Investor Day 2017 Part 1

Jun 8, 2017

Slides

Hello, everyone. Welcome to Alibaba Investor Day 2017. I'm your host, Rob Lin, Investor Relations Head of Alibaba. Before I get started with the event, let me just quickly cover the safe harbor. Today's discussion will contain forward looking statements. These forward looking statements involve risks, 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 reports on Form 20 F and other documents filed with the SEC. Any forward looking statements we make at the events are based on assumptions as of today, and we do not undertake any obligations to update these events statements, except as required under applicable law. Please note that certain financial measures that we use on this event at this event, such as adjusted EBITDA, 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 latest earnings release. Now let's welcome our first presenter, Daniel Zhang, CEO of Alibaba. Ladies and gentlemen, welcome to Alibaba. This is our 2nd year to host this Investor Day. And I'm the 1st representative. And on behalf of around 550,000 Alibaba employee, I'm a little bit nervous because with such a so many analysts, okay. So on behalf of our 50,000 employee, welcome all to Alibaba again. And for the 1st comer, for the first time visitors, wish you have a very good day in Alibaba and Hangzhou. And let me start with our big picture. And where I today in the last in the next 2 days, we will give you a very detailed introduction of our business, our strategy and, of course, our number. And by starting of our long process, I will just share with you first the history of evolution in Alibaba. As you know, Alibaba was born in 1999. This is our 18th year. And in the last 18 years, Alibaba have made actually, our business evolved very, very rapidly. When we born, actually at that time, it was the first Internet bubble, and we leveraged the power of Internet, which is transparency to empower our sellers, China's needs to sell through our platform to the other markets. We call it Meet by Alibaba. So it's about buyer and seller meet on our platform and find business opportunities. And over time, we move to the 2nd stage, which is in 2003 with starting off our Taobao and later Tmall business. We start to help buyer and seller not only to find trading opportunity but also to transact on our platform. And we help 100 of millions of consumers today to shop on Alibaba. And as we show in the video, starting from 2,009, and we set up a new business, which is cloud. And today, with this develop our cloud business, we get a chance to help our partners to work on Alibaba to work at Alibaba. And in the recent years, we made very big progress and we made very big investments in digital and entertainment and we want to build a new platform to enable, again, 100 of millions of consumers to live at Alibaba. So that's the evolution of our business, but we always with this evolution, we always follow our heart at day 1, which is make it easy to do business anywhere. But Alibaba today has so many businesses. But how to look at Alibaba? Who am I, who are we. Here, I just want to use one big picture to show Alibaba is an economy. Today, as I said, we have so many customers, 100, 500,000,000 customers around us. We have close to 10,000,000 small businesses working on our platform, transaction our platform every day. We are now moving to new areas like digital entertainment. Together with all the partners, all the participants in the ecosystems, buyer, buyers, sellers, service providers, content providers, today, altogether, we constitute a real economy. And you know that last year, in this real economy, Alibaba, in terms of the size of the economy, today, our core commerce platform contribute over close to JMB 550,000,000,000 in the past fiscal year. But if you look at the components of this economy, actually, you see a very clear picture and very big synergy across each of the platforms, each of the business sections. Obviously, when you look at picture, you can see that we start from the physical products. We start from China. We start from China wholesale and the retail platforms. And we, over time, we move to cross border exports and cross border imports. And over time, we move to new area, which is digital entertainment because we want to give our consumers more chances to consume more categories more products in more categories. And today, also, we by our investment in Kobe, in Erlema, in other companies, we also get a chance to move to local services. We believe it's very, very important to people's daily life. But what we do is not only to build new business in the economy, but most important thing Alibaba is doing is to build the infrastructure for all the participants to do business easier in this economy. So that's why we put a full horizontal lines in the big picture. The first is our payment and financial services. We provide these services through our affiliate company and finance. We also have our logistics service provided by another affiliate company, Cainiao. And by our Alibaba marketing platform, we provide our merchants, our sellers, our partners a marketing platform not only to sell the product, but also to market their brand, to promote their brand, to manage their consumers. At the very bottom, which is the foundation, which is the physical infrastructure of all economy, which is cloud. So this is one big picture of Alibaba. But if we use one sentence to describe Alibaba, actually, Alibaba is an economy but driven by big data. Today, when you see each elements, each