Q3 2025 Alibaba Group Holding Ltd Earnings Call
Good day, ladies and gentlemen, thank you for standing by welcome to Alibaba Group's December quarter, two 'twenty 'twenty four results conference call.
At this time, all participants are in listen only mode.
After managements prepared remarks, there will be a Q&A session.
Speaker Change: I would now like to turn the call over to Lydia Lu head of Investor Relations of Alibaba Group.
Speaker Change: Please go ahead.
Speaker Change: Good day, everyone welcome to Alibaba Group December quarter, 2024 earnings conference call with US <unk>, Chairman and Chief Executive Officer, Toby Shea Chief Financial Officer, Jonathan <unk>, Chief Executive Officer of Alibaba ecommerce business groups. These calls.
Speaker Change: Also being webcast from 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 as usual, we would like to remind everyone that today's discussion may contain forward looking statements, particularly statements about our business.
Speaker Change: Packs and patchy financial results that are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in our forward looking statements. Please refer to the safe Harbor statements that appear in our press release and Investor presentation provide you today. Please.
Please note that certain financial measures that we use on this call I expressed on non-GAAP basis, our GAAP results.
Speaker Change: Asia of GAAP to non-GAAP measures can be found in our earnings press release, unless otherwise stated he mostly of all stated metrics mentioned you on this call refers to year over year gross margin is the same quarter last year.
Eddie: With that I will now turn the call over to Eddie.
Speaker Change: Okay.
Eddie: Go into other than payroll.
Speaker Change: Hello, everyone and.
Speaker Change: Welcome to this quarter's earnings call.
Speaker Change: Over the past year, we have pursued our user first AI driven strategy and focused on our two core businesses of E Commerce, and AI plus cloud after a year of transformation.
Speaker Change: Our core businesses have demonstrated accelerated growth momentum. We have also largely completed the divestments of our offline assets.
Speaker Change: Across Alibaba group, our business is now possess strong business fundamentals and profit generating capabilities.
Speaker Change: This quarter, we continued to pursue our integrated AI plus cloud strategy and our cloud business, leveraging our industry, leading AI product portfolio overall revenue, excluding Alibaba consolidated subsidiaries grew 11% year over year this quarter with a related product revenue maintaining triple digit year over year growth for the sixth consecutive quarter.
Speaker Change: With the rapid adoption of AI technology across industries customer demand for Alibaba cloud products has surged looking ahead revenue growth of cloud intelligence group will continue to accelerate we recently launched.
Speaker Change: Q1, two five Max our flagship AI Foundation model, which has achieved industry leading performance across multiple recognized benchmarks.
Speaker Change: So at the end of January over 90000, QM based derivative models have been developed globally, making Q1, the most popular among developers across the major model families over 290000 companies and developers have accessed Q&A API through Alibaba cloud the <unk> platform and we will soon release a deep reasoning.
Speaker Change: Model built on Q1, two point by Max and.
E Commerce, Taobao and Tmall continued to invest in new user growth and comprehensive user experience enhancements, we saw strong growth in both new consumers and orders during the quarter 88, VIP members, our core consumer group maintained double digit growth, reaching $49 million by the end of the quarter.
Speaker Change: Taobao and Tmall also made solid progress in monetization as planned with CMO growing 9% year over year.
Speaker Change: At the same time, Taobao and Tmall continued to strengthen merchant friendly measures that improve our platforms business operating environment, fostering higher quality and more sustainable development development.
Speaker Change: Our international E Commerce business maintained strong growth this quarter driven by cross border businesses with continued improvement in operating efficiency during the quarter, we increased investment in key markets, while focusing on operating efficiency with choices unit economics, improving on a sequential basis, we expect <unk> to achieve its full.
Speaker Change: First quarter of profitability in the next fiscal year.
Speaker Change: Our other Internet platform business has continued to improve operating efficiency aim op achieved profitability. This quarter looking ahead, Alibaba as a strategic direction and roadmap are clearer than ever we will continue to focus on three business categories first domestic and international E Commerce second AI plus cloud computing.
Speaker Change: And third intranet platform businesses, we are confident that our focused strategy will drive sustained solid growth for Alibaba group today.
Speaker Change: <unk> AI technology advancements are driving profound industry transformation.
Speaker Change: In alignment with Alibaba group's business landscape, we will scale up investments in the following three areas as part of our broader strategy over the next three years.
Speaker Change: First infrastructure for AI and cloud computing, the AI era presents a clear at massive demand for infrastructure, we will aggressively invest in AI infrastructure, our planned investment in cloud and AI infrastructure over the next three years is set to exceed what we have spent over the past decade.
Speaker Change: Second AI Foundation models and AI native applications.
Speaker Change: AI Foundation models are pivotal to transforming industry productivity, we will substantially increase R&D investment in AI Foundation models to maintain our technological leadership and drive the development of AI native applications.
Speaker Change: Third.
Speaker Change: Transforming our existing businesses with AI AI technology presents powerful opportunities to enhance user value across our e-commerce and other internet platform businesses, we will increase investment in AI application, R&D and computing power and deeply integrate AI across our businesses capturing new.
Speaker Change: Growth opportunities in the AI era looking ahead, we're confident.
Speaker Change: In our focused strategy on e-commerce, and AI, plus cloud and excited by the business opportunities being unlocked by this new technology cycle. Thank you.
Speaker Change: Thank you Eddie the strong financial results of the past quarter shows that we are making very good progress to ignite growth in our core businesses.
Speaker Change: Our taobao and Tmall businesses, we saw a significant upswing in our see them up close which accelerated to 9% year over year driven by growth in <unk> and improved the monetization. This outcome reflected the full quarter impact of the software service fee.
Speaker Change: And the increasing adoption of <unk>.
Speaker Change: Our cloud business continues to exhibit robust momentum with revenue growth accelerating to 13% and the overall revenue from businesses, excluding Alibaba consolidated subsidiaries grew over 11% fewer buying even foster public cloud revenue growth.
Speaker Change: Additionally, our AI momentum remains robust with AI related product revenue sustaining triple digit growth for the sixth consecutive quarter.
Speaker Change: These achievements highlight our commitment to innovation and reinforce our leadership in cloud and AI sectors.
This quarter, a I D C maintained its rapid growth momentum.
Speaker Change: We're really driven by strong cross border business performance.
Speaker Change: D C increased investments during overseas shopping festivals quarter over quarter and have continued to invest in select European markets and the Gulf region.
Speaker Change: Users.
While we made good progress in growing our core businesses, we maintained the financial discipline with enhanced operating efficiency.
Speaker Change: Achieving positive EBITDA growth in Taobao and Tmall group.
Speaker Change: While we improved operating efficiency of other businesses with the goal of sustainable business growth and achieving profitability.
Speaker Change: This quarter, a map achieved a profitability for the first time, while the majority of lossmaking businesses will achieve breakeven and gradually begin to contribute profitability at scale within the next one to two years.
Speaker Change: We have been actively managing our balance sheet through strategic divestment of noncore assets share buybacks and effectively extending our debt maturities at attractive rates.
Speaker Change: During the quarter, we entered into agreements to dispose all of our interests in Santa for up to a maximum of U S. Dollar $1 6 billion and in in time for U S. Dollar 1 billion. These moves reflect our strategic shift to streamline operations and focus on.
Speaker Change: Our core businesses.
Speaker Change: Recently, we have obtained the P. R. C N T Trust approval with respect to Sun and in times merger control filing we expect the major financial impacts will be reflected in March quarter. These transactions will improve our operating efficiency and.
Speaker Change: Enhance our agility.
Speaker Change: For December quarter, we repurchased shares of a total of U S dollar $1 3 billion or 0.6% net reduction in share count.
Speaker Change: Combined with approximate U S dollar 10 billion repurchased in the first half of this fiscal year, we had achieved a 5% net reduction in share count over the last nine months.
