Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's June quarter 2018 results conference call. At this time, all participants are in a listen-only mode. After management's prepared remarks, there will be a question and answer session. I will now turn the call over to Robert Lin, Head of Investor Relations of Alibaba Group. Please go ahead.
Hi. Good day, everyone, and welcome to Alibaba Group's June quarter 2018 results conference call. With us today are Joe Tsai, the Executive Vice Chairman; Daniel Zhang, CEO; Maggie Wu, CFO. This call is also being webcast on our IR section of the corporate website. A replay of the call will be available on our website later today. Let me cover the safe harbor. Today's discussion will contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussions of these risks and uncertainties, please refer to our latest annual report on Form 20-F and other documents filed with the U.S. Securities and Exchange Commission.
Any forward-looking statements that we make on this call are based on assumptions as of today, and we do not take any obligation to update these statements except as required under applicable law. Please note that certain financial measures as we use on this call, such as adjusted EBITDA, adjusted EBITDA margin, adjusted EBITA, adjusted EBITA margin, non-GAAP net income, non-GAAP diluted EPS, and free cash flow are expressed on a non-GAAP basis. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. With that, I will turn over to Joe.
Thank you, Rob. Thank you all for joining us. Last quarter, I talked about three themes in my remark. First, we gained incremental market share and a larger share of the consumer e-commerce wallet. We continue to grow at scale because we had the foresight to invest in technology, supply chain, and logistics. Second, our New Retail initiatives are substantially growing Alibaba's total addressable market in e-commerce. Third, Alibaba is well-positioned to capture more discretionary spend of Chinese consumers in addition to e-commerce through offerings in entertainment and local services. That's what I said last quarter. All of these themes continue to play out in the current quarter, and I believe will play out for many years to come as the Chinese middle class continues to grow.
I want to particularly emphasize that Alibaba's three-pronged consumer offering, retail, entertainment, and local services, will be the long-term drivers of value creation as the Chinese middle class expands and more of these consumers demand a higher quality lifestyle. The good thing is, our historical strength in e-commerce is giving us a distinct advantage because we have already acquired our customers. To be exact, this quarter, we gained another 24 million transacting users to a total of 576 million annual active consumers. These consumers have made purchases on our platform, not just once or twice a year, but on a regular, frequent basis. The average annual active consumer places 90 orders across 16 different product categories per year on our China retail marketplace platforms. They trust Alibaba as the company that will offer goods and services where they can spend and get quality and value for their money.
Because of the loyalty of our consumer customers, we have the confidence to aggressively invest in new products and service offerings, as well as in innovations and necessary infrastructure to provide them with a better experience. Whether it is daily supply of fresh food, catching the latest fashion trends, access to luxury brands, the most popular videos, the most exciting sporting events, or a quick late-night snack delivery, Alibaba is busy at work to satisfy our customers. As I said on the last earnings call, we are extremely excited by the flywheel effects of expanding consumer wallet share across our ecosystem. The events of the past quarter, as we have seen the success of share gains in core commerce, video subscription growth driven by FIFA World Cup, and the integration of food delivery into our service offerings, have given us substantial confidence in our ability to capture more wallet share.
Now, I want to spend a few minutes on the current trade tensions. First, what's the impact to our business? Well, Alibaba's business is focused on capturing the Chinese domestic consumption opportunity and less reliant on Chinese exports. We believe that Chinese government policy will continue to support imports into China to satisfy the rising demand of Chinese consumers. This coming November, China will hold the world's largest import exhibition in Shanghai that will showcase products from all over the world. If U.S. goods become too expensive due to tariffs, Chinese consumers can shift to domestic producers or imports from other parts of the world. In terms of our international expansion, the world is a big place. We have made substantial progress in emerging markets like Southeast Asia and South Asia, as these markets are ripe for us to add more consumers into our ecosystem.
When you look at Alibaba's presence in the United States, our focus is on helping American farmers and small businesses to sell their products to Chinese consumers. In addition, as demonstrated by our partnership with Starbucks, we are working constructively with American brands to better serve Chinese consumers. Next, just a few comments on the macro environment. It is clear that nobody wins in a trade war. Over the years, China has become less reliant on exports so that the Chinese economy can withstand the imposition of tariffs on Chinese products. The most important point, however, is that the strength of China's domestic demand is critical to the stability of the Chinese economy and market confidence. Domestic consumption and investment account for more than 90% of GDP growth.
Domestic consumption is supported by 3 important trends that we have seen in the past several years, which we believe will continue to be the case. Number 1, real wage growth with more people joining the middle class. Number 2, healthy household balance sheets based on high savings rates. Number 3, easier access to consumer credit due to supportive government policy and innovative businesses like Ant Financial. These are the reasons why we strongly believe that the Chinese economy, as supported by domestic consumption, will continue to be resilient. Now I will turn it over to Daniel for his comments about the quarter. Thank you.
