Q2 2026 Alibaba Group Holding Ltd Earnings Call

Speaker #1: After management's prepared remarks, there will be a Q&A session. I would now like to turn the call over to Lydia Liu, Head of Investor Relations of Alibaba Group.

Speaker #1: Please go

Lydia Liu: Thank you. Good day, everyone. Welcome to our September Quarter 2025 earnings conference call.

Speaker #2: Thank you. Good day, everyone. Welcome to our September quarter 2025 earnings conference call. With me today from Alibaba are Jiuzhai Chairman Eddie Wu, Chief Executive Officer Toby Xu, Chief Financial Officer, and Jiang Fan, Chief Executive Officer of Alibaba E-commerce Business Group.

Speaker 1: With me today from Alibaba are: Joseph Tsai, Chairman, Eddie Liu, Chief Executive Officer, Toby Xu, Chief Financial Officer, and Jiang Fan, Chief Executive Officer of Alibaba E-Commerce Business Group. I would like to remind you that this call is also being webcast on our corporate website. A replay of the call will be available on our website later today. Just a few forward-looking statements before we begin today. Today's discussions may contain forward-looking statements, particularly statements about our business and financial results that are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the Safe Harbor statements that appear in our press release and investor presentation provided today. Please note that certain financial measures that we use on this call are expressed on a non-GAAP basis.

With me today from Alibaba are: Joseph Tsai, Chairman, Eddie Liu, Chief Executive Officer, Toby Xu, Chief Financial Officer, and Jiang Fan, Chief Executive Officer of Alibaba E-Commerce Business Group. I would like to remind you that this call is also being webcast on our corporate website. A replay of the call will be available on our website later today. Just a few forward-looking statements before we begin today. Today's discussions may contain forward-looking statements, particularly statements about our business and financial results that are subject to risks and uncertainties, which could cause actual results to differ materially from those contained in the forward-looking statements. Please refer to the Safe Harbor statements that appear in our press release and investor presentation provided today. Please note that certain financial measures that we use on this call are expressed on a non-GAAP basis.

Speaker #2: I would like to remind you that this call is also being webcast on our corporate website. It will play off the call and will be available on our website later today.

Speaker #2: Just a few forward-looking statements before we begin today. Today's discussions may contain forward-looking statements, particularly statements about our business and financial results, that are subject to risk and uncertainties, which could cause actual results to defer materially from those contained in the forward-looking statements.

Speaker #2: Please refer to the safe harbor statements that appear in our press release and investor presentation provided today. Please note that certain financial measures that we use on this call are expressed on a nine-gap basis.

Speaker #2: Our gap results and reconciliations of gap to nine-gap measures can be found in our earnings press release. With that, I'm going to turn the call over to Eddie.

Speaker 1: Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. With that, I'm going to turn the call over to Eddie. ?????? Welcome to Alibaba Group's quarterly earnings call. Over the past quarter, Alibaba delivered steady and healthy growth. Our total revenue increased 15% year over year, excluding Sun Art and Intime. Our continued investment in core businesses is yielding results, with China e-commerce CMR growing 10% and cloud intelligence revenue rising 34%. Let me walk you through the latest developments across our AI+ Cloud and consumption businesses. Sustained strong demand for AI and rising usage of public cloud drove Alibaba Cloud's 34% revenue growth this quarter, while revenue from external customers accelerated by 29%. AI-related products continued to post triple-digit year-over-year growth for the ninth consecutive quarter. In the cloud computing market, two major trends are becoming increasingly apparent.

Our GAAP results and reconciliations of GAAP to non-GAAP measures can be found in our earnings press release. With that, I'm going to turn the call over to Eddie.

Eddie Liu: ?????? Welcome to Alibaba Group's quarterly earnings call. Over the past quarter, Alibaba delivered steady and healthy growth. Our total revenue increased 15% year over year, excluding Sun Art and Intime. Our continued investment in core businesses is yielding results, with China e-commerce CMR growing 10% and cloud intelligence revenue rising 34%. Let me walk you through the latest developments across our AI+ Cloud and consumption businesses. Sustained strong demand for AI and rising usage of public cloud drove Alibaba Cloud's 34% revenue growth this quarter, while revenue from external customers accelerated by 29%. AI-related products continued to post triple-digit year-over-year growth for the ninth consecutive quarter. In the cloud computing market, two major trends are becoming increasingly apparent.

Speaker #1: ??????welcome to Alibaba Group's quarterly earnings call. Over the past quarter, Alibaba delivered steady and healthy growth. Our total revenue increased 15% year over year, excluding SunArt and Intel.

Speaker #1: Core businesses are yielding results, with our continued investment in 10% and cloud intelligence, while China e-commerce CMR is seeing revenue rise by 34%. Let me walk you through the latest developments across our AI plus cloud and consumption businesses.

Speaker #1: Sustained strong demand for AI and rising usage of public cloud drove Alibaba's cloud revenue growth of 34% this quarter, while revenue from external customers accelerated by 29%.

Speaker #1: AI-related products continued to post triple-digit year-over-year growth for the ninth consecutive quarter. In the cloud computing market, two major trends are becoming increasingly apparent.

Speaker #1: First, as AI applications scale, more developers and enterprise customers are choosing vendors with full-stack AI technology portfolios. Second, customers are deepening and broadening their use of AI, which is significantly increasing demand for compute, storage, and other traditional cloud services.

Speaker 1: First, as AI applications scale, more developers and enterprise customers are choosing vendors with full-stack AI technology portfolios. Second, customers are deepening and broadening their use of AI, which is significantly increasing demand for compute, storage, and other traditional cloud services. Together, these forces are accelerating revenue growth driven by external customer demand. This quarter, we continued to strengthen our full-stack AI capabilities, spanning high-performance AI infrastructure, foundation models, and AI development frameworks. Our flagship model, Qwen Max, ranks among the global leaders in benchmarks for real-world coding tasks, agent tool use capabilities, and other specialized valuations. Our full-stack AI capabilities are now a defining competitive advantage. Alibaba Cloud is gaining market share across multiple segments. In the hybrid cloud market, Alibaba Cloud has become a key player, growing more than 20% year over year, outpacing the industry, and steadily expanding market share.

First, as AI applications scale, more developers and enterprise customers are choosing vendors with full-stack AI technology portfolios. Second, customers are deepening and broadening their use of AI, which is significantly increasing demand for compute, storage, and other traditional cloud services. Together, these forces are accelerating revenue growth driven by external customer demand. This quarter, we continued to strengthen our full-stack AI capabilities, spanning high-performance AI infrastructure, foundation models, and AI development frameworks. Our flagship model, Qwen Max, ranks among the global leaders in benchmarks for real-world coding tasks, agent tool use capabilities, and other specialized valuations. Our full-stack AI capabilities are now a defining competitive advantage. Alibaba Cloud is gaining market share across multiple segments. In the hybrid cloud market, Alibaba Cloud has become a key player, growing more than 20% year over year, outpacing the industry, and steadily expanding market share.

Speaker #1: Together, these forces are accelerating revenue growth driven by external customer demand. This quarter, we continued to strengthen our full-stack AI capabilities, spanning high-performance AI infrastructure, foundation models, and AI development frameworks.

Speaker #1: Model QN3 Max ranks among the global flagship leaders in benchmarks for real-world coding tasks, agent tool use capabilities, and other specialized valuations. Our full-stack AI capabilities are now a defining competitive advantage.

Speaker #1: Alibaba Cloud is gaining market share across multiple segments. In the hybrid cloud market, Alibaba Cloud has become a key player, growing more than 20% year over year, outpacing the industry and steadily expanding market share.

Speaker #1: Our financial cloud business is also growing faster than the market, with market share continuing to rise. In China's AI cloud market, we're also the clear leader, with a market share larger than the combined total of the second to fourth largest providers.

Speaker 1: Our financial cloud business is also growing faster than the market, with market share continuing to rise. In China's AI cloud market, we are also the clear leader, with a market share larger than the combined total of the second to fourth largest providers. Recently, businesses such as the NBA, Marriott, China UnionPay, and Bosch have partnered with Alibaba Cloud on AI initiatives. Last week, we officially launched the Qwen App, which aims to be the most advanced personal AI assistant powered by our latest models. In the first week of its public beta, the Qwen App has already surpassed 10 million in new downloads. The launch of the Qwen App marks Alibaba's commitment to both AI for enterprise and AI for consumer. In enterprise-focused AI, our goal is to build a world-leading full-stack AI provider serving businesses across all industries.

Our financial cloud business is also growing faster than the market, with market share continuing to rise. In China's AI cloud market, we are also the clear leader, with a market share larger than the combined total of the second to fourth largest providers. Recently, businesses such as the NBA, Marriott, China UnionPay, and Bosch have partnered with Alibaba Cloud on AI initiatives. Last week, we officially launched the Qwen App, which aims to be the most advanced personal AI assistant powered by our latest models. In the first week of its public beta, the Qwen App has already surpassed 10 million in new downloads. The launch of the Qwen App marks Alibaba's commitment to both AI for enterprise and AI for consumer. In enterprise-focused AI, our goal is to build a world-leading full-stack AI provider serving businesses across all industries.

Speaker #1: Recently, businesses such as the NBA, Marriott, China UnionPay, and Bosch have partnered with Alibaba Cloud on AI initiatives. Last week, we officially launched the QN app, which aims to be the most advanced personal AI assistant powered by our latest models.

Speaker #1: In the first week of its public beta, the QN app has already surpassed 10 million new downloads. The launch of the QN app marks Alibaba's commitment to both AI for enterprise and AI for consumer.

Speaker #1: In enterprise-focused AI, our goal is to build a world-leading full-stack AI provider serving businesses across all industries. For consumers, we aim to build native AI-first applications by leveraging our best-in-class models and Alibaba's extensive ecosystem.

Speaker 1: For consumers, we aim to build native AI-first applications by leveraging our best-in-class models and Alibaba's extensive ecosystem. On the one hand, Qwen Max's intelligence and world-class tool use capabilities, combined with Alibaba's rich consumer and lifestyle use cases, contributed to exceptional user retention in the Qwen app's beta release. We believe this is the right moment to scale our consumer AI efforts. On the other hand, the synergy between AI and the broader Alibaba ecosystem is a powerful multiplier. Alibaba is the only company in China with both a leading large model and extensive lifestyle and commerce use cases. Qwen will gradually integrate e-commerce, map navigation, local services, and more, becoming an AI-powered entry point for everyday life. With AI innovation and ecosystem collaboration reinforcing each other, we're confident in our ability to deliver substantial user value.

For consumers, we aim to build native AI-first applications by leveraging our best-in-class models and Alibaba's extensive ecosystem. On the one hand, Qwen Max's intelligence and world-class tool use capabilities, combined with Alibaba's rich consumer and lifestyle use cases, contributed to exceptional user retention in the Qwen app's beta release. We believe this is the right moment to scale our consumer AI efforts. On the other hand, the synergy between AI and the broader Alibaba ecosystem is a powerful multiplier. Alibaba is the only company in China with both a leading large model and extensive lifestyle and commerce use cases. Qwen will gradually integrate e-commerce, map navigation, local services, and more, becoming an AI-powered entry point for everyday life. With AI innovation and ecosystem collaboration reinforcing each other, we're confident in our ability to deliver substantial user value.

Speaker #1: On the one hand, QN3 Max's intelligence and world-class tool use capabilities, combined with Alibaba's rich consumer and lifestyle use cases, contributed to exceptional user retention in the QN app's beta release.

Speaker #1: We believe this is the right moment to scale our consumer AI efforts. On the other hand, the synergy between AI and the broader Alibaba ecosystem is a powerful multiplier.

