[caption id="attachment_94851" align="aligncenter" width="700"] Source: Company reports/Coresight Research[/caption]   1Q20 Results For 1Q20, ended June 30, 2019, Alibaba reported revenue of ¥114.9 billion ($16.7 billion), up 42% year over year. Growth was primarily driven by growth in cloud computing and China retail marketplaces, which benefited from the 6.18 midyear shopping festival. However, revenue missed the consensus estimate of ¥115.6 billion. Operating income for the quarter increased 204% year over year, yielding an operating margin of 21.2%. Growth in operating income would have been 27% excluding share-based compensation expense from Ant Financial’s awards to employees incurred in 1Q19. Non-GAAP diluted EPS increased 56.1% to ¥12.55 ($1.83), beating the consensus estimate of ¥10.28. Core commerce revenues reached ¥99.5 billion ($14.5 billion), up 44% from 1Q19. The increase was driven primarily by solid revenue growth from its direct sales business and commissions from delivery services.

• China commerce retail reached ¥6 billion ($11.0 billion), up 40% year over year. The strong growth was driven by contributions from direct sales business, including Tmall Supermarket and Freshippo. Revenue from customer management and commission also increased 27% and 23%, respectively, year over year, thanks to user growth and higher Tmall physical good GMV.
• China commerce wholesale reached ¥0 billion ($436 million), up 33% year over year. The growth was propelled by an increase in average revenue from paying members on 1688.com, Alibaba’s domestic wholesale marketplace.
• International commerce retail reached ¥5.6 billion ($811 million), up 29% year over year. The consolidation of Trendyol, Turkey’s leading e-commerce platform, and AliExpress, contributed to the revenue growth.
• Local consumer services revenues were ¥6.2 billion ($900 million), up 137% year over year. The segment consists of revenues from platform commissions, food delivery and other services provided by on-demand food-delivery platform Ele.me.

Cloud computing revenues reached ¥7.8 billion ($1.1 billion), up 66% year over year and primarily driven by an increase in average spending per customer. Digital media and entertainment reported revenues of ¥6.3 billion ($920 million), up 6% year over year. The consolidation of Alibaba Pictures contributed to the growth. Innovation initiatives and others reported revenues of ¥1.3 billion ($187 million), up 21% year over year due to the revenue growth from Amap. As of 1Q20, there were 674 million annual active consumers on China’s retail marketplaces, an increase of 20 million from the 12-month period ended March 31, 2019. There were 755 million mobile monthly active users on China retail marketplaces, increasing 34 million over March 2019. Outlook The company did not provide updates on the fiscal year 2020 outlook. On its 4Q19 earnings call, the company said it expects revenue to top ¥500 billion for the fiscal year 2020. Management noted slower global growth, but believes its business will continue delivering robust growth, given China’s growing middle class, urbanization in lower-tier cities and rapid expansion of digitalization. The consensus estimates of revenue and non-GAAP diluted EPS for 2Q20 are ¥113.8 billion and ¥10.0, respectively, according to Bloomberg.