Thanks, Joe. Hello, everyone, thank you for joining our earnings call today. We sustain an outstanding pace of growth and deliver another strong quarter with 61% total revenue growth, significant user expansion, and even better engagement across our businesses. Taobao continues to be the leading consumer media platform and the starting point of any retail journey for Chinese consumers. Mobile MAU reached a total of 634 million, which represents a 20% year-on-year growth. We continued our investment in new customer acquisition, our annual active consumers increased 24 million to 576 million for the 12 months ended June 30, 2018. Around 80% of the increase in annual active consumers came from low-tier cities. During our annual Taobao Maker Festival on August 8th, we launched the new 88VIP tier to our membership program to drive consumers' engagement and loyalty in Alibaba ecosystem.
88VIP program offers a comprehensive set of services to meet the needs of consumers, from retail discount savings to local food delivery, entertainment, online movie ticketing, and video and music streaming content services. 88VIP members are also given exclusive access to a wide variety of products. This new loyalty tier has gained widespread popularity since its launch. We are also seeing keen interest from a large number of brand partners who wish to join this program in order to access the high-value customers across our ecosystem. Tmall's leading position across all major categories in B2C has been further strengthened. Excluding unpaid orders, physical goods GMV grew 34% year-on-year in June quarter. Our June 18 shopping festival drove excellent results in 2 areas. First, Tmall paid GMV grew over 40% year-over-year during the campaign.
Second, we expanded our June 18 festival to offline outlets, bringing in 70 shopping malls and 100,000 Tmall Smart stores, Intime department stores, Hema stores, and RT-Mart hypermarkets. Market leadership and share gain continue to be our priority for Tmall, we will continue to reinvest into the business. In addition to our solid Taobao and Tmall growth, we are pleased to report our progress of the execution of the new retail strategy. Hema continued to generate exceptional popularity among consumers, which is testament to the middle-class lifestyle evolution in Chinese cities, and their increasing and powerful demand for quality products. As of June 30th, there were 45 self-operated Hema stores over 13 cities in China, primarily located in Tier 1 and Tier 2 cities.
Hema will continue to enlarge its coverage within these cities to meet the needs of more residents living within 3 kilometers of convenient access to fresh groceries. Looking ahead, Hema will not only fulfill online orders through digitalization of its in-store operations, it will also be reshaping the whole supply chain through utilization of big data. Bringing fresh products from their places of origin directly to the dinner table of hundreds of millions of Chinese families will become reality. We are also gaining exciting momentum in the new retail transformation of our business partners. As of June 30th, a third of RT-Mart hypermarkets have completed their digital transformation that integrates customer insights, supply chain management, retail technologies, and digital payments. Alibaba is now enabled to fulfill 60-minute delivery of online orders within the perimeter of its location-based services.
In addition to the enhancement of the leading position in our core commerce and new retail, we continued our investments in cloud computing, digital entertainment, globalization, and other new businesses. Our cloud computing business continued its rapid growth over the past quarter. Cloud computing revenue for this quarter grew 93% year-on-year to $710 million USD. Alibaba Cloud launched more than 660 new products and features during the quarter, including a language-based document and analysis tools, hybrid disaster recovery for enterprises, and big data analytical tools. The video streaming capability and the CDN services of Alibaba Cloud managed to handle the majority of China's online traffic demand during the live broadcast of FIFA World Cup series.
In addition to Youku, the other three official World Cup online streaming channels in China have chosen to partner with Alibaba Cloud to ensure the smooth, high-definition, low-latency real-time access for the hundreds of millions of viewers in China. During the FIFA World Cup tournament this summer, Youku streamed all 64 matches, and its users enjoyed World Cup matches on 180 million mobile devices and smart TVs. As a result, Youku saw a daily average subscriber growth of 200% year-over-year during the quarter. We are seeing increasing demand in sports content and invested in providing comprehensive digital media offering for our users. We made a strategic investment in Suning Sports. Youku media content platform will collaborate with Suning Sports to create a joint platform for high-quality sports contents. Our cross-border and international retail businesses continue to show promising growth.
Revenue from our international commerce retail business reached $652 million USD in the quarter ended June 30, representing 64% year-on-year growth. Lazada has repositioned its business to include C2C marketplace, LazMall, and LazGlobal. Relaunched in June and July, LazMall is revamped in most of its markets to showcase brand stores that offers premium services and guarantee product authenticity. These brands have worked with Tmall in China for many years, and we together will pursue new opportunities in new markets. For LazGlobal, the platform will connect consumers in Southeast Asia with products supplied by Taobao and Tmall sellers in China via a cross-border model. We are confident the deepened Lazada integration with the Alibaba ecosystem will drive market share gains. We are also active in investing in logistics. In the June quarter, we together with Cainiao Network, led an investment in ZTO Express.
