저자: Dylan · 외국인
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알리바바 1분기 실적 분석. 매출 7%, 조정EBITDA 36% 성장, 클라우드 18%(AI 매출 3자리 성장 7분기 연속), CMR 12% 성장. 다만 자본지출 3.3조 달러급 투자 사이클로 잉여현금흐름이 5억 달러에 그쳐 주가 급락. 자사주 매입은 전분기 대비 크게 축소, 배당 확대로 전환. 클라우드 성장률 20%대 상향 시사에 낙관적 입장 유지.
다듬은 글
Hey, welcome back to Two Super Guys Stocks. I'm Dylan. And I'm Vinnie. And today is one of those four times a year where we get a little peek into Alibaba's business, one of our largest holdings here at Two Stupid Guys Trade Stocks. We're going to take a little look at their most recent quarterly filing, and what I did and did not like in terms of the results, whether or not that matters going into the future, and how I'll be adjusting my evaluation of Alibaba going forward, which is a big shift.
All right. Yeah. Uh just a little clue here as to what the market thought of these earnings. Uh that would be it right there. Just the big uh you know cliff spiky down. Spikey down. Not good. Not not ideal. Yeah. Not ideal. We also we Bur sold so we just did a 13F video. Bur sold all of his Baba. Granted, if you watch the video, we think there's something a little fishy there, but also doesn't help.
Yeah. Yeah. We'll we'll link that one above. Um, so as far as like you know where we are in the context of things, don't forget we're still up like 45% year to date. So like don't get too discouraged over that that little you know dip down after earnings here is this little you know kind of down slide or drop here in the in the stock chart.
Uh we're still up significantly year to date which is awesome place to be depending on your perspective. All right. All right. So as a business owner I try to look at how is the business performing. All right. This is what the business is doing here. Okay. So as far as Alibaba cloud, this is their management's highlights, right?
So this is still a sales pitch and what they think is important. Um, but they did mention that their their a uh cloud sector grew up 18% largely driven by AI related revenue which was up in the triple digit territory for the seventh consecutive quarter. They still don't give it an actual number to tell you how big it is relative to the business.
But any part of your business, even it's relatively small, growing at triple digits for seven quarters in a row is pretty phenomenal, right? Yes. I mean 18% pretty awesome but yeah the market clearly didn't like something you know exactly and you know for those of us that been Alibaba shareholders for a little while we remember this this customer management revenue CMR right that is the high profitability uh segment of their online retail business right that grew 12% uh year-over-year for this quarter which is a big number this is a number that was negative just like last year you know 2 3% almost every quarter They're now growing it in the double digit territory, which is amazing.
Yeah, that sounds awesome. Yeah. Yeah. And it's not that they're just doing this at the cost of being a less profitable business. Remember Charlie Mer famously called Ibida earnings. Um, but their IBA was up 36% on this 7% overall growth. Right? So, they're growing topline and earnings bottom line at a significant clip.
They are however going through a major reinvestment cycle which is why I think the market's a little pissed off at them right now. Okay. All right. So they did highlight how much money they returned to shareholders last year and will be planning to this year. Now they were I one of the reasons I bought into them was you know they had a saving cash pile big kind of free cash flow and they were buying back shares like crazy.
If they they highlighted last year they bought back 5% of the outstanding shares which is a big big number right. Yeah. um not many companies can manage to you know tear up 5% of their shares in one year. This year they're doing more the special dividend. They increase the regular dividend and increase the special dividend.
Total of $4.6 billion will be coming back to a shareholders. It's actually next month. It's like after June 12th I think is the the X date for that dividend. Um but the pace of buybacks has come down significantly. We'll talk about that when you actually see the slide about it. All right. Their presentation.
So this is this is what they're seeing as kind of the big things here. Like I said, topline revenue up 7%. That CMR revenue 12% growth. Cloud growth with 18%. Um the Alibaba International did have still growing pretty well. Little step down from where they were previously. We'll look at that on the individual side for them.
Uh Ibida, like I said, 36% year-over-year. earnings. Yes, I know. But still, it's nice to see even earnings growing. Um net cash position still in a fantastic place where they have net positive cash by 50.5 USD billion. That's that's a big number. Yeah, we lost. That's disgusting. Yeah. So, here's the share purchase slide.
