30, 2020, annual active consumers on our China Retail Marketplaces reached 742 million, representing a quarterly net increase of 16 million. Mobile MAUs on our China Retail Marketplaces reached 874 million, an increase of 28 million since March. These numbers reflect Taobao’s continuing strong consumer mind-share, healthy user stickiness and engaging user experiences as the world’s leading consumer community.

Tmall online physical goods GMV, excluding unpaid orders, grew 27% year-over-year with all major categories growing at a similar or faster rates relative to December 2019 quarter. Our unparalleled product offerings an engaging user experiences contributed to higher purchase frequency, as well as higher average spending per customer across all city tiers that increased both year-over-year and quarter-over-quarter.

In terms of user acquisition, we continued to increase our penetration in less developed markets. Taobao Deals, our new mobile app targeting value conscious consumers reached 40 million MAU in June. The disruption in international tourism presented an opportunity for our import commerce business. Tmall Global, the leading cross border import platform in China grew over 40% year-over-year in GMV, excluding unpaid orders.

Looking forward, our China Retail Marketplaces will focus on the following areas. Number one, continue to drive user acquisition especially in less developed markets and work towards reaching our mid-term goal of serving more than 1 billion Chinese consumers. Number two, continue expanding our product supply, especially in categories currently under penetrated by e-commerce. And number three, continue to enhance the shopping experience and the path to purchase on our platforms through new content formats, such as live streaming and short videos.

Our investment in New Retail over the past several years have well-positioned our grocery business Freshippo, Tmall Supermarket and Taoxianda, to capture unprecedented growth opportunities during the pandemic. And continue to see healthy growth momentum in the past quarter. More than 60% of Freshippo’s GMV came from online and the stores, which have been in operation for more than one year enjoyed double-digit same-store growth.

Tmall Supermarket’s half-day delivery services, which leveraged Sun Art’s store-based inventories gained widespread popularity among consumers and helped Sun Art increase consumer reach and create incremental sales. We enabled approximately 15% of Sun Art’s total revenue during the June quarter. Ele.me successfully roll out an important branding upgrade in July. The new brand proposition ‘Anything You Love We Deliver’ represents the transformation of Ele.me from a food delivery platform into a comprehensive digitalized local service platform. In addition to food and beverage, Ele.me now also delivers everyday necessities such as groceries, fresh produce, medicines and flowers from local merchants.

In the June quarter, Ele.me achieved positive unit economics as a result of improved operational efficiency. It also received positive year-over-year GMV growth signaling healthy recovery of the business. We also saw promising early stage results in Ele.me’s strategic cooperation with Alipay. During the past quarter, approximately 45% of new customers ordering food delivery on Ele.me was contributed by the Alipay mobile app. We will further deepen the cooperation and we believe there is significant potential for value creation by combining Ele.me and the power of the entire Alibaba ecosystem to capture opportunities that will emerge from the ongoing digital transformation of the food and beverage and the retail industries. We will continue to invest in this area.

Lazada continues to show strong progress in the last quarter, with order volume growing more than 100% year-over-year. The pandemic has significant impact on many Southeast Asian countries and it has converted many consumers into online shoppers. We believe the increasing adoption of online shopping is beneficial for healthy growth of the region’s e-commerce industry over the long term. Southeast Asia continues to be the strategic priority in our globalization strategy. In this highly competitive region with Lazada’s new leadership in place, we aim to build a sustainable digital business, leveraging Alibaba’s technology to serve local consumers and the business partners. During the June quarter AliExpress, our cross-border export marketplace, saw order conversion and the delivery time negatively impacted by challenges in cross-border logistics, but the situation has started to improve in July.

Alibaba.com and 1688.com, two of our oldest businesses saw new market opportunities this year. Many international wholesalers have turned to Alibaba.com to source products from China, as global supply chains were disrupted and the Chinese factories were the first to resume production. In June, daily active buyers on Alibaba.com increased over 100% year-over-year. 1688.com also saw more than 50% year-over-year growth in daily active buyers as a result of increasing number of SMEs, especially small retailers looking for supply as Chinese economy reopened.