We will deepen our collaboration with ZTO in all aspects to promote the digital transformation of ZTO's logistics capabilities. This quarter, Cainiao's next-day delivery services achieved a coverage of about 1,500 districts and counties and completed its business integration with 4 local last-mile companies. Cainiao has also completed a fundraising round for its pickup station business subsidiary, Zhejiang Yizhan, with the participation of key industry partners, including ZTO, YTO Express, Yunda, STO, and Best Express. Boosting our global logistics network, Cainiao is leading a joint venture with the China National Aviation Corporation and YTO Express that will invest approximately $1.5 billion to build a world-class digital logistics center at the Hong Kong International Airport. This brings us another step closer to realizing our strategic goal of enabling international delivery anywhere within 72 hours. Turning to enablement of retail service partner stores.
In August, we announced a strategic partnership with Starbucks China that will enable a seamless Starbucks experience and transform Starbucks China into a digital operation. This will evolve collaboration across our ecosystem, including digital stores in Alibaba consumer apps, coffee delivery for online orders, and the loyalty program collaboration. The strategic partnership with Starbucks is proof of Alibaba's empowerment of our business partners through our digital infrastructure. Looking ahead, we will continue to develop our unique ecosystem offering to deliver exceptional value proposition for our business partners and consumers in China and globally. We will make a commitment in growing our core commerce business and investing in cloud computing, digital entertainment, local services, logistics, and globalization for the future growth. I turn the call over to Maggie, who will walk you through the details of our financial results.
Thank you, Daniel. Hello, everyone. We delivered another strong quarter. In the June 2018 quarter, major operating and financial metrics continued to record strong result. Total revenue grew 61% year-over-year to CNY 80.9 billion, and revenue from core commerce increased 61% year-over-year to CNY 69.2 billion. Mobile MAU on our China retail marketplaces reached 634 million in June 2018, an increase of 17 million over March 2018. Annual active consumers on our China retail marketplaces reached 576 million, a net add of 24 million quarter-over-quarter. Among the annual active consumers added, about 80% were from lower-tier cities. Revenue from cloud computing increased 93% year-over-year to CNY 4.7 billion. Adjusted EBITDA achieved a growth of 17% to CNY 29 billion, and the adjusted EBITDA for core commerce was CNY 32.8 billion, an increase of 22% year-over-year. Our non-GAAP free cash flow grew 16% year-over-year to CNY 26 billion for the quarter.
For the quarter, total revenue grew 61% year-over-year. This was led by robust growth in our China commerce retail business and Alibaba Cloud. The consolidation of Cainiao Network and Ele.me also resulted in greater revenue. Excluding revenue from the consolidation of Cainiao and Ele.me, our revenue would still have strong growth of 49% year-over-year. Cost of revenue in the quarter was CNY 43.7 billion, or 54% of revenue, compared to CNY 17.5 billion or 35% of revenue. It shows an increase. The cost of revenue as a percentage of revenue increased from 33% in the quarter ended June last year to 50% in this quarter. I want to make sure you understand the changing nature of the cost of revenue. First, consolidation of Cainiao and Ele.me means logistics costs and operating losses in food delivering are incorporated in our P&L.
Second, the cost of inventory from our New Retail businesses are included due to gross revenue accounting. Third, the cost of international expansion, particularly Lazada's startup losses are included. Fourth, an increase in content spending from Youku's original contents and World Cup. As a percentage of revenue, without the effect of SBC expenses or other major operating expenses, including product development, sales and marketing, and general administrative expenses remained stable year-over-year. Let me talk about the Ant Financial's impact in this quarter. During this quarter, Ant Financial announced that it has completed Series C equity financing totaling about $14 billion, which resulted in a significant increase in Ant's valuation.
Under U.S. GAAP, we're required to mark to market the share-based awards granted to our employees by Ant Financial and recognize them as our SBC expense, even though the SBC has no economic cost to us and there is no dilution to our shareholders. For this quarter, we have taken a one-time charge in the amount of CNY 11.5 billion to market the SBC granted to our employees from Ant. Including the effect of such Ant Financial related share-based compensation expense, net income for the quarter would have increased by 33% on a year-on-year basis. During the quarter, we recorded other net income of CNY 83 million, compared to 1 point in the same quarter last year. This was primarily due to two factors. Number one, an exchange loss of around CNY 1.5 billion as CNY depreciated against the U.S. dollar during the quarter.
Secondly, less profit sharing from Ant Financial as compared to same period last year, as Ant Financial continued to execute an aggressive expansion plan and their business developed well. Excluding the impact from foreign exchange loss and profit sharing from Ant Financial, non-GAAP net income grew 10% year-over-year to CNY 20.7 billion. We expect the above impact would continue since CNY has further depreciated against the U.S. dollar since the end of June, and Ant Financial will continue to invest to expand its market leadership in digital payment and accelerate its globalization strategy in this year. Free cash flow and the cash position. As of the quarter end, cash equivalents and short-term investments were CNY 177 billion compared to CNY 205 billion as of March 2018.
