Q2 2024 Alibaba Group Holding Ltd Earnings Call

Okay.

Yeah.

Yes.

Good day, ladies and gentlemen, thank you for standing by welcome to Alibaba Group's September quarter, 2023 results conference call.

At this time all participants are in listen only mode. After management's prepared remarks, there will be a Q&A session.

I would now like to turn the conference over to Rob Lin head of Investor Relations of Alibaba Group.

Go ahead.

Good day everyone.

Good day, everyone and welcome to Alibaba group's September quarter, 2023 results conference call.

All right.

Hi, Chairman.

Eddie Wong Chief Executive Officer.

Appreciate it.

Chief Financial Officer.

Who do you guy see off of both.

How 'bout chemo group and some fun cause CEO of Alibaba International Digital Commerce.

Oh.

This call is also being webcast on the IR section of our 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 may contain forward looking statements, including without limitation statements about our new organization and governance structure strategies and business plans as well as our belief and expectations about our business prospects such as the future growth of our business revenue and return on investments.

Forward looking statements.

Involve inherent risks and uncertainties may cause actual results to differ materially from our current.

Expectations for a detailed discussion of these risks and uncertainties. Please refer to our latest annual report on form 20-F, and other documents filed with the U S. S. C C.

So on the website of the Hong Kong stock exchange.

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 adjusted EBITDA adjusted EBITDA margin adjusted EBITA adjusted EBITA margin non-GAAP.

GAAP net income non-GAAP diluted earnings per share or a D. S and free cash flow are expressed on a non-GAAP basis, our GAAP results and reconciliation of GAAP to non-GAAP measures can be found in our earnings press release.

Unless otherwise stated growth rate of all stated metrics mentioned during this call refer to year over year growth versus the same quarter last year with that I will now turn to Joe.

Thank you Rob.

Hello, ladies and gentlemen.

Thank you for joining our earnings call for the September quarter. Although this is the first communication in my new role as chairman of the company I'm pleased to connect with some old friends in the investment community.

This is not your normal earnings report for the quarter. This is the first time you will hear directly from our group CEO Eddie rule on his strategic thinking.

He will lay out our plans for growing the business as well as our strategic priorities for execution and investment.

I'm pleased with this quarter's results, which show that our strategic focus on user centric value proposition and technology innovation are driving improvements across our businesses. In addition, while global markets remain volatile we are entering a phase of a more stable operating environment in China.

In terms of assay at my organization to highlight the value of our businesses here are a few updates.

First we announced in our earnings release that Alibaba will not pursue a full spin off of talent intelligence group in light of uncertainties created by recent U S export restrictions on advanced computing chips.

Instead, we will focus on developing a sustainable growth model based on emerging AI driven demand for networks and highly scaled cloud computing services.

Second in August tiny all smart logistics filed its prospectus and after U S vacation for an IPO on the Hong Kong stock exchange, while the success of an IPO transaction is subject to market conditions and relevant approvals, we're confident of the business fundamentals of our logistics unit.

Other areas of reorganization and focus are going well across our businesses as evidenced by strong revenue growth for AI D C and tiny al and narrowing losses in local services and digital media Entertainment.

I travel around to speak with investors. Many have asked me about the relationship between the group company and our business units in a post reorganize world I want to make two points here.

First Alibaba group will continue to support our operating businesses, where the group's strong balance sheet. We ended the quarter with $63 billion in net cash and we generated 27 billion in U S dollars and free cash flow in the last 12 months Alibaba has never been in a better financial position to it.

That's for the growth of our businesses.

Second while each business is expected to operate independently and interact with each other based on arm's length market principles. The group will use our resources to ensure long term strategic synergies can be realized we have businesses that are very symbiotic with each other and their relationships are highly strategic.

Take for example high now supports the logistics needs of our E Commerce businesses and Alibaba cloud provides superior technology capabilities to our own businesses.

And my job is to balance the short term goals of each business unit against the opportunities for long term value creation.

Now.

Let me say a few words about capital management.

We're focused on unlocking value to improve shareholder returns.

We're looking at four areas and capital management.

One enhance return on invested capital of our operating businesses, we have undertaken a review of our operating businesses and ways to enhance our allies see return on invested capital in the fiscal year ended March 23.

R. R. I C was in the single digits, obviously, there's room for improvement and we're targeting to lift our aro I see into the double digits.

Number two invest our cash flow for future growth the clarity of focus emerging from our reorganization as highlighted many strategic growth opportunities for investment given the strength of our balance sheet Alibaba is well positioned to capture these opportunities later on Eddie will discuss our growth strategy and prior.

Where it is for investment.

Number three monetize the value of non core assets, our balance sheet carry 67 billion in U S dollars in equity securities and other investments as well as investment in equity method Investees.

In addition, we have operating businesses that tie up capital, but generally low growth.

Not all of these investments are core to our not all of these investments our core or strategic to our business.

We are evaluating creative ways to monetize the value of these assets in order to return value to shareholders.

Number four speaking of returning value to shareholders. This may take the form of our share repurchase program, our cash distributions we had dividends.

We already have a share repurchase plan that still gives US 13 billion in U S dollars in dry powder as of today.

In addition, as we have just announced the company will pay an annual dividend.

Our capital management activities are dynamic and remain a top priority for our management team and our board of directors.

Now I turn to Eddie for his remarks.

Oh.

Okay.

Investors are friends welcome to everybody.

Thanks for joining this quarter's earnings call. It's exciting for me to speak with you on today's earnings call as CEO of Alibaba group for the first time.

So in addition to updating you on the progress we've made in all of our businesses over the past quarter I'd also like to share with you my thinking about Alibaba as future development strategy and business plan.

Through 24 years of development Alibaba has grown into a group that spans E Commerce cloud computing local services logistics digital media and entertainment, new retail and many innovative new businesses today. The world is at the starting point of a new era rapid technological advances are profoundly reshaping all industries all products in all of our daily lives.

Jos.

Virtually any prediction made today is balanced to underestimate the future as the penetration rate of Internet users reaches a sealing the driver of growth in this sector will be technology, especially AI. Therefore, I have defined the following three directions as the key priorities for Alibaba is next decade, our technology driven intranet platform businesses.

Driven technology businesses and global Commerce network.

In light of Alibaba is huge and complex set of businesses as well as rapidly evolving market and technology trends we.

We intend to transform Alibaba and embraced the future through the following three key initiatives.

First establishing a highly nimble and fast decision, making governance structure and corresponding incentive system today, Alibaba must contend with fast evolving new technologies as well as new changes in expectations in the market no matter how successful our business models have been in the past we need to turn over a new patients start a fresh we need to reawaken our entrepreneurial mindset.

Set and improve our decision making systems.

And we initiated corporate governance reforms this year and continue to move quickly ahead with developing fast and nimble decision, making systems going forward. If we want each of Alibaba as different businesses to face the market more independently on autonomous Lee.

On that basis, we're exploring corresponding incentive systems that strikes the right balance between independents and cooperation across the business groups, so as to maximize synergy for development.

Secondly, conducting a strategic review of existing businesses, focusing on the long term and maintaining high intensity investments in core businesses.

After years of development, we are keenly aware that outstanding business models are extremely rare.

Going forward, we will give each of the existing business. It's a different level of priority based on market size business model and product competitiveness and will distinguish between core and noncore businesses.

Core businesses, where we will keep our long term focus intensively invest resources pursue R&D enhanced user experience and make sure that our products and services are constantly evolving to meet our users' needs to keep them vital and competitive for the long term as for the noncore businesses, we will realize the value of these assets by turning them profitable as soon as possible.

Or through other means of capitalization.

Thirdly firmly committing to investing strategically for the future. The Alibaba group will strengthen its strategic incubation initiatives the highest priority for major investments, we placed on services and products that meet user demand and that our AI driven.

We will resolutely invest and revolutionary products for the future as well, taking a patient long term approach adopting a three year window for evaluation and proof of value.

In this way will nurture new businesses and new growth drivers for Alibaba into the future.

