Alibaba.com Announces Third Quarter 2008 Results

Alibaba.com Limited (HKSE:1688), the world’s leading B2B e-commerce company, today posted financial results for the quarter ended September 30, 2008. The company also announced that its board of directors has authorized a share repurchase program of up to HK$2 billion (approximately US$258 million*) through the end of 2009.

“While the global economy is facing extraordinary challenges, our business continues to grow at a steady pace and we delivered another solid performance in the third quarter. Through the first nine months of the year, our net profit grew 100% year-on-year,” said David Wei, chief executive officer of Alibaba.com. “The network effect of our marketplaces continues to strengthen, with the number of registered users, storefronts and paying members all increasing. Our international marketplace attracted a record number of registered users in the third quarter, increasing 74% year-on-year, suggesting that small businesses worldwide are increasingly turning to the Internet as a new channel for international commerce.”

“China’s economy remains one of the relative bright spots in the world economy, driven by domestic investment and consumption growth. Our China marketplace for domestic trade was the main driver of revenue growth during the quarter, and its revenue increased 79% over last year. The China marketplace accounted for 38% of our revenue during the quarter, up from 29% from a year ago. This reflects the success of our strategy to achieve a more balanced mix of revenues from our two core marketplaces.

Alibaba.com had 398,351 paying members as of September 30, 2008, representing a 46% increase from the third quarter of 2007 and an 8% increase from the second quarter of 2008. As a result of the higher number of paying members, Alibaba.com reported total revenue of RMB780.2 million in the third quarter of 2008, up 37% from the same period of 2007 and 6% from the second quarter of 2008. The company’s investment in China domestic trade has increased the significance of the China marketplace, which contributed 38% of total revenue for the current quarter, compared to 29% in the third quarter of 2007 and 36% in the second quarter of 2008.

The company’s China marketplace continued to experience robust growth and has become a more important revenue contributor as the growth of China’s domestic trade outpaced exports. During the third quarter, revenue from the China marketplace increased to RMB295.7 million, an increase of 79% year-on- year and 11% quarter-on-quarter. The China marketplace accounted for 38% of total revenue in the current quarter, compared to 29% in the same period last year and 36% in the second quarter of 2008.

Gross profit for the third quarter of 2008 was RMB681.6 million, an increase of 38% year-on-year and 6% quarter-on-quarter. Gross margin stayed at 87%, which was the same as the third quarter of 2007 and slightly lower than 88% in the second quarter of 2008.

Profit from operations in the current quarter was RMB364.2 million, representing a 54% increase year-on-year and a 7% increase quarter-on-quarter. Operating profit margin increased to 47% in the current quarter from 41% in the same period last year and from 46% in the second quarter of 2008.

Profit from operations before share-based compensation expense (non-GAAP) was RMB402.8 million in the current quarter, an increase of 49% year-on-year and a 4% increase quarter-on-quarter. Operating margin excluding share-based compensation expense (non-GAAP) was 52% in the current quarter, up from 47% in the same period of 2007 and declined slightly from 53% in the second quarter of 2008.

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