Jane Penner - Head of Investor Relations and Vice President Chung Tsai - Non-Executive Director, Chairman of Investment Management Committee, Member of Audit Committee and Member of Remuneration Committee Zhaoxi Lu - Chief Executive Officer Wei Wu - Chief Financial Officer Yong Zhang - Chief Operating Officer

Alex Yao - JP Morgan Chase & Co, Research Division Alan Hellawell - Deutsche Bank AG, Research Division Angela Moh - Morgan Stanley, Research Division Dick Wei - Crédit Suisse AG, Research Division Carlos Kirjner - Sanford C. Bernstein & Co., LLC., Research Division Piyush Mubayi - Goldman Sachs Group Inc., Research Division Yiu Hung Chong - Citigroup Inc, Research Division Alicia Yap - Barclays Capital, Research Division Eddie Leung - BofA Merrill Lynch, Research Division Erica Poon Werkun - UBS Investment Bank, Research Division Chun Ming Zhao - 86Research Limited Scott W. Devitt - Stifel, Nicolaus & Company, Incorporated, Research Division Mark S. Mahaney - RBC Capital Markets, LLC, Research Division

Good day, ladies and gentlemen, and thank you for standing by. Welcome to Alibaba Group's September Quarter 2014 Results Conference Call. [Operator Instructions] I would now like to turn the call over to Jane Penner, Head of Investor Relations of Alibaba Group. Please go ahead.

Good day, everyone, and welcome to Alibaba Group's September Quarter 2014 Earnings Conference Call. With us today are Joe Tsai, Executive Vice Chairman; Jonathan Lu, Chief Executive Officer; Daniel Zhang, Chief Financial -- I'm sorry, Chief Operating Officer; Maggie Wu, Chief Financial Officer. Also, as you know, we distribute our earnings release through Alibaba Group's Investor Relations website located at www.alibabagroup.com, so please refer to our IR website for our earnings release as well as the supplementary slides that accompany the call. You can also visit our corporate website for the latest company news and updates. This call is also being webcast from our IR section of the corporate website. A replay of the call will be available on our website later today. Now let me quickly cover the safe harbor. Today's discussion will contain forward-looking statements made under the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. Factors that could cause actual results to differ materially are set forth in today's press release. To also understand these risks and uncertainties, please refer to our Form F-1, as amended, originally filed with the U.S. Securities and Exchange Commission on May 6, 2014. Any forward-looking statements that we make on this call are based on assumptions as of today, and we do not undertake any obligation to update these statements, except as required under applicable law. Please note that certain financial measures that we use on this call such as non-GAAP EBITDA, including non-GAAP EBITDA margin and non-GAAP net income are expressed on a non-GAAP basis. We have also adjusted our net cash provided by operating activities to remove purchases of property and equipment and intangible assets, excluding the acquisition of land use rights and construction in progress, and adjusts for changes in loan receivables relating to microloans of our SME loan business, which we refer to as free cash flow. Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. With that, I will now turn the call over to Joe.

Good evening, or good morning, depending on where you are. Thank you, all, for joining. Jonathan, Maggie, Daniel and I look forward to discussing our business on our first earnings call as a public company. In the quarter that ended in September, which is our fiscal second quarter, I'm pleased to report that we saw continued strong growth across our core operating metrics, which drove our strong financial results. We grew gross merchandise volume across our China retail marketplaces, and we increased the number of active buyers across our ecosystem. As a result of this strong performance, we grew revenue significantly, and we continue to expand our strong position and competitive advantage as the unrivaled leader in mobile commerce across China. Our businesses continues to perform well, and our results highlight both the strength of our ecosystem and the strong foundation we have for sustainable future growth. My colleagues will provide you with a more in-depth look at our business operations and financial results, but before they do that, I want to highlight a few of our key growth areas. We grew gross merchandise volume across our China retail marketplaces by 49%. The overall GMV growth of 49% year-on-year is an acceleration from the GMV growth rates achieved in the previous 2 quarters of 46% and 45%, respectively. One key reason for this strong GMV growth is the continued growth in active buyers. Our platform engages users with strong commercial intent, and you will recall that an active buyer is someone who came to our retail marketplaces to make at least 1 purchase during the period of measurement. For the 12 months ended September, our annual active buyers increased to 370 million -- sorry, 307 million. Annual active buyers for the year ending in September amounted to a 52% year-on-year…