Speaker #1: Alibaba is the only company in China with both a leading large model and extensive lifestyle and commerce use cases. QN will gradually integrate e-commerce, map navigation, local services, and more, becoming an AI-powered entry point for everyday life.

Speaker #1: With AI innovation and ecosystem collaboration reinforcing each other, we're confident in our ability to deliver substantial user value. In consumption, we continue to deepen collaboration across businesses, and the benefits of our large integrated platform are becoming increasingly evident.

Speaker 1: In consumption, we continue to deepen collaboration across businesses, and the benefits of our large integrated platform are becoming increasingly evident. This quarter, China e-commerce CMR grew 10%. Our quick commerce business saw significant improvement in unit economics, with greater fulfillment efficiency, stronger user retention, higher average order value, and expanding scale. The growth of quick commerce business contributed to rapid growth in Taobao App's monthly active consumers, and supported CMR expansion. Brands on Tmall are also accelerating their adoption of on-demand retail. As of 31 October 2023, approximately 3,500 brands on Tmall have onboarded their offline stores to our quick commerce business. Going forward, we will further enhance synergy between quick commerce and the broader Alibaba ecosystem, continue improving unit economics, and meet consumers' fast-growing demand for immediate access to diverse products and services. On 1 October 2023, AMAP's daily active users reached a historical high of 360 million.

In consumption, we continue to deepen collaboration across businesses, and the benefits of our large integrated platform are becoming increasingly evident. This quarter, China e-commerce CMR grew 10%. Our quick commerce business saw significant improvement in unit economics, with greater fulfillment efficiency, stronger user retention, higher average order value, and expanding scale. The growth of quick commerce business contributed to rapid growth in Taobao App's monthly active consumers, and supported CMR expansion. Brands on Tmall are also accelerating their adoption of on-demand retail. As of 31 October 2023, approximately 3,500 brands on Tmall have onboarded their offline stores to our quick commerce business. Going forward, we will further enhance synergy between quick commerce and the broader Alibaba ecosystem, continue improving unit economics, and meet consumers' fast-growing demand for immediate access to diverse products and services. On 1 October 2023, AMAP's daily active users reached a historical high of 360 million.

Speaker #1: This quarter, China e-commerce CMR grew 10%. Our quick commerce business saw significant improvement in unit economics, with greater fulfillment efficiency, stronger user retention, higher average order value, and expanding scale.

Speaker #1: The growth of quick commerce business contributed to rapid growth in Taboo apps' monthly active consumers and supported CMR expansion. Brands on Tmall are also accelerating their adoption of on-demand retail as of October 31.

Speaker #1: Approximately 3,500 brands on Tmall have onboarded their offline stores to our quick commerce business. Going forward, we will further enhance synergy between quick commerce and the broader Alibaba ecosystem, continue improving unit economics, and meet consumers' fast-growing demand for immediate access to diverse products and services.

Speaker #1: On October 1, AMAP's daily active users reached a historical high of 360 million. In September, we launched the AMAP Street Stars feature, which has significantly boosted user engagement.

Speaker 1: In September, we launched the AMAP Street Stars feature, which has significantly boosted user engagement. In October, AMAP Street Stars averaged more than 70 million daily active users, with average daily user reviews more than triple the amount of the same period last year, indicating strong future growth potential. AMAP Street Stars has built a trust-based rating system for local offline services using user-consented metrics, such as the user's credit rating. We believe that enhancing consumer trust is essential to strengthening consumer confidence, enabling merchants to focus on operations, while giving consumers greater peace of mind, supporting the healthy and sustainable growth of the local offline services sector. Looking ahead, we'll continue investing decisively in our two core strategic pillars: AI+ Cloud, and consumption.

In September, we launched the AMAP Street Stars feature, which has significantly boosted user engagement. In October, AMAP Street Stars averaged more than 70 million daily active users, with average daily user reviews more than triple the amount of the same period last year, indicating strong future growth potential. AMAP Street Stars has built a trust-based rating system for local offline services using user-consented metrics, such as the user's credit rating. We believe that enhancing consumer trust is essential to strengthening consumer confidence, enabling merchants to focus on operations, while giving consumers greater peace of mind, supporting the healthy and sustainable growth of the local offline services sector. Looking ahead, we'll continue investing decisively in our two core strategic pillars: AI+ Cloud, and consumption.

Speaker #1: In October, AMAP Street Stars averaged more than 70 million daily active users, with average daily user reviews more than triple the amount of the same period last year, indicating strong future growth potential.

Speaker #1: AMAP Street Stars has built a trust-based rating system for user-consented metrics, such as the user's credit rating. We believe that enhancing consumer trust is essential to strengthening consumer confidence, enabling merchants to focus on operations while giving consumers greater peace of mind, and supporting the healthy and sustainable growth of the local offline services sector.

Speaker #1: Looking ahead, we'll continue investing decisively in our two core strategic pillars: AI plus cloud and consumption. We will advance both enterprise and consumer-focused AI, unlock deeper synergies across Alibaba's businesses, and use these engines to drive Alibaba's long-term growth and carry the company to the next level.

Speaker 1: We will advance both enterprise and consumer-focused AI, unlock deeper synergies across Alibaba's businesses, and use these engines to drive Alibaba's long-term growth and carry the company to the next level. Thank you. I will now hand over to Toby. Thank you, Eddie. We are continuing our focus and discipline on AI+ Cloud and consumption, and we see strong momentum from these strategies, with gains in technology, market share, consumers, and user engagements. Now, let's look at the financial results. On a consolidated basis, total revenue was RMB 247.8 billion. Excluding revenue from Sun Art and Intime, revenue on a like-for-like basis would have grown by 15% year over year.

We will advance both enterprise and consumer-focused AI, unlock deeper synergies across Alibaba's businesses, and use these engines to drive Alibaba's long-term growth and carry the company to the next level. Thank you. I will now hand over to Toby.

Speaker #1: Thank you. I will now hand over to

Speaker #1: Toby. Thank you, Eddie.

Toby Xu: Thank you, Eddie. We are continuing our focus and discipline on AI+ Cloud and consumption, and we see strong momentum from these strategies, with gains in technology, market share, consumers, and user engagements. Now, let's look at the financial results. On a consolidated basis, total revenue was RMB 247.8 billion. Excluding revenue from Sun Art and Intime, revenue on a like-for-like basis would have grown by 15% year over year.

Speaker #2: We are continuing our focus and discipline on AI, plus cloud and consumption. We see strong momentum from these strategies, with gains in technology, market share, consumers, and user engagements.

Speaker #2: Now, let's look at the financial results. Our consolidated total revenue was RMB 247.8 billion. Excluding revenue from Sunlar and Intime, revenue on a like-for-like basis would have grown by 15% year over year.

Speaker #2: Total adjusted EBITDA decreased 78%, primarily due to our strategic investments in quick commerce business to grow its user base and transaction volume, partly offset by double-digit revenue growth in China e-commerce group and cloud intelligence group, and improved operating efficiencies across various businesses including AIDC and Hujing DME.

Speaker 1: Total adjusted EBITDA decreased to 78%, primarily due to our strategic investments in quick commerce business to grow its user base and transaction volume, partly offset by double-digit revenue growth in China e-commerce group, cloud intelligence group, and improved operating efficiencies across various businesses, including AIDC and Hujing DME. Our GAAP net income was RMB 20.6 billion, a decrease of 53%, primarily attributable to the decrease in income from operations. Operating cash flow was RMB 10.1 billion, a decrease of RMB 21.3 billion compared to the same quarter last year. The year-over-year decrease was mainly attributed to our increased strategic investments in quick commerce business. Free cash flow was an outflow of RMB 21.8 billion, which reflected our significant investments in quick commerce business and AI+ Cloud infrastructure. We are reinvesting our free cash flow to create a winning quick commerce business and to be a leader in AI.

Total adjusted EBITDA decreased to 78%, primarily due to our strategic investments in quick commerce business to grow its user base and transaction volume, partly offset by double-digit revenue growth in China e-commerce group, cloud intelligence group, and improved operating efficiencies across various businesses, including AIDC and Hujing DME. Our GAAP net income was RMB 20.6 billion, a decrease of 53%, primarily attributable to the decrease in income from operations. Operating cash flow was RMB 10.1 billion, a decrease of RMB 21.3 billion compared to the same quarter last year. The year-over-year decrease was mainly attributed to our increased strategic investments in quick commerce business. Free cash flow was an outflow of RMB 21.8 billion, which reflected our significant investments in quick commerce business and AI+ Cloud infrastructure. We are reinvesting our free cash flow to create a winning quick commerce business and to be a leader in AI.

Speaker #2: Our GAAP net income was RMB 20.6 billion, a decrease of 53%, primarily attributable to the decrease in income from operations. Operating cash flow was RMB 10.1 billion, a decrease of RMB 21.3 billion compared to the same quarter last year.

Speaker #2: The year-over-year decrease was mainly attributed to our increased strategic investments in the quick commerce business. Free cash flow was an outflow of RMB 21.8 billion.

Speaker #2: Which reflected our significant investments in the quick commerce business and AI, plus cloud infrastructure. We are reinvesting our free cash flow to create a winning quick commerce business and to be a leader in AI.

Speaker #2: Our strong balance sheet, backed by $41 billion in net cash, gives us confidence in this reinvestment strategy. Revenue from Alibaba's China e-commerce group was RMB 132.6 billion.

Speaker 1: Our strong balance sheet, backed by $41 billion in net cash, gives us confidence for this reinvestment strategy. Revenue from Alibaba China e-commerce group was RMB 132.6 billion, an increase of 16%. Customer management revenue increased by 10%, primarily due to the improvement of take rate, which benefited from the increasing penetration of Quanzhan Tui, and the addition of software service fees. Revenue from our quick commerce business increased 60%. During the quarter, we executed our plan to grow the scale of our quick commerce business, improve user experience, and narrow UE loss. The adjusted EBITDA from Alibaba China e-commerce group was RMB 10.5 billion. Excluding loss from our quick commerce business, our Alibaba China e-commerce group EBITDA would have grown at mid-single-digit year-over-year for the quarter. Going forward, this adjusted EBITDA may fluctuate quarter over quarter due to intense competition, and a significant investment in user experience.

Our strong balance sheet, backed by $41 billion in net cash, gives us confidence for this reinvestment strategy. Revenue from Alibaba China e-commerce group was RMB 132.6 billion, an increase of 16%. Customer management revenue increased by 10%, primarily due to the improvement of take rate, which benefited from the increasing penetration of Quanzhan Tui, and the addition of software service fees. Revenue from our quick commerce business increased 60%. During the quarter, we executed our plan to grow the scale of our quick commerce business, improve user experience, and narrow UE loss. The adjusted EBITDA from Alibaba China e-commerce group was RMB 10.5 billion. Excluding loss from our quick commerce business, our Alibaba China e-commerce group EBITDA would have grown at mid-single-digit year-over-year for the quarter. Going forward, this adjusted EBITDA may fluctuate quarter over quarter due to intense competition, and a significant investment in user experience.

Speaker #2: An increase of 16%. Customer management revenue increased by 10%, primarily due to the improvement in take rate, which benefited from the increasing penetration of Chen Zhantui and the addition of software service fees.

Speaker #2: Revenue from our quick commerce business increased 60%. During the quarter, we executed our plan to grow the scale of our quick commerce business, improve user experience, and narrow UE loss.

Speaker #2: The adjusted EBITDA from Alibaba's China e-commerce group was RMB 10.5 billion. Excluding losses from our quick commerce business, our Alibaba China e-commerce group EBITDA would have grown at mid-single digits year over year for the quarter.

