Recently, Alibaba released its financial report for the first quarter of fiscal year 2022 as of June 30, 2021.

The report shows that Q1 fiscal quarter revenue was 205.74 billion yuan, a year-on-year increase of 34%; net profit was 42.84 billion yuan, a year-on-year decrease of 7.8%. Operating income was 30.85 billion yuan, a year-on-year decrease of 11.1%; operating profit margin was 15, a year-on-year decrease of 8 percentage points.

Overall, although revenue is still growing, Alibaba’s performance in other indicators is not ideal, which to a certain extent is the external manifestation of Alibaba’s current predicament.

Alibaba gave two reasons for the revenue growth in the Q1 financial quarter.

First, consolidate Sun Art Retail. The financial report shows that if the revenue of consolidated Sun Art Retail is excluded, Alibaba’s Q1 fiscal quarter revenue growth will drop from 34 to 22, a decrease of 18.43 billion yuan. That is, the consolidated Sun Art Retail has brought Alibaba’s Q1 fiscal quarter Revenue of 18.43 billion yuan.

Second, Cainiao Logistics and international trade retail business revenue growth. The financial report shows that during the reporting period, Alibaba's overseas e-commerce platform Lazada's order volume increased by more than 90% year-on-year, while Cainiao Logistics Network revenue increased by 5 billion to 11.601 billion yuan, and Cainiao parcel order volume increased by 63% year-on-year. The substantial increase in order volume for these two businesses has injected considerable vitality into revenue growth.

The year-on-year decrease in profit was due to an increase in expenses. The financial report shows that Alibaba’s total costs increased by 55.85 billion yuan to 174.89 billion yuan in the Q1 fiscal quarter, which was higher than the revenue growth.

The high increase in total costs is due to changes in two expenditures. First, the integration of Sun Art Retail increased inventory costs, leading to an increase in revenue costs; second, in order to acquire users and increase market share, Alibaba implemented strategies and initiatives such as "Cloud Nail Integration" during the reporting period, resulting in a significant increase in marketing expenses 98.0 to 27.04 billion yuan, and the proportion of R&D expenses in total expenditures also increased from 9 to 13.

In other words, Alibaba’s increased investment and increased revenue in the Q1 financial quarter were not equal. If we look at the specific business segments, we can find clues that caused the uneven increase in Alibaba’s increased investment and increased revenue.

Alibaba divides all its businesses into five sectors: commerce, cloud computing, digital media and entertainment, innovative initiatives and other, and unallocated.

Among them, the commercial sector is the main revenue force, accounting for 87% of the revenue in the first quarter. Moreover, only the commercial sector achieved profitability in the Q1 fiscal quarter, but its profit scale shrank year-on-year. The financial report shows that in the Q1 fiscal quarter, Alibaba’s commercial sector revenue was 180.24 billion yuan, a year-on-year increase of 35.2%; profit was 39.02 billion yuan, a year-on-year decrease of 13.7%.

However, the increase in revenue in the commercial sector does not increase profits. In the final analysis, Alibaba's domestic e-commerce retail business development has fallen into weakness. A specific manifestation is that during the reporting period, Alibaba's e-commerce platform held the 618 Shopping Festival, and the number of merchants and brands participating in the event more than doubled from last year, reaching more than 250,000, and more than 1 million new products were launched. . However, judging from the financial report, this mid-year promotion did not bring the ideal revenue increase results for Alibaba.

Upon closer inspection, Alibaba’s e-commerce retail business fell into weakness due to multiple factors.

For example, consumers have gradually become accustomed to the promotional activities of e-commerce platforms, and the promotional activities are too long, and the consumption stimulus has become smaller; the prices of some products on the platform have been raised before the event, resulting in low prices during the event. The discount is not much better than usual, and it cannot attract consumers; and in the live broadcast e-commerce format, short video platforms such as Douyin and Kuaishou have increased their e-commerce efforts, which will also have a big impact on Alibaba's e-commerce business.

Therefore, Alibaba needs more profits to cope with changes in consumer psychology and industry competition. However, because rational consumers have other choices, the returns they can bring to Alibaba will still shrink.

