Alibaba (BABA - Get Report) said during its annual investor meeting in China on Thursday that the company's revenue could grow a stunning 49% for the 2018 fiscal year, but which of its businesses are prompting this rosy forecast?
The company, which reported $23.3 billion in revenue for the past year ended March 31, is still heavily reliant on its core e-commerce business. For the past quarter, its bundle of e-commerce arms brought in $4.6 billion of its $5.2 billion total revenue.
But its e-commerce business is more complicated than the one-stop shop of U.S. e-commerce giant Amazon.com (AMZN - Get Report) due to its different businesses that specialize in different types of e-commerce. "Revenue from core commerce is primarily generated from our China retail marketplaces, 1688.com, AliExpress, Alibaba.com and Lazada.com," the company said in its latest financial report.
Alibaba's stock finished Thursday up 13% to $142.18 on news of the favorable outlook, and the stock is up about 62% year-to-date.
CrispIdea head of research Shejal Ajmera raised the company's price target to $144 based on the guidance and said she sees upside potential of 16% now, vs. 10% before the announcement. "We have gained confidence in Alibaba and estimate the top line growth of ~35% - 40% in FY18," she wrote in an email on Thursday.
TheStreet has broken out its different e-commerce businesses to give you a better picture of where its revenue growth is coming from.
Alibaba.com was launched in 1999 by Jack Ma as a business-to-business (B2B) website. Most members of the site are manufacturers, trading companies or resellers who trade in large quantity. In other words, it helps Chinese exporters do business with overseas companies.
Revenue and GMV from Alibaba.com is not broken out in the financial report. However, for the past quarter, Alibaba's e-commerce arms, including Alibaba.com, brought in $4.6 billion of its $5.2 billion total revenue.
Taobao Marketplace launched in May 2003 as a consumer-to-consumer (C2C) commerce site, or a way for small businesses and individuals to sell items. It's the largest online shopping marketplace in China. There is currently no English version of the site.
Alibaba founder Ma used this site to push eBay (EBAY - Get Report) out of China. "eBay may be a shark in the ocean, but I am a crocodile in the Yangtze River," he said at the time, according to Forbes. "If we fight in the ocean, we lose -- but if we fight in the river, we win," he said. By the end of 2006, eBay pulled its online marketplace from China."
The company's goal for the Taobao app is to make it a place for users to not only shop, but also share product knowledge and lifestyle content to boost engagement and retention, the company said in its latest financial report. For the latest quarter, Alibaba added 14 million monthly active users (MAUs) to its China retail marketplaces for a total of 507 million MAUs in March 2017. Taobao's efforts to be seen as a lifestyle content destination include a "digital mirror" feature that lets users virtually apply makeup, as well as different webisodes.
For the fiscal year 2017, the total amount of items sold on Taobao (GMV) jumped 17% year-over-year to $320 billion.
Tmall.com was launched in April 2008 as a business-to-consumer (B2C) platform on Taobao as a way for legal entities to sell their goods to consumers. In February 2014, Alibaba launched Tmall Global as a way for overseas branded merchants to sell goods in the Chinese online retail market.
As of March 2017, 75% of the consumer brands that ranked in Forbes Top 100 World's Most Valuable Brands have established a presence on Tmall, the company said in its latest earnings report. The site is valuable for retailers because it also gives them insight into the Chinese market when it comes to launching new products, building their brand, customer acquisition and customer lifecycle management.
For the fiscal year 2017, the total amount of items sold on Tmall (GMV) jumped 29% year-over-year to $227 billion.
In March 2010 Alibaba launched 1688.com, a website for wholesale business.
For the quarter ended March 31, Alibaba's revenue from its China commerce wholesale business increased 36% year-over-year to $213 million due to an increase in the average revenue from paying members, as well as a jump in the number of paying members on the platform, the company said.
Lanched in 2010, AliExpress is a B2C platform that allows Chinese branded companies to sell their items to consumers outside the China market. For the past year ended March 31, total annual active buyers on AliExpress and Lazada was 83 million.
Alibaba's international commerce retail business revenue increased 233% year-over-year to $1.066 billion due to both AliExpress and Lazada.
E-commerce site Lazada.com was launched in 2012 to serve Southeast Asia, including Indonesia, Malaysia, the Philippines, Singapore, Thailand and Vietnam. In April 2016, Alibaba paid approximately $1 billion for a controlling stake in Lazada as a way to help the company expand into the region. At the time, Max Bittner, CEO of Lazada Group, said in a statement, "the transaction will help us to accelerate our goal to provide the 560 million consumers in the region access to the broadest and most unique assortment of products."
As stated previously, total annual active buyers on AliExpress and Lazada was 83 million. Alibaba's international commerce retail business revenue increased 233% year-over-year to $1.066 billion due to both Lazada and AliExpress.
Due to the consolidation of Lazada, as well as video site Youku, Alibaba's revenue grew 56% for the past year to $23.3 billion. After adjusting for the two business consolidations, revenue growth would have been about 44% to 45%.