Speaker #2: Going forward, this adjusted EBITDA may fluctuate quarter over quarter due to intense competition and a significant investment in user experience. Revenue from AIDC grew 10%.

Speaker 1: Revenue from AIDC grew 10%. AliExpress, in particular, has developed its AliExpress Direct model that leverages local inventories in over 30 countries. AliExpress has also enhanced the range of our product offerings by launching the Brand Plus program, providing go-to-market solutions to Chinese brands going overseas. A combination of logistics optimization and investment efficiency enhancement resulted in AIDC's adjusted EBITDA profit of RMB 162 million this quarter. Looking ahead, while we continue to enhance operating efficiency, AIDC adjusted EBITDA may fluctuate quarter over quarter due to tactical investments in select markets. Our cloud business delivered another quarter of accelerated growth, as both growth of cloud segment revenue and revenue from external customers accelerated to 34% and 29%, respectively. This momentum was primarily driven by public cloud revenue growth, including the increasing adoption of AI-related products. AI-related product revenue continued to grow at triple-digit pace.

Revenue from AIDC grew 10%. AliExpress, in particular, has developed its AliExpress Direct model that leverages local inventories in over 30 countries. AliExpress has also enhanced the range of our product offerings by launching the Brand Plus program, providing go-to-market solutions to Chinese brands going overseas. A combination of logistics optimization and investment efficiency enhancement resulted in AIDC's adjusted EBITDA profit of RMB 162 million this quarter. Looking ahead, while we continue to enhance operating efficiency, AIDC adjusted EBITDA may fluctuate quarter over quarter due to tactical investments in select markets. Our cloud business delivered another quarter of accelerated growth, as both growth of cloud segment revenue and revenue from external customers accelerated to 34% and 29%, respectively. This momentum was primarily driven by public cloud revenue growth, including the increasing adoption of AI-related products. AI-related product revenue continued to grow at triple-digit pace.

Speaker #2: AliExpress, in particular, has developed its AliExpress Direct model that leverages local inventories in over 30 countries. AliExpress has also enhanced the range of our product offerings by launching the Brand Plus program, providing go-to-market solutions to Chinese brands going overseas.

Speaker #2: A combination of logistics optimization and investment efficiency enhancement resulted in AIDC's adjusted EBITDA profit of RMB 162 million this quarter. Looking ahead, while we continue to enhance operating efficiency, AIDC adjusted EBITDA may fluctuate quarter over quarter due to technical investments in select markets.

Speaker #2: Our cloud business delivered another quarter of accelerated growth, as both growth of cloud segment revenue and revenue from external customers accelerated to 34% and 29%, respectively.

Speaker #2: This momentum was primarily driven by public cloud revenue growth, including the increasing adoption of AI-related products. AI-related product revenue continued to grow at a triple-digit pace.

Speaker #2: AI-related product revenue this quarter accounted for over 20% of revenue from external customers, with its contribution continuing to increase. We are seeing accelerated adoption of our AI products across a broader range of enterprise customers, with a growing focus on value-added applications, including coding assistants.

Speaker 1: AI-related product revenue this quarter accounted for over 20% of revenue from external customers, with its contribution continuing to increase. We are seeing accelerated adoption of our AI products across a broader range of enterprise customers, with a growing focus on value-added applications, including coding assistants. The adjusted EBITDA margin remained relatively stable at 9%. We will continue to invest in customer growth and technology innovation to increase adoption of AI infrastructure cloud and strengthen our market leadership. All other segment revenue was a decrease by 25%, mainly due to the disposal of Sun Art and Intime businesses. All others adjusted EBITDA was a loss of RMB 3.4 billion, primarily due to the increased investment in technology businesses, partly offset by the improving operating results of other businesses. Hujing DME has achieved profitability for three consecutive quarters.

AI-related product revenue this quarter accounted for over 20% of revenue from external customers, with its contribution continuing to increase. We are seeing accelerated adoption of our AI products across a broader range of enterprise customers, with a growing focus on value-added applications, including coding assistants. The adjusted EBITDA margin remained relatively stable at 9%. We will continue to invest in customer growth and technology innovation to increase adoption of AI infrastructure cloud and strengthen our market leadership. All other segment revenue was a decrease by 25%, mainly due to the disposal of Sun Art and Intime businesses. All others adjusted EBITDA was a loss of RMB 3.4 billion, primarily due to the increased investment in technology businesses, partly offset by the improving operating results of other businesses. Hujing DME has achieved profitability for three consecutive quarters.

Speaker #2: The adjusted EBITDA margin remained relatively stable at 9%. We will continue to invest in customer growth and technology innovation to increase the adoption of AI infrastructure cloud and strengthen our market leadership.

Speaker #2: All other segment revenue decreased by 25%, mainly due to the disposal of the Sunlar and Intime businesses. All others adjusted EBITDA was a loss of RMB 3.4 billion, primarily due to the increase in investment in technology businesses, partly offset by the improving operating results of other businesses.

Speaker #2: Hujing DME has achieved profitability for three consecutive quarters. The all-other segment comprises a set of innovative initiatives, including several strategic AI-driven technology infrastructures and businesses, such as our foundation model and AI apps.

Speaker 1: The all other segment comprises a set of innovative initiatives, including several strategic AI-driven technology infrastructure and businesses, including our foundation model and AI apps. We are excited to continue investing in these initiatives for future growth. Thank you. That's the end of our prepared remarks. We can open up for Q&A. Thank you, Toby. Hi, everyone. You're welcome to ask questions in Chinese or English. A third-party translator will provide consecutive interpretation for the Q&A session. The translation is for convenience purposes only. In the case of any discrepancy, our management statement in the original language will prevail. 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. ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Operator, please go ahead with Q&A session. Thank you. Thank you.

The all other segment comprises a set of innovative initiatives, including several strategic AI-driven technology infrastructure and businesses, including our foundation model and AI apps. We are excited to continue investing in these initiatives for future growth. Thank you. That's the end of our prepared remarks. We can open up for Q&A.

Speaker #2: We are excited to continue investing in these initiatives for future growth. Thank you. That's the end of our prepared remarks. We can open up.

Speaker #2: for Q&A. Thank you,

Lydia Liu: Thank you, Toby. Hi, everyone. You're welcome to ask questions in Chinese or English. A third-party translator will provide consecutive interpretation for the Q&A session. The translation is for convenience purposes only. In the case of any discrepancy, our management statement in the original language will prevail. 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. ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Operator, please go ahead with Q&A session. Thank you.

Speaker #1: Toby: Hi, everyone. You're welcome to ask questions in Chinese or English. A third-party translator will provide consecutive interpretation for the Q&A session. The translation is for convenience purposes only.

Speaker #1: In the case of any discrepancy, our management statement in the original language will prevail. 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.

Speaker #1: ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Operator, please go ahead with the Q&A session. Thank you.

Speaker #1: you.

Speaker #2: Thank

Speaker #2: If you do wish to ask a question, please press star, then one on your telephone, and wait for your name to be announced.

Operator: Thank you. If you do wish to ask a question, please press Star, then 1 on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press Star, too. If you are on a speakerphone, please pick up your handset to ask your question. To give more people the opportunity to ask questions today, please keep yourself to no more than one question at a time. Thank you. Your first question today comes from Gary Liu at Morgan Stanley. Please go ahead.

Speaker 1: If you do wish to ask a question, please press Star, then 1 on your telephone, and wait for your name to be announced. If you wish to cancel your request, please press Star, too. If you are on a speakerphone, please pick up your handset to ask your question. To give more people the opportunity to ask questions today, please keep yourself to no more than one question at a time. Thank you. Your first question today comes from Gary Liu at Morgan Stanley. Please go ahead. Hi, thank you for the opportunity, and congratulations on the strong set of results. My question is related to cloud business. How should we look at the growth outlook going forward? Should we continue to expect growth to accelerate?

Speaker #2: If you wish to cancel your request, please press *2. If you are on a speakerphone, please pick up your handset to ask your question.

Speaker #2: To give more people the opportunity to ask questions today, please keep yourself to no more than one question at a time. Thank you. Your first question today comes from Gary Yu at Morgan Stanley.

Speaker #2: Hi, thank you for the opportunity to speak today.

Speaker #2: ahead.

Gary Liu: Hi, thank you for the opportunity, and congratulations on the strong set of results. My question is related to cloud business. How should we look at the growth outlook going forward? Should we continue to expect growth to accelerate?

Speaker #3: Opportunity and congratulations on the strong set of results. My question is related to the cloud business. How should we look at the growth outlook going forward?

Speaker #3: Should we continue to expect growth to accelerate? And on the demand side, given we don't have a big AI company like in the U.S., how should we look at the key driver driving the external revenue growth going forward?

Speaker 1: On the demand side, given we don't have a big AI company like in the US, how should we look at the key driver driving the external revenue growth going forward? Thank you. ?????????????????????????????????????????????????????????????????????????????????????????????????????AI????????????????????????? ?????????????????????????????????????????????????????????AI????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????AI?????????????????????????????????????????????????????????AI????????????????????????????????????????????????????????????????????????????AI???????????????????? Thank you for those questions. Let me start with the first one. Certainly, we see that customer demand for AI is and remains very strong. In fact, we're not even able to keep pace with the growth in customer demand and in orders in terms of the pace at which we can deploy new servers. We certainly do see that demand for AI is accelerating. In terms of where that demand is coming from, it's really coming from all aspects of enterprise operations as AI adoption continues to not only accelerate, but deepen with applications across product development, throughout manufacturing processes, and also in terms of supporting the enterprises and customers use their products.

On the demand side, given we don't have a big AI company like in the US, how should we look at the key driver driving the external revenue growth going forward? Thank you.

Speaker #3: Thank you.

Toby Xu: ?????????????????????????????????????????????????????????????????????????????????????????????????????AI????????????????????????? ?????????????????????????????????????????????????????????AI????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????AI?????????????????????????????????????????????????????????AI????????????????????????????????????????????????????????????????????????????AI???????????????????? Thank you for those questions. Let me start with the first one. Certainly, we see that customer demand for AI is and remains very strong. In fact, we're not even able to keep pace with the growth in customer demand and in orders in terms of the pace at which we can deploy new servers. We certainly do see that demand for AI is accelerating. In terms of where that demand is coming from, it's really coming from all aspects of enterprise operations as AI adoption continues to not only accelerate, but deepen with applications across product development, throughout manufacturing processes, and also in terms of supporting the enterprises and customers use their products.

Speaker #2: Hi,非常感谢您的提问。我先回答您的第一个问题。我觉得从我们现在看到客户的需求还是非常旺盛。我们现在阿里云的AI服务器，我们的上架节奏其实还是严重跟不上客户订单的增长速度。我们在在手的积压订单数量还在持续的扩大。所以从现在的数据需求上来说，我们可以看到未来的增长潜力还在持续的加速过程当中。然后在需求侧，其实我们看到在企业的应用方方面面其实的这些需求都在我们看到的情况还是在非常快速的增长。现在在我们的支持的很多企业当中，无论是在产品研发，包括在产品的制造过程当中，以及在产品上线之后的客户买了他们产品之后的每天的日常使用环节，在整个方方面面的环节其实AI的需求都在持续的渗透。所以我们看到无论是企业作为模型的训练也好，推理也好，甚至是他们的终端客户在开始使用他们的开发的AI产品，这些都会用到云端的算力。所以我们看到客户企业实在的付费的需求其实还是一个比较大的一个我们看到是一个大的潜力在增长的过程当中。所以我们觉得对于AI未来的需求，我们是抱有一个比较大的信心。 Thank you for those questions. Let me start with the first one. Certainly, we see that customer demand for AI is and remains very strong.