I'll share our three year development strategies and goals for each of the business groups and companies and.

And how they will capture market opportunities.

We'll start with Taobao and Tmall group.

Taobao and Tmall group is committed to three core strategies to putting users first building an ecosystem.

For brands and merchants to thrive and realizing AI technology, driven innovation despite competition in the market this quarter tableau on T Ball group.

Maintain steady revenue growth and accelerated <unk> growth in the next three year strategic cycle, putting users first is the top priority for Taobao and Tmall group and in particular, the focus will be on the following three areas first.

This is what we call Universal Taobao.

How 'bout is universal or nip it.

And that it has a vast assortment of goods and services. It can supply we must resolutely be an integrated platform that meets the needs of all tiers of consumption demand serving the largest consumer base in order to increase consumer purchase frequency. This represents an important choice for tableau on tmall to maintain growth in today's competitive landscape.

Second as consumer tiers and price competitiveness.

China is a consumer market with multi tiered value propositions, we have the most diverse consumer base and also have China's manufacturing advantage that means in any category, there's a sufficiently rich assortment of supply with different value propositions to meet the needs of different consumers. Accordingly, we have to execute a multi tier market strategy within one up how about is a super app integrates all.

Three mainstream sales formats live streaming content driven sales graph.

<unk> marketing driven sales and everyday low priced product sales, making it the most comprehensive platform.

The taobao app can accommodate different product tiers from branded goods to white label goods and the whole range of value propositions. They represent we.

We intend to make tableau, a universal consumer app that connects to an all inclusive and highly diversified marketplace, leveraging AI and next generation operating models.

At the same time, we must execute a price competitiveness strategy price competitiveness is the strongest force at work for both branded goods and non branded goods. We will continue to leverage our platform model to optimize product efficiency enhanced supply chain efficiency and adopt price competitiveness as a core strategy across all product here.

In terms of user value how about we'll remain committed to its positioning as an internet consumption platform. It is not a retail company in line with her identity as an internet consumption platform, we will prioritize our strategy of putting users first.

With improving platform stickiness on customer retention as our core goals from the operational perspective, we will adopt a user purchase frequency as the highest priority kpis for platform operations, a bump G. M. P. As purchase frequency is the most direct measure of uses recognition oven internet consumption platform.

How about diverse monetization products can support our strategic shift to putting users first we're convinced that only with more users can be generate more market opportunities for merchants. These investments will create a virtuous win win cycle for users merchants and the platform.

Next.

I will describe our strategy for the cloud intelligence group given the uncertainties in the current environment.

Following evaluation, we have decided not to pursue a full spin off off cloud intelligence group.

Alibaba group will continue to invest strategically in cloud intelligence group in the long term at the same time cloud intelligence group will continue to maintain its independent operation to be managed by its CEO and overseen by a sport and this quarter. We saw the AI bring about continued growth in demand for computing power and large model services cloud.

Computing is the infrastructure of the digital economy, it's a business model that achieves network effects with computing resources and a service model that features both network effects and scale effects with the advent of the at Europe typified by large models and the demand for AI transformation and innovation across all industries investment will grow exponentially and demand for cloud computing will expand.

Financially as well, creating a huge incremental opportunity.

The cloud intelligence group will resolutely implement a strategy of driving growth with AI and are prioritizing public cloud it will scale up its technology investments in AI related software and hardware.

Driving growth where they are.

We see a fundamental paradigm shift underway in computing worldwide, we stand at the inflection point in this shift from traditional computing to AI computing in the future incremental demand for cloud computing will be driven by demand for AI and most AI computing will round the clock going forward, we will do two things first we will bill.

The most open cloud in the AI era, providing stable and efficient infrastructure for all industries and enabling all sectors to go intelligent second we will build an open and prosperous AI ecosystem at the recently concluded <unk> Zara Conference, we announced a comprehensive upgrade of our AI infrastructure, the artificial intelligence platform P. A I pie.

And our large model tweet Sherman to sue them.

Which has hundreds of billions of parameters as well as eight vertical models. I also have one stop model application development platform Alibaba cloud violin in let's say a year and we now have in place a full stack cloud computing system for AI development and are ready to better support demand for AI driven computing power.

This quarter, we began proactively managing the quality of our cloud revenue and achieved enhanced profitability Alibaba cloud has advantages in terms of pricing power high renewal rates and highly scalable cloud computing infrastructure and application service products going forward, we'll be selective about all of our products and business models, we will reduce project based revenue exposure invest more in core products.

We're a public cloud and continue to enhance the cloud business as revenue quality by prioritizing public cloud, we will continue to reap scale effects and technological dividends.

Going forward, we're extremely optimistic about the long term development prospects of AI plus cloud computing in combination.

Next let's turn to Alibaba International and digital Commerce.

We're convinced that there's a huge growth potential in international markets in the coming years. Our core strategies include first building a world leading digitalized supply chain network.

Alibaba already boasts the richest supplier assortment in the world plus an initially completed cross border plus local global logistics network over the next few years will accelerate our efforts to build a world leading digitalized supply chain network, leveraging multiple world, leading merchandise centers, plus our high efficiency logistics network covering major international markets.

Second is building world, leading AI plus overseas digital retail technologies within Alibaba International Digital Commerce, we will build unified core technology capabilities for AI, plus digital retail to drive efficiency enhancements and user experience innovations across platforms and regional markets. For example by leveraging AI and other technologies to solve for.

Translation across languages, and transnational customer service, we can empower large numbers of merchants to truly make the leap from local to global and that represents a huge market opportunity and dividend thirdly, achieving breakthroughs in key emerging regional markets in the next few years.

At present, the Alibaba International Digital Commerce has relatively high penetration of users in just a few regional markets, such as southeast Asia and Turkey.

Huge potential to grow user penetration in the majority of international markets, leveraging our existing resources and footprint, we will scale up our investment in selected high potential regional markets and capitalize on highly certain growth opportunities.

Next let's turn to our China strategy.

China continues to focus on building out its global Smart logistics network and on reinforcing its end to end capabilities and cross border logistics solutions.

Revenue maintained relatively rapid growth this quarter.

Over the next three years, China was a core strategies.

We'll see.

First to accelerate construction of its global Smart logistics network scale up its investments in technology grasp the historic opportunity of cross border E Commerce growth and achieve rapid growth in its international business by offering innovative products for cross border E Commerce platform since merchants and secondly to continue to differentiate itself in China and maintain healthy business growth.

China will continue to empower the industry with technology capabilities, helping brands and manufacturers to achieve higher levels of logistics digitalization that intelligence, providing brands and consumers with high quality multi platform all channel supply chain and logistics solutions.

Next.

Let me share with you our strategy for the local services group this quarter. The local services group achieved 16% year on year revenue growth further improvement in business scale and efficiency and both quarter on quarter and year on year growth in Aac's over the next three years location based technology services will continue to evolve and develop rapidly across a wide range of sectors benefit.

All different kinds of businesses not just those in the sector as everyone's paying attention to you today like to home food delivery restaurant dining and mobility and not only in <unk> businesses, we expect to see a relatively fast growth in demand for location based technology services from two big businesses. Accordingly, The group will continue to invest resolutely and location based technology services.

In both of its core local service businesses, a map will primarily develop mobility in two destination technology services and all of them will primarily develop on demand to home technology services.

At the same time, the local services businesses will take advantage of opportunities to innovate their applications and enhance their capabilities leveraging AI. The standard of success will be advancing together with ecosystem next is digital media entertainment.

<unk> achieved healthy growth in its revenues this quarter with enhanced synergies across the different businesses on the back of a strong recovery in the offline cultural consumption market down my recorded strong GMP growth. This quarter. We have continued year on year improvement in profitability on yogurt with a total number of interactions during paid online broadcasting of live performance has set a new record and two films Coproduce, partly about pictures.

