Good day, ladies and gentlemen. Thank you for standing by, and Welcome to Alibaba Group September quarter 2015 results conference call. At this time, all participants are on a listen-only mode. After management's prepared remarks, there will be a question and answer session. I would now like to turn the call over to Jane Penner, Head of Investor Relations of Alibaba Group. Please go ahead.
Good day, everyone, and Welcome to Alibaba Group September quarter 2015 earnings conference call. With us are Joe Tsai, Executive Vice Chairman, Daniel Zhang, Chief Executive Officer, Maggie Wu, Chief Financial Officer. As you know, we distribute our earnings release through Alibaba Group's investor relations website located at www.alibabagroup.com. Please refer to our IR website for our earnings releases as well as the supplementary slides that accompany the call. You can also visit our corporate website for the latest company news and updates. Please check it out. This call is also being webcast from our IR section of the corporate website. A replay of the call will be available on our website later today. Let me quickly cover the safe harbor.
Today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. Factors that could cause actual results to differ materially are set forth in today's press release. To also understand 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 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 non-GAAP EBITDA, including non-GAAP EBITDA margin and non-GAAP net income, are expressed on a non-GAAP basis. We have also adjusted our net cash provided by operating activities to remove purchases of property and equipment and intangible assets, excluding acquisition of land use rights and construction in progress, and adjust for changes in loan receivables relating to microloans of our SME loan business, which we refer to as free cash flow. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. With that, I will now turn the call over to Daniel.
Thank you, Jane. Good evening or good morning, depending on where you are. Thank you all for joining us today. We had a great quarter with strong growth across our core operating metrics. Our ecosystem continues to thrive. GMV grew 28% year-on-year. This increase was driven by robust annual active buyer and mobile monthly active user growth. User engagement is very healthy, with more buyers purchasing across more categories. We are winning in mobile. Mobile users are highly engaged, it drives online marketing spend by our merchants. In the September quarter, both mobile GMV and mobile revenue in the China retail business exceeded 60%. As a result, we saw robust revenue growth during the quarter. Overall, year-on-year revenue growth was 32%, specifically, revenues from our China retail marketplaces grew 35%. We are fortifying our market leadership in the major cities.
In addition to Beijing and Shanghai, we added Chengdu, Guangzhou, Hangzhou, Suzhou, and Wuhan for same-day delivery for groceries. We continue to develop commerce in the low-tier cities and rural areas. In the September quarter, we increased our presence in over 4,000 additional rural villages where we provide purchasing and delivery services. At the same time, we remain committed to providing a trusted consumer experience with authentic products by driving merchants that handle counterfeit products off our marketplace. This commitment to the best consumer experience has clearly not hidden our ability to monetize GMV. We also want to call your attention to some recent developments in our cloud computing business. In the September 2015 quarter, revenue from cloud computing and internet infrastructure continued to accelerate.
We opened a data center in Singapore serving regional and global customers, and we'll continue to expand our customer base, geographic coverage, and product offerings. We recently announced our Hangzhou plus Beijing Twin Hub strategy, and I want to share our thoughts on this. Beijing is the capital of China and commands invaluable influence both domestically and on the global stage. Our base in Beijing will help us better serve and connect with customers in the northern region. Outside of Hangzhou, Beijing is our largest operation space. This was also an important quarter for our international business. Our globalization strategy is focused on cross-border commerce. Our China retail marketplace platforms are engaging as a gateway for international brands and retailers to sell their products to Chinese customers. We are making good progress.
Just two weeks ago, we hosted diplomatic representatives from 39 countries at our official kickoff ceremony for this year's November 11th. We announced strategic partnerships with almost 100 agricultural and governmental organizations from 25 countries to offer their best fresh food to Chinese customers. We also recently opened offices in London and Milan to serve European brands, retailers, and trade associations who seek to access the large and growing Chinese customer class looking for high-quality imported products and services. I want to give a quick update on the progress of our business collaboration with Suning. We are partnering with Suning in multiple fronts, including omnichannel and logistics, and you will see this brought to life on November 11th. For example, consumers can place orders online and goods will be fulfilled from Suning retail stores.