The pandemic has also transformed the way enterprises work, accelerating demand for cloud infrastructure and services. According to IDC’s latest report, Alibaba Cloud maintained its position as the largest public cloud service provider in China. Which is a testament to Alibaba Cloud strengthening market leadership. In the June quarter, our cloud computing revenue grew 59% year-over-year. In sectors such as Internet, Financial Services, Consumer Retail and Public Services Alibaba Cloud not only provides infrastructure as a service, but also develops industry-specific technologies and the business solutions to address real world application requirements for our customers.

As offices and schools reopened in China, DingTalk’s DAU moderated from the peak level, but remain over 100% higher than pre-COVID-19 levels. Approach to work and education have changed fundamentally and DingTalk will be the important digital collaboration platform for working and learning moving forward, connecting all industries to services on cloud.

For our Digital Media and Entertainment business, Youku’s daily active subscriber base increased by more than 60% year-over-year during the quarter with the release of popular TV series and variety shows. In July, cinemas started to gradually reopen in China and Alibaba Pictures has been preparing for business to resume. We are closely monitored the pace of recovery. Recently, we decided to stop the operations of UCWeb and other innovation initiatives in India after extensive review of the business. We don’t expect it to have a material impact on the Group’s overall financial performance.

Today, we face uncertainties from not only the global pandemic, but also increasing tensions between US and China. As the world’s largest e-commerce platform Alibaba’s primary commercial focus in the US is to support our American brands, retailers, small businesses and the farmers to sell to consumers and the trade partners in China as well as the other key markets around the world.

We believe global trade will continue and Alibaba’s active pursuit of our mission to make it easy to do business anywhere are fully aligned with the interests of both China and the United States. We are closely monitoring the latest shift in US government policies towards Chinese companies, which is in a very fluid situation. We are assessing the situation and any potential impact carefully and thoroughly and will take necessary actions to comply with any new regulation.

Now, I will turn it over to Maggie, who will walk you through the details of our financial results.

Maggie Wu — Chief Financial Officer and Head of Strategic Investments

Thank you, Daniel. Thank you everyone for joining us tonight. I’d like to review our financial highlights for our June quarter. We delivered a very strong start to our new fiscal year. Mobile MAUs in June was 874 million, quarterly net adds of 28 million, and annual active consumers was 742 million, quarterly net adds of 16 million. We continue to acquire new users and consumers from less developed areas of China, reflecting our ongoing success in broadening product offerings to meet different demands. The purchase frequencies and spending of our consumers coming from less developed areas also continued to improve.

Our total revenue was RMB154 billion, up 34% year-over-year. The increase was mainly driven by the robust growth of China Commerce Retail and Cloud Computing businesses. Our domestic core commerce business has fully recovered from the COVID-19 impact and showing strong growth. Cloud Computing revenue grew 59%. Our free cash flow in June quarter increased by 39% to RMB36 billion. Our strong profit growth and cash flow enables us to continue to strengthen our core business and invest for longer-term growth.

Now let’s move on to revenue in details. China Commerce retail grew 34% year-over-year. Customer management revenue grew 23%, primarily due to increased revenue contribution from search related revenue as well as new monetization formats. This new formats includes recommendation fees and things like live streaming. We see the number of paying merchants and spending per merchant both increased.

Commission revenue was up 17%. Commission revenue growth was primarily driven by solid 77% growth in Tmall Physical Goods paid GMV. The gap between the growth of Commission revenue and Tmall Physical Goods paid GMV growth was mainly because of faster growth in FMCG and consumer electronic categories that have lower blended commission rates and also because of our initiatives to support our merchant customers, including our waiver of annual service fees for first half of 2020.

