Alibaba Group Holding Limited Q2 FY2026 earnings call

• Alibaba delivered steady and healthy growth with total revenue up 15% ex Sun Art and Intime. China e-commerce CMR grew 10% and Cloud Intelligence revenue rose 34%. • Alibaba Cloud's 34% revenue growth driven by strong AI demand and public cloud usage, with external customers' revenue up 29%. AI-related products had triple-digit growth for ninth quarter. • Launched Qwen app, which had over 10 million new downloads in first week of public beta. • Quick commerce business saw improvement in unit economics, with 3,500 brands on Tmall onboarded to quick commerce. • Amap's daily active users reached historical high of 360 million, with Amap Street Stars boosting user engagement.

Total revenue increased 15% year-over-year excluding Sun Art and Intime. China e-commerce CMR grew 10%. Cloud Intelligence revenue rose 34%. Alibaba Cloud's revenue grew 34% this quarter, with external customers' revenue accelerating by 29%. AI-related products had ninth consecutive quarter of triple-digit growth. China E-commerce CMR revenue was RMB 132.6 billion, up 16%. Cloud business revenue from external customers was 29% growth. AIDC revenue grew 10%. All other segment revenue decreased 25% due to disposal of Sun Art and Intime businesses.

• Continue investing in core strategic pillars: AI plus cloud consumption. • Cloud business to continue investing in customer growth and technology innovation. • Quick commerce to further enhance synergy with ecosystem, improve unit economics, and meet consumer demand. • AIDC to continue enhancing operating efficiency but adjusted EBITA may fluctuate due to tactical investments. • All other segments to continue investing in innovative initiatives for future growth.

• Supply chain issues may impact CapEx pace. • Intense competition could cause fluctuations in adjusted EBITA for China E-commerce Group and AIDC. • Macro environment instability may affect return on invested capital for AI investments.

Q: How should we look at the growth outlook for cloud business?

A: Customer demand for AI remains strong, with accelerating adoption across enterprise operations. Conviction in future AI demand growth is strong.

Q: Share key progress for quick commerce and outlook for December quarter CMR and EBITA?

A: Quick commerce optimized unit economics, per order UE loss cut by 50% since November. CMR to be impacted by base effect and investment phase, EBITA may fluctuate due to ongoing investments.

Q: What to do with cost savings from quick commerce efficiency optimization?

A: Continue to refine user experience, focus on high-value users and expanding retail categories. CMR and EBITA may fluctuate due to market competition and investment dynamics.

Q: Thoughts on CapEx over next 3 years?

A: May need to scale up CapEx to meet customer demand due to supply chain and demand growth. AI sector in early phases, ratio of CapEx to incremental revenue not stable yet.

Q: Evaluation of ROIC in AI investment?

A: Prioritize training foundation models, inference on Bailian, and customer prioritization. Supply chain undersupply expected to continue for 2-3 years with demand outstripping supply.

Q: Other subsectors in consumption market for investment?

A: Apart from quick commerce, invest in Freshippo, offline O2O, Fliggy, Amap, and local services to drive synergies and increase market share.