Goldman's Five Key Points On Alibaba's Results & Share Buyback Program

Shares of Alibaba Group Holding Ltd BABA closed down 5 percent on Wednesday after the company announced its Q1 financial results. Earnings came in at $0.59 per share, in line with the Street’s consensus; revenue of $3.270 billion, however, was slightly below consensus expectations, which called for $3.362 billion.

Goldman Sachs analysts Piyush Mubayi, Fan Liu and David Jin shared some comments regarding the results and other announcements, adding that their estimates and target price are being reviewed, pending further details from the earnings call.

5 Key Points

1) GMV of China retail marketplaces rose 34 percent year-over-year, mainly driven by a 32 percent surge in active buyers, which reached 367 million. The contribution of mobile buyer continued to increase, to account for 39.5 percent of revenues and 83.7 percent of total MAUs.

On the contrary, the overall monetization rate fell slightly to 2.33 percent on the back of the suspension of the online lottery and the “decrease in pricing charged on Juhuasuan.”

The Mobile/PC take rate gap continues to close, as the mobile take rate surged to 2.16 percent, versus the desktop take rate of 2.55 percent.

2) Revenues grew considerably year-over-year. The rates were:

China wholesale, up 41 percent

International retail, up 40 percent

International wholesale, up 12 percent

Cloud & infrastructure, up 106 percent

3) Other revenue surged by 82 percent year-over-year, mainly on the back of “consolidation of  UCWeb and Autonavi.”

4) The Non-GAAP EBITDA margin fell 2pp to 52 percent, principally due to the “consolidation of acquired businesses and investments in new business initiatives such as over-the-top TV services, mobile operating system and local services.”

5) Alibaba has authorized a two-year share repurchase program for up to $4 billion. The main purpose is offsetting the “dilution from the share-based compensation program (20% of revenues in 1QFY16).”