We have also integrated Suning's Logistic network and services, which will be made available to other merchants on our platform. On November 11th, the Suning warehouses will be supporting fulfillment of FMCG products. In addition, Suning locations will offer after-sales service for online purchase of goods. Finally, I just want to give a bit of preview to November 11th. We are focused on four key areas this year: globalization, omnichannel, mobile, and the logistics. We are taking November 11th global because our Chinese customers, as well as global brands and retailers, have demanded it.
Many well known overseas retailer countries are partnering with us directly to offer specialty fresh foods. In terms of omnichannel, more than 180,000 offline stores across 330 cities will interact with our mobile commerce app and offer new shopping experience and services to customers. With that, I will hand over to Maggie to discuss our financial performance this quarter.
Thank you, Daniel. Hello, everyone. Here are some financial highlights from the September quarter. Our GMV grew 28% year-over-year to RMB 713 billion. Excluding the effect of the suspended luxury business, GMV would have increased by 30% year-over-year. Our GMV growth was primarily driven by increase in annual active buyers, which grew to 386 million by the end of September quarter. Mobile MAUs were 346 million in September. Revenue grew 32% year-over-year to RMB 22.2 billion. The year-on-year performance was driven primarily by the acceleration of our China commerce retail business, as well as the growth of Alibaba Cloud. Non-GAAP EBITDA margin was 50%, same as in the year ago period. Non-GAAP net income grew 36% year-over-year to RMB 9.3 billion.
Diluted non-GAAP EPS, excluding SBC and amortization of intangible assets and certain other items, was RMB 3.63, an increase of 30% compared to RMB 2.79 in the same quarter of 2014. Now let's get into the details. In the September quarter, our blended monetization rate was 2.42% versus 2.3% in the year ago period. Our mobile monetization rate increased to 2.39% in September quarter, up from 2.16% in June quarter and 1.73% in March quarter. The trajectory is especially impressive because the suspension of luxury business that began in late February have disproportionately negatively impacted mobile monetization.
Going forward, we expect improvements in mobile monetization will be driven by our proven ability to deliver value to both buyers and our advertisers on mobile devices and increase engagement on our platform. In the long term, we still believe our mobile monetization rate will approach or even exceed historical PC monetization rates. We're also making steady progress in PC monetization despite the slight year-on-year decline. In the long term, we're optimistic about our blended monetization rate. Having said that, in the near term, as you know, we don't forecast revenue growth or take rates. Keep in mind that the improvements to monetization may not always be linear due to a variety of factors. Year-on-year, our revenue grew 32% to RMB 22.2 billion.
This growth was primarily due to the acceleration of our core China commerce retail business, which benefited from our focus on high quality merchants and on delivering a better value proposition to our merchants. We optimized online marketing efficiency and increased online marketing inventory on both mobile and PC screens. Those also contributes to the revenue growth. Our mobile revenue from China retail marketplace was around RMB 10.5 billion, or $1.7 billion, representing a year-over-year increase of 183%. This year-over-year increase in mobile revenue in both absolute dollars and as a percentage of total revenue from the China commerce retail business was due to an increase in mobile GMV and better monetization of mobile usage. Revenue from our international commerce retail business was RMB 481 million, a year-over-year increase of 15%.
Please note that our recent efforts in the cross-border import business are not reflected in this revenue line. In the future, we'll develop metrics that measure our progress in the cross-border import efforts, such as Tmall Global progress. Cloud computing and internet infrastructure revenue grew 128% year-on-year, primarily due to an increase in the number of paying customers and also to an increase in their usage of our cloud computing services, including more complex offerings such as our content delivery network and database services. Other revenue is flat year-on-year due to a tough comparison to September quarter 2014, when we booked interest income from the SME loan business to this line. We no longer book the vast majority of that interest income to other revenue.
This is because of the restructure of our relationship with Ant Financial, which has been communicated earlier, and the restructure was completed in February 2015. We expect this restructuring will continue to negatively impact the year-on-year growth of our other revenue line until we anniversary it in June quarter next year. In this quarter, our non-GAAP EBITDA margin was 50%, flat from year-ago period. Our message remains the same. We do not manage to a margin target. We will continue to make strategic investments into new and existing businesses to build long-term value. We'll continue to invest a portion of our free cash flow in new businesses, and the growth of this new investment spending may be higher than our overall revenue growth. Let's talk about our operating expenses.