Thanks, Joe. Hello, and welcome to our first earnings call. Joe gave a good overview of the progress we have made in our key operating metrics, and I want to give you a sense of how we achieved these results, mainly, what we are doing to drive GMV and active buyers. Let's start with the GMV group. Tmall GMV continues to grow extremely well, but in the September quarter, Taobao Marketplace grew faster year-on-year than in the prior 3 quarters. A clear celebration of a real large business. This acceleration was due to a number of factors. First, we have made several productions [ph] on Taobao to improve our buyers' experience, including a new recommendation engine based on data. Such results are now more personalized, which increase conversion rates. Second, we have promoted new categories that are growing fast, including: furniture and decoration, car accessories, household products, sports gear and baby/maternity. It's clear from the list of categories that our buyers are beginning to live at Alibaba. Taobao is now a destination that can meet every imaginable need. Of course, GMV growth is fundamentally driven by our ability to attract and retain active buyers. Our extremely popular mobile Taobao app has been one important source of new buyers on our platform. We have recently added features to increase usage of the app, including hour [ph] flash sales that encourage mobile buyers to return several times a day. In addition, more buyers from smaller cities are using our retail marketplace every year. Even though these new buyers initially transact less than buyers from first-tier cities, we believe they will be an important engine of GMV growth in the future. In general, our data suggests that the longer a buyer stays on our platform, the more they spend across a greater variety…

Thank you, Jonathan. Hello, everyone. Joe and Jonathan discussed the key operating metrics in the September quarter, so now I'll walk through the details of monetization and our financial performance. First, the highlights. GMV grew 49% year-over-year to RMB 556 billion, and it was up 11% sequentially. Revenue grew 54% year-over-year to RMB 16.8 billion and was up 6.5% sequentially. Our blended monetization rate was steady at 2.3% versus 2.31% a year ago. Non-GAAP EBITDA margin was 51%, down from 59% in the year ago period. I'll dig into the details on this in a few minutes. By the way, the non-GAAP EBITDA was -- also called adjusted EBITDA, same thing. Non-GAAP net income grew 15% year-over-year to RMB 6.8 billion. Non-GAAP diluted EPS was RMB 2.79, an increase of 9.4% compared to RMB 2.55 in the previous quarter of 2014 -- I mean 2013. So moving on to monetization. I want to make it very clear that we manage the business to promote growth in GMV and active buyers, not to maximize our own monetization rate. We view monetization rate as merely nearly an output of our success in driving GMV, active buyers as well as improving the customer experience and their return. That said, we are monetizing our GMV very well. The blended monetization rate across PC and mobile devices is stable at 2.3%, consistent with prior years. This blended rate is lower sequentially due to strong GMV growth on Taobao Marketplace, where GMVs are less monetized since it's literally still a free marketplace. As Joe noted, our performance in mobile this quarter has been particularly strong. The mobile monetization rate increased to 1.87% from 1.49% in June quarter, and some 0.61% in the year-ago period. Our mobile monetization rate is now 74% of that of our PC…

[Operator Instructions] And our first question comes from Alex Yao from JPMorgan. Alex Yao - JP Morgan Chase & Co, Research Division: Congratulations on a very solid quarter as the first -- as a public company. My first question is about the monetization rate. Can you comment what is driving the improvement of the mobile monetization rate during the quarter? Is there any one-off event attributable to the increase? Or you guys drive a lot of sales and marketing effort to drive the merchant adoption? And then secondly, on the PC monetization rate, if my calculation is correct, it seemed to decline a little bit compared to the same period last year. Why did the PC side decline?

Okay. I will take this question. For the mobile monetization rate, I think the key reason for the increase in the mobile monetization rate is that the continued increase of the mobile traffic. And because today, more and more Chinese people, they get used to shopping online via mobile device. And on the other hand, when our merchants witnessed the behavior change and they will spend -- actually, today, they are spending more money on the mobile side to bid for the keywords and buy the online marketing services. I think these are the key reasons for the increase in the mobile monetization.