Probably the top two spots for box office reached during the summer season over the next three years do you I mean as core strategies will include the following one leveraging AI and other technology innovation D. M able achieve a standardized process based digitalized film and drama show production capabilities within three years, we will cultivate next generation content creators and promote the upgrading of the entertainment industry, we will launch innovative new.

Consumer applications that will expand the boundaries of the business Secondly, <unk> will remain committed to its top quality content strategy, while increasing the ratio of self produced content.

Bill stronger mindshare with its users with stable output of exclusive content Alibaba Pictures will maintain this advantages in offline scenario coverage and market share and will continue to produce top quality films performance was another self produced content as leading.

Media and Internet company.

Company Alibaba CME group strives to achieve overall stable profitability as soon as possible.

Overall strategies for strategic level innovation businesses as announced the group will continue to invest in an incubator strategic level innovative business for the future. We have a clear cut selection criteria are sufficiently large addressable market unique positioning in the market in alignment with the use of demand trends and the group's strategy of driving growth where they are today, let me introduce you to our first batch of these strategic level.

<unk> businesses. They are 1688, 16 Idiot son, you Didnt talk on Quake 16.

688 is Alibaba is oldest business serving mainstream manufacturers in China has a solid foundation and huge potential to reinvent itself with this new era.

It can leverage China manufactured products, the most competitive anyway to expand from <unk> into SME and consumer procurement. It also has the service capabilities to support cross border transactions Shang you or idle fish is the most popular secondhand goods trading platform among Chinese young consumers, but we see idle fish as being much more than that in the.

Future it can become a lifestyle platform for consumers hobbies and interests.

<unk> talked with the advent of the AI era, there's no unprecedented scope for imagination about its future. It's the most effective enterprise productivity tool in China and in the future. We believe that every individual and every company will have a personalized smart assistant powered by AI didn't talk has the potential to become the best AI Smart assistant platform for users.

Yeah, It's a search and all of this product that's very popular with youth in the large model here. We believe that core has tremendous opportunity to create a revenue revolutionary research product for students and young people the strategic level innovation businesses that I've listed out above well in organizational terms operate as independent subsidiaries and will not be constrained to their previous positioning with them.

The group, enabling them to face the larger market with their own strategies. The group will make continued investments in them over a three to five year period.

In this exciting AI era, Alibaba will resolutely devote itself to driving the technology evolution and product innovation and.

And we will continue to incubate innovative businesses in technology products and will meet new expectations and new demands of this growing market for products and services.

Competition in the Internet and technology sector is a never ending game no product ever enjoys a long term note any successful technology company must have the capacity to transition across technology cycles for 24 years, Alibaba is firmly craft development opportunities and the PC era and in the mobile era, along the way we've had success.

As well as failures, we gained experience and learned lessons.

Today, Alibaba has grown into a diversified business group with annual revenues of 125 billion U S dollars and free cash flow of 27 billion U S dollars, we're privileged to serve and support transactions and fulfillment for tens of millions of Smbs, we own the third largest cloud computing platform globally, and the deep convergence of AI plus cloud computing will be in.

Important impetus for our future development today.

Today, we stand at the beginning of a new era of technology centered on AI. The next decade will bring dramatic change for worldwide, creating immense uncertainties and opportunities in parallel Alibaba is embarking on a new entrepreneurial journey and is fully prepared to devoted solve to driving technological transformation, we possess sufficiently advanced resources strong cash flow.

Agile governance mechanisms and a strong talent pipeline.

We're confident that we can both unleash new momentum in our existing businesses and create fresh new growth opportunities.

Thank you and our next I'll hand to Mike.

Sure.

Trudi.

Hi, everyone.

This is truly and I'm delighted to speak with you all again.

Eddie has shared with you his thinking on taobao and Tmall groups three key strategies.

He further reiterated that putting users first is the top priority and further set up three points of focus here.

I will present to you on our operations in the September quarter, and give an overview of the just completed Tmall double 11 Global shopping festival.

As a result of our ongoing efforts to attract new merchants enhance price competitiveness and enriched content offerings.

In the September quarter, we continued to achieve rapid growth MTA use even more importantly.

We also saw that organic users grew.

At the same time more users proactively coming to the top of our means that user mindshare is strengthening as the top of it becomes more attractive and in this process. We specifically saw several very clear changes.

First tableau on T mall rich assortment of supply constitutes a huge advantage with a constant inflow of new merchants, new merchandise and new content.

How 'bout has become more vital than ever as a universal app.

We continue to invest in building our merchant ecosystem.

Turing to the principles of driving with ditch.

Digital digital technology openness and inclusivity, the number of merchants increased by over $1 million in the September quarter compared to the June quarter.

At the same time Taobao is live streaming ecosystem maintained its growth momentum on the one hand top tier live streamers and agencies from other platforms continue to join the taobao platform, such as east five and the wine and spirits influenced certainly shouldn't work and developing very well on top of our life on.

On the other hand merchant operated Livestream also has strong growth momentum with more and more tmall brand merchants, taking part the live streaming part participation rate and total live streaming time are growing and the share of G. M V from merchant operated live streaming is also increasing.

More and more merchants are realizing that self operated live streaming is much much more than just a sales tool.

It's an important and sustainable approach for brand building and user engagement on the Thai baht.

Second.

In line with our value positioning as an internet consumption platform. We've now put in place a complete matrix of sales models brand marketing driven sales everyday low priced product sales and live streaming content driven sales. These three sales models are independent and complementary in combination they provide one stop comprehensive Val.

Taobao App users leveraging our universal supply. This sales matrix provides the consumer finds goods option, allowing users with specific purchase intent to find exactly what they want through fast accurate search. It also allows users with no specific purchase intent to have fun browsing, enabling goods to find consumers and even users who don't want.

Buy anything right away can enjoy learning encyclopedic knowledge from relevant lifestyle and consumption content I E sowing seeds as.

As we said there is no question that the Taobao App has everything you could want or need. The only question is can you think of everything you need Oh going forward. Even if you can't think of what you need no matter. The taobao App will help you do the thinking all you need to do is come to the Taobao App and you will have a great experience different users can get exactly what they want and need and have a fun time and besides.

Live streaming, which I just discussed the total time spent on short videos posted on Guangdong more than quadrupled in the September quarter. Overall total time spent by users on the type of IP is also growing and finally in light of the clear trend of stratification in China's consumer market. We've engaged in a comprehensive exercise to build price competitiveness, we define <unk>.

Dice into three different tiers with different value propositions and manage price competitiveness by product category and by sales format.

This waiver comprehensively strengthening the price competitiveness of merchandize.

This clearly defined rigorous management matrix is generating business scale growth and operational certainty for merchants, who have supply chain advantages and product competitiveness. This supply together with branded merchandise creates a good price advantage on the top of our platform, resulting in more transacting buyers and orders in the September quarter.

For example, the number of 88 VIP members, surpassing 30 million in the September quarter with continued growth in their G. M. P and at the same time in respect of users with low purchasing power the scale of active consumers and conversion rates have increased significantly in <unk>.

Order for us to build a funnel more price competitive and universal tableau, a crucial underlying driver is technology in the September quarter, we continue to rollout our comprehensive AI upgrade across the entire type of platform. So I'd like to upgrade.

Here I'd like to highlight a major upgrade to Alibaba as one chunk type.

Product the one Shanghai Unbounded version, we released in August.

It enables merchants to allocate their advertising budgets across all available properties within the Alibaba ecosystem using a single interface and Leverages AI to provide data analytics and insights to intelligently locate targeted users to create AI generated advertising content. So the upgrade enables merchants to optimize their advertising spending and to significantly enhanced campaign.

See conversion rates and ROI. So the one sounds high upgrade has resulted in growth in the number of advertisers.

Next I'd like to spend a little time talking about this years double 11.

During double 11. This year, we achieved comprehensive growth in the number of merchants transacting buyers orders and GMP.

Even more importantly, though this years double 11 with a test of our strategy. This year. So let me share with you here the progress on several of our key initiatives as seen during this years double 11, so starting with price competitiveness.