As in prior quarters, we use non-GAAP numbers to exclude share stock-based compensation. Non-GAAP cost of revenue was RMB 6.6 billion. Non-GAAP product development expense was RMB 2 billion. Non-GAAP sales and marketing expense was RMB 2.2 billion. Non-GAAP general and administrative expense was RMB 1.1 billion. Non-GAAP cost of revenue as a % of revenue increased year-over-year. This was primarily due to an increase in costs associated with our new business initiatives and an increase in traffic acquisition costs. The latter grew due to the expansion of our third-party affiliate ecosystem as part of the strategy to strengthen our ad platform business under Alibaba. Non-GAAP product development expense as a percentage of revenue decreased slightly year-over-year as we stopped paying royalty fees to Yahoo after our IPO in mid-September 2014.
Non-GAAP sales and marketing expense as a percentage of revenue is flat year-on-year, and non-GAAP G&A expenses was stable year-on-year. We generated RMB 13.6 billion or $2.1 billion of free cash flow in September quarter, an increase of 52% compared to RMB 8.9 billion in the same quarter of 2014. Capital expenditure in September quarter was RMB 3.2 billion, a slight decrease from RMB 3.4 billion in the same quarter last year. As of September, our cash equivalents and short-term investments were RMB 106 billion versus RMB 115 billion in June quarter.
Despite our strong free cash flow during this quarter, that decrease was mainly due to the RMB 17 billion or $2.7 billion in cash dispersed to repurchase our shares. We purchased 40.8 million shares in the quarter, representing about 1.6% of our weighted average outstanding shares. 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 your telephone keypad 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 yourselves to no more than two questions at a time. Once again, if you wish to ask the questions, please press star one. Your first question comes from the line of Eddie Leung of Merrill Lynch. Please ask your question.
Good morning and good evening. I have two questions. The first one is about your retail business. We have seen Tmall outperforming Taobao in terms of growth rates in the past couple of quarters, and it seems like the trends are getting more obvious. Just curious to hear your thought on this. Are we seeing any structural change in user preferences and user behavior? What could be the long-term positions of Taobao? Secondly, we would also like to hear more about your progress in lower tier cities' commerce. Wondering if you can share any metrics with us in terms of the business developments outside the so-called Tier 1 and Tier 2 cities. Thank you.
Thank you, Eddie. This is Daniel. For the first question, I would say, actually, as we always tell you that, in our China retail business, we manage our e-commerce platform as a whole. Actually, Taobao and Tmall are two separate brands, and they have very clear market position, but they are integrated platforms. They are integrated marketplaces. Actually, we always look at the growth of the entire two marketplace as a whole. We have very clear operating goal, which is in five years we want to achieve $1 trillion GMV. Today, we are happy that we are on track.
For the second question, in the rural areas, yes, we initiate our Rural Taobao program more than half a year ago. So far we make very good progress. As we said in our script, we add, Actually, we add 4,000 village in this quarter. Actually today we are, I think, China is very big, and we are in still in early stage, but we believe the most important thing is to create the value for the farmers. Today we are focused on to help them to buy from our online marketplace to improve their lifestyle. Looking ahead, actually, we will help them to sell their original products, produced in the farm, in the rural areas to the people living in the downtown, in urban cities. Actually, we believe that we'll continue to expand our network in the rural areas to bring benefit for our customers. Thank you.
Next question operator.
Your next question comes from the line of Robert Lin of Morgan Stanley. Please ask the question.
Hi. Good morning, management, and congratulations on a very strong quarter. I got two questions here. I guess one is on brand commerce. you know, obviously, this year's Double 11 is very focused on omnichannel. We've heard from retailers that about 20%-50% of their sales from Tmall are now fulfilled from the stores, and this is one step forward. Can you give us a more near-term metrics on this initiative? How would you record the GMV that's being fulfilled from the stores, or, you know, experienced from the stores? I guess there's about $3 billion marketing dollar that I've seen different news sources talking about promotion this year. Can you share us the economics? How much are we bearing in that $3 billion marketing dollar costs for this Double 11 events?