Revenue from Cainiao grew 54% year-over-year. This was primarily caused by the fast growth of our cross border businesses such as Tmall Global supported by increased adoption fulfilled by Cainiao services. Revenue from local consumer services was RMB7.1 billion, up 15%. This is due to an increase in average order value and ongoing recovery in on-demand delivery GMV growth.

Unit economics per order for the on-demand delivery business was positive during the quarter, reflecting improved delivery network efficiency as well as enhanced marketing efficiency that leverage our consumer insights technology. This has led to further narrowing of losses year-over-year for the local consumer service. Our merchant acquisition continue to accelerate for this local consumer services. Ali Cloud continued its strong growth. So we show 59% year-on-year growth in revenue and at the same time, the losses continue to be narrowed. So our average revenue per customer continued to improve and other cost services across are growing very well.

So for DME and innovation initiatives, one thing worth to mention about is that our online gaming business, which was developed from acquired businesses has been growing well. So it is not recognized as part of the DME segment and it grew into sizable revenue and user scale and was moved out of the incubator, which is the innovation initiatives segment.

Let’s take a look at our cost trends. Cost and expense growth generally kept pace or was lower than revenue growth reflecting ongoing improvement in operating efficiency. The savings from operating efficiency improvements were reinvested into strategically important businesses with strong long-term growth potential.

Let’s move to segment reporting. We continue to enjoy solid revenue growth by segments. The strong possibility coming from the core business enables us to invest for the future. For the Core Commerce segment market-based Core Commerce possibility grew strongly to RMB55.5 billion, up RMB8.7 billion year-on-year.

Developing businesses such as local consumer service, Lazada, New Retail and Cainiao, all showed strong operating performance and improved operating efficiency. The combined losses of these development businesses was narrowed by RMB1.5 billion to RMB4.2 billion, which contributed to the 25% EBITDA growth of the overall Core Commerce segment.

Cloud Computing, we talked about the loss margin were narrowed to 3%. For our Digital Media and Entertainment, we continued to focus on reducing losses in Youku through content cost control, while increasing paying subscribers’ growth. Losses reduced by about RMB1 billion year-on-year to RMB1.3 billion for the DME segment.

Innovation Initiatives and others, the increased losses were primarily due to our investment in DingTalk businesses and also often maybe for the user expansion as well as the technology research and innovation. So overall, our business continued to deliver strong profit growth with improving efficiency. At the same time, we use our incremental profit to continue to invest back into our business.

So June quarter, free cash flow and capex, our businesses overall continued to show strong profitability and cash flow. As of June 30, cash, cash equivalents and short-term investments were RMB382 billion, which is over $50 billion. For the quarter, free cash flow was RMB36.6 billion, which increased by 39%, mainly due to our robust profitability growth.

The June quarter other financial metrics, the share of results of equity method investees in the quarter was RMB349 million. We recorded our share of results of our equity method investees one quarter in arrears that’s for this June quarter earnings were recognizing our investees March quarter share of results. But you can tell that the Ant’s Group has performed well in the March quarter. The COVID-19 pandemic has caused widespread disruption to the economy, which has and could continue to impact our investee companies.

So June quarter GAAP to non-GAAP net income reconciliation is shown on this page and is self-explained. So looking ahead, China has managed pandemic and the whole process is managed very well and the economy recovered very quickly. So our Group has benefited from overall China’s recovery, as well as the accelerated digitization of our customers.

Our core and new businesses all developed well. This allows us to have multi-engine drivers for the revenue and profit growth. Our strong profit growth will make it possible for us to reinvest. We will continue to reinvest our incremental profits back to our businesses and continue to expand our market leadership in various areas.

Before our Q&A session, we would like to announce that our Investor Day will be held on September 28 to 30. This time it, it will be a virtual one due to the pandemic, the limitation on travel people. So we hope to provide in-depth business updates as we did in previous Investor Days. Details will be posted on the Investor Relationship section of Alibaba Group’s website.

Now, we can open up for questions. Thank you.

