BABA(BABA) - 2026 Q1 - Quarterly Report

Executive Summary CEO and CFO Commentary CEO Eddie Wu highlighted strong growth from consumption and AI + Cloud, with CFO Toby Xu emphasizing robust core business revenue and strategic investments - Strategic focus on consumption and AI + Cloud delivered strong growth, with decisive investment in quick commerce achieving key milestones and winning consumer mindshare[3] - Cloud Intelligence Group experienced accelerated revenue growth driven by robust AI demand, with AI-related product revenue becoming a significant portion of external customer revenue[3] - Core businesses delivered strong revenue growth: Customer management grew 10% and Cloud Intelligence Group grew 26%, with AI-related product revenue achieving triple-digit growth for the eighth consecutive quarter[4] - Significant investments were made in quick commerce and AI initiatives, while AIDC significantly narrowed its loss, approaching breakeven[4] Overall Business Highlights Alibaba Group reported 2% revenue growth to RMB247,652 million, with net income surging 78% to RMB43,116 million, despite a 3% decrease in operating income Key Financial Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :------------- | | Revenue | 243,236 | 247,652 | 2% | | Revenue (like-for-like) | N/A | N/A | 10% | | Income from operations | 35,989 | 34,988 | (3)% | | Net income attributable to ordinary shareholders | 24,269 | 43,116 | 78% | | Non-GAAP net income | 40,691 | 33,510 | (18)% | - Income from operations decreased 3% year-over-year, mainly due to a decrease in adjusted EBITA, partially offset by lower amortization of intangible assets and share-based compensation expense[5] - Net income increased 76% year-over-year, primarily driven by mark-to-market changes from equity investments and a gain from the disposal of Trendyol's local consumer service business[5] Business and Strategic Updates Strategic Re-alignment and Segment Reporting Alibaba Group strategically combined Taobao, Tmall, Ele.me, and Fliggy into Alibaba China E-commerce Group and reclassified Cainiao, Amap, and DME into 'All others' for simplified financial reporting - Taobao and Tmall Group, Ele.me, and Fliggy were strategically combined into Alibaba China E-commerce Group to advance the 'user first' strategy[7] - Cainiao, Amap, and Digital Media and Entertainment Group (Hujing DME) were reclassified into 'All others' for simplified financial reporting[7] - New segment reporting structure includes: (1) Alibaba China E-commerce Group, (2) Alibaba International Digital Commerce Group, (3) Cloud Intelligence Group, and (4) All others[7] Alibaba China E-commerce Group Overview Alibaba China E-commerce Group launched 'Taobao Instant Commerce,' driving 25% YoY increase in Taobao app MAU, with customer management revenue growing 10% and 88VIP members exceeding 53 million - Launched 'Taobao Instant Commerce' service on the Taobao app, strengthening its leadership in China's e-commerce industry[8] - Monthly active consumers on the Taobao app increased by 25% year-over-year in the first three weeks of August, driven by quick commerce investments[8] Alibaba China E-commerce Group - Customer Management Revenue | Metric | Q2 2025 (RMB millions) | YoY Change (%) | | :----------------------- | :--------------------- | :------------- | | Customer management revenue | 89,252 | 10% | - The number of 88VIP members grew double-digits year-over-year, exceeding 53 million[11] Alibaba International Digital Commerce Group (AIDC) Overview AIDC's revenue grew 19% to RMB34,741 million, significantly narrowing losses due to improved operating efficiency in AliExpress' Choice and Trendyol's International business Alibaba International Digital Commerce Group (AIDC) - Revenue | Metric | Q2 2025 (RMB millions) | YoY Change (%) | | :----------------------- | :--------------------- | :------------- | | AIDC Revenue | 34,741 | 19% | - AIDC significantly narrowed losses year-over-year and quarter-over-quarter, focusing on operating efficiency[13] - AliExpress' Choice business unit economics improved due to logistics optimization and enhanced investment efficiency[13] - International wholesale platform saw broader adoption of AI-powered tools for marketing, procurement, and product listing[14] Cloud Intelligence Group Overview Cloud Intelligence Group's revenue increased 26% to RMB33,398 million, driven by public cloud and AI-related products, with AI-related product revenue maintaining triple-digit growth Cloud Intelligence Group - Revenue | Metric | Q2 2025 (RMB millions) | YoY Change (%) | | :----------------------- | :--------------------- | :------------- | | Cloud Intelligence Group Revenue | 33,398 | 26% | - AI-related product revenue achieved triple-digit year-over-year growth for the eighth consecutive quarter[16] - Alibaba Cloud was highlighted in Omdia's 'Market Radar: GenAI Cloud Titans in Asia & Oceania 2025' report for its full-stack GenAI solutions and developer-friendly AI platform[17] Share Repurchases Alibaba repurchased 56 million ordinary shares (7 million ADSs) for US$815 million, with US$19.3 billion remaining in authorization through March 2027 Share Repurchase Activity (Q2 2025) | Metric | Value | | :-------------------------------- | :------------ | | Ordinary shares repurchased | 56 million | | ADSs repurchased | 7 million | | Total value of repurchases | US$815 million | | Remaining authorization (as of June 30, 2025) | US$19.3 billion | Consolidated Financial Performance Summary Financial Results Alibaba Group's revenue increased 2% to RMB247,652 million, income from operations decreased 3%, while net income surged 76%, but non-GAAP net income decreased 18% June Quarter Summary Financial Results (Q2 2025 vs Q2 2024) | Metric | Q2 2024 (RMB millions) | Q2 2025 (RMB millions) | YoY Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :------------- | | Revenue | 243,236 | 247,652 | 2% | | Income from operations | 35,989 | 34,988 | (3)% | | Operating margin | 15% | 14% | | | Adjusted EBITDA | 51,161 | 45,735 | (11)% | | Adjusted EBITA | 45,035 | 38,844 | (14)% | | Net income | 24,022 | 42,382 | 76% | | Net income attributable to ordinary shareholders | 24,269 | 43,116 | 78% | | Non-GAAP net income | 40,691 | 33,510 | (18)% | | Diluted earnings per ADS | 9.89 | 17.98 | 82% | | Non-GAAP diluted earnings per ADS | 16.44 | 14.75 | (10)% | - The decrease in income from operations was primarily due to a decrease in adjusted EBITA, partially offset by lower amortization of intangible assets and share-based compensation expense[20] - The increase in net income was primarily due to mark-to-market changes from equity investments and a gain from the disposal of Trendyol's local consumer service business[20] Costs and Expenses Analysis Total costs and expenses increased to RMB212,813 million, driven by higher sales and marketing for 'Taobao Instant Commerce,' while cost of revenue and G&A decreased Costs and Expenses (Q2 2025 vs Q2 2024) | Expense Category | Q2 2024 (RMB millions) | % of Revenue (2024) | Q2 2025 (RMB millions) | %