The decrease in cash and short-term investment during the June quarter is primarily due to cash used in investing activities, including investments such as Hema and ZTO Express, partly offset by robust free cash flow generated from operations of around $4 billion. Our strong cash flow continues to allow us the strategic and operational flexibility to invest in technology and acquire the resources to accomplish our strategic objectives. Capital expenditures. Total CapEx in the quarter were CNY 11 billion, in which about CNY 1.4 billion related to the acquisition of land use rights and construction in progress. Let's turn into the segment report. Our Core Commerce segment had another strong quarter with revenue growth of 61% year-on-year. The robust performance was mainly driven by the China Commerce Retail business that grew by 47% year-on-year and represented 78% of the segment revenue from the 85% same quarter last year.
We have many other new businesses growing. China commerce retail. Let's look at the key components. First of all, user and GMV. We continue to expand our market share in China commerce retail business. This quarter, we experienced strong user activities and robust GMV growth. Mobile MAU, our China retail marketplace, has net adds of 17 million and annual active consumers with net adds of 24 million. About 80% of these net adds are from the lower tier cities, as we broaden our offerings and services into those regions. We saw accelerated growth in Taobao paid GMV, given ongoing improvements in search and personalized recommendations on the Taobao app. Tmall continued to gain wallet share and expand our B2C market leadership. Excluding unpaid orders, physical goods GMV in Tmall was up 34% year-over-year in the quarter.
The robust growth was driven by continued increases in conversion rates and average consumer spend with strong performance from FMCG, consumer electronics, apparel, and home goods categories. Our fundamentals continue to be healthy and strong. We see strong user growth, especially in lower tier cities, and robust engagement across our growing ecosystem. The combined customer management revenue and commission revenue exhibited healthy growth of 33% year-over-year for the quarter. The customer management revenue grew by 26% year-over-year. This growth trend is mainly due to, first of all, the measured approach to monetization by focusing on user experience and increased conversion to transactions for merchants. There was a high base comparison in the previous years. We showed 65% year-on-year growth in the same quarter last year. We continue to see higher average spending from merchants on our customer management services. Commission revenue grew strongly by 55% year-on-year.
This is primarily due to, first, robust growth in Tmall physical goods GMV, 34% year-over-year, and then less rebates provided this quarter during June 18 promotions compared to last year. We are very pleased with our Tmall progress that continued to demonstrate market leadership with GMV growth faster than the overall industry during the quarter. Other revenue from China commerce retail was up more than 340% year-over-year to CNY 7 billion. The rapid revenue growth was driven by the success of our New Retail initiatives, such as Tmall import business, Hema fresh food grocery business. The Core Commerce adjusted EBITDA margin was 47% in the quarter, compared to 63% in the quarter last year. As discussed in the last earnings call, the financial profile of our New Retail businesses will change the margin profile of our Core Commerce segment over the next several years.
Our others revenue under China commerce retail, which consists primarily of our New Retail initiatives, grew from 3% of the total revenue during the same quarter last year to nearly 10% this quarter. We expect New Retail to become a more meaningful revenue contributor to Core Commerce in near term. Over the long term, we also believe New Retail will have a more meaningful profit contribution to Core Commerce. Again, it is important to note that our Core Commerce revenue relating to marketplaces is recognized as a fraction of total retail sales, while New Retail revenue is primarily recorded on a gross basis, which includes the cost of inventory. The increasing mix of New Retail revenue will structurally change the margin profile of the Core Commerce segment. However, we expect the growth of New Retail will lead to absolute profit growth in steady-state operations.
Excluding the effect of New Retail and Lazada, as well as the consolidation of Cainiao, Ele.me, adjusted core commerce EBITDA margin was similar to that of prior year, which is approximately 62%, even taking into account of the investment that led to faster user growth and expanding B2C market leadership. We did see operating leverage from our core business offset by strategic investments. Our core marketplace business continues to be very healthy. It is our business philosophy to invest in strategic businesses for the long-term growth. That will increase user base, improve the user experience, and add value to our ecosystem. Cloud computing revenue grew 93%. This is primarily driven by both revenue mix towards a higher value-added product and services and a robust growth of paying customers.
Adjusted EBITDA margin of the cloud computing segment was -10% from -4% in the quarter ended last year, primarily due to our added investment in infrastructure and the capacity in anticipation of additional customers. Our digital media and entertainment segment revenue in the quarter was CNY 6 billion, an increase of 46% year-on-year. This increase was primarily driven by increase in subscription revenue from Youku and the mobile value-added service revenue from UCWeb, such as mobile search and the other businesses. The success of the World Cup event and ongoing improvement of Youku's content offerings resulted in daily average subscriber growth of 200% year-over-year during the quarter. As a result, Youku total revenue growth rate for the quarter further accelerated from the prior quarter. However, the cost of World Cup broadcasting rights increased overall content costs at Youku.
