Good day, ladies and gentlemen. Thank you for standing by. Welcome to Alibaba Group's March Quarter 2017 and Full Fiscal Year 2017 Results Conference Call. At this time, all participants are on listen-only mode. After management's prepared remarks, there will be a Q&A session. I would now like to turn the call over to Rob Lin, Head of Investor Relations of Alibaba Group. Please go ahead.
Good day, everyone, and welcome to Alibaba Group's March quarter 2017 and Full Fiscal Year 2017 Results Conference Call. With us today are Mr. Joe Tsai, Executive Vice Chairman; Daniel Zhang, Chief Executive Officer; Maggie Wu, Chief Financial Officer. This call is being webcast from our IR section of the corporate website. A replay of the call will be made available on our website later today. Let me go quickly 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 and 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 undertake any obligation to update these statements except as required under applicable law. Please note that certain financial measures that we use on this call, such as adjusted EBITDA, 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 release. With that, I will turn the call over to Joe.
Thank you, Rob. Thank you all for joining us. We had a great quarter. Before we get into the details of our business, I want to give some perspective on the China macro environment as well as our vision of New Retail. Both of these are important to understanding a long view of Alibaba. On China macro, there is an important secular trend underway. Chinese consumers are driving the shift of the Chinese economy from an export and investment-led to a consumption-led economy. When looking at investing in China, this secular trend is absolutely important to pay attention to, and that is what we focus on when we plan our strategy rather than on quarter-to-quarter cyclical trends. There are a few underlying reasons for this secular shift to a consumption economy, and these reasons are why we think the trend will be long-term and sustainable.
First, China's GDP per capita is now more than $8,000. For context, when I started at Alibaba in 1999, China's per capita GDP was $870. At the current $8,000 level, people's basic needs for shelter and food are satisfied. Consumption is moving up the hierarchy of economic needs. In other words, people are spending more on discretionary goods and services. We believe the growth of per capita GDP in China will continue for years to come and eventually approach advanced economies such as the U.S., where GDP per capita is over $50,000. Second, over the past several years, among Chinese urban employees, wages have increased over 10% per year-on-year. People have disposable income to spend.
Lastly, the high savings rate in China means that Chinese consumers have a lot of cash on hand. Net cash on the Chinese household balance sheet, that is total cash deposits minus debt, is nearly $4 trillion. In addition, Chinese household debt as a percent of GDP is 45% as compared to 80% in the United States. The potential levering up of the Chinese consumer, especially among the younger Chinese population, will provide a powerful driver of consumption for many years into the future. Proof of the strength of the Chinese consumer is reflected in the 2006 retail sales growth in China at 10.4%, which outpaced GDP growth. What does all this mean for Alibaba? Our view is the traditional thinking that pits e-commerce against physical retail no longer holds.
The distinction between online and offline retail is quickly going away because of the mobile phone. Traditional e-commerce is about you sitting at home, in your office buying stuff on your desktop computer. Chinese consumers today are equipped with a mobile phone, and they can buy anything, anytime, anywhere. Now, let's focus on the concept of anywhere. Because of the mobile shopper, this is changing the way we think about customer traffic, retail space, inventory location, and logistics. Let me give you an example. Under our New Retail model, if you walk into a grocery store at lunchtime with your mobile phone, you can do any of the following three things. First, you can eat in by ordering fresh items from the counter and have them cook it for you right there. Second, you can buy a fresh lunchbox to take back to your office.
Third, you can order some fresh seafood and vegetables that you don't want to lug back to your office and ask the store to deliver them to your home before dinnertime. You can do all of the above by selecting items and paying with your mobile phone. All of your consumption activity is being captured digitally. Now the store knows your preferences and can give you a personalized selection of products on your mobile app, no matter where you are. It knows you and can predict your needs. Alibaba is best positioned to capitalize on this digital transformation. Here's why. Number one, we have the consumer scale, with more than 500 million mobile active users engaged in commerce activity monthly. Because of this, we are the partner of choice for operators with physical retail footprint.
Number two, we have continuous fresh data generated by activity of these users across our ecosystem of internet services, from shopping to local services to entertainment. Number three, we have the technology. Our cloud computing technology gives us the proprietary capability to manage massive amounts of data, and our development in artificial intelligence gives us the brains to get value out of that data. With that, I would like to turn it over to Daniel. Thank you.