pillars of infrastructure and each elements of the business, we can see totally different picture. But the common thing is that we use the data to drive the business. We also view those all these business cases, all these business as cases to generate data. We also try to use the data and leverage our data technology to not only collect data, store data but also manufacturing to manual data to get the real value from the data mining and the data analytics and computing, then to use the value of this data to refill the operation of the entire economy, to refill the operation of our participants' operation. So in one sentence, Alibaba is a data company. All the data are from these business cases, but all the data are used for this business case. Because of the data, our economy, our ecosystem can continue to be prospective. Next. So when we look at the big picture of Alibaba Business, obviously, today, we have a core business, still our core commerce. And Taobao actually is a very important platform for our core commerce business. But Powerball as a business also experienced a very rapid evolution during the past more than 10 years. I remember during the IPO 3 years ago, we talked about people that we talked to people that Taobao is experiencing a mobile transition. But today, what I can share with you is that Taobao has already accomplished a successful mobile transition. We deliver all we mentioned in the last 2, 3 years to the market, and actually, we do even more. Today, 85% of our transactions today are from mobile. And every day, people visit to our mobile app, average speaking over 7 times. So today, Taobao first completed mobile transition, but most important thing is that Taobao is not again, is not only as a marketplace. Today, Taobao because of the mobile transition, Taobao has transformed from a marketplace to a social commerce platform. Because of the social, because of the fun of discovery, because of the experience of exploration. So that's why people want to come back again and again and spend so much time with us on our leading Taobao mobile app. On top of the mobile transition, the second very important thing, which is the heart of Taobao today, is intelligent. When we talk of big data, when we talk of the value of the cloud computing, actually, before we share all this benefit with the participant in our economy, we have to be the 1st beneficiary to use all this data. Today, what I can share with you is that today, all of our products, our applications are data driven. And because of the data driven, because of the intelligence of the mobile app, we can give the right person, the right product at the right context, at the right user interface. And because of this, we can develop more formats and user interface to give people different experience. Just example, in the PC time, when people go to a shopping destination, the most important thing is search and navigation. But today, in Taobao, actually search and navigation still there. But we have a lot more applications to enable people to discover the thing they never expected. For example, actually later, our Taobao team leader will share with you the experience of live streaming, of the news feeds, of the recommendation, of the short video. Actually today, all these applications are in Taobao. But all these applications are contained the same are contained a very important consumption context, which give people a lot of fun of discovery, of exploration. On one side, today, we have so many actually, we have over 500,000,000 monthly active users use our Taobao mobile app. But on the other side, actually today, we have millions of small businesses, big businesses. They are all in our retail platforms. Today, what we are doing right now is to how to leverage after we experienced a very successful mobile transition, after we successfully run our operation based on the data and use the data and make our mobile app to be intelligent, today what we do is that how to leverage the insight we have of our customers to further to upgrade our business not only from the sales side, but also to help our merchant, our seller to upgrade their business from supply side, from manufacturing side, from design side. So that's what we call the smart manufacturing, smart product design. We strong believe the end of the world is not like C2C or B2C. It's all about consumer driven C2B. But how to achieve C2B goal is all about data, is about consumer insight and also about because of the insight, because of the data, we cannot only to help people to sell efficiently, to do marketing efficiently, but also help them to manufacturing efficiently and do product design efficiently. So Internet data technology will empower the whole transformation, total transformation of the business. And of course, the other very important thing we are doing right now is to how to fully leverage our user base and half a billion user base in our economy and how to give them more selections, more experience. So that's why we are working very hard on our loyalty, customer loyalty program to give people not only the selection but enhance their stickiness in our economy. Next. Tmall is famous for a B2C platform. Everybody tells Tmall as a B2C platform. But today, what I want to say is that Tmall is not only as a B2C sales platform. Today, what we position Tmall is an engine to empower our business partners to experience a good a successful digital transformation. So today, China is experiencing a trend of quality consumption. We have a growing group of middle class