Speaker Change: In November 'twenty plentiful, we also completed a do currency bond issuance raising approximately U S. Dollar 5 billion through a combination of U S. Dollar to six 5 billion U S. Dollar denominated notes and see an etch 17 billion RMB denominated.
Speaker Change: Notes.
Speaker Change: Which was strategically structured to leverage that.
Speaker Change: Pricing of RMB notes to significantly lower our overall financing cost.
Speaker Change: On a consolidated basis.
Total consolidated revenue was RMB $280 2 billion, an increase of 8% cancer.
Speaker Change: Consolidated adjusted EBIDTA increased 4% to RMB 40, or 54, 9 billion, primarily attributable to revenue growth and improved operating efficiency, partly offset by the increase in investments in our e-commerce businesses.
Speaker Change: Excluding the effect of long term cash incentive plan, our adjusted EBIDTA growth would have been an increase of 5% on a like for like basis compared to the same quarter last year.
Speaker Change: Our non-GAAP net income was RMB $51 1 billion, an increase of 6%.
Speaker Change: Our GAAP net income was RMB $46 4 billion, an increase of 333% primarily due to the increase in income from operations Mark to market changes from our equity investments and the increase in share of results of equity method in that.
Speaker Change: Ts.
Speaker Change: Yeah.
Speaker Change: Operating cash flow this quarter was RMB 79 billion, an increase of 10%.
Speaker Change: Free cash flow this quarter decreased 31% to RMB 39 billion. The decrease in free cash flow was mainly attributed to the increase in expenditure related to our investments in cloud infrastructure.
Speaker Change: As of December 31, 2020, full we continued to maintain a strong net cash position of RMB $378 5 billion or U S dollar $51 9 billion.
Speaker Change: The strong net cash position and healthy operating cash flow, bringing us the confidence and sufficient resources to increase our investments in cloud and AI infrastructure to capitalize the substantial growth potential presented by the latest AI innovations.
Speaker Change: Now, let's look at segment results, starting with Taobao and Tmall group.
Speaker Change: Revenue from Taobao, and Tmall group was RMB $136 1 billion, an increase of 5% cut.
Speaker Change: Custom manual revenue increased by 9%, primarily driven by the growth in <unk> and improvement of take rate.
Speaker Change: This outcome reflected a full quarter impact of the software service fee and the increasing adoption of <unk>.
Speaker Change: We increased our efforts to grow our user basis and continue to invest in strategic initiatives to enhance user experience. These efforts led to strong growth in new consumers and strong order growth.
Speaker Change: During this quarter the number of 80, a VIP members continue to grow rapidly reaching $49 million.
Speaker Change: With solid profitability and increasing up unlike call cohort basis, we will continue to balance the scale and profitability of this program.
Speaker Change: Taobao and Tmall group adjusted EBIDTA increased by 2% to RMB 61.1 billion, primarily due to the increase in revenue from customer management service, partly offset by the increase in investment in user experience.
Speaker Change: Revenue from <unk> grew 32% to RMB 37, 8 billion this quarter, primarily driven by strong performance of cross border businesses.
Speaker Change: Revenue from International Commerce retail business increased by 36% to RMB $31 6 billion, primarily driven by the increase in revenue contributed by on express and trend deal.
Speaker Change: Revenue from our international Commerce wholesale business increased by 18% to RMB six 2 billion, primarily due to an increase in revenue generated by cross border related value added services.
Speaker Change: AIB seas, adjusted EBITA was a loss of RMB 5 billion compared to a loss of RMB three 1 billion in the same quarter of last year.
Speaker Change: D C increased investment during the overseas shopping festivals quarter over quarter, and our continued investments in select European markets and the Gulf region to acquire users.
Speaker Change: However, the UE after 80 choice business improved on a sequential basis move.
Speaker Change: Moving forward, we will continue to enhance operating efficiencies within each business and drive high quality growth by strategic investments in select markets.
Speaker Change: Revenue from cloud Intelligence group grew 13% and overall revenue excluding Alibaba consolidated subsidiaries increased by 11%, mainly driven by the double digit revenue growth of public how products, including AI related products.
Speaker Change: Clouds, adjusted EBIDTA increased by 33%, primarily due to shifts in product mix towards higher margin public cloud products and improving operating efficiency.
Speaker Change: Partly offset by the increasing investments in customer growth and technology.
Speaker Change: We will continue to invest in anticipation of customer growth and technology innovation, particularly in AI infrastructure to capture growth opportunities in the AI era.
Speaker Change: Revenue from Tanya decreased by 1% and adjusted EBIDTA increased by 76%.
Speaker Change: There is an ongoing restructuring with our E. Commerce business is taking on certain logistic platform low Tanya will continue to focus on building its global Smart logistics network.
Speaker Change: And make it end to end logistic capabilities available to our own e-commerce businesses as well as third parties.
Speaker Change: Revenue from local service group grew by 12% to RMB 17 billion.
Speaker Change: Driven by the order growth of both <unk> and <unk> as well as revenue growth for marketing services.
Speaker Change: How it's adjusted EBIDTA loss narrowed significantly as unit economics improved due to operating efficiency and as scale increased.
Speaker Change: Revenue from digital media and Entertainment group grew 8% to RMB five 4 billion, while its adjusted EBITA loss continued to narrow.
Speaker Change: Revenue from all other segment increased by 13% to RMB $53 1 billion, mainly due to the increase in revenue from retail businesses, including fresh a Po and Alibaba House.
Speaker Change: Adjusted EBITA was a loss of RMB three 2 billion.
Speaker Change: In closing during this quarter, we are making significant strides in enhancing the competitiveness of our E Commerce and car businesses. Additionally, we are focusing on improving the efficiency of our lossmaking segments to establish a clear path to profitability.
Speaker Change: In addition, this quarter, we continued to optimize our balance sheet and shareholder return with significant non core asset sale share buybacks and effectively extending our debt maturities at attractive rates.
Speaker Change: As Eddie mentioned, we will continue to execute our strategy and make significant investments to seize the opportunities presented by the AI era.
Speaker Change: Looking ahead, our unique business positioning coupled with our strong financial position gives us full confidence to grow thank.
Speaker Change: Thank you that's the end of our prepared remarks, we can open up for Q&A.
Speaker Change: Thanks, Tobey hi, everyone for today's call you're welcome to ask questions in Chinese or English or third party translator will provide consecutive interpretation for the Q&A session. Please note that the translation is for convenience purpose only in a case of any discrepancy our management statement in arranging the language will prevail.
Speaker Change: If you are unable to hear the Chinese translation bilingual transcripts of this call will be available on our website within one week. After the end of the meeting.
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Speaker Change: Operator, please connect speaker and conference lines now please.
Speaker Change: We start Q&A session. Thank you.
Speaker Change: If you wish to ask a question. Please press star one on your telephone and wait for your name to be announced if you wish to cancel your request. Please press star two.
Speaker Change: If you're on a speakerphone please pick up the handset to ask your question.
To give more people the opportunity to ask questions. Please keep yourself to no more than one question at a time.
Speaker Change: Your first question comes from Alicia Yap with Citigroup. Please go ahead.
Alicia Yap: Thank you.
There is no management. Thanks for taking my questions. Congratulations on the solid results. My question is related to cloud AI and also the Capex. So we father is leading cloud infrastructure services and a strong foundation and models, but I think well positioned to capture the transformation era.
Alicia Yap: <unk> adoptions in the coming months in China, and also a possible outside of China. So maybe can management share some insight.
Alicia Yap: It will translate into the financial upside in terms of the cloud revenue growth and also the cloud margins trend in the next several quarters.
Alicia Yap: We know that that Capex spend this quarter almost double from last quarter to 31 billion and also management know that on the prepared remarks that.
Alicia Yap: Expect that to us.