First price competitiveness increased significantly with direct price reductions at everyday low prices beyond basket based discounts for multiple purchases price competitiveness is what putting users first and creating value for you is really all about in the past we organize merchants to provide good prices to consumers through basket based discounts.

That satisfies some consumers, but others found it too complicated.

Building on all the efforts we've made over the last half year to build price competitiveness.

During this years double 11, we successfully organized direct price reduction and everyday low price offerings. In addition to those basket size based discounts.

This comprehensively strengthen price competitiveness on taobao and Tmall as a result, we achieved satisfactory results in terms of new user acquisition existing user retention overall purchase conversion rates and repurchase rates.

For example, the number of 88 VIP members further group and reached 32 million and our enhanced price competitiveness gives us stronger confidence in everyday sales outside of large campaigns.

Yeah.

Secondly, our product Glen product granularity based matrix of sales models began to pay off as I mentioned in one of our milestones in the September quarter was getting this matrix in place double 11 was the first real world test of our ability to deploy all of <unk>.

Brand marketing everyday low price on live streaming in a coordinated way during a large scale campaign with granularity at the level of store and of product.

By launching products.

With us here.

Large brands, taking excellent advantage of Tmall Haybox, two intensively launched new products can lead new consumption trends in China in terms of everyday low price, we achieved explosive growth with both off the top of our good price festival and the 10 billion subsidy programs in terms of the live streaming content driven sales model merchant offered advice to me made huge.

Breakthroughs with merchant operated live streaming accounting for close to 70% of all the dozens of lives to me rooms that generated over 1 billion Yuan in sales as a result of this test we are more confident that the taobao App is the best one stop platform for merchants to manage diversified users and merchandise across all phases of product life cycles.

And to achieve long term certainty for their business and rather more clear about how to best serve these merchants.

Third we've begun to explore new operating models for new supply.

What makes it how about universal is the rich and diverse merchant ecosystem on the turbo platform.

They are the foundation of rich supply on top of it.

Over the past few months we've.

We've made some adjustments to optimize their supply mix on the platform building on a base of T. Mobile branded merchants. We've further growing the number of channel merchants and White label factory sellers.

But not all merchants are good at online operations and Theres No reason for us to forced them all to become good at everything.

Some white label merchants for example, excel at lean manufacturing and can produce large volumes of high quality goods at low cost. So during double 11, we tested semi consignment and full consignment models targeting them. This allows the white label manufacturers to do what they do best they're responsible for producing good merchandise and we are responsible.

For helping them sell it. This pilot initiative is just getting started and we will look forward to updating you further on future earnings calls.

Taobao and Tmall each years double 11, as a large scale test of the strategies and tactics, we've been deploying since the beginning of the year.

The business results, we achieve the competencies we honed in all of the feedback we've received from users and merchants validated the correctness of our three key strategies of putting users first building, a prosperous ecosystem and driving growth with technology.

China's e-commerce market will be a highly competitive landscape for the long term. The road ahead will be long and difficult I will remain firmly committed to and will not change our strategies, our focus and our investment plans guided by the principle of putting users first as long as we resolutely stay the course of investing and upgrading we can certainly create a universe.

<unk> Taobao App that is both more fun and more price competitive over this three year business cycle, our rich and diversified monetization products will enable us to create a virtuous cycle for users merchants and the platform.

Thank you.

And next I'll be handing over to Jonathan.

Well, hi, everyone I'm delighted to speak with you all during this earnings call.

Yes, I do see continued to maintain our rapid growth this quarter amidst an uncertain international market environment. This progress was the result of our sustained.

Expansion in the different markets, we serve as well as our product and technology innovations business model transformation and efficiency improvement in our supply chain services, all of which are realized greater value for our customers next let me provide more details starting with our business model transformation and our supply chain services upgrade.

So as you all know over the past few months aliexpress rolled out a brand new service model called AE choice. So.

Put simply we've upgraded from a pure platform cross border model to a business model that offers more supply chain services on the one hand.

The platform has dramatically reduced the complexity of doing business for merchants, allowing more diverse merchandise to enter the platform on.

On the other hand with the platform taking responsibility for end to end consumer services delivery time has improved dramatically greatly improving consumers experience.

AE choices already achieved rapid order growth over the past few months.

As a result of this business model transformation in supply chain services upgrade.

In our collaboration with Honeywell, we began piloting our global five day delivery service in Spain and other countries.

And we believe that continually enhancing services to customers is the basis for long term development of the platform.

Second product technology innovation Aig's, he serves consumers in different countries and regions.

So we need to continually optimize user experience to meet local consumer needs.

We're committed to driving ongoing improvement in platform commerce, sufficiency and to upgrading customer experience through product and technology innovation.

Over the past quarter, we continued to see the value generated by these investments.

For example, we are actively leveraging AI to enhance merchant operating efficiency.

This quarter Alibaba Dot Com launched new AI based digital products for foreign trade. These AI products are tightly integrated throughout the entire foreign trade value chain features include smart launch and management merchandize market analysis customer interaction real time translation for video chats are covering.

Many important links in the foreign trade business.

Leveraging digital technology merchants can export their goods to global markets more efficiently and achieve higher operating efficiency with certainty.

Our progress in different regional markets around the world last quarter, we achieved quite good growth in different regional markets in Turkey, trendy all maintained rapid growth in profitability upscale while also expanding into neighboring markets.

In Southeast Asia, Lazard as overall financial situation.

Also improved significantly.

And going.

Going forward, we'll continue to focus on enhancing platform operation efficiency and on sharpening our differentiated competitive advantage. So as to achieve long term sustainable development in Germany, We announced the acquisition of a leading local BTB platform visible post acquisition Alibaba Dot Com will operate two brands in Europe, and we'll do business on multiple <unk> trade.

It forms furthering Alibaba dot com is international expansion.

Looking ahead, we see some high confidence market opportunities.

Including further expansion of AE choice and opportunities in some.

Emerging markets.

Over the next few quarters or short term business focus will be on rapidly expanding our business scale and market share. We will actively invest in these areas to achieve growth. The mission of AI D. C has to help global SME is engaged in digital trade. During this years double 11, we supported merchants in multiple countries.

Directly provided services to consumers in over 100 countries and help them achieve rapid business growth.

Taking aliexpress as an example.

With the growth of E choice, the volume of merchandise placed by merchants in our warehouses.

Crew by several fold compared to last year and the choice warehouses grew by several fold compared to last year and a large number of SME merchants achieved fast sales growth during double 11 going forward. We will continue to create long term value for global merchants and consumers through product and technology innovation and consumer service upgrades and will continue to enable merchants to <unk>.

<unk> sustained business growth.

On the platforms.

Thank you.

Thank you John fans, we achieved healthy financial performance in the past quarter, driven by steady business momentum and improving operating efficiency in several major businesses.

Consolidated revenue was RMB $224 8 billion, an increase of 9% consolidated adjusted EBITA increased 18% to RMB 42, 8 billion non-GAAP diluted earnings per share was RMB 195, an increase of 21%.

Since July 1st to November 15th we have repurchased approximate approximately USD 3 billion worth of our shares which accounted for one 3% of total shares outstanding.

This is supported by our continuous generation of strong free cash flow during the quarter free cash flow was RMB 45, 2 billion or U S.

Solid $6 2 billion, an increase of 27%.

Over the last several months.

The capital Management Committee and took a review on ways to improve our our I C and a potential use of cash our priority in cash deployment in the following order.

Investing in technology and innovation for growth.

Secondly, reduce total shares outstanding to achieve accretive earnings per share so Scott stocked with purchases and three <unk>.

Long term investors via end and your dividend.

Cash will be returned to shareholders through a combination of share repurchase and dividends.

Accordingly.

Addition to our U S. Dollar 40 billion share repurchase program. We are pleased to announce that our board of directors has approved an annual dividend for fiscal year 2023.

Now of U S dollar.

0.125 per ordinary share all U S. Dollar one per avs the aggregate amount of the dividend will be approximately USD two 5 billion.