Thanks, Joe. Hello, everyone, Thank you for joining us our earnings call today. We enjoy one outstanding quarter and fiscal year. Over the past year, our businesses have prospered through innovation and realization of synergies between our various platforms in commerce, Digital Media and Entertainment, logistics, and cloud computing. Our business is more than making connections. We are transforming existing business models through helping manufacturers, brands, and retailers cope with digital transformation. In this ever-changing environment, where impact of the internet continues to move up the retail chain from sales and marketing to supply chain, manufacturing, and even product design. Our mission of making it easy to do business anywhere is more relevant than ever. Our core commerce business sustained very healthy growth. It is defying modest expectations about the Chinese economy and even our own law of large numbers.
Today, we have more than 500 million mobile active users as a result of our continued excellence in capturing the consumer's time and wallet share with discovery, personal recommendations, and entertainment. Taobao has transformed into a consumer community, powered by a rich mix of content and interactive features such as live streams, news feeds, short-form videos, photos generated by everyone from influencers to celebrities to brands. Even as our active user base grow, average time spent per user continued to remain robust, while user stickiness, as measured by DAU divided by MAU ratio, has increased to 41%. Taobao is moving from satisfying demand to creating demand through the continuous improvement to our algorithm-driven personalization and the rollout of differentiated merchandising for different user segments. Tmall remains the partner of choice for brands, serving as cornerstone of their China online retail strategy and operations.
The value that it brings to merchants encompass sales, marketing, and brand building, customer management, new distribution channels to the lower tier cities and the rural areas, and even new markets outside of China. Tmall continues to be the primary engine for the ongoing consumption upgrade from daily items to high quality discretionary goods among Chinese consumers. Our global strategy achieved a key milestone with the launch in Malaysia of the first eWTP hub outside of China. We are working together with the Malaysia government to develop logistics, payments, training, and turnkey export services dedicated to supporting local business to grow through cross-border e-commerce. We continue to develop Lazada in order to grow more access to Southeast Asia consumers. Together with the accelerated growth in AliExpress, we now have 83 million annual active buyers globally besides China. Our cloud computing business continued to grow at a fast pace.
We now have more than 807,000 paying customers, with revenue growth of 171% year-over-year during fiscal 2017. As our paying customers base continue to grow, we are also introducing cloud-based applications and services that deliver new value to customers. We have completed the initial phase of integration of our Digital Media and Entertainment assets, forming a closed loop matrix with a mix of both content distributors and content generators. The successful data integration between our retail commerce platforms and our Digital Media and Entertainment matrix now allows brands to track, engage, and manage the whole life cycle of their customers in our ecosystem. Upon this foundation, we have introduced a solution to brands that we call Uni Marketing that is unmatched in its potential to optimize digital brand building and marketing campaigns.
By facilitating brand into accumulate and analyze customer activity data for ongoing management, we will help brands to convert marketing spending from an expense into an investment. Today, Alibaba Group is an economy with 507 million active mobile users and a RMB 3.8 trillion in GMV. The opportunities ahead for our business is brighter due to the network effects and possible synergies across our ecosystem. We are excited by the multiplied effects that can be gained through collaboration between our different platforms. There is immense potential for growing the user base of our core commerce platforms through conversion of users in our Digital Media and Entertainment metrics, as well as through the payment platform of our affiliate company, Alipay. The opportunity for cross-selling to users across the various platforms is clear.
We have long empowered businesses in digital sales and marketing. Today, we are progressing up the retail chain to support them in intelligent manufacturing and product design, as well as cloud infrastructure. As businesses increasingly digitalize their entire operations, we can leverage the combined technology and infrastructure of our retail, logistics, and cloud platforms to offer a solution that maximizes the value of digitalization. In globalization, the manufacturers and merchants represented on our China retail platforms are eager to address the expanding and evolving consumption demands globally through our platforms. We will focus on leveraging the competitive advantage of our China retail platform, logistic platform, and global retail platforms to work towards serving 2 billion global consumers.
At the same time, China's commitment to importing $2 trillion worth of goods as part of the One Belt One Road initiative presents a significant opportunity for our platforms to broaden selection of high-quality products to meet the demand of the world's largest consumer market. We will continue to invest significantly in AI technology such as voice recognition, machine learning, and natural language processing for application to our technology in real use cases such as product discovery, personal recommendations, and customer services. It will contribute to meaningful improvements in operating efficiency across all our platforms. Further technology developed to serve our own business needs can be open to our customers, both existing and new. Now, I turn the call over to Maggie, who will walk you through the details of our financial results.