Rob Lin — Investor Relations

Hi, everyone. For today’s call, you are welcome to ask questions in Chinese or English and third-party translator will provide consecutive interpretation for the Q&A session. And our management will address your questions in the language you asked. Please note that the translation is for convenience purposes only. In the case of any discrepancy, our management’s statement in the original language will prevail.

[Foreign Speech] Operator, please connect speaker and SI conference line now. Please start Q&A session when ready.

Questions and Answers:

Operator

Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Your first question comes from the line of Eddie Leung from Bank of America. Please ask your question.

Eddie Leung — Bank of America — Analyst

Thank you.

[Foreign Speech] Thank you. My question is, given the existence of several large e-commerce platforms in China in parallel, all of them already being at considerable scale, meaning that there are bound to be some consumers who are on multiple platforms simultaneously. The question is, in the future what consumers under what circumstances and with respect to what products do you see specifically coming to Alibaba’s platform?

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] Thank you. I will answer that question. With respect to Alibaba’s China Retail Marketplaces for consumers, what we offer is an integrated service experience with the widest and richest product assortment, with highly competitive pricing, with excellent services provided pre-sale, during sale and post-sale. And therefore, we’re already positioned to meet the needs of all kinds of different consumers in different categories. That’s why Alibaba is the number one choice for online shoppers in China and we’ll continue to keep working to keep that case.

[Foreign Speech] Secondly, from the merchant perspective, we have Tmall where brands make their goods available to consumers who can buy goods, in particular, new goods directly from brands. We also have Taobao, where goods are made available through many different channels to consumers, including now with direct sourcing from origin including of agricultural and food products.

So the fact is that we can meet a whole range of — the full range of different needs and demands from consumers, both in terms of different categories and products and also in terms of the range. You can have some consumers who are more affluent, but they could be also looking for value for money offerings, but in other cases, they’ll be looking for product of higher quality or higher level of service. So our intention is to continue to provide more options and to meet needs in all of those different areas.

Eddie Leung — Bank of America — Analyst

[Foreign Speech] Thank you.

Operator

Your next question comes from the line of Alicia Yap of Citigroup. Please ask your question.

Alicia Yap — Citigroup — Analyst

Hi. Good evening, management. Thanks for taking my questions and congrats on the solid results. My question is on your international retail business, especially Lazada. What is your latest view for the e-commerce evolvement in Southeast Asia regions? What are the differentiated approach that you have, your competitive strength and any areas that you think there are rooms to change or improve that you foresee how the landscape will evolve as compared to China and in the region, and how Lazada will position that? Thank you.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] Thanks, Alicia. Let me answer this question. I think as I said in my script, Southeast Asia market is the — is our strategic priority for Alibaba’s globalization strategy. And I think when we look at our Lazada’s operation, we are — we expect to build a more tech-driven, AI-driven sustainable business. I think today in this market, the competition is very extensive and people invest, and even satisfies the buyers’, sellers, even shipping fees and trying to get short-term growth. But, we strongly believe we need to build a long-term sustainable business.

And so our advantage is first is about Alibaba’s Technology Infrastructure, and especially our experience and know-how and technologies in the AI and in the search and recommendation and the supply and demand match mechanism. I think this is our big advantage and we — after our transport — after Lazada’s business transformation, we are also — actually, we are today gaining the benefit from this, I mean, technology implementation.

And second, I think, we — as part of Alibaba’s operation, we have a big advantage to supply the Southeast Asian market with the goods from China and from other countries. Today, actually, we — Lazada is not an isolated business for Alibaba. Actually, this is part of Alibaba Global Network and we are trying to sell not only from local-to-local but also China to Southeast Asia and other countries to Southeast Asia. And at the end of the day, I think we are trying to build a global network and to sell anywhere by anywhere.