Now, let's look at cost trends as a percentage of revenue excluding SBC.

Cost of revenue ratio decreased to one percentage point to 62% during this quarter.

Development expenses ratio remained stable at 5% during the quarter sales and marketing expense ratio remained stable at 11% in this quarter general and administrative expenses ratio decreased one percentage point to 3% in this quarter.

Our net income was RMB $26 7 billion, an increase of RMB 49, 2 billion compared to a net loss of $22 5 billion the same quarter last year.

Increase was primarily due to a gain from the increase in fair value of our equity investments.

That's a net loss in the same quarter last year and an increase in adjusted EBIDTA.

Our non-GAAP net income, which excludes net gains or losses from investment fair value changes and other items was RMB 42 billion, an increase of RMB six 4 billion.

As of September 32023, we continue to maintain a strong net cash position of RMB $457 8 billion or U S dollar $62 7 billion.

Free cash flow of this quarter was RMB 45, 2 billion, an increase of 27% increase.

The increase was primarily due to an increase in profitability and a decrease in capital expenditure.

Really offset by net changes in working capital.

Now, let's look at the segment results, starting with Taobao and Tmall group.

Revenue for Taobao, and Tmall group was RMB $97 7 billion, an increase of 4%.

Customer management revenue increased by 3% to RMB $68 7 billion.

Primarily due to the increase in merchants' willingness to invest in advertising, partly offset by the modest decline in taobao and Tmall online pay G. M D.

Creation of a strategist, especially that of price competitiveness strategy has resulted in increase in order volume and more consumers.

Direct sales and other revenue increased 6% to RMB 23, 9 billion, primarily due to strong sales driven by the consumer electronics and appliances.

China Commerce wholesale business revenue increased 18% to RMB five 1 billion, primarily due to an increase in revenue from value added services provided to paying members.

Taobao and Tmall group adjusted EBIDTA increased by 3% to RMB 47 1 billion.

Increase was primarily due to narrowing losses in certain businesses and increasing profit from custom Madden human services, partly offset by increasing investment in user acquisition and retention as well as the increase investment in content.

Yeah.

Alibaba International Digital Commerce group revenue was RMB 24, 5 billion an increase of 53%.

Revenue from International Commerce retail business increased by 73% to RMB 19 billion. The increase in revenue was primarily due to strong combined order growth of AI D. Six retail business is driven by the solid performance of all major retail platforms.

The revenue contribution from <unk> Express is choice and the improvement in monetization.

Revenue from our international Commerce wholesale group.

Business increased by 9% to RMB five 5 billion.

Increase was primarily due to an increase in revenue generated by cross border related value added services.

D C. Adjusted EBITA was a loss of RMB $384 million.

Losses significantly narrowed primarily because of improved margins of Nevada and trend deal, partly offset by the increase in investment in new business such as in the Revere and Ali Ali Express choice.

Total revenue from tiny of grew 25% to RMB 22, 8 billion, primarily contributed by the increase in revenue from cross border fulfillment solutions. During this quarter Tonya roll out its premium five day delivery service for consumers in a country.

Fees and regions.

Ultimately the service enhance to Ali's first choice has overall shopping experience and order volume for choice ramped up rapidly during the quarter.

China adjusted EBITA was a profit of RMB.

$900 6 million compared to RMB 125 million in the same quarter last year. The increase was primarily because of improved operating results from cross border fulfillment solutions technology and other services as well as domestic logistic services.

No of course service group revenue in September quarter grew 16% to RMB 15, 6 billion, primarily due to strong growth in both.

Aim at businesses.

During the quarter, but almost all of this volume grew year over year and quarter over quarter, driven by increasing number of transacting users and higher purchase frequency per use it daily.

In this quarter at a gross of aimed at increased rapidly due to strengthen <unk> position as a comprehensive two destination service platform as well as strong travel demand during the summer season.

Hey.

Good day holiday period from September 29, two October six that combine the mid autumn Festival and National day holiday a map of recorded an all time high of over 280 million peak D. A U as the Chinese economy experienced a strong recovery in <unk>.

<unk>.

Local services group adjusted EBITA was a loss of RMB, two 6 billion this quarter compared to a loss of RMB three 3 billion in the same quarter last year.

Primarily due to the continued narrowing of losses from our two home business driven by earlier must improve the unit economics per order and increasing scale.

Revenue from Cloud Intelligence Group was RMB 27, 6 billion in this quarter an increase of 2%.

All the year revenue growth was mainly driven by Alibaba consolidated businesses.

Revenue, excluding Alibaba consolidated businesses slightly decreased primarily due to our continued effort to improve revenue quality by reducing the revenue from market based contracts that are off low margins, which was mostly offset by an increase in revenue from our.

Public cloud products and services.

Going forward, we will continue to enhance the quality of our revenue by reducing certain low margin project based contracts.

During this quarter, our public power revenue represented over 70% of our external how revenue and grew healthy year over year, reflecting the stickiness in demand from customers across major industries.

Part of the public cloud revenue growth was driven by the strength strong demand for our model training and related services and cloud infrastructure.

<unk> forward revenue from motto training and related services may be constrained in the foreseeable future given the expanded its ball control rules imposed by the U S.

Further restrict the export to China of advanced computing chips, and a semiconductor manufacturing equipment. We believe the long term growth opportunities driven by AI services have just begun.

I will enable the rapid innovation.

All industries and the demand for AI driving cloud computing services will continue to grow.

And if I can play in all of you.

Continue to explore our native solutions to fulfill the needs of our customers.

Klaus adjusted EBIDTA increased by 44% to RMB, one 4 billion, primarily due to increasing revenue from public cloud products and services as well as improving operating efficiency.

This is within the <unk> segment continued to achieve synergies on September 19, Alibaba Pictures announced its acquisition of tomei aiming to leverage Tom its leading position in offline performance market to expand influence in the offline entertainment industry drilling.

Quarter maintaining.

Maintaining its industry leading position.

<unk> growth and improving profitability.

Revenue from our <unk> group was RMB five 8 billion, an increase of 11% primarily driven by the strong revenue growth of offline entertainment business of Tom I, and Alibaba pictures as well as the increase in Europe.

<unk> revenue, partly offset by a decrease in local advertising revenue.

Adjusted EBITA was a loss of RMB 201 million compared to a loss of RMB $362 million. The improved adjusted EBIDTA was mainly due to the increase in profitability of Tom I and Alibaba Pictures.

Lastly, I'd like to know that starting from this quarter, we reclassified the revenue of our King Taco business, which was previously reported under cloud intelligence group to all others. The purpose of which was to provide ding talk with greater autonomy and to promote.

Asian and enhance competitiveness.

All other Sackman Dean talk and intelligent information platform.

Our first batch of strategic level innovation businesses that we are incubating as future growth drivers.

<unk> paying enterprise customers have reached over 100000 and during the quarter ended September 32023 number off paying enterprise customers grew around 40%.

<unk> continues to operate its products and services to serve more enterprises and organizations. It has recently launched seven product lines that had been fully integrated with our primary trade tongue E. Large models, which will continue to drive growth enterprise customers.

Adoption.

Our intelligent information platform in cruise clock Huh, you see lab and other businesses.

<unk> provides young users with a one stop platform for inflammation search storage and consumption. During the month ended September 32023.

Continued to grow strongly with EBITDA up over 35%.

Revenue from all other segment remained stable at RMB $48 1 billion, primarily due to the revenue growth contributed to the buy fresh Apple Flaky, Alibaba house and intelligent information platform.

Nearly offset by decrease in revenue from sunlight.

I would just say at the top from all other segment was a loss of RMB, one 4 billion compared to a loss of RMB. Two 9 billion in the same quarter last year, primarily due to improved operating results from fresh Hippo Dean talk and flaky.

Thank you that's the end of our prepared remarks, we can open it up for Q&A.

Hi, everyone for todays call you are welcome to ask questions in Chinese to English or third party translator will provide consecutive interpretation for the Q&A session.