Alicia Yap: The investment or Capex in the next three years will be more than the past 10 years. So can management clarify the combat and help us crystallize the amount of the spend in the next few quarters and also do you have a budget that you can share for us for the next three years.
Alicia Yap: How will that capex spend actually it won't Pat overall profitability trend. Thank you.
Alicia Yap: Okay.
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Speaker Change: Thank you and there were quite a few questions in there and perhaps before I get into each of those questions.
Speaker Change: Should begin by sharing with you our overall views on AI and why we're investing in our.
Speaker Change: NII so aggressively.
Speaker Change: Larger opportunities that we see.
Speaker Change: In this sector as well as the ways.
Speaker Change: We have been and will continue to monetize developments around AI progressively as they as they come out.
Speaker Change: First of all we think that Alibaba is extremely well positioned in the AI space.
Speaker Change: In particular in the Asia market, where we have several very important advantages. We are the number one cloud provider in the region and number four cloud provider globally, we have leading models leading technology we have.
Speaker Change: Terry.
Speaker Change: Our models as well as a thriving open.
Speaker Change: Ecosystem.
Speaker Change: And we also have.
Speaker Change: Multitude of application scenarios for AI across our <unk> ecosystem.
Speaker Change: But to explain the group's strategy around AI requires taking an even longer term view because this is the kind of opportunity for industry transformation that really only comes about once every several decades.
Speaker Change: So when it comes to Alibaba as a strategy are first and foremost goal is to pursue hei.
Speaker Change: Sweet of Hei is our primary objective we aim to continue to develop models that extend the boundaries of intelligence.
Speaker Change:
Speaker Change: Why is that the primary aim while it's because all of the.
Speaker Change: Visible.
Speaker Change: AI application scenarios today that we see around content creation search and so on and so forth have arisen precisely as a result of the ongoing extension of those boundaries and we want to keep pushing out those boundaries to create more and more opportunities.
Speaker Change: Well I can do that sooner than mid teens.
Speaker Change: It's useful center and you've been pushing too so.
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Speaker Change: Yeah, It's Andrew negotiation.
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Speaker Change: So we see the continued.
Speaker Change: Pushing out the boundaries of intelligence and the pursuit of Hei as the key objective in our efforts.
Speaker Change: Secondly, the pursuit of hei can contribute events business value.
Speaker Change: Is there a.
Speaker Change: In studies that indicate that.
Speaker Change: When hei has achieved it could potentially.
Speaker Change: Pardon me the standard for Hei is artificial intelligence that can replace or achieve 80% of our human capabilities.
Speaker Change: Around 50% of global GDP is men.
Speaker Change: Manpower salaries, including.
Speaker Change: Intellectual or mental work and physical labor.
Speaker Change: So.
Speaker Change: <unk> can be achieved.
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Speaker Change: A tremendous impact in terms of restructuring industry around the world and could have a significant influence on or even replace 50% of global GDP.
Speaker Change: Second we will continue to deepen the integration of cloud and AI.
Speaker Change: See this is the most important kind of infrastructure.
Speaker Change: And.
Speaker Change: In the.
Speaker Change: Future, we will continue to.
Speaker Change: Two.
Speaker Change: Build AI on the integrated fashion.
Speaker Change: Across our cloud and in our own business applications.
Speaker Change: When we talk about intelligence, we're really talking about the toll consider output.
Speaker Change: By models, and we think that in the future 95% of those output tokens will be generated on the cloud and distributed by the cloud because only a cloud computing network and generate and distribute tokens without Hyatt.
Speaker Change: This level of efficiency and we can.
Speaker Change: Connect to developers.
Speaker Change: On the most efficient and rapid basis worldwide through our globally deployed network.
Speaker Change: Datacenters thirdly, we maintain an open attitude with respect to the deep integration of AI.
Speaker Change: Into our own scenarios to create value across all of our businesses.
Speaker Change: We expect that with the further integration of AI.
Speaker Change: Across our <unk> and to see offerings, we will achieve higher efficiency, we will increase user time spent and create more user value.
Speaker Change: For our users so that's precisely the thinking.
Speaker Change: Behind our determination as you referenced to invest more in cloud and AI over the next three years than we did in aggregate over the last 10 years.
Speaker Change: Okay.
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Speaker Change: The second part of your question had to do with.
Speaker Change: Capex on a quarter by quarter basis going forward.
Speaker Change: What I've laid out for you is our overall expectation for the coming three years I would say that on.
Year by year basis, the annual level of Capex will be more or less equal across these three years, but there could be.
Speaker Change: Fluctuation within each year on a quarter by quarter basis given.
Speaker Change: At the time that it takes for supply chains to provide what's needed as well as for the Itc's together setup, but overall, we would expect it to be relatively even over the next three years.
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Speaker Change: The other part of your question had to do with the potential impact of our Capex plans on profitability.
Speaker Change: I would say that this next three year period.
Speaker Change: We will likely be.
Speaker Change: Single period in which we'll be making the most concentrated and highest level of investments.
Speaker Change: Building out our cloud and AI related infrastructure and of course.
Speaker Change: Hardware infrastructure, we will have an impact.
Speaker Change: In terms of depreciation, but behind that is our expectation of huge demand for take up on the part of both internal and external customers there's huge demand there.
Speaker Change: We definitely see this being taken up very rapidly.
Speaker Change: Next question please.
Speaker Change: Thank you. Your next question comes from Alex Yao with JP Morgan. Please go ahead.
Alex Yao: Thank you management for taking my question and congrats on a very strong quarter.
Alex Yao: My question is also related to <unk>.
Alex Yao: <unk> accounts, so based on my observation.
Alex Yao: Introduction of latest deep six large language model families.
Alex Yao: <unk> brought high quality model at affordable cost up to the entire industry.
Alex Yao: And then because give six model itself is a freedom charge monetization of large language model consumption has moved down one layer in the value chain to the compute power and pumps.
Speaker Change: So first of all do you agree or disagree with this statement.
Speaker Change: Secondly to what extent is the compute power Ford lost language model or Jamie is not.
Speaker Change: Commodity and lastly, with the help from deep deep six high quality and high cost of efficiency models, what do you see the most of high potential area in terms of.
Speaker Change: And native application within Alibaba ecosystem and outside of Alibaba ecosystem. Thank you.
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Speaker Change: Chartered the Union Chongqing given us yet.
Speaker Change: Neither one.
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Speaker Change: The AI <unk> Ts, where the team's done done their own high school you face hundreds Archie.
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Speaker Change: Provisions at the end of a number <unk> <unk>.
Speaker Change: Previously entered the Kinder daiwa.
Speaker Change: Thank you those were some some really good questions.
Speaker Change: I think.
Speaker Change: We're still in a.
Speaker Change: Very early days, when we were talking about.
Speaker Change: Advancement of artificial intelligence technology, although it's developing rapidly we're still in the initial stages of development.
Speaker Change: So I think.
Speaker Change: Future business models, and the future ways in which these models will be monetized.
Speaker Change: Or not necessarily clear to anybody today as the boundaries of intelligence get pushed out as the models get smarter and smarter.
Speaker Change: More and more opportunities.
Speaker Change: To monetize them, but in ways that may not be apparent to us today.
Speaker Change: Talking about the future, where the model's become sufficiently intelligent to be able to supplant.
Speaker Change: Engineers, and scientists that kind of expertise and that will really be in a different stage of development.
Speaker Change: The second point is that if you look at current models today the level of differentiation.
Speaker Change: Cross models from different vendors is narrowing.
Differences are becoming less obvious in fact, it's also becoming less apparent what the differentiation is between open source models and closed models.
Speaker Change: But the development of all of these different models.
Speaker Change: Open source are closed.
Speaker Change: Our are beneficial for our cloud computing network offerings, because all of these models open or closed will need to be hosted on our cloud computing.