Looking ahead, I want to take this opportunity to talk about the formation of a local services holding company that will hold Ele.me, a leading on-demand food delivery platform in China, and Koubei, a leading local services platform focused on in-store consumption in China. We plan to separately capitalize with investments from Alibaba and Ant Financial and third-party investors. As of time of this announcement, we have received over $3 billion in new investment commitments, including commitment from Alibaba and SoftBank. As a result of this reorganization, subject to closing conditions, we will consolidate Koubei, which would result in a material one-off revaluation gain when the transaction closes. Local services is an essential part of Alibaba's China three-pronged consumer strategy around goods, services, and entertainment. It is a must-win and must-have for us. As China consumers demands more quality and diversity of services, this category represents a massive trillion-dollar opportunity.
Ele.me and Koubei will work together to provide a comprehensive local service offerings that is core to our strategy. Together with our commerce and entertainment, this local service flagship subsidiary will offer complementary consumer insights, category expansion, and on-demand logistic network infrastructure to strengthen our value proposition to our merchants and brand customers. Our plan is to aggressively invest in these businesses to gain market share and execute deep integration into the ecosystem of Alibaba service offerings, such as incorporating local service users into our new 88VIP membership. Near-term investments to gain food delivery market share in China and the consolidation of Koubei after completing the reorganization may result in slower overall group profit growth near-term. These businesses will have substantial operating leverage once unit economic turn positive. Looking ahead, we continue to have confidence in our value proposition and the long-term growth.
We have shown a track record of delivering strong long-term profit growth by identifying new growth opportunities that is supported by solid execution. That concludes our prepared remarks. Operator, we're ready to begin the Q&A session. Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on the telephone and wait for your name to be announced. If you wish to cancel a request, please press the pound or hash key. To give more people the opportunity to ask questions, please keep yourself to no more than one question at a time. Once again, it's star one for question. Our first question comes line of Eddie Leung from Merrill Lynch. Please ask your question.
Good evening. Thank you for taking my questions. Could you share your thoughts with us on the e-commerce competitive landscape, given the fast growth of some of your peers in the lower price point market, so to speak? Many years ago, we remember Taobao also started more in the lower price point market, and then developed it into today's scale. Just wondering how you think about the difference today versus many years ago. If you guys can, could you also comment a little bit on the outlook of your customer management business? There has been a bit of a deceleration. Of course, we know there is a high base effect. Any color going into second half of this year would be helpful. Thank you.
Operator and Eddie on the phone. You come through very noisy, but let me summarize your question. Your first question is the lower price point competitor and its impact to us, right? The second question is any color on customer management revenue in the second half.
Okay, thanks.
Maybe let me answer the second question first. Daniel will talk about the competitive landscape. For customer management revenue growth, when you look at the fundamentals of our business, it all shows very healthy growth. The user net adds, whether it's your annual active consumer, shows one of the highest net adds in the past years. GMV grow very strongly, not only Tmall GMV, but also Taobao accelerated for its paid GMV. When you look at the revenue growth for China retail, as I mentioned the last quarter during the call, people should combine customer management revenue and the commission. If you look at a combined revenue growth, 33%, it's pretty much the same level as in previous quarter. That's still very strong growth. Of course, we have been focusing on adding user as well as improve the user experience.
Some of these business initiatives of improving user experience could help on the transaction, but at the same time may impact our P4P. For example, for those buyers who want to click to enter into the store directly, we let them do it, don't have to click on the paid product listing. Overall, the China retail marketplace growth in the revenue represents the performance of the business, represents the value we provided to these merchants who pay us.
Thanks, Eddie. This is Daniel. I will comment on your first question. I think today, with hundreds of millions of user base in Alibaba ecosystem, actually, we do have consumers with different tiers with different consumption power. All we want to do is to use the technology to do a right matchmaking to make sure the right customers can find the right supply and the right assortments. We do see that in recent years, actually, the new internet users grow, especially in low-tier cities in the rural markets. That's why we made a lot of efforts and investment in acquiring the new customers in these areas. This quarter, you see, we have a very good in terms of new user acquisition. We will continue to do that in terms of expanding the user base in the low-tier cities.
At the same time, we still try to improve the product selections on our platform to not only meet but also create the demands for the customers with different needs. Having said that, I think price, of course, is very important, user experience. At the same time, all the customers expect a reasonable quality of the products when even they enjoy a very low price. How to provide a low price product but with a good quality is a key thing. That's all we want to do, and this is what we have achieved in the past few years. Thank you.
Thank you.
Next question.