I guess a more broad term, long term, what this means for Alibaba in terms of online, offline advertising revenue. Second question is more on the EBITDA margin. Obviously we recently, you know, talked about Youku acquisition. If we were to, you know, there's a lot of consolidation going on in China internet. Do we want to accelerate our potential acquisition of strategic assets because I think the valuation has become more reasonable? Do we feel that the EBITDA margin that we're currently have is a suitable level we want to work with?
Yeah. Hi, Rob. This is Maggie. I'll answer your second question first, and then Daniel will answer your first. It comes to margin, we still remain the message the same. We don't manage business by managing the margins. This is why we don't give margin guidance. Our core business generate high margins. We'll continue to make strategic investments into new and existing business to fuel long-term revenue and profit growth. Our investment may be lumpy and non-linear. When we assess the investment make, we are very, you know, have very rigid process in that we have these post-investment maintenance tools and, you know, measures.
Yeah. Actually, for the first question, I would say today, when we look at the O2O opportunities, actually we should develop the solutions by categories and by industry. Actually, in different sector, in different industry has different O2O solution. People will also always talk about the online, offline experience. What we can share is that first, when we look at our GMV, when we calculate our GMV, we only calculate the GMV processed through our system, paid by our by Alipay. This is our GMV, and the basis to calculate our GMV. Having said that, actually in the O2O solution, actually part of this could be the orders are generally online, but fulfilled offline or picked up by customers in stores.
All people can enjoy the service, and they can buy some product online or enjoy the service offline. Situations are various in different industry. we always follow our methodology, which is, we will monitor the GMV by the amount of the transaction processed in our system. As to the RMB 3 billion market, actually we are not, I'm not aware of this RMB 3 billion market story, and this is definitely not in our operating metrics.
Next question, operator.
Thank you. Your next question comes from the line of Carlos Kirjner-Neto of Bernstein. Please ask your question.
Hi, thank you for letting me ask my questions. Can you help us understand the portion of GMV that is not monetized? For example, what portion of Taobao sellers do not pay Alibaba, and what percentage of GMV do they correspond to? Secondly, of the $102 million in the cloud computing line, how much is cloud computing proper, such as infrastructure and platform as a service, versus web hosting and other legacy services, and how fast is the cloud computing piece actually growing?
Yeah. Hey, Carlos, this is Joe. To your first question, the way we look at this, we don't tie specific GMV to specific marketing dollars, because advertisers advertise on our platform not only to generate that direct GMV, they also look to acquire new customers, to engage with their customers. You know, a scenario is if somebody comes to us, a user comes to our site because of online marketing by a merchant, and they buy something, and then they again come back a week later to purchase from the same merchant because they had bookmarked that merchant storefront. That is additional GMV that's generated, not directly as a result of advertising, but that merchant has acquired the user. The point here is that merchants are buying online marketing to do a bunch of things rather than directly generating that direct GMV.
W e feel that our entire marketplace provides a really terrific platform for merchants to market themselves, build their brand, engage with their customers. It's way beyond just generating that specific GMV, and that's why our China retail marketplaces are such a robust platform for merchants. That's why the brands are coming to our platform.
Yeah. Carlos, this is Maggie. Regarding to your second question, what's the percentage of revenue in this AliCloud and infrastructure representing the AliCloud computing revenue? I should say that significant majority of that revenue are cloud computing revenue.
Next question, operator.
Your next question comes from the line of Ming Zhao of 86Research. Please ask your question.
Thank you very much for taking my questions. First question is, can management give us an update on the category mix change right now on the platform? We are aware of the, you know, maybe the apparel categories are more maturing. Some of the new categories like food and beverage is growing very strong. We wanna see if there's any color about new categories growth can bring more growth while offsetting the more maturing categories. Some picture would be better for us to understand the change there. The second question is a follow-up on the cloud computing. Assuming the tripple-digit growth is coming from mainly the number of client growth, you know, can you give us some metrics about, you know, how many clients are you servicing on the cloud computing side? What is the profitability picture of that cloud computing? Thank you very much.