You saw that the translation is for convenience purpose only in the case of of any discrepancy I imagine a statement in there or is there a language will prevail if you're unable to hear the Chinese translation bilingual transcripts of this call will be available on the website within one week after the meeting.

How did your hot and humid.

Are you, claiming going somewhere in court you went to you and when will play a T cell phone control of anything.

To be consistent so chelsey if any.

The Moody's with ambient leach at <unk>.

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So it's really the essential ways to it.

Good morning, Tim.

That's the only thing ive been sitting on walk, where you where you are strong too it sounds like what you just heard the Ito ne Telemundo Wahoo.

Downtown San Diego.

Operator, please connect speaker in SA Conference line now please start the Q&A session when ready thank you.

Thank you if you wish to ask a question. Please press star one on your telephone.

If you wish to cancel your request please press <unk>.

If you're on a speakerphone please pick up the handset to ask your question.

Give more people the opportunity to ask questions. Please keep yourself to no more than one question at a time.

Your first question comes from Ronald Keung with Goldman Sachs. Please go ahead.

Thank you management team and congratulations Phil.

With the new leadership team.

So.

A key priority and hotels just now.

Yeah, I'll kick off with the cloud dependent distributions, which is now no longer proceeding.

Some investors were initially hoping for some extra return programs.

Distribution, just how should we think about that.

Our ongoing.

<unk> reorganization.

And how should we think about shareholder return.

On a next day basis.

Do we think beside the newly announced <unk>.

And do we consider any by the upsizing of the buyback or even a special dividend to <unk> $63 billion of net cash and given that it's two months into your Roes.

Okay.

This in part already.

You would have thought.

From here.

The next.

Thank you.

Right.

Yep.

Second one is on your 200, because I saw five would have to say yes.

We also went live with <unk>.

Since you mentioned the typhoon.

<unk> hundred towards Shuang.

Good siphoned Attune smoker, you what she said Oh, My God Oh, you bought.

The mature.

Cui policy you format, you May know Midland Blood Shanghai, It's yes, sorry, you said Youll show me on D. C. A T.

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You should call. It all sounds element of two good teams and you buy essentially E mail arches, we're using a single limits you could go to agenda and I'm sure you saw it in human tissue.

For me this summer.

Hey, thanks.

Thanks very much for the question. It's a very good question. This is Joe Tsai.

So.

Yes.

They have multiple ways.

To provide value to shareholders.

And.

We have previously announced a multitude of approaches.

From full spin off of our cloud business to share repurchase.

And we've already explained the strategic thinking around the rationale for not doing the spin off.

Now there are alternative ways to provide enhanced returns to shareholders.

And right now our thinking is that we're very excited about our multiple businesses.

Taobao Tmall group to cloud that we should.

Get into a phase of investing for growth.

And Eddie has laid out a very clear strategy and multiple priorities.

For our investments.

So I think you know.

That gives you a pretty good direction of the uses of our cash.

As well as.

Thinking about how we can highlight the value of our businesses.

Rather than through.

Full spin offs.

Vesting and creating a sustainable growth model.

And in these kind of businesses. So I think you should think about our core businesses is coming to a phase where.

There is a reset for sure, but I think going forward, we feel very opposite optimistic we feel very confident about the fundamentals and all the.

Tools and ability that we have built up capabilities that we have built up over the years to continue to invest and show value to our investors that way.

As far as the stock repurchase is concerned we are.

Under still executing our overall a $4 billion.

Share repurchase plan that was approved by the board.

I said as of today, we have $13 billion of dry powder left and we will continue to execute that buyback.

We're not going to it.

<unk>, a one time cash dividend I think we think as we laid out that's the priority for cash uses to invest for future growth.

And then.

Executing our current share repurchase plan and number three has told me I said, we have announced the dividend. So those are the plans.

For the uses of our cash thanks.

Yeah.

Ronald Simeon Gutman T washes out and shows how much should you saw on the shone.

Uh huh.

A fun one shot should Ohio towards when we are going to function well.

Much attention.

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Just as a teacher.

Yes.

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<unk> tissue something she way Oh, I'm acutely auctions or that you can shed on that where we let it wholesale.

So that's why you should hold to coincide Eddie you're not using <unk>.

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Candy holding Eagle Creek, and your daughter's Shlomi junk similar to you all you want but it sounds like <unk> you know what attaches. So he can answer you push you go lunch into China or shipped to go towards a you could should Oh preload the Chi Tung.

So Christian you will find me Anthony on the <unk> side, So that's what.

<unk> you would see shoulder season, two of these a year without even yet do you I mean 20 online generally hurts Sunday under tissue country, no need should see you soon and seeing them as soon as in <unk> should be shown at <unk>.

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<unk> contact you touched on quote one of the arguments I can't seem to get them trained.

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So when when people call you saw it seemed that you get a sense in the you can find a home that shook onetime Toby Easings, yes, Allah one that just using yonder to get someone to your house.

Next question.

Thank you. Your next question comes from Alicia Yap with Citigroup. Please go ahead.

Hi, Thank you.

Yeah, So I guess.

Hum.

What's it Danielle <unk>.

How about poultry.

Okay. Thank you.

Just a thought women taking <unk>.

Pulses ladies.

Joseph <unk> Joseph.

Yeah.

Uh huh.

That's helpful.

Thanks.

No.

Hi, Thanks.

No.

With that I'll call it.

Pieces as well.

So that's probably why now how does this work.

So as a kid.

Now I'd like to see that Genzyme.

Uh huh.

That's awesome. Thank you Dan.

One is on Wednesday.

Sure.

She now.

So youll filing.

Hi, Danielle.

Thank you.

Thank you management for taking my question my questions are firstly relate to investment plans for Taobao and Tmall group. Because recently you have been increasing your investments and I'm wondering if management could share with us in what areas you think those investments have yielded.

Results that have exceeded your expectations and in what areas you think there's still room to do better.

And as the purpose of these investments more too.

Regain market share or is it more about ensuring a sustainable growth of <unk> and <unk> and then finally, we noted that in this years double 11, there was more collaboration with reach out and I'm wondering if you could talk to us about that experience and how the conversion rate was of users coming from wechat as compared to other channels.

<unk>.

With that Sean.

Yes.

Thank you Qi dong to assure them that Sandra Zhang to.

Shanghai correlation should have final hookup.

Now when I say that holiday season, and I would tell me that casino.

Thank you Felicia.

Total Italian 19 chance you asked something about Josh.

Thank you for that.

Oh My God.

Sheila.

Yeah go ahead, sorry, what Bob Allomap with him about where she talked about it you can push it.

Sure.

She sends out now.

Yes. Thank you this is trudi.

As Eddie has explained Taobao Tmall group.

Our three key strategic priorities, namely.

Namely putting users first building an ecosystem for brands and merchants to thrive and realizing AI technology driven innovation. So those are the strategies and of course all of the investments that we're making and we will make will be it.

<unk> tended to serve those strategies so in terms of investing.

In users we've made investments in building of course.

Price competitiveness across the platform.

On increasing our <unk>.

Purchase rate as well as on acquiring new users and we've seen important payoffs are on the table at all.

All the Kpis, we've discussed including time spent as well as a number of our active purchasers.

Now what that told us when they are kind of closes with alcoholic Tricia walk on page <unk>.

Okay.

Should that downtown.

Uh huh.

Sure houses that you have down though.

Yeah Yeah.

So that turns out, though I think I can.

Jumping on that one.

So she's got that Toyota.

In terms of our investments in enriching.

Enriching our content on top of all again, we're certainly seeing good payoffs from those investments as we mentioned earlier a very important one is were seeing an increase in organic users users, who proactively opened up their app and come to us we've seen the increase in user time spent and if you look at Guangdong as well again, we've achieved.

Good growth in terms of number of users and their time spent there. So all of that really gives us all the more confidence that we need to continue with these investments.

Investments in enriching the content environment.

Sure sure.

Well actually the Oceania, that's easy to how they should that hurts your rate that's the only thing.