Speaker Change: Network so.
Speaker Change: If you ask me what the clearest monetization.
Speaker Change: The pathway is today, it's definitely.
Speaker Change: Our cloud computing offerings that exists to host and to support the operation of these of these clouds.
Speaker Change: So.
Speaker Change: If I could offer an analogy.
Speaker Change: AI artificial intelligence is like electricity in this new era than our cloud computing network is like the power grid that carriers that electricity.
Speaker Change: No wonder how many and when do you agree with that and sometimes you don't name women through the digital channel either.
Speaker Change: Devo or do the Shanda, well macondo AI in Washington that needs a good chunk I tell them kind of attaching to it that youre that you acquire.
Speaker Change: Then you saw a machine that street retail leader in Europe, <unk> also known as <unk>.
Speaker Change: Women don't make any on dose of 800 <unk> fit on Golar <unk> <unk>. So let's use a woman to woman April as we conduct Zhukov on me under him in here and they hit you with that.
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Speaker Change: So you called in your commentary that said EMEA AI to.
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Speaker Change: <unk> 2 billion.
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Sean Dargan: Sean Dargan, Don Johnson, local artisan and you'll recall that can join us either to Hong Kong to you Pat.
Speaker Change: Hey, Don Tassio EDM cheese on Diego that you've attempting desert assignments that will mute the way it will go aig's within Europe now.
Sean Dargan: Got quite some way cynical food to local.
Sean Dargan: In the.
Sean Dargan: Your other question had to do with <unk>.
Sean Dargan: AI applications that we think have the greatest potential.
And then the Alibaba ecosystem.
Sean Dargan: Models are becoming more and more powerful and are evolving faster and faster.
Sean Dargan: Which means that it's actually quite difficult for me to tell you definitively what are the areas with the highest potential I think that all applications potentially.
Sean Dargan: It could have a huge potential.
Sean Dargan: But we are certainly internally looking at some very interesting opportunities first in terms of the taobao app.
Sean Dargan: As a portal for lifestyle and for consumption we're.
Sean Dargan: We're doing a lot of internal development and many of these projects will be launched soon you'll see them when they are deployed.
Sean Dargan: But these are AI enhancements within our tomo will serve to increase consumer engagement and also drive higher transaction efficiency.
Sean Dargan: Other kinds of AI empowered applications will contribute to.
Sean Dargan: Purchase related decision, making and increase user time spent and create value.
Sean Dargan: For users so beyond sharpen we can expect.
Sean Dargan: Introduction of AI features on taobao to create.
Sean Dargan: More kinds of value.
Sean Dargan: We also have our to see AI offerings.
Sean Dargan: <unk> and 'twenty.
Sean Dargan: So <unk> is in.
Sean Dargan: AI search product, which has the largest number of users.
In China.
Sean Dargan: AI.
Sean Dargan: It is being deployed and will continue to be deployed to improve search productivity creation and overall efficiency.
Sean Dargan: As you know one of our very important the most important asset we have on the <unk> side is the <unk> talk.
Sean Dargan: As well, we're also deploying AI there to redefine the enterprise.
Sean Dargan: Collaboration experience.
Sean Dargan: And the same is also true for <unk>.
Sean Dargan: Where we're deploying AI to extend that it's now currently mostly used as an obligation up it has $170 million do you use in China, but as we more deeply integrate AI.
Sean Dargan: <unk> into lifestyle, and local services and that will increase.
Sean Dargan: Time spent as well.
Sean Dargan: Okay.
Sean Dargan: Okay.
Next question please.
Speaker Change: Thank you. Your next question comes from Kenneth Fong with UBS. Please go ahead.
Kenneth Fong: Hi, Good evening management, Thanks for taking my questions and congrats on the strong results.
Speaker Change: I have a question about the <unk>.
Speaker Change: E Commerce site.
Speaker Change: So we see that revenue has been very strong and accelerating for both AI DC. So at CMO for CTG. So can management share with US what has changed and the key initiated ahead for PDGF ITC.
Speaker Change: Financially we see the margin for TPG has also stabilized so how should we think about the trend ahead.
Speaker Change: And for ITC.
Speaker Change: We target for profitability next year, so shorter term what are the key driver for driving profitability at <unk>.
Speaker Change: Longer term should we expect the international business being more profitable than domestic ones, giving it is less competitive. Thank you.
How kind of see a tissue and the <unk>.
Speaker Change: 200, <unk> competency to chew through the year.
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Speaker Change: Zero, New quickly co coordinator, Shawn Yue change a minimum of two years.
Speaker Change: Yes.
Speaker Change: I'll, let Nick go through different logo wins.
Speaker Change: Sure No woman clinicians Hangzhou coordinator attention online.
Glenn Solomon: Glenn Solomon <unk> general the functional Joshua.
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Glenn Solomon: Email me I, just want to come to the Unicorn truffle, so it won't be up without <unk>. So it's for sure the total.
Glenn Solomon: Oh I'm sorry.
Glenn Solomon: So once you start showing unfortunately, that's all I can do the phones will uphold the answer shortly.
Josh: Hi, Josh.
Josh: The Xiaomi Schindler's your Guangzhou, the more sure I mean, it cannot just ship them yet.
Josh: Great.
Speaker Change: I know you've got Houston.
Speaker Change: So you just want me Tricia the true.
Speaker Change: Yeah, and I'm a woman answer you.
Speaker Change: Sure Johan the Shanghai, Jean Michel you don't have a whole lot going on there.
Speaker Change: Yeah.
Speaker Change: So out of nowhere with each other.
Sure.
Speaker Change: When they want the tranche two of them will be our highest Shaw Mitchell Chan lingo should've been doing on the shelf to ensure women should that you all will remember Jon that you could yeah, hi, Joshua.
Speaker Change: On the shoulder.
Speaker Change: Thank you.
Speaker Change: There are quite a few questions there why don't I start with <unk>.
Speaker Change: Domestic e-commerce.
Speaker Change: Domestic e-commerce business.
Speaker Change: The strategy that we've been pursuing has been to enhance the user experience to make innovation and optimize optimization around user experience to achieve higher levels of stickiness and looking ahead to the coming.
Year.
Speaker Change: Year, we see potential to further.
Speaker Change: Achieve further user growth.
Speaker Change: By investing in users at the same time as you've said we've done a lot.
Speaker Change: To drive increased monetization.
Speaker Change: Recently, including among other things.
Speaker Change: Charging a payment processing fees, but we will continue to invest in enhancing the user experience as well as operate.
Speaker Change: <unk> the operating environment for our merchants and those things will continue to require investment. So overall, we're looking at Steve.
Speaker Change: Stabilizing market share, while enhancing the user experience and optimizing merchant operations efficiency.
Speaker Change: Oh, what's up with us I'm going to go quick.
Speaker Change: Hotel, which should have shrunk in Brooklyn.
Speaker Change: And so should the <unk> piece will be the year, when Mayo, Quadrangular, who I'm, hoping data John leadership P&I.
Speaker Change: No phone Carlos for the largest Sweden, which are the one that people will be awash or the way that genome kind of where you.
Speaker Change: Yeah.
Speaker Change: On behalf of <unk>.
Speaker Change: You're good John Lee the tissue.
Speaker Change: Goldman <unk> quick one are you going to zero.
Speaker Change: The pit Jose year women's like what should the quadrennial Woody man woman solar films.
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You got fusion and our media attention.
Speaker Change: So good job.
Speaker Change: John are you going to coordinate.
Speaker Change: Amongst them the quality and deal with the Jamba Yugo swing either you can mention.
Speaker Change: Okay.
Speaker Change: And I'll call them those ship one of the options are there as well.
Speaker Change: Whats element should you the syringe or Asia.
Speaker Change: European High hurdle.