So, you know, last year we were getting spoiled seeing these big, you know, 4.8 5.8 uh 4.1 billion dollars per per quarter being spent in share purchases. As share prices come up, like I said, 45% year to date. We've now seen uh the share buybacks taper down to 600 million most recent quarter. You know, not great when you consider the fact it was 4.8 8 billion last year, but like I said, they're on a major investment cycle and the stocks become more valuable, so they're not getting as much return on their investment for buying back those shares.
So, they've chosen to pivot towards more of a dividend strategy. Okay. Right. I mean, makes sense. I also like a lot of people that watch our videos, I actually now refuse to look up the BABA earnings report, so I could learn everything in real time from you. So, did not know the share back. Yeah, I actually have to avoid everything.
uh did not know the share buybacks dropped that much, but it yeah, makes sense. They were buying a bunch when it was 80 bucks a share. They're at 130. So, yeah, I mean, if anything, it shows it to you that management is a prudent steward of capital, right? They're only doing it when it when it's at a good price.
Yeah. So, all right, this is this is something I wanted to draw from this slide here. Um, so this is some financial highlights of the results from this quarter and then on actual 12-month period. So if you notice the most recent quarter all of these numbers pretty much are bigger than the year. So 7% compared to 6% 93 compared to 243% is a is a crazy number.
I don't really like using net income for Alibaba as a metric because they they own a lot of investments and they have to you know kind of mark accounting right. Yeah. Yeah. So uh same thing with Berkshire Hathaway. It's not a really good useful metric. Operating earnings is a much better metric when it comes to a company like that.
Um but still those numbers are much larger than they were on the yearly basis here. All right. Um same thing when we talk about Ebidov, right? So the earnings but in this company it may be more useful because we're not actually talking about um you know the the fluctuations from markettomarket accounting but 36% versus 5%.
This is telling me that management is on the right track and in fact things are accelerating on a quarterly basis compared to where they were on a yearly basis. Right. That's a good sign. Okay. All right. I mean that's awesome. I I'm still waiting for the we lost 8%. So this this is fantastic. Like I don't Yeah, this slide I think explains it uh to a degree.
So when you're looking at a business, you're looking at this free cash flow, right? That's the thing that matters the most to me. Um they generated $3.8 billion in net cash provided by operating activities, right? Think that that's like the the raw profit or whatever of the the quarter. However, because they're an investment cycle and you know they've talked previously on earnings calls about the fact that every server that they're putting in place at the time was basically is it capacity was being completely used up by you know customers.
Right. So like they they had the ability to basically sell that capacity immediately. Right. Right. So when you have an environment like that you have to invest heavily in your infrastructure because you are getting what they believe is a solid return or you're being able to sell that product immediately.
So, they invested $3.3 billion of that $3.8 billion this quarter alone back into purchasing property, plant, and equipment, right? That's that's this line right here. So, yeah. Yeah. You know, we've talked about the major investment cycle with the American internet companies. This is even more aggressive on a percentage basis of how much money there are putting into their cloud infrastructure.
Yeah. This is very reminiscent of like what is it 2022 meta. I'm I can't I'm actually kind of surprised that this was the negative because to me this kind of seems like common sense when you have $51 billion that you're sitting on. You should be doing this. You should be taking swings because even if it doesn't work, it's just one quarter's revenue.
You know, one quarter's revenue over the next five years is nothing. So, I seems like a good idea to me as as someone with a long-term perspective. I think it is too. Yeah, you know, management did not give us any raw data on return on invested capital. I think that's what Wall Street would really love to see is like, can you actually show me like the return on my money?
You know, where's is that 3.3 billion actually earning me something? You know, like I said, I'm referencing back to a conference call. I think it was like last year somewhere around the springtime last year where they mentioned that like said every new server that they were putting on was basically that capacity is being used immediately.
So, they're saying that the demand is there and it sounds like it still is, right? like I'm going to talk a little bit more about the uh cloud growth in the uh earnings report as far as like the um the conference call here in a second and this is just that $50.5 billion positive cash here. Okay. So like I said end of the day free cash flow for this quarter only 516 million.