Speaker #2: In fact, we're not even able to keep pace with the growth in customer demand in terms of the pace at which we can deploy new servers.

Speaker #2: So we certainly do see that demand for AI is accelerating. In terms of where that demand is coming from, it's really coming from all aspects of enterprise operations as AI adoption continues to not only accelerate but deepen, with applications across product development and throughout manufacturing processes.

Speaker #2: And also, in terms of supporting the enterprises and customers, we use their products. So in all of those places, AI adoption continues to deepen. And, of course, all of this activity around model training and inference requires the use of compute as well.

Speaker 1: In all of those places, AI adoption continues to deepen. Of course, all of this activity around model training and inference requires the use of compute as well. Essentially, we're talking about huge potential and continually growing demand among real customers engaged in real-world use cases. Therefore, our conviction in future AI demand growth is strong. Next question, please. Thank you. Your next question comes from Kenneth Fong at UBS. Please go ahead. Hi, good evening, management, and thanks for taking my question. Congrats on the strong performance in our quick commerce initiative. Can management share some key progress for quick commerce and synergy to our core e-commerce so far? Given the synergy, what's the outlook for December quarter CMR and EBITDA for our core e-commerce? Thank you. ????????????????????????????????????????????????????????????????????????????????????????????????12?????CMR????????EBITDA????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????10??????????????????????????????????????????????????GMV??????????????????????????????????????????????????????????????????????????????????????75%???????????????8???????????????????????????GMV??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Thank you for your question.

In all of those places, AI adoption continues to deepen. Of course, all of this activity around model training and inference requires the use of compute as well. Essentially, we're talking about huge potential and continually growing demand among real customers engaged in real-world use cases. Therefore, our conviction in future AI demand growth is strong.

Speaker #2: So essentially, we're talking about huge potential and a continually growing demand among real customers engaged in real-world use cases. Therefore, our conviction in future AI demand growth is strong.

Lydia Liu: Next question, please.

Speaker #1: Next question, please.

Operator: Thank you. Your next question comes from Kenneth Fong at UBS. Please go ahead.

Speaker #2: Thank you. Your next question comes from Kenneth Fong at UBS. Please go ahead.

Speaker #2: ahead. Hi,

Kenneth Fong: Hi, good evening, management, and thanks for taking my question. Congrats on the strong performance in our quick commerce initiative. Can management share some key progress for quick commerce and synergy to our core e-commerce so far? Given the synergy, what's the outlook for December quarter CMR and EBITDA for our core e-commerce? Thank you.

Speaker #3: Good evening, management, and thanks for taking my question. Congrats on the strong performance in our pre-commerce initiative. Can management share some key progress for pre-commerce and synergy to our core e-commerce so far?

Speaker #3: Given the synergy, what's the outlook for the December quarter CML and EBITDA for our core e-commerce? Thank you.

Jiang Fan: ????????????????????????????????????????????????????????????????????????????????????????????????12?????CMR????????EBITDA????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????10??????????????????????????????????????????????????GMV??????????????????????????????????????????????????????????????????????????????????????75%???????????????8???????????????????????????GMV??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Thank you for your question.

Speaker #2: 关于是晚上好，感谢接受我的提问。同样演出和你们本季度在其实零售这一方面取得的扎实的业绩。那么我想了解一下其实零售这一方面最新的一些重大的进展以及它所实现的一些协同效应。那么基于这些进展，对于12月份季度的CMR以及就是核心电商EBITDA这一方面有什么样的展望？ Thank you for

Speaker #3: 那我先回答这个问题。对，首先感谢你的问题，就是说这几个月我们是专注于在保持市场份额的前提下，优化我们的优异。那么我们认为在这方面还是取得了非常显著的进展。一方面订单结构优化，同时规模效应也带来了物流成本的显著下降。对，10月以来闪购的优异，就是每单的亏损已经较七八月份降低一半。在这样的基础上，淘宝闪购的订单份额稳定，然后GMV份额稳中有升。对相关实物电商品类也有明显的拉动。我可以展开讲一下。首先订单结构的优化，过去两个月平台的高比单价订单占比提升，按照最新的数据来看，我们非茶饮的订单已经上涨到75%以上。那么闪购最新的比单价环比8月份也涨了超过两位数。比单价的提升也带动了淘宝闪购整体GMV份额的拉动。其次，随着订单份额的扩大，淘宝闪购的物流规模效应正在凸显。体现在我们的配送时效优于去年同期，单均物流成本显著降低。那么我们每单的物流成本已经明显低于淘宝闪购大规模投入以前。那么在以上两点共同作用下，我们已经完成短期内每单亏损对比七八月份降低一半的既定目标。同时我们看到优异收敛过程中，用户的留存跟频次也是好于预期。

Speaker 1: Over the past few months, we've focused on optimizing our unit economics in quick commerce while maintaining our market share. We believe we've made significant progress on this front. The order mix has improved, and the economies of scale from growing order volume have driven clear reductions in logistics costs. Since November, the per order UE loss for quick commerce has been cut by 50% compared to July-August. On this basis, quick commerce has maintained stable order share, with GMV share holding steady and trending upward. We're also seeing meaningful uplift in related physical e-commerce categories. Let me expand a bit further on those points. First, in terms of order mix optimization, over the past two months, the share of higher average order value, higher AOV orders has increased. According to the latest data, non-beverage orders now account for over 75% of total orders.

Over the past few months, we've focused on optimizing our unit economics in quick commerce while maintaining our market share. We believe we've made significant progress on this front. The order mix has improved, and the economies of scale from growing order volume have driven clear reductions in logistics costs. Since November, the per order UE loss for quick commerce has been cut by 50% compared to July-August. On this basis, quick commerce has maintained stable order share, with GMV share holding steady and trending upward. We're also seeing meaningful uplift in related physical e-commerce categories. Let me expand a bit further on those points. First, in terms of order mix optimization, over the past two months, the share of higher average order value, higher AOV orders has increased. According to the latest data, non-beverage orders now account for over 75% of total orders.

Speaker #2: Over the past few months, we've focused on optimizing our unit economics in pre-commerce while maintaining our market share. We believe we've made significant progress on this front.

Speaker #2: The order mix has improved, and the economies of scale from growing order volume have driven clear reductions in logistics costs. Since November, the per order UE loss for quick commerce has been cut by 50% compared to July and August.

Speaker #2: So, on this basis, quick commerce has maintained a stable order share, with GMV share holding steady and trending upward. We are also seeing meaningful uplift in related physical e-commerce categories.

Speaker #2: Let me expand a bit further on those points. First, in terms of order mix optimization, over the past two months, the share of higher average order value (AOV) orders has increased.

Speaker #2: According to the latest data, non-beverage orders now account for over 75% of total orders. Most recently, the AOV for quick commerce has grown by double digits compared to August, which has contributed to an increase in quick commerce's overall GMV share.

Speaker 1: Most recently, AOV for quick commerce has grown by double digits compared to August, which has contributed to an increase in quick commerce's overall GMV share. On the second point about logistics, as the order volume scales, quick commerce is realizing very clear economies of scale in fulfillment logistics. Delivery speed is now faster than the same period last year, while average logistics cost per order has declined significantly. In fact, the average cost per order is now lower than it was before we started making large-scale investments in quick commerce. These two factors together have enabled us to achieve our near-term target, namely cutting by half the per order loss versus July-August. Importantly, during this phase of narrowing UE losses, both user retention and purchase frequency have outperformed expectations.

Most recently, AOV for quick commerce has grown by double digits compared to August, which has contributed to an increase in quick commerce's overall GMV share. On the second point about logistics, as the order volume scales, quick commerce is realizing very clear economies of scale in fulfillment logistics. Delivery speed is now faster than the same period last year, while average logistics cost per order has declined significantly. In fact, the average cost per order is now lower than it was before we started making large-scale investments in quick commerce. These two factors together have enabled us to achieve our near-term target, namely cutting by half the per order loss versus July-August. Importantly, during this phase of narrowing UE losses, both user retention and purchase frequency have outperformed expectations.

Speaker #2: On the second point about logistics, as the order volume scales, quick commerce is realizing very clear economies of scale in fulfillment logistics. Delivery speed is now faster than the same period last year, while the average logistics cost per order has declined significantly.

Speaker #2: In fact, the average cost per order is now lower than it was before we started making large-scale investments in quick commerce. So, these two factors together have enabled us to achieve our near-term target, namely cutting by half the per order loss versus July and August.

Speaker #2: And importantly, during this phase of narrowing UE losses, both user retention and purchase frequency have outperformed expectations.

Speaker #2: And importantly, during this phase of narrowing UE losses, both user retention and purchase frequency have outperformed expectations. Beyond food 除了餐饮外卖，我们也看到闪购在零售品类的快速发展。那么闪购已经显著带动相关品类跟业务的拉动，尤其在食品健康超市等实物电商品类上。例如，盒马、猫超、闪购订单环比8月上涨30%。这几个月我们也在积极推动品牌商家加入淘宝闪购。那么后续我们也会加速相关业务品类和闪购的协同与整合。综合来看，我们坚定认为闪购业态与阿里生态有巨大的协同潜力。那么我们第一阶段已经完成了规模的快速扩张，第二阶段我们的优化优异优化符合预期。为外卖业务长期可持续发展，奠定了一个基础，也增加了我们在技术零售长期投入的决心。下一阶段我们会持续精耕细作用户体验，聚焦高价值用户的经营，聚焦零售品类发展。聊天室闪购是淘天平台升级的核心战略之一。我们的目标是三年后为平台带来万亿的成交，继而带动相关品类整体市场份额的上涨。 delivery, we're also seeing rapid growth in retail categories via quick commerce.

Speaker 1: Beyond food delivery, we're also seeing rapid growth in retail categories via quick commerce, clearly driving growth across related categories and businesses, especially groceries, healthcare products, and supermarket segments within physical e-commerce. For example, Freshippo and Tmall supermarket quick commerce orders are up 30% from August. Over recent months, we've also actively onboarded merchants and brands onto Taobao Instant Commerce, and we will further accelerate integration and synergy between key retail categories and the quick commerce model going forward. In summary, we firmly believe that the quick commerce model holds immense potential for synergy with the broader Alibaba ecosystem. In phase one, we successfully achieved rapid scale expansion. In phase two, UE optimization is progressing in line with our expectations, laying a solid foundation for the long-term sustainability of the quick commerce business, and reinforcing our confidence in sustained long-term investment in quick commerce.

Beyond food delivery, we're also seeing rapid growth in retail categories via quick commerce, clearly driving growth across related categories and businesses, especially groceries, healthcare products, and supermarket segments within physical e-commerce. For example, Freshippo and Tmall supermarket quick commerce orders are up 30% from August. Over recent months, we've also actively onboarded merchants and brands onto Taobao Instant Commerce, and we will further accelerate integration and synergy between key retail categories and the quick commerce model going forward. In summary, we firmly believe that the quick commerce model holds immense potential for synergy with the broader Alibaba ecosystem. In phase one, we successfully achieved rapid scale expansion. In phase two, UE optimization is progressing in line with our expectations, laying a solid foundation for the long-term sustainability of the quick commerce business, and reinforcing our confidence in sustained long-term investment in quick commerce.

Speaker #2: Clearly driving growth across related categories and businesses, especially groceries, healthcare products, and supermarket segments within physical e-commerce. For example, Freshippo and Tmall Supermarket quick commerce orders are up 30% from August. Over recent months, we have also actively onboarded merchants and brands onto Taobao Instant Commerce, and we will further accelerate integration and synergy between key retail categories and the quick commerce model going forward.