families and how to give high quality products to the consumers, to the middle families in China. Today, in Tmall, as we disclosed in the last earnings release, today, we have 75% of top 100 4 consumer brands, they are all in Tmall. Tmall already become their first choice to be on Internet in China. But what we think is that we can do more for our partners on Tmall. We can not only to help them sell more, but also help them to manage their customers smartly in the customers' entire lifecycle. Of course, we do believe we still have a very big potential in TMOS growth, and we are committed to continue our investment in our B2C market in Tmall to continue to acquire the new customers in the top tier, in the low tier, in the even in the rural areas. At the other hand, we continue our leadership and influence in the key account partners to help them to enhance their to grow their sales, to help them to do their entire business more efficiently on our retail platforms. Next. So just now I show you that in our core commerce platforms, Taobao, Tmall, each of them experienced a very rapid evolution during the past few years. But today, we see an even bigger picture, which is new retail. Actually, after Jack's announcement sharing of the new retail view, actually in the whole market, people all talk about new retail. What is new retail? But in Alibaba, what we want to do is that we have advantage. We have so many merchants already online. We have already served them to do a online business. But beyond the service online, how we can do more to help this business to transform to a totally digital operation. So today, we start with a very important thing, which is digitalizing the 5 key components in the retail operations, which we believe is fundamentally important in the new retail strategy. First is customers, how to help the brand partners, how to help our retailers to digitalize their customers' footprints, not only online, but also in the brick and mortar chains. 2nd is how to help our partners to get their listings, get their product listings to be digitalized and the inventory stocks can be shared both online and off line. 3rd one is orders. For brick motor stores, how to help our partners to digitalize their orders to be an electronic order. And of course, the next one is payment. Because of AliPay, we get a chance to help our brick and mortar chains to digitalize their payment. And the last one, of course, if we can do all these 4, then we get a chance to help them to digitalize the loyalty program operation. Because of all this, we can see if a offline store can do all these five things to be digitalized, Actually, the outcome of the retail operation will be no difference with the online operation. Because of this, we then further get a chance to see how to reformat, how to restructuring the components of the product listings of the retail format of the customers. And today, actually, we do have some experiments and innovations in certain categories via our strategic investments. We have some we are doing some experiments in fashion categories via our investment in Thai. We also work very closely with Suning to see how to do the omni channel strategy in the consumer electronic categories. And while our investment in Sanjiang, in our in house development, Hema, we are trying to see how to redefine the supermarket, hypermarket model in a totally different way. But having said that, we are still on the way, but we strongly believe that at the end of day, online, offline with the digitalization of all these 5 components of retail operations, onlineoffline will be on the same page, will give people seamless experience. Next. On top of new retail, actually we see another very interesting client demand, which is how to help them to do marketing effectively and efficiently. Today, in Alibaba, we have a very successful closed loop marketing and retail platforms, which is in Taobao and Tmall. But with our expansion to digital entertainment platform, we see an even bigger picture and even bigger potential, which is we can help our merchants on our retail platforms to manage their customers cross platform in the entire Alibaba economy. And all the data could be collected and could be analyzed under Unified Identity. Because of this, then we can give our partners, our marketers a very strong position, a tool to manage the footprints to track the footprints, to manage the footprints of their customers cross platforms. And we even work with 3rd party media and partners to leverage the data we have to help them to improve the ROI of the media activity. So that's why here we show you the synergy between our e commerce platform and our e market our digital entertainment platform. And we believe this synergy will become more and more stronger in the coming years because today, everybody is talking about digitalization. Everybody is talking about digital operation. But when I talk to a lot of marketing people, I said, today, you say you switch all of your marketing budget to digital marketing. But is there any difference when you do the traditional media? Can you track, can you manage, can you have the customer insight because of the digital marketing? What I share with them is that today, with the help of Alibaba, with the involvement of our entire economy, we say we can help you to achieve all this in the entire customer's life cycle. Next. So just now I mentioned the key components in our core commerce platform. Now I want to share with you in one picture what we have done, what we are doing and we are going