Thank you, Daniel. Hello, everyone. We're very happy to announce that we delivered another quarter of excellent results. In terms of quarterly revenue, this quarter, the total revenue growth accelerated to 60%, the highest growth rate we have achieved since IPO. This was led by robust growth in our core commerce, Alibaba Cloud, as well as Digital Media and Entertainment businesses. Our non-GAAP free cash flow was $1.2 billion for the quarter, demonstrating the strength of our business. Revenue from China Commerce Retail business now represents 67% of total revenue, down from 76% for the same period last year. We now have a more diversified revenue base with multiple growth drivers, including Alibaba Cloud, Digital Media and Entertainment, and international businesses. Our ability to monetize the users on our platform continues to improve.
Annual revenue per annual active buyers continued to increase, reaching RMB 251, $36 in the March quarter. Mobile revenue per mobile user reached RMB 179 or $26 in the March quarter. Our mobile commerce platforms have become the destination for social commerce, consumption of content, and brand engagement. Quarterly cost trends. Cost of revenue excluding stock-based compensation was RMB 14.3 billion. As a percentage of revenue, it increased year-over-year, primarily due to the increase in content acquisition cost of Youku Tudou, cost of inventory of Lazada, and the logistic costs associated with Tmall Supermarket, as we talked about in previous quarters. We continue to see strong operating leverage from our China commerce business. This operating leverage allows us to make strategic investments, which positions us for long-term revenue and margin expansion.
Our effective tax rate, excluding SBC and one-off items, was 23% in the quarter ended March 31st, 2017, up from 14% in the same quarter of 2016. The lower tax rate a year ago was primarily due to our investment in Suning, which was treated as reinvestment of earnings in China, and thus not subject to withholding tax. This quarter, we are accruing the withholding tax on all the distributable earnings to our PRC operations, which lead to an increase in our effective tax rate, which is actually a normalized tax rate. We expect our in the future, normalized annual effective tax rate, excluding SBC one-off items, will be in the range of 20%-25%. Assuming that no significant impact from investment or acquisition, et cetera.
Non-GAAP net income in the quarter was RMB 10.4 billion, an increase of 38% year-over-year. Free cash flow, capital expenditures and cash. We continue to generate significant free cash flow. In the March quarter, we generated RMB 8 billion or about $1.2 billion in free cash flow. Our cash flow allows us the strategic and operational flexibility to invest in technology and acquire the resources to accomplish our strategic objectives. Total CapEx expenditures in the March quarter was RMB 3.4 billion, in which RMB 575 million related to the acquisition of land use rights and the construction in progress. At the end of March quarter, our cash equivalents and short-term investments were RMB 146.7 billion or $21 billion.
This is an increase of RMB 8 billion from the end of December quarter, primarily because of free cash flow generation from our operations. Segment reporting. For our Core Commerce, revenue increased 47% year-on-year. China Commerce Retail revenue grew 41% primarily due to the strong growth of online marketing service revenue. Online marketing service revenue in our China Retail Marketplace grew 46% year-over-year, which is driven primarily by mobile user growth and our ability to deliver more relevant content to consumers through our improved data technology. This growth resulted in higher average spending on our online marketing services by increasing number of brands and merchants. Commission revenue grew by 34% year-over-year, reflecting robust GMV growth on Tmall. Our consumers purchased more frequently across more categories on our China Commerce Retail marketplaces.
The average annual spend per active buyer for the 12 months ended March 31st, 2017, continued to increase both year-over-year, and we continue to see healthy consumer cohort growth on spending. International commerce retail revenue increased 312%. This is a year-over-year increase, mainly due to the consolidation of Lazada starting in mid-April and re-acceleration of revenue growth from AliExpress. Our AliExpress and Lazada businesses had about 83 million annual active buyers combined globally for 12 months ended March 2017. Our core commerce, core marketplace adjusted EBITDA margin of the segment remains flat year-over-year at 59%. Still very high, taking into account of operating leverage generate of the business and investment we have made. Cloud computing revenue increased 103% year-over-year.
This was led by an increase in the total number of paying customers, partially offset by a number of price cuts during the quarter as we continue to pass cost savings to our customers through improved technology and scale. We reached a record 874,000 paying customers this quarter. We continue to see strong new customer additions across a variety of industries and businesses. Our more established customers are increasing usage of higher value-added services and applications as well. Adjusted EBITDA margin of the cloud computing segment improved from a - 16% in the prior year's quarter to - 8% this quarter. Our cloud computing business top priority remains expanding market leadership. We will continue to acquire in customers through more cost-effective solutions for standard products, as well as developing and deploying more sophisticated products and services.
