Agree with most of this but in regard to cloud margins we have yet to see any real/true expansion yet…
BABA cloud has been at roughly ~9% EBITA margins for 8 consecutive quarters… all EBITDA growth is directly tied to revenue growth. I do think it will improve from here but only time will tell 🤷♂️
Substantive point, well taken. You're right that BABA cloud EBITA margins have been roughly flat in the high single digits for many quarters, and that EBITDA growth outpacing revenue growth doesn't mean operating leverage has fired, it may also mean D&A is scaling with capex deployment.
Margins do stay flat when you're investing ahead of demand and they will expand when capex finally meets some form of constraint. The "no idle card" phrasing is the signal in my opinion, the qualitative tell that this is the quarter operating leverage begins moving.
Also, the 19-point EBITDA/revenue spread is one quarter and not yet a trend. Next quarter becomes proof on whether EBITA follows. If it doesn't, my operating-leverage assumption weakens and I will have to revisit.
Agree this is the central thing to watch. Next quarter print will provide additional visibility!
Agree with most of this but in regard to cloud margins we have yet to see any real/true expansion yet…
BABA cloud has been at roughly ~9% EBITA margins for 8 consecutive quarters… all EBITDA growth is directly tied to revenue growth. I do think it will improve from here but only time will tell 🤷♂️
Substantive point, well taken. You're right that BABA cloud EBITA margins have been roughly flat in the high single digits for many quarters, and that EBITDA growth outpacing revenue growth doesn't mean operating leverage has fired, it may also mean D&A is scaling with capex deployment.
Margins do stay flat when you're investing ahead of demand and they will expand when capex finally meets some form of constraint. The "no idle card" phrasing is the signal in my opinion, the qualitative tell that this is the quarter operating leverage begins moving.
Also, the 19-point EBITDA/revenue spread is one quarter and not yet a trend. Next quarter becomes proof on whether EBITA follows. If it doesn't, my operating-leverage assumption weakens and I will have to revisit.
Agree this is the central thing to watch. Next quarter print will provide additional visibility!