Speaker Change: But not sure on the powertrain, yes, sure Youll do you women Huntsville catch on but you can leave now.
Speaker Change: Accordingly, the township, Juan <unk>, I'm gonna be corneal yingli.
Speaker Change: You can assume that a woman can happen then should slow down.
Speaker Change: Okay condo Joshua.
Speaker Change: The voting has begun to change to them.
Speaker Change:
Speaker Change: Secondly.
Speaker Change: In terms of our international E Commerce business. This is really an amalgamation of <unk>.
Speaker Change: Lots of different business models, including <unk> cross border as well as local platforms that we operate.
Speaker Change: But.
Overall as we've said, we expect to see a stable trend in our international business.
Speaker Change: The next few years.
Speaker Change: Working towards achieving profitability significant profitability.
Speaker Change: Scale.
Speaker Change: In our B to B to C business.
Speaker Change: As you know we've done a lot to optimize the business model and unit economics have increased very significantly.
Speaker Change: As we've said in over the next few quarters, you can expect to see significant increase in profitability.
Speaker Change: In some countries.
Speaker Change: We are working on collaborating with local platforms.
Speaker Change: Where it makes sense to do so and that is also beneficial to <unk>.
Speaker Change: Increasing our profitability.
Speaker Change: You asked in the long term if the international e-commerce business could be more profitable than our domestic ecommerce business.
Speaker Change: I don't think Thats something I can I can judge at this point what I can say is that at this particular point in time.
Speaker Change: Pathway to profitability in the international business is clear.
Speaker Change: Well I'll call it that tends to work with ISO New England take GTT literally the wind here let's.
Speaker Change: Let's say a TPG was challenged yoga, Jonathan Ghansham, what digital women Hiseq communicate adjourn shortly Cheng Cheng Cheetah mobile CL King County.
Speaker Change: This should help them, so cheap bandwidth hi, Shang Guang J.
Speaker Change: So core CECI scratchy due both let's say Q2 was the highest since that you could hold that you plan to hit total we do jobs that you won't do that.
Speaker Change: Yes, yes.
Speaker Change: Joseph Citi, Paul Claude you. The Healy we are all court challenge to 80, a VIP member County, <unk> pardon me that hu with tissue how much do you want me I'll try to hit in fact, you can wait till rooted action food is here you could tranquil can harm the firewall machinery, all three T. He assortment total digital media <unk> highest Germany.
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Speaker Change: Oh, and then Jake around Gainful Veda, Jacob <unk> Bancorp, Inc. Golf shot.
Speaker Change: Susan on the Shan Shan.
Speaker Change: Suddenly upon the champion gender entry that she doesn't want Michelle just a woman's archiving environments for sure. The EPS, so while I wish all of them with tissue to Italian.
Speaker Change: So tons of tissue on the debt.
Speaker Change: And Thats all it takes.
Speaker Change: Both the Shire parties in Shanghai <unk> Si.
Speaker Change: Two women Sunjata.
George: Hi, George to meet that challenge.
Speaker Change: TD <unk>, so it's actually a family of one year.
George: <unk> put on hold while I wish I could be done in the winter time.
George: So, leaving the charter Ashika showed slipping from that session density that you don't want hashana attending when Michelle Keefe at home routes that you wont see that yet <unk>.
George: There's some chatter in Shanghai in June.
George: See what I say, but hold key.
Toby: Thank you. This is Toby I'll take the question regarding margin on TTP.
Toby: As I think some firm has stated very clearly.
Speaker Change: The strategy for TPG.
Toby: Has been too.
Toby: First in achieving.
Toby: Healthy stable market share that's been the priority of investment for the past several quarters and indeed in this quarter.
Toby: Investing in enhancing user experience in acquiring new users as well listen our 88 VIP.
Toby: User group and those investments will continue.
Toby: Also we've integrated new payment methods as well, which is an important means also of.
Toby: Engaging with new users.
Toby: Of course, while making these investments we're also actively exploring ways to.
Toby: Increased revenues and we've done so with.
Toby: The software service fee as you've seen.
Toby: As well as with more intelligence are more intelligent marketing product Chang Chun toy or our Qs T, which is driving higher levels of monetization and what will continue.
Toby: To invest in those areas, while also seeking to increase monetization.
Toby: In those same ways, while paying a lot of attention to optimizing the business environment for merchants on the platform so margin as always.
Toby: Our balance between revenue and expenditure and we do remain in an investment stage as we have been and will continue to invest in enhancing user experience and acquiring new users.
Toby: Next question please.
Toby: Thank you.
Speaker Change: Next question comes from Robert Young with Goldman Sachs. Please go ahead.
Speaker Change: Thank you, Joe and even Toby and media.
Speaker Change: So further on the AI questions, we've seen the AI revenue a triple digit growth as we had mentioned for six quarters now so how should we quantify the size of that are we reaching kind of more substantial and a double digit mark here for AI. The reason is I want to know the implications for our cloud margins.
Speaker Change: Even that historically cloud business is at a very significant margin gap versus our the global cloud players. So as the mix shifts from public cloud to training and then now increasingly to influence how should we think about the growth and then more importantly, the cloud margin outlook for us.
Speaker Change: <unk> versus <unk>.
Speaker Change: Global periods and the longer term. Thank you.
Speaker Change: Sure on additional tier.
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Speaker Change: While Michigan's shins and cohort <unk> <unk> dose cohort and I will Miss you want their treaties on mute. So you think this one will be kind of a couple hundred of Twilio to help me out of our way when a cook with GSO EG the only challenging.
Speaker Change: Copa de Haan year wait at Kingsville quota, if EMEA modal Lasalle Kuwait is a woman until I saw say aig's for assistance under literally.
Speaker Change: Anyway, if I'm in women contact each Angola will I send you one more quick so you could see it at least it sounds to me that your capex.
Speaker Change: Capex that you got you got you and says Archie or Michelle 17 test year.
Speaker Change: To hit at a tall order.
Speaker Change: Toyota Unshell Cordoba software unitize annually.
Speaker Change: <unk> <unk> hundred <unk> zone. It is onward, Tom got you.
Speaker Change: Mr. Tao Xian da Chenzhou Lessor has a Sunday.
Speaker Change: Sanjay, what hey, young woman Judah Donkey the detriment versus how you ensure that you don't need Cano sur.
Speaker Change: That she'd hot <unk> and the highest equation D user he was always happy.
Speaker Change: Thanks for those questions Indeed, you're absolutely correct.
Speaker Change: Our AI related revenues.
Speaker Change: <unk> over 100% growth three digit growth for the sixth consecutive quarter.
Speaker Change: And customer demand for AI and related products continues to grow in fact that growth is turning out to be.
Speaker Change: Much higher than our original expectation and what we've seen in particular from the Spring Festival Chinese new year onward is an explosion in demand for.
Speaker Change: For inference in fact around 60% to 70% of the new demand that we're seeing now is for inference.
Speaker Change: So we expect that with this rapid expansion in demand we will.
Speaker Change: Grow our customer base.
Speaker Change: <unk> industry coverage across a wider range of sectors and all of that will certainly contribute to our higher levels of margin.
Speaker Change: In our.
Speaker Change: AI services.
Speaker Change: However, as I said earlier.
Speaker Change: We're committed to making the highest ever.
Speaker Change: Our historical investments in Capex in the coming three year period.
Speaker Change: And if you take those investments and amortize them over the coming years that will certainly have an impact on.
Speaker Change: Margin.
Speaker Change: A final point.
Speaker Change: I would expect that given the fierce competition in China and the different market dynamics here.
Speaker Change: The kind of margin that youll see in China will be somewhat different from what you will see internationally.
Speaker Change: So let me just you won't even see we.
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Speaker Change: How long do we shall cube.
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Speaker Change: Tons of Jupiter, you can suddenly Melissa you choose a hint that I spoke with mortality into FID on something out when we aren't seeing a woman Sega G thought.