to do. And as you can see, our core commerce platform now evolved from a pure market sales marketplace to a e marketing platform. And now we are doing a lot of exercise to execute our omnichannel strategy to make our merchants connect their online, offline and to give people unique and seamless experience. And what we are doing right now is that on top of these 2, sales, marketing, omni channel, we also want to help them to develop a new sales new distribution channel. For example, here with our Village Taobao program, with our LST, it's a low tier city distribution, Uberized distribution network. We try to help our merchants on our retail platform to enter into this new distribution channel and help them to improve their efficiency of the distribution. And most important thing is help them to get the data of the end customer in this new distribution channel. Of course, we have new channels like AliExpress, Lazada, which also give the merchants in China a new way via our platform to enter into a new market. Of course, on top of all these sales, marketing, distribution channel, which are all on sales side, Now we are doing a lot of exercise with Cainiao, our field company, to develop a data driven smart supply chain management solution to help people not only to manage customer efficiently, but also to manage their inventory efficiently. So that's the one big picture of our core commerce. And our core commerce is transformed from making connections to redefine retail. Next, now let's move to another very important business, Alibaba Cloud. People talk a lot about Alibaba Cloud and a lot of people see big potential of Alibaba Cloud. What I want to share with you here is the synergy we see in Alibaba Economy, how we, again, to leverage our existing business, our core business in core commerce to leverage, to empower our merchants in our core commerce to help them to transform to digital operation and empower their digital operation in our Alibaba Cloud. You know today, we have so many merchants on our retail platforms. They are doing retail sales. They are doing customer management. They are doing customer service, they are managing their inventories, they need they are trying to get the financial services. So today, our cloud business are evolving from an infrastructure service to a SaaS based application advanced service to all our participants in our core commerce. And we do believe this is a very, very unique synergies we have in Alibaba Big Family and how to and also because of this, we get a very concrete chance to help our merchants not only doing their business, not only transaction, doing sales, doing transaction on our platform, but really working at Alibaba. Next. Then let's move to the new platform we are building up in the recent years, which is digital media and entertainment platform. As I said, actually, we why we want to build the Digital Entertainment and Media Platform? We have a couple of reasons. First, we view this as an expansion of the consumption category. We strong believe that over time, with the development of the economy and the growing number of middle class family, people need more and more digital contents on top of the physical products. So that's why we want to invest in digital contents and give people more selections in their consumption. 2nd, we do see very strong synergy between the retail platform and the digital media platform because of the demand, strong demand about the smart marketing, about digital marketing of our merchant, our partners. So here, in our digital media platform, what we do is that, 1st, we have a lot of portfolio business in our digital media and entertainment platform. We have UC as a focus on video. We have sorry, we have UC focus on mobile browser, focused on mobile search and news feeds. We have YouTube. They are working on providing the video service to customers. We have Alibaba Picture. Their job is to cross the value chain of the movie financing, movie production, movie marketing, movie distribution, ticket sales and even to merchandise business. And we also recently, we acquired Pamae, is a very good business in the live event ticketing business. And we do see very strong synergy in all these portfolios in digital media and platform. But behind this, what we are doing now is try to build up a content generation ecosystem to generate content in different formats to video, to news feeds, to short video, to live events, to movies. We are building up a content generation platform, content generation ecosystem. And on the other hand, we will continue to invest to enhance our position as a content distribution platform. Of course, between these two, we are also working very hard to improve our monetization capability in the digital media platform. But again, when we look at the commercial value of this digital platform, is not only from the digital business, but also you can see very obviously the synergy from our marketplaces, from our retail marketplaces. From this you can see the synergy from the demand of our merchants as a marketer across the retail marketplaces and digital media platforms. And in doing this, what we are trying to do is for the first time in the world, we are trying to build a portfolio across retail marketing, but more importantly is to cross the entire customer's life cycle when they are in different apps, when they enjoy the different services. So that's the big picture of our Digital Entertainment and Media platform. Next. So here are another very important topic, which is globalization. In the