Yeah. Thank you, Ming. This is Daniel. For the first question, if we analyze the GMV by category, I would say actually our consumer electronics, mobile phone and large appliance in Tmall actually enjoyed rapid growth in the past quarter. On top of that, actually, we can see a very clear trend that people buy day-to-day necessities from online platform, because this is much more convenient than the offline brick-and-mortar chains. The food and beverage and especially fresh food is very popular online today. Thank you.
Hi, Ming. Regarding your second question about cloud computing, the number of paying customers growing very well. We haven't, you know, disclosed it on a quarterly basis. However, we did talk about it in our 20-F. The number of enterprises who are using our cloud services is already over 1.5 million. There is a big group of people, merchants on Taobao and Tmall platform. Going forward, we might consider, you know, to add more disclosure at the due course.
To the question about profitability profile, you know, cloud computing is very nascent right now. The market is huge, and we're really, you know, not even at the first pitch of the first inning. Not really thinking about the profitability, because long term, we think that this is definitely going to be profitable. That's not what we're focused on at this point.
Thank you. Next question, operator.
Your next question comes from the line of Erica Poon Werkun of UBS. Please ask your question.
Thank you. Two questions on industry alliances. You mentioned about the joint effort with a bunch of online retailers for the upcoming Singles' Day. It seems that your role is shifting from a disruptor to a potential savior for on-offline retailers. Could you just share your perspectives on online retailing over the long term? Do you also expect Alibaba's penetration of China's overall retail will pick up meaningfully with more integration with offline retailers? My second question is on OTA. In light of yesterday's deal among Ctrip, Qunar, and Baidu, could you just, you know, perhaps update us on your thoughts on the China OTA segment and also Alibaba's role in it? Thank you.
Thank you. This is Daniel. For the first question, I would say today, if you look at the landscape in China, online shopping only account for 10% of the total retail in China. I would say that is a huge potential. If we look at the people geography spreading, and half of our population actually in the low-tier city and in the rural areas. That's why we initiate our Rural Taobao program and try to engage these new customers who are living in the real rural village. This is the, I think, the dividend from the new customers. In terms of the category expansion, I would say today and more and more daily necessities and household products are sold online.
For some of the categories today, still far if you look at the penetration rate, still far below 10%, far below the average. We believe, which has great potential in the future. For the second question about OTA, yes, we observed the deal announced by Baidu and Ctrip. We believe the travel market is a very huge market and with over RMB 500 billion market size. Chinese people, when they, their lifestyle is getting better, they will enjoy more and more travel products and services. Actually, in Alibaba, we have our own travel business, which is Alitrip. Today, actually, today, Alitrip has been, has already made a very big progress. We are very happy with this result and business development. We will continue to invest in this travel business, and because this is the need for the people, for Chinese people when their lifestyle is getting better. Thank you.
Next question, operator.
Your next question comes from the line of Ross Sandler of Deutsche Bank. Please ask your question.
Great. Thank you. I just had one question on the macro and one on the desktop take rate. Just on the macro, what does the environment look like heading into the December quarter in terms of GMV growth compared to the 28% reported in the September quarter? I know you don't guide, just any thoughts on, you know, what kind of GMV growth you're expecting for Singles' Day would be helpful. On the desktop take rate, this has been declining for several quarters, it looks like you guys are starting to experiment with new ad insertions. Can we just get an update or talk about the trajectory of desktop take rate in the December quarter and potentially beyond? Thank you.
Hey, Ross. This is Joe, just commenting on your macro question. You know, I mean, the way we look at it is this way, if the Chinese economy is growing gangbusters, are we gonna benefit from this? Absolutely, we will. I think it's, you know, something that is obviously influenced in both directions. Having said that, we just don't think that the current macroeconomic situation will fundamentally affect consumption patterns. You know, you have a Chinese economy that is only 37% penetrated in terms of consumption, relative to, you know, more developed countries. You're looking at more, you know, over 60% of their economy is consumption.
There's a definitely a secular tailwind driving consumption growth. When you look at the individual Chinese consumer, they are very liquid. They have a lot of liquid to cash deposits in their bank accounts. Over the last several years, wage growth has been growing over 10% year-on-year and there's a high savings rate. People have lots of savings, lots of liquidity, and we expect that this is not a, you know, temporary setback in the macroeconomy is not going to affect their consumption pattern and, you know, in a fundamental way. As, and as you know, we don't forecast GMV growth. It's very hard to say what the next quarter is going to look like, and we, you know, don't give out any forecasts on that.