Speaker Change: You're going to send you the capex the total way way liability woman that's empty in genotype <unk> for those who are likely more of a chance.
Speaker Change: And then your hall, which arguing or Egypt.
Speaker Change: So when you take a year, so women judah associated towards a bit more.
Speaker Change: You've heard me away.
Speaker Change: That one we couldn't do the cuckoo anyway for me. She said well you guys had a woman does 10 hitter.
Speaker Change: Thank you that hold with them, but.
Speaker Change: Yeah.
Speaker Change: The other thing I would say is the cloud is a business. That's characterized by both strong scale effects and strong network effects and the scale effects are particularly important at this stage as we're engaging in large capital investments building out.
Our hardware.
Speaker Change: With Capex.
Speaker Change: So the point is that as we achieve greater scale and acquire more customers will be able to better optimize the cost of this buildup.
Speaker Change: Next question please.
Speaker Change: Thank you. Your next question comes from U N Lau with Citic Securities. Please go ahead.
Speaker Change: And I'll hop.
Speaker Change: Joe Hudson, it industry that <unk> and <unk>.
Speaker Change: The LNG mentioned interested why would only box now.
Speaker Change: <unk> now on a hail of any TMA rounding Coca Cola tour now total.
Speaker Change: Total add a whole bunch of novel plenty of Honeywell Hudson.
Speaker Change: And the way that Eagle, who don't worry about it.
Speaker Change: Okay.
Speaker Change: Thank you management congratulations on the strong results in all the progress Youre, making around AI and my question has to do with shareholder returns I think we see this 2.07 billion U S dollars.
Speaker Change: Pardon me.
Speaker Change: $97 billion of dry powder for share buybacks I'm wondering if you can tell us.
Speaker Change: How that will be deployed given all of the progress that you intend to make around AI and the investments there.
Speaker Change: Uh huh.
Speaker Change: Great idea when tier and what that kind of a take home at that show.
Two decades, all adjourn good chapter Society meeting a critical not safe passage on the agenda of outstanding share reduced by seven 6%.
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<unk> <unk> could reduce <unk> outstanding shares stock actually helped us sustain will compensate so you will atrophy kind of dull women's <unk> downhole and leaching pond, I should say, making even reduce the <unk>. So you take that and go to court I shouldn't bother Eagle progress.
Speaker Change: Well in the December quarter as you know, we conducted a $1 3 billion in U S dollars of buybacks achieving.
Speaker Change: 0.6% net reduction in share count and during the first half of the fiscal year.
Speaker Change: Repurchased approximately $10 billion, achieving a 5% net reduction in share count over the last nine months. So as you can see we've already made very considerable progress with.
Speaker Change: With these share repurchases.
Tony: That's good woman say Jake this is Tony.
Tony: So young <unk>, so let's stay on it don't calculate budget towards share buyback convened weight carlita technical jobs. So it's actuation side, Tim and Luca took a tightening chairman Lu really near woman by the CEO in catastrophe bonds.
Tony: So the alcohol she believes the Duluth and negative two will ensure that <unk>.
Speaker Change: That's a negative to EMEA, one thing Joe Montella, Solaris <unk>. Some cheetah. He goes out so you negotiate a human woman Jed.
Tony: Ill ask Clint meeting soil softened undervalued.
Tony: As is common market practice for companies engaging in share repurchase programs of course, we will consider the current share price as we execute our share buyback program.
Tony: And that's why in the first six months you saw an accelerated pace of share repurchase as an example.
Tony: In the June quarter, we raised 5 billion U S dollars and debt financing and used the entirety of the proceeds for share buybacks and that was because at the time.
Tony: Price was only 80 U S dollars, which in our view is extremely undervalued right. So <unk> Shaikh our.
Tony: One then.
Tony: Well, that's an element I'm sure Youll.
Tony: Jacob Capital Management Committee will meet you could challenge going on because it took away the chunky Shirley Kyushu whaler Yaqing hard cycles, that's hung in tone.
Tony: So that's the Benson paid <unk> 70 to <unk> now called genetic achieved unchangeable and the doses that hung harder bluntly <unk> Hewson, who don't wait while.
Tony: While we like which is sunk we don't really break out the one more quick tissue young Hans Jacob Goosey.
Tony: Download Ultrashape Waco, Egypt toll roads that cotton founder year will tell you here from you might see some currently Bob.
Tony: As you know.
Tony: We have set up at the board level.
Tony: Capital Management Committee precisely for the purpose of optimizing capital allocation so as to enhance shareholder return the committee has been.
Tony: Providing strong management to shareholder return initiatives and we'll continue to do so and we will aim to continue to elevate shareholder returns through a combination of dividends or share buybacks as well of course as investment in high growth high potential areas.
Speaker Change: Well I can one more quickie shoot.
Speaker Change: So you won't have to take a woman the changing data could only bond and I took a downhole Jake.
Michael: Michael Let me add one Hudson Goku Javits OS now.
Michael: We saw a pizza in the San Diego to Kalo, Mcclung Hot idling or tissue.
Michael: Going forward, we will continue to deploy our cash effectively and optimally to enhance shareholder return.
Michael: And we will continue to execute share repurchases in accordance with the allocation in guidance given to us.
Michael: By the board of directors and with an eye on the share price.
Michael: Okay.
Michael: Next question please.
Michael: Thank you.
Speaker Change: Comes from Gary Yu with Morgan Stanley. Please go ahead.
Speaker Change: Hi, Thank you for the opportunity and congratulations on a strong set of results I have two questions both related to AI and cloud.
Speaker Change: The first one is I appreciate management comment about potentially.
Speaker Change: Presenting 50% of the global GDP.
Speaker Change: Cloud is important infrastructure.
Speaker Change: When we think about how we monetize this potential sizable market opportunity. Besides the infrastructure, which is represented by plough, how should we think about Alibaba strategy.
Speaker Change: Tap into to application or software layer.
Speaker Change: And could management comment more about the <unk>.
Speaker Change: Price adoption side, because we kind of understand the previous comment about.
Speaker Change: The consumer facing part including consumption and local services.
Speaker Change: And my second question is related to <unk>.
Speaker Change: Capex So our management comment about the next three years being the heaviest investment cycle in the past decade, how should we think about how quick.
Speaker Change: Alibaba plans to allocate in investment how much will be spent on chips.
Speaker Change: Civically, how should we think about the mix between spending on.
Speaker Change: In part chips from from U S as well as domestic chips and in the event offered.
Speaker Change: What restriction from the U S. How should we think about.
Speaker Change: Any contingent plan.
Speaker Change: In order to continue with the investment thank you.
Speaker Change: Yeah.
Speaker Change: Consequently, some potential.
Speaker Change: On year to <unk> 20.
Speaker Change: When she has.
Speaker Change: U T formula.
Speaker Change: Container.
Speaker Change: We don't want to ingest onshore AI OCA noncredit tissue type.
Speaker Change: Transfer with GDP of life insurance.
Speaker Change: Are you not sure Shunyata John cited Citrix shores.
Speaker Change: With some wins outside of Xiaomi.
Shanghai, the Formula to true Love Ctrip, So should <unk> to assure that you want you want women Sameer on that side.
Speaker Change: FEP ranch PNG format and uncle.
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Speaker Change: The.
Speaker Change: The argument in us granting you too.
Speaker Change: So the total Capex before me contact lens on your <unk> question.
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Speaker Change: Towards that would be two to 330, you can see let's.
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Speaker Change: But in the AI agent that she uses door and door to your neighborhood that has yoshito whaler debates with Jim Benson.
Speaker Change: What I would do it with MTN says you got your shutdowns.
Speaker Change: The aging of course, LNG, who can tell you the alcohol I found towards UNH essentially since the lingo Ponzu Syngenta bundled here one thing you can't wait until now that you took on dual or ethical EMEA.