Speaker #2: So in summary, we firmly believe that the quick commerce model holds immense potential for synergy with the broader Alibaba ecosystem. In phase one, we successfully achieved rapid scale expansion; in phase two, UE optimization is progressing in line with our expectations, laying a solid foundation for the long-term sustainability of the quick commerce business and reinforcing our confidence in sustained long-term investment in quick commerce.

Speaker #2: In the next phase, we will continue to refine the user experience through operational upgrading with a focus on serving high-value users and a focus on expanding retail categories.

Speaker 1: In the next phase, we will continue to refine the user experience through operational upgrading with a focus on serving high-value users, and a focus on expanding retail categories. Quick commerce is a core strategic pillar in the Taobao Tmall group's platform upgrade. Our goal is to generate RMB 1 trillion in GMV for the platform within three years, thereby driving market share gains across the related categories. ???????????????????CMR?EBITDA????????????????????????????????????????????????????????????????????CMR??????????????????????????????????????????????????????????????????????????????EBITDA?????????????????EBITDA????????????????????????????9?????????????????????????????????????????????????????????????????????????????????????????????????? Thanks. This is Toby. Let me take the second part of your question about CMR and EBITDA. As Jiang Fan just shared with you, quick commerce is having a very significant effect in terms of enhancing user engagement as well as driving transactions in relevant categories. That, of course, has a positive impact on CMR.

In the next phase, we will continue to refine the user experience through operational upgrading with a focus on serving high-value users, and a focus on expanding retail categories. Quick commerce is a core strategic pillar in the Taobao Tmall group's platform upgrade. Our goal is to generate RMB 1 trillion in GMV for the platform within three years, thereby driving market share gains across the related categories. ???????????????????CMR?EBITDA????????????????????????????????????????????????????????????????????CMR??????????????????????????????????????????????????????????????????????????????EBITDA?????????????????EBITDA????????????????????????????9??????????????????????????????????????????????????????????????????????????????????????????????????

Speaker #2: Quick commerce is a core strategic pillar. In the Taobao Tmall Group's platform upgrade, our goal is to generate ¥1 trillion in GMV for the platform within three years, thereby driving market share gains across the related categories.

Speaker #3: 那我来回答你的第二个问题是关于这个整个CMR跟EBITDA的这个波动的。那么这个刚才讲咱说到了，因为这个从闪购的角度，不管是对用户的活跃度、相关品类的成交的拉动，还是都是有明显的作用。所以对CMR也会有一个正向的影响。那下一步其实我们最主要的工作就是要怎么样更好地进行远近场的协同这个把这个进行一个体现出来。那么所以从回来对于整个的中国电商集团的这个EBITDA，首先我来讲这个闪购这块。闪购这个EBITDA因为这个整体的一个投入，那么所以从这个角度来讲，这个季度九月季度会是一个高点，随着整个效率的提升，包括优异的显著改善跟规模的稳定，整个的投入我们预计在下个季度是会显著的收缩的。当然对于这点的话，我们也会根据这个整个市场的竞争的状态动态调整我们的投入策略。

Toby Xu: Thanks. This is Toby. Let me take the second part of your question about CMR and EBITDA. As Jiang Fan just shared with you, quick commerce is having a very significant effect in terms of enhancing user engagement as well as driving transactions in relevant categories. That, of course, has a positive impact on CMR.

Speaker #2: Thanks, this is Toby. Let me take the second part of CMR and EBITDA. As Jiang Fan just shared with you, quick commerce is having a very significant effect in terms of enhancing user engagement as well as driving transactions in relevant categories.

Speaker #2: It has a positive impact, so that, of course, on CMR. The main thing that we need to do in this next phase is to better integrate and achieve synergies across conventional e-commerce and quick commerce.

Speaker 1: The main thing that we need to do in this next phase is to better integrate and achieve synergies across conventional e-commerce and quick commerce, so as to more fully realize that impact. However, we are in an investment phase right now, so this is relevant to EBITDA. I think likely the September quarter will be the quarter during which the scale of those investments are the highest. As efficiency improves and UE improves, and as the scale of this business stabilizes, we can expect to see, I think, by next quarter, a significant sizing down in the scale of those investments. Of course, having said that, we will dynamically adjust the pace and size of our investments in line with market competition.

The main thing that we need to do in this next phase is to better integrate and achieve synergies across conventional e-commerce and quick commerce, so as to more fully realize that impact. However, we are in an investment phase right now, so this is relevant to EBITDA. I think likely the September quarter will be the quarter during which the scale of those investments are the highest. As efficiency improves and UE improves, and as the scale of this business stabilizes, we can expect to see, I think, by next quarter, a significant sizing down in the scale of those investments. Of course, having said that, we will dynamically adjust the pace and size of our investments in line with market competition.

Speaker #2: So as to more fully realize that impact. However, we are in the investment phase right now, so this is EBITDA. I think likely the September relevant to the quarter will be the quarter during which the scale of those investments are the highest. As efficiency improves and as the scale of this business stabilizes, we can expect to see UE improve and, I think, by next quarter, a significant size down in the scale. Of course, having said that, we will be monitoring those investments.

Speaker #2: dynamically adjust the pace and size of our investments in line with market competition.

Speaker #3: 电商的CMR最主要受到这个支付手续费跟全站推技术的影响，因为去年这个我们是九月开始收的这个支付手续费，所以在下个季度我们预计增速会放缓。那我们一直也在强调我们的最主要的目标是中长期的市场份额，这个过程中我们会坚定地投资消费者，投资商家增长，也会坚定推动电商平台的业务模式升级。在这个过程中，这个CMR跟EBITDA会有短期的波动。

Speaker 1: ???CMR???????????????????????????????9?????????????????????????????????????????????????????????????????????????????????????????????????????????????CMR?EBITDA???????? When it comes to CMR in the e-commerce business, there will be an impact from the base effect in respect of the payment processing fee as well as the rollout of QZT. We started charging the payment processing fee in September of last year. Starting from next quarter, we could expect to see a slowdown in growth due to that base effect. As we've consistently emphasized, our primary and foremost objective is to secure market share for the medium and long term. During this process, we will continue to decisively invest in consumers, in merchants, and we will resolutely move ahead with business model upgrading of our e-commerce platform. During that process, you can therefore expect that there will be short-term fluctuations in CMR and in EBITDA. Albrecht, let's take the next question. Thank you.

???CMR???????????????????????????????9?????????????????????????????????????????????????????????????????????????????????????????????????????????????CMR?EBITDA???????? When it comes to CMR in the e-commerce business, there will be an impact from the base effect in respect of the payment processing fee as well as the rollout of QZT. We started charging the payment processing fee in September of last year. Starting from next quarter, we could expect to see a slowdown in growth due to that base effect. As we've consistently emphasized, our primary and foremost objective is to secure market share for the medium and long term. During this process, we will continue to decisively invest in consumers, in merchants, and we will resolutely move ahead with business model upgrading of our e-commerce platform. During that process, you can therefore expect that there will be short-term fluctuations in CMR and in EBITDA.

Speaker #2: When it comes to CMR in the e-commerce business, there will be an impact from the base effect in respect of the payment QZT. We started processing fees as well as the rollout in September.

Speaker #2: charging the payment processing fee in last year, and so starting from next quarter, we could expect to see a slowdown in growth due to that base consistently emphasized our effect.

Speaker #2: Our primary and foremost objective is to secure market share for the medium and long term. During this process, we will continue to invest in consumers and decisively invest in merchants. We will resolutely move ahead with the model upgrading of our e-commerce platform.

Speaker #2: And during that process, you can therefore expect that there will be short-term fluctuations in CMR and in EBITDA.

Lydia Liu: Albrecht, let's take the next question.

Speaker #4: Operator, let's take the next question.

Speaker #4: Operator, let's take the next question.

Speaker 1: Your next question comes from Alex Yao at JP Morgan. Please go ahead. ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????key stakeholder??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ?????????? Thank you very much for the opportunity. As Jiang Fan just said, we've now completed the first phase of these investments. We're now in the second phase where we are enhancing efficiency. My question is, as the efficiency is optimized and we obtain cost savings, what are we going to do with those cost savings? How will the benefits of those cost savings be allocated or distributed across the value chain among the different key stakeholders? Assume, for example, that we're going to continue to maintain the same level of intensity with respect to subsidies to consumers and this ongoing incremental improvement in the financial performance of the business, what will that mean in terms of subsidies for merchants?

Operator: Your next question comes from Alex Yao at JP Morgan. Please go ahead.

Speaker #1: from Alex Yao at JP Morgan. Please go ahead. Thank you. Your next question comes

Jiang Fan: ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????key stakeholder??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ??????????

Speaker #5: 好的，谢谢管理层接受我的问题。那就像刚才蒋凡总聊的，我们第一阶段的投资已经结束，现在进入到第二阶段就是效率优化的一个阶段了。那我想问的问题是，随着我们效率优化，然后取得这个成本的节省，我们在这个节省上面是怎么思考在这个价值链上 key stakeholder 上面的利益分配，就比如说对消费者端的补贴是维持原来的那个强度，那么就是说这个财务的改善是相对渐进的，包括跟商户这边的补贴的比例，就是我们的这个成本节省会在这三个这个利益相关方上面怎么体现，怎么分配，然后还有一个相关的问题就是，如果假设我们不去减少用消费者补贴的话，还是通过现在的路径用户的结构优化、订单比例的提升、高价值的比例等等等等，我们的优益还有多少空间继续提升。

Alex Yao: Thank you very much for the opportunity. As Jiang Fan just said, we've now completed the first phase of these investments. We're now in the second phase where we are enhancing efficiency. My question is, as the efficiency is optimized and we obtain cost savings, what are we going to do with those cost savings? How will the benefits of those cost savings be allocated or distributed across the value chain among the different key stakeholders? Assume, for example, that we're going to continue to maintain the same level of intensity with respect to subsidies to consumers and this ongoing incremental improvement in the financial performance of the business, what will that mean in terms of subsidies for merchants?

Speaker #2: Thank you very much for the opportunity. So, as Jiang Fan just said, we've now completed the first phase of these investments. We're now in the second phase, where we are enhancing efficiency. My question is, as the efficiency is optimized and we obtain cost savings, what are we going to do with those cost savings?

Speaker #2: How will the benefits of those cost savings be allocated or distributed across the value chain among the different key stakeholders? Say, for example, that we're going to continue to maintain the same level of intensity with respect to subsidies to consumers, and there's this ongoing incremental improvement in business. Then what will that mean in terms of subsidies for the cost savings that merchants will need?

Speaker 1: The cost savings will need to be allocated or distributed somehow across the three key stakeholders: consumer, merchant, and platform. If we do not decrease those subsidies to consumers and we continue to follow the same path that we are on now and rely on optimization of user mix, as well as driving increase in order share and driving higher basket sizes, then what does that mean for UE and how much scope is there going forward for UE growth? ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Yes, this is Jiang Fan. Let me take this question, and it is actually related to, in part, some of the things that I was sharing with you a bit earlier. What we have been doing in this period of time is enhancing the user experience and at the same time increasing the average order value.

The cost savings will need to be allocated or distributed somehow across the three key stakeholders: consumer, merchant, and platform. If we do not decrease those subsidies to consumers and we continue to follow the same path that we are on now and rely on optimization of user mix, as well as driving increase in order share and driving higher basket sizes, then what does that mean for UE and how much scope is there going forward for UE growth?