And the third one, I think, today for Lazada we have — we also have different segments. We have our large mall for brands, operation and which provide high-quality products directly from the brands and with good fulfillment delivery services. We have our Lazada marketplace, which is more like a small B2C or even C2C. And as I said before, we have like large global, which is a cross-border business from China and other countries. We will continue to invest and enhance the position of each of the marketplaces and provide an integrated experience to our customers.

And as to the difference, I mean, between China market and our Southeast Asia market, I would say, I think maybe the biggest difference is actually in Southeast Asia social network is very popular and there are a couple of very important players in this market. And merchants also loves to interact with customers via our social network. So how to leverage the power of our social networks, I think it’s a very important goal to us. So, actually we have done a lot and we will continue to do further. Thank you.

[Foreign Speech]

Alicia Yap — Citigroup — Analyst

Thank you, Daniel.

Operator

Your next question comes from the line of Binnie Wong of HSBC. Please ask your question.

Binnie Wong — HSBC — Analyst

Good evening, management. Congrats on the fairly successful quarter and also on a successful June 18 Shopping Festival. Question is on the Taobao Deals. We saw the news that you will soon launch a short video channel to strengthen the ecosystem and while Douyin, on the other side also talking about expanding e-commerce business, making it closed loop.

So the question is, how do we differentiate when we talk about this live streaming and short video, I guess in the terms of like social commerce? And how do we better help merchants to sustain the relationship longer with customers? And also far do you see live streaming as cannibalized or incremental to merchants marketing particularly on Alibaba? Thank you.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] Okay. I think, first of all, Taobao Deals targets value conscious customers by offering high-quality products — high-quality — sorry high quality and value for money products. So I think the target customers for Taobao Deals actually is very, very clear. And as part of the consumer experience in Taobao Deals mobile app, we launched the short live streaming and short-form video. I think by this — this is not a complete user experience. It’s part of the consumer interface, but it’s — I think we are trying to give factories and supplies a tool to manage their customers and also trying to give customers different experiences in their consumer journey on Taobao Deals.

But I think the primary goal is still segment the Taobao Deals with the value for money products and low-end customers. This is very clear. And the short-form video just a consumer feature, and this will be highly integrated with the whole — the entire consumer journey in Taobao Deals mobile apps. And in terms of the live streaming activities in other player, including Douyin. I will say, actually for our merchants I think live streaming is a — it’s more likely event marketing and actually in there as part of their entire operation and people can — it’s impossible for people to do seven-day 24-hours live streaming and all the ways.

And if you look at the details of live streaming today, actually most of the merchants viewed it as a way to do promotion and acquire new customers. But they do need a sustainable and day-to-day operation platform, which is Alibaba platform. So that’s why a lot of merchants they think they build their stuff on our platform and they operate — they are trying to bring all the other consumers, customers from different, I mean, ways to Taobao, because this gives them a best way to operate. And this also gave them the highest ROI in the operation.

And for Taobao live streaming I think we also introduced live streaming in Taobao and Taobao Deals. And as we disclosed, the GMV from Taobao live streaming tripled in this quarter. I think this is already — is a very important consumer feature. But that’s not all, that’s part of consumer experiences. And because of the incremental traffic generated from the Taobao live streaming, we are also identifying new opportunities for monetizing this I mean, additional traffic in Taobao live streaming.

So — but once again this monetization model is not a separate one. It’s part of the whole solution, entire solution, we provide for our merchants to manage their customers on our platform for their entire lifecycle.

Binnie Wong — HSBC — Analyst

That’s super clear. Thank you, Daniel.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech]

Rob Lin — Investor Relations

Operator, next question, please. Operator, next question, please.

Operator

Your next question comes from Mark Mahaney. Please ask your question.