Speaker Change: Today here, Ron Yeah, So I'll start with <unk> plus <unk> in anyway, if I may one more contracts.
Speaker Change: No we wont do the whaler that's year uses at thinking as Amin does each year, what would you do that she assured wholesale shutdown towards the east here also we can do that you couldn't do digital today, Yeah, Sharon <unk> Watson can do other stakeholders ECM range, yes.
Speaker Change: But the yard Purion, yeah, she used to play a good chance that they hold its Jim did you switch your critical note.
Speaker Change: Hello, I'm a day halfway done zone that enable calculates what the hit you took on dosing going gotcha. Okay. You don't always answer alien advances that Indians aren't you truly do let's say that youll see share gains in the AI age in the <unk> holiday eager you can see also.
Speaker Change: It also one month I think is how you shutdown due this year Youre youll fit on total Navy seal Quad Zilla G&A placebo, how does a Hollywood title Sheila you hear seal had emotion bushel Celesio partners this year.
Speaker Change: Does your bond passages in concordance is Shelby.
Speaker Change: Well I enjoyed it.
Speaker Change: So here is where the TCE or do some good Sierra against this <unk> is almost the top dose that you got to that of being good.
Speaker Change: Well. Thank you for those questions as we said we definitely see some.
Speaker Change: Very clear opportunities for.
Speaker Change: The application of AI on the <unk> side, which I've already mentioned when it comes to the <unk> side, there are a host of different opportunities.
Speaker Change: For Alibaba cloud intelligence.
Speaker Change: To capture I think as a general remark.
Speaker Change: SaaS.
Speaker Change: Software going forward will become more and more AI agent <unk>.
Speaker Change: Driven in.
Speaker Change: In other words, a lot of the internal systems employed by enterprises in the future will become more like a network of mud.
Speaker Change: Multiple AI agents to collaborate and call on one another to provide services, including to assist the enterprise even in.
Speaker Change: Important decision, making.
Speaker Change: Along with that there will also be a lot of opportunities to upgrade not just the software or the SaaS layer, but also the underlying supporting paas layer.
Speaker Change: Another really good example, I think is Ding talk which is our flagship enterprise collaboration product I think going forward with AI.
Speaker Change: A lot of functionality on.
Speaker Change: I don't think target will be achieved through natural language.
Speaker Change: Interaction and.
Today's CRM and ERP type systems will become more like databases.
Speaker Change: That feed in so enterprise meetings and decision making.
Speaker Change: Can all be handled through natural language on.
Speaker Change: Ding talk.
Speaker Change: Again, there are many opportunities for the integration of all kinds of agents into.
Speaker Change: <unk> talk.
Speaker Change: Another important thing to notice that a lot of companies internally have huge amounts.
Speaker Change: Proprietary data in their own proprietary.
Speaker Change: In house processes, and they'll need to leverage AI agents in order to enhance.
Speaker Change: The efficiency.
Speaker Change: Those kinds of processes, so I think overall.
AI will be able to empower.
Speaker Change: Reshaped all kinds of corporate software corporate obligations and this is a huge opportunity.
Speaker Change: How soon you saw the Tiago.
Speaker Change: While much is a turnkey the capex the total it's Eva I'll call them in the IDC D. Amanda Tim Go survey, the little more by the <unk> or.
Speaker Change: <unk> found them into each year going towards <unk> lending like donkeys Shymkent. She is a woman diagonal is entities with Cessna it into a holler <unk> lingo choose to pay those aren't doing unless you can get that to the cheese was a woman challenging southern goal.
Speaker Change: All in the tickets into the mobile platform and then go into June and goes to the here in Wilmington to the AI.
Natalia: Thank you Natalia.
Speaker Change: Onto the other part of your question regarding Capex.
Natalia: In order to give you.
Natalia: A breakdown as to what percentage of our Capex will go into an area that would really require giving you a detailed breakdown of the cost of all the different equipment in our RBC. So I don't think I am really at liberty to get into that kind of detail with you. What I can tell you is that the way we've designed our cloud very deliberately.
Natalia: Has to be compatible with a whole range of.
Natalia: All kinds of different chips, so no matter, what kind of policy changes may be forthcoming in the future that will not.
Natalia: Not affect us I mean, it will certainly be able to.
Natalia: <unk> our investment plan.
Due to the time limit we will now take the last question.
Thank you.
Speaker Change: Question comes from <unk> Shah with Nomura. Please go ahead.
Natalia: Hey.
Speaker Change: Actual CLEC.
Natalia: Hello, everyone.
Natalia: <unk> got plenty of it.
Natalia: And then.
Natalia: Speaking directly to the kind of Ottawa in time.
Natalia: Art jewelry fountain asset portfolio in EMEA hit as hard.
Natalia: Youll cool LMR general and consistent data hit those kind of accumulation.
Natalia: So our total laser Doug.
Natalia: Divestments and high <unk>.
Natalia: That to me.
Natalia: Yes sure.
Speaker Change: What triggered the need is there anything Shanghai auto show that sensor AI the unusuals in downtown Los Angeles at Homegoods and <unk>.
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Natalia: Sure Tom.
Natalia: And I think that's.
Natalia: Families Steakhouse at BR <unk>.
Speaker Change: Im looking at it would be helpful to your client now we align Audrey outlays cheerfully atg Joseph laser scanning of the dolphin.
Natalia: Hi.
Natalia: <unk> got more genes.
Natalia: Thank you you've got the although the industry Council.
Natalia: Okay.
Speaker Change: Thanks management for taking my questions I have I have two questions. My first is for.
Speaker Change: Following your successful divestment of physical retail assets in time and Sun art.
Speaker Change: I'm wondering if you have any plans for potential future divestment of other assets, including fresh of who you are.
Speaker Change: <unk> and <unk>.
Speaker Change: My second question coming back to cloud it seems that a lot of the revenue growth that's being driven.
Speaker Change: In cloud.
Speaker Change: As a result of demand for our compute associated with uptake and AI, but im wondering if theres. In addition to that any future monetization pathway.
Speaker Change: Monetization model for 'twenty the use of the model itself is there any way to generate revenue and profits from our model not just from the compute.
Speaker Change: And.
Speaker Change: As Eddie said, the Chinese AI market seems to be rather homogeneous in the sense that there's a lack of differentiation across the different models do you think that will continue to be the case in the future will there come a day when there might just be one or two.
Speaker Change: Big models in the market.
Speaker Change: A large market share.
Speaker Change: <unk> oil well with adding the depo <unk>, Eddie quickly to India, India findings.
Speaker Change: You know when youre going to be take or militia Fe, Cushing <unk> and <unk>.
Speaker Change: CECO Twitch, Hulu, India was challenging so synthetically kind of double Mahesh.
Speaker Change: <unk> <unk> now <unk> Cushing it hits is heading towards now Kochi digitally manage at igo should take a shallow FMT to E mail them.
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Speaker Change: China towards Lasalle when Mediatek <unk> connect launches how are you getting some cotton valley here, one we hit towards the Teng Shashi.
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Speaker Change: So call some legal challenge Symphony or judge it a challenge year, Todd the judge not only to find that Keith Cheung Kita, who didn't go the way of our challenging what Michelle Qi Hamster, Scotland.
Speaker Change: Thank you. This is Toby I'll take the first part of the question and then hand over to Eddie.
Speaker Change: So as you know.
Speaker Change: We have been strictly implementing our strategy of focusing on our core businesses and exiting our non core businesses.
Speaker Change: And so it's been announced in the December quarter.
Speaker Change: We completed the sale and full of Sun art and in time, and we have already passed anti monopoly reviews. So we expect to complete those transactions either in the March quarter or in the June quarter.
Speaker Change:
Speaker Change: We will continue to look for opportunities to exit.