Yes, Alex, this is Maggie. In terms of the PC take rate, it's lower than previous quarter, slightly, and the reason is that we have a very strong G&A growth on Taobao Marketplace. If you look at the growth rate, it actually accelerated compared with previous quarters. And the Taobao Marketplace GMVs are relatively less monetized since it's still literally a free marketplace. So that's the reason. Having said that, we manage business to promote the overall growth of GNA [ph] active buyers. Really, take rate is just the output, as a result. And we look at PC and mobile as an integrated marketplace.

Our next question comes from Alan Hellawell from Deutsche Bank.

I had a question about the interplay between commissions and marketing services revenues. If I'm not mistaken, commissions in the quarter may have doubled year-on-year, and marketing services may have risen by a bit more than 30%. I was wondering if you could just give a little bit of color as to what the drivers were between these different trajectories, whether you do it as a function of PC or mobile, but get some color there. And would simply love to get enough refresh on how you are contemplating your M&A strategy over the next couple of quarters.

Yes, Alan, I'll take the commission versus online marketing revenue question, then I'll refer to Joe to talk about our M&A strategy. Yes, you're right, actually commission revenue grew faster year-on-year than the online marketing revenue growth. As we discussed in the announcement that our retail revenue consists 33.5% commission revenue in the quarter compared to 24.8%. And the reason for a relatively slower growth in the online marketing is pretty much the same reason as when we talk about PC take rates because Taobao GMV grows so much faster. And when you look at the PC versus mobile GMV mix, Taobao has a higher PC GMV percentage than in Tmall. And as I said, Taobao is relatively less monetized, so that's the impact which resulted to kind of a slower growth, not really slower but just compared to the much faster growth on the commission.

Alan, this is Joe. Thanks for the question on M&A. You asked about the M&A strategy for the next couple of quarters, but I think we always look at M&A as a long-term strategic thing. So the horizon is much longer than the 2 quarters. And the kind of criteria that we use in terms of making investments and acquiring companies is that, number one, we always like opportunities that will help us add more users and also additional engagement of these users in terms of converting them into e-commerce users. And number two, we are always interested in improving customer experience. So for example, we have previously said we have a partnership with the higher logistics business, where we have both a commercial relationship on logistics as well as an equity relationship to bring the 2 companies closer together in order to bring better logistics service to the large appliance category, and that has worked out really well for us. And number three, we're always interested in adding additional product and service categories that will enhance our position in terms of getting the consumers' wallet share. So that's what we're looking at in terms of the strategy.

Yes, I just want to add a little bit to the Taobao GMV growth. I keep saying that it grows faster. There -- there are reasons behind it. And we see this as very positive because Taobao is our core traffic engine, and they're our [indiscernible] source of eventually monetizing for all of our marketplaces, including Tmall. So we have been making a lot of efforts to grow the GMV of Taobao Marketplace.

Our next question comes from Angela Moh from Morgan Stanley.

Just a couple of questions from me. On the average spend, if we just take the number of buyers and kind of back out the average GMV per person or per buyer, that's kind of down about 2% year-on-year. Is that something that you guys are worried about? Or -- because you mentioned that a number of categories of new products have actually increased. So maybe you could comment a little bit on that. The second question is more on the recent announcement about the investment of about, I think, RMB 10 billion [ph] over 5 years at Taobao Village. Could you also maybe give us a little bit more color on that [ph]?

Right, the second question -- the line is not that good. Could you please repeat the second question, Angela?

Sorry, so the second question is recently we saw an announcement about investment of, I think, about RMB 10 billion over 5 years on Taobao [indiscernible]. So going down into the rurals [indiscernible] a little bit more in terms of the execution of this.

Yes, okay. I'll answer on the first -- the GMV per buyer question, then Daniel will answer the rural one. The slight decline of this [indiscernible] GMV per annual active buyer does not really worry us. It just slightly decreased due to the significant growth of the new buyers in the past year. If you recall, we have been talking about the rule of platform is that the longer a consumer stays, the more they spend annually. So normally, the new buyers' spending level are relatively lower, but will catch up as they buy from more categories and [indiscernible] the number of orders. So if you really break it down, that is a look at the branded [ph] average of that spending level. We do see that.