Yeah. Yeah. Okay. I mean yeah but I it's not like they didn't make a bunch of money. They just spent it that can have a in my opinion a large future return. So yeah absolutely. So they've always provided this chart. This is just a good way of seeing how well they're controlling their expenses. Um, the only thing I really wanted to highlight here is look at this cost of revenue.
Um, so because they've pivoted more to this CMR management revenue again over time, they're becoming less and less the direct sales. They're also kind of get, you know, getting rid of non-core assets like the Sunar disposition. You're actually seeing the cost of revenue go down, which is good. So that means their gross margin is becoming higher, right?
That's that's a good thing for a business. Absolutely. They yeah they are sending a little bit spending a little bit more money on sales and marketing here though come up a couple percent. Now that's certainly them trying to drive that revenue growth which makes sense. It's just something you have to keep an eye on you know longer term to see if it makes sense but um in the short run I I can certainly see like said they're going through an investment cycle.
I'll give them a little bit of credit on that. All right so this is another positive slide I wanted to highlight here. Okay so this is all the the subsegments of Alibaba, right? And this is where they're breaking out the IBIDA growth for each segment. They notice a trend here. They're all pretty much positive numbers and some of them are pretty large positive numbers.
That's a good thing. Means that each unit is profitable. Well, not profitable, but becoming more profitable over time, right? So, some of them are still negative as far as the actual, you know, Ibida. So, Alibaba International is still negative. Kean now and local consumer services. All all of those are negative.
Um you know really the only two positive ones are tabout team all and then the cloud intelligence you know those are the ones that really are adding to their profitability at this particular point in time but the other ones are moving the right direction. The growth rate as far as revenue goes pretty good numbers too.
There was this one that was kind of an outlier. They kind of reevaluated the way that they were reflecting revenue for intersegment business. So that that's why I was a negative on the quarter. Um that got rolled into like uh the actual core e-commerce business. So that's why. Right. So I got to say when in companies you have like dreamers like founders and then you have like fiscally conservative optimizers, right?
So like I consider Tim Cook not a visionary but he's a good manager. The new iPhone that comes out every year is the same as the I'm sorry if people disagree with that. Um there's nothing. It's just they rely on what they've already built to continue to sell and it works. Then you have like dreamers that go out of business all the time because they can't do anything fiscally responsible.
Then you have Mark Zuckerberg is a little bit of hybrid. To me, this is more of a hybrid, right? They're they're showing fiscal discipline, but they're also invest in AI infrastructure as soon as possible. So, I'm very surprised on the down 7% still. this uh like yeah no I I completely agree it's really that faith in management like I think that would be the leap of the quarter that you're really trying to struggle for is that they're sh saying we're doing some things we're seeing some positive signs but you have to have faith in us which is is a hard leap if you've been shareholder for more than like you know a year because you saw the prior management try to say the same thing uh they never had the results that the current management does um to this degree and you know it they were really kind of how do I put this uh destroying the business for the sake of revenue growth, right?
Because they had like the son acquisition there um or getting into their non-typical lower profit margin businesses in order to continue growth. Um so I just want to highlight 12% like I said CMR revenue that's a big number. Um they're 88 VIP. This is the equivalent to Amazon Prime cross 50 million.
Another solid thing. You know, this these are the kind of consumers that you really want to have on your side over time, right? Um and then like I said in the EBIDA 8% increase, uh you know, in terms of the profitability. So growing the more profitable business line at a faster rate is definitely coming through to the bottom line of you know, at least this segment, which is a great thing to say.
uh Alibaba International, I already kind of mentioned that 12% decrease. If you actually look at they talked about how the growth rate was still pretty solid, it it fell off quite significantly. Um we're looking at uh you know the year-over-year. So 22% uh versus I can't quite see this one, 29%. Sorry, my camera's in the way.
Um but it's still growing at a at a significant clip, but it fell off a lot. Part of this is, you know, trade wars, right? This is this is the the quarter where we saw that really start to take off where we saw you know international kind of disturbances in trade and um this is their international unit.
So it makes perfect sense that they would be strongly affected more so than the domestic tab team all unit but it was right I would assume I mean most that's going to resolve now that there's trade deals or a little bit. Yeah kind of iffy if trade deals today maybe not tomorrow. Yep. Yeah. Exactly. Uh so 18% growth uh big number there.