Thank you. Our next question comes in line of Alicia Yap from Citigroup. Please ask your question.
Hi. Good evening, management. Joe, Daniel, and Maggie, thanks for taking my questions, and congrats on solid results. I have some follow-up on this combined online core commerce. With GMV growth and commissions likely to experience potentially high base as well from last year with this CMR also laps out a tough comp. I think management previously comment about the increasing page view and time spent on the numbers of the recommended feed pages. Are we still on track to introduce potential some additional ad loads to those second landing pages later this year? Also, second question quickly is just, can you help us reconcile the 34% physical GMV versus the 55% commission revenue growth? Is that implying the take rate actually increasing? Thank you.
Sure, Alicia. For your first question, definitely, we have multiple monetization levers that support our customer management revenue growth going forward. Things like improvement in search and personalization technology and ad inventory, ad loads, et cetera. The important thing is that we continue to provide the value to our customers, both merchants and consumers. That's all we do every day. The question on the 34% year-end GMV growth compared to the 55% commission growth, like I said, the commission growth rate, one of the reasons is last year's easy comp. Last year this quarter, as we disclosed in the earnings announcement, that we have had promotion initiatives by giving merchants discounts and rebates. That's one of the reasons, not necessarily increase in the take rate in Tmall.
This is Daniel. I want to add more comments on this question. I think actually today, Taobao is positioned as a consumer media platform. When you browse on Taobao, it's not only about search and navigation, it's about a lot of media content, which create a lot of content page views, not only the product listing page views. Actually, we continue to invest in this and to enrich the content on our platform, which are totally on track, and we strongly believe this will give us a lot of potential for future monetization. Today, the key thing for us is always we want to give our users a better experience first, and give our users to form a habit of browsing this content and spend more time with us.
By this way, they can not only find what they need, but also discover the things beyond their expectation. In the long term basis, actually, we are very careful, and we are very positive in monetization of these incremental page views in different content formats.
Thank you.
Next question.
Thank you. Our next question comes from the line of Grace Chen from Morgan Stanley. Please ask your question.
Hi. Thank you for taking my question. My question is about the new retail business. Alibaba has been doing several mergers and acquisitions, and also has been setting up Hema and partnerships with various companies to lay out the foundations for the new retail business. I'm wondering is there still any missing parts in your business portfolio to implement your new retail strategy? After the recent merger and acquisitions, what is your critical next step to execute the new retail strategy? Thank you.
This is a very big question. I would say, when we talk about new retail, actually, we do two things. First, we incubate new retail formats, empowered by all of Alibaba's digital infrastructure. Today, I think the successful showcase is Hema, but I would say we will continue to do that, to incubate new animals. On the other hand, we are trying to help our retail partners to transform their existing retail infrastructure, retail outlets, into a digital operation. I think this is more complicated, and this is not only relevant to the technology, but also relevant to the product assortment, relevant to supply chain, and relevant to the understanding and insights of the millennials in China.
Today, what we do is that in some of the vertical categories, we work closely with some retail partners like in Suning electronics, department store, Easyhome in decoration material categories. Recently, we even invest in Focus Media. The purpose of this investment is to transform a so-called traditional media into a digital media. This is more like, in Alibaba, we call it the new retail of Alibaba business. I would say this is not the end of the world, but I think the key thing is that I do believe that in the future, there are a lot of new retail formats will arise and a lot of existing retail formats will be upgraded. All our mission is to make our business partners to do this transformation easier in the digital era. Thank you.
Next question.
Thank you. Our next question comes from the line of Thomas Chung from Credit Suisse. Please ask your question.
Hi. Thanks, management, for taking my questions. My question is about the food delivery business. Can management comment about the competitive landscape and our strategies in becoming the number one in this segment? Thank you.
Yes. We have very strong commitment in food delivery business. That's why we make a huge investment and acquire Ele.me. Today we are making very good progress in consolidating and integrating the business. The reason why we value this business is, the reason is quite simple. I think, in both Joe, Maggie, and my script, we see very clearly because we believe this is a very essential part of what our customers need. When Alibaba enter into this area, we strongly believe we need to leverage our strong user base, hundreds of millions of user base in China. Also to leverage what we built in the last mile and in the digital infrastructure to do this business in an innovative way. That's why we are very confident for the future of this business.
Our CEO of Ele.me said publicly that we are trying to gain 50% market share in three years. The confidence is from the perspectives of Alibaba ecosystem. Actually, so far, we are making quite good progress. We believe that food delivery business is not like it's just a food delivery. It's all about to meet the customer's need with good food quality and innovative meal. Also with a good service quality. That's the purpose of our business.
Next question.
Thank you. Our next question comes from Mark Mahaney from RBC Capital Markets. Please ask your question.