Speaker #2: to be allocated or distributed somehow across the You know, three key stakeholders: consumer, merchant, and platform. And then so if we don't decrease those subsidies to consumers, then we we're on continue to follow the same path that now, and rely on optimization of user mix as well as driving increase in order higher basket size than what does that mean for UE and how much scope is there going forward for UE growth?

Speaker #2: share and driving a Yes, this

Jiang Fan: ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Yes, this is Jiang Fan. Let me take this question, and it is actually related to, in part, some of the things that I was sharing with you a bit earlier. What we have been doing in this period of time is enhancing the user experience and at the same time increasing the average order value.

Speaker #5: 我来回答一下这个问题，就是刚才在我的讲述中已经表达了一部分。那就是我们在这段时间的优益提升，首先一方面是这个比单价的上涨，那意味着我们每单的收入会涨，因为这个我们的收入是跟比单价相关的。然后刚才我讲到了我们的物流的这个效率随着这个规模提升是有一个显著的优化的。对，然后我觉得未来我们还是有很多的空间。那一方面就是我们的这个消费者，因为我们在过去的几个月还是以新客大量新客为主，然后随着我们的这个消费者的这样的一个转化成这种跟我们平台的这种更高的一个粘性，那我们也会在这过程中去提升比单价，然后去改变我们的补贴的方式。然后同时就是我们在淘宝内的这样的一个过去几个月的这种流量，包括这个闪购的这样的频道的一个快速上涨，成为一个这个每天过亿用户访问的这么一个频道，那这里面还有很大的一个商业化的空间。那我觉得这也是一个未来优益改善的机会。对，当然就是说整个这个市场还是竞争的市场，我们也会去根据市场的竞争的情况，也去看我们的机会，然后也会去动态调整我们这样的一个策略。

Speaker #2: Take this question. It's actually related to, in part, some of the things that I was sharing with you a bit earlier regarding Jiang Fan.

Speaker #2: So what we've been doing in this period of time experience. And at the same time, increasing the is enhancing the user average order value.

Speaker 1: That means the revenues attributable to each order will increase because our revenues are proportionate to average order value. I also spoke earlier about how we've optimized logistics, fulfillment logistics efficiency, and we'll continue to drive improvement there with scale. I think going forward there is still considerable scope there on the one hand in respect of consumers because over the past few months it's really been primarily new consumers in this business. What we're doing is converting those users into users with a higher level of stickiness across the platform as a whole. Through that process, we'll continue to increase average order size, average order value, and to modify the ways in which we provide subsidies.

That means the revenues attributable to each order will increase because our revenues are proportionate to average order value. I also spoke earlier about how we've optimized logistics, fulfillment logistics efficiency, and we'll continue to drive improvement there with scale. I think going forward there is still considerable scope there on the one hand in respect of consumers because over the past few months it's really been primarily new consumers in this business. What we're doing is converting those users into users with a higher level of stickiness across the platform as a whole. Through that process, we'll continue to increase average order size, average order value, and to modify the ways in which we provide subsidies.

Speaker #2: That means the revenues attributable to each order will increase because of our average order value. I also spoke earlier about how we've optimized logistics and fulfillment logistics efficiency.

Speaker #2: And we'll continue to drive improvement there with scale. is still considerable So I think going forward, there scope there on the one hand in respect of consumers because over the past few months, it's really been primarily new consumers in this And what we're doing is converting those business.

Speaker #2: Users into users with a higher level of stickiness across the platform as a whole. And through that, we increase average order size, average order value, and modify the ways in which we provide subsidies.

Speaker 1: Also, if you look at traffic on the Taobao app over the past few months, including on the quick commerce channel, which has rapidly increased to the point where it now has over 100 million daily users on the channel, I think it speaks to the fact that there's considerable potential for monetization, further monetization, and I think that that's an opportunity also to improve UE in the future. Now, having said that, again, the market is a highly competitive market, so we will be looking at those opportunities, adjusting our approach dynamically in line with market dynamics. Thank you. Albrecht, let's move on to the next question. Thank you. Your next question comes from Ronald Kim at Goldman Sachs. Please go ahead. ?? Eddie ???? Lydia?????????????????????????? 3,800 ?????????????????????? 1,200 ??????????? CapEx ????? incremental power revenue?????? ratio??? ratio ???????? CapEx ? incremental revenue ??? outlook???? Thank you.

Also, if you look at traffic on the Taobao app over the past few months, including on the quick commerce channel, which has rapidly increased to the point where it now has over 100 million daily users on the channel, I think it speaks to the fact that there's considerable potential for monetization, further monetization, and I think that that's an opportunity also to improve UE in the future. Now, having said that, again, the market is a highly competitive market, so we will be looking at those opportunities, adjusting our approach dynamically in line with market dynamics.

Speaker #2: you look at traffic on the Also, if Taobao app over the past QuickCommerce channel, which is few months, including on the rapidly increased to the point where it now has over 100 million daily users on the channel.

Speaker #2: I think it speaks to the fact that there's considerable potential for monetization. Further monetization, and I think that that's an opportunity also to improve UE in the future.

Speaker #2: Now, having said that, again, the market is a highly competitive market, so we will be looking at those opportunities. But adjusting our approach dynamically in line.

Speaker #2: dynamics. Thank you.

Lydia Liu: Thank you. Albrecht, let's move on to the next question.

Speaker #1: I'll be here. Let's move on to the next with market.

Operator: Thank you. Your next question comes from Ronald Kim at Goldman Sachs. Please go ahead.

Speaker #6: Thank you. Your next

Speaker #6: The question comes from Ronald Kim at Goldman Sachs. Please go ahead with your question.

Speaker #6: ahead. Thank

Ronald Kim: ?? Eddie ???? Lydia?????????????????????????? 3,800 ?????????????????????? 1,200 ??????????? CapEx ????? incremental power revenue?????? ratio??? ratio ???????? CapEx ? incremental revenue ??? outlook???? Thank you.

Speaker #2: you. So I'd like to ask next three years. And I'm wondering is as you sit here today regarding the 380 billion figure that you had previously what you're thinking mentioned in particular because over four quarters, I the past believe 120 billion has already been spent.

Speaker 1: I'd like to ask about CapEx over the next three years, and I'm wondering what your thinking is, as you sit here today, regarding the 380 billion figure that you previously mentioned, in particular because over the past four quarters, I believe 120 billion has already been spent. How should we be thinking about CapEx going forward and the incremental revenue being driven by that CapEx, and how to evaluate the correlation between CapEx and the expected incremental revenue? Thank you. ????????????????? 3,800 ??? CapEx ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ???????????????????????????????? 3,800 ???????????????????????????? Thank you for your question. The 380 billion CapEx figure that we had previously mentioned was a planned figure for a three-year period, but based on what we're seeing now, and as I just mentioned, the pace at which we can add new servers is insufficient to keep up with the growth in customer orders.

I'd like to ask about CapEx over the next three years, and I'm wondering what your thinking is, as you sit here today, regarding the 380 billion figure that you previously mentioned, in particular because over the past four quarters, I believe 120 billion has already been spent. How should we be thinking about CapEx going forward and the incremental revenue being driven by that CapEx, and how to evaluate the correlation between CapEx and the expected incremental revenue? Thank you.

Speaker #2: So how should we be thinking about CAPEX going forward? And the incremental revenue being driven by that CAPEX? And how to evaluate the correlation between CAPEX and the expected incremental revenue?

Speaker #2: Thank you. Thank you. For your question, the $380 billion CAPEX figure that we had previously mentioned was for a three-year period. However, based on what we're seeing now, and as I just planned mentioned, the pace at which we can add new servers is insufficient to keep up with the growth in customer orders.

Jiang Fan: ????????????????? 3,800 ??? CapEx ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ???????????????????????????????? 3,800 ???????????????????????????? Thank you for your question. The 380 billion CapEx figure that we had previously mentioned was a planned figure for a three-year period, but based on what we're seeing now, and as I just mentioned, the pace at which we can add new servers is insufficient to keep up with the growth in customer orders.

Speaker #2: So, looking at the CAPEX situation from where we're at today, and of course, there are also...

Speaker 1: Looking at the CapEx situation from where we're at today, and of course there are also supply chain issues to consider as well, the pace at which we can build out IDCs and launch new servers is also part of that consideration. Essentially, we're working as fast as we can to be able to satisfy all of that customer demand. In that context, if we're not able to satisfy all of that customer demand especially well with the current pace of investment, we wouldn't rule out further scaling up that CapEx investment. Again, that is somewhat dependent on supply chains and availability. In overall terms, certainly we will be investing in AI infrastructure aggressively in order to meet the demand of our customers.

Looking at the CapEx situation from where we're at today, and of course there are also supply chain issues to consider as well, the pace at which we can build out IDCs and launch new servers is also part of that consideration. Essentially, we're working as fast as we can to be able to satisfy all of that customer demand. In that context, if we're not able to satisfy all of that customer demand especially well with the current pace of investment, we wouldn't rule out further scaling up that CapEx investment. Again, that is somewhat dependent on supply chains and availability. In overall terms, certainly we will be investing in AI infrastructure aggressively in order to meet the demand of our customers.

Speaker #1: launch new and servers is also part of that consideration . But Idcs essentially we're working as fast as we able to satisfy all of that customer demand can to be in that If we're able to not of that satisfy all especially well customer demand the pace of then we context .

Speaker #1: investment . But again , that somewhat dependent supply and availability . But in overall terms is , certainly on will be chains investing in AI infrastructure aggressively we order to meet the demand of our customers .

Speaker #1: a in big picture , terms So , I say in that the 380 billion figure we had mentioned would previously be on the small side , certainly in terms of the customer demand currently might seeing .

Speaker 1: In big picture terms, I would say that the 380 billion figure we had mentioned previously might be on the small side, certainly in terms of the customer demand that we're currently seeing. ??????????????????????????????????????????????????? AI ???????????????????????????? AI ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ? AI ????????????????????????????????????????????????????????????????????????????????????????????????????? token ???? token ????????. Thank you. The second part of the question had to do with the incremental revenue being driven by these capital expenditures and if there's some kind of ratio that we can calculate between X amount of CapEx investment and X amount of incremental revenue. I don't think it's really possible to make that kind of estimate, at least for the time being, because overall the AI sector is still in the early phases of its development. If you look at the different ways that our AI infrastructure is currently being used, that's in flux and spans several different areas.

In big picture terms, I would say that the 380 billion figure we had mentioned previously might be on the small side, certainly in terms of the customer demand that we're currently seeing.

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Ronald Kim: ??????????????????????????????????????????????????? AI ???????????????????????????? AI ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ? AI ????????????????????????????????????????????????????????????????????????????????????????????????????? token ???? token ????????. Thank you. The second part of the question had to do with the incremental revenue being driven by these capital expenditures and if there's some kind of ratio that we can calculate between X amount of CapEx investment and X amount of incremental revenue. I don't think it's really possible to make that kind of estimate, at least for the time being, because overall the AI sector is still in the early phases of its development. If you look at the different ways that our AI infrastructure is currently being used, that's in flux and spans several different areas.

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Speaker #1: Thank you . The second part of the question had to do with the revenue being incremental by these capital driven expenditures . there's some kind ratio that of between And if we can x CapEx investment amount and of X amount revenue , I incremental it's really don't think of kind of possible to make that estimate , at least for the time being , because overall , the AI still sector is in the early phases of its development if you look the .

Speaker #1: Ways that our AI infrastructure is currently being utilized are in flux and spend at several different areas. For example, servers that are directly used for training.