Our Digital Media and Entertainment segment revenue increased 234% year-over-year, primarily due to the consolidation of Youku and to an increase in revenue from mobile value-added service generated by UCWeb. Adjusted EBITDA margin of this segment improved slightly quarter-on-quarter to - 44% this quarter. We will continue to invest in content, user acquisition and infrastructure for the segment. Going forward, on full-year basis, we expect the business will continue its fast growth, and we expect the negative EBITDA margin for the Digital Media and Entertainment segment to narrow. Revenue from Innovation Initiatives and Other segment increased 88% year-on-year. Adjusted EBITDA margin of this segment was - 74%, reflecting ongoing investment in AutoNavi, Cainiao, and DingTalk.
Full Fiscal Year 2017 financial highlights. Total revenue in fiscal year 2017 grew 56% year-on-year to RMB 158 billion, driven by the healthy and sustainable growth of our China Commerce Retail business. Triple-digit revenue growth of Alibaba Cloud as it continues to drive market leadership. The inclusion of Youku Tudou and Lazada in our financial statements also contributed to revenue growth on a year-on-year basis. We are at the end of the full anniversary effect of this. GMV transacted on China Retail Marketplace in fiscal year 2017 was about RMB 3.8 trillion, an increase of 22% compared to RMB 3.1 billion in fiscal year 2016. Our China GMV growth was primarily driven by increasing spending per user growth, with fast growth in order frequencies among active buyers.
New active buyers continue to drive GMV growth. Besides the GMV on our China regional marketplace, we also see strong growth in GMV of our global businesses. We are on track to reach our RMB 6 trillion GMV goal by 2020 fiscal, implying CAGR of 17%. Yeah. Annual active buyers in China reached 454 million, an increase of 31 million from the 12-month period ended March 2016. We had 83 million annual active buyers on our AliExpress and Lazada marketplace combined globally during fiscal year 2017. We have successfully capitalized on the transition of users from desktop to mobile. For fiscal 2017 year-end, our mobile MAU reached 507 million.
Mobile GMV transacted on China Retail Marketplace grew strongly by 49% year-on-year to RMB 2.898 trillion, which equals to $433 billion and represented 79% of total GMV. Mobile revenue growth was even stronger, showing 80% year-on-year growth, it represents 80% of total revenue for China Retail Marketplace. Since our IPO, we have shared with you our belief that mobile monetization rate would exceed that of desktop, this has become a reality now. Our Cloud Computing Segment maintained strong growth in fiscal 2017, with revenue increasing 121% year-on-year to RMB 6.7 billion. Adjusted EBITDA margin improved to - 7% from - 41% in the previous year, primarily due to the robust revenue growth and the economies of scale.
In fiscal 2017, we repurchased and canceled approximately 27 million of our shares for about $2 billion. Our board of directors has authorized a new share repurchase program in an aggregate amount of $6 billion. Looking ahead, we are very excited about the prospects for fiscal year 2018. We expect a healthy and sustainable growth of our China Commerce Retail business. Our revenue base is now more diversified with businesses such as cloud computing, digital media entertainment. They're becoming more meaningful revenue growth drivers. Same as last year, we intend to give our fiscal 2018 revenue guidance, which will be simultaneously webcast in the upcoming Investor Day. Our Investor Day will be held on June 8th, 9th in Hangzhou.
For those who are unable to attend in person, we will make presentation materials available on our IR website. That concludes our prepared remarks. Operator, we are ready to begin the Q&A session. 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 your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. To give more people the opportunity to ask questions, please keep yourself to no more than two questions at a time. Again, that is star one on your telephone. Your first question comes from the line of Piyush Mubayi from Goldman Sachs. Please ask your question.
Thank you, and congratulations on outstanding top-line growth, the record since the IPO, Joe , Daniel, and Maggie. My first question is with regards to the 46% growth in online marketing services we've seen. Would you be able to split that between the brand and pay-per-performance advertising? If possible, the growth that you've seen in paid click and cost per click. While you talk through that, if you could give us a sense of for how much longer we can expect this very quick pace of growth to be maintained. Thank you.
Hi, Piyush. Thank you for the question. The strong growth we've seen in our China Retail Marketplace, especially online marketing service, actually, when you look at these drivers, the number of clicks, click-through rate, all of these shows a very healthy growth. Actually, due to our continued efforts in, you know, providing the relevant content through our data and technology to attract more users and buyers to our platform. In terms of going forward, we are very confident that, you know, all of these efforts we made are, you know, will generate good results going forward. Things like, you know, our algorithm improvement, personalization, and the use of data, right now we see this is still at a starting point at the early stage.