Yes, your tissue cannot Hollywood, Oh, Moshe Dashon, Jeff on that one.

John that's right.

Sanjay have gone through the AI total Angela Shanghai.

Gosh, I'm personally Quaker agenda Hogan ghansham.

Also as Eddie said AI.

Is the defining technology of our time at a very very important driver going forward of growth in Congress. So we will of course continue to invest in AI, leveraging AI capabilities to enable merchants to grow.

Sustainably and help them develop their businesses in the long term on the platform.

Oh gosh, yeah Tony.

Tony how the heck from Shanghai.

Okay.

Do you see that.

You guys haven't seen Oh my God.

Yes sure.

What are your thoughts about how about and it turns out needle.

As another part of our effort to become a very strong content platform. We're also leveraging AI generated content using aig's C to lower the barrier to entry and make it easier to produce compelling content.

Yeah totally I shall say that thats really changed on the shelf at T O.

Uh huh.

Yeah, that's exactly why you all said that you don't go back go attempting to how about what Joe Shan Shan Michelle Faith that you guys have any items.

I believe that AI will be able to unlock and create fresh new experiences and a lot of fun for consumers it'll be compelling for consumers and an example of that is the new consumer facing product.

Called one one.

Now, let me tee that up right.

Sure sure that there's just a hunch would she needs.

Can I ask you know kinder.

Finally, you asked about collaboration with with Wechat. This is a very initial stage and its influence has been very limited.

This is raphael.

Oh sure Joe you saw for <unk> because for.

Well that sounds good.

Washington, Colorado now she gotcha, Charlie Hustle that somehow.

Our collaboration with Wechat has been focused on a few limited areas one of which is our traffic.

Thank you Jeff.

<unk> Shao Lee.

Oh that sounds a family of one <unk> to check on the 14th I shouldnt be in that sense of what's your thought.

I thought that was actually even better.

T O.

In terms of.

Construction of systems.

Also worked on enhancing recommendation capacity and in terms of policies. We also provided.

$100 million.

<unk> as well as bilateral policy support.

Can you talk about Asia.

Okay Philippines.

So that's a whole.

Yeah.

Of course, <unk> is an open platform and we stand ready to work with all partners and potential partners to provide the best services to our merchants.

Thank you.

Next question.

Thank you. Your next question comes from Gary Yu with Morgan Stanley. Please go ahead.

Hi, Thank you management for the opportunity to ask questions.

I have a question regarding the opening remarks from bill.

A follow up to target to increase our return on invested capital to double digit.

Can management share more about what kind of possible for housing.

Talk to you in the next couple of years.

Pacific Clotting on cautiousness, turning profitable.

Uh huh.

<unk> specific business units that we think we kept type profitable with certain tariff type. Thank you.

Oh I feel like I said when you come here shortly.

Since you're not sure Glenn you had shown some catch up I don't have a challenge.

Sure Matt.

We're trying to move you all she wont buy Rois C to C. E. O routes opened up we value P. T. Sundar young we showed a three P M.

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Yeah.

Okay.

Okay and Gary. Thank you for your question I would take this question.

Yeah as Jill mentioned actually we are looking very closely to our I C.

And.

We do set a target that we want to increase our IC to double digit.

In the next few years and there's a few right we will take to achieve that.

Okay.

Okay.

I went to your wash and Toby will know who he thought and I'm not sure. So the children onside chose once you.

Well Ms. Sheila on the movie ought to see about Rois seats.

We'd like to see near neighbor. He called the younger issue number will adopt at younger moved beyond that well more hitachi teach on Kashi.

In all our businesses if you like actually as Eddie mentioned, we do have core and noncore business.

In addition, we will also have many of the investments sitting in our equity sort of like investments or even investment associates. So far those investments. We are also a resource that we can use to.

As part of the resource that we can utilize to enhance our our.

Our IC.

The majority who are you going to Ics shop on the CIO of the year, we're not sure fun way casino of FIFA and you should truths that youre right well my head.

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Cooper in Chongqing Pardon me this was towards the high or I mean, you said Glen Nancy a formula towards it and what's useful so I already said towards the yes, you don't see that on marketing do you want to highlight some plumbing to Susan we've owned it.

And.

With respect to the Caf businesses as Eddy explained actually we will need to invest in innovation and growth so far all of these.

<unk> core businesses the growth and the future profitability will help certainly generating more earnings which will contribute to increase of our IC.

Yeah.

Some of the root cause of Eddie just on Aneel could hinder format, almost xi'an shout out towards the towards the pharmacy don't see Sunshine and I Wonder why nobody likes each and you put a T shirt.

The two that you need to know about sardo Hanukkah T golf woman.

Okay.

And with respect to the noncore business and also the investments in LNG. They are no longer strategic to US I think on one hand, as Eddie mentioned, we would want would need those business to become profitable as early as possible and also for some of the investments.

We will also in looking to the opportunity to monetize once you will give us cash and eventually we can utilize the cash to give the return to the shareholders.

So that will also help to increase our IC.

Yeah.

Number two.

So your question you were like Changzhou, China tissue I'm going to switch on food I've got shot.

Sure the total.

T meal, a chunk of your yoga assortment of course, you know the meru Eddie coincide so G CSF Oner Xiang Qin quite a young at heart and they're gonna strongly unique.

Hey, Moshe charter towards the Hershey, what's your way it creates huge I guess, yet to go will be quite a function.

Yes.

Just as a kind of uncharted cheeky at all.

Oh, yes, you could teach them well enough.

Yeah.

So thank you.

Oh sure sure.

Next question.

Thank you. Your next question comes from Alex Yao with Jpmorgan. Please go ahead.

Great.

And thank you for taking my question.

I have a question regarding the cloud business group.

So thank you guys.

Every month you want.

You decided not to proceed with a cool spring fall off the crop business.

So we score the Cingal and <unk>.

In terms of depletion for apartments.

Market conditions change or the financial on the screen.

Would you reconsider.

And then religion.

Police and I think you guys.

Uh huh.

To develop.

Both growth model for the cloud business.

Kevin.

I see.

So from the U S.

Hum.

Talk about your thoughts on how the sustainable growth model. Thank you very much.

Hock I just wanted to win.

An issue when you are in China, Yeah, with that and then we're going to China.

And so I'm using shampoo.

Quick fashion show year on year with lunch and Typhoon <unk>.

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Thanks Sheila.

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Most of the questions are younger.

Yeah.

Okay. Alex this is a two part question. So I'll answer the first part and Eddie will answer the second part.

About the.

Our announcement to not proceed with the full spin off.

For us there.

This is when.

When we announced the full spin off.

We're looking at a way to sort of a financial engineering way to show the value of the business and that was one of the business was operating.

DNA in circumstances that we thought were.

Predictable.

With our ability to project.

The the business and communicate to investors and provide a level of transparency to investors.

Whoa independently hold the shares of cloud intelligence group.

Circumstances have changed and right now rather than focus on financial engineering, we rather focus on figuring.

Figuring out how to grow the cloud business.

A big part of that is for us to for.

For the group to provide cash to make investments.

But in.

In the AI driven world.

<unk> developed a full blown business based on a very networked and highly scaled infrastructure requires investment.

So we would rather.

Sure.

Investors through the operations of the cloud business, rather than spinning it off and hopefully we can enhance value to shareholders.

As we deliver.

Future growth revenues and profits in the future.

As far as the sustainable business model I'll, let Eddie.

To answer that question.

Uh huh.

So you give it to you from the Acapu fan wash your children don't wait until you get to fund them with yoga Bluefin auto parts, Okay, Eddie like where you. Dr. Mcclain do you go into you know to sue on the CIT team to suit, which.

<unk>, yeah with a lunch under Chi fan.

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She has seen the hunger that you can pay off Oh, sorry, I'm being bought just told you that.

So all of them are you interested in Italian workings on lateral larger there can you sort of way younger children, but do you get you don't want a myriad of ways to see if he'll refreshing their trends on your end user.

So I took a train ticketing you will then say Simeon that Chile will maintain how youll face hometown, though you're attempting to do.