last year's Investor Day, I shared with you Alibaba has 3 long term strategies: 1st is globalization 2nd is about rural China 3rd is our big data cloud computing and our strategy remain unchanged. And in globalization, in the past 1 year, we made substantial progress. Today, when we talk globalization, to serve 2,000,000,000 consumers over the world. So that's the big picture of Alibaba. That's what I want to share with you at the beginning of this Investor Day. Thank you. Thank you, Daniel. Now we welcome Ms. Maggie Wu, CFO. About the same time last year, we had our 1st Investor Day conference, and we received many positive feedbacks. So we had great events, very successful Investor Day. And then one feedback I received is, Maggie, why don't you just give us that guidance number earlier so that we could peacefully hear through the rest of the presentation? I'm not sure whether you're going to be peaceful after my presentation, but I'm gonna go earlier. So I'll cover 5 areas today. Reporting cards. My my My daughter is gonna graduate from her primary school this summer, and she's gonna turn in her school report card. So do we. So this is about 3 years since our IPO. So we're going to report back to you on on some of the key progress we've made. It's not only the results of the business development but also the healthiness of our business. And number 2, evolving value proposition to customers. This is a continuous topic from last year. And number 3, we're going to renaming 2 of our metrics. So I'll talk about that. And number 4, I'll give financial guidance. Number 5, valuation framework. Okay. So I think it would be fun for us to revisit some of the burning questions that we had during all these years. I still remember that during the IPO roadshow, people what people ask most are 2 questions, right? Number 1 is the GMV growth. How sustainable is this China retail marketplace GMV growth going to be? So we answered that by showing you all of these reports. Our GMV grow at a 37% CAGR for fiscal 'thirteen to 'seventeen, and we reached $547,000,000,000 GMV, which puts us ahead of Walmart and become if you compare the GDPs among 200 countries in the world, we're number like 22. And we represent 11% of China retail sales. We're going to remain our longer term goal and change, which is what I've talked about, like, 2, 3 years ago. We aim to achieve US1 $1,000,000,000,000 GME by year 2020 fiscal year 2020. Okay. Maybe some of you still remember that how worried you were, how concerned you were during our IPO roadshow. The question you asked is that how are you going to grow your mobile business? And what's the take rate going to be? Will that exceed PC? Right? And by that time, we only have around 160,000,000 MAUs and only 7% of our revenue coming from mobile. So the last fiscal year, we reported 507,000,000 MAUs by the end of March 'seventeen and 90 79% of our GMV coming from mobile, 80% of our revenue coming from mobile. We totally turned this business into the world's number 1, the largest mobile economy in 3 years' time. And talk about the take rate. We did experience some dip during our mobile transition on the take rate. So and then after all these 3 years, our blended take rate came back to ever high, which is 3.03 percent. And then the mobile take rate surpassed the PC. I remember this is a must ask question in every single roadshow meeting, and people ask why you believe that your mobile ticket rate is going to exceed PCs. So what I said is that it's simply because mobile provide broader user base, higher user engagement, and more data. Okay. Number 3, what's Alibaba's cloud growth potential going to be, and will it be profitable anytime soon? Last quarter was the 8th consecutive quarter. We reported 3 digits of cloud revenue growth. So it's interesting, we did this comparison with AWS. When they were at our site, of course, they didn't report much disclose much as they always do, but the growth rate of the AWS revenue was not as high as Ali Cloud. So the cloud EBITDA margin, you could see that negative margin getting narrowed over these years, and it almost gets to the breakeven point. Of course, at this stage, profitability is still not the priority of our cloud market leadership in the following quarters. Okay. People also asked about why is SBC as a percent of revenue so high and what's the dilution impact from SBC? So SaaS composition share based composition is important for us to recruit and maintain good people. And in our case, it's actually kind of unique that when you look at the SBC as a percent of revenue, it did show quite high point as high as 27%, and then last quarter, we reported 11%. That's because this unique thing that the employees do not only receive the grants from Alibaba Group but also the grants from Ant Financial, which accounting wise, is going to be mark to market. But it's not a real cost to us because there's no cash outflow, there's no dilution to our share base. So if you take that part out, the blue line shows you the SEC as a percent of revenue for the related to the Alibaba stock. SBC dilution for the past 2 fiscal years was stayed within the range we told people, which is 1%. So we had 0.9%, 0.7% dilution in the past 4 years. But we're very happy to announce that we had this share repurchase plan when we announced in year 2015. And then it did show accretive effect on this share base. So the overall net SBC dilution accretive share repurchase, we had a creation of 0.8%, 0.3% for the past 2 years. So we recently announced another US6 $1,000,000,000 