Alibaba.com Announces 2008 Interim Results

HONG KONG, Aug. 27 /Xinhua-PRNewswire/ -- Alibaba.com Limited (HKSE:1688),
the world's leading B2B e-commerce company, today announced its unaudited
results for the six months ended June 30, 2008.
First Half 2008 Highlights:
-- Total revenue increased to RMB1,415.2 million, up 47.8% year-on-year.
-- Revenue from our China marketplace increased by 84.6% year-on-year to
RMB481.6 million, contributing 34.0% of total revenue, and was the main
revenue growth driver in the first half.
-- Operating profit grew by 70.6% year-on-year to RMB651.0 million.
Operating profit margin increased to 46.0% from 39.8% in the first half
of 2007.
-- Net income (Profit attributable to equity owners) was RMB697.2 million,
an increase of 136.2% year-on-year.
-- Earnings per share, basic and diluted ("EPS") was 15.24 Hong Kong cents
and 15.23 Hong Kong cents, respectively, compared to 6.18 Hong Kong
cents in the first half of 2007.

Key Operating Data
As of June 30, 2008, our combined marketplaces had 32.5 million registered
users, an increase of 32.5% year-on-year, of which 5.6 million were from the
international marketplace and 26.9 million from the China marketplace.
As of June 30, 2008, the total number of storefronts on our marketplaces
grew to 3.8 million, an increase of 54.1% year-on-year. We had 802,286
storefronts on our international marketplace and 3.0 million storefronts on
our China marketplace.
The number of paying members of our combined marketplaces was 368,006, an
increase of 44.0% year-on-year, which consisted of 29,766 Gold Supplier
members and 13,912 International TrustPass members from the international
marketplace, and 324,328 China TrustPass members from the China marketplace.
"In the first six months of 2008 we reported healthy growth in revenue and
profitability, despite a weakening global economy," said David Wei, CEO of
Alibaba.com. "The network effect of our marketplaces continued to strengthen.
We posted steady increases in registered users, supplier storefronts and
paying members, reinforcing our position as the world's leading B2B e-
marketplace. Our fast-growing China marketplace continued to contribute an
increasing proportion of our overall revenue mix during the first half,
demonstrating the rising importance of domestic China traders to our business.
We also made significant progress in our global expansion efforts by forming
partnerships in India and Japan and opening a sales office in Taiwan. We will
further accelerate our globalization plans in the future.
"With a slowing global economy, high commodity prices and policies by the
Chinese government towards the export manufacturing sector, we are beginning
to feel the impact on our customers' businesses as well as on our own. This
'economic winter' is making it difficult for some of our customers to conduct
business and as a result we have seen a slowdown in the addition of Gold
Supplier members, which may continue until next year. We believe that this is
a cyclical situation and that in the long run Chinese exports will remain very
competitive in the world market. We are taking a number of steps to help our
SME customers weather this difficult time, including lowering the entry
barriers for SMEs to do business online, helping more SMEs use e-commerce to
conduct business, increasing our investment in user acquisition, and enhancing
customer satisfaction.
"Despite the impact the current climate is having on Gold Supplier members
in our international marketplace, our China marketplace grew very quickly in
the first half of 2008. This growth is a result of efforts taken over the past
few years to expand the network effect of our marketplace and maintain high
customer satisfaction levels, which are bearing fruit in the face of a strong
domestic economy. Going forward, we expect the robust growth of our China
marketplace to continue. The recent launches of a series of new products and
services including 'Winport', 'China TrustPass for Individuals' and 'Export-
to-China' will further expand our China marketplace and we are encouraged by
the positive response these initiatives have received so far."
First Half 2008 Results
Alibaba.com reported total revenue of RMB1,415.2 million in the first half
of 2008, representing a 47.8% increase from the first half of 2007. The year-
on-year growth was driven mainly by increases in the number of paying members
of our combined marketplaces and in average spending per paying member of the
China marketplace.
Alibaba.com had 368,006 paying members as of June 30, 2008, representing a
44.0% increase from the same period a year ago.
International Marketplace
Revenue from our international marketplace was RMB933.5 million for the
first six months of 2008, an increase of 34.0% year-on-year, accounting for
66% of total revenue. The growth was primarily due to an increase in the
number of Gold Supplier members and sales of value-added services.
As of June 30, 2008, Alibaba.com's international marketplace had 29,766
Gold Supplier members, a net increase of 7,748 from 22,018 as of June 30,
2007.
The number of International TrustPass members reached 13,912 as of June 30,
2008, a net increase of 2,953 from 10,959 as of June 30, 2007. While we are
pleased with the growth of new International TrustPass members, the growth of
Gold Supplier members was slower than expected due to macroeconomic factors.
Some of our export-orientated customers in China are being cautious and
delaying their initial membership subscription or renewal decisions.
To achieve a higher level of customer satisfaction and sales efficiency in
the international marketplace over the long-term, we began to restructure our