Piyush, I just want to supplement that, you know, you asked about the distinction between brand and pay-for-performance advertising as though those two are different types of coming from different types of advertising budgets. We actually don't see it that way. If you take a typical FMCG company, they would use pay-for-performance, in other words, click-based, type of advertising even to promote their brand, because the landing page of the click could fall on something that is a brand promotional page as opposed to a detailed product item to be purchased. They're seeing our suite of potential online marketing products from pay-for-performance to CPM-based advertising to special sort of customized brand promotional campaigns using our data sets. I don't think we are seeing the online marketing business as a brand versus P4P type of split.
Understood. Thank you.
Operator. Operator, next question.
Thank you. Your next question comes from the line of Mark Mahaney from RBC Capital Markets. Please ask your question.
Great, thanks. I just want to ask about international. You had that data point in there about how you've now achieved 83 million active buyers. When you think about overall investment priorities for the company, where does and since the IPO, has international now become a much more material investment area for you in terms of potentially strategic actions or or organic growth? Just lay that versus the other growth initiatives that you have now. How does international rank? Thank you.
This is Daniel. Yes, international is our core strategy for the next five to ten years. We are very happy to see we made a concrete progress in the Southeast Asia. Actually, last April, since our investment in Lazada last April, actually, their business grow very well. Together with existing AliExpress, which is a cross-border export business, actually, we are happy to see in terms of the GMV, in terms of the annual active buyer, we see a robust growth. We do believe this is just the early stage of the new game in the market outside China.
What we wanna do is to leverage what we call the China engine to empower the growth in other markets. China is famous for the manufacturing, and we have so many local brands, China local brands, and retailers and small and OEM factories on our China retail platforms. Today, they are eager to go with us to the new market outside China. We believe this give us a unique value proposition and a unique advantage to grow the new market outside China.
Thank you, Daniel.
Operator, next question.
Thank you. Your next question comes from the line of Alan Hellawell from Deutsche Bank. Please ask your question.
Thank you, and again, congratulations. I was hoping to gain further color on margin profile for core e-commerce and media and entertainment as we move into FY 2018. It's very well profiled that in core e-commerce you have countervailing trends, which is the extremely profitable and leverageable core retail business, and for the time being at least, the impact of growth businesses such as Lazada and Tmall Supermarket. I'm just curious how we should think about the interplay of those two broad pieces in commerce from an EBITDA margin perspective as we move into FY 2018. Similarly, Maggie has very helpfully pointed out or suggested that there is scope for negative margin compression or margin improvement in Digital Media and Entertainment.
I'm just wondering whether you could just outline the basic content spend plans for Aidge and then maybe top-line related progress in subscriptions. Finally, you know, So much of the story, the success story of marketing services seems to crystallize in the experience of key account Tmall storefronts. They get the branding value proposition that Joe and company have been talking about over the past year. I'm just wondering, the guys in the middle and the bottom of the pyramid, what are we doing for them? Because it's been said at times that we have more than 1 million advertisers, and I'd love to find out what, how they're achieving success. Thank you.
Thank you, Alan . In terms of the margin, as we, as you have seen that our China retail business will continue to see very strong margin and that is the result of healthy operating leverage offset by our investments in those new areas. Going forward, we you know, continuing to see this huge potential in each of our business development. High profitability of our core commerce will support our investment in new businesses such as cloud computing and Digital Media and Entertainment. In the long run, we do expect to see cross-segment synergies that will further deliver overall leverages in the entire business. Having said that, like we mentioned before that we don't manage the business to manage an overall margin profile. We will ensure the growth of the whole business and profitability. You know, that's how we look at this margin.
Yeah, I wanna have a few, give more comments on the first question. I think, in terms of the, in terms of Tmall Supermarket and Lazada, I would say like Tmall Supermarket, we never view this as a separate independent business. We view this as a very important piece of the entire Tmall operation. Via this Tmall Supermarket operation, we very effectively improve the user stickiness and improve the user experience because they are all buying the daily necessities on Tmall Supermarket. Today, our fresh products business also run very well through our Tmall Supermarket. Even we have a lot of investment in Tmall Supermarket, but on a general basis, you can see we have very robust growth in profitability.
We do believe this is a model, is a very healthy model. We will continue to invest on this. In terms of Lazada, actually today is still at an early stage, but we are very happy to see the fast growth of their business. We do see a strong synergies between the overseas market and China market. On top of the China supply to the world, I mentioned just now, we're also trying to leverage the fulfillment network Lazada built in Southeast Asia, to leverage this network to ship the products from China to that region and for multiple retail platforms of Alibaba. That's the synergy we can see in our globalization.