share repurchase program approved by our board. We're going to be smartly deploy our capital and continue to manage that SBC dilution. Okay. This is interesting. Every meeting, people ask me about the margin. So how your investment going to impact your margin, especially the core commerce margin? So what I said is that we're willing to take up a percentage of our margin, our operating leverage we generated to reinvest into the business. If we see this metrics as KPIs, this is the one KPI that I failed, that our margin is still very high. So but 2017 fiscal, we had reported 62% of the EBITDA margin for our core commerce. And last year, the number was 63%. So I should say, somehow, it indicates that we might have not invested enough into our growing business. So I'll talk more about that later. So that's the report card. And last year, I remember how many of you were nervous about me announcing that we going to stop reporting quarterly GMV. But instead, we're going to give annual GMV reports. So I talked to people ask why and people are nervous about how they build the model, etcetera. I talked to one of my investor friends who has a 5 year old boy, right? So I said that 1 year boy is 5 year old. You measure his growth by measuring his stature, right, the boy. But when he's already 18 years old, you can't just measure his stature every quarter, right? That's annoying. You're going to measure the growth, the inner growth, the healthiness, you know, and all of that. So believe it or not, our revenue growth and GMV growth are decoupling. So while you see 22% of GMV growth, our revenue for China Retail Marketplace are growing 43%. Why is that? Again, it's because of the broader value proposition we provide to our merchants and brands' customers. And we are not just simply a distribution platform nor a marketing platform. We provide mixed value, broader value and also transform the way business is being conducted in China. So when you look at the GMV and the revenue, people just naturally calculate the take rate. And take rate is such a puzzle thing that when our take rate is at a lower level, people are worried about how high can you grow that take rate. And when we grow the take rate higher, people worried about, does that mean it hurts merchants ROI, right? So we have to answer both questions. The good thing about our revenue is that the model we have right now at Alibaba, which contributes more than 60% of our revenue, is a market driven model. So it's not we're holding a gun against merchants' head or we're adjusting up the price, commission, etcetera, to make the revenue grow. It's all determined by the merchants and brands how much they want to pay. Right? They bid for every single click they're willing to pay. So how did they calculate the ROI? The decision was with Gong. Right? Okay. So the left hand side is the old take rate, which only accounts for the GMV value we provided, the transaction value. But nowadays, when you look at all of these other values, the marketing value, the customer service, So when we receive this one click payment from the merchants and brands, that one click not only leads this potential buyer to transition, but also shows value in the entire consumer life. We bring them, make them aware of the products and services merchants have, and then they started showing interest by bookmarking the store fronts, by bookmark the products and putting things in shopping cart. Now we converted them into buyers. And then after purchase, they could still stay with the merchants because all of these data transparent we provide to the merchants and brands and then do the repeated purchase and the loyalty program, etcetera. So that's a much broader value. And then people will ask about, okay. So you're not measuring this statue for 5 years void. What are the inner, you know, measurements you have? I could give you, you know, 20 or 30 of them, but now I share with you 4. So when you look at the user user engagement on our platform, every day, we have more than 180,000,000 DAUs, which means consumers come 1 180,000,000 plus consumers come to our mobile Taobao every day. And more than 40,000,000 of them are coming to not directly go to purchase, but just review and look at these contents. And the they're here to look at the contents, even watch movies. We have a Taobao, right, the 2nd floor Taobao theater. So you can watch movie during midnight. So these young people just come and spend time here. And then we the the data shows that 80% plus year on year growth on number of users, the number of times they share the products and the contents. And the content also driven the user from just watching content and then go directly to the product page views. That growth is 140%. And then the daily unique product page view growing more than 60%. What that is, is that when you go to mobile Taobao, it's not only you flip on this page and it all of these products show up, counted as, you know, like, 5 products show up, counted as 5. Only if the consumer click on that product listing, it's counted as the unique product page view. That number already go over to 6,000,000,000 a day. Huge number, and it's still growing 60%. 