Gold Supplier sales force in the first quarter of 2008. The sales force is now
re-arranged into two teams focusing on customer acquisition and customer
retention, respectively. The sales team transition was completed in the second
quarter, and we expect the benefits of the move to be realized as the overall
operating environment improves.
China Marketplace
Revenue from our China marketplace increased to RMB481.6 million in the
first half of 2008, an improvement of 84.6% compared to the same period in
2007, due to increases in the number of China TrustPass members and sales of
value-added services. Our China marketplace accounted for 34.0% of total
revenue in the reporting period and surpassed 36.1% in the second quarter of
2008, a significant increase when compared to a 27.2% contribution to total
revenue in the first half of 2007. This shows the growing importance of the
China marketplace to our overall business development.
Alibaba.com's China marketplace had 324,328 China TrustPass members as of
June 30, 2008, a net increase of 101,752 from 222,576 as of June 30, 2007. The
strong growth in China TrustPass members is due to both external and internal
factors. Externally, the increased Internet penetration in China and a
continued strong domestic economy is benefiting our business. Internally, we
saw improvements in customer acquisitions through our own sales force and our
network of resellers. The sales of value-added services such as keyword
bidding and premium placements also recorded healthy growth. In addition, the
launch of 'China TrustPass for Individuals' in the second quarter added over
10,000 paying members as of June 30, 2008.
Gross profit for the first half of 2008 was RMB1,244.6 million, an
increase of 49.1% year-on-year. Our gross margin improved to 87.9% in the
period under review, compared to 87.2% in the same period last year.
Total operating expenses were RMB665.7 million in the period, representing
a 46.6% increase from RMB454.1 million in the first half of 2007. The increase
was due to the expansion of our operations to support the continued growth of
our businesses.
Profit from operations (which represents profit after deducting share-
based compensation expense) for the first half of 2008 was RMB651.0 million,
representing a 70.6% increase from the first half of 2007. Our operating
profit margin for the period was 46.0%, compared to 39.8% in the same period
last year. The year-on-year improvement in operating profit margin was mainly
attributable to the growth of other operating income and the benefits of
economy of scale during the period. As experienced previously, we expect our
operating profit margin for the second half of 2008 to be lower than in the
first half because we plan to further invest in user acquisition and enhance
the services to our customers.
Profit from operations before share-based compensation expense (non-GAAP)
was RMB745.1 million for the period under review, up 70.9% year-on-year.
Operating margin excluding share-based compensation expense (non-GAAP)
increased to 52.7% in first half of 2008 from 45.5% in the same period a year
ago.
Net finance income for the first half of 2008 was RMB163.6 million, a
year-on-year increase of RMB145.4 million compared to RMB18.2 million for the
first half of 2007, due to higher interest income and exchange gain through
effective treasury management.
Profit attributable to equity owners for the first half of 2008 was
RMB697.2 million, representing a 136.2% increase year-on-year.
Earnings per share, basic and diluted, was 15.24 Hong Kong cents and 15.23
Hong Kong cents, respectively, compared to 6.18 Hong Kong cents in the first
half of 2007.
Other Financial Information
Deferred revenue and customer advances amounted to RMB1,987.8 million as
of June 30, 2008. This compares to RMB1,919.8 million as of December 31, 2007
and RMB1,524.3 million as of June 30, 2007, representing increases of 3.5% and
30.4% respectively. The increases were mainly due to the growth of paying
members and their spending on our marketplaces.
Recurring free cash flow (non-GAAP) for the first half of 2008 was
RMB549.6 million, representing a 6.3% increase compared to the same period
last year.
About Alibaba.com Limited
Alibaba.com Limited (HKSE: 1688), a member of the Alibaba Group, is the
world's leading B2B e-commerce company. It connects millions of buyers and
suppliers from around the world every day through three marketplaces: an
English-language marketplace ( http://www.alibaba.com ) for global importers
and exporters, a Chinese-language marketplace ( http://www.alibaba.com.cn )
for domestic trade in China, and a Japanese-language marketplace
( http://www.alibaba.co.jp ) facilitating trade to and from Japan. Together,
its marketplaces form a community of more than 32 million registered users
from over 240 countries and regions. Alibaba.com has offices in more than 30
cities across mainland China as well as in Taiwan, Hong Kong, Europe and the
US.

Financial and Operational Highlights

1H 2008 1H 2007 Change

Revenue (RMB million) 1,415.2 957.7 +47.8%
Profit attributable to equity owners (RMB
million) 697.2 295.2 +136.2%
Earnings per share, basic (HK$) 15.24 6.18 +146.6%
Earnings per share, diluted (HK$) 15.23 6.18 +146.4%

Registered users 32,523,290 24,554,913 +32.5%
International marketplace 5,614,887 3,621,623 +55.0%
China marketplace 26,908,403 20,933,290 +28.5%

Storefronts 3,770,614 2,447,309 +54.1%
International marketplace 802,286 595,834 +34.6%
China marketplace 2,968,328 1,851,475 +60.3%

Paying Members (Note 1) 368,006 255,553 +44.0%
Gold Supplier 29,766 22,018 +35.2%
International TrustPass 13,912 10,959 +26.9%
China TrustPass 324,328 222,576 +45.7%

CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE PERIOD ENDED JUNE 30, 2008

Unaudited Audited Unaudited Unaudited
1H 2008 1H 2007 2Q 2008 2Q 2007
RMB'000 RMB'000 RMB'000 RMB'000
(Note2)
Revenue
- International
marketplace 933,522 696,751 469,358 371,983
- China marketplace 481,643 260,965 265,726 141,826

Total revenue 1,415,165 957,716 735,084 513,809

Cost of revenue (170,564) (122,717) (91,638) (65,317)

Gross profit 1,244,601 834,999 643,446 448,492

Sales and marketing
expenses (442,505) (307,428) (240,762) (160,810)

Product development
expenses (74,049) (58,278) (37,457) (31,014)

General and
administrative expenses (149,119) (88,432) (76,909) (47,815)

Other operating income 72,074 691 50,819 444

Profit from operations 651,002 381,552 339,137 209,297

Finance income, net 163,621 18,198 115,073 9,826

Profit before income
taxes 814,623 399,750 454,210 219,123

Income tax charges (117,444) (104,543) (57,746) (65,981)

Profit attributable to
equity owners of our
Company 697,179 295,207 396,464 153,142

Dividends -- -- -- --

Earnings per share, basic
(RMB) RMB13.80 RMB6.12 RMB7.85 RMB3.18

Earnings per share,
diluted (RMB) RMB13.79 RMB6.12 RMB7.84 RMB3.18

Earnings per share, basic
(HK$ equivalent) (Note 3) HK$15.24 HK$6.18 HK$8.77 HK$3.22

Earnings per share,
diluted (HK$
equivalent) (Note 3) HK$15.23 HK$6.18 HK$8.76 HK$3.22

ADDITIONAL FINANCIAL DATA

Unaudited Audited Unaudited Unaudited
1H 2008 1H 2007 2Q 2008 2Q 2007
RMB'000 RMB'000 RMB'000 RMB'000
(Note 2)
Revenue

International marketplace
Gold Supplier 900,159 680,252 452,529 362,749
International TrustPass 18,276 15,146 9,282 7,881
Other revenue (Note 4) 15,087 1,353 7,547 1,353

933,522 696,751 469,358 371,983

China marketplace
China TrustPass 454,576 258,422 248,449 139,632
Other revenue (Note 5) 27,067 2,543 17,277 2,194

481,643 260,965 265,726 141,826

Total 1,415,165 957,716 735,084 513,809

Recurring Free Cash Flow
(Non-GAAP)

Net cash generated from
operating activities 590,926 564,407 303,672 235,497

Purchase of property and
equipment, excluding payment
for land use rights and
construction costs of
corporate campus project (41,280) (47,004) (27,475) (24,824)

Non-recurring item -- (499) -- (499)

Total 549,646 516,904 276,197 210,174

Share based compensation 94,098 54,489 49,225 26,452

Unaudited Audited
As of As of
30.6.08 31.12.07
RMB'000 RMB'000
5,772,480 5,273,552
Cash and bank balance

Deferred revenue and customer advances 1,987,830 1,919,849

Note 1. Includes paying members with active storefront listings on our
international and China marketplaces as well as paying members who
have paid membership package subscription fees but whose
storefronts have not been activated.
Note 2. Comparatives figures have been reclassified to conform to the
presentation of current period.
Note 3. The translation of Renminbi amounts into Hong Kong dollars has
been made at the rate of Renminbi 0.9056 to HK$1.0000 for the six
months ended June 30, 2008 (six months ended June 30, 2007:
RMB0.9896 to HK$1.0000). No representation is made that the RMB
amounts have been, could have been or could be converted into Hong
Kong dollars or vice versa, at that rate, or at any rates or at
all.
Note 4. Other revenue earned with respect to the international marketplace
mainly represents commission income from Alibaba Software
(Shanghai) Co., Ltd, a subsidiary of our Company's controlling
shareholder, for cross-selling of Alisoft Export Edition to our
customers.
Note 5. Other revenue earned with respect to the China marketplace mainly
represents advertising fees paid by third party advertisers, some
of which were earned through an agency arrangement with a
subsidiary of our Company's controlling shareholder.

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For investor inquiries please contact:

Lindy Lau
Alibaba.com Limited
Tel: +852-2215-5215
Email: lindylau@alibaba-inc.com

For media inquiries please contact:

Christina Splinder Jasper Chan
Alibaba.com Limited Alibaba.com Limited
Tel: +852-2215-5130 Tel: +852-2215-5213
Email: csplinder@alibaba-inc.com Email: jasperchan@alibaba-inc.com

SOURCE Alibaba.com Limited

Lindy Lau of Alibaba.com Limited, +852-2215-5215, or lindylau@alibaba-inc.com;
Or Christina Splinder of Alibaba.com Limited, +852- 2215-5130, or
csplinder@alibaba-inc.com; Or Jasper Chan of Alibaba.com Limited,
+852-2215-5213, or jasperchan@alibaba-inc.com