Alibaba Group Holding Limited 115 Management Discussion and Analysis Operating Results The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements and the related notes included in this annual report and in particular “Business Overview.” This discussion contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” and elsewhere in this annual report. We have prepared our consolidated financial statements in accordance with U.S. GAAP. Our fiscal year ends on March 31 and references to fiscal years 2020, 2021 and 2022 are to the fiscal years ended March 31, 2020, 2021 and 2022, respectively. Overview Our total revenue increased by 41% from RMB509,711 million in fiscal year 2020 to RMB717,289 million in fiscal year 2021, and further increased by 19% to RMB853,062 million (US$134,567 million) in fiscal year 2022. Our net income increased by 2% from RMB140,350 million in fiscal year 2020 to RMB143,284 million in fiscal year 2021, and decreased by 67% to RMB47,079 million (US$7,427 million) in fiscal year 2022. Our non-GAAP net income, which excludes the effect of share-based compensation expense, amortization and impairment of intangible assets, impairment of investments and goodwill, gain or loss on deemed disposals/disposals/revaluation of investments, and certain other items as adjusted for tax effects, increased by 30% from RMB132,479 million in fiscal year 2020 to RMB171,985 million in fiscal year 2021. Non-GAAP net income decreased by 21% to RMB136,388 million (US$21,515 million) in fiscal year 2022. For further information on non-GAAP financial measures we use in evaluating our operating results and for financial and operational decision-making purposes, see “—Non-GAAP Measures.” Our Operating Segments We organize and report our business in seven operating segments: • China commerce; • International commerce; • Local consumer services; • Cainiao; • Cloud; • Digital media and entertainment; and • Innovation initiatives and others. This presentation reflects how we manage our business to maximize efficiency in allocating resources. This presentation also provides further transparency to our various businesses that are executing different phases of growth and operating leverage trajectories. We present segment information after elimination of inter-company transactions. In general, revenue, cost of revenue and operating expenses are directly attributable, or are allocated, to each segment. We allocate costs and expenses that are not directly attributable to individual segments, such as those that support infrastructure across different operating segments, to different operating segments mainly on the basis of usage, revenue or headcount, depending on the nature of the relevant costs and expenses. In discussing the operating results of these seven segments, we present each segment’s revenue, income from operations and adjusted earnings before interest, taxes and amortization, or adjusted EBITA. Our reported segments are described below: • China commerce. China commerce segment mainly includes our China commerce retail businesses such as Taobao, Tmall, Taobao Deals, Taocaicai, Freshippo, Tmall Supermarket, Sun Art, Tmall Global and Alibaba Health, as well as wholesale business including 1688.com. • International commerce. International commerce segment mainly includes our international commerce retail and wholesale businesses such as Lazada, AliExpress, Trendyol, Daraz and Alibaba.com.
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