45% -plus year on year daily average buyer adding to the shopping cart. So that by sharing couple of these engagement metrics, I hope that it gives you a sense of this the stickiness of users on our platform, the broader value propositions. When these brands and merchants spending, they thought it's marketing dollar, but it's not only marketing dollar. It gives them a chance to enable them to manage the consumer assets during the entire consumer lifetime. This shows give you some example of the contents I was talking about, right? So 120% plus year end growth on daily content page views. People who use mobile Taobao, they're be very familiar with this. Okay. I also want to talk about the cohort you normally ask about. I want to share with you 3 cohorts. 1 is the number of orders this consumer plays on marketplace. The statistic shows that longer consumer is on our platforms, more orders they place. So when you look at the bottom line, it shows the consumer register year. For example, consumer who registered with us in year 2016, they're a year 1 consumer, right, the average order they put during a year time is 38%. And for the year 5 consumer, number of orders he placed, averagely, so 123 orders. So that compares to our nearest peers. You probably can calculate from others' reports, we're 10 times more. So the average number of orders per consumers' our platform is 85. And for year 5, you could tell that people purchase more than twice a week. And longer consumers on the platform, more categories they purchased. So it also shows the trend the growing trend with the aging of the consumers and also the expanded categories they visited. And ARPU, so you could calculate the average blended ARPU in our platform is around USD 1,000, right? We have reported 454,000,000 of active consumers, and then that's the average spending level. But if you look into breakdowns, the year 1 consumer spending level is a lot lower, RMB3000 per year. And then the year 5 could go as high as RMB12000. And then the longer they're also higher spending level after 5 years. So it's important to understand what the value broader value proposition we're talking about because that explains not only the revenue growth but also the robustness and the potential of this business. So you probably still remember the merchants P and L. I showed you last year that we're helping the merchants almost every single line of their spending, the cost and expenditures. We continue to do that. Okay. Metrics. We are renaming 2 of our metrics, annual active buyer. We're going to change it to annual active consumer. That's because in early days, our why we call it buyer is mostly related to their purchase of the physical goods. But nowadays, we see more and more people are consuming contents, right, the services, the lifestyle kind of products on our platform. So by changing that name, it gives us, later on, the same kind of terminology to describe the growth of our other businesses, like our entertainment business. And we're going to change online marketing revenue, which is the biggest part of our revenue, to consumer management revenue. Like we said, basically, customer management revenue. That customer is the merchants and brands customer or the consumers. So we made it possible or enabled these merchants and brands, manage the consumer during their entire life cycle from they become awareness, and then they turn to interested in products and the stores and then purchase, repurchase, loyalty, etcetera. So this represents the real business value we provide to our customers. Financial guidance. So last year, we guided 48% year on year revenue growth in June, and then we adjusted up to 53% by the end of the year. We turn out to show the growth of 56%. So the reason behind that, of course, is the robust the value we provide to the merchants. And then if you go look into the deeper, that 8 percentage points additional growth are mainly coming from our core business, China retail business. And when you think about it, the clicks number of clicks are growing, conversions are growing. Why is that? That's because we have more relevant content. Right? And then behind that, that is the data technology we keep improving. So by the time we gave that 48% guidance, we did not really factor in all of these development and growth in the content and also in the technology, data technology we have made, for example, like personalization. So it go very fast and even exceeded our own expectation. Okay. 2018 annual revenue guidance. We're expecting 45 to 49% revenue growth. And that is, you know, like I said, it's not anything that we can adjust price to make it happen. It's going to be all voted by feet of the merchants and consumers. And we have that confidence that based on, you know, the data, the technology we have, the whole integrated business we have built, we're going to achieve that. So when you look at the all of these years, revenue growth. Last year, we showed 56%, but actually, there was a non apple to apple comparison because Inkulazada was a newly acquired business. And last year, we started to consolidate in April 20 16. And the year before, there was no comparison number. So if you took that out, last year's growth was somewhere between 44 percent to 45%, which means by having such a big base, larger base, we continue to accelerate our revenue growth. So after giving you the revenue, you will have margin question in mind. Right? That's the natural flow. So we growing our business like in a wine industry that Joe talked about that we have that vintage period, right? So normally, it takes, like, 7 years for us to grow the business into, you know, start to see the harvest. This shows the different businesses that are in different stages. So on the left hand side, these are new business. Even with our even with our core business, there are new elements that we're growing. Right? The new retail, the rural