Okay. Ross, for your second question about PC monetization. You have noted that we have been making steady progress in PC monetization. What I would like to share with you is that a way to look at the monetization level, we think the blended take rate is a more meaningful measure, and then the second, you know, measure is the mobile take rate. The reason is that we view our marketplace as an integrated piece, and we suggest, you know, when you look at the merchants who are paying us, this is the same group of merchants. They're just, you know, behind two screens, the PC and mobile. The take rates reflects overall value we provide in and recognized by this group of merchants.
Going forward, you know, when you look at the take rate between mobile and PC, mobile obviously is more important than PC because in the current quarter, mobile already contributed over 60% of GMV and over 60% of China retail marketplace's revenue. You know, we still remain the message unchanged that in the long run, mobile take rate will be approaching or even exceed the historical monetization rate, which is. In near term, the growth may not be linear, but we're very optimistic that it will grow in the long run.
This is Daniel. I want a few words on Singles' Day this year. As I said in my script, actually, there's only two weeks ahead, and for this year's Singles' Day, we are preparing for this. All the participants, all the merchants, service providers in this ecosystem are now preparing for the Singles' Day. In terms of the strategy for this year's Singles' Day, basically, we will focus on, first, we will focus on mobile. We believe the mobile transition has deeply changed people's consumption pattern. Today, I would say, in Singles' Day, I can expect that a lot of people will enjoy shopping in the midnight when our Singles' Day gets started.
For the entire day, we believe that a lot of people actually will buy from mobile. Second, for this year's Singles' Day, we will focus on globalization. That's why we kick off our Singles' Day ceremony by inviting so many foreign representatives to join us. This is a starting point for our globalization. Actually, today, we have a lot of the products supplied by overseas merchants. They are available on our platform for our consumers, and we will promote more products on the day.
The third one, actually, we focus on omnichannel, and we have worked with, as I said, we work with so many offline brick -and-mortar chains in 330 cities to give people the integrated experience in the relevant industry. We believe that this is a change of the people's experience when they consume offline. As we always do, we don't want to give a guidance in terms of GMV of the Singles' Day, actually, but we believe this will be the biggest day for our consumers and for our merchants.
Next question, operator.
Your next question comes from the line of Douglas Anmuth of J.P. Morgan. Please ask your question.
Thanks for taking the question. I know you don't guide to margins and profitability specifically, but your margins were flat year-over-year in 2Q. I was hoping you could comment and give us some color just around the puts and takes as you think about fiscal year 2017, particularly as you're now past the at least annual impact here of UCWeb and AutoNavi, where the areas of leverage and then perhaps the offsets might be in fiscal 2017. Thanks.
Right. For fiscal 2022, it's still too early to comment on the margins. I think what we have shared is that our core business margin is very healthy at high 50s. For the flat, if you compare the margin for this quarter and a quarter in last year, actually, there are pluses, there are minus. The pluses are the operating leverage we generated, the minus represents the investment we made in things like areas like digital entertainment or OTT set-top box business, as well as our investment in our mobile OS business. What I could share is that, you know, we're gonna continue to make strategic investment. This margin question has been asked many times.
We also look at the history of this business. If when we make strategic investment, you know, some of the big investments, they always are, you know, concerns on how much margin it's gonna take. If imagine, we, you know, in years 2003 we didn't make an investment in Taobao. That's a big investment. If we didn't make an investment in AliCloud in 2009, there were a lot of questions during those years, and it's hard to imagine how we could get where we are today. That's the thinking we have. UC and AutoNavi, the business progressed very well, although it's still relatively small. We'll disclose more on the progress of the business at a due course. We did comment on the margin impact from the possible, you know, Youku deal. The comments is that overall margin structure would not be fundamentally changed.
Next question, operator.
Your next question comes from the line of Piyush Mubayi of Goldman Sachs. Please ask your question.