Alan , I'll address your second question about kind of the content spending layout for the Youku business. The first thing to say is that I, we don't think this is a winner-take-all market. This is a entertainment market that is large enough that can accommodate several players. The market has basically settled to three main players, as you know. We think that over time, the market will become more rational, although in the near term, there's still going to be pretty fierce competition for licensed content.
I think just like other players, we have moved towards not just licensing content that we don't produce, but also to develop ways for developing proprietary content and working with talent and directors for proprietary content. Over time, the cost of content should come down. Obviously, we're not going to telegraph to you how much we're gonna spend over the next 12- 18 months. This is a very competitive market and we will, you know, find a content that we wanna spend on accordingly.
Yeah, this is Daniel again. For the last question about the small scale business on our platform, I would say that's very important question. These group of business are very important to Alibaba because our mission to help SMEs to make it easier to do business anywhere. In terms of how to help them to do business better, today what we do is to leverage the data and technology. We develop a lot of tools and services to enable them to do business efficiently.
For example, today, the small scale business, they can, maybe they don't afford to do a very big brand activities, but they do have the tool, a very efficient tool to tailor make their storefront, a homepage which could be driven by big data for the visitors to the store, and they can see the different selections and different views, even different views. We also give a lot of promotion and marketing tools to these small merchants. I think this is the growth, the continuous growth of our small merchants is very critical to the long-term for the long-term success of our business.
Thank you. Operator, next question please.
Thank you. Your next question comes from the line of Eddie Leung from Merrill Lynch. Please ask your question.
Hi. Good evening. Two questions. The first one is about the product mix. On your Chinese e-commerce platform. I'm just wondering if we have see a shift of product mix from high margined products to low margin business or the other way round, and how would that affect the ability of your merchants to pay for your marketing and other services? That's my first question. Then the second question is also related to your overseas business. Just wondering, broadly speaking, are we at the moment going deeper in the existing markets? Or are we thinking more about increasing our geographical coverage to more countries? Thanks.
In terms of product mix, I would say, actually, we are such a big platform, and we have over 500 million monthly mobile active users. We cannot give them 500 million people the consistent high value or low value product, low price product. That's why the data and the data-driven business is so important to us. Today, what I can share with you is that we have already accomplished the 100% data-driven personalization page in all of our major user interface and on our mobile app.
We rank this not only based on the price, but most important thing is based on the lifestyle, based on the demographic of our customers. That's the core of our operating methodology. In terms of the, in terms of the international strategy, as I said before, this is a long-term commitment. This is long-term strategy. We start with Southeast Asia. We believe that this is a very important here, very important region with very big population, but close to China and have enough Chinese population there. The Chinese products are very popular in this market. That's why we start with Southeast Asia. Via our cross-border export platform, AliExpress, we also cover a lot more countries, and we will continue to invest in this international markets. This is a long, that's a long way to go.
Thank you.
Operator, next question.
Thank you. Your next question comes from the line of Eric Sheridan from UBS. Please ask your question.
Very much for taking the questions. Maybe the first, was curious how short-form video or video around brand awareness or selling might become a bigger part of the platform longer term, sort of merging the worlds of video consumption with e-commerce and what that might mean for bandwidth or infrastructure costs longer term. Second question would be following up on Joe's comment from the presentation, maybe an update on how your leading advantage on mobile commerce is accelerating your efforts to blur the lines between offline and online retail. Thank you so much.
This is a very interesting question. For the short-term, short-form video, we believe this is a very important content format and in the future in mobile commerce. We do see actually in our mobile ecosystem, there are actually before we have buyer and seller, but now we have a lot more roles, a lot more partners in this ecosystem. Some of them are the content providers and the celebrities, influencers or even brand itself. Short compared to other, compared to other form, content formats, actually short-term, short-form video, in e-commerce, actually, they have some advantage. The biggest advantage is that it's a lot of content are evergreen. A lot of content can be repeatedly consumed and which will give us a lot of operating leverage.
In the longer run, we do see some costs increase in short-form video. If we look at the overall user experience and merchant tools, and video as a merchant tools to promote their brand and broadcast their new content, new products, we believe this will definitely enrich the user experience and re-enrich the ROI of the merchant operations.