Speaker #1: We are have rented servers that to customers we have for customers inference we're also , of servers using ourselves for and violin , for inference , as well as for applications internal within course , the Group , Alibaba like Amap , like Taobao , like Q1 and Quark and these transforming applications into member services or membership based products for our users .

Speaker 1: For example, we have servers that are directly rented to customers for training. We have servers that are directly rented to customers for inference. We're also, of course, using servers ourselves for buy-in for inference as well as for internal applications within Alibaba Group, like Amap, like Taobao, like Q1, and Quark, and transforming these applications into member services or membership-based products for our users. Overall, our AI products and AI infrastructure are being used in all these different ways, different kinds of applications, resulting in different revenues and different gross margin levels. I think in terms of that kind of ratio you were asking about, whatever it is, it certainly wouldn't be stable at this point. I think in the long term, though, what we care about more is that our infrastructure is serving high-quality tokens and providing good cost-effectiveness for those tokens.

Jiang Fan: For example, we have servers that are directly rented to customers for training. We have servers that are directly rented to customers for inference. We're also, of course, using servers ourselves for buy-in for inference as well as for internal applications within Alibaba Group, like Amap, like Taobao, like Q1, and Quark, and transforming these applications into member services or membership-based products for our users. Overall, our AI products and AI infrastructure are being used in all these different ways, different kinds of applications, resulting in different revenues and different gross margin levels. I think in terms of that kind of ratio you were asking about, whatever it is, it certainly wouldn't be stable at this point. I think in the long term, though, what we care about more is that our infrastructure is serving high-quality tokens and providing good cost-effectiveness for those tokens.

Speaker #1: So overall, products and AI infrastructure are being utilized. AI is being used in many different ways and in various kinds of applications, resulting in different levels of revenues.

Speaker #1: So I gross in terms of that kind of ratio , you were asking about whatever it is . It's certainly wouldn't margin be stable at in the long term , this though , what we care point .

Speaker #1: I think is our that infrastructure is serving high quality tokens a good cost those effectiveness for tokens and . providing

Speaker #3: Next question please

Speaker #4: Your

Speaker #4: question comes Thank you . next Lee Zhang at Macquarie . from go ahead . . Please

Speaker 1: Next question, please. Thank you. Your next question comes from Elijah McQuarrie. Please go ahead. ??????????????????????????????????????????? AI ??????????????????????????????????????????????????????????????????????????????????????????????????? MAS ????????????????????????????????????? APP???????????????????????????????????????????????? AI ??? RYC???? Thank you, management, for taking my question. This is more of a follow-up question. The company is a full-stack AI service provider and obviously is currently in an important investment cycle. We can see that the investments you're making cover a number of different segments in the value chain. You know, considering the instability in the supply chains that are ongoing at present, I'm wondering how you consider the allocation of our resources because you have the model as a service, the MAS layer. We also continue to build out underlying capabilities, fundamental capabilities, and on the user-facing side, we have apps including Tongyi or Qwen and AMAP, products like that that we're iterating rapidly and scaling up to users.

Lydia Liu: Next question, please.

Operator: Thank you. Your next question comes from Elijah McQuarrie. Please go ahead.

[Analyst]: ??????????????????????????????????????????? AI ??????????????????????????????????????????????????????????????????????????????????????????????????? MAS ????????????????????????????????????? APP???????????????????????????????????????????????? AI ??? RYC???? Thank you, management, for taking my question. This is more of a follow-up question. The company is a full-stack AI service provider and obviously is currently in an important investment cycle. We can see that the investments you're making cover a number of different segments in the value chain. You know, considering the instability in the supply chains that are ongoing at present, I'm wondering how you consider the allocation of our resources because you have the model as a service, the MAS layer. We also continue to build out underlying capabilities, fundamental capabilities, and on the user-facing side, we have apps including Tongyi or Qwen and AMAP, products like that that we're iterating rapidly and scaling up to users.

Speaker #5: In the Q3 2025 Alibaba Group Holding Ltd Earnings Call, I wanted to know if AI told you the ROIC.

Speaker #1: Yeah . Thank you taking my management for This is question . follow up more of a . The company is a AI provider and service obviously currently is in important stack investment .

Speaker #1: cycle And see the investments we can you're making that cover a number of segments an different value the . So you know in , considering chain instability in supply chains that are ongoing at present .

Speaker #1: I'm wondering how you the the allocation our of resources because you have model the as a The service . mass layer also . We continue to build out underlying , fundamental capabilities .

Speaker #1: Facing the side, we have apps for the user, including Tony, Q1, and Amap. Products like that are rapidly iterating and scaling up to users.

Speaker #1: So I'm just , in the wondering present environment , And on how should we think about how we the return on invested ROIC in respect of AI and including both should training and inference evaluate ?

Speaker 1: I'm just wondering in the present macro environment, how should we think about, how should we evaluate the return on invested capital, RYC, in respect of AI and including both training and inference? ??????????????????????? AI ????????????? AI ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI???? AI ?????????????????????????????????????????????????????????????????????????????????????????????? token ????? token ????????????? token ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ???? 24 ????????????????????????? AI ???????? 24 ??????????? token???????????????????????????????????????????????????????????????????? AI ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? CPU ???????????????????????????????? GPU ????????????????????????????????????. Thank you. Let me take my question. Indeed, as a full-stack AI service provider, we are currently in a very important investment cycle for AI and investing in our products as well as in our infrastructure. There are several different places where we're investing, and we do have some internal thinking about how we prioritize them, and I can share, I think, some of those considerations with you.

I'm just wondering in the present macro environment, how should we think about, how should we evaluate the return on invested capital, RYC, in respect of AI and including both training and inference?

Speaker #1: capital

Eddie Liu: ??????????????????????? AI ????????????? AI ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI???? AI ?????????????????????????????????????????????????????????????????????????????????????????????? token ????? token ????????????? token ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ???? 24 ????????????????????????? AI ???????? 24 ??????????? token???????????????????????????????????????????????????????????????????? AI ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? CPU ???????????????????????????????? GPU ????????????????????????????????????.

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Jiang Fan: Thank you. Let me take my question. Indeed, as a full-stack AI service provider, we are currently in a very important investment cycle for AI and investing in our products as well as in our infrastructure. There are several different places where we're investing, and we do have some internal thinking about how we prioritize them, and I can share, I think, some of those considerations with you.

Speaker #1: You . Let me take my question . Indeed . As a stack full A.I. service provider , we are currently in a very important investment cycle for AI and products investing in in , as our our infrastructure .

Speaker #1: So there are different places where we're investing several and we some do have internal thinking about how we prioritize them . And I share , can I think some of those considerations with you all , .

Speaker #1: I would say that the most critical of those the first thing that we First of need priorities , to ensure is that we are able to continually train our own foundation models , because in the space , overall , the AI ability our of AI infrastructure be able to to more customers acquire or to be able to acquire high use value cases on ability to continually iterate and upgrade our foundation models .

Speaker 1: First of all, I would say the most critical of those priorities, the first thing that we need to ensure is that we are able to continually train our own foundation models, because in the AI space overall, the ability of our AI infrastructure to be able to acquire more customers, or to be able to acquire more high-value use cases, relies on our ability to continually iterate and upgrade our foundation models. We need to be doing that in order to be able to unlock new demand and to acquire new customers by unlocking new use cases. After that, after unlocking new higher-value use cases, the next thing is to look at the amount of token consumption, as well as the token quality, as well as the willingness of customers to pay for those tokens. That willingness is going to continue to strengthen gradually.

First of all, I would say the most critical of those priorities, the first thing that we need to ensure is that we are able to continually train our own foundation models, because in the AI space overall, the ability of our AI infrastructure to be able to acquire more customers, or to be able to acquire more high-value use cases, relies on our ability to continually iterate and upgrade our foundation models. We need to be doing that in order to be able to unlock new demand and to acquire new customers by unlocking new use cases. After that, after unlocking new higher-value use cases, the next thing is to look at the amount of token consumption, as well as the token quality, as well as the willingness of customers to pay for those tokens. That willingness is going to continue to strengthen gradually.

Speaker #1: We need to be doing that to be in order able to unlock new demand , and to acquire customers new by unlocking new use , relies .

Speaker #1: After that , after unlocking new higher value use cases , then the next thing to is to look at the amount of token as well as the consumption token quality , as well as the willingness of customers to for pay tokens those .

Speaker #1: And that willingness is going to continue to strengthen gradually . So I would I would say that that is one of the highest the priorities when to it comes allocating those investments .

Speaker 1: I would say that that is one of the highest priorities when it comes to allocating those investments. Another priority is around inference, and I'm thinking primarily of inference as a service on Bai Lian. That is also a relatively high-priority area for us because we've created the Bai Lian platform in order to be able to serve customers all around the world. We want to ensure that those AI resources are available 24 hours a day and are being utilized 24/7 with high efficiency. The key there is to ensure that one AI server can run at full capacity 24 hours around the clock and thereby to generate more tokens. Bai Lian is a very critical resource pool for us and is a relatively high priority.

I would say that that is one of the highest priorities when it comes to allocating those investments. Another priority is around inference, and I'm thinking primarily of inference as a service on Bai Lian. That is also a relatively high-priority area for us because we've created the Bai Lian platform in order to be able to serve customers all around the world. We want to ensure that those AI resources are available 24 hours a day and are being utilized 24/7 with high efficiency. The key there is to ensure that one AI server can run at full capacity 24 hours around the clock and thereby to generate more tokens. Bai Lian is a very critical resource pool for us and is a relatively high priority.

Speaker #1: Another is priority around inference . I'm thinking primarily of inference on as a service , on by Lin . That is also relatively a priority us area for because created the platform in order to be able serve we've to all the world .

Speaker #1: We want to ensure that our AI resources are available 24 hours a day and are being utilized 24/7 with high efficiency.

Speaker #1: key there the is to So that ensure one AI server can run at full capacity , 24 hours around the clock , and thereby to more generate tokens .

Speaker #1: So is by very critical Leon . Resource pool for us and is a relatively high priority . Separately , of course , we have internal cases for AI inferencing , and indeed we have also external who are customers leveraging use inferencing services to their demand .

Speaker 1: Separately, of course, we have internal use cases for AI inferencing, and indeed we also have external customers who are leveraging our inferencing services to meet their demand. That's also part of the picture. When it comes to these external customers, we also have some criteria for prioritizing different external customers. If an external customer is utilizing all of our services across cloud, all of our cloud services spanning storage, spanning big data, and all of these other things, then of course that customer would be accorded a higher level of priority. If you have a customer that's merely renting a GPU to meet some very simple inferencing needs, the demands of those customers would accordingly be given a slightly lower level of priority.

Separately, of course, we have internal use cases for AI inferencing, and indeed we also have external customers who are leveraging our inferencing services to meet their demand. That's also part of the picture. When it comes to these external customers, we also have some criteria for prioritizing different external customers. If an external customer is utilizing all of our services across cloud, all of our cloud services spanning storage, spanning big data, and all of these other things, then of course that customer would be accorded a higher level of priority. If you have a customer that's merely renting a GPU to meet some very simple inferencing needs, the demands of those customers would accordingly be given a slightly lower level of priority.

Speaker #1: That's also part of the picture. But when it comes to external factors affecting customers, we also have some criteria for prioritizing different externals for customers.

Speaker #1: If an external customer is utilizing all of our services across cloud , all of Alibaba Cloud services spanning storage spanning big data . And all things , then other of customer of these would course , be accorded a higher level of priority .

Speaker #1: If you have a customer that's merely renting a GPU to meet some very simple inferencing needs , then the demands of those would accordingly be given a customers slightly lower level of priority .

Speaker #2: Would you ? To to your to . The machine . The machine . machine . So we like to Sipping . Do that in .