Um not only uh are they seeing like a significant uptake in in their actual um kind of uh you know providing of of AI services to on their cloud segment um but the it's still profitable at this point. So the positive IBIDA grew 69%. So it was a profitable unit before this and that profitability grew at a very very big double digit number which is awesome to see.
So when you're growing your IBA at 69%, you're growing your top line at 18%. Doesn't it make sense you wouldn't be investing $3.3 billion into this segment of your business? Yeah, I would think so. Yeah, I mean sounds great. I don't have a problem with this. Yeah, I would absolutely be throwing money at that.
Um and then like you know this is like I said just reiterating that point of the decrease about the increasing integration of logistics offering into our e-commerce business. So just kind of consolidating them into the tabo. All right. So my conference call notes here. All right, this is interesting.
They talked about so 18% very very solid number. This where we had long hoped this double digit territory for cloud. Um you're actually saw that it was not only 18% for the whole quarter but it was kind of backloaded in they had the Chinese New Year at the beginning of the quarter. Um, so it was after that they saw a lot of customers coming online with demand for for their cloud computing and they said not only did they notice it was backloaded on Q1 that that trend has continued through April and May.
So they did give us a little bit of this quarter kind of color there. Um, and they also believe that the the kind of upcoming cloud growth rate is the longer run rate we can expect. So 18% is what they're hinting at there is they think it's on the low side. So they're actually going to be growing their their cloud segment at more than 18%.
And it's that trend has continued from only not the beginning of the you know end of the first quarter here but the beginning of the second quarter is so far this year as well. Uh and they think it's going to continue into the future. So they look for a cloud number that's in the 20s something percent range.
I'm thinking maybe next quarter. That's what they're sounds like they're hinting at. They didn't give us that number but that's my stupid guy interpretation of it. So this is going to be a question in the comments so I'm just going to ask it. Imagine you have a certain amount of money and you can only throw it in one stock.
All right. Now, you can throw it into Nvidia, you can Google, it could be anything. Would this be in a top 10 for you? And it's a hold for five years. Yeah. Yeah. It's it's it's actually, you know, I I think there's a lot of optimism and I'm really happy with what management is doing. They're uh not only kind of divesting non-core assets, they're growing the cloud which is the future of the business that which is a very high profitability business at a significant rate and that rate is increasing.
Uh they're reinvesting heavily and they have a very shareholder friendly management which knows that as they start to kind of reap the rewards of this, they will continue to pay that out towards shareholders be it through share purchases or dividends. Um, I think it's it's a nice place to be where multiple stars have aligned and we're still at a reasonable price, I think, for the stock.
So, I think I think it's it's a it's a solid opportunity. Now, is this meta at 80? No. But uh is this, you know, Google at 150? Yeah. Yeah. It's in that territory. That's a better comparison. Yeah. Yeah. Um, so high profitability business, CMR still growing, noncore business. I already basically said that.
and this this heavy cloud AI investment. They said it'd be nice if they gave us a little bit more color as far as like the the numbers on return on investment they're seeing here. Um, and if that's still the case where every service that they put online is being utilized at 100% capacity almost immediately like it was last year.
If that's the case, like yeah, you should be investing $3.3 billion, maybe screw the dividend. Go ahead and just buy some more servers and put them in in business, you know? So, I was going to say that. I was going to say screw the dividend, buy more servers. That's funny. Yeah, 100%. I'm down for that.
It's it's if it's a swing for a potential home run, especially with them saying, "Hey, the increase has continued even after the quarter ended." I screw it. I don't want a dividend. I would rather more AI infrastructure. Yeah, absolutely. One thing I would note too is that um you know, I will no longer be using my my free cash flow yield calculation on this stock because it it doesn't make sense at this point.
Oh, I could go and do the number if you really wanted to me. you know, their their market cap is 230 billion, $180 billion net. Uh they only had $500 million in free cash flow this most recent quarter. Uh we're talking about, you know, say annualize two billion into a $200 billion company. That's like 1%.
That's a horrible free cash flow return business, but that's because they're going through a massive investment cycle. You know, the likes of which comparatively is bigger than Google, bigger than Meta, bigger than Microsoft. All right. Man, never thought I'd see the day. Holy crap. Yeah. Oh jeez. Vinnie's grown up.
He's gonna stop using Intel's model. All right, guys. Have a good one. Catch you next.
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