Hi, this is Jonathan. I'll take the second question. Right now, there's 34% of the Chinese people in urban areas use the e-commerce, but only 9% of Chinese people in rural areas use e-commerce. So this is -- we consider this as a big opportunity for long term. Our vision is that we'll enable the farmers to sell their farm products to city people and globally. At the same time, we encourage Chinese 600 million farmers to buy online from Taobao. So this is a long-term view.

Our next question comes from Dick Wei from Credit Suisse. Dick Wei - Crédit Suisse AG, Research Division: My first question is on AliTrip. I wonder if you have any updated strategy or investment plans or any area of focus for the AliTrip new subsidiary? And then I think the other side, the other questions I have maybe in terms of the other income line, I suppose this mainly comes from the Ali -- I guess from Ant Financial. I wonder, any kind of spends [ph] or directionally how does the margin trend are coming along from the Ant Financial side or any details we can have?

Okay, this is Daniel. I will take the first question about travel. Actually, late last month, we just launched a new branding of our travel business. And the purpose is quite clear, and we believe that travel market is fierce [ph] market for Chinese people. And today, if -- when we look at the market, we want to launch our services to the Chinese consumers to not only for their touring [ph] domestically but also to bring more Chinese people to other countries. But we don't want to do this like other -- as a OTA. But we will stick to our platform model. We will try to connect the service providers, the hotels, the airlines and the sight-seeing connect with end customers directly. Actually, we had -- we made a -- recently, we made an investment in a Chinese software ERP company, as a travel ERP company, which is Shiji. And the purpose is that we want to work with them to connect with the system of the hotels and restaurants so that the merchants at the hotels and restaurants can supply their inventories on a real-time basis. And by this way, they can sell their products and service more efficiently.

Yes, Dick, regarding your question about our Small and Micro Financial Services Group profitability. You can see from our disclosure that our profit sharing from the group is slightly down. The reason behind it is that based on our restructure agreement, the 49.9% profit sharing have been changed to 37.5% but a bigger [ph] pipe. But currently, the profit mainly coming from Alipay. Other businesses are still in the very initial stage. And one thing I do want to mention about is that overall, our Ant Small and Micro Financial Services Group is still in its very early investing stage. And growing profit is definitely not their priority. So we do not expect very high or significant profit-sharing growth.

Our next question comes from Carlos Kirjner from Bernstein. Carlos Kirjner - Sanford C. Bernstein & Co., LLC., Research Division: Two questions. Can you give us some direction on how much more user cohorts have spent as they stayed longer in the platform? For example, if you take users who joined 2, 3 or 5 years ago, how much more are they spending today versus in their first year? Second, can you also give us some direction on what EBITDA would have been x the impact of UCWeb and AutoNavi and talk a bit about the rationale for developing your own OS given the strength of Android and iOS?

Yes, let me share with you some color on this average spending per buyer. As I said that longer customers stay with us, the more they're going to spend annually on our platform. I'll give you an example, like customers who stayed with us within 1 year time, their average spending, annual spending level is somewhere around RMB 1,000. And for the ones who stayed with us for 5 years' time, their spending level is somewhere around RMB 15,000. And then for the one who stays as long as 10 years, their level is going to be above RMB 30,000. So this is the trend we see so far as our consumers' pace for the their spending pattern.

Carlos, this is Joe Tsai. Your question, I think, is about why we're investing to develop our OS. Operating system is a very long-term strategic project for Alibaba, especially for the China market. As you probably know, that Google has a strong franchise in Android. And although a lot of phones in China are operating on the Android system, there's not a lot of Google services that operate with these phones. And the whole thinking behind developing an operating system is that it's not just an operating system. It makes sense if you have overlay a number of internet services on top of that operating system, for example, maps, for example, for us in our case, e-commerce. And we feel that we are a very strong Internet service company in China. And developing an OS for a mobile device, not just phones but also other mobile devices, will be a long-term winning strategy for us. And I just want to emphasize that it's a very long-term game. The dominant player today may not be dominant tomorrow. So that's why we're continuing to invest in our OS.

