Alibaba.com Exceeds One million Paying Members in Q3 While VAS ...

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1, 2011. This upgrade is a key step toward our long-term vision of bringing e-commerce and our business to another level: helping our customers move from “Meet at Alibaba” to “Work at Alibaba.” The new CGS 2011 edition includes an upgraded customer working platform on the marketplace and new services for promoting trust and safe trading on the Alibaba.com platform. The upgrade aims to enhance user experience while steadily expanding our customer base and strengthening our customer relationship. The number of Global Gold Supplier members reduced to 11,017 as of September 30, 2010, representing a decrease of 7,594 y-o-y and 2,542 q-o-q, which is primarily due to the expected impact from product upgrade and price increase last year. Revenue from Global Gold Supplier remained steady as compared to the previous quarter. To further build on the membership growth achieved in India in the past two years, in the third quarter of 2010, we launched local operations in Mumbai, India to better serve the vast Indian small business community. Our Indian office handles all direct membership sales and provides hands-on support and customer training programs. As of September 30, 2010, there were 14.9 million registered users and 1.6 million storefronts on our international marketplace. In the third quarter, registered users increased by 1.3 million and storefronts grew by 62,716. AliExpress During the period, we actively expanded our suppliers, buyers, product categories and product offerings on this transaction-based wholesale platform. At the same time, we stepped up our effort in improving its flow, including streamlining the process of placing orders while maintaining trust and safety on the platform, providing enhanced overall user experience. In July 2010, we completed the acquisition of Vendio, an e-commerce platform providing a one-stop solution for small businesses that are selling across multiple online channels, including eBay and Amazon. In August 2010, we acquired Auctiva, the leading third-party developer of listing, marketing and management tools for eBay sellers. Through these two acquisitions, Alibaba.com gained access to more than 250,000 small online retailers who have potential sourcing needs from suppliers on our international marketplace and AliExpress. The connection of these two platforms with our marketplaces will help integrate the e-commerce value chain between B2B and B2C, fully realizing the B2B2C model. Business integration is underway as we are now working on further matching criteria like product categories in demand, quality and scale of suppliers, etc. between the buyers and our AliExpress suppliers. China Marketplace Revenue from our China marketplace increased to RMB492.2 million (US$72.7 million) in the period, representing a 30.1 percent increase y-o-y and a 4.6 percent increase q-o-q. During this period, registered users rose by 2.0 million to 41.8 million and storefronts grew by 324,314 to 6.6 million. Paying member growth was also well on track. As we have previously cautioned, the net addition of paying 4
members has reverted to a more sustainable level in the third quarter, when the new product impact of China TrustPass Basic was absorbed. We achieved 37,850 net additions of China TrustPass paying members, bringing the total to 631,348 as of September 30, 2010, growing 32.8 percent y-o-y and 6.4 percent q-o-q. The strong growth in our base of paying members was mainly attributable to the positive effects of new business initiatives introduced in the beginning of the year. In the third quarter of 2010, the contribution of VAS revenue to China TrustPass revenue exceeded 20 percent attributed mainly to the strong growth momentum in Ali-ADvance and Premium Placement. Further product and search feature modifications in Ali-ADvance helped us address customer needs in a more effective way and hence raised the return on investment for our members. We expect further penetration of VAS as more new features are being launched and our members further experience the power of these applications. HiChina HiChina had about 2.1 million domain names in service, and the total number of paying members for its non- domain name services was around 255,000 as of September 30, 2010. The growth in domain names in service slowed down in the third quarter mainly due to the new government policy on the authentication process for users. Ali-Loan Ali-Loan continued to demonstrate its value in solving small businesses‟ financing needs while increasing members‟ stickiness to Alibaba.com. As of September 30, 2010, the cumulative number of loans issued by our partner banks to our paying members was more than 8,000, with total loans exceeding RMB20 billion (US$3.0 billion) since the program was introduced. Gross profit increased to RMB1,207.2 million (US$178.3 million) in the period, up 35.0 percent y-o-y from RMB894.4 million (US$132.1 million) and up 6.0 percent q-o-q from RMB1,139.0 million (US$168.2 million). Gross profit margin declined slightly to 83.3 percent compared with 86.6 percent in the same period last year and was flat from 83.4 percent in the second quarter of 2010. The decline was primarily due to a higher cost of revenue stemming from the inclusion of financial results from HiChina and Vendio, which had relatively lower gross profit margins. Total operating expenses were RMB831.9 million (US$122.9 million) in the period, representing a 24.4 percent increase y-o-y from RMB668.8 million (US$98.8 million) and a 10.5 percent increase q-o-q from RMB752.9 million (US$111.2 million). The increase in operating expenses, for both y-o-y and q-o-q, was mainly due to the consolidation of expenses incurred by HiChina, Vendio and Auctiva, as well as our continuing investments in our business as we expand. Total operating expenses as a percentage of revenue were 57.4 percent for the period, compared with 64.8 percent in the same period last year and 55.1 percent in the second quarter of 2010. The y-o-y decrease was mainly due to the VAS growth as well as scale benefits that we realized while the q-o-q increase was mainly due to higher share-based compensation expense incurred in the third quarter of 2010. Profit from 5
Page 1 and 2: Alibaba.com Exceeds One million Pay
Page 3: Third Quarter 2010 Financial and Op
Page 7 and 8: About Alibaba.com Limited Alibaba.c
Page 9: ADDITIONAL QUARTERLY FINANCIAL INFO

Alibaba.com Exceeds One million Paying Members in Q3 While VAS ...

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