Thank you. I wanted to ask about the sustainability of the digital media revenue growth. It seems like you had a nice impact from World Cup there. Could you talk about whether some of the newer customers, or some of the newer business that came out of that event, whether that looks like it's sustainable, whether those are new customers that will stay with the service. Anything you can tell about what their activity has been like post the World Cup? Thank you very much.
Well, actually, we do see the solid demand in the market about the sports contents. That's why in our presentation, we said that we have many viewers who came to watch the live streaming of World Cup and in over 180 phones and smart TVs. Post the World Cup, actually, we are working closely with our partners to jointly build up this digital sports platform on Youku. So far, I think the new soccer season just began, and you can find the sports content of British Super League and also our Chinese Super League in Youku already. We will continue to work on this and introduce all these five super leagues in Europe and other good sports contents to our audiences.
One more comment on this is that, actually, before we introduced sports content to Youku, actually, we have more female than male on Youku platform because we introduce a lot of drama show and variety shows, drama hits and variety shows. With the sports content, we do get more men coming to us. They are very young and very passionate. On top of the sports content, we do see the opportunity to find synergies between the sports content platform and the commerce platform, and with which we can help our brand partners, and to acquire new customers in sports categories in the joint platform. Thank you.
Next question.
Thank you. Our next question comes from Gregory Zhao from Barclays. Please ask your question.
Hi, management. Thanks for taking my question, and congratulations on the strong quarter. My first question is about your international, some international brands. We see during the quarter, more international brands coming onto your Tmall marketplace. How shall we expect the advertising and the commission revenue contribution from these new players, and how shall we expect growth trend going forward? A very quick follow-up is on your 88VIP. How do you expect the membership to integrate your existing services and improve the user engagement, and can you share some initial metrics of the business? Thank you.
For the first question, international, I think globalization is our long-term strategy. That's why we make very big investment in Southeast Asia, and that's why we newly acquired a business in Southern Asia, Daraz, and our investment in Trendyol, a Turkey leading e-commerce company. We have a very big picture in terms of globalization. So far, actually, we do see a very big progress in terms of customer acquisition and user growth and the category expansions in the new markets. One advantage we are taking is that, as I said in my script, we have a lot of brand partners with us for many years. Today, we are working with them not only in China anymore, but also in these new markets.
China is famous for manufacturing base. We have a lot of good supplies with very good prices, which are very popular in South Asia and the Southern Asia market. We will continue to do that, to leverage what we supply from China and what we partner with this brand to build a unique advantage in these new markets. In terms of 88VIP, I would say actually this is a new program. So far we get very warm feedback from market. The purpose of this program is to enhance the loyalty and the stickiness of our customers in our core commerce platforms and other new businesses.
That's why for the first time, we consolidate the most of the consumer service we have in Alibaba ecosystem, starting from the retail discounts, exclusive offering of some products to the movie and to entertainment, music, even food delivery. We strongly believe that in each of the business lines, we may find some other players who can offer these kind of services. Actually Alibaba today is more like all-in-one, and we want to provide this all-in-one membership program to our loyalty customers to enhance their stickiness in our ecosystem.
Greg. Just a quick question to touch on your international brand comment. We do have a lot of luxury brands and international brand coming into working with us. You've seen that in the Luxury Pavilion that we have had success. We continue to attract them, give the consumers a differentiated experience for the higher tier consumers, and that's how we can continue to offer value to the consumers. You see some of these luxury brands actually opening up Tmall flagship store as well when they join the Luxury Pavilion.
Thanks very much.
Next question, please.
Thank you. The next question, come from line of Wendy Huang, Macquarie. Please ask your question.
Thank you. Two very quick questions. The first, your revenue growth is very strong, yet the adjusted EBITDA growth was only 13% this quarter. Given that you mentioned the New Retail's margin will be structurally different from previous. Should we expect the adjusted EBITDA growth to stay at the current level for extended period of time? Second, very quickly on your overseas strategy. There has been some media report talking about a $5 billion investment in India market in the Reliance Retail. Can you give us update on your overseas expansion and investment? Thank you.
Right. Wendy, when look at the EBITDA growth. Take a look at the core commerce EBITDA first. In one quarter's time, I think if you compare with the quarter last year, our absolute EBITDA profit growth is from $3.9 billion to $4.8 billion. That means we net added approximately $1 billion profit in a quarter's time. That gives us the flexibility to invest. We talked about investment in all of these strategically important areas, local services, logistics, New Retail, and also entertainment business, including some seasonal investment like this World Cup investment in this quarter. Going forward, I think we're very clear that the core business, we're going to continue to emphasize the healthy growth, which going to support our investment. Strategic investment will not be ended in two or three quarters' time. It will continue.
The thing is that we believe those are the areas that have big TAM. At the same time, we, Alibaba Group, has the advantage to provide better service and the integration among different businesses, get the synergy out of these businesses and eventually add value to our customers, and then we could monetize better in the future.