And our next question comes from Piyush Mubayi from Goldman Sachs.

Can I just ask you the question about -- I think Carlos asked this question earlier. Would it be possible to break down the higher expenses for the quarter between the impact of consolidation and the higher spending in the core business? That's the first question. And the second, you've got a strategic position in ASEAN with the investment in Singapore. Could you give us a sense of how you'd like to see this evolve?

Yes. Just for the investment we'll make, you see ultimately -- if we exclude the impact of that 2 companies from the non-GAAP EBITDA, our non-GAAP EBITDA margin would have been somewhere around 54%.

For the global strategy, we believe that Southeast Asia is a very important area we have to explore. And in this area, a lot of Chinese people are living there. And they are familiar with Taobao, and they like to buy from Taobao. So today, what we are doing is that we try to [indiscernible] -- to collaborate with our partners to make the logistics system and the network system ready. For example, early this year, we made an investment in Singapore Post. And the reason is very obvious, we want to work with them to build up the richest network in the Southeast Asia to help our merchants to deliver product to their -- to this region more efficiently.

Our next question comes from Thomas Chong from Citigroup.

Joe, Jonathan and Maggie, my question is about Juhuasuan. Given recently there are a lot of news folks talking about the ramp-up [ph] of Juhuasuan, can you comment about the long-term strategy for this business line? And would you be doing your own merchandising to grab the share for the discount retail sector in China?

Okay, this is Daniel. I will answer this question. So Juhuasuan is a very unique platform. Actually, people from Taobao -- actually, this platform is -- the purpose, to first, to serve our Taobao seller to help them to sell in the model sort of a group buying the products to the Taobao consumers. And we limited SKUs, but it's a very deep stock level that the merchant can sell overnight, so without any distribution cost so the sales could be very efficient. And the other purpose for the Juhuasuan is to not only to help our merchants to sell product, but also to help them to promote their store front. So in this case, we -- merchants will do Juhuasuan as a marketing platform, and they will use some products to be promoted in Juhuasuan platform to make people aware of their software and go into their software for repeat purchase.

Our next question comes from Alicia Yap from Barclays.

My question is regarding the AliExpress. I wanted to know what are the categories that are most attractive to the global consumer in this marketplace? And how should we think about this marketplace with the upcoming November 11 promotion?

Yes, AliExpress is a platform to help Chinese consumers -- Chinese merchants to sell to the consumers in other countries. And when you look at the top-selling categories in AliExpress, actually in different countries, the top-selling category could be very different. And today, for example, in Russia, the apparel obviously is the #1 category because everybody understands in Russia and the consumer market is not so mature. And people cannot find good apparel, good jacket with high quality but low price. But China is famous for the manufacturing base of apparel. And for other countries, actually for some countries, consumer electronics and the digital products and phones are very popular. For this coming 11/11, AliExpress will also join this campaign. And they will sell -- actually, they will promote the products as well as the brand and the merchants on the platform and to the people in other countries.

Our next question comes from Eddie Leung from Merrill Lynch.

I have 2 questions. The first one is about your active buyers. Could you share with us some metrics about the retention rate you have seen of your active buyers in the past, let's say, 1 year as well as the organic user growth you have seen on your platform? And then secondly, about your merchant base, could you give us the number of merchants on your Taobao and Tmall platforms in the past quarter?

Yes, for the first question, the active buyer retention, as Maggie mentioned just now, we -- our platform have a very good stickiness to the consumers. People usually start with some light category. When we call it a light category, for example, like virtual items, people -- for the new customers, they will start with some virtual items like birthday [ph] cards, cellphone cards, game cards. And when they get used to online shopping, they will switch -- they will buy items from other categories. And they will spend more and more money on our platform. So the way you look at our active buyer, every quarter in the past few quarters, you can see the net add is very material. And we are confident that these people will be spending more in the future as they get used to shopping online.

Our next question comes from Erica Poon Werkun from UBS.