At this time Haynesville horizontal.

One way you can judge Hallandale, you couldn't go in but it's a good thing attempting to go way too.

I'm going to be in the mid teens or more so I'm Gonna go Chile Ghansham the well let me tell you. If you can China local problems with Cook with Tivo and can call congestion choppy before so it took us a woman today. So we are trying to them they tend to only Winchester as the time that you go out you can send out until it.

Yeah Yeah.

She says that a woman named Shana whaler.

Realized she said she always pushing the AI side, she says and as I thought.

So English is how fast things you can start a beautiful elements at all.

So janssen TD eager once you.

It seemed kinda as it hits into her because she is well into its own voices on the AI team sits on Tuesday.

Now what might you do 10 times that could hinder oiler, but it's one where the AI suddenly the symbiosis huh.

On the funding side a lot yeah juices.

The agenda eastern compare critical near where you throw it out there going into outlet chickens and goodbye.

Hey, Ida AI into the grass Shirley.

Let's say it doesn't seem quite sharp women's you that's how cheap do you need.

Hey, I suppose how you send it somewhere else in Cleveland.

Please <unk>.

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If he can be detailing the Gulf rosada changes and Kung Fu Panda, though AI suddenly they shouldn't yet did you see here, our olivine Tanya Integra and she has a suite of endorsing that totally so we are seeing greater without Houston.

The increase bounds of cool Tomorrow, and Linda Hi, It's roundup, Pos subpoena attempting to warm and I'm looking at the service is down to <unk>, but with a little bit.

Are you, saying to US is an attempt to keep only Utah, Washington, the fine Okay.

E Sun is up nine two cohorts and we shouldn't be and I'll tell you that AIG is on schedule. So you wouldn't want you the tons silica although in the AI could you find do you Cook, where by the way life P. T go unconverted chats.

This is a woman that don't.

T V shouldn't that means he is.

I only that isn't done soon.

Thank you well the question that you've asked really is a critical one there have been many changes in the situation in the market.

At this in two parts in terms of business model, the CPU centered a traditional cloud computing business.

Is one where we built up a strong portfolio over the last 14 years in this part of the business going forward as we said, we're going to place our focus on a.

Public cloud because we think public cloud is wherever you can achieve very strong network effects and scale effects and thereby provide very good value for money to our customers. The second part of the business are going forward into the future is GPU based.

AI computing and obviously there have been some some major changes in the external environment.

Policy wise and otherwise that will bring about important changes in the <unk>.

The China market.

I think going forward, what we can certainly expect to see in the China market is that there'll be multiple different chips.

Chips being used multiple different providers meeting demand for AI computing power.

In the China market and I think cloud in China is going to play.

And ever more important role in supporting the development of AI.

In this market.

Cloud can allow.

Developers to achieve much higher.

Efficiency and not have to worry about complex issues around.

Chip design.

I think that we have a complete set of offerings in place that's really well designed to support development because we've always been supporting one cloud with multiple chips and we have these different layers a platform as a service model as a service.

Infrastructure as a service we're able to support.

Heterogeneous architecture.

At all of these different levels and I think that without in place, we're well prepared to provide a great value to the Chinese market.

Let's invite the last question.

Thank you. Your next question comes from Giles shall with Barclays. Please go ahead.

Thank you very much for taking my question.

You highlighted a choice as it once the growth driver has seen.

The fastest growing segment I was wondering if you.

Can you expand a bit on which countries and regions.

Choice has entered and you talked about revenue contribution earlier I was wondering is there any magnitude.

Sure.

Sort of a timeline to get to unit economics breakeven and it related to that for your <unk> business.

You have a mix of sort of a local e-commerce in Turkey, and in Southeast Asia, and you'll have a cross border E toys longer term, what's the focus or do you always is.

It's sort of a 50 50 or a healthy balance between the two thank you very much.

So she had tissue of the tumor.

What's it going to show quite a U D C for Amanda Goldstein.

Yes sure choice since as you got a treat them here with phone Jonah Toyota to go too long.

So I hope that you don't get me using diagnostic which I teach you a tweet who took a choice to food.

Sorry, I'll shoot auto should choice to a showroom with a collection center you'll.

For golf, all you'll be able to tell me you should you got to push it to you Youll wouldn't uncle <unk>.

She can transform yeah.

The only thing that I will hand woman should all air D C.

Towards sheets I do none yeah sure check up on T. J S. Shang.

Meanwhile, Johanna Youre crowd scenes, yes, Sean tissue Sue my tone.

Number two the other year, whether you go PV rely accretive with somebody else.

The Eagle, which were not how should we essentially bought she'll tell you got a walkout with Shandong Zhejiang Ping home, they're telling you go Gucci.

That sounds great I have Diego until you're sure you might make a odd express choice and ginger to arbitrage the Chattanooga.

Since when did you hear what kind of you have finance people show you go to the swing Kashagan.

Got it.

<unk> told you by the bank of Montreal.

You were talking to.

No unconditional sure.

Hum.

How do you go Cheyenne motions you Tony you called pin hedge how do you call it.

It's been talked about Germany equal one question for you Moshe.

No it's not doing okay kind of like how many people can I add something.

You mean the choice metric.

Yeah.

B J P can hamlisch houseware Hitachi assertion that you don't want to send out Nagel trio only.

Yeah.

Thanks for the question well first of all I should point out that choice is actually based on.

H E.

So it's not something new that's come out of nowhere, it's layered on top of our preexisting business AE and AE is in over 100 different countries.

Countries.

So what we've really done with choice as we've gone from a pure platform model to.

Our platform plus choice model of fully entrusted model and what we found is that the user experience with choice is a significantly better than with the pure platform model.

So at this point choice is a major driver of growth in our business.

They're not well, Matt you mentioned that tries to catch what union. She answered by that they don't quite have as soon as something that in the champions of Crestwood that you could sure they know what they like.

The C code.

It wasn't really a choice that PD.

With the change in growth.

That's price controls Avenue, but you could do it.

Oh, sorry, I thought I should go out you don't know what in sugarcane, how did you go to pin down.

Okay.

Yes.

Artist price stuck.

Looking now.

So choice has been launched for about a year now and it's certainly growing very fast and accounts for an increasingly higher proportion of orders. So I would say that in a few more quarters from now choice will account for more than 50% of our revenue from aliexpress.

Uh huh.

Number of orders not revenue.

But just trying to make sure you meet.

So we're sure that you've got total chi.

So she just should take are literally further to medically.

I'm kind of particularly whether you're good.

Then John will do with Hudson Gorilla, Cheekily Elyse I'd peso shortly.

Oh, I'm, usually a buffet line should generate women shall Cui Cui.

You can see with.

I'm sure you'll problems in greater China.

David.

Yeah.

So choice is still there.

A business Thats in the investment stage its profit is negative for the time being but with.

Further growth, it's a unit economics will certainly be improving for now we're placing our number one priority for choice is achieving growth, but our unit economics and profitability will certainly optimize going forward.

The crown jewel can dig themselves in the tea leaves so Andrea Shaw.

Sure.

Jacob.

Yeah.

She grew up in India can quadrant punishing Jonathan could easily.

Okay.

What must be according mutual conversion we've been deep.

I don't know what you're doing.

Please go ahead.

And then the chance you want me to Schrom, one female sure mm. Two showed you grew up in deposit beta I assure you it should go.

For the other trials that you won't quota you got it.

Actual total kind of not only the Chinese are jumping on the BD.

Yeah.

So as regards.

Local e-commerce model versus the cross border model.

Uh huh.

And in some countries the.

Local model works better in other countries of the cross border model works better I don't I wouldn't say that we have any fixed percentage in mind in terms of how to allocate the business. It really comes down to how do you provide the best user experience and best meet user demand in those different countries and markets.

Okay.

Thank you that concludes our earnings call for today, we will see you next quarter. Thank you.

Yeah.

That does conclude our conference for today. Thank you for participating you may now disconnect.

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