Eric, on your second question, I think there's a, you know, digitizing the offline retail sector is a very, very complex question. It's probably would take some time to get into all the details. I think to get people a better understanding of this is to understand that we are the partner of choice right now because of our large scale, you know, online presence and hundreds of millions of consumers coming to our platform and all the data we have on these consumers, so that these physical retailers with physical footprint are very, very interested in working with us, trying to figure out how to.
Their foot traffic as well as obviously increasing their sales per square foot. How to better leverage their real estate to make their operations more efficient and also more sales. They are now, you know, a lot of the retailers are, you know, with physical footprint are not doing great, but they see an opportunity, those that are willing to sort of disrupt themselves and adopt changes working with us, will come out ahead. That's why we're pushing the strategy of New Retail very, very hard. I think.
Thank you.
Come to our, if you come to our Investor Day, we'll be able to, you know, develop a more sort of, comprehensive understanding of New Retail. It is a complex area. We think we're the only people that have the capability and understanding and the know-how to execute it.
Operator, next question.
Thank you. Your next question comes from the line of Alicia Yap from Citigroup. Please ask your question.
Hi. Thank you. Good evening, Management. Congrats on the strong results. Thanks for taking my questions. I have a questions. Can Management share with us, among the big brands on your platform, how much of the percentage of ad budgets that you believe, Ali is now capturing, and how much higher the overall ad budget percentage you could ultimately capture over the medium to long term? Then, a quick question is that, is there any plans for investing or partnering into the autonomous driving technology? Thank you.
Yes. Today, in our retail marketplace, we have a lot of brand partners. They are not only sell product on our platform, but also doing brand building activities, customer management activities, promotions. We do see they spend more and more dollar on our platform. We do see a very interesting changing trend, which is before they more like they spend more like a dollar in nature of trade marketing because the people who are running the business on platform are traditional e-commerce team, or we call e-commerce team. Today, more and more company can connect that e-commerce team with the digital marketing team.
Today, with our especially after our development of the Digital Media and Entertainment platform, we established a very good connection between digital marketing and commerce. We are very confident that over time people will spend more and more marketing dollar and branding dollar via the data-driven cross-platform solutions and on our ecosystem.
On the autonomous driving question, I think you have to understand a lot of technology companies are doing this. Obviously, the long-term commercial opportunities are very murky. Nobody has figured out the long-term economic model for this. People are doing it because there are some very interesting artificial intelligence related technology in an autonomous driven car that gets all the technology companies very intrigued.
Things like computer vision, lidar technology, you know, simultaneous localization and mapping. All those technologies are very interesting, and that's why companies are all investing in those technologies. The same is true in the case of Alibaba. We may not be investing those technologies for to create a, you know, driverless car, but we are investing in all those component technologies for other applications.
Thank you.
Operator, next question, please.
Thank you. Your next question comes from the line of Chi Tsang from HSBC. Please ask your question.
Great. Thank you very much, and good evening, everybody. I wanted to ask you about your rural strategy. If you can give us an update on your plans to expand coverage and also to drive demand in rural China. I'm also wondering if you can give us an idea of what percentage of your China retail business is being driven by retail in terms of whether it's buyers, or, you know, sort of, spending and how fast that's growing. Thank you so much.
Yes. Rural strategy is very important. During the past two years, we have already developed very rapid growth in rural areas. We have a Rural Taobao strategy, which today cover close to 30,000 villages across China. Today what we do see that, the traditional brick-and-mortar chains cannot effectively and efficiently cover the rural areas. Internet do give us a new way to serve the people in the village. What we are doing right now is to help our merchants, brands, on our retail marketplaces to work closely with them to serve the people in the village.
We even do tailor-made products with our brand partners to direct, to eliminate all the distribution channels to serve the end customers in the village. Looking ahead, we are not only trying to sell more from urban city to the rural areas. In rural village, we also can have a very good organic agricultural product supply. What we wanna do is to, again, use our retail platform. We wanna help the farmer to sell more to the people in the city.
Regarding to your question on the revenue driver for China regional marketplace revenue, if you look at the direct driver, the people who are paying us are these merchants and brands. The number of paying merchants and brands are increasing as well as their spending level at our platform. What makes them paying more and more people coming to us is, you know, what we have done on our marketplace, both on user and user experience side. I mentioned about, you know, the growth driver of the revenue by increases in the number of users coming to our platform. We reported 507 million MAUs by the end of this quarter.