My first question is about mobile GMV. We've seen continued fast growth in the mobile GMV contribution. How do you see that contribution to trend over the next couple of years? And how do you expect that to influence the company's average take rates and also gross margin? The second question is on Double Eleven. I'm just wondering if you expect it to be a bigger event this year versus last year? Could you share with us how many sellers are participating this year versus last year and if there's any early indication on consumer responses?

Right. In terms of the mobile GMV as a percentage of total GMV, we're already at 35.8%. We see it's still going up, and we believe that in the following quarters, you'll see the increasing trend. However, we do see PC has a role, right, in this e-commerce. People will not switch 100% to mobile. And having said that, to us, a mobile is just another piece of screen, so what we are focusing on are the people behind the screen. So to us, separating the mobile GMV and PC GMV is really for purpose of this early stage for mobile progress. Investors aren't really concerned. I would like to know our progress on the mobile front. Going forward, to us, it's really integrated. It's one marketplace. The users are what we [indiscernible] focus on. So the take rate, the monetization, you have seen that our mobile take rate grows really fast. And whereas a lot of times where the mobile take rate could be an art of -- expectation is that mobile take rates are approaching PCs. The reasons are take rates reflect the value we provided to the merchants. And we do believe that we have a higher chance to provide higher value to our customers. What I mean by saying that is, first of all, we see more customers we can provide service to for this mobile platform, so more buyers, more merchants. And secondly is high engagement. We do see people come more and more often. Many times [indiscernible]. And third one is we could utilize more on the data side to drive and to provide more value to our customers. So in summary, we do see the mobile take rates to keep -- grow and approach PCs.

And I just wanted to sort of talk a little bit about just taking a step back and talk about mobile monetization. As you can see, we're disclosing mobile revenue as a percentage of our total China retail marketplace revenues. We're one of the very few companies in China that has really generated substantial revenues from mobile and clearly disclose it. And the reason why mobile monetization rates continue to increase is that when we look at a user, they are a consumer. When they come to use our mobile app, they're commercial intent is extremely strong. In fact, that commercial intent is no different from when they visit a desktop computer. When they come to the Taobao app, they want to buy something. And that leads to very strong conversion rates, which then benefits the merchants, which then allows the merchant the confidence to allocate more of their marketing budgets on us. So our mobile users actually generate transactions. And as I've said, over the last 12 months, $95 billion of GMV generated on our mobile platform. So we see that this strong commercial intent applies across-the-board whether it's on desktop or mobile.

This is Daniel, I will take the second question 11/11. There will be 1 week ahead and for this year's 11/11. And this will be our sixth 11/11 promotion. And last year, the promotion was very successful. The sales volume was RMB 5.8 billion, which is very huge. And this year, we don't want to focus on a single number. Instead, we want to achieve some other objectives. First is that globalization. We want this year to be the staring point of our global single-day promotion, and we're trying to -- we have been really trying to bring more and more overseas high-quality products via our platform to Chinese people. I'm sure many of you have heard the story of Costco, and they have very successful in our presale campaign and then -- which is just accomplished. And the other thing we focus on is mobile. As you can see, more and more Chinese consumers, they're shopping via mobile device. We want our 11/11 promotion could be more fit to Chinese consumers experience and to give there a good experience and look and feel on the shopping selection on the mobile side. And the last one is how to introduce, how to attract more and more participants in our ecosystem to this big campaign. This year, for example, we invited hundreds of game developers to develop small games and tens of thousands of shoppers -- tens of thousands of merchants, they use these small games in their storefronts to interact with consumers. And we also have a lot of movie stars, and they are interacting with their fans and they help us to distribute the coupons to these fans. So generally speaking, November 11 is not a game for Alibaba Company. It's a game -- it's a big day for the ecosystem. Today, in China and tomorrow, we think, is a global day for the consumers and merchants and ecosystem in e-commerce.

Our next question comes from Ming Zhao from 86 Research.

I have 2 questions. The first question is we don't see the guidance. So is this company's policy of not giving guidance for the future quarter or future year? Or can you share some color about the December quarter in terms of GMV revenue? That's my first question. The second question is about the coming of the smart logistics. So Maggie, you just mentioned that the profit-sharing percentage change has led to a slightly decline in below-the-line other income. Does that mean there isn't really, not any significant number there for the smart logistics? Or in the future, if that company is aggressively investing, we're going to see some loss there?