Speaker Change: Our non non strategic minority owned assets and Youll continue to see announcements.
Speaker Change: Coming forth as we go forward.
Speaker Change: And in the future, we will be focusing as we have been on our core businesses.
Speaker Change: We'll be looking at.
Speaker Change: The assets in which we're invested and exiting as I say, the noncore ones, but in respect of other assets will be looking for ways to tap into their business value and to see that better value better reflected in the valuation of Alibaba group and I think fresh up which you mentioned is a really good example of that fresh upwards business Thats achieved.
Speaker Change: Very good growth very good expansion, it's achieved very good profitability and it's an excellent example of.
Speaker Change: An innovative business model that integrates online and offline retail so given its success no. We don't have any plan to sell fresh paper, but we would certainly have and she can open attitude for example to introducing a strategic investor or other solar approaches that could enhance the value of <unk>.
Speaker Change: <unk> and in particular result in value be better reflected in the valuation of the Alibaba groups. So this is something that needs further exploration going forward.
Speaker Change: Uh huh.
Speaker Change: Hello.
Speaker Change: Well Michel Theyre already in the solar tons ounces Chiseller, Eli you Cook will fit on changing that.
Speaker Change: Aia's and one time in the Chinese usual.
Speaker Change: Woman Tony emotion she says.
Speaker Change: Well, mostly U K on the motion that is being put in there so you're going to be a minimal sheet.
Speaker Change: Women they are women.
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Speaker Change: So hopefully the chico's Soviet API.
Don I shouldn't do you assume that as or sulfate API, it's hung out in <unk>.
Speaker Change: Sure Doug Michels, you can see the most in need of securities in <unk> either.
Speaker Change: When I look over the way that a couple of the show the dichotomy that you could tease out what Michel again, So you got more in cities, whether you've got the AGM post the API Solvay, but let's take the pharmacy, the heidrick way with Sendai Digger silliman that easier.
Speaker Change #100: Yeah, Dan what Judah Youll you told me you say, you've got KVM looking well my Celgene.
Speaker Change #100: The shutdown of Autoclave, Arthur do you them in a KVM margin should kind of al-qaeda chaser mortgage holders, who have not had the eagle people from cohort shanda, whereas here in the us.
Speaker Change #100: <unk>.
Speaker Change #101: Good evening and good luck.
Speaker Change #101: Tony you, Tony the Yens and walking Desama shall we say hub.
Speaker Change #101: The only way how you got it.
And yet.
Speaker Change #103: So on the five year, so young woman does Tony the API at a cookbook. She says to me that the only send down toward that she thought greensand attempting shuttle just normal candela Yougov <unk> co.
Speaker Change #103: <unk> also there you go you can show Google So your modem to understand what you're telling me you see them being <unk> $3000 order with us.
Speaker Change #103: In the Sanya most of that sort. So you can see it I'm Toni <unk>.
Speaker Change #103: I'm talking on the goods was in Brooklyn.
Eddie: Thanks. This is Eddie let me take the other part of that question.
Speaker Change #103: So yes.
The growth the robust growth that we're seeing in cloud revenue is largely being driven by huge customer demand for.
Speaker Change #103: For AI products.
Speaker Change #103: Our churn when model is an open source product, but that does not necessarily mean that it is provided free of charge.
Speaker Change #103: In fact, we do charge.
Speaker Change #103: For access to the model.
Speaker Change #103: The API on <unk>.
Speaker Change #103: Our platform of course, we're not.
Speaker Change #103: The revenues that we create that were are relatively low.
Speaker Change #103: But as the models.
Speaker Change #103: Improve become more powerful is the capabilities become more sophisticated.
Speaker Change #103: Certainly possible that we could charge.
More for the use of the models.
Speaker Change #103: But I should also say that Q1 is an open source model, which means that a lot of developers are using it.
Speaker Change #103: As a foundation a model on which to develop their own vertical models in their own applications.
Speaker Change #103: Therefore, only natural that they will deploy those models those applications on Alibaba cloud because thats the most efficient way.
Speaker Change #103: To do it.
Speaker Change #103:
Speaker Change #103: Thirdly.
Speaker Change #103: I'd also say that when.
Speaker Change #103: Customers are accessing our Q1 model or through the APR.
Speaker Change #103: A lot of opportunities for us to cross sell to them other of our cloud offerings. It's a really excellent example of cross selling opportunity. So although Q1 in and of itself is not driving it may not drive huge revenues. It's a very very important part of our overall cloud offering that will help to drive overall.
Speaker Change #103: Cloud revenue.
Speaker Change #103: Uh huh.
Speaker Change #104: It seems like you're going to use AI and Tom listen this is a good year.
Speaker Change #104: Uhm, good that AI, Tom listen, it's useful has had quite a sort of a data items I'd say, yes. So and this is an anthology. So you will do the chip <unk> with ITC that it's all machines are kind of as you hired she said I kind of would you say.
Speaker Change #104: He is with a teetotal machines on me, a little who conduct to the Doctor. That's how would you size. The amendment the amendment of the Asia.
Speaker Change #104: That's the one Kendall <unk> <unk> AI.
Speaker Change #104: So those are deep cecos trailing motion if you will mention when you boil equity trades of the treaty marking department that's useful.
Speaker Change #104: Good idea on what kind of that whole shingly Antigua.
Speaker Change #104: With your time, so you're morphing thinks about it.
Speaker Change #104: And then of course, you've seen Google put on the hunger since it's seen with Honda C or what else would you conduct <unk> Honda So Honda Creek create sort of Colombia.
Speaker Change #104: Allow me a quick handoff Ingo you fit under put on Todd Daniels articles with OCA in Antarctica.
Speaker Change #105: Tencent fit under the ECL charge outs at a point yet to hear Tom the other jobs that of Colombia, what Yung Kim will outweigh your phase <unk>. So I am watching what the trades are emerging and then go to hosting Draglines DSO woman condo rely or May look in cabinets and type you are founded on the Ukraine.
Speaker Change #106: Finally on your last question, which had to do with the future market landscape for AI and China. This is a period of time right now where things are iterating and developing rapidly and at the same time.
Speaker Change #106: It's very early days in the development of AI. So I, just don't think it's possible to charge what the end game.
Speaker Change #106: We'll look like what I can tell you.
Speaker Change #106: As the trends that we're seeing today as I've said the gap.
Speaker Change #106: Between different foundation models today is narrowing.
Speaker Change #106: I think that.
Speaker Change #106: Going forward you can expect to see a lot of demand.
Speaker Change #106: Around post training, so thinking of models like open AI or one.
Speaker Change #106: Deep seek the reasoning models as well as the reasoning model of Q1 that we will be releasing shortly a lot of the demand will be around post training to customize those models adopt them to different sectors different use cases.
Speaker Change #106: To adapt them to private datasets and I think that there is a huge market potential for that kind of post training I think there's also lots of opportunities to create value for a whole range of different companies large.
Speaker Change #106: And small.
Speaker Change #106: All of these models are specialized models the vertical models I've referenced will all need to be hosted on cloud. So that's why we are very excited and confident in the prosperous development of an open cloud ecosystem.
Speaker Change #106: Okay.
Speaker Change #106: Thanks Eddie.
Speaker Change #106: <unk>.
Hey session of today's earnings call. Thank you very much for joining US today, we look forward to speaking with you soon thank you.
Speaker Change #106: That does conclude our conference for today. Thank you for participating you may now disconnect.
Speaker Change #106: Yes.
Speaker Change #106: <unk>.
Speaker Change #106: Okay.
Speaker Change #106: Okay.
Speaker Change #106: Yeah.
Speaker Change #106: Okay.
Speaker Change #106: Okay.
Speaker Change #106: Okay.
Speaker Change #106: Okay.
Speaker Change #106: Yeah.