The volume of the clicks and also the conversion of these matches all showing very positive growing trend. This reflects that, you know, our ability to deliver more relevant content to consumers through our improved data and technology. This is the, you know, all of this. By the end of the day, when merchants and brands, look at the value we provided to them, they vote by their feet, right? More and more people started to realize that the value we provided are not only the transaction value, but also help them acquire consumer and make the consumers buy and then retain the consumer, the loyalty, but basically the whole customer operation in the entire, you know, customer life. That's the driver for the, for the growth in China regional marketplace.
Thank you for that. I was actually referring to framing that question around rural, trying to get an understanding of how much rural is impacting your China retail business in terms of buyers or in GMV or something like that.
Yeah. I see. Rural right now is still a small, very small business, compared to our entire, China retail. Not a significant, nothing significant.
Operator, we will take the last two questions, please.
Okay. Thank you. Your next question comes from the line of Jason Helfstein from Oppenheimer. Please ask your question.
Thanks. Perhaps a longer-term question, specific to the 2020 goal of RMB 1 trillion of GMV and 2 billion customers. Generally, how do you see that broken down between domestic and international, just as you're thinking long term about a global strategy? Thank you.
Well, we do have a goal in 2020. We wanna achieve a RMB 6 trillion in GMV by fiscal year 2020. I think to serve 2 billion consumers is an even longer term goal. We are working very hard towards that goal. I think we just at the beginning stage to get our business globalized. Southeast Asia is the first area we are exploring, and we wanna make sure that we understand the local culture and the local people, because shopping is highly relevant to the culture and the lifestyle.
Actually, this also give us a lot of opportunities to train our people and upgrade our team to be a real global team. I think that's the most important thing at this stage. With the more powerful team and people and we can serve more consumers around the world.
Last question, please.
Your last question comes from the line of Evan Zhou from Credit Suisse. Please ask your question.
Hi, good evening. Thank you for taking my question. A question regarding our media-related revenue. Just wondering whether we can have some more colors on kind of the breakdown for that revenue, because I think UCWeb has been doing really well besides the Youku business and also within Youku, I think the industry trend is that the pace of personal related revenue is being surpassing the ad related revenue. I was wondering whether we kind of see the similar trend and also there are any other sort of like user paying related revenue like, you know, live streaming or music related revenue that we can have some more colors on.
Finally, on our RMB 6 billion buyback program, I think traditionally we do this to kind of offset the dilutive impact on SBC. As we see our SBC also been kind of trending down, both on absolute numbers and as a percentage of revenue. I was wondering, like, whether we're kind of seeing the program, the buyback program as another way to kind of return value to shareholders. Thank you.
For the first question, actually, we view Youku, we view UCWeb and our assets in digital media sector, not a standalone assets again. We view this as an integrated part of our consumer media platform, which is our Mobile Taobao and Tmall. Actually, we do see a big advantage to leverage our existing advertiser base on our China retail platform and to help them to promote their products and build their brand cross-platform to Youku and to UCWeb, but using organic ads format consistent with the contents in each of the apps. Today what we are in a very unique position to have a consumer media, we have a video site, we have the mobile search plus a news feeds and ads format, which is all in one solution to our advertisers.
Most important thing is that back-end, we have our unified ID in place to help our advertisers to track the footprints of the advertisers, and all the data could be collected and used further in their future operations. This is a unique position of our UCWeb and Youku revenue operation.
Yeah, I'll comment on the buyback program. I think you need to look at the buyback program in the context of what we've already done over the last 2.5 years since we became a public company. Over that period, we spent a total of $5.1 billion and bought back approximately 3 percentage points of our shares. Our reason that we had communicated very clearly was that we want to prevent dilution. I'm very happy to say that since the IPO, our share count, our outstanding share count has not increased despite our stock-based compensation programs. The primary reason for buyback is to sterilize the dilutive effect of our stock-based comp program.
I think this $6 billion buyback is no different. It's for that main purpose. When you say, you know, return value to shareholders, it is, you know, in a buyback any time you counter the dilutive effects, you are, you know, it's not returning value to shareholders, you're preserving value to shareholders. Obviously cash is going out the door to some shareholders in a buyback program. We're not saying that, "Oh, we have cash sitting on the balance sheet we don't know what to do with." There are a lot of very important strategic activities where we have $ 20 billion of cash on the balance sheet that we want to deploy. The buyback is part of our capital allocation thinking, but it's not the only thing. There are plenty of strategic areas and opportunities that we would want to be able to deploy our cash.
Okay. Thank you.
Thank you everyone for joining. If you have further questions, please reach out to the Investor Relations team. Thank you.
Thank you, ladies and gentlemen. Unfortunately, we have run out of time for further questions. That does conclude our conference for today. Thank you for participating. You may all disconnect.