Yes, Tony [ph], it's Maggie. Yes, it's our company policy not giving out guidance. The reason is because we're really a long-term view rather than focusing on the near-term profitability or revenue, et cetera. So we will be continuing to communicate with our investor analysts closely on our business progress and reports [indiscernible] but not giving guidance. So in terms of profit sharing, I see you're talking about the profit sharing with the Small and Micro Financial Group. This is for the logistic, [indiscernible] group, we're not having a profit-sharing arrangement, neither we consolidate them because that's the company we own 48% so not have a control in that. So profit sharing with the Small and Micro Financial Group, what I'm trying to say is that, that group's business has tremendous potential but it's still in a very early stage. So they are not really after a high profitability, high growth in the profit. So we do not expect a significant profit sharing from that group in the near term. That's the -- yes. For the smart logistics, we have actually accounting for that part of investment. And the total investment commitment for that company is 48% of RMB 5 billion. So that gives you a sense about the impact.

Our next question comes from Scott Devitt from Stifel. Scott W. Devitt - Stifel, Nicolaus & Company, Incorporated, Research Division: A separate question on China smart logistics. Could you just provide an update on the progress of it? And then generally, any improvements or changes in merchant delivery times or other fulfillment measures that you track in the quarter? And then secondly, could you talk a bit more about international efforts and the way you're thinking about growth outside of China? Thus far, Alibaba's benefited internationally partially through organic growth and also made some minority investments. And I'm wondering how you would depict future growth in international markets' organic versus acquired?

Yes, so the first question on China smart logistics, point number 1, we are still looking closely with our logistic partners to connect our system with their system so that we can track the data -- track the status of the orders for every single orders generated on our platform. And today, we are -- all the systems from our 14 major [ph] delivery company partners -- actually, we have already connected the system with them. And today, we are working heavily with them to prepare for the coming November 11. And hopefully, we can track the every single order from November 11 from our system integration. And the point number 2, for the hardware infrastructure, today we are still looking at the infrastructure resources that they use, right, in the critical areas. And we have already made some investments to acquire some land-use rights to -- but we will -- when we launch these warehouses and we construct, and we will basically share these resources with our logistics partners to help them expand their capacity. And for the second question, for the international expansion, today, we view the global strategy is one of the important strategy in our group, but we will start with the cross-border right now. And as we said, today, when we look at the cross-border, we try to leverage what we have today. Basically, first -- basically, there are 2 things: First is our -- we have a huge consumer base in China, and China is the largest consumer market in the world. So what we are doing right now is to help more and more overseas merchants. Most of them, they don't -- maybe most of them, they don't have China presence right now to help them sell their product and services by our online marketplace to Chinese consumers. And the second strength we have is that China is the largest merchant as a manufacturing base. And today via our AliExpress platform, we help Chinese merchants to sell through to the consumers in other countries.

Our next question comes from Mark Mahaney from RBC Capital Markets.

I'd just like to follow-up on an earlier question about Alipay. Any more details you can provide on how that investment is faring for you, and overall, the increased penetration of Alipay across the Alibaba platform and off of Alibaba?

Yes, Mark. So first of all, Alipay is [indiscernible]. Now they changed their name to Ant Small and Micro Finance Group. It's a totally separate group business. But having said that, the growth of Alipay business is very well. It's still a private company. We're not -- they're not providing public disclosures. But what I can share is that the business grows very well. TPV, total payment volume, grows very well. And their mobile business, the AliWallet, is in a very healthy growth trend. And the impact to our ATH [ph] Group are really 2 lines. One line is the processing fee we pay to Alipay. So that still stays at the same chart level, which is very favorable to Alibaba Group. And the other line is the profit-sharing discount [ph]. Yes, that's about the Alipay.

With that, operator, I think we need to close the call.

Ladies and gentlemen, thank you participating in today's conference. This concludes our program. You may all disconnect, and have a wonderful day.