Thank you for taking my question. I looked at the delta in the growth for Tmall, and it accounts for about 73% of the sequential growth in GMV terms, which is all-time high. I wondered if you could share some color on what led to this huge growth in Tmall vis-a-vis Taobao, and whether we can expect this drive, the driver of the business to continue to remain Tmall to the same magnitude. That's my first question. The second question is about O2O space. I wanted to know if you could share with us your Koubei strategy, mostly because it's emerged as an area of high level of cash spend. We wanted to know whether you'd go down that path or you'd leverage your very deep customer presence and SME relationships. Thank you.
Hi, Piyush Mubayi. This is Maggie. Regarding this GMV growth in Tmall or Taobao, first of all, I, like Daniel just said, we do view these two platform as one integrated marketplace. The overall growth means more to us. Secondly, we have communicated about our long-term goal and near-term goal on the GMV. We're talking about US $1 trillion GMV goal by the end of 2020 fiscal year. You could work, you know, backwards to get the taker for the overall GMV growth. It's either Taobao or Tmall. Obviously, Tmall contains more higher, you know, brands and better service providing merchants and the growth are higher to overall we're, you know, we're focusing on this longer term US $1 trillion goal.
Hey, Piyush, I'll address the O2O question. The O2O market is huge. It's about a US $1 trillion market in China. First, you know, we think that this is a space that can accommodate several very significant players. It's not a, you know, winner-take-all kind of market. You know, in terms of the investment that you're asking, you know, what kind of cash spend, what kind of investments, we see a very aggressive and competitive market right now. The place people are spending money on is user acquisition, you know, rebates to customers that come to, you know, use their services. That's where Alibaba with our unrivaled mobile leadership has an advantage.
If you look at the Taobao app, mobile Taobao app, and also, the Alipay app, these are two of the largest apps in China, that with users coming in to engage in commerce transactions every day. Those two apps are providing a great entry point for our Koubei service. The places where we are going to spend money in terms of investment might not be what you think. We think that there are other areas, such as merchant acquisition, and things like that, where, you know, you need to be very innovative. Having building out a huge sales force on that front, is not the way to go. We hope to run the Koubei business as a light business and as an innovative business. Thanks.
Next question, operator.
Your next question comes from the line of Robert Peck of SunTrust. Please ask your question.
Yeah, two quick questions. One, I was wondering if you could talk a little bit more about where desktop monetization could go. It looks like last quarter declined about 50 basis points year-over-year, while this quarter only declined 7 bps . Joe, is this something where we could see this going positive next quarter? The second question is the Yahoo spin of Aabaco. Could you just talk about that asset in relation to Alibaba? Is that something that's of interest in buying shares in that? Is that something you could acquire? Just curious on your views on Aabaco. Thank you.
I'm gonna ask Maggie to address the first question, and I'll take the second one.
Hey, hey, Bob. Regarding the desktop take rate, I said earlier that we have been making efforts to continuously optimizing the, you know, online marketing efficiency as well as increase the ad inventory. Those all contribute, you know, make the PC take rate grow at a steady pace. We're making progress there. Overall, you know, the take rate, the way we look at it is, first of all, is one marketplace and blended take rate is more important. Secondly, mobile already accounts for 62% of GMV, and we still see that trend going up. Eventually this is gonna be a mobile business. For the mobile take rate, we said that, it's, we're very optimistic, for longer term growth.
On Aabaco, we're reading the news just like you are. Don't have any information on that in addition to what was already known by the market. What we know recently from reading news is that they are going to delay the spin until sometime in January. It's, you know, we don't really speculate on what happens after that. Just wanted to make an overall comment. Just like our, you know, share repurchase program, we will buy shares or buy back our shares if it is very significantly, you know, accretive to our shareholders. That's the principle we operate on.
Next question, operator.
The next question comes from the line of Dick Wei of Credit Suisse. Please ask your question.
Hi, thank you for taking my questions, and congrats on the strong quarter. Two questions. First question is on the probably the overall take rate for the company. For I think this is the first quarter that the mobile take rate surpasses the PC take rate. I wonder how what kind of the ROI that we observe from this kind of the occurring between PC and mobile? Probably more importantly, with some of the changes in the PC kind of the ad format, what kind of ROI at some of our merchant fees on the PC front?