Hey, Wendy. Your voice was low. Can you repeat the second question?
Your investment in the overseas and also the media report about $5 billion investment in the Reliance Retail in India.
Just to summarize, I think you were asking about our overseas investment, particularly on, I guess the news about the Reliance Retail in India.
Yeah.
Is that correct?
Yes. That's correct.
Yeah. Wendy, I'll take that question. This is Joe Tsai. Look, Reliance is a very good company, strong company in India. We've a lot of respect for them. But what you read in the news is just untrue. I think taking a step back, I've talked about investing in the emerging markets, both Southeast Asia and South Asia. As you know, we've put a lot of resources into Lazada, which operates in six Southeast Asian countries. We've also recently invested in the largest e-commerce business in Pakistan and Bangladesh. These are sort of off the beaten track markets it seems to you guys, but just remember that Pakistan has a population of 200 million people. It's about the same size in terms of population as Indonesia. These are some of the areas that really excite us.
By the way, Bangladesh, if you don't recall, has 160 million people. Although they're growing from a very low base, we think they have very good long-term potential. We're also very excited about these South Asian markets.
Operator, we'll take the last question.
Sure. The last question comes in of Alex Yao from J.P. Morgan. Please ask your question.
Hi. Good evening, management. Thank you for taking my question. I have a few in terms of the formation of the local service holding company. Firstly, from capital allocation perspective, why do you guys need to seek external investors given the critical importance of these business in your broader new retail strategy and your healthy free cash flow generation capability? Secondly, I think the transaction highly likely will be closed in FY '19. Can you talk about what could be the financial impact for FY '19, including the consolidation of Koubei as well as the potential step-up in pricing subsidy for Hema? Lastly, I think Hema is very important to support the overall new retail strategy. Potentially, the long-term transportation for those services delivery and product delivery will transform from intracity to intercity. Is the investment in Hema enough to support the whole new retail strategy?
Are there any other incremental investment you need to do to further improve the local on-demand intracity delivery? Thank you.
Alex, you've broken up during these questions. Can you just summarize the three questions for us?
Number 1, for the formation of a local service holding company, why do you want to seek external investors and funding source? Number 2, in light of the consolidation of Koubei and more investment in Ele.me, can you talk about the financial impact in FY 2019 from this local service holding company? Thirdly, in addition to investment in Ele.me, are there any other areas that you think are worth investing in terms of the local delivery? Thank you.
Let me answer your first question. In terms of the local service holding co., actually, this is a newly set-up company, which we combine both Koubei and Ele.me business under this whole co. As we said in our earnings release, we are very happy to work with other investors and commit CNY 3 billion in the coming fundraising, which we believe that will give a very solid support to our local service business to gain the market share and to acquire new customers in the ecosystem. We strongly believe that this is a very important area, we will do everything we can to win the battle. We are committed to invest not only the money, but also the technology. Actually, because this is a new area, that's why we are very happy to work with other investors on this as well.
In terms of the, I think Maggie may answer your second question, let me finish your third question at the same time. I think, yes, by the investment in Ele.me, today we have a very good large scale on-demand point-to-point delivery network. I think this is a very unique network which is good not only for food delivery, but also is necessary for the new commerce, any in-store fulfillment and delivery. This I think could be relevant to any other categories to do in-store fulfillment and point-to-point delivery. Actually, today we are working very hard to consolidate this network, integrate this network with our other business.
We do believe that if we add more business cases into this point-to-point network, this will enhance the attractiveness and the stickiness of the riders in the system, and also improve the efficiency of the operation, which on the long term, we believe is fundamentally important to this new retail strategy. Let me just supplement the first question why we include third-party investors. We're combining two businesses, and in the Koubei business, we already have third-party investors. When we bring both companies into one holding company, those third-party investors will become part of the investors in the holding company. We start with a starting point already with third-party investors. Also we want to make sure that this is a business that can be validated by the market in long run. We've been talking to SoftBank.
They came in and take a look, and they really like the business. They are making a very large commitment to our business, which is a really great validation of the business. This is just the first step. We only announced about CNY 3 billion of commitments that we have received, more money will be coming from other third-party investors.
Alex, to your second question about the financial impact. This investment into the local service area together with consolidation of Koubei will have an impact on our financial. It will result in slower overall group profit growth in near term. To the extent, if you look at our core commerce EBITDA, we said that without this investment, that business EBITDA margin level could be comparable to the previous quarters. That gives you a sense of how much we have invested in those strategic areas. Hema, local service represents somewhere around 20% of that investment if we're talking about the quarter. Although it will drag down our profitability, but this business will have a substantial operating leverage once unit economics turn positive. That we have the confidence that to turn that business into profitable business.
Thanks.
That concludes our call today. Thanks everyone for joining. If you have any questions, please contact the investor relations team at Alibaba. Thank you.
Thank you. Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.