supermarket, international elements, these are businesses in incubation time. They're less than 3 years. And now we see this traction businesses, like Express, Alibaba, you may not notice that our last quarter's result was the first time we report our annual active consumer worldwide. So AliExpress, together with LADADA, already represents more than 80,000,000 of annual active consumers all over the world. You could compare with, you know, Amazon Prime and their worldwide buyers. It's a very significant achievement, but that business only accounts for, like, 1% to 2% of our revenue. So just give you a context that you can compare. Then Ali Cloud is already in its 7th, 8th year, And we have this, how about Tmall and alibaba.combusinessgeneratingstrongcashflow to support the growth. Okay. So what do I mean by showing this? By showing this, I would like to remind people that this is a company Always invest for longer term, invest for future. We're not talking about the next quarter margin, so I never give a percentage wise margin guidance. But I think I should share with you because the question in your mind, all the friends are investors and analysts, you must already calculate it, right, the revenue guidance I give, 45 to 49 percentage point, is pretty much 10 percentage point higher than the consensus number. Then that represents a big amount. Right? So last year, we reported RMB 158 1,000,000,000 revenue. 10 percentage gives you RMB 15,000,000,000 to RMB 16,000,000,000. That's about 2,000,000,000 dollars. Would that go directly to your profitability? Not necessarily. So assuming we the growth mainly coming from the core business, which in the past year shows like around 60% of the margin, that gives us around RMB 10,000,000,000. So where are you going to invest that money? We are willing to invest that money into expansion of consumer base, keep improving the consumer experience, quality consumption, and to make it very clear, we're gonna invest that to gain the b2c market share. Again, this is a successful track record for the for how we grow the business. So at the beginning, the before 7 years, it's all at the low point. Now revenue, no high growth. And then gradually, it's going to contribute. So it's not talking about how much we're going to invest, we are not going to open the playbook right now. So we're but the areas I talked about is going to be focus for reinvestment into the core business. And it might not necessarily spend all up that big number, but I want to reassure you that our determination and the confidence of expanding the market leadership and the decision of the investment. So by the end of the day, I hope that I wouldn't miss the fiscal too much. So last year, we had 62% margin. I think we do have operating leverage while we're having these investment plans. So I want to talk about the valuation framework. People might not fully appreciate it that we are the business leader, not only in the whole commerce or the cloud. We are the business leader in so many businesses areas. We're not only the number one in the e commerce, the Taobao already the single largest mobile economy in the world, and Tmall is number one market share in the B2C in China. We also have this AliExpress Lazada, already number 1 in commerce in SEA countries and Russia, number 3 in Spain, and our Xianyu is a secondhand e commerce apps, are already number 1 measured by MAUs in China. And then AliCloud, of course, number 1 across service provider in China. And then Youku, the online video platform in China, also has its leadership, and UC number 1 browser. And Shenmai is the number 2 mobile search in China. We have Autonavi, which is the number 2 map apps measured by MAUs in China. And then number 1, the Dinhoc office communication apps. And then Haukaukaukau, which sits with Alipicture, is even the number 2 movie ticketing service measured by MAU in China, right, all of this. And, Hans, you know about Alipay. So this kind of the teams are going to all of these areas and then become into the top leaders. And this shows you the 4th segment we talked about and reported to you. We repeated the financial results here. And at the same time, we're also showing the comparable companies at the bottom. So for each business, we have these great names that we're honored to be comparable to them too. So at the right hand side, there is a strategic investment where we have Joe is going to talk about investment tomorrow. But by showing these ones, the Cai Niu, the Suning, Kobei, Bibi, all of these and the delivery companies, that market value has already gone over US50 $1,000,000,000 So just to give you some reference in case you need to prepare the valuation. Profitability and cash flow. Non GAAP net income CAGR, 43%, very strong and free cash flow, great ability to generate cash flow. We had generated over US10 1,000,000,000 dollars cash flow in the past year and the FCF CAGR was 37%. And then net cash, we had US8 $1,000,000,000 net cash service, this dry powder in case we need it. So that pretty much concludes my presentation. I'm not sure whether you still remain peaceful, but I feel excited. The whole team feels very excited. Thank you very much. Maggie, if I can just ask you to stand put. I'm sure after that guidance, we don't need questions. But I still have to invite our CEO, Daniel, on stage as well as Joe, if you'd like to do a Q and A with us. Unfortunately, this year is not raising hands, so we have a system back in stage getting all of your questions into a pool. We're going to start live streaming here.