Maybe my second question is that, I think the company has make quite a few of the large M&As of this year, adding more than RMB 10 billion kind of investment this year. I wonder how should we think about going forward if there's any some of the important opportunities any kind of the reference size investment that we may be thinking about? Thank you.
Hey, Dick, it's Jane. Could you just repeat your first question for us?
Okay. Yeah, sure. First question is, how do we see the ROI differences on PC and on mobile, given the PC take rate now is below that of mobile take rate? Also, what is the kind of the return investment impact, given some of the new formats that we have on PC side?
Yeah. Hi, Dick. It's Maggie. I think, you know, when we look at the take rate, either PC, mobile, we think it's more meaningful to look at a blended because we're facing same group of merchants. They either spend on PC or mobile. It's just two pieces of screen. The ROI of the merchants means more to us before we consider ROI. The ultimate measure, for, you know, for us to look at to, you know, to ensure the value provided is these merchants continue to stay in our program. They have their single store growth, they continue to spend on our platform. We, you know, very happily see that is the trend.
Hey, Dick. On your second question, you know, obviously, you know, I'm not gonna telegraph the, you know, forward-looking M&A activity. The one thing that I just wanna say is, you know, we do M&A and acquisitions investments consistent with our core business strategy. On the business strategy, we have seen that, you know, consumption growth is something that we wanna leverage our business to. Consumption is not just about online shopping, but also consumption of digital goods. It's about consumption of services. You know, we are looking at things that will enhance our position in the consumption eco-economy and the growth in consumption economy.
We're ready for, the next question, operator.
Your next question comes from the line of Chi Tsang of HSBC. Please ask your question.
Hello. Hi, thanks very much for taking my question. I just had one question. I'm wondering, as it relates to Singles' Day, in particular, your strategy regarding, this year globalization and also multi-channel. I'm wondering if that is, positive or negative to your margins. Thank you.
This is the seventh year, we since we start our Singles' Day big campaign. Actually, we never connect a Singles' Day with margin. What we wanna do is that to create the day for the consumers, to give them to make the day for the festival of the shoppers. That's our purpose. In our operating methodology, we don't connect this with margin, and we don't manage our business by margin, as we always said. Thank you.
Operator, we're ready for our final question.
Sure. The final question comes from the line of Mark Mahaney of RBC. Please ask the question.
Thank you. Could you talk about some of the cohort trends? Of the active buyers that you brought on in the last year, how do they compare with active buyers you've had on in the past? Are they ramping up relatively similarly in terms of spend or the categories that they shop in, or are they somehow different than the cohorts that you've brought in in the past? When you talk about globalizing November 11th, could you talk about how much maybe in marketing or in merchant outreach you plan to spend maybe this year, or you have been spending this year in preparation for that, to help us think about how much of an effort you're making to truly globalize November 11th. Thank you.
Sure, Mark. According to the cohort analysis we have done, it still shows the same pattern, which is, you know, for same group of consumers, longer to stay with us, more they can spend on an annual basis. You're asking about compare the first year consumer that has joined us this year and in previous years. The average spending level actually, you know, is not any lower. We do observe that new buyers come more to our mobile platform, which could have a smaller ticket size, but the frequency of the purchase, the engagement is higher.
Yeah, for the second question about November 11th and the spending for this big event, I would say, yes, actually, we position globalization as our core strategy for the coming decades, we prioritize globalization in November 11th this year. Actually, as always know that, actually, we are the entry point of the online shoppers, the people has high recognition of November 11th, we enjoy the massive organic traffic in November 11th. Actually, we this won't cost us a lot to get the traffic and to get the people's recognition. On top of that, we do spend some marketing dollar and to get to acquire new customers and to get them recognize the new offerings on our platform like the offerings from other countries, the supply from other countries.
On top of that, actually, when we look at November 11th, this is not only the day for the consumer, but also the day for the merchants. All of the merchants, they were very active in participating in this November 11th, and they will spend their marketing dollar on our marketplace to get more traffic and get people's recognition of their services and products. Thank you.
I think we're finished with the Q&A, and we can close the call. Thank you everyone for joining us today.
Ladies and gentlemen, that does conclude our conference for today. Thank you for participating. You may all disconnect.