Photo credit: Alibaba Group

Alibaba Group on Thursday reported earnings for the quarter ending June 30. Shortly afterward, Alibaba Group’s CEO Eddie Wu addressed investors and analysts on an earnings call.

In the new fiscal year, our strategies of ‘user-first’ and ‘AI-driven’ are starting to bear fruit. This quarter’s results reflect continued steady growth momentum.

Taobao and Tmall Group achieved steady year-over-year growth in orders and in GMV. Alibaba International Digital Commerce (AIDC) revenue maintained strong growth.

Alibaba Cloud’s revenue excluding Alibaba-consolidated subsidiaries returned to positive growth, notably driven by core public cloud and AI products.

Across other segments, we achieved better operational efficiency and monetization capabilities, to varying degrees. This drove significant improvement in some loss-making businesses.

User-first Strategy Continues

Taobao and Tmall Group (TTG) maintained its ‘user-first’ strategy and continued to invest in key capabilities, aiming to deliver “quality products and services at attractive prices” across diverse shopping needs of consumers.

This quarter saw steady growth in GMV and order volume, driven by a notable increase in purchase frequency. Internal and external data about e-commerce players’ market share dynamics indicates a positive trend in our gradual market share stabilization, further validating the effectiveness of our investments in user experience.

88VIP members reached 42 million by quarter-end. We will continue to explore and improve program benefits, product offerings, and service experiences for this expanding premium member base.

In TTG’s operational strategy, we attach great importance to rich and diverse product offerings, while focusing on investing in enhancing shopping experiences. We continuously improve the efficiency in matching of products with user traffic, and ensure stable and sustainable growth. As orders and GMV continue to grow, we’re advancing monetization step by step, including the launch of our new marketing tool Quanzhantui.

Through algorithm upgrades, we aim to enhance the efficiency of merchants’ monetization, while also improving the efficiency of traffic utilization and conversion of user traffic to purchases on our platform.

We expect CMR growth to gradually align with GMV growth over the coming quarters.

Cloud + AI

In our Cloud segment, we continue to pursue high-quality revenue and effectively execute our integrated cloud + AI development strategy.

This quarter, Alibaba Cloud’s overall revenue excluding Alibaba-consolidated subsidiaries grew 6%, with public cloud revenue maintaining double-digit growth. AI-related product revenue sustained triple-digit growth, continuing to increase its share of public cloud revenue.

We are seeing more major customers are choosing Alibaba Cloud as their compute infrastructure for AI development. At the same time, Alibaba’s proprietary large language models are gaining wider adoption.

This year, Alibaba Cloud served as a major cloud service provider for the Olympic Games, providing cloud computing and AI services to Olympic Broadcasting Services (OBS).

At the Paris Olympics, cloud-based live broadcast, powered by Alibaba Cloud, overtook satellite signals as the primary means of broadcast for the first time in Olympic history. Two-thirds of broadcasters used live signals transmitted by Alibaba Cloud in real-time around the world, reaching billions of viewers.

Additionally, Alibaba Cloud’s AI technology saw its first widespread application at the Paris Olympics including 360-degree replays in real-time, bringing pleasant surprises to the audience.

Our long-term strategy for integrated cloud + AI development comprises three key aspects:

1. We will continue to optimize our cloud product offerings, focusing on competitive, sustainable gross margin, and scalable public cloud products. This forms the foundation for Alibaba Cloud’s sustainable, high-quality growth.
2. We will strengthen synergies between Cloud and AI products, not only supporting existing customers in implementing new AI capabilities on Alibaba Cloud, but also enabling AI-native enterprises to scale and succeed on our platform. We’re committed to capitalizing on both opportunities.
3. We will continue to invest in R&D and AI CapEx, to ensure the growth of our AI-driven cloud business.

Looking to the medium and long term, we are confident that Alibaba Cloud’s overall revenue excluding Alibaba-consolidated subsidiaries will return to double-digit growth in the second half of the fiscal year, with gradual acceleration thereafter.

Through intensive R&D investment, we aim to sustain profitable growth while establishing ourself as a leading cloud service provider for AI with healthy profitability and market share leadership.

Looking Ahead

In international e-commerce, AIDC delivered 32% revenue growth this quarter. Our international businesses segment comprises a diverse business matrix, integrating both cross-border and local operations as well as B2B and B2C formats.

This presents numerous opportunities in both operational models and market expansion potential. Jiang Fan will provide a more detailed update momentarily.

Beyond e-commerce and cloud, we have implemented strategic realignments across our key Internet technology businesses through a thorough evaluation of their product capabilities and market competitiveness.

While maintaining product competitiveness, most of these businesses will now place a higher priority on monetization. This quarter, we’ve already seen these businesses significantly improving profitability, and we expect this trend to continue in the coming quarters.

We expect most of these businesses to break even within 1 to 2 years and gradually contribute to profitability at scale.

This new fiscal year is a pivotal one for Alibaba as we set our strategic direction and realize the successes of our transformation. We are fully confident in Alibaba’s sustained, healthy development into the future.

For more in-depth coverage of Alibaba’s June quarter earnings, click here