Mark Mahaney — RBC Capital Markets — Analyst

Okay. Thank you. I just wanted to ask about the Ali Cloud business. Can you talk about the sustainability of growth there? Are there particular industry verticals that you have recently seen be more aggressive in terms of cloud deployments? And just talk about what’s happening in terms of the competitive dynamics whether pricing remains relatively consistent, you’re seeing more aggressive pricing in the industry? Thank you very much.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] Cloud is a fast-growing business. If you look at our revenue breakdown, obviously, cloud is enjoying very, very fast growth and what we see is that all the industries are in the process of digital transformation and cloud is very important I mean, moving to the cloud is a very important step to all the industries. And we strongly believe that sooner or later, all the businesses will move to cloud, and so that’s why we do see the fast-growing — we do believe the fast-growing will continue in near and mid-term.

And even in the longer term, this will totally change how enterprises work and how business collaborate. And in terms of industry development, even all the industries, they are embracing the cloud, but I think that the people who move fastest are first from the Internet company because all the Internet companies, all Internet operations actually could be powered by cloud. So Internet is a very, very important sector.

But in recent months, we do see the fast growth from other sectors, including financial services, like consumer retail, and even like public sectors like power and utilities to answer first. So, we do believe it is still in the early stage, and as I said before, we don’t want to just provide and cloud in terms of Infra Services. If we just do it as an infra service as services then a price competition is inevitable.

And then all the cloud services is more like a commodity business. Today, Alibaba’s Cloud is cloud plus intelligence services and is about the cloud plus the power of the data usage. So that’s why we work hard to develop industry-specific solutions with BaaS and PaaS services together with our SaaS partners and we will continue to do that to enhance our market leadership.

Maggie Wu — Chief Financial Officer and Head of Strategic Investments

[Foreign Speech] Yeah, Mark. This is Maggie. To supplement what Daniel said, towards — regarding your question on the competition and cloud computing, our peer company who also has cloud businesses, they report their results as well. And I think you can do the comparison, although none of these companies have disclosed the Cloud Computing revenue and profitability, the EBITDA like we do. But you still can’t figure our from — derive the Cloud’s revenue from them.

Obviously, we’re the largest in terms of our business size, so we recorded more than RMB12 billion revenue in one quarter’s time. This is more than double of our nearest competitor, and we’re growing faster. Just to give you a sense of…

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] I would also like to add that if you look at — if you compare to give you a global comparison of the China cloud market and the US cloud market, based on the third-party study that we’ve seen the China cloud market is going to be in the — somewhere in the $15 billion to $20 billion total size range and the US market is about 8 times that. So the China market is still at a very early stage and we expect based on what we’ve seen of our customers as well as observing the whole market growth, the China market is going to be a much faster-growing market in cloud than the US market. So we feel very good, very comfortable to be in the China market. And just being in an environment of faster digitization and faster growth of usage of cloud from enterprises because we’re growing from such a smaller base about one-eighth the base of that of the US market.

[Foreign Speech]

Rob Lin — Investor Relations

Operator, next question. Thank you.

Operator

Thank you. Your next question comes from Youssef Squali from Truist. Please ask your question.

Youssef Squali — Truist — Analyst

Great. Thank you and good morning. Two very quick ones. First, it seems like the recovery has been somewhat uneven between higher-income and lower-income consumers. Daniel, I was just wondering if you believe that, as a result of this pandemic there has been a structural impact on lower-income consumers and maybe how long it may take them to recover over time? And second, Maggie, any update to the guidance that you had given the last call about the total revenue in fiscal 2021 of more than RMB650 billion? Thank you.

Maggie Wu — Chief Financial Officer and Head of Strategic Investments

[Foreign Speech] Maybe I’ll answer first, okay, on this revenue guidance, Youssef. So we grow revenue for June quarter by 24%. We remain the guidance unchanged, although, we’re very confident on our business because this is just the first quarter of this of fiscal year, and there are still three more quarters to go. We’ll update you at due course if there are any updates. Thank you.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] For the consumer segment I think generally speaking the recovery of Chinese consumption I think just stayed strong. As China is the first country, who I mean moved out of the pandemic and all the situation is almost under control except for a couple of cities. So that’s why the recovery of the consumption I think it’s quite promising. And if you look at our number and our China retail market business reported a very strong growth in this quarter.