Speaker 1: ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? scaling law ??????????????????????????????? Gemini 3 ????????????????????????????????????????????????? AI ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ????????????????????????????????????????????????????????????????????????????????????? Fab ??? DRAM ???????????? CPU??????????? AI ????????????????????????? AI ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ? AI ????????????????????????????????????????????????????????? Hyperscaler????????????? GPU ????????????????????????????? GPU ???????????????????????????? AI ?????????????? Moving on to the second question, which I thought was a really good one. I think there are two pieces to this issue. First is the supply side. Second is first is the demand side. Second is the supply side. If we look at foundation models, and these could be video generation models, they could be omni modal models going forward, but the capabilities continue to increase and be enhanced. We're not yet seeing any issues in terms of scaling law. Nobody's hit the wall yet, so to speak, in the industry. We continue to make a lot of progress and make very important breakthroughs in terms of model capabilities.

Eddie Liu: ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? scaling law ??????????????????????????????? Gemini 3 ????????????????????????????????????????????????? AI ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ????????????????????????????????????????????????????????????????????????????????????? Fab ??? DRAM ???????????? CPU??????????? AI ????????????????????????? AI ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? AI ? AI ????????????????????????????????????????????????????????? Hyperscaler????????????? GPU ????????????????????????????? GPU ???????????????????????????? AI ?????????????? Moving on to the second question, which I thought was a really good one. I think there are two pieces to this issue. First is the supply side. Second is first is the demand side. Second is the supply side. If we look at foundation models, and these could be video generation models, they could be omni modal models going forward, but the capabilities continue to increase and be enhanced. We're not yet seeing any issues in terms of scaling law. Nobody's hit the wall yet, so to speak, in the industry. We continue to make a lot of progress and make very important breakthroughs in terms of model capabilities.

Speaker #2: The scaling law . As male women . Due to the . machine AI machine . Sitting to . The will take . Sweets .

Speaker #2: The woman can the the AI that . The the the woman can . To To five . . CPU . 40 . AI Are able .

Speaker #2: AI to . The . 20 . One to . 20 . Three . Woman to AI . 20 . AI that has . To woman can make all the hyperscaler decision in GPU .

Speaker #2: And the GPU . Can now so I guess .

Speaker #1: Moving on to the second [question], I thought moving on to the second was a really good one. I think there are two pieces to this issue.

Speaker #1: Supply side. The second is the first, and the second is the demand. The first is the supply side. If we look at side models foundation, these could be modal omni forward. This could model generation video.

Speaker #1: The models are going enhanced capabilities, and we continue to see increased scaling. We're not yet seeing any issues in terms of scaling.

Speaker #1: Nobody's law hit the wall to speak . In the industry , we to a lot of and make progress very important continue of .

Speaker #1: . modeling more become models powerful then the AI models will be able to make things world . They'll real be breakthroughs to in the able larger variety of different use cases , and that will result in these models No serving of a lot tasks as the increase , they become capabilities .

Speaker 1: As the models become more powerful, the AI models will be able to do more things in the real world. They'll be able to serve a larger variety of different use cases, and that will result in these models serving a lot of tasks. As the capabilities increase, they become stronger. As these tasks become more deeply embedded across all industries, all aspects of business operations, with those two drivers, we see in the next three-year period a highly definitive trend of demand for AI. With all of this rapid growth in demand, we also need to be thinking about the supply side. I'm sure that you as analysts have also been looking at the supply side.

As the models become more powerful, the AI models will be able to do more things in the real world. They'll be able to serve a larger variety of different use cases, and that will result in these models serving a lot of tasks. As the capabilities increase, they become stronger. As these tasks become more deeply embedded across all industries, all aspects of business operations, with those two drivers, we see in the next three-year period a highly definitive trend of demand for AI. With all of this rapid growth in demand, we also need to be thinking about the supply side. I'm sure that you as analysts have also been looking at the supply side.

Speaker #1: And these stronger more deeply become imbedded across industries , all all of operations business . So with two drivers , aspects see in the those we next three year period highly definitive trend of demand for , a AI .

Speaker #1: And with all of this growth, rapid demand is also a factor we need to be thinking about. I'm looking at the supply side. I have also sure that analysts have been looking at the supply in the second half of the year.

Speaker #1: think you look You know , if worldwide . you look fabs , if at Dram vendors , companies , CPU storage manufacturers across all of those different links value that chain go to making AI in the servers , there is a situation of Supply undersupply .

Speaker 1: Starting from the second half of this year, I think we've seen worldwide, you know, if you look at fabs, if you look at DRAM vendors, storage companies, CPU manufacturers, across all of those different links in the value chain that go to making AI servers, there is a situation of undersupply. Supply is unable to keep up with demand for all of these components globally. I think that we can expect that to continue throughout this scaling up and investment cycle driven by real demand for AI. We know that the supply side is going to be a relatively large bottleneck. I think that it could be at least a period of two or three years for those different suppliers, those different vendors to be able to ramp up their production capacity.

Starting from the second half of this year, I think we've seen worldwide, you know, if you look at fabs, if you look at DRAM vendors, storage companies, CPU manufacturers, across all of those different links in the value chain that go to making AI servers, there is a situation of undersupply. Supply is unable to keep up with demand for all of these components globally. I think that we can expect that to continue throughout this scaling up and investment cycle driven by real demand for AI. We know that the supply side is going to be a relatively large bottleneck. I think that it could be at least a period of two or three years for those different suppliers, those different vendors to be able to ramp up their production capacity.

Speaker #1: is unable to keep up with demand for all of these components globally I that you . And continue throughout this scaling up . think by real for demand AI .

Speaker #1: We know that supply side is going to the relatively large bottleneck . I So think that it could at least a period of be 2 or 3 years for those different different vendors , to be able to ramp up production capacity .

Speaker #1: suppliers , those So in this period expect their to we can to see of rapid increase in continue and not to be driving demand 2 to 3 years , the supply side .

Speaker 1: In this period of two to three years, we can expect to continue to see a rapid increase in demand and that to be driving the supply side. I think in the next three years to come, AI resources will continue to be undersupplied with demand outstripping supply. What we can see internally in the industry, and if we look at, you know, the hyperscalers in the US, all of the latest GPUs that are running are running at full capacity, and not just them, the last generation GPUs, even GPUs from three to five years ago, so several generations back, those GPUs are to this day still running at full capacity. You know, looking ahead to the next, say, three years, we don't really see much of an issue in terms of a so-called AI bubble. Well, let's take the last question, please, Operator.

In this period of two to three years, we can expect to continue to see a rapid increase in demand and that to be driving the supply side. I think in the next three years to come, AI resources will continue to be undersupplied with demand outstripping supply. What we can see internally in the industry, and if we look at, you know, the hyperscalers in the US, all of the latest GPUs that are running are running at full capacity, and not just them, the last generation GPUs, even GPUs from three to five years ago, so several generations back, those GPUs are to this day still running at full capacity. You know, looking ahead to the next, say, three years, we don't really see much of an issue in terms of a so-called AI bubble.

Speaker #1: the think in So I three years to come . next AI resources will to be undersupplied with demand outstripping supply and what we can see we look hyperscalers US and the at , you industry .

Speaker #1: , all the GPUs that latest are running are running of capacity . And not just them . generation The last , even GPUs GPUs from 3 to 5 years ago .

Speaker #1: So And if , those back GPUs are to this day , still running at capacity . you know , So , next looking several don't really see much issue phase , of an in terms of so-called AI full bubble we .

Speaker #3: Well, let's take the last, please. Operator question.

Lydia Liu: Well, let's take the last question, please, Operator.

Speaker #4: last question comes from She from Nomura

Speaker #4: ?

Speaker 1: Thank you. Your last question comes from Xie Liang Xi from Nimira. ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Thank you. In the last earnings call, management shared that Alibaba intends to grow its market share in the consumption market in China, and we've seen that over the past few months your investments in quick commerce have indeed resulted in an increase in market share. I'd like to know, apart from quick commerce, apart from instant commerce, what are the other subsectors in the consumption market that you see as good opportunities for investment where you will consider scaling up your investments? ?????????????????????????????????????????????????????????????????????????????????????????????????????????? O2O ?????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Thank you. This is Jiang Fan. Let me take this question. You know, Alibaba has been investing strategically in the consumption market over many years, and we've entered a huge number of different categories and sub-verticals.

Operator: Thank you. Your last question comes from Xie Liang Xi from Nimira.

Speaker #6: . Can see . .

Xie Liang Seah: ????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? Thank you. In the last earnings call, management shared that Alibaba intends to grow its market share in the consumption market in China, and we've seen that over the past few months your investments in quick commerce have indeed resulted in an increase in market share. I'd like to know, apart from quick commerce, apart from instant commerce, what are the other subsectors in the consumption market that you see as good opportunities for investment where you will consider scaling up your investments?

Speaker #6: Show that . We Thank you .

Speaker #1: Thank you. In your earnings call, I shared that Alibaba intends to grow its market share in the consumer market in China.

Speaker #1: And we've seen that over the past , management few months . Your investments in quick have indeed resulted in an increase in market share .

Speaker #1: So I'd like to a know from quick commerce apart from instant commerce , what are the other subsectors in the consumption market ? That you see as a opportunities for where you will investment , good consider up your scaling investments .

Eddie Liu: ?????????????????????????????????????????????????????????????????????????????????????????????????????????? O2O ??????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????

Speaker #7: In the In the . . The auto . The most feature . The you should woman that you the . Showing . That .

Speaker #7: .

Speaker #1: This is . take this question . You know Alibaba has been Thank you . strategically in market the over many years . we've And a entered huge of number different categories .

Jiang Fan: Thank you. This is Jiang Fan. Let me take this question. You know, Alibaba has been investing strategically in the consumption market over many years, and we've entered a huge number of different categories and sub-verticals.

Speaker #1: Some verticals . So apart from quick commerce , which we've been investing in heavily , we've talked a lot about it of . We also have Freshippo .

Speaker 1: Apart from quick commerce, which we've been investing in heavily, we've talked a lot about it, we also of course have Freshippo, we have the offline O2O model, as well as Fliggy, as well as Amap, and of course local services. That's our landscape, or matrix, of businesses that we've been investing in. I think what we need to be doing now really is working to integrate, connect those businesses, and to drive more synergies across those existing businesses. In that way, we can achieve a further increase in our market share in that larger consumption market. Thank you. Thank you. Thank you, everyone, for joining us today. We look forward to speaking with you again on our December quarter earnings call.

Apart from quick commerce, which we've been investing in heavily, we've talked a lot about it, we also of course have Freshippo, we have the offline O2O model, as well as Fliggy, as well as Amap, and of course local services. That's our landscape, or matrix, of businesses that we've been investing in. I think what we need to be doing now really is working to integrate, connect those businesses, and to drive more synergies across those existing businesses. In that way, we can achieve a further increase in our market share in that larger consumption market. Thank you.

Speaker #1: We have offline Offline . well as Fliggy as well as Amap . model course local And of services . So our that that's as landscape or of businesses that we've in .

Speaker #1: We have offline Offline . well as Fliggy as well as Amap . model course local And of services . So our that that's as landscape or of businesses that we've investing to be doing now , really is working to integrate , connect those businesses and to we need more synergies across those existing businesses .

Speaker #1: And in that way, can we achieve an increase in our market and further that consumption market.

Speaker #3: you . Thank everyone , for joining us Thank you , today . We look to forward again you on our December quarter earnings call

Operator: Thank you, everyone, for joining us today. We look forward to speaking with you again on our December quarter earnings call.