Domestic commercial retail revenue is currently the business that contributes the most revenue to Alibaba, accounting for 46%. The weak performance growth it shows will affect the entire commercial sector and Alibaba’s overall operations. Receipt status.

Upon closer inspection, the reason for the poor growth of the commercial sector is that the domestic e-commerce business has passed the period of rapid growth, and a slowdown in growth is inevitable.

On the contrary, the cloud computing sector, digital media and entertainment sectors show good growth potential. Although they are still losing money, the scale of losses is gradually shrinking.

The financial report showed that the cloud computing sector had revenue of 16.05 billion yuan, a year-on-year increase of 29.0, and a loss of 1.643 billion yuan, a year-on-year decrease of 39.0; the digital media and entertainment sector had revenue of 8.07 billion yuan, a year-on-year increase of 15.4, and a loss of 10.1 billion, a year-on-year decrease of 50.0.

Among them, the loss reduction of the cloud computing sector is due to the gradual maturity of Alibaba Cloud's business and the reduction of investment. However, its customers in the Internet, financial services, retail and other industries are on an increasing trend, so its profit performance will be increasingly The better. However, the Q1 fiscal quarter was affected by the two factors of rectification of the online education industry and restrictions on overseas services. With the inclusion of DingTalk, which is still in the investment stage, the revenue growth rate of the cloud computing sector fell from 59% in the same period last year to 29%.

The loss reduction of Alibaba’s digital media and entertainment segment is mainly due to Youku’s improvement of operational efficiency through investment in high-quality content, optimization of user membership plans and other strategies, resulting in a year-on-year increase of 17% in daily paid membership, achieving user Double growth in scale and revenue. Moreover, because the relevant departments have strengthened anti-monopoly supervision and ordered Tencent to lift its exclusive music copyright, Xiami Music in this segment has also ushered in a turnaround in development. Recently, Alibaba has applied for multiple "Xiami Music Entertainment" trademarks.

Taken together, the development of cloud computing, digital media and entertainment sectors is in the sunrise period. If appropriate measures are taken in the future, it can bring new possibilities to Alibaba.

However, their current revenue ratios are only 8 and 4 respectively, which cannot offset the negative impact of the downward trend in the commercial sector on Alibaba's overall revenue.

And its two segments, which account for a smaller proportion of revenue, saw losses in the Q1 fiscal quarter expand. Among them, the revenue of innovative initiatives and other sectors was 1.375 billion yuan, a year-on-year increase of 3.72%; the loss was 2.94 billion yuan, a year-on-year increase of 11.0%; the last unallocated sector had a loss of 2.58 billion yuan, a year-on-year increase of 17.5%.

With students in the front and back row lagging behind, it will be difficult for Alibaba’s revenue to show a significant improvement in the two sectors of cloud computing, digital media and entertainment that are still losing money in the short term.

In addition to the difficulties in developing its own business, Ali’s external environment is also very harsh.

On the one hand, in August 2020, in order to prevent Chinese companies from storing and processing the private and sensitive information of American citizens, the US government announced the expansion of its "Clean Network" plan to restrict cloud-based services including Alibaba. Applications that the system provides services to. In October, Ant Group’s payment services were restricted again.

On the other hand, the domestic Anti-Monopoly Law has been tightened, and Alibaba has been fined hugely many times. The financial report shows that Alibaba spent 9.114 billion yuan in the Q1 financial quarter to pay some antitrust fines.

When the domestic and international environment was unfavorable to Alibaba, the capital market gave negative feedback to its development. Since October last year, Alibaba's stock price has continued to fall. As of August 5, Alibaba's opening trading prices in both the U.S. and Hong Kong stock markets have dropped by about one-third.

Faced with the disapproval of the outside world, Alibaba carried out the largest stock repurchase plan in the company's history, increasing the stock repurchase plan from US$10 billion to US$15 billion to announce to the outside world that it was still committed to Future development is full of hope.

However, rather than stabilizing the reputation of the outside world, Alibaba should perhaps consider how to revitalize its many businesses, make its ecological construction convenient for more people and enterprises, and provide greater benefits to the outside world. imagination space and expectations, and also add more color to your business blueprint. After all, its revenue is still growing and it can mobilize many resources to achieve transformation.