Most important thing is that the ASP for the consumers in all city tiers actually grew, and they buy more frequently and they consume more. But if you look further, I agree that for the low-income people I think they are — if you look at their consumption behavior actually they are still some uncertainties because they are actually more cautious about the future of the economy.

As you know that in China a lot of low-income people from the service sectors. And today, I think as compared to the physical goods consumption the consulting service sectors still take some time to fully recover and the employment in this service sector also need more time to recover. So I think this will bring some sort of like uncertainties for these low-income groups.

[Foreign Speech]

Rob Lin — Investor Relations

Operator, next question, please.

Operator

Your next question comes from the line of Gregory Zhao of Barclays. Please ask your question.

Gregory Zhao — Barclays — Analyst

[Foreign Speech] Thank you very much. I’m delighted to have the opportunity to ask a question. Congratulations on a strong quarter. So we know that China has produced a number of globally leading Internet giants with Alibaba as the most typical example. And these companies including Alibaba are at the front of the entire world in terms of developing all kinds of applications for the Internet. But when it comes to things like operating systems or even semiconductors and chips China lags behind the rest of the world. So my question is, does Alibaba have any longer-term plans to invest in that kind of key infrastructure? And as part of that, does Alibaba have plans to hire more talent from international markets?

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] Thank you. Alibaba has always been committed to market-oriented and user-oriented development and we continue to invest for the long-term in technology with those objectives in mind. We believe that all technology must be tightly integrated with the market to meet needs in the market, we’ve done that with consumer-facing technology and now also with the cloud where we’re not just providing infrastructure, but are looking for ways to leverage on the cloud to help businesses enhance their operations and become more effective.

So certainly, this is our commitment we’re committed to long-term investment and to doing research through our DAMO academy, among others but we do believe very strongly that research and development should be highly integrated in order to create value for society.

Gregory Zhao — Barclays — Analyst

Thank you very much.

Rob Lin — Investor Relations

Operator, next question.

Operator

Your next question comes from the line of Jin Yoon from New Street Research. Please ask your questions.

Jin Yoon — New Street Research — Analyst

Hi. Good evening. Hey. Thanks for taking my question. Maggie, I think in your prepared remarks you talked about re-investments back into the business, the profits, reinvestment back into the business. Can you just kind of talk about the scale and scope of kind of what that investments look like in the duration and how we should be thinking about the rest of the fiscal year in terms of when some of these investments will hit? Thanks again.

Maggie Wu — Chief Financial Officer and Head of Strategic Investments

[Foreign Speech] Sure. Jim, let me answer your questions. First of all, as you can tell that we have very strong profit generation power, right? So if you look at the adjust EBITDA of this one quarter, we have generated over RMB50 billion profit. So, we use part of that profits to reinvest back to develop business. While other people use investors’ money to invest that, so that’s number one.

Number two, in terms of to what extent, I think we got lot of questions on — you’re talking about cost control and efficiencies does that mean that we are very cautious in terms of investing in marketing and user acquisition etc. The answer is not necessarily. We are very committed to further extend not only the user base but also in terms of user engagement. But also they’re on increase business of these users and provide them with broader products and services.

So when you look at the marketing — sales and the marketing costs, we’re investing over like RMB13 million sales and marketing at one point of time. It’s not a small number. However as… [Technical Issues]

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech]

Rob Lin — Investor Relations

Operator, could you please take the next question. Operator, can you hear us?

Maggie Wu — Chief Financial Officer and Head of Strategic Investments

This is Maggie. Maybe let me summarize what I just answered to Jin’s question. So, with the strong revenue and profit growth, we’re going to continue to reinvest back to these strategically important businesses. So I think our investment aims for a longer-term healthy and sustainable growth.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech]

Rob Lin — Investor Relations

Operator, could we have the next question, please.

