Alibaba Group (BABA) investor relations material

Executive summary

• Group revenue grew 9% year-over-year to CNY 269 billion (RMB268,953 million), driven by strong cloud, AI, and quick commerce momentum.

• AI commercialization accelerated, with Alibaba Cloud's external revenue up 45% and EBITDA up 133% year-over-year.

• AI-related product revenue maintained triple-digit growth for the 12th consecutive quarter, reaching a CNY 49.5 billion annual run rate.

• Strategic realignment formed new core segments—E-commerce Group, AI Cloud and Compute Services, AI Labs and Applications—to enhance synergies and AI capabilities.

• Adjusted EBITA declined 30% year-over-year to CNY 27.3 billion, reflecting increased investments in AI and technology.

Financial highlights

• Net income attributable to ordinary shareholders fell 75–76% year-over-year to CNY 10.4 billion (RMB10,444 million), impacted by lower operating income, goodwill impairment, and a regulatory fine.

• Operating cash flow rose 11% to CNY 22.9 billion; free cash flow outflow widened to CNY 44.7 billion, reflecting heavy AI infrastructure investment.

• CapEx surged 75% year-over-year to CNY 67.7 billion, driven by AI infrastructure build-out and higher chip procurement costs.

• Net cash position stood at CNY 207,975 million as of June 30, 2026.

• Diluted earnings per ADS was RMB3.71 (US$0.55); non-GAAP diluted earnings per ADS was RMB8.52 (US$1.26), down 42% year-over-year.

Outlook and guidance

• Cloud revenue growth expected to accelerate, with EBITDA margin projected to expand steadily.

• AI-related product revenue forecasted to approach $10 billion annualized next quarter.

• Quick commerce business expected to achieve profitability by FY2029 and contribute 30% of e-commerce GMV long-term.

• Confident in achieving CNY 100 billion in external cloud revenue and 20% gross margin by 2030.

• Management expects continued strategic and financial flexibility to invest in full-stack AI capabilities as AI monetization ramps up.