Operator

Thank you. Your next question comes from Colin Sebastian from Baird. Please ask your question.

Colin Sebastian — Baird — Analyst

Great. Thanks and congratulations on the quarter. Two quick ones from me as well. First off, Daniel, I think you mentioned that the change in strategy in India, if maybe you could talk in a little more detail about the platform’s opportunities in that market? And then secondly, looking at the gap between the mobile MAUs and the total active commerce user base, the gap has increased a bit and I’m wondering if that’s an opportunity over time to engage those mobile monthly users that are not yet active customers? Thank you.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] First of all, as I said, we decided to stop operations of UCWeb and other Innovation Initiatives in India after our business review. And we believe that globalization is our long-term strategy, but in the near-term I think we are closely monitoring the change of the geopolitical environment and also the national policy of other countries. And we will adjust our strategies, according to this change.

For the second question, I would say, today our MAU and AAC still have a very strong growth given we have such a huge size of the consumer base in China. But I think the most important thing is that we have people engaged with us. That’s the starting point and our — if you look at our historical number you will see that the longer people stay with us, the more spending they will do, and the more consumption they would do, and the more categories they will consume. So we will continue to engage with customers, and to convert the visitors, the new customers into our loyal buyers in the long run.

Colin Sebastian — Baird — Analyst

Thank you.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech]

Rob Lin — Investor Relations

Next question, please.

Operator

We are now going to take the last question. Your last question comes from Piyush Mubayi from Goldman Sachs. Please ask your question.

Piyush Mubayi — Goldman Sachs — Analyst

Thank you for taking my question and congratulations on a good set of numbers. May I just take a step back and look at COVID and the aftermath of COVID, I wanted to understand from you, if there were specific areas that you saw an increased opportunity emerge and would that lead to a change in tactic? We did notice that 6.18 period, you were very — you were much more aggressive and it bore fruit very, very quickly for you and we want to do understand if those two can be read together and we can see an emergence of potentially a much more aggressive stance from you that would bear fruit over time? That’s my question.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech] Well, I think this pandemic changed fundamentally people’s lifestyle and changed how enterprises work. And if you look at the consumption sector I will say after the pandemic people care more about the health and that’s why we see the health-care categories grows very fast. And — but I think that’s not all, and we do see a lot of increasing opportunities in FMCG, in new brands and also in many sectors.

Related: Key highlights from Alibaba Q1 2021 financial results

And also from the retail perspective, I think all the retail operators moving to the digital sector, I mean, moved to digital operation. So how to leverage the power of our new retail infrastructure to help these merchants to serve their customers on a local basis I think this is a growing opportunity. And the cloud, we said many times, and cloud is a big wave and we are still in the early stage in terms of the fast-growing. And I think 6.18 as a mid-year campaign is part of our annual operations.

And we think that we took the right approach to meet the demand and grow emerging demand of the consumers I think post-pandemic, and also meet the demand of the suppliers who want to sell more products and deliver more services to their customers. So we are happy to see the good results and we will continue to create value for both our customers and the merchants.

Maggie Wu — Chief Financial Officer and Head of Strategic Investments

[Foreign Speech] Yes. Piyush, as you observe that during this June 18 Shopping Festival, we together with the local government and together with our merchant partners has invested billions of RMB in consumer coupons, subsidies to stimulate domestic consumption. And you asked us whether we’re going to continue the aggressive investment, I think I would put in this way, we will aggressively invest into the business to expand our market leadership. At the same time, we also want to invest smartly — aggressive and smartly.

Smartly means that we’re aiming in long-term sustainable growth rather than just temporarily acquire customers and GMVs. So that the investment is going to be focused on user base growth, also engagement, also retention, also by saying smart it also means that we are going to leverage the resources from whole Alibaba economy which includes us and others to grow our business. Thank you.

Daniel Zhang — Chairman and Chief Executive Officer

[Foreign Speech]

Operator

[Operator Closing Remarks]

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